Earlier this month, a New York financial services regulator opened an investigation into the reverse mortgage servicing and origination operations at Nationstar Mortgage (NYSE: NSM) and Reverse Mortgage Solutions, Inc. While RMS has remained silent on the matter, for Nationstar, the probe is “business as usual,” according to comments made by company leadership last week.
The New York State Department of Financial Services (NYDFS) began investigating the companies following a story from the New York Post, which revealed there have been 27 complaints lodged with the NYDFS, the majority of which were against RMS and Champion Mortgage, a division of Nationstar.
When asked by an analyst during last week’s second quarter earnings conference call whether this investigation would be a lengthy process, or something that could be wrapped up quickly, Nationstar President and CEO Jay Bray indicated that regulatory scrutiny is part of the everyday business in the mortgage servicing sector.
“I would put that in the camp of business as usual,” Bray said during the call. “There are always going to be requests for information; it is the kind of world we live in. And so we will answer the questions and work with those guys—we have a good relationship with them—and we will address it. If you look at the servicing business, we are the largest reverse [mortgage] servicer. So clearly, we are going to get questions about reverse servicing.”
As part of the investigation, the NYDFS sent letters to both RMS leadership as well as to Anthony Villani, executive vice president and general counsel at Nationstar. The letters require both companies to provide various data on their reverse mortgage origination and servicing activities in the State of New York since 2009.
Part of the data collection calls for Champion to provide a detailed breakdown of all reverse mortgages related to New York properties originated by the company from 2009-2014.
Nationstar, which provided a written statement to RMD on the investigation last week, affirms that it has never originated reverse mortgages in any state, including New York.
The company did, however, acquire Greenlight Financial Services in June 2013, which included the acquisition of Greenlight’s reverse mortgage division. After the acquisition, Nationstar shut down the division.
“We don’t originate today; we have never originated any [reverse mortgages] except for our brief couple of months with Greenlight,” Bray said. “And we have never originated a reverse loan in New York—just to king of set the stage and get the facts right.”
Nationstar reported a net income loss of $92 million, or $0.92 per share, for the second quarter ending June 30, 2016.
Written by Jason Oliva