New York fines Nationstar $5M for past compliance flaws

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The New York Department of Financial Services is fining Nationstar Mortgage $5 million for failing to comply with servicing and origination regulations as it grew between 2012 and 2014.

"The company's failure to fully plan for risks associated with its rapid growth exposed borrowers to increased risks, including in some cases, the possibility of costing them additional money," New York Department of Financial Services Superintendent Maria Vullo said in a press release.

Nationstar, which also paid $7 million to New York borrowers as a result of NYDFS examinations, additionally consented to an $5 million payment in the form of donated property or mortgages to one or more nonprofits that are rehabilitating vacant and abandoned properties.

In addition, Nationstar will identify a third-party consultant to assess the sufficiency of measures it is taking to address its compliance deficiencies.

The new consent order followed an examination that focused on Nationstar's servicing operations between Jan. 1, 2014 and March 31, 2014, including a review of loans produced between March 1, 2012 and March 31, 2014.

The examination found "in many instances, servicing files lacked documentation showing the company's compliance." Among other things, files lacked "loss mitigation correspondence, single point of contact notices and annual privacy notices," according to NYDFS.

Additionally, the department found flaws in Nationstar's origination operations that included failure to obtain authorization for multiple domain names and failure to fund more than 900 loans within required time frames.

The number of loans Nationstar originated and serviced grew rapidly between 2011 and 2013. Its origination volume, for example, grew from 26,898 first-lien home loans in 2011 to 97,970 mortgages in 2013.

Nationstar has made a number of operational improvements and rebranded under the name Mr. Cooper recently.

WMIH Corp., the company that holds Washington Mutual's legacy reinsurance business, has agreed to acquire Nationstar.

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Enforcement actions State regulators Servicing Loss mitigation Nationstar NYDFS New York