Secondary Servicer Karma...

from Paul Muolo at Inside Mortgage Finance...

Keep in mind that Ocwen, Nationstar Mortgage and Walter Investment have built their businesses on the purchase of “legacy” MSRs from the megabanks. But what if that business model no longer works? What do they do next? Next week Nationstar reports its second quarter results. If the company misses the targets set by investment bankers, it could be a blood bath...

… CLARIFICATION: This past week, in a news item about Nationstar, we said the nonbank lender/servicer was under investigation by the NYDFS. But a spokesman for the company took umbrage at the language we used, saying: “We work with regulators and government entities every day and are continually asked to provide information for their review. That doesn’t constitute being ‘under investigation,’ and again, to my knowledge it’s not a term that the NYDFS has used itself. We have not provided any further commentary regarding this matter since our initial statement that we would comply with the request, which we have.” However, we will point out at that back in March the NYDFS said it had received hundreds of complaints about Nationstar’s practices, including problems with loan modifications, improper fees and lost paperwork. NYDFS chief Benjamin Lawsky asked Nationstar to disclose a number of operating details to help the state regulator gauge whether the servicer’s growth is harming borrowers. I guess that’s not considered an investigation.
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So I wonder whom the BIG Banks are gonna dump this crap on next? Get ready for wholesale packaging of nonperforming notes....