New York State's top banking regulator, Benjamin M. Lawsky, is raising questions about the capabilities of Nationstar Mortgage Holdings. He wants to know details about the Texas-based servicer's staffing levels, modification procedures, and affiliated businesses.
Lawsky, superintendent of financial services, said his office has received hundreds of complaints from state residents over problems related to the firm's loan modifications, improper fees, and lost paperwork. In a letter to Nationstar, he wrote: "Our department has significant concerns that the explosive growth at Nationstar and other nonbank mortgage servicers may create capacity issues that put homeowners at risk."
In recent years, nonbank servicers like Nationstar have been expanding rapidly as more and more traditional banks cease servicing subprime mortgages. Nonbank firms say they can service the loans more efficiently and with better customer service than banks.