Case Page

 

Case Status:    DISMISSED    
On or around 07/25/2016 (Court's order of dismissal)

Filing Date: June 02, 2015

According to the law firm press release, Nationstar is the nation’s second largest non-bank subprime mortgage servicer. In this capacity, Nationstar collects mortgage premiums and otherwise services mortgages for loans owned by other entities. Nationstar began to grow its portfolio beginning in early 2014 by purchasing mortgage servicing rights (“MSRs”) from other non-bank sub-prime mortgage servicers and from bank entities who no longer wanted to service their own portfolios due to increased regulatory scrutiny.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements about the Company’s business, future revenues, operating results and financial prospects. Nationstar claimed to be improving its profitability as a result of increased servicing revenue on its exponentially expanding MSR portfolio, leading to servicing fee profits, and as a result of profits being “earned” by its Solutionstar subsidiary, with which it had contracted to provide various loan services. However, Nationstar failed to disclose deficiencies in management control and supervision necessary to ensure the Company’s compliance with applicable laws and regulations in connection with the servicing of MSRs, and that Nationstar had been gouging mortgagors and illegally enhancing its profits through illicit practices, such as charging for repeated, unnecessary inspections, which resulted in additional late payment fees, and pressuring mortgagors to carry out expensive modifications and refinances on their mortgages. In addition, heightened regulatory scrutiny into MSR transferring and servicing, including a probe into Nationstar’s own loan servicing practices launched by the New York State Department of Financial Services in March 2014, was significantly increasing Nationstar’s costs of servicing MSRs and diminishing the profitability and carrying value of the Company’s MSR portfolio. Defendants’ false and misleading statements and omissions regarding the Company’s business, future revenues, operating results and financial prospects issued during the Class Period caused Nationstar common stock to trade at artificially inflated prices of as high as $38 per share.

The complaint alleges that due to a series of partial disclosures in late 2014 the price of Nationstar common stock began to decline, beginning with a November 6, 2014 report of declining third quarter 2014 financial results, followed in January 2015 with Nationstar being named as a defendant in a class action brought in federal court in the Southern District of Florida on behalf of mortgagors alleging racketeering in connection with the collection of unlawful inspection fees. Nationstar’s stock price declined further on a February 26, 2015 report of dismal fourth quarter and fiscal 2014 financial results, and even further when the Company priced a March 25, 2015 equity offering well below market.

Then on May 5, 2015, before the market opened, Nationstar issued disappointing first quarter 2015 financial results. Nationstar reported a net loss of $48.3 million, or ($0.53) per share, as the Company’s revenues fell 15% year-over-year. Much of the loss came from a $110 million ($0.77 per share) write-down on the value of the Company’s MSRs. Following this series of partial disclosures, the price of Nationstar common stock fell, closing at $19.51 per share on May 5, 2015, nearly 50% below its Class Period high.

On August 21, 2015, the Court appointed lead plaintiff and approved lead counsel. Lead plaintiffs filed an amended complaint on October 16.

On June 20, 2016, the Court issued an Order granting Defendants' Motion to Dismiss. Plaintiffs were given leave to file an amended complaint. Plaintiffs did not do so, thus this case was ordered dismissed with prejudice on July 25.

COMPANY INFORMATION:

Sector: Financial
Industry: Misc. Financial Services
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: NSM
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. Florida
DOCKET #: 15-CV-61170
JUDGE: Hon. William P. Dimitrouleas
DATE FILED: 06/02/2015
CLASS PERIOD START: 02/27/2014
CLASS PERIOD END: 05/04/2015
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Robbins Geller Rudman & Dowd LLP (Boca Raton)
    120 East Palmetto Park Road, Suite 500, Robbins Geller Rudman & Dowd LLP (Boca Raton), FL 33432
    561.750.3000 561.750.3364 ·
  2. VanOverbeke Michaud & Timmony, P.C.
    79 Alfred Street, VanOverbeke Michaud & Timmony, P.C., MI 48201
    313.578.1200 313.578.1200 ·
No Document Title Filing Date
COURT: S.D. Florida
DOCKET #: 15-CV-61170
JUDGE: Hon. William P. Dimitrouleas
DATE FILED: 10/16/2015
CLASS PERIOD START: 05/08/2014
CLASS PERIOD END: 05/04/2015
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Kessler Topaz Meltzer & Check LLP (Pennsylvania)
    280 King of Prussia Road, Kessler Topaz Meltzer & Check LLP (Pennsylvania), PA 19087
    610.667.7706 610.667.7706 · info@ktmc.com
  2. Robbins Geller Rudman & Dowd LLP (Boca Raton)
    120 East Palmetto Park Road, Suite 500, Robbins Geller Rudman & Dowd LLP (Boca Raton), FL 33432
    561.750.3000 561.750.3364 ·
No Document Title Filing Date