A dispute arising out of a 2015 purchase agreement in which Nationstar Mortgage acquired the reverse mortgage services portfolio of former reverse mortgage lender Generation Mortgage has been resolved in favor of Nationstar, which sought compensation from Generation. for certain losses on the portfolio of services purchased. This is according to court documents obtained by RMD.

As the original case arose out of a foreclosure action brought after the death of a borrower who had taken out a reverse mortgage with Generation, the ownership issues in that case ultimately led Nationstar to seek compensation from Generation for the expenses. additional property related, which led to the original litigation according to court documents.

Portfolio purchase and real estate issue

In 2015, the Nationstar mortgage Between in a purchase agreement with Generation Mortgage to acquire a portfolio of reverse mortgage management rights. Nationstar paid $ 192 million to Generation Mortgage and received reverse mortgage net assets valued at $ 233 million, including $ 4.9 billion of outstanding principal balance assets and $ 4.6 billion of liabilities supported, according to a government file filed at the time of the agreement.

Three years later, Nationstar sued Generation Mortgage and its guarantor, alleging that they had violated the original purchase agreement by failing to “indemnify Nationstar in accordance with the express terms of the agreement, and for a judgment. declaratory that the defendants owe Nationstar an obligation to defend and indemnify it in accordance with the express terms of the agreement, ”according to the original 2018 complaint filed with the Southern District Court of New York.

Part of the deal was the purchase of the Mortgage Management Right (MSR) for a reverse mortgage in Maryland, and at the time of the purchase, Nationstar was unaware that the secured property contained any lead paint. When the borrower passed away and Nationstar launched a foreclosure with the intention of immediately selling the property, they also had to deal with a previously unknown illegal occupant in addition to rectifying the lead paint situation, “at large fees “according to the complaint.

After that, however, the family of a child alleging bodily injury from the lead paint sued Nationstar as the loan manager for damages, according to the complaint. As a result, Nationstar sought compensation from Generation for the expenses incurred.

Decisions 2019 and 2021

The purchase contract contained a “survival period” – or a negotiated period within which the MSR buyer must notify any claim against the MSR seller for compensation – and Generation alleged that the damage suffered by Nationstar must have occurred before the end of the period. .

In December 2019, a lower court sided with Generation to close the case. However, last week the New York Court of Appeals First Division ruled that the compensation claim “should not be dismissed,” stating instead that there is nothing in the purchase contract. which limits the damages to that which has been realized by Nationstar within the five one-year contractual limitation periods.

“On the contrary, the agreement provides that a claim is made in a timely manner when the claimant provides the defendants with sufficient information and documents to establish the basis for the claim, and it is not necessary for the documentation to show that the plaintiff actually realized the loss, “the new ruling reads.


Generation Mortgage, which in 2014 had become one of the top 10 reverse mortgage lenders in the industry with more than 3,100 HECM endorsements between July 2013 and July 2014, announced its intention to go out the reverse mortgage industry in October of the same year.

“The decision to leave the origination business was not an easy one, but was made inevitable by the wave of recent regulatory changes,” Colin Cushman, then CEO of Generation Mortgage, told RMD in October 2014. “ As a result of these changes, the industry experienced a reduction in the number of units, as well as a reduction in loan balances, significantly reducing origination revenues while increasing expenses.

By the time news of the lender’s exit broke, it was rumored that Nationstar was eyeing Generation’s portfolio of reverse mortgage services. In May 2015, Nationstar purchased the wallet and the news was mediatized this August. The lawsuit’s initial claim for compensation was filed three years later, in August 2018, according to court documents.

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