Robbins Geller Rudman & Dowd LLP Files Class Action Suit Against Nationstar Mortgage Holdings Inc.

NEW YORK, June 2, 2015 /PRNewswire/ -- Robbins Geller Rudman & Dowd LLP ("Robbins Geller") (http://www.rgrdlaw.com/cases/nationstar/) today announced that a class action has been commenced on behalf of an institutional investor in the United States District Court for the Southern District of Florida on behalf of purchasers of Nationstar Mortgage Holdings Inc. ("Nationstar") (NYSE:NSM) common stock during the period between February 27, 2014 and May 4, 2015 (the "Class Period").

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today.  If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Samuel H. Rudman or David A. Rosenfeld of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at [email protected].  If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/nationstar/.  Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The complaint charges Nationstar and certain of its officers and directors with violations of the Securities Exchange Act of 1934.  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.

Plaintiff seeks to recover damages on behalf of all purchasers of Nationstar common stock during the Class Period (the "Class").  The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.

Robbins Geller, with 200 lawyers in ten offices, represents U.S. and international institutional investors in contingency-based securities and corporate litigation.  The firm has obtained many of the largest securities class action recoveries in history and was ranked number one in the number of shareholder class action recoveries in ISS's SCAS Top 50 report for 2014.  Please visit http://www.rgrdlaw.com for more information.

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SOURCE Robbins Geller Rudman & Dowd LLP

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