American Home Mortgage Servicing and Carrington Capital Management agreed last week to settle a lawsuit regarding alleged improper servicing by American Home on $128.1 million in non-agency mortgage-backed securities owned by Carrington. The lawsuit was filed in 2009 by Carrington, which claimed American Home had conducted “fire sales” of delinquent properties in the securities in an effort to repay debt. At the time, American Home denied the charges. The terms of the settlement were not released. [Includes two briefs]

A settlement involving major servicers and state attorneys general could be close, as state AGs have until Feb. 6 to agree to a potential $25 billion settlement. Negotiations on the settlement have dragged on for 15 months and were previously slated to end Feb. 3. Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo would reportedly be included in the settlement. Some $17 billion in penalties paid by the banks would go toward principal reductions, $5 billion would go toward a reserve account that would ... [Includes three briefs]

Analysts are divided regarding the outlook for Ocwen Financial as the special servicer has grown significantly in the past two years. Fitch Ratings and Moody’s Investors Service recently downgraded Ocwen and Saxon Mortgage due to concerns about Ocwen’s growth strategy and financial standing while others have endorsed Ocwen and its practices. Ocwen handled a $106.1 billion portfolio at the end of the third quarter of 2011, including $74.9 billion in subprime mortgages. The total included some of the $38.6 billion in subprime loans the servicer acquired from Litton Loan Servicing. At the beginning of February, the company is set to close acquisitions of the Saxon platform and its $26.6 billion portfolio as well as $15.0 billion in non-prime mortgage servicing rights from ...

Nationstar Mortgage’s servicing portfolio has grown significantly in the past year due to acquisitions from banks, a trend the company’s officials suggest will continue. “There is significant room for market penetration as larger banks dispose of servicing assets,” the nonbank servicer said in a recent presentation to investors. Nationstar is touting its growth prospects even after increasing its servicing portfolio to $102.7 billion at the end of the third quarter of 2011 from $12.7 billion at the end of 2007. The company owns 49.2 percent of the holdings, with the rest being subserviced for others ...

Carrington Holding Company this week announced a partnership with Oaktree Capital Management to purchase up to $450 million in real estate-owned properties and offer them as rentals. The plan is not specific to loans owned by the government-sponsored enterprises, according to Carrington officials. “Whether this inventory comes from the GSEs, banks or directly from the [multiple listing service] isn’t a primary concern at the moment,” said Rick Sharga, an executive vice president at Carrington Mortgage. “We’ll put together the portfolio based on properties that meet the criteria we’ve established to ensure a reasonable return for the investors.” ...

Credit Suisse Securities won an auction this week for $7.01 billion in predominantly non-agency mortgage-backed securities sold by the Federal Reserve Bank of New York. The securities were part of the Maiden Lane assets the Fed acquired from AIG and the amount of the winning bid was not disclosed. The Fed halted sales of the assets last year after demand for the securities decreased. The sale this week of most of the remaining Maiden Lane II assets was prompted by an unsolicited offer from Goldman Sachs. The Fed decided to auction the MBS sought by Goldman and Credit Suisse won, also beating bids by Barclays Capital and Merrill Lynch ... [Includes three briefs]

The Consumer Financial Protection Bureau announced this week that it will immediately begin supervision of non-bank servicers and lenders. The supervision became possible due to President Obama’s controversially executed appointment of Richard Cordray as director of the CFPB. “Since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them,” Cordray said this week of non-banks. “But we must establish clear standards of conduct so that all financial providers play by the rules.” ...

In 2011, high-touch subprime servicer Carrington Mortgage Services significantly decreased its delinquency processing timelines and had its servicer rating confirmed at the end of the year. The servicer also made adjustments after facing criticism from non-agency mortgage-backed security investors who claimed that Carrington’s practices improperly favored investments made by the hedge fund that also owns the servicer. Carrington serviced $11.73 billion in subprime mortgages as of the end of the third quarter of 2011, according to estimates by Inside Nonconforming Markets. The servicer received a mid-range rating for subprime and special servicing from Fitch Ratings, with the rating service recently confirming that Carrington “demonstrates proficiency in overall servicing ability.” ...

Non-bank servicers have received a reprieve from scrutiny by the Consumer Financial Protection Bureau due to a heated political fight in Congress. Despite a major push last week by the Obama administration, Senate Republicans blocked an attempted vote to confirm former Ohio Attorney General Richard Cordray as director of the CFPB. Last week, the Senate voted 53-45 on a motion to consider Cordray as director of the CFPB. At least 60 votes were needed to end a Republican filibuster. Scott Brown, R-MA, was the only Republican to vote in favor of the motion ...

The Treasury Department increased its threats against non-agency servicers regarding Home Affordable Modification Program performance. In a report released last week, the Treasury was highly critical of JPMorgan Chase and a number of other non-agency servicers remain on notice. Freddie Mac, acting as the Treasury’s compliance agent for the Making Home Affordable program, conducts quarterly assessments of HAMP servicers. In the third quarter of 2011, Chase was deemed to be in need of “substantial improvement” in compliance with MHA guidelines, the third quarter in a row for the servicer ...