Lone Star Funds becomes lightning rod
Foreclosures draw media coverage and NY Attorney General begins investigation of its servicing subsidiary
On Tuesday, the editorial board of the New York Times called out Lone Star Funds’ foreclosure practices and called on the government to suspend sales of discounted mortgages until it has procedures in place to protect the rights of homeowners.
The next day, the Times reported that New York Attorney General Eric T. Schneiderman has opened an investigation into Caliber Home Loans, a mortgage company owned by Lone Star, after a “surge in consumer complaints.”
— Renata Pumarol (@RenataPumarol) September 30, 2015
Recent Lone Star media coverage:
- “Lone Star-backed lender faces probe by NY Attorney General,” Bloomberg, Oct 7, 2015.
- “New York Attorney General Examining Private Equity Firm’s Mortgage Business,” New York Times, Oct 6, 2015.
- “Foreclosure Abuses, Revisited,” New York Times, Oct 6, 2015.
- “The Foreclosure Crisis: Can Washington Save Distressed Homeowners From Wall Street?,” WGBH, Oct 5, 2015.
- “Elizabeth Warren is on the hunt again,” Washington Post, Sept 30, 2015.
- “Elizabeth Warren Leads Protest of Agency NPL Practices,” DS News, Sept 30, 2015.
- “Warren Demands HUD Curb Sales of Soured Loans to Private Equity,” Bloomberg, Sept 29, 2015.
- “As Banks Retreat, Private Equity Rushes to Buy Troubled Home Mortgages,” New York Times, Sept 28, 2015.
Schneiderman was a co-chairman of the residential mortgage-backed securities task force that worked with the Justice Department and other state attorneys generals to negotiate tens of billions of dollars in settlements with Wall Street banks over their mortgage practices during the run-up to the financial crisis, according to the Times.
Lone Star has faced escalating scrutiny for its role in buying distressed home mortgages from government entities. Last Wednesday, housing activist groups, US Senator Elizabeth Warren and US Representative Michael Capuano rallied in Washington DC against these programs and met with officials from both HUD and the Federal Housing Finance Agency. Activists also protested outside Lone Star’s Washington, D.C. office.
Last month, we published a report on Caliber, asking whether investors can trust the ex-Countrywide managers who run Lone Star’s Caliber Home Loans to oversee a servicing portfolio that has ballooned tenfold since 2012.
Are Lone Star’s practices creating unnecessary headline risk for limited partners?
For more information, visit www.LoanSharkFunds.org.