UNITE HERE: Is Lone Star Funds building a new Countrywide Financial?

Caliber Home Loans’ massive growth overseen by veterans of disgraced home lender

DALLAS--()--Institutional investment manager Lone Star Funds has overseen rapid growth in its in-house residential lender Caliber Home Loans. Caliber’s servicing portfolio has ballooned from $6.5 billion in 2012 to $70.3 billion in early 2015.

Caliber’s massive growth has been fueled in part by Lone Star Funds’ acquisitions of nonperforming loans from government-supported entities like HUD, Fannie Mae and Freddie Mac.

However, Lone Star Funds’ decision to tap former executives of disgraced lender Countrywide Financial raises questions about the firm’s ability to manage its explosive growth. The New York Times recently called Lone Star a “lightning rod, criticized by housing advocates and lawyers for borrowers.”

A new report by UNITE HERE takes a closer look at the former Countrywide executives who comprise Caliber Home Loans’ top leadership, and can be found at www.pecloserlook.org.

Joe Anderson, Caliber’s Chairman and CEO, previously led Countrywide’s troubled Consumer Markets Division. Anderson’s division was implicated in US Department of Justice accusations of fraud and predatory lending resulting in settlements worth billions of dollars.

In 2011, DOJ alleged that Anderson’s division “engaged in a pattern or practice of discrimination based on race and ethnicity” from 2004 to 2008. Countrywide settled the case for $335 million. The DOJ later reached a $16 billion settlement with Countrywide that in part covered DOJ’s claims of “origination of defective residential mortgage loans by Countrywide’s Consumer Markets Division” and “the fraudulent sale of such loans to the government sponsored enterprises Fannie Mae and Freddie Mac.”

Questions to consider:

  • Why has Lone Star Funds put executives from Countrywide in charge of its own home lending firm?
  • What steps has Lone Star taken to ensure that Countrywide’s alleged misdeeds do not recur at Caliber Home Loans?
  • Can investors trust ex-Countrywide managers to oversee a servicing portfolio that has ballooned tenfold since 2012?
  • Why are HUD and other government entities selling distressed debt to a company led by former Countrywide executives?

Contacts

UNITE HERE
Elliott Mallen, 312-656-5807

Release Summary

Lone Star Funds’ decision to tap former executives of disgraced lender Countrywide Financial raises questions about the firm’s ability to manage its explosive growth.

Contacts

UNITE HERE
Elliott Mallen, 312-656-5807