Winning Bidder in Loan Auction Sues Nationstar for Refusing Sale

Winning Bidder in Loan Auction Sues Nationstar for Refusing Sale

07/30/2013 BY: ESTHER CHO

Truman Capital Advisors and U.S. Bank filed suit against Nationstar Mortgage after the servicer decided not to complete the sale and transfer of 534 mortgage loans Truman Capital bid on through Auction.com.

According to the complaint, which was filed Monday in New York State Supreme Court, Truman Advisors bought the non-performing loans for an agreed price of $150 million.

A few days after Nationstar notified Truman Capital that it was the winning bidder, the complaint states the Lewisville-based servicer, acting through its agent

Auction.com, notified Truman Advisors that it “refused to complete the sale and transfer” of the loans covered by the winning bids.

The complaint alleges that Nationstar’s decision was “based principally, if not solely, on its belated realization that the reserve prices it had set for, and at which it had agreed to sell … was significantly lower than their fair market value.”

Truman Capital alleges Nationstar’s failure caused the company to suffer at least $35 million in damages.

However, a complaint filed by Nationstar against Truman Advisors last week states that under Auction.com terms, “[n]o obligation to sell shall be binding on Seller unless and until a written contract of sale or loan sale agreement is signed and delivered by Seller. Seller reserves the right to rescind any oral acceptance of a winning bid prior to the execution and delivery of an executed contract of sale or loan sale agreement for any reason.”

The complaint filed in federal court in California further states Nationstar never actually executed a written agreement with Truman Advisors to sell the loans bid on via Auciton.com.

Nationstar argued that it had “exercised its right to rescind any acceptance of a winning bid.”

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