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Mortgage servicer Green Tree failed compliance tests, monitor says

WASHINGTON, May 14 (Reuters) - Mortgage servicer Green Tree failed more than one-quarter of tests that assess how it deals with struggling borrowers, a watchdog said on Wednesday, adding further pressure on nonbank servicers who have faced increasing concerns from regulators.

Green Tree, a subsidary of Walter Investment Management Corp , had acquired mortgage servicing rights from a unit of Ally Financial Inc, which had earlier entered a settlement that subjected it to the tests.

The report of Green Tree's failures comes from a monitor appointed to review compliance with the settlement, which was with state and federal authorities.

Walter Investment Management, along with Ocwen Financial Corp and Nationstar Mortgage Holdings Inc, have been the most aggressive nonbank acquirers of servicing rights on home loans. Walter was the ninth-biggest mortgage servicer in the country in 2013, according to industry publication Inside Mortgage Finance.

Last week the U.S. financial risk council raised red flags about new, potentially risky practices by nonbank mortgage servicers, which it said are not regulated as carefully as banks.

Mortgage servicers handle borrowers' accounts, processing payments and handling foreclosure proceedings.

(Reporting by Aruna Viswanatha in Washington and Peter Rudegeair in New York; Editing by Meredith Mazzilli)