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http://mortgage.freedomblogging.com/2009/08/04/loan-servicer-says-foreclosure-rescue-plan-is-costly/14901/

Subprime servicer says Obama foreclosure-rescue plan is costly
August 4th, 2009, 2:00 am · 28 Comments · posted by Mathew Padilla

At least one loan servicer is going public with this simple fact: doing loan modifications costs it money while the deals are worked out.

Up until now, in every press report I have seen, servicers have either been silent on the issue or said they would work to modify more loans and cooperate with government efforts to prevent foreclosures.

Of course, the servicers normally promising a stronger effort are the ones tied to retail banks. They are highly visible companies.

But late last month Reuters had an interesting quote from Bruce Rose, a former Salomon Brothers bond trader and currently CEO of Greenwich, Connecticut-based investment firm Carrington Capital Management, which owns loan servicer Carrington Mortgage Servicers in Santa Ana. “We are in a position where it’s a very tough balance act, and that’s weighing heavily on us now. This is a classic case of an unfunded government mandate.”

The problem: as a servicer spends time fixing delinquent mortgages it must keep making payments to investors as required by the servicing contract.

According to Reuters, Carrington is part of the Independent Mortgage Servicers Coalition, an alliance of companies servicing many of the riskiest mortgages made during the housing boom. They collect payments on more than $700 billion in loans. Here’s more:

The costs of borrowing to finance delinquent payments to bond investors far outweigh expected revenue from incentives paid by the government, Rose said. The government will pay servicers $1,000 for every loan modified, and another $1,000 a year for three years if the borrower stays current.

Until recently I never saw Rose give an interview to anyone. He has been media shy since he founded Carrington in 2003. Here’s a little background on the company from a Bloomberg story:

Carrington began one of its funds with $25 million from New Century Financial Corp., then the U.S.’s second-biggest subprime lender, the mortgage company said in Securities and Exchange Commission filings. The hedge fund bought the lender’s loans, packaged them into bonds and sold all but the riskiest tranches, the company said.

The firm did the same with subprime loans from other lenders, including H&R Block Inc.’s Option One, according to bond filings.

After New Century failed in 2007, Carrington bought the Irvine, California-based company’s servicing business for $188 million, giving it more control over loans backing bonds it owned or might buy.

In related news, Ohio Attorney General Richard Cordray and that state’s Department of Commerce sued Carrington, alleging it did not follow completely a pact with the state to offer loan modifications to borrowers, according to business journal Business First of Columbus. Here’s more:

Carrington in January 2008 signed a pact with the state to resolve a dispute tied to previous litigation against bankrupt mortgage lender New Century Financial Corp. … Later in 2008, Carrington was among nine mortgage servicers that signed a non-binding agreement with the state for “substantial and large-scale” modifications to help Ohioans facing foreclosure stay in their homes. Cordray said the lawsuit filed in Franklin County Common Pleas Court alleges Carrington didn’t give borrowers workout terms that sidestep foreclosure and didn’t respond to complaints in a timely manner.

Carrington, in its own release, said, “Carrington remains single-mindedly committed to helping homeowners throughout this difficult economic cycle and has modified loans for approximately half of its customers, the vast majority of which are now back on track and remain in their homes.” And, “We regret that the Ohio Attorney General has declined our offer to continue to work constructively to help homeowners and has instead chosen to pursue meritless litigation against the company.”

http://www.forbes.com/2009/08/28/dodd-carrington-capital-business-wall-street-dodd.html

Lobbying
How Dodd Helped A Troubled Hedge Fund Fight For Help

Maurna Desmond, 08.28.09, 02:30 PM EDT

With the assistance of Sen. Christopher Dodd, Carrington Capital lobbied hard for Fed money and came up empty-handed. Now what?

When staffers at the Federal Reserve received a letter from Sen. Christopher Dodd, D-Conn., in early August saying mortgage servicers were concerned that the terms for access to Fed loans were too onerous, some of them were taken aback.

“Independent servicers argue that the terms of the TALF [Term Asset-Backed Securities Loan Facility] advances are not economically viable,” Dodd wrote to Fed Chairman Ben Bernanke. “As a result, a number of independent servicers may not be able to continue modifying loans.” He goes on to ask Bernanke for his “views on the matter.” (Read Dodd’s letter here.)

The officials were surprised by the senator’s Aug. 7 letter because it followed an eight-month lobbying campaign by a handful of mortgage servicers and benefited one firm more than any other: Carrington Mortgage, a division of Carrington Capital, a Greenwich, Conn.-based hedge fund. The letter from Dodd, who chairs the Senate Banking Committee, was a rare coup for Carrington, a key player in the subprime mortgage industry, and one that has been attracting the wrong kind of attention lately.

(snip)

http://christopherfountain.com/2009/08/31/who-is-bruce-rose-and-carrington-capital/

August 31, 2009...10:22 am
Who is Bruce Rose and Carrington Capital?

Word that this guy and his Greenwich hedge fund are pals of Chris Dodd made me curious to learn more about them. No friends other that Dodd, it would seem, but then, Dodd’has always been willing to be your friend as long as your mommy pays him to do so.

(snip)