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The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.
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| Servicer Seized
Michigan regulator seizes Northwestern Financial Corp.
June 9, 2009
By MortgageDaily.com staff
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Michigan regulators seized a mortgage servicer accused of pocketing investors' payments and siphoning off escrow funds.
The state's Office of Financial and Insurance Regulation placed Northwestern Financial Corp. into conservatorship on Friday, a news release today said. James Gerber, director of receiverships for the regulator, was named conservator.
The Order Appointing Conservator directed that the company cease and desist from doing business.
Northwestern serviced 156 mortgages in the state as of Dec. 31, 2008. The order enables the conservator to operate the firm and stabilize its servicing operations.
"The commissioner's actions were prompted by the agency's discovery that Northwestern was improperly servicing its mortgages," Michigan said.
Investors began complaining to the commissioner that they were not receiving payments based on the agreements that they had with Northwestern. A state investigation found inadequate file records and no documentation to back up alleged payments to contractors. It also uncovered personal use of repair escrow account funds.
The Wixom, Mich.-based company was owned by its president, John P. Collins Jr., and Gregory Anusbigian, according to the order. Northwestern was operated from Collins' home and was licensed under the Mortgage Brokers, Lenders and Servicers Licensing Act, 1987 P.A. 173, since 1996. It was also licensed under the Secondary Mortgage Loan Act, 1981, P.A. 125.
Turns out that Collins was the borrower on multiple loans serviced by Northwestern. He admitted he couldn't make the payments, in turn leaving investors holding the bag. Some of his payments that were made came from the escrow account.
In all, the escrow account was short more than $230,000.
"Respondent lacks the necessary funds to continue to service the mortgage loan contracts," the order said. "Staff has determined, based on the investigation, that respondents pose an imminent threat of harm to consumers and investors."
Northwestern is the 77th mortgage-related closing tracked by MortgageDaily.com during 2009. |
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Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.
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