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Five companies have been identified as potential servicers of a securitized pool of subprime mortgages for beleaguered American Business Financial Services.
On Tuesday, the Pennsylvania-based company petitioned the court handling its bankruptcy case to approve bid rules for a March 23 planned auction of the company’s right to service securitization trusts. American Business said certain securitization insurers have asserted that its contracts for servicing rights have expired. Although the company disputes the assertions, it deemed that the auction is necessary to avoid losing its authority to either service loans or sell the rights, according to court documents. While there were no bids as of the petition filing, American Business said it had notified five qualified servicing companies of the servicing sale. Those prospects were Countrywide Home Loans Servicing; Select Portfolio Servicing Inc., formerly known as Fairbanks Capital; Wilshire Credit Corp.; Litton Loan Servicing; and Ocwen Federal Bank FSB. The date proposed for the court hearing of the bidding procedures is set for March 9. Upon approval, bidders would have until March 18 to submit their offers for the 10 a.m. auction five days later. American Business’s filed for Chapter 11 bankruptcy in late January. The company was unable to keep funding loans and sought approval to obtain financing necessary to support its origination business through a commitment of $500 million in debtor-in-possession financing from Greenwich Capital Financial Products Inc. Following the bankruptcy filing, American Business named a new president and on Feb. 18 announced it received interim court approval to use approximately $175 million of the $500 million DIP financing facility to resume the loan origination business, pay certain secured creditors and business expenses. At that time, the lender informed it had downsized its Philadelphia workforce by 134 employees to cut costs and meet its restructuring business plan objectives. With a portion of the DIP financing in place, the lender said it was “hopeful that, through the restructuring process, the company [could] improve its capital structure and take advantage of the fundamental strength of its loan origination business.” |
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Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.email: s3celeste@aol.com |
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