On the eve of the financial crisis, the hedge fund manager Bruce M. Rose did a surprising deal that took his firm into the business of collecting mortgage payments from people with tainted credit.

Now, seven years later, securities regulators are scrutinizing the deal, looking in particular at how part of it was financed.

The Securities and Exchange Commission last fall began to subpoena documents from Mr. Rose’s Carrington Holding Company about the purchase of mortgage servicing operations from the failed subprime lender New Century Financial,according to regulatory filings. The previously unreported investigation is seeking information about how Carrington financed the $188 million deal, which relied in part on the firm’s later issuing special securities to the investors in its hedge fund.

Lightly regulated firms are moving into mortgage servicing, buying batches of the business from established banks. Regulators have recently expressed some concerns about how these new servicers are performing and their dealings with borrowers. In addition, the servicers’ financial strength has yet to be fully tested by a big drop in home prices.

Read more here

Write A Comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ready to get started?

Speak to a specialist at (888) 737-6344