NEWARK, N.J. – A federal bankruptcy court approved an order yesterday selling tens of millions of dollars in mortgage servicing rights held by CU National, a unit of U.S. Mortgage to a mystery company believed to be owned by one of the credit union customers.
The sale was the subject of a violent dispute between credit union creditors of the failed mortgage company who claim that as much as $160 million of their mortgages were fraudulently sold to Fannie Mae.
The sale of the servicing rights was opposed by several credit unions, including Suffolk FCU, Treasury Department FCU, First Florida CU, Educational Systems FCU and TCT FCU, all questioning the viability of the winning bidder for the servicing rights, Symbionce Financing Solutions LLC.
In motions filed with the bankruptcy court, TCT FCU, which has $6 million of loans being serviced by CU National, claims that Symbionce is really a shell company created by Novartis FCU with no staff, no office, no infrastructure and no insurance, and has not been approved by NCUA.
The company, said TCT, has not demonstrated it qualifies for bond coverage under CUMIS Insurance and is not licensed with state regulators to service loans.
There is no record of Symbionce Financing on any of the Internet search sites.
In fact, TCT said Symbionce appears to be owned by Ann South, CEO of Novartis, which has one of the largest exposures to CU National.
South did not return phone calls seeking comment.
U.S. Mortgage filed for bankruptcy on Feb. 23, amid a criminal investigation of its loan sales. Since then the company, based in Pine Brook, N.J., has conceded that its owner sold millions of dollars in credit union loans to Fannie Mae and at least one other company without remitting the receipts to its credit union customers.
