Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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C-BASS LLC Completes Sale of Litton Loan Servicing


Successfully Reaches Agreement With 48 Secured and Unsecured Creditors; Proceeds From Sale of Subsidiary Will Be Used to Pay Down Company Debt; Allows for Assets of the Company to Be Paid Out Over Time

Credit-Based Asset Servicing and Securitization LLC ("C-BASS") today announced that it has successfully completed the sale of Litton Loan Servicing to Goldman Sachs. The sale of Litton, a recognized industry leader in mortgage default management, was a key step for C-BASS (the "Company") to reach a long-term agreement with its secured and unsecured creditors on November 13, 2007. The terms of the transaction were not disclosed.

Since late July 2007, the company had been under liquidity pressure from its lenders and worked with numerous potential counterparties to come up with a solution that would satisfy the Company's creditors and equity holders. In August 2007 the Company hired The Blackstone Group to assist in solving its liquidity challenges. The Blackstone Group, working with management and Hunton & Williams, C-BASS' legal advisors, created a solution that allowed the Company to reach a consensual out of court restructuring with all its creditors.

The agreement provides a framework for the Company to manage its portfolio assets, allowing the underlying cashflow to repay the secured and unsecured creditors of C-BASS over time.

Information for Customers of Litton Loan Servicing

Customers with loans that are serviced by Litton Loan Servicing will not be affected by this event. Customers should continue to make their monthly payments as usual and may contact Litton at 1-800-247-9727 or at

About C-BASS

C-BASS is a New York-based company, long regarded as a leading issuer, servicer and investor in credit-sensitive residential mortgage assets. C-BASS is a limited liability company capitalized by MGIC Investment Corporation (NYSE: MTG), Radian Group Inc. (NYSE: RDN), and C-BASS management. MGIC Investment Corporation, based in Milwaukee, WI, is the parent of Mortgage Guaranty Insurance Corporation (MGIC), and Radian Group Inc., based in Philadelphia, PA, is the parent of Radian Guaranty Inc. For more information, please visit

About Litton Loan Servicing

Houston-based Litton Loan Servicing is a mortgage servicing company specializing in loss mitigation and default management for residential loans. Since its inception in 1988, Litton has grown from a handful of employees servicing customers exclusively in Texas to more than 1,000 employees servicing more than 400,000 customers nationwide. Throughout its substantial growth, Litton has maintained its primary objective of preserving homeownership and keeps thousands of customers facing foreclosure in their homes each year. For more information, please visit

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Goldman Sachs

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LOL! They get the Turkey Award! Hey, SWAMP LAND 4 SALE... REAL CHEAP!

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Just wondering how this will, if any benefit current Litton Loan slave customers....

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Not News
GS is/was the, "Undertaker" er...underwriter on MANY loans that LL has been involved in.

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Does this mean I won't meet Sr., Jr., and Christopher?  I just spoke with Gary & we both still plan to go to the pool party.

Bigger pocketbooks, more liability wanting little or no exposure.  Hmmm????

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Still Fighting
Are the Litton's and other senior management still going to be involved with this? If not maybe Gary and Big Bob could put them to work cleaning up after the pool party!
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KeyWords! :)

Let's Raise the Hood on Mortgage Lending

By David Lee Smith December 10, 2007

2 Recommendations

Like it or not, we've become a nation fixated on investigations. Congress in particular, taking its oversight role perhaps a little too seriously, has all manner of inquiries going at any given time. The most recent -- and perhaps the most questionable -- involves a look-see by a Senate committee into potentially self-serving activities by a group of half a dozen televangelists.

Fine, investigate the TV preachers if you must -- although targeting that group in hopes of unconvering some sort of income-tax or truth-in-sermonizing violations appears a little absurd for members of this purportedly august group. But what about mortgage brokers and lenders? This crew is appearing more culpable by the day for the subprime mortgage wounds that have bled over too much of our economy. That, it seems to me, is where the senators might better expend their efforts.

Another idea
Until recently, my conclusion was that the subprime infestation was simply a circumstance of cyclicality: The system had been working as it should -- that is, until home prices stopped increasing linearly, catching all manner of borrowers in bad positions when the music stopped. But a Wall Street Journal article published last week has led me to believe that there really are identifiable culprits in the subprime rot.

At this juncture, I'd be hard-pressed to state precisely where the bodies are buried in this mess. But I think we should start with an analysis of the practices of the major lenders, including, of course, Countrywide (NYSE: CFC), Washington Mutual (NYSE: WM), Wells Fargo (NYSE: WFC), and JPMorgan Chase (NYSE: JPM). And let's not forget that army of brokers who worked with the individual mortgagees. Beyond that, we should clearly take a gander at those who securitized the mortgages, including the likes of Goldman Sachs (NYSE: GS), Merrill Lynch (NYSE: MER), etc.

According to the Journal, in 2005, fully 55% of subprime mortgages that were ultimately packaged into securities to feed the voracious appetites of investors went to borrowers with scores that could have qualified them for cheaper conventional loans. In 2006, that proportion moved to 61%, nearly half again higher than it had been in the first year of the decade.

Bad form
Further, the article also contains a number of other sobering revelations:

  • Brokers frequently operated under compensation schemes that rewarded them for pushing borrowers toward loans carrying higher interest rates than they should have been charged.
  • An analysis by Fitch Ratings of 45 subprime loans that lurched into default, despite the borrowers' having credit scores that theoretically should have put them into conforming loans, indicated a prevalence of misrepresentation in the origination process.
  • A New Century rate sheet from last March (that was not intended for public disclosure) promised brokers a "yield spread premium" for putting borrowers into loans with interest rates above the lender's listed rates.
  • In an era when we're prone to regulate almost any transaction of any type between two or more parties, in most states, mortgage brokers or lenders have no obligation to steer lenders toward the mortgage that's most appropriate for them.

So, I'm admittedly in a quandary, Fools. On the one hand, I'm opposed to regulatory oversight of almost any industry. My experience has been that, when government at any level begins meddling in an area of commerce, that area is soon on the way to higher prices, lower quality, or both.

Control tower to lender
But in this case, I believe that the various sectors of the mortgage business have demonstrated in spades that they're generally unsuited for flying without control-tower supervision. Of course, although it's been conveniently forgotten, the industry was pushed by members of the administration and the preacher-investigating Congress to participate in raising home ownership toward what was considered a magic 70% level.

Beyond that, the system of subprime adjustable-rate mortgages, with the down payment often tied to piggyback loans -- such that borrowers frequently waltzed into their new homes with nary a dime of their own cash forked over -- worked well as long as home prices headed steadily higher. But as they say, all good things must come to an end, and they've clearly done so for housing.

With the idea that the system must be fixed, we first have to establish who or what went wrong. We will clearly be able to do that best by raising the investigative hood on all segments of the mortgage industry and attempting to repair what's broken. But until that's accomplished, I'd recommend that Fools give a wide berth to investments in the lenders, the homebuilders, and perhaps most areas of financial services that haven't been thoroughly fumigated.

For related Foolishness:

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4 justice now
Don't ya just love factual quotes like this one:

Litton has maintained its primary objective of preserving home-ownership and keeps thousands of customers facing foreclosure in their homes each year.

Yeah right... and Hitler was one of the finest humanitarians throughout all of modern history.


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I was thinking the same thing.

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Way To Go

While on the subject of Litton, it seems to important not to mention this story again.  Anyone who has not yet posted a comment at the end of the story should do so.

 (From the thread: Litton in the news, again)

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A Smurfy post

C-BASS To Sell Servicing Unit To Goldman For $500 Million -Source -
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I'm going to New York in two weeks for a meeting!!!!  Surprise! Surprise! Surprise!  for both CBASS and Litton Loan Coming!
Tell you all later, but many things are now in place to put away Litton Loan, CBASS, and MGIC! 
By the way another Class action is being prepared against CBASS for their POOLING AND SERVICING AGREEMENTS.

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Why would anyone want this POS company and all of its attached legal woes anyway?

What is Goldman going to gain by this other than a major headache? What and how much dirt can this transaction cover up and for whom?

Since they can't keep selling loans and borrowers multiple times is this another attempt to muddy the waters, just in another way?

Anyone know?

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Litton Loan buyout by Goldman is very interesting, several notable items to mention.
1) No amount is not mentioned, these are companies of a PUBLICLY TRADED COMPANY.
2) No time duration is noted on the purchase.
3) No management of Litton is mentioned.
4) Nothing about the agreements with CBASS creditors is mentioned.
5) It's mentioned that the payoff will be determined by the "Cash Flow" of Litton Loan?  What does that mean?
All of us that have law suits against Litton Loan are going to have to figure that out, I just wonder if Goldman bought a "Pig in a Poke" and did manage to buy Litton Loans Liability's also?  
Well I guess the thousands of us in litigation with Litton, are going to have to use discovery to make sure their is "Sufficient" cash to deal with us, I'm wondering if that cash will come out of the "Buy Out".  If so this purchase could be really doomed.  But if Litton Loan is infused with cash, its anybody's guess. The 1200 plus Federal litigation case's could easily cost well over $500 million in liability alone, now add the Class Actions, and Thousands of State Court actions!  There is no way, Litton Loan will survive the expansive litigation, yet alone the now growing regulators inquiries and beginning states and federal investigations.
DISCOVERY IS ON! And going after Larry Litton Jr and Sr. personally appear to now be the target of personal litigation for "Intentional Wrongful Acts".
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Bass Shorted Subprime to `God, I Hope You're Wrong' Wall Street
Bloomberg - Dec 18, 2007
For his part, Sadek says he was never told that hedge funds had asked how his firm did business. He disputes Bass's characterization of Quick Loan's mortgages. ``If my loans were so bad, why did Wall Street keep buying them to securitize?'' Sadek says.
New Fed Rules Protects Banks
Free Market News Network - Dec 21, 2007
Fed Chairman Ben Bernanke announced the proposals four months after the collapse of the US housing market and the upward spiral of home foreclosures sparked a crisis on Wall Street, which is massively invested in subprime mortgage-backed securities ...

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