As sophisticated mortgage servicing rackets go, it looks like Carrington Capital has the process locked down but good. It also looks quite like they have been bending to to point of breaking. But, who is going to complain? Carrington seems have found the keys to the magic kingdom: screw the senior secured creditors, after all, no one thinks they are popular. Moreover, Carrington manages to accomplish this while appearing to "help" home-debtors. (People, let's face up to the fact that the couple who is 25% underwater on their real-estate and for whom it is not looking like cram-downs are going to do squat are not "home-owners.")
Carrington knows it sounds patriotic when they tell parties that they are trying to keep homeowners in their homes by renting out after they foreclose on them," said a senior bond investor under condition of anonymity. But such a strategy actually increases investor losses, he said.
More importantly, Carrington appears to have little interest in trying to sell the REO properties. I spoke with two REO brokers hired by Carrington Capital last year, who said they are coming to terms with the fact that Carrington Mortgage Services used to them to do its dirty work and propel the myth that it is trying to sell REO properties.
We've got the entire article first for a bit of sneak peeking. Enjoy!
Frayed Ends.Carrington Capital.pdf