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CU System
Court orders sale of CU National Mortgage servicing
NEWARK, N.J. (5/4/09)--A U.S. Bankruptcy Court order in New Jersey Thursday authorized the sale of assets related to mortgage servicing rights held by Pine Brook, N.J.-based CU National Mortgage and parent company, U.S. Mortgage Corp., to Symbionce Financing Solutions LLC. Symbionce, whose address is a post office box in Roselle Park, N.J., was one of two bidders for purchasing servicing rights out of a market of 23 potential bidders, according to documents filed with the court. The documents list Ann South, CEO of Novartis FCU, East Hanover, N.J., as managing owner of Symbionce. A key element of the purchasing agreement is that Symbionce will receive the assets "free and clear" and not be liable for any liens, claims, interests and/or encumbrances related to the servicing rights sold. Novartis is one of four credit unions named in the court order as exercising their right of first refusal with the mortgage companies. Judge Rosemary Gambardella said the court would honor that right and that the four--which also included Oakland Municipal CU of Oakland, Calif.; Energy Capital FCU of Houston, Texas; and Piedmont Advantage CU of Winston-Salem, N.C.--would pay the mortgage company debtors what they owed on their servicing agreements as of the court date. Objections to the sale were filed by Suffolk FCU, Medford, N.Y.; TCT FCU, Ballston Spa, N.Y.; Treasury Department FCU, Washington, D.C.; First Florida CU, Jacksonville, Fla.; and Educational Systems FCU, Greenbelt, Md. U.S. Mortgage and CU National filed for Chapter 11 bankruptcy Feb. 23 in the Newark court, listing more than $200 million in debts to Fannie Mae and 19 credit unions, among others (News Now March 2). The bankruptcy set off a flurry of lawsuits, with credit unions such as Dover, N.J.-based Picatinny FCU alleging in a court petition that the company sold $14 million of the credit union's mortgage loans without authorization to Fannie Mae. The court ordered the mortgage company to turn over all funds belonging to the credit union and to transfer mortgages it had been servicing to Picatinny's new servicer (News Now March 24). Among the top 20 creditors with the largest unsecured claims against CU National are 19 credit unions from New Jersey, New York, District of Columbia, Maryland, North Carolina, Florida and California. Nearly 300 creditors were listed in the bankruptcy petition's accompanying papers.


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