Balancing the Scales of Justice for Pro Se Homeowners

Do you have a claim against New Century Mortgage?

Posted by on Feb 20, 2012

New Century Mortgage is currently in the process of wrapping up its bankruptcy proceedings, having successfully skirted dealing with the feared “floodgates” of borrowers claiming to be known claimants harmed by New Century’s, and its associates in enterprise, predatory lending practices.  So let’s take a quick look at few facts.

  • New Century originated approximately 100 Billion in Mortgage loans between January 2004 and April 2007
  • Estimates put the number of discrete borrowers between 2 to 3 million individual loans.  (According to the Center for Public Integrity, the average loan size at the subprime lending peak in 2005 was $183,000 per loan (See here  Read under the “Deeper and Deeper in Debt, ¶3) – that would put the number of borrowers closer to the FIVE million mark)
  • The Missal Report states that, at a minimum, 10% of those loans were subject to TILA/RESPA Violations, state and federal violations, faulty appraisals (overvaluing property) among other actionable deficiencies.
  • The Missal Report details that New Century was provided monthly reports that detailed, on a loan level basis, the precise reason for an investor refusing the loan because of the above mentioned problems.
  • The Missal Report details how New Century created Bid Sheets detailing the obvious deficiencies and problems of the above identified loans that were then sold to investors as “Scratch and Dent” loans at a discount.

The Liquidating Trustee, Alan Jacobs, and the Creditors Committee (made up of the likes of Deutsche Bank, Wells Fargo and Credit Suisse) claim that they “never knew” of any borrower having a potential claim.  Really?  Jacobs claims that upon reviewing the debtor’s books and records, he can’t identify any borrower that may have a potential claim against the Estate of New Century.  Missal could find these records, but Jacobs and the crew can’t.  What do you think – is he lazy, stupid, or a liar?

                The Court has ruled in the Galope Claim that constructive notice by way of placement of ads in the Wall Street Journal and the Orange County Register are sufficient.  Sigh.    The Wall Street Journal, in 2007/2008, reported:

  • Paid readership of approximately 1.2m in 2007 – so the Court assumes that what, 100% of the New Century customers read the WSJ?  And that of course does not deal with the other 800,000 to 1.8 million borrowers (assuming the 3m count is correct and not the 5m).
  • The profile of a WSJ reader in 2007/2008 is an individual with an annual income of 191k and a personal net worth of 2.1m – does this describe a subprime borrower?
  • The Orange County Register has a readership of approximately 650,000 daily readers
  • The profile of the daily reader is has an annual income in excess of $100,000 annually

If you add the 1.2 million readers from the WSJ with the 650,000 readers of the Orange County register, and assume that the number of borrowers IS less than 2 million – you still can NOT rationalize that these two publications were sufficient.  If you follow the Center for Public Integrity estimate of borrowers, the notifications fall woefully short of providing constructive notice to all New Century borrowers.   

Testimony by New Century counsel confirms that their intended audience was the financial firms (those that funded New Century Mortgage) and the employees of New Century Mortgage (the individuals that perpetrated and executed the predatory loans).  Of course the Judge has expressed his “weariness” of the case and that apparently is a sufficient basis upon which to allow New Century Mortgage to continue its victimization of borrowers. 

A homeowner would have to claim that they are one of the “scratch and dent” borrowers or that they were subject to a “kick out” by New Century Mortgage investors.  The only way to find that out is through discovery because they sure as heck won’t tell you – even though by law they were required to do so.  The Missal Report also details how Patrick Flanagan, a Sr. Executive at New Century, negotiated contracts with investors that they would not kick out more than around 2.5% of the loans for known problems.  This means the investors – you know the ones sitting on the Creditors committee like Deutsche Bank, Wells Fargo and Credit Suisse – closed their eyes and took the Loans knowing they were taking Notes that were subject to claims by the borrowers.  Missal, not surprisingly, was unable to verify this – think Deutsche Bank is going to admit that they intentionally ignored problematic loans?   Does anyone know what that does to their precious “holder in due course” status?  Doesn’t the UCC state that in order to claim HIDC status when the investor purchases the Notes they are claiming that they were unaware of any known “claims”??

I am exploring this interesting aspect …and if you are a New Century Mortgage borrower…you might want to spend some time reading the Missal Report  (Click HERE to down load a partial report).  Compare YOUR loan to those characteristics describe as being a basis for a “kick out” (starting around page 109 of the report) and then discuss it with your attorney NOW.  You have to ask, if New Century KNEW…then weren’t you entitled to ACTUAL notice and not  just constructive notice of the deficiency?? 





Join the conversation and post a comment.

  1. Trish Boaz

    well, I am fighting Kondaur capital corporation which is chock full of ex-New Century Mortgage employees…wish me luck on my UD tomorrow as I head in there with the great knowledge I have received from this site.

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