April, 2012

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LOCAL EDITION SERVICING New England State Will Gain $190M in Servicer Settlement STATE REVEALS ITS LIKELY TAKE FROM THE GOVERNMENT'S RECENT SETTLEMENT WITH THE COUNTRY'S LARGEST BANKS. CONNECTICUT // Residents of Connecticut will receive $190 million from the historic $25 billion settlement with five servicers, according to the office of the state attorney general. Funds from the settlement will overwhelmingly benefit Connecticut residents in need of loan-term modifications, accord- ing to Attorney General George Jepsen, who drummed up the details in a statement. Estimates for the value of refinance loans hover around $36 million. Connecticut will also benefit from $27 million doled out for foreclosure prevention programs. "There are many reasons why I believe this settlement is good for Connecticut, but the most important reason is this: It provides immediate help to thousands of Connecticut homeowners at a time when they can still use that help to save their homes," Jepsen said in the statement. "For the first time, state attor- neys general will have author- ity to monitor how federally regulated banks comply with the new servicing rules and to impose heavy penalties on those banks that fall short," he added. Federal officials and 49 state attorneys general, including Jepsen, negotiated with the nation's five largest servicers— including Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo—to secure roughly $25 billion for homeowners in every state except Oklahoma. The attorney general for Oklahoma obtained a separate settlement with the servicers. As part of the settlement, servicers will provide $17 billion to borrowers via relief options, including principal reductions, with an estimated $32 billion potentially on the way in direct relief. Servicers agreed to offer $3 billion in refinance opportunities to mortgage borrowers who are also current on their loans and $5 billion to state and federal authorities, with about $4 billion for the former and $750 million for the latter. The settlement did not ab- solve the servicers of civil and criminal claims, with individual borrowers and investors free to pursue their own cases. $5 million out of investors across multiple states, was more elaborate than expected due to an additional charge for obstructing justice. According to Twin Cities Business magazine, Dufresne was convicted of one count of mail fraud and one count of money laundering for his house-flipping scam. However, the court dis- covered that following his guilty plea, Dufresne had attempted to obstruct justice by selling assets. U.S. District Court Chief Judge Michael J. Davis handed down states, would then be split among them following the sale of the real estate assets. Dufresne went on to ad- mit that in actuality he used the funds he accumulated for personal gain. Describing the scheme, Dufresne noted in his confession that he ran a sort of personal Ponzi scam in which he used subsequent investment dol- lars to pay off individuals who had previously invested. Various government entities participated in bringing Dufresne to justice, including the U.S. Postal Inspection Service, the Federal Bureau of Investigation, and the Internal Revenue Service's criminal investigation division. The original prosecu- tors on the case were Assistant U.S. Attorneys Robert M. Lewis and James S. Alexander. Aurora Sells Servicing Rights NATIONSTAR HAS SECURED THE ACQUISITION OF $63B IN MORTGAGE SERVICING RIGHTS FROM AURORA. TEXAS // Nationstar Mortgage LLC seized a recent deal with Aurora Bank, formerly Lehman Brothers Bancorp, for a handover of $63 billion in residential mortgage servicing rights (MSRs). A statement ascribed about Mortgage Fraud Results in Hefty Sentence IN THE MIDWEST, A MAN CONVICTED OF MULTISTATE MORTGAGE FRAUD GETS A SERIOUS SENTENCE AFTER OBSTRUCTING JUSTICE. MINNESOTA // In Minnesota, a former house flipper was sentenced to more than eight years in federal prison for his role in a real estate investment scheme. The hefty sentence for Robert W. Dufresne Jr., who is accused of bilking more than Dufresne's sentence of 97 months in prison, and he also slapped the fraudster with an order to pay more than $6.5 million in restitution. The sentencing comes almost a year after Dufresne pleaded guilty to the crimes in question. Coming clean on his activities, Dufresne confessed that he fraudulently collected money from investors that was allegedly going toward the purchase, renovation, and resale of residential properties. Those investing believed that the amount earned from flipping the houses, which were spread around Minnesota and various $268 million and $210 million in cash value to the MSRs and servicing advance receivables, respectively. It said that Nationstar will likely enter into about $1.45 bil- lion of advance financing facili- ties to pay for the receivables. The company will amass a portfolio made up of 75 percent in non-conforming private-label securitizations and 25 percent in conforming GSE-backed mortgages. Nationstar will sell 65 per- cent of the rights to MSRs to Newcastle, with the former set to retain 35 percent of the excess. According to the statement, Nationstar expects to close the transaction during the second quarter this year. THE M REPORT | 55 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

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