Massachusetts Attorney General Martha Coakley has been busy — earlier this week, her office announced that it had won an expanded preliminary injunction against troubled thrift Fremont General. The new court order places restrictions on the thrift’s future sales of servicing rights, one week after Fremont said it would sell servicing rights on 13 percent of its portfolio to an affiliate of Carrington Capital Management.
Any future servicer taking on Fremont loans tied to property in Massachusetts will be taking on Fremont’s liability for those loans, and must abide by the terms of an existing preliminary injunction, Coakley said in a press statement on Tuesday. “We are pleased that the Court has held Fremont accountable for the unfair loans it originated in Massachusetts,” said Attorney General Coakley. “This decision reflects that lenders cannot escape responsibility for their illegal conduct and contribution to the foreclosure crisis simply by selling off their loans or servicing rights.” The original injunction, issued on February 25, 2008, prohibits Fremont from initiating or advancing foreclosures on loans that are “presumptively unfair.” (See earlier coverage of the injunction here). Following a hearing on March 28, Suffolk Superior Court judge Ralph Gants issued an additional provision to its injunction that prohibits Fremont from selling or assigning loans or servicing obligations unless the buyer/assignee agrees in writing to be bound by the obligations of the preliminary injunction and provides written notice of that agreement to the Commonwealth at least five days in advance of the sale or assignment. The Superior Court permitted one existing assignment — the sale to Carrington — to proceed. Any subsequent sales or assignments will be subject to the new prohibition, Coakley said. Carrington, likely in a show of good faith, said it had nonetheless agreed to abide by the terms of the Fremont injunction on the 290 additional Massachusetts loans it now owns servicing rights on. Under the terms of the agreement, Carrington will provide Coakley’s office with at least a 45-day notice of all foreclosures it intends to initiate or advance within the state, and allow the Attorney General’s Office an opportunity to object to the foreclosure going forward. Carrington may only proceed with a foreclosure to which the Massachusetts AG objects if Carrington files a request with an agreed-upon third party, and that third party reviews the matter and agrees that a foreclosure is appropriate.
