Credit Union Servicing Rights Sold Out of BK

A federal bankruptcy court has approved an order selling tens of millions of dollars in mortgage servicing rights held by CU National, a unit of U.S. Mortgage of Pinebrook, N.J., to a mystery company believed to be owned by one of the credit union customers.According to a report in Credit Union Journal, the sale was the subject of a violent dispute between credit union creditors of the failed mortgage company who claim that as much as $160 million of their mortgages were fraudulently sold to Fannie Mae. (The order by the court came late Thursday.) The sale of the servicing rights was opposed by several credit unions, including Suffolk FCU, Treasury Department FCU, First Florida CU, Educational Systems FCU and TCT FCU, all questioning the viability of the winning bidder for the servicing rights, Symbionce Financing Solutions LLC. In motions filed with the bankruptcy court, TCT FCU, which has $6 million of loans being serviced by CU National, claims that Symbionce is really a shell company created by Novartis FCU with no staff, no office, no infrastructure and no insurance that has not been approved by NCUA. The company, said TCT, has not demonstrated it qualifies for bond coverage under CUMIS Insurance and is not licensed to service loans. However, there is no record of Symbionce Financing on any of the Internet search sites.