Billionaire Wilbur Ross clashed with Rose in court in March over Carrington’s conduct. The legendary investor’s subprime servicer, American Home Mortgage, collects payments on the only Carrington securities Rose doesn’t service in-house. Ross says Carrington wrongfully delays the sale of foreclosed homes so Rose can keep collecting interest on zombie properties, injuring other investors in the process. Carrington sued American Home in February, claiming the servicer was short-changing investors by selling properties at “fire-sale” prices.
For instance, in April 2008, when the foreclosure team at Ross’ American Home got a bid for a property in Strum, Wisc., for $65,000–15% higher than the most recent appraisal–Carrington blocked the sale and demanded the home be relisted at $89,000. For seven months, Rose’s hedge fund collected interest until the property sold for $45,000.
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