THE RISE OF THE BOTTOM FEEDERS: APPARENTLY THERE IS A MARKET FOR “SCRATCH AND DENT” MORTGAGE LOANS AND THOSE WITH KNOWN FRAUD AND REGULATORY VIOLATIONS

December 20, 2011

We were recently requested to become involved with a foreclosure case concerning an entity which calls itself Kondaur Capital Corporation. Wells Fargo assigned the loan to Kondaur post-foreclosure.

Who/what is Kondaur Capital Corporation? From Bloomberg Business Week, today:

   “Kondaur Capital Corporation purchases scratch and dent residential mortgage loans. It bids family residential loans, including story loans, hyper-defaulted loans, loans secured by unique properties, loans with origination fraud, loans with regulatory violations, and loans rejected for investor purchase.”

   You saw that correctly; there are no typos. “Scratch and dent” residential loans. “Hyper-defaulted” loans. “Loans with origination fraud”. “Loans with regulatory violations.” “Loans rejected for investor purchase.”

   Now you ask, how much did Kondaur pay for these loans? How much was paid on the loans before they were sold or assigned to Kondaur? What return on its investment is Kondaur expecting/projecting from loans with known issues and problems including fraud and regulatory violations? Is Kondaur betting that most homeowners will simply accept a statement that Kondaur “purchased” their loan and is now entitled to foreclose and evict? 

   Those are just the preliminary questions. However, the more obvious issue is that Kondaur cannot assume or claim status as a bona fide purchaser with no knowledge of defenses. If Kondaur knowingly accepts mortgage loans which have fraud, regulatory violations, have been rejected for investor purchase (for what reasons, pray tell), or other “scratches” and “dents”, Kondaur takes the loans subject to all legally available defenses. 

   Googling the principals of Kondaur reveals that its CEO was the former Director of Strategic Planning at Encore Credit Corporation before becoming a Senior Vice President of a subsidiary of the now bankrupt New Century Mortgage. He also was previously associated with Option One and Long Beach Mortgage. All of these entities, which those of you who follow this website and foreclosure litigation developments know, are at the forefront of mortgage foreclosure litigation, including massive securitization, origination of predatory loans, and problematic “assignments”. 

   Thus, BOLO (be on the lookout) for any Kondaur foreclosure. By revealing publicly what types of mortgage loans it purchases, it has advised the world that there are defenses to any foreclosure it is involved in, and has also let us know what type of discovery should be propounded in any Kondaur foreclosure as well.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

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