Yet another gathering of crows is emerging in the role of Rust Consulting in the foreclosure review process and history of it and its related companies. The plot thickens and the conflicts of interest continue to become increasingly nefarious. Below are excerpts relative to this activity and the history of Rust Consulting and its ties to Apollo Global Management, SourceHov, CVCI, Citigroup and firms such as Coldwell Banker, Century 21, and Sotheby's Real Estate.
The crows feed at Ugland House in the Grand Caymans. Even JPMorgan Chase's tendrils are linked to this tax haven of the rich and powerful. See this link: http://www.sec.gov/Archives/edgar/data/1511470/000091957412006346/0000919574-12-006346.txt
OCC Misses Another Conflict of Interest: Foreclosure Review Outreach/Payment Processor Rust Consulting Owned By Residential Real Estate Player Apollo, Being Sold to VC Arm of Citigroup « naked capitalism
Now why might Rust be motivated not to be as diligent as it could be? Rust “joined” SOURCECORP, now SourceHOV, in 1999. SourceHOV is majority owned is Apollo Global Management, one of the fund managed by private equity giant Apollo. Apollo struck a deal to sell SourceHOV (and therefore Rust) to CVCI, a venture capital fund operated by Citigroup, in mid-March (I believe the sale has not yet closed).
Now let’s look briefly at some of Apollo’s involvement in residential real estate, a conflict that appears to have escaped the OCC’s attention. Apollo owns Realogy, which is the biggest residential brokerage service in the US, through its brands Coldwell Banker, Century 21, and Sotheby’s Real Estate. Residential brokerage firms have reason to play nicely with servicers; investors have claimed they’ll do broker price opinions for nothing but submit a bogus charge to the servicer (required periodically when a borrower in a securitized mortgage is delinquent) if they get the more lucrative sale of the property out of bank real estate owned. Apollo also manages Apollo Residential Mortgage, a REIT that invests in and manages RMBS, residential mortgage loans, and other US residential mortgages assets. Who are sources for loans? The big banks as originators and the servicers for seasoned loans. And in general, of all the big PE funds, Apollo has the deepest and most extensive dealings in commercial and residential real estate, giving it deep ties to the real estate units of all the major banks and servicers.
So it looks to be a stunning lapse for the OCC and Fed not to have caught this not-inconsiderable conflict of interest. Rust is also an approved Federal contractor, as reader LN, who provided us with this lead, also pointed out. Did Rust fail to make adequate disclosure of its ownership in its applications to become a government contractor?
The only upside out of this lapse is that it reflects sufficiently badly on the OCC and Fed that it might force them to be more zealous about getting Rust to do its job than they might otherwise. Assuming, of course, that NC readers turn the heat up by alerting their Congressmen of this latest IFR-related fiasco.
See Rust Consulting Inc GSA 520 Contract
MORE HISTORY OF RUST CONSULTING:
Rust Consulting has a 35-year history founded in the combination of technology and consulting services to the legal industry.
Treasury Secretary Jack Lew’s Infamous Ugland House Ties Pop Up Again in Foreclosure Check Scandal By Pam Martens: May 9, 2013
Note: Ugland House is a building located in George Town, Cayman Islands Located on South Church Street, the building is the registered office address for 18,857 entities and has for years been linked to tax avoidance strategies. During his first presidential campaign, U.S. President Barack Obama referred to Ugland House as "either the biggest building in the world or the biggest tax scam in the world." President Obama subsequently nominated Jack Lew to Treasury Secretary in 2013, despite objections that Mr. Lew had invested heavily in funds in Ugland House while he worked as an investment banker at Citigroup during the 2008 financial meltdown, with President Obama stating that he was not concerned about Mr. Lew's past financial transactions. The building is occupied by the law firm Maples and Calder.
- BUSINESS ADDRESS: UGLAND HOUSE, P.O. BOX 309, GRAND CAYMAN STATE: E9 ZIP: KY1-1104 BUSINESS PHONE: 44 (0) 20 7529 5202
- MAIL ADDRESS: STREET 1: UGLAND HOUSE, P.O. BOX 309 CITY: GRAND CAYMAN STATE: E9 ZIP: KY1-1104
Rust Consulting, the firm serially mismanaging the payments to foreclosure victims, has its own Political Action Committee which is somewhat comically called the Rust Consulting “Administrative Excellence” PAC. Curiously, Rust Consulting is paying the claims for both the National Mortgage Settlement and the Independent Foreclosure Review settlement.