Freddie Mac objects to HomeBanc's proposed sale of its loan servicing business

By Reshmi Basu

New York, Oct. 11 - Federal Home Loan Mortgage Corp. (Freddie Mac) objected to HomeBanc Mortgage Corp.'s proposed sale of its loan servicing business, arguing that the company does not have the authority to sell $1.37 billion of Freddie Mac loans, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

In September, the court approved a stipulation agreement with JPMorgan Chase NA and Freddie Mac under which HomeBanc transferred the servicing rights for some 7,101 Freddie Mac loans to JPMorgan on an interim basis.

However, on Oct. 5, HomeBanc filed a cure notice, saying those loans may be included in the sale of its business.

According to the objection filed by Freddie Mac, those servicing rights are excluded from HomeBanc's auction, as stipulated by the court-approved stipulation agreement.

In addition, Freddie Mac argued that prior to HomeBanc's bankruptcy filing, it terminated the company's contract to service those mortgages, which means those loans cannot be included in HomeBanc's sale.

HomeBanc, an Atlanta-based mortgage banking business, filed for bankruptcy on Aug. 9. Its Chapter 11 case number is 07-11079.

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