Defunct Mortgage Lenders Seek to Destroy Thousands of Boxes of Loan Documents
By: Cadie Thompson | Technology Editor, CNBC.com
Two failed subprime mortgage lenders are trying to convince federal bankruptcy judges in Delaware today that they should be able to destroy thousands of boxes of original loan documents.
In two separate hearings, Mortgage Lenders Network USA and American Home Mortgage, are both asking for the right to purge themselves of documents that they claim are too expensive to maintain or move.
Reuters reports:
The former subprime lender (Mortgage Lenders Network USA) shut down in February 2007. In a Jan. 6, 2010, motion, Neil Luria, the liquidating trustee, asked Bankruptcy Judge Peter J. Walsh for permission to destroy nearly 18,000 boxes of records now warehoused by document storage company Iron Mountain.
Luria stated that destruction is necessary to eliminate $16,000 per month in storage costs as he disposes of the last assets of the bankrupt company.
In the American Home Mortgage case, the liquidating trustee, Steven Sass, has asked Bankruptcy Judge Christopher Sontchi to approve destruction of 4,100 boxes of loan documents stored in a dank parking garage beneath the company's former headquarters in Melville, Long Island.
AHM had been one of the biggest originators of subprime loans until it abruptly collapsed and closed in August 2007.
The boxes are the last still held by AHM. Sass stated that the local fire marshal wants the documents removed as a fire hazard, and he said the cost of moving them would be prohibitive.The requests, by trustees liquidating Mortgage Lenders Network USA and American Home Mortgage, come despite intense concerns that paperwork critical to foreclosures and securitized investments may be lost.
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