DJSP-related REO firm to be sold
A default servicing subsidiary connected to DJSP Enterprises and former Florida foreclosure attorney David J. Stern signed an acquisition agreement, according to a regulatory filing.
Default Servicing LLC will be sold to Default Servicing USA Inc., a unit of Arlington, Va.-based Homeland Security Capital Corp., according to a filing with the Securities and Exchange Commission.
Default Servicing LLC provides real estate-owned liquidation services directly to REO customers, including property inspection, valuation, eviction, broker assignments, closing and other services.
The Homeland subsidiary, based in Louisville, Ky., will pay $500,000 cash for the company and up to $3.25 million as a percentage of revenue through 2014, according to the regulatory filing.
DJSP was the back-office processing firm of Stern. DJSP voluntarily delisted from Nasdaq in March in after failing to to meet the minimum trading requirements of $1 per share in December. On Friday, it was trading at 8 cents a share over the counter.
The problems of the Law Offices of David J. Stern began when four large Florida default services law firms became the target of then Florida Attorney General Bill McCollum for alleged sloppy foreclosure practices last fall. The investigation has since been expanded to include other firms under current AG Pam Bondi.
The rapid downfall came amid a national scandal in the mortgage servicing sector, dubbed robo-signing, where employees at foreclosure law firms were accused of signing foreclosure affidavits and other legal documents with no knowledge of the validity of the claims in the documents. Since the fall, the firm's employee count slid to just a half dozen attorneys and no support staff as of mid-May from some 1,400 previously.
Stern ceased foreclosure work at the end of March.
Now Stern is fighting back against former clients whose business once elevated him to one of the richest and most well-known default services lawyers in the country.
The fight is taking place largely in state and federal courtrooms via 25 lawsuits, in which Stern alleges the biggest names in the mortgage industry owe him more than $34 million in unpaid invoices.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
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