American Business Financial wants to sell servicing rights

By Ellen Chang

Houston, March 1 - American Business Financial Services, Inc. said it wants to sell the company's servicing rights, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company said the sale will benefit its creditors by maximizing the value of the company's servicing rights for its securitization trusts. Some of the securitization insurers have said that the term of the contracts for the servicing rights has expired and that the company does not have the right to continue to service the loans. The securitization insurers also have said they have the right to name a back-up servicer for the loans.

American Business Financial said it disagrees with the assertions made by the insurers, but if the insurers are successful with their claims, the company could lose its right to either service the loans or sell the servicing rights. However, the insurers said they have agreed to cooperate with the company in a sale of its servicing rights.

The company said it services loans available for sale and loans for others, a total of $1.6 billion as of Sept. 30, 2004 and included 22,000 loans.

American Business Financial said it contacted five potential purchasers before it filed for Chapter 11 protection.

Currently, the company, Phoenix Management Services and SSG Capital Partners, LP have contacted Countrywide Home Loans Servicing LP, Select Portfolio Servicing, Inc., Wilshire Credit Corp., Litton Loan Servicing and Ocwen Federal Bank FSB as potential buyers of the servicing rights.

The bidding procedures objection deadline is March 7 and the bidding procedures hearing is March 9.

The bid deadline is March 18 with the auction to take place March 23.

The contract objection deadline is March 21 and the sale objection deadline is March 18.

The sale hearing is scheduled for March 24.

American Business Financial Services, the Philadelphia-based company, originates, sells and services home equity loans and money mortgage loans. The company filed for Chapter 11 on Jan. 21 and its case number is 05-10203.

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