American Home Mortgage Servicing, the subprime mortgage company owned by New York billionaire Wilbur Ross, has been hit with a lawsuit from a homeowner who says the firm’s business practices have led to widespread “unfair and improper foreclosure proceedings.” According to the Oct. 25 lawsuit, which is seeking class-action status, the company “routinely and systematically assesses unwarranted fees against consumers, resulting in premature default.” It follows lawsuits filed by attorneys general Texas and Ohio against American Home for allegedly violating consumer protection laws, in addition to the ongoing nationwide probe into foreclosure documentation by banks and loan servicers. Ross, who is the CEO of distressed workout company WL Ross & Co., bought American Home in 2008 and expanded its operations. A spokesperson for the company said that “while a lawsuit on occasion may identify a legitimate servicing error, most of which are isolated and none of which to our knowledge indicate any systematic process flaws or patterns or unlawful behavior, we believe the majority of them are without merit.” [Bloomberg]

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Donald Trump and Stuyvesant Town

Now that Stuyvesant Town and Peter Cooper Village owners Tishman Speyer and BlackRock Realty are out of the picture, some of the city’s biggest real estate names are vying for a stake in the 110-building complex, including one Donald Trump. Tishman Speyer and BlackRock announced earlier this week that they would hand over the debt-ridden property to creditors after missing a $16.1 million mortgage payment earlier this month. Since then, “people have asked us if we would get involved in running it or buying it,” Trump told the Post. “We are looking at it right now very seriously.” Trump isn’t the only one. WinnCompanies, the Boston-based apartment manager, is looking to dip its feet into the New York City market by taking on the property manager role at Stuy Town, and earlier this week, a high-profile group including investor Wilbur Ross, real estate mogul Richard LeFrak and investment firm Centerbridge Partners said they were interested in taking ownership. Rose Associates, the Related Companies and Prudential Douglas Elliman are also reportedly interested in a management role. Whoever owns the property next could be responsible for the $200 million in rent overcharges left over from October’s rent-stabilization ruling against Tishman Speyer, said Alex Schmidt, the tenants’ attorney in that case. [more]

James Lockhart, who stepped down as head of the Federal Housing
Finance Agency in August, advocated more aggressive mortgage
modifications in a Tuesday CNBC
interview, arguing that principal reductions are necessary in addition
to lowering monthly payments. Lockhart, who is now vice chairman of WL
Ross & Co., the distressed investment firm run by billionaire Wilbur
Ross, said he predicts another spike in foreclosures this year, as
well as an increase in strategic defaults because “the stigma is not
there anymore.” He added that “the odd marriage” between the public
and private sector in the housing market “isn’t working and we need a
divorce.”

At CNBC’s recent “Billionaire Roundtable,” real estate bigwigs real estate bigwigs Sam Zell, chairman of Equity International, Wilbur
Ross, chairman and CEO of WL Ross & Co., and Richard LeFrak, president and chairman of the LeFrak Organization, weighed in on the outlook for commercial real estate. Zell appeared the most optimistic of the bunch, arguing that headlines projecting the impending collapse of the commercial real estate market have been greatly exaggerated. While Ross said he believes the fallout from Dubai‘s debt crisis wouldn’t be “the terrific contagion that some people had thought,” he insisted that commercial real estate will nonetheless be fighting an uphill battle for quite some time. “You’d be amazed how little office and retail space unemployed people need,” he said. “The biggest victims are going to be the regional banks.” Watch Part 2 of the video after the jump. [CNBC via Square Feet Blog] [more]

A massive U.S. commercial real estate crash is in its beginning stages, billionaire Wilbur Ross said today. The WL Ross & Co. CEO, who is also working on a government program to rid banks of their toxic assets, said he is practicing extreme caution on the commercial real estate investments front, especially with regard to office spaces, which are rapidly shedding tenants. Though the Public-Private Investment Program has made $1.5 billion in pooled government and private funds available to his company for purchasing banks’ distressed assets, Ross said he had used less than $100 million of those funds by Oct. 15, and that the money he spent went toward residential mortgage-backed securities rather than commercial properties. Earlier this month, WL Ross, along with several other firms led by Starwood Capital Group and TPG, agreed to buy $4.5 billion in real estate from the seized Corus Bankshares, after the bank’s investments in construction loans for condominiums went sour. [Bloomberg]