Federal regulators spent Thursday on the defense as the Senate Banking Committee discussed the failure of the Federal Reserve Board and the U.S. Office of the Comptroller to regulate changes in the mortgage lending market that eventually led to a subprime fallout.

The old philosophy out of bad comes good is coming to life for many companies specializing in loss mitigation and strategic lending. In the past week, several businesses issued press releases announcing new strategies designed to find the upside of the current subprime crises.

Twinsburg, Ohio-based Reimer, Lorber & Arnovitz Co. law firm hired Nicole Alling as director of business development and marketing. Nicole, who has more than 10 years of experience in marketing and 5 years in default servicing, previously served as the marketing manager for Safeguard Properties.

An attorney specializing in mortgage lending and litigation believes subprime lenders may soon be facing a series of lawsuits from disappointed borrowers. I think borrowers will look for any avenue they can to avoid bankruptcy or foreclosure, and some will choose litigation as a way to keep their house and credit in tact, said Andrew Stutzman, mortgage and lending litigation chair at Philadelphia-based Stradley, Ronon, Stevens & Young, LLP.

Irvine, California-based People’s Choice, a mortgage lender specializing in nonprime loans, filed for Chapter 11 bankruptcy this week, according to Bloomberg News. The filing arrived just as delinquency rates were hitting a 4-year high.

The Office of U.S. Senator Chris Dodd said representatives with Irvine, California-based New Century Financial Corp. will not be attending the Mortgage Market Turmoil: Causes and Consequences hearing scheduled to take place in front of the Senate Banking Committee on Thursday.

The First American Homeownership Foundation (FAHF)—the philanthropic arm of The First American Corp. —says its second year in existence will be dedicated to helping homeowners struggling with risky ARM loans and the threat of foreclosure.

Santa Monica, California-based Fremont General Corp. announced it will be selling $4 billion in subprime residential real estate loans, according to a press statement issued on Wednesday. Fremont General — the parent-company of Fremont Investment & Loan — said it already has approximately $950 million in cash from the first sale installment under the agreement with the remaining sales under the agreement expected to be completed over the next several weeks.

Atlanta, Georgia-based Street Resource Group Inc., a provider of technology, consulting, and information solutions for mortgage warehouse lenders, has appointed David Brackin to the position of chief operating officer.

Mortgage lender Fannie Mae, one of the nation’s largest government-sponsored enterprises (GSEs), has suspended its mortgage selling and servicing agreement with Irvine, California-based New Century Financial Corp.