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September 19,
2007
Mortgage
Lending
name='1'>House Passes Comprehensive FHA Reform
Yesterday, the House of
Representatives passed
href='http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1852eh.txt.pdf'>H.R.
1852, the “Expanding American Homeownership Act of
2007,” which will allow the Federal Housing Administration (FHA)
to serve more subprime borrowers at affordable rates and terms,
according to a House Financial Services Committee press release. The
bill, originally introduced by Rep. Maxine Waters (D-Calif.) and House
Financial Services Committee Chair Barney Frank (D-Mass.), will also
enable the FHA to recapture borrowers that have turned to predatory
loans in recent years and offer refinancing loan opportunities to
borrowers struggling to meet their mortgage payments in the midst of the
current turbulent mortgage markets. “A revitalized FHA program
will help future homeowners realize the dream of home ownership, and
will prevent many first time and inexperienced home buyers from being
pushed into loans that are unaffordable or difficult to
understand,” Frank said.
href='http://www.house.gov/apps/list/press/financialsvcs_dem/press0918072.shtml'>Click
here to read the press release.
name='2'>U.S.
face='Times New Roman' size='3'> Trustee Objects to Aegis' Proposed
Incentive Plan
U.S. Trustee
Kelly Beaudin
Stapleton objected to subprime lender Aegis
Mortgage Corp.’s proposed employee incentive plan,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday.
size='3'>Stapleton specifically objected to the plan as it pertains to
Aegis’ officers. In its motion, Aegis revealed that 29 employees
would be affected by the incentive plan, and of those, four were called
“officers.” However, nine other employees, called
“senior eligible employees,” included Aegis’ CEO Dan
Gilbert, COO Mike Massella and CFO Ed Robertson. The incentive plan
proposed by Aegis would pay the 13 eligible senior employees, most of
whom are officers, bonuses ranging from 24-56 percent of their annual
salaries, Stapleton said.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=35188'>Read
more. (Registration required.)
name='3'>Commentary: Lack of Salvage Skills Hurts Home
Lenders
For the past 15 years,
the mortgage industry has focused mostly on developing better ways to
make, sell off and service home loans, but has largely neglected the the
grim but vital task of salvaging loans that go sour, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. For example, lenders trying to sell a
foreclosed home for $250,000 often don't react pragmatically by cutting
a deal when a bidder offers $230,000; instead they might counter with a
token price reduction of $1,000. As a result, homes don't sell, and when
they do, they fetch far lower prices. When foreclosures account for a
tenth or more of total sales, those homes sell at discounts of 25
percent or more to prevailing prices, according to Christopher Cagan,
head of a real estate research group owned by First American
Corp.
href='http://online.wsj.com/article/SB119016566588831970.html?mod=us_business_biz_focus_hs'>Read
more. (Registration required.)
name='4'>Wachovia Sued Over Le Nature Bankruptcy
A Wachovia Corp. unit has
been sued over the collapse of Le Nature's into bankruptcy in 2006 on
allegations that it was aware of the beverage maker's financial problems
prior to its public disclosure, the Associated Press reported yesterday.
The lawsuit, filed late Monday in federal court in
w:st='on'>
size='3'>Manhattan
that Wachovia Capital Markets LLC and others knew about alleged improper
accounting practices and financial issues prior to the completion of a
September 2006 credit facility for the company, in which Le Nature's
borrowed $285 million. The loan, which was administered by Wachovia Bank
N.A., was later syndicated, according to the lawsuit. The complaint also
names Le Nature's outside auditor, BDO Seidman LLP, and Gregory J.
Podlucky, Le Nature's chairman and chief executive, as
defendants.
href='http://biz.yahoo.com/ap/070918/wachovia_le_nature_s.html?.v=1'>Read
more.
name='5'>Homebanc Drops 5 VPs from Employee Retention
Bid
Homebanc Mortgage Corp.
has withdrawn its Aug. 31 employee retention motion with respect to five
executives, who the U.S. Trustee overseeing the chapter 11 proceedings
characterized as “insiders,”
size='3'>Bankruptcy Law360 reported yesterday.
The move follows the trustee's objection to the debtors' bid to pay
$532,000 in retention bonuses to 15 vice presidents. Homebanc filed a
supplement on Monday to the “non-insider employee retention
plan” motion it lodged at the end of August. The supplement
alerted the court that the five executives had been dropped from the
non-insider retention motion and said that Homebanc would seek court
approval to implement an incentive compensation plan with respect to
those five employees.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=35226'>Read
more. (Registration required.)
name='6'>Calpine Disclosure Triggers More Objections
The equityholders’
committee voiced its opposition to Calpine's recent disclosure
statement, questioning the energy company's ability to emerge from
chapter 11 under the proposed plan,
size='3'>Bankruptcy Law360 reported yesterday.
Calpine filed its amended reorganization plan and disclosure statement
on Aug. 28. The group says the problems over the plan stem from
financial adviser Miller Buckfire and others' low valuation of the
company. The equityholders expressed anger over Calpine's decision to
turn down multiple other reorganization offers that they maintain would
have maximized the value of the company, according to court papers. A
hearing on the matter has been scheduled for Sept. 25, the same day as
the hearing for approval of Calpine’s disclosure
statement.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=35199'>Read
more. (Registration required.)
SEC
Pushes for Hedge-Fund Disclosure
The Securities and
Exchange Commission, increasing its scrutiny of hedge funds and insider
trading, is asking hedge-fund advisers for information about
relationships their investors and employees have with public companies,
the Wall Street
Journal reported today. Since May, the SEC has
sent about two dozen letters to registered hedge-fund advisers asking
for new information as part of its routine examinations. It has sought
lists of public companies where funds' employees, relatives, investors
or clients serve as officers or directors. The new questions are part of
that review process and come amid a broader increase in focus on hedge
funds.
href='http://online.wsj.com/article/SB119013484429231164.html?mod=us_business_whats_news'>Read
more. (Registration required.)
The United Automobile
Workers union and General Motors remained at odds on key issues, even as
the union acknowledged the need for talks to move more quickly toward a
settlement, the New York
Times reported today. Talks recessed in the
fourth session since the UAW’s contract with GM expired at 12:01
a.m. on Saturday. The negotiations were set to resume on Wednesday. The
UAW’s contract with GM has been extended hour by hour. Contracts
at Ford Motor and Chrysler have been extended indefinitely. The
stop-and-start nature of the discussions suggested the two sides were
still far apart on a deal that would cover GM’s 73,000 workers in
the
face='Times New Roman' size='3'>United
States
primary issue is the creation of a health care trust that would assume
responsibility for $55 billion in benefits for employees, retirees and
their families. The major sticking point appeared to be the way the
trust would be financed. Normally such a trust, called a voluntary
employee benefit association, or VEBA, is financed with a combination of
cash, stock and possibly real estate.
href='http://www.nytimes.com/2007/09/19/business/19auto.html?ref=business&pagewanted=print'>Read
more.
w:st='on'>
name='9'>Pittsburgh
face='Times New Roman' size='3'> Brewery Transfer
Complete
The transfer of assets
from the former Pittsburgh Brewing Co. to a new ownership group has been
completed, the Associated Press reported today. Under a court-approved
reorganization, the brewery will invest $4.1 million in modernization
and will increase marketing to promote its brands. The company, which
makes
face='Times New Roman' size='3'>Iron
size='3'>City
other beers, is called Iron City Brewing Co., the name the brewery was
founded under in 1861. Pittsburgh Brewing had originally sought
bankruptcy protection in 2005 after the city Water and Sewer Authority
threatened to cut off its water supply because of $2.5 million in unpaid
bills. Pittsburgh Brewing disputed the charges but agreed in April to
settle its debt by paying at least $575,000.
w:st='on'>
size='3'>Iron
face='Times New Roman' size='3'>City
size='3'>Brewing is owned by a team of investors led by Unified Growth
Partners, a private equity firm in
w:st='on'>
size='3'>Greenwich,
w:st='on'>
size='3'>Conn.
John N. Milne.
href='http://biz.yahoo.com/ap/070919/pa_bankrupt_brewery.html?.v=1'>Read
more.
name='10'>TROUBLED COMPANIES IN THE NEWS
The business news
articles below are taken from the U.S. Business Journal’s Daily
Summary of Troubled & Fast Growing U.S. Companies which is published
by Bastien Financial Publications.
ABI Members receive a 50% discount off of our regular subscription rate
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Adept Technology
Inc.
size='3'>reported a fourth quarter net loss of $5.7 million, on an 18%
revenue decline–to $12.3 million. For the year, the firm
reported a net loss of $11.5 million, on a 16% revenue decline–to
$48.7 million. The results included charges of $4.2 million and $6
million, related to goodwill impairment and restructuring, for the
quarter and the year respectively. Adept is a Livermore, Ca.
manufacturer of robots and related software.
Aerosonic
Corp., a
w:st='on'>
size='3'>Clearwater
face='Times New Roman'>, Fl. manufacturer of mechanical
instruments for aircraft, reported a second quarter net loss of $1.3
million, on a 30% revenue decline–to $5.3 million.
Beazer Homes USA
Inc., an
w:st='on'>
size='3'>Atlanta,
w:st='on'>
size='3'>Ga.
size='3'>homebuilder, reached an agreement with a group of banks to
slash the maximum amount that it can borrow from them to only $17.5
million, down from $100 million under the earlier agreement. A week ago
Beazer received default notices on certain notes from U.S. Bank National
Association.
E*Trade Financial
Corp.,
Manhattan, N.Y., warned that profit this year could fall as much as 31%
because of hits to its mortgage business. E*Trade, best known for
online stock trading, also said that it wants to get out of its business
of purchasing mortgage loans from third parties. The company said
that its exposure to the mortgage market could result in losses of as
much as $345 million. Earlier, E*Trade boosted its loan-losses setaside
to $245 million and recently warned that it may have to take another
$100 million to cover losses at its securities portfolio.
Napco Security Systems
Inc.,
w:st='on'>
size='3'>Amityville
w:st='on'>
size='3'>N.Y.
size='3'>, reported its fiscal net declined 31%–to $4.2 million,
on a 5% revenue decline–to $66 million.
National City
Corp.,
Cleveland, Oh., warned investors that its losses will be at the higher
end of earlier projections of between $130 million and $160 million. The
firm is still investigating a number of nonrecurring items connected to
its mortgage banking business.
Quest Software
Inc., an
Aliso Viejo, Ca. provider of application and database management
products, said that it will take $143 million in pretax adjustments to
costs and other items related to stock-options issues for the period
1999 into 2006. The adjustments will require Quest to restate its
financial results for those periods.
U.S. Properties
Listings LLC in
w:st='on'>
size='3'>Florida
state officials as two individuals are being charged with operating an
unregistered telemarketing business, following complaints filed against
the firm in both
size='3'>New Mexico and
size='3'>Florida
size='3'>.