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November
6, 2007
Mortgage
Lending
name='1'>Survey: Lenders Tightening Credit to Prime Home Buyers and
Businesses
The Federal Reserve's
latest survey of banks' senior loan officers showed that more banks are
tightening lending standards for home buyers -- even those with good
credit -- and raising borrowing costs for larger businesses, the
Wall Street Journal
reported today.
size='3'>The survey, conducted in the first half of October and released
yesterday, involved 52 domestic banks and 20 foreign institutions. It
was the Fed's first poll of loan officers since the summer credit
crisis. The Fed received the results by Oct. 18, ahead of last week's
policy meeting at which it cut its benchmark interest rate by a quarter
percentage point to 4.5 percent. About 40 percent of banks said that
they tightened terms for prime mortgages in the prior three months for
people with the best credit records, up from about 15 percent in the
July survey. Nearly 60 percent of banks said they tightened standards on
home mortgages classified as 'nontraditional,' up from 40 percent in the
href='http://online.wsj.com/article/SB119431136429383308.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
href='http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200711/default.htm'>Click
here to read the Fed’s October 2007 Senior Loan Officer
Opinion Survey on Bank Lending Practices
name='2'>Commentary: Amendment Will Weaken Mortgage Reform
Bill
As members of the House
Financial Services Committee meet today to mark up the Mortgage Reform
and Antipredatory Lending Act of 2007, an amendment to be offered by
Chairman Barney Frank (D-Mass.) will weaken a borrowers’ ability
to pursue legal remedies against Wall Street under federal law,
according to an editorial in today’s
size='3'>New York Times. In addition, it would
prevent borrowers from seeking redress on the state level, which
sometimes offers stronger protection than federal law. Specifically,
state law would be pre-empted with regard to common predatory practices.
Under the bill, it would be illegal for a creditor to make a loan
without documenting the borrower’s ability to repay. It would also
be illegal for creditors to refinance existing loans into new ones that
are virtually impossible to pay off, a process known as “equity
stripping.” The Frank amendment would impose the bill’s
limited liability federal remedies to those specific violations.
href='http://www.nytimes.com/2007/11/06/opinion/06tue2.html?ref=opinion'>Read
more.
In related news, the
mortgage legislation being considered today by the House Financial
Services Committee could do more harm that good by placing
“Sarbanes-Oxley Act” type controls on the sinking mortgage
and housing market, according to an editorial in today’s
Wall Street
Journal.
href='http://online.wsj.com/article/SB119431696009483532.html?mod=opinion_main_review_and_outlooks'>Read
more. (Registration required.)
Additional groups have weighed
in on the current debate, as both the U.S. Chamber of Commerce and the
American Bankers Association sent letters yesterday voicing their
concerns about the legislation to the House Financial Services Committee
href='http://www.house.gov/apps/list/speech/financialsvcs_dem/ht110607.shtml'>Click
here to listen today’s House Financial Services Committee
hearing mark-up of H.R. 3915.
name='3'>American Home Hits Back at Motion for
Stay
Bankrupt lender American
Home Mortgage Holdings Inc. asked a judge on yesterday not to delay the
$500 million sale of its servicing assets to AH Mortgage Acquisition
Co., a company owned by investor Wilbur Ross,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday.
size='3'>American Home took aim at DB Structured Products Inc.’s
stay motion, saying that it was moot under the terms of the amended
asset purchase agreement. American Home added that the stay motion
failed on the merits, and that it would suffer serious harm if for some
reason the sale didn't go through. A hearing on the matter is set for
tomorrow.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=39318'>Read
more. (Registration required.)
name='4'>Long & Foster Discouraging Use of Outside
Lenders
The founder of Long &
Foster, the
face='Times New Roman'
size='3'>Washington
region's largest residential real estate brokerage, struck a nerve last
week when he urged his thousands of agents to recommend the company's
in-house mortgage lender more often and stop working with outside
lenders such as Bank of America, the Washington Post reported
yesterday. In an e-mail to all Long & Foster agents and managers, P.
Wesley Foster Jr. chastised his workers for funding mortgages through
Bank of America more than 2,200 times last year and through Wells Fargo
instead of using Long & Foster's affiliate, Prosperity Mortgage. The
e-mail sparked criticism, with some Long & Foster agents, consumer
activists and others raising concerns about whether Long & Foster
executives are trying to profit at the expense of their clients'
interests. The harshest reactions came from bank loan officers who could
lose business if the agents listen. Critics say Foster is urging
anti-competitive business practices that would limit consumer choices,
which Foster denies.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/11/04/AR2007110401274_pf.html'>Read
more.
Autos
name='5'>Dura Seeks to Quiet Critical Investors
Dura Automotive Systems Inc.,
in court papers filed Friday, moved to silence the law firm and
creditors who bought nearly $96 million worth of Dura bonds and then
objected to the company’s chapter 11 plan, the Associated Press
reported yesterday. The company asked Bankruptcy Judge Kevin
Carey to order the law firm to disclose its fee arrangements
with its 14 clients and reveal what they paid for Dura's 9 percent
subordinated debt. Dura, based in Rochester Hills, Mich., said that it
needs to know whether the firm 'purports to represent merely a single
disgruntled creditor who seemingly acquired its 9 percent subordinated
notes for speculative purposes in the weeks and months following the
(bankruptcy filing) or a group of disgruntled creditors engaging in such
speculation.'
href='http://biz.yahoo.com/ap/071105/dura_bankruptcy.html?.v=1'>Read
more.
name='6'>Ford Pact Gets Local Unions’
Approval
Local leaders with the
United Auto Workers union unanimously approved a tentative four-year
labor pact with Ford Motor Co., in a sign that the union may not face
major opposition as it seeks approval from the rank and file, the
Wall Street Journal
reported today. Union officials outlined details of the
pact, reached during the weekend, that both sides hope will give
the
size='3'>Dearborn
w:st='on'>
size='3'>Mich.
in a tough
w:st='on'>
size='3'>U.S.
size='3'>auto market. Among them: Ford will put $13.2 billion into a new
fund that will allow it to shed billions in retiree benefits. It will
also potentially make the union Ford's largest shareholder, with a stake
that if converted could be at least four times that of the Ford
family's. In return, the pact gives the UAW a commitment that Ford won't
close any more
size='3'>U.S. plants for four
years and calls for Ford to invest in
w:st='on'>
size='3'>U.S.
size='3'>plants.
href='http://online.wsj.com/article/SB119429825487982999.html?mod=us_business_whats_news'>Read
more. (Registration required.)
name='7'>Creditors Opposing
face='Times New Roman' size='3'>Delphi
size='3'>'s Latest Reorganization Plan
Delphi Corp.'s
reorganization plan, which enjoyed broad support when it was filed in
September, now appears headed for a fight, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The auto-parts supplier's unsecured creditors
and shareholders are lining up to oppose the new plan, which was revised
last week after
size='3'>Delphi ran into problems
securing enough bankruptcy-exit financing because of the recent credit
crunch. A delay in
size='3'>Delphi's exit from bankruptcy
could complicate a turnaround at General Motors Corp., its former parent
and a big customer.
size='3'>Delphi, which sought chapter
11 protection two years ago, last week said that credit-market
turmoil has forced it to seek a smaller financing package that won't be
enough to make more than $3 billion in cash payments to unsecured
creditors and GM.
href='http://online.wsj.com/article/SB119431149002383324.html?mod=us_business_whats_news'>Read
more. (Registration required.)
Gallery Resolves Landlord Dispute
Movie Gallery Inc. has changed
the way it will conduct going-out-of-business sales at more than 500 of
its video-rental outlets to placate the stores' landlords, the
Associated Press reported yesterday. In papers filed with the U.S.
Bankruptcy Court in Richmond, Va., on Friday, the nation's
second-largest movie rental chain said it has 'diligently worked to
resolve consensually each of the objections' brought by more than a
dozen landlords of shopping centers in the past two weeks. The landlords
-- including Wal-Mart Stores Inc. -- had attacked Movie Gallery for
writing itself a 'free pass' to conduct the sales. They protested the
lack of restrictions on the hours during which the sales could take
place, as well as the number and type of signs advertising the sales.
Excessive displays could hurt neighboring businesses, the landlords
argued.
href='http://biz.yahoo.com/ap/071105/movie_gallery_bankruptcy.html?.v=1'>Read
more.
New
York Gallery Owner Files Bankruptcy
Lawrence Salander, an
owner of Salander-O'Reilly Galleries LLC, filed for personal bankruptcy
protection, claiming he and his wife have debts of at least $50 million
as
size='3'>New York
size='3'>prosecutors are investigating his business, Bloomberg News
reported today. The
size='3'>Manhattan district attorney's
office searched Salander's
size='3'>Upper East Side townhouse and
gallery last week, as part of a criminal investigation based on customer
complaints about fraud. Creditors with $4.6
million in claims filed an involuntary petition against
Salander-O'Reilly Galleries on Nov. 1, asking a judge to force it into
bankruptcy. Gallery clients, such as Earl
Davis, tennis star John McEnroe and former New York Observer Publisher
Arthur Carter have sued Salander, claiming he pocketed proceeds of art
sold on consignment, promised guaranteed investment profits while paying
back little or nothing, and reneged on loans and bills.
href='http://quote.bloomberg.com/apps/news?pid=20601088&sid=a.95n8ZwIPv8'>Read
more.
name='10'>Citigroup Expects to Take Until Mid-2008 to Clean Up
Problems Caused by Credit Markets
Citigroup Inc. officials
said yesterday that it will take the bank until the middle of next year
to clean up its problems caused by credit-market turmoil, though
investors made it clear they think the largest bank in the United States
by assets will need much longer than that, the
face='Times







New


Roman'
size='3'>Wall Street Journal reported today.
As it became clearer how the bank's problems have deepened in recent
weeks, they sent Citigroup's stock down 4.9 percent yesterday, despite
pledges by officials that the bank would maintain its dividend and
remain a 'vibrant' institution. The bank Sunday night said it expected
it may have to record losses of between $8 billion to $11 billion in the
current quarter, likely wiping out net profit for this period. Citigroup
has been weighed down for months by investors' concerns about its
leadership, financial flexibility and corporate strategy. Besides its
exposure to subprime mortgages, Citigroup is also facing problems with
off-balance-sheet vehicles that are now the focus of a possibly $100
billion industry rescue attempt.
href='http://online.wsj.com/article/SB119427180931882492.html?mod=us_business_whats_news'>Read
more. (Registration required.)
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