href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
November
15, 2007
Mortgage
Lending
name='1'>Mortgage Reform Bill Expected to Pass in
House
The House of
Representatives is expected to overwhelmingly pass legislation today
that would place new home mortgage standards on brokers, lenders and
Wall Street firms, and provide more powers for federal regulators
overseeing the industry, CongressDaily reported today. H.R.
3915 is expected to garner significant support from Republicans
from
size='3'>Ohio
w:st='on'>
size='3'>Michigan
that have seen increased foreclosure rates as a result of the downfall
of the subprime mortgage market serving less-than-creditworthy
borrowers. The
measure would require that brokers and lenders ensure the borrower would
have an ability to repay adjustable rate mortgages that would reset in
future years; mandate that there would have to be a 'net tangible
benefit' for home refinancing, and require all mortgage originators such
as brokers and loan officers to be licensed. The Senate will take up the
issue next year.
name='2'>District Court Ruling Targets Mortgage
Pooling
Judge
size='3'>Chris
the U.S. District Court in
w:st='on'>
size='3'>Cleveland
dismissed 14 foreclosure cases brought on behalf of mortgage investors,
ruling that they had failed to prove that they owned the properties they
were trying to seize, the
size='3'>New York Times reported today. The
pooling of home loans into securities has been practiced for decades and
helped propel real estate prices in recent years as investors sought the
higher yields that such mortgage trusts could provide. Some $6.5
trillion of securitized mortgage debt was outstanding at the end of
2006. However, as foreclosures have surged, the complex structure and
disparate ownership of mortgage securities have made it harder for
borrowers to work out troubled loans, in part because they cannot
identify who holds the mortgage notes, consumer advocates say. Judge
Boyko’s Oct. 31 ruling indicates that the intricacies of the
mortgage pools are starting to create problems for lenders as
well.
href='http://www.nytimes.com/2007/11/15/business/15lend.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='3'>Massachusetts
face='Times New Roman' size='3'> Complaint Targets Bear Stearns for
Improper Trading with Collapsed Hedge Funds
w:st='on'>
size='3'>Massachusetts
top securities regulator yesterday alleged a Bear Stearns Cos. unit
failed to notify investors about a conflict of interest in its trading
with two bankrupt Bear Stearns-managed hedge funds that suffered
billions of dollars in losses, the Associated Press reported yesterday.
A civil complaint by Secretary of State William Galvin said that Bear
Stearns Asset Management Inc. violated securities laws and its own rules
by failing to notify the hedge funds' independent directors that it was
trading securities from its own accounts with hedge funds it also
advised. Galvin said the complaint was the first of its type alleging
failures by Wall Street firms to disclose conflicts involving mortgage
investments that he says left investors unaware of the risks they would
face as the market recently soured. Rather than focusing on the conflict
of interest posed by trading securities from its own accounts with hedge
funds that Bear Stearns also manages, Galvin's complaint targets the
firm's alleged failure to notify the funds' independent
directors.
href='http://biz.yahoo.com/ap/071114/bear_stearns_trading_complaint.html?.v=3'>Read
more.
name='4'>ResCap's Investors Concerned over Lender's
Viability
Pressure is mounting on
Cerberus Capital Management LP and General Motors Corp. to prod GMAC
Financial Services into fixing Residential Capital LLC (ResCap) as the
credit-market shakeout ripples beyond the lending industry, the
Wall Street Journal
reported today. ResCap, the once-profitable mortgage
lending unit of GMAC Financial, is now burdened with a portfolio of
loans rapidly declining in value. That has put the unit in danger of
violating terms of loan agreements, triggering concerns that its lenders
will demand immediate payment or force the unit into bankruptcy
protection if GMAC or its owners don't step in with an equity injection
or take other steps.
href='http://online.wsj.com/article/SB119509269027293715.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='5'>Court Approves $35 Million Loan for AHM's Servicing
Business
Bankruptcy Judge
size='3'>Chris
size='3'>topher S. Sontchi gave American Home
Mortgage Corp. permission to borrow $35 million to fund the operation of
its loan-servicing business before the final closing of the servicing
business' $500 million sale,
size='3'>Bankruptcy Law360 reported yesterday.
The sale of American Home Mortgage's loan-servicing business to AH
Mortgage Acquisition Co. — owned by billionaire Wilbur L. Ross Jr.
— will take place in two stages, according to American Home
Mortgage's Monday motion seeking authorization to obtain
limited-recourse post-petition financing. An initial closing is expected
in mid-November, at which time the purchaser is expected to pay purchase
price. Then a final closing will take place on or before Sept. 8, 2008,
according to AHM.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=39966'>Read
more. (Registration required.)
name='6'>Barclays to Write Down $2.7 Billion Due to
size='3'>U.S.
size='3'>Subprime Market
Barclays Plc,
size='3'>Britain
third-biggest bank, unveiled a £1.3 billion ($2.7 billion)
writedown for losses on securities linked to the
w:st='on'>
size='3'>U.S.
size='3'>subprime housing crisis, Reuters reported today. While less
than initially expected, Barclays Capital investment bank unit said that
it would write down £500 million for the July-September quarter and
£800 million for October. BarCap said that its October
writedown reflected the impact of rating agency downgrades on a broad
range of CDOs and the subsequent market downturn. It continues to have
exposure to some areas under pressure, but the bank said it had sought
to limit any future writedowns by valuing all its residential
mortgage-backed securities CDO principal and second-lien mortgage
collateral at zero.
href='http://www.nytimes.com/reuters/business/business-barclays-trading.html?ref=business&pagewanted=print'>Read
more.
name='7'>Senate Proposal on Public Hedge Funds Might Be Attached to
Tax Legislation
A Senate proposal to tax
private equity firms and hedge funds that are traded publicly might yet
become part of tax extenders legislation this year, but tax staffers are
still wrestling with details, such as how long to make a grace period
before higher tax rates kick in,
size='3'>CongressDaily reported today. Senate
Republicans and some key Democrats oppose a broader provision -- part of
an extenders and alternative minimum tax (AMT) package the House
passed last week -- to tax carried interest at ordinary rates. That
makes it unlikely that the carried interest tax rise will ultimately be
part of an AMT/extenders package that goes to the president. However,
the publicly traded partnership bill from Senate Finance Chairman Max
Baucus (D-Mont.) and ranking member Charles Grassley (R-Iowa) faces
better odds. Grassley said yesterday that he believes it might travel as
an offset with tax extenders legislation in the Senate. The bill would
tax publicly traded partnerships as corporations. While profits are
taxed to investors and fund managers at the 15 percent capital gains
rate under the partnership structure, under the Baucus-Grassley bill
they would be taxed at the 35 percent corporate rate. Shareholders would
also be taxed on any dividends they receive, as with other publicly
traded companies.
Autos
name='8'>Trust Objects to
face='Times New Roman' size='3'>Delphi
size='3'>Financing Agreements
An indenture trustee for
noteholders has objected to bankrupt Delphi Corp.'s move to enter into
more than $6 billion in exit financing, saying it is unclear what
arrangements the company will be entering into,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday.
face='Times New Roman' size='3'>Delphi
size='3'>announced in July that a group of investors, led by hedge fund
Appaloosa Management LP, had agreed to invest up to $2.55 billion to
help fund the auto parts producer's exit from chapter 11. Appaloosa,
however, filed documents with the U.S. Securities and Exchange
Commission earlier this month saying that the equity purchase and
commitment agreement had been terminated.
w:st='on'>
size='3'>Delphi
release stating that the conditions to the investment agreement
were not satisfied prior to a Nov. 8 hearing, meaning that the investors
were “no longer obligated” to execute the amendment to their
proposal. Wilmington Trust Company said in the motion that it supports
Delphi's efforts to obtain exit financing and emerge from bankruptcy
protection as soon as possible, but it is “decidedly unclear
whether the financing arrangements for which approval is sought by the
motion, which are apparently premised on the approval of the amended
equity purchase and commitment agreement, remain suited to the debtor's
exit financing needs.”
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=40068'>Read
more. (Registration required.)
name='9'>Court Approves Federal-Mogul’s Bankruptcy
Exit
A federal judge in
size='3'>New Jersey
auto supplier Federal-Mogul Corp. the final court approval it needs to
leave bankruptcy, putting it on track to exit before the end of the
year, the Detroit Free Press reported today.
Federal-Mogul’s chapter 11 plan looks to allocate 50.1 percent of
the stock in the reorganized company to pay asbestos claims. Financier
Carl Icahn is expected to buy 43 percent of the company. R
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20071115/BUSINESS01/711150362'>ead
more.
name='10'>Ford Workers Approve a Four-Year
Contract
United Automobile Workers
members at Ford Motor approved a new four-year contract on Wednesday by
the widest margin of any auto company, the
size='3'>New York Times reported today.
Overall, 79 percent of union members approved the agreement covering
54,000 active Ford workers, which is similar to contracts reached at
General Motors and Chrysler. The union said 81 percent of production
workers voted in favor of the contract, while 71 percent of skilled
trades workers approved it. The highlight of the new union contracts is
the creation at each company of a voluntary employee benefit
association, or VEBA, which will take responsibility for retiree health
care benefits.
href='http://www.nytimes.com/2007/11/15/business/15auto.html?ref=business&pagewanted=print'>Read
more.
name='11'>Drought Forces Plant Nursery into
Bankruptcy
The historic drought
gripping the Southeast has forced a well-known
w:st='on'>
size='3'>Atlanta
nursery that once employed more than 700 people to file for bankruptcy,
the Associated Press reported yesterday. Pike Nursery Holding, a popular
nursery based in suburban
w:st='on'>
size='3'>Atlanta
opened its first store in 1958, said yesterday that the lingering dry
conditions drove it to file for chapter 11 protection. The Norcross,
Ga.-based retailer, which has 22 locations in
w:st='on'>
size='3'>Georgia,
size='3'>Alabama
w:st='on'>
size='3'>North Carolina
has secured $11.75 million in financing to help it operate during the
bankruptcy. The company said normal business will continue as
scheduled.
href='http://biz.yahoo.com/ap/071114/sou_southern_drought_bankruptcy.html?.v=1'>Read
more.
name='12'>Bernanke to Make Fed’s Decision-Making Process More
Transparent
Beginning Tuesday, the Fed will
share more detailed and more frequent projections about the economy than
it has in the past, Chairman Ben S. Bernanke said yesterday, a change
that may provide strong clues about the Fed's target levels of
inflation, the Washington Post reported today. Bernanke said
that making the Fed’s decisions more transparent would make it
easier for businesses and consumers to plan financial decisions.
Moreover, he said, financial markets would respond to economic news in
ways that are more likely to reinforce the Fed's actions. Four times a
year the Fed will release reports of what 19 policymakers -- seven
governors and 12 regional bank presidents -- expect in terms of
inflation, economic growth and unemployment over the next three years.
It will also publish a narrative explaining their consensus view on what
major risks the economy faces.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/11/14/AR2007111400696_pf.html'>Read
more.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/11/14/AR2007111400696_pf.html'>