March 42008

 

name='1'>February Consumer Bankruptcy Filings Increase

15 Percent

face='Times New Roman'

size='3'>U.S. consumer
bankruptcy filings increased more than 15.2

percent nationwide in February over the previous month, according to
ABI, relying on data from the

size='3'>National
face='Times New Roman'

size='3'>Bankruptcy
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size='3'>Research
face='Times New Roman'

size='3'>Center.
Overall consumer filings totaled 76,120 in

February, up from the 66,050 consumer filings recorded in January. The
figure was also up 37.3 percent from

February 2007. Chapter 13 filings constituted 36.4 percent of all
consumer cases in February, down slightly from

last month. “February's bankruptcy spike -- the highest single
month since the 2005 law changes --

forecasts the start of more to come for the balance of 2008,” ABI
Executive Director

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size='3'>Samuel J. Gerdano. 

href='http://www.abiworld.org/AM/Template.cfm?Section=Monthly_Bankruptcy_Statistics&Template=/MembersOnly.cfm

&NavMenuID=3716&ContentID=46994&DirectListComboInd=D'>Click
here to view the February

statistical charts.

Mortgage
Lending

name='2'>Relief for Homeowners Is Given to a

Relative Few

The Bush administration,
releasing new data on yesterday, said

that mortgage companies were showing more willingness to relax the loan
terms for subprime borrowers who are in

danger of losing their houses, the New York Times

reported today. However, while the data showed an
increase in forbearance, it also showed that

only a tiny fraction of troubled borrowers are getting either a
reduction in their interest rate or in their loan

amount. Nearly 16.7 percent of the estimated six million people who have

subprime mortgages are behind in their

payments and 6.8 percent are in foreclosure. Industry analysts predict
that as many as three million subprime

mortgages could end up in foreclosure over the next several years. Hope
Now, an industry alliance created last

fall in response to the mortgage crisis, reported that almost 150,000
subprime borrowers have received some kind

of “loan modification” since September and that the number
of modifications jumped 16 percent in

January to 45,320 loans. 

href='http://www.nytimes.com/2008/03/04/business/04paulson.html?ref=business&pagewanted=print'>Read

more.

name='3'>Regulator Wants Banks' Detailed Data on

Mortgages

The U.S. Office of the
Comptroller of the Currency (OCC) sent a letter

to nine large national banks Friday, including Citigroup Inc. and Bank
of America Corp., asking the financial

firms to provide month-end mortgage data for the past five

months, Bankruptcy
Law360 reported

yesterday. The agency is asking the banks to send in the data by the end

of March and then to submit regular

reports within 30 days after month's end. The OCC's plan to compile
increasingly detailed mortgage data was

discussed with the banks at a meeting in early February, according to
the agency. The OCC said that it hoped the

data it collects from this effort will give it a more complete picture
of the mortgage market, helping both in

its supervisory role and in its work to help prevent unnecessary
foreclosures. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=48794'>Read

more. (Registration

required.)

name='4'>Court Tells Bush Administration to Reassess

Cuts to Housing Aid

A federal court in

w:st='on'>
size='3'>Sacramento ruled

Monday that the Bush administration must reassess its plan to eliminate
a down payment assistance program used by

more than 100,000 low- and middle-income home buyers, Bloomberg News
reported yesterday. Judge Lawrence Karlton

held that the Department of Housing and Urban Development failed to
comply with the Administrative Procedures Act

requiring “a reasoned analysis” in trying to reverse a
10-year-old federal policy. The judge said

that the agency must review the rule it adopted in October and that the
head of the agency, Alphonso R. Jackson,

must be excluded from the discussions. More than 100,000 consumers used
the aid in 2006, and it accounted for a

third of all Federal Housing Administration loans. The administration
sought to ban the aid, contending that the

program leads to higher housing prices and a disproportionate number of
foreclosures. 

href='http://www.nytimes.com/2008/03/04/business/04hud.html?ref=business&pagewanted=print'>Read

more.

name='5'>Fannie Mae, Freddie Mac Set Stricter

Appraisal Rules

Fannie Mae and Freddie
Mac announced an agreement with New York

Attorney General Andrew Cuomo to discourage inflated appraisals by
enforcing new standards in the home-mortgage

market, the Wall Street
Journal

size='3'>reported today. Seeking to head off the threat of lawsuits from

Cuomo, the two government-sponsored

providers of funding for mortgage loans agreed to a code of conduct due
to take effect next Jan. 1. The code bars

lenders and their representatives from pressuring appraisers to supply
inflated estimates of property values,

which are widely viewed as an important contributor to the mortgage
crisis. Bank employees who are involved in

making loans won't be allowed to choose appraisers and lenders won't be
able to make loans on the basis of

appraisals from their own employees or from other companies they
control. The code also bars lenders from using

appraisals ordered by mortgage brokers. 

href='http://online.wsj.com/article_print/SB120456185094007821.html'>Read

more. (Registration

required.)

name='6'>Deutsche Bank Objects to New Century

Plan

Deutsche Bank National
Trust Co. (DBNTC) has become the latest

bank to lodge a protest against the disclosure statement filed by New
Century Holdings Inc., filing an objection

to the plan that asks the company to provide more information,

size='3'>Bankruptcy Law360 reported yesterday.

DBNTC formally joined previous

objections lodged by Wells Fargo Bank, Goldman Sachs Mortgage Co. and
Citimortgage, Inc. The banks objected to

the lack of information in New Century's first disclosure statement,
which left blank the estimated recovery for

several groups of creditors. The blanks in the document prompted several

major creditors to demand more

information before they signed off on the plan. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=48746'>Read

more. (Registration

required.)

name='7'>Mortgage Lender Struggles to Stay in

Business

Overwhelmed by margin
calls from its creditors, home-mortgage

lender Thornburg Mortgage Inc. said that it has to sell assets or raise
capital to stay in business, the

Wall Street Journal
reported today. The news

knocked off more than half of the market value of the company, which is
structured as a real-estate investment

trust, and it dragged down shares of other mortgage lenders. The news
also raised fears that Thornburg would join

hundreds of other nonbank home-mortgage lenders and brokers that have
gone out of business over the past year.

While most of the others were subprime lenders, Thornburg specializes in

selling 'jumbo' mortgages in amounts

above $417,000 to wealthy borrowers. The Santa Fe, N.M.-based company
has had a low default rate but has been

struggling with liquidity issues since last summer because its ability
to borrow has been restricted by the

credit crisis. 

href='http://online.wsj.com/article_print/SB120456448633807935.html'>Read

more. (Registration required.)

name='8'>Pacific Lumber Disclosure Statement

Approved

Bankruptcy Judge

size='3'>Richard S. Schmidt approved Pacific
Lumber's joint disclosure statement on

Friday, setting the stage for creditors to vote on three competing
reorganization plans later this

month

size='3'>, Bankruptcy Law360 reported
yesterday. Judge Schmidt also dismissed all

objections to the joint disclosure statement or stated that they had
been resolved. Several

w:st='on'>
size='3'>California

state agencies had filed objections to the statement last

week, claiming that it did not contain

sufficient information about the transfer of land. The three entities
that have proposed reorganization plans are

Mendocino Redwood Company LLC and Marathon Structured Finance Fund LP;
the Bank of New York Trust Company,

Pacific Lumber's indenture trustee; and Pacific Lumber, together with
its parent company Maxxam Inc. Judge

Schmidt set March 25 as the deadline for ballots to be submitted and for

objections to be filed with the court

and also set a hearing for April 8, at which confirmation of the plans
will be considered. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=48761'>Read

more. (Registration

required.)

Sirva

Wins Approval to Tap $150 Million

Chapter 11 Loan

Relocation services
company Sirva Inc. won final court approval to

borrow on a $150 million bankruptcy loan to fund its operations during
what the company hopes will be a quick

stay in chapter 11 protection, the Associated Press reported yesterday.
Bankruptcy Judge

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size='3'>James M. Peck on Friday said that
Sirva, the parent company of Allied Van

Lines Inc., can borrow up to $150 million from a group of lenders led by

JP Morgan Chase Bank. Peck last month

had given the company permission to use up to $100 million of the
financing. Sirva sought chapter 11 protection

on Feb. 5 after reaching an agreement on a reorganization plan with its
lenders that would cut the company's debt

by $200 million. Under the company's prepackaged bankruptcy plan,
Sirva's lenders will trade a portion of the

debt they're owed for a 75 percent stake in the reorganized company. The

lenders have already voted in favor of

the proposed restructuring plan, clearing the way for Sirva to exit
chapter 11 in two to three months. A hearing

on the bankruptcy plan is scheduled for March 21.

href='http://www.forbes.com/feeds/ap/2008/03/03/ap4724889.html'>Read
more.

href='http://www.forbes.com/feeds/ap/2008/03/03/ap4724889.html'>

name='10'>Gift Cards at Risk as Retailers File for

Bankruptcy

As more retailers file
for bankruptcy or go out of business, more

than $75 million in gift cards are at risk of becoming worthless pieces
of plastic this year, the Associated

Press reported yesterday. The Sharper Image announced late last month
that it was suspending the acceptance of

gift cards, at least temporarily. It urged shoppers to check the company

Web site later this month for an

update.  For many shoppers, it's a harsh
lesson about the risks of gift cards as they

are treated as a loan to the company, not as cash, under chapter 11.
Consumers spent an estimated $26.3 billion

in gift cards at retailers alone last holiday season, compared with
$24.8 billion in 2006 and $18.48 billion in

2005, according to the National Retail Federation. The number of retail
bankruptcies or liquidations this year is

expected to reach the highest levels since the 1991 recession. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/03/AR2008030302372_pf.html'>Read

more.

name='11'>Court Rejects Rigas Appeal

Adelphia Communications
founder John Rigas and his son, Timothy,

lost their final appeal yesterday of their convictions for fraud that
led to the collapse of the nation's

fifth-largest cable television company, the Associated Press reported.
The Supreme Court rejected the appeal

without comment. The elder Rigas is serving a 15-year prison term, while

his son, the former chief financial

officer, was sentenced to 20 years in prison. The second U.S.
Circuit Court of Appeals in

w:st='on'>New

York

last year upheld their convictions on charges of
securities fraud, conspiracy to commit bank fraud

and bank fraud. 

href='http://http//www.nytimes.com/aponline/us/AP-Scotus-Adelphia-Fraud.html?sq=bankruptcy&st=nyt&scp=5&a

mp;pagewanted=print'>Read more.

href='http://www.nytimes.com/aponline/us/AP-Scotus-Adelphia-Fraud.html?sq=bankruptcy&st=nyt&scp=5&pag

ewanted=print'>