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July 22, 2008
E.D.N.Y. Courthouse to be Named in
Honor of Conrad Duberstein
President Bush last week signed a bill honoring former ABI Director the
late Chief Judge Conrad B. Duberstein by designating
the U.S Bankruptcy Court for the Eastern District of New York, located
at 271 Cadman Plaza East, Brooklyn, N.Y., as the 'Conrad B. Duberstein
United States Bankruptcy Courthouse.' The bill was introduced by Rep.
Edolphus Towns (D-N.Y.) in January 2007.
href='http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h430enr.txt.pdf'>Click
here to read the text of P.L. 110-262.
As Loan Giants Are Inspected, Bush
Prods Congress
Bank examiners from the Federal Reserve and the Comptroller of the
Currency are inspecting the books of the nation's two largest mortgage
finance companies, Fannie Mae and Freddie Mac, as the Bush
administration prods Congress to approve a plan that would enable it to
inject billions of dollars into the companies, the New York
Times reported today. Treasury Secretary Henry M. Paulson Jr. said
that the Fed and the comptroller's office began combing the books of the
two companies after their declining stock prices caused widespread
anxiety in the market. Paulson emphasized that he still believed that
the companies have an adequate cash cushion to withstand further
declines in the housing market, and that he has no plans to use the new
authority he seeks in the near term. The financial condition of Fannie
and Freddie is of keen interest to members of Congress, some of whom
have expressed concern about approving a plan without a clearer
understanding of the value of the possible losses from mortgage-related
securities owned or guaranteed by the two companies.
href='http://www.nytimes.com/2008/07/22/business/economy/22treasury.html?_r=1&hp=&oref=slogin&pagewanted=print'>Read
more.
Mortgages
Housing-Assistance Package Would
Limit Down-Payment Assistance
Mortgage programs that helped nearly 79,000 people buy homes using
government-insured loans last year would be eliminated as part of a
broader housing package that Congress expects to pass this week, the
Washington Post reported today. More than half a million people
-- including many first-time home buyers, minorities and single mothers
-- have bought homes this way in the past decade using loans insured by
the Federal Housing Administration (FHA). However, the FHA said that
seller-funded down payments present the single biggest challenge to its
solvency. Borrowers who take part in these arrangements go to
foreclosure at nearly three times the rate of borrowers who put their
own money down, according to the agency. The fate of these seller-funded
down-payment-assistance programs has been in limbo for weeks; the
Senate version of the housing bill would ban them while the House
version would not. Negotiators crafting a compromise bill have agreed to
the Senate's position, which also is supported by the Bush
administration.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/07/21/AR2008072102456_pf.html'>Read
more.
Report: Many Florida Loan Originators
Found to Have Criminal Records
More than half the mortgage professionals registered in Florida --
120,563 -- entered the industry this decade without being licensed by
the state, and thousands of loan originators entered the industry with
criminal histories, the Miami Herald reported yesterday.
Industry leaders continually asked Florida regulators to bring this
group under their watch by imposing mandatory licensing, but regulators
refused to press for any changes, claiming that lawmakers would never
approve. While the Miami Herald found breakdowns in the state's
licensing system for mortgage brokers, the lack of controls over
originators created even more problems for an industry steeped in the
highest fraud rate in the nation. In the past eight years, more people
with criminal records in Florida jumped into the business as loan
originators than any other category of mortgage professionals.
href='http://www.miamiherald.com/newsletters/five_min/v-print/story/611670.html'>Read
more.
Judge Approves
Fremont-CapitalSource Deal
Bankruptcy Judge Erithe A. Smith approved subprime
mortgage lender Fremont General Corp.'s plan to sell a nonbankrupt
subsidiary's assets to CapitalSource Inc., Bankruptcy Law360
reported yesterday. Judge Smith ruled that Fremont may direct its wholly
owned subsidiary Fremont General Credit Corp. to vote its Fremont
Investment & Loan shares, representing a 100 percent stake in the
bank, to accept the CapitalSource asset purchase agreement inked last
April, Fremont said. When the Brea, Calif.-based lender entered
bankruptcy a month ago, listing both assets and liabilities over $100
million, it said that the main purpose of the filing was to facilitate
the close of this transaction.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=63124'>Read
more. (Subscription required.)
SEC Order on Naked Short-Selling Takes
Effect
An order from the Securities and Exchange Commission (SEC) aimed at
protecting some of the country's largest financial companies against a
form of short-selling took effect yesterday, provoking complaints from
smaller firms that they have been left vulnerable to the practice, the
Washington Post reported today. Shares of the 19 large
companies in the SEC's order have been rising since the commission
announced last week that it would shelter them from the practice, known
as naked short-selling, while organizations representing banks and
investment firms excluded from the list have been pressing to have the
protection extended to them. The SEC's order, issued last Tuesday,
provides further protection against abusive naked short-selling -- which
was already barred by securities law with only a few exceptions -- to 19
companies, including mortgage giants Fannie Mae and Freddie Mac and
leading Wall Street investment banks Goldman Sachs, Merrill Lynch and
Lehman Brothers, among others. The commission required that traders get
a commitment from a lender to supply the securities before selling them
short. The order is set to expire July 29, but the SEC may extend it for
a full month and could broaden it to cover more companies.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/07/21/AR2008072102455_pf.html'>Read
more.
American Home Mortgage Wins
Extension
Bankruptcy Judge Christopher S. Sontchi granted an
extension for American Home Mortgage Corp. (AHM) to file its exclusive
reorganization plan, giving the company until Aug. 19 to file its plan
and until Oct. 17 to solicit acceptance for it, Bankruptcy
Law360 reported yesterday. The lending company had asked in a
motion filed May 30 for a deadline of Sept. 2. AHM said then that it had
made significant progress and continued to focus on maximizing the value
of its estates through an orderly liquidation. The company cited its
struggles with working and litigating with “numerous large
financial entities” and other parties to obtain approval of the
sale of its servicing business.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=63096'>Read
more. (Subscription required.)
Empire Land Seeks Approval of $38
Million Land Sale
Building developer Empire Land LLC is seeking court approval for a plan
to sell a plot of residential land in Arizona for $38 million,
Bankruptcy Law360 reported yesterday. The plan, filed Friday
with the U.S. Bankruptcy Court for the Central District of California,
seeks approval for Saguaro Reserve LLC, of which Empire Land owns 50.1
percent and home-builder KB Home Tucson Inc. owns 49.1 percent, to sell
the land to Prime Group for $8 million more than its most recent
appraisal value, but $7.5 million less than the secured obligations of
Saguaro. The two companies formed Saguaro in 2004 in order to 'acquire,
develop, improve and dispose of' a property known as Saguaro Springs,
consisting of 516 acres of residentially-zoned property in Marana,
Ariz., according to court documents. Empire Land has handled the
day-to-day management of the business since its creation.
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=63110'>Read
more. (Subscription required.)
Connecticut Shipyard Seeks Bankruptcy
Protection
Derecktor Shipyards in Bridgeport, Conn., has filed for chapter
11 protection, but said that the reorganization is not expected to
affect its 250 workers, the Associated Press reported today. The
boatyard makes and repairs yachts, ferries, crab boats and other
vessels. Bridgeport Mayor Bill Finch said that he has spoken with
Derecktor executives, who said that the bankruptcy filing is meant to
help the boat maker work out a contract dispute with a customer.
Derecktor has operations in New York and Florida that are not
affected by the bankruptcy action.
href='http://www.boston.com/news/local/connecticut/articles/2008/07/22/bridgeport_shipyard_seeks_bankruptcy_protection/'>Read
more.
Wachovia Posts $8.66 Billion Loss,
Slashes Dividend, Will Sell Assets
Wachovia Corp. swung to a second-quarter loss on $6.1 billion in
write-downs as the company posted a net loss of $8.66 billion, compared
with year-earlier net income of $2.34 billion, the Wall Street
Journal reported today. Net charge-offs at Wachovia soared to 1.10
percent of total loans from 0.14 percent a year earlier and 0.66
percent in the first quarter. Nonperforming loans rose to 2.41
percent from 0.49 percent a year ago and 1.70 in the first quarter.
Wachovia said that it is taking actions to reduce the number of
credit-only commercial borrowers and to sell selected noncore
assets.
href='http://online.wsj.com/article_print/SB121672493460973315.html'>Read
more. (Subscription required.)