March 112008

 

Mortgage
Lending

name='1'>Probe Focuses on Countrywide Loan

Data

Federal investigators are

finding that Countrywide's loan

documents often were marked by dubious or erroneous information about
its mortgage clients, the

face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The company

packaged many of those mortgages into securities and sold them to
investors, raising the additional question of

whether Countrywide understated the risks such investments carried.
Countrywide, the largest mortgage company in

the United States in terms of dollar value of loan originations, also
was considered among the most aggressive in

finding ways to make home loans to consumers whose qualifications
couldn't be proved or seemed questionable,

mortgage industry executives and analysts said. The Federal Bureau of
Investigation has begun looking into its

practices in pursuing such business. 

href='http://online.wsj.com/article_print/SB120519470504525747.html'>Read

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name='2'>Congress Continues to Work on FHA Overhaul

Bill

Congressional negotiators

are attempting to reach a deal this week

on legislation that would overhaul the Federal Housing Administration's
mortgage insurance program to provide a

boost to the nation's shaky housing industry,
face='Times New Roman'

size='3'>CongressDaily reported yesterday.
Congress is trying to finish an overhaul of

the New Deal-era program, which provides insurance to cover the risk of
default for lenders. The toughest hurdle

could be deciding how much to raise the FHA loan limits, which critics
contend are too low in many high-cost

markets such as

size='3'>California and

face='Times New Roman'
size='3'>Massachusetts. At

the beginning of

the year, FHA loan limits were set at $362,000. However, the economic
stimulus package raised the cap to

$625,500. In addition, limits in some high-cost areas were allowed to
increase to almost $730,000 under the bill.

House Financial Services Chairman Barney Frank (D-Mass.) has been a
proponent of raising the cap, arguing that it

would revive market share in the agency that lost ground in recent years

to subprime lenders who filled the void

with new products. Conferees must also resolve how much to lower the
current 3 percent down-payment requirement.

The Senate measure would lower the down-payment requirement to 1.5
percent, while the House bill would allow no

down payment in some cases.

name='3'>Carlyle Fund Seeks Halt to

Liquidation

The Carlyle Group’s

troubled mortgage-debt investment fund,

Carlyle Capital, said yesterday that it had asked lenders to halt
further liquidation of collateral worth as much

as $16 billion while the two sides discuss ways to repay the debt,
the

size='3'>New York Times reported today. The
fund, which invests mainly in triple-A

rated mortgage securities issued by Fannie Mae and Freddie Mac, has
received $400 million in margin calls, and

some lenders started to liquidate collateral for $5 billion of debt.
Banks are asking for their money back amid

concerns the economic climate may deteriorate further. 

href='http://www.nytimes.com/2008/03/11/business/worldbusiness/11carlyle.html?_r=1&oref=slogin&ref=busine

ss&pagewanted=print'>Read more.

Autos

name='4'>Dura Seeks New Financing

Dura Automotive Systems Inc.
said yesterday that it is reaching out to

financing sources in a renewed effort to pay down its debts and get out
of bankruptcy, the Associated Press

reported yesterday. Dura said that it needs a $150 million first-lien
term loan and an $80 million second-lien

loan to implement the chapter 11 plan it filed Friday. The money Dura is

seeking now is much less than the $425

million in loans it hoped to get last year to fund a more generous
chapter 11 plan. Failure to land the loans in

December caused the parts maker to scrap its exit plan and come up with
a new one.

href='http://www.forbes.com/feeds/ap/2008/03/10/ap4754660.html'>Read
more.

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

name='5'>Delphi Relaunches Exit Financing with GM

Backing

Auto parts supplier
Delphi Corp. will relaunch its $6.1 billion

chapter 11 exit financing package, this time with a new commitment from
a General Motors Corp. affiliate, Dow

Jones reported yesterday. GM recently agreed to new terms in which an
affiliate would accept a $2 billion

first-lien note from Delphi

and provide part or all of the financing for a
second-lien loan of $825 million that is included

in the overall $6.1 billion package. The auto maker previously was
supposed to be paid $2 billion in cash and a

second-lien note of $750 million. Most of the investors that agreed to
inject up to $2.55 billion into Delphi

objected to GM's participation, saying it gave the auto maker too much
influence at

w:st='on'>
size='3'>Delphi. They argued GM's

participation violates the terms of the investment agreement. 

href='http://money.cnn.com/news/newsfeeds/articles/djf500/200803101349DOWJONESDJONLINE000525_FORTUNE5.htm'>Read

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GM

Won’t Intervene in Strike at

American Axle

General Motors President
and COO Frederick A. Henderson said

yesterday that the automaker is concerned by a two-week-long strike at a

parts supplier that has slowed or

stopped production at 29 GM plants, but he indicated that the automaker
did not plan to intervene in the

dispute, the New York
Times reported

today. Nearly 3,650 employees of American Axle and Manufacturing
represented by the United Automobile Workers

union walked off the job on Feb. 26. Negotiators have been meeting daily

since March 6 but have not signaled they

are near a settlement. The strike has not affected sales because GM had
a three- to five-month supply of its

pickup trucks and large sport utility vehicles for sale at the end of
February. Analysts had expected GM to

temporarily shut the factories that build those products at some point
this year. 

href='http://www.nytimes.com/2008/03/11/business/11axle.html?ref=business&pagewanted=print'>Read

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name='7'>Leiner Health Products Files for Bankruptcy

Protection

Leiner Health Products
Inc., a leading maker of vitamins and

nutritional supplements, filed for bankruptcy protection yesterday, a
year after the Food and Drug Administration

found problems at one of its manufacturing plants that prompted a
product recall, the Los Angeles Times reported

today. The Carson, Calif.-based company,

which supplies store-brand products to major retailers including Costco
and CVS, listed assets and debt of $500

million to $1 billion in its chapter 11 petition. Three company
affiliates also filed for protection from

creditors. In conjunction with the petition, which does not include
Leiner's Canadian subsidiary, a group of

lenders agreed to provide Leiner with $74 million in
debtor-in-possession financing. 

href='http://www.latimes.com/business/la-fi-leiner11mar11,1,6752467.story?ctrack=4&cset=true'>Read

more.

Judge

Approves $60 Million DIP Loan for

Sharper Image

Sharper Image Corp. will
continue operating as a

debtor-in-possession after Bankruptcy Judge Kevin

Gross approved up to $60 million in financing
for the bankrupt retail chain,

Bankruptcy Law360
reported yesterday. Sharper

Image filed for bankruptcy protection on Feb. 19, announcing it would
shut down 90 of its stores as part of a

restructuring agreement. The San Francisco-based company cited for its
woes a slew of class actions over its

signature product, the Ionic Breeze air purifier, several years of
declining profits, sagging sales, increased

competition and tightened credit from suppliers. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=49620'>Read

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name='9'>PricewaterhouseCoopers to Pay $30 Million to

Settle Audit Suit

PricewaterhouseCoopers
LLP has reportedly agreed to pay $30

million to put to rest a lawsuit filed over the collapse of Spokane
Metropolitan Mortgage & Securities Co.,

alleging that the accounting firm made improper audits that led to the
company's collapse,

face='Times New








&

#13;




&

amp;amp;amp;#13;
Roman' size='3'>Bankruptcy
Law360 reported yesterday.

In a lawsuit filed in 2005, Metropolitan Mortgage had accused the
accounting firm of failing to properly perform

its duties as independent auditor of both Metropolitan Mortgage and its
affiliate Summit Securities Inc. in 1999

and 2000. The audited financial statements did not conform to accounting

standards, and negligent and careless

auditing of the two companies effectively hid the true extent of the
companies' financial missteps that would

later force Metropolitan Mortgage into bankruptcy, Metropolitan Mortgage

alleged. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=49643'>Read

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name='10'>SEC Probe Turns Attention to

size='3'>Alabama
size='3'>Official's Ties

The Securities and
Exchange Commission is investigating the mayor

of
size='3'>Birmingham

size='3'>,
size='3'>Ala.

size='3'>, to determine if he steered underwriting business to a local
investment-banking firm in exchange for

payments while he led the committee that oversaw the finances of

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

face='Times New Roman'
size='3'>County,
the

face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The SEC said that

it is seeking information related to $5 billion raised by

face='Times New Roman' size='3'>Jefferson County
size='3'>,

w:st='on'>
size='3'>Ala., through
bond

offerings and derivative contracts, the same types of instruments that
are at the heart of the county's current

financial distress. The
w:st='on'>

size='3'>Montgomery,
w:st='on'>

size='3'>Ala., investment
bank, Blount Parrish & Co.,

underwrote nearly $2 billion of the securities offerings, the SEC said.
While many local governments are

struggling with the turmoil in the municipal-bond market and the
declines in home prices,

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

size='3'>County

size='3'>'s aggressive use of derivatives has put the government in
serious financial trouble. The derivatives,

known as interest-rate swaps, were designed to protect against sharp
increases in interest rates. Now, the county

is under pressure as credit-rating firms started downgrading debt in
late February and as investment banks are

seeking more collateral to shore up the contracts. 

href='http://online.wsj.com/article_print/SB120519204654725643.html'>Read

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name='11'>Citigroup Acts to Bolster Hedge

Funds

Citigroup moved yesterday

to shore up six of its hedge funds

pressured by a tightening in the municipal bond market, the
New

York Times reported today. The bank has
committed to injecting $1 billion across six

highly leveraged municipal bond funds with $15 billion in assets, which
were sold to wealthy customers under the

names ASTA and MAT. About $600 million had been provided as of last week

after lenders issued a margin call in

response to falling securities values. Citigroup’s alternative
investments unit has been particularly hard

hit. Last month, Citigroup suspended redemptions in a large corporate
debt fund, CSO Partners, after investors

tried to withdraw more than a third of its $500 million in assets. In
January, Citigroup injected $100 million

into the fund, which suffered heavy losses last year. 

size='3'>Citigroup has also rescued

seven affiliated investment funds, shifting more than $49 billion in
securities onto its already strained balance

sheet. 

href='http://www.nytimes.com/2008/03/11/business/11bank.html?ref=business&pagewanted=print'>Read

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