February 72008

 

Mortgage
Lending

name='1'>Senate Banking Chairman Refines Mortgage

Rescue Plan to Gain Support

Following Republican
criticism, Senate Banking Chairman

size='3'>Chris Dodd

(D-Conn.) said yesterday that he is refining his plan for the federal
government to purchase troubled subprime

mortgages and refashion them so homeowners can stay in their
residences,

size='3'>CongressDaily reported yesterday.
Dodd cautioned that talks are still fluid

and that he intends to reach out to panel members and hear their views
on how to stem the increasing tide of

foreclosures that have rocked the nation's housing market. Dodd has
proposed devoting $20 billion to a new agency

that would refinance at-risk mortgages through the Federal Housing
Administration's mortgage insurance program or

secured under Fannie Mae or Freddie Mac. However, yesterday he said that

he would look to use existing structures

to get the money out more quickly so it would not get bogged down on a
debate over increasing the federal

bureaucracy. Dodd will meet today with FDIC Chairwoman Sheila Bair and
hold a hearing next week with Bernanke,

Treasury Secretary Paulson and SEC Chairman
w:st='on'>

size='3'>Christopher Cox as
witnesses to discuss further answers to the

housing crisis.

name='2'>More than 500,000 Subprime Mortgage Holders

Received Assistance in Second Half of 2007

The HOPE NOW

face='Times New Roman' size='3'>Alliance
reported that approximately

545,000 subprime mortgage holders were helped to forestall foreclosure
in the second half of 2007, according to a

press release. The revised data for the second half of 2007 now reveals
that 324,000 prime borrowers were helped,

totaling 869,000 prime and subprime homeowners in the second half of
2007. This includes 652,000 repayment plans

initiated and 217,000 loan modifications. The new totals are based on
revised data and more complete

participation through
w:st='on'>

size='3'>Alliance members.
The data was provided by the 14 HOPE

NOW servicers responsible for more than 33.3 million home loans, or
about 62 percent of both prime and

subprime loans outstanding nationwide. 
href='http://www.fsround.org/media/pdfs/NationaldataFeb.pdf'>Click

here to read the report.

name='3'>Experts See Limited Benefits to Lowering

Rates on Jumbo Mortgage Loans

As Congress moves to
lower borrowing costs on so-called jumbo

mortgages, lending experts caution that the benefits to borrowers may be

limited, the Wall Street Journal
size='3'>reported today. As part of a broader

economic-stimulus package, lawmakers are considering allowing Fannie Mae

and Freddie Mac to purchase or guarantee

mortgages larger than $417,000, the current cutoff for conforming loans.

That in turn is expected to encourage

lenders to charge lower rates on the larger loans, because the loans
would have the implicit backing of the

federal government. The pending legislation would temporarily boost the
cap for Fannie and Freddie to as much as

$729,750, especially in places like
w:st='on'>

size='3'>California and
along the East Coast where housing prices

are much higher than the national average. However, mortgage experts
caution that the benefits of lower interest

rates on certain jumbo loans could be tempered by various factors.
Additional fees could be imposed on the loans

to compensate for added risk, pushing up their cost to consumers. The
temporary fix is also scheduled to expire

at the end of this year, offering only a narrow window for borrowers
unless that date is extended. UBS calculates

that about 44 percent of all mortgages greater than $417,000 could
qualify under the proposed higher limits,

depending on how rules are set. 

href='http://online.wsj.com/article_print/SB120234341375149111.html'>Read

more. (Registration required.)

name='4'>Solutia Files Lawsuits against Banks for

Backing Out of Financing Pact

Solutia Inc. has sued
three banks for backing out of a $2 billion

financing commitment needed by the chemical company to exit from chapter

11 protection, the

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

Citigroup Inc., Goldman Sachs Group Inc. and Deutsche Bank AG -- told
Solutia last month that the tight credit

market made them unable to find lenders to back the loan and qualified
as a 'materially adverse' condition that

would allow the banks to terminate their agreement. St. Louis-based
Solutia is demanding that the banks complete

the deal or pay $2.25 billion in damages, claiming fraud and breach of
contract. Solutia, the former chemicals

division of Monsanto Co., argues that the banks knew the credit markets
had been slowing for months when they

agreed to the financing deal Oct. 25. 

href='http://online.wsj.com/article/SB120235007383649503.html?mod=us_business_whats_news'>Read

more. (Registration required.)

Amp'd

Mobile Sues for Disbursements Prior to

Chapter 11 Filing

Former mobile video
network operator Amp'd Mobile Inc. is suing

over a dozen companies to recover more than $10 million paid out to
creditors in the days preceding its

chapter 11 filing, the Associated Press reported yesterday. 

The largest lawsuit,

filed Tuesday against Merrill Lynch, Pierce and Fenner & Smith
Inc., seeks the return of about $4.05

million. Amp'd
face='Times New Roman'

size='3'>Mobile said that
it was insolvent at the time it

transferred the funds to Merrill Lynch on April 9, 2007. In addition to
suing Merrill Lynch, Amp'd Mobile has

filed lawsuits against a number of other creditors, including: Latham
& Watkins, seeking the return of more

than $1.04 million; U-Tek Digital Co., seeking $655,300; Perfect
Connection LLC, seeking $592,773; and Playboy

Enterprises International Inc., seeking $361,000. The company has also
filed suit against its former CEO Peter

Adderton in seeking to reclaim $1.15 million paid in the weeks leading
up to the bankruptcy filing.

href='http://biz.yahoo.com/ap/080206/amp_d_mobile_bankruptcy.html?.v=1'>Read

more.

name='6'>Chrysler to Continue to Shift Contracts Away

from Plastech

Chrysler CEO Robert
Nardelli said yesterday that the company is

going to continue with its plan to move its parts contracts away from
bankrupt Plastech Engineered Products Inc.

to other suppliers, the Wall Street
Journal reported today.

Chrysler on Monday idled production at four assembly plants amid a
dispute with Plastech over the auto maker's

access to tooling at Plastech plants. Plastech filed for bankruptcy
protection late Friday after Chrysler

canceled its contracts with the supplier. The plants reopened Tuesday
afternoon after Chrysler and Plastech

reached an interim agreement, valid until Feb. 15, that restored
shipments of Plastech components for Chrysler.

Plastech, which was seeking financial help from its biggest customers,
claims that it was forced into bankruptcy

by Chrysler's decision to cancel contracts, a claim that Chrysler
refutes. 

href='http://online.wsj.com/article_print/SB120232662752548379.html'>Read

more. (Registration

required.)

name='7'>Northwest and Delta Talk Merger

In events that could
reshape the airline industry, merger talks

have picked up pace between Delta Air Lines and Northwest Airlines,
the

size='3'>New York

Times reported today.
face='Times New Roman'>

size='3'>Analysts speculated that a Delta-Northwest combination could
spur Continental Airlines and United

Airlines into negotiations of their own.  In
their discussions, Delta and Northwest

have reached the point of settling on leadership, and it appears that
Delta’s chief executive, Richard H.

Anderson, would retain that role in a combined carrier. Any merger is
expected to involve a stock swap at close

to current market prices. Delta shares closed Wednesday at $17.95, up 92

cents; Northwest closed at $18.47, up 69

cents. A softening economy and high fuel prices have convinced many in
the industry that mergers — and the

sweeping cost cuts that can accompany them — are needed to prevent

carriers from facing a recurrence of the

financial problems from which they are still recovering. 

href='http://www.nytimes.com/2008/02/07/business/07air.html?ref=business&pagewanted=print'>Read

more.

name='8'>Senate GOP Blocks Additions to Stimulus

Bill

By a single vote, Senate
Republicans yesterday blocked an

expansive fiscal stimulus package championed by Democrats as partisan
rancor engulfed the effort to inject a

quick burst of spending into the slowing economy, the
face='Times New Roman' size='3'>New York

Times reported today. 
size='3'>The package needed 60 votes under

Senate rules to move forward, but failed 58-41, with 8 Republicans
joining 48 Democrats and 2 independents in

support of it. The majority leader, Sen. Harry Reid of

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size='3'>Nevada, switched
his vote to no from yes at the last

second, a parliamentary move that lets him control the next steps on the

bill.  The

measure was opposed by Republican leaders who said the Democrats added
too many costly provisions, including an

extension of unemployment benefits, tax credits for the coal industry
and increased subsidies for home energy

costs. The total cost of the Senate plan came to about $204 billion over

two years, or about $40 billion more

than the House version. 

href='http://www.nytimes.com/2008/02/07/washington/07fiscal.html?_r=1&oref=slogin&ref=business&pagewa

nted=print'>Read more.

International

name='9'>Credit Crunch Pounds

size='3'>U.K.
size='3'>Economy

Amid the deepening
credit-market turmoil, the

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

Kingdom's embrace

of financial globalization is becoming a

liability and Bank of England officials will meet today to decide if any

steps should be taken to ease the pain,

the Wall Street
Journal reported today.

For more than a decade, the United Kingdom has
reaped vast benefits from its role as a hub

for the world's capital, building
face='Times New Roman'

size='3'>London into a financial center

to rival

w:st='on'>New

York

size='3'>. No large country is more dependent on the movement of foreign

money through its banks as nearly $2.4

trillion flowed in and out of the United Kingdom
size='3'>in 2006. That amount is equivalent to the

country's entire annual economic output, the most recent data indicate.
The financial sector accounts for more

than one-fifth of all
face='Times New Roman'

size='3'>U.K. jobs, compared
with only 6 percent of U.S. jobs and

contributed about one-quarter of the nation's economic growth over the
past five years. 

href='http://online.wsj.com/article/SB120234240716748807.html?mod=hpp_us_pageone'>Read

more. (Registration

required.)

name='10'>Sea Containers Drops Appeal against

Pension Ruling

Transport group Sea
Containers has dropped an appeal against a

decision to force it to put more money into two U.K.
size='3'>pension schemes, the Pensions

Regulator said yesterday, according to Reuters. The regulator said in a
note that as a result of the appeal being

dropped, it had issued two Financial Support Directions (FSD) for Sea
Containers to support two schemes belonging

to its U.K. subsidiary. Last June's move by the
regulator to require Sea Containers to put

a reported £91 million into the two schemes was the first time it
had used its power in this way. 

href='http://uk.news.yahoo.com/rtrs/20080206/tbs-uk-seacontainers-pensions-5d0af8e_1.html?printer=1'>Read

more.

href='http://uk.news.yahoo.com/rtrs/20080206/tbs-uk-seacontainers-pensions-5d0af8e_1.html?printer=1'> 

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