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October
4, 2007
Mortgage
Lending
name='1'>House Panel to Consider Legislation Allowing
Bankruptcy Courts to Alter Mortgages
The House Judiciary
Subcommittee on Commercial and Administrative Law today will mark
up
href='http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3609ih.txt.pdf'>H.R.
3609, the “Emergency Home Ownership and Mortgage Equity Protection
Act of 2007.” The bill, sponsored by Rep. Brad Miller
(D-N.C.) would allow bankruptcy judges to modify a mortgage on a chapter
13 debtor’s primary residence to the property’s fair market
value at a new interest rate. The measure has 13 co-sponsors, including
Subcommittee Chairwoman Linda Sanchez (D-Calif.) and House Financial
Services Committee Chair Barney Frank. (D-Mass.).
In related news,
Democratic leaders in Congress remain divided about how to address the
growing crisis in housing and home foreclosures involving borrowers who
took out subprime mortgages, the
size='3'>New York Times reported today. At a
news conference yesterday, House and Senate Democrats focused
on two proposals: providing more money to groups that help
homeowners renegotiate their loans and temporarily allowing Fannie Mae
and Freddie Mac to hold more mortgages in their own investment
portfolios. While the House has already passed several bills aimed at
the mortgage problem, Senate Democrats have been bogged down by
disagreements and other difficulties in lining up enough votes to block
any Republican filibuster. White House officials said President Bush put
forward a plan in August to expand the Federal Housing
Administration’s mortgage insurance program and proposed a way to
strengthen the regulation of Fannie Mae and Freddie Mac.
href='http://www.nytimes.com/2007/10/04/business/04housing.html?ref=business&pagewanted=print'>Read
more.
name='2'>Senator Looks to Attach GSE Bill to Appropriations
Legislation
Sen. Charles Schumer (D-N.Y.)
said yesterday that he would push to attach legislation to raise
portfolio caps on Fannie Mae and Freddie Mac to a must-pass
appropriations bill to bring stability to the turbulent home mortgage
market, CongressDaily reported yesterday. Schumer said that a Senate
deadlock over legislation to overhaul the two government-sponsored
enterprises that hold or guarantee 40 percent of the home mortgage
market has forced him to look for another vehicle. “In my view,
and I think in the view of many of us here, we shouldn't wait for the
full GSE reform to get the needed relief because in the next three to
six months, things are going to get very bad,' Schumer said. He noted
that the administration could lift the caps placed on the two through
executive order, but it has allowed each to grow up to only 2 percent
annually, citing concerns that Fannie and Freddie still have not taken
sufficient steps to correct accounting scandals.
name='3'>American Home Unit
w:st='on'>
size='3'>Sale Meets Heavy
Opposition
Bankrupt American Home
Mortgage Investment Corp. faces a number of objections to the sale of
its loan servicing business, with even more objections filed just ahead
of the court-appointed Tuesday deadline,
size='3'>Bankruptcy Law360 reported yesterday.
Numerous parties weighed in, including JP Morgan Chase Bank, UBS Real
Estate Securities Inc. and Wells Fargo Funding Inc. In court documents
filed on Monday, American Home Mortgage noted that “in excess of
45 objections had been filed in response to the sale motion, including
objections to the assumption and assignment of certain executory
contracts and unexpired leases.” In late September, an affiliate
of billionaire investor Wilbur Ross was named lead bidder with a $435
million purchase offer for the court-approved auction of American Home
Mortgage Investment Corp.'s loan servicing unit.
face='Times New Roman'>Bankruptcy Judge
size='3'>Chris
size='3'>topher Sontchi approved a request
yesterday from American Home Mortgage for permission to file a reply to
the swarm of objections before 4 p.m. today.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=36559'>Read
more. (Registration required.)
name='4'>Mortgage Lenders Network Seeks Second Exclusivity
Extension
Mortgage Lenders Network
USA Inc. asked a bankruptcy court judge to extend its exclusivity period
by six months due to the complex nature of the case,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Since Mortgage Lenders Network filed for
bankruptcy on Feb. 5, it has sold nearly $400 million worth of mortgage
loans and transferred more than $12 billion of mortgage servicing
assets, the lender said. The six-month extension will not hurt or
prejudice the lender's creditors or other parties in the case, it added.
The extension would push the deadline of the lender's exclusive period
for filing a reorganization plan, which expired on Wednesday, up to Jan.
31. Mortgage Lenders Network also asked to extend its exclusive
solicitation period another 100 days, from Dec. 4 to April 2.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=36579'>Read
more. (Registration required.)
name='5'>Housing Slump Slows
w:st='on'>
size='3'>Baltimore’s
Urban Revival
w:st='on'>
size='3'>Baltimore
urban revival is being threatened as home sales dry up, tax revenues
fade, foreclosures surge and hiring declines, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today.
w:st='on'>
size='3'>Baltimore
a lot of financial strength as its port is thriving from trade,
financial services companies are strong, and the federal government is
channeling money into medical research and to companies that locate
here. However, the fallout from the housing downturn is already showing
up as a setback in this struggling city’s effort to reinvent
itself as a robust commercial center, one in which a rebuilt downtown
has attracted new residents, particularly young people, as well as more
office workers. While the housing boom propelled this process forward in
recent years in
size='3'>Baltimore
w:st='on'>
size='3'>Cleveland
w:st='on'>
size='3'>Memphis
size='3'>and
face='Times New Roman'
size='3'>Pittsburgh
is no longer true.
href='http://www.nytimes.com/2007/10/04/business/04baltimore.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='6'>Judge Approves
w:st='on'>
size='3'>Kara
face='Times New Roman'
size='3'>Homes
Reorganization Plan
Bankruptcy Judge
Michael B. Kaplan
approved
w:st='on'>
size='3'>Kara
face='Times New Roman'
size='3'>Home
reorganization plan yesterday, nearly a year after the homebuilder filed
for bankruptcy,
size='3'>Bankruptcy Law360 reported yesterday.
The plan will hand over ownership of the home builder to hedge
fund
size='3'>Plainfield Specialty Holdings II Inc., private equity firm Del
Mar Capital and Fishman Real Estate Enterprises LLC.
w:st='on'>
size='3'>Plainfield
size='3'>Del
$12 million on the plan's effective date. The cash infusion will be used
to pay administration and vendor costs, real estate taxes and working
capital, and will give $2.25 million to unsecured creditors. The new
Kara homes will be owned 60 percent by
face='Times New Roman' size='3'>Plainfield
size='3'>, and 20 percent each by
w:st='on'>
size='3'>Del Mar and
Fishman. The new owners are expected to pour in $92 million to complete
12 Kara housing projects through
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=36545'>Plainfield-owned
development company Maplewood Home Builders LLC. The investment will be
partially financed by a $26 million revolver. Read
more. (Registration required.)
face='Times New Roman' size='3'>
name='7'>Delphi
size='3'> Scales Back Financing Plan
Delphi Corp. expects it
will have to shrink its $7.1 billion plan to exit bankruptcy proceedings
and change certain terms for creditors, but the auto-parts maker expects
to secure a deal 'very shortly' on financing that would allow it to
emerge from chapter 11 in the next few months, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Delphi told a bankruptcy judge in
size='3'>New York
financing will be less than the $7.1 billion the company previously
sought. Delphi Corp.'s chairman, Robert 'Steve' Miller, said that the
turmoil in credit markets that created financing difficulties for the
company appeared to be 'settling down.' Since a global credit squeeze
began in August, however,
size='3'>Delphi has run into
difficulty trying to obtain an exit-financing loan.
w:st='on'>
size='3'>Delphi
calls for unsecured creditors to be repaid in full with a mix of about
20 percent cash and 80 percent stock at a value of around $45 a share.
Existing shareholders are expected to get some new shares in the
reorganized company.
href='http://online.wsj.com/article/SB119145930687448467.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='8'>Insurance Policies under Review in
w:st='on'>
size='3'>Davenport
Bankruptcy
Insurance policies held
by individual parishes in the Diocese of Davenport, Iowa, are under
examination for liability in the diocese’s bankruptcy case,
the
size='3'>Quad
w:st='on'>
size='3'>City
w:st='on'>
size='3'>Davenport
Times reported today. The targeted policies
are in addition to the coverage the diocese believes that it held with
Travelers Insurance about 50 years ago. Attorneys representing the
diocese and the claimants are attempting to reach settlements with
Travelers and the parish insurance companies in time for filing the
reorganization plan. The diocese requested an extension to Nov. 16 to
file its plan.
href='http://qctimes.com/articles/2007/10/04//news/local/doc4704751172421433687681.txt'>Read
more.
name='9'>Calpine Shareholders Look to Delay Bankruptcy Plan Vote
Pending Appeal
Calpine Corp. shareholders are
seeking to temporarily bar the company from sending its bankruptcy
reorganization plan for a creditor vote pending its appeal on the
reorganization plan's disclosure statement, the Associated Press
reported yesterday. In papers filed Monday with the U.S. Bankruptcy
Court in Manhattan, Calpine's shareholders’ committee said that
sending the chapter 11 plan out for a vote now would cause 'widespread
confusion' as the company intends to update its valuation just 10 days
before voting on the plan is slated to end. The committee said that a
stay, pending its district court appeal of the bankruptcy court's Sept.
25 ruling approving Calpine's chapter 11 plan disclosure statement,
wouldn't jeopardize the energy giant's plan to exit bankruptcy
protection by the end of January. The company is slated to seek court
confirmation of its reorganization plan on Dec. 18.
href='http://money.cnn.com/news/newsfeeds/articles/apwire/D8S1ARTO0.htm'>Read
more.
name='10'>Analysis: After Delta's Recovery, New Turbulence
Stirs
Delta Air Lines Inc.'s
emergence from bankruptcy court protection earlier this year came with
its management and labor flying smoothly together, but there may be
turbulent times for the company ahead, according to the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>today. Gerald Grinstein, who just retired as chief executive,
managed to cut Delta's costs deeply while winning unusual loyalty from
the company's largely nonunion work force. He has
since been replaced by Richard H. Anderson, former CEO of
Northwest, a rival carrier known for its contentious labor relations.
Delta's new dynamics reflect the complex path being traveled by the
major
face='Times New



















Roman'
size='3'>U.S.
size='3'>airlines, four of which have undergone bankruptcy
restructurings since the Sept. 11, 2001, terrorist attacks. The industry
overall returned to the black only last year after the major airlines
pared staff down by 37 percent in the past six years and reduced wages
and benefits for those who remained. But maintaining profitability could
prove as difficult as regaining it. Weak demand in
the United States and rising fuel prices
threaten to hasten the next industry downturn. The challenge for Delta
and other big airlines is to hold down costs even as employees push for
rewards for enduring tough times.
href='http://online.wsj.com/article/SB119143243647247841.html'>Read
more. (Registration required.)
name='11'>CitiMortgage Sets Funds Aside for D.C. Residents with
Limited Credit History
CitiMortgage plans to
announce today that it has set aside $200 million for mortgages
to
size='3'>Washington,
w:st='on'>
size='3'>D.C.
residents who have limited credit histories and therefore often end up
with high-cost or risky home loans, the
size='3'>Washington Post reported today.
CitiMortgage, a division of Citigroup, plans to fund the loans as part
of a test project that may be extended nationwide next year. Fannie Mae
and State Farm Insurance each have agreed to buy $100 million worth of
those mortgages. CitiMortgage and its partners estimate that the program
could serve an estimated 2,000 people in the D.C. region, with the loans
averaging $100,000 each. The nonprofit group coordinating the project,
Neighborhood Housing Services of America, said the average loan for the
low- to moderate-income home buyers it served nationally this year was
$93,000.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/10/03/AR2007100302457_pf.html'>Read
more.
name='12'>Interstate Bakeries Receives Extension to Settle
with
size='3'>Union
A
w:st='on'>
size='3'>U.S.
size='3'>bankruptcy judge on Wednesday gave Interstate Bakeries Corp.
(IBC) a final 30 days to settle differences with a key union and come up
with a plan to begin bringing the maker of Wonder bread and Twinkies
snacks out of bankruptcy, Reuters reported yestereday.
IBC, one of the largest
w:st='on'>
size='3'>U.S.
size='3'>commercial bakers and distributors of fresh-baked bread and
sweet goods, said it has identified at least three potential investors
that could help save the company from liquidation, but it must reach
agreement with the International Brotherhood of Teamsters on certain
issues first. Teamsters attorney Frederick Perillo said there was little
chance the union could reach an agreement with IBC and argued in court
that the union should be allowed to talk directly with potential
investors immediately.
href='http://news.yahoo.com/s/nm/20071004/bs_nm/interstatebakeries_california_dc_1'>Read
more.
International
name='13'>U.S.
face='Times New Roman' size='3'> Firms Looking to Acquire British
Mortgage Bank
Two New York-based
private-equity firms are using skills honed in
w:st='on'>
size='3'>Japan
size='3'>during a banking crisis almost a decade ago to map potential
takeover bids for ailing British mortgage bank Northern Rock PLC,
the Wall Street
Journal reported today. J.C. Flowers & Co.
and Cerberus Capital Management LP, both with long track records for
snapping up troubled banks around the world, are separately discussing
potential bids for Northern Rock, which last month experienced the
United Kingdom's first bank run in more than a century after depositors
feared that the nation's fifth-largest mortgage lender was near
collapse. None of the several possible takeover scenarios being
discussed would leave much for Northern Rock shareholders.
href='http://online.wsj.com/article/SB119145077260448208.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
TROUBLED COMPANIES IN THE
NEWS
The business news articles below are taken from the U.S. Business
Journal’s Daily Summary of Troubled & Fast Growing U.S.
Companies which is published by Bastien Financial Publications.
size='3'>ABI
size='3'>Members receive a 50% discount off of our regular subscription
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To subscribe email steve@creditnews.com
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size='3'>ABI
37
size='3'>Coherent Inc.,
w:st='on'>
size='3'>Santa Clara
face='Times New Roman'>, Ca., will take between $22
million and $28 million in noncash charges related to restating past
financial results because of stock-based compensation costs.
/>
EFJ
Inc
size='3'>.’s stock price plunged 33% after the Irving, Tx. maker
of radios and radio-security systems warned of a large operating loss
for its third quarter because of a drop in demand for its Transcrypt
encryption devices.
Ford Motor
Co.,
Dearborn, Mi., reported that its sales in August fell 18%–to just
over 175,000 units.
Ikanos Communications
Inc.,
Fremont, Ca., expects to take a charge in its third quarter of as much
as $4 million related to restructuring. Hoping to save $3.5 million next
year, the fabless semiconductor firm is reducing its management staff
and outsourcing certain semiconductor operations.
Journal Sentinel
Inc. wants to trim the payroll at its daily
newspaper in
face='Times New Roman' size='3'>Milwaukee
size='3'>,
size='3'>Wi
size='3'>. by between thirty-five and fifty workers.
Micron Technology
Inc., the
big Boise, Id.-based chip maker, reported a fourth quarter net loss of
$158 million. Revenue increased 5%–to $1.4 billion. For the year,
it lost $320 million on an 8% revenue increase–to $5.7 billion.
The results for the quarter included $20 million in memory-chip
writedowns while both the quarter and year included a restructuring
charge of $19 million. Micron was also hurt by a drop in selling prices
for its DRAM and NAND chips.
Midway Games
Inc., the
w:st='on'>
size='3'>Chicago
w:st='on'>
size='3'>Il
maker, warned that third quarter revenue will fall far short of
expectations as a result of delays in shipping out its Stranglehold
game. Originally projected at $50 million, sales for the quarter will be
only about $39 million. Midway also anticipates a loss of 33 cents a
share in the quarter, compared to an earlier projected 23-cent-a-share
loss.