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February 29,
2008
Mortgage
Lending
name='1'>Republicans Block Consideration of Housing Relief Package
in Senate
Senate Republicans
yesterday blocked consideration of a bill designed to prop up the
struggling housing industry, declaring that the Democratic-backed
provisions would harm mortgage lenders and inflame the housing crisis,
the Washington
Post reported today. With a 48 - 46 vote, the
Senate did not gain the 60 votes needed to halt a threatened filibuster
on S. 2636. The vote capped a week of parliamentary gridlock in the
Senate, which spent nearly three days mired in an
w:st='on'>
size='3'>Iraq
debate. The housing proposal includes billions of dollars for local
communities to buy up subprime mortgages and a controversial rewrite of
bankruptcy laws to allow judges to modify mortgages on primary
residences of chapter 13 debtors. Majority Leader Harry M. Reid (D-Nev.)
will bring the legislation back for a final push, possibly later next
week, when the leading Democratic presidential candidates will have
returned after Tuesday's critical primaries. Minority Leader Mitch
McConnell (R-Ky.) said that he would support beginning debate on the
housing package if Republicans were allowed to offer a handful of
amendments related to the economy, including provisions related to
cutting taxes.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/02/28/AR2008022803722_pf.html'>Read
more.
href='http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?position=all&page=S1346&dbname=2008_record'>Click
here to read Sen. Durbin’s floor statement on the mortgage
modification provisions of S. 2636.
name='2'>Negative Equity Likely to Lead More Borrowers to Abandon
Homes
As home prices plummet,
concerns are being raised that borrowers owing more on their mortgages
than the homes are worth are now starting to walk away from their
properties, the Wall
Street Journal reported today. Typically,
borrowers who turn in their keys are those who have run into financial
trouble or need to relocate but can't sell their homes. However,
mortgage industry executives and consumer counselors say they are
starting to see people who aren't in dire financial straits defaulting
on their mortgages because they don't want to pay for properties that
have negative equity. Many are speculators who had planned to quickly
flip the home, but others appear to be homeowners who had second
thoughts about their purchase. Also, many borrowers who bought in recent
years have put down little if any equity.
size='3'>Goldman Sachs economists estimate that as much as $3 trillion
in mortgages could be underwater by the end of the year, leaving 30
percent of the country's outstanding mortgages in negative
equity.
href='http://online.wsj.com/article_print/SB120424677934501611.html'>Read
more. (Registration required.)
w:st='on'>
name='3'>New York
face='Times New






Roman'
size='3'> Prosecutor Calls for Changes to Bankruptcy
Code
A top New York prosecutor
yesterday called on Congress to amend federal bankruptcy rules, saying
there was a double standard in the way that individuals and corporations
are treated, Reuters reported yesterday. 'They can change a loan to
Chrysler Corp. but they can't change the terms of a loan on a primary
residence,' said Manhattan District Attorney Robert Morgenthau, who has
held the post for three decades. As Congress is currently considering a
number of proposals to the Bankruptcy Code for modifying primary home
mortgages, Morgenthau said he would support a city council bill that
would encourage Congress to act on behalf of individual homeowners. The
bill, which will be introduced by councilman David Weprin, will ask
Congress to change the Bankruptcy Code to give the courts authority to
alter the terms of a mortgage on a borrower's primary residence.
href='http://news.yahoo.com/s/nm/20080228/us_nm/usa_housing_morgenthau_dc_1'>Read
more.
size='3'>California City Strikes Deal to Avoid
Bankruptcy
A last-minute deal
between city leaders and labor unions could allow
w:st='on'>
size='3'>Vallejo
w:st='on'>
size='3'>Calif.
becoming the first city in the state to declare bankruptcy over a budget
shortfall, the Associated Press reported today. The two sides reached
the tentative agreement yesterday to cut labor costs just before the
City Council was set to vote on whether to seek bankruptcy
protection.
face='Times New Roman' size='3'>Vallejo
has grappled with spiraling employee expenses, a slowing
economy and a rash of home foreclosures. The City Council postponed the
vote until Monday so that council members and the public have time to
study the agreement with the unions representing
w:st='on'>
size='3'>Vallejo
officers and firefighters. The city faces a $9 million budget deficit
for its fiscal year ending in June and is set to run out of money at the
end of March, according to City Manager Joseph Tanner, who recommended
the bankruptcy filing.
href='http://www.nytimes.com/aponline/us/AP-Vallejo-Budget-Crisis.html?sq=bankruptcy&st=nyt&scp=2&pagewanted=print'>Read
more.
New
Century Estimates Bankruptcy Payout
New Century Financial
Corp. estimates that its chapter 11 case would produce a recovery of
from 2 percent to 17 percent for unsecured creditors of its defunct home
lending business, the Associated Press reported yesterday. More than $35
billion in claims for payment hit the
w:st='on'>
size='3'>Irvine
w:st='on'>
size='3'>Calif.
after it filed for chapter 11 protection last April.
face='Times New Roman' size='3'>New Century's final affairs will be
wrapped up in two stages: one involving a distribution of the company's
remaining cash, and the second involving the pursuit of lawsuits against
former lenders and others that creditors will attempt to hold
accountable for New Century's collapse. Court documents filed Wednesday
have no estimate of the value of those lawsuits, which could grow out of
ongoing Securities and Exchange Commission and Justice Department
investigations, or out of a probe of New Century's accounting being
conducted by Michael J. Missal, a court-appointed investigator.
href='http://www.chron.com/disp/story.mpl/ap/fn/5579043.html'>Read
more.
name='6'>Pharmed Seeks Chapter 11 Extension
Pharmed Group Holdings
Inc. is asking a bankruptcy judge to give it another 60 days to prepare
a chapter 11 liquidation plan with the aid of its unsecured creditors,
the Associated Press reported today. Negotiations on the terms of a plan
are underway with its unsecured creditors’ committee, Pharmed said
in a court filing Monday. The exclusive filing period was set to expire
Monday, but it is automatically extended until the U.S. Bankruptcy Court
in
size='3'>Miami rules on the
extension request at a March 7 hearing. Pharmed is also asking the court
to extend its exclusive right to solicit plan votes by 60 days, through
May 25.
href='http://www.chron.com/disp/story.mpl/ap/fn/5579008.html'>Read
more.
name='7'>Delphi Objects to Regulator’s ADA
Claim
Delphi Corp. has asked
a
size='3'>Manhattan
size='3'>bankruptcy court to disallow and expunge a proof of claim filed
by the U.S. Equal Opportunity Employment Commission (EEOC) related to
the company's sick-leave policy,
size='3'>Bankruptcy Law360 reported yesterday.
The EEOC's claim corresponds to the monetary component in the
enforcement action the EEOC brought on behalf of a nationwide class
of
size='3'>Delphi
allegedly unlawful sick-leave policy. That lawsuit is lodged in the U.S.
District Court for the Western District of New York. When Delphi tried
to work out a deal to cap the EEOC’s Americans with Disabilities
Act claim, the commission wouldn't agree to a cap smaller than $15
million, according to
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=48505'>Read
more. (Registration required.)
w:st='on'>
name='8'>Texas
face='Times






New



Roman'
size='3'> Panel Refuses to Open Probe against
Asarco
The Texas Commission on
Environmental Quality denied an
w:st='on'>
size='3'>El Paso
face='Times New Roman'
size='3'>County
size='3'>prosecutor’s bid to launch an investigation of criminal
allegations against bankrupt Asarco LLC, which is taking steps to
restart operations at a defunct copper smelter in the city,
Bankruptcy Law360
reported yesterday. Concerned the reopened smelter would
emit severe levels of pollution,
w:st='on'>
size='3'>El Paso
face='Times New Roman'
size='3'>County
size='3'>attorney Jose R. Rodriguez urged the commission in October to
conduct a criminal enforcement review of the Tucson, Ariz.-based copper
producer for allegedly violating federal and state environmental and
health regulations. The commission’s decision now prevents any
local law enforcement agency from taking further criminal action against
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=48531'>Read
more. (Registration required.)
Allows Wellman to Tap $225 Million Chapter 11 Loan
Plastics manufacturer
Wellman Inc., which sought chapter 11 protection last week, has won
court approval to tap a $225 million bankruptcy loan to fund its
operations while it searches for a buyer for its assets, the Associated
Press reported yesterday. Bankruptcy Judge
size='3'>Stuart M. Bernstein on Wednesday gave
Wellman permission to borrow on the loan from its senior lenders, led by
Deutsche Bank AG, pending an April 1 final hearing on the financing.
According to court papers, Wellman will use the loan to fund its
operations during its chapter 11 case and to pay off about $127 million
the company owes Deutsche Bank and other senior lenders under an
existing revolving loan.
href='http://www.chron.com/disp/story.mpl/ap/fn/5579552.html'>Read
more.
name='10'>Wilbur Ross to Buy Stake in Bond Insurer
Fund manager Wilbur Ross,
who specializes in distressed sectors, will invest up to $1 billion in
bond insurer Assured Guaranty Ltd., the
size='3'>Wall Street Journal reported
today. The move,
announced today by Assured Guaranty, is a blow to industry leaders MBIA
Inc. and in particular Ambac Financial Group Inc., which had been seen
as a possible partner for Ross. The decision to go with Assured Guaranty
takes away for now one possible source of fresh capital for Ambac and a
potential vote of confidence in the embattled insurer's prospects. It
also means Ambac and MBIA -- already coping with the entry of Warren
Buffett's Berkshire Hathaway into the bond insurance business -- will
face a better capitalized competitor in Assured Guaranty as
well.
href='http://online.wsj.com/article_print/SB120428539586202835.html'>Read
more. (Registration required.)
International
name='11'>Credit-Default Swap Losses Hurt Swiss Re's Net
Income
Swiss Reinsurance Co.
today reported an 87 percent drop in fourth-quarter net profit, as
losses linked to the meltdown of the
w:st='on'>
size='3'>U.S.
size='3'>subprime mortgage market marred otherwise strong operational
results, the Wall Street
Journal reported today. The world's largest
reinsurer by premium volume, which warned of more subprime-linked
write-downs for the current quarter and said that the market will remain
tough this year, said net profit for the quarter fell to 170 million
Swiss francs ($161.9 million) from 1.3 billion francs a year earlier.
The fourth-quarter results were hurt by a 1.3 billion franc charge on
credit-default swaps, hedging instruments that were issued by Swiss Re
and were designed to protect an investor from falling bond prices. As
bond markets have worsened further since late last year, the company,
which is in the process of cleaning up its balance sheet, estimated
another mark-to-market loss of 240 million francs in the first
quarter.
href='http://online.wsj.com/article_print/SB120427655183302729.html'>Read
more. (Registration required.)
href='http://online.wsj.com/article_print/SB120427655183302729.html'>