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June 25, 2008
Housing
Senate Close to Approving Bill to
Help U.S. Homeowners
The Senate is poised to approve a huge package of housing legislation,
including a refinancing program aimed at rescuing hundreds of thousands
of homeowners in danger of foreclosure and the most sweeping government
overhaul of mortgage financing since the New Deal, the New York
Times reported today. The Senate package would allow distressed
borrowers and their lenders to stem losses by allowing qualified owners
to refinance into more affordable, 30-year fixed-rate loans with a
federal guarantee. The legislation would also provide benefits for
first-time buyers, who would receive a refundable tax credit of up to
$8,000, or 10 percent of the value of a home, on purchases of unoccupied
housing. As part of a regulatory overhaul of Fannie Mae and Freddie Mac,
the mortgage finance giants, the bill would permanently increase to
$625,000, from $417,000, the limit on loans they can purchase from
lenders in expensive housing markets, making it easier for borrowers to
obtain mortgages at discounted rates. Senate Majority Leader Harry Reid
(D-Nev.) has threatened to keep the Senate in session, if
needed, through the Fourth of July holiday to finish the housing
measure. Despite a presidential veto threat, a crucial procedural vote
on the package received overwhelming bipartisan support yesterdy
morning, clearing 83 to 9.
href='http://www.nytimes.com/2008/06/25/washington/25housing.html?_r=1&adxnnl=1&oref=slogin&ref=business&adxnnlx=1214395896-Jo4ghSdAqtp00rnrVpWIhQ&pagewanted=print'>Read
more.
In related news, an amendment to the Senate housing bill would
require members of Congress to disclose residential mortgages on their
financial disclosure reports, CongressDaily reported yesterday.
'This amendment would close an unwarranted loophole,' said Senate Ethics
Committee ranking member John Cornyn (R-Texas). Ethics Committee
Chairwoman Barbara Boxer (D-Calif.), who joined Cornyn in offering the
amendment, said that it 'will help make our disclosure rules stronger.'
The measure comes on the heels of reports that Senate Banking Chairman
Christopher Dodd (D-Conn.) and Senate Budget Chairman Kent Conrad
(D-N.D.) received below-market VIP mortgage rates.
Illinois Plans to Sue Countrywide,
CEO
The Illinois attorney general's office, which began an investigation
into the business practices of Countrywide Financial Corp. last fall,
says that it has found enough evidence of wrongdoing and that it
plans to file a civil suit against the mortgage lender and its CEO
Angelo Mozilo, the Wall Street Journal reported today. In a
draft of the complaint, Illinois alleges that the company engaged in
'unfair and deceptive practices' in the sale of mortgage loans. The
78-page document says that the company loosened its underwriting
standards, structured loans with 'risky features' and engaged in
'marketing and sales techniques' that incentivized employees and
mortgage brokers to push loans whether or not homeowners had the ability
to repay them. Illinois Attorney General Lisa Madigan is also asking
that her office be given 90 days to review any loans that are currently
in foreclosure or that are moving toward foreclosure.
href='http://online.wsj.com/article_print/SB121436097291702365.html'>Read
more. (Registration required.)
Federal Government, States Probe
Real Estate Loan Broker
The FBI and securities regulators in California and Pennsylvania are
probing a Philadelphia-based loan broker over allegations that more than
100 prospective borrowers lost millions of dollars through a practice in
which the firm collected upfront fees for real estate development but
didn't find any funding, the Wall Street Journal reported
today. Authorities say they are trying to determine whether Remington
Financial Group Inc. and a related firm, BlueStone Real Estate Capital,
accepted fees without seriously trying to obtain financing for clients.
California's Department of Corporations is investigating Remington and
BlueStone, and also is looking into LandBridge Equity LLC, a
land-investment company based in Washington, D.C. Remington is named as
a defendant in six civil lawsuits filed in California's Superior Court
that allege the company conducted an 'advance fee scheme' by collecting
nonrefundable fees from would-be borrowers with 'no intention of
providing the financing.' The company has denied the plaintiffs'
allegations.
href='http://online.wsj.com/article_print/SB121435406779501815.html'>Read
more. (Registration required.)
Tough Market Pushes Caruso Homes
into Chapter 11
Homebuilder Caruso Homes Inc. filed for chapter 11 protection on Monday,
blaming the nation's ailing housing market and defaulting mortgages for
its mounting debt, Bankruptcy Law360 reported yesterday. In its
chapter 11 petition, filed in the U.S. Bankruptcy Court for the District
of Maryland, the company estimated its assets at less than $100 million
and liabilities at more than $100 million. Caruso's largest creditors
include 84 Lumber, L&L Carpet Discount Inc., Dunn's Floor Covering
Inc. and Maryland Foundations Inc. according to the company's bankruptcy
filing. No individual creditor's claim is estimated at more than
$500,000.
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=60158'>Read
more. (Registration required.)
U.S. Trustee Objects to Sharper Image
Incentive Plan
Acting U.S. Trustee Roberta DeAngelis objected to
Sharper Image Corp.'s proposed employee incentive plan, calling it a
disguised retention plan that pays certain employees of “officer
status,” Bankruptcy Law360 reported yesterday. The chain
store's proposal to the court includes a payment of $250,000 to a single
company executive - CFO Rebecca Roedell - as compensation for
supervising the second wave of store closures as part of Sharper Image's
wind-down. DeAngelis said that the amounts proposed to be paid to
Roedell and certain others were unreasonable. The plan was not a
necessary cost of preserving the company's estate and is embedded with
provisions that afford Sharper Image “excessive discretion,”
she said.
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=60176'>Read
more. (Registration required.)
Chrysler Taps $2 Billion Line of
Credit
Chrysler LLC tapped a $2 billion credit line from its owners, Cerberus
Capital Management LP and Daimler AG, to bolster the auto maker's
liquidity amid a painful downturn in U.S. sales that is stretching its
resources, the Wall Street Journal reported today. The drawing
of the $2 billion loan was required as part of the agreement Cerberus
and Daimler signed when Cerberus bought its stake a year ago, said a
Chrysler spokeswoman. Daimler will provide $1.5 billion, with the rest
coming from Cerberus. The loan is due in 2014.
href='http://online.wsj.com/article_print/SB121433273392900583.html'>Read
more. (Registration required.)
Delta, Northwest Pilots Reach
Tentative Pact
Negotiators for the unions representing pilots at Delta Air Lines Inc.
and Northwest Airlines Corp. agreed yesterday to a tentative joint
contract covering all 11,000 aviators, the Wall Street Journal reported
today. The negotiators also agreed on a method for integrating the
groups onto a single seniority list by the time the planned
Delta-Northwest merger closes, Delta said. Leaders of the two unions,
both branches of the Air Line Pilots Association, are meeting this week
to vote on the tentative accord. If they approve it, the deal will go
out for membership votes. The two airlines, ranked number three and
number five in the nation by traffic, respectively, hope to complete the
href='http://online.wsj.com/article/SB121433918183600897.html?mod=us_business_whats_news'>Read
more. (Registration required.)
Suruga Files for Bankruptcy
Protection in Japan
Suruga Corp., a Japanese developer of condominiums, filed for bankruptcy
protection at the Tokyo District Court after accumulating debt of about
62 billion yen ($576 million), Bloomberg News reported yesterday.
Suruga's 21 billion yen of unsecured senior public offered- corporate
bonds are in default. It is first time since September 2001, when Mycal
Corp. defaulted, that public offered-debt has been in default.
href='http://www.bloomberg.com/apps/news?pid=20601080&sid=aJNmqDi2YpIc'>Read
more.