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February 27,
2008
Mortgage
Lending
name='1'>Bush Vows to Veto Mortgage Modification
Bill
President Bush sided with
banks and mortgage lenders yesterday, threatening to veto a bill being
offered by Senate Democrats that would allow bankruptcy court judges to
modify the terms of a mortgage as part of the debt restructuring in
a bankruptcy filing, the
size='3'>New York Times reported today. The
White House said that the bill would “undermine existing
contracts” and lead to tighter credit. “These and other
provisions of the bankruptcy-related provisions in the bill would
fundamentally alter the expectations of parties to hundreds of thousands
of home purchases after the fact,” it said. It also objected to
provisions that would provide $4 billion for state and local governments
to redevelop abandoned homes and provide money for homeowner counseling
programs. Supporters of the legislation say it could prevent as many as
600,000 home foreclosures affecting people who took out tickler or other
complicated mortgages and now face steep increases in interest rates and
monthly payments. However, mortgage lenders, and the Wall Street firms
that purchased the loans, have mounted a campaign against the bill,
saying that it would send a chilling message to investors and lead to
higher borrowing costs in the future.
href='http://www.nytimes.com/2008/02/27/business/27housing.html?ref=business&pagewanted=print'>Read
more. (Registration required.)
name='2'>Commentary: Congress Should Act on Mortgage Modification
Legislation
Congress should pass
legislation that gives distressed homeowners the chance to modify their
mortgages under bankruptcy court protection before it even thinks of
asking taxpayers to pick up the tab for the mortgage mess, according to
a New York
Times editorial today. If the bankruptcy
provision becomes law, lenders will have a powerful incentive to modify
troubled loans voluntarily rather than running the risk that a
bankruptcy court would do the modifying for them. Lenders object that by
giving homeowners the right to modify their mortgages under court
supervision, the bankruptcy amendment would raise the cost of mortgages
for everyone. The legislation could bolster an idea proposed recently by
the Treasury Department’s Office of Thrift Supervision that if
lenders voluntarily agree to loan modifications, they would become
entitled to a share of the house’s appreciation, if any, when the
house is ultimately sold.
href='http://www.nytimes.com/2008/02/27/opinion/27wed1.html?ref=opinion&pagewanted=print'>Read
more.
In related news, a
commentary in today’s
size='3'>Wall Street Journal argued that
proposed corrections to the housing downturn will prevent the market
from finding a bottom and prevent owners and shoppers alike from having
confidence to judge what houses are worth. The commentary argues that
many homebuyers in the last two years were rank speculators, taking out
zero-down subprime loans, then walking away when the bet didn't pay off.
A careful study of recent
size='3'>Massachusetts foreclosures by
Federal Reserve Bank of
w:st='on'>
size='3'>Boston
suggests that the key factor wasn't an inability to pay, but an
unwillingness to pay once falling house prices made homeownership no
longer a winning speculation. The commentary also proposes that a better
use of taxpayer money in the current housing downturn would be to buy up
houses at foreclosure auctions and demolish them, especially in
neighborhoods likely never to recover.
href='http://online.wsj.com/article_print/SB120407264971695087.html'>Read
more. (Registration required.)
name='3'>Case Could Increase Class Action Suits over
Mortgages
A federal appeals court
is nearing a decision on a battle between Chevy Chase Bank and a
size='3'>Wisconsin
for the first time enable homeowners across the country to band together
in class-action lawsuits against mortgage firms and get their loans
canceled, the Washington
Post reported today. After a federal judge
in
size='3'>Milwaukee
the Wisconsin couple had been deceived and other borrowers could join
their suit, Chevy Chase Bank appealed to the circuit court in
size='3'>Chicago
Demet, the lawyer for the plaintiffs, said a decision by the appeals
court is imminent, though others involved in the case said it could be a
matter of weeks.The case is alarming Wall Street's biggest banks, which
could bear the hefty cost of reimbursing all mortgage interest, closing
costs and broker fees to groups of homeowners who uncover even minor
mistakes in their loan documents.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/02/26/AR2008022603351_pf.html'>Read
more.
name='4'>Small and Midsize
w:st='on'>
size='3'>U.S.
size='3'>Banks Beginning to Struggle in Credit
Crisis
The credit crisis is
tightening the screws on thousands of small to midsize banks across
the
face='Times New Roman' size='3'>United
States
local builders and businesses that depend on those lenders for
financing, the New York
Times reported today. Losses are mounting so
rapidly at some of these banks that a small number of them, perhaps 50
out of the 7,500 nationwide, could fail over the next 12 to 18 months,
analysts said. Some of the others are likely to shut branches or seek
out mergers as the weakening economy strains their
finances. Federal
regulators are particularly concerned about the exposure of smaller
banks to the commercial real estate market, which has begun to soften in
href='http://www.nytimes.com/2008/02/27/business/27bank.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='5'>Court Approves
size='3'>Sale of
w:st='on'>
size='3'>Delphi
Business
Bankruptcy Judge
Robert D. Drain
approved Delphi Corp.'s $447 million plan to sell its
global steering and half-shaft business to Steering Solutions Corp., an
affiliate of Platinum Equity LLC,
size='3'>Bankruptcy Law360 reported yesterday.
Earlier this month, more than 15
face='Times New Roman' size='3'>Delphi
size='3'>creditors filed objections to the sale. Most of the objections
addressed the way contracts and leases would be assigned in connection
with the sale and concerns about the amount of information in the sale
documents.
size='3'>Delphi
closing of the sale is targeted for March 31.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=48201'>Read
more. (Registration required.)
name='6'>W.R. Grace Plans $4 Million
w:st='on'>
size='3'>Sale
Contaminated Sites
Troubled industrial giant
W.R. Grace & Co. asked a federal bankruptcy court on Friday to let
it sell 10 contaminated plots of land for almost $4.4 million,
Bankruptcy Law360
reported yesterday. The contaminated plots, which range
in size from five to 180 acres, are located in
w:st='on'>
size='3'>Charleston
S.C.;
size='3'>Owensboro
w:st='on'>
size='3'>Ky.
Rico;
size='3'>Woburn
w:st='on'>
size='3'>Mass.
w:st='on'>
size='3'>Waterloo
w:st='on'>
size='3'>N.Y.
w:st='on'>
size='3'>Atlanta
w:st='on'>
size='3'>Memphis
w:st='on'>
size='3'>Tenn.
w:st='on'>Fort
Pierce
w:st='on'>Fla.
and
face='Times New Roman' size='3'>Joplin
size='3'>,
size='3'>Mo.
Md.-based W.R. Grace filed for chapter 11 in 2001 following a number of
asbestos-related lawsuits over its mining and manufacturing
operations.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=48246'>Read
more. (Registration required.)
Sea
Containers Wins Exclusivity Extension
The court overseeing Sea
Containers Ltd.'s bankruptcy proceedings granted the company’s
request for an extension to file its reorganization plan and seek
creditor approval of the plan,
size='3'>Bankruptcy Law360 reported yesterday.
Bankruptcy Judge Kevin
J. Carey signed off Monday on an order
granting Sea Containers' extension bid — its fifth in the case
— and extending the company’s exclusive filing and
solicitation rights through April 15 and June 16, respectively. Sea
Containers' exclusive filing rights were slated to expire on Feb. 20.
and its solicitation rights on April 19.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=48187'>Read
more. (Registration required.)
name='8'>Acting
w:st='on'>
size='3'>U.S.
size='3'>Trustee Appointed for Region 15
Tiffany L. Carroll has
been appointed Acting U.S. Trustee for the Southern District of
California and the Districts of Hawaii, Guam and the
w:st='on'>Northern Mariana
Islands
the Executive Office of the U.S. Trustees announced yesterday. Carroll
replaces U.S. Trustee Steven J. Katzman, who was
appointed in May 2003 and has resigned to return to private practice.
Carroll has served as Assistant U.S. Trustee heading the U.S. Trustee
Program’s
face='Times New Roman' size='3'>San Diego
office since October 2005. She joined the Program as a
trial attorney in the
w:st='on'>
size='3'>San Diego office
in 1991. Carroll received her law degree from Seattle University School
of Law in
size='3'>Tacoma,
w:st='on'>
size='3'>Wash.
degree from
size='3'>Pitzer
face='Times New Roman' size='3'>College
size='3'>in
face='Times New Roman' size='3'>Claremont
size='3'>,
size='3'>Calif.
size='3'>
Strikes Parts Maker for GM
The United Automobile
Workers union called its third strike in five months yesterday, sending
some 3,650 workers at parts factories in
w:st='on'>
size='3'>Michigan
size='3'>New York
job in opposition to proposed pay and benefit cuts, and to what it
called unfair labor practices, the
size='3'>New York Times reported today.
Analysts said that the strike, against American Axle and Manufacturing
Holdings, threatened to shut down some truck production at General
Motors, the supplier’s biggest customer and former parent company.
GM officials said that there were no immediate disruptions, and both
companies had stockpiled some parts in preparation for a work halt,
though it was reported to be only a few days’ worth.
The UAW’s president, Ron
Gettelfinger, who led the union in brief strikes against GM and Chrysler
last fall, accused American Axle of failing to provide enough
information for the union to evaluate the proposed cuts.
href='http://www.nytimes.com/2008/02/27/business/27axle.html?ref=business&pagewanted=print'>Read
more.
name='10'>Delta Says Northwest Talks Hit Snags
In a sign that merger
talks with Northwest Airlines Corp. have stalled, top executives of
Delta Air Lines Inc. issued a memo to employees saying that no
'potential transaction meets all our principles,' the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The memo comes as executives at the two
airlines wait for their pilots to reach an accord among themselves on
seniority -- an accord needed before a merger can move forward. In its
memo, issued yesterday, Delta said that seniority for all its employees
is one priority it would consider in any merger. Delta also cited other
priorities, such as keeping its
w:st='on'>
size='3'>Atlanta
size='3'>headquarters. It added the airline will continue to focus on
its 'stand-alone plan' until all 'these conditions are met.'
href='http://online.wsj.com/article_print/SB120406150345694519.html'>Read
more. (Registration required.)
href='http://online.wsj.com/article_print/SB120406150345694519.html'>