April 292008

 

Mortgage
Lending

name='1'>Senate Panel to Examine Foreclosure

Practices

The Senate Judiciary
Committee’s Subcommittee on

Administrative Oversight and the Courts is planning a hearing next week
to investigate whether mortgage lenders

are abusing the bankruptcy court system and deepening the foreclosure
crisis by levying dubious fees on troubled

borrowers or moving to seize their homes improperly, the

face='Times








&

#13;




&

amp;amp;amp;#13;
New







Roman'

size='3'>New York

Times reported today. Subcommittee Chair
Charles E. Schumer (D-N.Y.) said that he hoped

the hearing on May 6 would lead to legislation intended to protect
borrowers from abusive practices. A number of

bankruptcy judges and officials representing the Office of the U.S.
Trustees are concerned with excessive fees

imposed on homeowners and actions taken to seize the homes of borrowers
who are not delinquent on loans. The

subcommittee will interview Clifford J. White III, director of the
Executive Office for U.S. Trustees, and

Katherine M. Porter, an associate professor of law
at

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

face='Times New Roman'
size='3'>University
size='3'>and author of a

comprehensive study on lenders’ practices in bankruptcy.
Porter’s analysis of 1,733 foreclosures in

2006 found that questionable fees were added to borrowers’ bills
in almost half the loans. 

href='http://www.nytimes.com/2008/04/29/business/29bankrupt.html?ref=business&pagewanted=print'>Read

more.

In related news, the
Senate Interstate Commerce, Trade and Tourism

Subcommittee today will consider the history and current status of
subprime mortgage lending and non-traditional

mortgage loans executed by nonbank financial companies. The hearing will

also consider the Federal Trade

Commission’s authority and use of its authority to protect
consumers from unfair or deceptive lending

practices by non-bank entities and examine ways to improve consumer
protections in subprime and nontraditional

home lending. The hearing will take place at 10:30 a.m. ET in Room 253
of the

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

size='3'>Office

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

size='3'>. 

href='http://commerce.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=d131b86b-e28e-42cf-b

0a0-b9dada215e3f'>Click here to view the witness
list.

name='2'>Bank of

w:st='on'>

size='3'>America
size='3'>Vows More Help for Countrywide Mortgage

Debtors

Bank of America said it will
expand efforts to help Countrywide

Financial borrowers avoid foreclosure on troubled mortgages, the
Associated Press reported today. The

announcement came as members of the Federal Reserve Board convened two
days of public hearings on Bank of

America’s proposed $4.1 billion stock deal for Countrywide, based
in Calabasas, Calif. Liam E. McGee,

president of Bank of America’s global consumer and small-business
banking operation, said that the bank

would modify at least $40 billion in problem loans from at least 265,000

borrowers over the next two

years.

href='http://www.nytimes.com/2008/04/29/business/29lend.html?ref=business&pagewanted=print'>Read

more.

name='3'>Commentary: Quick Work Needed on Housing

Relief Package

The housing relief
package being pushed by House Financial

Services Chairman Barney Frank (D-Mass.) is too much carrot and too
little stick as it would guarantee troubled

loans that are refinanced by lenders, provided that the lenders reduce
mortgage balances to an amount equal to 85

percent of the property’s current value, according to a
New

York Times editorial today. Participation by
lenders would be voluntary. If they or

other parties to the loan — like mortgage investors — did
not want to reduce the loan balances, they

could continue with foreclosures. Congress could fix that big flaw by
finally allowing bankrupt borrowers to have

their mortgages modified under court protection. Lenders would have a
real incentive to participate in the

bill’s rescue plan if they knew that borrowers had the option of
going to court, where a judge could change

the terms of a mortgage. 

href='http://www.nytimes.com/2008/04/29/opinion/29tue3.html?ref=opinion&pagewanted=print'>Read

more.

name='4'>Federal Regulators Look to Tighten Policies on

Credit Card Issuers

The Federal Reserve and
two other regulators plan to propose

strict policies on credit card issuers after criticism that card
companies charge too many hidden fees and

unfairly raise interest rates on borrowers, the
face='Times New Roman' size='3'>Wall Street

Journal reported today. The agencies, which
include the Office of Thrift Supervision

and the National Credit Union Administration, would propose labeling
several credit card and banking practices as

'unfair or deceptive.' The Fed has scheduled a public meeting on Friday
to issue the plan. The proposal is

expected to include curbs on the fees depositors are charged when they
overdraw their bank account. One part of

the proposal would restrict the ability of lenders to raise interest
rates on existing credit card balances.

Another part of the plan would create restrictions on how lenders apply
payments borrowers make on their credit

cards. 

href='http://online.wsj.com/article_print/SB120943768642151847.html'>Read

more. (Registration required.)

face='Times New Roman' size='3'>

name='5'>Delphi

size='3'> Looks

to Extend DIP Financing

Delphi Corp. is looking
to secure and win approval of $4.1 billion

in debtor-in-possession (DIP) financing that would last until the
company emerges from chapter 11 protection or

until the end of 2008, Bankruptcy
Law360 reported yesterday.

In a filing Thursday with the U.S. Securities and Exchange Commission,
the auto parts maker said that it hoped to

obtain a refinancing package that would include a $1 billion first
priority revolving credit facility, a $600

million first priority term loan and an approximate $2.5 billion second
priority term loan. A hearing on the

motion is scheduled for Wednesday. The struggling company met with banks

last week regarding the financing, the

SEC filing said. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=54499'>Read

more.

(Registration required.)

Judge

Approves Auction for Diamond Glass

Inc.

Bankruptcy Judge

face='Times New Roman'
size='3'>Christopher
Sontchi approved bidding

procedures Thursday for bankrupt automotive glass and repair service
company Diamond Glass Inc. to sell

substantially all of its assets at an auction on June 5,

face='Times New Roman'

size='3'>Bankruptcy Law360 reported yesterday.

An affiliate of Guggenheim Corporate

Funding LLC, which is providing Diamond Glass with a $7

million credit facility, will be the stalking horse bidder at the
auction. Judge Sontchi approved bidding

procedures for the June auction and gave Diamond Glass permission to
reimburse Guggenheim up to $500,000 for its

expenses associated with the sale. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=54473'>Read

more. (Registration

required.)

name='7'>NYRA's Chapter 11 Plan

Confirmed

Bankruptcy Judge

size='3'>James M. Peck yesterday confirmed the

New York Racing Association Inc.’s

reorganization plan, putting the bankrupt racing franchise one step
closer to emergence from chapter 11,

Bankruptcy Law360
reported. However, it

remains to be seen whether NYRA will be able to emerge from bankruptcy
any time soon, since the plan relies on

the passage of additional legislation by
w:st='on'>New York
size='3'>’s state government. In February, the

governor signed into law a 25-year extension of the NYRA's franchise to
operate thoroughbred racing in the state.

NYRA and state lawmakers agreed that, if its franchise were extended,
the company would not have to pay real

estate taxes in the future. NYRA’s plan cannot become effective
unless that provision is also

passed. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=54425'>Read

more. (Registration required.)

Verso

Technologies Files for

Bankruptcy

Verso Technologies Inc. filed
for chapter 11 protection on Friday in the

U.S. Bankruptcy Court for the Northern District of Georgia, Reuters
reported. The company said in a statement

yesterday that it expects to file a plan of liquidation for its assets
and subsidiaries with the court. Verso

said last week it had received a going concern qualification from its
independent auditors.

name='9'>United Restarts Talks with US

Airways

After seeing its latest
prospect slip away on Sunday with the

decision of Continental Airlines to end merger talks, United restarted
discussions with US Airways about a

possible deal, the New
York Times

size='3'>reported today. The two airlines talked during the last few
months, but the negotiations took a back

seat so that United could explore a deal with Continental. A deal now
between United and US Airways is far from

certain, however.
size='3'>Analysts said yesterday that US

Airways was less attractive to United than Continental, whose hubs
in

face='Times New Roman' size='3'>Houston
size='3'>and

face='Times New Roman' size='3'>Newark
size='3'>would have complemented United’s

operations in
face='Times New








&

#10;







&

amp;amp;#13;




&#

10;




&#1

0;



&

amp;#10;



Rom

an' size='3'>Chicago. By
contrast, United and US Airways both have

extensive service to
w:st='on'>

size='3'>Washington,
w:st='on'>

size='3'>D.C., and might
have to cut flights there.

href='http://www.nytimes.com/2008/04/29/business/29air.html?_r=1&oref=slogin&ref=business&pagewanted=

print'>Read more.

name='10'>Fed's Bailout of Bear Stearns Questioned by

Ex-Staffer

A former top staffer at
the Federal Reserve said that the central

bank’s rescue of Bear Stearns Cos. will come to be seen as its
'worst policy mistake in a generation,'

the Wall Street
Journal reported today.

Until mid-2007, Reinhart was director of monetary affairs at the Fed and

secretary of its policy-making panel,

the most senior position on the Fed's Washington, D.C.-based staff.
Reinhart said that the Fed's move may have

been justified if the alternative was a chain-reaction run on many other

investment banks. However, he said that

other options were not pursued, such as taking a 'tougher line' with
J.P. Morgan, seeking other suitors, removing

certain assets from Bear's portfolio or quickly implementing its
previously announced offer to temporarily swap

Treasury securities for dealers' less-liquid assets. 

href='http://online.wsj.com/article_print/SB120941300416350473.html'>Read

more. (Registration

required.)

name='11'>Mortgage Broker Sues Lenders in Privacy

Breach

LendingTree, an online
mortgage broker that claims to have more

than 20 million customers, had a privacy breach that exposed personal
data such as income and job information on

an undisclosed number of users, the Washington Post reported
today. The private company notified

customers by letter last week that 'several former employees may have
helped a handful of mortgage lenders gain

access to LendingTree's customer information by sharing confidential
passwords with the lenders.' The company

filed suit last week against five
face='Times New Roman' size='3'>Southern

California home loan lenders, alleging

that they improperly gained access to

customers' data, according to court records and a copy of the letter
posted on LendingTree's Web site. The

company also filed suit against two former executives in

face='Times New Roman' size='3'>North
Carolina, claiming that
they

shared the passwords with the lenders.

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/04/28/AR2008042802613_pf.html'>Read

more.

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/04/28/AR2008042802613_pf.html'>