href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
May 9, 2008
House Passes Mortgage Aid Bill Despite
Veto Threat
The House of Representatives yesterday approved an ambitious plan to
rescue hundreds of thousands of homeowners at risk of foreclosure by
helping them trade exotic loans with rapidly rising monthly payments for
more affordable mortgages backed by the federal government, the
Washington Post reported today. Bucking a White House veto
threat, 39 Republicans joined Democrats in supporting the bill, the
centerpiece of a broader housing package that represents Washington's
most aggressive response to the nation's housing crisis. H.R. 3221,
sponsored by House Financial Services Chairman Barney Frank (D-Mass.),
aims to unfreeze mortgage markets by expanding the Federal Housing
Administration's reach and strengthening mortgage giants Fannie Mae and
Freddie Mac. It also would create a $7,500 tax credit for first-time
home buyers to try to boost sales and slow plummeting home
prices.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/08/AR2008050803482.html'>Read
more.
New Century Pushes for Approval of
Reorganization Plan
Though the chapter 11 reorganization plan of New Century TRS Holding
Corp. has come under fire from several parties in the lender's
bankruptcy, the company continues to push for approval, Bankruptcy
Law360 reported yesterday. The company and its unsecured creditors'
committee said in post-hearing brief on Wednesday that the plan does not
inflate the claims of certain creditors. New Century's post-hearing
brief comes in response to an objection filed at the end of April in
which the ad hoc committee of beneficiaries of New Century's pension
plan urged the court to deny confirmation of the lender's March 18
liquidation plan because it threatened to disperse the funds held in
trust for the exclusive benefit of employees.
href='http://bankruptcy.law360.com/secure/printview.aspx?id=55612'>Read
more. (Registration required.)
Fed, FTC Propose New Rules on
Poor-Credit Notices
The Federal Reserve and the Federal Trade Commission proposed new rules
yesterday that would require lenders to tell consumers when they are
being offered less favorable terms based on poorer credit scores,
Reuters reported. The rules would require a 'risk-based pricing' notice
to consumers when they receive more expensive credit terms than those
offered to individuals with better credit histories. Credit card issuers
would be required to provide risk-based pricing notices to any customers
who receive a higher annual percentage rate than the lowest rate that
the firm is granting its best-qualified customers, according to the
proposal. The rules contain some exceptions, including an option for
lenders, in lieu of providing risk-based pricing notices, to provide
credit scores to all of their customers along with explanatory
information.
href='http://www.reuters.com/articlePrint?articleId=USN0837547820080508'>Read
more.
GM to Pay Up to $200 Million to Help
End Axle Strike
General Motors Corp., the biggest U.S. automaker, agreed to
provide as much as $200 million to help American Axle &
Manufacturing Holdings Inc. end a two-month strike that has idled all or
part of 33 GM plants, Bloomberg News reported yesterday. The aid will be
used for costs such as early retirements and buyouts of union workers at
the supplier, GM said yesterday in a U.S. regulatory filing. The United
Auto Workers walkout at American Axle, GM's largest axle supplier, cut
the automaker's production by 230,000 vehicles through April and cost
$800 million in the first quarter, GM said. The strike began Feb.
26.
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=a73gmOpN_pCE'>Read
more.
Many Wireless Resellers Going
Under
Many resellers of cellphone service - which lease the networks of
national carriers - are closing, going bankrupt or struggling, USA
Today reported today. The latest casualty is Sonopia, which helped
clubs and organizations set up their own mobile services, which is
shutting down. Earlier this year, Hispanic-focused Movida Communications
and high-end boutique Voce filed for chapter 11. While Voce shut down,
Movida was quickly purchased by Paul Greene, CEO of gear provider APC
Wireless. In the past 18 months, ESPN Mobile, Disney Mobile and
youth-targeted Amp'd Mobile have all shut down. All told, about 10
wireless resellers have closed shop, leaving about 55, says consultant
Alex Besen of the Besen Group.
href='http://www.usatoday.com/money/industries/telecom/2008-05-05-wireless-resellers-cellphone_N.htm?csp=34'>Read
more.
Sirva's Chapter 11 Plan
Approved
Relocation company Sirva Inc. said Wednesday that Bankruptcy Judge
James Peck approved its chapter 11 plan and that it
expects to emerge from bankruptcy protection soon, Bankruptcy
Law360 reported yesterday. Sirva, which owns Allied Van Lines,
submitted the amended reorganization plan for approval to Judge Peck on
April 30. The amended plan resulted from a deal with its unsecured
creditors' committee, which had objected to the plan Sirva filed in
February. Under the plan, Class 5 creditors, which hold general
unsecured claims, would receive 25 percent of their allowed amounts. The
initial plan would have provided such claimants with no
recovery.
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=55649'>Read
more. (Registration required.)
Demand Growing for Corporate
Loans
With the economy struggling, analysts say that some corporations are
starting to tap so-called revolving lines of credit and other forms of
backstop financing that could lead to banks being forcing them to raise
money to cover the loans, the New York Times reported today.
Collectively, banks have pledged to lend companies more than $1
trillion. And because most of those loans have not been made yet, and
many perhaps never will be, the banks have not accounted for them on
their balance sheets. Some companies, such as Univision, Porsche, CIT
Group and Sprint Nextel, have already tapped lines of credit in recent
months. A growing number of companies might soon follow suit, analysts
say.
href='http://www.nytimes.com/2008/05/09/business/09loan.html?ref=business&pagewanted=print'>Read
more.
Federal Reserve Auctions $28.77
Billion in Treasury Securities to Ease Credit Problems
The Federal Reserve yesterday auctioned $28.77 billion in safe Treasury
securities to big investment firms, part of an ongoing effort to ease
credit problems, the Associated Press reported. In exchange for the
28-day loan of Treasury securities, bidding firms can put up more risky
investments, including risky mortgage-backed securities and bonds backed
by federally guaranteed student loans, as collateral. Bidders'
identities are not made public. To help shore up the shaky student loan
market, the Fed agreed last week to let financial institutions put up
bonds backed by federally guaranteed student loans as collateral.
Yesterday's auction was the first where that option was available.
Spreading credit problems have forced more than 60 lenders to stop
making federally guaranteed student loans, either temporarily or
permanently.
href='http://news.yahoo.com/s/ap/20080508/ap_on_go_ca_st_pe/fed_credit_crisis_3'>Read
more.
Vegas Development Headed for
Foreclosure
Developer Ian Bruce Eichner's Cosmopolitan Resort Casino
located on the Las Vegas Strip got caught last year in the
capital-markets crisis and is headed toward foreclosure, the Wall Street
Journal reported yesterday. Deutsche Bank AG has sunk nearly $1 billion
into the project, and two other lenders have provided $175 million. The
willingness of lenders to give such developers more money helped fuel
the commercial real estate boom that started in 2003 and reached its
zenith in early 2007. Some of those lenders now face the potential for
loan losses.
href='http://online.wsj.com/article_print/SB121029701281679533.html'>Read
more. (Read more.)