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October
26, 2007
Mortgage
Lending
name='1'>Dissent Threatens Legislation Looking to Modify Home
Mortgages in Bankruptcy
Legislation looking to
allow bankruptcy judges to modify chapter 13 debtors’ home
mortgages is being threatened by dissent among Democrats and steep
opposition from Republicans,
size='3'>American Banker reported today. The
bill, H.R. 3609, that once seemed to be on the fast track for
consideration, is now being called upon by both parties to be examined
further as it may unnecessarily alter BAPCPA. H.R. 3609, sponsored by
Rep. Brad Miller, was pulled for consideration at a House Judiciary
Committee mark-up hearing on Wednesday and has now been scheduled for
another hearing before the House Judiciary Subcommittee on Commercial
and Administrative Law next Tuesday at noon.
href='http://www.abiworld.org/pdfs/Home_Mortgages.pdf'>Click here to
review
size='3'>ABI
home mortgage modification legislation.
name='2'>Federal Reserve Consumer Panel Urges Mortgage Lending
Changes
Members of the Federal
Reserve's consumer advisory panel urged the board yesterday to ban
prepayment penalties and other potentially abusive lending practices
that have come under fire amid the current housing crisis, Dow Jones
Newswires reported. Specifically, a large portion of the council said
the Fed should require lenders to make sure a borrower has the ability
to repay a mortgage loan over the life of the loan, not just at the
introductory interest rate. 'There has to be a point where you are
looking out at if these borrowers can sustain payment on their homes,'
said Patricia Hasson, president of Consumer Credit Counseling Service of
Delaware Valley Inc. Wachovia Corp.'s (WB) Mark Metz said any repayment
standard placed on lenders should be aimed at aligning the interests of
borrowers and lenders and not curtail available credit. Council members
also advocated the Fed take other steps, including requiring
lenders have borrowers - specifically those with subprime loans -
make escrow payments for property taxes and costs tied to buying a
house.
href='http://money.cnn.com/news/newsfeeds/articles/djf500/200710251109DOWJONESDJONLINE000917_FORTUNE5.htm'>Click
here to read more.
name='3'>Commentary: Few Heeded the Warnings of Coming Subprime
Crisis
Even though experts such
as former late Fed Reserve Governor Edward Gramlich forewarned of the
current subprime lending crisis the
w:st='on'>
size='3'>United States
size='3'>is now facing, little was done to heed to warnings as over half
the mortgage loans were made without any federal supervision, according
to a commentary in today’s
size='3'>New York Times. As late as 2003,
subprime loans accounted for only 8.5 percent of the value of mortgages
issued in this country. In 2005 and 2006, the peak years of the housing
bubble, subprime was 20 percent of the total — and the delinquency
rates on recent subprime loans are much higher than those on older
loans. A new report from Congress’s Joint Economic Committee
predicts that there will be two million foreclosures on subprime
mortgages by the end of next year. At the same time, investors who
bought assets backed by subprime loans are continuing to suffer severe
losses. Everything suggests that there will be many more stories like
that of Merrill Lynch, which has just announced an $8.4 billion
write-down because of bad loans — $3 billion more than it had
announced just a few weeks earlier. Unfortunately, assertions that
unregulated financial markets would take care of themselves have proved
as wrong as claims that deregulation would reduce electricity
prices.
href='http://www.nytimes.com/2007/10/26/opinion/26krugman.html?_r=1&oref=slogin&ref=opinion&pagewanted=print'>Read
more.
name='4'>American Home Sues Lehman Bros.
Bankrupt lender American Home
Mortgage Investment Corp. has sued Lehman Bros., accusing the investment
bank of hitting American Home with improper margin calls in July and
demanding money the company says it did not owe, the Associated Press
reported yesterday. When the Melville, N.Y.-based lender couldn't meet
Lehman's second margin call, for $7 million, Lehman foreclosed on $84
million worth of subordinated notes issued in American Home's
structured-finance operation. American Home is asking the court to order
Lehman to return the notes or pay damages for the allegedly improper
foreclosure. The company's suit against Lehman is the second this week
targeting former bankers for its Broadhollow and Melville
structured-finance vehicles. Earlier, the company sued Bank of America,
accusing it of defaulting on a duty to cover a $25 million shortfall in
the sale price of mortgages owned by the two units.
href='http://biz.yahoo.com/ap/071025/american_home_mortgage_bankruptcy.html?.v=1&printer=1'>Read
more.
name='5'>Mortgage Lenders Network Wins Exclusivity
Extension
Mortgage Lenders Network
USA Inc. has won a second extension of its exclusivity period for
submitting a reorganization plan as Bankruptcy Judge
face='Times New Roman' size='3'>Peter Walsh
size='3'>agreed Wednesday to push the deadline back another six
months, Bankruptcy
Law360 reported yesterday. Mortgage Lenders
Network's exclusive filing period is now set to expire on Jan. 2, while
its exclusive solicitation period will end on March 3. The lender filed
its extension request on Oct. 3, a day before the exclusivity period was
set to expire, arguing that an extension was justified because the
chapter 11 case involved complicated
size='3'>liquidations and litigations.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=38473'>Read
more. (Registration required.)
Denies Rosetta's Motion to Dismiss Calpine Complaint
Rosetta Resources Inc. said
yesterday that a bankruptcy court denied its motion to dismiss a
fraudulent transfer complaint filed against the oil and gas company by
former parent Calpine Corp., the Associated Press reported yesterday.
From the outset of Calpine's bankruptcy proceedings, Rosetta has
maintained that the transaction in which it received all of Calpine's
oil and gas business was fully vetted and approved by Calpine's board
and that the proceeds paid in the transaction represented a fair value
for the business. Rosetta said it will continue to 'vigorously' defend
itself against Calpine's claims.
href='http://biz.yahoo.com/ap/071025/rosetta_resources_lawsuit.html?.v=1'>Read
more.
Autos
name='7'>Judge Authorizes Valeo’s $4 Million Settlement with
Bankruptcy Judge
Robert Drain
size='3'>approved a settlement yesterday under which French auto parts
maker Valeo SA will pay Delphi Corp. $4 million to resolve a lawsuit
alleging that it sold defective parts, the Associated Press reported
yesterday. The company’s subsidiary, Delphi Automotive Systems
LLC, sued Valeo in
size='3'>Michigan state court in 2005,
alleging that some multifunctional electrical switches Valeo sold
size='3'>Delphi
size='3'>Delphi
auto-parts supplier to General Motors Corp., is trying to emerge from
bankruptcy by early 2008. As part of its reorganization, the Troy,
Mich.-based company has been settling litigation and restructuring
supply contracts with its big customers, such as GM. The company is
expected to file an amended reorganization plan on Monday.
href='http://www.clickondetroit.com/money/14423530/detail.html?rss=det&psp=news'>Read
more.
name='8'>Dana Wants $20 Million Trade Secrets Claim
Dismissed
Bankrupt auto parts maker
Dana Corp. objected to a $20 million claim filed by one of its
suppliers, alleging that the company's underlying claims — which
include allegations of trade secret theft — are lacking in
merit, Bankruptcy
Law360 reported yesterday. Dana argued that
the $20 million claim filed by one-time supplier Jasco Tools Inc.
results from Jasco's discontent over Dana's pre-petition business to
resource parts from Jasco to an alternative supplier when the contract
between Dana and Jasco expired. Jasco filed the claim based on a 1995
purchase agreement between the two companies under which Jasco provided
precision-machined casings to Dana for five years. In 1999, the
companies met to renegotiate the deal, although Dana also solicited bids
from several other companies. Based on a bidding process, Dana awarded
the contract to Nationwide
size='3'>Precision Products Corp., which prompted Jasco to bring a suit
alleging that Dana and Nationwide “participated in a scheme to
divert the business away from Jasco, as evinced by Nationwide's hiring
of two former Jasco employees.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=38462'>Read
more. (Registration required.)
name='9'>UAW Bargainers Now Turn to Ford
With the United Auto
Workers union on the verge of ratifying a new contract with Chrysler
LLC, bargaining now shifts to Ford Motor Co., the
w:st='on'>
size='3'>U.S.
maker with perhaps the greatest need for labor-cost reductions,
the Wall Street
Journal reported today.
face='Times New Roman' size='3'>Ford posted a net loss of $12.6 billion
in 2006, and its sales are off 13.3 percent in the first nine months of
this year amid a broader downturn in the market, driven by the housing
slump and rising gasoline prices. After a profit of $468 million in the
first half of 2007 -- much of that from one-time items such as the sale
of Aston Martin -- Ford is likely to post a loss in the third quarter.
It is unclear how far the UAW would be willing to go to help Ford
weather the storm. UAW President Ron Gettelfinger has said that Ford's
contract is likely to follow the pattern set by the agreements hammered
out with GM and Chrysler that shifted billions of dollars in retiree
health-care obligations off their books to union-run trusts, known as
voluntary employees' beneficiary associations (VEBAs).
href='http://online.wsj.com/article/SB119335775196272291.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='10'>Quigley Co. Bankruptcy Plan to Proceed
Judge
face='Times New Roman' size='3'>Stuart M. Bernstein
size='3'>said that the Quigley Co.'s disclosure statement to repay
creditors and asbestos claimants can move forward, dealing a blow to a
group of asbestos personal-injury claimants, the Associated Press
reported yesterday. Judge Bernstein said that while the plan raises
questions about the treatment of asbestos creditors, its disclosure
statement provides creditors with enough information to make an informed
decision on the plan. The disclosure statement 'does not describe a plan
that is unconfirmable as a matter of law,' Judge Bernstein said, denying
the asbestos group's argument that the plan has no hope of confirmation
and shouldn't be sent to creditors for a vote.
face='Times New Roman' size='3'>Quigley, a defunct company that once
made heat-resistant products containing asbestos, is trying to wrap up
its chapter 11 case with a plan that would compensate victims sickened
by its products through a trust funded by $650 million in contributions
from drug maker Pfizer Inc.
href='http://www.chron.com/disp/story.mpl/ap/fn/5246077.html'>Read
more.
name='11'>Congressman Proposes Overhaul of Taxes
House Ways and Means
Chairman Charles B. Rangel (D-N.Y.) yesterday unveiled a broad proposal
that includes repealing the alternative minimum tax as well as reducing
taxes on an estimated 91 million mostly lower- and middle-income
Americans while raising them for many in the upper income brackets,
the Washington
Post reported today.
face='Times New Roman' size='3'>Among the bill's most controversial
elements is a surtax of four percentage points on married couples with
adjusted gross income of more than $200,000 and 4.4 percentage points
for couples with more than $500,000 in income. The bill also targets the
managers of hedge funds and private-equity firms as executives' earnings
would be taxed at ordinary income tax rates, which are more than double
the capital gains rate they now pay. Hedge fund operators would also
lose their ability to defer income taxes through the use of offshore
havens. The plan would not change the amount of revenue collected,
according to the staff of the Joint Tax Committee, but it would alter
existing law to shift $1 trillion of the tax burden over 10 years.
Rangel's bill is unlikely to be voted on or even debated before next
year. Many Democratic leaders have endorsed components of the bill, but
Republicans have generally rejected it, and the debate is likely to
spill into the 2008 presidential campaign.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/10/25/AR2007102502487_pf.html'>Read
more.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/10/25/AR2007102502487_pf.html'>