February 252008

 

Mortgage
Lending

name='1'>Congress to Examine Housing

Proposals

Congress is set to examine a
housing stimulus package that includes such

proposals as a change to the Bankruptcy Code for struggling homeowners,
shielding banks from lawsuits and

providing government assistance to homeowners facing foreclosure, the
Associated Press reported yesterday.

Lawmakers also plan this week to question several high-profile mortgage
and banking executives about industrywide

losses and lavish executive-compensation packages. A bill likely to be
debated on the Senate floor Tuesday, S.

2636, includes a proposed revision to the Bankruptcy Code that would
allow judges to cut interest rates and

reduce what's owed on troubled borrowers' mortgages. Also included in
the Senate legislation is a measure

mandating $200 million for foreclosure-prevention counseling services
and an allowance for states to issue more

tax-exempt bonds so that housing agencies could help homeowners
refinance high-cost mortgages. In the House,

lawmakers are considering whether the federal government should shield
banks from lawsuits brought by investors

whose holdings of mortgage securities are negatively affected by changes

in loan terms or other measures intended

to help at-risk borrowers. The plan was first put forward by Rep. Mike
Castle (R-Del.) but appears to have

attracted support from key House Democrats. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/02/24/AR2008022400838_pf.html'>Read

more.

name='2'>Lenders Pulling Back Home Equity

Loans

In an attempt to grapple
with the mortgage crisis that began

unfolding last year, several of the nation's largest lenders are
shutting off access to home equity lines in

areas where home values are declining, the

size='3'>Washington

Post reported on Saturday. Countrywide
Financial, the nation's largest mortgage lender,

suspended the home equity lines of 122,000 customers last month after
reviewing their property values and

outstanding loan balances. USAA Federal Savings Bank froze or reduced
credit lines for 15,000 of its customers,

including Corazzi, and the company said that it will not reconsider its
decisions until 'real estate values

improve substantially.” Bank of America is starting to do the same

and is contacting some borrowers to work

with them on the payments. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/02/22/AR2008022202987_pf.html'>Read

more.

name='3'>Study: Subprime Litigation Likely to

Surpass S&L Lawsuits

A recently released study

reported that the number of lawsuits

filed in federal courts in the wake of the subprime mortgage crisis is
on track to outpace the litigation

stemming from the savings and loan scandal of the early 1990s,

size='3'>Bankruptcy Law360 reported on Friday.

A tally of subprime-related cases done

by Navigant Consulting Inc. already adds up to half of the total 559
actions filed in the wake of the S&L

scandal. The number of subprime-related cases filed in second half of
2007 was nearly double the number of cases

filed in the first six months of the year. The study identified 278
total cases filed in 2007, with 181 cases

filed in the second half of 2007, compared to 97 filed in the first
half. Ninety percent of those cases were

still active at the end of 2007. The study breaks down the total number
of cases filed into five major

categories: borrower class actions, securities cases, commercial
contract disputes, employment class actions and

bankrutpcy-related cases. Borrower class actions were the dominant type
filed in 2007, comprising 43 percent of

the total, according to the study. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=47835'>Read

more. (Registration

required.)

name='4'>Court Approves First Magnus' Liquidation

Plan

The court overseeing
First Magnus Financial Corp.'s chapter 11

proceedings approved the bankrupt mortgage lender's liquidation plan and

rejected a bid to have the case

converted to a chapter 7 liquidation, Bankruptcy

Law360 reported on Friday. Bankruptcy
Judge

size='3'>James M. Marlar signed off on a
memorandum decision confirming the Tucson,

Ariz.-based mortgage company's second amended plan and denying a motion
from creditor WNS North America Inc. to

convert the case to a chapter 7 liquidation. Under the plan, First
Magnus' management would be replaced by an

advisory board, made up of impartial representatives from the unsecured
creditors' class and charged with

overseeing the operation of two trusts. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=47743'>Read

more. (Registration

required.)

name='5'>Asarco Asks for Approval of Settlements over

Mining Sites

Asarco LLC has asked the
court overseeing its chapter 11 to

approve two settlement agreements that would resolve claims from
Washington
size='3'>state,

w:st='on'>
size='3'>Montana and the

U.S. Environmental Protection Agency in exchange for more than $46
million in allowed general unsecured

claims, Bankruptcy
Law360 reported on

Friday. The settlement would resolve their dispute with Asarco over a
mine site covering about 15 square miles in

the Lewis and
size='3'>Clark

face='Times New Roman' size='3'>National Forest
in

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

size='3'>. The state filed a proof of claim in the

Asarco bankruptcy case for past and

future response costs connected to the site. The EPA didn't file a
claim, but said it expects to incur

response costs at the site and could seek to file a late proof of claim.

Asarco also filed a motion seeking

approval of the deal with the state of

face='Times New Roman'

size='3'>Washington and the

w:st='on'>
size='3'>Port of

size='3'>Everett

size='3'>, where Asarco operated a smelter in the early 1900s. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=47928'>Read

more. (Registration

required.)

name='6'>Radnor Files Amended Liquidation

Plan

Radnor Holdings has
submitted an amended liquidation plan in its

chapter 11 case that aims to fulfill a $28 million secured claim held by

Tennenbaum Capital Partners LLC,

Bankruptcy Law360
reported on Friday. The foam

cup manufacturer filed its liquidation plan in the U.S. Bankruptcy Court

for the District of Delaware on

Thursday, outlining that the secured lender would receive Radnor’s

equity interests in Wincup Re LLC and

all the proceeds of the liquidation of its other assets. Radnor said
that as long as TCP’s claims and other

secured and assumed liabilities claims are paid in full, each holder of
unsecured claims stand to receive a

pro rata share of the distribution amount. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=47900'>Read

more. (Registration

required.)

name='7'>Interstate Bakeries Seeks Approval to Reject

Some Labor Pacts

Interstate Bakeries Corp.

is trying to end several labor contracts

with its union workers as it gears up to seek approval of its plan to
exit bankruptcy protection next month, Dow

Jones' Daily Bankruptcy
Review reported

today. In documents filed Thursday with the U.S. Bankruptcy Court
in

w:st='on'>Kansas
City, the

wholesale baker sought approval to reject its collective bargaining
agreements with two units of a union that

voted down a new labor contract with the company. That union, the
Bakery, Confectionery, Tobacco Workers and

Grain Millers International Union, represents more than a third of the
company’s 24,000 workers. The

company, which needs to modify its labor agreements as a condition of
its reorganization plan and bankruptcy-exit

financing, is also seeking to alter eight collective bargaining
agreements that cover a total of 259 workers to

end the company’s obligation to contribute to the American Bakers
Association Retirement Plan. Interstate

Bakeries is slated to seek bankruptcy-court approval of its
reorganization plan on March 12, but first needs to

reach new labor contracts. (Subscription required.)

name='8'>Restaurant Chain Operator Receives Approval of

Chapter 11 Financing

Bankruptcy Judge

size='3'>Mary F. Walrath on Friday gave final
approval for Buffets Inc. to tap $285

million in bankruptcy financing after the company reduced the size of
the loan package to resolve objections from

creditors, the Associated Press reported on Friday.
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filed for bankruptcy protection last month,

is the
face='Times New Roman'

size='3'>U.S.
size='3'>retail sector's biggest casualty so far of

the economic slowdown that prompted consumers to cut spending. The
company, which operates casual dining

restaurants, had been losing customers to cheaper fast-food restaurants,

according to analysts. The company,

based in
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an' size='3'>Eagan,
w:st='on'>

size='3'>Minn., owed banks

$634 million when it filed for chapter

11 protection. Under the deal Judge Walrath approved Friday, $200
million of the existing bank loans will be

rolled up into the bankruptcy financing. 

href='http://www.chron.com/disp/story.mpl/ap/fn/5562887.html'>Read
more.

name='9'>Struggling Bond Insurer Moves Closer to

Raising Capital

Bond insurer Ambac
Financial Group Inc. inched closer over the

weekend to an agreement with a consortium of banks on plans to
restructure the company and raise roughly $3

billion of capital, the Wall Street
Journal reported today.

MBIA, the biggest bond insurer, which has guaranteed $679 billion of
debt, recently raised about $2.6 billion in

capital to buttress its top-notch rating. Moody's, S&P and Fitch
Ratings have placed MBIA's triple-A rating

on watch for possible downgrade; a move to negative outlook would be
considered by debt investors as an

improvement in MBIA's health. For Ambac policyholders, the most
contentious issue has been a potential

restructuring, which could effectively split Ambac's low-risk
municipal-bond business from its riskier

structured-finance business. Ambac, the second-biggest insurer of bonds,

guarantees the principal and interest

payments on more than $550 billion in debt. 

href='http://online.wsj.com/article_print/SB120390107241589455.html'>Read

more. (Registration

required.)

International

name='10'>German Bank Blames UBS for Subprime

Hit

HSH Nordbank AG said that

Swiss bank UBS AG sold it $500 million

in securities tied to U.S. subprime mortgages that have since soured, in

the latest case of a midtier German

lender to be singed by the slump in the U.S. mortgage market, the

size='3'>Wall Street Journal reported today.
HSH, which specializes in shipping

finance, joins a growing number of investors around the world, including

municipalities in the United

States and
w:st='on'>
size='3'>Australia
size='3'>, that fault

the banks that packaged and sold the investments. HSH said yesterday
that UBS had sold it investments tied to

debt pools known as collateralized debt obligations and that those
investments had incurred significant losses.

HSH, based in
size='3'>Hamburg

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

size='3'>Kiel, that it was
considering legal action. 

href='http://online.wsj.com/article_print/SB120390129420789457.html'>Read

more. (Registration

required.)

href='http://online.wsj.com/article_print/SB120390129420789457.html'>