September 182007

 

Mortgage
Lending

name='1'>House Set to Vote on FHA Mortgage Legislation
Today

The House is set to vote today
on a bill that would allow the Federal Housing Administration, which
insures mortgages for low- and middle-income borrowers, to back
refinanced loans for tens of thousands of borrowers who are delinquent
on payments because their mortgages are resetting to sharply higher
rates from low initial ''teaser'' levels, the Associated Press reported
today. The White House wants to expand the mandate of the Depression-era

FHA, part of the Department of Housing and Urban Development, to allow
it to insure loans of delinquent borrowers that are refinanced to lower
rates. However, the administration objects to a plan by Financial
Services Committee Chairman Rep. Barney Frank (D-Mass.) to raise the
limit on the size of mortgages FHA can insure to $500,000 in high-cost
areas of the country from the current $362,000, to be added to 

href='http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1852rh.txt.pdf'>H.R.

1852, which is being put to a vote today. The measure is
Congress' first legislative response to the mortgage-market tumult of
the summer. 

href='http://www.nytimes.com/aponline/us/AP-Congress-Mortgages.html?pagewanted=print'>Read

more.

name='2'>Bush Administration and House Chairman Renew Push for
Legislation to Overhaul GSEs

The Bush administration
and House Financial Services Chairman Barney Frank (D-Mass.) are
renewing their push for passage of a bill to revamp Fannie Mae and
Freddie Mac, both fearing that a few provisions affecting
government-sponsored enterprises might clear this Congress this year as
lawmakers race to correct problems in the mortgage market,
CongressDaily
size='3'>reported today. The two are advocating passage for different
reasons: The administration prefers provisions in a House-passed bill
that would give a new regulator the ability to restrict the
government-sponsored enterprises' combined $1.5 trillion portfolio based

on safety and soundness in the wake of accounting scandals at both.
Meanwhile, Frank wants passage because the House bill will siphon more
than $2.2 billion from the two's portfolios over the next five years to
an affordable housing fund, with first-year funds going to parts of the
Gulf Coast region affected by Hurricane Katrina. The two fear that the
Senate will address only a few provisions as it begins its work for the
fall.  The Senate Banking Committee is still
negotiating its bill, and Banking Chairman Chris Dodd (D-Conn.) has
instead decided to mark up legislation Wednesday to overhaul the Federal

Housing Administration mortgage insurance program.

name='3'>Judge Approves $23 Million New Century Loan
w:st='on'>
w:st='on'>Sale

Bankruptcy Judge
Kevin J. Carey

size='3'>approved an asset purchase agreement that will allow New
Century Financial Corp. to sell more than 200 loans to

w:st='on'>
size='3'>California
size='3'>mortgage company Residential Mortgage Solution LLC,
Bankruptcy Law360
reported yesterday.

size='3'>Under the agreement, RMS will pay New Century $23.33 million
for 214 loans with unpaid balances totaling almost $45 million. RMS will

also take over servicing of the purchased loans. New Century’s
current servicer, Carrington Mortgage Services LLC, will have 30 days to

transfer servicing of the loans to RMS, the agreement said. New Century
sold its loan servicing business to Carrington Capital Management LLC
for $184 million in May. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=35075'>Read

more. (Registration required.)

name='4'>SouthStar Stay Lifted for More
Foreclosures

Bankruptcy Judge
Paul Bonapfel
size='3'>lifted the automatic stay in SouthStar Funding LLC’s
chapter 7 liquidation so that US Bank NA and Countrywide Home Loans Inc.

can foreclose on a handful of delinquent borrowers’
properties, Bankruptcy
Law360 reported yesterday. Both lenders, which

were secured creditors of SouthStar, owned second notes and deeds to
secure debt on the properties at issue, and filed their motions for a
stay lift last month.  Other parties in
SouthStar's bankruptcy proceedings have recently made and been granted
similar bids. Atlanta-based SouthStar, whose business includes offering
subprime mortgages, faces liquidation after seeking chapter 7 protection

in April. The company announced it would cease its mortgage lending
operations shortly before filing for bankruptcy, listing assets and
debts both in excess of $100 million. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=35066'>Read

more. (Registration required.)

name='5'>Paulson Cautions Against Rush to Regulation in Credit
Crisis

U.S. Treasury
Secretary Henry M. Paulson Jr. said yesterday that turmoil in the
world’s financial markets could continue for some time, but
cautioned against the hasty introduction of regulations that could
stymie innovation and slow economic growth, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Paulson, who met with French President Nicolas
Sarkozy and
w:st='on'>
size='3'>France
size='3'>’s finance minister, Christine Lagarde, said that
financial turbulence in the wake of the credit crisis this summer
“will be with us for a while,” particularly in markets
linked to subprime mortgages. He also warned that imposing new
regulations could be counterproductive at a time when the global economy

remains robust. “The whole world and the
w:st='on'>
size='3'>U.S.
size='3'>have benefited from innovative financing techniques and
innovation in terms of securitization and credit availability, and so we

need to think this through carefully and don’t rush to judgment
and overreact,” Paulson said. 

href='http://www.nytimes.com/2007/09/18/business/worldbusiness/18paulson.html?ref=business&pagewanted=print'>Read

more.

name='6'>Commentary: Debt Market Looks to Fed to Restore
Confidence

As the Federal
Reserve’s policy-making board meets today, the commercial paper
market, which has recently started to loosen, will be a factor that Fed
governors will consider as they decide on a rate cut, the
New York Times

size='3'>reported today. Investors assume that the central bank will
reduce the overnight federal funds rate by at least a quarter of a
percentage point to 5 percent. Some traders have been asking for a rate
cut of half a percentage point, saying that it would help ease credit
and give stocks a lift. But it could raise fears of inflation and
suggest that the Fed was more worried about the economy than previously
thought. This week, four major brokerage firms — Bear Stearns,
Goldman Sachs, Lehman Brothers and Morgan Stanley — will report
third-quarter earnings, the first since the credit market turmoil began.

And the chief financial officer of Bank of America, Joe L. Price, said
yesterday that the turbulence would have a “meaningful
impact” on third-quarter earnings, following on the heels of a
profit warning from Merrill Lynch last week. 

href='http://www.nytimes.com/2007/09/18/business/18bank.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read

more.

Ford
Could Step Up Cost-Cutting if Economy Puts Goals at Risk

The head of Ford Motor
Co.'s North and South American operations said that the company could
accelerate cost cutting if a slowing
w:st='on'>
size='3'>U.S.
size='3'>economy puts the auto maker at risk of missing key financial
goals in 2008 and 2009, the
size='3'>Wall Street Journal reported today.
'There's more risk than there is opportunity going forward' for
the
face='Times New Roman'
size='3'>U.S.
size='3'>auto market amid uncertainty about the housing market and job
growth, said Ford Executive Vice President Mark Fields. 
Fields said recent weak job numbers and the turmoil in
the debt and home mortgage markets have led Ford to hold down
fourth-quarter production to avoid building excess inventory. If it
appeared that the company could miss key goals such as cutting operating

costs by $5 billion by next year or regaining profitability in North
America by 2009, 'we'll adjust the plan accordingly,' Fields said. He
said that the company's North American turnaround is currently on track
to meet the 2008 cost-cutting target and 2009 profitability
goal. 

href='http://online.wsj.com/article/SB119009072707730916.html?mod=hpp_us_whats_news'>Read

more. (Registration required.)

Bush
Picks Ex-Judge for Attorney General

Former federal judge
Michael Mukasey was tapped by President Bush yesterday to take over as
attorney general and lead a Justice Department, the Associated Press
reported yesterday. Mukasey, the former chief

w:st='on'>
size='3'>U.S. district judge
in the

size='3'>Manhattan
size='3'>courthouse just blocks from ground zero, will likely face a
relatively smooth confirmation by a Democratic-led Senate that has
demanded new Justice Department leadership for months. He replaces
Alberto Gonzales, a Texan who announced his departure three weeks ago
amid investigations that began with the firing of U.S.
attorneys. Appointed to the bench in 1987 by President Reagan,
Mukasey also worked for four years as a trial prosecutor in the U.S.
Attorney's Office in New York's southern district - one of the Justice
Department's busiest and highest-profile offices in the country. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2007/09/17/AR2007091700199_pf.html'>Read

more.

Bally

Total Fitness Expects to Emerge from Bankruptcy this
Month

Bally Total Fitness
Holding Corp. said yesterday that the U.S. Bankruptcy Court for the
Southern District of New York has approved the Chicago fitness chain's
amended prepackaged chapter 11 reorganization plan and expects to emerge

from bankruptcy by the end of September, the Chicago Tribune reported
today. The court-approved package makes use of an investment from
shareholders led by Harbinger Capital Partners to expedite its exit from

bankruptcy, and it will make Harbinger the company's owner. Under that
plan, the
size='3'>New York private-equity
concern agreed to invest a total of $223.6 million in Bally, and in
exchange will receive all the equity interest in the
w:st='on'>

size='3'>Chicago
size='3'>company. 

href='http://www.chicagotribune.com/business/chi-070917-bally-bankruptcy,0,3289871,print.story'>Read

more.

w:st='on'>
name='10'>U.S.
face='Times New Roman' size='3'> Attorney Fights Dana over
Superfund Claims

U.S. Attorney Michael
Garcia filed a motion with the U.S. District Court for the Southern
District of New York on Friday urging the judge to reject Dana’s
bid to establish procedures for the estimation of claims of the U.S.
Environmental Protection Agency, the National Oceanic and Atmospheric
Administration of the Department of Commerce and others,

face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The move comes barely a week after Garcia
first asked Bankruptcy Judge
size='3'>Burton Lifland to adjourn an upcoming

hearing and grant the DOJ a two-week extension to respond to Dana's
motion over liabilities that could exceed $300 million. The U.S.
Attorney had previously argued that the government couldn't analyze the
dispute sufficiently to respond to Dana's Sept. 5 estimation procedures
motion under the existing schedule. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=35103'>Read

more. (Registration required.)

w:st='on'>
name='11'>U.S.
face='Times New Roman' size='3'> Trustee Looks to Chapter

7 Conversion for Rowe Cos.

Though Rowe Cos.’
disclosure statement has been approved, U.S. Trustee
face='Times New Roman' size='3'>W. Clarkson McDow Jr
size='3'>. wants to convert the proceedings from chapter 11 to chapter 7

because he contends that the company has failed to live up to its
obligations under chapter 11,
size='3'>Bankruptcy Law360 reported yesterday.

The Rowe Cos. has not filed operating business reports for the last
three months, and it has not paid its U.S. Trustee fees for the first
and second quarters of this year, McDow said. McDow also said that a
possible explanation for the debtors’ preference for a chapter 11
was based on the mention of a $120,000 “new stock payment”
with which he had earlier taken issue and which was absent from the
now-approved statement put forth Wednesday. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=35064'>Read

more. (Registration required.)

name='12'>Pacific Lumber to File Bankruptcy Plan

Pacific Lumber Co. said
yesterday that it will file its chapter 11 plan by the end of September
to comply with the ruling of a judge who declined to give the company a
deadline extension, the Associated Press reported yesterday. The company

plans to submit a plan by Sept. 30, the new deadline set by the U.S.
Bankruptcy Court in Corpus Christi, Texas. Pacific Lumber, which is
based in
face='Times New Roman' size='3'>Scotia
size='3'>,
size='3'>Calif., wanted to

extend the deadline for filing to Oct. 18, but Bankruptcy Judge
Richard Schmidt
on Friday declined that request, setting the month's-end
deadline and scheduling a hearing for Oct. 2. Creditors of Pacific
Lumber and affiliate Scotia Pacific clamored for the court to end the
exclusive period, arguing that the two companies were about to run out
of cash. 

href='http://biz.yahoo.com/ap/070917/pacific_lumber_bankruptcy.html?.v=1'>Read

more.

name='13'>Sentinel Bankruptcy Lists $2 Billion in
Assets

Sentinel Management Group

Inc., the
size='3'>Northbrook, Ill.-based cash
management firm that filed for chapter 11 last month only days after
freezing client withdrawals, has about $2 billion in assets, the
Chicago Tribune
reported yesterday. The debtor's property consists of
$333.9 million in checking, savings or other financial accounts, as well

as $506 in cash on hand. Most of the money is at Bank of New York. The
filing shows creditors holding secured claims of $2.06 billion,
including $928.2 million to Fimat
w:st='on'>
size='3'>USA and $312.2
million to bank of
w:st='on'>New
York. The largest
unsecured claim is $361.4 million from Discus Master Limited, a French
hedge fund. Companies with unsecured claims include Chicago-based Kottke

Associates, with $50 million;

w:st='on'>
size='3'>Lake
face='Times New Roman'
size='3'>Shore, with
more than $60 million; and Alaron, with $3.3 million. 

href='http://www.chicagotribune.com/business/chi-070917-sentinel,0,3021541.story?track=rss'>Read

more.

name='14'>Aspen Executive Air Files for Bankruptcy
Protection

Aspen Executive Air, a
private jet-service provider, filed for chapter protection on Friday,
the Rocky Mountain
News reported yesterday. The closely held
company, based in

size='3'>Aspen, listed debts and assets

of less than $100 million in chapter 11 documents filed Sept. 14 in U.S.

Bankruptcy Court in
w:st='on'>
size='3'>Wilmington,
w:st='on'>
size='3'>Del. 

The three biggest creditors are JLT Aircraft Holding Co.,

owed $19.8 million; Walker Aircraft LLC, owed $11.2 million; and Flight
Safety International Inc., owed $300,847. The 25 largest unsecured
creditors are owed $32.4 million. 

href='http://www.rockymountainnews.com/drmn/airlines/article/0,2777,DRMN_23912_5700249,00.html'>Read

more.

name='15'>TROUBLED COMPANIES IN THE NEWS
 
The business news
articles below are taken from the U.S. Business Journal’s Daily
Summary of Troubled & Fast Growing U.S. Companies which is published

by Bastien Financial Publications.  
 
ABI Members receive a 50% discount off of our regular subscription rate

of $500 when subscribing to the complete Daily Summary.

To subscribe email
steve@creditnews.com
href='mailto:steve@creditnews.com'>
color='#0000ff' size='3'><mailto:steve@creditnews.com>
or call 800-407-9044—use ABI

Code 37
 
Collectors Universe
Inc., a
Santa Ana, Ca. firm which provides authentication services for baseball
cards, coins and other collectibles, reported a fourth quarter net loss
$840,000, on a slight revenue increase–to $10.7 million.  For

the year, the firm lost $520,000, on a 10% revenue increase–to
$40.5 million.

Isonics
Corp., a
Golden, Co. firm which creates products from isotopes for medical
research and security purposes, reported a first quarter net loss of $3
million, on a 14% revenue decline–to $5.9 million.

KeyBank
size='3'>, Cleveland, Oh., announced plans to close its help-desk and
call-center operations in
w:st='on'>
size='3'>Dayton

size='3'>, Oh., affecting nearly 200 employees. Volume at the location
had declined by as much as 7% annually in recent years. The job cuts
will occur within the next eight months.

Lattice Semiconductor
Corp.’s stock price sank more than 13%
recently after the

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

size='3'>, Or. designer and seller of programmable logic chips warned
that revenue in its third quarter will fall below earlier expectations.
 The company is now looking at revenue of about $59.2 million, down

from nearly $63 million in last year’s third quarter. Lattice
cited dropping sales of its older products and weakness in
September’s sales. The firm added that it hopes to save up to $1.6

million per quarter because of a workforce downsizing that will result
in an extra charge of between $1.8 million and $3 million.

Plug Power
Inc., a
Latham, N.Y. firm provider of power-generation systems for residential
and commercial sites, reported a second quarter net loss of $17 million,

on a 45% revenue increase–to $4 million.

Value Line
Inc., a New York-based provider of
publications for the investment industry, reported its first quarter net

declined 5%–to $5.9 million, on a 3% revenue decline–to
$20.8 million.