Ginnie Mae is taking steps to curb repeated mortgage refinancings that it says are hurting both borrowers and investors, the Wall Street Journal reported. The government-backed firm, which promotes homeownership by guaranteeing government mortgage bonds, is considering barring some loans backed by the Department of Veterans Affairs from inclusion in its flagship bonds. Its proposal, to be released today, is aimed at stopping so-called “churning,” a practice in which lenders push borrowers to refinance their home loans over and over in a bid to boost fees to the lenders. Ginnie Mae has made churning a priority in recent years. It started taking action against individual lenders last year when their activity suggested they were pushing refis on borrowers, even when the borrowers wouldn’t benefit from it. Ginnie Mae’s backing of government mortgage bonds gives investors certainty they will be paid, which in turn allows lenders to make mortgages at lower rates, often to first-time home buyers and veterans. Its portfolio of outstanding bonds has ballooned in recent years and now makes up nearly a third of all agency-backed mortgage debt. That has put the firm in the position of having to more carefully police the actions of its lenders, many of which are independent firms, to preserve the flow of capital into the mortgage market. Now, Ginnie Mae is focusing on mortgages where a borrower pulls cash out of their home during a refinancing, resulting in a loan that is more than 90 percent of the value of the property. The firm is seeking input from investors and others before completing the policy.
McQuillen Place, a project vital to the continued rebirth of downtown Charles City, Iowa, has sought chapter 11 protection, the Cedar Valley Business Monthly reported. While the renovation could still be realized, it won’t be through local attorney Charles Thomson, whose LLC, McQuillen Place, filed for bankruptcy last week. Thomson, the developer behind the $8.6 million project on the corner of Main and Clark streets, lists 20 debtors to whom he owes money. At the top of the list is First Security Bank of Charles City, which claims McQuillen Place Co. LLC owes it $2.75 million as the primary financier of the project. Bankruptcy documents note the bank's claim is in dispute. Court documents state McQuillen Place Co. owes Floyd County $212,530 in real estate taxes dating back to September.
A bitter battle between McGuire Development Co. and a former partner has ended with the company taking over the site of a long-stalled $200 million development of retail and housing on the edge of the Buffalo Niagara Medical Campus, the Buffalo (N.Y.) News reported. McGuire on Friday seized control of the 11-acre Pilgrim Village, which is home to low-income townhouses, after developer Mark H. Trammell defaulted on more than $12 million in loans, company officials said. McGuire's takeover leaves the future of the apartments uncertain. For now, McGuire executives said, a non-profit company will continue managing the 66-unit property while McGuire decides how best to redevelop the site. With much of the Medical Campus built out in recent years, the Pilgrim Village reconstruction was one of a handful of projects still underway on and near the campus. The plan to construct a six-story building with apartments and shops aimed at graduate students, Medical Campus workers and low-income residents sought to capitalize on the neighborhood's rapid growth.
The head of a Sherman Oaks firm accused of bilking thousands of investors in a $1.3-billion Ponzi scheme was arrested Thursday along with two associates on federal criminal charges, the Los Angeles Times reported. Robert Shapiro, the owner of the Woodbridge Group of Cos., and two other company executives were accused of conspiracy to commit mail and wire fraud and other violations of federal law in an indictment unsealed in the Southern District of Florida. Shapiro, Dane R. Roseman and Ivan Acevedo were arrested in California and pleaded not guilty in federal court in Los Angeles. Roseman and Acevedo were released on bond, while Shapiro remained in custody. (Shapiro should not be confused with L.A. celebrity attorney Robert L. Shapiro.) Prosecutors said a Ponzi scheme was orchestrated from Woodbridge’s offices throughout the United States, including in Sherman Oaks, where it is headquartered, and in Boca Raton, Fla., where it was previously headquartered. High-pressure sales tactics were used to secure money for what were promised to be “low risk” and “conservative” investments, but in reality the funds were funneled to real estate owned by Shapiro, according to the U.S. attorney’s office.
Houston employees of L.K. Bennett, an upscale women’s fashion retailer that counts Pippa Middleton and singer Jennifer Nettles among its customers, found themselves locked out of their store earlier this month after the retailer failed to pay rent, WSJ Pro Bankruptcy reported. Fearing other landlords would follow suit, L.K. Bennett USA Inc. filed for chapter 11 last week and on Tuesday received permission from a U.S. bankruptcy court to start liquidating inventory at store-closing sales. The company faces pressure for a tighter liquidation time frame from lender Wells Fargo & Co. L.K. Bennett USA, a subsidiary of U.K.-based L.K. Bennett Ltd., made its debut in U.S. Bankruptcy Court in Wilmington, Del., after seeking protection from creditors. Its future is linked to its U.K. parent, which last month began similar proceedings overseas. L.K. Bennett USA said that it could close its 10 U.S. stores, as well as five stores-within-a-store in Bloomingdale’s, and stop selling online “unless and until there is interest expressed in the purchase of the debtor or its assets in connection with” the U.K. proceedings.
