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Ocwen Financial Corp. disclosed yesterday after the market closed that it had been threatened with a possible delisting by the New York Stock Exchange for failing to file its 2014 annual financial statement on time, and that it wasn’t certain when it would file the required statements, the Wall Street Journal reported today. Ocwen said that the principal reason it had missed deadlines to make the disclosures was because it needed more time “to analyze and review” an affiliated company that finances the purchase of mortgage-servicing rights for Ocwen. The company is looking into whether the company, Home Loan Servicing Solutions Ltd. (HLSS), has the “ability to continue to meet its obligations to fund new servicing advances.” Ocwen didn’t explain if the affiliate was facing financial or liquidity constraints, but it said that “a failure by HLSS to fund new servicing advances could have a material negative impact on the Company’s financial condition.”

The Supreme Court today will hear consolidated oral argument in the cases of Bank of America v. Caulkett and Bank of America v. Toledo-Cardona. The two cases, deal with a common scenario in the wake of the housing crisis, according to a SCOTUS Blog argument preview: a homeowner who files for chapter 7 bankruptcy has two mortgages, but the value of the house is less than the primary mortgage. Does the Bankruptcy Code allow courts to void the second mortgage, which is essentially worthless? The Supreme Court’s answer, according to the blog could hurt the bottom line of banks that have issued second mortgages or, alternatively, reduce the flexibility of debtors and banks holding first mortgages to work together to stave off foreclosures and keep the homeowners in their houses. Click here to read the full post.

For further information on the cases, including petitions and amicus briefs filed before the Supreme Court, be sure to visit ABI’s Newsroom.

Controversial real estate developer and restaurateur James McGown, known for bankrupting his way through the Big Apple, is offering 13 Brooklyn, N.Y., properties in a pre-foreclosure real estate auction set for March 27, Crain’s New York Business reported yesterday. Among those up for sale is 320 Court St., which currently houses McGown’s Buschenschank beer garden. Other properties included in the auction are Brooklyn’s 555 Union St. and 557 Union St., as well as 65 4th Ave., which is the site of McGown’s Cherry Tree Bar. McGown gained notoriety in 2010 for owning a basement condo in TriBeCa described by tabloids as a "sex cave." He has filed more than a half-dozen bankruptcy petitions in the past six years for businesses including South Brooklyn Pizza. The auction will be conducted by East River Mortgage Corp., a real estate entity owned by McGown that filed for bankruptcy protection in 2012.

The government sweep of profits from Fannie Mae and Freddie Mac was defended by the top Treasury Department housing official, who called again for Congress to replace the U.S.-owned mortgage-finance giants, Bloomberg News reported yesterday. Michael Stegman, a senior adviser at Treasury, used his speech yesterday at a Goldman Sachs housing-finance conference in New York to respond to shareholders who have sued to stop the sweep and called for the companies to be allowed to build capital and be freed from U.S. conservatorship. “Simply returning these entities to the way they were before is not practical nor is it a realistic consideration,” Stegman said. Concerns about whether Fannie Mae and Freddie Mac may need more taxpayer support have mounted as their profits and capital cushions have shrunk in recent quarters. Stegman said that taxpayers would face costs either by allowing them to recapitalize or with new draws from the Treasury. The companies, which have been under U.S. control since they were seized in 2008, got $187.5 billion in bailout funds before they became profitable again. The financial arrangement that allows the companies to draw on Treasury funds if they require capital is “necessary to protect financial stability and to ensure the continued flow of mortgage credit,” Stegman said.

RealtyTrac reported that owners of about 3.3 million U.S. homes face higher payments on home-equity lines of credit (Heloc) over the next four years as interest-only periods expire on loans originated during the bubble era, Bloomberg News reported yesterday. Those Heloc loans, worth a total of $158 billion, will begin requiring principal paydowns this year through 2018. Monthly bills will increase by an average of $146, raising the threat of defaults, especially for borrowers who have negative equity in their homes, the Irvine, California-based real estate information service said yesterday. About $88 billion of the resetting Heloc debt originated during the last decade’s housing bubble is backed by seriously underwater homes, where the owners owe more than 125 percent of the resale value and have less incentive to keep up payments, RealtyTrac said in its report. While resets in 2014 didn’t increase the default rate, the risk will rise this year and RealtyTrac predicts it will peak at 62 percent of resets in 2016.

The Federal Housing Finance Agency (FHFA) released a set of new rules for the sale of troubled mortgages by U.S.-owned Fannie Mae and Freddie Mac, Bloomberg News reported yesterday. FHFA, which oversees the government-sponsored enterprises, will require prospective investors to prove they’ve retained a loan servicer with a track record of handling delinquent debt, the agency said yesterday. Servicers also will have to offer aid to avoid foreclosures as a condition of sale. Fannie Mae and Freddie Mac are under orders from FHFA to reduce their holdings of delinquent loans. Freddie Mac has auctioned off more than $1 billion in deeply delinquent debt since July in two separate bulk sales. Fannie Mae hasn’t yet conducted any bulk auctions of defaulted mortgages. With the new requirements, “sales by Freddie Mac and Fannie Mae will result in more favorable outcomes for borrowers and local communities, while also reducing losses to the enterprises and, therefore, to taxpayers,” said FHFA Director Melvin L. Watt.

Bankrupt RadioShack Corp. spent an emergency loan on fees and other payments to favored lenders in what creditors said was a departure from a judge’s orders, Bloomberg News reported yesterday. The judge overseeing the bankruptcy approved RadioShack’s borrowing of $10 million on Feb. 10 to allow it to make essential payments. Instead, the company’s budget shows that it used $3.2 million for interest and fees to select lenders and almost $8.7 million for fees and retainers to advisers, a committee of creditors said in a court filing yesterday. The electronics retailer also intends to make unauthorized payments this month of around $38.4 million to lenders who agreed to advance money solely to pay their earlier loans, the committee said. RadioShack has been met with harsh criticism of its borrowing plan and a deal to sell its best stores to its biggest shareholder, Standard General LP, which arranged a large pre-bankruptcy loan. The creditors’ committee has now asked the judge to rewrite his temporary approval to clarify what he was authorizing.