Residential Capital LLC struck a deal with Financial Guaranty Insurance Co. to cut the bond insurer's $5.55 billion claim to $596.5 million, Dow Jones Daily Bankruptcy Review reported today. The settlement filed on Friday brings ResCap, once the fifth-largest mortgage servicer in the country, a step closer to the end of its chapter 11 case, but still requires bankruptcy court approval.
Lehman Brothers' trustee James Giddens said that an initial round of distributions began Friday that should result in institutional customers getting all their money back, Reuters reported on Friday. A settlement announced earlier this year between the brokerage, Lehman's defunct parent company and its European affiliate will provide for full payments for hedge funds, corporate affiliates, counterparties and other customers, Giddens said. Corporate entities with customer claims against Lehman's U.S. broker-dealer have been waiting nearly five years for their money, as Giddens, the trustee tapped to administer the broker's estate, has worked to determine exactly how much money was available to pay them back. The linchpin to quantifying the estate's assets was a deal announced in February under which Giddens allowed Lehman's parent company to assert a $2.3 billion customer claim against the brokerage, and allowed a $9 billion customer claim to Lehman's European unit.
Bank of America Corp.’s $8.5 billion mortgage-bond settlement is “outstanding” for investors, said a Pacific Investment Management Co. executive, who defended the deal against opposition, Bloomberg News reported yesterday. The settlement was reached after an investor group that included Pimco and BlackRock Inc. at first demanded $12 billion, eventually coming down to a “take it or leave it” offer of $8.5 billion, Kent Smith, an executive vice president at Newport Beach, Calif.-based Pimco who helped negotiate the agreement, testified on Thursday. Smith was the first witness to testify in a trial over the agreement, which is being considered by Justice Barbara Kapnick in New York State Supreme Court in Manhattan. The accord resolves claims from Countrywide Financial mortgage-bond investors over loans bundled into securities. American International Group Inc. is fighting the settlement, saying that Bank of America isn’t paying enough to compensate investors.
Bank of America Corp.’s $8.5 billion mortgage-bond settlement is “outstanding” for investors, said a Pacific Investment Management Co. (Pimco) executive, who defended the deal against opposition, Bloomberg News reported today. The settlement was reached after an investor group that included Pimco and BlackRock Inc. at first demanded $12 billion, eventually coming down to a “take it or leave it” offer of $8.5 billion, Kent Smith, an executive vice president at Pimco who helped negotiate the agreement, testified yesterday. Smith was the first witness to testify in a trial over the agreement, which is being considered by Justice Barbara Kapnick of New York State Supreme Court in Manhattan. The accord resolves claims from Countrywide Financial mortgage-bond investors over loans bundled into securities. American International Group Inc. is fighting the settlement, saying that Bank of America isn’t paying enough to compensate investors.
The National Fair Housing Alliance announced yesterday that Wells Fargo has agreed to spend at least $42 million to settle allegations that it neglected the maintenance and marketing of foreclosed homes in black and Latino neighborhoods across the country, the Washington Post reported today. A year-long investigation by the advocacy group found that homes serviced by Wells Fargo in minority communities were far more likely than those in white areas to be left in disrepair, with broken windows, unkempt yards or water damage. These homes were also less likely to have for-sale signs than ones in predominantly white neighborhoods. Under the agreement, Wells Fargo, which did not admit any wrongdoing, will provide $27 million to nonprofit groups to promote homeownership, neighborhood stabilization and property rehabilitation in minority communities in 19 metropolitan areas. It will also provide $11.5 million to the Department of Housing and Urban Development to help 25 other cities.
McGraw Hill Financial Inc. and its Standard & Poor’s unit won a bid to move to federal court in New York lawsuits filed by 14 states accusing the businesses of inflating mortgage-backed securities ratings, Bloomberg News reported yesterday. The U.S. Judicial Panel on Multidistrict Litigation yesterday granted the companies’ request, concluding that consolidation of the cases for pre-trial proceedings such as the disclosure of evidence was the most efficient way to proceed. “S&P has its principal place of business in this district and the witnesses and evidence relating to the states’ claims may be found there,” the six-judge panel said in its order. “New York is also where some of the alleged misconduct occurred.” Almost all of the state lawsuits faced by New York-based McGraw Hill and S&P were filed in February and timed to coincide with the U.S. Justice Department’s filing of a lawsuit in Santa Ana, Calif., that raised similar allegations. The 15 cases moved to federal court in New York yesterday include one filed by the District of Columbia.
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MF Global Inc.’s former customers should get 94 cents on the dollar as disputes including a lawsuit against directors and officers delay the potential for full recovery, the failed brokerage’s trustee said, Bloomberg News reported yesterday. Most customers have already recovered 89 percent of what they were owed, trustee James Giddens said in a report covering his progress from Dec. 5 to June 4 in overseeing the brokerage’s wind-down. Giddens sees the potential for 94 cents following the completion of settlements with MF Global’s U.K. unit and JPMorgan Chase & Co., according to the report filed in bankruptcy court yesterday.
Collapsed brokerage MF Global Holdings Ltd. on Tuesday effectively ended its bankruptcy, saying that court-appointed trustee Louis Freeh will step down and hand the estate's remaining wind-down duties to a new three-member board, Reuters reported yesterday. The commodities broker, led by former New Jersey Gov. Jon Corzine, filed for chapter 11 protection in 2011 after investors were spooked by its exposure to $6.3 billion in European sovereign debt. The company's liquidation plan put together by Freeh, a former FBI director, and MF Global's creditors, was approved by bankruptcy Judge Martin Glenn in April, and the plan went into effect yesterday. The plan could not go into effect until certain conditions were met or waived, one of which was that the estate had enough cash to pay its claims, according to court papers filed in February. A new board, consisting of Daniel Ehrmann, Nader Tavakoli and Richard Katz, will finish liquidating MF Global's assets.
Mortgage lender Residential Capital LLC is seeking bankruptcy court approval to pay back more than $1.1 billion it owes to parent Ally Financial and to send another $800 million to bondholders, Dow Jones Daily Bankruptcy Review reported today. Lawyers for ResCap said in a court filing on Monday that by paying down its entire debt to its parent plus a portion of the $2.1 billion in principal it owes to bondholders now, the mortgage lender can eliminate millions of dollars in future interest payments. Interest payments to bondholders alone could reach $20 million a month and that cash, ResCap said, could instead go to its other creditors.
