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RadioShack Corp. is preparing for a bankruptcy filing and is in talks with Sprint Corp. to sell leases on some of its stores to the wireless carrier, Bloomberg News reported yesterday. The court restructuring would allow RadioShack to emerge with a leaner business after a migration of consumers to the Internet left it with 11 straight quarterly losses and depleted its cash. The company would file for bankruptcy protection as early as the first week of February. Under the developing plan, RadioShack would seek to complete a bankruptcy reorganization with 2,000 to 3,000 stores, compared with the more than 4,000 it has now. The company also has been reaching out to potential lenders for a loan that would finance its operations during court proceedings.

The U.S. Supreme Court yesterday ruled in favor of homeowners seeking to back out of mortgages when lenders are accused of failing to follow a federal “truth in lending” law, Reuters reported yesterday. On a 9-0 vote, the court handed a win to an Eagan, Minnesota couple, Larry and Cheryle Jesinoski, over the $611,000 loan they obtained in 2007 from Countrywide Home Loans Inc., now part of Bank of America Corp. On the technical question before the justices, the court said that homeowners need only write a letter to the lender, as the Jesinoskis did, and do not need to file a lawsuit in order to benefit from a provision of a federal law known as the Truth in Lending Act. The law allows consumers to rescind a mortgage for up to three years after it was made if the lender does not notify them of various details about the loan including finance charges and interest rates. The Jesinoskis filed their notice right before the end of the three-year period and filed a lawsuit a year later after the bank said it was disputing the claim. The language of the law "leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind," Justice Antonin Scalia wrote on behalf of the court.

The owner of a shopping center in Boynton Beach, Fla., filed for chapter 11 to halt a foreclosure lawsuit by a subsidiary of BBX Capital Corp. and then filed a lawsuit against its lender, the South Florida Business Journal reported today. BankAtlantic hit Grove Plaza D and owners Jack Lupo, Dale Goldstein, Brian Horowitz, Gary Axelrod and Michael Rauch with a foreclosure lawsuit in 2012. After the bank was sold, the loan was assigned to Florida Asset Resolution Group, owned by former bank parent company BBX Capital in Fort Lauderdale. The litigation concerns the 12,236-square-foot retail plaza on 1.2 acres. The interest-only mortgage was made for $2.7 million in 2008, but it has ballooned to over $5 million with the default interest rate.

A client note from Moody’s Investors Service says that foreclosure timelines for private-label residential mortgage-backed securities loans backed by properties in California and Nevada, two non-judicial foreclosure states, will remain lengthy over the next year until gradually starting to decline in early 2016, HousingWire.com reported yesterday. Analysts with Moody’s cited procedural scrutiny on foreclosures as a result of Homeowner Bill of Rights laws are extending the amount of time that properties are in foreclosure and that repeat foreclosure filings are keeping servicers occupied with legacy foreclosure issues. Analysts say that the lengthy timelines are credit negative for private-label RMBS because more than 21 percent of all properties backing seriously delinquent loans are in the two states — 19 percent in California and 2 percent in Nevada.

New York City rent stabilized tenants won a major victory when a federal appeals court ruled that their leases can’t be seized in bankruptcy and sold to pay off creditors, the New York Post reported today. The U.S. Court of Appeals for the Second Circuit on Thursday reversed a lower court decision that a rent-stabilized lease could be sold like any other household asset to satisfy debts. State law doesn’t specifically shield rent-stabilized leases from a forced sale in the event of bankruptcy, but the issue hasn’t really been tested in the courts until this case. “We hold that section 282 (2) of the Debtor and Creditor Law (DCL) exempts a debtor-tenant’s interest in a rent-stabilized lease,” the appeals court said in a statement.

The developer behind Forestdale Village on Cape Cod filed for chapter 11 protection last week, Boston Business Journal reported on Friday. Forestdale Village LLC listed assets of $3.8 million, consisting entirely of property, and liabilities of $4.76 million. The subdivision appears to consist of 148 lots. The developer's website suggests that it was aimed at potential residents age 55 or older, with a special emphasis on selling to veterans. The subdivision was approved under Chapter 40B, which lets developers sidestep local zoning if they building housing designated "affordable" in communities that fall short of state targets for such housing.

Detroit developer Herb Strather on Wednesday withdrew his auction bid for over 6,000 parcels of blighted Detroit land spread across the city, the Detroit Free Press reported yesterday. He and his Texas-based partner, Eco Solutions, offered $3.18 million for the bundle of properties last month in the Wayne County Treasurer's annual tax-foreclosure auction. But auction rules required the pair to submit a redevelopment plan for approval by Treasurer Raymond Wojtowicz for their bid to be accepted. Chief Deputy Treasurer David Szymanski said a major shortcoming of their plan was a proposal to have the city of Detroit use federal money to clean up the blight. The bill for such an effort could run into the tens of millions of dollars. "The whole idea here was whoever bought the bundle would have to demolish the properties at their expense," said Szymanski. "It doesn't make sense to make Detroit do the dirty work and then they get the cream of the crop" properties. Strather and the owner of Eco Solutions, John Page, will be refunded their 10 percent deposit on the properties — $315,800 — as well as their $25,000 auction registration deposit, the county said.

Sears Holdings Corp. said that it is considering forming a real-estate investment trust that would hold 200 to 300 of its stores, as the struggling retailer continues to pursue ways to shore up its balance sheet, the Wall Street Journal reported today. Through a sale-leaseback deal, the company would continue to operate in the store locations, but the real estate would be sold to a newly formed REIT and shareholders would be given rights to purchase shares or equity stakes. The retailer said it would book “substantial proceeds” from such a move. Sears has been hemorrhaging cash as it reported losses that have rattled its supplier base. The company has recently sought to raise cash as the holiday season approaches, including selling $625 million in debt to owners of the company’s stock and taking a $400 million short-term loan backed by 25 of the company’s properties.

A deal to acquire the stalled Chicago Spire project out of bankruptcy hasn't closed and may not, according to a lawyer for the project's longtime leader, leaving the future of the proposed high rise in doubt, Dow Jones Daily Bankruptcy Review reported today. Thomas Murphy, a lawyer for Irish developer Garrett Kelleher, said on Friday that new investor Atlas Apartment Holdings LLC hasn't yet met Friday's deadline to obtain the financing it needs to pay off the Spire's creditors and take over the project.

Melvin L. Watt, director of the Federal Housing Finance Agency, announced a program yesterday offering more reassurances to mortgage lenders that fear they could suffer unpredictable losses on the loans they sell to the government, the New York Times reported today. The move in large part is intended to reassure banks that have had to pay tens of billions of dollars to settle legal cases arising from the housing boom and bust and to buy back bad loans sold to Fannie and Freddie. To avoid having to make those payments again, many lenders now demand that borrowers meet stricter requirements for loans, known in the industry as overlays. Separately, Watt disclosed that efforts are underway to allow borrowers to receive government-backed loans with much smaller down payments than are now required.