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1250 Oceanside Partners Files for Bankruptcy Protection

Submitted by webadmin on Mon, 2013-03-11 00:00

1250 Oceanside Partners and two affiliates, owners of more than 1,800 acres of land on the Island of Hawaii, filed for bankruptcy to restructure more than $500 million in debt, Bloomberg News reported yesterday. Oceanside listed assets of more than $10 million in chapter 11 documents filed on Wednesday. Affiliates Front Nine LLC and Pacific Star Co. also sought court protection. Developer Lyle Anderson controlled the three companies until 2008, when Bank of Scotland LLC declared a default on about $1 billion in debt and exercised its right to replace the directors, including Anderson. The debt was secured by projects in New Mexico, Arizona and Hawaii. Sun Kona Finance I LLC acquired the portion secured by Hawaiian assets in December. The total balance due on that debt was about $625.2 million, according to court papers.

ABI Tags

Business Reorganization

Court Administration

First-day Motions

Practice and Procedure

Real Estate

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Monday, March 11, 2013 - 12:00

Fannie-Freddie in Venture to Securitize Home Loans

Submitted by webadmin on Tue, 2013-03-05 00:00

Fannie Mae and Freddie Mac will form a new joint company for securitizing home loans as a steppingstone toward reducing government involvement in the mortgage market, the regulator of the government-controlled companies said yesterday, Reuters reported. "The overarching goal is to create something of value that could either be sold or used by policy makers as a foundational element of the mortgage market of the future," said Edward DeMarco, who is the acting director of the Federal Housing Finance Agency. Fannie Mae and Freddie Mac, which were bailed out by the government in 2008, help finance about two-thirds of new home loans. DeMarco is seeking to shrink them and reduce risks to the taxpayers who support the mortgage giants. Since they were seized by the government in the bailout, the companies have drawn nearly $190 billion from the Treasury to stay afloat. By creating a new securitization company, the Federal Housing Finance Agency intends to pave the way for a single securitization platform, forcing Fannie Mae and Freddie Mac to abandon their current separate systems. DeMarco said that the goal was to build a single infrastructure to support the mortgage credit business.

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Tuesday, March 5, 2013 - 12:00

ResCap Looks to Maintain Control of Its Chapter 11 Case

Submitted by webadmin on Tue, 2013-03-05 00:00

In advance of a hearing today on Residential Capital LLC's request for a 60-day extension to file a reorganization plan, ResCap on Friday aimed to deny an attempt by bondholders to have a bankruptcy court thwart the request in order to file their own reorganization plan, Dow Jones Newswires reported yesterday. The creditors, a group of junior secured bondholders, want a judge to deny ResCap's request for a 60-day extension, through late April, on its exclusive right to file a reorganization plan without the threat of rival proposals. In its Friday filing, ResCap, the mortgage subsidiary of Ally Financial Inc., notes that its unsecured creditors' committee supports the company's bid for more time. Originally, ResCap wanted a 90-day extension but reduced it to 60 days after negotiations with the committee.

ABI Tags

Business Reorganization

Claims

Mortgage

Practice and Procedure

Real Estate

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Tuesday, March 5, 2013 - 12:00

RBS Deutsche Bank Lose Appeal in Mortgage-Bond Lawsuit

Submitted by webadmin on Mon, 2013-03-04 00:00

A federal appeals court on Friday ruled that Royal Bank of Scotland Group Plc, Deutsche Bank AG and Wells Fargo & Co. must face claims from a pension fund over $1.3 billion in mortgage bonds and potentially billions more, Bloomberg News reported on Friday. The appeals court reversed a lower-court ruling that dismissed the case against the banks and NovaStar Mortgage Inc. over loans bundled into securities before the financial crisis. The claims by the New Jersey Carpenters Health Fund "permit us to draw the reasonable inference" that the banks are liable under federal securities laws, the appeals court said in its decision. The New Jersey fund filed a class-action complaint over $1.3 billion in bonds sold to investors in 2007, according to court papers. The fund claimed that the securities were riskier than promised and that offering documents contained material misstatements and omissions about the loans backing them.

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Monday, March 4, 2013 - 12:00

Banks Find More Wrongful Foreclosures Among Military Members

Submitted by webadmin on Mon, 2013-03-04 00:00

The nation's biggest banks wrongfully foreclosed on more than 700 military members during the housing crisis and seized homes from roughly two dozen other borrowers who were current on their mortgage payments, findings that eclipse earlier estimates of the improper evictions, the New York Times DealBook blog reported yesterday. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo uncovered the foreclosures while analyzing mortgages as part of a multibillion-dollar settlement deal with federal authorities. In January, regulators ordered the banks to identify military members and other borrowers who were evicted in violation of federal law. The analysis, which was turned over to regulators in recent days, provides the first detailed glimpse into the extent of wrongful foreclosures amid the collapse of the housing market. While lenders previously acknowledged that they relied on faulty documents to push through foreclosures, the banks claimed borrowers were rarely evicted by mistake, including military personnel protected by federal law.

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Monday, March 4, 2013 - 12:00

Freddie Mac Posts Its Largest Profit Ever Last Quarter

Submitted by webadmin on Fri, 2013-03-01 00:00

Freddie Mac, buoyed by the housing market's rebound and an improving economy, reported an $11 billion annual profit for 2012 on Thursday—its largest ever annual gain and first profitable year since 2006, the Wall Street Journal reported today. Freddie's profit compares with a year-earlier loss of $5.3 billion. The fortunes of Freddie and its larger sibling, Fannie Mae, have turned around as home prices have stabilized and mortgage delinquencies slowed. That has allowed the government-controlled companies to set aside less money for loan losses. Fannie Mae, which has yet to post its annual results, reported $9.6 billion in profit during the first three quarters of 2012. Both firms reported tens of billions of dollars in losses from 2007 until 2011, as falling home prices and rising mortgage delinquencies blew big holes in their balance sheets. Freddie, for example, lost more than $90 billion between 2008 and 2011. After they were taken over by the government in 2008, the companies tightened lending standards and boosted the fees they charge lenders. They currently are responsible for backing nearly two-thirds of mortgages, as private lenders remain skittish of holding on to loans.

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Friday, March 1, 2013 - 12:00

Analysis Foreclosure Files Detail Error Gap

Submitted by webadmin on Fri, 2013-03-01 00:00

Some of the country's biggest banks were on pace to find a higher rate of past foreclosure mistakes than regulators disclosed in January when they halted a review in favor of a $9.3 billion settlement for homeowners, the Wall Street Journal reported today. The figures show wide discrepancies in how banks performed in the review and raise questions among some observers about how the process was conducted. The banks were ordered in 2011 to hire consultants to review foreclosures in search of possible errors that could result in compensation for borrowers. Nearly 6.5 percent of files reviewed unveiled errors requiring compensation, officials at the Office of the Comptroller of the Currency said in January. They later revised the error rate to 4.2 percent after requesting new data, raising the total number reviewed to roughly 100,000 files. But a breakdown of the information provided to the regulator shows that more than 11 percent of files examined for Wells Fargo & Co. and 9 percent of those for Bank of America Corp. had errors that would have required compensation for homeowners. A narrower sample of files—representing cases selected by outside consultants—showed error ratios of 21 percent for Wells Fargo and 16 percent for Bank of America.

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Friday, March 1, 2013 - 12:00

Bank of America Probed by New York over Mortgage Securities

Submitted by webadmin on Fri, 2013-03-01 00:00

Bank of America Corp., the second-largest U.S. bank by assets, is under investigation by the New York Attorney General's Office over the bundling of mortgage loans into securities, Bloomberg News reported today. New York Attorney General Eric Schneiderman, who sued JPMorgan Chase & Co. last year over losses on mortgage bonds, is probing the purchase, securitization and underwriting of home loans and mortgage securities, the bank said yesterday in a regulatory filing. Bank of America said that it "continues to cooperate fully" with the investigation. The U.S. Securities and Exchange Commission is investigating practices by the bank's Merrill Lynch unit related to collateralized debt obligations, including valuation and marketing, according to the filing.

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Friday, March 1, 2013 - 12:00

Despite Aid Borrowers Still Face Foreclosure

Submitted by webadmin on Fri, 2013-02-22 00:00

While banks reported that they have given more than half a million struggling homeowners roughly $45.8 billion in relief, thousands of homeowners are still not getting the help they need to save their homes from foreclosure, the New York Times reported today. Just under 71,000 borrowers, or 13 percent of the total borrowers helped so far, received assistance on their primary mortgage, which has been the main source of defaults and foreclosures through the housing crisis. But more than 170,000 homeowners received assistance on their second mortgage, which typically is a home equity line of credit that borrowers can tap for cash. Even though addressing second mortgages does offer some relief to homeowners, in a troubling number of instances the banks are not providing any help with the first mortgage, the housing advocates said. That leaves the homeowners still in jeopardy of losing their homes, while giving banks credit for restructuring loans or wiping out debt under the settlement.

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Friday, February 22, 2013 - 12:00

U.S. Banks Bigger Than GDP as Accounting Rift Masks Risk

Submitted by webadmin on Thu, 2013-02-21 00:00

ABI Bankruptcy Brief | February 21 2013

February 21, 2013

NEWS AND ANALYSIS

U.S. BANKS BIGGER THAN GDP AS ACCOUNTING RIFT MASKS RISK

Applying stricter accounting standards, such as those proposed by FDIC vice chairman Thomas Hoenig, for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are -- or about the size of the U.S. economy -- according to data compiled by Bloomberg yesterday. "Derivatives, like loans, carry risk," Hoenig said. "To recognize those bets on the balance sheet would give a better picture of the risk exposures that are there." U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books. Applying international standards for derivatives and consolidating mortgage securitizations, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co., would double the asset size while Citigroup Inc. would jump 60 percent, third-quarter data show. JPMorgan would swell to $4.5 trillion from $2.3 trillion, leapfrogging London-based HSBC Holdings Plc and Deutsche Bank AG, each with about $2.7 trillion. Read more.

COMMENTARY: TOO BIG TO FAIL CASTS LONG SHADOW

Despite the push to end corporate bailouts, the prospect of the government backstopping even more of the financial system is a possibility being debated within regulatory circles in regard to non-bank financing activity and was recently raised by the head of the Federal Reserve Bank of New York, according to a commentary in yesterday's Wall Street Journal. Regulators have been wrestling with how to reduce the risk of runs on the so-called shadow banking system, funding markets outside regulated banks. In particular, they have focused on making money-market funds less vulnerable. And they have looked to rein in risks posed by repurchase, or repo, markets, which involve the transfer of cash and securities between banks and financial firms. While regulated banks have faced far tighter oversight following the financial crisis, the shadow-banking market remains a source of potential instability. It is worth remembering that runs on non-bank institutions engaging in financing, rather than traditional bank runs, were a cause of the crisis and led to seizures of credit markets, according to the commentary. Read more. (Subscription required.)

FEDERAL RESERVE UNLIKELY TO END STIMULUS EFFORTS SOON

The prevailing sentiment at the Federal Reserve is that the central bank's efforts to pump tens of billions of dollars into the economy every month should not end anytime soon, the Washington Post reported today. Consumers are just beginning to reap the benefits of ultra-low interest rates and increased credit. Cutting off the program now could harm that fledgling progress before it is fully realized, according to Fed officials. That means the Fed is likely to give its latest stimulus initiative more time to filter through the broader economy. Read more.

CONSUMER BUREAU SAID TO WARN BANKS OF AUTO LENDING SUITS

The U.S. Consumer Financial Protection Bureau has told at least four banks that it may sue them over vehicle loans and interest-rate markups by auto dealers that appear discriminatory, Bloomberg News reported today. The banks received letters from the CFPB last week giving them 15 days to provide an explanation of the practice. The letters indicate the bureau believes the banks may have violated the Equal Credit Opportunity Act, a 1974 law that bars discrimination in lending. The letters, sent as vehicle loan originations are on the rise, demonstrate that the CFPB may be willing to sanction banks over mark-ups by auto dealers, which were excluded from the bureau’s supervision in the 2010 Dodd-Frank Law. As the economy has improved, auto truck loans climbed to $85.8 billion in the third quarter of 2012, according to the Federal Reserve. Read more.

LATEST ABI PODCAST EXAMINES ISSUES SURROUNDING "CROWDFUNDING" A CHAPTER 11 PLAN

ABI Resident Scholar Prof. Scott Pryor speaks with David C. McGrail of McGrail & Bensinger LLP (New York), author of the article "'Crowdfunding' a Chapter 11 Plan" in the February ABI Journal. McGrail explores the uses of crowdfunding, the effect of the JOBS Act on crowdfunding and how crowdfunding might be applicable in a chapter 11 reorganization. To listen to the podcast, please click here.

JUST ADDED! ABI LIVE WEBINAR ON APRIL 5 - "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"

A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register here as this webinar is sure to sell out.

EXPLORE CURRENT ISSUES FOR FINANCIAL ADVISORS IN BANKRUPTCY CASES AND MORE AT ABI'S 31ST ANNUAL SPRING MEETING

The 2013 Annual Spring Meeting, to be held April 18-21, 2013, at the Gaylord National Resort and Convention Center in National Harbor, Md., features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

• Creditors’ Committees and the Role of Indenture Trustees and Related Issues

• The Individual Conundrum: Chapter 7, 11 or 13?

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• Law Firm Bankruptcies

• How to Be a Successful Expert

• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Click here to register today!

ABI IN-DEPTH

MARK YOUR CALENDARS FOR APRIL 10 TO TAKE PART IN ABI’S LIVE WEBINAR "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"

Do not miss the "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?" webinar presented by ABI's Consumer Bankruptcy Committee on April 10 from noon-1:15 ET. ABI's panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:

Prof. Daniel A. Austin of Northeastern University School of Law (Boston)
Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)
Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)

CLE credit will be available for the webinar. This webinar is sure to sell out; register now for the special ABI member rate of $75!

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!

An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: MELLENTINE V. AMERIQUEST MORTGAGE CO. (6TH CIR.)

Summarized by Prof. Laura Bartell of Wayne State University Law School

The Sixth Circuit reversed dismissal of claim under the Fair Debt Collection Practices Act (FDCPA) by homeowners against a law firm representing a lender in connection with the foreclosure of mortgage, holding that the law firm was a "debt collector" under the FDCPA. The Sixth Circuit also reversed judgment on the pleadings entered against the lender under the Real Estate Settlement and Procedures Act (RESPA), holding that the homeowners pleaded sufficient facts to state a claim. The court affirmed the dismissal of all other claims under FDCPA and RESPA.

There are more than 750 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: ASSIGNMENT OF RENTS: ABSOLUTE MAY NOT BE SO ABSOLUTE

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines the case of In re MRI Beltline Industrial, L.P. in which the debtor moved for authority to use rents received from tenants of commercial buildings that it owned, and for a "carve out" to permit it to use rents for administrative expenses (including its attorney fees). In response, the mortgagee asserted that the debtor did not have any interest in the rents, and thus could not use them, because its assignment of rents was absolute.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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