Syms Corp. yesterday won bankruptcy court confirmation of a chapter 11 plan that will see the former retailer renew its life as a real estate owner, Dow Jones DBR Small Cap reported today. Rather than throwing all its real estate on the bankruptcy auction block at distressed prices, Syms fashioned a plan that allows it to wait for the right time and the right price before selling. The company's advisers estimate the real estate is worth $147 million.
Real estate company Park Lane I LLC filed for chapter 11 protection on Thursday as it faces foreclosure on two of its properties in Birmingham, Ala., Dow Jones DBR Small Cap reported today. The Manhattan-based company, which shares a corporate address with Lightstone and was placed in bankruptcy by Lightstone executive Bruno de Vinck, owns two apartment complexes in Alabama called Cliffs at Rocky Ridge and Overlook at Homewood. Both of the properties are in receivership and are being managed by GlassRatner Management & Realty Advisors LLC.
Goldman Sachs & Co. and units of JPMorgan Chase & Co. and Ally Financial Inc. overstated the quality of loans underlying mortgage-backed securities they sold to the failed Guaranty Bank in Austin, Texas, according to lawsuits brought by the FDIC as its receiver, Bloomberg News reported yesterday. In three separate complaints filed in state court in Austin on Aug. 17, the Federal Deposit Insurance Corp. alleged those institutions and others sold about $5.4 billion worth of certificates to Guaranty Bank. Guaranty Bank, which had 103 branches in Texas and 59 in California, was closed by the Office of Thrift Supervision three years ago. Claiming the certificate sellers breached Texas securities law by making misleading or untrue statements about loans backing those certificates, the FDIC said in one complaint that it seeks at least $900 million in damages from Goldman Sachs, Ally Financial's Residential Funding Securities LLC and from units of Deutsche Bank AG and JPMorgan Chase.
Homeowners could soon have an easier time selling their homes for less than what they owe on their mortgages, under new guidelines from a federal housing regulator and mortgage-finance giants Fannie Mae and Freddie Mac, the Wall Street Journal reported today. The Federal Housing Finance Agency yesterday announced measures to make "short sales" of underwater homes easier for homeowners, including extending help to people who have financial difficulties but have not missed mortgage payments. One part of the plan is for Fannie and Freddie to place a $6,000 cap on the amount of money holders of second mortgages can receive when the sale is completed, as a way to prevent the mortgage holders from haggling over their slice of the home-sale proceeds. Those second-lien holders would still be able to reject the sales if they saw fit. The changes only affect underwater mortgages guaranteed by Fannie and Freddie, which back the bulk of U.S. home loans.
The U.S. Treasury on Friday revamped the bailout of Fannie Mae and Freddie Mac to curb chances the giant mortgage finance firms could emerge from government control as the powerful, profit-driven corporations they once were, Reuters reported on Saturday. The Treasury said that it would require the companies, whose massive losses threatened the financial system after the housing bubble burst in 2007, to shrink their investment portfolios more quickly and turn over any profits to taxpayers. Previously, the companies, which buy mortgages from lenders and repackage them as securities for investors, were required to make a 10 percent dividend payment to the Treasury. At times, they had to borrow from the Treasury just to make the payments. Now, they simply will not be able to retain any profits.
The Treasury Department is preparing to revamp the terms of its nearly four-year-old financial backing of Fannie Mae and Freddie Mac in a bid to allay investor concerns that the companies could one day exhaust their federal lifelines, the Wall Street Journal reported today. Currently, the government-controlled mortgage-finance companies make 10 percent dividend payments to the Treasury every quarter, an arrangement that has forced them to borrow money from the government during periods where they do not turn a large profit. Under the new arrangement between Treasury and the companies' federal regulator, all the firms' quarterly profits would be turned over to the government as a dividend payment; the government would not require such payments in periods when the firms are unprofitable. The revised terms would also accelerate the reduction of the firms' mortgage portfolios. The firms will have to shrink those portfolios by 15 percent annually beginning next year—a change from the currently required 10 percent annual reduction. That means the portfolios, which can be no larger than $650 billion for each firm at the end of the year, will fall to the final cap of $250 billion by 2018, four years earlier than previously scheduled.
Syms Corp., the bankrupt discount clothing chain, and its Filene's Basement LLC unit won court approval to sell a Miami property for $4.35 million, Bloomberg News reported yesterday. Bankruptcy Judge Kevin J. Carey yesterday gave the company permission to sell the assets to Florida-based Independent Living Systems LLC, the initial bidder for the property. No other offers surfaced to compete with Independent Living.
Four years after filing the largest bankruptcy in U.S. history amid soured real estate bets, Lehman is still in the property business, wagering it can recover about $12.9 billion from mortgages and assets around the globe, Bloomberg News reported yesterday. Its $3 billion purchase this year of the remaining 53 percent of apartment owner Archstone Inc. made it the biggest buyer of U.S. commercial property by value in the last 12 months, according to research firm Real Capital Analytics Inc. Lehman has invested $5 billion in real estate since its demise, acquiring loans and buying out joint venture partners. Lehman aims to raise $53 billion through 2016, to pay creditors an average of 18 cents on the dollar on about $300 billion of claims. The company made its first payment of $22.5 billion in April, about 53 percent more than it previously estimated was possible, after exiting court protection.
The Federal Housing Finance Agency (FHFA) said yesterday that it may take action to prevent the proposed use of eminent domain by municipalities to seize and restructure underwater mortgages, citing potential risks to taxpayer-supported firms Fannie Mae and Freddie Mac, the Wall Street Journal reported today. The concern expressed by the FHFA comes as a trio of municipalities in California, Chicago and other communities have said that they are considering a plan that would allow them to purchase underwater loans from mortgage bond trusts at a discount, then refinance them at current market value. But the proposal, pitched to municipalities by private consulting group Mortgage Resolution Partners, has alarmed banking and other trade groups that warn stripping loans from investors would create unnecessary losses and reduce the availability of credit. Already, the Securities Industry and Financial Markets Association has proposed prohibiting loans originated in areas using eminent domain from a key part of the $5 trillion mortgage-backed securities market that is a backbone for U.S. housing finance.
Citigroup Inc., the third-biggest U.S. bank by assets, sold $158 million of mortgages to a joint venture of two investment funds as the lender disposes of unwanted home loans, Bloomberg News reported yesterday. The partnership of Oaktree Capital Group LLC and Carrington Holding Co. bought the loans under a program to offer delinquent borrowers an opportunity to rent their homes as an alternative to foreclosure and eviction, the three companies said in a statement. Citigroup Chief Executive Officer Vikram Pandit is reducing the bank’s U.S. mortgage portfolio as part of his strategy to offload unwanted assets from the Citi Holdings division, which had $100 billion of home loans in North America at the end of June. The bank sold $500 million of delinquent mortgages in the second quarter, the bank said last month.
