|NEWS AND ANALYSIS
ANALYSIS: LAWSUITS AGAINST STUDENT DEBTORS ECHO FORECLOSURE PROBLEMS
As lenders turn to the courts to collect on an increasing number of student loan defaults, consumer advocates and lawyers defending debtors say that many of their suits are marred by missing documents and procedural errors, Bloomberg News reported today. Like mortgages, student loans were bundled into packages and sold to investors. "This is robosigning 2.0 with student loans," says Robyn Smith, a lawyer with the National Consumer Law Center, a nonprofit advocacy group. "You have securitized loans in these large pools; you have the sloppy record keeping," as in the mortgage crisis. The National Collegiate Student Loan Trusts are investment vehicles created by a Boston company called First Marblehead that concentrates on education lending. From 1996 through 2007, First Marblehead bought student loans from lenders including Bank of America, JPMorgan, and a bank now owned by Citizens Bank. It transferred batches of loans to trusts it created -- more than two dozen in all. The trusts sold bonds backed by the loans. The trusts are responsible for collecting loan payments from borrowers and paying out interest to bondholders. In 2013 bond rater Moody's Investors Service said that it expected losses to reach as high as 50 percent in 15 National Collegiate trusts it examined. Read more.
CFPB WARNS REVERSE MORTGAGE ADVERTISING IS MISLEADING
A new study from the Consumer Financial Protection Bureau (CFPB) found that reverse mortgage advertising can be confusing and misleading, and issued a warning to older Americans to be on the lookout for potentially deceptive reverse mortgage advertisements, according to HousingWire.com today. In the new study released today, the CFPB said that consumers were confused about reverse mortgages being loans, and they were left with "false impressions" that reverse mortgages are a government benefit or that getting a reverse mortgage would ensure consumers could stay in their homes for the rest of their lives. According to the CFPB, the number of reverse mortgage originations is likely to increase in the coming years with the retirement of the "baby boom" generation. The CFPB says that members of this group have more home equity than retirement savings. Studies have estimated that among Americans nearing retirement, 41 percent have no retirement savings account. But a majority of them, about 74 percent, own their homes and have built up good equity, the CFPB said. Read more.
Read the full study.
COMMENTARY: REAL REASON BEHIND CFPB'S NEW PAYDAY REGS
Last month, the Consumer Financial Protection Bureau issued a "framework" for a rule that seeks to make it more difficult for consumers to obtain short-term or "payday loans," according to a commentary yesterday in The Hill. At first glance, it defies explanation that the financial regulator would act so aggressively against a product that has high customer satisfaction rates and accounts for less than 5 percent of consumer complaints to the CFPB. The CFPB's rule, according to the commentary, is actually the culmination of a complex campaign executed by a network of political operatives under the direction, and for the benefit, of major Democrat Party operative Martin Eakes. Eakes is the chief executive officer, and co-founder, of Self-Help Enterprises. By severely limiting the ability of payday lenders to operate, it dramatically increases the market share for a portfolio of alternative products offered by Eakes and the numerous affiliated companies of Self-Help Enterprises. Read the full commentary.
ANALYSIS: BUYOUT FIRMS CASH OUT AT THE EXIT
While buyout firms typically plan to sell companies nearly five years after buying them, that period is shrinking as robust demand from strategic buyers is allowing private-equity firms to reap impressive gains in less time, the Wall Street Journal reported today. Private-equity firms now own a company for an average of 5.5 years, down from 5.9 years in 2014 and the lowest point since 2011, according to data provider Preqin. That decline reverses a trend toward longer holding periods in the aftermath of the financial crisis, when private-equity firms struggled to shed some companies. Before the crisis, the average holding period was about 4.5 years. A flourishing takeover market has created ripe conditions for buyout firms to cash out of older investments and some newer ones, too. The dollar volume of U.S. deals reached $788 billion by the end of May, according to data provider Dealogic, a record for this point in a year. Read more. (Subscription required.)
DEWSNUP REDO ON THE HORIZON? IMPACT OF WELLNESS ON BANKRUPTCY COURT AUTHORITY? LISTEN TO ARCHIVES OF RECENT ABI MEDIA TELECONFERENCES!
To examine the Supreme Court's recent rulings in bankruptcy cases, ABI held media teleconferences featuring leading experts from varying viewpoints. The teleconferences are now available in the ABI Newsroom, and provide discussions on the following cases:
- Consumer Case Round-up: Bullard v. Hyde Park Savings Bank, Harris v. Viegelahn and Bank of America v. Caulkett (and Bank of America v. Toledo-Cardona) (June 3, 2015)
Moderator: Paul Hage of Jaffe Raitt Heuer & Weiss
Speakers: Tara Twomey of the National Consumer Law Center, chapter 13 trustee Henry E. Hildebrand, III, and chapter 13 trustee Peter C. Fessenden.
Click here to listen.
- Wellness International Network, Limited v. Sharif (May 29, 2015)
Moderator: Prof. Kenneth Klee of UCLA Law School
Speakers: Prof. S. Elizabeth Gibson of the UNC School of Law and Ben Logan of O'Melveny & Myers LLP
Click here to listen.
ABI LIVE WEBINAR ON JUNE 16 TO EXAMINE ASSET SALES ISSUES IN OIL AND GAS BANKRUPTCIES
Join the latest abiLIVE Webinar on June 16 to explore the unique challenges that can arise in a § 363 sale of the assets of a business involved in the energy industry, with a particular emphasis on oil and gas bankruptcies. Presented by ABI's Asset Sales Committee, the webinar features experts discussing the interplay in energy company bankruptcy cases among the Bankruptcy Code, federal and state laws, the regulatory structure governing the energy industry, and the political and practical realities of the industry’s significance on national, regional and local levels. Speakers on the program are Bryan M. Gaston of Conway MacKenzie (Houston), Ira L. Herman of Thompson & Knight LLP (New York) and Shari L. Heyen of Greenberg Traurig, LLP (Houston). Click here for the ABI member price.
For additional information on oil and gas company bankruptcies, be sure to pick up a copy of ABI's When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy.
NEXT ABI WORKSHOP TO FEATURE BANKRUPTCY JUDGES EXAMINING COMMISSION RECOMMENDATIONS ON RESOLVING COURT SPLITS
The next ABI Workshop, the 2015 Bankruptcy Judges Roundtable, will take place at ABI headquarters on Aug. 4 to examine the Chapter 11 Reform Commission's recommendations on resolving court splits. The Commission identified more than 30 splits in case law on important bankruptcy issues. Attend the program from 3:00-4:30 p.m. ET in person or via live webstream to hear five bankruptcy judges discuss the recommendations and issues surrounding the court splits. ABI will seek 1.5 hours of general CLE credit in 60-minute-hour states and 1.5 hours of credit in 50-minute-hour states for the program. Networking reception to follow from 5-7 p.m. ET for in-person attendees, and registration for just the reception is also available. Click here to register.
NEW CASE SUMMARY ON VOLO: FLORES V. SALVEN (IN RE DDJ INC.; 9TH CIR.)
Summarized by Lars Fuller of BakerHostetler
The 9th Circuit BAP affirmed the bankruptcy court's order overruling creditors' objection to chapter 7 trustee's final report. The creditors failed to comply with vexatious litigants order restrictions, and the BAP rejected the appellants' argument that the order was void because the bankruptcy court did not have jurisdiction because the appellants were separately appealing other previous orders of the bankruptcy court.
There are more than 1,700 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: BAILOUT RISK IS ALIVE AND WELL
The "too big to fail" problem can't be solved with living wills and orderly liquidation, according to a recent blog post. Rather, the post suggests that a structural solution is needed to reduce the size of mega-institutions.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
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