FORECLOSURE SETTLEMENT WITH BANKS FILED IN FEDERAL COURT
The court-appointed monitor of a $25 billion U.S. settlement with five banks over abusive foreclosure practices said that he is hoping consumer advocates will let him know if banks are not complying, Bloomberg News reported yesterday. Joseph A. Smith Jr., who left his position as North Carolina's banking commissioner to take the monitoring job, said that he has set up a website where housing counselors, bankruptcy lawyers and other advocates can report problems. "I am hopeful that we will get additional input in terms of our review of the banks' work from out in the field," Smith said. He added that he is working on setting up uniform standards for monitoring compliance at each bank and has hired BDO Consulting to help. The settlement agreement, filed in federal court in February, was reached after attorneys general from all 50 states announced a probe into foreclosure practices following disclosures that banks were using faulty documents to seize homes. The nation's five largest mortgage servicers – Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. – negotiated the agreement with federal agencies, including the Justice Department, and 49 states. Read more.
ANALYSIS: MORTGAGE-MODIFICATION PROGRAM MANAGES TO BEAT CRITIC'S FORECAST
While government's efforts to stem the housing crisis have fallen short of the sweeping plan outlined shortly after President Barack Obama took office, the Home Affordable Modification Program (HAMP) has now eclipsed a prediction made by one of the program’s critics, the Wall Street Journal reported today. In December 2010, the Congressional Oversight Panel, which oversaw the 2008 financial rescue, predicted that the HAMP program would only prevent 700,000 to 800,000 foreclosures. The report added that the program’s prospects "are unlikely to improve substantially in the future." But as of April, the three-year-old HAMP program has actually eclipsed that forecast, having helped nearly 802,000 U.S. homeowners avoid losing their homes through permanent loan modifications, up about from around 795,000 in March, according to Treasury Department statistics released yesterday. Under the HAMP program, the government pays lenders incentives to help borrowers avoid foreclosure by reducing their mortgage payments. Due to low enrollment, only about $3.23 billion has been spent on the effort out of a possible $30 billion from the 2008 financial industry rescue, according to Treasury statistics. Read more. (Subscription required.)
MORTGAGE RATES IN U.S. FALL TO RECORD LOWS WITH 30-YEAR LOANS AT 3.67 PERCENT
Mortgage rates in the U.S. dropped to record lows for a sixth straight week as concerns over slowing job growth pushed investors into the safety of government bonds that guide interest costs, Bloomberg News reported today. The average rate for a 30-year mortgage dropped to 3.67 percent in the week ended today from 3.75 percent, Freddie Mac said. It was the lowest in the McLean, Va.-based mortgage-finance company's records dating to 1971. The average 15-year rate declined to 2.94 percent, also a record, from 2.97 percent. The 10-year Treasury yield, a benchmark for mortgages, slipped to less than 1.5 percent for the first time on June 1 after a Labor Department report showed that U.S. payrolls climbed by 69,000 last month, the fewest in a year. Read more.
WHITE HOUSE SKEPTICAL OF GOP STUDENT LOAN PROPOSALS
The Obama administration on Tuesday brushed off Republican proposals to pay for the $6 billion extension of the reduced-rate student-loan program, which expires July 1, the Washington Post reported yesterday. GOP House leaders last week sent the president a set of proposals to cover the cost of the extension that included increasing the amount paid by federal employees for their retirement and limiting the ability of states to recoup Medicaid costs through taxes on providers. "We're not going to trade off student loans for other vital, vital programs," Vice President Joe Biden said after meeting with 10 college presidents to discuss an administration effort to increase transparency in the information students receive on loan packages. The looming deadline presents a tricky proposition for Obama, who has called the student-loan issue critically important for the 7.4 million people who have the subsidized Stafford loans. Both the administration and GOP leaders want to freeze the interest rate at the current 3.4 percent and avoid an average fee hike of $1,000 per student when the rate doubles to 6.8 percent. But the two sides remain deadlocked over how to pay for the plan. Read more.
Make sure to listen to ABI's latest podcast featuring scholars debating current issues of student debt and bankruptcy.
FORMER BEAR STEARNS EXECUTIVES AGREE TO SETTLE SHAREHOLDER SUIT FOR $275 MILLION
Former senior executives of Bear Stearns Cos., including former chief executives James E. Cayne and Alan D. Schwartz, have agreed to settle a shareholder suit for $275 million, the Wall Street Journal reported today. The 2008 lawsuit, led by the State of Michigan Retirement Systems, had accused the executives of misleading investors about the firm's business and financial well-being in the run-up to the financial crisis. The proposed cash settlement was disclosed in papers filed in a federal court yesterday. Bear Stearns was acquired in a last-minute rescue by JPMorgan Chase & Co. in March 2008, with assistance from the Federal Reserve, after nearly collapsing during the subprime-mortgage meltdown. Read more. (Subscription required.)
WEBINAR ON JUNE 26 TO EXAMINE SUPREME COURT'S RULING IN RADLAX CASE
Having already examined the oral argument in a previous ABI media teleconference, panelists will reconvene for an ABI and West LegalEd Center webinar on June 26 to discuss last week's Supreme Court ruling in RadLAX Gateway Hotel LLC v. Amalgamated Bank. CLE credit will be available for the webinar, which will be held from 2:00-3:30 p.m. ET.
Experts on the program include:
• David Neff of Perkins Coie LLP (Chicago), the counsel of record for petitioner RadLAX Gateway Hotel LLC and participant in the argument.
• Jason S. Brookner of Andrews Kurth LLP (New York), whose article was cited in the brief for the respondent.
• Prof. Charles Tabb, the Alice Curtis Campbell Professor of Law at the University of Illinois College of Law, who recently published a paper titled "Credit Bidding, Security, and the Obsolescence of Chapter 11."
ABI Resident Scholar David Epstein will be the moderator for the webinar.
The webinar costs $115 and purchase provides online access for 180 days. If you are purchasing a live webcast, you will receive complimentary access to the on-demand version for 180 days once it becomes available. Click here for more information.
LATEST CASE SUMMARY ON VOLO: KLINE V. DEUTSCHE BANK NATIONAL TRUST CO. (IN RE KLINE; 10TH CIR.)
Summarized by David Little of Onsager, Staelin & Guyerson, LLC
Affirming the bankruptcy court, a three judge panel of the Tenth Circuit BAP held that (1) a foreclosing creditor did not willfully violate the automatic stay by serving an amended foreclosure complaint after a debtor filed a chapter 13 petition, but without notice of the bankruptcy and ceasing all actions against the debtor upon learning of the bankruptcy; and (2) following the Rooker-Feldman doctrine, the bankruptcy court could not consider whether foreclosure after lifting the stay was proper based on service of the amended foreclosure complaint being void. The panel ruled that the creditor's actions of continuing the foreclosure action and not re-serving the amended complaint occurred after the automatic stay was lifted and thus by definition could not be violations. The panel further ruled that success on the debtor’s claim that the creditor willfully violated the automatic stay necessarily required review of a state court’s foreclosure judgment and thus barred the bankruptcy court from considering the effect of the void service of the amended foreclosure complaint.
More than 500 appellate opinions are summarized on Volo typically 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: SIGTARP SCRUTINY GOES BEYOND TARP MATTERS
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post finds that, contrary to popular belief, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) is not confined to scrutinizing those crimes that relate directly to the request for or use of TARP funds, and the office appears poised to increase the scope of its activity.
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 First-day orders authorizing full and immediate payment of the claims of ‘critical vendors’ should be prohibited; all pre-petition unsecured creditors should be subjected to the same rules.Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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ABI'S Webinar to Discuss the Supreme Court's Forthcoming Ruling in RadLAX Gateway Hotel LLC v. Amalgamated Bank
June 26, 2012 Register Today!