RealtyTrac reported that foreclosure activity declined in January as the number of U.S. homes starting the process fell to its lowest level in more than six years, but the varying legal requirements in each state continued to influence regional markets, Reuters reported today. Foreclosure starts were filed on 64,773 homes, down 11 percent from December and down 28 percent from a year ago. It was the lowest level since June 2006. The drop in starts came as activity in California dried up after homeowner protection legislation enacted at the start of the year placed new requirements on all servicers in the state. Excluding the decline in California, foreclosure starts edged up less than 1 percent compared to December, said Daren Blomquist, vice president at RealtyTrac. Overall foreclosure activity was seen on 150,864 properties last month, down 7 percent from December. Compared to a year ago, activity tumbled 28 percent. Read more.
REGULATOR EXPLAINS DECISION TO END FLAWED FORECLOSURE REVIEW
Thomas J. Curry, the Comptroller of the Currency, shed light yesterday on his decision to scuttle an independent review of bank foreclosures, portraying the flawed process as a boon to outside consultants and a barren maze for homeowners, the New York Times DealBook blog reported yesterday. The process began in 2011 when regulators accused banks and other loan servicers of shoddy foreclosure practices. Curry, who took over the comptroller's office several months after the review started, argued that homeowners languished without payment as the review suffered from delays. The independent consultants that banks hired to run the 14-month review, however, racked up some $2 billion in charges. "It just doesn't make sense for these servicers to continue funneling money to consultants that could be better used to help distressed borrowers who have lost their homes," Curry said. His speech comes amid a growing outcry from lawmakers and housing advocates, who have questioned the regulatory oversight of the foreclosure review. Critics say that regulators should never have trusted consultants to objectively evaluate banks from which they are paid huge sums. Read more.
HOUSING INDUSTRY HOPES OBAMA LINE WILL SOFTEN MORTGAGE RULE
U.S. realtors and mortgage bankers say that they hope President Barack Obama's call for streamlined mortgage rules in his State of the Union speech on Tuesday will help them convince regulators not to set a strict minimum down payment for home loans, Bloomberg News reported yesterday. At issue is the so-called Qualified Residential Mortgage rule, which six banking regulators, including the Federal Deposit Insurance Corp. and the Federal Reserve, are aiming to complete this year. The regulators drew protests in 2011 when they released a preliminary draft requiring lenders to keep a stake in mortgages with down payments of less than 20 percent and those issued to borrowers spending more than 36 percent of their income on debt. Bankers and some consumer groups said that such a requirement would shut creditworthy borrowers out of the market. Industry participants and some lawmakers are now pressing for the regulators to align the QRM rule with another regulation with a similar name that is also aimed at preventing risky home lending: the Qualified Mortgage, or QM, rule. That guidance, issued by the Consumer Financial Protection Bureau in January, offers legal safe harbor protections to banks that issue loans to borrowers spending no more than 43 percent of their income on debt. Read more.
AUDIT FINDS HUD'S OVERSIGHT OF HOUSING-CONSTRUCTION PROGRAM LAGGING
The U.S. Department of Housing and Urban Development is still struggling to adequately monitor its construction program for the poor more than a year after Congress demanded widespread improvements in oversight and accountability, the agency's Office of the Inspector General said in an audit this week, the Washington Post reported today. Auditors pointed out that HUD has strengthened controls over its HOME Investment Partnerships Program, which was established in 1992 and delivers between $1 billion and $2 billion in annual grants to states and local jurisdictions to build, buy or renovate affordable housing. But the audit found that the agency could not demonstrate the effectiveness of field office monitoring efforts and "may have lost opportunities to obtain early warnings of potentially serious problems." HUD countered that its monitoring is effective and that the agency "continually strives to manage its programs as effectively and efficiently as possible." Read more.
COMMENTARY: NEW YORK BUDGET DOES LITTLE TO ADDRESS COMING MUNICIPAL DISTRESS
While the specter of financial collapse looms over New York State's cities, the current budget being proposed for the state does not do enough to address its imminent municipal distress, according to a commentary by Syracuse Mayor Stephanie A. Miner in the New York Times today. Gov. Andrew M. Cuomo's proposed state budget, put forward last month, would not increase state aid to cities or do much to reform tax, pension or labor laws. Instead, it would let municipalities push payment of today's ballooning pension costs into the future, according to Miner. Labor costs are too high -- not because of salaries, but because of the rising costs of pensions and health care. City leaders and labor unions jointly negotiated these past arrangements but have not cooperated to keep them in check, according to Miner. Most public-sector unions in the state cannot legally strike; instead, unresolved labor disputes go to binding arbitration, which often leads to judgments that the cities cannot afford. Also, revenue in cities like Syracuse has plummeted, and not just because of the Great Recession. Municipal aid and school aid have been cut or have stagnated in recent years. Miner says that billions of dollars' worth of corporate tax breaks have been given away in the name of "economic development." Additionally, she finds that the model of using property taxes to finance schools, police, fire, sanitation and other services is no longer sustainable. (New York City, which has relatively low property taxes but levies a city income tax, is an exception.) For decades, once-large industrial employers like Eastman Kodak in Rochester, the Otis Elevator Company in Yonkers and the Carrier Corporation (a maker of heating and air-conditioning equipment) in Syracuse have shed jobs and closed plants. Even when unemployment -- 8.2 percent in New York State in December, compared with 7.8 percent nationally -- falls, property tax revenue will not come back, Miner predicts. Click here to read the full commentary.
VIEW BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: JUDGE RAKOFF REVERSES HIMSELF IN MADOFF CASE
When U.S. District Jed Rakoff recanted a ruling he made previously in the liquidation of Bernard L. Madoff Investment Securities Inc., the reversal was important because it allows the Madoff trustee to knock out billions of dollars in claims, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss on their new video. To view the video, please click here.
NEXT WEEK'S ABI LIVE WEBINAR: REVISITING RADLAX AND HALL - NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS
See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as they summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:
• Susan M. Freeman of Lewis and Roca LLP (Phoenix)
• Adam A. Lewis of Morrison & Foerster LLP (San Francisco)
• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)
JUST ADDED FOR APRIL! ABI 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!
POWER TO VETO BANKRUPTCY SALES AMONG ISSUES TO BE EXAMINED 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
- Current Issues for Financial Advisors in Bankruptcy Cases
- The Individual Conundrum: Chapter 7, 11 or 13?
- 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!
DON'T MISS THE 9TH ANNUAL WHARTON RESTRUCTURING AND DISTRESSED INVESTING CONFERENCE ON FEB. 22!
The University of Pennsylvania's Wharton School of Business will be holding the 9th Annual Wharton Restructuring and Distressed Investing Conference on Feb. 22 at the Hyatt at The Bellevue in Philadelphia. The theme of this year's conference is “Health of Nations: Distress, Recovery or Revival?” It will offer a unique opportunity to hear from a distinguished gathering of keynote speakers and panelists in their discussion of the current economic climate and issues of debt, investing, and restructuring across the globe. To register, please click here.
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: DAVENPORT V. FRONTIER BANK (IN RE DAVENPORT; 11TH CIR.)
Summarized by Lynn Hinson of Dean Mead Egerton Bloodworth Capouano & Bozarth PA
The Eleventh Circuit affirmed the district court's ruling, which affirmed the bankruptcy court's determination that a debt owed by the debtor to a bank was not dischargeable. Specifically, the debt was not dischargeable because the bank reasonably relied on the debtor's false financial statement in making a loan.
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: FURTHER ANALYSIS OF THE US AIRWAYS-AMERICAN AIRLINES MERGER
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post further examines the merger of US Airways and American Airlines, which was formally announced today.
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
After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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.
Have a Twitter, Facebook or LinkedIn Account?
Join our networks to expand yours.
ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
Feb. 19, 2013 Register Today!