2013

A recent decision out of the Bankruptcy Court for the Northern District of New York has brought greater certainty to the interpretation of what qualifies as an “interest” when determining the scope of a Section 363(f) “free and clear” sale in bankruptcy. The decision in In re Tougher Industries, Inc. became the latest in…

Last summer, we at Crunched Credit wrote (here, here and here) about Mortgage Resolution Partner’s (“MRP”), a San Francisco-based venture-capital firm, proposal whereby underwater performing residential mortgage loans held in private label securitization would be seized, refinanced, or restructured and sold to third party investors, with the government recovering the administration costs and MRP earning a fee on each transaction (the “Program”), which (or some version of which) was (and in some cases still is) being considered by, for example, the County of San Bernardino (which has dropped the idea), the City of Chicago (a decision on whether to move forward is still pending), Wayne County, MI (Detroit area) (Wayne County has dropped the idea), and the City of Salinas, CA (which has entered into an agreement with MRP to provide residential foreclosure data but has indicated that this agreement does not mean that they are considering the Program at this time).Continue Reading No Marriage for Mortgage Resolution Partners Yet (But Proposal Still Being Considered)

Terrorism insurance has been boring for the past several years. It risks becoming not boring. In the lee of the terrorism attack of 9/11, the Terrorism Risk Insurance Act, or TRIA, was rapidly passed by the Congress and signed by the President. TRIA provided a federal backstop for private terrorism insurance responding to the unwillingness of the private insurance market to provide meaningful terrorism insurance in light of the unpredictability of the risk and, therefore, perceived inability to price the insurance. TRIA was initially passed in November 2002 and reauthorized in 2005 and 2007. It expires on December 31, 2014. An extension is far from certain.Continue Reading Terrorism Insurance Redux

The FDIC’s new rules (promulgated per the requirements of the Dodd-Frank Act) for calculating deposit insurance assessments for insured depository institutions, including "large institutions" and "highly complex institutions," are set to become effective on April Fool’s Day, 2013. No kidding. As institutions of this type are active investors in CLOs, particularly the “AAA”-rated tranche of CLOs, there has been significant consternation among market participants on the immediate and long-term effect of such new rules.Continue Reading CLO Update: New FDIC Rules on “Higher Risk Securitizations”

Among the more technical topics we cover in this Blog, we keep an eye on Europe as we fundamentally continue to worry that Europe’s disease could infect our markets. As I write this, Cyprus is trying to sort out the terms of the proposed EU bailout for the banking sector which is eight times the size of the GDP of the whole darn island. The US commodities and stock markets have fluttered in response and may continue to flutter for several days, but now a deal has been announced and the betting is Cyprus will drop out of the headlines and become yesterday’s news. We’ll be back to business with nary a backward glance at Europe; until next time.Continue Reading Cyprus: Not the Archduke Ferdinand Moment, This Time

Last week, we and a few of our colleagues here at Dechert attended CREFC’s 2013 Distressed Debt Summit. Echoing the mood at January’s CREFC conference, the mood at the NY Athletic Club last week was upbeat about the CMBS market as a whole but the general sentiment, with respect to the distressed debt market, is that good deals (in other words, deals worth making) are harder and harder to come by.Continue Reading Reflections on the 2013 CREFC Distressed Debt Summit

The warm weather is not the only thing descending on New York City this week as CREFC hosts its annual Distressed Debt Summit at the New York Athletic Club overlooking Central Park. March in New York City is famous for the Big East Tournament (speaking of distressed…), St. Patrick’s Day parades and love blooming along with the flowers. But it won’t be all buzzer beaters, green beer, horse carriage rides and proposals in the park as industry leaders look to discuss the market trends and opportunities in the distressed debt market for 2013.Continue Reading Distressed Debt Conference in Bloom in NYC

Early last month, in Borough of Merchantville v. Malik & Son, LLC, 429 N.J. Super. 416 (App. Div. 2013), the New Jersey appellate court held that a condemning authority, under the State’s eminent domain law, was not required to negotiate with a mortgagee which had obtained a final judgment of foreclosure on the relevant property, was in possession of said property and had the right to sell said property at a sheriff’s sale. Additionally, the appellate court held that the property owner’s express rejection of the condemning authority’s offer to purchase its property and invitation to discuss more reasonable compensation was inadequate evidence that the property was worth more than the amount offered by the condemning authority and constituted a rejection of such offer permitting the condemning authority to proceed with litigation.Continue Reading Left Out in the Cold: New Jersey Court Holds Condemning Authority Not Required to Negotiate with Lenders in Eminent Domain Proceedings

Last October, I wrote about a scheme employed, in three separate bankruptcy cases, by debtors seeking to evade the absolute priority rule in order to keep the real property owned by the debtor in the hands of the ‘family’ at the expense of the debtors’ creditors.Continue Reading When Lenders are the Losers in Bankruptcy Court…Well, Not so Fast

February has certainly been a big month for federal agencies to issue long-awaited final rules. The latest agency to throw its hat into the ring is the U.S. Department of Housing and Urban Development, which recently codified its long standing position that liability under the Fair Housing Act may be proven by disparate impact without any discriminatory intentions.  This final rule provides additional support to potential government and private plaintiffs seeking to challenge “facially neutral” practices as violations of the Fair Housing Act.  We have previously blogged about the different types of liability related to discrimination in lending here.  This rulemaking comes at a time when lenders have already begun to reexamine how they will structure their residential mortgage lending activities in the face of the CFPB’s new qualified mortgage rules.  (See our DechertOnPoints for more information on the new QM/ATR rule and the additional proposal).Continue Reading HUD’s Final Rule on Fair Housing Act Liability Explained in New Dechert OnPoint