November 08, 2007: 12:58 PM EST

NEW YORK (Associated Press) – HomeBanc Mortgage Corp. says it must complete the sale of its loan-servicing business to Bear Stearns Cos. and unload other assets before it can formulate a Chapter 11 plan.

The Atlanta-based lender is asking a federal bankruptcy court to extend by four months its exclusive right to propose a plan through April 7, 2008.

In a filing Wednesday with the U.S. Bankruptcy Court in Wilmington, Del., HomeBanc said that it has “communicated regularly” with its major creditor constituencies regarding the sale process and other potential means for maximizing value for its creditors.

An exclusivity extension is, however, necessary to allow the sale of the servicing business and other assets to close, and time for talks on plan terms, the liquidating lender said.

The sale of the company’s servicing business to EMC Mortgage Corp., a Bear Stearns affiliate, is set to close Dec. 3. The deal, which calls for EMC to pay about $60 million to take over the servicing of about $7 billion worth of home loans, was approved by Judge Kevin Carey on Nov. 1.

The company is also seeking to extend its exclusive right to solicit creditor support for a plan through June 4, 2008. The company’s exclusive solicitation period is currently set to expire Feb. 5, 2008.

What happened to this old story? I tried to find news at FTC, but this seems to be buried very deep for some reason; did the case get resolved, or was someone paid off..what happened last year??

Re: Dec. 30 (Bloomberg) — Bear Stearns Cos., the fifth-largest U.S. securities firm, was told by the U.S. Federal Trade Commission to provide data and documents in connection with an investigation of mortgage lending to risky borrowers.

Bear Stearns’s EMC Mortgage Corp. unit, which buys and services home loans, received the demand following a Dec. 8 FTC resolution, according to a filing today with the Securities and Exchange Commission. The New York-based firm said EMC Mortgage is cooperating with the government’s inquiry.

According to the filing, made by an $830 million mortgage trust set up by Bear Stearns, the FTC is investigating the so- called sub-prime mortgage market. It said the agency is trying to determine whether any lenders, brokers or companies that handle loan services such as payment collection violated consumer- protection laws.

The filing didn’t specify which data or documents EMC was told to provide. Bear Stearns spokeswoman Elizabeth Ventura wasn’t available for comment.

Bear Stearns is one of the world’s biggest underwriters of mortgage-backed bonds.

“The principal business of EMC has been the resolution of non-performing residential mortgage loan portfolios acquired from Resolution Trust Corp., from private investors and from the Department of Housing and Urban Development,” according to the filing by Bear Stearns ARM Trust 2005-12.

Maybe here? To contact the reporter on this story:
Gregory Cresci in New York at gcresci@bloomberg.net
Last Updated: December 30, 2005 16:14 EST

Re: After the 1982 amendment to 371, the OCC promulgated C.F.R. 34 that set forth standards for real-estate related lending and associated activities by national banks. There, the OCC listed five categories of state law that expressly do not apply to national banks. The types of state laws affected were those that relate to the loan-to-value ratio, the schedule of repayment, the term, the maximum loan amount, and covenants and restrictions necessary to qualify a leasehold as acceptable security.The regulation then explicitly stated that state laws of the types listed in these categories are preempted. Since the agency identified only five categories of laws, state laws not described applied to national banks, absent preemption under another provision of the NBA.

Second, regarding credit insurance and private mortgage insurance,56 the federal McCarran-Ferguson Act creates a clear-cut rule that state laws enacted for the purpose of regulating the business of insurance do not yield to conflicting federal statutes unless a federal statute specifically requires otherwise in certain circumstances. Only one federal law permits otherwise. The Gramm-Leach-Bliley Act (GLBA) permits national banks to engage in insurance sales, solicitations, and cross-marketing. However, the Act does not provide an exception from McCarran-Ferguson in thirteen areas.These exceptions include: requiring private mortgage or other insurance to be purchased from the bank or an affiliate; the payment of commissions in certain circumstances; the release of information; and certain types of written disclosures. To the extent that proposed attempts to extend national bank preemption beyond that expressly permitted in GLBA, this action conflicts with the McCarran-Ferguson Act.

Not that this helps your city, but that behavior isn’t rational. Insuring municipal bonds is as close as you get to free money. Municipalities as most miss a payment or two. That says how fearful the monolines are right now.

Warren Buffet ought to step in. That’s the sort of thing he does in his reinsurance business. His team mainly does nothing and waits for the times when the insurance market is irrational, then they write a ton of business in a very short period.

Just yesterday I spoke with the finance director of our prosperous little, investment-grade-bond-issuing city. She said she had recently presided over what she thought would be a fairly routine issuance of public facilities district bonds, backed by a seemingly ironclad dedicated stream of sales tax rev. Part of the process is the solicitation of bids from the monolines.

But this time, she said, NOBODY wanted to bid on insuring these bonds. She said the monolines have suddenly become very skittish. She said she still hopes that after they review the situation they will change their minds and insure, but it is also possible that the city will have to issue the bonds without insurance, and pay the higher interest.

Just two weeks earlier, when I asked her about the monoline issue, she said the city’s bond counsel had told her it did not appear to be an issue.

Yes. If by “failure … to perform” you mean failure to make principal and interest payments when due, rather than losses on mark-to-market/model or downgrade.