Federal Reserve Chairman Ben S. Bernanke said that Fannie Mae and Freddie Mac don’t need a loosening of regulatory constraints to help borrowers threatened with foreclosure, the Washington Post reported today. The government-sponsored mortgage funding companies have said that they could help ease the crunch in the mortgage markets if they were allowed to buy more mortgages and mortgage-backed securities and help borrowers refinance on more manageable terms. Democratic lawmakers have joined housing industry groups and Wall Street investment firms in calling for a relaxation of the limits, but President Bush and federal regulators have rejected the proposals. Bernanke joined those opposed, saying Fannie Mae and Freddie Mac have the ability to provide relief. Bernanke suggested instead that Congress consider allowing the Federal Housing Administration to play a larger role.

Indian companies that process U.S. mortgages are reporting fewer work orders and diminishing revenue because of the subprime loan fallout overseas, the Associated Press reported today. Several companies have moved employees once assigned to mortgage documentation and related services to other areas. As U.S. lenders tighten credit or close down, the volume of paperwork done by Indian outsourcing companies declines because of fewer applicants and fewer loans. Mumbai-based WNS Holdings is in the process of redeploying 500 of its staff after one of its top 10 clients — First Magnus Financial Corp. — filed for bankruptcy in the United States. Bangalore-based Infosys Technologies Ltd. and iGate Global Solutions Ltd. have also redeployed about 50 and 100 staff respectively due to the winding up of their business with GreenPoint.

Bankruptcy Judge Louise DeCarl Adler on Friday ordered immediate jury trials in more than 40 sex-abuse lawsuits against the Roman Catholic Diocese of San Diego, the Associated Press reported on Saturday. Trials scheduled in state court in San Diego for five cases had been suspended in February when the diocese abruptly filed for bankruptcy protection the night before the first trial was slated to begin. Lawyers of the abuse victims told the judge Thursday that reactivating those trials was the only way to get the diocese into a settlement after more than three years of fruitless negotiations in state and federal courts. The San Diego diocese has offered about $94 million to settle the claims as part of its bankruptcy reorganization plan. Plaintiffs’ attorneys are seeking a settlement of about $200 million.

Bankruptcy Judge Louise DeCarl Adler said yesterday that she would decide by Monday whether to allow as many as 42 sex-abuse cases against the Roman Catholic Diocese of San Diego to go to trial immediately, the Associated Press reported yesterday. Judge Adler issued a preliminary ruling late Wednesday night tentatively granting the plaintiffs’ request to send the cases to state court but said she needed to weigh additional issues brought up in oral arguments before making a final decision. San Diego Superior Court trials already scheduled for five cases were suspended automatically when the diocese abruptly filed for bankruptcy in February, the night before the first trial was slated to begin. Lawyers representing about 150 people who claim they were sexually abused as children by priests told Adler that reactivating those trials was the only way to force the diocese into a settlement after fruitless negotiations in court. The San Diego diocese has offered about $94 million to settle the claims as part of its bankruptcy reorganization plan. Plaintiffs’ attorneys are seeking a settlement of about $200 million.

As the subprime-mortgage crisis ripples through the broader housing market, the Bush administration is looking to the Federal Housing Administration (FHA) to help low- and middle-income homeowners avoid foreclosure, the Wall Street Journal reported today. President Bush has balked at allowing mortgage giants Fannie Mae and Freddie Mac to buy more mortgages for their portfolios to ease the credit crunch triggered by rising defaults on home loans to borrowers with poor credit. But he said earlier this month that he supports giving the FHA more flexibility to help those facing foreclosure refinance their homes. Senate Banking Chairman Christopher Dodd said recently that FHA reform will be among his top priorities, and a bill passed by committee is set to head to the full House this fall. Treasury Secretary Henry Paulson, meanwhile, has instructed staff to work with the Housing and Urban Development department, which oversees FHA, to find ways to help individuals caught in the fallout of the credit crunch.

A U.S. District Court judge ruled Monday against the Roman Catholic Diocese of San Diego’s request to remove the authority to estimate the value of childhood sexual abuse cases from federal bankruptcy court, the San Diego Union-Tribune reported today. “At this juncture, the bankruptcy court is in the best position to determine from a case-management standpoint how and when these actions should proceed for estimation or liquidation,” wrote Judge Irma Gonzalez in her nine-page ruling. Instead, she set another hearing for Nov. 26 to check on the status of the chapter 11 case and attempts to settle lawsuits involving some 150 men and women who say they were sexually molested as minors by priests and other church workers. The diocese has valued the abuse claims at $95 million; plaintiffs’ lawyers want twice that amount.

Fannie Mae, the mortgage finance giant, yesterday predicted that housing prices will decline by 2 percent on average this year and by 4 percent next year as mortgage delinquencies rise, lenders tighten borrowing standards and the volume of unsold homes approaches record levels, the Washington Post reported today. “This is clearly a market poised for more severe overall credit losses,” said Enrico Dallavecchia, Fannie Mae’s chief risk officer. Adding to the trouble, Dallavecchia said, is that many borrowers with adjustable-rate mortgages are facing rising monthly payments, which could drive them into foreclosure. Fannie Mae, which was chartered by the government to keep money flowing to mortgage lenders, offered its assessment yesterday as it provided an update on its financial condition. The company has been arguing that it could help stabilize troubled mortgage markets if regulators loosened restraints on its business, but that plea was rejected last week.

Qualcomm Inc., the San Diego, Ca. chip manufacturer, which is facing a number of legal challenges both here and internationally and which is preparing to go head to head with rival Broadcom over a patent dispute, has now seen its general counsel resign as its lead attorney. Internationally, the company is facing anti-competition complaints in both Europe and Korea while at home a federal judge, just last week, pointed at Qualcomm’s legal team for allegedly withholding evidence.

See Also:  Bankruptcy Los Angeles

A little-known company reportedly linked to state-controlled oil giant Rosneft won the auction today for a company that owns the foreign assets of the bankrupt Yukos oil group, the Associated Press reported today. The complicated case is the latest twist in the state-driven carve-up of Yukos, whose main production and refining units have been sold at bankruptcy auctions against billions of dollars in disputed back tax bills. At today’s auction in Moscow, OOO Promneftstroi — which the Interfax agency said is linked to Rosneft — bought Yukos’ Dutch-registered holding company Yukos Finance BV for 7.84 billion rubles ($306 million), according to the Russian Federal Property Fund. The sale was less than 250 million rubles ($10 million) above the starting price. Yukos Finance BV controls a 49 percent stake in Slovakia’s pipeline monopoly and over $1.5 billion (1.1 billion euros) in cash raised from the sale of Yukos’ large stake in Lithuanian refiner Mazeikiu Nafta to Poland’s PKN Orlen in 2006.

Chapter 7

Subprime mortgage lender Accredited Home Lenders Holding Company sued the private equity firm Lone Star Funds to force it to complete its $400 million takeover of Accredited, Reuters reported today. Accredited’s shares fell as much as 34.8 percent after Lone Star said late Friday that it would not go through with its $15.10-a-share buyout, citing a “drastic deterioration in the financial and operational condition of the company.” However, San Diego-based Accredited said that the merger agreement prohibited Lone Star from backing out for that reason. It said that if shareholders tendered more than half of Accredited shares by today, all merger conditions would be met. The lender is seeking to force Lone Star to complete the merger or pay money damages. This month, Accredited said its survival was in doubt and a bankruptcy filing was possible.