LandAmerica Sale to Fidelity Not a Sure Thing

"More suitors for LandAmerica - Stewart applies to acquire LandAmerica underwriters"

From Inman News:

Fidelity National Financial Inc. is not the only suitor hoping to snatch up LandAmerica Financial Group Inc.'s title insurance underwriting subsidiaries in bankruptcy court, according to creditors seeking to derail fast-track approval of the sale.

LandAmerica says it hasn't received a better offer than the combined $298 million Fidelity is offering for Lawyers Title Insurance Corp., Commonwealth Land Title Insurance Co. and United Capital Title Insurance Co., and has asked the bankruptcy court to approve the sale next week.

Behind the newest development is LandAmerica's filing for "Chapter 11 bankruptcy protection Nov. 26, saying it planned to sell off the title insurance underwriting subsidiaries that account for up to 90 percent of its annual revenue in order to pay creditors."

LandAmerica owes more than $650 million and was having difficulty paying creditors after its 1031 property exchange subsidiary "invested proceeds in auction rate securities that had become insolvent." (Background here.)

The LandAmerica case is being heard in Richmond, Virginia, however, approval before the bankruptcy court "can approve the sale, the Nebraska Department of Insurance -- which regulates Lawyers and Commonwealth -- must sign off on the deal."

Nebraska regulators, already scheduled to hold a hearing Monday to rule on Fidelity's application to acquire Lawyers and Commonwealth has now been presented with an application by Stewart Title Guaranty Co., the nation's fourth-largest title insurer.

We've heard from at least one lender, CapitalOne, that it will not accept title insurance commitments issued on behalf of the LandAmerica title companies. We've also heard that other New Jersey title companies are quickly signing Commonwealth and Lawyers Title agents to pick up transactions where the lender has balked at accepting their title commitments.

The sale of LandAmerica's title business to Fidelity and Chicago Title is far from a done deal. Next week's hearing will add another chapter to the story.

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306.
Tel 201-656-9220. Fax 201-656-4506.
E-mail vti@vested.com - http://www.vested.com/

Sphere: Related Content

Uncovering the impact of TARP

Inman News reports on Uncovering the impact of TARP-- Lawmakers question plan's oversight, use in curbing foreclosures

"Lawmakers expressed concerns today about oversight of the Treasury Department's $700 billion Troubled Asset Relief Program, questioning whether the money spent so far has done much to stabilize credit markets or reduce foreclosures."

The article points out the following:

• The Treasury Department has already doled out $195 billion through TARP without a system in place to measure whether the money is actually helping relieve the credit crunch, or whether banks and other companies that receive the money are complying with restrictions on its use, according to a Government Accountability Office report to Congress.
• Instead of purchasing troubled assets as originally proposed, the Treasury Department has purchased $155 billion in preferred shares in 87 banks and financial institutions -- with no requirements that the banks track or report how they use the money -- Acting Comptroller General Gene Dodaro told members of the House Financial Services Committee at a hearing today.
• Rep. Paul Kanjorski, D-Pa., said the GAO report made clear "the dire need for improvement" in oversight of the program. The report was "full of examples of failed supervisions" and highlighted the fact that beneficiaries of the program are not required to boost lending or engage in loan modifications, he said.
• Some lawmakers want to see TARP money used directly to boost mortgage lending and help prevent foreclosures. If the Treasury Department doesn't go along, Congress has the power to cap the program at $350 billion -- all but $15 billion of which has already been allocated.

Where does that leave TARP and all of us with our livelihoods tied into the real estate industry? Not very encouraged.

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306

Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com

Sphere: Related Content

Foreclosure Follies: A rebuttal to the FDIC modification plan.

The Wall Street Journal continues its theme on the inherent weakness of the FDIC's proposed mortgage bailout plan. We commented on the FDIC's Sheila Bair's Mortgage Miracle on December 3, 2008. The FDIC responded to the WSJ in a letter to the editor "Our Foreclosure Plan" on December 7, 2008.

According to today's editorial,

The FDIC wants to pay loan servicers to restructure delinquent loans and then have taxpayers share the losses if the loans fail again after six months. The FDIC did not appreciate that we reported private data showing that more than 50% of modified loans go delinquent again. The agency suggested that 15% might be a better estimate.

That estimate just got a lot harder to defend. Comptroller John Dugan released the default numbers on loans modified in the first two quarters of 2008, based on data from institutions servicing more than 60% of all first mortgages. "What makes these quarterly reports unique is that they are not merely surveys, but instead consist of validated, loan level data," said Mr. Dugan. "We believe the reports include the most accurate and reliable data on mortgage performance that is available today."

The Journal's approach was somewhat ratified by a report issued by the Comptroller of the Currency, John Dugan, that showed high default rates following modification. "The results, I confess, were somewhat surprising, and not in a good way."

The editorial continues,

"Of mortgages modified in the early part of this year, more than 35% had gone at least 60 days delinquent again after just six months, and a full 53% were 30 days delinquent or more. By eight months, this default rate had climbed to 58%. Second quarter modifications are on track to be nearly as ugly, with more than 50% of borrowers at least 30 days delinquent at the six-month mark. Come to think of it, these stinkers are going south so quickly that perhaps the FDIC's plan actually will protect taxpayers -- there won't be much left to insure after these toxic loans blow up in the first six months after modification."

Perhaps New Jersey Governor Jon Corzine should take a closer look at these numbers and accept the strong possibility that his efforts to stop foreclosures will create more havoc in the real estate market by not allowing "toxic loans" to blow up and clear the mortgage out of the market place and allow the property to get into the real estate market sooner than later.


Stephen M. Flatow

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306.
Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com

Sphere: Related Content

NJ Governor Urges Mortgage Foreclosure "Timeout"

Timeouts are not confined to sports. According to Bloomberg News Service and other outlets,

"New Jersey Gov. Jon S. Corzine urged a “timeout” on foreclosures, saying keeping people in their homes is an important step in efforts to correct a “deeply troubled” market.

A three- to six-month freeze on foreclosures is needed as the “economic dominoes are picking up speed,” Corzine said today at a housing conference hosted by the Treasury Department’s Office of Thrift Supervision in Washington. Mortgage foreclosures rose to a record high in the third quarter as one in 10 U.S. homeowners fell behind on mortgage payments or were in foreclosure, the Mortgage Bankers Association reported last week."

According to the Star-Ledger, "Corzine's remarks followed news from banking regulators, stating that more than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again."

In what direction will borrower assistance travel? Corzine would like to see the resurrection of an entity such as the Home Owners' Loan Corp. that was created in 1933 to help borrowers refinance troubled home loans during the Great Depression.

Even the FDIC admits a high rate of default after terms of modification are agreed upon. The solution will not be simple and it will be painful for lenders, especially if they are blocked from foreclosing.

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306.

Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com

Sphere: Related Content

Sometimes You Just Cannot Resist

In every situation, we can often find humor.
The banking debacle is no exception.

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306.
Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com

Sphere: Related Content