Homeowners Want Their Own Committee in ResCap Bankruptcy
Homeowners with mortgages serviced by Residential Capital LLC want to form an official committee in the company's
bankruptcy case, which would give them a louder voice in the company's complicated Chapter 11 proceedings.
In a Friday filing with U.S. Bankruptcy Court in Manhattan, a lawyer for the group of homeowners said they're
concerned that state and federal settlements this year with mortgage servicers including ResCap's government-owned
parent Ally Financial might not be enforced properly now that ResCap is in bankruptcy. A ResCap spokeswoman declined to
The settlement, over borrower claims of improper foreclosure practices, offers billions of dollars in relief to many
homeowners who either owe more than their homes are worth or were forced to sell their homes and move. While the
homeowners do have one representative on ResCap's official committee of unsecured creditors--a plaintiff in a
Pennsylvania class-action lawsuit brought by the same lawyer asking for a committee--the group said it needs more say to
protect its interests.
"One borrower claimant seated on the Committee will simply be overruled if any objection is made" by other "dominant"
members of the committee, the lawyer said. Further, if the class-action suit isn't viable, "then the one and only
borrower representative will be found to have no standing to be on the creditors' committee," the lawyer said in the
ResCap said at the time of its bankruptcy filing that 65,000 of its customers are in foreclosure proceedings, and
51,000 have declared bankruptcy.
An official committee gets more stature than standalone creditors in a bankruptcy case, most notably because it
typically gets its legal and professional fees paid for by the estate.
The lawyer, Robert E. Brown of Robert E. Brown PC, points out in his filing that a borrowers' committee was appointed
in the bankruptcy case of American Home Mortgage Holdings Inc. (AHMIQ).
ResCap's restructuring hinges on the sales of its various mortgage assets to Berkshire Hathaway Inc. (BRKA, BRKB) and
Nationstar Mortgage Holdings Inc. (NSM), which have been named the stalking-horse bidders for ResCap's legacy loan
portfolio and mortgage-servicing portfolio, respectively. The sales, which are subject to higher bids, could generate
more than $4 billion for ResCap's estate.
ResCap filed for Chapter 11 protection May 14 as bond-related payments loomed and litigation over soured mortgage-
backed securities mounted. The move is intended to help Ally, which isn't part of the bankruptcy, sever itself from an
estimated $400 million to $1.25 billion in liabilities related to ResCap's troubles.
Full Article: Nasdaq.com
Loved to read your blog. I would like to suggest you that traffic show most people read blogs on Mondays. So it should encourage blogger to write new write ups over the weekend primarilyReplyDelete
What a wonderful piece of information Admiring the time and effort you put into your blog and detailed information you offer! I will bookmark your blog and have my children check up here often. Thumbs up!ReplyDelete
will be checking up here often tooReplyDelete