Home foreclosures rose 47 percent in March over what they were during the same time period in 2006. What is even more alarming is how many of these foreclosures are senior citizens being evicted. Senior citizens have become a major target for “predatory lenders.” Many seniors are in need of cash to cover medical, prescription costs, etc. They use the equity in their homes to cover these costs and become vulnerable to lenders.

Diane DiDonato, who owns a title company in Pittsburgh says that “seniors get talked into taking out loans for more money than they need. Some people have borrowed 125 percent of the value of their home. They will never be able to recoup that, she said.

Senior citizens make attractive targets for predatory lenders for several reasons. They usually have owned their homes for many years, and have quite a bit of equity. They don’t always understand the terms of these complex deals, especially when it comes to adjustable rates. They don’t realize how much their monthly rates can rise until its too late. They are also very trusting.

Seniors see a TV commercial featuring an actor from their generation and they think, why, that person would never lie, so they enter into a bad deal and are betrayed by that trust, DiDonato said.

When seniors become homeless, because of foreclosure, during what are supposed to be their ‘golden years’ the results can be truly devasting.”

The complete article can be found at:

http://www.consumeraffairs.com/news04/2007/04/seniors_predatory.html

Pam

On April 25, a New York bankruptcy judge approved a Delta Air Line plan to exit bankruptcy. The plan would bring to a close Delta’s 20 month bankruptcy.

Delta expects to emerge from bankruptcy protection on Monday. The reorganization was successful in reducing labor costs, restructuring its fleet and terminating a pilot pension plan.

Shares in the reorganized Delta (NYSE symbol DAL) are scheduled to begin trading on May 2. The reorganization plan will give unsecured creditors between 62% and 78% of the value of their allowed claims as shares of the new stock.

For more information, please visit the LA Times at http://www.latimes.com/business/la-fi-delta26apr26,1,7288212.story?coll=la-headlines-business

Ray

WMC Mortgage announced that 771 workers, including 185 at its Addison based Texas division. This round of layoffs follows the termination of 460 employees last month.

WMC spokeswoman Brandie Young said that the layoffs are the result of the turmoil in the mortgage industry. Many subprime mortgage lenders are leaving the business.

WMC, headquartered in California, said it has no plans to leave the subprime mortgage industry but is looking to adjust to meet the changes in the marketplace.

For more information, please visit the Fort Worth Star Telegram at www.star-telegram.com

http://www.star-telegram.com/100/story/79013.html

Ray

The National Association of Realtors said earlier this week that home sales suffered the largest drop in sales in 18 years. A spokesman for the group said that sales of existing homes fell 8.4% in March from February, the largest single month drop since 1989.

The group acknowledges that fallout from the subprime lender situation is a cause in some of these numbers. The situation has made it more difficult for buyers with low credit scores to buy homes. He did say that the situation is masking improvements in fundamentals in the housing market and expects the numbers of home sales to rise the second half of the year.

An economist with Wachovia however is saying that potential home buyers are more wary with the current problems in the housing market. He said that this is one reason why the consumer confidence index, also released Tuesday, has dropped.

For more information, please read the following CNN article: http://money.cnn.com/2007/04/24/news/economy/home_sales/index.htm?postversion=2007042412

Ray

As you know buyers of companies frequently suggest that the target file a chapter 11 case so that the buyer can purchase "clean" assets. This process is not a foolproof method of purchase since the sale process in a bankruptcy includes open, public bidding. That is why there are often larger sized break up fees in a sale of assets out of a bankruptcy proceeding than in a private sale situation.

In the case of a Kentucky hospital, a Bankruptcy Judge recently commented on the fact that it appeared that the whole case was for the sole benefit of the potential buyer of the hospital's assets, the University of Kentucky.

"Bankruptcy Judge William S. Howard expressed concern yesterday that the Samaritan Hospital bankruptcy filing caters to the needs of the University of Kentucky while overlooking the unsecured creditors and other possible buyers for the hospital.

Samaritan's filings appear to be "designed to complete the transaction to UK with only a nod, if that, to to other potential buyers," Howard said. He later added that from the unsecured creditors' point of view, "the fox appears to be guarding the henhouse.""

Here is a link to the whole article:

http://www.Kentucky.com/179/story/47972.html

Mike