U.S. loans GM $4 billion more

General Motors, which is surviving on $15.4 billion in U.S. government loans, announced today that it has received an additional $4 billion from the government.

In a regulatory filing, GM said it borrowed the additional money today after amending its loan agreement with the U.S. Treasury last Wednesday.

The new loan brings the total amount lent to GM to $19.4 billion.

The automaker said in press release that the new loans are “to maintain adequate liquidity as the company undergoes an aggressive restructuring.”

GM said it had previously believed it would need only $2.6 billion prior to June 1 but now forecasts needing that amount plus an additional $1.4 billion.

The added $1.4 billion “reflects updated timing of when certain expenses would be incurred,” the company said.

The additional amount is being pulled ahead from money that was expected to be borrowed later. GM had forecast that it would need $9 billion from the government after June 1. Now that total has now dropped to $7.6 billion.

“We appreciate President Obama's and his Administration's ongoing support of GM and the domestic U.S. auto industry as we undertake the difficult but necessary actions to reinvent our company,” GM said in a statement. “We will continue to work closely with members of the President's Auto Task Force throughout our restructuring and together we will continue to monitor our liquidity needs during this period.”

Payday loan regs pass, ending 4-month impasse

The Senate passed a payday lending bill today, a controversial measure proponents call a compromise, and consumer advocates call disappointing.

The Senate vote for passage, 41-4, broke a four-month long General Assembly impasse.

Sen. Joel Lourie,D-Richland, a co-sponsor of the compromise amendment that broke impasse, said he expects the House of Representatives to accept the Senate version of the bill, without a need for further action.

If that happens, the bill would go downstairs for the governor to sign or veto.

The compromise raises the maximum payday loan amount to $550 from $350, and limits outstanding loans to one at a time by way of a database that will track borrowers.
.
Borrowers would have to wait one day between loans, and after consecutive loans a two-day cooling off period would be in effect.

Other provisions of the compromise are that borrowers would have a 24-hour to change their mind on taking out a loan, meaning they could cancel the transaction within 24 hours if they chose.

If borrowers get trapped in a loan they cannot repay, they could enter an extended payment plan, once per year, which would allow their loan repayment to be broken into four equal payment dates.

The bill also calls for an annal review of the database by the state Board of Financial Institutions, which must make a report to the Senate Banking and Insurance Committee and the House Labor, Commerce and Industry Committee.

Loan reset threat looms till 2012

Homeowners nationwide with good credit but artificially low mortgage payments could be forced to pay more to the bank sometime within the next three years, according to Credit Suisse.

If low interest rates remain, some of these borrowers will be spared payment shock. But those with extremely low payments via deferral of interest/principal owed, will not.

While preparing a story about high-priced foreclosure resales selling slowly in Orange County, I asked Credit Suisse for the latest version of its chart on loan resets nationwide. (The chart has popped up on several Web sites in past months.)

To the right is the version updated last month (click on it for larger image). It shows resets increasing from here with peaks in 2010 and 2011/2012 in the range of $30 to $45 billion monthly. The chart also shows subprime resets are still going on, but decreasing in frequency over the rest of 2009. However, prime resets and resets on loans to people with decent credit scores but special circumstances (stated income) are heading straight up through early 2012.

Note that the chart uses both resets, when interest rates change, and recasts, when payments change. Resets and recasts often happen at once, but not always. Credit Suisse, an analyst told me, used resets in the chart for all loans except option adjustable-rate mortgages, when borrowers can choose a minimum payment that may be less than interest owed (option ARMs are in yellow on the chart… see how they are rising!). For option ARMs it used recasts, which can happen either when the loan amount expands to a maximum allowed — often 115% or 125% of original principal — or a set period, such as five years. (Read more on resets/recasts at Calculated Risk.)

Now here is a copy of the chart published in a February report. This chart goes back further in time. The older chart shows a big peak in 2010 — about $40 to $45 billion a month in loans around September/October 2010. The newer chart pushes that peak about one year into the future into late 2011/beginning 2012.

Some borrowers will hold on a little longer. Maybe the housing market will recover by 2012 and they can sell to avoid foreclosure.

But if any of these borrowers are deferring principal and interest owed, reaching say a maximum of 125% on a loan amount on 2005 to 2007 prices, then it is much less likely home prices will have rebounded enough to save them by 2011 or 2012.

1-in-4 O.C. home buyers use federal loan program

For the past five months, roughly one out of every four home buyers in Orange County used a federally run loan insurance program that was practically nonexistent here two years ago.

Now home buyers are taking advantage of loans insured by the Federal Housing Administration. One reason: they can make a down payment as low as 3.5% and that can be gifted from a relative. Another reason: the limit was raised to nearly $730,000.

The chart (click on it for larger image) shows FHA market share of purchase loans per month — it was 24.2% in April, down a tad from 25.2% in March but nearly triple a year ago.

FHA has also taken off because brokers and lenders are pushing the program to consumers. When investors in 2007  stopped buying securities backed by mortgages with no government protections, lenders increased or switched to FHA loans and also began doing more loans that can be sold to Fannie Mae or Freddie Mac, which are both under federal receivership.

Under FHA, borrowers pay a fee, and those fees go into a pool which is used to compensate lenders if borrowers default. However, if the pool is inadequate to keep up with defaults, taxpayer money could be used to fill the gap.

I haven’t seen data on what percentage of Orange County purchase loans are being sold to Fannie or Freddie, but I would guess they are making up most of the other 75% of the market.

Our federal government is keeping Orange County’s housing market on life support. How long will this go on?

LI loan officer charged in mortgage scam

As a Garden City loan officer, Anita Bareja approved applications like the one from a purported sales manager earning $15,000 a month, prosecutors said Friday.
In reality the borrower was a welder earning $11 an hour -- and a partner in Bareja's scheme to steal money from banks through fraudulent mortgage applications, according to a release from Nassau District Attorney Kathleen Rice's office.
Bareja, 35, of Dix Hills, pleaded not guilty Friday to charges of grand larceny and forgery charges in First District Court in Hempstead. She was held on $20,000 bond, or $10,000 cash, and due back in court May 26.
A message for Bareja's lawyer Neil Greenberg was not immediately returned.

Prosecutors say Bareja approved at least three false loan applications from co-conspirators, based on what she knew to be falsified bank and employment information, and took an estimated $500,000 in profit, Rice said.
Two co-conspirators are to be arrested soon, according to a spokesman for Rice. No further details were available.
On top of lying about the co-conspirators' salary information, the mortgage applications included forged house appraisals to inflate the amount of the loans, Rice said.
Bareja faces two counts of second-degree grand larceny, three counts of first-degree falsification of business records, one count of first-degree scheme to defraud, and four counts of third-degree criminal possession of a forged instrument.
In May 2006, Bareja, while working at EFI Capital Corp., and her co-conspirators, used falsified employment records, financial information and bogus appraisals to obtain more than $1.5 million in fraudulent mortgages, Rice said.
Once Bareja approved the loan for the inflated sale price, she and her co-conspirators would profit from the difference, Rice said. They then defaulted on the loans and sent the newly purchased home into immediate foreclosure.
The investigation is ongoing.

Tags: Loan,money,debt,insurance,economic,bank

Story Comments 01 May 22, 2009 in City State officials reject airport’s bid for expansion loan

SEATAC, Wash. – In a decision that could jeopardize more than 200 planned jobs, state officials on Thursday rejected the Spokane airport’s request for a $6.8 million loan.

It’s too much to ask for, some members of the state Community Economic Revitalization Board said, when many rural communities are struggling more.

“I just can’t get there,” said board member George Raiter, voting no.

But by a single vote, the board also offered an alternative: $4 million. Proponents were disappointed, but said they’d see if there was a way to make it work.

“Hopefully there is. We want to be in Spokane,” said Bret Burnside, president of Cascade Aerospace USA, one of the two companies that wants to expand into a new $11.6 million building that would be partially paid for with the loan money.

Airport spokesman Todd Woodard said the expansion would create 266 new jobs.

“It’s an extraordinary number for Eastern Washington,” said Terry Lawhead, the regional manager for the state office of Community, Trade and Economic Development.

Unfortunately for proponents, $6.8 million was also an extraordinary number. Until now, CERB loans have been capped at $2 million.

“Leaping from 2 to 6.8 is a big step,” board member Marty Gardner said. The board voted to do away with that limit to consider the Spokane proposal.

For the past three years, state cash has helped add 142 local aircraft-based jobs. Some $750,000 in grants and nearly $3.3 million in loans has helped develop facilities used by four companies. Among them: a new 18,000-square-foot maintenance hangar.

Since setting up maintenance operations in February, Cascade has grown from 40 Spokane-area jobs to 60. Workers commute from as far away as Idaho and Moses Lake. Burnside said Thursday that a pending deal could mean 60 more jobs by the end of the year.

To supplement the $6.8 million no-interest loan, the airport would kick in $1 million, with Cascade and an aircraft-painting company, Associated Painters, each adding nearly $2 million.

In Cascade’s case, Burnside said, having the additional hangar space would mean the company could add more than 200 new workers, plus work for local suppliers. Associated Painters President Rod Friese said the Spokane operation would mean 36 jobs or more. The new facility is essential, he said.

“Without it, we will be forced to look elsewhere,” he said.

Spokane Community College would piggyback on the expansion, moving its aircraft-technician program from Felts Field. SCC President Joe Dunlap said the program has grown from 43 students to 90 in just two years.

Spokane International Airport’s proposal has already been pared back once. The original plan was to ask for a total of $8.7 million to build two buildings.

CERB projects are mostly rural, but in the last months of each two-year budget cycle, unspent money can be used for urban projects. The airport, as part of Spokane County, is considered urban.

The two-year budget cycle ends June 30. After that, any money left over would fall under the next budget’s rules, meaning that only $1.5 million can be spent in urban areas.

So airport and company officials must decide quickly whether they can make the project work with $4 million.

Some CERB members objected to spending so much money in one spot. State Sen. Dan Swecker, R-Rochester, suggested that the proposal was an urban money grab. CERB loans are for hard-to-grow rural areas, he said. Urban areas can find other money, he said. “Urban always wins,” he said.

Raiter, a county official from Kelso, also said the project would wrongly gobble up money that could be spread around. “I can’t do that to other parts of the state,” he said.

And the Spokane airport has “gotten three CERB loans since 2005,” added board member Julie Tappero, of Gig Harbor. “It’s not like they’ve never gotten anything.”

Sen. Brian Hatfield, D-Raymond, argued that the 266 jobs were a rare “bird in the hand” that shouldn’t be turned down in favor of awarding $50,000 here and there.

“What did we really get for that in the long term?” he said. “Right now we need jobs for the recession.”

Tags: Loan,money,debt,insurance,economic,bank

Government seeks US$300mn World Bank loan for transport sector

The Peruvian government is seeking a US$300mn loan from the World Bank to partly finance transport infrastructure development projects, according to a bank document posted on its website.

The funding - to be covered by the World Bank Group's International Bank for Reconstruction and Development (IBRD) - would support road and highway projects (80%), and the general transportation sector (20%).

The loan would support an overall US$1.08bn transport infrastructure development program, of which another US$630mn is to be covered by the state and US$150mn by IDB.

The World Bank's contribution is expected to be authorized on October 8, while its approval by the bank's board is expected for January 28, 2010.

According to document, US$200mn of the US$300mn loan would support an US$880mn road rehabilitation and maintenance program developed by the transport and communications ministry (MTC).

Another US$75mn of the funding would support a US$150mn road maintenance program known as Proyecto Perú, implemented by the national roads authority (Provías).

A total of US$20mn would support a US$40mn road safety program to reduce critical points and improve bridges, improving safety standards along a number of national roads.

Finally, US$5mn would support a US$10mn institutional support and transport regulation initiative, which seeks to improve the institutional performance of Provías and other MTC areas, increasing the quality of infrastructure management, monitoring and evaluation by improving information and planning, among other issues.

Tags: Loan,money,debt,insurance,economic,bank

Banks approve $150-M loan to ICTSI

MANILA, Philippines—Port operator International Container Terminal Services Inc. (ICTSI) has raised $150 million from a three-year loan with a syndicate of seven banks for the refinancing of some debt due by end-2010.

In a disclosure to the Philippine Stock Exchange yesterday, ICSTI said it had signed a three-year loan facility with The Bank of Tokyo-Mitsubishi UFK Ltd., Calyon, HSBC Ltd., Australia and New Zealand Banking Group Ltd., Chinatrust (Philippines) Commercial Bank Corp., Citibank NA and Mizuho Corporate Bank Ltd.

“Proceeds of the loan facility will be used to refinance substantially all of the remaining outstanding balance of the company’s $250 million revolving and term loan facility due in December 2010 and will result in ICTSI having no substantial debt repayments due until the second half of 2011,” the company said.

It was earlier reported that ICTSI is bracing for a tough global environment by settling some debts ahead of maturity and negotiating with foreign creditors to stretch out the term of the large maturities next year.

ICTSI has already prefunded its capital requirements for this year and taken steps to prefund some of the debts due next year. The company tapped $106 million in remaining funds from a revolving credit facility in October last year and raised another P7.2 billion last December from five- to seven-year loans.

The company’s principal business is the management, operation and development of container terminals here and abroad while subsidiaries provide cargo handling and related services to container, storage facilities and services, and roll-on roll-off and anchorage services to non-containerized cargo or general cargo.

Aside from operating its flagship Manila International Container Terminal, ICTSI also operates two other terminals in the Philippines—the Cubi Point at the Subic Bay Freeport Zone in Zambales and Sasa International Port in Davao City. It also has a global portfolio of port terminals in 11 countries across four continents. It has operations in the Philippines, Brazil, Poland, Madagascar, Japan, Indonesia, Syria, China, Ecuador, Colombia and Georgia.

Doris C. Dumlao

Tags: Loan,money,debt,insurance,economic,bank

Pilgrim's Pride repays DIP loan, sells assets

NEW YORK, May 22 - Pilgrim's Pride Corp <PGPDQ.PK>, the bankrupt U.S. chicken processor, said on Friday that it fully repaid its $450 million debtor-in-possession financing facility and completed the sale of its Farmerville, Louisiana, processing facility for $72.3 million.

The company said it sold the Farmerville complex, which includes a processing facility, a cook plant, two hatcheries, a feed mill and a protein conversion plant, to Foster Farms. A U.S. Bankruptcy Court approved the sale earlier this week.

Pilgrim's Pride said the proceeds of the sale will be held in a cash collateral account and used for general corporate operating purposes as needed.

The company and certain of its subsidiaries filed for Chapter 11 bankruptcy protection in December. It has been closing plants, reducing production and laying off employees as it works to return to profitability.

Tags: Loan,money,debt,insurance,economic,bank