What
every good corporate citizen does when the sledding gets tough, they filed
for
bankruptcy. Ironically,
their borrowers, who probably faced the same fate when their loans went into
default and their homes were foreclosed on, can now at least smile when they
appear before the
Bankruptcy
Court secure
in the knowledge that their lenders will soon face the same fate. Or will
they? ResMae insiders probably have already made off with the lion’s
share of loot they made selling subprime mortgages to the Merrill Lynch's
of the world and with the bankruptcy filing, they won't have to buy back
what I'm sure will be a landslide of defaulted loans in the next few quarters.
But that's another story and frankly, it looks like there will be some juicy
lawsuits that will spring out of this filing. My law firm,
Heygood,
Orr, Reyes & Bartolomei, would love to help the
secured
creditors and the
trustee sort
out who got what, when and how in the ResMae debacle.
The bleeding gets worse.
Another subprime lender,
Accredited Home Lenders Holding Co. out of San Diego, reported a 4Q loss of $37.8 million because they were forced to buy back a bunch of their cruddy loans. It will only get worse for Accredited, so if you're in
LEND get out and get out quick. Accredited is begging its lenders to extend its loan covenants so it can regroup. It isn't going to help; it's only going to prolong the chance for insiders to cash out while they can.
©2007
Angel Reyes
Read more articles by Angel Reyes at AngelReyesBlog.com.