A prior post addressed a proposed amendment to Article 9's official comments stating that the date of an Article 9 filing relates back to the initial filing date even if the debtor did NOT authorize the filing at that time. This post returns to that topic for two reasons. First, although it is risky to generalize, I sense that bankruptcy judges may still be unaware of this proposed amendment. This is relevant because bankruptcy judges often are on the "front lines" of Article 9 interpretation. Second, I have heard, indirectly, that at least some people want this amendment to lend approval to some lenders' current practice to routinely file without authorization during the loan application process. In other words, the loan is likely to be given within a few days, so no harm no foul. Maybe I misheard or misunderstood?  

As suggested by one of the commentators in response to my last post, eliminating debtor signatures from financing statements sure did open a can of worms. Moving to medium neutrality is one thing. Rendering debtor authorization optional is something different entirely.      

1. Pino v BONY | Florida Supreme Court to Review Dismissed Foreclosure Lawsuit Against Greenacres Man
2. BONY V PINO | Florida Supreme Court Oral Arguments Live Thursday May 10, 2012 @ 9:00AM EST
3. Just How Much Foreclosure Fraud Exists? Presenting the MBA’s Brief in the Florida Supreme Court Pino Case

1. Attn Captain Obvious | Fed Proposes Rule that Would Require Creditors to Determine a Consumer’s Ability to Repay a Mortgage BEFORE Making the Loan
2. Mortgage Bankers Association Letter to the Federal Reserve RE “Skin in the Game” and the Ability of Borrowers to Repay
3. Mass Court May Rule on Retroactivity of some Foreclosures Tied to ‘Naked Mortgages’

1. Why Mortgage-Backed Securities Aren’t (Backed by Securities): How MERS Toasted the Banks
2. Bear Stearns Asset Backed Securities Trust 2005-4 v. EMC Mortgage Corp | JPMorgan Sued for $95 Million Over Mortgage Securities
3. Another Wrist Slap | Wells Fargo Agrees to “Settle” with SEC for $11 million on Wachovia Securities Laws Violations Involving Mortgage-Backed Securities

1. Update from NJ – Bank of New York v. Michael Raftogainis – Foreclosure Case Means Lenders Have to Prove They Hold Mortgage in Atlantic, Cape Counties
2. Motion to Dismiss WITH Prejudice Against Florida Default Law Groups Client Deutsche Bank – Over Two Year Period Plaintiff Failed to Produce Documents to Foreclose
3. Allonge (n)- A Clever Way for Pretender Lenders to Pabricate “Proof” of Ownership in Order to Foreclose

1. Howdy Folks | Oklahoma Supreme Court Attacks Fraudclosure Head On in TWO STRONG January 17, 2012 Opinions
2. Hawaii Toxic Titles | RE SB 651 – Fannie Mae Update on Legislative Changes Affecting Non-Judicial Foreclosures
3. Toxic Titles – “Pretender Lenders” Walking Away from Foreclosures

I'm having trouble getting excited over RadLAX going before SCOTUS.  Ronald Mann has written that RadLAX "well might be the most important business bankruptcy case since its 1999 decision in Bank of America National Trust & Savings Ass’n v. 203 North LaSalle Street Partnership." I think that statement is literaly true, but that's not saying much; the Supreme Court doesn't hear very many business bankruptcy cases, period.

As it stands, I don't think the outcome in RadLAX is going to have much of an impact on bankruptcy practice on the ground.  If the creditors prevail, the world will look like status quo, say 2009:  credit bidding is allowed in sales under plans (and there will be little reason to teach RadLAX in a bankruptcy course).

If the debtor prevails, then de jure there will be no right to credit bid, but there will be one de facto in most cases (making the case well worth teaching).  If there's a DIP financing agreement, that agreement will almost certainly provide for the DIP lender to have a right to credit bid.  That means a ruling for the debtors will affect a narrow class of creditors and cases.  It will affect secured lenders not in the DIP consortium, and it will affect secured lenders in cases where there is no DIP financing. That's cases financing themselves on cash collateral or unrestricted cash or trade credit or unsecured insider DIP loans.  In other words, no impact whatsoever on the mega-cases.  Maybe a greater impact on middle market. We'll also see syndication agreements including provisions to deal with cash bidding situations.  In other words, a ruling for the debtors in RadLAX is unlikely to result in a major realignment of power in bankruptcy cases.  

Sadly, SCOTUS taking RadLAX (which is reasonable to deal with a circuit split) is a reminder that SCOTUS hasn't addressed the two key issues in Chapter 11:  the use of DIP financing agreements and asset sales as sub rosa plans.  Obviously SCOTUS has to have a proper case to deal with these problems, and SCOTUS generally has discretion on hearing appeals.  The Court could have dealt with this in Chrysler, but because of the macroeconomic impact of Chrysler (via GM), it was not the ideal case for addressing the interaction between the DIP loan, the sale, and the plan. So while it's nice to see a business bankruptcy case before the Court, I don't think too much rides on this one.  

1. Florida Clerk of Court (NOT SHARON BOCK) Sues Mortgage Electronic Registration System (MERS) for Civil Conspiracy, Unjust Enrichment, as well as Fraudulent and Negligent Misrepresentation
2. PBC Clerk of Court Sharon Bock to County Citizens RE Fraudclosures, It’s Not My Problem
3. Clueless | Palm Beach County Clerk of Court Sharon Bock on FL MERS Lawsuit “We had no knowledge of the lawsuit until today”

1. NFHA Report | Here Comes the Bank, There Goes Our Neighborhood – How “Lenders” Discriminate in the Treatment of Foreclosed Homes
2. Bulldoze ‘Em | Banks turn to demolition of foreclosed properties to ease housing-market pressures
3. High court in Massachusetts upholds law aimed at blocking certain evictions from foreclosed homes

1. Incoming! | Florida’s Red Carpet Treatment of Fraudclosures Results in Surge in New Filings
2. PB Post | More than Half of Palm Beach County Foreclosure Canceled
3. Supply and Demand | Banks backing off on foreclosures in Palm Beach County

1. NFHA Report | Here Comes the Bank, There Goes Our Neighborhood – How “Lenders” Discriminate in the Treatment of Foreclosed Homes
2. GAO Report | VACANT PROPERTIES – Growing Number Increases Communities’ Costs and Challenges
3. Fraudclosuregate | More Banks Walking Away from Homes, Adding to Housing Crisis

1. Mass. Bankruptcy Judge Voids Foreclosure of MERS Mortgage – Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too
2. California | Bankruptcy Judge Denies MERS, Foreclosure Sale Void, “MERS System is not an Alternative to Statutory Foreclosure Law”
3. Statement by CEO of Mortgage Electronic Registration Systems (MERS) “The MERS System is not fraudulent, and MERS has not committed any fraud.”

1. Oakland County, MI Wins Federal Suit Against Fannie/Freddie for Transfer Taxes on Deeds
2. Fannie Freddie FHA REO Inventory Q1 2010
3. KABOOM | FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac (Filings)

1. William K Black | How Did a Relatively Small Number of Subprime Loans Cause a Record Crisis?
2. William Black – Lenders Put the Lies in Liar’s Loans
3. William Black | What if the SEC investigated Banks the way it is investigating Mutual Funds?

1. EXECUTIVE ORDER 13519 ESTABLISHMENT OF THE FINANCIAL FRAUD ENFORCEMENT TASK FORCE
2. 1st Annual Mortgage Foreclosure Defense Symposium at the PGA National Resort & Spa
3. An August Surprise from Obama? Rumors – Administration is About to Order Government-Controlled Lenders Fannie Mae and Freddie Mac to Forgive Portion of Mortgage Debt

1. OCC Settles Civil Money Penalties Against Large National Bank Mortgage Servicers for $394 Million; Penalty Assessment Coordinated with Servicers’ Actions and Payments Under Federal-State Settlement
2. Supreme Court of South Carolina ADMINISTRATIVE ORDER Re: Mortgage Foreclosure Actions
3. Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure Abuses

1. OCC Settles Civil Money Penalties Against Large National Bank Mortgage Servicers for $394 Million; Penalty Assessment Coordinated with Servicers’ Actions and Payments Under Federal-State Settlement
2. Supreme Court of South Carolina ADMINISTRATIVE ORDER Re: Mortgage Foreclosure Actions
3. Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure Abuses

1. Houston’s County Joins Texas Suit Seeking $10 Billion From MERS, Banks
2. Texas | Rusk County Court Approves Legal Action Against Mortgage Electronic Registration Systems (MERS)
3. Texas | Kingman Holdings v. CitiMortgage & MERS, Signing officer “had no such authority, MERS would know that fact

1. Houston’s County Joins Texas Suit Seeking $10 Billion From MERS, Banks
2. Texas | Rusk County Court Approves Legal Action Against Mortgage Electronic Registration Systems (MERS)
3. Texas | Kingman Holdings v. CitiMortgage & MERS, Signing officer “had no such authority, MERS would know that fact

1. More “Deadbeats” | Church Foreclosures Surge, Seen as ‘Next Wave’ in Crisis
2. LPS’ Mortgage Monitor Report Shows Average Loan in Foreclosure Is Delinquent for Record 599 Days
3. By the Numbers: A Revealing Look at the Mortgage Mod Meltdown

1. Oregon | House Proposal Would Weaken Senate Foreclosure Protection Bills, Validate MERS Retroactively
2. Homeowners’ Response to Banks’ Dual Track Mod/Foreclosure System
3. Oregon | Re: PRR 174 – Public Records Request Acknowledgment on Oregon House Judiciary Committee Records Dash-7 Amendment to Senate Bill 519

Wall Street Journal Reporter Jessica Silver-Greenberg casts a spotlight on the market for fertility treatment loans - including loans that enable the purchase of other women's eggs  - in the article "In Vitro a Fertile Niche for Lenders."  (subscription required). Perhaps this will prompt some coverage of the adoption loan market, which also has very interesting not-for-profit lending options; the direct financial price of the credit may be low but some complicated strings are attached. My earlier efforts to broadly evaluate the impact of loans in these markets are here and here.