Royal Bank of Scotland certainly looks to be hostile. The consortium lead by Royal Bank of Scotland said that it is ready to make an unsolicited offer for the entire ABN AMRO bank. In essence, they were already hostile, so the fact that the said that they were going to take this directly to the shareholders is no surprise.

Is the gorilla in the room still LaSalle Bank?

There is an interesting situation developing here that we could perhaps point out that fact that we could have another consortium coming up, if Bank of America is not happy with the situation. If they want to secure the opposition, they may want to start their own consortium. There are possible implications. LaSalle Bank does create an interesting point. Most of the best legal experts in the world are looking at the contract of the sale of LaSalle Bank, going through the details to see what is possible, what can they do in these circumstances.

So the question is how difficult of a position could the shareholders of ABN AMRO be be in?

On the one hand they are going to legally block the sale but voted to break up the bank on Thursday and at the same time you have Bank of America saying that they have a contract that is bullet proof to buy it. This will have to be decided by the courts unless multiple side back down.

Typically courts are slow most time but this particular court is quite rapid. In this case there is a famous judge that is world recognized and appreciated in the business community; therefore the court case will be in very good hands for fair judgment. It will be faster and all parties involved have an interest in not being entangled in court cases.

So everyone is wondering, how will this Barclay deal play out? Is there really the possibility of another consortium coming forward? How will this end?

For the moment the market is giving it 50/50% chance to both the Barclays offer and to the consortiums offer. It is difficult to judge who will win given the legal complications. It is also possible for Bank of America to get annoyed with the situation and it could consider contacting some of their associates in the US and Europe and build an equivalent to what Royal Bank of Scotland is doing. This acquisition has global implications, not just Europe.

When can we expect to see some conclusion?

We have an acceleration factor here due to the fact that the current contract for the sale of LaSalle Bank has a 14 day chance for a counter offer from initial contract, therefore there is pressing time issue. That fact alone points to an accelerated process.Being a complicated acquisition, regardless of the outcome the earliest most economists and industry experts are seeing is an outcome by the end of 2007.

Will Royal Bank of Scotland go for LaSalle Bank directly if their consortium does not get the ABN AMRO acquisition?

They could have already done that. Due to the fact that they have started the consortium shows that they feel that this avenue offers the best value for all the parties involved and for the shareholders of ABN AMRO. So the fact that they have not singled out LaSalle Bank is a very good indicator they believe the consortium has a very good chance of success.
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68% of ABN AMRO shareholders voted in favor for the Dutch bank to pursue a sale or merger of parts or all of the bank in today’s meeting.

Of the shareholders present or represented by proxy, 68% have voted in favor of hedge fund TCI’s proposal that ABN AMRO pursue the sale, spin-off or merger of some or all of the major businesses.

ABN Amro has announced it is now engaged in soliciting alternative bids for LaSalle Bank, the Chicago-based holding it agreed to sell to Bank of America for $21 billion on April 23. Industry insiders have speculated that Royal Bank of Scotland could bid up to $23 billion for LaSalle — but BoA can likely match that offer, and other banks might enter the fray.

Meanwhile, Bob Diamond, Barclays president has expressed his continued optimism with his companies $91 Billion takeover of ABN AMRO.

Sources: http://www.reuters.com/

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Washington Mutual launched a brand new mortgage and home equity line of credit product that is bundled into a single loan. This unique feature allows customers to reset interest rates or switch between fixed and adjustable rates up to twice a year without having to refinance.

WAMU Mortgage Plus is designed for more control and flexibility, it will help consumers take advantage of changes in their financial needs or market conditions without the costs or hassles of refinancing.

WAMU Mortgage Plus gives customers a simple way to get cash for remodeling projects, college tuition or debt consolidation.

WAMU Mortgage Plus will charge customers $250 each time they reset terms of their mortgage home equity loan, up to twice a year, though the first reset will be free. There is no cost to switch from a fixed rate because it is believed to be the safest option as oppose to an adjustable rate.
 
Borrowers will have to put 10% down, but Washington Mutual charges no origination fees and waives various other costs home buyers typically pay, such as appraisal and title fees.

Once borrowers begin paying down their mortgage, they are able to tap into their equity with a check, cash advance or, in most states, a credit card. That available line of credit will grow as they pay down their mortgage
 
There are other products with similar features.

If you feel interest rates are going to go down, you can use the variable rate option, if you feel interest rates are going to go up then you lock into a fixed rate mortgage. Simple as that.
 
Washington Mutual began offering WAMU Mortgage Plus in March and is kicking off nationwide marketing today.

WAMU Mortgage Plus is only available to people with better credit scores and desire flexibility. WaMu Mortgage Plus clients will be able to choose between the conventional method of paying both interest and principal or just make the interest payments.

The housing report showed that the rise in sales activity helped to lift prices, with the median sales price increasing to $254,000, a gain of 6.4 percent compared with the same period a year ago.

The Commerce Department reported Wednesday that new home sales rose 2.6 percent in March compared with February, when new home sales had plunged to the lowest level in nearly seven years. New homes were sold at a seasonally adjusted annual rate of 858,000 units in March.

The March improvement was just half what analysts had expected and still left the sales pace 23.5 percent lower than a year ago as the housing industry continues to go through a painful adjustment after an extended boom period.

Analysts said the rise in home sales reflected better-than-normal weather in March following serious winter storms in January and February.

The report on new home sales followed a report Tuesday that sales of existing homes, by far the larger part of the sales market, fell 8.4 percent in March.

The slump in housing, which began last year, has been a significant drag on economic growth. Analysts expect that to continue as rising mortgage foreclosures dump more homes onto the market and cause lenders to toughen their standards, making it harder for prospective buyers to qualify for loans.

Also Wednesday, the Dow Jones industrial average shot past 13,000 for the first time in history as stronger-than-expected earnings reports streamed in, suggesting to investors that corporate America is successfully weathering the cooling economy.

The median price of a new home rose 6.4 percent last month to $254,000 from $238,800 a year earlier, the report showed.

The biggest increase was a 50 percent rise in sales in the Northeast, followed by an increase of 9.8 percent in the Midwest two regions which had been slammed by winter storms in February. Sales fell 2.7 percent in the South and were down 0.9 percent in the West.

The gain may be more a reflection of higher-than-normal temperatures in March than a sign of a recovery in demand, economists said. The National Association of Realtors reported yesterday that existing homes sales dropped by the most since 1989 last month. Those purchases are largely based on contracts signed in February, when winter storms dissuaded buyers.

The government will release its first look at growth in the gross domestic product for the January-March period on Friday.

Effective May 1, 2007, SONYMA (State of New York Mortgage Agency) will accept loans that are 40 years in term. SONYMA has allocated an additional $10 million for its Closing Cost Assistance Loans (CCAL) which provides borrowers with the greater of $5,000 or 5% of their total mortgage amount to cover the expenses associated with closing their mortgage loan.

The 40 year mortgage product will offer up to 97% financing, and a below market interest rate that remains fixed for the duration of the loan. The fixed rate on the 40-year mortgage will initially be offered at 5.5% for SONYMA’s standard program, the Low Interest Rate Program. This is an estimated 0.875 % below average market rates for 40-year mortgages.

With this new 40 year product, borrowers will have lower monthly payments than a traditional 30-year mortgage. On a loan amount of $225,000, this translates into monthly savings of approximately $100. This difference can help first-time homebuyers achieve their goal of sustainable homeownership. said Priscilla Almodovar, the President and Chief Executive Officer of State of New York Mortgage Agency.

SONYMA Mortgage Loans help both low and moderate income New Yorkers achieve homeownership by providing low down payment mortgage financing at below market interest rates. In addition to satisfying income and purchase price limit requirements, eligible applicants must be first-time home buyers, as defined under the program OR except in federally designated Target Areas of the state.

By reducing or eliminating borrowers contributions towards closing costs, SONYMA’s CCAL helps borrowers overcome one of the larger obstacles to homeownership - the amount of funds generally necessary for down payment and closing costs. The assistance is available in combination with any currently available SONYMA mortgage program. It requires no monthly payments and is forgiven after ten years.

The purpose of the Agency is to create affordable homeownership opportunities for low and moderate income first time homebuyers and other qualifying homebuyers. SONYMA is a public-benefit corporation of the State of New York created in 1970.

Another 2 days, another $7.5 Billion dollars - you know the old cliché.

The Rival Trio of Royal Bank of Scotland, Banco Santander Central Hispano and Fortis NV; has submitted an offer for ABN AMRO of $98.5 Billion. This offer has topped a previous offer via an agreement that had been reached between ABN AMRO and Barclays.

In what was suppose to be the largest banking takeover the world has ever seen, ABN AMRO had had made a preliminary agreement to sell to British bank Barclays for what was an amazing $91 Billion US. ABN had committed to a meeting with a rival bidding consortium led by Royal Bank of Scotland which resulted in ABN’s newest offer.

Formed by King William I in 1824, ABN AMRO has its origin is traced to the Netherlands Trading Society, and was forged in its current form in 1991 through the merger of Algemene Bank Nederland (ABN) and Amsterdam-Rotterdam (AMRO) Bank.

The consortium’s bid consists of 70% cash and 30% Royal Bank of Scotland shares, giving it an appeal to shareholders over Barclays’ all-share offer. As reported on Reuters, ‘its management (ABN AMRO) is recommending the deal with Barclays’, however, Seeking Alpha states, ‘Activist investor TCI Fund Management is demanding that the ABN board “recommend the Royal Bank consortium offer…and terminate the LaSalle Bank sale” at its annual board meeting tomorrow.’

The consortium intends to break up ABN, an idea favored by TCI and one ABN CEO Rijkman Groenink is trying to avoid.

The European Banking sector is considered ripe for consolidation, takeover offers of ABN AMRO appear to be the beginning of a series of European acquisitions and mergers.

New Century Financial was awarded a bankruptcy approval 04/24/2007 to proceed with the sale of its loan origination unit in an expedient auction with offers due by 5/2/2007. Auction bids will begin with offers of at least $1 million.

U.S. Bankruptcy Judge Kevin Carey agreed to sign an order approving the auction. Additionally, he agreed to sign an order allowing New Century to sell its Access Lending subsidiary.

New Century acquired Access Lending last year and the original founder of Access, David Fleig, agreed to purchase it for about $76,000 and 60 percent of the proceeds from the sale of loans. According to the court filing, New Century has estimated that its portion of the proceeds would total about $6 million.

New Century Mortgage had been the largest provider of subprime mortgages; they primarily lent money to people with poor credit histories prior to filing for bankruptcy this month. New Century Mortgage imploded under huge delinquency rates and defaults, a federal criminal probe, and orders by or agreements with at least 17 U.S. states to stop lending.

New Century is currently being traded for an embarrassing 93¢ per share, down from a 52 week high of $51.97 on May 1, 2006.

In the final agreement, New Century has committed to file it’s financial reports by 5/31/2007.

The markets are entering towards new highs, in part due to rising home construction and encouraged investors.

But wait a minute isn’t the mortgage market imploding?

Since the subprime mess that was the major reason that originally hurt the markets back in February, the business of handing out risky loans is a business no more. Most of the major subprime lenders that contributed to the problems are not in business after a much needed market correction.

Fannie Mae, one of the nations biggest home mortgage investors is debuting a campaign that will allow lenders to refinance certain subprime borrowers homes, thus reducing the number of foreclosures.

One option for an homeowner that is in foreclosure is their home mortgage will go from a 30 year term to a 40 year fixed rate mortgage. This subprime bailout will reduce a persons monthly mortgage payment every month and make their mortgage more affordable.

Fannie Mae will offer this program to those individuals with risky credit, be able to afford the new payments and they must exhibit that they are in trouble.

Is this going to be subprime take two?

NO, obviously Fannie Mae and investors are going to be much more careful this time around. In fact, a foreclosure costs banks an national average of more than $25,000 and foreclosures are not the best option for anyone involved.

Foreclosure rates had jumped to record numbers this year after risky borrowers had begun foreclosing pretty quickly on their mortgages, like instantly on what is know as 1st payment default.

Irvine, California based Option One Mortgage Corp. has been sold to OOMC Acquisition Corp., a newly formed company affiliated with Cerberus Capital Management, L.P today.

Parent company H&R Block announced the definitive agreement this morning stating a softening market conditions and less desire for subprime mortgages from the secondary market.

The sale price consists of the value of the tangible net assets of the business at the date of closing, minus $300 million. Jan. 31, 2007, the tangible net assets of Option One were $1.27 billion. Contingent on Option One’s future net income from mortgage loan originations, H&R Block may also receive an additional cash payment in the form of an earn out.

Option One has originated $21 billion in loans during the first nine months of fiscal 2007. Option One is an leader in mortgage servicing, with a servicing volume of approximately $68 billion in non-prime mortgages at Jan. 31, 2007. In 2006 Option One Mortgage was among the nation’s 10 largest originators of non-prime residential mortgages with $40 billion in loan originations.

H&R Block has also committed to cease operations of H&R Block Mortgage their loan originator division dealing directly with the retail borrowers. H&R Block will continue to provide its retail tax and other clients with prime residential mortgage loans through H&R Block Bank, which began operations in May 2006.

Listen to a recorded conference call beginning at 10:00 a.m. EDT April 20 by dialing (888) 286-8010 (U.S./Canada) or (617) 801-6888 (international). The replay access code is 63164608.

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