A look at the stories on HousingWire’s weekend desk…with more coverage to come on bigger issues: Last night commercial lender CIT Group (CIT) filed for bankruptcy in addition to a planned private funded bailout. 90% of the number of debtholders voting on the decision, both large and small, cast affirmative votes for the prepackaged plan, although the conditions for consummating the exchange offers were not met. CIT is hoping for quick and decisive action on its filing with the court, according to a release by the company. CIT expects to reduce total debt by approximately $10bn, significantly reduce its liquidity needs over the next three years, enhance its capital ratios and accelerate its return to profitability. “The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy,” said CEO Jeffrey Peek. The private bailout will enable CIT to meet its short-term obligations. CIT also secured an incremental $1bn committed line of credit to provide supplemental liquidity during bankruptcy processing. Early Friday evening, Lender Processing Services (LPS) looked set to enter the REO auction business. The Jacksonville-based provider of technology and services to the mortgage and real estate industries is said to be completing a deal to acquire Chicago-based Rising Tide Auctions. The auction company was originally formed as a partnership between NRC Realty Advisors, a Chicago-based auction company, and a group of REO industry experts. The Federal Deposit Insurance Corporation (FDIC) announced that U.S. Bank, Minneapolis, a wholly-owned subsidiary of U.S. Bancorp, assumed all of the deposits and essentially all of the assets of nine failed banks. The nine banks involved in today’s transaction are: Bank USA in Arizona. California National Bank, San Diego National Bank and Pacific National Bank in California. Park National Bank and Community Bank of Lemont in Illinois. North Houston Bank, Madisonville State Bank and Citizens National Bank in Texas. As of September 30, 2009, the banks had combined assets of $19.4bn and deposits of $15.4bn. The nine banks had 153 offices, but reopen as branches of U.S. Bank this weekend during their normal business hours. Depositors of the nine banks will automatically become depositors of U.S. Bank. Deposits will continue to be federally insured, “so there is no need for customers to change their banking relationship to retain their deposit,” assures the FDIC. The Community Mortgage Banking Project and the Community Mortgage Lenders of America spent the weekend sounding off on draft legislation introduced last week from the House Financial Services Committee. The draft addresses systemic risks and “too big to fail” concerns with lenders. The firms are “deeply concerned” that subtext of the Financial Stability Improvement Act would have a “devastatingly, adverse impact” on the secondary mortgage market, forcing community-based lenders to reduce lending or go out of business, “which will significantly raise the cost of credit for consumers seeking affordable mortgages,” they said in a joint statement. “We are concerned that the broad risk retention provisions in the draft Financial Stability Improvement Act could jeopardize affordable mortgages for consumers by crippling the ability of community-based lenders to tap the secondary mortgage market for funding,” they say. “This would further accelerate the consolidation of the mortgage market into just a handful of the largest institutions. The result would be reduced competition and choice for consumers – an ironic and counterproductive result for a bill intended to mitigate “too-big-to-fail” concerns.” As the market for Ginnie Mae (GNMA) mortgage-backed securities (MBS) continues to grow, with 96% of loans securitized being FHA insured, analysts at Barclays Capital warn of servicer risk. In their weekly wrap, they say, “while overall GNMA buyouts should continue to increase in the near future, there are significant variations among servicers.” The argue that discrepancies come from two sources. First, issuers may have different underwriting practices and geographical concentrations, leading to different delinquency rates in their portfolios. This eventually results in different amount of buyouts. Second, even with similar delinquency rates, some servicers are more aggressive in exercising their buyout option resulting in higher involuntary prepayments. Hopefully, none of the homes auctioned on the weekend in Barrington, Illinois required an FHA-backed mortgage: the bids started at one dollar. The sleeper town is located 30 miles from Chicago and some of the homes are being released by the city in order to prevent demolition. According to the local NBC affiliate, Barrington hopes the homes could be refurbished to historic charm, but the town’s citizens were not convinced. Nor were investors. Or anyone else. No one placed a bid and not a single house sold.