by Calculated Risk on 9/19/2007 02:16:00 PM

From Bloomberg: PHH Sale to GE, Blackstone May Collapse as Banks Balk

PHH Corp., the New Jersey-based mortgage lender that agreed to be bought by General Electric Co. and Blackstone Group LP, said the $1.8 billion sale may unravel as lenders back away from some leveraged buyouts.

JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. told Blackstone they may fall $750 million short in funding its part of the deal ...

``There will be some deals that won't get done, but it won't be the big names,'' billionaire financier Wilbur Ross, whose New York-based WL Ross & Co. invests in distressed companies, said today in an interview. ``Some of the smaller deals have better escape hatches.''

Other deals in trouble include Genesco and Reddy Ice.. The banks are balking as they report write downs from the LBO loans - and try to avoid more pier loans on their balance sheets. See the WSJ: Fuzzy LBO Math

The [Morgan Stanley]’s finance chief, David Sidwell, told Bloomberg in an interview that net of fees, Morgan Stanley had $726 million of markdowns on $31 billion of leveraged-loan commitments.

Lehman Brothers Holdings said Tuesday on a conference call that it had “more than” $1 billion of paper losses on $27 billion of such commitments.