Williby's Real Estate Laws

Real Estate Foreclosure Fraud!

2011-08-19T09:27:00.001-07:00

August 19, 2011

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^{California Attorney General shuts down law firms accused of conning homeowners!}

Santa Clara County
District Attorney
Warns of Foreclosure Scams!

Posted: 08/19/2011 08:11:22 AM PDT
Updated: 08/19/2011 08:11:29 AM PDT

Santa Clara County, CA -- With more con artists trying to dupe Santa Clara County homeowners facing foreclosures, authorities are asking residents to be more diligent and get the facts on mortgage laws. District Attorney Jeff Rosen said Thursday that his office recently sent two people to prison for running a scam business that preyed on San Jose homeowners who were beyond on their mortgages. The con artists told homeowners to pay them a fee up front and in exchange they would change their mortgage terms.

Rosen said it is illegal for even legitimate business people to request residents to pay an advance fee for loan modification services on a home mortgage.

To find a certified foreclosure counselor, call the DA's hotline at 408-794-1242. To report fraud, call 408-792-2879.

California Attorney General
Shuts Down Law Firms
Accused of Conning Homeowners!

Posted: 08/18/2011 04:31:47 PM PDT
Updated: 08/19/2011 06:16:05 AM PDT

SAN FRANCISCO, CA -- The state Attorney General's Office has shut down four Southern California law firms that allegedly conned about 2,500 California homeowners facing foreclosure into paying thousands of dollars to join a lawsuit against lenders that went nowhere. The law firms made false promises to the plaintiffs to entice them to sue the lenders, telling them that foreclosure proceedings would be stopped and their monthly payments reduced, Attorney General Kamala Harris said Thursday at a news conference. The attorney general is suing the law firms of:

Philip Kramer;
Christopher Van Son;
Paul W. Petersen; and
Mitchell Stein, which also has an office in Walnut Creek.

"It will bring justice to a number of homeowners of California who were targeted by predators," Harris said. The suit, which seeks civil penalties, alleges false advertising and violations of the business and professions code.

The State Bar Association has taken over the practices of the law firms. Since 2009, 20 attorneys in California have either been disbarred or given up their license after they got in trouble from loan-modification rescue scams.

Harris alleges that the Southern California attorneys banded together to file "mass joinder" lawsuits, which effectively folded cases with separate but similar circumstances into one legal filing. The law firms sent out mailers to homeowners in California and 16 other states who had trouble paying their mortgage. The mailers gave the impression that a legal settlement was within reach and that the homeowners would benefit by becoming a named plaintiff. Telemarketers gave homeowners misleading advice and information about the benefit of joining the case, according to Harris' suit. Call center companies were also named in the suit.

Unlike conventional civil cases, which typically work on a contingency fee basis, the homeowners were required to pay from $4,000 to $10,000 to be added as a plaintiff. To date, about 2,500 homeowners, all from California, have been identified as victims, said Harris. "They are really homeowners who have been victimized a second time," she said.

Representatives of the Van Son, Kramer, and Petersen law firms could not be reached for comment. A man named Toby, who declined to give his last name and identified himself as a senior paralegal for Mitchell Stein, said the law firm had an active case in Los Angeles Superior Court. "It's not as simple as Kamala Harris filing suit," he said.

No disciplinary charges have been filed against the attorneys by the Bar Association.

The attorney general's lawsuit does not indicate whether the cases filed by the four law firms have any legal merit. To that end, the Bar Association will look at the circumstances of each case to see whether they should be referred to other lawyers. Clients can call the Bar Association at 213-765-1672 for more information.

A state law makes it illegal to ask for an upfront payment for loan-modification services. The law applies to real estate licensees and attorneys. "Be wary of any person or company that asks for a fee in advance," said Ophelia Basgal, regional counsel for the U.S. Department of Housing and Urban Development, She reminded consumers that HUD-approved counseling agencies provide free help to homeowners facing foreclosure. Call 888-995-HOPE (4673) for more information.

California Attorney General:
Lawyers Scammed Homeowners
with Suit against Banks!

Posted: 08/18/2011 11:47:49 AM PDT
Updated: 08/18/2011 02:15:02 PM PDT

COSTA MESA, CA -- California prosecutors sued several lawyers and call center operators for allegedly duping desperate homeowners across the country into paying thousands of dollars to join dubious lawsuits against big banks. The complaint unsealed Thursday in Los Angeles County Superior Court accuses prominent foreclosure attorneys Philip Kramer and Mitchell Stein and at least 17 other individuals and businesses of ensnaring borrowers in a scheme that falsely promised a cut of future settlements.

The lawsuit portrays the defendants as the most recent in the chain of mortgage-related scammers who helped fuel the housing bubble and have cashed in on its collapse. The defendants previously worked in the fraud-ridden loan modification industry, in which lawyers offer to negotiate better mortgage terms on behalf of troubled borrowers in exchange for a fee.

They are accused of telling borrowers that they had a solid claim to being victims of predatory lending because courts had already found most lenders to have approved inappropriate mortgages.

"They essentially took advantage of what we know is a growing sentiment out there," California Attorney General Kamala Harris said Thursday. "They suggested that by joining this lawsuit, the banks would have to pay. But the only people who paid were those homeowners who were victimized for the second time."

Investigators are aware of some 2,500 California residents who have been listed as Plaintiffs in the lawsuits, but there could be many more who paid fees and were never actually added to the suits or are out of the state, Harris said. Up to 2 million official-looking mailers advertising the lawsuits were sent to homes in at least 16 other states, including Arizona, Florida, Nevada, New York and New Jersey, Harris' office said in a release. Some borrowers had their homes foreclosed on after paying to join the suits filed by Kramer and Stein, according to the complaint.

Defendants in the complaint are all based in California, but the investigation could eventually ensnare associates in other parts of the country.

Florida bar spokeswoman Zannah Lyle confirmed that her organization was looking into allegations of rule violations concerning Tallahassee-based lawyer and lobbyist David Ramba's work with Kramer to recruit struggling homeowners to join lawsuits against banks. Ramba did not immediately respond to a message seeking comment.

The attorney general's complaint was unsealed a day after state bar investigators and state Department of Justice agents served defendants with copies of the complaint at 14 locations in Los Angeles and Orange counties. Officials loaded boxes of seized documents into moving vans Wednesday. Armed police guarded the entrances to emptied offices, which appeared to contain wall-to-wall cubicles for phone center workers. The Orange County raids took place in sprawling office parks with manicured lawns surrounding Irvine's airport.

Outside one office, a man in a business suit said he had worked for the raided company but refused to answer any other questions as he carried a stack of framed pictures from the building and oversaw the removal of a small refrigerator by younger apparent employees. At another office, a manager who would only give his first name, David, said he and his colleagues had been questioned about their connection with Kramer. He said they had done business with the lawyer two years ago but not since.

Prosecutors accuse the defendants of making false representations and three counts of unfair competition. They are seeking an injunction stopping the defendants from continuing with the business in addition to unspecified monetary damages.

No criminal charges have been filed in connection with the case.

Kramer's firm and the other defendants' were placed into receivership on Monday and have had their assets seized, the attorney general's office said. Harris said that bar association lawyers were reviewing the suits against the banks to determine whether any plaintiffs had legitimate complaints that could be pursued against the lenders. Calls to Kramer's office were being forwarded to a state bar phone number Thursday. Calls to Stein, who refers to himself on his firm's website and other communications as "The Doberman," went straight to a busy signal.

Prosecutors accuse Kramer and Stein of exploiting an existing lawsuit known as Ronald v. Bank of America NA filed in Los Angeles Superior Court in March 2009. Stein was one of the lawyers who first filed that case, which alleged on behalf of a few dozen clients that the bank committed mortgage-related improprieties. Kramer later joined as counsel to another defendant who was added to the case. The lawyers used the Ronald case to drum up business and have since filed separate lawsuits against JPMorgan Chase & Co, Wells Fargo Bank NA, Citibank NA and others to broaden their base of clients, the complaint alleges.

The lawyers and their associates sent mailers that looked like official class-action lawsuit notifications and stated that their recipients were potential plaintiffs in a litigation settlement. The letters claimed they could cut their mortgage to as little as 70 percent of their value, prevent foreclosure and get $75,000 in damages. They directed people to phone supposed law offices that were actually call centers staffed by operators with no legal expertise.

In addition to using mailers, Stein used his law firm's Facebook page to make overblown claims about bank behavior and his ability to seek retribution, according to the complaint. "Look for Patriot Act violations in your mortgage," Stein wrote in a Jan. 17 posting. "Talk to a lawyer. You might just cancel the mortgage."

Prosecutors estimated hundreds or even thousands of people paid between $5,000 and $10,000 to join the lawyers' suits. Kramer gloated in an October 2010 e-mail to another defendant about the virtues of their new undertaking compared with the loan modification business. "Only morons would prefer to 'sell' mods from this day forward," Kramer wrote, according the complaint.

Bank records show more than $7 million deposited in three of Kramer's accounts connected to the investigation, with millions more paid to call centers that provided answers to prospective clients responding to the mailers, the complaint said. Those workers are accused in the complaint of overstating lawyers' progress in the lawsuits, all of which are in their earliest stages, and of misrepresenting judges' apparent disposition toward the banks.

Some salespeople are alleged to have told borrowers that the judge in the Ronald v. Bank of America has told the lender it has "no defense" and that its main argument is "absurd." The salespeople also tell homeowners that the case's lawyers have proven banks have taken money from investors that can't be accounted for, the complaint says.

Philip Warmanen, a 71-year-old travel agent in Jacksonville, Fla., was among those who joined the lawsuit. Warmanen said he responded to a mailer that turned out to be from Kramer's law firm early this year after Bank of America failed to offer him a modification on his home that had lost about half its value since he paid $525,000 for it in 2006. Warmanen was told he should receive a modification and other settlement benefits in just a couple months when he paid $4,000 to join the lawsuit but has heard little of the case since then. "They said there was a strong likelihood that this would be successful and that they had a few cases where the judgment had come through positively in favor of the complainants," he said. "They led me to believe that that might be my case."

Help for those filing Foreclosure! (01:36)

Bay Area housing market reflects different rebounds

2011-07-10T14:31:00.000-07:00

July 10, 2011

Credit History: Your credit history or credit report is simply a record of your past borrowing and repaying activities, including information about late payments and bankruptcy. It enables lenders to decide if you are “safe” to lend to. It’s basically an assessment of your ability to repay a loan.

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^{July 10, 2011: Real estate tax hike for Philadelphia!}

Bay Area housing market reflects different rebounds

Posted: 07/10/2011 07:10:10 AM PDT
Updated: 07/10/2011 08:15:07 AM PD

Bay Area cities are rebounding from the housing crash in wildly different ways, confirming the adage that the three most important rules for home buying are location, location, location.

Many affluent cities are nearing the stratospheric prices reached during the housing bubble, but others, primarily middle-income and working class, are far from recovering from the depths of the crash.

That disparity can be seen even in communities next door to one another. East Palo Alto's median home price is $246,000 in the current quarter, down 62 percent from $650,000 in the second quarter of 2007. But just across 101, leafy Palo Alto, home to many high-tech companies and entrepreneurs, has a median house price of $1.4 million, just 12 percent below the peak reached in 2008.

Of course, the higher-priced communities never dropped as sharply as cities hit hard by subprime lending and foreclosures, so they have had an easier time recovering. In general, affluent areas today are about 20 percent off their highs reached since 2007, while middle- and lower-income areas are 50 percent or more below the highs, an analysis of quarterly median home prices shows.

The home price data was prepared at the request of this newspaper by DataQuick, a real estate information service. The company compiled quarterly median prices for single-family resale homes in 74 Bay Area cities, with a preliminary figure for the second quarter of this year. The analysis shows how home prices have fared since 2007, the peak year for the Bay Area housing market, and it compares current prices with their high and low points since then.

For many cities, the current levels may be the new normal.

"I think most areas have corrected to affordable levels," said Sean O'Toole of ForeclosureRadar, a real estate distressed property tracking service. Other cities are benefiting from a boom in social media and technology -- and their high incomes -- which has led to a shortage of quality housing in those areas, he said.

But in areas where prices have declined sharply, thousands of Bay Area homeowners appear to be stuck in homes that won't return to their purchase price for years. For them, the venerable practice of trading up to a more expensive home is at best a dream deferred.

"The trade-up buyers are scarce," said Colleen Badagliacco, co-founder of Altera Real Estate in San Jose. "They've lost equity. You used to buy up in a down market because maybe the financing was easier, and now the financing isn't easier and the classic person may not have the equity to move up."

In nine cities, home prices are still at their post-bubble low points or have just hit them. Union City, for example, is a victim of a small double-dip in housing prices, with a median price this quarter of $390,000, the market's lowest point since 2007.

Mountain View, the site of Google (GOOG) and other tech powerhouses, has held its own as well as any Bay Area city, with a $950,000 median home price that's only 9 percent below its peak.

In San Jose, investors paying cash are still driving the low end of the market, buying properties near the median price of about $471,000, Badagliacco said.

Investors buying distressed properties account for as much as a third of the sales in many of the hardest-hit communities, where easy-to-obtain mortgages boosted home buying and inflated prices, only to be followed by a wave of foreclosures as the new homeowners lost jobs, or saw their interest rates reset to payments that were beyond their means.

"Cash investors aren't going to pay $700,000 for a house," Badagliacco said. "I'm hearing that people can buy a foreclosed condo for $150,000 to $200,000, rent it out for $800 to $1,000 a month and get a decent return. That will always moderate prices."

The housing crunch left no city unscathed, the analysis shows.

Two big cities with a more diverse mix of housing -- San Francisco and San Jose -- land somewhere in the middle of the ongoing recovery. San Francisco, with a median price this quarter of $799,000, is about 22 percent below its 2007 median home price of $870,000, and San Jose's second quarter median price is 36 percent below its peak of $700,000 at the beginning of 2007.

"Every sector has been hit with a drop from 2007 prices. It's just how much," said Rick Turley, president of Coldwell Banker Residential Brokerage of the Bay Area.

In the East Bay, prices are recovering at a better rate in cities such as Orinda, San Ramon and Lafayette that historically have higher home prices.

"They will have declined the least. It's really that simple," Turley said.

"Higher-priced communities to start with had fewer marginal buyers, and fewer people took out resetting adjustable loans," he said. "And fewer people have been affected by the overall economic downturn."

But Antioch, Pittsburg and Richmond, cities that were considered more affordable, are struggling to get back to where prices were four years ago.

"There were more marginal borrowers with less of a down payment," Turley said. "So what you are seeing now is many more distressed sales."

That has hit some communities harder than others.

"Some of the areas have had a lot more impact from foreclosures," said Peter McDowell, a real estate agent in the Pleasanton office of J. Rockcliff Realtors, an East Bay brokerage.

Brentwood and Antioch are struggling because they're not close to jobs and don't have the draw of good schools like some wealthy areas.

"A lot of those areas did not have the fundamentals to support prices" once the housing boom was over, he said. People who bought at high prices just to get in on the rising market are having trouble selling now because the commute to jobs is so long.

It's a tale of two cities in some cases. In Berkeley, $662,500 was the median price paid for a single-family house in the second quarter of this year. That's about 23 percent below where it was in early 2007. In Oakland, the median price was $238,000 -- a sobering 62 percent drop from the third quarter of 2007. Both communities, however, are well above their low points, which were reached in 2009.

"Oakland is a hard-hit community. They had lower prices to start with and they had more marginal borrowers" than Berkeley, Turley said.

In Walnut Creek, the median stood at $685,000, down 22 percent from the median price of $880,000 reached in 2007. Next door in Concord, the median price was $275,000, almost 50 percent below the $545,000 median price reached in the first quarter of 2007.

"A lot of people who probably should have been renters were sucked into risky loans that would come back to haunt them if prices didn't keep going up, and bought more house than they could ultimately afford," said Andrew LePage of DataQuick.

Phoenix [Arizona] Housing Market Rebounds in May

One of the most troubled U.S. housing markets saw a sharp increase in home sales in May. More than half of the buyers of Phoenix homes were absentee investors, likely attracted to aggressive discounts on distressed or bank-owned properties, which accounted for more than 64% of sales. Although May’s home sales are good news and even the number of foreclosures also dropped for the month, analysts note that new-home sales remained low as construction prices rise and people search for bargains. For more on this continue reading the following article from The Street.

Phoenix-area home sales rose in May, when resales of single-family houses hit the highest level for that month in six years amid near-record levels of investor purchases.

The region's median price remained at essentially the same level at $120,000 that it's been at the past six months as distressed property sales continued to account for around two-thirds of the resale market. The median price dropped sharply from a year earlier, however, as the number of homes selling below $100,000 shot up nearly 41 percent year-over-year, a real estate information service reported.

A total of 9,837 new and resale houses and condos closed escrow during May in the combined Maricopa-Pinal counties metro area. That was up 0.8 percent from the month before and up 4.9 percent from a year earlier, according to San Diego-based DataQuick, which tracks real estate trends nationally via public property records.

On average, Phoenix-area sales have risen 5.2 percent between April and May since 1994, when DataQuick's complete Phoenix region statistics begin.

May's total sales were the highest since 2007, when 10,112 homes sold, and were 8.6 percent short of the average number of May sales since 1994. However, the number of existing resale single-family detached houses that sold in May was the highest for that month since 2005, while resales of condos were the highest for a May since 2006. The new-home market remained troubled, however, with sales at the lowest level for a May in 14 years.

Sub-$100,000 home sales, which rose 40.8 percent from a year earlier, represented 39.7 percent of all May transactions, compared with 28.8 percent a year earlier.

In May, buyers paid a median $120,000 for all new and resale houses and condos that closed escrow in the two-county Phoenix area. That was the same as the month before but down 13.7 percent from a year earlier. The median has fallen year over year for 11 consecutive months.

The May median was 14.2 percent below the highest median recorded over the past year --$139,900 last June -- and it stood 54.6 percent lower than the all-time peak of $264,100 in June 2006. For the past six months the median has vacillated between $119,000 and $120,000 -- the lowest levels since late 1998. This reflects several factors, including recent home price erosion; the high numbers of investors, who target lower-cost homes, especially foreclosures; and an unusually low percentage of new-home sales coupled with an above-average share of existing (not new) condo sales.

In May 6.8 percent of sales were new homes, which on average are more expensive than other home types, compared with 10.1 percent a year ago and a 10-year monthly average of 26 percent of sales. Resale condos, which tend to be the most affordable home type, made up 12.6 percent of May's transactions, compared with 10.7 percent a year ago and a 10-year monthly average of 10.0 percent.

Absentee buyers, who are mainly investors, purchased 45.3 percent of all Phoenix-area homes sold in May, down from 46.3 percent in April and a record 47.1 percent in March, but up from 37.8 percent a year earlier. Absentee buyers, who paid a median $101,000 in May, can include second-home purchasers and others who indicate at the time of sale that the property tax bill will go to a different address.

Cash buyers represented 42.0 percent of all sales in May, down from 44.5 percent in April and a record 48.0 percent in February, but up from 34.4 percent a year ago. May's cash buyers paid a median $90,000, down from $91,900 in April and $112,9500 a year ago. Specifically, these were transactions where there was no indication of a purchase loan recorded at the time of sale. Some of these "cash" buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage , and in some cases they might take out mortgages after their purchases.

Foreign buyers purchased roughly 6 percent of the Phoenix-area homes sold in May, based on a review of public property records where foreign addresses were available. Of the foreign buyers that could be identified, about 93 percent were from Canada. Australia was the next-most-common country, representing about 3 percent of the buyers with a foreign address. Foreign buyers paid a median $115,000 for resale houses, $95,400 for condos and $146,103 for newly built homes.

U.S. buyers from outside of Arizona bought nearly 20 percent of all homes sold in the Phoenix area in May, and represented about 46 percent of all absentee purchases. Buyers from California represented the largest out-of-state buyer group, accounting for 8.9 percent of all absentee buyers and nearly 20 percent of the out-of-state absentee buyers.

In May, distressed property sales - the combination of sales of foreclosed homes and "short sales" - edged higher, to more than 64 percent of the resale market.

Foreclosure resales, defined as homes that had been foreclosed on in the prior 12 months, represented 50.8 percent of May resales. That was up from 50.6 percent in April and 50.0 percent a year earlier. The peak level for foreclosure resales was 66.2 percent in March 2009. Short sales, transactions where the sale price fell short of what was owed on the property, made up an estimated 13.7 percent of Phoenix-area resales in May. That was up from an estimated 12.4 percent in April but down from 14.9 percent a year earlier. Two years ago the estimate was 8.1 percent.

Foreclosures fell month-to-month. Lenders foreclosed on 4.832 house and condo units in the two-county Phoenix area during May, down 8.5 percent from April but up 5.6 percent from a year earlier. During the first five months of this year, 27,112 homes were foreclosed on, up 7.0 percent from the same period last year. The foreclosure figures are based on the number of trustees deeds filed with county recorder offices. The document signals that a home was lost to foreclosure.

This article was republished with permission from The Street.

New Program to Help Home Owners Has Great Benefits, But Tough Rules

If you’re having trouble making your mortgage payment, there are a billion reasons to check out the latest federal government mortgage assistance program. The U.S. Department of Housing and Urban Development’s Emergency Homeowners Loan Program, now running in 27 states and Puerto Rico, will dole out $1 billion in interest-free loans to about 30,000 home owners who are unemployed, under-employed, or suffering financially due to a medical crisis.

It’s a federal program, so of course there’s paperwork. And you only have until July 22, 2011 to get it filled out and over to one of the counseling agencies helping to run the program. Call 855-346-3345 for information about participating agencies in your area.

You’ll know by Oct. 1 if you’ve been approved for EHLP because the money has to be obligated before the federal government’s fiscal year ends on Sept. 30th.

The toughest thing about the program may be the eligibility rules. If you want to be approved for EHLP, you can’t:

»» Have federal tax liens;

»» Have past-due student loans (deferments and forbearance are OK);

»» Have more than one 60-day late mortgage payment in the past two years;

»» Be in bankruptcy;

»» Have family income of more than $75,000 or 120% of the area median income;

Then there are things you must have to get into EHLP:

»» Be a minimum of three months late on your mortgage payment.

»» Income that’s at least 15% less than what you were earning in 2009.

»» The ability to make your full mortgage payment again in two years, because you’re likely to be working or have another source of income again by then.

That last requirement will be hard for HUD to prove; it’ll likely be up to an underwriter to decide who qualifies.

But if you can meet those requirements (as well as a bunch more that the credit counselors running the program will tell you about), EHLP is a sweet deal.

You have to agree to pay 31% of your family’s monthly income toward the mortgage payment (minimum payment is $150). The federal government loans you the money to pay the rest of your mortgage payment.

You can keep getting that subsidy for two years, or until you’ve borrowed $50,000.

The best part is that if you make your mortgage payments on time, the government forgives 20% of the EHLP loan every year. So in five years, your loan is completely forgiven.

If you think there’s even the slightest possibility you’d qualify for the program, you should go for it. You’ve got nothing to lose and a lot of mortgage payment help to gain.

Real-Estate Disclosure: What You Don't Know Can Hurt You

2011-06-25T14:18:00.000-07:00

June 25, 2011

In a rare midyear move, the Internal Revenue Service is increasing the tax deduction you can take for using personal vehicles for business. On July 1, 2011, if you use your personal vehicle for business, you’ll be able to deduct 55 cents a mile from your taxable income. That marks a 4-cent increase from the beginning of this year. While the IRS normally updates mileage rates once a year during the fall for the next calendar year, the tax agency decided to raise the gas mileage tax deduction earlier due to high gas prices. (The average gas price currently is $3.61 a gallon, which is up from $2.74 last year, according to AAA.) "This year's increased gas prices are having a major impact on individual Americans,” IRS Commissioner Doug Shulman told USA Today. “The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices. We are taking this step so the reimbursement rate will be fair to taxpayers."

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^{June 25, 2011: Homeowners Nightmare!}

The average gas price currently is $3.61 a gallon, which is up from $2.74 last year, according to AAA.

Banking Industry Thief!

Posted: 06/30/2011 07:47:45 AM PDT
Updated: 06/30/2011 09:24:27 AM PDT

SAN FRANCISCO, CA — The FBI arrested a Fremont woman Wednesday on suspicion of stealing more than $800,000 from more than 20 Citigroup clients, a United States Department of Justice official said.

Tamara Lanz Moon, 43, also was arraigned the same day in a San Francisco courtroom, nearly a week after a federal grand jury indicted her on six counts of mail fraud in connection with the case, authorities said.

Moon, who worked for Citigroup from 1996 to 2008, operated a scheme in which she falsified account records, forged client signatures, made unauthorized trades in client accounts and created fake letters of authorization to divert client funds, federal prosecutors said.

As a registered general securities representative for Citigroup, Moon was tasked with executing trades for brokers and processing the paperwork for clients with investment accounts, authorities said.

Authorities have accused Moon of using the money from the scheme to invest in real estate, remodel her home, pay mortgages on properties she owned, pay her credit card bills, and to lower the line of credit for her home equity.

Moon, a former Redwood City resident, was released on bail and ordered to appear next in court before U.S. District Court Judge William Alsup on July 5.

If convicted of each count, she faces a maximum prison sentence of 120 years, authorities said.

The Financial Industry Regulatory Authority assisted the FBI with the investigation.

Knowledge is Buying Power

Date: June 25, 2011

Lakeland, Fla. -- When a bulldozer began to to clear away dirt for an in-ground pool in Brian Dyer's back yard, the Lakeland, Fla., homeowner got the surprise of his life: mountains of trash emerged from the hole. "It's just a sick feeling in the pit of your stomach to see what they're bringing up with each scoop," he told local media.

Dyer said that contractors tried to dig into three different areas in the backyard and each time, came up with more trash. "We found several tires, what appears to be washing machine tubs, trash, debris, metal parts, we found a lawnmower in the deep hole over there," he said, pointing to an 11-foot-deep hole. "You name it, it seems to be coming up out of the hole." Dyer has no idea how much more trash is under his property, how far it goes--or, even worse, if it's under his house. "We're very fearful at this point," he also told local media.

It's anybody's guess as to whether anyone but the person who dumped the stuff illegally knew it was there. Builders dug down the required 12 inches for the foundation when the house was built in 2006. The debris was hidden three feet deep. Nobody knows who's responsible for cleaning up the mess, either. While Dyer is trying to figure out his recourse, he's abandoned his plans for an in-ground pool and is opting for an above-ground instead.

Dyer's plight reminds us a little of the snake house in rural Idaho, also in the news this week. In that case, homeowners bought their dream house, only to discover it was infested with thousands of garter snakes. Former owner Ben Sessions recalls killing 42 of them in a single day and resorted to making "snake sweeps" before his wife and young sons got out of bed in the morning. After battling the reptiles unsuccessfully for months, the family finally fled. They later filed for bankruptcy, and the bank foreclosed on the property.

Snake Foreclosure!

If "location, location, location" is the most important thing about real estate, "disclosure, disclosure, disclosure" runs a close second. Sellers are required to disclose "material facts" about their home that might influence your decision to buy -- the roof that leaks, problems with the septic system in heavy rains, the fact that the guy next door keeps bees who sometimes mistake your porch for his. (The only exception to this is if you're buying a bank-owned property; in foreclosure sales, the bank isn't required to tell you anything.)

Of course, disclosure couldn't help Dyer, since his wife bought the house when it was new construction, and the builder denied any knowledge of the trash dump. But Sessions learned his lesson the hard way. According to reports, when he bought the house, the snake infestation had been documented. But Sessions -- believing it was just a story concocted by the previous owner to walk away from the mortgage -- signed the disclosure document anyway. So when the story turned out to be true, he had no legal recourse.

All of which underscores the importance, as a buyer, of doing your due diligence and investigating every disclosure your seller is required to make. And as a seller, it's equally important to be up front about your home's flaws -- even the ones you have paid to correct.

Most states require disclosure of deaths, as well, and not just the ones from unnatural causes. If a natural death occurred in the house within the past three years, it needs to be disclosed -- right up there with whether unleaded paint is on the walls if the home was built before 1978.

And it goes without saying, best to disclose whether your house is built on a trash heap or is infested with garter snakes.

How Is a Property Value Determined?

It’s a total of the land worth plus any improvements made to the land. Those improvements can be anything from your house – the most obvious – to sheds, fancy driveways, tennis courts, pools, even landscaping. As for the land, its size and location and its ability to be developed are determining factors. If it’s too hilly or sandy, making it difficult to build on, it likely will be worth less. If it’s in a desirable neighborhood, it’s going to be worth more. If it’s near shopping, that can be good. If it’s too close to shopping centers and traffic, that can lower the value.

What is an Improvement?

An improvement is a positive alteration to a home or its land. It can be an upgraded kitchen, a new bathroom, a renovated basement and other obvious structural changes. A new roof or fresh interior or exterior paint can be an improvement, as can updated electrical and plumbing systems.

Think, too, in terms of what stays with a house when you buy/sell it – lighting fixtures, window treatments, flooring. Updating all of these can be viewed as improvements from a buyer’s perspective.

Amenities like swimming pools, hot tubs, brick vs. asphalt driveways, sunrooms, and enclosed porches are other possible, positive additions to a home. Additional structures like sheds or guest houses or garage apartments can constitute improvements, as well.

Landscaping is another strong way to make improvements to a home. Well-designed trees, shrubs, flowers, walkways, fences and yards can make a huge difference in a home’s curb appeal. (You’ve probably noticed that homes with stately, mature trees tend to have more value than homes with no trees or very young ones.)

If you’re considering an improvement to your home or land, be sure your local zoning code allows for the changes you want to make. In some areas, a rental apartment over your garage or in your basement may not be allowed. A fence may only be allowed to be a certain height or constructed out of specific material. (Some areas, for instance, don’t allow chain-link fences in the front yards of residential areas.) Your lot’s setback requirements may mean you can’t extend your family room as far into your back yard as you’d hoped. Also, know that permits are often required before you (or a contractor) can make many improvements on your home.

Non-Disclosure States

There are 14 non-disclosure states whereby real estate sales data is not made a matter of public record.

Non-disclosure states include:

Idaho, Indiana, Kansas, Mississippi, Missouri, Montana, New Mexico, North Dakota, South Dakota, Texas, Utah, and Wyoming.

Lists of Disclosures
as per The California
Assoc. of Realtors

Added: June 26, 2011

Glossary of Terms

"Foreclosure (FC) sale": a sale of a property that occurs while the property is actively in some stage of foreclosure. (Stages include "NOD" for notice of default, "LIS" for lis penden, "NTS" for notice of trustee's sale, "NFS" for notice (judgment) of foreclosure sale, and "REO" for real estate owned or bank-owned property.) This definition of foreclosure sale includes only sales to third-party buyers or investors not involved in the foreclosure process. It does not include property transfers from the owner in default to the foreclosing bank or lender.

"REO sale": a sale of a property that occurs while the property is actively bank-owned (REO).

"Preforeclosure sale": a sale of a property that occurs while the property is actively in default (NOD, LIS) or scheduled for foreclosure auction (NTS, NFS).

"Pct. of all sales": total share of foreclosure sales (or preforeclosure sales or REO sales) among all residential sales during the quarter or year.

"Avg. FC sales price": the average sales price of foreclosure sales (or preforeclosure sales or REO sales) during the quarter or year, excluding sales with no sales price.

"Avg. FC discount": the percentage difference between the average sales price of foreclosure sales and the average sales price of nonforeclosure sales during the quarter or year. In order to come up with the discount, RealtyTrac takes the sale price and divides it by the number of square feet in the home, to come up with the average price per square foot. Then it parses the numbers by property (those not in foreclosure, those in foreclosure, and those which have already been repossessed by the banks). Comparing the average cost per square foot gives RealtyTrac the discount rates. The company doesn't take into account the condition of the property or the type of property (i.e. a condo vs. a detached home).

"Avg. REO discount": the percentage difference between the average sales price of REO sales and the average sales price of nonforeclosure sales during the quarter or year.

"Avg. preforeclosure discount": the percentage difference between the average sales price of preforeclosure sales and the average sales price of nonforeclosure sales during the quarter or year.

Mortgages rates are at record lows, so where's the refinancing activity?

2011-06-17T13:59:00.000-07:00

June 17, 2011

Real estate information and analytics provider CoreLogic has signed up Lisle, Ill.-based Midwest Real Estate Data LLC (MRED) -- a sprawling regional MLS representing 13 Realtor associations and nearly 40,000 subscribers -- to provide listings data to its Partner InfoNet analytics program. Although CoreLogic is calling its agreement with MRED exclusive, the MLS is currently in negotiations with a CoreLogic rival -- National Association of Realtors subsidiary Realtors Property Resource LLC (RPR).

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^{July 19, 2011: Where is America's Cheapest Real Estate?}

Fixed Mortgage
Rates Unchanged

Date: June 23, 2011

WASHINGTON, D.C. -- Fixed mortgage rates were mostly unchanged this week, hovering near yearly lows. The average rate on the 30-year loan held steady at 4.50 percent, Freddie Mac said Thursday. It hit 4.49 percent two weeks ago, the lowest level this year. The average rate on the 15-year fixed mortgage, popular for refinancing, inched up to 3.69 percent. Last week it reached a yearly low of 3.67 percent. Rates typically track the yield on the 10-year Treasury note. That yield has been dropping in recent weeks based on weak data that points to a slower economy.

Low mortgage rates and falling home prices have done little to boost the troubled housing markets. Tougher lending standards and bigger down payment requirements have prevented many people from taking advantage of the ultra-low rates. Many people who can qualify are holding off, worried that prices have yet to bottom out.

Fewer people purchased previously occupied homes in May. Sales fell to their lowest level of the year. Since the housing market went bust in 2006, sales have fallen in four of the past five years and hit a 13-year low last year. New-home sales fell last month to a seasonally adjusted annual rate of 319,000 homes. That's far below the 700,000 homes per year that economists say must be sold to sustain a healthy housing market.

Federal Reserve Chairman Ben Bernanke said Wednesday that the housing market is dragging down the broader economy. For the market to recover, he said foreclosures must be cleared from the pipeline of homes for sale. Most economists say home prices will keep falling through the rest of the year. Many forecasts don't anticipate a rebound in prices until at least 2013.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day. The average rate on a five-year adjustable rate mortgage fell from 3.27 percent to 3.25 percent, the lowest rate on records dating back to 2005. The average rate on a one-year adjustable-rate loan rose to 2.99 percent, slightly above the record low of 2.95 percent. The rates do not include the extra fees known as points. One point is equal to 1 percent of the total loan amount.

The average fees rose to 0.8 percent from 0.7 percent for the 30-year fixed loan, according to Freddie Mac's survey. They were flat at 0.7 percent for the 15-year fixed loan, the survey found. The average fees for the five-year and one-year ARM were unchanged at 0.6 percent and 0.5 percent, respectively.

Mortgage rates
level off
at 2011 lows

Date: June 17, 2011

California - Mortgage rates leveled off this week at or near their lows for the year after declining for eight consecutive weeks, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey. Low rates appear to have sparked interest in both refinancing and home purchases, according to a separate survey of loan applications conducted by the Mortgage Bankers Association. Freddie Mac's survey showed rates on 30-year fixed-rate mortgages, which last week hit a low for the year of 4.49 percent, averaging 4.5 percent with an average 0.7 point for the week ending June 16.

Rates on 30-year fixed-rate mortgages hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, before rebounding to their 2011 high of 5.05 percent in February.

Rates on 15-year fixed-rate mortgages averaged 3.67 percent with an average 0.7 point -- a new 2011 low, but essentially unchanged from 3.68 percent last week.

Rates on 15-year mortgages hit an all-time low in records dating back to 1991 of 3.57 percent in November. At this time last year, 15-year loans were averaging 4.2 percent.

For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 3.27 percent with an average 0.6 point, down from 3.28 percent last week and 3.89 percent a year ago. That's a new 2011 low, and not far off the all-time low in records dating to 2005 of 3.25 percent seen in November.

Rates on 1-year Treasury-indexed ARMs averaged 2.97 percent with an average 0.5 point, up from last week's 2010 low of 2.95 percent. At this time last year, the 1-year ARM averaged 3.82 percent.

Looking back a week, a separate survey by the MBA showed demand for purchase loans was up a seasonally adjusted 4.5 percent during the week ending June 10 compared to a week earlier and 6.1 percent from a year ago. Requests to refinance still accounted for 70 percent of applications, however, with refinance applications up 16.5 percent from the previous week. Demand for re-financings was still down 28 percent from November, when mortgage rates hit all-time lows. Borrowers with an incentive to refinance remain constrained from doing so by lack of equity in their homes, said MBA chief economist Michael Fratantoni in a statement. In a May 18 forecast, MBA economists said they expect rates on 30-year fixed-rate mortgages to rise to an average of 5.5 percent during the final three months of this year and average of 5.9 percent during the fourth quarter of 2012.

Mortgage rates!

Published: 7:01 p.m. Saturday, July 10, 2010

An odd scene has been playing out lately in the offices of mortgage brokers and bankers around the country. Mortgage rates have sunk to levels not seen in more than a half-century — a seductive 4.57 percent for an average 30-year fixed loan. Yet brokers and lenders report not a flood but a trickle of customers. So what's going on?

Call it a tale of the haves and have-nots.

The haves are those who stand to save money from refinancing and have the financial wherewithal to do so. Mortgage rates have been low for so long that most of them already have refinanced in the past 18 months. Doing so again wouldn't be worth the cost for most.

The have-nots? Those are the millions of Americans pummeled by the housing collapse. They have little or no home equity or no money for down payments. Or they lack the credit or steady income to get or refinance a mortgage.

The result is that brokers like Ginny Ferguson are filling their days doing something other than handling a stampede of customers buying homes or refinancing. Ferguson, CEO of Heritage Valley Mortgage in Pleasanton Calif., has managed to stay busy: She's archiving files, reviewing marketing plans and calling previous clients and agents to try to drum up business. "Am I sitting around playing solitaire on my computer? No," she says.

The 4.57 percent average for a 30-year fixed-rate loan last week was the lowest on records that mortgage company Freddie Mac has kept since 1971. The last time rates were lower was the 1950s, when most long-term home loans lasted just 20 or 25 years. Under normal circumstances, 4.57 percent would be irresistible.

A decade ago, if you'd told David Christensen, owner of Mountain Lake Mortgage in Lakeside, Mont., that rates would drop this low, he wouldn't have believed you. And if rates did somehow fall this far, he never thought he would lack for customers, as he does now.

Yet both have come true.

Christensen argues that mortgage lending standards have tightened so much since the financial crisis that many people with decent but not-stellar credit can't qualify. Lenders are demanding stronger credit scores and higher down payments or home equity.

"The pendulum has swung too far the other way," Christensen said. "It needs to come back to the middle."

Chokehold on credit

Overall lending has ticked up in recent weeks, driven by borrowers looking to refinance. But it remains only about half the level of early 2009.

Stricter lending rules aren't the only factors behind the restrained demand. A tax credit for homebuyers that helped lift home sales expired April 30. The result is that fewer people are taking out loans to buy homes.

And some borrowers who do have good credit and solid jobs are still being rejected for refinanced loans. It's because their homes are worth less than they owe on their mortgage. They're "under water," in real estate parlance. About a quarter of American households with a mortgage are in this predicament.

Blame the housing bust. It shrank home values and depleted home equity.

Most people in the lending industry say lending standards were far too lax during the boom. Yet these days, some brokers recall the boom times with a tinge of nostalgia. Buyers and refinancers were everywhere. And yet rates were higher than they are now.

In the summer of 2005, lending activity was about 30 percent more than it is today. And homebuyers and refinancers had to pay about a full percentage point more for a mortgage than today's 4.57 percent.

"If the money was as easy as it was three or four years ago, I'd be the richest guy in town," says Joe Bell, a mortgage broker and real estate agent in St. Petersburg, Fla.

Now?

"The phone rings a lot, but a lot of people can't qualify."

Opportunity glut

Part of the problem is that people have been able to receive mortgage rates of less than 5 percent at several points over the past 15 months. For them, spending thousands on fees to take out a new loan wouldn't make sense.

For many of the homeowners who refinanced over the past two years, rates would need to drop to nearly 4 percent for refinancing to be financially worthwhile, said Patrick Cunningham of Home Savings and Trust Mortgage in Fairfax, Va.

"We're turning down a number of people for every one person that we can get through," Cunningham says. "That part is frustrating for us, certainly. I would say it's even more frustrating for the consumer."

The drop in rates this spring and summer has been a surprise. Mortgage rates had been expected to rise after the Federal Reserve ended its program to lower rates by buying up mortgage-backed securities.

At the start of April, rates started to rise. Good economic news had caused long-term U.S. Treasury bonds, a haven during the recession, to lose some appeal. As demand for Treasurys fell, their yields rose. And so did mortgage rates, which track the yields on long-term Treasurys.

But then several European countries fell into crisis over their debt burdens. Investors rushed back into the safety of Treasury bonds. That drove down Treasury yields — and mortgage rates.

Savings — at a cost

The costs of refinancing are generally considered worthwhile for homeowners who can shave at least three-quarters of a percentage point off their rate and plan to stay in their homes for several years.

For mortgage lenders and brokers, refinancing clients are generally people with excellent credit, stable jobs and plenty of equity in their homes.

People like Chris O'Donnell, 43, of Centreville, Va.

He and his wife are on track to close their refinanced loan this month. They are pulling money out to buy a new heating and air conditioning system for a home they bought last year.

But they're able to do so only because they had put down 50 percent of the purchase price when they bought the home. Few can afford to do that.

O'Donnell is shaving his mortgage rate by about half a percentage point to just over 4.6 percent. He'll save about $100 a month on payments. But he notes the main reason he can do that is the economy's feeble state.

"It's good for us," he said. "But it scares the heck out of me for the economy."

Haves

They stand to save from refinancing and have the financial wherewithal to do so. But because mortgage rates have been low for so long, most of them already have refinanced. Doing so again wouldn't be worth the cost for most.

Have-nots

They are the millions of Americans pummeled by the housing collapse. They have little or no home equity or no money for down payments. Or they lack the credit or steady income to get or refinance a mortgage.

Glossary of Terms

What's Behind Double Dipping Home Prices?

2011-06-02T11:55:00.000-07:00

Experts say the housing market can't get much better for would-be home buyers this spring. Buying is now more affordable than renting in nearly four out of five cities, according to the quarterly Rent vs. Buy Index released by online real estate resource Trulia. Mix in attractive mortgage rates luring house hunters, and experts expect to see some life restored to the flat-lining housing market this spring.

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Negative Equity!

Date: August 9, 2011

Posted: 08/09/2011 12:00:00 AM PDT
Updated: 08/09/2011 08:23:50 AM PDT

The percentage of Bay Area homeowners who are underwater -- which means their mortgage is higher than the home's value -- edged up from a year ago, as the housing market continues to struggle to get out of its very long slump.

Some 22.8 percent of single-family houses with mortgages were in negative-equity territory during the second quarter, up from 21.1 percent a year ago, said a report released Tuesday by Zillow, a real estate information website.

"Negative equity is growing because you still have foreclosures happening so the housing values are still declining," said Svenja Gudell, senior economist for Zillow. "As home values decline, negative equity will increase."

In Alameda County, 20.2 percent of homes were underwater, up from 17.7 percent, and in Solano County, 55.4 percent of homes were underwater, up from 51.5 percent

Some areas saw improvement. In Contra Costa County, 33.3 percent of homes were underwater, down from 36.6 percent a year ago. And 54.4 percent of homes in San Joaquin were underwater, down from 55.9 percent.

In Santa Clara County, 12 percent of homes were underwater, down from 12.8 percent a year ago. San Mateo County had 13.7 percent of homes with negative equity, up from 10.7 percent.

"Negative equity is still among us. We are still surrounded by it," said a broker-realtor with Tri-City Real Estate Brokers in Fremont. "Some are in negative equity and don't need to sell. Some are in negative equity and need to sell. We're seeing only the ones that need to sell."

Before the number of underwater homes can decline, homeowners need to increase their income so they can pay down their mortgage and equity line of credit, he said. Home values also have to rise.

Bay Area home values for the second quarter fell 6.2 percent from where they were a year ago, but rose 0.8 percent from the first quarter , said the Zillow report.

"We expect a bumpy road ahead. There will be many ups and downs in home values before this is over, and we continue to expect a true bottom in 2012, at the earliest. There are still hazards in the form of a full foreclosure pipeline, high negative equity and fluctuations in demand," Zillow Chief Economist Stan Humphries said in a statement.

Underwater HOMES: Negative equity has worsened in the Bay Area, although some counties saw minor improvements. The chart lists the percent of single family houses in the region whose value was below the mortgage amount.

Region 2nd quarter 2011

Bay Area - 22.8%
Alameda County - 20.2
Contra Costa County - 33.3
San Mateo - 13.7
Santa Clara - 12
Solano County - 55.4
San Joaquin County - 54.4

Region 2nd quarter 2010

Bay Area - 21.1%
Alameda County - 17.7
Contra Costa County - 36.6
San Mateo - 10.7
Santa Clara - 12.8
Solano County - 51.5
San Joaquin County - 55.9

Source: Zillow

Buyer Beware!

Date: June 9, 2011

California - The Sacramento County District Attorney Jan Scully announced today that Carmina McGivern and Sean McGivern pled no contest to felony charges of grand theft. Carmina McGivern, 32, and her husband Sean McGivern, 31, admitted that they embezzled over $66,000 from two victims between March and August 2009.

In March 2009, the victims hired real estate agent Carmina McGivern to assist in their purchase of a residence in Elk Grove. The victims opened an escrow account for the purchase. Over the next five months, the McGiverns falsely claimed that the sale would not be approved unless the victims paid additional monies into the escrow account. The victims complied with the McGiverns’ requests and paid over $66,000 for deposit into the escrow account, but the McGiverns kept the monies for themselves. In August 2009, the McGiverns used the victims’ personal identification information without their knowledge in an unsuccessful attempt to get a
$66,000 bank loan.

Carmina McGivern and Sean McGivern each face up to two years in state prison. Sentencing is scheduled for August 9, 2011 at 8:30 am in Department 63 of the Sacramento Superior Court.

Double-Dipping Prices!

June 2, 2011

Bad news for the housing market cropped up in data released this week, indicating that home prices have double dipped, dropping to new post-Recession lows in March 2011. The disappointing figures scale back incremental gains made in the wake of the 2010 home buyer's tax credit and reinforce the probability of a long, slow recovery for the housing market.

Standard & Poor's Case-Shiller Home Price Index

Standard & Poor's Case-Shiller Home Price Index, a leading measure of U.S. home prices, fell 4.2 percent in the first quarter, 5.1 percent below its level this time last year. According to the report, prices are down more than 33 percent from their July 2006 peak, slumping to near mid-2002 levels.

Those figures essentially blot out nearly a decade of home price appreciation and jeopardize an already fragile economic recovery. "This month's report is marked by the confirmation of a double dip in home prices across much of the nation," said David M. Blitzer, chairman of the Index Committee at S&P Indices, in a press release. "Home prices continue on their downward spiral with no relief in sight."

Experts blame stubbornly high unemployment, a surge in foreclosures, and distressed sales for the continued slump, which has discouraged the prospective home buyers needed to soak up the excess supply of available homes.

Despite nascent signs that the economy might be on the road to recovery, the share of homeowners dipped to 66.4 percent in the first quarter of 2011, according to the U.S. Census Bureau, down from its peak of 69.2 percent in late 2004. Homeownership rates are back to 1998 levels, and with a sputtering housing market, experts say that level could dip further.

"Housing is expected to experience little more than a dead-cat bounce in the months to come," said Diane Swonk, chief economist at Chicago-based financial services firm Mesirow Financial. "We are still years, rather than months, from seeing any return to normalcy in this market."

While prices in 12 of the 20 metropolitan areas tracked by the report--including Minneapolis, Chicago, and New York--fell to new recession lows, the nation's capital provided the only bright spot, with home prices up 1.1 percent in March and 4.3 percent over the past year.

The seat of the federal government and home to numerous universities, agencies, and nonprofits, D.C. has been fairly well insulated from the housing crash, says Mark Meyerdirk, principal broker at Washington, D.C.-based real estate firm Urban Broker LLC. "People in D.C. feel very comfortable with the market and are optimistic about the economy recovering," he says. "Job growth has been great here the past 13 months, so with those promising numbers the consumer confidence here is maybe greater than in other markets."

Seattle was the only other metro area to see a monthly increase--a modest 0.1 percent uptick--but prices in the Pacific Northwest city remained 7.5 percent off levels recorded a year ago.

Industry experts have noted that declines have become more regionalized over the past year, with the greatest price drops sinking markets in the Southeast and Southwest, as well as industrial Midwestern states such as Michigan and Ohio. But while areas swamped with foreclosures continue to grapple with the excess supply of homes for sale, areas less afflicted with distressed properties have seen bidding wars for turnkey properties, Swonk says.

"When the housing bust hit, there was really nowhere to hide," Swonk says. "But as the housing market hits what some are calling a double dip, what we're seeing is there are some places to hide. You are seeing pockets like Washington now doing OK."

Although Washington may be the only metro area seeing a significant bump in home prices, many experts expect price declines to level off in the third quarter. When demand will pick up and reignite the fizzling housing market is another matter. "We feel we're about 12 to 18 months away from price stability," says Ken Shuman, head of communications at real estate information website Trulia. "The first sign of recovery would just be stability, not even price upswing."

Foreclosure Prevention Failure!

June 9, 2011

WASHINGTON, DC — The Obama administration is blaming the three largest U.S. mortgage lenders for the failures of its foreclosure-prevention program. It says they've done little to help people at risk of losing their homes. Wells Fargo, Bank of America and JPMorgan Chase & Co. have failed to help enough people permanently lower their mortgage payments so they can stay in their homes, the Treasury Department said today. The three lenders have received about $24 million from the government last month for the program.

Based on those lenders' lackluster success for the first three months of 2011, the government has removed financial incentives it had given them. They amounted to up to $1,000 per permanent loan modification. About 843,000 homeowners have dropped out of the program as of April. That's more than half of the roughly 1.6 million homeowners who have started with the program on a trial basis over the past two years. Treasury said the three lenders incorrectly determined that many people were ineligible for the program.

Another firm, Ocwen Loan Servcing, was also cited as needing substantial improvement. But it was not subjected to the same financial penalties as the other three companies.
Six other firms - American Home Mortgage Servicing, CitiMortgage, GMAC Mortgage, Litton Loan Servicing, OneWest Bank and Select Portfolio Servicing - require moderate improvement. But Treasury said they will not lose their cash incentives.

The program was launched in 2009 and was intended to help those at risk of foreclosure by lowering their monthly payments. Borrowers start with lower payments on a trial basis. But the program has struggled to convert them into permanent loan modifications. Homeowners say the program has been a bureaucratic mess. Many say they were disqualified after banks lost their documents and failed to return their phone calls. Banks blame homeowners for failing to submit needed paperwork.

Those homeowners who are accepted into the program receive interest rates as low as 2 percent for five years. They can repay their loans over a longer period. The median savings for those who remain in the program is about $526 per month.

The Treasury Department said that when the program began, most of the lenders did not have the needed staff or resources to help the many homeowners seeking lower mortgage payments.

Foreclosure Investments!

While the demand for foreclosures continues to grow, real estate investors face a host of challenges when it comes to closing the deal on distressed properties.

(J.P. Morgan Chase banking unit foreclosed on a home [pictured left] near Rexburg, Idaho, that is infested with garter snakes.) Two families have fled the house in scenes reminiscent of horror-film classics. One turned to a local TV station in 2006 to document the infestation, complaining of not being able to sleep at night. The video is still available on YouTube and is doing absolutely nothing for sales. The backlog of foreclosure inventory currently in the system coupled with the two to three million more expected to flood the market in the coming months is the primary contributing factor to depressed home prices. The psychological effects of foreclosures have also taken their toll on would-be buyers as they contemplate purchasing a home in this market.

"Thirty percent of people have known someone who's either gone into foreclosure, was forced to do a short sale, or has applied for a loan modification," Shuman says. "When you take a look around the room and 3 out of 10 people have done that, you tend to think twice about 'Do I want to be a statistic?'"

With home prices at historic lows and distressed properties selling at discounts of 35 percent or more in some parts of the country, scooping up bank-owned bargains has become increasingly lucrative for real estate investors. "If you have some money, the smart thing is to buy [foreclosures] as investments," says Jim Gillespie, CEO of Coldwell Banker Real Estate. "Once they hit the market, [they] sell pretty quickly because they're priced so strong."

Buying a foreclosure can be a long and arduous process, according to Stephanie and Jay Herbert, who waited three months for the keys to their foreclosure purchase. After the bank accepted their offer, the Herberts were told the bank didn't actually own the property and therefore couldn't sell the house. "We had sold our stock and had this chunk of money because we had to pay 20 percent down," she says. "Then, all of the sudden we were told the bank couldn't get the title because they didn't own the property. It was really disappointing." The Herberts learned this after paying for inspections and spending hours preparing to renovate the property. Eventually, the Herberts got the house, but not before plenty of back-and-forth between the bank and real estate agency. "It was just a big mess. Buying the foreclosure was the biggest pain," Herbert says. "It was a great price, but not a good experience."

Buyers can also run into problems when it comes to financing foreclosures. Qualifying for a loan is tough in this market, but it can be even harder if the mortgage is for a distressed property because lenders have higher standards for the homes they finance these days. "Your credentials need to be much stronger," says Keith Gumbinger, vice president of mortgage information website HSH.com. "Expect to put down 25 or 30 percent on the property and expect to pay higher fees to get your mortgage."

Snake Foreclosure!

Biggest Defaulters on Mortgages Are the Rich!

2010-07-08T19:57:00.000-07:00

According to an LA times article this morning, a Wells executive, who is responsible for the bank’s foreclosed commercial properties, was seen throwing parties at a $12 million beach house in Malibu, California, which the previous owners had to surrender to Wells to satisfy debts. According to the article, Wells Fargo had refused to show the house to prospective buyers, perplexing local real estate agents!

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^{May 31, 2011: Home Prices Plunge}

The Mortgage Forgiveness Debt Relief Act

The Mortgage Forgiveness Debt Relief Act was introduced in Congress on September 25, 2007, and became law on December 20, 2007. This act offered relief to homeowners who would formerly owe taxes on forgiven mortgage debt after facing foreclosure. The act extends such relief for three years, applying to debts discharged in calendar year 2007 through 2009. (With the Emergency Economic Stabilization Act of 2008, this tax relief was extended another three years, covering debts discharged through calendar year 2012.)

Normally in US law when a lender decides to forgive all or a portion of a borrower's debt and accept less, the forgiven amount is considered as income for the borrower and is liable to be taxed. However, after the signing of the Mortgage Forgiveness Act, amendments have been made to remove such tax liability and allow the borrower and lender to work freely together to find a common solution that is beneficial to both parties. This protection is limited to primary residences -- rental properties are ineligible for relief -- so consultation with a tax advisor is necessary to ensure that a borrower qualifies.[1] The amount of forgiven mortgage debt allowed to be excluded from income tax is limited to $2 million per year.

More recent legislation provides for a specialized type of refinancing option, available for mortgages made after 2006, for owner-occupied homes. Under this program a debtor provides information similar to that necessary for a short-sale but rather than selling the house to a third-party an FHA guaranteed loan at a fixed-rate is available if the original lender is willing to write-off all but 85-percent of outstanding of the debtor's obligations (including principal, interest, late-fees, prepayment penalties, and all other fees). FHA-backed refinance packages are available beginning October, 2008, and carry a fee equal to 1.5% of the value of the house. Debtors who exercise this option must sacrifice 50-100 percent of equity that builds in a house, and may not participate in home equity loan programs. This program is only available to owner-occupied residences. This program requires consent from a lender: consent is not automatic and may be freely withheld, though withholding consent can result in a foreclosure with adverse financial results.

One Million Foreclosures!

July 14, 2010

Economic woes may force more than 1 million American households to lose their homes this year. Nearly 528,000 homes were foreclosed in the first six months of 2010. As lenders work through a huge backlog of borrowers behind on their mortgages, even more home repossessions could occur before the end of the year. According to RealtyTrac, Inc., a foreclosure listing service, the number of households facing foreclosure in the first half of the year climbed 8 percent when compared to the same time frame last year. In June, 1 in every 411 households received a foreclosure filing. The fastest growing group of foreclosures involved homeowners with good credit who took out conventional fixed-rate loans. Many of these borrowers have fallen behind in their mortgages due to unemployment or reduced income. It takes about 15 months for a home loan to go from being 30 days late to the property being seized and sold. Between January and June of this year, about 1.7 million homeowners received a foreclosure-related warning. At the time of this writing, more than 7.3 million home loans are in some stage of delinquency. The states experiencing the highest foreclosure rates are California, Florida, Michigan, Illinois, Arizona and Nevada.

Million Dollar Foreclosures!

July 8, 2010

Published: July 8, 2010

LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley. Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars is seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic. By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent. Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment. “The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million. Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties. “I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.” The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail. At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend. At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months. Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them. In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.

The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default. The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.

With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans. “Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.” Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006. “I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.” The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults. “They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process. In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.

In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008. The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two. The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch. But this is still Silicon Valley, where failure can always be considered a prelude to success.

In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing. His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments. “I’m going to be downsizing,” he said. The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”

2012: The Crash of the U.S. Housing Market?

From Glenn Beck's Fox News Channel program on June 16, 2009 - a graph showing the upcoming crash of the United States housing market thanks to incompetent buffoons like Nancy Pelosi, Harry Reid, Barney Frank and Chris Dodd who were told many times this was coming and chose to look the other way as hundreds of thousands of people were outright handed mortgage loans they had no possible way of repaying and had no business owning a home.

According to the forecast we've only seen the worst offenders hit the foreclosure mark so far. The next stage comes in 2010 - just prior to the midterm elections - when people who actually tried to pay on their homes will begin to fall into foreclosure -- with another group set to arrive there in 2011 just prior to the total collapse in time for 2012.

Evictions & Foreclosures in 2010!

2010-06-21T20:59:00.001-07:00

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^{Loan Modification - Part II}

Foreclosure Process!

June 28, 2011

Foreclosure processes are different in every state. If you are worried about making your mortgage payments, then you should learn about your state's foreclosure laws and processes. Differences among states range from the notices that must be posted or mailed, redemption periods, and the scheduling and notices issued regarding the auctioning of the property. However, a general understanding of what to expect can be found on our foreclosure timeline.

In general, mortgage companies start foreclosure processes about 3-6 months after the first missed mortgage payment. Late fees are charged after 10-15 days, however, most mortgage companies recognize that homeowners may be facing short-term financial hardships. It is extremely important that you stay in contact with your lender within the first month after missing a payment.

After 30 days, the borrower is in default, and the foreclosure processes begin to accelerate. If you do not call the bank and ignore the calls of your lender, then the foreclosure process will begin much earlier. At any time during the process, talk to your lender or a housing counselor about the different alternatives and solutions that may exist.

Three types of foreclosures may be initiated at this time: judicial, power of sale and strict foreclosure. All types of foreclosure require public notices to be issued and all parties to be notified regarding the proceedings. Once properties are sold through an auction, families have a small amount of time to find a new place to live and move out before the sheriff issues an eviction.

Judicial Foreclosure. All states allow this type of foreclosure, and some require it. The lender files suit with the judicial system, and the borrower will receive a note in the mail demanding payment. The borrower then has only 30 days to respond with a payment in order to avoid foreclosure. If a payment is not made after a certain time period, the mortgage property is then sold through an auction to the highest bidder, carried out by a local court or sheriff's office.

Power of Sale. This type of foreclosure, also known as statutory foreclosure, is allowed by many states if the mortgage includes a power of sale clause. After a homeowner has defaulted on mortgage payments, the lender sends out notices demanding payments. Once an established waiting period has passed, the mortgage company, rather than local courts or sheriff's office, carries out a public auction. Non-judicial foreclosure auctions are often more expedient, though they may be subject to judicial review to ensure the legality of the proceedings.

Strict Foreclosure. A small number of states allow this type of foreclosure. In strict foreclosure proceedings, the lender files a lawsuit on the homeowner that has defaulted. If the borrower cannot pay the mortgage within a specific timeline ordered by the court, the property goes directly back to the mortgage holder. Generally, strict foreclosures take place only when the debt amount is greater than the value of the property.

Buy-Out, Get Out!

June 21, 2010

Jon Daurio, chief executive officer of mortgage investor Kondaur Capital Corp., recently offered a $4,000 check to Barry Culver for the deed to his Bryan, Ohio house. With the exchange, and a pay-off to a second-lien holder, Culver was freed of $120,000 in crushing mortgage debt on the house, said Daurio, who had bought the right to cut the deal when he purchased the mortgage months earlier. The house, after repairs, is now on the market for $47,500. "It got me out of a bind," said Culver, a former Kmart employee who has since relocated near his in-laws in Tennessee where job prospects are better. "I got a little cash out of it and was able to pay off other stuff I owed."

Such 'cash-for-keys' offers are common for Orange, California-based Kondaur, one of the largest players in the business of buying and resolving distressed loans for profit. The business is growing more popular, with volumes of loans for sale at their highest since the founding of Kondaur in July 2007, said Daurio, a veteran of the subprime lending industry. At DebtX, a Boston-based loan exchange, the number of bidders on pools of loans is up 25 percent since last quarter.

DEALS ARE INCREASING

Owners of bad loans are increasingly making deals with borrowers to avoid a foreclosure, which tends to reduce returns for investors and place a black mark on the homeowner's credit. Lawmakers and regulators are becoming more accepting of these solutions even though they mean the borrower loses the home. The trend comes after more than two years of loan modification programs and foreclosure moratoriums that have produced mixed results, with many homeowners ineligible or defaulting again.

Where a modification isn't feasible, the U.S. Treasury in April will begin paying borrowers who agree to a deed-in-lieu of foreclosure or short sale, where a home is sold for less than outstanding debt. Unlike most modifications, those actions erase excess debt and reset home values, solving the problem of underwater loans that are a top cause of defaults. U.S. modification efforts to date have been "tragic" in delaying housing and economic recovery, Daurio said. "All you are doing is delaying depreciation of the houses," Daurio said. "You are not preventing it by keeping people in a house that they can't afford." More than 11 million properties with mortgages are "underwater," according to First American CoreLogic. Efforts to expand use of principal forgiveness haven't caught on.

DELAYING THE INEVITABLE

Foreclosures have been stalled on more than 1 million bad loans since the U.S. Home Affordable Modification Program was announced a year ago, resulting in higher costs and losses to investors, according Moody's Investors Service. This is delaying an inevitable clearing of the housing market that is needed for a lasting rebound, analysts said. A pent-up "shadow inventory" from failed modification efforts could destabilize the market in 2010, they worry. "You are preventing the orderly transfer of a home from those that can't afford it to those that can afford it," said Rod Dubitsky, a global structured finance specialist at Pacific Investment Management Co. in Newport Beach, California.

The ability to customize loan workouts and earn potentially huge profits are enticing investors to the market, where loans are commonly sold at 40 cents to 60 cents per dollar of principal. Discounts give investors more room to work with borrowers than banks working to mitigate their loss, said Kingsley Greenland, chief executive officer at DebtX. Investors generally look for a quick workout since it costs them to carry the loan or the property, said Jeff Freud, founder of LoanMarket.net, in Irvine, California. Distressed whole loans are just a slice of the total mortgage market, however. Many loans are tied up in securities, and banks now with adequate reserves are arranging deed-in-lieu and short sale agreements themselves.

Mountains of cash chasing a limited field of loans has buoyed prices, but that is reducing opportunity for funds, said Louis Lucido, a principal at Los Angeles-based DoubleLine. But that could change if the Federal Deposit Insurance Co. more rapidly unwinds the assets of its failed banks, he said. New entrants to the market tend to be small investors, who hold less than 100 loans at any one time, analysts said. Among a pool of loans acquired by Dean Engle, a real estate investor in San Francisco who teaches others how to get a start in the business, was a foreclosed home in Greenwood, Missouri. It was still occupied by the former owner, who had no money to find a new place to live. Engle told Ellen Brewood, a local agent to offer the former owner $5,000 to move out, and avoid a lengthy eviction. The house was vacated within five days. After 15 days on the market, it had offers above the $139,000 asking price.

U.S. Mortgage Crisis Culprits!

DICK FULD

Dick Fuld, CEO of Lehman, half billion dollar a year golden boy of Wall Street and namesake of Dick Armey and Dick Cheney - was the one of the key enablers of the subprime mortgages mess. Fuld's company backed lenders across the country that were making questionable loans to questionable borrowers. Lehman was not content just packaging other banks' loans so they went into subprime loan business themselves. Lehman Brothers then took the loans, put them in bundles and asked the rating agencies to rate them AAA, then got Credit Default Swaps from AIG to guarantee garbage and then sold the securities to investors around the world including several countries such as Iceland. Most of this debt is now deemed toxic and worthless. It is rumored that Fuld restructured his personal holdings to isolate them from prosecution.

ANGELO MOZILO

Angelo Mozilo co-founded Countrywide in 1969 and built it into the largest mortgage lender in the U.S. Last summer, Bank of America bought Countrywide. Mozilo almost single-handedly created a business environment where anyone can get a loan with or without any documentation. Countrywide was famous for "liar loans". We are still paying for the crap that Mozilo created and we're in for stage two when all the option ARMs reset late 2009 to 2010. Those option ARMs are going to be another $30 Billion clusterfoot in 2010. Mozilo also founded IndyMac Bank which we also bailed out. Mozilo's garish pay package was criticized by many, including Congress. Mozilo left Countrywide last summer after Bank of America bought it.

Bank of America said it would spend up to $8.7 billion to settle Countrywide's predatory lending charges filed by 11 state attorneys general but the question is where is the public investigation and hopefully the prosecution of Angelo Mozilo? If Bank of America is willing to spend $8.7 billion to settle then one assumes that there was fraud on a massive, massive scale. Unfortunately I can only assume that Mozilo is sitting fat and happy while millions of people WORLDWIDE pay for the crap he inflicted on the global economy.

KATLEEN CORBETT

Kathleen Corbet of Standard and Poor legitimized significant numbers of risky securities that imploded and will still implode through 2010. She's not the only culprit as two other agencies Fitch and Moody's also legitimized securities that sunk into near worthlessness. Standard and Poor, Fitch and Moody's absolutely knew that the securities they rated called CDOs (Collateralized Debt Obligations) should not be AAA rated. There was an infamous email that an S&P analyst sent out, "[A bond] could be structured by cows and we would rate it." If you knowingly sell a salvaged car as a new car by faking the car's title, that's fraud. If you rate a security that is a piece of crap as AAA-grade paper, it's fraud too.

In my opinion, Corbett and her peers at Moody's and Fitch are the biggest linchpins of this global crisis that hit Ann Arbor to San Francisco yet we hear nothing about investigations and prosecutions. Why is the Department of Justice and the 50 state Attorney Generals not prosecuting the people who certified garbage securities as AAA rated?

JOE CASANO

Everyone has heard about AIG and the $150 billion bailout but have you ever heard of Joe Casano? Joe Casano founded AIG's Financial Products unit and was responsible along with the credit rating agencies (Fitch, Moody's and S&P) for legitimizing all the toxic securities that collapsed the global financial market. Casano sold credit-default swaps (CDS) that put virtual guarantees on the mortgage securities that were the cause of the global financial meltdown. Credit Default Swaps are insurance contracts that "guarantee" companies and sellers of the garbage securities will pay their debt. AIG's massive CDS-issuance business made so much money for AIG. Till the very day AIG collapsed, they kept on selling contracts that turned out to be a house of cards that led to AIG's downfall and subsequent taxpayer rescue. Casano now lives in London with hundreds of millions of dollars collected while at AIG. He now has armies of lawyers to shield and insulate him from enormous damage he has caused all of us in the world.

These are the real culprits behind our collective pain and yet we have yet to hear any investigation or prosecution. Even Bernard Madoff was a lowly functionary when compared to Fuld, Casano, Corbett and Mozilo. "He wouldn't believe it, that investors wanted to pay him," Brewood said of the former owner.

Double Feature!

Michael Jackson History: King of Pop!

Previous Movie: Blackhawk Down

A.R.M. TIME-BOMB 2010!

2009-09-20T10:52:00.000-07:00

According to an LA times article this morning, a Wells executive, who is responsible for the bank’s foreclosed commercial properties, was seen throwing parties at a $12 million beach house in Malibu, California, which the previous owners had to surrender to Wells to satisfy debts. According to the article, Wells Fargo had refused to show the house to prospective buyers, perplexing local real estate agents!

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^{Loan Modification - Part I}

BAD A.R.M.

September 20, 2009

An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on a variety of indices. Among the most common indices are the rates on 1-year constant-maturity Treasury (CMT) securities, the Cost of Funds Index (COFI), and the London Interbank Offered Rate (LIBOR). A few lenders use their own cost of funds as an index, rather than using other indices. This is done to ensure a steady margin for the lender, whose own cost of funding will usually be related to the index. Consequently, payments made by the borrower may change over time with the changing interest rate (alternatively, the term of the loan may change). This is not to be confused with the graduated payment mortgage, which offers changing payment amounts but a fixed interest rate. Other forms of mortgage loan include the interest only mortgage, the fixed rate mortgage, the negative amortization mortgage, and the balloon payment mortgage. Adjustable rates transfer part of the interest rate risk from the lender to the borrower. They can be used where unpredictable interest rates make fixed rate loans difficult to obtain. The borrower benefits if the interest rate falls and loses out if interest rates rise.

Adjustable rate mortgages are characterized by their index and limitations on charges (caps). In many countries, adjustable rate mortgages are the norm, and in such places, may simply be referred to as mortgages.

Thousands of Bay Area homes have a ticking time bomb embedded in their mortgage. The homes were purchased with loans known as option ARMs, short for adjustable rate mortgages. Next year (2010) many option ARM payments will begin to readjust, slamming borrowers with dramatically higher monthly mortgage bills. Analysts say that could unleash the next big wave of foreclosures - and home-loan data show that the risky loans were heavily used in the Bay Area.

From 2004 to 2008, "one in five people who took out a mortgage loan (for both purchases and refinancing) in the San Francisco metropolitan region (San Francisco, Alameda, Contra Costa, Marin and San Mateo counties) got an option ARM," said Bob Visini, senior director of marketing in San Francisco at First American CoreLogic, a mortgage research firm. "That's more than twice the national average.

"People think option ARMs (will be) a national crisis," he said. "That's not really true. It's just in higher-cost areas like California where you see their prevalence."

Of the 10 metro areas nationwide with the most option ARMs, three are in the Bay Area, according to Fitch Ratings, a New York research firm. They are the East Bay counties of Alameda and Contra Costa, the South Bay area of Santa Clara and San Benito counties, and the counties of San Francisco, Marin and San Mateo.

Together, these areas account for the second-most option ARMs in the country, although they are still far behind the greater Los Angeles area (including Los Angeles, Riverside, San Bernardino and Orange counties), according to Fitch data.

Understated data

First American shows more than 54,000 option ARMs issued here with a value of about $30.9 billion. Fitch shows more than 47,000 option ARMs here with a value of about $28 billion. Both say their data underestimate the totals.

Why are so many option ARMs clustered here?

"In markets where home prices were going up rapidly, more and more borrowers needed a product like this to afford something," said Alla Sirotic, senior director at Fitch Ratings. Option ARMs were designed for savvy real estate investors and people whose income fluctuates, such as those paid on commission. Instead, the loans became a tool for regular people to "stretch" to buy homes that were beyond their means.

That's because option ARMs let borrowers choose to make very low payments for the first five years. During that initial period, borrowers can pick their payment option - they can pay interest and principal, interest only, or a minimum monthly payment that doesn't even cover the interest.

Fitch said 94 percent of borrowers elected to make minimum payments only. The shortfall gets added to their loan balance, which is called negative amortization. The amount they owe can grow substantially.

The mortgages 'recast'

After five years, or once the loan balance reaches a certain threshold above the original balance, the mortgages "recast" and borrowers must make full principal and interest payments spread over the loan's remaining life. Fitch said that new payments average 63 percent higher than the minimum payments, but could be more than double in some cases.

"When option ARMs recast, the payment shock is much more intense than we've seen (with other types of loans, such as subprime)," said Maeve Elise Brown, executive director of Housing and Economic Rights Advocates in Oakland, a consumer advocacy group. "That makes them potentially much more damaging."

Unlike subprime loans, which were more commonly used for entry-level homes, option ARMs started out with high balances. In the five-county San Francisco area, option ARMs average about $584,000 and were used to buy homes averaging $823,000, according to an analysis of First American data.

That means they'll spawn foreclosures among upper-end homes.

"The mid- to high-end real estate market is already stranded right now," said Mark Hanson, principal of Walnut Creek's the Field Check Group, a mortgage consultant. "Any sort of extra inventory is not going to be welcome for that market whatsoever."

Option ARMs became widespread starting in 2005, which is why the recasts and higher payments will hit starting in 2010, five years later.

Joey Amacker of Newark, who works as an account manager for a catering company, refinanced his home with an option ARM for $624,000 so he could pull out money to build an addition. The friend who sold him the loan assured him that an option ARM was a safe and affordable product, he said.

Amacker said he initially made only the minimum monthly payment of $1,800, which covered part of his interest and none of the principal. The amount he owed grew to $660,000 by November 2008, according to loan documents.

Meanwhile, payments that would cover both interest and principal also escalated above his reach, said Amacker, a single father of twin teenage boys. Although he wanted to pay more than the minimum, "it was a struggle, borrowing from Peter to pay Paul," he said. His 21-year-old daughter moved in to help out, and he rented out the addition he'd built. But he couldn't keep up with the payments. He's been trying to get his bank to modify the loan, but says it doesn't get back to him. The bank did not respond to a request for comment.

Between the negative amortization and his missed payment and penalties, Amacker's total debt has ballooned to $725,000, while the house is probably worth about $500,000, he said.

"I feel so ashamed of how I could have gotten myself in such a bad situation," he said.

Like Amacker, most option ARM borrowers owe much more than their homes are worth, so they cannot refinance their way out of trouble.

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Mortgage Foreclosure Resources & Fraud

2009-04-29T09:43:00.000-07:00

«• April 28, 2009

The Obama administration Tuesday announced changes to the mortgage rescue program known as Making Home Affordable, adding provisions to reduce payments on strapped borrowers' second mortgages and help more underwater homeowners refinance into government-insured loans. More Information coming to Williby's Real Estate Blogs very soon! •»

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Foreclosure Fraud

Posted: 08/12/2011 04:35:26 PM PDT
Updated: 08/14/2011 04:49:27 PM PDT

SACRAMENTO, CA -- A 39-year-old Tracy man pled guilty Friday in federal court for conspiring to rig bids at public real estate foreclosure auctions in San Joaquin County. Walter Daniel Olmstead participated in the scheme with other real estate investors where they agreed not to bid against each other on certain properties. After the conspirators' designated bidder bought a property, the group would hold a second, private auction. The conspirator who bid the highest got the real estate and the difference between the public and the private auction prices was split among the conspirators. Federal prosecutors say Omstead participated from November 2008 to July 2009. Olmstead faces up to 10 years in prison and a $1 million fine. He also pled guilty to mail fraud which carries a sentence of up to 30 years in prison and a $1 million fine. His sentencing date has not yet been scheduled. Seven other people have pled guilty in connection with this case, including 38-year-old Yama Marifat of Pleasanton. Marifat pled guilty in March.

Mortgage Fraud

August 14, 2011

Mortgage Fraud: Mortgage fraud is a material misstatement, misrepresentation, or omission relied on by an underwriter or lender to fund, purchase, or insure a loan. This type of fraud is usually defined as loan origination fraud. Mortgage fraud also includes schemes targeting consumers, such as foreclosure rescue, short sale, and loan modification.

Introduction

Mortgage fraud remained elevated in 2010 despite modest improvements in various economic sectors and increased vigilance by financial institutions to mitigate it. Although recent economic indicators report improvements in various sectors, overall indicators associated with mortgage fraud––such as foreclosures, housing prices, contracting financial markets, and tighter lending practices by financial institutions––indicate that the housing market is still in distress and providing ample opportunities for fraud. National unemployment remains high, and housing inventory is at the same level it was in 2008 in the midst of the housing crisis.1 Mortgage delinquency rates and new foreclosures continued to increase in prime and subprime markets.

Mortgage Fraud Perpetrators

Mortgage fraud enables perpetrators to earn high profits through illicit activity that poses a relative low risk for discovery. Mortgage fraud perpetrators include licensed/registered and non-licensed/registered mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, settlement attorneys, land developers, investors, builders, bank account representatives, and trust account representatives. There have been numerous instances in which various organized criminal groups were involved in mortgage fraud activity. Asian, Balkan, Armenian, La Cosa Nostra,2 Russian, and Eurasian3 organized crime groups have been linked to various mortgage fraud schemes, such as short sale fraud and loan origination schemes.

Mortgage fraud perpetrators using their experience in the banking and mortgage-related industries—including construction, finance, appraisal, brokerage, sales, law, and business—exploit vulnerabilities in the mortgage and banking sectors to conduct multifaceted mortgage fraud schemes. Mortgage fraud perpetrators have a high level of access to financial documents, systems, mortgage origination software, notary seals, and professional licensure information necessary to commit mortgage fraud and have demonstrated their ability to adapt to changes in legislation and mortgage lending regulations to modify existing schemes or create new ones.

Mortgage fraud perpetrators target victims from across a demographic range, with perpetrators identifying common characteristics such as ethnicity, nationality, age, and socioeconomic variables, to include occupation, education, and income. They recruit people who have access to tools that enable them to falsify bank statements, produce deposit verifications on bank letterhead, originate loans by falsifying income levels, engage in the illegal transfer of property, produce fraudulent tax return documents, and engage in various other forms of fraudulent activities. Mortgage fraud perpetrators have been known to recruit ethnic community members as co-conspirators and victims to participate in mortgage loan origination fraud.

Read the Full Report: 2010 Mortgage Fraud Report - Year in Review

Foreclosure Fraud

Posted: 07/01/2011 06:55:41 AM PDT
Updated: 07/01/2011 11:10:41 AM PDT

Eight Bay Area real estate investors have agreed to plead guilty for their parts in two conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Alameda and Contra Costa counties, the Department of Justice announced Thursday.

Felony charges were filed Thursday in federal court in Oakland against:

Thomas Franciose, 64, of San Francisco;

William Freeborn, 44, of Alamo;

Robert Kramer, 63, of Oakland;

Thomas Legault, 50, of Clayton;

David Margen, 53, of Berkeley;

Brian McKinzie, 38, of Hayward;

Jaime Wong, 42, of Dublin; and

Jorge Wong, 36, of San Leandro.

Prosecutors claim they conspired to rig bids by agreeing not to bid against one another at foreclosure auctions in Alameda and Contra Costa counties -- some in both counties, some only in one -- between May 2008 and this January.

When real estate properties are sold at the auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. After the conspirators' designated bidder bought a property, they would hold a secret, private auction -- sometimes right near the courthouse steps at which the legitimate auction had just been held -- at which each would bid the amount above the public auction price he was willing to pay. The difference between the public auction price and that at the second auction was the group's illicit profit to be divided among the conspirators, often in cash.

The eight men also were charged with using the U.S. mail in carrying out their conspiracy, by paying potential competitors not to bid competitively in the public auctions, court filings say.

"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, assistant attorney general in charge of the Department of Justice's Antitrust Division, in a news release. "The Antitrust Division will vigorously pursue these kinds of collusive schemes that eliminate competition from the marketplace."

Franciose, Jaime Wong and Jorge Wong were charged with one count each of bid rigging to obtain selected real estate at foreclosure auctions in Alameda County and one count each of conspiracy to commit mail fraud. Freeborn and Legault were charged with one count each of bid rigging to obtain selected real estate at foreclosure auctions in Contra Costa County and one count each of conspiracy to commit mail fraud. Kramer, Margen and McKinzie were each charged with two counts of bid rigging to obtain selected real estate at foreclosure auctions in Alameda and Contra Costa Counties and two counts each of conspiracy to commit mail fraud.

Each bid-rigging count -- a violation of the Sherman Antitrust Act -- is punishable by up to 10 years in federal prison and a fine of up to $1 million, or either twice the gain derived from the crime or twice the loss suffered by the victim. Each mail fraud conspiracy count is punishable by up to 30 years in federal prison and a fine of up to $1 million.

Justice Department spokeswoman Gina Talamona said court dates have not yet been scheduled. Anyone with information on bid rigging or fraud related to public real estate foreclosure auctions should call the Antitrust Division's San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Foreclosure Resources

April 28, 2009

The Federal Reserve Banks have established Foreclosure Resource Centers to help address local and regional challenges in their mortgage markets and local communities. The map below links to these regional foreclosure centers, where you’ll find resources for small municipalities, housing counselors, and consumer and community groups.

Communities across the country are facing the challenge of dealing with the destabilizing impacts of foreclosed properties. If you are having difficulty making your mortgage payment, one of the most important things you can do is seek assistance. The resources contained in this blog provide information and links to agencies and organizations that may be able to help you.

Fraud

East Bay couple returns home to find someone else living in it!

By Kurtis Alexander, Santa Cruz Sentinel [Santa Cruz, California]
Posted: 04/26/2009 08:18:49 PM PDT
Updated: 04/27/2009 07:48:04 AM PDT

Two years ago Tom Decker and his wife, Maria McArthur, bought an old home on a wooded lane in the Santa Cruz Mountains they thought held promise of becoming the perfect retirement getaway.

The East Bay couple knew the house, acquired for a modest $50,000, came with its share of problems, like a slipping hillside in the back and other government-required fixes. While Decker says he was prepared to tackle the repairs, the two could not have been ready for what they now say stands between them and their dream home.

A week ago, after many long weekends spent driving from their primary residence in Pleasanton to improve the new property, the couple returned to the Ben Lomond house and discovered someone else had moved into the home.

The cars in the driveway weren't theirs, their belongings had been stacked in the garage and their keys no longer fit the locks, they said. And worse yet, upon arriving at the property on Hubbard Gulch Road, the couple says, a man emerged from the front door.

"We said, 'This is our home,' and he said, 'This is my home,' " Decker said. "We were dumbfounded."

A week later, McArthur and Decker remain unable to legally get back into the house, they say, and have been staying with friends, until they sort out what they believe is an elaborate case of real estate fraud.

"We'd always been a little nervous about break-ins, but we never had thought our home could be stolen," McArthur said.

The Santa Cruz County Sheriff's Office did not return phone calls seeking comment on the couple's situation.

The man who moved into the house earlier this month tells a much different story.
Daniel Judd says he was sitting at his home two Saturdays ago when strangers arrived at the house and told him it was theirs.

"They started yelling at me," he says. "I said if you have a claim, please bring it forward."

The difference of opinion that day, both sides agree, turned into a heated debate that sheriff's deputies ended up settling. When Judd produced a deed that showed he was the property's owner, the deputies allowed Judd to remain on the property and sent McArthur and Decker on their way.

Since then, however, both parties have been ordered to stay out of the home, both sides acknowledge.

Meanwhile, the Santa Cruz County District Attorney's Office confirmed at the end of last week that it too is looking into the case.

Real estate records reviewed by the Santa Cruz Sentinel indicate Decker and McArthur bought the property two years ago. But their transfer documents assigned ownership, in what was an apparent mistake, to another party, which has since sold the home to Judd.

In November 2007, McArthur purchased the home for $50,000, records reveal. In 2008, she transferred ownership to a corporation called the California Housing Association LLC, jointly owned by her and her husband. Decker says the corporation is where he conducts his real estate business.

That corporation, however, is licensed in Nevada, records show, while the home's title was moved to what appears to have been a then-nonexistent California company of the same name.

In March of this year, records show, a California Housing Association LLC was established by Ray Tate of Santa Cruz. As the registered owner of the property, that corporation sold the home on April 2 for $14,000, ostensibly to Judd.

A representative of Old Republic Title Co. in Capitola, where Decker and McArthur had insured property titles, reviewed the records. "The last deed to the individual (Judd) is a fraudulent deed," said Rod Seyffert, chief title officer at Old Republic.

Judd, who says he moved into the mostly furnished home earlier this month, confirmed he bought the property from Tate. Tate could not be reached to comment.

Bank of America in $8.5B mortgage settlement (June 29, 2011)

Bank of America and its Countrywide unit will pay $8.5 billion to settle claims that the lenders sold poor-quality mortgage-backed securities that went sour when the housing market collapsed.

Real Estate "Short Sales"

2008-11-23T08:35:00.000-08:00

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Short sale failure

August 19, 2011

More than a year has passed since the government launched the Home Affordable Foreclosure Alternatives program, or HAFA, a short-sale program that provides incentives to lenders and homeowners in an effort to avoid foreclosures. But few have benefited from the program. With so many homeowners struggling to pay their mortgages, you would think millions of borrowers would have benefited from HAFA, or the Home Affordable Foreclosure Alternatives program. But lenders have completed only 10,438 short sales since the program started, according to a recent report released the Treasury Department.

The government has spent less than $10 million of $4.1 billion allocated to the program. HAFA is another government program that's supposed to last through the end of next year. The program was created to offer an option for homeowners who don’t qualify for a loan modification under HAMP, the Home Affordable Modification Program. However, Lenders don't seem to be enticed by the mere $1,500 that the government offers them for every short sale completed under the program. Also, under HAFA, lenders are not allowed to go after the homeowner to collect the loan balance in the future. They have to forgive the difference between the total amount of the loan and whatever price the house sells for.

In case you are in the process of trying to get approved for HAFA or thinking about applying for it, don’t give up. Maybe you'll be be part of the small group of lucky homeowners who were able to benefit from HAFA. Here is a list of how many short-sale transactions each lender completed since the beginning of the program through June, according to the latest servicers' performance report:

•» JP Morgan Chase: 3,596.
•» Wells Fargo completed 3, 123.
•» Bank of America did 1,873.
•» Select Portfolio Servicing, 591.
•» Litton Loan Servicing, 483.
•» All other servicers: 1,088.

Short Sale Fraud

July 19, 2011

NEW YORK (WREB) -- Just as the housing market began to collapse near the end of 2007, a real estate agent in Bridgeport, Conn. asked Regions Bank if it would accept a $102,375 bid on a home that was underwater on its mortgage. Under the impression that this was the best offer on the home, Regions agreed to the short sale and released the mortgage it owned on the home. Later that same day, the new owner -- an investment group owned by another real estate agent -- resold the home to a buyer who had been lined up before the short sale transaction went through. The final sale price: $132,500, netting the seller a cool $30,000 -- a profit that should have gone to Regions.

In this latest twist on short sale fraud, scammers have found a way to rip off mortgage lenders by tens of thousands of dollars -- sometimes in a matter of hours. The scam artists, usually real estate agents, will secure a legitimate bid on a home, one where the borrower owes far more on the mortgage than the home is worth. Then they arrange for an accomplice investor to make a lower offer on the home.

Foreclosures for sale: Big supply, low prices

The agent then presents the lower bid to the lender and asks them to forgive any remaining balance owed -- without disclosing that there was a higher bid made on the home. Once the short sale is approved, the scammer then sells the home to the higher bidder, often on the same day.

"These same-day resales are on average nearly $50,000 greater than the lender agreed upon short-sale price," said Tim Grace, senior vice president of product management and analytics at CoreLogic (CLGX), a financial analytics company based in Santa Ana, Calif. Such transactions are expected to cost lenders more than $375 million this year, up more than 20% from last year, according to CoreLogic
The anatomy of a scam

Most of the time, pulling off one of these scams involves a real estate agent and an investor acting as a "straw buyer." Sometimes, the owner of the home is involved as well, but not often, said Robert Hagberg, an investigator for the mortgage giant Freddie Mac (FMCC, Fortune 500). "In most instances, the sellers are apathetic; they've, basically, already lost their homes," he said. With nothing to gain or lose, they allow agents to handle the entire deal.

To get the banks to approve low bids, appraisals or broker price opinions are manipulated. Home prices have plummeted in many housing markets and the house may be worth far less than what the seller paid. Sometimes, said Hagberg, fraudsters bribe appraisers or brokers to get the prices they want but they can employ sneakier methods as well. One method: Misstating the home's location so it's compared with much cheaper places.

One case in California last year involved an expensive Malibu property that the agent said was in Riverside, Calif. "It didn't cause any alarm bells to go off at the bank," said Grace. "The short sale went through at $200,000, which was a fifth of its value. It was turned around for $1 million."

Sometimes an agent will point out every defect in the home to get appraisers to reduce their values, according to Hagberg. In Wisconsin, an agent left the windows open during spring rains and flooded the basement. He told the appraiser the plumbing burst and would need expensive repairs. All it really needed was a pump. "When the flippers say there's something wrong with the electricity, the plumbing or the roof, the appraiser can't tell whether they're being deceived or not," said Hagberg.

Fraud ultimately hurts homeowners

Five years ago, when the housing market was thriving, lenders rarely heard of a short sale fraud. But as the housing market crumbled and beleaguered homeowners increasingly turned to short sales to get out of their underwater mortgages, the frauds increased as well. Now, 13% of all existing homes sales are short sales, according to the National Association of Realtors. And last year, frauds associated with short sales comprised half of all fraud investigations for mortgage companies like Freddie Mac (FMCC, Fortune 500), according to Hagberg.

The impact of short sale fraud goes well beyond the direct losses to banks. These frauds have become so common, it has become more difficult for legitimate short-sale transactions to go through. That hurts sellers because it forces more of them into foreclosure. It hurts banks by adding to their costs and it can make all the parties more cautious. The frauds "defeat why we do short sales in the first place," said Hagberg.

In the Bridgeport, Conn. scam, two real estate agents were arrested. It was just one of four similar frauds that were listed in their indictment, which netted them a total of more than $180,000. They pled guilty and are awaiting sentence. They may be out of business but with home prices off about a third from their peak nationwide and down 50% or more in many post-bubble communities, there are opportunities for other short-sale fraud artists to take their place.

Short Sale

A short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Most Short Sales leave a deficiency balance for which the Mortgagor / Borrower is still liable. In 99% of all cases it is not a settlement-in-full. A deficiency balance will remain while the mortgage broker, real estate agent / broker, loan officers, title and closing agents still remain getting their profit. Short sales are not governed by any regulatory agency.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, the advantages include avoidance of having a foreclosure on their credit history and the partial control of the monetary deficiency. Additionally, a short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults.

Process

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than would result from foreclosure or continued non-payment. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from mortgage failures that in part triggered the financial crisis of 2007–2011, they are now more willing to accept short sales than ever before. For "under-water" borrowers who owe more on their mortgage than their property is worth and are having trouble selling, this presents an opportunity for them to avoid foreclosure as a result.

Negotiations

Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal, Broker Price Opinion (abbreviated BPO), or Broker Opinion of Value (abbreviated BOV). Typically, lenders do not accept short sale offers or requests for short sales until a Notice of Default has been issued or recorded with the locality where the property is located.

Lenders have a varying tolerance for short sales and mitigated losses. The majority of lenders have a pre-determined criteria for such transactions. Other distressed lenders may allow any reasonable offer subject to a loss mitigator's approval. Multiple levels of approvals and conditions are very common with short sales. Junior liens - such as second mortgages, HELOC lenders, and HOA (special assessment liens) -may need to approve the short sale. Frequent objectors to short sales include tax lien holders (income, estate or corporate franchise tax - as opposed to real property taxes, which have priority even when unrecorded) and mechanic's lien holders. It is possible for junior lien holders to prevent the short sale. If the lender required mortgage insurance on the loan, the insurer will likely also be party to negotiations as they may be asked to pay out a claim to offset the lender's loss in the short sale.

Consent

Short sales are different from foreclosures in that a foreclosure is forced by a lender, whereas both lender and borrower consent to a short sale. However, this consent may be revoked at any time as short sales are entirely voluntary transactions for both parties. The borrower may decide to remain in the property and attempt a refinance or modification of their mortgage loan, or may refuse to cooperate with the lender's demand for financial documentation or a cash contribution, and thereby ensure foreclosure. Similarly, lenders can refuse to evaluate or approve a short sale offer, generally due to disapproval of either the buyer's offer amount or high closing costs, which reduces the lender's net proceeds. All short sale contracts should include a contingency clause specifying that the contract is contingent upon approval of the seller's lender(s).

In the state of California, short sales can be tricky in that it is important for the party handling the deal to advise the seller to seek the advice of an attorney and a CPA. There could be tax consequences if the loan(s) on the property are not purchase money (all the funds needed to purchase the property). On the other hand, if the loan(s) on the property are purchase money, then the loans are considered "non-recourse" and the debt is generally forgiven and satisfied at the end of the short sale.

Changing consent can present a perilous situation for potential buyers. It can waste considerable time and money for a prospective buyer who anticipated a sale. Typically, deposits with the bank will be refunded but money for paid inspections or other services cannot be.

There are several defenses against this. If the seller has moved out of a property, that is a clue that they have no intention of staying or negotiating further with the bank. "Bank Approved Short Sales" are advertised by real estate advertisements, indicating that a real estate broker has verified the selling bank's position. This still does not guarantee acceptance, and it often does not take junior lien holders into account, but it is better than situations where the bank holding the mortgage has only been lightly involved in the borrower's decision.

Credit reporting

A short sale does adversely affect a person's credit report, though the negative impact is typically less than a foreclosure. Short sales are a type of settlement. Like all entries except for bankruptcy, short sales remain on a credit report for seven years. Depending upon other credit information it is typically possible to obtain another mortgage 1-3 years after a short sale.

While it is frequent if not common for a lender to forgive the balance of the loan in question, it is unlikely that a lien holder that is not a mortgagee will forgive any of their balance. Further, it is common for a lender to omit updating mortgage balances to reflect a zero balance after a short sale. However, willfully misrepresenting information on a credit report can constitute libel in some jurisdictions, and lenders may be sued in civil court for engaging in this behavior.

Fraud

U.S. Media sources reported that some lenders have been accused of engaging in fraud during the short sale process. The fraud involves lenders in second position demanding kickbacks in the form of cash payments from the home buyer or real estate agent, and that are not disclosed anywhere on closing documents or HUD-1 statement. This is in violation of RESPA rules, which require disclosure of such payments.

Deficiency Balance

By nature, all short sales will have a deficiency balance. Laws governing the right of the lender to pursue a borrower for the deficiency balance vary state to state. States considered recourse states allow the lender to pursue. Non-recourse states generally prevent this, though some allow pursuit of deficiency though set forth limits on the amount that can be pursued.

If a lender can legally pursue the deficiency and does not specifically waive its right to pursue the deficiency, the borrower is at risk for a deficiency judgment.
Nevada law potentially grants lenders a six year window of time to sue for the deficiency based on breach of contract in contract law, not foreclosure law. Other states may differ.

Borrowers considering a short sale should be aware of this risk and ask every party involved in the process (Realtor, lender, third party, ...) what can and will be done to protect against a deficiency judgment. Consult an attorney in the state where the property resides to determine specific risks.

Once a short sale has been completed, a Chapter 7 bankruptcy is a possible remedy that the borrower can use to remove the risk of the deficiency judgment or to discharge the judgment itself.

Minnesota Foreclosure Prevention Assistance Program

2008-11-16T16:02:00.000-08:00

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Foreclosure Prevention Assistance Program (FPAP)

The Foreclosure Prevention Assistance Program assists Minnesotans facing foreclosure due to a temporary financial crisis by providing case management services and, if applicable, mortgage payment, or other financial assistance on a one time basis. The program is delivered through community-based nonprofit organizations statewide.

Don't Borrow Trouble

The DON'T BORROW TROUBLE Minnesota Campaign is a public education initiative aimed at stopping predatory lending practices in the Twin Cities seven-county metropolitan area. The Campaign seeks to educate families and individuals about how to avoid predatory lending scams and about available community resources. The DON'T BORROW TROUBLE help line has been established at 612-312-2020 to offer families a safe place to call before they sign anything that puts their home at risk.

Contact

For more specific Foreclosure Prevention information, call the Home Ownership Center at 651-659-9336 or 888-HOC-MINN. Or visit their website at www.hocmn.org to find an organization offering foreclosure prevention assistance near you.

For general information about the Foreclosure Prevention Assistance Program, call the Minnesota Housing Consumer Information Line at 651-296-8215 or 1-800-710-8871 .

You may also contact HOME Line at +1-612-728-5767 or +1-866-866-3546. HOME Line provides free legal, organizing, education and advocacy services so that tenants throughout Minnesota can solve their own rental housing problems

Colorado Foreclosure Laws

2008-11-07T00:51:00.000-08:00

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- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Typically four monthsi

- Right of Redemption: Yes

- Deficiency Judgments Allowed: Yes

In Colorado, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines

The foreclosure process in Colorado is quite a bit different than in other states because here, the governor appoints a "Public Trustee" for each county in the state. The trustee must act as an impartial party when handling a power of sale foreclosure. In Colorado, the non-judicial power of sale foreclosure is carried out as follows:

The process begins when the attorney representing the lender files the required documents with the Office of the Public Trustee of the county where the property is located. The Public Trustee then files a "Notice of Election and Demand" with the county clerk and recorder of the county. Once recorded, the notice must be published in a newspaper of general circulation within the county where the property is located for a period of five (5) consecutive weeks.

The Public Trustee must also mail, within ten (10) days after the publication of the notice of election and demand for sale, a copy of the same and a notice of sale as published in the newspaper, to the borrower and any owner or claimant of record, at the address given in the recorded instrument. The Public Trustee must also mail, at lease twenty-one (21) days before the foreclosure sale, a notice to the borrower describing how to redeem the property.

The owner of the property may stop the foreclosure proceedings by filing an "Intent to Cure" with the Public Trustee's office at least fifteen (15) days prior to the foreclosure sale and then paying the necessary amount to bring the loan current by noon the day before the foreclosure sale is scheduled.

The foreclosure sale must take place between forty-five (45) and sixty (60) days after the recording of the election and demand for sale with the county clerk and recorder. The Public Trustee may hold the sale at any entrance to the courthouse, unless other provisions were made in the deed of trust.

The lender has the option to file a suit for deficiency in Colorado and the borrower has up to seventy five (75) days after the sale to redeem the property by paying the foreclosure sale amount, plus interest..

Boston, Massachusetts - Tenant Foreclosure

2008-10-06T09:42:00.000-07:00

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Tenants Facing Foreclosure, Mass. Legal Help. "Describes the foreclosure process, how to deal with these new owners, and how foreclosure affects your rights and responsibilities as a tenant." Provides key information, including eviction and how to get your security deposit back.

Sometimes landlords stop paying their mortgages. As a result banks and other lenders foreclose on these properties. In many cases, they become the new property owners. If you are a tenant, these new owners might try to convince you that you do not have the same rights as other tenants and that they do not have the same obligations as other landlords. But for the most part, your rights are the same as in any landlord-tenant relationship.

This chapter describes the foreclosure process, how to deal with these new owners, and how foreclosure affects your rights and responsibilities as a tenant. In addition, this chapter also contains a small section about the rights of former owners, which are different. Produced by Esme Caramello and Rafael Mares. Created April, 2008

What Tenants in Foreclosed Buildings Should Know, City of Boston. Provides a list of basic tips and information for tenants.

The Tenant's Helper: A Handbook for Renters, 6th edition, Sept. 2006 , City of Somerville. This 66-page book covers the usual information, like security deposits and evictions, but also includes information on discrimination, roommates, and tenants' rights after the sale of a building. Great resource.

How to Persuade People With Subconscious Techniques

2008-09-23T23:57:00.000-07:00

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How to Persuade People With Subconscious Techniques

from wikiHow - The How to Manual That You Can Edit

Persuasiveness is one of the most important skills anyone can learn because it is useful in countless situations.At work, at home, and in your social life, the ability to be persuasive and influence others can be instrumental for achieving goals and being happy.Learning about the tricks of persuasion can also give you insight into when they're being used on you. The biggest benefit of this is that money will stay in your pocket as you realize just how sales people and advertisers sell you products that you don't necessarily need. Here are several techniques that work on a subconscious level.

Steps

Framing. When someone tells you "Don't think about an elephant" you find it difficult to comply; by just mentioning "elephant", the image pops into your mind, regardless of the context. This is a classic example of framing. [1] Framing is frequently used by skillful politicians. For instance, politicians on both sides of the abortion debate cite their positions as "pro-choice" or "pro-life," because "pro" has better connotations than "anti." Framing is a subtle way of deploying emotionally charged words to shift people towards your point of view. Whenever you wish to launch a persuasive argument, plan the words that you would use, and correlate them to images they would conjure in the minds of the target audience. Classify the images as either positive, negative or neutral. Regardless of other words are within its vicinity, a single word would still be effective in framing an argument. Another example is illustrated by the difference between saying "Having a cell phone will keep me out of trouble" and "Having a cell phone will keep me safe". Ponder which word is more effective for your message: "trouble" or "safe".
Mirroring. Mirroring someone is when you mimic their movements. The movement can be virtually anything, but some obvious ones are hand gestures, leaning forward or away, or various head and arm movements. We all do this subconsciously, and if you pay attention you'll probably notice yourself doing it. How to mirror someone is self explanatory, but a few key things to remember are to be subtle about it and leave a delay between the other person's movement and your mirroring (2-4 seconds works best). This is also known as "the chameleon effect".[2]
Scarcity. This is one that advertisers use a lot. Opportunities, whatever they are, seem a lot more appealing when there is a limited availability. This can be useful to the average person in the right situation, but even more importantly, this is a method of persuasion to be aware of. Stop and consider how much you're being influenced by the fact that a product is scarce. If the product is scarce, there must be a ton of demand for it right?
Reciprocation. It's the old saying, "Do unto others...". When someone does something for us, we feel compelled to return the favor. So, if you want someone to do something nice for you, why not do something nice for them first? In a business setting, maybe you pass them a lead. If at home, maybe it's you letting the neighbor borrow the lawn mower. It doesn't matter where or when you do it, the key is to complement the relationship.
Timing. People are more likely to be agreeable and submissive when they're mentally fatigued. Before you ask someone for something they might not be quick to agree to, try waiting until a more opportune time when they've just done something mentally taxing. This could be at the end of the work day when you catch a co-worker on their way out the door. Whatever you ask, a likely response is, "I'll take care of it tomorrow."
Congruence. We all try, subconsciously, to be consistent with previous actions. One great example is a technique used by salespeople. A salesperson will shake your hand as he is negotiating with you. In most people's minds, a handshake equates to a closed deal, and so by doing this before the deal is reached, the salesperson is much more likely to negotiate you in to a closed deal. A good way to use this yourself is to get people acting before they make up their minds. If, for example, you were out and about with a friend and you wanted to go see a movie but the friend was undecided, you could start walking in the direction of the theater while they make up their mind.
Fluid speech. When we talk, we often use little interjections and hesitant phrases such as "ummm" or "I mean" and of course there is the ubiquitous "like". These little conversation quirks have the unintended effect of making us seem less confident and sure of ourselves, and thus less persuasive. If you're confident in your speech, others will be more easily persuaded by what you have to say.
Herd behavior. We constantly look to those around us to determine our actions; we have the need for acceptance. We are far more likely to follow or be persuaded by someone we like or by someone who is in an authority position. A simple, effective way to use this to your advantage is to be a leader, and let the herd follow you. You don't need any official title to be seen as a leader. Be charming and confident and people will place greater weight on your opinion. If you're dealing with someone who isn't likely to see you as an authority (such as a superior in the workplace, or your significant other's parent) you can still take advantage of herd behavior: Casually praise a leader who that person admires. By triggering positive thoughts in that person's mind about a person they look up to, they'll be more likely to associate those qualities with you.
Man's best friend. To give people the impression that you're loyal, and to inspire them to be loyal to you, put up a picture of you with a dog (it doesn't even have to be your own dog). This can make you seem like a team player, but don't go overboard; putting up too many pictures can make you seem unprofessional.[3]
Offer a drink. Give the person who you're persuading a warm drink (tea, coffee, hot cocoa) to hold while you're talking to them. The warm sensation of the drink in their hands (and their body) can subconsciously make them feel like you're an emotionally warm, likable and welcoming person. Giving them a cold drink can have the opposite effect! In general, people tend to feel cold and crave warm food or drinks when they're feeling socially isolated, so fill that need in order to make them more receptive.[4]
Break the touch barrier. Whether you're closing a deal or asking someone on a date, touching them (in a subtle and appropriate way) can improve your chances by subconsciously activating the human desire to bond. In a professional environment, a pat on the back or hand on the shoulder as you're passing by or offering reassurance can go a long way. In romantic situations, any soft touch from a woman will usually be taken well; men will require further reading in order to avoid making a woman feel uncomfortable.[3]

Tips

There are several things you can do to make yourself seem more dominant, like wearing an all-black outfit or maintaining a neutral face, but there are times when being dominant isn't necessarily more persuasive. If you're a salesperson, you might prefer to relate to the client, rather than intimidate--but if you're a supervisor, giving people a more dominant impression might mean getting your way more often.
Use the same techniques you fear from a sales person on the sales person. For example - you are out to buy a car, be the lead in the conversation. Ask questions that you know the answer to, like "So car sales are down, huh?" and "Man, I bet you guys need to move these 08's with the 09's already on the floor." This will encourage the sales person to work harder to close the sale. Remind them that their income is not what it once was, without coming out and saying so.
If you want someone to clean up after themselves, spray a little bit of all purpose cleaner in the area that's a mess. The faint smell can sometimes trigger the desire to tidy up.[3]

Warnings

Don't persuade anyone to do something that isn't conducive to their well-being.
Be careful using persuasive techniques in friendships. Sometimes a decision needs to be made, and it is OK to convince others to 'buy in'. However, if you do this too often, people may interpret this as you being controlling, or manipulative, both of which can lead to undesirable outcomes.

Related wikiHows

Sources and Citations

DumbLittleMan.com - Original source, shared with permission.

↑ http://en.wikipedia.org/wiki/Framing_(social_sciences)

↑ http://instruct1.cit.cornell.edu/courses/phi663/Bargh%20-%20Chameleon%20Affect.pdf (PDF)

↑ 3.0 3.1 3.2 MSNBC.com - 9 mind tricks to get what you want

↑

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California Foreclosure Law

2008-09-13T02:33:00.000-07:00

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Mortgage Fraud
Strike Force!

August 4, 2011

California State Atty. Gen. Kamala D. Harris has subpoenaed CitiGroup Inc. and its banking subsidiary, CitiBank, ordering the two entities to answer questions regarding the selling and marketing of mortgage-backed securities in the Golden State, a person familiar with the investigation said. The person, who was not authorized to speak publicly about the matter and spoke on condition of anonymity, would not further characterize the nature of the investigation. Spokespeople for the attorney general’s office and Citi declined to comment.

In May, Harris announced the creation of a Mortgage Fraud Strike Force that would target mortgage fraud of any size. Harris said then that she would tackle corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses. To prosecute some of the cases, Harris said she would use California's False Claims Act, which makes it a crime to defraud the state.

The probe comes as several other investigations into the practices of other large banks are underway. New York and Delaware have more than a dozen attorneys working full time on a wide-ranging investigation into Wall Street's role in the mortgage meltdown. Those investigators have subpoenaed or requested information from 13 financial firms, including Goldman Sachs Group Inc. and JPMorgan Chase & Co. Citi is not a focus of that probe.

Citi is one of five large banks negotiating with a committee of all 50 state attorneys general probing banks' servicing and foreclosure practices. Those negotiations are still underway.
Updated: July 15, 2011

Home Sales Climb

East Bay home sales climbed sharply from May to June as short sales and bargain prices brought in buyers, but sales were lower than a year ago. In Alameda County, a total of 1,584 new and existing single-family houses and condominiums changed hands in June, up 17.4 percent from May, but down 4.8 percent from June 2010, said a report released Thursday by MDA DataQuick. The median sales price was $351,000, up just under 1 percent from May, but down 12.3 percent from a year ago.

Contra Costa County saw 1,692 homes close escrow last month. That's a 14.1 percent gain from May, but down 2.1 percent from a year ago. The median price was $268,000, up 5.1 percent from May, but down 5.5 percent from a year ago. Contra Costa County is seeing more short sales, which helps explain the sales volume increase from May to June, said a broker-associate with a Danville office of Realty. He also saw that as a good sign for the market. "I think people are starting to realize we are probably at the bottom or close to the bottom," he said.

Low interest rates are helping to push sales, but so are price cuts on individual properties, said an agent with a Fremont office of Realty Experts. "They may have spurred a lot of buyers to make a move, especially in the higher end," he said. The expert also said he had a property -- a five-bedroom luxury home in Union City -- that was listed at $945,000 a few months ago. "Nothing happened. We dropped it to $880,000 last week and had multiple offers. Now it's pending," he said.

The nine-county Bay Area saw a similar sales spike from May to June. A total of 7,998 homes changed hands, up 14.5 percent from May. The sales spike was almost three times the normal increase that happens between May and June, when springtime brings out homebuyer, although higher May-to-June gains occurred in 2008 and 2009.

Last month's sales volume turned out to be the highest for any month since June 2010, which marked the end of a federal program that provided tax credits and spurred sales a year ago. Median sales prices continue to struggle in response to sales of lower-priced properties and a sluggish market for move-up buyers, the report said. June's median sales price of $377,750 for the Bay Area was up 1.5 percent from May but down 7.9 percent from a year ago.

Still, last month's sales were 4.5 percent lower than June 2010, and 21 percent below the June average going back to 1988, the report said. And for the first six months of the year, sales were off slightly from the same period a year ago. A total of 38,783 homes changed hands from January to June 2011, a 4.3 percent drop from a year ago.

DataQuick says the month-to-month spike in sales happened not just in the Bay Area but throughout the state. "It's difficult to point to one specific thing that caused last month's sales to jump more than usual from May. It wasn't just in the Bay Area -- we saw it across much of the state. June likely benefited from a combination of factors, such as price reductions, low mortgage rates and perhaps a batch of short-sale transactions from spring that took months to close. Bargain hunters, mainly investors and first-time buyers, remain very active," John Walsh, DataQuick president, said in a statement.

He went on to say: "Let's keep in mind, however, that last month was not a particularly strong June, historically speaking, and one month's increase in sales from the prior month doesn't constitute a trend."
Updated: June 20, 2011

Cal. Pen. Code § 470(2008)

California Penal Code on Forgery -- Check your Deed or Mortgage Assignments!

See Related Blog: Free Credit Reports

- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Typically 120 days

- Right of Redemption: Varies

- Deficiency Judgments Allowed: Varies

In California, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Using this type of foreclosure process, lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one (1) year to redeem the property.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

A notice of sale must be: 1) recorded in the county where the property is located at least fourteen (14) days prior to the sale; 2) mailed by certified, return receipt requested, to the borrower at least twenty (20) days before the sale; 3) posted on the property itself at least twenty (20) days before the sale; and 4) posted in one (1) public place in the county where the property is to be sold.

The notice of sale must contain the time and location of the foreclosure sale, as well as the property address, the trustee's name, address and phone number and a statement that the property will be sold at auction.

The borrower has up until five days before the foreclosure sale to cure the default and stop the process.

The sale may be held on any business day between the hours of 9:00 am and 5:00 pm and must take place at the location specified in the notice of sale. The trustee may require proof of the bidders ability to pay their full bid amount. Anyone may bid at the sale, which must be made at public auction to the highest bidder. If necessary, the sale may be postponed by announcement at the time and location of the original foreclosure sale.

Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.

Glossary - Foreclosure Terminology

2008-09-01T12:18:00.000-07:00

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Data Breach!

June 9, 2011

The Citi credit-card breach is one among many similar attacks, including those at Sony and Lockheed Martin. There are countless ways personal data can be compromised, but you can take steps to reduce the risk. Andrea Coombes has five tips.

Glossary of Terms

Accelerate - An option given to lenders through an "acceleration" clause in the mortgage or deed of trust requiring the borrower to pay the entire balance of the loan all at once if their loan is in default.

Affidavit - A sworn statement in writing usually given while under oath or in the presence of a notary.

Appraisal - The process in which a licensed or authorized person gives an estimate of property value.

Appreciation - The difference between the increased value of the property and the original value.

Assignment - The transfer of property to be held in trust or to be used for the benefit of the creditors (lenders).

Bid - The offered amount for a property for sale at auction.

Certificate of Sale - A document given to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.

Clear Title - A title that is not burdened with defects.

Credit Bid - A bid on behalf of the lender at a foreclosure sale. The bid amount must be less than or equal to the balance of the loan in default.

Decree - A judicial decision.

Deed - A signed document that transfers ownership of property from one party to another.

Deed-in-lieu of Foreclosure - An instance where borrowers voluntarily convey their rights in a property to the lender.

Deed of Trust - A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The three parties included in a deed of trust are the borrower, lender and trustee.

Default - A mortgage or deed of trust is said to be in default when the borrower fails to make the payments as agreed to in the original promissory note.

Deficiency Judgment - A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.

Equitable Title - The present right to possession with the right to acquire legal title once a preceding condition has been met.

Fair Market Value - The price a property would sell for on the open market.

Foreclosure - The forced sale of property pledged as security for a debt that is in default.

Free & Clear - Ownership of property free of all indebtedness.

Judicial Foreclosure - A foreclosure that is processed by a court action.

Lien - A charge upon real or personal property for the satisfaction of a debt.

Legal Description - A formal description of real property sufficient to locate it by reference to government surveys or approved recorded maps.

Lender - A person who lends money for temporary use on condition of repayment with interest (i.e., the bank, mortgage company, etc.).

Lis Pendens - A recorded notice of pending lawsuit.

Mortgage - A written pledge of property that is used as security for the repayment of a loan.

Non-judicial Foreclosure - The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default.

Notary - A public officer licensed by the state to attest to and certify the validity of signatures of others. A notary is often referred to as a notary public.

Notice of Sale - A notice giving specific information about the loan in default and the proceedings about to take place. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.

Personal Property - Property other than real property consisting of things temporary or movable.

Posting - To publish, announce or advertise by physically attaching a notice to an object.

Postponement - Postponement means to put off to a later time. In the case of a foreclosure sale, this is generally done by announcement at the original sale or by posting notices establishing the new date and time the foreclosure sale will take place.

Right of Redemption - A borrower's right to reacquire property lost due to a foreclosure.

Request for Notice - A recorded document requiring a trustee send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.

Subject To - The purchase of a property with an existing lien against the title without assuming any personal liability for the liens payment.

Title - The instrument that is evidence of a person's right in real property (i.e., a deed).

Trustee - A neutral party who advertises the foreclosure property for sale and conducts the auction to sell said property to the highest bidder.

Trustee Sale - An auction of real property conducted by a trustee. Also known as a Sheriff's Sale.

Upset Bid - A recorded bid placed after a foreclosure sale has ended that is higher than the highest bid received at the actual foreclosure sale.

Writ - An order or mandatory process in writing issued in the name of a court or judicial officer commanding the person to whom it is directed to perform or refrain from performing a specified act.

Arkansas Foreclosure Law

2008-09-01T11:28:00.000-07:00

- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Typically 120 days

- Right of Redemption: Varies

- Deficiency Judgments Allowed: Varies

In Arkansas, lenders may forclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process. However, an appraisal of the property must be made prior to the schedule date of foreclosure.

In any foreclosure under a mortgage or deed of trust in Arkansas, the property must sell for not less than two-thirds of the appraised value. If it does not, then it may be offered for sale again within twelve (12) months. The second sale may be to the highest bidder without reference to the previous appraisal.

Judicial Foreclosure

In judicial foreclosure, a court decrees the amount of the borrowers debt and gives him or her a short time to pay. If the borrower fails to pay within that time, then the clerk of the court, as commissioner, advertises the property for sale.

Sales of real property under court order will be on a credit of not less than three (3) months, but not more than six (6) months, or on installments to not more than four (4) months credit overall. To secure payment, a lien will be retained on the property for its price and the purchaser must also give a bond with surety for the amount of the purchase price.

The lender may bid at the sale by crediting a portion (or all) of the amount the court found was owed to the lender against the sales price of the property purchased at the foreclosure sale. If the real estate does not sell for an amount equal to what’s due on the mortgage loan, then the lender may seize other property from the borrower as in an ordinary judgment.

The borrower has one (1) year from the date of the sale to redeem the property by paying the amount for which the property was sold, plus interest.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

The trustee must record a notice of sale in the office of the recorder of the county where the property is located. The mortgagee's or trustee's notice of default and intention to sell shall be mailed within thirty (30) days of the recording of the notice by certified mail to the borrower. This includes any borrower of record or of whom the lender has actual notice. The notice must also be mailed to anyone who records a Request for Notice that specifically described the mortgagee including its recording information.

Within five (5) days after the notice is recorded, the trustee must mail, by certified mail, a copy of the notice of sale to each of the people who are parties to the trust deed, except for himself. Additionally, the notice of default and intention to sell must appear in a newspaper in the county where the property is located once a week for four (4) consecutive weeks, with the last notice being published not less than ten (10) days prior to the date of the sale.

Said notice of default and intention to sell must contain the names of the parties to the mortgage or deed of trust, a legal description of the trust property and, if applicable, the street address of the property, the book and page numbers where the mortgage or deed of trust is recorded or the recorder's document number, the default for which foreclosure is made, the mortgagee's or trustee's intention to sell the trust property to satisfy the obligation, including, in conspicuous type, a warning as follows: "YOU MAY LOSE YOUR PROPERTY IF YOU DO NOT TAKE IMMEDIATE ACTION" and the time, date, and place of sale.

Any person including the mortgagee (lender) may bid at the sale, except the trustee, who may bid on the behalf of the beneficiary (lender) but not for himself or herself in deed of trust sales. The high bidder must pay the price bid at the time of sale, or within ten (10) days. The lender may bid by canceling out what it is owed on the loan, including unpaid taxes, insurance, costs or sale and maintenance, but for cash for any higher price.

The trustee may postpone the sale by public proclamation at the time, place and date last appointed for sale, up to seven (7) days past the original date, but if for a longer time, then the whole notice procedure must be performed a second time, including the sixty (60) day wait.

Once the sale is complete, the proceeds will go to the pay for the expenses of the foreclosure sale, then toward the obligations secured by the trust deed that was foreclosed and then to junior lien holders in order of their priority. The original borrower is entitled to receive any remaining funds. The successful bidder receives a trustee’s deed.

The lender may sue the borrower for a deficiency within twelve (12) months of a power of sale clause foreclosure. The lender may sue for (1) the difference between the foreclosure sale price and the balance due on the loan, or (2) the balance due on the loan minus the fair market value of the property, whichever is less.

Mortgage Fraud

2008-08-26T07:18:00.000-07:00

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Fraud Alert!

Updated: June 20, 2011

Cal. Pen. Code § 470(2008)

California Penal Code on Forgery -- Check your Deed or Mortgage Assignments!

Deed Fraud Scheme!

June 18, 2011

MURRIETA, Calif. (WREL) -- A family is being told the house they thought they bought in Murrieta actually belongs to someone else. The family says they can't stop making their mortgage payments. That was hardly the feeling last summer where there was all the euphoria of buying their first home.

"Even though you've made your payments in full every month, you could get a knock at the door saying get out," said would-be homeowner Charlie Zahari. "If you look at it, we're renters in a house we can't move out of."

They custom painted the girls' bedrooms and sodded the backyard. They stopped making improvements when they found out they're not the legal owners of the home. "We actually got a call from the FBI who said we just wanted to inform you that your house has been part of a deed fraud scheme," Zahari said.

Karen Tappert is the person the Zahari's say is responsible for stealing the home and selling it to them. She's facing federal charges, but that does little to help the Zahari's with their situation. They must continue paying for the home or otherwise put their credit at risk. They can also be forced to vacate at any moment. Tappert's federal trial is under way in Nevada.

Officials said it started when the original owners of the property vacated the house because they thought the bank was going to foreclose on them. That never happened, and the alleged scam artists swooped in and fraudulently sold it to the Zaharis.

The family said neither the title company, First American Title Insurance, nor the bank have done much to help answer how the title company allowed the purchase of the home in the first place.

In a statement, First American said, "For privacy reasons we cannot comment on the specifics of Mr. & Mrs. Zahari's claim, however, generally the process of establishing title involves other necessary parties and is dependent on their cooperation. This process can be time consuming and complicated." Bank of America also said they're a victim too and they're working with the title company for a resolution.

Civil Fraud

June 17, 2011

U.S. regulators could file civil fraud charges against some credit rating agencies, and settle with more Wall Street banks, for their role in developing mortgage-bond deals that helped trigger the financial crisis, the Wall Street Journal reported, citing people familiar with the matter.

The inquiry into the rating agencies broadens the U.S. Securities and Exchange Commission's (SEC) probe into the sales and marketing of mortgage-bond deals by several financial firms, the paper said.

It said other firms being probed by the SEC include JP Morgan, Citigroup, Morgan Stanley, Bank of America's Merrill unit and UBS AG.

The SEC was also reviewing the conduct of McGraw Hill's Standard & Poor's, and Moody's Investors Service, owned by Moody's Corp, on at least two mortgage-bond deals, the paper said.

JP Morgan is expected to settle within weeks allegations related to its sale of a $1.1 billion mortgage-bond investment as the market collapsed in early 2007, the paper said.

JP Morgan declined to comment to media sources on any settlement of the collateralized debt obligations (CDOs).

Mortgage-backed securities and CDOs were at the heart of the financial crisis. Wall Street banks vacuumed up home loans, often subprime mortgages, and repackaged them into bonds and other securities that were sold with top-notch credit ratings.

When the U.S. housing market crashed, the securities plummeted in value, generating enormous losses for investors around the world.

Last year, Goldman Sachs settled civil fraud charges with the SEC for about $550 million regarding its role in marketing a subprime mortgage product.

The Journal said JP Morgan and most other banks facing fraud allegations are expected to agree to pay about half or less than the $550 million paid by Goldman.

The paper said a Standard & Poor's spokeswoman declined to comment, and it quoted Michael Adler, a spokesman for Moody's, as saying: "Although Moody's is uncertain as to what The Wall Street Journal is referring, we would certainly cooperate with any requests we receive from the SEC."

Media sources could not immediately reach Standard & Poor's or Moody's for comment. The SEC declined to comment.

The SEC is considering whether the credit ratings firms failed to do enough research to be able to rate adequately the pools of subprime mortgages and other loans that underpinned the mortgage-bond deals, the paper said.

The SEC last month sought public comment on proposals that the credit rating agencies needed to reveal more about how they judge financial products and how those ratings perform over time.

Fraud

April 28, 2008

NEW YORK — Reported incidents of mortgage fraud jumped 42 percent nationwide, with Florida reporting the highest number of cases, according to industry data released Monday.

Properties in the Sunshine State accounted for nearly a quarter of all mortgage fraud incidents, the Mortgage Asset Research Institute said. California ranked second, followed by a three-way tie for third among Illinois, Maryland and Michigan.

The report is based on data submitted by MARI subscribers about loans that were originated in the first quarter of this year and have since been classified as fraudulent.

The most common mortgage fraud cases included misrepresenting income, employment history, and debt and assets. Maryland, for example, had an unusually high percentage — 69 percent — of its cases involved tax return and financial statement misrepresentation.

Mortgage fraud has represented about $1 billion in losses over the past decade, the Mortgage Bankers Association has said.

The increase in reported incidents comes as lenders raise credit standards to curb rising foreclosures. Critics charge the industry for being too lax in qualifying risky borrowers during the boom, which fueled an overheated housing market.

But the stricter requirements have done little to curb fraud.

"Tightening credit standards by itself doesn't eliminate fraud," said Merle Sharick, vice president and national manager of business development for MARI, especially in markets that typically attract a lot of speculators like Florida and California.

You Can Avoid Foreclosure and Keep Your Home

2008-08-24T09:33:00.000-07:00

^{↓↓↓↓↓↓↓↓↓ Blog Post Starts Below ↓↓↓↓↓↓↓↓↓}

^{California Attorney General shuts down law firms accused of conning homeowners!}

On Mortgage Rates,
Obama Wants Proposal
for how Government can keep Big role!

Posted: 08/19/2011 08:11:22 AM PDT
Updated: 08/19/2011 08:11:29 AM PDT

President Obama has directed a small team of advisers to develop a proposal that would keep the government playing a major role in the nation’s mortgage market, extending a federal loan subsidy for most home buyers, according to people familiar with the matter.

The decision follows the advice of his senior economic and housing advisers, who favor maintaining the government’s role as an insurer of mortgages for most borrowers. The approach could even preserve Fannie Mae and Freddie Mac, the mortgage finance giants owned by the government, although under different names and with significant new constraints, said people knowledgeable about the discussions.

A decision to preserve a major government role would mark a big milestone in the effort to craft a new housing policy from the wreckage of the mortgage meltdown and could mean a larger part for Fannie and Freddie than administration officials had signaled.

In a statement, the White House said it is premature to say that senior officials have agreed on any of the three main options outlined earlier this year in an administration white paper on reforming the housing finance system. “It is simply false that there has been a decision to move forward with any particular option,” said Matt Vogel, a White House spokesman. “All three options remain under active consideration and we are deepening our analysis around how each would potentially be implemented. No recommendation has been made to the president by his economic advisers.”

The proposal is likely to draw criticism from many Republicans, who blame the financial crisis on policies they say overly encouraged the housing market. And many economists, including some who have worked in the White House under Obama, consider the federal role harmful to the free market. But if this approach became law, it probably would keep in place the kind of popular home loans that have been around for decades — 30-year fixed-rate mortgages with relatively low interest rates. Officials have not determined whether to advance a final proposal before the 2012 presidential election. Officials from the White House, the Treasury Department and the Department of Housing and Urban Development are working out the details.

The government could maintain a substantial role in various ways. These include restructuring Fannie and Freddie as public utilities overseen by a government regulator. The government would no longer guarantee their financial health, as in the past, but would continue to backstop the mortgage-backed securities they issue using loans made by private banks. Or the two companies could be shut down and replaced with several successors that, likewise, would have their mortgage-backed securities guaranteed by the government in exchange for a fee. A federal guarantee, by reducing the risk to investors, can make it cheaper for firms to raise money for making home loans, in turn reducing mortgage rates.

For years, Fannie and Freddie — shareholder-owned companies chartered by Congress to support the housing market — owned or insured trillions of dollars in home loans. When the housing market crashed, the government seized the firms, and it has spent more than $150 billion propping them up. Since then, Fannie and Freddie have played a key role in ensuring the availability of mortgages amid the market upheaval. But the Obama administration has said it wants to scale back the federal role. In weighing whether to preserve Fannie and Freddie, administration officials have several concerns, said people familiar with the discussions. They spoke on the condition of anonymity because the talks are still preliminary.

The firms spent decades developing a market in which investors worldwide can buy and sell securities backed by U.S. home loans, and administration officials don’t want to jeopardize it. In addition, officials don’t want to punish the thousands of Fannie and Freddie employees who have specialized knowledge about the mortgage market and had nothing to do with the poor business decisions top executives made in the run-up to the financial crisis. But some critics warn that nearly any government role could leave taxpayers on the hook. “The long-term consequence is that the taxpayers ultimately have to bail out the government’s losses,” said Peter Wallison, a fellow at the American Enterprise Institute. He added, “There is only one legitimate role for government in guaranteeing mortgages: That is mortgages for low-income people, to enable them to buy homes.”

Under the approach Obama endorsed, the government would seek to limit the exposure of taxpayers. Fannie, Freddie or other successor firms would charge a fee to mortgage lenders and banks and use the money to create an insurance pool to cover losses on mortgage securities caused by defaults on the underlying loans. The government would be the last line of defense in case of another housing market meltdown, using taxpayer money to cover losses only if the insurance pool ran dry.

Some special advantages awarded to Fannie and Freddie would be eliminated, according to people familiar with the matter. For example, the two companies were allowed for decades to do business while holding a fraction of the reserves — essentially, rainy-day money — that banks and other financial firms were required to hold. This advantage allowed Fannie and Freddie to grow very large. The companies, or the firms that replace them, would have to start holding much more in reserve.

The administration’s strategy also would require Fannie and Freddie, if they remain in some form, to shed many of the mortgages they own. Their loan portfolios, which have ballooned recently, would shrink greatly over coming years and perhaps be eliminated. Private firms would have to fill the void.

“We remain committed to winding down Fannie and Freddie, though such significant measures would need to be done gradually and with care,” said Vogel, the White House spokesman. “We believe that it is essential to bring private capital back to the center of a reformed housing system.”

Although banks would be able to make any home loans they wanted, only those that met federal standards would be eligible to be included in securities assembled by Fannie, Freddie or successor companies. And only those securities would have a government guarantee. Any effort to remake the nation’s housing finance system would be phased in over five to 10 years.

Since early in his tenure, Obama has promised to offer a proposal to overhaul the nation’s housing finance system. In February, the administration released a long-awaited white paper discussing an overhaul of the housing finance system. The paper called for the end of Fannie and Freddie but did not say what should replace them. Three options were presented. The first two called for greatly reducing the federal role in the mortgage market, perhaps eliminating it. A third option called for largely maintaining the government’s footprint but introducing several changes to reduce the chances that another taxpayer bailout would be needed. (All of the options preserved the Federal Housing Administration, a government agency that helps low- and middle-income and minority home buyers.) The administration’s decision in February to release a series of options — and not make a formal recommendation — reflected a political calculation and a disagreement among Obama’s advisers.

Two top Obama advisers, HUD Secretary Shaun Donovan and Treasury Secretary Timothy F. Geithner, think the government should maintain an outsize role in the housing market, administration officials said. Donovan thinks federal support for housing fulfills a public service, while Geithner has been focused on the need for the government to have a way to keep the mortgage market operating during a financial crisis.

Other advisers, however, opposed a continued government role over the long run. Austan Goolsbee, who this month left his job as chairman of Obama’s Council of Economic Advisers, argued that the federal role in housing distorts the free market. By subsidizing mortgage investments, he argued, the government drives capital away from other types of investments — for example, those in companies developing environmentally friendly technology. He also warned that the government is putting enormous sums of taxpayer money on the line while conveying little actual benefit to home buyers.

In a meeting with the president, Goolsbee said that the government had finally brought Fannie and Freddie’s excesses to heel by taking over the companies and that it would be a mistake to let them loose in the market again, said a person familiar with the meeting. Goolsbee likened the companies to a villain held in a special prison who shouldn’t be freed just because he promises to help the poor, the source recounted.

Lawrence H. Summers, who was director of the National Economic Council until early this year, argued that, over the long term, it didn’t make sense to have a government-backed agency providing guarantees to the mortgage market but that Fannie and Freddie still play a crucial role. “My position was that we needed to maximize activity in the short run to support the housing market,” Summers said in an interview. “Discussions of scaling down Fannie and Freddie were vastly premature under the circumstances of a collapsing housing market.” After a decade or so, he added, the government role might be phased out. He cautioned that models similar to Fannie and Freddie “were problematic because they were likely to lead to the same type of abuses” that Fannie and Freddie engendered.

Gene Sperling, who became director of the National Economic Council this year, shepherded the release of the white paper. He agreed that a continued government guarantee made sense. In the end, Obama signaled agreement. The White House, however, says the president has not made a final decision.

See Related Blog: Tips for Avoiding Foreclosure

Losing a home can be financially and personally devastating. Here's information to help you keep your home. Relief may be available.

People facing money problems:

If you are facing unemployment or have money problems, you may be able to keep your home if you know the right steps to take. Read on for important information and links to local organizations that can help you get through difficult times without losing your home. Government organizations and the mortgage industry worked together to provide this information to help you keep your home.

Disaster area victims:

If you live or work in an area declared a disaster by the President and the hurricane, tornado, flood, wildfire, or other natural or man-made event damaged your home or reduced your income, your lender will provide disaster relief:

For 90 days on an FHA insured loan. (Go to the Disaster Help webpage.)

In most cases for other loans.

Military personnel and spouses:

If you or your spouse is on active military duty, you may qualify for a reduction in your interest rate resulting in lower payments. Read how the Servicemembers Civil Relief Act of 2003 (formerly the Soldiers' and Sailors' Civil Relief Act of 1940) affects military homeowners.

Facing Money Problems:

Financial problems are most often associated with major life changes like:

Job loss;
Cuts in work hours or overtime;
Retirement;
Illness, injury, or death of a family member; or
Divorce or separation.

If your family is facing any of these issues and you can't pay your bills, look closely at what you owe and what you earn. Eliminate unnecessary spending and reach out for help if you still can't make ends meet. Taking action right away can help you protect your family from the loss of your home.

Arizona Foreclosure Laws - Real Estate

2008-08-19T16:56:00.000-07:00

- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Typically 90 days

- Right of Redemption: None

- Deficiency Judgments Allowed: Varies

In Arizona, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

The trustee must record a notice of sale in the office of the recorder of the county where the property is located. Within five (5) days after the notice is recorded, the trustee must mail, by certified mail, a copy of the notice of sale to each of the people who are parties to the trust deed, except for himself. Additionally, the notice must appear in a newspaper in the county where the property is located once a week for four (4) consecutive weeks, with the last notice being published not less than ten (10) days prior to the date of the sale.

Optionally, if it can be done without a breach of the peace, the trustee can post the notice at least twenty (20) days prior to the date of the sale, in some conspicuous place on the property to be sold and/or he or she can post the notice at the courthouse or at a specified place at the place of business of the trustee in the county in which the property is located.

The trustee or the trustee’s agent must conduct the sale. The sale is for cash to the highest bidder, except that the lender can make a "credit bid," which means to cancel out some part (or all) of the money the borrower owed the lender on the lean, instead of paying cash. A successful high bidder must pay the bid price by 5 pm of the day after the bid, other than a Saturday or legal holiday. Every bid is an irrevocable offer until the sale is completed, which happens when the bidder pays the bid price to the trustee’s satisfaction. If the high bidder fails to make the payment by 5:00 pm, the day after being notified of the option to buy, then the trustee may postpone the sale.

The trustee may postpone the sale to another time, or another place, by giving notice of the new date, time and place by public declaration at the last place and time the property was offered for sale. No other notice is required. A trustee may also, by written agreement, extend the time for a buyer to come up with the payment.

Once the sale is complete, the proceeds will go to the payment of the obligations secured by the deed of trust that was foreclosed, then to junior lien holders in order of their priority. The successful bidder gets a trustee’s deed, which provides conclusive evidence that the trustee conducted the foreclosure sale property.

A note regarding Deficiency Suits: A lender may not bring a deficiency suit against a person who lost a property that is 2.5 acres or less at a foreclosure, provided the property was a single one-family or a single two-family dwelling. This is so even if the high bid at foreclosure was less that the balance due on the loan. However, in foreclosures against other types of property, a deficiency suit is allowed, but is limited to the difference between the balance owed and the fair market value of the property, and then only if the suit is brought within ninety (90) days of the power of sale foreclosure.

What is Foreclosure?

2008-08-17T09:12:00.000-07:00

Foreclosure is the legal right of a mortgage holder or other third-party lien holder to gain ownership of the property and/or the right to sell the property and use the proceeds to pay off the mortgage if the mortgage or lien is in default. It is a concept that has existed for centuries.

Initially, the law had it that a mortgage default resulted in the automatic ownership of the property by the holder of the mortgage (sometimes referred to as the mortgagee). But the law developed over the years so as to allow mortgagors time to pay off mortgages before their property was taken away. This process of taking away the mortgagor's property because of default is what constitutes foreclosure.

Today, numerous state laws and regulations govern foreclosure to protect both the mortgagor and the holder of the mortgage from unfairness and fraud. In the United States, although states have their own variations, the basic premises of foreclosure law remain the same.

Types of Foreclosure

The mortgage holder can usually initiate foreclosure anytime after a default on the mortgage. Within the United States, there exist several types of foreclosure. Two are widely used, with the rest being possibilities only in a few states.

The most important type of foreclosure is foreclosure by judicial sale. This is available in every state and is the required method in many. It involves the sale of the mortgaged property done under the supervision of a court, with the proceeds going first to satisfy the mortgage, and then to satisfy other lien holders, and finally to the mortgagor. Because it is a legal action, all the proper parties must be notified of the foreclosure, and there will be both pleadings and some sort of judicial decision, usually after a short trial.

The second type of foreclosure, foreclosure by power of sale, involves the sale of the property by the mortgage holder not through the supervision of a court. Where it is available, foreclosure by power of sale is generally a more expedient way of foreclosing on a property than foreclosure by judicial sale. The majority of states allow this method of foreclosure. Again, proceeds from the sale go first to the mortgage holder, then to other lien holders, and finally to the mortgagor.

Other types of foreclosure are only available in limited places and are therefore considered minor methods of foreclosure. Strict foreclosure is one example. Under strict foreclosure, when a mortgagor defaults, a court orders the mortgagor to pay the mortgage within a certain period of time. If the mortgagor fails, the mortgage holder automatically gains title, with no obligation to sell the property. Strict foreclosure was the original method of foreclosure, but today it is only available in New Hampshire and Vermont.

Acceleration

The concept of acceleration is used to determine the amount owed under foreclosure. Acceleration allows the mortgage holder the right when the mortgagor defaults on the mortgage to declare the entire debt due and payable. In other words, if a mortgage is taken out on property for $10,000 with monthly payments required, and the mortgagor fails to make the monthly payments, the mortgage holder can demand the mortgagor make good on the entire $10,000 of the mortgage.

Virtually all mortgages today have acceleration clauses. However, they are not imposed by statute, so if a mortgage does not have an acceleration clause, the mortgage holder has no choice but to either wait to foreclose until all of the payments come due or convince a court to divide up parts of the property and sell them in order to pay the installment that is due. Alternatively, the court may order the property sold subject to the mortgage, with the proceeds from the sale going to the payments owed the mortgage holder.

See also: Tips for Avoiding Foreclosure - Real Estate

Alaska Foreclosure Laws - Real Estate

2008-08-16T09:13:00.000-07:00

- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Varies by Process; Typically 90 days

- Right of Redemption: Varies by Process

- Deficiency Judgments Allowed: Varies by Process

In Alaska, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, has been instituted more since the late 1980's, when lenders found that they were foreclosing on residential property worth substantially less than the amount owed. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

In the case of judicial foreclosure, the process is carried out according to the rules of equity, deficiency suits are permitted and the borrower has no rights of redemption.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed, provided it meets the minimum protection laws set forth by the State of Alaska. Otherwise, the non-judicial power of sale foreclosure is carried out in the following three phases:

The trustee must record a notice of default in the office of the recorder of the recording district in which the property is located not less than thirty (30) days after the default and not less than three (3) months before the sale.

Said notice of default must state the name of the borrower, the book and page where the deed is recorded and it must describe the property, the borrower’s default, the amount the borrower owes, and the trustee’s desire to sell. It must also state the date, time and place of the sale.

Within ten (10) days after recording the notice of default, the trustee must mail a copy of the same by certified mail to the last know address of (1) the borrower, and (2) any person whose claim or lien on the property appears of record or is known to the lender of trustee and (3) any occupant. The trustee may have the notice delivered personally instead of sending it by certified mail.

Any time before the sale, the borrower may cure the default and stop the sale by paying a sum equal to the missed payments plus attorney’s fees. The lender may not require the borrower to pay off the entire remaining principal balance of the loan to cure the default, just the missed payments and attorney’s fees. If the lender has recorded a notice of default two or more times, then the Alaska statutes provide that the lender can refuse to accept the borrower’s monies for the missed payments and attorney’s fees and proceed with the foreclosure sale instead.

The sale must be made at a public auction held at the front door of a courthouse of the superior court in the judicial district where the property is located. The trustee must sell to the highest and best bidder and the lender may bid at auction.

The trustee may postpone sale of all or any portion of the property by delivering to the person conducting the sale a written and signed request for the postponement to a stated date and hour. The person conducting the sale shall publicly announce the postponement to the stated date and hour at the time and place originally fixed for the sale. This procedure shall be followed in any succeeding postponement.

When this type of foreclosure process is used, the borrower has a right to redeem the property and deficiency suits are not allowed.

Tips for Avoiding Foreclosure - Real Estate

2008-08-15T17:29:00.000-07:00

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?

Don't ignore the letters from your lender. Contact your lender immediately. Contact a HUD-approved Housing Counseling Agency. Toll FREE (800) 569-4287 TTY (800) 877-8339

If you are unable to make your mortgage payment:

1. Don't ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL.

6. Contact a HUD-approved housing counselor.

The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

8. Use your assets.

Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

9. Avoid foreclosure prevention companies.

You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.

10. Don't lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.

Alabama Foreclosure Laws - Real Estate

2008-08-15T14:34:00.000-07:00

- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Varies by Process; Typically 30 - 60 days

- Right of Redemption: 12 months

- Deficiency Judgments Allowed: Yes

In Alabama, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. However, when no power of sale is present, lenders may, at their option, choose to forego a lawsuit and foreclose by selling the property, as outlined below in the "No Power of Sale Foreclosure Guidelines".

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. However, if the deed of trust or mortgage contains a power of sale clause, but does not specify the time, place and terms of sale, then a foreclosure sale may take place at the front or main door of the courthouse of the county where the property located, after default of the deed of trust or mortgage, for cash to the highest bidder. The sale may not take place until thirty (30) days after the last notice of sale is published.

Said notice of sale must be given by publication once a week for four (4) successive weeks in a newspaper published in the county or counties in which the property is located. If the property is under mortgage in more than one county, the publication is to be made in all counties where it is located. The notice of sale must give the time, place and terms of said sale, together with a description of the property. If no newspaper is published in the county where the lands are located, the notice shall be placed in a newspaper published in an adjoining county for four (4) successive weeks.

No Power of Sale Foreclosure Guidelines

If no power of sale is contained in a mortgage or deed of trust, the lender, or any assignee thereof, may, after default of the mortgage or deed of trust, either file a lawsuit to foreclose or foreclose by selling the property to the highest bidder for cash at the courthouse door of the county where the property is situated. Said sale may not take place until after notice of the time, place, terms and purpose of the sale has been published for four (4) consecutive weeks in a newspaper published in the county wherein said lands, or a portion thereof are situated.

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