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foreclosure (107)

Loan Mods......White Noise to Keep Us Distracted?

Posted by Linda McKissick on February 12, 2010 at 4:00am

This same information, but given in a two hour presentation by a totally different source, is a real eye opener of the level of deception being fed to us.

The attached video talks about just one of the 'Sweetheart' deals the FDIC has made. It has similar deals with over 52 banks.

So all the talk about Loan Mods......Window Dressing.

According to DSNews, which by the way has no article about the back door deals being made, but does have several articles on different institutions buying up defaulted loans......gee I wonder why.

http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1006278

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Citigroup to Ease Foreclosure Process

Posted by Cynthia McKenna on February 11, 2010 at 11:20am

Citigroup to Ease Foreclosure Process
Citigroup announced Thursday that it will let delinquent home owners who don’t qualify for any federal relief program stay in their homes for six months as long as they turn over the keys and leave the property in good condition when the grace period expires.

The bank estimates that more than 20,000 borrowers in hard-hit states like Michigan, Ohio, Florida, Illinois, Texas, and New Jersey could be eligible.

Citigroup is hoping its plan will prevent borrowers from damaging their homes before they depart, which will save the bank significant repair dollars. The program also allows the company to bypass the slow-moving foreclosure process and gives the bank more control over when it puts properties on the market.

Source: The Washington Post, Renae Merle (02/11/2010)

Wow! I am amazed that banks continue to make their own rules. No need for NAR to keep them out of real estate, they are controlling it now....


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Is It Wrong to Make a Profit as a Real Estate Investor?

Posted by Allan S Glass on February 1, 2010 at 7:00pm
As a nation on edge and in the midst of the worst economic crisis since the Great Depression, many of the daily aspects reflected in “Americana” seem to have become taboo. For the past two years our stunned and gun-shy population has wandered through news of continued job losses, store closings, grim foreclosure statistics driving the economy south, and consumer confidence to all time lows.In times of chaos and turmoil it’s normal to wonder who is to blame for our collective misery as it is expected that we all seek solutions to our temporary slump. However, one unfortunate by-product of this circumstance is the blurred distinctions between actions that lead to recovery and those that caused our loss. In the real estate industry this has become most evident in the grouping of profit with greed, and investment with speculation.Profit vs. GreedIn a recent article for the Washington Post, conservative columnist George Will writes, “Greed, we are agreed, is bad. It also is strange. It has long been included among the Seven Deadly Sins, which suggests that it is a universal and perennial facet of the human fabric.” He continues on with the example of ticket brokers, like Stub Hub, to illustrate his point that the open market properly punishes greed with missed opportunities and sudden collapse due to improper timing. “Greed is worse than a moral defect, it is a cause of foolish pricing. That is why markets know it when they see it.”Without entering a conversation about regulation versus free markets I would concur that greed unchecked leads to downfall. Further, the collapse of the US housing market shows that the unfortunate side effect of unchecked greed is the collateral damage done to those who were not greedy but remain caught in the crossfire.Profit on the other hand is a basic tenet of Capitalism and the cornerstone to our free market society. Profit is the engine that propels entrepreneurs, investors, and jobs, manufacturing, creativity, and expansion alike. In his seminal book “The Science of Getting Rich” Wallace Wattles explains that one must always give more in “Use Value” than they receive in “Cash Value.” His clear yet sometimes lost point among business ventures is that a properly functioning marketplace allows for a reasonable entrepreneurial profit to those who add value to the business process. This distinctive balance lies within the intent of the business performing the service.In illustration of this point can be found in the real estate industry by comparing investors to speculators.Investor vs. SpeculatorA real estate investor is an individual or entity that invests equity into a real estate asset for the purpose of generating income from or adding value to the existing improvements. Investors can have long term or short-term strategies. They may use their own capital or they may borrow (leverage) equity to varying degrees. Some create value by curing defects either physical (dilapidation) or financial (cash buyers with quick closings), while others employ long-term hold strategies that gather value from timing and appreciation. Yet all prudent investors share the distinction of returning to the marketplace “Use Value” for the profits or “Cash Value” they earn.Speculators can share timing and leverage strategies with investors, yet that is where the similarities end. The intent of a speculator is not to add value to the economic engine; rather they look to take advantage of the marketplace by simply getting in line first. The speculator is driven by greed. Profit margins and financial gain are not based on business strategies that help balance supply and demand, thus making the business plan viable in the long term. Instead the speculator looks to horde or corner markets to their advantage intending to reap exceptional short term profits before quickly exiting the marketplace without regard to what is left behind.The Soap AnalogyMost all of us bathe on a regular basis. To do so effectively we use water and some form of cleaning agent. For this example let’s assume we all use soap.If one were to plan for a shower and find all the soap gone, the reasonable response would be to go down to a convenience store (grocery store, warehouse store, or drug store) and buy another bar. Most of us would look for the best bargain or our favorite brand and gladly pay the store’s asking price. For this transaction to occur we realize that some other business distributed the bars of soap in large bulk quantities to that store to accommodate our smaller purchase. Before that, a manufacturer bought raw materials mixing together bars of soap to later package and sell to that same distributor.Each step along the way a business invested their capital to provide a service both for the entity before them and customer who comes after them in the economic process. For this privilege and purpose each investment entity earns a tidy profit. By charging too much for their service they lose customers and go out of business. By contrast, not charging enough leads to loss, inhibiting the ability to remain a viable and profitable concern. Either way, free market forces act to keep profits in balance and all of us clean. Further we support these profits and welcome the service provided by continuing to buy bars of soap.But what happens when someone only seeks to take advantage of system for the short term and their own personal gain. Let’s imagine we’ve all taken a two-week cruise across the Pacific Ocean. Forced to share close quarters for an extended period of time it would quickly become apparent that good hygiene practices are necessary to the shared enjoyment of the passengers. Again, enter the need for soap.For this example let’s assume that the passengers did not realize this need until the boat was long to sea and the boat’s sundry shop was grossly undersupplied with the sudsy necessity. Enter the speculator. Realizing that other passengers have nowhere to turn, too little supply and extraordinary demand, he quickly gathers all of the available soap and waits for the pandemonium to begin. Beyond the myriad of possible disasters awaiting the group one outcome remains certain – Imbalance and market failure.The Real Estate WorldExamples of our ship bound soap pirate were seen all across America this past real estate cycle. From Brooklyn to Las Vegas, Florida to California speculators bought or reserved condominium units before homeowners could find their place in line. Speculators bought income property that did not earn enough income to support the prices paid intending to sell it in short order by way of rapid appreciation. Eventually the music stopped. The result – Imbalance and market failure.Yet amid the ashes born of greed and speculation, comes the profitable investor intent on creating value within the economic system. Recognizing a need and providing a valuable service, the investor uses free markets to find balance in the economy and provide profits for its coffers. Identifying “Use Value” in exchange for “Cash Value” the profitable investor solves problems, creates jobs, provides a service, fuels growth, inspires innovation, and is the cornerstone to the American Capitalist System.That is never wrong.

Allan S. Glass is a real estate broker in Los Angeles, Californiaspecializing in REO and Short Sale transactions. Allan is also a featured blogger on Realtor.com. The ASG Real Group has over $1 billion and 17+ years of transaction experience.
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Fact or Myth; Bankruptcy guarantees a stop to foreclosure.

Posted by Jesus (Jesse) Gonzalez on February 1, 2010 at 7:17am
In an effort to disclose, let me first tell you that I am not a Bankruptcy Attorney….or any other type of Attorney for that matter. This blog is not to be interpreted as legal advice because, it’s not. For legal advice you need to speak to a law professional. This blog is just my opinion and should be consider as nothing more. In my opinion, the concept that Bankruptcy guarantees homeowners a stop to foreclosure is a myth! Let me explain why I have this opinion. First off a creditor, your bank, can petition the court to remove the stay you received as protection from creditors when you filed for bankruptcy protection. In many cases, the moment the bank learns you filed for protection, they run to the court and ask for the stay to be lifted. So, why would a court ever agree to this course of action suggested by the bank? A simply reply, is because the bank has the right to ask and have their request considered fairly among the evidence provided to the court. It also depends greatly on what type of bankruptcy protection you are under, if it’s Chapter 7…..most likely the bank’s request to lift the stay will be granted and that’s because Chapter 7 bankruptcy isn’t designed to protect you from foreclosure, sad but true. If you want a much better chance at protecting the home from foreclosure, you may want to consider Chapter 13 which puts you on a repayment plan and allows you to pay off your debts over time and therefore, gives homeowners a better chance of protecting the home however, either way….nothing is guaranteed. Now, just because the bank request the stay to be lifted, it doesn’t necessarily always mean it will be. The truth of the matter is, your Attorney will have arguments to the court, on your behalf, to keep the protection in place but, even then, nothing is guaranteed. My point is, just because the bank request the stay to be lifted and just because your Attorney is going to argue against it, nothing and, I do mean nothing ever guarantees you will be able to stop foreclosure. It simply boils down to a variety of conditions such as, hardship, skill of the Attorney and the willingness of the court. Unfortunately, many times the homeowners’ walk away wishing they never started the process from the beginning. Ultimately all bankruptcy protection does is buy you some time. You will ultimately still find yourself across the table negotiating with you lender trying to save your home. Only this time, you are also having to pay Attorney fees. A Short Sale may be a better option.
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Time is of the Essence!

Posted by Lon Mapes (909) 255-6289 on January 24, 2010 at 8:43am
When I first created my brokerage's "REO Team" a couple years ago I often wondered what area we needed to focus on to attract -- and also keep Asset Managers happy.After asking others, reading a lot, and attending conferences, we came up with the motto: "Our job as REO Agents is to make the Asset Manager's job as easy as possible". Keeping this focus proved very beneficial and truly launched our REO Team.As I pondered this today, I thought of a new motto to add to our original one: "Time is of the Essense". Time and again I have had Asset Managers thank me for getting back to them in a timely manner. By timely, they meant returning emails or calls within 3 hours or less. I have always been a fanatic about responding very quickly -- usually within minutes. I assumed other agents operated the same way.What I have learned is that this is not the case. Numerous Asset Managers have told me that is their #1 pet peeve. Something so simple...but often overlooked.
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Financial Crisis Inquiry Commission

Posted by Billie Dalessio on January 13, 2010 at 5:50pm
All REO Brokers, for that matter all Real Estate Professionals should watch the panel questions to learn about the financial crisis. It is available for viewing at www.c-span.org In the on-going blame game that has been in effect since the beginning of the crisis, this is the most fair and balanced of each parties viewpoint, without media bias one would find on politically motivated networks. Most people have an opinion on the root cause of the meltdown. Some think it rests on a residential real estate housing bubble. I have never been in agreement with that viewpoint. Real Estate is unlike a dot com, it cannot truly be a complete bubble. By definition when a bubble bursts, nothing is left, in real estate, the underlying asset remains, although at a reduced value, it still retains some value.Others believe that the cause is Wall Street greed. Many others believe it was the push for increased homeownership rates.These thoughts are over-simplication, although there is plenty of blame to go around, it is a combination of many factors that created the perfect storm. The purpose of learning where the system went wrong is to prevent repeating the behaviors that brought us here.It's my opinion that there was a whole circle of responsibilty. An environment of appreciating real estate values, and low interest rates had Main St wanting to invest in stocks & real estate rather than put their cash in safe low return savings accounts, or T bills & the like. Wall St under pressure to out perform year over year, as the bar is set higher and compensation tied to investment returns to the firm looked for new investment vehicles to sell. Mortgage loan brokers. some of which didn't even need a license depending on which state they did business in were looking for new loans. Institutional investors looked to maximize returns on their portfolios and pension funds. Enter new products; mortgage backed securities and credit default swaps. CDS were basically a bet that a package of loans would fail, sort of like shorting a stock. In order to sell these new products they needed to be rated, so Credit Rating Agencies such as Moody's & Standard & Poors evaluated these new products. They developed sophisticated models based on extrapolating real estate appreciation. Real estate purchasers counted on rising values and incomes to sustain their mortgages. Relaxed qualifying opened the market to more borrowers, it was now possible to purchase with no money down, lower credit scores and low documentation of income.There were some mortgage fraud where borrowers or originators lied on applications. Some borrowers decided to cash in on their equity to purchase home improvements, vacations, toys or anything else they wanted now. Homeownership rates went up and helped to fuel the economy, So the circle went- until it broke down.Here's why I think it broke-1. Real Estate values are not constant, they fluctuate up and down.2. New sub-prime loans were more profitable than conforming loans, so too many were written.3. MBS & Credit Default Swaps needed an increased amount of loans to package, Wall St wanted more.4. Mortgage applications were taken by inexperienced unlicensed people, including some real estate agents.5. The riskier the loan, the higher the profit to the mortgage broker, and demand for the loans increased.6. Mortgage Companies solicited home owners to refinance, and spend their equity now, rather than build it up.7. Credit Rating Agencies formulas of taking B & C paper, repackaging and rating AAA, (which I liken to taking B & C student and puting them on the Honor Roll) led to global institutional investors purchasing the MBS & CDO's, thinking they were safe.8. Government watch dogs that started to raise red flags were squashed.9. Banking regulations did not apply to Investment Companies.10. The Fed kept long term interest rates low.11. The new finacial products were complex, and some buyers did not understand them, and relied on their ratings.12. No transparency in capital reserves and product mix at major lenders.13. Consumers take loans which they don't understand have pre-payment penalties, balloon payments, negative amortization etc. This one gets alot of bad press, as in "they should have know better" but I know that I have signed documents to purchase a car without reading it, and have many times checked the box on a website that states I have read & understand the terms & conditions without reading them.- and I deal with legally binding contracts everyday.14. Economic conditions weaken, Real Estate values decline,Foreclosure rates increase placing downward pressure on values, Market liquidity tightens, Panic starts. I am not sure which fueled which, but the combination led us here.
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To Use A Short Sale Negotiator Or Not?

Posted by David Gubler on December 29, 2009 at 11:13am
To Use A Short Sale Negotiator Or Not?Tough Question! There are a handful of good companies providing a great service to listing agents. Unfortunately there are many that simply obtain the components of a short sale package, submit it to the lender, and then cross their fingers and wait. This is NOT short sale negotiation! If that is all they are doing then we need to use different nomenclature... they are then merely a short sale facilitator or processor.The concept of using a short sale negotiator has merit. An experienced negotiator does have a better chance of obtaining a beneficial outcome from the lender(s) than most real estate agents. Why? Because if they really are negotiating short sales in volume then they do have...1. More experience with lender procedures and parameters.2. Actual contacts with decision-makers & a bona-fide ability to escalate a lingering short sale transaction.3. Enhanced ability to maintain persistent follow-up.4. Effective solutions for rebutting the lenders value determinations, settlement amounts, deficiency judgments, promissory notes, etc.All short sales will NOT be approved by the lender(s)! Noone can guarantee that! A good short sale negotiator will provide the following to a listing agent and their clients:1. Reduce the time it takes to complete the transaction.2. Improve the commission retention rate of the agents.3. Effectively negotiate better settlements (lower!) and reduce the incidence of deficiency judgments and promissory notes.4. Most importantly... free up more of an agents most important asset... TIME! Affording agents more time to focus on business development and acquiring more listings.
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eLoan Mods

Posted by Dan Waterman on December 8, 2009 at 12:09pm
In a recent post on Mortgage Servicing News the latest and greatest in the world of default servicing is electronic (on-line) loan modification. Ironically, I'm reading a book right now by Mark Zandi (Financial Shock - I recommend it to everyone in our REO network btw) and he talks about online lending. Albeit, they aren't the same, but I can only imagine some of the fraud and future complications that will be the result of consumers jumping online to apply for a loan modification which, in turn is automatically run through underwriting by a series of codes that do verification based on the honor system.Call my pessimistic, but I don't see this being the salvation to our situation. Don't get me wrong, I'm glad that there are solutions being recommended, however; when's the last time that we, the people (and more importantly the REO professionals) were consulted about potential realistic solutions?Read the article here....it's actually very informative. I don't mean to sound like the write-up is bad. It's not.
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Citigroup Suggests Mortgage Debt Forgiveness

Posted by Howard Bell on November 28, 2009 at 5:05pm
Nearly one in four U.S. borrowers owe more on their mortgage than their home is worth, indicating that the housing recovery could see another wave of defaults. 23% of mortgage holders, were underwater in the third quarter, and 5.3 million have mortgages that are 20% higher than the value of their home since the recession began. Analysts expect prices to dip again this winter as foreclosures increase and economic growth remains modest. The Wall Street Journal reports.Its not a new idea and many have always clamored for the banks to take some responsibility for loose lending practices that helped fuel the boom. But now it seems that a major institution is on board and will spearhead a push for mortgage debt forgiveness.Citigroups quarterly reports on mortgage borrowersAs unemployment rises, more borrowers need principal forgiveness on their mortgages, not just restructured loans, Citigroup Inc.'s mortgage chief said. see chart here To date, Citigroup helped 130,000 homeowners with $20 billion in mortgages outstanding avoid potential foreclosure last quarter. But that number increased 20% from the second quarter. The sub prime debacle is behind us, the culprit now is unemployment.UnemploymentThe Main Cause of DelinquenciesThe main problem of the mortgage industry changes from house-price depreciation to unemployment, the mortgage market needs more programs where there is principal reduction for borrowers with negative equity in their home, as opposed to just a loan restructure, Mr. Das said. (Via Wall street Journal).Loan mods alone are not enough to avoid another tsunami of foreclosures. The housing recovery's momentum has slowed, and it seems likely that house prices will now resume their fall. Re-default rates on loans that had already been modified in the quarter were nearly 39 percent, up 10 percent from the second quarter. High unemployment coupled with a loss of home equity are too big a burden for many home owners and the temptation to walk away, may begin to look like good business sense.Foreclosures initiated in the third quarter rose about 10% from the second quarter but fell about 11% from a year earlier. Completed foreclosures fell less than 1% from the second quarter and about 48% from a year earlier. Things appear to be moderating, although I dont think Citigroup is addressing the Alt A recasts, which are expected to add to the problem, in a big way, beginning this year and into 2012.Citigroup Speaks OutCiti proposes new programs to forestall impending foreclosures. Recognizing that existing programs are not enough, the bank wants to reduce the principal owed and to bring this down to a number homeowners could cover. In return for forgiveness of some debt, Citi wants to share any potential upside. Banks step up and take a hit along with the home owner, home owner gets to stay in the house, Home stays off the market helping home prices stabilize and bank gets equity share for the effort. Having the lenders in an equity share position with home owners is a solid idea.Thanks for Readingwww.yourpropertypath.comRelated ArticlesFannie Mae Allows renters to Stay in Foreclosed HomeFannie Mae Gets Into The Home Rental BusinessNAR Report Third Quarter
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Short Sale: Deal or No Deal?

Posted by Marcelo Da Silva on October 22, 2009 at 8:20pm

Have you spent 30 minutes on hold only to find out that a paperwork is missing? Then after you fax, sometimes may take 72 hours to be uploaded to the file. And sometimes after 30 days or more, they advise you to refax as the file has "disappeared". Hopefully this will be over as short sales are becoming a normal practice instead of REOs. We can all agree that approvals have increased dramatically over the past year. However the wait has not...Today, something happened that went unnoticed. Equator, former aka REOTrans, announced the launch of first ever short sale module used by a large lender. Although the article mentions Bank of America, it has not been officially disclosed. However, no matter who the lender is, this is a big step that we hope become standard. No more missing documents or excuses not to approve/disapprove a file. No more files sitting on a desk waiting to be worked. Most importantly, this will bring a peace of mind for the homeowners who will know where they stand. What say you?
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Real Estate "Shadow" Inventory Sasquatch

Posted by Billie Dalessio on October 9, 2009 at 3:40pm
By now thanks to recent articles in The Wall Street Journal, New York Times, Bloomberg, CNBC and other media, so called Shadow Inventory has come to the mainstream, but it is more elusive than Sasquatch. Real Estate Agents have been blogging about this for months. For those who may have missed it, Shadow Inventory is the defaulted loans that the lenders are allegedly not releasing for sale. According to Rick Sharga, VP of RealtyTrac “We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market” Lawrence Yun, NAR chief economist called it a business decision by the banks “ I believe many banks including Fannie and Freddie, who are holding onto some properties, are releasing foreclosed properties in a measured way so as not to flood the market which they perceive then perhaps could lead them to even more drastic price cuts .So they are releasing properties on a measured pace as a business decision to minimize losses”How big is this Shadow Inventory? Well that depends on what you’re counting, and who is doing the calculations. Some statistics include foreclosures that have been completed, plus NOD (Notice of Defaults), NTS (Notice of Trustee Sales), Strategic Defaults (borrowers that are capable, but not willing to continue to pay on negative equity properties), possible Builder Bankruptcy’s, Vacant lots, Zombie Subdivisions, Commercial Loans, Debt-Securitization Markets, Side-line Sellers, and future Option Arms set to re-set in 2010.The problem here is that no two experts are counting the same. Just as followers of Sasquatch, Bigfoot and Yeti fantastic creatures can’t agree on the details, neither can the forecasters of Shadow Inventory. A recent report from Amherst Securities Laurie Goodman, which took into consideration reports from Mortgage Banker’s Association, Trulia, Core Logic and RealtyTrac led to the report that 7 million properties are in this inventory, and this was not including half of the items listed above. https://www.youtube.com/watch?v=stVgR0SeiQoShe further concludes that 7 million understates the problem because it does not include borrowers that are currently 30- 90 days late in paying, only those which already have received NOD. According to Ms. Goodman’s research, a borrower that misses 1 payment only has a 25% chance to recover, after 2 missed payments 5%, and after 3, only a 1% chance to recover.That is only 2 experts, and quite the disparity between 600,000 and an understated 7 million. Atlanta Federal Reserve real estate expert Analyst K.C. Conway, who is part of the central bank’s Rapid Response program to spread information about emerging problems to bank examiners focused on commercial real estate at a Sept 29, 2009 presentation “Banks will be slow to recognize the severity of the loss-just as they were in residential”In my opinion let’s take the monster out from under the bed, and really look at it. Lenders may have inventory of foreclosed homes that have not been released yet. It may be that the process is taking longer, and the REO departments cannot handle the volume, some may have title issues, some might be in a short sale process, or some may be occupied by tenants that just were granted a whole slew of rights through Protecting Tenants at Foreclosure Act in May 2009. Mistrust of Wall Street and Banks is leading some to a conspiracy theory. As someone who has been a Real Estate Broker for 18 years, and has lived through the Savings and Loan Meltdown, sold properties for the RTC and FDIC, I do not believe they are taking into consideration any of the positives in future-casting. Current foreclosed single family residential property inventory is down. Days on the market from list date to under contract is down. Multiple offers on foreclosed homes becoming the norm. What about sideline buyers pent up demand for these properties? Investment firms and private investors itching to buy bulk portfolios? Housing Affordability Index is at a 20 year high, which brings even more buyers into the market. It will take further stimulus, credit market liquidity, lower unemployment rates, and restored consumer confidence to beat the monster, but it can be done.
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FORECLOSURES AND RESIDENTIAL TENANT RIGHTS

Posted by Richard Zaretsky on October 3, 2009 at 8:12am
Purchasers at foreclosure need to address new legislation that went into effect May 20, 2009 called the Protecting Tenants at Foreclosure Act of 2009 (note: it is Title VII in this link). There is still the advance rent and security deposit issue as the ACT does not address how the tenant can protect itself from the loss of those monies.New new Act is very broad and effectively covers every residential mortgage in every state. It does NOT apply to tenancies that are not "bona fide" - and that definition is also very broad. For example, if you are in foreclosure and the tenant is your child, the Act will NOT apply.The key is when was the lease entered into - was it before or was it after the foreclosure was filed? If it was before the lease was signed, then it takes precedence over the mortgage foreclosure and the tenant cannot be evicted because fo the foreclosure - provided the tenant does not breach the lease. The ONLY exception is if the buyer is purchasing the property as its PRIMARY RESIDENCE, in which event the 90 days.If the lease was after the foreclosure, then the tenant can be evicted 90 days after notice to vacate is given by the NEW owner after the foreclosure sale. In essence, any lender must give any bona fide tenant 90 days to vacate the premises AFTER the lender or any other buyer at a foreclosure sale acquires title to the property. Of course some state tenant laws still apply, for example, if the prior Landlord (the foreclosed owner) had given a notice to vacate prior to the foreclosure sale occuring (because of a tenant breach) in which event that notice start date would remain applicable.The HUD explanation is simple regarding the notice to vacate:(1) The advance notice applies to tenants in any foreclosed dwelling or residential real property, regardless of the type of loan or other security interest on the property.(2) An advance notice of 90 days is the minimum period of notification. A longer period may be provided, for example, if greater protections are provided by state or local law.(3) Responsibility for providing the advance notice to tenants falls on the immediate successor in interest of the property, which will generally be the purchaser.(4) The notice must be given to anyone who, as of the date of the notice of foreclosure, is a bona fide tenant, whether or not there is a lease.A detailed analysis of the Act is found at: PROTECTING TENANTS AT FORECLOSURE: NOTICE OF RESPONSIBILITIES PLACED ON IMMEDIATE SUCCESSORS IN INTEREST PURSUANT TO FORECLOSURE OF RESIDENTIAL PROPERTY.Remember that during the remaining term of the lease or the 90 days notice period, the terms of the lease still apply - the tenant obligations to maintain the premises, pay rent, etc. must still be adhered to by the tenant or they can be sued and evicted by the new owner! This new law is NOT a free ticket for tenants!!!!It is important to recognize that the new law is only a starting point - STATE LAWS that provide greater protections are still in place and will override the new federal law. I would also note that if the lease term was finished before or during the 90 day period, the lease term is NOT extended by this law and normal state remedies for holdover tenancy would be in effect.MISSING SECURITY AND ADVANCE RENT PROTECTION FOR TENANTS -The ACT does not provide any monetary protections that I spoke about in my previous article and therefore the game plan in that article still applies. The problem is that most tenants gave to the original landlord last month's rent and a security deposit. The new owner has no responsibility to the tenant for those monies!!There can be other more imaginative ways to proceed - but remember that because the old landlord that lost the house isn't the owner anymore does not mean that you get a free 90 day pass to live in the house (althought that is how it is likely to pan out for new owners). The new owner can sue the tenant for unpaid rent for the 90 days. That leaves the tenant in a conumdrum of how to recover the deposit and advance rent and that is why participation in the foreclosure suit with a request to the court to deposit monies to the court registry is going to be the best legal route a tenant can take to demand and get fair treatment regarding its financial obligations. My suggestion is to get involved as a tenant in the foreclosure suit when served with the foreclosure summons and complaint. You may want to seek the advice of an attorney in your State when doing so.Copyright 2009 Richard P. Zaretsky, Esq.Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES.
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Do You Know Who the "Big Two" are?

Posted by Lowell Caro, Jr on October 1, 2009 at 7:58pm
I won’t make you guess. The “Big Two” are Wells Fargo and Bank of America. Why are they the big two? They are the big two because during the second quarter Wells Fargo and Bank of America combined, originated 44% of all home loans. http://www.nationalmortgagenews.com/lead_story/?story_id=96Why am I telling you this? Well, despite the fact that many loans are sold or transferred from the originating lender, this still means that the “Big Two” are pretty strong and are likely to have REO asset well into the future. Now you say, “but their networks are closed”. True, so you need to know how to get in to their network. Hmmm…sounds like a great question for “Ask the Asset Manager”!
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Mortgage Cure Rate - Is This The Proof Of The Shadow Inventory?

Posted by Marcelo Da Silva on October 1, 2009 at 4:06pm

Interestingly enough I came across an article that mentions the numbers regarding the cure rate. Basically cure rate is the percentage of portfolio of delinquent mortgages that are brought current or paid. According to Fich Rating, a global credit rating agency, the cure rate among prime fell to 6.6% from an average of 45% during 2000 through 2006. At the same time Alt-A fell to 4.3% from 30.2% average and subprime fell to 5% from a 19% average. Unbelievale numbers that exposes the fragile state of our economy.
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Whats Next?

Posted by Michael Howard on October 1, 2009 at 2:30pm
So…Where are we heading in this market? Countless moratoriums at the Federal and State level. Moratoriums from the banks themselves trying to work out loan mod’s. Local Judges refusing to evict homeowners., Local sheriff’s doing the same. Now we have programs like HAMP and Court decisions like National Bank v. Kesler. There is such an underpinning of resentment from the American people against not only the Banks but corporate America as well. Will this sentiment continue to stall the inevitable? I for one am of the opinion that the market must be allowed to run its course. Real estate is and always has been cyclical. Yes, this is one of the worst markets we have seen in decades but “this too shall pass”.There is a huge amount of shadow inventory the banks are holding. Release it. By all means, do loan mod’s for people who are able to, for people who were duped into loans they could not afford. Help those that we can but at the end of the day these loan mod’s are mere Band-Aids, just delaying the inevitable by a year or two. Put the homes that are foreclosed on the market. Foreclose on the homeowners that have no justifiable means to pay those notes and let the market work its way out. It will be ugly or uglier than it has already been…But we will see quicker return to normalcy. The Government would be better served by spending to create jobs so that MORE homeowners do not lose their homes.So, how do we repair it once it hits “Sea Level”?Keep interest rate levels low and keep the tax incentive for first time home buyers.Ease restrictions on investors purchasing multiple properties. (This is key to the rebuilding)Ease restrictions on homeowners who have had foreclosures and or BK’s to get back into the market.Create restrictions so Banks can no longer offer exotic loans (I hear new ARM programs are coming)There are many others but I would love to hear some other ideas.
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Who Walks Out? New Studies Shed Light on Strategic Defaults - Very Interesting

Posted by Linda McKissick on October 1, 2009 at 3:12am

A nationwide rise in homeowners’ “negative equity” is convincing more people to walk out on their mortgages, even if they have favorable credit ratings and can afford to pay their loan, according to recent studies.Two reports – one by researchers at Northwestern University and two other colleges, the other by the national credit bureau Experian and the consulting firm Oliver Wyman – are offering a clearer picture of “strategic defaultees” than has been previously available.According to Experian and Wyman, numbers of strategic defaults are far greater than you might expect. Nearly 600,000 borrowers nationwide fell into this category in 2008, more than double the number in the previous year. That number also represents 18 percent of all serious delinquencies from last year.So what kind of people turn in the keys and walk out on their homes, even when they can pay the mortgage? It’s not who you think – not entirely, anyway.The Experian report looked at 24 million U.S. credit records and found that borrowers with the highest credit ratings are 50 percent likelier to strategically default than lower-rated homeowners. The defaultees often have no adverse credit history, going from a record of perfect payments to no mortgage payments at all.It’s not longtime homeowners; the Northwestern report said borrowers who bought more than five years ago were less likely to default. Surprisingly, though, “young people” don’t account for that many walkouts, either. “The young are more dependent on the loans market and thus face higher reputation costs from defaulting,” the report says.Above all, though, the studies agree that negative equity – being severely “underwater” in a mortgage – is the biggest factor in strategic defaults. “The homeowners who walk away know full well they are damaging their credit records, but are making a calculated decision that sticking it out over the long-term would be worse,” writes Boston Globe real estate reporter Scott Van Voorhis.Not all underwater borrowers are equal, however. The Northwestern study says homeowners never walk out if their negative equity totals less than 10 percent of the home’s value. Once that shortfall reaches 50 percent, though, a significant number of borrowers will default strategically.The Experian report agrees. Strategic defaults are much higher in boom-and-bust markets with jumbo loans, like California – where walkouts have risen 6800 percent since 2005 – and Florida, where they’re up 4500 percent. (By contrast, walkouts nationwide rose 9 times since 2005.)There is one upside in the statistics: According to the Northwestern report, moral sensibilities keep the walkout numbers lower than they might be otherwise. Eighty percent of borrowers “think it is morally wrong to do a strategic default,” and even “amoral people can choose not to default when it is in their narrow economic interests to do so because of the social costs this decision entails.”But as unemployment and foreclosure inventories continue to rise, it remains to be seen just how much of a deterrent the “social costs” of strategic default will remain.
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Judges are putting a halt to foreclosures..The law, according to a Nevada Judge, is that for purposes of foreclosure, both the Note and the Deed of Trust must be assigned

Posted by Dawn Barrier on September 30, 2009 at 8:23am
Read the whole article from RISMEDIA @ Op-Ed: 60 Million Mortgages May Have Fatal FlawsInteresting Report....RISMEDIA, September 29, 2009-The latest chapter in the mortgage meltdown is being written in court, as one by one, judges are putting a halt to foreclosures. The latest was a recent Kansas Supreme Court case. In Landmark National Bank v. Kesler, the court held that a nominee company called MERS had no standing to bring a foreclosure action.Nor was Kansas the first. In August 2008, Federal Judge for the U.S. Bankruptcy Court for the District of Nevada ruled MERS had no standing. "Indeed, the evidence is to the contrary, the Note has been sold, and the named nominee no longer has any interest in the Note."Read more: http://rismedia.com/2009-09-28/op-ed-60-million-mortgages-may-have-fatal-flaws/#ixzz0SVrf1JSYIn each case, the reason stems from a fundamental misstep in the handling of Notes and Trust Deeds that runs contrary to established court policies which require that the real parties identify themselves to the court. Each of these cases involved MERS and, in each case, the courts' rationales were almost identical.First, a little background. Over the last 40 years, mortgage lending has evolved from a bank holding the mortgage to the mortgage being bundled and sold as part of an investment pool, usually in the form of a bond.As a registered security, the Note is a negotiable instrument, like money or a cashier's check, and under securities law that Note must be given to the investor. In this case, mortgage backed securities, (MBS) were bundled together in a pool and shipped to...well, we don't really know.One of the impediments to an MBS is the need to file assignments for the beneficiaries in each county each time the mortgage is resold. And apparently, no one holds them for very long because most have been passed around several times.In order to avoid the logistical nightmare of trying to maintain a public chain of title, the biggest lenders joined MERS, Mortgage Electronic Registration Systems, Inc.MERS was created with the sole intent of evading the recording fees due to the county in which the security is located.But, as there often is with a BIG IDEA, there were also unintended consequences. Only now are they coming to light. Until MERS was challenged in a foreclosure proceeding, no one had taken a look at the law.MERS lost track of the Notes. In some cases, according to my research, they deliberately destroyed them.Every thing was fine until the economy contracted. MERS began foreclosing on delinquent home loans and then one day; someone said "show me the Note."In reviewing the judge's rulings in the above matters, several key points have been determined:• MERS is not the beneficiary of the Notes and has no skin in the game. It did not lend any money, collect any payments or do anything more than track the sale of the securities.• Judicial procedure requires that parties identify themselves and prove their standing.• Splitting the Note and Trust Deed leaves no party with standing to foreclose. The true holder of the Note, the security, paid the lender so the lender is covered. The true holder of the Note was insured by AIG so they are covered. AIG and the banks were bailed out by taxpayers. So, unless the American tax payer can produce a "blue-ink" original Note, no one has standing to foreclose.• Allowing a foreclosure to proceed without the original Note places the homeowner in double jeopardy. If the original Note were to surface, the holder of the Note would be entitled to payment, but from whom? The borrower is still on the hook.MERS currently holds 50 to 60 million loans so this is no small matter. And, just because they have lost repeatedly doesn't mean they will give up. They will keep right on foreclosing in hopes that the homeowner won't fight back and, in most cases, they won't be stopped.[Editor's Note: RISMedia has been in touch with MERS for a response, which will be running in our Wednesday edition of the e-news.]Read more: http://rismedia.com/2009-09-28/op-ed-60-million-mortgages-may-have-fatal-flaws/#ixzz0SVswwhLq
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The FiveStar Conference...was it REALLY worth it?

Posted by Lowell Caro, Jr on September 27, 2009 at 8:34pm
Isn't that a question almost all of us asks? How much am I really going to spend on this trip and what am I really going to get out of it?Well, there are a number of ways to look at to determine if it's "worth it" or not. I guess we need to start by figuring out what the cost actually is. We can use the round numbers from my trip as a basis. I got a decent plane fair, an average "king" room, add in the cost of the conference and the cost of food and drink. I can round it out to just under $3000.00. Now, what do you get for your hard-earned $3000.00? A lot of that depends on what you intend to get for it. You can go to the conference for the education, for the networking or to gain business.If you go for the education you can definitely get your money's worth. There were a multitude of courses and panels with the most up-to-date information available, ranging from information on short-sales and BPOs all the way through Bulk REO sales. The classes and panels are conducted by industry experts. Additionally there were speakers like Steve Forbes and James B. Lockhart III. You can get great industry information there, some of which you can find else where, but most of which you will NOT get anywhere else. So, if you go for the education, you can get your money's worth. It may be an expensive education, but you can load up with classes all-day, everyday of the conference.If you go for the networking, you'll probably find the best networking you'll find anywhere. Networking with agents from areas outside your market area is one of the best ways to gain insight into the industry. There were hundreds, if not thousands of agents from all over the country at the conference. In addition to that, there were countless opportunities to network with those agents at the conference and outside the conference.If you go to gain business, you can do it, you just have to go with the right attitude, the right plan and be a networker. You must realize that you are competing with those "hundreds, if not thousands of agents from all over the country". I can honestly say that I have either gained new business or strengthened the bond with an existing client at every conference I've been to except for one. I've been to seven conferences in the past 2 1/2 years.Now back to the cost...so, if you gain insight into the industry through a class, from another agent or if you happen to get the attention of someone in the asset management community or the valuation community, what would it take to make it worth your money? A couple REO assets? 50 or 60 BPOs? After you write-off the trip, what would it take to make it worthwhile? Just the education? I have a friend that currently works with about 38 different banks/asset management companies and STILL attends all the conferences. Why? It must be worth the time to him.I'm not here to tell you should or shouldn't attend the conferences, but hopefully I've given you enough information to make an educated decision on your own. Of course, this is all just my point of view... :)
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Understanding Making Home Affordable Program - Modification & Short Sale Guidelines

Posted by Marcelo Da Silva on September 26, 2009 at 7:30am

When the admnistration introduced regulations to stop the foreclosure bleeding that was affecting the health of our economy, the Making Home Affordable came to life. Under the Making Home Affordable the servicers that agreed participating will receive $1,000 up front and another $1,000 up to 3 years for every successful loan modification. On the borrowers side, they will receive a $1,000 per year up to 5 years that goes straight to their balance provided they are current. And the investor will receive $1,500 bonus while servicers will receive $500.The Making Home Affordable was amended on April, 2009 to address the short sale. Under the guidelines, servicers will receive $1,000 for a successful short sale or DIL (deed in lieu of foreclosure), borrowers are eligible up to $1,500 for relocation expenses and the Treasury will “share the cost of paying junior lien holders to release their claims, matching $1 for every $2 paid by the investors, up to a total contribution of $1,000 by Treasury”.Please note that while the modification side of the Making Affordable program will expire on June of 2010, the short sale side of it will expire on December of 2012. It seems that short sale will be in for a while and if that will impact the REO inventory is yet to be seen. What is your take?
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Commercial Reo"s. Who's preparing now for the future?

Posted by James Clarence Harris Jr. on September 25, 2009 at 6:02am
I know we are all busy will the current state of residential Reo's; just like we were 5 years ago when any and everybody jumped in the market to sell real estate. As the residential inventory is getting bottled necked due to all the shadow inventory of foreclosures. Who's gearing up for the next big wave. I see as predicted that commercial Reo's will be around for a long time; and I'm looking for your feedback on how you're preparing for the next Tsunami in real estate in your market..
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