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So the fuckwits can't even do their side of the game right. Who'd have thunk that? They couldn't give money to the right people, they can't prove they have a right to the money coming in, they can't do shit except give Obama BJ's to forestay their comeuppance.
Gloom and doom.
99.9% of the foreclosures are valid. If the borrowers were paying their mortgage and taxes it wouldn't be in foreclosure. Why did this suddenly come to light a mere three weeks before the election when many of the AG's having a fit are up for election? I have a few reasons: 1. If people stay in their homes that are unemployed they don't need housing assistance and therefore are less of a burden on the state. 2. They give the impression that homes are at least lived in and maybe even mow the lawn. 3. The AG's will stick it to the evil banks and that's what the angry electorate wants!
Sorting out the titles will be an easy but time consuming process for the lenders.
The only REAL problem is that it makes current foreclosure sales slow and puts the closing process in jeopardy. What is needed are some laws or time based rules that clear title path and allow foreclosures to continue. Perhaps the good that comes out of this portion of the crisis is a new title system rather than the expensive and largely outdated process used now.
Borrowers living in their homes on defaulted mortgages will be extended from the current 18 month average while this is sorted out. Ultimately, it will have little effect on bank solvency but could do more serious damage to the housing industry, although, the housing industry as a percent of gdp has declined to 7% and while that is significant and will clearly be a drag it will not devastate the economy to the extent it did in 08..
Rally on!
:confused: The solution is to further remove risk from the lender? Really?Quote:
Originally Posted by 4matic
Now, who's listening to Cramer these days?Quote:
Originally Posted by 4matic
I read a great rant about all of this yesterday:
Why Foreclosure Fraud Is So Dangerous to Property Rights
Posted By Barry Ritholtz On October 12, 2010 @ 8:00 am In Credit,Legal,Real Estate,Really, really bad calls,Regulation,Taxes and Policy
There seems to be a misunderstanding as to why the rampant and systemic foreclosure fraud is so dangerous to American system of property rights and contract law. Some of this is being done by people who are naked corporatists (i.e., the WSJ Editorial Board [1]) excusing horrific conduct by the banks. Others are excusing endemic property right destruction out of genuine ignorance.
This morning, I want to explain exactly why this RE fraud is so dangerous, and explain the significance of the rights that are currently being trampled. I also want to demonstrate that the only way the nation could have the quantity and magnitude of errors we see is by willful, systemic fraud.
Perhaps this commentary will allow for a more intelligent debate of this issue, and focus on what can be done to fix the problems, rather than the blind parroting of talking points.
~~~
The process of purchasing a home in America culminates with an event called “the Closing.” It is an hour plus long contract signing that ensures the buyer is legitimately taking title, possession and legal ownership of a unique parcel of land and any structures upon it. The process gives any buyer specific rights to that property that cannot be abrogated under the laws of the United States.
At the closing, buyers sign and initial numerous documents. The goal is to accomplish the following:
1) Papers are signed that will be filed with the County Clerk (or appropriate officer) along with recording fees, for the official transfer of title from the prior owner to the new owner. The enabling purchase loan (i.e., mortgage note) is also filed with the Clerk.
2) The buyer receives title (ownership) of the land;
3) The mortgage lender establishes a new interest in that property contingent upon their mortgage note;
4) All other claims, liens, tax obligations and prior mortgages, home equity lines or second notes are satisfied and extinguished before title passes to the new owner.
5) Third party claims of any interest in that property superior to the buyer are eliminated;
6) Title Insurance is purchased and issued so the buyer has a recourse in case of defects in ownership occurs.
Every step of the process is designed to protect the property rights of all parties. The result is more than a mere transaction selling property from one party to another; rather, this has created a system where ownership interests are clearly defined; where title history can be reviewed going back decades and centuries. There is a certainty to the purchasers of this property against all future claims.
Everything about this process has been created to make sure the transfer goes off perfectly. In a nation of laws, contract and property rights, there is no room for errors. Indeed, even small technical flaws can be repaired via a process called “perfecting title.”
As we noted previously [2], esteemed economists such as Hernando de Soto [3] have identified that the respect for title, proper documentation, contract law and private property rights are the underlying reason capitalism works in Western nations, but seems to flounder elsewhere.
We cannot have free market capitalism without this process. So what does it mean if banks have been systemically, fraudulently and illegally undermining this process?
~~~
The closing process described above took place with all parties participating voluntarily. The buyer wants the house, the seller wants the transaction, the financing bank wants to make the mortgage loan.
What happens during a proper foreclosure? The prior closing is essentially reversed, only its done involuntarily. The process requires another RE closing, only this time, the Note holder is exercising their right to repossess the house if the borrower has failed to uphold the terms of the mortgage note. It typically states that if a borrower fails to make the requisite payments, they become delinquent. After an extended period of delinquency, they go into default. That allows the note holder to exercise their rights to foreclose on the property, and take title and possession.
The same care and attention to detail that occurred during the initial closing must also occur in the foreclosure process. All of the steps noted in our initial closing must occur here also. But since it is an involuntary process for the (soon-to-be former) property owner, extra care must be taken to make sure that property rights are being maintained and respected. The entire process is, if anything, is even more rigorous.
The law does not tolerate any errors in this process. What does the foreclosure process legally require? It varies by state and mortgage note, but the following is a good outline:
1) Notice of Delinquency is sent to a borrower who has fallen behind his payment schedule;
2) Notice of Default is sent to a delinquent borrower who has missed the requisite number of mortgage payments;
3) Notice of Foreclosure is sent to the defaulted borrower, and the process begins;
4) Affadavit by the bank’s representative are signed attesting to: Ownership of the note, who the borrower is, the property in question, the date of last mortgage payment, amount of delinquency, tax escrow owed, other payments (such as homeowners insurance);
5) Notarized documents: A Notary Public affirms that the affidavit was actually signed by the signatory, and this allows it to be entered into the court as documentary evidence;
6A) Notice of Pendency (Lis Pendens) is filed with the County Clerk putting the world on notice as to the foreclosure action;
6B) Summons and Complaint are prepared by bank attorneys, who further verify the specific information attested to by the bank executives. The attorneys then file the Complaint, commencing the Foreclosure Action;.
7) Service of Process is filed, either hand delivered to the home owner, or nailed to the door of the home;
8) Referee is Appointed to review and process the case; calculate the amount owed, and report back to the Court; The Referees report is also notarized;
9) Judgment of Foreclosure is moved for by Note holder;
10) Court orders the property auctioned. The court specifies a notice of the auction, publicizing the property auction;
11) Bidders must Close on the auctioned house in 30-90 days; In the event of no sale, the bank takes possession (REO);
The fraud that has come to light are primarily occurring in steps 4, 5, 6 and 7. The verification of the specific data that is mandated legally is not taking place by bank executives. Reviewing a file can take anywhere from, 20 minutes to well over an hour. Yet some bank employees are testifying that they have signed off on as many as 150 per day (Wells Fargo [4]) or 400 per day (Chase [5]).
It is impossible to perform that many foreclosure reviews and data verifications in a single day. The only way this could happen is via a systemic banking fraud that orders its employees to violate the law. Hence, how we end up with the wrong house being foreclosed upon, the wrong person being sued for a mortgage note, a bank without an interest in a mortgage note suing for foreclosure, and cases where more than one note holders are suing on the same property that is being foreclosed.
This is more than mere accident or error, it is willful recklessness. When that recklessness is part of a company’s processes and procedures, it amounts to systemic fraud. (THIS IS CRIMINAL AND SHOULD BE PROSECUTED).
The next step in our cavalcade of illegality is the Notary. Their signature and stamp allows these fraudulent documents to be entered into court as actual evidence (no live witness required). Hence, we have no only fraud, but contempt of court on top of it (BOTH OF WHICH REQUIRE PROSECUTION).
Law firms preparing the legal documents are not doing their job of further verifying the information. And, it seems certain states such as Florida have foreclosure mills who were set up from the outset as fraudulent enterprises. (EVEN MORE PROSECUTION NEEDED).
Lastly, some service processors are not bothering to do their job. This is the last step in the foreclosure proceedings that would put a person on notice of the errors (YET MORE FRAUD).
There are multiple failsafes and checkpoints along the way to insure that this system has zero errors. Indeed, one can argue that the entire system of property rights and contract law has been established over the past two centuries to ensure that this process is error free. There are multiple checks, fail-safes, rechecks, verifications, affirmations, reviews, and attestations that make sure the process does not fail.
It is a legal impossibility for someone without a mortgage to be foreclosed upon. It is a legal impossibility for the wrong house to be foreclosed upon, It is a legal impossibility for the wrong bank to sue for foreclosure.
And yet, all of those things have occurred. The only way these errors could have occurred is if several people involved in the process committed criminal fraud. This is not a case of “Well, something slipped through the cracks.” In order for the process to fail, many people along the chain must commit fraud.
That it is being done for expediency and to save a few dollars on the process is why the full criminal prosecution must occur.
~~~
The approach of most Western nations to property is an important legacy. In the United States, it has been enshrined in the Constitution. Even the rare exercise by the State to take private property during Eminent Domain [6] requires an extensive and proper process. The Fifth Amendment to the US Constitution guarantees that no “private property be taken for public use, without just compensation.” The Supreme Court has detailed the process required for the State to seize any citizen’s private property without the owner’s consent.
There is simply no reason we should tolerate unlawful property seizure merely when it is done by banks. They are not the State, not the King, and not above the law."
Now (Benny here), also, just imagine what this will do to the MBS market, present and future, that many think has to be revived for housing to "recover"? That's what the banks are freaked about, and why they are rallying their whores to tell all of us that this is nuthin', no big whoop, it'll go away, nuthin' to see, move along. Let's not even go near the CDS market based on this corrupt crap.
Not to change the subject (great info benny) but i own a rental condo in Aspen. I can not refi (currently paying 6.25%) because the prop is less than 30% ownership occupied.
What really irks me is that i am paying this mortgage on time and yet i can not get any relief from this interest rate. Yet my next door neighbor can get a loan modification because she is deliquent and is in finacial despair. They droppped her rate to 4%, interest only 5/1 arm.
Rewarding her for inabilty to pay, punishing me for paying on time and not being a deadbeat. Not very fair if you ask me.
:rolleyes: yeah, what we need to do is make real estate speculation more attractive. that's even dumber than the "relief". fucking idiot.Quote:
Originally Posted by skideeppow
Speculation, Once again you have shown yourself to be a total fucking ass clown.
Hugh, GO fuck yourself once again.
Sorry "investment"Quote:
Originally Posted by skideeppow
I hear this from people all the time. Life isn't fair, and real estate financing is less fair than life. The backdrop for banks agreeing to do loan modifications is the threat of bankruptcy or another REO property. Why would they voluntarily "modify" their loan with you when you have not demonstrated financial distress by ceasing to make payments?Quote:
Originally Posted by skideeppow
I was surprised that Bill Gross's proposal of refinancing every "current" mortgage to some low fixed rate across the board idea never got any traction. Seemed like a move that would be popular in this election cycle. Not saying it is possible or even a good idea but when I heard it I thought the idea had some meat on it. It would be a pretty good stimulus for the country without much up-front costs. Borrow from China at 2% lend to Americans at 4%. What could go wrong?Quote:
Originally Posted by Hutch
Makes perfect sense, provide incentives for the people who did speculate and can't pay their bills but fuck over the responsible ones. You sir are a Jeenus. May I suggest pulling your dick out of the light socket so you can see clearly. Electricity is made for lamps not to provide lightning bolts across your eyesQuote:
Originally Posted by Hugh Conway
I dont want a loan mod, i just want to refi at the lower rates that are availalbe. I could get down to at least 4 7/8 on an investment prop right now. But because the prop is not more than 30% owner occupied, no one will do it. I'm saying, if i stop making payments after three missed months i will probably qualify for a loan mod? Does that make sense?Quote:
Originally Posted by Hutch
I get that the system is not fair, even wacked, but it still makes sense. Looking at it from the bank's standpoint - if you stop making your mortgage payments your credit will be adversely affected and it will send the message to your lender that you are in financial distress, which changes their calculations with regard to the risk of refusing to modify your loan. It's easy for people to say that they are in financial distress but the banks simply don't believe it as long as you are current. If there is no financial distress, the bank is not going to rewrite the loan, and I don't think you're going to see any government program requiring banks to rewrite loans that were negotiated at arms length either.Quote:
Originally Posted by skideeppow
Loan underwriting is kind of similar. It seems totally arbitrary to us that a lender will not lend on an investment property simply because it is not 30% owner-occupied, but they probably have some MIT guys crunching numbers in the back room that have decided that that figure inversely correlates to default or (maybe more likely) they cannot package and resell the loan unless it meets that threshold.
So is your property a condo in a complex with multiple units?
That's how it works in SF (and I'm assuming most condo situations). When we bought our place, lenders wouldn't touch us because it was a brand new 3-unit condo building and they needed 50% owner occupancy. Some local banks would but required more down or higher interest rates. Luckily, all three units sold immediately so we were able to secure immediate financing. That's not the say that they tried to increase the down payment 3 days before closing and the day of move-in...they tried...but failed :)
Quote:
Originally Posted by skideeppow
Sounds to me that your source of finance doesn't have much faith in the Aspen condo/rental market. Or something else about your financial situation. What banker is she dealing with? Talk to them.
Personally, and, I don't want you to take this personally, I don't think a lot of refi energy should be used to prop up Aspen real estate prices. The banks have much bigger problems. But, from what I hear, the High Rocky Mountain market isn't sloshing around in liquidity much these days. I'll be in the market for a one to two bedroom with attached garage and rental history up there in a few years.
I've discovered Yves Smith in the noise about this great fraud. One smart woman.
http://www.nakedcapitalism.com/
http://watch.bnn.ca/#clip359769
The problem is FNMA rules for investment (NOO) properties is the project needs to be at least 51% owner occupied to get a new N/O/O loan. That said, the low owner occupancy of the project has you over a barrel. I would contact the bank servicing your loan. If your lucky, it is one of the big guys (Wells, Citi, Chase) and if you bitch far enough up the line of command maybe they will mod the loan, as that is your only option unless there is a portfolio lender out there that will do the loan with no intention of selling it to FNMA. That would likely be an ARM program, but maybe a 7 year fixed ARM would make sense for you. In CA, I would try Union Bank or US Bank and see what happens.Quote:
Originally Posted by skideeppow
Good luck
I'd hope nobody. I was just posting what i decided to do. I'm a little above, with nothing down, does that bother you? Will i be down 100K off 220K purchase? I doubt it. If i am, well, i live in cali, i can walk and well, as i stated before, im back to renting. Until they change that rule, i really could give a collective fuck about the housing market. I'm sorry, you arent going to convince me that throwing 24K a year away on rent is a better decision then throwing it into a house no matter where you live. I guess im not clear on the doom and gloom here? I walk, im right where i started. I went FHA, as i have stated over and over, got my down payment back and 2 years running owning a house. If i lose it, once again...where is my problem here. I am renting again? Sorry dude, if you are saying i made a bad decision, id need a little more clarification. Either way benny, im just trying to have a home where i can raise my kid. Whether it works out or not, i really dont know. That depends on me keeping my job. I keep my job, it works out.Quote:
Now, who's listening to Cramer these days?
Oh jeez, I meant this Cramer:
http://www.cnbc.com/id/18724672/
I don't know who you are dealing with now on the banking side but I would recommend Firstbank in Colorado. They tend to know the Colorado real estate market pretty well and don't fall into the trap of assuming every property in the same county is identical. They were extremely helpful when my wife and I purchased a place in dt denver in fall 2008. We were only the 2nd or 3rd tenants to close in a 40 unit building and it didn't bother them at all as they knew the area well and didn't doubt the building would fill. We had a lot of trouble using some of the larger banks solely because the property was new construction, a "highrise" (7 stories?) and in a "declining market" mostly based on a number tract homes that were being foreclosed on out by the airport (20 miles away). Local knowledge goes a long way with this sort of thing.Quote:
Originally Posted by skideeppow
How long ago was that? You have to keep in mind the new loan regulations state that for investment properties, the complex has to be over 30 or 40% owner occupied. Dealing with local lenders.Quote:
Originally Posted by Missing Sock
Thanks for the info. i will give them a call
Thanks, great info.Quote:
Originally Posted by liv2ski
It was September '08 so right when the financial world was staring into the abyss. Obviously no guarantee it works out but its worth a phone call as I have found them to be very helpful.Quote:
Originally Posted by skideeppow
skideeppow, check in with Inspector Gadget. His office seems to do things other lenders haven't been able to lately. I have 10 mortgages (fannie and freddie stop at 4 right now), but he got me a loan on a new house (3.5 months ago). 4.25% too. I did have to put 20% down on the property (but I always do that anyway). The loan ended up getting sold to Wells Fargo so someone is still buying this stuff.