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Matt’s Take on the News

December 20, 2011

The Power of the Short Sale

Mark Puente from the St. Petersburg Times brings us an article that highlights the prevalence of short sales. While the article speaks to the Tampa Bay area, I would suggest that the same message can be conveyed about most metropolitan areas around the United States.

According to Mr. Puente, “A spike in the number of homes sold through short sales in the Tampa Bay area is driving down prices — and that may be good news. Short sales — when a bank takes less than what is owed on a home — have climbed nearly 25 percent in the last five months when compared to the same period in 2010. Median prices on those deals fell 24 percent.”

The good news is that the areas inventory of distressed homes is slowly being purged at prices that ARE GREATER than bank owned prices (On average banks are saving 20% when they agree to settle debt as a short sale versus when they sell the property as a bank owned transaction (also known as a REO).

In the short term, the volume of short sales can be bad for the housing market because they depress prices. The reality, however, is that things aren’t going to get better until they get worse. Think of it as tough love. The properties will either get shorted or they will go into foreclosure (for the most part) and sell at even lower prices. When they sell at lower prices (i.e. as a REO sale), the housing market will continue to be depressed. The banks are also exposing themselves to title issues when they sell a REO.

Take the time to read the entire article. It’s a worthwhile read.

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Matt’s Take on the News

December 15, 2011

A Holiday Reprieve

Seems like this is an annual event! The lenders start to play nice and stop foreclosing on people during the holiday season. While I think this is admirable, I’ve always wondered why they don’t help people stay in their homes throughout the year.

I know there are those of you out there that think that I am sympathetic to people who have clearly defaulted on their notes…..well…you are right. I would prefer to see a bank put forth a better effort to help these folks out rather than bonusing their executives 10s of millions of dollars while fleecing the tax payers by accepting bail outs.

The bottom line is that if a lender can convert a non performing note into a performing note, why won’t they?

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Matt’s Take on the News

December 13, 2011

Be Aware of the Wrath of the Credit Union

Mark Puente from the St. Petersburg Times brings us a VERY important article that everyone needs to pay attention to. If you are late on a mortgage payment (or any other payment on an unsecured note) to a credit union and you hold other loans with the same credit union (lets say a car loan), the credit union can repossess your vehicle! Even if you are current on your car loan, the credit union can repossess the car!

Why is this so important? Many people have taken advantage of lower interest rates that are offered by credit unions. Whether they take out a mortgage, a home equity line or a car loan, individuals are oftentimes attracted to very low interest rates. What people don’t do is….you guessed it… read the fine print.

According to Mr. Puente, “The tactic is called cross-collateralization. Clauses in loan agreements transform secured loans, like cars, boats or recreational vehicles, into collateral for unsecured loans like credit cards.
Credit unions can even block customers from selling a paid-off vehicle if the client has other outstanding debts with the institution.
The cross-collateralization clauses are disclosed in loan contracts, but the language is buried in the documents.”
If you or one of your clients has defaulted on a mortgage held by a credit union, make them aware of what you just read. It may save them a world of hurt.

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Matt’s Take on the News

December 8, 2011

Foreclosure Review

An interesting article just came out of the state of Connecticut. Apparently the state is encouraging residents who feel that they have been “wronged” by banks (read due to foreclosures) to apply for a “foreclosure review.” In reading the article the foreclosure review appears to be a grievance process that may allow some homeowners to collect damages from a laundry list of banks.

According to the bank, “The federal agencies (Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System) have ordered independent firms to evaluate whether individual borrowers suffered financial injury as a result of their loan servicer’s errors, misrepresentations, or other deficient foreclosure practices; and to determine the appropriate amount of financial remediation that the loan servicer must provide to individual borrowers.”

I will keep an eye out for any similar articles that are relevant to other states.

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Matt’s Take on the News

December 6, 2011

Occupy This!

By now everyone has heard of the Occupy Wall Street movement. While the movement hasn’t changed policy….yet….it sure has brought awareness to the games that are being played on Wall Street. Justin Elliott, a Salon reporter, brings us an excellent article that high lights a new movement by, presumably, the same group.

The new campaign is called Occupy Our Homes which targets, “…foreclosure crisis and protest “fraudulent lending practices,” “corrupt securitization,” and illegal evictions by banks.” The article points out, “Occupy Our Homes organizer Abby Clark tells me protesters are planning to “mic-check” (i.e., disrupt) foreclosure auctions as well as launch some new home occupations.

“This is a shift from protesting Wall Street fraud to taking action on behalf of people who were harmed by it. It brings the movement into the neighborhoods and gives people a sense of what’s really at stake,” said Max Berger, one of the Occupy Our Homes organizers and a member of Occupy Wall Street’s movement-building working group.”

What will be interesting to me is to see what effect this campaign has on the 2012 Presidential election. It’s a known fact that the shadow inventory of foreclosed homes continues to bulge at the seams because of the election. Obama doesn’t want the American public to see the true state of this crisis. What will also be interesting is to see if any candidate embraces Occupy Our Homes. What are your thoughts?

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Matt’s Take on the News

December 1, 2011

Sad Fallout of Robo Signing

MSNBC brings us an article that reports on the untimely death of an individual that was caught up in the robo signing debacle. While I don’t agree with what she did, it’s still sad to see the effects. The article does bring up excellent advice from the Nevada Attorney General:

“I would suggest you review your documents and bring them to an expert and an attorney,” said John Kelleher, chief deputy attorney general for Nevada’s fraud unit.

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Matt’s Take on the News

November 29, 2011

A Politician that really cares?

It’s like sitting a unicorn…or Bigfoot…or…well maybe it’s not that bad but finding a politician that actually cares is a rare site. Amanda Mole from the Hernando Independent Examiner reports on a “home foreclosure prevention workshop” that was sponsored by Congressman Rich Nugent. The workshop attracted hundreds of people on a a crisp Saturday morning.

According to Ms Mole, “The event, which took place from 9:00am to 1:00pm, included three panel discussions with advice on consumer protection, legal process, and credit management and debt reduction. Additionally, 30 vendors, including banks, legal service providers, and debt counselors, were available on-site to provide assistance to the attendees free of charge.”

If the workshop helps one person, it was a success. My hope is that it will help many more!

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Matt’s Take on the News

November 22, 2011

It’s not just Florida!

It’s not just in Florida where law firms (that represent lenders) are getting blasted by the government. Thom Weidlich from Bloomberg reports on a law firm in New York that has been banned by Fannie Mae and Freddie Mac.

The article points out that, “Last month, Steven J. Baum PC, one of the largest foreclosure law firms in New York State, agreed to pay the U.S. $2 million and change its practices to resolve a probe of its foreclosure filings. The agreement concluded an investigation into whether the firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement didn’t constitute a finding of wrongdoing. Steven J. Baum PC, located in Amherst, New York, just north of Buffalo, has attracted lawsuits and fines for its actions during the housing crisis. It has been accused of overcharging, filing false documents and representing parties on both sides of a mortgage transfer. On Oct. 28, a New York Times column reported that the Baum firm held a Halloween party last year during which employees dressed as foreclosed-upon homeowners.”

They sound like classy people don’t they?

Matt’s Take on the News November 17, 2011 Squatting…on a different level! Eric Goldshein from The Business Insider reports on several interesting uses for foreclosed homes.  In Nevada, industrious drug dealers, are turning abandoned, foreclosed homes into grow houses…..rent free!  College students in California (and I’m sure in the other 49 states as well) are [...]

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Matt’s Take on the News

November 15, 2011

The Easy Way Out

Several Months ago I commented on an article that involved a government proposal to liquidate government owned housing inventory (read Fannie and Freddie owned properties) in bulk. The idea is to get rid of it in one fell swoop. This article, written by Diana Olick, suggests that people may be waiting to purchase houses due to the fear that a glut of houses (that hit the market at one time) will further depress prices.

It would stand to reason that if the government sold the REO properties in bulk; all buyers would require an extreme discount. Such a discount would conceivably crush the real estate market…at least in the near term. Maybe that’s the idea?