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Matt’s Take on the News
October 6, 2011

Old Habits Never Change!

Pallavi Gogoi reports on a a recent finding that should, but isn’t. Shocking. Robo signing has been going on for years. Studies done show that the deliberate falsification of mortgage documents date back to the late 1990′s.

“Because of these bad titles, property owners can’t prove they own the properties they think they bought, and banks can’t prove they had the right to sell them,” says Jeff Thigpen, the registrar of deeds in Guilford County, N.C.

What does this mean to the average American Citizen? Your guess is a s good as mine. I would suspect that this doesn’t bode well for the housing market. If additional mortgage documents are put under scrutiny, the bank’s ability to foreclose will be more limited. I would also suggest that old habits never die. This “practice” will rear its ugly head sometime in the future

Here is what the “experts” think:

Widespread robo-signing that stretches back a decade or more could create problems for homeowners. Regulators have so far not asked lenders to clean up the potentially millions of suspect documents filed in the past decade or earlier. That troubles some banking experts, including Sheila Bair, who until early July was chairwoman of the Federal Deposit Insurance Corp.

“We do not yet really know the full extent of the problem,” Bair said in written remarks to the Senate Banking Committee. She and others have called for a comprehensive study on the extent of the fraudulent signatures in mortgage documents.

If documents with robo-signed signatures are challenged in court, judges could question the ownership of the properties, says Katherine Porter, a professor at University of California Irvine School of Law and an expert on consumer credit law. The consequences extend to homeowners in good standing when they try to sell.

If invalid documents are discovered in the chain of ownership, it could delay the sale or make it difficult for buyers to get a mortgage because title insurers won’t write a policy for the property, says Justin Ailes, vice president of government affairs of the American Land Title Association, a trade association representing the title insurance industry. Banks and other mortgage lenders won’t write a home loan without title insurance.

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Matt’s Take on the News
October 4, 2011

You Elected Them!

Politicians….you can’t live with them and you can’t…….I’ll stop here….I can live without politicians! As most people know Florida is a judicial state meaning that lenders/investors have to go through the court system in order to foreclose. Some of our genius politicians are proposing that lenders be allowed to go through a non judicial foreclosure process meaning that home owners will have no real legal rights to stop lenders from foreclosing. Why would politicians lobby for this? IMO because of the effect that lobbyists have in their bid to get reelected…read MONEY!

According to the bankers, “Bankers see it as a speedy and efficient way to manage foreclosure cases and get tens of thousands of Florida properties in ownership limbo back on the market, helping pull the state out of its economic doldrums.” That’s a great idea. Let’s let the banks screw over the consumers, fraudently sign documents and then foreclose at will. This goes all the way to the governor’s office. “But the Florida Bankers Association (AKA LOBBYISTS!!!), which has pushed the plan over the past few years, has key allies. Scott voiced support for the proposal at a Florida Bar convention this summer and told reporters Wednesday he is still interested in it. Some lawmakers have already jumped on board

“Well, I want to make sure that we have an efficient process, so we don’t create a reason for banks or whoever lends money not to lend money in Florida,” Scott said. “When you talk to people that are in the system now they say it’s 600 days to get through foreclosure. All that does is create another incentive for people to not lend money when we want people to lend money to our state.

“I don’t know the answer yet, but I want to look at the process,” Scott said. “I want to get more information before I make a decision.”

Attorneys, obviously, beg to differ with the banking lobby. “But defense attorneys say the existing system needs more oversight by the courts, not less. Lawyers in the past few years have reported numerous cases where documents used to support foreclosures were missing or forged. The result has been a process that is not always fair to the homeowner, they say.

“Anything that takes away oversight isn’t necessarily a good thing, not necessarily for homeowners in foreclosure or the market in general,” said Chris Immel, a foreclosure lawyer in Palm Beach County. “We routinely see documents that just don’t add up.”

A banking lobbyists rebuttal to this was, “…that with reputable financial institutions, that shouldn’t be a problem. Most cases, even when going through the courts, result in foreclosure, he said, but a non-judicial route would get to that end result quicker.

Show me a reputable financial institution!!

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Matt’s Take on the News
September 29, 2011

Slow Sales = Stabilization?!

In this article, Courtney Edelhardt comments on an observation that slow sales of bank owned homes (presumably made by economists that were employed by the local real estate board) is stabilizing the local real estate market. The only way that slow sales of bank owned properties can stabilize the market is if the number of houses sold out weigh the number of homes being foreclosed on. In most areas of the country this is simply not the case. The bottom line is; that bank owned homes don’t disappear. They have to be dealt with sometime. Bank owned homes are certainly not appreciating value they are depreciating in value. While a sudden flood of bank owned homes will further depress the real estate market, they can be dealt with at once versus’ over an extended period of time.

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September 27, 2011

I’m Back!

Yes….I am back from a much needed vacation. While we missed our kids greatly, my wife and I had a great time! I will resume my articles this Thursday. ALSO, if you have any questions that you want me to address (I wont publish your names) I will give you my opinions in the body of the articles. Have a great week!

Matt’s Take on The News

News Rewind

Phony Audits: A New Twist on Foreclosure Rescue Scams

The Federal Trade Commission reports on the latest flavor of the month…Forensic Loan Audits. Forensic Loan Audits are being sold as a way for consumers to “beat the bank.” The idea is for the auditor to comb through the mortgage documents of a seller in pre foreclosure in an attempt to provide discrepancies. Lore has it that some of these companies promise “forgiveness of all debt.”

Some excerpts from the report include:

In exchange for an upfront fee of several hundred dollars, so-called forensic loan auditors, mortgage loan auditors, or foreclosure prevention auditors backed by forensic attorneys offer to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The “auditors” say you can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.

Nothing could be further from the truth. According to the FTC and its law enforcement partners:

there is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.
some federal laws allow you to sue your lender based on errors in your loan documents. But even if you sue and win, your lender is not required to modify your loan simply to make your payments more affordable.
if you cancel your loan, you will lose your home and you will have to return the money you borrowed to your lender.

If you are in default on your mortgage or facing foreclosure, you may be targeted by a foreclosure rescue scam. The FTC wants you to know how to recognize the telltale signs and report them. If you are faced with foreclosure, the FTC says legitimate options are available to help you save your home.

Don’t get me wrong, there are legitimate companies that perform loan audits (typically involving attorneys) and their are legitimate reasons to have your loan docs audited. Beware of false promises. If the company wants to charge an up front fee, think twice.

If you want to read the bulletin, go to:

http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt177.shtm

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Taking a Break September 22, 2011

…….at least thats what I will be doing for the next few weeks! As a result, my assistant (Ashley) will pick several of my most popular commentaries from the archives, and republish them. Based on your past response and interest, Ash will publish these until I return. Have a great week! ( Just got back!)

Matt’s Take on The News

Original Date: May 5, 2011

What Would Happen If Everyone Did This?!

Laura Bassett from the Huffington Post brings us a very thought provoking article. According to Ms Bassett the Village of Hempstead New York pulled all of their money out of JP Morgan Chase as a sign of protest. The village was protesting the banks poor record of implementing mortgage modifications. The Village is trying to start a precedent. Laura reports that they are the 1st community in the country to withdraw money from a bank in protest of the banks poor modification record.

What would happen if individuals and communities alike followed suit? I’ll bet that the banks would take notice. I’ll bet that the banks that receive the deposits will continue to work to improve their loan modification track record. What do you think?

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Taking a Break September 20, 2011

…….at least thats what I will be doing for the next few weeks! As a result, my assistant (Ashley) will pick several of my most popular commentaries from the archives, and republish them. Based on your past response and interest, Ash will publish these until I return. Have a great week! ( Just got back!)

Matt’s Take on The News

Original Date: 5/25/2010

High-End Homeowners Falling Into Foreclosure Trap

Joseph Pisani from CNBC reports on a growing trend in the distressed real estate market. More and more Luxury Homes (defined as homes with mortgages that are equal to or greater than $1,000,000) are falling into foreclosure. According to Mr. Pisani, in February of 2010, 4169 homes were in some stage of foreclosure, which represented an increase of 121% versus last year.

Pisani also reports, “Data shows that that may be the case around the county. The 90-day delinquency rate on home loans worth over a million dollars hit a high in February at 13.3 percent, higher than the overall rate of 8.6 percent, according to real estate data firm First American CoreLogic. Foreclosure proceedings generally begin to start after a homeowner has been at least 90 days late on a mortgage payment, experts say.”

An interesting observation from the article echoes what we have been saying for a very long time, ““Lenders are far more likely to go the short sale route,” says Andrew LePage, an analyst at real estate research firm DataQuick. “There’s a lot more money at stake, and maintenance can be high if a foreclosure just sits there.” Lenders don’t want high end homes back. They weigh their bottom line down…they are difficult to sell…they are expensive to maintain etc etc.

So if you are not focusing on the high end market, don’t you think that you should start?

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Taking a Break ( Part 6) September 15, 2011

…….at least thats what I will be doing for the next few weeks! As a result, my assistant (Ashley) will pick several of my most popular commentaries from the archives, and republish them. Based on your past response and interest, Ash will publish these until I return. Have a great week!

Matt’s Take on The News

Original Date: 7/9/2010

Foreclosure Friday – The Top 1% Stick It To The Banks

John Nyardi from the Wall Street Journal reports on a topic that I have been addressing for awhile. As time goes on, a higher percentage of people with $1M and up mortgages are defaulting as compared to their median priced brethren. Mr. Nyaradi points out that, “One in seven homeowners with (a) loan over $1M are in default. That compares to 1 in 12 loans below the $1M mark. This is putting a huge amount of stress on the financial system as 23% of all luxury homes bought as investments are now 90 days or more overdue compared to just 9% of the smaller homes.”

There could be several reasons for this trend. Some folks that are defaulting on $1M+ mortgages, are doing so on second and third homes. If they lose these homes, they still have other(s) to move to and live in. Typically, if an individual with a median price home defaults, they are defaulting on primaries and have no other place to do. So they do there best to hang in there. The other side of the coin is that those that have $1M+ mortgages, have the means to continue throwing good money after bad so they do so until it runs out. Guess what? The money is running out!

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Taking a Break ( Part 4) September 8, 2011

…….at least thats what I will be doing for the next few weeks! As a result, my assistant (Ashley) will pick several of my most popular commentaries from the archives, and republish them. Based on your past response and interest, Ash will publish these until I return. Have a great week!

Matt’s Take on The News

Original Date: April 26, 2011

How Does Foreclosure/Short Sale Affect My Score?

This is one of the most frequently asked questions in my business. Unfortunately there is not an exact science to make this determination. However, Jeanine Skowronski from Main Street reports on a study that was recently completed by FICO. They simulated various types of delinquencies and related them to (3) consumer types each with different starting FICO scores (prior to going delinquent).

They concluded that a short sale WITH deficiency balance has the same effect on your credit score as a foreclosure. They also concluded that a short sale WITHOUT a deficiency judgment has less of an effect on a consumers credit score. What this means to you realtors out there is that you need to do everything in your power to eliminate the chance of a deficiency judgment. If there is a home equity line involved, this will be virtually impossible….without me.

Call your attorney and ask them what effect there will be when you accept a commission in short sales where your client eats a deficiency judgment.

Call me to find out how we tackle this predicament.

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Taking a Break ( Part 3) September 6, 2011

…….at least thats what I will be doing for the next few weeks! As a result, my assistant (Ashley) will pick several of my most popular commentaries from the archives, and republish them. Based on your past response and interest, Ash will publish these until I return. Have a great week!

Matt’s Take on the News

Original Date: April 20, 2010

Why a Short Sale Often Takes So Long

REAL ESTATE: It’s better for some banks to ‘delay and pray,’ brokers say
Tom Bayles from the Sarasota Herald Tribune brings us an enlightening article describes the plethora of reasons as to, “Why a short sale often takes so long” to complete. He touches on the obvious ones which include:
• The banks are being flooded by short sale requests • The banks are under staffed • The existence of multiple liens on the house can drag a short sale out

He also touches on a few that are not so obvious:
• Loans are bundled with other loans and sold off as a portfolio that can include hundreds of individual notes. The ultimate decision to approve a short sale is now subjected to yet another layer which is the investor • Mix this in with Private Mortgage Insurance and you have another approval layer to deal with! • Another reason is better expressed through direct quotes from the article, “Some banks are urging federal regulators not to come in and force them to admit all of their problem loans, he said. “Most banks are trying to buy time. It is called the ‘delay and pray strategy,’” Thomas said. “You delay valuating the house at market and pray the value will come back. If you mark it down for short sale and do that deal you have to take a hit to your capital.” • Then there is “extend and pretend” This is where the bank will extend the term, lower the interest rate or grant a forbearance to the home owner. This strategy is designed to extend the inevitable so the bank doesn’t have to show the bad debt on their books. This happens frequently with higher end homes.

So now you know! Short sales can take a LONG time!

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Taking a Break ( Part 2) September 1, 2011

…….at least thats what I will be doing for the next few weeks! As a result, my assistant (Ashley) will pick several of my most popular commentaries from the archives, and republish them. Based on your past response and interest, Ash will publish these until I return. Have a great week!

Matt’s Take on the News

Original Date: 3/3/2011

The Truth About Servicing Companies

Prashant Gopal and Lorraine Woellert from Bloomberg have written an article about how loan servicing companies play a role in the “oh” so popular foreclosure crisis. There are changes looming for servicing companies. According to the article, “Changes being studied include a new fee structure for servicers, independent reviews of rejected requests to ease loan terms and a fund to compensate victims of improper foreclosures, according to Bair and other federal and state regulators. Lawmakers have proposed reining in the privately run Merscorp Inc., even as the company says it could serve as a national mortgage registry.”

To be clear, “Servicers collect monthly mortgage payments, and may modify or foreclose on a loan in a default. They often don’t own the loans they are servicing. Servicers have an incentive to push for foreclosure, which can generate additional fees, and they also can charge borrowers when they are late making payments, giving them a reason to delay loan modifications. Accounting rules allow banks that foreclose to hold off writing down any loss until the home is sold. They must take the loss immediately when allowing a sale by the owner for less than value of the mortgage.”

While the rest of the article is very good, real estate professionals must fully understand the last paragraph in its entirety. People will complain about the length of time it takes to get a short sale approved…guess what…the longer it takes the more servicing companies get paid. People complain about “banks” being unreasonable in the valuation of short sales…guess what…the longer they drag out the inevitable (even if its a foreclosure) , the longer they can put off the write down. In fact, they don’t have to write down the bad asset until the house is sold. This is the reason that lenders are holding such an enormous inventory of foreclosed homes (aka the shadow inventory)….they don’t want to absorb the bad debt.