Real Property Check

Real Estate Reality Check™ - Building Wealth in Real Estate

  • Buying
  • Selling
  • Financing
  • Investing
  • The Economy
Home 2010 Archives for November 2010

Archives for November 2010

Record Jump in Shadow Inventory Pushes Total Unsold Inventory to 6.3 Million Units

realpropertycheck.com November 22, 2010

Record Jump in Shadow Inventory Pushes Total Unsold Inventory to 6.3 Million Units

In today’s report released by CoreLogic shows shadow inventory of residential property at 2.1 million homes as of August 2010, or eight months worth of supply, a jump of over 10% from last year (a five months’ supply). Shadow inventory (sometimes called “pending supply”) includes homes seriously delinquent (90 days or more), currently in foreclosure, or REOs (real estate owned, or bank owned). “Visible” inventory, currently at last year’s level of 4.2 million units of unsold supply, includes inventory of new and existing homes which were on the market in August.

Corelogic-08-2010-visible_vs_shadow_inventory
Corelogic Shadow Inventory Report for August 2010: Visible vs. Shadow Pending Inventory

The total supply can be thus estimated at 6.3 million units, a level comparable to the worst levels registered at height of the crisis back in 2008. These numbers don’t even include October’s foreclosure hiccups related to the Robo Gate which may have significantly increased visible inventory as a result of buyers’ reluctance to close due to difficulties in obtaining both financing and title insurance.

What If You Bought A Property Foreclosed Upon By Robo-Signers? Read this.

CareLogic Shadow Inventory Report for August 2010
CareLogic Shadow Inventory Report for August 2010: Shadow Pending Inventory Detail

You can download today’s (2010-11-22) full CoreLogic report right here.

Did you know you can read a Kindle book on a PC or an iPhone? You can download Amazon’s free Kindle app for your PC right here to get access to valuable books instantly. Below you can view an excerpt from “Cashing in on Pre-foreclosures and Short Sales: A Real Estate Investor’s Guide to Making a Fortune Even in a Down Market” by Chip Cummings.

Filed Under: Buying, Selling, The Economy Tagged With: bank owned, delinquent loans, foreclosures, pending supply, REO, residential, shadow inventory

HAMP and New Revelations about Securities Fraud With Consequences

realpropertycheck.com November 20, 2010

HAMP and New Revelations about Securities Fraud With Consequences

As of October 2010, HAMP (the Treasury Department’s Home Affordable Modification Program) had generated about 520,000 active permanent loan modifications, far below its stated goal of modifying three million mortgages and helping to staunch the housing crisis. The program has been mired by bureaucratic delays and chaotic foreclosures triggered by trial payments (see: “HAMP (…ered) Recovery and the Flood of Foreclosures: Why Banks Can’t Lose”).

Double Standard In Loan Modification

HAMP is famous for sinking homeowners under piles upon piles of paperwork. Banks, on the other hand, receive as much as $1500 per HAMP loan modification in subsidies from the federal government without having to produce any proof that they actually own the mortgage in question.

HAMP participation does not require banks to provide any physical proof of a note underlying a property. Zip. Nada. Do the banks even own the mortgages they participate in modifying? Who knows.

Many lenders pooled and securitized their loans, then sold the securities to investors. Some of these lenders could still produce physical proof of a mortgage even though they had sold it to investors. How is that even possible? An excellent question.

It is really quite simple but could have messy consequences.

Who Owns What

Some lenders simply failed to deposit the notes in the mortgage pool and no one noticed. They got the money but forgot to hand over the goods. What would you call that in the real world?

According to court testimony of an executive at Bank of America, Countrywide (now owned by Bank of America) sold what it claimed were mortgage-backed securities but kept the notes underlying the loans. It did so not by oversight but as a policy.

In a lawsuit brought up in the United States Bankruptcy Court in Camden, N.J., an executive at Bank of America said that Countrywide’s practice was

to maintain possession of the original note and related loan documents.

Investors in mortgage backed securities can sue lenders for failing to fulfill their contractual obligations and force them to buy back the loans they failed to hand over.

There is a possibility that this could actually happen at a larger scale. There are many cases in which proper procedures for setting up mortgage securities trusts were not followed. Now there will be mortgage modifications based on missing documentation or false premises. How can a bank modify a loan if it does not own it?

The Congressional Oversight Panel concludes in its report:

Claimants will contend that the securitization trusts created securities that were based on mortgages which they did not own(…) Since the nation’s largest banks often created these securitization trusts or originated the mortgages in the pool, in a worst-case scenario it is possible that these institutions would be forced to repurchase the M.B.S. [mortgage-backed securities] the trusts issued, often at a significant loss.

This would also mean that HAMP subsidies already paid out by the government would have to change hands.

But there is a larger issue at stake. If these lenders had followed proper procedures, they would not be able to legally receive government subsidies for modifying loans they no longer own.

Should courts force these banks to buy back the securities they had improperly (or fraudulently) set up, not only some weaker banks but even the nation’s biggest financial institutions could be shaken.

It is not yet clear whether this is going to affect borrowers who have successfully received their HAMP loan modification, but should lawsuits materialize at a larger scale, it could bring the program to a screeching halt.

You can read the full report by the Congressional Oversight Panel right here.

Filed Under: Investing Tagged With: HAMP, loan modifications, mortgage

Robo-Signing Settlement in The Works: No Foreclosure Until Loan Modification Fails?

realpropertycheck.com November 16, 2010

Robo-Signing Settlement in The Works: No Foreclosure Until Loan Modification Fails?

UPDATE: H.R. 3808 INTERSTATE RECOGNITION OF NOTARIZATION ACT OF 2010, seen by many as an attempt at legalizing robo-signing, was averted by a Presidential Veto which was sustained when the veto override procedure failed in the House of Representatives on Nov. 17th 2010. H.R. 3808 would have required “each federal and state court to recognize any lawful notarization (…) by a notary public” in another state while legalizing the use of digital signatures and digital-only document storage (see also -> MERS). It does not take a rocket scientist to figure out how this would have both legalized and streamlined the robo-signing of foreclosure documents. Luckily, the President’s Veto stands and the measure cannot be reconsidered by the House or the Senate. This does not resolve any of the current problems caused by robo-signers, however.

50-state attorney general investigation into robo-signing foreclosure practices is reportedly nearing a settlement.

As reported by CNBC’s Diana Olick, Bank of America and JPMorganChase appear to be agreeing to the same framework of a settlement.

1. Banks would pay into a fund administered by attorneys general which could be used to compensate borrowers who can prove valid claims to having been wrongfully foreclosed upon (in exchange , those borrowers would presumably have to agree to forgo ever seeking legal recourse elsewhere).

2. There are talks of some kind of third-party mediation for review of eligibility as per the first point above.

3. Banks would have to eliminate dual track of modifications and foreclosures, which have often resulted in homeowners in negotiation of a loan modification being foreclosed upon by another arm of the lender. Only after all options of modification are exhausted will a bank be able to begin foreclosure proceedings (what looks good on paper can be still subject to interpretation, so don’t celebrate just yet).

i, Robot, Columbia Pictures, 2004
i, Robot, Columbia Pictures, 2004 (buy at Amazon.com)

The final agreement could still look a lot different from this framework.

Principal write downs as part of the settlement have been on the table as well.

Banks are apparently in no mood to lavish money at a compensation fund if they can dodge the bullet.

In an interview last week, Iowa Attorney General Tom Miller hinted at the possibility that

maybe instead of paying huge fines, they [the banks] adequately fund the modification process

What sounds so laudable comes down to this: The arrangement mentioned by AG Tom Miller would keep the money and the leverage in banks’ hands. It is difficult not to wonder whether past victims of the robo gate who had been wrongfully foreclosed upon as a result of a clerical mistake and/or fraud are going to get shortchanged again.

We will keep you posted.

In the meantime, if you happen to be a victim of robo-signing, your property was a subject of a regular foreclosure or a short sale or you cut a loan modification deal with your lender, you could be liable for taxes on phantom income unless you preempt the IRS. Read how you can legally dodge the bullet in: “Negative Equity and How You Can Avoid Tax On Phantom Income From Relinquished Property.”

You can also find out how to get out of trouble with your lender in: “How To Stop A Foreclosure (And Walk Away With Money In Your Pocket).”

Filed Under: Homeowners' Club, The Economy Tagged With: foreclosure, Robo Gate, robo-signing

  • 1
  • 2
  • 3
  • …
  • 5
  • Next Page »

Categories

  • Apps (3)
  • Books (3)
  • Buying (25)
  • Financing (21)
  • Homeowners' Club (20)
  • Investing (24)
  • Other Stuff (11)
  • Selling (14)
  • The Economy (18)

Tags

bankruptcy building wealth in real estate commercial real estate contract for deed David Lindahl deed delinquent loans distressed properties Donald Trump double-dip Fannie Mae featured FHA financial regulation foreclosure foreclosures Frank-Dodd bill Freddie Mac HAMP HARP HOA home prices house rules keeping records lease option lien loan modifications mortgage mortgage originator no-docs loans notice of default prohibition of steering incentives real estate developers real estate investing Rent to Own REO residential robo-signing Robo Gate seller financing setting the price title insurance unsold inventory wraparound mortgage Zillow

Tags

bankruptcy building wealth in real estate commercial real estate contract for deed David Lindahl deed delinquent loans distressed properties Donald Trump double-dip Fannie Mae featured FHA financial regulation foreclosure foreclosures Frank-Dodd bill Freddie Mac HAMP HARP HOA home prices house rules keeping records lease option lien loan modifications mortgage mortgage originator no-docs loans notice of default prohibition of steering incentives real estate developers real estate investing Rent to Own REO residential robo-signing Robo Gate seller financing setting the price title insurance unsold inventory wraparound mortgage Zillow

Archives

  • December 2015
  • May 2014
  • July 2012
  • April 2011
  • March 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010

Copyright © 2021 · Streamline Pro Theme on Genesis Framework · WordPress · Log in