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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

Looking for Unbelievable Home Deals in the Dallas Area? Check this Out

realpropertycheck.com November 13, 2010

Looking for Unbelievable Home Deals in the Dallas Area? Check this Out

If you happen to be looking for unbelievable deals in the Dallas area, check out Today’s Home Deals.

The Today’s Home Deals service is tracking 43 neighborhoods across 17 cities in the Dallas area to find the best home deals for your money. Their website shows lowest price-per-foot homes by area and calculates the below-area-norm discount.

Dallas area map

You can request free coverage of an yet un-listed neighborhood right here.

Filed Under: Buying, Homeowners' Club, Investing Tagged With: Dallas, deals

Negative Equity and How You Can Avoid Tax On Phantom Income From Relinquished Property

realpropertycheck.com November 8, 2010

Negative Equity and How You Can Avoid Tax On Phantom Income From Relinquished Property

A short sale or a foreclosure can come with a twist: it can have severe tax consequences which only hit you after the fact. By relinquishing a property with negative equity, you incur what is called phantom income from cancellation of indebtedness unless…

[Read more…]

Filed Under: Homeowners' Club, Investing Tagged With: 1031 exchange, deed in lieu of foreclosure, delinquent loans, homestead, IRS, mortgage, phantom profits, taxes

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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

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