Monday, September 23, 2013

CFPB and OCC Broker Another Settlement....A Win for Chase Bank Customers

There are approximately 2.1 million JP Morgan Chase Bank customers who can expect to receive a small refund as part of a recent $309-million settlement between the Consumer Financial Protection Bureau (CFPB) and the bank. The CFPB and the Office of the Comptroller of the Currency (OCC) determined that Chase “engaged in unfair billing practices for certain credit card add-on products by charging consumers for credit monitoring services that they did not receive.” Customers can expect to receive a “full refund” if they have been identified as not receiving the services between October 2005 and June 2012.
However, doing some simple math, we can determine that on average, each bank customer will only receive less than $150.00. It is great that governmental agencies are watching such practices. However, my question is what is the value of the money that Chase received in regard to the practices?   Almost seven years of conduct resulted in what benefit to Chase? We would need to know this in order to determine whether this is an appropriate resolution. What was the average bank customer charged during that time? Seems relatively certain that is was more than $150 each!
Again, it is great that the government is protecting us…and equally sad that we need protection!! The CFPB seems to be one governmental agency that is stepping up and monitoring lender conduct. It also seems that charging for a service that customers did not receive is a tad on the despicable side, so was part of the settlement punitive? Certainly seems like it should be given that the allegation was that Chase charged for services that were not received but the bank customers.
Hopefully the next settlement will provide more benefit to those that were harmed. In the interim, we should be thankful that someone is out there to protect us.

Paddy Deighan J.D. Ph.D

Saturday, September 21, 2013

Amazing Quote from History

I am frequently astounded that quotes from history...quotes that may have been made hundreds of years ago, are still true today (if not truer today). I was watching a history program on late night cable and there was a quote from Thomas Jefferson that rally caught my attention.  Mr. Jefferson stated: “My reading of history convinces me that most bad government results from too much government.” 
How did he know this type of thing? How could they be so acutely aware of the affect of anything on the future. I suppose that some things are fundmanetal and apparently, Mr Jerfferson stated this after reading history. Perhaps we all need to read a little more history.
Sooooo, I decided to read a few more quotes from Mr. Jefferson since has many quotes as they pertain to government and because I have had a fascination about him since graduate school at WIlliam and Mary.  He was a tall man yet his desk at William and Mary is tiny!!!! I always wanted to try and sit in it (it is roped off of course)!!!

Paddy Deighan J.D. Ph.D

Wednesday, September 18, 2013

Luxury Home Market Recovering the Quickest

There is an old adage that applies to the current real estate market. That which falls most during a recession is normally also what rises quickest. This certainly applies to home sales. Homes worth over $1 million the brunt of the real estate down turn over the past five years.  Some reliable sources estimate that home is the $1 million plus market took an average 46% loss. I am familiar with many market win which the values dropped 70% in the luxury market.  However, these homes are now rebounding at an astonishing rate. Investors who had available funds, purchased the homes as values dropped and the investors also took advantage of historically low rates. Now, as those homes rise in value, investors consider whether to cash in or hold on as interest rates inch upward.  

 According to real estate research firm, DataQuick Inc., million-dollar homes are gaining at triple the pace of others. Those homes gained an average of 37% in first half of 2013 compared to 2012, which is also the highest level since 2007. Homes sold for under $1 million also rose, but only 11% during the same time period. The National Association of Realtors said million-dollar homes accounted for 2.4% of home sales in June 2013, which is way up from 1.3% early last year. 

Analysts opine this is due to the wealthiest people holding off until they were confident about the recovery. These people may have done very well with other investments over the past few years, and they may be looking to begin investing in real estate once again. After all, home interest is still a significant tax deduction (for now at least). DataQuick names the Seattle area as a prime area for million-dollar home price increases, at 61%. Sacramento, San Diego, and Charlotte were also identified as prime areas feeding the increase.   

Paddy Deighan J.D. Ph.d   

Best markets for Real Estate Recovery

As a follow up to my blog post about luxury home recovery, here is a compilation of the cities that are recovering faster than most. I have to say that I am surprised / shocked at some of the cities…but here they are!! Some markets are experiencing more progress than others. RealtyTrac recently released its first Housing Market Recovery Index, which reveals the metro cities leading the housing recovery.
The index showed that upstate New York, southwest Florida, and Northern California’s Bay Area are leaders in the housing recovery. On the other hand, markets in northern Maryland, southeast Pennsylvania, and downstate Illinois are still showing signs of lagging the furthest behind in the recovery, according to RealtyTrac.
“The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels,” said Daren Blomquist, vice president at RealtyTrac.
For its Housing Market Recovery Index, RealtyTrac used seven different measures to evaluate the 100 largest metro’s recovery: the unemployment rate, underwater loan percentage, foreclosure activity percentage change from peak, distressed sales, investor share, cash purchases, and median home price change from the bottom. The following are the metros that ranked highest on its Housing Market

Recovery Index:
Rochester, N.Y.
Median home price change from trough: 93%
Unemployment rate: 7%
Underwater home owners: 7%
Cape Coral-Fort Myers, Fla.
Median home price change from trough: 82%
Unemployment rate: 7.4%
Underwater home owners: 42%
Albany-Schenectady-Troy, N.Y.
Median home price change from trough: 44%
Unemployment rate: 6.4%
Underwater home owners: 9%
San Jose-Sunnyvale-Santa Clara, Calif.
Median home price change from trough: 70%
Unemployment rate: 6.9%
Underwater home owners: 9%
San Francisco-Oakland-Fremont, Calif.
Median home price change from trough: 96%
Unemployment rate: 6.5%
Underwater home owners: 17%
Birmingham-Hoover, Ala.
Median home price change from trough: 58%
Unemployment rate: 5.9%
Underwater home owners: 15%
Atlanta-Sandy Springs-Marietta, Ga.
Median home price change from trough: 57%
Unemployment rate: 8.9%

Underwater home owners: 36%

Paddy Deighan J.S. Ph.D
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Sunday, September 8, 2013

Negative Equity Report: Good News or Bad news?

Negativity equity is an issue that can be an indication of many aspects of a real estate market.  Zillow keeps track of such things and while many question the accuracy of some of Zillow’s reports (such as their Zestimates), the Negative Equity report seems accurate.
According to the most recent Zillow  “Negative Equity Report” , there are 12.2 million homeowners who are still underwater on their properties. This equates to nearly a quarter (23.8 percent) of all homeowners with a mortgage and 16.7 percent of all homeowners with and without a mortgage. Zillow predicts that by the end of the second quarter of 2014, the negative equity rate will have fallen to 20.9 percent and 1.9 million more homeowners will once again be in positive territory. “Widespread rising home values during the past year have helped…many homeowners who were only modestly underwater to come up for air,” said Zillow chief economist Stan Humphries. However, he added, “for those homeowners who are deeply underwater…there is still a long row to how.”
negative equity attorney

More than half of all underwater borrowers (57 percent) are 20 percent or more underwater. Furthermore, one in seven (13.4 percent) of all underwater borrowers owe more than twice what their home is worth. If home values rise, as Zillow predicts, 4.8 percent in the next year, it will take homeowners who are 20 percent underwater four years to reach positive equity and homeowners who are more deeply underwater years longer -  particularly given that most analysts agree that home appreciation rates are due to slow by the end of 2014. “Negative equity will be a factor in…markets for years to come,” said Humphries.
Negative equity can lead to strategic defaults, short sales, loan modification applications, bankruptcies and many other events that can affect a real estate market. All in all, this report is lower than I anticipated so it seems like good news.

Paddy Deighan J.D. Ph.D

Thursday, September 5, 2013

Government Fraud Case Against Bank of America Moves Forward

A court in New York ruled that there are “genuine factual disputes” that justify letting the case continue against the second-largest U.S. bank. Only a few prominent cases tied to the financial crisis have ever gone to trial.
Judge Rakoff also stated that he will decide before trial which specific legal theories he will allow the government to pursue. Presumably, he will announce that aspect of his decision within the next couple of weeks.

bank of america short sale
What he determines about what the proper scope of the trial should be of great interest to correspondent lenders who sold loans to Countrywide/BofA in the past, and who are now facing repurchase demands from that bank (or other investors) now. In fact, that “scope” ruling could be of great value to correspondents regardless of whether Rakoff allows few or many legal theories and claims to be pursued by the government.
If he rules that certain types if theories or claims cannot properly be pursued, then it stands to reason that correspondents should be able to defend themselves against similar claims by BofA by reminding the bank that those types of claims have been adjudicated to be legally impermissible by a prominent judge in this very prominent case.
Likewise, BofA cannot possibly suffer damages related to certain types of claims by the government if the government is not even allowed to pursue those claims at trial — therefore, any subsequent attempt by BofA to force correspondents to “make it whole” for supposed losses on such claims would be presumptively fraudulent.
On the flip side, if Rakoff allows a broad spectrum of types of claims to go to trial, correspondents should benefit from noting the lengths to which BofA goes to demonstrate that there was no problem whatsoever with the loans, underwriting practices, and loan programs in dispute.
All of BofA’s public protests about the quality and accuracy of the loan data and underwriting will be useful to quote back to the bank when it does a shameful about-face and demands that the third-party originators who sold it these loans should pay up for supposed “defects” related to loan file information and alleged poor underwriting.
Case Background
To recap the pertinent case background, the U.S. Department of Justice sued Bank of America last October, joining a whistleblower lawsuit originally brought by former Countrywide Financial Corp executive Edward O’Donnell.
It alleged that Countrywide, acquired by Bank of America in July 2008, caused more than $1 billion of taxpayer losses by selling defective home loans to Fannie Mae and Freddie Mac, the mortgage financiers seized by the government in September 2008.
The government said the loans went through a program called the “High Speed Swim Lane” – also known as “HSSL” and “Hustle” – that Countrywide devised in 2007 to speed up loan processing, even if it meant ignoring safeguards to help ensure that loans were sound and not tainted by fraud.
Bank of America, in court papers, countered that HSSL was a “legitimate and good-faith effort” to develop systems for making prime loans after the collapse of the subprime market.

Paddy Deighan J.D. Ph.D

Wednesday, September 4, 2013

More Troublesome Restrictions From HOAs

Just in case you believe that Home Owners’ Associations (HOAs) have too much time on their hands and too much control, here is yet another restrictive HOA story.  In many states, neighborhood homeowners’ associations (HOAs) can regulate just about anything – and everything – they wish. However, at least in New York, the HOA cannot tell you who you can and cannot support via a political yard sign. A state Supreme Court decision made last week established that local HOAs “do not have the authority to ban residents from displaying political signs.” The ruling came in response to a nine-year battle between local homeowners and their HOA, which had been fining them five dollars a day for every sign they placed in their yard. Ultimately,the HOA placed a lien on the home for $1,070. The HOA argued that the covenants in the neighborhood restricted “additional sign[s] or other advertising devices of any nature…placed for display to the public view on any home, in any window of any home, on any lot or other portion of the property.” The plaintiffs argued that the restrictions applied to advertising only and the court agreed that the rules did not apply to political signs. The homeowners are also protected from further levying of fines as part of the ruling.

Undoubtedly, the HOA will amend its by-laws to include any sign, not just advertising signs, but this is a minor victory against obtrusive HOA activity. In my experience, HOAs are run by people with too much time on their hands and too much desire to regulate….”autonomous dictatorships”, I call them.   
What is the average HOA by-laws length?  500 pages?  I have seen them to be over 1,000 pages and no one ever reads them (except those that patrol the neighborhoods scouring the community for violations).  Yup, those same people that have too much time on their hands. Hey, I am just happy that spell-check recognized 'shenanigans" LOL

Paddy Deighan J.D. Ph.D