Friday, August 26, 2011

GMAC No Flip Addendum..Comical but Not Funny

GMAC No Flip Addendum is comical but not funny and really quite interesting. A variation of the below has been circulating lately. In a relatively short document, there are so many issues raised. First, GMAC is defining what a "flip" is. There is no uniform or legal definition, so let's call it what it is: an opinion only.

Second, what is "inflated" value? If I buy a blow up Elvis impersonator on Ebay for $100 and sell it for $102 that is "inflated" value! LOL

Third, in real estate, buying and reselling is NOT a short period of time. Thirty days, maybe, but certainly not 90 days.

Fourth, buyer and buyer agent are not involved in a "scheme". Hmmm, so a well thought out business plan is certainly not a scheme. I checked with Batman. Again the "F" word...flip! LOL Flip is not a legal definition, so what is their point.

I could go on and on...this Addendum is ludicrous.

If I were a buyer agent, I would refuse to sign this or modify it to state that you are unaware of buyer's future plans with the property. The bottom line is that if I were a buyer or buyer agent, I would have TREMENDOUS problems with this. Don't sign it and provide valid reason.

Welcome to America...where even buyers are no longer entitled to a profit...or to pray at the 9/11 site..unless you are Muslim. they go to pray near there, but the vast mnajority of Americans cannot. Thanks Bloomberg. Nice financial reporting systems but poor excuse for an American.


State of CA


Property flips occur when ownership of one property changes several times in a brief period of time. Property flipping becomes

illegal and a fraud for profit scheme when a home is purchased and resold within a short time frame at an artificially inflated

value. For the purposes of this statement, a short time frame is defined as a period extending ninety (90) days from the date of

the short sale transaction.

BUYER represents, along with BUYER real estate agent, that I/WE are not involved in a for profit scheme to flip the property and

that there are no current agreements, written or otherwise, to immediately re-sell the Property at a higher price, and that no

transactions of this nature will take place within ninety (90) days of the date of closing on the short sale transaction.

I/WE represent that there are no relationships between any parties involved in the transaction, including BUYER, SELLER,


I/WE understand that any information associated with the short sale, may be made available to federal, state, and/or local law

enforcement agencies for such action within their jurisdiction as they deem appropriate if illegality related to this short sale is














Subscribed and sworn to before me this ____________day of ____________, 20____


Notary Public

My commission expires: ______________

Paddy Deighan, Esq. PhD

Sunday, August 21, 2011

New Jersey Supreme Court Gives Go-Ahead for Lenders to Foreclose

New Jersey Supreme Court Gives Go-Ahead for Lenders to Foreclose. The New Jersey State Supreme Court determined in December of 2010 that four of the nation’s largest lenders had to cease filing foreclosure actions due to the uncertainty over the lenders’ foreclosure systems. Justice Stuart Rabner called a halt to foreclosures by some of the biggest banks in the country in the state of New Jersey. The Supreme Court determined that Bank of America, Wells Fargo, JPMorgan Chase and other major lenders cease and desist all foreclosures in the state until they had proven that they had dealt with potential consumer abuse in their systems and could be confident that their foreclosure processes were fair and just. The Court has now determined that the lenders have satisfactorily completed the process and it is anticipated that there will imminently be a plethora of new filings.
This will undoubtedly also be met with a tremendous amount of “foreclosure defense”, ”loss mitigation”, and “foreclosure relief” advertising and regrettably, most of the firms do not offer quality relief or they are engaged in the unauthorized practice of law. I have blogged about this in the past…there simply is no way to help someone with foreclosure defense without engaging in the practice of law. Yet firms are out there servicing potential clients and charging them thousands of dollars. The New Jersey Attorney General has recently taken action against six such firms.
In an effort to remedy this situation, the New Jersey legislature recently passed the Foreclosure Rescue Fraud Prevention Act designed to compel fraudulent foreclosure rescue companies to compensate people who have lost their homes and savings by trusting them. Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a homeowner advocacy group, explains that “New Jersey is going to be inundated with new cases of foreclosures and the bad guys will take advantage of that – they’re going over the lists right now of the people named in foreclosure filings.”
Many are encouraging Governor Christie to sign this bill into law and it is being reviewed at the moment.

Paddy Deighan, Esq

Saturday, August 20, 2011

Fear of Fraud Ruining Many Investor Deals

It keeps getting harder and harder to get shorts sales accomplished. It is especially difficult with investors even though they are paying cash in most instances. Investors are more than one-third of current transactions do it does not behoove the industry to make matters more difficult for them.

Lenders have certainly made it more difficult for investors with restrictions in reselling, re-listing, marketing, etc. However, now the listing agents and their brokers are injecting personal feelings, emotions, and LEGAL opinions into the mix and this is REALLY hurting the industry.

Earlier today, I was on the telephone with a listing agent in Florida. I was on the call as the attorney for an investor/buyer with cash. This agent explained to me that she does not so “investor” deals. I explained to her that this is distressed real estate and she cannot afford to maintain this position. WELL!!! Missy Miss advises me that she does $20M a year in production and does not need to do investor deals! Folks, this lady would boo a cure for cancer. Could not have been more negative, condescending and arrogant.

My response to this verbal diarrhea was that she accepted a client and has a duty to the client. He position necessarily violates that duty. She then explained that her broker told her not to accept investor deals. OK, a new wrinkle. She stated that attorneys told them not to participate in them because they might lose their licenses. I advised her that NOT participating in investor deals and presenting all offers, FAIRLY (without sabotaging them) could cause her to lose her license!!!

Ladies and Gentleman, this is really getting out of hand. Not all investor deals are fraud. A small fraction of them are. Do we judge ALL attorneys and ALL real estate professionals by the bad actions of a few?? There is NO place in the real estate market for the injection of personal feelings and emotions into the process. This listing agent was clearly sabotaging the deal because she “didn’t like it”.

I then decided to review the foreclosure status online. The foreclosure is 2 ½ years old and getting close to sale. I asked what the status of the property was and the listing agent told me “pre-foreclosure”. PRE-foreclosure?? Honey, this property is half way to gone!! Did she not know the difference?? A willing buyer, with CASH, told her that there is not a good fit – and it was not because of price or terms, it was because of her!! Investors need love too!!! LOL

Paddy Deighan JD PhD

Sunday, August 14, 2011

Day of Prayer in SOME Schools, but not in the USA

Very interesting.....I do a lot of stem cell research in Russia and Ukraine and a lot of DNA research in Iceland...distressed real estate pays the bills since the grant from the Federal Govt stopped being paid in 2009...anyway....I am planning on being in Urkaine at the end of the month and one of the graduate students commented that I will be there for a day of prayer.

I inquired what that was since I am familiar with most Russian and Ukrainian holidays (and they have a LOT of them-LOL)!! It was explained to me that in their version of elementary school and high school, the students go to school on September 1 and it is called the "day of prayer". They dress in black and white and carry candles to pray for success in the new school year.

I was floored by this since if you tried to do that here, various organizations would file a lawsuit so fast your head would spin around like Linda Blair in the Exorcist.

It is really tragic that people have more freedom in previously Communist countries than we do in many regards. Also realize that they have religious diversity there too...Orthodox, Christian, Jewish, Muslim...pretty much the same mix that we have and yet they are able top come together for a "Day of Prayer" in school. No lawsuits, no bitterness and hatred...traditions honored, not torn apart.

paddy Deighan

Foreclosure Defense is the Practice of Law

Foreclosure defense is the practice of law. You would not think that if your home is in default or foreclosure since there is a remarkable number of firms soliciting distressed home owners with offers of foreclosure defense and delay of foreclosure. Most of these firms have limited ability to help you, since they are not attorneys. Many are being charged with the unauthorized practice of law. My home state of New Jersey just took action against six such firms operating within the state.

The firms will try and lure you in with promises of foreclosure defense success or delay in the process to enable you to retain your home. I can fill an encyclopedia set with failures of such firms that I have been told about during the recent past.

There are many legal issues in regard to distressed real estate. There are tax, credit, deficiency judgment and many legal issues specific to foreclosure defense. Many people know some or most of the issues but they are neither qualified nor permitted to discuss them with you. Additionally, attorneys have access to information that is not available to non-attorneys.

The options that are available to a home owner are numerous. However, each has its own intricacies. Short sale, loan modification, deed in lieu, strategic walk away, foreclosure defense all have many variables that will determine the likelihood of success. I counsel home owners to not rely upon the advice of someone that has a vested interest in the outcome and this includes real estate agents. They are invaluable in the process but unless the home is sold, they do not receive compensation. So, what do you think the suggested course of action is – a short sale!! However a short sale is not always your best option, especially if you want to retain the home.

Foreclosure defense is the practice of law. Do not trust your most valuable asset and your biggest financial exposure to anyone other than a lawyer that specializes in this complex area of law and tax.

Paddy Deighan