Monday, December 31, 2012

EVERYONE in Real Estate Needs a Marketing System


Everyone has a system...professional gamblers have a system...anyone directly in sales has a system that they must follow. However, most professionals do not have an organized, structured system. I have developed what has been working exceptionally well for me. I designate 1-2 hours each day on SEO and networking. I refer to this as "BLETWORKING" because it involves my blogs. Many people advocate doing this first thing in the morning. MY sustem is that I do this late at night because this is peaceful time. The phone is not ringing; the TV is not blarring; I put on my favorite music and away I go. I will state at this point that I do the blogging myself. Many delegate this to a trusted employee but I feel that it must come from me. I do delgate posting the blogs to other websites and social neworking sites to staff members. Here is the system: 1. First, I write a blog and upload it to Active Rain. I then copy and paste the blog onto my Blogger account and also my wordpress blog. This enhances my exposure and takes little time. 2. Then I share the blog on LinkedIn, my FaceBook business page, Twitter and Google + 3. Next, I upload the blogs into multiple Twitter accounts that are specific to certain areas of legal real estate - Twitter accounts designated for loan modifications (@loanmodlawyer1), foreclosure defense (@foreclosureatto), quiet title (@quiettitleattor), short sales (@shortsaleatty1), and deficiency judgments (@deficiencyjudge1) and MERS expert (@merssttorney). 4. Then I add them to Tweet Adder and allow the automated system to tweet the blogthroughout the day from all three sites (AR, Blogger and Wordpress). This entire process takes 1-2 hours only and I can do these things at my convenience. This process has become my #1 method for obtaining new clients in all of the categoties listed above!!
Paddy Deighan J.D. Ph.D Paddy Deighan, J.D. Ph.D http://www.homesavers.pro

Real Estate Lending Trends for 2013


Paddy Deighan J.D. Ph.D Real estate is at its most affordable rate in recent history. In my opinion, the real estate market cannot claim to be fully in “recovery” until lending loosens up. Sadly, most homeowners will not be able to take advantage of the great deals out there using conventional financing. According to the Wall Street Journal, lenders are unlikely to ease up on their credit and lending standards in 2013, and “buyers shouldn’t expect that getting a loan will get easier anytime soon.” According to Realtor Magazine a recent spate of refinancing activity has actually contributed to this trend, the report adds, because banks have “plenty of business coming their way” already. Don’t despair, I believe that good news will help all of us in 2013 (see below). Other issues could also restrain mortgage lending in the coming year. Banks are required to keep more money in reserve when they originate and purchase mortgages, making lending more difficult. Additionally, as Congress appears to have given up on avoiding the “fiscal cliff,” mortgage rates will likely head lower but home-buyers will have less money with which to purchase properties in 2013. According to Mortgage Reports at this point, many economists are predicting a recession regardless of the outcome of today’s talks, which are unlikely to yield anything that can be acted upon quickly enough to avert the cliff before midnight tonight (which just passed 30 seconds ago)!!! Happy New Year!! I cannot help but think that non-conventional and “creative” financing will make a huge comeback in 2013 as more would-be homeowners wish to take advantage of affordable housing but find themselves completely out of options in the conventional mortgage market. There is opportunity for everyone,…real estate agents, potential home owners, home sellers, and non-conventional lenders, so it makes sense to me that 2013 might be a better year for everyone and I certainly hope and wish this for everyone. Happy New Year and best wishes for a healthy and prosperous New Year!! Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Sunday, December 30, 2012

MisInformation Regarding the Expiration of the Mortgage Debt Forgiveness Relief Act


It is no secret that many of us on rallyed hard to get the word out that the Mortgage Debt Forgiveness Relief Act (MDFRA) should be extended. It is theoretically possible that it could be extended in the future and the extension could be retroactive to January 1, 2013. The President and both houses of congress have their hands full right now. However, there has been so much misinformation about the MDFRA situation and there are going to be a lot of distressed home owners that are making the wrong decisions and for the wrong reasons. As we approached the end of the year, many sellers decided that they were not going to sell because the close of escrow would not be before the end of the year, and hence, they would have a forgiveness of debt tax ramification. An example is that a listing agent received an approval on short sale on Friday evening, December 29th. She asked if the buyer could close on Monday!!! She advised my client, the buyer, that her clients were refusing to close because they will have a forgiveness of debt tax issue. I advised her that knowledgable tax professionals and attorneys can alleviate the tax ramifications most of the time. I advised that I have been successful over 90 % of the time when I challenged this with the IRS or state. The listing agent responded that the sellers' tax advisor indicated that they will have a tax problem if they close after January 1st. I suggested two things...1). they will have a larger forgiveness of tax issue when the property is foreclosed upon and subsequently sold because the bank will get less at Sheriff sale (presumably) than the short sale proceeds; and 2). they are facing litigation for failure to close. There is no valid justification for breaching the contract because you will have a tax problem that was clearly foreseen months ago. The listing agent is not in a good position here either as the approval took 8 months and it was an easy approval for a variety of reasons. She put herself in harms’ way after a third party negotiator failed to do much of anything on the file. I offered to negotiate the file but she insisted and now she faces problems with the buyer or seller in whatever happens (or does not happen) next. She also will not get a commission on a million dollar home.
Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Friday, December 28, 2012

Loan Modifications Statistics are Beginning to RISE!!


Many people evaluate the housing market by foreclosure statistics. I have previously blogged that this methodology is fraught with inconsistent variables that alter the findings (such as lenders purposely holding back foreclosure filings). Foreclosure activity remained elevated in the third quarter of 2012, but homeowners are fighting to stay in their homes. According to a report by the Office of the Comptroller of the Currency (OCC), servicers initiated 252,604 new foreclosure actions during the third quarter of 2012. Office of the Comptroller of the Currency Report Homeowners responded with 382,899 home retention attempts. Home retention actions include modifications and shorter-term payment plans. Of course, some of those home retention attempts address foreclosure actions initiated prior to 2012. The OCC reports that home retention efforts appear to be finally starting to work. Home Affordable Modification Program (HAMP) modifications rose 10 percent over Q2, and other forms of modifications increased by 54.2 percent. The Home Affordable Refinance Program (HARP) is also gaining ground, providing more than 80,000 refinanced mortgages in October 2012 alone. HARP article. On the basis of HARP II’s success, many lawmakers are hoping that a new version, HARP III, could continue to expand refinancing options to sub-prime borrowers who have remained current on their mortgages. It is likely (in my opinion) that the loan modification increase is due to the settlement with Attorney Generals in 49 states (Oklahoma did not join the litigation). Thanks to myriad factors like robo-signing, the foreclosure fraud settlement, seasonal trends, and foreclosure moratoria, many analysts claim it is impossible to actually get a clear idea about where the housing market is going. I believe that it is not practical to have a clear idea of where the housing market is…let alone predict where it will be in the short or long term. When you factor in the looming fiscal cliff, the uncertainty becomes overwhelming (even though I believe that the national media has grossly exaggerated the ramifications of the fiscal cliff. The name implies more danger than is really present). Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Wednesday, December 26, 2012

It Must Be Christmas, A Rare Example of theParties Working Together


I do a lot of work with Russia and Ukraine...even real estate work, but mostly scientific and business projects. I work with some senior members of Vladimir Putin's cabinet. It is always interesting to hear their impression of events that happen here. However, I discovered a Congressional House bill that was passed by House and then the Senate and signed by President Obama this month. The House authored the bill and the Senate made few changes and Obama made no changes. Yes, Veronika, there is a Santa Claus after all. The parties can work together. It was refered to as the Magnitsky bill. It was named after a Russian lawyer who exposed widespread corruption in Russian business. He was jailed and then mysteriously perished just prior to his release from prison because he was not brought to trial within one year as required by Russian law. The bill mandated that those responsible for the human rights atrocities that were committed against Magnitsky woud be denied access to the USA and they could no longer do business with the USA. The bill was opposed by Russian authorities. However, the bill effectively repealed the Jackson- Vanek amendment which affected trade with non economic market countries (i.e. Eastern Blcok countries). Jackson-Vanek was signed in 1974 during the height of trade relations difficulties with the former Soviet Union. The new bill normalizes business relations with Russia, Moldova and other former Eastern block countries so it appears to be a good thing....but more importantly, it indicates that the parties are capable of working together. It would be truly a Christmas dream for the press to write stories like this once in awhile....
Sergei Magnitsky Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Sunday, December 23, 2012

A Healthy Way to Enjoy the Tastes of Christmas


HAH, didn't think that it was possible to enjoy Christmas cookies in a reasonable manner did ya?? Well, there is one way that I have found that really helps. Celestial Seasons makes a variety of Christmas cookie teas. They not only taste like the cookies they mimic, but they smell like them too!! The whole house can smell like Christmas Sugar cookies by brewing this tea: Celestial Seasons Sugar Cookie Sleigh Ride Tea . There are many great flavors such as ginger bread and candy cane too. If Starbucks is more to your liking then there are many options there too Starbucks Christmas Blends So, if you are trying to watch your calories but you want to enjoy the flavors of Christmas, these teas are the ticket. Disclaimer: This is not a paid endorsement for Celestial Seasons LOL
Paddy Deighan, J.D. Ph.D http://www.homesavers.pro

Thursday, December 20, 2012

Another SEO Opportunity for Business from Zintro!


I know that we are inundated on a daily basis with SEO opportunities and opportunities to market our particular area of expertise. It is difficult to know which ones are out best options. Today, I discovered one that looks promising and it is early enough to get a startegic opportunity with them. The opportunity is from Zintro.com . It only took a few moments to complete a profile. An hour after I enrolled, I received a message on LinkedIn . So it seems that Zintro is a worthy new option for many of us. The referral was from a very good contact with an immediate need for services that I render. She contacted me immediately after reading my profile. The agent that contacted me was very relieved and I was obviously happy too. I suppose in these days of multi-level marketing and skepticism, I should disclose that I do not receive anything for mentioning them!! LOL I do not receive bonus points, coupons for a free oven mitt or even a personalized eyeglass case from a referral to them!! One of the things that I liked about the website is that there are unlimited opportunities to describe your area of expertise to maximize your exposure. You can literally fill in the fields with anything that you want and that enables you to focus upon a geographical area for example. Many opportunities such as this try and push you into pre-defined categories via a drop down menu. Zintro must have decent SEO opportunity – at least with LinkedIn because I received the referral within an hour of uploading my profile. It is a goal for many of us to optimize our time spent on SEO, Social networking and online marketing. It may make sense to give Zintro a try. I already received a great referral and I hope that you do too!! Good luck, Merry Christmas and Happy New Year!! Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Connecticut Introduces an Excellent Foreclosure Mediation Program

Connecticut lawmakers hope to help distressed homeowners deal with lenders who negotiate loan modifications while foreclosing at the same time. The state law makers are implementing a mandatory eight-month stay on foreclosure processes when homeowners enter mediation with a lender. “This is an effort to let the mediation process play itself out and give them space,” said state representative William Tong (D-Stamford). Tong is co-chair of the state legislature Banks Committee. This effort is designed to supplement the state’s groundbreaking foreclosure mediation program, which is run by the state judicial branch and is mandatory for homeowners facing foreclosure. State senator Bob Duff (D-Norwalk) believes that the 8-month stay is necessary because although “a lot of people were able to work things out within three months…there were some very difficult cases out there and those took longer”. The state has argued that this massive regulation is necessary because foreclosures are hurting home values too much in the state. I believe that this is an excellent response to a challenging problem, but I think that it needs to be implemented for reasons other than declining home values. It should be implemented due to the inherent unfairness of putting home owners through a lengthy loan modification process and later deny any relief after nine months to a year of cooperation by the distressed home owner.
Connecticut also recently attempted to cut MERS out of the equation in property transactions by passing a bill requiring foreclosing entities to register properties directly with town clerks or face fines. This also is a well though-out response to a difficult situation. Hopefully, more states will follow the lead of Connecticut. I also should comment that the many states require mediation or offer it to home owners in foreclosure.. the problem is that most state mediation plans place little leverage in lenders. Frequently, lenders do not even appear and the “representative” attending the mediation does not have authority – so what is the point?? Still, medication has been a very valuable tool. New York, and New Jersey have excellent medication programs and Florida has a very weak one. Paddy Deighan, J.D. Ph.D

Isn't This Behavior What Got the Real Estate Business into Trouble in the First place??

Those pesky little elves in Washington are at it again! I refer to them as elves because they tinker and meddle behind the scenes and no one really knows what they are doing! Of course I could refer to them as OTHER things but decorum and good taste prevent me from doing so in this forum…and besides, there are those that are equally delusional that will send me nasty emails!! LOL
In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by Investors Business Daily. Eric Holder has no business in the mortgage industry…he is completely detached from reality and meddling in EVERYTHING! He is more dangerous than OBomshell!
Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist. An additional 60 banks are under investigation, a DOJ spokeswoman says.
No Job, No Problem
Settlements include setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit and even counting "public assistance" as valid income in mortgage applications.
In several cases, the government has ordered bank defendants to post in all their branches and marketing materials a notice informing minority customers that they cannot be turned down for credit because they receive public aid, such as unemployment benefits, welfare payments or food stamps.
Among other remedies: favorable interest rates and down-payment assistance for minority borrowers with weak credit.
For example, the government has ordered Midwest BankCentre to set aside almost $1 million in "special financing" for residents living in predominantly black areas of St. Louis. The program includes originating conventional home loans at fixed prime rates for African-American borrowers "who would ordinarily not qualify for such rates for reasons including the lack of required credit quality, income or down payment."
The same federal order, signed last month, praises Midwest for adopting "less stringent underwriting criteria" while under investigation.
In the case against Citizens Bank of Detroit, settled in May, the U.S. decrees that "the bank may choose to apply more flexible underwriting standards in connection with the programs under this order."
Such efforts risk recreating the government-imposed lax underwriting that led to the housing boom and bust, critics fear.
"It's absolutely outrageous after what we've just gone through," said former Rep. Ernest Istook, a Heritage Foundation fellow. "How can someone both be financially stable enough to merit a mortgage at the same time they're on public assistance? By definition, you don't have the kind of employment that can support such a loan."

Senate Considering Another Bailout...The FHA!!


The FHA is receiving higher fees for funding loans and it is receiving additional “insurance” premiums. Yet, it is poised to require additional bailout money in 2013!! I can only speculate that this indicates government inefficiency at its highest. Earlier in the year, the Federal Housing Administration (FHA) made headlines amidst speculation that it might require a taxpayer bailout before 2013 in order to remain solvent. The administration’s Mutual Mortgage Insurance (MMI) fund had fallen below its mandatory reserve ratio, and legislation demands that the situation be resolved in order for the FHA to continue to function normally. Although many individuals simply assumed the FHA, like other government entities, would simply take Treasury money to resolve the problem, several senators are hoping to fix the issue in another way: by increasing insurance premiums, barring “unscrupulous” lenders from FHA programs, requiring repayment of losses from lenders who committed mortgage fraud, improving internal financial controls, increasing transparency, and requiring an independent study of the agency’s “safety and soundness”. The proposed legislation, called the “FHA Stabilization and Reform Amendment,” was proposed by Senator Bob Corker (R-TN). Corker’s official website says that “the FHA has moved so far beyond its original mission to assist low-income Americans purchase their first home that it poses a real threat to taxpayers and must be fixed.” Corker calls his amendment “common sense.” The FHA is the only option for many perspective buyers and it is more important than ever. It is needed by more than just “low income” home buyers and in my opinion, it will not survive if it is only funding low income properties since there is a higher default rate on those and the fees are higher on more expensive homes. I am a bit shocked that the FHA is in this position, but I suppose it is not surprising since it is, after all, a government agency. Paddy Deighan J.D. Ph.D

Monday, December 17, 2012

Foreclosure Statistics Can Be Deceiving


I read in National Mortgage Professional.com that it has been 71 months since foreclosure starts were as low as they were in November 2012. According to RealtyTrac, 180,817 foreclosure starts – this includes default notices, scheduled auctions, and bank repossessions – were filed in November of 2012. This equates to roughly one in every 728 homes. However, statistics fail to recignize WHY foreclosures were low during this time. Bank of America, Wells Fargo, Chase and CitiBank have all been scaling back on foreclosures and NODs. There is expected to be a huge number of filings in January and Febraury. The lenders and servicers had to absorb inventory slowly so there was a slow down for the past several months and most of 2012. You have to look at fundamentals....the number of homes with negative equity is roughly 50%..the economy is strugggling and unemployment is high..much higher than the Bureau of Labor is reporting due to its methodology. I have clients that are many months behind and they have not received an NOD or foreclosure yet. They will someday. It is inevitable. One client has not made a payment in 4+ years. Does anyone really think that he is not going to be foreclosed upon?? The bottom line is that more and more home owners are behind in their payments and that will eventually lead to more foreclosures and defaults. We cannot ignore the fundamentals when we analyze the market. It has been stated, that there are “liars, damn liars and statisticians”. Statistics can be manipulated. Both political parties do it all of the time. Ever notice that when the unemployment rates are announced, each party says that the number supports their contention?? Let’s keep our heads in this market and keep our focus on our core competency. That is MBA school 101 and it is sound advice. Work on our strengths and eliminate our weaknesses and 2013 will be a great year if we do not worry about “the market”. The market will not be here after December 21, 2012 anyway LOL LOL LOL Paddy Deighan, J.D. Ph.D http://www.homesavers.pro

Sunday, December 16, 2012

More on Bankruptcy and Short Sale Negotiation


I posted two blogs in bankruptcy yesterday and several people contacted me with questions so I thought that it made sense to expand on this series of blogs. I mentioned that you do not necessarily need bankruptcy court approval in most bankruptcy short sale scenarios because the debtors are probably in Chapter 7 and the home has no equity so the trustee will likely “abandon:” his or her interest in the property since there is no equity to distribute to creditors. The trustee’s duty is to the creditors and NOT the debtor (as many erroneously believe). I also noted that the real estate agents must be approved by the court in order to receive their commission in matters that require court approval. This is an easy, but essential step. Typically a CV and affidavit will suffice. There is one substantial issue that bears mentioning. When you are working with a client on a short sale, it is not a bad idea to ask them whether they are contemplating bankruptcy. Note, I am not suggesting that you ever SUGGEST bankruptcy. PLEASE do not do this!! However, their home sis underwater and there is a pretty good chance that they are contemplating bankruptcy (or they have already filed and not notified you). This is critical information because when a short sale is in negotiation and the home owner files bankruptcy, the short sale negotiation on the servicer side will be transferred to the bankruptcy department. You guessed it, you are probably starting all over again!! That is why it is critical to ask because it may be prudent to not begin the short sale negotiation AFTER the petition is filed. Of course you can always wait until the debtor is discharged too. However, if you are inclined to wait, I would only do it if it is a Chapter 7 since they are typically of short duration. Having to interrupt a short sale negotiation during a bankruptcy is disruptive for the agents, negotiator, bankruptcy attorney, lender negotiator and debtor. A little information on the owners’ situation may prove to be invaluable. Be careful how you ask about bankruptcy in these politically correct days in which everyone is hyper sensitive!! Padraic Deighan J.D. Ph.D

Saturday, December 15, 2012

Bank of America Short Sale – Bankruptcy clarification, Part II


Bank of America Short Sale – bankruptcy clarification, Part II. I previously stated that Bank of America sent a note out about short sale approvals when the home owner is in bankruptcy. The gist of the release was that you need bankruptcy court approval. The good news is that in the majority of your short sales, you will not need bankruptcy court approval. Most home owners (and other debtors) file a Chapter 7 bankruptcy petition. In a chapter 7 in which the home owner is also seeking a short sale, the bankruptcy court approval will not be necessary. Here is why….the trustee will quickly release that the property has no equity – that is why it is a short sale!!! The trustee will “abandon” his or her interest in the property therefore and once it is abandoned, the debtor is free to short sell it. Another nice aspect of a bankruptcy short sale is that upon filing, the file goes to the servicer’s bankruptcy department and this is typically a higher level (quality) of personnel. There will not be as many instances of “well, we cannot find the papers”. They also have higher authority and they are typically “designated” on a file. Many agents run from a short sale when the debtor is in bankruptcy. In many instances, it is actually a blessing (for the above reasons). If the petition is a Chapter 13 or Chapter 11 (they are not exclusively for businesses), there will be a necessity to seek Court approval. I do invoke certain Chapter 11 & Chapter 13 methodologies that would not require bankruptcy court approval and they are related to securitization audits and Quiet Title actions. However, Court approval is not a lengthy or burdensome process. Agents should note that the bankruptcy court must also approve YOU in order for you to receive a commission. This is also not a difficult or lengthy proves, but it must be done. You will provide your resume/CV to the bankruptcy attorney. If you want your commission, you must do this!! Padraic Deighan J.D. Ph.D http://www.homesavers.pro

Clarification of a Bankruptcy – Short Sale Issue Part I


Clarification of a bankruptcy – short sale issue. I read today a release from bank of America that attempted to clarify some bankruptcy issues as they relate to short sale approvals. Essentially what was stated is correct some of the time but not always…in fact a majority of the time, negotiators will NOT have to get short sale approval from the bankruptcy court. The Bank of America release may be found in the agent resource center, but here is the release: Bank of America can review a short sale offer while the loan is in an active bankruptcy. To complete a short sale and issue the approval letter, the bankruptcy documents must be filed and approved by the court. Any final agreement will require bankruptcy court approval. Homeowner(s) should consult with their Bankruptcy Counsel about how these programs could affect their mortgage and their bankruptcy case. When a loan is in bankruptcy, there is an Automatic Stay, also known as a "hold," of any collection activity placed on any and/or all debts to which the debtor is a party. Before the short sale specialist can discuss the short sale, Bank of America must have written authorization from the Homeowner(s') Bankruptcy attorney on the law firm's letterhead to discuss loss mitigation options with the borrower. This is in addition to the Bank of America Third-Party Authorization Form needed from the borrower to speak to the bankruptcy attorney and the listing agent. If Homeowner(s) is/are currently in a bankruptcy proceeding, or have previously obtained a discharge of this debt under applicable bankruptcy law, all communication and notices are for information purposes only and is not an attempt to collect the debt, a demand for payment, or an attempt to impose personal liability for that debt. The Homeowner(s) is/are not obligated to discuss their home loan with Bank of America or enter into a short sale agreement or other loan-assistance program. Customers should consult with their bankruptcy attorney or other advisor about their legal rights and options. For a short sale to be processed to completion for a loan in bankruptcy, Bank of America must receive one of the following releases issued by the bankruptcy court: Granted Motion to Sell* Granted Motion for Relief from Automatic Stay with noted short sale negotiation* Dismissal Discharge with Abandonment, Closing Order, Final Decree, Trustee No Asset Review *A granted Motion differs from a requested Motion. Note: If Homeowner(s) receive(s) a discharge under a Chapter 7 a bankruptcy proceeding: discharge releases the Homeowner(s) from personal liability for certain specified types of debts. The Homeowner(s) is/are no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the Homeowner(s) from taking any form of collection action on discharged debts, including legal action and communications with the Homeowner(s), such as telephone calls, letters, and personal contacts. Although a Homeowner is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien. There are three types of bankruptcy filing, Chapter 7, 11 and 13 (as far as individuals are concerned). The above is sound advice in MOST, but not all Chapter 11 & 13 petitions but it is inapplicable to many Chapter 7 and some Chapter 11 and 14 petitions. Padraic Deighan J.D. Ph.D http://www.homesavers.pro

Wednesday, December 12, 2012

Wall Street Doin' It All Over Again


I have mentioned this to more than a few people and they are all in disbelief. Wall Street has not learned a lesson. Why should they?? They got away with one of the biggest scams that will ever grace this great nation. We have all heard ad nauseum about the morgtgage fraud/crisis. The bankers are only hald to blame as the Wall Street pirates orchestrated the entire mortgage debacle. I can tell you that everythig that uyou have heard is true, The fraud, Securities fraud, insurance fraud - all of it. Bankers and Wall Street thieves conspired to benefit tremendouslyt from the plight of home owners. What is worse is that they did not share in the pain. Home owners default on the securitized mortgages?? No problem. Wall Street pirates are pretty smart. They had indsirance that covered more than 100% of their losses. Wall Street actually benefited from the defaults. Well, I am here to tell you that no lesson has been learned. Wall Street is at it again. NOW, they are bundling LEASES and securitizing them and selling them as securities. This is even a better scam as the tenants are never going to fight back when they lose out because the money is not enough for them to fight Wall Street. Wall Street will make billions out of securitizing leases and undoubtedly, landlords and tenants will be hurt in the process. The government sits idly by as the bankers and Wall Street cash in on the misfortune of others. Sure, the Feds are suing Bank of America for its CountryWide lending process. Where are the convictions of Wall Street pirates that knowingly hurt millions of people (including real estate agents)?? I certainly hope that the securitization of leases doeds not end in the same manner as securitization of mortgages and deeds of trusts. Time will tell... Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Monday, December 10, 2012

Feds Suing Bank of America over CountryWide Activity


The federal government appears to be looking at an alleged massive fraud case against Bank of America. Bank of America may have settled with the state attorneys general over mortgage and foreclosure fraud, but the Federal government is now looking at the bank activity. The U.S. Department of Justice announced recently that it is suing BofA for “over $1 billion [in] alleged mortgage fraud related to the sale of loans to Fannie Mae and Freddie Mac”. In the first civil fraud suit of its kind, the Justice Department is tackling BofA’s beleaguered Countrywide acquisition in 2008. The government alleges that from 2007 to 2009, Countrywide used a loan process called a “hustle” to push loans through quality checkpoints and eliminate those checkpoints whenever possible. Employees were compensated based on volume of loans originated rather than based on the quality of those loans. At first glance, this type of employee bonus program is fraught with problems and the government is likely to look into this bonus program as it attempts to prove its case against Bank of America. Industry analysts call the move by the Justice Department a “novel effort by the government to defray costs tied to the 2008 bailout of Fannie and Freddie,” and suggest that if the suit is successful, it “opens a new front against [the] banking industry”. The suit is based on violations of the Federal False Claims Act, which calls for triple damages to be paid by violators if the government can prove that their actions led to taxpayers losing money or being ripped off. Fannie Mae actually stopped buying and guaranteeing new loans from BofA this past February in response to the lender’s refusal to repurchase billions in defaulted mortgages from the GSE. This is certainly a pretty big deal and I am surprised that there has been no mention of this in the media. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Thursday, December 6, 2012

FHA Extends Anti Flipping Waiver Through 2014


Earlier this week I posted a blog that indicated that the GSEs, Fannie Mae and Freddie Mac have loosened their approval criteria by enabling a distressed home seller to participate in a short dale even if they are current on their mortgage. There is additional good news this week as the Federal Housing Administration (FHA) has announced that it will extend its “anti-flipping waiver,” which permits buyers to purchase homes that have already been sold once in the past 90 days. The extension will now carry through to December 31, 2014. The FHA began prohibiting flipping in 2003 in an effort to slow ballooning home values, and the waiver was instituted in 2010 in an attempt to stave off neighborhood blight. The two-year extension has some caveats, however. Properties cannot have a “pattern of previous flips during the 12 months before the transaction” and cannot be marked up more than 20 percent without documentation showing repairs to justify the sale price. These are certainly reasonable caveats and this extension also highlights that the restrictions on short sale home flipping are ludicrous. If the Federal government allows it, how can a lender or servicer allege that it is fraud to re-sell a home in less than 30 days after acquisition of the short sale property? In other words, does the Federal government tacitly allow short sale fraud?? Of course not…this just further illustrates the absurdity of the 30-60-90 day hold periods on many lenders’ approved short sales. This is especially true when you view the reason WHY the FHA extended the waiver. FHA Commissioner Carol Galante justified the extension of the waiver, saying that the decision “is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight.” The waiver is not applicable to reverse mortgages insured by the Department of Housing and Urban Development (HUD). The waiver also requires that all transactions be arms-length. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Tuesday, December 4, 2012

New Fannie Mae and Freddie Mac Short Sale Guidelines


There was some rather good news for home owners who have loans with GSEs Fannie Mae or Freddie Mac! If you have a hardship, loss of job, divorce, change in financial circumstance from medical or family issue, etc., you can now be considered for a short sale even if you have not missed a mortgage payment. Freddie and Fannie will now have the same requirements and procedures. This was not true in the past. This is great news, especially for people who have a sudden change in their circumstances and can no longer afford their mortgages, but do not want to have their credit ruined in order to be able to sell their home. So, if you have a change in your circumstances which will change your financial picture, and you want to sell your home without ruining your credit, you may have an opportunity to do this. This would be a tremendous benefit to many home owners. Yet, this good news seems to have gone overlooked as I spoke with two real estate agents this week that advised that there clients wanted to do a short sale but they (home owners) were current. In both scenarios the home owners DID have hardship and this is still necessary. Apparently, the agents had assumed that since the sellers had to short sell, that they were delinquent. Certainly many if not most home owners that need a short sale ARE delinquent, but not all of them. Income and value of the home are also not fatal to a short sale with Fannie Mae or Freddie Mac and this seems to be another misconception. I was approached today by a real estate agent from Florida and she believed that we could not get a short sale approved because the home owner had pretty good income. However, after review of the home owner’s situation, his income was good but his expenses were high and he did have hardship so we can now process the short sale when it was otherwise believed that the home owner did not “qualify”. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Sunday, December 2, 2012

Something Old is Something New Again..Deeds in Lieu are BACK!


Something old is something new again. There is one thing that I say ad nauseum…that distressed real estate is cyclical. If loan modifications are an option today, they will not be in the future but they will become an option later. This has certainly been true of Deeds in Lieu (DILs). Deeds in Lieu have not been much of an option since early 2010. However Fannie Mae is changing the process a bit and this may help many home owners. The GSE hopes that the new requirements for deed-in-lieu transactions will actually create more exit options for borrowers and has optimistically re-named the process a “mortgage release” instead of keeping the old “deed-in-lieu” title. Borrowers now have three options for deed-in-lieu transactions. They can still turn in their keys and move out, settling their debt by turning over the property as collateral in lieu of payment. If a borrower wants to remain in the home, however, they may qualify for a three-month transition option with no rent required. If they want or need to stay longer (such as because of an employment situation or school calendar) there is a 12-month lease with a market-rent payment option. These options will hopefully keep distressed borrowers in their homes and maintaining their properties rather than simply abandoning them. One of the disturbing DIL trends for me is that lenders and servicers offer DILs without agreements!! The home owner is left to take a leap of faith that certain events will or will not happen!! I recommend pushing HARD for an agreement that enumerates all of the terms and understandings of the parties. In addition to the deed-in-lieu changes, Fannie Mae has also released its servicers from obtaining approval to postpone foreclosure sales on mortgage loans more than 12 months delinquent. This may help lenders and loan servicers keep more families in their homes using the new, flexible “mortgage release” requirements. Paddy Deighan J.D, Ph.D http://www.homesavers.pro

Saturday, October 13, 2012

Fraud Continues to Plague Distressed Home Owners


Didn’t take long….but it appears that “distressed-homeowner schemes have displaced loan-origination fraud as the most common type of mortgage fraud”. This is according to the FBI. I can already tell you that the next wave of fraud will be when the pirates embark on a Quiet Title fraud scheme…Arrrrgghhh matey!!! LOL I recently spoke at a national conference for title companies. The FBI had at least 12 agents in the conference because they are serious about investigating fraud. Anyway, back to the distressed home owner situation. The Federal government is handling this new threat to the financial security of distressed home owners. It has already charged 530 people for “allegedly defrauding more than 73,000 homeowners who had fallen behind on their mortgage payments”. The foreclosure-rescue scams hinged on “fake…programs” that charged fees in exchange for negotiation of mortgage terms, purchase of the mortgage by often-hypothetical investors who would allow the homeowner to remain in the home, or other foreclosure alternatives. Why is this not a surprise?? The 530 individual charges are just one way that the federal government is hoping to show that it will protect “ordinary homeowners,” explains FBI associate director Kevin Perkins. Federal entities are also investigating lenders of all sizes. Many of us are already aware of the settlement that 49 of 50 state attorneys general executed. The resolution settled foreclosure fraud allegations with the five biggest banks in the country last February. The amount of the settlement was $25 billion. However very little of this money actually will go to distressed home owners, but that is another story for another day. Approximately, $14 billion of that went to the plaintiffs in the underlying cases. The reaming $12 billion is a proverbial “drop in the bucket” when you consider that there is about $13 TRILLION in home debt. Housing and Urban Development (HUD) believes that “Each of these efforts sends the same message,” said HUD secretary Shaun Donovan in a press conference recently. Donovan continued, “when it comes to harming homeowners, no one is above the law.” It is unfortunate that people try and illegally profit from the misfortune of others. A week does not pass that I do not her about something new and illegal!! Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Thursday, September 27, 2012

Further Discussion on Quiet Title


I am in Zurich Switzerland on a Venture capital project with Credit Suisse. Some investment bankers asked me about short sales in the USA. They have a misperception about Quiet Title and it caused me to reflect a little and it became apparent to me that there are a lot of misperceptions about them here too. A lot of the misperceptions focus on false promises offered by pirates that promise the world and deliver a small sliver of it. So, I wanted to distinguish some fact from fiction. First, the foundation of a Quiet Title action is the securitization audit. It is an essential element of a successful Quiet Title action. Many/most of the companies offer what I refer to as “superficial” audits that really have little substantive value. An analogy is the DNA testing that is offered to the public. Most are superficial scans that are merely identifying your heritage and then making assumptions about your health based upon risk factors known to people of that region. They are not specific to you as an individual. A securitization audit is NOT a forensic audit. Totally different animal. I describe them as follows: a securitization audit is to the mortgage or deed of trust as a forensic audit is to the loan or note. In Quiet Title actions, it is helpful, but not imperative, to have a forensic audit as well. The reason will be outlined below. Quiet Title, if successful, strips away the mortgage or deed of trust. It removes the “lien” from the property. I describe the scenario as receiving a property “free, but not clear”. This is a significant distinction. Pirates in this space advertise that you can get a property “free and clear”. Not so!! You can remove the secured interest, but the underlying debt is still lowed!! I will describe strategies in future blogs because I receive a lot of questions from real estate professionals about this. I the past three weeks, a judge in Florida and another in New Jersey have asked me about this…it is new for the judicial system too!! Paddy Deighan J.D. Ph.D http//www.homesavers.pro

FINALLY!!! FHA Relaxed Condo Financing Rules


It is always been extremely difficult if not almost impossible to get FHA financing in many condominium properties. This is because the Federal Housing Administration (FHA) has never fully supported the concept of condominium purchases. However, the FHA is going to make some temporary exceptions to the current rules. Typical FHA rules for condominium financing provide that no one condominium in a condominium development can be eligible for financing unless the entire development has been FHA-certified. There are so many rules, regulations, and potential legal liabilities that many condo homeowners’ associations (HOAs) opt out of the process. They had the luxury of doing this when markets were strong several years ago. However, in today’s tight lending market, more and more buyers are wishing they could get the relatively “looser” financing offered in an FHA loan. Their dream has come true – at least for the now. The FHA announced recently that its requirements for development-certification will be loosened for the foreseeable future. They will allow FHA certification on mixed-use developments – an increasingly popular building and residential trend – “provided that the commercial interests don’t harm the building’s residential component” and the leeway regarding delinquent association dues has been expanded so that no more than 15 percent of units can be more than 60 days delinquent on dues. Previously, that number was 30 days. Also, condo association boards will be less liable for FHA certification violations than previously, which will make more condo developments more open to getting certified. Under previous versions of the FHA condominium rules, about 2,100 of the 25,000-of condo projects nationwide were certified as of late 2011. Consequently, the FHA was insuring very few condo unit loans (35,433) and unit owners were losing money and buyers because financing was so hard to obtain. The FHA and the Community Associations Institute (CAI) predict that the rule changes “will spark home sales and help tens of thousands of condominium communities begin to recover from the housing slump.” Let’s hope so…this will be a tremendous benefit to the current market. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Good Old Discussion about HAFA


Let's Have a Good 'Ole Honest Discussion about HAFA. It seems customary these days to read a blog and perhaps members respond. However, sometimes it makes sense to turn it into a discussion in which the collective knowledge and experience of the members can benefit everyone. Sooo, I chose a frequently discussed, but little known four letter word…HAFA. I read a thread on another website and I replied to the thread. The person that posted it was horrified when I provided some details about HAFA. She had no idea about some of the “details”. Folks, this is a Federal program. Did anyone think that it would be anything other than a convoluted nightmare?? Frequently, I have my clients opt out of HAFA. Sometimes the home owner does not qualify of course. Today, many home owners are asking for HAFA because they believe that they will receive a relocation expense. Let’s start with some of the basics. One of the troublesome aspects of the HAFA program for me is that if a short sale is denied under the program, the home owner as AGREED TO A DEED IN LIEU!!! No terms, nothing specified. Just an agreement to a deed in lieu!!! Sometimes they have to vacate almost immediately!!! No relocation bonus…nothing!! We have to read the program details CAREFULLY. Another aspect that I do not like is that the program unnecessarily puts restrictions on payments to a second. They offer below market rates for a junior lien payout (I view 10% as an industry standard). This can and does cause a lot of problems. For example, HAFA will frequently not only underpay on a junior lien, but it will require full satisfaction on the second. This is a bit incongruous!! On many occasions, the buyer had to pay for the full release of the lien on their side of the settlement sheet. Today, my office is handling a short sale in South Carolina. The first authorized 10% to the second but they required full release of lien. Second (Green Tree) wanted 15% for full release. The buyer originally thought that he had to come up with $4,700 and he agreed. Ok, no problem. THEN, NationStar decides that it was a HAFA approval – THIS despite the fact the my client signed a HAFA opt out form. Now, the first is only willing to pay 6% to the second and the buyer had to dig into his pocket for an additional $3,000. I reminded NationStar (via Skype since I am in Switzerland at the moment) that there was a HAFA opt out and that at no time in the past did they ever suggest anything other than 10% to the second. It was take it or leave it!!! Where are the home owner rights?? Isn’t this America and we have a choice?? Hmmm, stupid question, yes this is America but we have fewer and fewer choices…can’t even get a 32 ounce Big Gulp in NYC…. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Tuesday, September 25, 2012

FINALLY, FHA Relaxes FHA Condo Financing Rules!!


It is always been extremely difficult if not almost impossible to get FHA financing in many condominium properties. This is because the Federal Housing Administration (FHA) has never fully supported the concept of condominium purchases. However, the FHA is going to make some temporary exceptions to the current rules. Typical FHA rules for condominium financing provide that no one condominium in a condominium development can be eligible for financing unless the entire development has been FHA-certified. There are so many rules, regulations, and potential legal liabilities that many condo homeowners’ associations (HOAs) opt out of the process. They had the luxury of doing this when markets were strong several years ago. However, in today’s tight lending market, more and more buyers are wishing they could get the relatively “looser” financing offered in an FHA loan. Their dream has come true – at least for the now. The FHA announced recently that its requirements for development-certification will be loosened for the foreseeable future. They will allow FHA certification on mixed-use developments – an increasingly popular building and residential trend – “provided that the commercial interests don’t harm the building’s residential component” and the leeway regarding delinquent association dues has been expanded so that no more than 15 percent of units can be more than 60 days delinquent on dues. Previously, that number was 30 days. Also, condo association boards will be less liable for FHA certification violations than previously, which will make more condo developments more open to getting certified. Under previous versions of the FHA condominium rules, about 2,100 of the 25,000-of condo projects nationwide were certified as of late 2011. Consequently, the FHA was insuring very few condo unit loans (35,433) and unit owners were losing money and buyers because financing was so hard to obtain. The FHA and the Community Associations Institute (CAI) predict that the rule changes “will spark home sales and help tens of thousands of condominium communities begin to recover from the housing slump.” Let’s hope so…this will be a tremendous benefit to the current market. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Quiet Title: Separating fact from Fiction


I am in Zurich Switzerland on a Venture Capital project with Credit Suisse. Some investment bankers asked me about short sales in the USA. They have a misperception about Quiet Title and it caused me to reflect a little and it became apparent to me that there are a lot of misperceptions about them here too. A lot of the misperceptions focus on false promises offered by pirates that promise the world and deliver a small sliver of it. So, I wanted to distinguish some fact from fiction. First, the foundation of a Quiet Title action is the securitization audit. It is an essential element of a successful Quiet Title action. Many/most of the companies offer what I refer to as “superficial” audits that really have little substantive value. An analogy is the DNA testing that is offered to the public. Most are superficial scans that are merely identifying your heritage and then making assumptions about your health based upon risk factors known to people of that region. They are not specific to you as an individual. A securitization audit is NOT a forensic audit. Totally different animal. I describe them as follows: a securitization audit is to the mortgage or deed of trust as a forensic audit is to the loan or note. In Quiet Title actions, it is helpful, but not imperative, to have a forensic audit as well. The reason will be outlined below. Quiet Title, if successful, strips away the mortgage or deed of trust. It removes the “lien” from the property. I describe the scenario as receiving a property “free, but not clear”. This is a significant distinction. Pirates in this space advertise that you can get a property “free and clear”. Not so!! You can remove the secured interest, but the underlying debt is still lowed!! I will describe strategies in future blogs because I receive a lot of questions from real estate professionals about this. I the past three weeks, a judge in Florida and another in New Jersey have asked me about this…it is new for the judicial system too!! Paddy Deighan J.D. Ph.D http//www.homesavers.pro

Thursday, September 20, 2012

So What Exactly is All of this Talk About Quiet Title?


Hardly a day goes by that someone doesn't mention a “Quiet Title” action. From everything that is stated, it appears to be a dream come true for distressed home owners. First of all, the term “Quiet Title” is a bit misleading. The term "Quiet Title" refers to legal court matters in which the actual title to a property is disputed among several different claimants. This can happen in a variety of settings, but it is most common in inheritance battles or battles between business partners that each claim title to a property. This type of action does not apply to the vast majority of distressed home owners. HOWEVER,... What my colleagues in law and I have been successfully been doing is to argue in Court that the lender is not the real party in interest since they assigned their rights to the mortgage and/or note. This occurred because the lender (or servicing agent) does not properly “perfect” their interest in the property or they do not otherwise properly assign their interest. This creates a legal challenge to the foreclosure action. It also may be the basis for a separate cause of action to strip away the mortgage and thus make the remaining debt an unsecured obligation. This can be a very valuable asset to distressed home owners. Such actions can strip away th secured interests and render a property (as I like to say) "clear, but not totally free". I ahv e been successful in this type of action and it can be a huge benefit for home owners seeking a loan modification, short sale apporval, Deed in Lieu (DIL) or one seeking clear title to their property. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Wednesday, July 11, 2012


The transfer of loan servicing from one entity to another is certainly nothing new. However, there seems to be a new wave of transfers. Aurora has transferred to NationStar mortgage and CITI has transferred to Carrington Mortgage. As a side note, Carrington is a new servicer there is no history to guide us. I have noticed a number of blogs and questions on websites about how the transfer of servicing can affect a short sale and/or a foreclosure sale date. There seems to be a lot of panic, but the servicing transfer may be a good thing for you. The first thing to do is to contact the new services and be nice and polite. They have not done anything wrong (YET). LOL! If you explain that you initiated a short sale with the prior servicer, and that you need more time, just ask!! More often than not they will grant more time. Also note that even in non-judicial foreclosure states, there are statutes that govern adjournment of sheriff or trustee sales. If this does not result in additional time, then politely explain what the other servicer did wrong (multiple document submissions, etc). You can also point out the positive highlights of the short sale offer such as offer close to BPO etc. My process is that I first try and ‘kill them with kindness. If that does not work, I resort to financial common sense of why extending the sale date may be a good thing for the servicer and the investor on the loan. If that fails, I “go Jersey” on them LOL. For example, you can point out that the transfer of servicing may not have been effectuated properly. For example, I have notices that NationStar has not been particularly diligent about advising homeowners of the transfer of servicing. As I write this blog, I have been on hold with them for 30 minutes, so I am multi-tasking!! I will conclude with a concept. You probably were not getting very far with the prior servicer (they certainly knew in advance of the transfer and probably sis little on the file). A new servicer is probably a good thing. Padraic Deighan J.D. Ph.D http://www.homesavers.pro

Monday, July 2, 2012

New Documents Intended to Simply and Clarify Settlement Procedures

Well the Dynamic Duo without a Clue-o, Barney Frank and Chris Dodd are at the center of more changes in real estate. The Dodd-Frank bill established the Consumer Financial Protection Bureau (CFPB). The CFPB developed new settlement statements and other changes soon to take effect in our world. I blogged previously about that Dodd Frank changes that will increase closing costs and loan costs to consumers. Previous changes were made to the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedure Act (RESPA). I had an opportunity to review the new proposed forms that were intended to SIMPLIFY and CLARIFY the settlement procedure. Naturally, as only the government can do, in my opinion, the proposed changes only serve to make a relatively clear and simple procedure more convoluted. The HUD-1 was pretty clear and easy to understand and it was only two pages. Since it was a government document, it made most sense when you read the second page first and the first page second!! LOL The new HUD-1 will be known as the “Loan Estimate and Settlement Disclosure Form”. So, it fine government fashion, it makes sense to replace a tow page document with one that is 5 or 6 pages. Remember, this new document is intended to clarify and simplify the process. I reviewed the document and it is easy to understand, but it is a bit overwhelming. There appears to be SOOO much on it. Therefore, it hardly qualifies as an improvement and as I mentioned, it is a bit overwhelming if in nothing else but sheer volume of information. In all likelihood, buyers and sellers will end up paying more in settlement costs as this new document is not without new expenses that are sure to be passed on to buyers and sellers. I cannot help but think about the old adage: “if it ain’t broke, don’t fix it.” Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Realty Trac Announces List of Best Short Sale Lenders

Realty Trac announces list of best Short Sale Lenders. There certainly is a lot of negative press about short sales and the lenders that participate in them. There never seems to be any positive input and the realty Trac announcement sounds positive. However, according to the RealtyTrac findings, some banks have found that by courting short sale buyers, short sale sellers benefit as well. The data firm recently released a list of its “best major banks to work with when buying short sale homes,” and many analysts believe that these banks are also the best to work with when trying to sell those homes. RealtyTrac named PNC Financial Group the best major bank to work with thanks to an average transaction time of 151 days and an average percent discount of 40 percent. Government entities like Fannie Mae, Freddie Mac, and HUD came in second. They had an average turn-around time of 154 days for the transaction and an average percentage discount of 42 percent. Rounding out the top three, Ally Financial offered an average 35 percent discount with 188 days from start to end of the transaction. These seem like positive numbers and the percentage of discount seems healthy. However the turn-around time seems atrocious to me, especially considering the healthy discounts. If the GSEs can turn around properties that quickly then it seems reasonable to conclude that non-government lenders and servicers should be able to do it more quickly. Chase, Bank of America and Wells Fargo have all introduced new programs so let’s see what happens in the coming months. There is certainly a lot of hype that the markets are improving and I find little credence to it, but we can all work hard and get as many deal completed as we can!! Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Friday, June 29, 2012

Is There Really a REO/Foreclosure Home Shortgage??

Is there REALLY a REO/Foreclosure Home Shortage?? According to Realtor Magazine real estate investors are starting to report indications that the housing recovery could be starting to gain some solid foundations. One indication in particular could not only be a positive sign for the market, but could actually spur more investing as would-be investors rush to get in on the bargains before they miss their chance. There may actually be a shortage of REO deals. According to a report in Bloomberg, recovering markets like Phoenix and Miami may have bottomed out, with the result that bulk-REO buyers are starting to have trouble finding the bargain-basement deals that they once snapped up and converted into money-making rentals in no time. In fact, the “shortage” could result in hedge funds and investing firms having some difficulty “get[ting] capital out in an efficient way” if the trend continues. Of course, there are still plenty of foreclosure and REO properties out there for investors to purchase, but the key to successfully turning them into cash-flow properties quickly is to purchase them in areas that are already recovering. This way, the demand for properties is already present and there are many qualified, would-be renters at the ready. Furthermore, hedge funds prefer to buy in bulk, while many lenders are opting to do short sales or sell off properties via auction and the traditional real estate brokers. As a result, the much-hoped-for mass-auctions are not appearing, with the problem that some investing firms have literally billions of dollars that they cannot invest. Paddy Deighan, J.D. Ph.D http://www.homesavers.pro

Some Additional Thoughts on Note Buying

Yesterday I wrote about some issues in the note buying segment of real estate. I wanted to expand on the topic because there is a lot of interest in it and it is a misunderstood issue. The first and foremost issue is that buying the note itself does not impart a lot of benefit of the buyer. Most notes that are sold are in default or imminent default. Therefore, the note itself has little value. However, unless the buyer asks for the assignment of the note, it is not automatically assigned to the buyer. The assignment is not only critical; it is essential and the route of many of the standing problems that plague the foreclosure industry. For the same reasons that lenders and their servicers are plagued with difficulties, the note buyer now has to ensure that the assignment has been properly recorded and perfected. Otherwise, they may have the same difficulty as the lenders and servicers are having now when it is time to foreclose. Distressed home owners are becoming very savvy. They know that they have some leverage in the foreclosure process and they are using it to get money from lenders or buyers. This is why I maintain that buying notes are not for the faint of heart. Conceivably, you just brought yourself a big headache in having to foreclose and pay the home wonder to leave. Another “note buying” point that needs clarification: Many of the notes that are purchased are on homes that are listed for sale. The sale of the note by the lender does not affect the listing agreement signed by the home owner. The listing agent still has the listing. However, if the home owner tenders a Deed in Lieu (DIL) to the lender or servicer, the listing agreement is voided because the home owner no longer has standing (the legal right) to list the home and prudent agents will terminate the listing immediately. Of course, many home owners neglect to mention to their agent that they tendered a Deed in Lieu. But THAT is another story!! LOL Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Thursday, June 28, 2012

An Important Aspect of Note Buying


An important aspect of Note buying: Many aspects of real estate are cyclical and that makes things both interesting and challenging. It also requires all of us to stay abreast of latest trends and issues. Note buying is one such trend. It goes away for a while and then new programs get marketed and it returns again with some variation on the original theme. I am going to write tomorrow more in-depth blog on some aspects of note buying. However, I wanted to address one specific area today. I have been discussing note buying with several entities and I have been working with investors to purchase notes on a large scale. The first obstacle in any note buying strategy is to have a clearly defined strategy. This sounds easy but my experience indicates that most do not have a clear strategy. One thing to consider: Many notes have been modified through the various loan modification programs. Such changes are not reflected on the original mortgage and such modifications are not recorded. They are not in the public domain. I mention this because many note buyers recognize that they may have to negotiate with the home owner in order to achieve their goals. Many astute note buyers try and work out a deal with the home owner PRIOR to obtaining the note. This is prudent but any arrangements made in such a scenario are probably not legally enforceable. Additionally, the home owner may not mention that the loan has been modified already. This takes away one avenue to get the home owner to cooperate with the note buyer because typically a note buyer offers better terms than they thought the home owner already had. But alas, this may not be true due to loan modification. Accordingly, as part of any note buying strategy, it would be prudent to ask whether a loan has been modified. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Wednesday, June 27, 2012

Fast Short Sale Approval?? Ask if the Servicer is Delegated


Fast Short Sale Approval?? Ask if the Servicer is Delegated. When home owners pay their mortgage payments to Bank of America, Wells Fargo, or any of the other "lenders" these entities are actually servicers for the investor that owns the note. In most cases, even though they lent the money they have subsequently sold the loan to an Investor. At this point, all they do is collect the payment, take a fee for this and then transfer the remaining funds to the holder of the loan...the Investor. The investor could be Fannie Mae, Freddie Mac, Pension funds, Insurance companies etc... When you are requesting a Short Sale the request is almost always made to the Servicer. If the Servicer is delegated then they have the authority to accept the Short sale without asking the investor for approval. Usually this delegation is based on certain parameters. For example: The Investor may tell their Servicer that they can accept any short sale as long as the loss is less than 35%; the Borrower (Seller) is at least 30 days delinquent on their payments, live in the property and the current payment is more than 31% of their gross income. If the Short Sale fits within these parameters then the Servicer can issue the approval. The parameters vary from investor to investor. Here's why it is important to know whether the Servicer is delegated. If the Servicer is able to approve the Short Sale without going to the investor, it saves a lot of time. It can easily cut the Short Sale time for approval in half. An example of why this knowledge is relevant: Recently it was discovered that a Servicer was delegated. There was a purchase price that netted the investor about $1,000 less than what would fit within this particular Servicer's delegation authority. At this point, there are two options: 1. the file could be submitted to the investor for approval, or 2. the purchase price could be raised $1,000 to get the approval quickly. The Buyer was perfectly happy to pay an additional $1000 (presumably in exchange for a faster approval). The Short Sale approval was received the next day. Accordingly, always ask the Servicer if they are delegated for the file you are working. If they are try to see if the Short Sale you have submitted fits their parameters. They may not always tell you but it certainly is worth asking. Knowing the answer can save you a lot of time. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Tuesday, June 26, 2012

Call it What it Is…Quiet Title is Not as Advertised


Call it What it Is…Quiet Title is Not as Advertised. Hardly a day goes by that someone mentions a “Quiet Title” action. From everything that is stated, it appears to be a dream come true for distressed home owners. First of all, what is being marketed as “Quiet Title” is not really an action to quiet title. The term quiet tile refers to legal court matters in which the actual title to a property is disputed among several different claimants. This can happen in a variety of settings, but it is most common in inheritance battles or battles between business partners that each claim title to a property. This type of action does not apply to the vast majority of distressed home owners. What my colleagues in law and I have been successfully been doing is to argue (successfully) in Court that the lender is not the real party n interest since they assigned their rights to the mortgage and/or note. This occurred because the lender (or servicing agent) does not properly “perfect” their interest in the property or they do not otherwise properly assign their interest. This creates a legal challenge to the foreclosure action. It also may be the basis for a separate cause of action to strip away the mortgage and thus make the remaining debt an unsecured obligation. This can be a very valuable asset to distressed home owners, but let’s call it what it really is…it is a defense to a foreclosure action or an independent cause of action to strip away the mortgage from the note. It is not a “Quiet Title” action. To me, this dilutes the value of the various people that are marketing “Quiet Title” actions. If they do not even call it by its proper names, do they really know what they are doing?? Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Monday, May 28, 2012

Borrowers of Bank of America May Have Something to Smile About


Customers of Bank of America may have something to smile about finally as 200,000 delinquent Borrowers to Receive Principal Write-Down Offers. Bank of America is wasting little time in getting one of the most popular terms of its recent settlement with the federal government underway. Bank of America sent out more than 200,000 letters this week to delinquent borrowers who where “thought to be eligible for principal-reducing modifications.” The requirements are simply that the homeowner owe more on the mortgage than the property is worth and have been at least 60 days behind on payments at the end of January 2012. If monthly housing costs turn out to be more than a quarter of the homeowner’s gross household income, then they could qualify for savings of 30 percent according to Bank of America estimates. The lender has been working since March on trial modifications that hold the potential to forgive more than $700 million in mortgage debt. However, the trial modifications require three “timely trial payments” before a modification is eligible to become permanent. This has become customary in the industry anyway, so it is not much of a hurdle. There is one major caveat to this initiative, however: if your loan is serviced by Bank of America but held by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), or the Veterans Administration (VA), then it is not eligible for a write-down under the terms of the foreclosure fraud settlement. That represents a lot of loans, but this is still good news for many borrowers. I have several clients in the program, so we will see what happens. Bank of America committed to forgiving $11 billion in total mortgage debt under that settlement, but if all homeowners who receive these letters – and others like them in Q3 2012 – were to receive permanent loan modifications, the actual number might be closer to $30 billion. We can all believe it when we see it!! Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Another Review of Non Judicial Foreclosure


Another review of Non Judicial Foreclosure. I have written previously that it is time to review the non-judicial foreclosure process in light of the many valid defenses to foreclosure that exist today. The deprivation of one’s home is the greatest personal financial loss that a person can have and how can we allow non-judicial foreclosure when there are so many home owners that have been harmed by their lender? Said another way, why should we allow banks to get away with the massive fraud that they are perpetrating on the public? In judicial foreclosure, the distressed home owner has defenses and counter claims that can be heard as part of the foreclosure process. In a judicial foreclosure state (meaning the matter is heard before a judge), if a promissory note or recorded assignment naming the plaintiff is not attached to the complaint, the defendant can file a response stating the plaintiff has failed to state a claim. This can be followed with a motion called a demurrer to the complaint. Different forms of demurrers can be found in legal form books in most law libraries. In essence the demurrer states that even if everything in the complaint were true, the complaint would lack substance because it fails to set out a copy of the note, and it should therefore be dismissed. Ordinarily there is no need to cite much in the way of statutes or case law other than the authority reciting the necessity of showing the note proving the plaintiff is entitled to relief. However, in non-judicial foreclosure states (such as California) foreclosure is done by a trustee without a court hearing, so the procedure is a bit trickier; but standing to foreclose can still be challenged. If the homeowner has filed for bankruptcy, the proceedings are automatically stayed, requiring the lender to bring a motion for relief from stay before going forward. The debtor can then challenge the lender’s right to the security (the house) by demanding proof of a legal or equitable interest in it. A homeowner facing foreclosure can also get the matter before a court without filing for bankruptcy by filing a complaint and preliminary injunction staying the proceedings pending proof of standing to foreclose. A judge would then have to rule on the merits. A complaint for declaratory relief might also be brought against the trustee, seeking to have its rights declared invalid. Paddy Deighan J.D. Ph.D http;//www.homesavers.pro

Monday, April 30, 2012

Homeowners and Real Estate Agents Paying for Questionable Services

Homeowners and real estate agents are paying money for questionable services. Virtually every day I receive a solicitation for “forensic audits” “quiet title” actions (frequently performed by non-attorneys and this is unquestionably the “unauthorized practice of law” in all 50 states), “mortgage or note trail,” etc. Many of these services provide a legitimate service and they actually produce the results that they promise. The problem is……how will this help a distressed homeowner or real estate agent?? Let’s suppose that an investigation is conducted into all phases of the distressed homeowner’s acquisition and loan of their property. We can further assume that the investigation reveals serious violations of the Truth in lending Act (TILA), Real Estate Settlement and Procedures Act (RESPA), the Home Ownership and Equity Protection Act (HOEPA), the Uniform Commercial Code (UCC) or various state laws. So now what?? First of all, violations such as those stated above are not going to stop a foreclosure sale. They are valid and legitimate Affirmative Defenses or a Counter Claim to a foreclosure action. The point in all of this is that the investigative information provided by many of the firms that perform this type of service is 100% accurate and informative and 100% useless unless the homeowner is filing an Answer or Counter Claim to a foreclosure complaint or the homeowner is willing to file a separate cause of action against the lender. However, the mere filing of a separate lawsuit for such violations will not automatically stop the foreclosure or foreclosure sale process. The only action that automatically stops foreclosure is a bankruptcy petition. Accordingly, in order for a distressed homeowner to achieve value out of a forensic audit or other service indicated above, they must be willing to file a cause of action against the lender or include the alleged violations as part of an Affirmative Defense or Counter Claim. Additionally, the distressed homeowner will have to have sufficient time prior to a foreclosure sale to utilize the information in a productive manner. If they do not have time (six months minimum – prior to sale), the filing of such actions is frequently useless. The distressed homeowner’s rights may not survive after the foreclosure sale as they may lose standing to maintain such an action since they are no longer the owner of the home. Paddy Deighan, Esq http://www.homesavers.pro

Sunday, March 4, 2012

Always Helps to Read the Fine Print

Always helps to read the fine print. This is especially true with government documents. For example, on a HUD-1, we typically read the second page first!! LOL I wanted to point something out that is frequently overlooked in HAFA (Home Affordable Foreclosure Alternative) programs.
The fine print in a HAFA transaction typically reads that if the lender rejects the HAFA short sale offer, the transaction AUTOMATICALLY converts to a Deed in Lieu (DIL)! For this reason, I have sellers execute a HAFA opt out form that is dated at the time of the purchase contract but not tendered unless or until I need it. The terms of a Deed in Lieu are typically not in the best interests of the seller and there will be no financial incentive to move or waiver of deficiency. The timing of the Deed in Lieu is also typically not conducive to a smooth transition for the home owner. It probably also goes without saying that there is no real estate commission paid either. The terms of the DIL are not specified but you can pretty much bet that they are not as favorable (or at least not as unfavorable) for the home owner.
HAFA has helped many home owners move on from a bad situation. For many, it is a tremendous program. However, for others, it has been a nightmare because of the Deed in Lieu. This situation also warrants great care in the submission on the short sale offer because you do not want to get the offer rejected (although a counter offer is fine).
As with many government programs, you have to be careful with proceeding under a HAFA program. The government required that lenders participate in the program but the lenders did manage to get certain concessions. The Deed in Lieu conversion on a rejected short sale in one such concession.

Paddy Deighan Esq
http://www.homesavers.pro

Thursday, March 1, 2012

Time for a Review of Listing Agreements

Time for a Review of listing Agreements
Time for a review of listing agreements. It seems that no one every talks about them and that they are largely taken for granted. However, some recent developments have placed emphasis on them and we should discuss the issues that relate to them.
Listing agreements form the basis of a relationship between the home owner and a real estate agent. For years, they have contained substantially the same information. However, I have noticed a marked increase in the variance of the terms of such agreements as well as a tendency to forget certain aspects of them.
Recently, I have encountered listing agreements with TWO year terms. No one should want that. If the home has not sold in a reasonable period of time, the home owner will want to work with someone else. Similarly, if the agent is unable to get an offer, they may not want to work with the owner either because the disconnect will probably be over the home owner’s reluctance to lower the price. We all know that price is the issue. If priced appropriately, almost anything will sell.
Please make the term within reasonable industry guidelines. Six months is certainly acceptable, and 12 months seems too long to me.
I have also encountered provisions which enable the agent to capture a commission TWO years after an introduction of a potential buyer. This seems too long as most agreements call for 6-12 months as a “look back” period.
Additionally, I have noticed commission rates creeping up. Lately, I have noticed compensation percentages of 8-10%. The norm is 6% and many lenders are unwilling to pay even that in a short sale. Home owners will be very angry when they discover that the norm is 5% or 6% and you signed them to a higher fee. Sometimes the higher fee is justified…so state that in the agreement.
Finally, I want to illustrate and interesting aspect of Listing Agreements. In many jurisdictions, they are INSTANTLY binding. There is no attorney review; there is no three day right to rescind or cooling off period. This is unlike a sales contract. It is easier to terminate a sales contract than a listing agreement. I personally feel that there should be strong warnings on the agreement to the home owner about this. However, it would be prudent to explain this to the home owner since doing so make avert negative feelings in the future.
Paddy Deighan
http://www.homesavers.pro

Saturday, January 21, 2012

3rd Party Short Sale negotiations, Part III

3rd Party Short Sale negotiations, Part III. Today, I wanted to discuss the reasons in favor of utilizing in- house 3rd party negotiators. The first reason for an in-house negotiator is that the agent already has established a relationship with the seller and there is a high level of trust. The seller will be comfortable discussing finances with the agent. The agent will also be diligent in pursuit of the approval since they are a professional and their compensation will dependent upon a successful outcome.
Agents also have the experience and depth of knowledge to complete a successful approval. Keeping the negotiations in-house also simplifies the process since there is not another person or firm engaged in the process. This simplifies the process and avoids the all-to-frequent occurrence of “too many chefs in the kitchen”. I have been involved in many short sales during the last six months in which too many people get involved and call the lender and title. Title in particular will be disturbed by too many calls and people involved in the process. The situation was analogous to the telephone game that we played as a child. As the message was whispered from pupil to pupil, the message is completely distorted. The more individuals involved in the short sale negotiation (even if they are from the same firm, broker, etc.), the higher the possibility that some information may be distorted.
All in all, I do not believe that there is a definite answer to which method is best. There are great 3rd party negotiators and there are no so great negotiators. This is also true of agent negotiators too. So, there is no definitive answer. Even though there is no definitive answer, the issue is a very important one. The success (or failure) of a short sale negotiation is the single biggest issue in obtaining approval. Such an important decision must be made with great care.

Padraic Deighan
http://www.homesavers.pro

Thursday, January 19, 2012

3rd party Negotiations in Short Sales, Part 2

Yesterday, I wrote about whether it is prudent to utilize a 3rd party negotiating firm or perform the services in-house. I presented two legal considerations for the utilization of a 3rd party negotiation firm. Today, I will discuss the practical reasons why it may be prudent to employ a 3td party negotiating firm.
According to NAR, the average short sale negotiation takes 27 hours to consummate. I maintain that this number is based on data that is now outdated. I believe that it takes at least 40 hours on average to complete a short sale. In any event, it takes a lot of time and effort to get a short sale approved (or denied). It is arguably not the best use of an agent’s time to negotiate the short sale. The time can be utilized in better business development or direct client services. The compensation is not commensurate with the amount of time spent (if there is additional compensation at all).
One of the other troublesome aspects of (listing) agents performing the short sale negotiations is that most buyers want the lowest approvable price. They are bidding on a short sale because they either truly love a particular home or they are shopping for the best price. It is in the agent’s financial best interest to obtain the highest approvable price because it will yield higher compensation for them and make the approval process easier for them. It is not difficult to get a short sale approved when the offer is close to fair market value.
A point can be made that the listing agent is in a difficult position with respect to their duty to their client. Their duty to the client in a short sale is to get the home approved and closed. The easiest way to ensure that this happens is to obtain the lowest approvable price because this will increase the likelihood of approval and close. It is a bit counter-intuitive that the best price may be the lowest price, but short sales are a different dynamic. This is especially true in the case of investor-buyers.
Tomorrow, I will present the considerations in favor of in-house negotiations.
Paddy Deighan

http://www.homesavers.pro

3rd Party Short Sale Negotiation or In-House??

3rd Party Short Sale Negotiation or In-House?? This has certainly become a contemptuous issue…so much so that it is almost political!! LOL I participated in a blog discussion about this last week and the opinions were strong on both sides. Soooo, I thought that we could have a discussion on here to view each other’s opinions. I will present the pros and cons and hopefully others will comment so that we can have a discussion.
I personally feel that neither the listing agent nor buyer agent should negotiate the short sale. There are two legal reasons and two practical reasons for this. I will discuss the legal issues today and the practical issues tomorrow.
The first legal reason is that despite what many have heard, lenders prefer negotiations from a 3rd party. Think about this logically. Would you rather see an offer and negotiations (as a lender) from someone which has a vested interest in the outcome negotiate the sale, or a neutral third party. I work for lenders and I can tell you that they prefer the third party negotiations. I work with investors and home owners on foreclosure defense and my experience is that many third party firms are really good at this and utilizing them strips all emotion and appearance of impropriety from the transaction. Virtually all of the fraud that we have read about comes from too many people with too much financial interest in a property – all working together in a fraudulent manner.
The second legal reason is that negotiating a short sale is outside the scope of your real estate license. Few attorneys or regulators will argue with this. One of the reasons is that when licensure was established in all states, short sales were unheard of and not even considered. The issue was not part of the established guidelines. Perhaps this will change, but for now, it is outside the scope of your license.
One of the problems with this is that your Errors and Omissions policies can void coverage!! Virtually all such policies contain provision that enable a carrier to deny coverage. There are catch-all phrases such as complying with all laws, rules and regulations and if the carrier can illustrate that you acted outside of your licensure, you will be personally liable for the claim defense and any loss associated with it. This is happening today!! I am in Orlando on a foreclosure defense hearing for a client and I saw an ad on television last night that stated what I have said is coming for years…”did you lose your home in a foreclosure auction?? Did you have a real estate professional negotiate your short sale?? You may have a claim for damages.”
Also, realize that your broker will not be pleased either as he or she will be a named defendant as well. The irony is that their liability insurance coverage may protect them but you may have no coverage as discussed above.

Paddy Deighan
http://www.homesavers.pro