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