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

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

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

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

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

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

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 . 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

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 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

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

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

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

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

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

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

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