Treasury Releases Guidance on Short Sales
Today, the US Treasury announced new guidelines to simplify the procedure for completing short sales, an increasingly common term used when lenders agree to allow the borrower to sell the house for less than is owed on the property.
These guidelines are intended to address the issues that have prevented short sales, such as financial incentives or deed in lieu transactions, and setting time limits within which the bank must respond to a short sale offer. These incentives include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders.
Borrowers would receive $1,500 in relocation expenses. Mortgage servicers have ten days to approve or deny a request for a short sale. When the sale is completed, the lender must fully release the borrower from the debt.
It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.
In one of the most contentious issues that were seen as holding up negotiations between lenders, the Treasury’s guidance caps the total proceeds to subordinate lien holders (second and third mortgages or other liens after the first loan) at $3,000.
At this point, I think these are guidelines and not requirements. Stay tuned!
STOP FORECLOSURE REALITY RADIO- With Christine Springer
TheUrbanSurvivalistS (Online Radio Show) had Christine Springer as a Special Guest to discuss Foreclosure defense and MERS. The host of the Show is Shane Richardson, a real quality guy. If you need assistance please reach out to Christine Springer at: Christine (at) DesertEdgeLegal (dot) com
Part One:
Part Two:
Global Gold Demand Up U.S. Dollar Down
China the world’s largest gold producer is set to break records for both production and consumption of gold. China over took South Africa, in 2007, to become the World’s largest producer of gold.
“Gold demand may be more than 450 metric tons compared with 395.6 tons in 2008, and output may climb to 310 tons, compared with 282 tons a year earlier, Zhang Yongtao, deputy secretary- general of the association, said at a conference in Kunming yesterday.”
Source: Bloomberg News
Gold is now flirting with a $1,200 an ounce (11-26-09). The continued weak U.S. Dollar could push a $1,500 an ounce sooner than later.
“The inflation concern this year has boosted the Chinese consumer demand for things like property, autos and gold…” This demand for hard goods vs. U.S. Dollar will most likely push China past India as the number one consumer of gold.
Read the full Story here:
Also, 60 Minutes did a story on Gold production from Congo and its tie in with the bloody conflict in that region. Story and video here:
Jane’s Story
Jane’s Story
This is a story about a woman named Jane. She could be your next door neighbor.
Her story is just like millions of other Americans. Jane had it all: a great job in technology with a big company, two adopted children and a home in a suburban town. Life was good and Jane thought she was set for life.
Jane decided to move to a nearby town with a better school district where her children could get a better education. Jane decided to buy a house in that neighboring school district in 2007, thinking she could sell her house in the old school district pretty quick.
Of course, the originator of her new loan, Quicken Loans, had no problem loaning her the money to buy her new home.
“You want a loan for a second house? No problem!”
So Jane closed on the loan for new house and moved in just in time for her kids to start school in the new school district.
Shortly after that, the economy tanked and Jane was laid off from work, going from a six figure income to the unemployment line. Then, she got sick and discovered that she could not return to work, because of the economy and her illness. She applied for Social Security Disability due to her health problems. Things got so bad that she tried to return to work, but the job market was non-existent, even with her skills in the technology field.
To make matters worse, the real estate market had collapsed, and she couldn’t sell the first home that she had moved out of.
Jane was a responsible citizen and always paid her bills on time. However, she eventually burned through her entire life savings to stay afloat, making the payments on her first home. Eventually, she ran out of money. She tried to work out a loan modification, but despite her best efforts, her pretender lender and servicer on the first house, Bank of America, refused to work out a loan modification on her home.
On October 28, 2009, the servicer on her loan, BAC Home Loans, filed a lawsuit against her to take her first home. At first, Jane was resigned to the fact that she would be unable to keep the home. She felt terrible that she couldn’t pay for the home, even though she’d done everything possible to sell the home and work out an arrangement to modify the loan.
Then, Jane decided to do some research to try to save her home. The first thing she did was look at the court papers she’d been served with. She ran a Google search on the attorney’s office representing BAC Home Loans, the servicer of her loan and Plaintiff in the foreclosure action, which quickly revealed that the law firm was essentially a foreclosure mill, churning out one document after another to foreclose on unsuspecting homeowners.
Jane noticed that there was an Assignment of her mortgage from the originator, Quicken Loans, to BAC Home Loans Servicing and MERS attached to the Complaint to Foreclose Mortgage. The recording date was October 19, 2009, just nine days before they filed the lawsuit against her.
Jane thought, “Hmmm….that’s odd. This assignment was filed just nine days before they filed a lawsuit against me to foreclose on my home. And who is MERS and what are they doing on the paperwork related to my home loan?
Jane also noticed that the assignment was signed by someone named William McAlister, who executed the assignment as “Authorized Signator” on behalf of MERS.
Jane looked at MERS’ corporate records for the State of Delaware and did not see anyone named William McAlister listed as an officer of the corporation. Jane also looked at MERS’ website and didn’t see anything about him there either.
Jane stumbled across some information on the internet that said MERS is essentially a privatized county recorder’s office that no one has access to except for its members. MERS has “Authorized Signators” who are employees of its member institutions, located throughout the country, and these “Authorized Signators” routinely execute Assignments even though they aren’t employed by MERS. This is to make the foreclosure process easier for them. They can execute the Assignment and have it recorded just days before a foreclosure lawsuit is filed or a trustee’s sale takes place.
On a hunch, Jane dialed the number on the lawsuit papers for the attorney’s office who was representing BAC Home Loans. She did a search by name in the law firm telephone directory, and guess who was listed? Mr. McAlister!
“Wait a minute,” thought Jane. “How can someone assign a mortgage for a company they don’t even work for, just days before they file a lawsuit to take my home?”
The answer is: They do it all the time BECAUSE HOMEOWNERS DON’T REALIZE THIS IS WHAT’S GOING ON!
Pay attention, folks! This is what it looks like!
The crooks trying to take your home, in this case Bank of America, MERS and their attorneys are using fraud and sleight of hand by recording an assignment of your mortgage shortly before they file a lawsuit against your or notice up a trustee’s sale.
They do it this way because it’s the only way they can show they have standing to foreclose. MERS never owns the note, and because it’s just a database, they never assign the mortgage until they foreclose on the property.
Why is this wrong? Because it completely circumvents the proper laws that govern how to document the chain of assignment and ownership.
These laws have existed for decades in this country. Before the lending industry created MERS and the securitization scheme, the owner of the Note would properly record the chain of ownership at the county recorder’s office where the property is located. That’s important, because as we’ve explained plenty of times, MERS’ entire operation is ILLEGAL.
Most homeowners just roll over and let them take their homes because they’ve never figured out how to put the pieces together.
I’m telling you that this is what’s going on, it’s fraud, and if you don’t do something about it, these crooks who LIED to you about your home loans will take your house because most people have no idea how bad the fraud is. Even the judge doesn’t have a clue about what’s really going on unless you explain it to the court.
If you’re in a judicial foreclosure state, fighting back is much easier to do. The plaintiff has already sued you, so there’s a legal action already open.
If you’re served, file an answer within thirty days and raise these issues. People are getting their foreclosures dismissed across the country because of this fraud.
Most judges don’t know anything about what’s really going on. If you keep it simple, hopefully the judge will get it. During the foreclosure proceedings, ask the judge to make the plaintiff explain what they did and how the mortgage got assigned to MERS in the first place.
So, attend all your court hearings, stick to the real issues, which are: 1) that the real lender isn’t a party to the lawsuit, 2) an assignment executed by someone who is not even employed by the entity trying to foreclose just a week before the foreclosure sale is initiated isn’t enough to prove standing to foreclose, 3) you know you owe someone some money, but you believe that the person who you owe the money to isn’t the party who is attempting to foreclose, 4) you want to make sure that the proper party that you owe the money to doesn’t sue you later after the plaintiff forecloses.
Note: Do not tell the judge you’re trying to get your home free and clear! This just makes you look like you’re trying to scheme the system, and will distract everyone from the real issue: that the Plaintiff is the party who is lying and that you want to make sure that the party foreclosing is the party who you actually owe the debt to.
Hopefully, the judge will get it. I say hopefully because this isn’t always the case.
However, in many cases, the foreclosure will be stalled because the plaintiff’s attorney’s office will not be able to explain to the court how the mortgage got assigned to the servicer or MERS in the first place.
If they did explain it, they would essentially be admitting that they participated in a massive scheme to defraud Americans by securitizing their home loans.
If the foreclosure is dismissed, they cannot take your home.
In some cases, the foreclosure sale is never re-filed and the borrowers continue to live in their homes without making a mortgage payment.
Depending on your state’s laws, after a certain period of time, the homeowner can file a quiet title action. For example, in Florida, after five years, the borrower can file a quiet title action.
A quiet title action is basically a lawsuit that asks a judge to “quiet title” to wipe away the mortgage debt, leaving the homeowner to own their home free and clear.
I don’t know what the statutes say in various states, but it will be interesting to see how this all unfolds.
This is how homeowners are winning their homes free and clear.
“Trial Period” Loan Modifications are Just Another Scam
I’ve been hearing rumblings lately about how many people are easily getting into “trial period” loan modifications and the occasional articles about it. My contact at a California law firm tells me that it’s easy to get qualified for a trial loan modification under the HAMP program. This is a good thing initially, but what happens when your trial period is up?
Apparently nothing.
I’ve never thought loan modifications were a good idea. They are a band aid on a much bigger problem: the massive scam that has been perpetrated on Americans through securitization and all the lies the banking industry had to tell in order to make the entire scheme work in their favor.
For awhile, loan modifications were the only option a lot of homeowners had because there was not a lot of information available to them about how to fight foreclosure, or lawyers who could intelligently represent them. Our elected officials still lag behind the rest of us in understanding what’s going on, but that’s not surprising. And I know that a lot of you just wanted a modification with a house payment you can afford, and I understand that too.
The problem is that loan modifications aren’t working. As I’ve mentioned before, HAMP doesn’t have any legal teeth, and since the government didn’t attach strings to the bailout money they received, the banks don’t have a legal duty to modify anything unless it’s a federally backed mortgage.
And now, people are in trial period modifications, making payments as required, yet the lenders aren’t permanently modifying their loans.
Trial period loan modifications are just another scam on us by our government and the lending industry to get as much money out of us now that they can’t make any more loans. They have to figure out a way to keep those massive profits coming.
Don’t be fooled, America: this is just another invention by the banks to scam you.
That’s why it’s so easy to qualify! They don’t do any underwriting before allowing you to get into the program. Isn’t bad underwriting part of the reason we got into this mess in the first place?
They know you’ll keep paying to save your home, and so far, it’s working. They’ll keep you in the trial period as long as they can to keep taking your money. When you get tired of paying into a trial loan mod and stop paying on your house, they’ll foreclose on you and you’ll kick yourself for not keeping your money in your pocket for something they were just going to foreclose on anyway.
I just can’t see how this mess isn’t going to turn into one massive pile of litigation. If our lawmakers are going to tie the hands of homeowners to keep them from getting legal representation for loan modifications or create laws that don’t force the banks to modify loans or respond to a short sale offer, what else can they do besides file a lawsuit?
Video: How to Spot Predatory Lending in Mortgage Documents
Should More Homeowners Walk Away?
I read a very interesting article today by Josh Brodesky of the Arizona Daily Star. He cites a study by a University of Arizona law professor named Brent White, who recently wrote a paper that concluded that it was in most people’s best interest to walk away from their homes.
As the article points out, it wasn’t that a professor was telling people to just walk away from their homes. He had a bigger point to make: why are the banks being bailed out for making bad loans, yet homeowners are still expected to hold up their end of the deals? He argues that the government, real estate agents and mortgage brokers, among other players in the lending game, were encouraging people to buy a home because it was a good investment. Yet now that the market has collapsed, the homeowners are left holding the bag.
A friend of mine who has filed a predatory lending lawsuit in federal court says that the part of this lending mess that makes him the most angry is how the bank, MERS, and the rest of the defendants all want to collect the money due to them under the loan, yet none of them want to accept responsibility in their part of the mess of his loan and the overall mortgage problem in this country. They all want the money; yet nobody wants to take responsibility for the crap loan he was sold without his knowledge. As he put it, if he had known that he was participating in an illegal scheme, he would have just said no.
Similar to the conclusion in Dr. White’s paper, the housing mess has fallen squarely on the backs of the middle class, and the government and the banking industry are standing around, passing the buck, and doing nothing meaningful to help homeowners.
This attitude is further reflected in the way the loan modification process unfolds. If you’ve tried to negotiate a loan modification, it’s a long, drawn out process that leaves the homeowner really angry. The government’s HAMP program has no teeth either – homeowners are suing the Treasury and the lenders for not following the guidelines, yet judges have repeatedly found that a bank has no duty to modify a loan under HAMP.
And how about getting a short sale approved? I know a handful of people who waited months to get a short sale approved. I know there are some of you out there who have had luck with short sales and modifications, but you are in the minority. I know because I hear from people daily asking me for help.
I’m personally conflicted on whether the government should intervene in a meaningful way. I’m politically and socially liberal but am so angry at how our government is handling this mess that I can’t call myself a Democrat anymore. I think they are going to get their rear ends handed to them in the mid-term elections in 2010 and in the next presidential election.
I don’t think the government should hand every homeowner a wad of cash, but would it be too much to ask that our elected officials pass some laws, since that’s what they are paid to do, that make it easier for a homeowner to get a loan modification or to make the bank to respond to a short sale offer within a reasonable period of time? How about relaxing the deficiency statutes in states that have them so that people don’t have to file bankruptcy to recover from a financial disaster when they lose their home?
If we’re not going to put Geithner in jail for his role in bringing on this economic crisis, surely he can figure out a way to make it easier for a homeowner to get a loan modification under Treasury guidelines!
Over the summer I sent a letter to President Obama expressing my anger at how his administration has responded to the housing mess. Guess what I got back? A form letter from him recommending the administration’s HAMP program!
Now, to be clear, I was not expecting a personal response. However, I certainly didn’t expect a letter that makes it clear that he’s still drinking the HAMP kool-aid.
I will probably get a lot of people who unfollow me after reading this post, but let’s be clear: what he’s doing on this issue isn’t working and it doesn’t matter which party he belongs to. I voted for Obama, and he hasn’t done ANYTHING meaningful to help homeowners. It really doesn’t matter which party he belongs to — this housing crisis isn’t a one party problem. We should all be holding the president responsible for their failure to act regardless of which party he or she belonged to.
With fewer options, maybe more people need to walk away and let the market start to crash again – and maybe the banks and our elected officials will take notice.
Wall Street is paying out record bonuses this year while Main Street struggles to keep a roof over their heads and pay for necessities. I’m personally tired of watching these greedy bankers get paid out millions in bonuses when the average person is struggling.
I wish I could tell you who to complain to in our government, but who’s listening to anything the people have to say? No one, as far as I can tell.
There is a serious leadership crisis in America. It’s becoming clear to me that it’s up to us, American citizens, to find a way out of this mess ourselves, because our government is clueless.
What can you do to help your fellow Americans?
Want to Short Sell Your Home Faster?
Much like the discussion around loan modifications, the discussion on short sales has matured over the last several months and unfortunately, it’s not getting much better.
In Arizona, short sales are apparently being approved by the banks with some regularity. This isn’t the case in California – a friend of mine who invests in short sales tells me he’s had some properties with short sale offers at the bank that have taken months for the bank to approve the deal.
I’m not going to get into the reasons why banks don’t approve these short sales – the point is, they apparently don’t have much of an incentive to do so unless you give them a few reasons to speed up the process.
I’ve also heard that many real estate brokers aren’t allowing their agents to negotiate short sales on behalf of clients because of liability issues. My thought is that finding a real estate agent to do this will become, if it hasn’t already, impossible especially with SB 94 in California and Arizona’s mortgage originator license laws, and because of the sheer frustration in dealing with these banks.
A creative way to do this is to use a loan audit to accelerate a short sale. Essentially, a homeowner gets a loan audit done and sends a letter to the lender letting them know that they’ve become aware of TILA/RESPA violations and could file a lawsuit if they so chose. However, given that the borrower really just wants to get rid of the house, they would prefer to short sell the home, and it’s really in the bank’s best interest to approve the sale.
In this scenario, the homeowner has several options: file bankruptcy, walk away or file a lawsuit. None of these three options look good for the bank. When it’s presented this way, it seems like it would get the bank’s attention and approve a reasonable short sale offer.
I know of a few attorneys who are using this technique to accelerate a short sale and getting them approved within thirty to sixty days of making the offer.
Got questions? Please comment below or send me an e-mail at Christine @ DesertEdgeLegal.com.
Video: Yield Spread Premium and Your Mortgage
This video generated some controversy on YouTube!
