First Published Thursday, 24 June 2010 09:21 pm
Copyright © 2010 Dow Jones & Company, Inc.

(Updates with comments from Treasury official.)

By Darrell A. Hughes

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Mortgage servicers on Thursday told U.S. House lawmakers that consecutive changes to the U.S. Treasury Department’s foreclosure prevention program have made it increasingly difficult to keep distressed borrowers in their homes.

Real-estate financial services consultant Edward Pinto described the Home Affordable Modification Program in two words: “numbing complexity.”

“At last count, HAMP had 800 requirements and servicers are expected to certify compliance,” he said. “With ever changing regulations, a constant need to re-evaluate past decisions in light of new regulations, and multiple appeals, it is no wonder that the HAMP pipeline became clogged through no substantial fault of servicers.”

HAMP was created to help financially strained borrowers avoid foreclosure, but the program’s lackluster performance has been mired in controversy, as some lawmakers are questioning whether the program should remain ongoing.

On Thursday, members of the House Oversight and Government Reform Committee held the second of two hearings to assess HAMP’s progress. This latest hearing primarily focused on what servicers are doing to ensure borrowers receive adequate relief.

Pinto, who served as Fannie Mae’s chief credit officer from 1987-1989, testified before the committee, along with J.P. Morgan Chase & Co.’s (JPM) head of home lending, David Lowman, and CitiMortgage Chief Executive Sanjiv Das. CitiMortgage is a unit of Citigroup Inc. (C). Bank of America (BAC) executive Barbara Desoer and Wells Fargo & Co. (WFC) executive Michael Heid were among others who testified.

According to Treasury’s most recent data, nearly one out of four homeowners offered help under the program have fallen out of HAMP. About 1.2 million trial modifications had been started under the plan and about 281,000 homeowners had been dropped by the end of April.

Many borrowers were expecting a mortgage modification when they ultimately didn’t qualify, Wells Fargo’s Heid said, adding that a lack of income documentation and failure to make all of the trial modification payments were the primary reasons some borrowers failed to receive a permanent modification.

Heid echoed the frustration expressed by Pinto and provided lawmakers with a “partial list” of more than 20 changes to the program since its inception in February 2009. “This has contributed to a level of complexity that has been difficult for customers to understand and for services to communicate and execute,” he said.

At the first hearing in March, Herbert Allison, Treasury’s assistant secretary for financial stability, acknowledged the program has had issues, including problems at some mortgage servicers, the difficulty for some borrowers to provide needed documentation, and “a process that has proven more complex administratively than originally conceived.”

Allison, responding to criticism from servicers, said Treasury took “swift and unprecedented action” in creating HAMP, which called for servicers to be recruited, policies and guidance to be developed; and that’s in addition to “mounting a massive effort to reach homeowners.”

Allison defended the administration’s actions, saying “there was little precedent on how to design a modification program of the scale required and limited data on which to base estimates of potential performance.” He added, “There was no existing infrastructure in the mortgage finance market or the government to carry out a national modification program at a loan level.”

Assessing HAMP’s impact on the industry, Allison said the program has changed the fundamentals of servicer duties from “collecting payments and processing foreclosures, to one that provides payment assistance to qualified homeowners.”

Servicers who testifed before lawmakers made several positive remarks about the program providing relief to many Americans. Still, they remain concerned that HAMP fails to address the financial circumstances and hardships of all borrowers.

The mortgage servicers told lawmakers that HAMP isn’t the only option, and each of them outlined their respective plans to assist borrowers with in-house initiatives that could be tailored to the needs of specific borrowers.

Pinto projected that the overall success of HAMP is likely to negatively impacted by high re-default rates. Pinto’s permanent mortgage re-default rate forecast is ten percentage points below the 50% that’s been projected by other mortgage sector observers.

Pinto based his projection on two statistics: most HAMP permanent modifications being made on loans with mortgage balances in excess of current home values and borrowers that received a permanent modification through May 2010 having a median total debt-to-income ratio of 64%.

“This leaves little money for food, clothing, taxes and other expenses,” Pinto said. “As a result, these borrowers are a worn-out furnace or roof replacement away from re-default.”

-By Darrell A. Hughes, Dow Jones Newswires; 202-862-6684; darrell.hughes@dowjones.com

(Michael R. Crittenden and James R. Hagerty contributed to this story.)

This is exactly what is going on with these Scams. Just as in this post I made prior this homeowner tried to do all they can to work with their lender to get help, modify and pay them current market value. Instead they foreclosed.

In this case they owed about 300K, according to tax records LPS, yes Lender Processing Services inc. came in and purchased it for $74,100 at the auction. Now the  home is pending sale for $59K. Sold it for less in a matter of a month??? Okkkaaaay?

How does this make ANY kind of sense? I can only see it making FRAUD sense…these homeowners vouch not to give up contacted the listing agent about the scam as well as mentioning Law Offices of David J. Stern the foreclosing firm for the lender. This does not make ANY sense what so ever and we need to continue exposing this fraud!

David Lazarus June 24, 2010 | 10:56 pm Los Angeles Times

Consumer columnist David Lazarus says banks should end their one-size-fits-all policies and help more homeowners who are in foreclosure.

Take the Fontana woman he writes about In his latest column. She wasn’t obligated to meet the mortgage obligations her husband left when he was killed in a car accident. But she wanted to stay in the home and tried negotiating lower payments with the bank.

Should the bank do more to  help her?

(Updates with Treasury official Herb Allison’s comments)

By Corbett B. Daly

WASHINGTON June 24 (Reuters) – The four largest mortgage lenders in the United States were grilled on Capitol Hill on Thursday about the limited number of home loans they have modified for homeowners facing foreclosure.

“I just wonder how hard you are really trying?” Rep. Dennis Kucinich asked David Lowman, chief executive of home lending at JPMorgan Chase & Co (JPM.N).

Lowman said JP Morgan had been understaffed to handle the demand from struggling homeowners seeking to restructure payments, though they have added staff in recent months.

“Why are you denying loan modifications to my constituents?” Kucinich, an Ohio Democrat, asked Lowman, calling JP Morgan Chase uncooperative with borrowers.

Ohio has been one of the hardest-hit states in the U.S. home foreclosure crisis.

The House Oversight and Government Reform Committee also summoned chief executives of the home lending units of Bank of America Corp (BAC.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) to answer questions about their loan modification practices.

Also at the witness table was American Home Mortgage Servicing Inc, which collects loan payments but does not make or hold loans. AHMSI is known in the industry as a monoline servicer, while the other four firms both make and service loans.

In 2009, the Obama administration announced the $75 billion Home Affordable Modification Program, known as HAMP, which provides incentives to loan servicers to modify loans for troubled borrowers. HAMP has been widely criticized as ineffective. Less than $200 million has been spent to date.

The Treasury Department said on Monday more people had been kicked out of trial loan modifications than had received permanent modifications.

About 150,000 borrowers who could not prove their income or keep up with the new payments had their modifications canceled in May, bringing the total number of cancellations to about 430,000, or more than one-third of the 1.24 million trial modifications started since the program’s inception.

HAMP NOT THE ONLY SOLUTION

The number of borrowers who have received a permanent loan modification rose to 340,459 in May — about 11 percent of 3.2 million HAMP eligible loans.

“This is not just about HAMP,” the panel’s chairman, Edolphus Towns, said, referring to the modification program.

“I think the mortgage banking industry has got to recognize that HAMP cannot be the only solution to the mortgage foreclosure crisis,” the New York Democrat told the financial executives.

Herb Allison, assistant Treasury secretary for financial stability, noted that there was little precedent on how to design a large national program and the administration has now begun to put pressure on servicers to increase modifications by publicly releasing data on their performance.

“The HAMP program fundamentally changed the servicer industry from one based on collecting payments and processing foreclosures, to one that provides payment assistance to qualified homeowners,” Allison said in a prepared statement released after the hearing.

All of the executives said they have made more loan modifications than just HAMP modifications.

JP Morgan Chase said it has completed about 173,000 permanent modifications, including roughly 47,500 HAMP loans, since the beginning of 2009.

Bank of America said it has completed more than 630,000 loan modifications since January 2008, including roughly 70,000 HAMP loans.

Rep. Steve Driehaus, an Ohio Democrat, urged the executives to stop foreclosure proceedings while they negotiated new loan terms with borrowers.

“We are sending a very mixed message when we are proceeding with foreclosure while negotiating” a loan modification, Driehaus said.

Citi and Wells Fargo said they do stop foreclosure proceedings as soon as loan repayment talks begin. Bank of America, JP Morgan Chase and AHMSI said they continue to pursue foreclosures on a dual track strategy, though foreclosure remains an option of last resort. (Reporting by Corbett B. Daly; Editing by Jan Paschal and Jeffrey Benkoe)

Lea Krivinskas Shepard
Loyola University Chicago School of Law

North Carolina Law Review, Vol. 89, 2010

Abstract:
This Article explores a significant market-based threat to the Truth in Lending Act’s right of rescission, a remedy that attempts to deter lender overreaching and fraud during one of the most complex financial transactions of a borrower’s lifetime. The depressed housing market has substantially impaired many borrowers’ ability to fulfill their responsibilities in rescission’s unwinding process: restoring the lender to the status quo ante by repaying the net loan proceeds of the mortgage transaction.

When a consumer is unable to finance her tender obligation, non-bankruptcy judges’ overwhelming response has been to protect the lender and deny rescission to the borrower. This Article argues that these courts, to fulfill TILA’s consumer-protective function, must take a different approach. Non-bankruptcy courts, which handle the vast majority of TILA rescission actions, should use their equitable authority under TILA to modify borrowers’ repayment obligations by allowing borrowers to tender in installments, over a period of years, and at reasonable interest rates. This approach both averts foreclosures that harm borrowers, lenders, and neighborhoods and ensures that TILA’s consumer-protective mandate will remain viable even in a depressed housing market.

This Article also considers an important aspect of TILA’s rescission remedy that, while tacitly acknowledged by courts and commentators, has been insufficiently explored in the academic literature. There exists an uneasy tension between the goal of the Truth in Lending Act – informing consumers of the financial consequences of their mortgage loan transactions – and borrowers’ frequent use of TILA rescission: defending their homes from foreclosure actions that the lender’s disclosure violation may or may not have precipitated. The Article concludes that TILA rescission actions, albeit a blunt instrument in the consumer protection setting, must be preserved, particularly during periods of economic calamity, since it remains a singular source of borrower leverage in a legal and economic climate that remains generally inhospitable to homeowners.

Accepted Paper Series

[ipaper docId=33526818 access_key=key-29yw7fc4p6kdwaelulz0 height=600 width=600 /]

Once more they are going after the WRONG PARTY and they KNOW IT!

Fannie and Freddie were responsible for so much of this meltdown – and now we have to listen to their ranting and thuggery.  Is there a hole deep enough for these guys?

They are so angry because their precious RMBS trusts are being exposed as schemes to loot pension funds, and that will make it harder to sell the next batch of poison they are cooking up.

Taxpayer-Owned Fannie Mae Attacks Struggling Homeowners

Shahien Nasiripour

First Posted: 06-23-10 11:03 PM   |   Updated: 06-23-10 11:28 PM

Taxpayer-owned mortgage giant Fannie Mae is targeting families by going after struggling homeowners who strategically default on their mortgage, the firm announced Wednesday.

A default is considered strategic when homeowners have the capacity to pay, yet choose to walk away from their mortgage. The trigger, researchers say, is negative equity: When the value of a home is less than what the lender is owed on it, borrowers are more likely to strategically default.

About 11.3 million homeowners with a mortgage, or 24 percent, owe more on their mortgage than the home is worth, according to real estate research firm CoreLogic. Another 2.3 million have less than 5 percent equity in their homes. All told, about 29 percent of all homeowners with a mortgage are either underwater or very close to it. The firm estimates that the typical underwater homeowner won’t return to positive equity until late 2015 or early 2016.

And Fannie Mae, an arm of the federal government and a big part of the Obama administration’s housing policy, wants to make sure that if struggling families walk away, they suffer for it.

Homeowners who strategically default or did not work “in good faith” to avert foreclosure through other means will be ineligible for new Fannie Mae-backed mortgages for seven years. The firm said it will also pursue homeowners in court, seeking so-called “deficiency judgments” to recoup outstanding debt by seizing borrowers’ other assets. Thirty-nine states do not limit the ability of lenders to recover what they’re owed.

Fannie Mae said that next month the firm “will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.”

“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting,” Terence Edwards, Fannie’s executive vice president for credit portfolio management, said in a statement.

Strategic defaults among homeowners have been on the rise. More than a million homeowners went that route last year, nearly double the amount in 2008 and more than four times the level in 2007, according to a recent analysis by the credit reporting company Experian and Oliver Wyman, a management consulting firm. A study by a team of academics from the University of Chicago and Northwestern University estimated that nearly a third of home mortgage defaults in March were strategic. The deeper underwater homeowners are, the more likely they are to walk away from their mortgage, the researchers noted.

Earlier this month, the House of Representatives passed a bill barring strategic defaulters from obtaining home mortgages backed by the Federal Housing Administration. The agency guarantees nearly one in four new mortgages.

“I can’t help but notice that every group now frantically calling for tough penalties for homeowners who walk away was virulently opposed to judicial modification of mortgages in bankruptcy,” Rep. Brad Miller, a North Carolina Democrat, told the Huffington Post.

Bank of America and Citigroup, the nation’s largest and third-largest banks by assets, respectively, support changing existing law to give federal judges the power to modify mortgages in bankruptcy, otherwise known as “cramdown.” Proponents argue that if homeowners were able to modify their mortgages in bankruptcy, the number of strategic defaults would substantially decrease, if not nosedive.

About 3 million homes will receive foreclosure notices this year, real estate research firm RealtyTrac estimates. More than 1 million will be repossessed by lenders, adding to the nearly 2.2 million homes that lenders took over from 2007 to 2009.

Fannie Mae and its sister firm Freddie Mac guarantee nearly three out of every four new mortgages, according to leading industry publication Inside Mortgage Finance. The two firms control about $5.5 trillion in home mortgages, according to their federal regulator. That’s nearly half of all outstanding mortgage debt in the U.S. Their share of the mortgage market is nearly double what it was 20 years ago.

Because Fannie controls such a large portion of new mortgage issuance, the freezing out of homeowners for seven years could prove devastating.

Brent T. White, a law professor at the University of Arizona, recently wrote in an academic paper that most homeowners can recover from a foreclosure within two years. In fact, defaulting on a mortgage is not as bad as most people think, White notes.

“Lenders are unlikely to pursue a deficiency judgment even in recourse states because it is economically inefficient to do so; there is no tax liability on ‘forgiven portions’ of home mortgages under current federal tax law in effect until 2012; defaulting on one’s mortgage does not mean that one’s other credit lines will be revoked; and most people can expect to recover from the negative impact of foreclosure on their credit score within two years (and, meanwhile, two years of poor credit need not seriously impact one’s life),” he writes.

There is a “huge financial upside” for seriously underwater homeowners to strategically default on their mortgages, White said.

While it’s still taboo among most homeowners, it’s common behavior among corporations.

In December, Morgan Stanley, the nation’s sixth-biggest bank by assets, walked away from five San Francisco office buildings the $820-billion firm purchased as part of a landmark $2.43-billion deal near the height of the real estate boom. A group led by Tishman Speyer Properties gave up a 56-building apartment complex in Manhattan in January after defaulting on some $4.4 billion in debt. A spokesman for the California Public Employees’ Retirement System, the nation’s biggest municipal pension fund and one of several investors in the venture, told the Huffington Post that they “basically walked away from it.”

Fannie was effectively nationalized in September 2008. Taxpayers own 79.9 percent of Fannie and Freddie. The Obama administration announced on Christmas Eve that it would provide unlimited financial assistance to the firms, disregarding what was a $400 billion cap on taxpayer bailouts. Their debt is backed by the U.S. government.

The two firms, facing growing losses on sour mortgages in perhaps a worsening housing market, have already taken $145 billion from taxpayers. Fannie Mae is responsible for $83.6 billion of that bailout.

Freddie Mac did not say it would take a similar position on strategic defaulters.

“Such so-called strategic defaults, once rare, are now common enough to jeopardize the already-weak housing and mortgage markets,” wrote economists Celia Chen and Cristian deRitis of Moody’s Economy.com in an April 13 note. “If the trend continues, strategic defaults could both accelerate the pace of home foreclosures and also make it harder for new borrowers to obtain mortgages. Both factors would in turn worsen the decline in house prices.”

JPMorgan Chase, the nation’s second-largest bank by assets with more than $2.1 trillion, warmed investors last month that underwater homeowners may not continue to make their payments even when they’re able to, according to a May 10 filing with the Securities and Exchange Commission.

A top executive at Freddie Mac posted a note on the firm’s website pleading with homeowners to not intentionally walk away from their homes.

“Knowing the costs and factoring in the time horizon, some borrowers have made the calculation that it is better to purposely default on the mortgage. While I understand how that might well be a good decision for certain borrowers, that doesn’t make it good social policy,” Freddie Executive Vice President Don Bisenius argued in a May 3 note.

The firm warned investors and analysts about the risk of increased strategic defaults in March 2008. Referring to it as “ruthlessness,” Dick Syron, Freddie’s former chairman and CEO, said the firm was “seeing an increase in ruthlessness” that had “the potential for changing consumer behavior.”

Fannie Mae said Wednesday that borrowers who have “extenuating circumstances may be eligible for new loan in a shorter timeframe” than the seven-year period it’s warning about.

Republicans in the House recently tried to rein in the twin mortgage giants. Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, attempted Wednesday to amend the financial reform bill under consideration by the House and Senate to mandate that the federal government appoint an inspector general to oversee Fannie and Freddie. The mortgage behemoths’ federal regulator has been operating without an independent watchdog looking over it and Fannie and Freddie since 2008.

Republicans have also tried to amend the bill to subject Fannie and Freddie to the Freedom of Information Act so members of the public can keep tabs on the firms by compelling the disclosure of documents and records.

Both efforts were thwarted by House Financial Services Committee Chairman Barney Frank (D-Mass.), who ruled that they were not “germane” to the legislation under consideration.

Emails sent after normal business hours to spokesmen for the White House and Treasury Department requesting comment were not returned.

Ryan Grim contributed reporting. THE HUFFINGTON POST

* New home sales tumble record 32.7 percent

* Month supply highest in nearly a year

* Median new home price drops

WASHINGTON, June 23 (Reuters) – Sales of new U.S. homes dropped a record 32.7 percent in May to the lowest level in at least four decades as the boost from a popular tax credit faded, adding to worries of a slowing economic recovery.

The Commerce Department said on Wednesday single-family home sales tumbled to a 300,000 unit annual rate, the lowest level since the series started in 1963.

In addition, April and March sales figure was revised down to 446,000 units and 389,000 units respectively. The drop in sales in May unwound two months of gains, which had been inspired by a government tax credit for home buyers.

Prospective home owners had to sign contracts by April 30 to qualify for the tax credit. Analysts polled by Reuters had forecast new home sales sliding to a 410,000 unit-pace. New home sales are measured at contract signing.

“The previous two months were revised down, so the lift from the tax credit was less than we previously realized. We are getting a little nervous,” said David Sloan, an economist at 4Cast in New York. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic on mortgage applications, see: link.reuters.com/pak53m

For a graphic on existing home sales, see: link.reuters.com/gaw43m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

U.S. stocks fell after new home sales data, and the major indexes turned negative. In addition, the S&P home builders ETF (XHB.P) fell 1.6 percent. U.S. government debt prices added to gains.

The report was the latest in a series to suggest that the economy’s recovery from the worst downturn since the 1930s might be losing strength.

It also came as Federal Reserve policymakers gathered for a two-day meeting at which they were expected to extend their pledge to hold overnight interest rates ultra low for “an extended period” to aid the still fragile economic recovery.

The U.S. central bank is not seen lifting rates, currently near zero, until next year.

A report on Tuesday showed sales of previously owned homes, which are recorded at contract closing, fell unexpectedly in May.

The expiry of the tax incentive has also resulted in a decline in new home construction and demand for home loans applications for loans to buy homes fell last week, staying near 13-year lows.

Last month’s weak sales pace saw the supply of homes available for sale jumping a record 46.6 percent to 8.5 months’ worth, the highest in nearly a year, from 5.8 months’ worth in April. However, the number of new homes on the market dipped 0.5 percent to 213,000 units, the lowest since November 1970.

The median sale price for a new home fell 1 percent in May from April to $200,900. In the 12 months to May, prices fell 9.6 percent, the largest decline since July 2009. (Reporting by Lucia Mutikani; Editing by Neil Stempleman)

Now, if this is only a piece of the American Pie that was created…Imagine this is a fraction of the 8 million waiting in the shadow foreclosure inventory looming in the highest states such as Arizona, California, Florida etc. Sellers need to price their homes aggressively or risk losing to these shadows.

In my opinion what these banks are doing now is committing fraud. Why? Because they are not disclosing this inventory and are making loans to unsuspecting buyers when they know for a FACT the values are still heading south!

A Housing Price Collapse in Queens New York Is Almost Certain

Posted by Keith Jurow 06/21/10 8:00 AM EST

Many commentators continue to describe the housing market in Queens as surprisingly resilient.  Hardly any has warned of a possible collapse.  Is this a disservice to both sellers and buyers?  Let’s take a close look and see.

Introduction to the Queens Housing Market

The borough of Queens in New York City has a population of roughly 2.2 million.  For nearly a century, it has been the bastion of the middle class in the Big Apple.  To put things in perspective, you could have bought a nice two-story attached brick house in south Queens for $16,000 in 1950.  Twenty-five years later, the cost of this same house was still under $30,000.

That began to change as inflation soared into double digits in the late 1970s. At the start of the new millennium, the median price of home sales in Queens had climbed to roughly $168,000 according to trulia.com.  During the bubble years of 2003-2006, home sales soared in Queens and throughout New York City (NYC).  Prices really skyrocketed.

Between 1996 and 2006, the annual number of first lien purchase mortgages originated in NYC more than doubled.  Citywide, a record of more than 50,000 owner-occupied homes were sold in 2006.  That year, the median size of a first lien purchase mortgage climbed to $384,000 according to the Furman Center for Real Estate and Urban Policy.  That nice brick house in south Queens actually sold in 2005 for a whopping $360,000.

As we saw in a previous REAL ESTATE CHANNEL article, the mortgage problem was exacerbated by the growing use of piggyback second liens to cover the 15-20% of the purchase price which the first mortgage did not.  In 2006, 28% of all New York City buyers took out piggyback seconds.  The Furman Center found that 43% of purchasers with incomes from $100,000 to $150,000 used a piggyback second mortgage.

According to trulia, home sales in Queens soared to a record of more than 20,000 in 2005.  The following year, the median price of all existing homes sold reached roughly $500,000.

While most bubble housing markets weakened in 2006 and then plunged in 2007-2008, the NYC market remained relatively robust because of the roaring stock market.  But quite unnoticed, sales volume began declining.  After the stock market peaked in the summer of 2007, the housing market began to unravel.

The Looming Default Disaster in Queens

According to RealtyTrac.com, as of June 16 there were 9,054 Queens residences which the banks had placed into default since the middle of February 2009.  Of these, 2,550 have been in default for more than a year.  None has been foreclosed by the banks yet.  Every one of these owners who is occupying the property has been living basically rent-free since stopping the mortgage payment.

More than 4,000 of these homes have outstanding mortgage debts in excess of $400,000.  Over 2,500 have mortgage liens of more than $500,000.

When RealtyTrac is unable to obtain the outstanding mortgage debt figure, it lists the amount for which the owner is in arrears.  Here is the real shocker.  More than 3,500 properties have arrearages listed, some as high as $100,000.  Roughly 280 of these owners owe anywhere from $25,000 to $100,000 in delinquent mortgage payments.  Those with arrearages of roughly $100,000 have not paid a cent to the lender in about three years.  Nice deal isn’t it?  Let’s not feel too sorry for these poor folks.

Without a doubt, the word has spread throughout Queens that the banks are not foreclosing on owners who stop making mortgage payments.  It is not very surprising, then, that an incredible 11.2% of all borrowers are now delinquent in their payments by 60 days or more.  This figure comes from Trans Union, the credit-reporting firm, which puts out a quarterly mortgage delinquency study based on a database of 27 million anonymous credit reports.  That is up from only 7.2% a year earlier.  The chart below shows how the serious delinquency rate has skyrocketed in the last three years.

How many delinquent owners are we talking about?  The borough has roughly 250,000 single-family homes and another 240,000 units in 2-4 family houses owned by investors.  Even assuming that roughly 1/3 of these owners are mortgage-free, at least 25,000 properties are seriously delinquent now.  We know from Core Logic’s monthly mortgage report that nearly all of these seriously delinquent borrowers will eventually default.  That is 25,000 additional properties which will eventually have to be foreclosed and repossessed by the banks.  Meanwhile, they are living rent-free and pocketing perhaps $3,000-$4,000 a month.  Investors who own 2-4 family houses may also still be collecting rent.  Sort of makes your blood boil, doesn’t it?

What About the Foreclosed Properties Owned by the Banks?

You would think that with so many delinquent and defaulted homeowners in Queens, there would now be a huge number of homes owned by the banks and sitting in their inventory (REOs).  Wrong.

RealtyTrac showed a total of only 1,389 homes in the banks’ repossessed inventory as of June 16.  Nearly 400 have an outstanding mortgage debt exceeding $500,000.  Dozens of these properties have been owned by the banks for more than two years.

You may have read something lately about how banks nationwide are unloading their REOs at a faster pace now.  Not in Queens.  RealtyTrac lists a total of 12 properties which the banks have up for sale now.  That’s right – 12.  Why only twelve?  Who knows?  The banks are clearly concerned that if they dump too many of their REOs onto a housing market that is now so thin, this will severely depress prices.  They would also have to write down the actual losses on their balance sheet.

What is the State of the Housing Market Now in Queens?

As of June 16, Trulia listed 12,777 properties for sale.  Of these, 672 were added in the previous seven days.  The average listing price was $438,000.

Are homes selling now in Queens?  Hardly.  According to MDA DataQuick, which culls its figures from county recorder offices, the median price of all new and existing single-family homes and condos sold in the first quarter of 2010 was $403,000.  That isn’t too bad a drop from the peak, right?  The problem is that only 1420 new and existing single-family properties were sold during this latest quarter.  That is an average of only 473 per month.  We are talking about a county with 2.2 million people and nearly 500,000 housing units (excluding multi-family apartment buildings).

By way of comparison, let’s take a look at Houston with a population slightly smaller than Queens.  According to the Houston Association of Realtors, sales of all existing homes in the Greater Houston area in May totaled 6,659.  Why such a difference?  Simple.  The median price of Houston sales was only $155,000.

With the market in Queens so awful, are home sellers cutting their asking price?  Not really.  Trulia reveals that only 24% of all homes listed there now have had the asking price dropped by the owner since being posted on the website.  That seems crazy, doesn’t it?  True, some of these owners are probably not what we might call serious sellers.  They don’t have to sell and are just “testing the waters.”

What about those who either really want to sell their home or are distressed and must sell the property?  Don’t they need to lower their asking price, perhaps substantially, in order to find a buyer?  Absolutely.

Even more important, what happens when the banks start putting into default the 25,000 seriously delinquent homeowners and foreclosing on the 9,000+ properties currently in default?  This overhang waits like a potential tsunami that we know will follow when an earthquake measuring 9.1 erupts underwater as it did in late 2004.

Sooner or later, the banks will have to begin whittling down the growing number of delinquent and defaulted properties in Queens.  What will happen to prices when the banks finally start to place this potentially enormous REO inventory on the market?  Simple.  Prices will plunge.  Make no mistake, it will be ugly.

Those who currently have their home on the market in Queens need to see what’s coming down the road.  If they refuse to lower their asking price substantially, they will almost certainly regret that decision in the next year or two.  Furthermore, prospective buyers probably ought to seriously consider whether waiting might be the more prudent course of action.

To a lesser extent, this analysis also applies to the three other outlying boroughs of Brooklyn, the Bronx, and Staten Island.

This is a case where Plaintiff’s counsel aggressively sought to have all foreclosures stopped due to no standing. He states Thats why the MERS system tried to be a nationwide system. “One Size Fits All Doesn’t Work”!

[ipaper docId=32239392 access_key=key-12qtvlfzvjvmbajyve1p height=600 width=600 /]

If we can only turn back time!

2005 NY Slip Op 09728

IN THE MATTER OF MERSCORP, INC., ET AL., appellants-respondents,
v.
EDWARD P. ROMAINE, ETC., ET AL., respondents-appellants.

2004-04735.

Appellate Division of the Supreme Court of New York, Second Department.

Decided December 19, 2005.

Hiscock & Barclay, LLP, Buffalo, N.Y. (Charles C. Martorana of counsel), for appellants-respondents.

Cahn & Cahn, LLP, Melville, N.Y. (Richard C. Cahn and Daniel K. Cahn of counsel), for respondents-appellants.

Bainton McCarthy, LLC, New York, N.Y. (J. Joseph Bainton of counsel), for American Land Title Association, amicus curiae.

Decher, LLP, New York, N.Y. (Joseph P. Forte and Kathleen N. Massey of counsel), for Mortgage Bankers Association, amicus curiae.

Howard Lindenberg, McLean, VA., for Federal Home Loan Mortgage Corporation, amicus curiae, and Kenneth Scott, Washington, D.C., for Federal National Mortgage Association, amicus curiae (one brief filed).

Brigitte Amiri, Brooklyn, N.Y., for South Brooklyn Legal Services, amicus curiae, April Carrie Charney, Jacksonville, FL., for Jacksonville Area Legal Aid, Inc., amicus curiae, and Daniel P. Lindsey, Chicago, IL, for Legal Assistance Foundation of Metropolitan Chicago, amicus curiae (one brief filed).

Before: ROBERT W. SCHMIDT, J.P., BARRY A. COZIER, REINALDO E. RIVERA, STEVEN W. FISHER, JJ.

DECISION & ORDER

ORDERED that the order and judgment is modified, on the law, by (1) deleting the provision thereof denying that branch of the petitioners’ motion for summary judgment which was to compel the Suffolk County Clerk to record and index the subject assignments and discharges, and substituting therefor a provision granting that branch of the motion, and (2) adding thereto a provision declaring that the mortgages, assignments, and discharges which name Mortgage Electronic Registration Systems, Inc., as the lender’s nominee or the mortgagee of record are acceptable for recording and indexing; as so modified, the order and judgment is affirmed insofar as appealed and cross-appealed from, with one bill of costs to the petitioner.

The petitioners, Merscorp, Inc. (hereinafter Merscorp), and its subsidiary, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), operate a national electronic registration system (hereinafter the MERS System) for residential mortgages and related instruments (hereinafter MERS Instruments). In essence, lenders who subscribe to the MERS System (hereinafter MERS Members) designate MERS as their nominee or the mortgagee of record for the purpose of recording MERS Instruments in the county where the subject real property is located. The MERS Instruments are registered in a central database, which tracks all future transfers of the beneficial ownership interests and servicing rights among MERS Members throughout the life of the loan.

Merscorp and MERS commenced this hybrid proceeding and action in response to the announcement by the Suffolk County Clerk (hereinafter the Clerk) that, as of May 1, 2001, he would no longer accept MERS Instruments that listed MERS as the mortgagee or nominee of record unless MERS was, in fact, the actual mortgagee. In June 2002 this court granted the motion by Merscorp and MERS to preliminarily compel the Clerk to record MERS Instruments and list MERS as the mortgagee in the County’s alphabetical indexes pending the SupremeCourt’s determination of the hybrid proceeding and action on the merits (see Matter ofMerscorp, Inc. v. Romaine, 295 AD2d 431).

The Supreme Court properly compelled the Clerk to record MERS mortgages (seeKlostermann v. Cuomo, 61 NY2d 525, 539). In short, the Clerk has a statutory duty that is ministerial in nature to record a written conveyance if it is duly acknowledged and accompanied by the proper fee (see Real Property Law §§ 290[3], 291; County Law § 525[1]). Accordingly, the Clerk does not have the authority to refuse to record a conveyance which satisfies the narrowly-drawn prerequisites set forth in the recording statute (see People ex rel. Frost v. Woodbury, 213 NY 51; People ex rel. Title Guar.& Trust Co. v. Grifenhagen, 209 NY 569;Matter of Westminster Hgts. Co. v. Delany, 107 App Div 577, affd 185 NY 539; Putnam v. Stewart, 97 NY 411).

Similarly, Real Property Law § 316-a (1), which only applies to the Suffolk County indexing system, provides that the Clerk must record and index “[e]very instrument affecting real estate or chattels real, situated in the county of Suffolk, which shall be, or which shall have been recorded in the office of the clerk of said county . . . pursuant to the provisions of this act.” Pursuant to Real Property Law § 316-a(2), the Clerk must maintain the indexes so they “contain the date of recording of each instrument, the names of the parties to each instrument and the liber and page of the record thereof” (see also Real Property Law § 316-a[4] and [5]). Thus, the Clerk’s duty to index recorded instruments is mandatory and ministerial in nature.

Contrary to the Supreme Court’s determination, there is no valid distinction between MERS mortgages and MERS assignments or discharges for the purpose of recording and indexing. Pursuant to Real Property Law § 321(1), the discharge document may be signed either by the mortgagee, the person who appears from the public record to be the last assignee, or their personal representatives.

As the proponents of a motion for summary judgment, Merscorp and MERS made a prima facie showing that they were entitled to judgment as a matter of law by tendering sufficient evidence to establish that they complied with the applicable recording statutes (see Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853; Artistic Landscaping v. Board of Assessors,303 AD2d 699). Once this showing was made, the burden shifted to the Clerk, who failed to raise a triable issue of fact in opposition to the motion (Alvarez v. Prospect Hosp., 68 NY2d 320, 324; Zuckerman v. City of New York, 49 NY2d 557, 562).

Since this is a declaratory judgment action, the order and judgment must be modified, inter alia, by adding a declaration that the mortgages, assignments, and discharges which name MERS as the lender’s nominee or the mortgagee of record are acceptable for recording and indexing (see Lanza v. Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied372 US 901).

SCHMIDT, J.P., COZIER, RIVERA and FISHER, JJ., concur.

295 A.D.2d 431 (2002)

743 N.Y.S.2d 562

In the Matter of MERSCORP, INC., et al., Appellants,
v.
EDWARD P. ROMAINE et al., Respondents.

Appellate Division of the Supreme Court of the State of New York, Second Department.

Decided June 10, 2002.

S. Miller, J.P., Krausman and Cozier, JJ., concur.

Ordered that the order is reversed, without costs or disbursements, and the motion for a preliminary injunction is granted pending the Supreme Court’s determination of the hybrid proceeding and action on the merits.

The petitioners, Merscorp, Inc. (hereinafter Merscorp), and its subsidiary, MortgageElectronic Registration Systems, Inc. (hereinafter MERS), operate a national electronicregistration system (hereinafter the MERS System) for residential mortgages and related instruments (hereinafter MERS Instruments). In essence, lenders who subscribe to the MERS System (hereinafter MERS Members) designate MERS as their nominee or the “mortgagee of record” for the purpose of 432*432 recording MERS Instruments in the county where the subject real property is located. The MERS Instruments are registered in a central database, which tracks all future transfers of the beneficial ownership interests and servicing rights among MERS Members. As of May 2001, the MERS System had recorded more than four million MERS Instruments in more than 3,000 counties in all 50 states, including more than 16,000 MERS Instruments in Suffolk County.

On April 5, 2001, the Attorney General issued Informal Opinion No. 2001-2 (2001 Atty Gen [Inf Ops] 2001-2) in response to two questions posed by the Nassau County Clerk regarding the latter’s obligation to record and index MERS Instruments. Although the Attorney General concluded that the Nassau County Clerk had a statutory duty under Real Property Law § 291 to record MERS Instruments if they were duly acknowledged and accompanied by the proper fee, he advised the Nassau County Clerk to list the MERS Instruments in the County’s alphabetical indexes under the names of the actual lenders. Based in part on the Attorney General’s Informal Opinion, the Suffolk County Clerk announced that as of May 1, 2001, he would no longer accept MERS Instruments which listed MERS as the mortgagee or nominee of record unless MERS was, in fact, the actual mortgagee.

Simultaneously with commencing this hybrid proceeding and action, Merscorp and MERS moved, inter alia, for a preliminary injunction to compel the Suffolk County Clerk to record MERS Instruments and list MERS as the mortgagee in the County’s alphabetical mortgagee-mortgagor indexes for recorded conveyances. Although the Supreme Court, Suffolk County (Bivona, J.), granted the request of Merscorp and MERS for a temporary restraining order on May 2, 2001, the same court (Catterson, J.), subsequently denied their request for a preliminary injunction on May 22, 2001.

It is well established that the decision to grant or deny a preliminary injunction lies within the sound discretion of the Supreme Court (see Doe v Axelrod, 73 NY2d 748, 750). In exercising that discretion, however, the Supreme Court must consider several factors, including whether the moving party has established (1) a likelihood of success on the merits, (2) irreparable harm if the injunction is denied, and (3) a balance of the equities in favor of the injunction (see CPLR 6301, 6312 [a]; Grant Co. v Srogi, 52 NY2d 496, 517; Clarion Assoc. v Colby Co., 276 AD2d 461). Upon our review of the record, we find that the Supreme Court failed to set forth specific findings with respect to the tripartite test for injunctive relief and 433*433 improvidently exercised its discretion in denying the motion for preliminary injunctive relief.

Merscorp and MERS demonstrated a reasonable probability of success on the merits of its claim for a writ of mandamus to compel the Suffolk County Clerk to record MERS Instruments (see Klostermann v Cuomo, 61 NY2d 525, 539). Contrary to the contention of the Suffolk County Clerk, he has a statutory duty that is ministerial in nature to record a written conveyance if it is duly acknowledged and accompanied by the proper fee (see Real Property Law § 290 [3]; § 291; County Law § 525 [1]). Accordingly, the Clerk does not have the authority to refuse to record a conveyance which satisfies the narrowly drawn prerequisites set forth in the recording statute (see People ex rel. Frost v Woodbury, 213 NY 51; People ex rel. Title Guar. & Trust Co. v Grifenhagen, 209 NY 569; Matter of Westminster Hgts. Co. v Delany, 107 App Div 577, affd 185 NY 539; Putnam v Stewart, 97 NY 411).

This Court notes that the Suffolk County index is governed exclusively by Real Property Law § 316-a. Real Property Law § 316-a (1) provides that the Suffolk County Clerk shall record and index “[e]very instrument affecting real estate or chattels real, situated in the county of Suffolk * * * which shall have been recorded in the office of the [C]lerk of said county * * * pursuant to the provisions of this act” (emphasis supplied). Pursuant to Real Property Law § 316-a (2), the Suffolk County Clerk must maintain the indexes so they “contain the date of recording of each instrument, the names of the parties to each instrument and the liber and page of the record thereof and shall be substantially the forms of the schedules hereto annexed” (emphasis supplied; see also Real Property Law § 316-a [5]).

Therefore, in light of Real Property Law § 316-a, Merscorp and MERS also demonstrated a reasonable probability of success on the merits of their claim to compel the Suffolk County Clerk to perform his ministerial duty to index MERS Instruments as the language of Real Property Law § 316-a is mandatory and not permissive (see Klostermann v Cuomo, supra at 539).

Moreover, to the extent that the Suffolk County Clerk has recorded approximately 16,000 MERS Instruments before May 1, 2001, MERS established irreparable harm to its business operation, the mortgage lending industry, and the general public, in the absence of a preliminary injunction compelling the Suffolk County Clerk to record and index MERS Instruments (see Clarion Assoc. v Colby Co., supra; McLaughlin, Piven, 434*434 Vogel v Nolan & Co., 114 AD2d 165, 174), particularly since Real Property Law § 316-a (8), (9) and (10) sets forth a mechanism for correcting any mistakes in the indexes.

Under these circumstances, a preliminary injunction should be granted to maintain the status quo while the legal issues are determined in a deliberate and judicious manner (see Moody v Filipowski, 146 AD2d 675, 678; Incorporated Vil. of Babylon v Anthony’s Water Cafe, 137 AD2d 791, 792; Tucker v Toia, 54 AD2d 322, 326).

Goldstein, J., concurs in the result, with the following memorandum:

Although I do not necessarily agree with my colleagues that there is a likelihood of success on the merits, I nevertheless concur in granting a preliminary injunction, as the Supreme Court failed to take into consideration and address the other factors which must be taken into account, namely, irreparable harm to the movant absent the granting of a preliminary injunction, and a balancing of the equities (see Melvin v Union Coll., 195 AD2d 447, 448). Where, as here, the case involves issues of first impression in the courts, it is appropriate to grant a preliminary injunction, “`to hold the parties in status quo while the legal issues are determined in a deliberate and judicious manner'” (Time Sq. Books v City of Rochester, 223 AD2d 270, 278,quoting Tucker v Toia, 54 AD2d 322, 326; State of New York v City of New York, 275 AD2d 740; Sau Thi Ma v Xuan T. Lien, 198 AD2d 186).

CAPITAL ONE, N.A., as successor by merger to Chevy Chase Bank, F.S.B., Petitioner,
v.
DOUGLAS R. FORBES, Respondent.

Case No. 2D09-4735.

District Court of Appeal of Florida, Second District.

Opinion filed May 12, 2010.

Carrie Ann Wozniak of Akerman Senterfitt, Orlando, for Petitioner.

Nicole E. Durkin of Deeb & Durkin, P.A., St. Petersburg, for Respondent.

LaROSE, Judge.

Capital One, N.A. (the Bank), seeks a writ of certiorari to quash a protective order that allows the disclosure of trade secrets to Mr. Forbes’s consultants and experts. The Bank also asks us to quash the trial court’s order because it did not sufficiently limit the scope of discovery.

Factual Background

The Bank filed a mortgage foreclosure action against Mr. Forbes. Allegedly, Mr. Forbes breached a construction loan agreement. Mr. Forbes filed a counterclaim alleging breach of contract, anticipatory breach of contract, and fraud in the inducement.

Mr. Forbes requested documents from the Bank. It produced responsive documents except, as relevant here, for requests ten and thirteen:

10. All technical and administrative manuals used in the internal communications system of Lender, or through which Lender policies, practices and procedures were communicated to its bank officers, employees, agents, partners, managers and/or “staff,” effective during the period from January 1, 2006 through the present, including, but not limited to, those manuals relating to construction or developer financing.

. . . .

13. All complaints, claims or protests brought in any judicial forum, arbitration proceeding, or industry dispute resolution forum by Lender clients or third parties against Lender alleging any breach of obligations, terms, conditions, or responsibilities by Lender in the conduct or exercise of its responsibilities and obligations with respect to or arising from engaging in the business of banking within the preceding five (5) years.

The Bank sought a protective order. The Bank argued that its construction-lending manual is a trade secret requiring adequate measures to protect against improper dissemination. There appears to be no dispute that the manual is a trade secret. The Bank also argued that other complaints, claims, or protests made against the Bank in any forum in the past five years were irrelevant, not reasonably calculated to lead to the discovery of any admissible evidence, and intended solely to harass the Bank. See generally, Allstate Ins. Co. v. Boecher, 733 So. 2d 993, 995 (Fla. 1999) (holding that there is an exception to the rule of complete discovery where it may be harassing or embarrassing).

After a hearing, the trial court denied the Bank’s motion as to request 13, except it narrowed the time frame to three years. The trial court concluded that the requested documents “may potentially lead to admissible evidence just based upon the counter plaintiff’s theory of policy written or potentially otherwise as to the lender’s motive to pull out of the project.”

As for the manual, the Bank’s counsel brought the document to the hearing for an in-camera inspection. The trial court did not inspect the materials but accepted counsel’s explanation that the materials contained the Bank’s lending guidelines and practices. The Bank’s counsel argued that the Bank would produce the materials if the trial court entered an adequate confidentiality order. The trial court denied the motion for a protective order, but agreed to grant a “confidentiality agreement between the parties for the protection of [the Bank].”

The trial court asked Mr. Forbes’s counsel to take the Bank’s proposed confidentiality order from the hearing and draft an order satisfactory to both sides. The Bank and Mr. Forbes could not agree. Each submitted a proposed order to the trial court. To center the dispute, we note that Mr. Forbes’s proposed order had no provision requiring consultants, experts, or their employees retained for the litigation to consent to the confidentiality provisions before viewing the manual.

The trial court adopted Mr. Forbes’s proposed order. The order provided that documents marked “Confidential” shall not be disclosed to any persons, except for counsel actively engaged in the litigation along with their employees and staff, parties and employees of the parties, persons with prior knowledge of the documents or the confidential information contained therein, and court officials involved in the litigation. Other relevant portions of the order provide as follows:

3. Plaintiff shall produce the documents requested, however the time period shall be limited to three (3) years prior to the date of this Order.

4. That the documents being produced pursuant to Paragraph 10 of Defendant’s First Request for Production of Documents which are marked “Confidential” by Plaintiff’s counsel shall not be disclosed to any persons, except that such documents may be disclosed or otherwise utilized as follows:

. . . .

(B) Such documents may also be disclosed to persons noticed for depositions during the course of such depositions, including retained outside consultants or experts and their employees retained for the purpose of assisting counsel in the litigation;

. . . .

5. Within 30 days after final conclusion of all aspects of this litigation, stamped confidential documents and all copies of same . . . shall be returned to the party or person which produced such documents or, at the option of the producer, destroyed.

(Emphasis added.)

Certiorari Jurisdiction

We may grant a petition for certiorari “only when the petitioner establishes (1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the trial (3) that cannot be corrected on postjudgment appeal. We examine prongs two and three first to determine our certiorari jurisdiction.” DeLoach v. Aird, 989 So. 2d 652, 654 (Fla. 2d DCA 2007)(citing Parkway Bank v. Ft. Myers Armature Works, Inc., 658 So. 2d 646, 648-49 (Fla. 2d DCA 1995)). If jurisdictional prongs two and three are not fulfilled, then we dismiss the petition rather than deny it. Id.

Analysis

Other Claims Specified in Request 13

The trial court denied, in part, and granted, in part, the Bank’s motion for a protective order as to these materials. The trial court narrowed Mr. Forbes’s request from five years to three years but did not otherwise narrow its breadth.

Discovery allows the parties to find potentially relevant evidence. The conduct of discovery is left to the trial court’s sound discretion. Fla. R. Civ. P. 1.280(b)(1); Friedman v. Heart Inst. of Port St. Lucie, Inc., 863 So. 2d 189, 193 (Fla. 2003). The order on review does not necessarily cause irreparable harm by allowing discovery of what the Bank claims to be irrelevant materials. See Am. Home Assurance Co. v. Vreeland, 973 So. 2d 668, 671 (Fla. 2d DCA 2008) (citingFirst Paradee, Ltd. v. Jones, 828 So. 2d 483, 485 (Fla. 2d DCA 2002)). Thus, certiorari jurisdiction is improper. We dismiss this portion of the Bank’s petition.

Manuals Specified in Request 10

The Bank argues that the trial court departed from the essential requirements of law by requiring the disclosure of trade secrets without providing adequate protective measures. An order requiring disclosure of trade secrets may cause irreparable injury that cannot be corrected on appeal; the disclosure lets the “cat out of the bag.” Id. Here, the trial court did not err. Its order sufficiently protects the Bank. See Allstate Ins. Co. v. Langston, 655 So. 2d 91, 94 (Fla. 1995). The Bank is concerned that experts or consultants retained by Mr. Forbes will misuse the materials. The order does not ignore that concern; only specified individuals may have access to the materials for the stated and limited purposes of assisting counsel in the litigation. No other use is contemplated. Further, the order requires that designated confidential materials, and any copies, be returned or destroyed at the end of the litigation.

Perhaps the order could have been clearer. However, we understand it to limit experts’ and consultants’ access to confidential information. Paragraph 4 of the order provides a blanket protection that documents may not be disclosed to “any person,” with enumerated exceptions. Importantly, the identification of people to whom access is granted is drawn narrowly to include only the parties and their employees, court employees, and outside consultants and experts. As for the consultants and experts, the order allows access only for a limited time and for the limited purposes of assisting counsel in this litigation.^[1] The trial court did not depart from the essential requirements of law by entering the order proposed by Mr. Forbes’s counsel. As to this issue, the petition for certiorari is denied.

Dismissed in part; denied in part.

SILBERMAN and CRENSHAW, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] We do not decide who would be liable should a consultant or expert violate the protective order. See, e.g.,Quinter v. Volkswagen of Am., 676 F.2d 969, 973 (3d Cir. 1982) (holding a nonparty liable for civil contempt where the nonparty had knowledge of the protective order.)

Another SMASHING article by The NyTimes Gretchen Morgenson! Outstanding work!

Fair Game

The Inflatable Loan Pool

By GRETCHEN MORGENSON Published: June 18, 2010

By DinSFLA 6/20/2010

Now if this isn’t another means to a massive mandatory recall for any of this robo-signer’s documents, then our judicial systems are playing with an enormous fire getting ready to ignite even more angry individuals who has his documents sworn into court!

Then again, they’re one of the same.

Today Susan Taylor Martin for Tampabay.com wrote an interesting article about a too too familiar robo-signer “Bryan J. Bly”.

In this article She states

“Over the past few years, Bly has signed countless mortgage assignments as either a notary public or “vice president” of various lenders.

In reality, Bly works for Nationwide Title Clearing, a Palm Harbor company. And he was recently reprimanded by state regulators after acknowledging in a sworn statement that Nationwide Title had him notarizing so many documents that he scribbled his initial instead of signing his full name as required by law.

Such a pace, critics say, shows that Bly and other so-called “robo signers” can’t possibly be sure that what they’re signing is accurate.”

Just by these statements alone why aren’t any of these assignments or any documents executed by Mr. Bly being pulled out from court shelves?

It’s quite simple and you don’t need to be an Einstein.

If there is a product that is shown to cause human any harm there is a mandatory recall. So where is this recall on these products? Where on earth is the government to put a stop to all this assembly line?

Does it have to take a Chinese toymaker with toxic paint, a drywall that deteriorates the guts of a home and possibly lead to possible health issues or how about a Japanese car manufacturer that makes faulty brakes? Again, where is the authority looking into these claims? And why are they NOT pulling these defective items out of our records  in the court houses? Exactly who is being notified that these documents can cause harm to you or that if you were a victim of such irresponsibility to come forward?

My point is these documents are making one extremely ill, homeless and even in some cases suicidal. If this isn’t harm than what is?

This is just wrong in every possible way! Fraud is Fraud.

Mortgage Players Look to Soften Bill

By NICK TIMIRAOS JUNE 21, 2010 NYTimes

As Congress moves to finalize new financial regulations, the mortgage industry is working to soften a series of provisions that reshape how most Americans obtain home loans.

The provisions in the legislation seek to eliminate questionable practices that proliferated during the housing boom by outlining clear underwriting standards, holding lenders more responsible for loans, and changing the way loan originators are paid. In addition, consumers would get new rights to seek damages when the mortgage process goes awry.

Industry officials are trying to limit their liability on new consumer-friendly provisions while pushing for greater flexibility on rules that aim to improve underwriting standards by forcing the original mortgage lender to keep a stake in the loan.

A panel of lawmakers reconciling the differences between the House and Senate bills is set to take up the mortgage provisions on Tuesday.

Both bills would require lenders to retain a 5% stake in loans that are bundled with others and sold in pieces to investors. The idea is that if lenders hold on to a stake, they are more likely to make sound loans.

Lenders want to secure a provision, included in the Senate bill, to exempt mortgages that meet certain underwriting standards from the risk-retention requirement that they keep 5% of loans they sell off. Such loans would have to fully document a borrower’s income and assets and couldn’t include features such as interest-only payments, negative amortization or balloon payments. Loans would also have to cap certain mortgage-origination fees at 3% of the loan.

Risk-retention rules are likely to raise the costs of making loans because banks will be required to hold more capital, a particular challenge for smaller lenders.

While consumer groups generally support exceptions for certain loans perceived as safer, some analysts say the provision would effectively promote certain loan types over others.

“One thing that disappoints me is that it revives the fetish of the traditional, fixed-rate, 30-year loans … without examining any of the risks of those loans,” such as higher interest-rate costs, said Todd Zywicki, a professor of law at George Mason University in Fairfax, Va.

Already, both bills would limit the ability of mortgage lenders to charge borrowers fees if they refinance or pay off their loans early.

The proposed legislation would also require lenders to ensure that borrowers can repay their loans and to prove that any refinancing provides a “net tangible benefit” to the borrower.

The industry wants to limit lenders’ legal liability when they make loans that meet the new standards. “If you comply with the provisions in the law…the borrower shouldn’t be able to challenge you later on,” said Glen Corso, managing director of the Community Mortgage Banking Project, which represents independent nonbank mortgage lenders.

Consumer groups oppose efforts to weaken the ability of borrowers to take legal action if they believe lenders have run afoul of the new rules.

Lenders also want to limit the amount of time that borrowers can dispute a foreclosure if they later find that their loan didn’t satisfy the new standards. Right now, the bill doesn’t include a statute of limitations on those claims. Consumer groups say time limits shouldn’t be added because some loans could contain features that don’t take effect for several years. But lenders say that a loan that defaults long after its origination isn’t likely to fail because of underwriting defects.

All together, the measures should lead banks to become more diligent about documenting a borrower’s income and assets. While that will curtail the abuse of “liar’s loans” that saw many borrowers and brokers report false incomes on loan applications during the past decade, the tougher standards could make it harder or more expensive for self-employed borrowers to get a loan.

Another key provision in the bill would change the compensation model for loan originators and mortgage brokers to prevent them from steering borrowers into loans with a higher rate. The bill would bar lender-paid commissions based on the rate or type of loan; origination costs would have to be paid upfront or over the life of the loan in a higher rate, but not a mix of both.

Brokers say that the rule would make it harder for them to compete with banks and that it would reduce competition, raising costs for consumers. “Most mortgage brokers will have to charge their fees upfront, which means the competitive landscape just shifted to banks and lenders,” said Roy DeLoach, chief executive of the National Association of Mortgage Brokers.

Consumer advocates say the changes will make it easier for borrowers to shop for loans and compare prices.

The new provisions will shift the burden of proof “from the consumers having to protect themselves from unreasonable fees to the providers of services justifying their costs,” said Barry Zigas, director of housing policy for the Consumer Federation of America.

“The whole market should be much safer now,” said Julia Gordon, senior policy counsel at the Center for Responsible Lending.

Meanwhile, brokers and real-estate-industry lobbyists want to relax new home-valuation rules imposed last year to ensure appraiser independence. Those rules bar mortgage brokers and loan officers from selecting appraisals by requiring the use of third-party appraisal management firms. Many banks, which own or have stakes in those firms, oppose the effort to alter the rules, as do consumer groups that say any attempt to weaken them could lead to appraisal fraud.

But brokers and real-estate agents say the rules have produced unrealistic appraisals from individuals who aren’t familiar with specific neighborhoods. Brokers say a new system should be created that allows them to order appraisals without being able to select the actual appraiser, and that consumers should be free to use an appraisal ordered by one lender even if they decide to get a loan from a different lender.

Write to Nick Timiraos at nick.timiraos@wsj.com

WAKE UP PEOPLE!

So now it appears that the this ARTICLE written a few weeks back has struck a nerve with the GOP. You know something does not fit well here. I mean why are they looking to punish anyone when the ones they should be punishing is the Banks for lying, corruption, stealing and fraud. Perhaps this all was instigated by these crooks to start a war game?

First you take our money to bail out these imbeciles then we find out it’s all a scam and NOW you want to penalize people because they have nothing invested?? I mean REALLY?? If I know this is coming better pack up now than later!

So my friends it is clear here that they are obviously being trained to act by the banks themselves.

House Republicans Want Penalties for Strategic Defaulters

By. Carrie Bay 06/17/2010 DSNEWS

Tumbling property values have left nearly a quarter of borrowers owing more on their mortgage than the home is worth, and recent studies have shown that when underwater, more and more of these homeowners are opting to walk away from their loan obligation even if they can afford to make the payments.

This idea of “strategic default” has become a universal concern within the industry, particularly since the social stigma attached to foreclosure has changed so dramatically in the aftermath of the housing crisis.

While defaulting strategically is not as frowned upon by the general public as it used to be, there are some lawmakers whose disdain for the practice has sparked a push to institute stronger deterrents for walking away and penalize those that do.

Last week, the U.S. House of Representatives passed the FHA Reform Act, with measures designed to replenish the Federal Housing Administration’s (FHA) depleted reserves.

A lesser publicized provision that was tacked onto the bill at the last minute would make homeowners who strategically default ineligible for an FHA-insured loan in the future.

The rider was introduced by Rep. Chris Lee (R-New York). Speaking on the House floor, Lee, who already had the backing of those in his party, tried to drum up Democratic support for the add-on stipulation.

“If a borrower makes the decision to strategically default on a loan, they certainly should not be allowed to benefit from a government-subsidized program,” he said.

The provision passed in a voice vote, without opposition.

“We are not talking about those families who have no choice or who simply can no longer afford their payments,” Lee said. “We are talking about the new phenomenon of a person who voluntarily chooses to stop paying their mortgage even though they still have the ability to pay.”

The FHA reform bill, including the agency ban on strategic defaulters, has not yet been approved by the Senate. And some onlookers say the part targeting borrowers who up and walk away will be particularly tricky.

It would require the HUD secretary to devise a strategy for defining and pinpointing strategic defaulters, implement screening procedures to ensure these homeowners are not granted an FHA-backed mortgage, and then enforce the new policy.

Title says it all. Like in the recent post about LISTENING TO CASSANDRA: ‘MERS’ By Carol A. Needham.

MERS has no authority to assign anything!

[ipaper docId=33335744 access_key=key-128zh9xi0glm6j9tpup0 height=600 width=600 /]

Cost of Seizing Fannie and Freddie Surges for Taxpayers

By BINYAMIN APPELBAUM Published: June 19, 2010 NyTimes

CASA GRANDE, Ariz. — Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year. They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle. The mortgage finance companies, created by Congress to help Americans buy homes, have become two of the nation’s largest landlords.

Bill Bridwell, a real estate agent in the desert south of Phoenix, is among the thousands of agents hired nationwide by the companies to sell those foreclosures, recouping some of the money that borrowers failed to repay. In a good week, he sells 20 homes and Fannie sends another 20 listings his way.

“We’re all working for the government now,” said Mr. Bridwell on a recent sun-baked morning, steering a Hummer through subdivisions laid out like circuit boards on the desert floor.

For all the focus on the historic federal rescue of the banking industry, it is the government’s decision to seize Fannie Mae and Freddie Mac in September 2008 that is likely to cost taxpayers the most money. So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office predicts that the final bill could reach $389 billion.

Fannie and Freddie increased American home ownership over the last half-century by persuading investors to provide money for mortgage loans. The sales pitch amounted to a money-back guarantee: If borrowers defaulted, the companies promised to repay the investors. DinSFLA HERE: Yea but what if there was Lender Fraud involved??? Why should any of us be on the hook for this??

Rather than actually making loans, the two companies — Fannie older and larger, Freddie created to provide competition — bought loans from banks and other originators, providing money for more lending and helping to hold down interest rates.

“Our business is the American dream of home ownership,” Fannie Mae declared in its mission statement, and in 2001 the company set a target of helping to create six million new homeowners by 2014. Here in Arizona, during a housing boom fueled by cheap land, cheap money and population growth, Fannie Mae executives trumpeted that the company would invest $15 billion to help families buy homes.

As it turns out, Fannie and Freddie increasingly were channeling money into loans that borrowers could not afford. As defaults mounted, the companies quickly ran low on money to honor their guarantees. The federal government, fearing that investors would stop providing money for new loans, placed the companies in conservatorship and took a 79.9 percent ownership stake, adding its own guarantee that investors would be repaid.

The huge and continually rising cost of that decision has spurred national debate about federal subsidies for mortgage lending. Republicans want to sever ties with Fannie and Freddie once the crisis abates. The Obama administration and Congressional Democrats have insisted on postponing the argument until after the midterm elections.

In the meantime, Fannie and Freddie are editing the results of the housing boom at public expense, removing owners who cannot afford their homes, reselling the houses at much lower prices and financing mortgage loans for the new owners.

The two companies together accounted for 17 percent of real estate sales in Arizona during the first four months of the year, almost three times their share of the market during the same period last year, according to an analysis by MDA DataQuick.

Valarie Ross, who lives in the Phoenix suburb of Avondale, has watched six of the nine homes visible from her lawn chair emptied by moving trucks during the last year. Four have been resold by the government. “One by one,” she said. “Just amazing.”

The population of Pinal County, where Mr. Bridwell lives and works, roughly doubled to 340,000 over the last decade. Developers built an entirely new city called Maricopa on land assembled from farmers. Buyers camped outside new developments, waiting to purchase homes. One builder laid out a 300-lot subdivision at the end of a three-mile dirt road and still managed to sell 30 of the homes.

Mr. Bridwell sold plenty of those houses during the boom, then cut workers as prices crashed. Now his firm, Golden Touch Realty, again employs as many people as at the height of the boom, all working exclusively for Fannie Mae. The payroll now includes a locksmith to secure foreclosed homes and two clerks devoted to federal paperwork.

Golden Touch gets more listings from Fannie Mae than any other firm in Pinal County. Mr. Bridwell said he was ready to jump because he remembered the last time the government ended up owning thousands of Arizona houses, after the late-1980s collapse of the savings and loan industry.

The way I see it,” said Mr. Bridwell, whose glass-top desk displays membership cards from the Republican National Committee, “is that we’re getting these homes back into private hands.”

Selling a house generally costs the government about $10,000. The outsides are weeded and the insides are scrubbed. Stolen appliances are replaced, brackish pools are refilled. And until the properties are sold, they must be maintained. Fannie asks contractors to mow lawns twice a month during the summer, and pays them $80 each time. That’s a monthly grass bill of more than $10 million.

All told, the companies spent more than $1 billion on upkeep last year.

“We may be behind many loans on the same street, so we believe that it’s in everyone’s best interest to aggressively do property maintenance,” said Chris Bowden, the Freddie Mac executive in charge of foreclosure sales.

Prices have plunged. So by the time a home is resold, Fannie and Freddie on average recoup less than 60 percent of the money the borrower failed to repay, according to the companies’ financial filings. In Phoenix and other areas where prices have fallen sharply, the losses often are larger.

Foreclosures punch holes in neighborhoods, so residents, community groups and public officials are eager to see properties reoccupied. But there also is concern that investors are buying many foreclosures as rental properties, making it harder for neighborhoods to recover.

Real estate agents tend to favor investors because the sales close surely and quickly and there is the prospect of repeat business. But community advocates say that Fannie and Freddie have an obligation to sell houses to homeowners.

David Adame worked for Fannie Mae’s local office during the boom, on programs to make ownership more affordable. Now with prices down sharply, Mr. Adame sees a second chance to put people into homes they can afford.

“Yes, move inventory,” said Mr. Adame, now an executive focused on housing issues at Chicanos por la Causa, a Phoenix nonprofit group, “but if we just move inventory to investors, then what are we doing?”

Executives at both Fannie and Freddie say they have an overriding obligation to limit losses, but that they are taking steps to sell more homes to families.

Fannie Mae last summer announced that it would give people seeking homes a “first look” by not accepting offers from investors in the first 15 days that a property is on the market. It also offers to help buyers with closing costs, and prohibits buyers from reselling properties at a profit for 90 days, to discourage speculation. Fannie Mae said that 68.4 percent of buyers this year had certified that they would use the house as a primary residence.

Freddie Mac has adopted fewer programs, but it said it had sold about the same share of foreclosures to owner-occupants.

The companies also have agreed to sell foreclosed homes to nonprofits using grants from the federal Neighborhood Stabilization Program. Chicanos por la Causa, which won $137 million under the program in partnership with nonprofits in eight other states, plans to buy more than 200 homes in Phoenix in the next two years. It plans to renovate them to sell to local families.

The scale of such efforts is small. The home ownership rate in Phoenix continues to fall as foreclosures pile up and renters replace owners.

But John R. Smith, chief of Housing Our Communities, another Phoenix-area group using federal money to buy foreclosures, says he tries to focus on salvaging one property at a time.

“I tell them, ‘O.K., you want to unload 10 houses to that guy, fine,’ ” he said. “ ‘Now give me this one. And this one. And one over here.’ ”

Here we have a tenant in common case where half owner interest was recorded 7 days before Chase recorded theirs. Therefor it was reversed as Gonzalez interest is superior to Chase.

[ipaper docId=33258855 access_key=key-14rmi8maalepe94lbmi7 height=600 width=600 /]

Edit: These images below keep going missing!

Question for Mr. Rubio is, exactly who is Foreclosing on you??

Where are the following assignments from  the Original Lender to MORTGAGE ELECTRONIC REGISTRATION SYSTEMS (MERS) to DEUTSCHE NATIONAL TRUST?

Take a look at the Original Mortgage:

See the arrow it clearly states the Lender is AMERIFIRST FINANCIAL, so where are the missing Assignments of the Mortgage that gives DBNT legal standing to file this Lis Pendens??

It is clear that from the face of these documents and a search in Leon County, FL records that there is none!

Law Office of Marshall C. Watson is the foreclosure mill handling this case. Lets see when they plan on filing the missing assignments….we’ll be back!

Listen up Real Estate agents as you are well too familiar with this tale.

Previously I wrote a post  ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS? and just today I received another example of these foreclosure mills working hand in hand as title companies demanding you use their terms or else get NO CONTRACT.

Here is the example of this agent from Coldwell Banker who clearly states

“FannieMaeHomePath-Purchase this property for as little as 3% down. This property approved for HomePath Mortgage Financing. Approved for HomePath Renovation Mortgage Financing. Large 3 bedroom unit with two full baths. 2nd floor master suite has hardwood floors and a huge closet. Upgraded kitchen has granite countertops and cherry wood cabinets. Laundry Room.  Fenced yard for added privacy.”

“REO Addendum not furnished until acceptance-See IMPORTANT attachments & Follow**Use FAR9 Contract-No Calls Please- EMAIL only: UNIT HAS NO APPLIANCES.”

Well here’s the catch, I got a sneak peek…read the last few sentences to discover the major RESPA VIOLATION among other serious issues.

I am sure Coldwell Banker would be estatic to see agents working in this fashion as well as Fannie Mae having their addendum crossed out in certain areas.

[ipaper docId=33202164 access_key=key-kovwb3di6vj5wqfk52w height=600 width=600 /]

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