2010 NY Slip Op 51482(U)

ARGENT MORTGAGE COMPANY, LLC, Plaintiff,
v.
DAPHINE MAITLAND, ET. AL., Defendants.

41383/07.

Supreme Court, Kings County.

Decided August 19, 2010.

Melissa A Sposato, Esq., Law Offices of Jordan Katz, PC, Melville NY, Plaintiff.

No Appearances, Defendant.

ARTHUR M. SCHACK, J.

In this mortgage foreclosure action, plaintiff’s motion for an order of reference for the premises located at 732 Hendrix Street, Brooklyn, New York (Block 4305, Lot 22, County of Kings) is denied with prejudice. The complaint is dismissed. The notice of pendency filed against the above-named real property is cancelled. Plaintiff’s successor in interest, AMERICAN HOME MORTGAGE SERVICING, INC. (AHMSI), lacks standing to continue this action because the instant mortgage was satisfied on April 26, 2010. Plaintiff’s counsel never notified the Court that the mortgage had been satisfied and failed to discontinue the instant action with prejudice. I discovered that the mortgage had been satisfied by personally searching the Automated City Register Information System (ACRIS) website of the Office of the City Register, New York City Department of Finance. AHMSI’s President and Chief Executive Officer or its Executive Vice President, Chief Legal Officer and Secretary Jordan D. Dorchuck, Esq., its counsel, Melissa A. Sposato, Esq. and her firm, Jordan S. Katz, P.C., will be given an opportunity to be heard as to why this Court should not sanction them for making a “frivolous motion,” pursuant to 22 NYCRR §130-1.1.

Background

Defendant DAPHINE MAITLAND (MAITLAND) borrowed $392,000.00 from original plaintiff ARGENT MORTGAGE COMPANY, LLC (ARGENT), on August 4, 2006. The loan was secured by a mortgage, recorded by ARGENT, at the Office of the City Register of the City of New York, New York City Department of Finance, on August 23, 2006, at City Register File Number (CRFN) XXXXXXXXXX. Defendant MAITLAND allegedly defaulted in her mortgage loan payments with her June 1, 2007 payment. ARGENT commenced the instant action with the filing of the summons, complaint and notice of pendency with the Kings County Clerk on November 8, 2007. Plaintiff’s counsel, on April 14, 2009, filed the instant motion for an order of reference with the Court’sForeclosure Department. After reviewing the papers, the Foreclosure Department forwarded the instant motion to me on August 16, 2010.

On August 16, 2010, I searched ACRIS and discovered that AHMSI, the successor in interest to plaintiff ARGENT, executed a satisfaction of the instant mortgage almost four months ago, on April 26, 2010. The satisfaction was executed in Idaho Falls, Idaho, by Krystal Hall, Vice President of “AMERICAN HOME MORTGAGE SERVICING, INC., AS SUCCESSOR TO CITI RESIDENTIAL LENDING, INC. AS SUCCESSOR TO ARGENT MORTGAGE COMPANY, LLC,” and the satisfaction was recorded at the Office of the City Register of the City of New York, on May 10, 2010, at CRFN XXXXXXXXXXXXX.

Successor plaintiff AHMSI is one of several companies controlled by billionaire investor Wilbur L. Ross, Jr. through his firm, W. L. Ross & Company. Louise Story, in her April 4, 2008 New York Times article, “Investors Stalk the Wounded of Wall Street,” described Mr. Ross as “a dean of vulture investing.” She wrote:

Almost two centuries ago, as Napoleon marched on Waterloo, a scion of the Rothschilds is said to have declared: The time to buy is when blood is running in the streets.

Now as red ink runs on Wall Street, the figurative heirs of the Rothschilds — bankers, traders, hedge fund gurus and takeover artists — are plotting to profit from today’s financial upheaval. These market opportunists — vulture investors in the Wall Street term — have begun to swoop. They are buying up mortgages of hard-pressed homeowners, the bank loans of cash-short businesses, and companies that seem to be hurtling to bankruptcy. And they are trying to buy them all on the cheap. . . .

“The only time you really know you’ve reached the bottom is when you’re back on the other side and things are going back up,” said Wilbur L. Ross, Jr., a dean of vulture investors, who made a fortune buying steel companies when no one else seemed to want them.

Such caution aside, his firm, W. L. Ross & Company, recently spent $2.6 billion for two mortgage servicers [AHMSI and Option One] and a bond insurance company. He said he planned to buy more as hedge funds and other investor sell at bargain prices.

Moreover, ACRIS revealed that defendant MAITLAND sold the premises to 732 HENDRIX STREET, LLC for $155,000.00, with the deed executed on April 5, 2010 and recorded on April 14, 2010, at the Office of the City Register of the City of New York, at CRFN XXXXXXXXXXXXX.

Plaintiff’s counsel never had the courtesy or professionalism to notify the Court that the instant mortgage was satisfied and file a motion to discontinue the instant action. The Court is gravely concerned that it: expended scarce resources on an action that should have been discontinued; and, would have signed an order that could have possibly damaged the credit rating of defendant MAITLAND and put an unfair cloud on the title to the subject premises now owned by 732 HENDRIX STREET, LLC, causing both defendant MAITLAND and 732 HENDRIX STREET, LLC much time and effort to correct an error caused by the failure of successor plaintiff AHMSI and plaintiff’s counsel to exercise due diligence. If successor plaintiff AHMSI is a responsible lender, not a vulture investor looking to profit “when blood is running in the streets,” it should have notified the Court that the subject mortgage had been satisfied.

Discussion

It is clear that successor plaintiff AHMSI lacked standing to proceed in the instant action since some time prior to April 26, 2010, when the satisfaction for defendant MAITLAND’s mortgage was executed. The exact date is probably April 5, 2010, when defendant MAITLAND likely paid off the subject mortgage loan as part of her closing with 732 HENDRIX STREET, LLC, for the sale of the subject mortgaged premises. “To establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant’s default in payment.” (Campaign v Barba (23 AD3d 327 [2d Dept. 2005]). The instant mortgage was satisfied months before the instant motion for an order of reference was forwarded to me by the Foreclosure Department. The satisfaction, dated April 26, 2010, states that “AMERICAN HOME MORTGAGE INC. AS SUCCESSOR TO CITI RESIDENTIAL LENDING, INC. AS SUCCESSOR TO ARGENT MORTGAGE COMPANY, LLC . . . does hereby certify that a certain indenture of mortgage . . . to secure payment of the principal sum of $392,000.00, and interest, and duly recorded . . . document no. 2006000477619 on the 23rd day of August 2006, is PAID, and does hereby consent that the same be discharged of record.” (See Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 [2d Dept. 2005]; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept. 2005]; Ocwen Federal Bank FSB v Miller, 18 AD3d 527 [2d Dept. 2005]; U.S. Bank Trust Nat. Ass’n Trustee v Butti, 16 AD3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks, Holding, Inc., 196 AD2d 812 [2d Dept 1993]).

The Court of Appeals (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 812 [2003], cert denied 540 US 1017 [2003]) declared that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.”

In Caprer v Nussbaum (36 AD3d 176, 181 [2d Dept 2006]) the Court held that “[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1st Dept 2002]).

Since AHMSI executed the satisfaction for the instant mortgage, the Court must not only deny the instant motion, but also dismiss the complaint and cancel the notice of pendency filed by ARGENT with the Kings County Clerk on November 8, 2007. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” Professor David Siegel, in NY Prac, § 334, at 535 [4th ed] observes about a notice of pendency that:

The plaintiff files it with the county clerk of the real property county, putting the world on notice of the plaintiff’s potential rights in the action and thereby warning all comers that if they then buy the property or lend on the strength of it or otherwise rely on the defendant’s right, they do so subject to whatever the action may establish as the plaintiff’s right.

The Court of Appeals, in 5303 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 315 [1984]), commented that “[a] notice of pendency, commonly known as a lis pendens,‘ can be a potent shield to litigants claiming an interest in real property.” The Court, at 318-320, outlined the history of the doctrine of lis pendens back to 17th century England. It was formally recognized in New York courts in 1815 and first codified in the Code of Procedure [Field Code] enacted in 1848. At 319, the Court stated that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

In Israelson v Bradley (308 NY 511, 516 [1955]) the Court observed that with a notice of pendency a plaintiff who has an interest in real property has received from the State:

an extraordinary privilege which . . . upon the mere filing of the notice of a pendency of action, a summons and a complaint and strict compliance with the requirements of section 120 [of the Civil Practice Act; now codified in CPLR § § 6501, 6511 and 6512] is required. Proper administration of the law by the courts requires promptness on the part of a litigant so favored and that he accept the shield which has been given him upon the terms imposed and that he not be permitted to so use the privilege granted that itbecomes a sword usable against the owner or possessor of realty. If the terms imposed are not met, the privilege is at an end. [Emphasis added]

Article 65 of the CPLR outlines notice of pendency procedures. The Court, in Da Silva v Musso (76 NY2d 436, 442 [1990]), held that “the specific statutorily prescribed mechanisms for implementing this provisional remedy . . . were designed with a view toward balancing the interests of the claimant in the preservation of the status quo against the equally legitimate interests of the property owner in the marketability of his title.” The Court of Appeals, quoted Professor Siegel, in holding that “[t]he ability to file a notice of pendency is a privilege that can be lost if abused’ (Siegel, New York Practice § 336, at 512).” (In Re Sakow, 97 NY2d 436, 441 [2002]).

The instant case, with successor plaintiff AHMSI lacking standing to bring this action and the complaint dismissed, meets the criteria for losing “a privilege that can be lost if abused.” CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

[t]he court, upon motion of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519. [Emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. Abatement is defined (Black’s Law Dictionary 3 [7th ed 1999]) as “the act of eliminating or nullifying.” “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains’ (2A Carmody-Wait 2d § 11.1).” (Nastasi v Nastasi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR 6501 (see 5303 Realty Corp. v O & Y Equity Corp. at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1st Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” AHMSI, as successor plaintiff, lacks standing to sue. Therefore, dismissal of the instant complaint must result in mandatory cancellation of the November 8, 2007 notice of pendency against the property “in the exercise of the inherent power of the Court.”

The failure of successor plaintiff AHMSI, by its President David M. Friedman or its Executive Vice President, Chief Legal Officer and Secretary Jordan D. Dorchuck, Esq., and its counsel, Melissa A. Sposato, Esq. and her firm, Jordan S. Katz, P.C., to discontinue the instant action since the April 2010 payoff of the MAITLAND mortgage appears to be “frivolous.” 22 NYCRR § 130-1.1 (a) states that “the Court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart.” Further, it states in 22 NYCRR § 130-1.1 (b), that “sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated.”

22 NYCRR § 130-1.1 (c) states that:

For purposes of this part, conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

It is clear that since at least April 26, 2010 the instant motion for aan order of reference “is completely without merit in law” and “asserts material factual statements that are false.”

Several years before the drafting and implementation of the Part 130 Rules for costs and sanctions, the Court of Appeals (A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 6 [1986]) observed that “frivolous litigation is so serious a problem affecting the proper administration of justice, the courts may proscribe such conduct and impose sanctions in this exercise of their rule-making powers, in the absence of legislation to the contrary (see NY Const, art VI, § 30, Judiciary Law § 211 [1] [b] ).”

Part 130 Rules were subsequently created, effective January 1, 1989, to give the courts an additional remedy to deal with frivolous conduct. These stand beside Appellate Division disciplinary case law against attorneys for abuse of process or malicious prosecution. The Court, in Gordon v Marrone (202 AD2d 104, 110 [2d Dept 1994], lv denied 84 NY2d 813 [1995]), instructed that:

Conduct is frivolous and can be sanctioned under the court rule if “it is completely without merit . . . and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; or . . .

it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another” (22 NYCRR 130-1.1[c] [1], [2] . . . ).

In Levy v Carol Management Corporation (260 AD2d 27, 33 [1st Dept 1999]) the Court stated that in determining if sanctions are appropriate the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, “22 NYCRR 130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party . . .” Levy at 34, held that “[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large.”

The Court, in Kernisan, M.D. v Taylor (171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules “is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Minister, Elders & Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [Emphasis added].” Since at least April 26, 2010, and probably since April 5, 2010, the instant action is “a waste of judicial resources.” This conduct, as noted in Levy, must be deterred. In Weinstock v Weinstock (253 AD2d 873 [2d Dept 1998]) the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal “completely without merit,” and holding, at 874, that “[w]e therefore award the maximum authorized amount as a sanction for this conduct (see, 22 NYCRR 130-1.1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [Emphasis added].” Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis (36 AD3d 734 [2d Dept 2007]) affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as “appropriate in view of the plaintiff’s waste of judicial resources [Emphasis added].”

In Navin v Mosquera (30 AD3d 883 [3d Dept 2006]) the Court instructed that when considering if specific conduct is sanctionable as frivolous, “courts are required to examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent’ (22 NYCRR 130-1.1 [c]).” The Court, in Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc. (6 Misc 3d 939, 943 [Sup Ct,

New York County 2004]), held that “[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney (Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992]).” In the instant action, plaintiff’s Chief Legal Officer or its outside counsel is responsible for keeping track of whether the mortgage was satisfied. In Sakow at 943, the Court observed that “[a]n attorney cannot safely delegate all duties to others.”

This Court will examine the conduct of successor plaintiff AHMSI and plaintiff’s counsel, in a hearing, pursuant to 22 NYCRR § 130-1.1, to determine if plaintiff AHMSI, by its President, David M. Friedman, or its Executive Vice President, Chief Legal Officer and Secretary, Jordan D. Dorchuck, Esq., and plaintiff’s counsel Melissa A. Sposato, Esq. and her firm Jordan S. Katz, P.C. engaged in frivolous conduct, and to allow successor plaintiff AHMSI, by its President David M. Friedman or Executive Vice President, Chief Legal Officer and Secretary Jordan D. Dorchuck, Esq., and plaintiff’s counsel Melissa A. Sposato, Esq. and her firm Jordan S. Katz, P.C. a reasonable opportunity to be heard. The Court is aware that AHMSI’s Chief Legal Officer, Mr. Dorchuck, is a member of the New York State Bar. (See Mascia v Maresco, 39 AD3d 504 [2d Dept 2007]; Yan v Klein, 35 AD3d 729 [2d Dept 2006]; Greene v Doral Conference Center Associates, 18 AD3d 429 [2d Dept 2005]; Kucker v Kaminsky & Rich, 7 AD3d 39 [2d Dept 2004]).

Conclusion

Accordingly, it is

ORDERED, that the motion of successor plaintiff, AMERICAN HOME MORTGAGE SERVICING, INC., for an order of reference for the premises located at 732 Hendrix Street, Brooklyn, New York (Block 4305, Lot 22, County of Kings), is denied with prejudice; and it is further

ORDERED, that because successor plaintiff, AMERICAN HOME MORTGAGE SERVICING, INC., lacks standing and no longer is the mortgagee in this foreclosure action, the instant complaint, Index No. 41383/07 is dismissed with prejudice; and it is further

ORDERED, that the Notice of Pendency filed with the Kings County Clerk on November 8, 2007, by original plaintiff, ARGENT MORTGAGE COMPANY, LLC, in an action to foreclose a mortgage for real property located at 732 Hendrix Street, Brooklyn, New York (Block 4305, Lot 22, County of Kings), is cancelled; and it is further

ORDERED, that it appearing that successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., Melissa A. Sposato, Esq. and Jordan S. Katz, P.C. engaged in “frivolous conduct,” as defined in the Rules of the Chief Administrator, 22 NYCRR § 130-1 (c), and that pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130.1.1 (d), “[a]n award of costs or the imposition of sanctions may be made. . . upon the court’s own initiative, after a reasonable opportunity to be heard,” this Court will conduct a hearing affording: successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., by its President David M. Friedman or Executive Vice President, Chief Legal Officer and Secretary, Jordan D. Dorchuck, Esq.; Melissa A. Sposato, Esq.; and, Jordan S. Katz, P.C.; “a reasonable opportunity to be heard” before me in Part 27, on Monday, September 13, 2010, at 2:30 P.M., in Room 479, 360 Adams Street, Brooklyn, NY 11201; and it is further

ORDERED, that because the headquarters of successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC. is in Irving, Texas, Mr. Friedman or Mr. Dorchuck may appear either in person or by telephone; and it is further

ORDERED, that Ronald David Bratt, Esq., my Principal Law Clerk, is directed to serve this order by first-class mail, upon: David M. Friedman, President of successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., 4600 Regent Boulevard, Suite 200, Irving, Texas 75063; Jordan D. Dorchuck, Esq., Executive Vice President, Chief Legal Officer and Secretary of successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., 4600 Regent Boulevard, Suite 200, Irving, Texas 75063; Melissa A. Sposato, Esq., Law Offices of Jordan S. Katz, P.C., 395 North Service Road, Suite 401, Melville, New York XXXXX-XXXX; and Jordan S. Katz, P.C., 395 North Service Road, Suite 401, Melville, New York XXXXX-XXXX.

This constitutes the Decision and Order of the Court.

Today an article was released about the the foreclosure mills moving forward to quash the subpoenas served upon them by the Florida Attorney General. In this article there was a tad bit of heresay going on…

One of the firms is represented by WPB attorney Gerry Richman:

The subpoena has had a chilling effect on clients and has led to defense lawyers citing the investigation in motions to have the Shapiro firm disqualified from cases. One judge, according to the petition, has said in open court he will deny all summary judgment motions filed by the law firms named by the attorney general based solely on the existence of the investigation.

In an interview, attorney Gerald Richman, who is representing the Shapiro firm, said he did not know who the judge is. He denied the Shapiro firm falsified any documents.

“One of our concerns is the broad brush,” he said. “We are not in the category with David Stern, we are not in the category with any other law firm. Hopefully we will not lose clients. We’re doing whatever we can to fight back.”

Ok, well how can anyone make such a statement without clarifying who the judge is? This is clear speculation!

The Attorney General’s office is fighting back stating the facts…

McCollum spokeswoman Sandi Copes responded, “our office is responsible for protecting consumers year-round, and this investigation has been ongoing for some time.”

Last is information requesting from David J. Stern regarding the subpoena from the AG…

“This request would include entities that have nothing to do with the Law Firm’s legal practice, e.g., if David J. Stern owns a piece of real estate in an entity or he has trusts set up for his family,” according to the petition filed by Stern’s attorney, Jeffrey Tew of Miami. “This request should be narrowed to include entities that have a connection with his legal practice.”

This statement is clearly hiding some important crucial information. Rumor has it but not confirmed that some Foreclosure Mills have been stocking up on real estate they foreclosed on into trusts. Again this is just a RUMOR!

I say keep on digging…eventually an ant hole will turn into a sink hole!

WHO IS TALKING ABOUT WHAT MATTERS?

Aren’t job losses and foreclosures as important as a “Ground Zero Mosque” (that has not been built, isn’t a mosque or even at ground zero?)

By Danny Schechter, Author of The Crime Of Our Time

We know we live in hard times that are on the verge of getting harder with 500,000 new claims for unemployment last week, a recent record. The stock market may be over for now as fear and panic drives small investors out. Big corporations hoard stashes of cash rather then hire workers.

Foreclosures are up, and the Administration’s programs to stop them are down, well below their stated goals, only helping 1/6th of those promised assistance.

And here’s a statistic for you: 300,000. That’s the number of foreclosure filings every month for the past 17 months. This year, 1.9 million homes will be lost, down from 2 million last year. Is that progress? In July alone, 92, 858 homes were repossessed.

At the same time, the number of cancelled mortgage modifications exceeded the number of successful ones. According to Ml-implode.com, last month, “the number of trial modification cancellations surged to 616,839, greatly outnumbering the 421,804 active permanent modifications.”

The Treasury Department admits its HAMP program did not meet expectations but justifies it on the grounds that it gave homeowners lower payments—thatr is, until they were tossed out of their homes. Critics call this “extend and pretend.”

And don’t think this is only a problem that affects the homeowners about to go homeless. The New York Times quotes Michael Feder, the chief executive of the real estate data firm Radar Logic to the effect that we are all at risk.

“My concern is that if we have another protracted housing dip, it’s going to bring the economy down,” Mr. Feder said. “If consumers don’t think their houses are worth what they were six months ago, they’re not going to go out and spend money. I’m concerned this problem isn’t being addressed.”

The larger point is that even if you believe the economy is already down, it can go lower. No one knows how to “fix it” either just as BP couldn’t plug the “leak” that, truth be told, is still oozing oil, and is 650 feet in scope.

So what are we doing about it? Are we demanding debt relief or a moratorium on foreclosures? Are we shutting down the foreclosure factories

Continue Reading…NewsDissector

Government and industry experts agree, consumer interest in buying homes is an essential element of a healthy real estate market, and absorption of today’s bloated housing supply is critical to recovery. These market fundamentals, though, are moving farther and farther out of reach as the American Dream of homeownership fades into the background for many.

A new study from real estate data provider Trulia found that one out of four renters do not plan on buying a home — ever. Of those renters who do see a home purchase in their future, 68 percent said it would be more than two years before they make that investment.

Trulia says this reluctance to buy could potentially drag out the real estate market’s recovery timeline further than many have predicted and the domino effect of such a delay could pose an enormous threat to the nation’s overall economic health.

Continue reading…DSNEWS

[ipaper docId=36116167 access_key=key-su0ql2ro51ggn7eueip height=600 width=600 /]

Written by Jeff Nielson Tuesday, 17 August 2010 11:50

Old habits are hard to break, and in the United States of America, there are few “habits” as common as mortgage-fraud. In 2006, the world discovered that the U.S. housing market was the most-fraudulent market in history. However, since that time, even that level of fraud has been surpassed – by the U.S. housing market of 2010.

Incredibly, four years after learning that the U.S. housing market was the global fraud-capital, U.S. mortgage-fraud has continued to increase every year. There is simply too much material here to cover even a small portion. For inquisitive readers, I recommend doing a simple Google-search for “U.S. mortgage-fraud increasing”.

In addition to coming up with an endless list of articles covering the last four years, one of the first “results” which readers will encounter is a Reuters article from June. That article reported a large haul of fraudsters: 1,215 people were charged in numerous frauds, totaling $2.3 billion in losses for victims. Thanks to the “magic” of search-engines, readers will also encounter a further list (on the left side of the page) of the recent Reuters articles on “U.S. mortgage-fraud increasing”.

One of the more hilarious/disturbing search-results was a Reuters article from April 2009, where the U.S. Justice Department “urged Congress” to force U.S. banks to keep records of their mortgages. The Justice Department stated unequivocally that such record-keeping would make it much easier to crack-down on fraud.

Naturally, nothing has been done on that front – since the U.S. government likes mortgage-fraud. Here’s why. A Reuters article released today on U.S. mortgage-fraud reported the case of a run-down Chicago home, which sold for $25,000 in a foreclosure auction, and then was quickly “flipped” in a fraudulent transaction for $355,000.

Pull out your calculator, and you’ll discover that this phony transaction resulted in a (fraudulent) price-rise of more than 1,300%. Put another way, if there were 100 non-fraudulent transactions, each of which reported a 5% decline in prices, and we add in the one fraudulent “sale”, suddenly those 101 sales show a “rising” U.S. housing market, once averaged-out (instead of the falling market which exists in the real world).

Of course, with U.S. mortgage-fraud steadily increasing (even though total sales in this market have plummeted to a tiny fraction of their bubble-peak), obviously the rate of fraud is much higher than merely 1% of transactions. This is especially true given that the vast majority of offenders are “insiders”: “mortgage brokers, appraisers, real estate agents or loan officers”. In other words, the supposed “rising prices” which the Obama regime and media-parrots cited to conclude that the U.S. housing market had “stabilized”, were in fact nothing more than a fraud-induced mirage.

Equally disturbing, even in the FBI “crackdown” on mortgage-fraud, of the $2.3 billion in victim-losses, only a paltry $147 million was recovered – less than 10%. This is of tremendous significance to U.S. taxpayers, since their government has made them “guarantors” of all U.S. mortgage-debt – including this endless stream of fraudulent transactions.

Even the “detected” fraud is leading to losses of 90+% for taxpayers. Meanwhile, the much larger mountain of undetected fraud naturally means losses of virtually 100%. For readers who dispute the premise that mortgage-fraud is a “way of life” in the United States, I will simply refer them to a superb, PBS expose on the U.S.’s fraudulent markets.

“The Warning” is a PBS documentary which goes back to the roots of current, U.S. mortgage-fraud, during the years of the Clinton regime. Of principal note was the position of U.S. Federal Reserve Chairman, Alan Greenspan – who was adamant that “market fraud” should not even be illegal in the U.S. Greenspan’s position was that the market should be left alone to “resolve” this fraud “in its own way” (i.e. through the fraudsters taking every last dime of the “sheep”).

What more needs to be said when you have the government of the world’s largest economy taking the position that rather than being a “problem”, that mortgage-fraud was a “solution to problems” (i.e. the crashing U.S. housing market)? Let the fraudsters artificially pump-up the prices of U.S. homes through their phony transactions, et voila we have a “U.S. housing recovery”.

Indeed, regular readers will be familiar with my previous articles on the “MERS” registry system. This was a fraud-facilitation entity created by Wall Street bankers during the mid-1990’s. It’s entire purpose was to replace the mortgage record-keeping of individual, financial institutions – so that it would be much easier to engage in serial mortgage-fraud via “mortgage securitization”, as the U.S. financial crime syndicate commenced their housing-bubble crime-wave.

The “MERS” registry has been regularly rejected in numerous court-decisions for being woefully inadequate in its record-keeping. This has resulted in a number of U.S. homeowners who, instead of losing their property to foreclosure were handed free and clear title to their properties – because the MERS registry had failed to provide adequate documentation of title.

However, none of the previous documentation of fraud in this commentary can compare with the most-brazen admission of mortgage-fraud – by the banksters themselves. In a previous commentary, I referred to a Wall Street Journal article about yet another mortgage-fraud court case.

In that incident, the bankers of JP Morgan were asked to explain a mortgage document where, instead of a buyer’s name appearing, there were the words “Bogus Assignee”. The hilarious explanation of Michelle Kersch, the lawyer defending the case was that the “name” wasn’t an indication of a fraudulent transaction in-progress. Instead, “Bogus Assignee” was merely a generic term, or a “placeholder”, which had been used on “a few occasions”.

In other words, instead of using the five-letter word “buyer” as its generic term on loan documents, we are supposed to believe that the substition of the two words “Bogus Assignee” was merely a random choice of words, to which we should attach no meaning whatsoever.

For market participants, the message is simple: invest in a U.S. bank and you are investing in fraud. Invest in a U.S. home-builder, and you are investing in fraud. Even though home-builders have not been directly connected to this fraud, when you create the “supply” for a fraud-saturated market, you become equally affected by that fraud – irrespective of the fact that these entities did not participate in this crime-wave.

As I have already demonstrated previously, even without mortgage-fraud, the U.S. housing market was doomed to a much worse, much longer collapse – now that this market has clearly begun another slide. However, as we become more aware of the massive levels of fraud in this market, it would appear that I have been guilty of understatement.

Simply put, there is nothing more that the Bush regime, and its successor the Obama regime could have done to destroy the U.S. housing market. This matters not at all to the U.S. government, which clearly believes that fraud is “good for business”. This is the attitude of the Wall Street Oligarchs as well, who engage in serial-fraud as a basic ingredient of their “business model”.

The Oligarchs defraud a client or business partner (generally numerous times). If the fraud becomes so obvious that U.S. regulators can’t simply pretend it doesn’t exist (any longer), then the bankster is taken to court by the U.S. “regulator”. A sweetheart-settlement is reached where a) the banker isn’t required to admit any “wrong doing” (since U.S. officials don’t consider fraud a “crime”); and b) the fine levied against the Oligarch is generally only a tiny portion of the profits they obtained through the fraud.

The fact that U.S. mortgage-fraud continues to soar, four years after this fraud-saturated market was exposed tells us that the U.S. government is intentionally under-funding law enforcement in this area. Law enforcement officials must be extremely demoralized. Not only are they unable to obtain the necessary “resources” to properly police this crime-wave, but the “big players” (i.e. the Wall Street Oligarchs) are essentially “immune” to any law-enforcement actions.

Never in history, never in any other part of the world, and never in any other market have the words “caveat emptor” carried as much weight.

Source- BullionsBullCanada

In accordance with Title 17 U.S.C. Section 107, any copyrighted work in this message is distributed under fair use without profit or payment for non-profit research and educational purposes only. GRG [Ref. http://www.law.cornell.edu/uscode/17/107.shtml]

Banking Executives Tell Obama Officials Government Needs To Play Large Role In Mortgage Market

(AP) WASHINGTON (AP) – The Obama administration invited banking executives Tuesday to offer advice on changing the government’s role in the mortgage market. Their response: stay big.

While the executives disagreed on the exact level of support needed, the group overwhelmingly advocated the government should maintain a large role propping up the nearly $11 trillion market.

Bill Gross, managing director of bond giant Pimco, said the economic recovery required more government stimulus, particularly in the housing market. He suggested the administration push for the automatic refinancing of millions homes backed by mortgage giants Fannie Mae and Fannie Mac.

Refinancing those homes at the lowest mortgage rates in decades would give Americans more money each month. That would boost consumer spending by $50 billion to $60 billion and lift housing prices by as much as 10 percent, he said.

Without such stimulus in the next six months, Gross said, the economy will move at a “snails pace.”

Treasury officials have said they have no plans to enact such a plan, which has been the subject of intense rumors on Wall Street in recent weeks.

Tuesday’s conference at the Treasury Department is the administration’s first of many steps toward restructuring the troubled industry. So far, rescuing Fannie and Freddie has cost the government more than $148 billion. That number is expected to grow.

Treasury Secretary Timothy Geithner pledged “fundamental change” to the structure of Fannie and Freddie. The mortgage giants profited tremendously during good times but burdened taxpayers with losses when the housing market went bust. He said the two companies weren’t the only cause of the financial crisis, but made it worse.

Fannie and Freddie buy mortgages and package them into securities with a guarantee against default. They have ensured that millions of Americans can get home loans – even after the housing market collapsed.

The two companies, the Federal Housing Administration and the Veterans Administration together backed about 90 percent of loans made in the first half of the year, according to trade publication Inside Mortgage Finance.

Geithner did not offer a specific exit strategy for Fannie and Freddie. He agreed that the government could remain involved in the mortgage system by guaranteeing investors in mortgage-backed securities get paid, even when borrowers default.

There is a “strong case to be made” for such an arrangement, Geithner said.’

But Geithner suggested that Fannie and Freddie’s replacements could pay the government to insure the loans. That money could be tapped if the housing market collapses and would ensure taxpayers do not get hit with losses in the future.

“It is our responsibility to make sure that we create a system that is not vulnerable to these same failures happening again,” Geithner said.

Republicans are expected to pick up seats in Congress in November and the Obama administration will need support from both parties to enact changes next year.

The Obama administration’s management of Fannie and Freddie has been under fire for months from Republicans on Capitol Hill. In December, the Treasury Department eliminated a $400 billion cap on how much money it would give the mortgage giants to keep them from failing.

Rep. Spencer Bachus, the top Republican on the House Financial Services Committee, accused the Obama administration of excluding critics of the government’s role in the mortgage system from Tuesday’s conference.

In a letter to Geithner, Bachus said Treasury appears to be “laying the groundwork for a predetermined policy outcome that looks uncomfortably similar to the failed status quo.”

But the industry executives and experts at the conference seemed to agree that the government should maintain a role in the mortgage market, even if Fannie and Freddie disappear someday. Where they disagreed was on the level of government involvement and whether it should be reduced gradually.

Gross advocated the biggest government role. He said Fannie and Freddie’s function should be consolidated into one government agency that would issue mortgage-backed securities. Without such a solid guarantee, mortgage rates would soar, he warned.

Gross said he is skeptical of having those securities issued by the private sector, saying that doing so would favor “Wall Street as opposed to Main Street.”

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Hmm…now doesn’t this ring close to home?

From Paper to Electronic: Exploring the Fraud Risks Stemming From the Use of Technology to Automate the Australian Torrens System

By Rouhshi Low

Interesting points:

In all electronic systems, land title instruments are prepared electronically. This may make it easier for fraudulent persons with access to the system to perpetrate fraudulent alterations, because unlike a physical alteration, an electronic alteration on an electronic document will not leave any physical evidence of the alteration.

In the paper system, the practice of the Land Titles Office manually checking instruments lodged for registration before updating the register may be said to act as a safeguard against this type of fraud, since any alteration of an instrument might leave some form of a physical mark which might then be noticed by the officer and appropriate action may then be taken. Of course the effectiveness of this safeguard depends on the vigilance of the examining officer.

It is observed that these considerations do not arise in the paper registration system. They are unique to an electronic system because of the use of technology to replace the handwritten signature. In the paper system, handwritten signatures can be forged, but there was never a requirement or a need for individuals to keep their signatures safe. It is simply not possible. Replacing handwritten signatures with digital signatures introduces a new element into the process. And because of the potential for fraud whether because the fraudulent person has managed to obtain an existing digital certificate/PSP or circumvented the registration process to obtain one, the use of digital signatures therefore imposes ‘new’ obligations on users as well as the entity responsible for the registration process that do not exist in the paper system. The user is now responsible for keeping the digital certificate/PSP safe. The entity issuing the digital certificate/PSP is responsible for developing and maintaining effective registration processes to minimize the risk of a fraudulent person impersonating an authorised user. In fact, attacking the registration process in this manner is an additional avenue for the fraudulent person to perpetrate identity fraud so that it could be said that in an electronic system, there might be two opportunities for identity fraud: (i) identity fraud of the owner of the land and (ii) identity fraud of an authorized user of the system.

So to perpetrate fraud in an electronic registration system, the solicitor would not even need to forge the victim’s signature, or mislead the client into signing documents, or create false powers of attorney, or fraudulently alter instruments, as is the case in the paper registration system. All that the solicitor would have to do would be to prepare the instrument, digitally sign it and submit it to the Land Titles Office for registration. As noted above, being able to fraudulently use a digital certificate/PSP to digitally sign instruments for lodgement and registration is a new opportunity for fraud in an electronic system. As seen in the discussion here, solicitors will have the greatest opportunity to perpetrate this new type of fraud.

In all the electronic systems, clients no longer sign land title instruments for registration. Rather an authorisation form is signed instead. This change in practice may see a shift in forgery cases – instead of forging the signature of the victim on the land title instrument, fraudulent persons will now have to forge the signature of the victim on the authorisation form.

The concern in abolishing the paper certificate of title in an electronic registration system is that it will result in more identity fraud. When the New Zealand system was introduced, Thomas argued that ‘[T]he absence of an outstanding duplicate certificate of title (or anything in substitution of the same) is argued to be a key flaw in the new system, making it more vulnerable to fraud’.63

But will this be the case? It is argued that identity fraud might be perpetrated in an electronic registration system in the same way as in the paper registration system – when the fraudulent person is able to successfully impersonate the victim of the fraud to convince the authorised user responsible for the transaction that he or she has a right to deal with the land. The difference is that in the paper registration system, since the certificate of title is the document used to evidence a right to deal with the land, identity fraud uses the certificate of title. In an electronic registration system, the manner in which identity fraud may be perpetrated would depend on the system and how identity and right to deal might be established.

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CONGRESS IS COVERING UP! SHAM…SCANDAL!

Janet Tavakoli of Tavakoli Structured Finance tells what she thinks of recent fines the SEC has imposed on Wall Street giants and where she would like future investigations take place.

Excerpts:

MERS was created in 1995 under the auspices of the Mortgage Bankers Association (MBA), as the mortgage industry’s utility, to streamline the mortgage process by using electronic commerce to eliminate paper. Our Board of Directors and shareholders are comprised of representatives from the MBA, Fannie Mae, Freddie Mac, large and small mortgage companies, the American Land Title Association (ALTA), the CRE Finance Council, title underwriters, and mortgage insurance companies.

Our initial focus was to eliminate the need to prepare and record assignments when trading mortgage loans. Our members make MERS the mortgagee and their nominee on the security instruments they record in the county land records. Then they register their loans on the MERS® System so they can electronically track changes in ownership over the life of the loans. This process eliminates the need to record assignments every time the loans are traded. Over 3000 MERS members have registered more than 65 million loans on the MERS® System, saving the mortgage industry hundreds of millions of dollars in the process. The Federal Housing Administration (FHA) and Veterans Administration (VA) approved MERS for government loans because they recognized the value to consumers. On table-funded loans, MERS eliminates the cost to the consumer of the mortgage assignment ($30 – $150). In addition, the MERS process ensures that lien releases are not delayed by eliminating potential breaks in the chain of title. Similar to the residential product, we also addressed the assignment problem in the commercial market with MERS® Commercial, on which is registered over $110 billion in Commercial Mortgage-Backed Securities (CMBS) loans.

More than 60 percent of existing mortgages have an assigned MIN, making a total of 65,000,000 loans registered since the inception of the system in 1997. The corresponding data for these mortgages is tracked on the MERS® System from origination through sale and until payoff. MERS therefore offers a substantial base of historical data about existing loans that can be harnessed to bring transparency to existing MBS products. Attached are letters from the MBA, FHA, Fannie Mae and Freddie Mac on this point.

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Related:

MERS May NOT Foreclose for Fannie Mae effective 5/1/2010

_________________________________________

Fannie Mae’s Announcing Miscellaneous Servicing Policy Changes

I know some people have this notion that somehow California real estate prices are going to miraculously recover simply by sheer determination and the belief in late night infomercial catch phrases. Instead of focusing on larger macro economic trends they will use limited data that doesn’t capture the larger emerging trend. We’ve all seen those TV ads yet data is going in a very different direction. Inventory is increasing in California. Prices are dropping. Problem loans are still filling the pipeline. These are facts and as stubborn as they are, they tell us a more provocative story about real estate in the state. That story revolves around the fact that a large shadow inventory is lingering and the artificial dams of government intervention are having a tougher time holding back the flood. Today, I wanted to focus on the higher end markets of Los Angeles County to show that contrary to a handful of anecdotal cases, overall there is a bigger trend emerging. The mid-tier market is now entering its correction.

Before we look at Santa Monica our targeted city today, I wanted to provide you with 35 specific examples of million dollar prime location foreclosures in Southern California. These are all in Los Angeles County:

Continue reading …Dr. Housing Bubble

DinSFLA Here: Now if we just put these time frames such as ‘1999’ with all that is happening today we arrive to some answers…Don’t we?

Electronic communications make it possible to conduct old transactions in new forms.  Some of the oldest kinds of transactions governed by law are transactions in real estate:  for example, sales, leases and mortgages.  In the Middle Ages transactions in real estate were conducted symbolically, without paper or signatures.  Writing, printing and more universal literacy brought paper deeds, mortgages and leases, memorialized by words on paper with manual signatures.   These were filed in public records to establish who had rightful title to any piece of land.  Several centuries have gone by since that initial migration to the then-new technology of paper documents and manual signatures.  A new technology of computers, software to run them, and electronic communications has come to replace paper.  The law of real property must now make a transition to accommodate the new technology.  The efficiency of real estate markets makes this imminently necessary.

This long dependence on paper, however, casts up certain barriers to using electronic communications to carry on real estate transactions.  The law of the states of the United States has many “statute of fraud” requirements that inhibit the use of electronic communications.  Statute of fraud requirements put total and express reliance upon paper documents and manual signatures to make transactions enforceable.  No paper, no enforcement.  These same requirements have also made it more difficult to develop electronic analogues to transactions in paper that are equally enforceable.

The first step to remedy the problem took place in 1999 when the Uniform Law Commissioners promulgated the Uniform Electronic Transactions Act (UETA).  This act adjusted statute of fraud provisions to include electronic “records” and “signatures” for the memorialization of all kinds of transactions, including basic transactions in real estate.  It is possible to have sale contracts, mortgage instruments (in whatever form a jurisdiction uses) and promissory notes memorialized in electronic form with electronic signatures that will now be treated the equal of the same paper documents with manual signatures.  This is the result of the widespread enactment of UETA and of the subsequent enactment of the Electronic Signatures in Global and National Commerce Act (E-Sign) by Congress.

Real estate documents must be recorded on public records to be effective.  Recording takes place in most states in a county office devoted to keeping these records.  Recording protects current interests in real estate by clarifying who holds those interests.  The chain of title leading to the current title-holder, meaning the historic record of documents relating to transactions for a specific piece of real estate, establishes the marketability of that piece of real estate by the current owner of interests in it.  The real estate records establish this chain of title.  State law governs these local recording offices, and there are requirements in the law of every state relating to the originality and authenticity of paper documents that are presented for recording.  UETA included optional provisions dealing with governmental authority, including that of local governments, to accept and utilize electronic records.  However, not all states adopted these optional provisions, and confusion still persisted whether these provisions, coupled with the rest of UETA, authorized recordation of electronic records.

The Uniform Real Property Electronic Recording Act (URPERA) removes any doubt with regard to the ability of a local recording office to accept and otherwise process electronic documents and signatures for recording.  Further, there must be an orderly conversion of every recording office in the United States for electronic recording to become accepted universally.  That will be a complex process, but it needs a starting point in the law.  URPERA, promulgated by the Uniform Law Commissioners in 2004, provides that essential start.

The act does three fairly simple things that will have monumental effect.  First, it establishes that any requirement for originality, for a paper document or for a writing manually signed before it may be recorded, is satisfied by an electronic document and signature.  This is essentially an express extension of the principles of UETA and E-Sign to the specific requirements for recording documents relating to real estate transactions in any state.  Second, it establishes what standards a recording office must follow and what it must do to make electronic recording effective.  For example, the office must comply with standards set by the board established in a state to set them.  It must set up a system for searching and retrieving electronic documents.  There are a minimum group of requirements established in URPERA.  Third, URPERA establishes the board that sets statewide standards and requires it to set uniform standards that must be implemented in every recording office.

These may be simple steps in the law, but the entire process of implementing electronic recording of electronic real estate documents will be complex from state to state.  Inserting URPERA in the law of a state requires careful scrutiny of its real estate law.  If paper documents are effective, for example, when they are time-stamped when delivered to a recording office, when should electronic documents that may be delivered electronically when an office is closed be considered effective?  Answers to questions like this one will take some work and some complex decisions as URPERA is considered for enactment in any state.

Notwithstanding this need for careful effort, it is important to make the start on electronic recording of real estate documents.  Real estate transactions involve billions of dollars in the United States.  The efficiency of real estate markets depends upon the adoption of technology to make them faster and more competitive.  After UETA and E-Sign, the key is URPERA.  Every state needs to consider it as soon as possible.

More info…ElectronicRecording.org

RELATED ARTICLE:

Electronic Property Document Recording (ERDS)

By ALAN ZIBEL (AP) –

WASHINGTON — Thought the housing crisis was over? Not quite.

Despite four years of falling prices and recent signs that they were finally bottoming out, homes are expected to lose still more value in many metro areas over the next year.

Parts of the country already pummeled by the housing crisis, like Las Vegas, Phoenix and Miami, will be hit hardest. But even some places that have held up relatively well — including New York, Los Angeles and Washington, D.C. — will suffer, too.

That’s the conclusion of economists who have been reducing their estimates for home prices as the outlook for the economic recovery has darkened. The number of homes for sale or headed for foreclosure is so high that they think prices will be even lower by next July.

Because housing is such an important engine of the economy, lower prices could dim the recovery. When home values fall and people have less equity, they tend to cut back on spending. And as prices decline, potential homebuyers stay on the sidelines, slowing sales even more.

Earlier this year, analysts said they thought home prices had finally reached their low point and were ready to start rising slowly in most areas of the country. Now, they think the actual bottom could be nearly a year away.

The average home price in the Standard & Poor’s Case-Shiller index of 20 big U.S. cities is forecast to drop nearly 2 percent this year from a year earlier, according to the average estimate of more than 100 economists polled this month by MacroMarkets LLC.

That’s more pessimistic than in May, when the consensus was for prices to be nearly flat. Other, more bearish analysts think prices will sink 10 percent or more.

Price drops of more than 10 percent are expected in the Phoenix, Miami and Las Vegas areas over the next year, according to Moody’s Analytics. Those areas have already been scorched by 50 percent declines in home values.

Moody’s predicts that other areas — New York, Los Angeles, San Diego, San Francisco, Denver, Detroit, Cleveland, Minneapolis, Tampa, Fla.; and Washington D.C. — will see declines of 2 to 8 percent by next July.

Many analysts expect home prices to rise for a few months because a tax credit offered to homebuyers through April increased demand. But the gains probably won’t last. By this time next year, Moody’s expects prices in 19 of the 20 cities to have fallen.

Why further price drops for already hard-hit areas, as well as in healthier markets like New York and Los Angeles?

There’s already a glut of homes left in each area by the real estate bust, and more foreclosures are expected as Americans fall behind on mortgage payments. Foreclosures add to the supply of homes on the market, bringing down prices.

In Miami, nearly a quarter of mortgage borrowers have missed at least three months of mortgage payments or are already in foreclosure, according to Moody’s. That’s the highest level in the country. In four other Florida cities — Fort Lauderdale, Cape Coral, West Palm Beach and Naples — the proportion exceeds 15 percent. The same is true for Las Vegas.

On top of that, so-called short sales, which happen when lenders let homeowners sell their houses for less than what they owe on their mortgages, are rising. They can drive down the value of neighboring homes, too. In Sacramento., Calif., short sales made up about 26 percent of homes sold in June, up from about 17 percent a year earlier.

Contributing to the problem is an economy grappling with high unemployment, relatively flat pay and tightened credit, all working to limit the number of people buying homes.

It could be a decade before the average price nationally reaches the peak it hit four summers ago, says Celia Chen, chief housing economist at Moody’s. Even when they do resume rising, prices may not outpace inflation.

The median price peaked at $230,300 in July 2006 before tumbling 28 percent to a low of $164,700 in January 2009, according to the National Association of Realtors. The median has since risen to $183,700.

Nationally, about 7.1 million homeowners — more than 13 percent of households with a mortgage — have either missed at least one payment or are in foreclosure, according to data provider Lender Processing Services Inc.

In some Sun Belt cities, investors armed with cash are gorging on deep discounts for some homes, yet the foreclosures keep coming. The local areas remain stuck with depressed economies and a glut of vacant and soon-to-be-vacant homes.

“Even when demand picks up, prices aren’t likely to budge all that much,” said Mark Vitner, senior economist with Wells Fargo Securities.

Moody’s forecasts flat or only slightly lower prices over the next year in Atlanta, Chicago, Boston, Dallas and Portland, Ore. And Seattle and Charlotte, N.C., are expected to enjoy slight price increases. In those areas, the supply of foreclosed homes is smaller, and the local economies are faring better.

Sales of new homes jumped last month, but it still was the second-weakest month in the 47 years records have been kept, the Commerce Department said Monday. Sales for April and March were also revised downward.

Michael Gao, 31, a software engineer in Mountain View, Calif., is watching home listings but feels renting is the wiser option for now. He fears the economy will worsen and thinks the home market will suffer.

“It’s really not looking good,” Gao said. “If the housing market will dip, then why would you buy now?”

Copyright © 2010 The Associated Press. All rights reserved.

My friends with the latest articles I posted…take note momentum is starting to build!

(Salt Lake City, UT) – The Bank of America’s motion for dismissal filed July 2, 2010 in US District Court of Utah may have opened the way for Judge Clark Waddoups to set aside his order halting foreclosures in Utah by ReconTrust Company and remand the case to state court. Attorneys John Christian Barlow and E. Craig Smay, in their plaintiff’s response filed Friday, July 8, 2010 say “the defendant’s motion to dismiss re-opens the issue of preemption of State law which previously arose in the analysis of the courts jurisdiction. There, the court analyzed and relied upon the wrong statute, producing an erroneous conclusion of preemption. That conclusion should now be corrected,” the attorneys said.

“The defendant’s motion to dismiss is based upon claims the plaintiff lacked a cause of action under Utah Code §16-10a-1501 and 57-1-21 addresses an issue not in dispute,” Barlow said. “ReconTrust Company is permitted to serve as trustee in Utah, but the company is still required to register and have offices in the state along with its competitor state banks, and may not foreclose non-judicially,” according to Barlow and Smay. “Bank of America’s motion to dismiss serves to more clearly show the federal court lacks jurisdiction to set aside the restraining order previously issued by the state court,” Barlow said. The Plaintiff filing cites the federal court’s own decision denying federal jurisdiction. (Jensen-ReconTrust)

The attorneys conclude “the motion by the defendant to dismiss must be denied and the prior order setting aside the state court injunction should be withdrawn and the matter remanded to the state court.”

While, the judge ponders his response to the filing, the plaintiff has moved the case to the 10th Circuit Court of Appeals in Denver (Appeal) The Bank of America has become the symbol of what’s wrong in America where homeowners (taxpayers) want less federal control and more accountability. The plaintiff Peni Cox has become a symbol of homeowners everywhere caught in the financial meltdown fighting faceless – paperless financial giants of Wall Street and their legal brain trusts.

Shareholders and mortgage investment portfolio managers are beginning to quietly caution banks about their foreclosure policies. Most of the financial institutions with foreclosures have received TARP TARP (Troubled Asset Relief Program) was designed to get so-called toxic assets off the books of major banks. These assets included mortgage-backed securities deemed impossible to value. Because banks could not buy and sell these securities, they were becoming increasingly illiquid, and a credit crunch began to emerge as lending between banks ground to a halt. TARP funds were utilized to purchase these assets, injecting banks with liquidity.

Barlow continues to champion his client’s rights contending remedies were taken away from her by faceless lenders who continue to overwhelm homeowners and the judicial system with motions and petitions as remedies instead of actually making a good-faith effort in face-to-face negotiations to help homeowners. “Mortgage lenders are required by law to be registered and have offices in the State of Utah to do business, that is unless you’re the Bank of America or one of their subsidiary companies which apparently are above the law in Utah,” Barlow said. “The Bank of America and other financial institutions, under the guise of mortgage lenders are trampling the rights of citizens,” he said.

Bank of America acquired the bankrupt Countrywide Home Loan portfolio in a stock deal June 3, 2009. And, according to the ReconTrust, the bank has over 1162 Utah homeowners in foreclosure as of July 10, 2010.

Next week KCSG News will report on Utah court cases in which the plaintiffs (homeowners) claim neither the lender, MERS (Mortgage Electronic Registration System), nor the Bank of America, nor any other defendant in the case, has any remaining interest in the mortgage promissory note bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the Trust Deed. Last month the Florida Supreme Court issued a ruling protecting homeowners from losing their homes to foreclosure mills hired by the lenders to foreclose using bogus documents created for lenders in which the lender had no secured interest. Similar cases are now making there way through Utah courts.

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Frankenstein real estate market – $3.5 trillion in commercial real estate debt and $10.3 trillion in residential real estate debt. Will we reach a 50 percent underwater market where 25 million Americans sit in homes worth less than their mortgage?

The real estate market has morphed into a beast that is largely sinking the overall economy into the ground.  If we combine the commercial real estate market ($3.5 trillion in debt) with residential outstanding mortgages ($10.3 trillion) we arrive at a figure that nears the annual GDP of our country.  What makes the figure even more troubling is the amount of leverage found in the real estate market.  Many of these loans will default yet banks are maintaining the notion that at some point par value will be reached; for many the par value scenario is the worst case they have mapped out, and this is highly optimistic.  We have created a real estate Frankenstein that now has a mind of its own and will do everything it can to stay afloat going forward, even at the expense of the real economy.  In fact, the real estate monster thinks it is the economy.

There is a flip side to housing values falling which seems to be ignored since most of the mainstream rhetoric is guided by the FIRE (finance, insurance, and real estate) experts.  The most obvious benefit is those looking to buy their first home don’t need to put themselves into so much debt that they risk their entire financial future for a home.  The next subtle change is the amount of money diverted from housing related spending to other sectors of the economy.  This last change will take time to sink into the overall economy but there is definitely a benefit of moving away from an economy highly dependent on Wall Street finance and real estate.

If we look at the current nationwide situation, the amount of distressed loans is stunning:

I think that the above disaster in distressed mortgages is causing very little reaction because we have somehow adapted to the current shocking situation.  Over 10 percent of all U.S. mortgages are at least one payment behind and another 4 percent are already in the process of foreclosure.  This figure is incredible given the entire mortgage market is made up of over 51 million active mortgages.  In 2007 if you were to tell someone that prices in California would fall by 50 percent (even 10 percent) many would have ignored you.  Now, it is standard practice for the market.

As a country we are much too reliant on real estate.  Commercial real estate is the next tragic saga in the RE bubble bursting with prices already falling by 42 percent.  At one point, CRE values in the U.S. were up to $6.5 trillion (now this was a rough generous estimate at the time).  Today, CRE values are down closer to $3 to $3.5 trillion; this is roughly the same amount of CRE loans outstanding.  This has pushed defaults through the roof:

The exponential rise is cause for serious concern.  There is little energy or political will to bailout the enormous CRE market.  This probably won’t stop the Federal Reserve and U.S. Treasury to game the system yet again and put taxpayers on the hook.  They created this massive monster and now want the public to fight it off with pitchforks.  The above chart is disturbing and the amount of bank failures we are seeing is directly related to the above trend.  Many smaller banks are deep in the trenches with CRE debt and much of this is now going bad.  How many strip malls do we really need?  Maybe having 20 Taco Bells in a one mile radius probably isn’t such a good idea.  Many of the commercial projects were built in the anticipation of sky high residential prices to justify their absurd underwriting expectations.  The above results have no excuse and are largely a reflection of massive delusional speculation in all things real estate.

Now that expectations are coming more into line and the fantasy world of Alt-A, subprime, and option ARM loans are behind us, most people have to qualify to get a loan with actual real income which many are now finding less of.  Banks lending virtually all government money, are now beholden to stricter (aka basic due diligence) in order to give out loans.  Yet if we look at the negative equity situation, the real estate monster grows scarier:

Over 20 million mortgage holders are underwater.  It is amazing that a few years ago, Deutsche Bank estimated that at the ultimate trough of the housing market, nearly half of all mortgages would be underwater.  This “doomsday” scenario seemed extremely farfetched.  Today, another 10 percent nationwide price decline would put us there.  Even without prices declining further, having 20 million Americans underwater is not a good sign going forward.  You figure over 7 million people are one payment behind or in foreclosure.  But what about the other 13 million?  This enormous group is basically a large cohort of renters but in a worse financial situation.  They are stuck.

Continue reading…DoctorHousingBubble

For all of you to study carefully and make your own conclusions. The saga continues…

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We all saw this coming…and so did they.

By Grace Gagliano | Bradenton.com

At Fran Maxon Real Estate, Stephanie Bell said the oil spill hasn’t led to cancellations on property purchases nor on vacation rentals listed with the Anna Maria real estate agency.

* 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.

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.

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As many have seen SFF was the first to expose this Bogus Assignment scandal via a YouTubeVideo.

Via: NakedCapitalism by Yves Smith

I’m not quite certain how to calibrate journalism American Banker style, but I found this article, “Challenges to Foreclosure Docs Reach a Fever Pitch,” (sadly, subscription only, e-mailed by Chris Whalen), to be both interesting and more than a tad disingenuous.

The spin starts with the headline, it’s a doozy. The “challenge to foreclosure documents” message persists throughout the article, and it’s perilously close to a misrepresentation:

Because the notes were often sold and resold during the boom years, many financial companies lost track of the documents. Now, legal officials are accusing companies of forging the documents needed to reclaim the properties.

On Monday, the Florida Attorney General’s Office said it was investigating the use of “bogus assignment” documents by Lender Processing Services Inc. and its former parent, Fidelity National Financial Inc. And last week a federal judge in Florida ordered a hearing to determine whether M&T Bank Corp. should be charged with fraud after it changed the assignment of a mortgage note for one borrower three separate times…

In many cases, [plaintiff attorney] Kowalski said, it has become impossible to establish when a mortgage was sold, and to whom, so the servicers are trying to recreate the paperwork, right down to the stamps that financial companies use to verify when a note has changed hands…

In a notice on its website, the Florida attorney general said it is examining whether Docx, an Alpharetta, Ga., unit of Lender Processing Services, forged documents so foreclosures could be processed more quickly.

“These documents are used in court cases as ‘real’ documents of assignment and presented to the court as so, when it actually appears that they are fabricated in order to meet the demands of the institution that does not, in fact, have the necessary documentation to foreclose according to law,” the notice said..

Yves here. Let’s parse the two messages:

1. Note how the problem is presented as one of “documentation”, implying it is not substantive.

2. Because everyone knows mortgages were sold a lot, (which is clearly mentioned in the piece) the idea that some somehow went missing (or as the piece suggests, the “documentation” is missing even though the parties are presented as if they know who really owns the mortgage) is presented as something routine and not very alarming.

OK, let’s dig a little deeper. Even though the media refers to “mortgages”, under the law there are two pieces: the note, which is the indebtedness, and the mortgage (in some states, a “deed of trust”), which is the lien against the property. In 45 of 50 states, the mortgage follows the note (it is an “accessory”) and has no independent existence (as in you can’t enforce the mortgage if you don’t hold the note. You need to have both the note and the mortgage. This is a bit approximate, but will do for this discussion).

Now, the note is a bearer instrument if it is endorsed in blank (as in signed by current owner but not specifically made payable to the next owner, which was common for notes that were sold). It isn’t some damned “documentation”. Remember the days of bonds, when you had the real security, or stock certificates? This is paper with a hard monetary value, the face amount of the note (as long as it’s current, anyhow).

So now go back and look at that little extract. This “oh business was so busy we mislaid a lot of paper” isn’t some mere filing error. It’s like saying you left an envelopes full of cash in the subway on a regular basis. In the late 1960s back office crisis on Wall Street, when the volume of stock trading overwhelmed delivery and settlement infrastructure, a LOT of firms went out of business, in the midst of a bull market.

OK, now the second item with the article finesses is the sale of mortgages versus the role of the servicer. For the overwhelming majority of first mortgages, and I believe about 50% of second mortgages and HELOCs, the servicer is working for a trust that holds the notes pursuant to a securitization.

The standard documentation for a RMBS calls for the trust to gave a certification at closing that it has all the notes and it has to recertify that it has all the assets at two additional future dates, usually 90 days out and a full year after closing.

So this “notes were flyin’ around, yeah we lost track” is presumably impossible if we are discussing securitizations. Or put it another way: it means the fraud here is much more extensive than servicers making up documents ex post facto. It means the fraud extended back into how the securitization took place (as in what investors were told v. what actually happened).

And before you say these reports are exaggerated, my limited sample and my discussions with mortgage professional (not merely plaitiff’s attorneys but mortgage industry lifers) suggests the reverse.

But what about the second claim in the headline, that this activity has reached a “fever pitch”? Wellie, that’s a distortion too, perhaps to energize those who would be enraged by visions of deadbeat borrowers staying in houses due to fancy legal footwork. Trust me, there are FAR more overextended borrowers living in “free” housing due to banks slowing up the foreclosure process than due to legal battles.

First, the story is ONLY about Florida, despite the hyperventilating tone. And Florida is way ahead of other jurisdictions. There is a group of lawyers that are sharing G2 on these cases, and there are also a fair number of sympathetic judges. Note some states (Minnesota in particular) have both extremely pro bank laws and a business friendly bar. So it’s misleading to make sweeping generalizations; you need to get a bit more granular, which this article fails to do.

Second, the “fever pitch” headline also conveys the impression that this is an epidemic, ergo, these cases are widespread. While it is hard to be certain (this activity is by nature fragmented), at this point, that looks to be quite an exaggeration. The vast majority of borrowers, when the foreclosure process moves forward, don’t fight. They lack the energy and the resources. And when the borrower prevails, the case is typically dismissed “without prejudice”, meaning if the servicer and trustee get their act together, they can come back to court and try again.

Most of the battles against foreclosure appear to fall into one of two categories:

1. The borrower can afford the mortgage, but has fallen behind due to what he thinks is a servicing snafu. I can give you the long form, but the way servicers charge extra fees is in violation of Federal law and is designed to put the borrower on a treadmill of escalating fees. And they do not typically inform the borrower that fees have compounded until 6 or more months into the mess, and by that time, the arrearage can be $2000 or more. The borrower is unable to fix the servicing error, the fees continue to escalate, and the house goes into foreclosure.

2. The borrower has filed for a Chapter 13 bankruptcy, but the trustee is fighting the bankruptcy stay and trying to seize the house.

So why this alarmist American Banker article? Even if the numbers of successfully contested foreclosures are not (yet) large, the precedents being set are very detrimental to the foreclosure mills, the servicers, and the trustees. Moreover, the costs of fighting these cases can quickly exceed the value of the mortgage. So it would not take much of an increase in this trend to wreak havoc with servicer economics, and ultimately, the losses on the trust, particularly on prime mortgages, where the loss cushions were considerably smaller than on subprime.

I suspect the real reason for alarm isn’t the “fever pitch,” meaning the current level of activity. It’s that a state attorney general is throwing his weight against the servicers, and what he is uncovering is every bit as bad as what the critics have been saying for some time. That may indeed kick up anti-foreclosure efforts in states with open-minded judges to a completely new level.

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Lender Processing Svc
(651) 234-3500
1270 Northland Dr Ste 200
Mendota Heights, MN 55120

Take a good look at the Buyer and the address in the document below. I investigated a little more and found multiple addresses below in forums and placed them here for you to see.

If you take a look at the Buyer in this Title the “Certificate Of Title” was issued under IndyMac Federal Bank…HUH? IndyMac FB does not exist…This seriously needs to be investigated! How are these being sold under failed banks?? Where does the money go after the auction and from the new sale?

Everyone needs to look at their documentation and look carefully for this address. If you have them under this address please forward them to StopForeclosureFraud@gmail.com.

OTHERS LISTED WITH 1270 Northland Dr. Ste 200 Mendota Heights, MN 55120

Fidelity National Foreclosure Solutions 1270 Northland Drive Suite 200.Mendota Heights, MN 55120 · (651)234-3500

Foreclosure & Bankruptcy Services. 1270 Northland Drive, Suite 200, Telephone, (651) 234-3500. Mendota Heights, MN 55120, Fax, (651) 234-3600 …

http://www.tampagov.net/CEBAgendas/20071001.pdf

WELLS FARGO BANK NA TRUSTEE
1270 NORTHLAND DR SUITE 200
MENDOTA HEIGHTS, MN 55120
INSPECTOR: Eddie Prieto  274-5545

DEUTSCHE BANK NATIONAL TRUST
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS, MN 55120
INSPECTOR: RANDEL SMITH 274-5545

http://www.newspapernotice.com/details.aspx?id=1889632
Current Beneficiary: MERS as nominee for Aegis Mortgage Corp Care of / Servicer Aegis Mortgage Corp/Fidelity C/O Fidelity National Foreclosure Solutions 1270 Northland Drive. Suite 200 Mendota Heights, MN 55120

http://www.geodetix.com/ftp/APPRAISAL_INFO_SAMPLE.TXT
BANK ONE NATIONAL ASSN TRUSTEE
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS MN 55120

http://ao.lackawannacounty.org/details.php?mapno=14204010007

http://www.stpete.org/pdf/vacantandboarded.pdf
WELLS FARGO BANK NA  TRE
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS                MN
551201176

LONG BEACH MTG LOAN TRUST
1270 NORTHLAND DR STE 20
MENDOTA HEIGHTS                MN
551201156

DEUTSCHE BANK NATL TRUST CO  T
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS                MN
551201176

http://www.alsb.uscourts.gov/credclaim.pdf
HomEq Servicing Corp.
1270 Northland Dr., #200
Mendota MN
55120-

IndyMac Bank-FSB;The Leader
Mortgage Co.
1270 Northland Drive, Suite 200
Mendota Heights
MN
55120-

Saxon Mortgage; Homecomings
Financial
1270 Northland Dr., #200
Mendota Heights
MN
55120-

http://madison-co.com/elected_offices/tax_assessor/display_parcel.php?pn=082I-29%20-007/02.29&street_name=v
FEDERAL NATIONAL MORTGAGE ASSOC
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS
MN 55120

http://gis.meridian.mi.us/assessing/details_process.asp?IDValue=33-02-02-06-378-004

BANK ON E AS TRUSTEE

1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS MN 55120-

http://www2.county.allegheny.pa.us/RealEstate/General.asp?CurrBloLot=0079B00251000000&SearchBloLot=0079B00251000000&SingleResult=True
JP MORGAN CHASE BANK (TRUSTEE)
1270 NORTHLAND DR SUITE 200
SAINT PAUL, MN 55120

http://www.lehighcounty.org/Assessment/puba.cfm?doc=HeroesGrant_form.cfm&pin=640703621999&parnum=1
WELLS FARGO BANK NA
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS MN, 55120

Contact Matrix and Team Breakdown of FIS Foreclosure Solutions, Inc.
operations for the month of December 2007

Select Portfolio Servicing Inc.
1270 Northland Drive, Ste. 200
Mendota Heights, MN 55120

http://www.dailycourt.com/bankruptcy.php/3:05-bk-39314/
Case #3:2005-bk-39314
Select Portfolio Servicing, Inc.
1270 Northland Drive, Suite 200
Mendota Heights, MN 55120

RELATED STORY:

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?