Deutsche bank says Crisis "Far from Over"

And this is news???!!!  I can't tell you how many foreclosures come through my door where Deutsche ban as trustee fro (fill in the blank) is the Plaintiff. No assignment of mortgage, no good faith effort to find a lost note, who are they kidding?  Matbe we should all just be like French Peasants and buy gold to stuff in our mattresses...these "Masters of the Universe" ought to be in irons....

Shadow inventory of unsold foreclosed homes

Here is an article from the san Francisco Chronicle describing the glut of unlisted homes that have already been foreclosed on. Here in Florida, I have no idea about a glut of foreclosed homes in inventory BUT there are probably TEN THOUSAND where the lenders are dragging their feet and don't want to even take title.....

Foreclosures? Want to vomit? Read on!!

Want to know how sick the system is?  Below is just part of one day's analysis of the status of mortgage foreclosures we answered and are monitoring. As you know, we were recently forced to start charging a flat fee of $150 to answer and monitor these cases. I have 2 full time people doing this.  I think we just passed a BILLION Dollars in foreclosure defenses, over 3,200 at about $300k each...

Here is how to read them:

date-initials of my employee-action taken-followup

FC= foreclosure; MSJ= Motion for Summary Judgement' OC= Opposing Counsel.

This is absolutely sickening!  When we call the plaintiffs lawyers, they pull the file and move; if not they only move if their clients scream at them, and because Uncle Sam is bailing everybody out , what do the "lenders" care? They've already raped the investors, and sliced and sliced up the packages of these worthless mortgages.

The lawyers for the plaintiffs are totally under water, and their clients don't really want the properties anyway, what with having to pay back assessments, ongoing assessments, property taxes, maintenance &tc., &tc...... 

These matters are moving at about the speed of molasses, which is why I beat the drum about moving aggressively against delinquent owners, and having clients consider authorization of their own foreclosures even when the first mortgage holder starts foreclosure. This is done on a not to exceed fee of $1500, including costs. We can usually go start to finish in 5-7 months and the associations can then rent out the properties. Remember, no guarantees, but if your association sits on it's hands, you will get death by slicing

I believe it will get worse as the lenders all wait for Uncle sam to see how much they can sucker the taxpayers for in a bailout. Current valuation is about 22 cents on the dollar wait, it gets worse, I think we are half way through, maybe.  Just wait until all of the resets on loans come this year, and all of the foreclosed properties get on the market at 50% of their former "value."

12-06-07-GT-Opened Mtg FC file. XXXXXX's office answered complaint 10-11-07.

docket pulled - nothing since answered filed. Check status 2mos.

02-20-08-GT-Per Gail, OC is awaiting hearing date for MSJ. Check status

2mos.

08-08-08-GW-Pulled docket nothing since April.  Status 2 mo

08-29-08-GW- MSJ filed.  check 1 mo for hearing date

02-02-09-GW- Nothing on docket since 8/08.  Check 2 mos

2-06-07-GT-Opened Mtg FC file. XXXXXXX's office answered complaint 10-11-07.

docket pulled - nothing since answered filed. Check status 2mos.

02-20-08-GT-Per Gail, OC is awaiting hearing date for MSJ. Check status

2mos.

08-08-08-GW-Pulled docket nothing since April.  Status 2 mo

08-29-08-GW- MSJ filed.  check 1 mo for hearing date

02-02-09-GW- Nothing on docket since 8/08.  Check 2 mos

04-09-08 LAP Answered Complaint.  Check status 3 mos.

08-08-08-GW- Pulled docket.  Nothing since April.  Check 2 mos

11-21-08-GW- MSJ filed.  Check 2 mos for hearing date

02-09-09-GW- Check 2 mos for hearing

12-03-07-GT-Answered Mtg FC complaint. Check status 3mos.

03-04-08-GT-MSJ was set for 02-28-08. Check status 2mos.

08-13-08-GW-  Sale date Septemebr 8, 2008.  Check 1 mo for CT

09-09-08-GW- OC filed Motion to cancel sale.  Check 1 mo for resch.

02-09-09-GW-Case reopened 9/08.  Nothing filed since 9/08.  Check 3 mos

03-16-08-GT-Gail answered Mtg FC complaint 03-07-08. Check status 3mos.

08-08-08-GW- Pulled docket.  Service being perfected.  Check 2 mo

02-09-09-GW- MSJ filed 11/08.  Check 1 mo for hearing

03-16-08-GT-Gail answered Mtg FC complaint 02-12-08. Check status 3mos.

05-22-08-GT-MSJ hearing set for 07-03-08. Check status 2mo.

08-08-08-GW-Pulled docket.  Nothing since April.  Check 2 mos

02-09-09-GW- Pulled docket.  MSJ filed 4/08 nothing since.  Emailed atty for

status

03-16-08-GT-Gail answered Mtg FC complaint 03-04-08. Check status 3mos.

04-20-08-GT-Owner filed BK 04-09-08.

08-20-08-GW-OC filed Amended Amts Due and Owing.  Check status 2 mos

08-22-08-GW-BKR discharged July 20, 2008.

02-09-09-GW- Defaults being filed 1/09.  Check 2 mos for MSJ

11-21-07-GT-Answered Mtg FC complaint. Check status 2mos.

01-28-08-GT-Stern's office is perfecting service and entering defaults.

Check status 2mos.

08-08-08-GW- Nothing on docket since December.  Check 2 mos

02-09-09-GW- Cas dismissed 8/14/08.  File closed

11-16-07-GT-File pulled for case status update. Docket shows no movement

since 04-03-07.

11-28-07-GT-Emailed status request to Echevarria.

11-29-07-GT-Per plaintiff's atty, this file is on BK hold. Check status

3mos.

03-04-08-GT-No movement on docket since 04-03-07. File to Gail to call OC.

03-07-08-GT-Per Gail's email from OC, file is still on BK hold. BK is

active. Check status 3mos.

10-24-08-Amending MSJ  Check 3 mos for hearing Check 2 mos

02-05-09-GW- BKR terminated.  Check 2 mos

02-09-09-GW- 10/08-Lenders atty amending MSJ and reschedule sale date.

03-09-08-GT-Gail answered Mtg FC complaint 02-12-08. Check status 3mos.

06-27-08-GW-Sale date 7/23/08.  Check 1 mo for CT. No fax sent per Kathy.

08-04-08-GW-Sale to third part for $99,700.  Check 1 mo for CT

4-18-08 LAP Answered Complaint.  Check status 3 mos.

02-09-09-GW- Nothng on docket since 7/08.  Check 2mos

12-27-07-GT-Answered Mtg FC complaint. Check status 2mos.

03-02-08-GT-OC is preparing defaults. Check status 2mos.

04-09-08-GT-BK filed 03-31-08.

05-22-08-GT-File was administratively closed but NOT dismissed. Check status

2mos.

09-18-08-GW-9/18/08 Hearing cancelled per phone call 9/17 from OC office.

Check status 2 mos

09-30-08-GW-Hearing cancelled.  check 2 mos for reschedule

02-09-09-GW-Nothing on docket since 9/08.  Court has the file as closed.  No

dismissal filed.  Check 2 mos

12-17-07-GT-Answered Mtg FC complaint. Check status 2mos.

03-02-08-GT-OC is preparing for defaults. Check status 2mos.

07-17-08-GW- Check status 2 mo

08-04-08-GW-MSJ hearing for 7/31/08 cancelled.  Check status 2 mos

02-09-09-GW- Hearing cancelled.  Notingo n docket since 7/08.  Check 2 mos

01-07-08-GT-Answered Mtg FC complaint. Check status 2mos.

02-04-08-GT-Owner is in BK.

03-09-08-GT-File is on BK hold. Check status 3mos.

06-15-08-GT-BK was discharged 03-24-08. OC is restarting the Mtg FC action.

Check status 2mos.

06-18-08-GW-MSJ hearing 7/17/08.  Check 1 month after.

09-15-08-GW- Hearing cancelled.  check 2 mos for reset.

11-01-08-GW-MSJ filed Check 2 mos for hearing date

02-09-09-GW-MSJ hearing 4/21/09.  Check 1 mo for sale date

01-21-08-GT-Answered Mtg FC complaint. Check status 3mos.

07-17-08-GW-Service being perfected.  Check 2 mo

02-09-09-GW- Noting on docket since 6/08.  called lender atty they are

preparing the MSJ in about a month  Check 1 mo

09-10-08-GT-Opened FC file. Ran clerk search - clear. Ready for TS.

10-03-08-GT-Have not rec'd TS back from Mike. Check status 2wks.

10-09-08-GT-Updated clerk search - Mtg FC found. File converted to Mtg FC.

Check status 3mos.

10/28/08-GW-Ans Complaint.  Check status 3 mos

03-18-08 LAP Answer Complaint - Check status 3 mos.

08-04-08-GW-MSJ hearing 9/22/08.  Check 1 mo for sale date

10-18-08-GW-MSJ hearing 11/4/08.  Check 2 mos for sale date

11-13-08-GW- Sale date 12/5/08.  Check 1 month for CT

11-18-08-GW- Bankruptcy filed 11/5/08.  Check 3 mos

12-01-08-GW- Foreclosure sale cancelled  Check 2 mos

02-09-09-GW- Nothing on docket since 12/08.  Check 2 mo

Race to the Courthouse Steps-2009 version

The situation is bad in Florida. We are now handling about a BILLION dollars of first mortgage foreclosures. When an owner is delinquent, the board needs to consider moving as fast as possible in the collection and foreclosure process, and try to take title and rent the property before the "lender" finishes the foreclosure. The lender foreclosures are taking anywhere from 9 months to TWO YEARS, as they don't want to pay taxes, assessments, insurance, etc., etc. Watch my video here for more details.

See my other videos and articles on the issues of the day at www.condocollections.com

Feds stop loophole debt strapped consumers use

here we go, homeowners underwater in debt have discovered a way out; find and buy a home in their community that is selling for half the price they paid 3 years ago, move out of their hopelessly overpriced residence and let the lender foreclose on the former abode.  This is part ofthe 'cretive destruction" of capitalism, and one of the only way a "little guy" could game the system to save himself without help from Uncle Sam....Not so fast say the regulators....

Little guys, bend over, big guys, get your hands out....billions for you!!!

September 19, 2008

MORTGAGEE LETTER 2008-25

TO: ALL APPROVED MORTGAGEES

SUBJECT: Converting Existing Homes to Rentals—Underwriting Instructions

Through this Mortgagee Letter, the Federal Housing Administration (FHA) takes steps to immediately respond to an unscrupulous practice arising in the housing mortgage market that poses a risk to FHA, FHA-approved lenders, and consequently to FHA’s ability to help new homeowners.

Recently, FHA and others in the mortgage industry have observed an increasing number of homeowners who have chosen to vacate their existing principal residence and purchase a new residence. This has been occurring as some homeowners, given the rising price of fuel, are relocating to homes nearer their employment, or are taking advantage of other home buying opportunities arising in the marketplace.

Due to FHA’s concern that some homebuyers in these transactions may attempt to provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage, FHA is instituting underwriting guidance designed to assure that the homebuyer can make payments on the full debt service of both mortgages. Consequently, beginning with case number assignments on or after the date of this Mortgagee Letter and until further notice, the underwriting analysis may not consider any rental income from the property being vacated except under circumstances described in this Mortgagee Letter. The exclusion of rental income from property being vacated is being instituted on a temporary basis while FHA further analyzes this situation to determine whether permanent measures may need to be taken. This will assure that a homeowner either has sufficient income to make both mortgage payments without any rental income or has an equity position not likely to result in defaulting on the mortgage on the property being vacated. In either case, this guidance is directed to preventing the practice known as “buy and bail” where the homebuyer purchases, for example, a more affordable dwelling with the intention to cease making payments on the previous mortgage. Although the property being vacated will not have a mortgage insured by FHA, surrounding properties may and, thus, FHA may be indirectly negatively affected should that property result in a foreclosure.

Exceptions:

Rental income on the property being vacated, reduced by the appropriate vacancy factor as determined by the jurisdictional FHA Homeownership Center (see http://www.hud.gov/offices/hsg/sfh/ref/sfh2-21u.cfm) may be considered in the underwriting analysis under the following circumstances:

• Relocations: The homebuyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance. A properly executed lease agreement (i.e., a lease signed by the homebuyer and the lessee) of at least one year’s duration after the loan is closed is required. FHA recommends that underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner.

• Sufficient Equity in Vacated Property: The homebuyer has a loan-to-value ratio of 75 percent or less, as determined by either a current (no more than six months old) residential appraisal or by comparing the unpaid principal balance to the original sales price of the property. The appraisal, in addition to using forms Fannie Mae1004/Freddie Mac 70, may be an exterior-only appraisal using form Fannie Mae/Freddie Mac 2055, and for condominium units, form Fannie Mae1075/Freddie Mac 466.

The guidance in this Mortgagee Letter applies solely to a principal residence being vacated in favor of another principal residence. This Mortgagee Letter is not applicable to existing rental properties disclosed on the loan application and confirmed by tax returns (Schedule E of form IRS 1040).

It is important to note that if the property being vacated had a mortgage insured by FHA, eligibility for a second FHA insured mortgage can only occur under the exemptions described in handbook HUD-4155.1 REV-5, paragraph 1-2.

If you have any questions regarding this Mortgagee Letter, call 1-800-CALLFHA.

Sincerely,

Brian D. Montgomery

Assistant Secretary for Housing-

Federal Housing Commissioner

Community Association Collections Crisis Worsens

In the past few months, a huge issue has arisen that needs to be properly dealt with by community associations.

What to do about lender foreclosures?

This post examines the ways to handle the position of the association in such actions.

When a mortgage foreclosure is filed and served, the vast majority of the properties have no equity. On sale, the association will not get paid and its' lien will be wiped out. The ability to obtain a money judgment is available either as part of the foreclosure as a cross claim for damages, or down the road in a Small Claims Court action.

On defense of mortgage foreclosures I notice that some lawyers file a claim, and incurs the expense of a process server and charges the association for the legal fees and costs. I think this is a gross waste of time and money to get a money judgment against someone who is letting a $300,000 asset be taken in th esuit. "You can't get blood from a turnip" is th elegal doctrine here, I believe.....

While this is legally proper, in the short term, I think it is only $$$ in the pocket of the lawyer doing the work. While it may end up with a judgment in favor of the association that is good for 20 years (must be renewed periodically during that time) and may someday be paid off, the association has paid a heck of a lot of money relative to the claim for a piece of paper (the judgment) that may never be collected upon. The reason for my conclusion is that the present value of the money probably never works in favor of the association.

When I defend foreclosures, I do not do counterclaims for that reason; I think it is throwing good money after bad. It's not a situation where one approach is "proper" and one is "improper" it's just that associations are under siege and I see no benefit in charging hundreds of dollars in the context of defending and counterclaiming in a first mortgage foreclosure, with the hope that the amount due will be collected some time in the next 20 years....I answer the complaint and monitor it until the CT is issued.

More later on an aggressive approach in these turbulent times.