Are All Deeds Since 2005 (Not Just Foreclosed Ones) At Risk?

October 13, 2010

Worms crawling out from under the rocks of foreclosures.I was listening to a radio program this week (The Kojo Nnamdi show on WAMU in Washington, D.C.) and the topic was–what else–the foreclosure crisis and robo-signing. OK, I thought, this might be interesting. And it was. Not from Kojo’s guests–who were OK but pretty predictable–but from one of the callers. It was a guy named Matthew (who I think is Matthew Weidner, a Florida attorney) who raised a scary point about the foreclosure mess.

Incidentally, Matthew Weidner’s blog has all sorts of fascinating information on it. Some of it’s a bit technical, and some of it’s Florida-specific (that’s where he is), but it’s worth looking at.

While robo-signing is the most recent problem to arise, a deeper problem is all the paperwork that accompanied all the purchase and sale transactions since about 2004 or 2005. Basically, the paperwork is a mess–severely flawed–since all those loans were sliced and diced over and over again to sell to investors. Heck, I even blogged about that–a book review called The Big Short by Michael Lewis. [Tip: Buy it. Read it.]

But caller Matthew’s point was that none of these properties–foreclosure or not–really can be said to have clear title. The paperwork’s bad on all of them. He called this “the elephant in the room” that no one wants to talk about. And, obviously, for good reason.

A lot of the problems with the foreclosure paperwork are coming to light because one of the parties (the owner) is highlighting the problem and using it to block further action. You don’t have the same situation in cases where you’ve got a willing seller, a willing buyer, and no bank in the middle of that transaction.

However, just because no one’s raising a fuss doesn’t mean the problem doesn’t exist. And as those rocks start getting turned over and the worms start wiggling out, someone’s going to notice that a lot of those worms are crawling out from supposedly “clean” sales.

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Stop Those Foreclosures Now!

September 22, 2010

Stop those foreclosures now!

The Washington Post reported on September 22 that Ally Financial and some other large mortgage lenders did not follow proper procedures when processing foreclosures. An excerpt:

Some of the nation’s largest mortgage companies used a single document processor who said he signed off on foreclosures without having read the paperwork – an admission that may open the door for homeowners across the country to challenge foreclosure proceedings.

The legal predicament compelled Ally Financial, the nation’s fourth-largest home lender, to halt evictions of homeowners in 23 states this week. Now it appears hundreds of other companies, including mortgage giants Fannie Mae and Freddie Mac, may also be affected because they use Ally to service their loans.

As head of Ally’s foreclosure document processing team, 41-year-old Jeffrey Stephan was required to review cases to make sure the proceedings were legally justified and the information was accurate. He was also required to sign the documents in the presence of a notary.

In a sworn deposition, he testified that he did neither.

The reason may be the sheer volume of the documents he had to hand-sign: 10,000 a month. Stephan had been at that job for five years.

Wow. 10,000 a month for five yearsYou do the math.

Let me say that I have precious little sympathy for homeowners who lied about their incomes in order to obtain loans. Or buyers who bought, knowing there was no way they could afford the homes, but figured they could sell for a nice profit. Or for others who gamed the system. Or for others who are now walking away from homes that they’re fully capable of making payments on, just because the home’s lost value. If there was mortgage fraud, then prosecute them to the full extent of the law. (I do have sympathy who, through job loss, illness, or other tragedy beyond their control lost their homes.) Hopefully, I’m making myself clear.

But it looks like Ally may not have been playing by the rules, either. If that’s the case, then let’s go after them to the full extent of the law. And if that means stopping hundreds of thousands of foreclosures, then so be it. And if that means going after them for already completed foreclosures that can’t be undone, let’s do that, too.

Here’s a passage I love from Robert Bolt’s A Man for All Seasons about Sir Thomas Moore:

ROPER So now you’d give the Devil benefit of law!

MORE Yes. What would you do? Cut a great road through the law to get after the Devil?

ROPER I’d cut down every law in England to do that!

MORE (Roused and excited) Oh? (Advances on ROPER) And when the last law was down, and the Devil turned round on you-where would you hide, Roper, the laws all being flat? (He leaves him) This country’s planted thick with laws from coast to coast-man’s laws, not God’s-and if you cut them down-and you’re just the man to do it-d’you really think you could stand upright in the winds that would blow then? (Quietly) Yes, I’d give the Devil benefit of law, for my own safety’s sake.

It may be distasteful. It may be messy. It may stick in your craw. But if Ally failed to comply with the law or applicable regulations, then it must be held accountable.


Bankruptcies, Home Losses Tied To Failed Health Care System

June 4, 2009

More than half a million families who own homes will file for bankruptcy this year because of illness and medical bills, according to a new study by the Physicians for a National Health Program (PNHP). The study will be published in the August issue of the American Journal of Medicine. PNHP, a membership organization of over 16,000 physicians, supports a single-payer national health insurance program. 

Himmelstein D, Thorne D, Warren E, Woolhandler, S. National bankruptcy in the United States, 2007: results of a national study. American Journal of Medicine. [August: prepublication] Available online at http://www.pnhp.org/new_bankruptcy_study or through the American Journal of Medicine, aimmedia@elsevier.com (212) 633-3944. 

The PNHP study was a broader look at medical bankruptcy: Medical Bankruptcy in the United States, 2007: Results of a National Study. (But because we’re a real estate blog, we’re especially considering the real estate implications of the study.)

The study looked at bankruptcy data from 2007. It found that:

  • Illness and medical bills were a cause of at least 62.1% of all personal bankruptcies that year.
  • Based on the current bankruptcy rate (expected to reach 1.4 million in 2009), the study’s authors project that medical bankruptcies will total 866,000.
  • The proportion of bankruptcies attributable to medical problems rose by 49.6% between 2001 and 2007.

Surprisingly, most of those bankrupted by medical problems had health insurance. More than three-quarters (77.9%) were insured at the start of the bankrupting illness, including 60.3% who had private coverage. Most of the medically bankrupt were middle class before their financial problems. Two-thirds (66.4%) had owned a home.

Out-of-pocket medical costs averaged $17,943 for all medically bankrupt families ($26,971 for uninsured patients, $17,749 for those with private insurance at the outset, $14,633 for those with Medicaid, $12,021 for those with Medicare, and $6,545 for those with VA/military coverage).

Among common diagnoses, nonstroke neurologic illnesses such as multiple sclerosis were associated with the highest out-of-pocket expenditures (mean $34,167), followed by diabetes ($26,971), injuries ($25,096), stroke ($23,380), mental illness ($23,178), and heart disease ($21,955).

Bottom line (according to an accompanying Q&A paper): “It appears that health insurance offers only modest protection against medical bankruptcy.” And from the study itself: “Being uninsured at filing did not predict a medical cause of bankruptcy.”

Among the items that did predict the filing of medical bankruptcy: a gap in coverage, older age, marriage, being female, larger household, and lower income quartile.

The study concludes: “The US health care financing system is broken, and not only for the poor and uninsured. Middle-class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts financial ones.”

While the study didn’t get into the real estate implications, other than to observe that 66.4% had owned a home, it would appear that a steady stream of foreclosures will continue–in fact, increase–regardless of what Congress or the Administration does if those actions only address lending practices or other specific real estate issues. What appears to be needed, from my reading of the implications of the report, is a multimodal approach that addresses the underlying causes of bankruptcies. And that includes . . . well, I was going to say a restructuring of the health care system, but maybe something more radical is needed. After all, to borrow a phrase from the last Presidential election, stopping at a so-called restructuring might be akin to putting lipstick on a pig.


We Read This Crap So You Don’t Have To: Nathan Jurewicz

May 27, 2009

“We Read This Crap So You Don’t Have To” features claims–primarily by e-mail–from real estate promoters. Note: We’re not evaluating the actual programs, though we may have some comments on the programs as described in the e-mails and sales pages. Rather, we’re examining the claims and pitches of these promoters and real estate gurus.

In the future, we’ll present some that are honest, straightforward, and actually full of good information. (Yes, Virginia, there is a Santa Claus!) But since it seems that about 90% of everything is crap–exceeding that old 80/20 rule–most of what you’ll read here deals with questionable claims and over-hyped pitches. And so it is with this posting.

I received an e-mail (a portion appears below) from another real estate promoter, Larry Goins. I’ve provided the emphasis in red.

Your whole short sales business works by itself…on automatic! That’s right, just crank it up, then stand back, and let it rip! Find out how right here.

And for good measure:

I STILL don’t know why Nathan’s letting out his secrets. If you’ve seen his “Short Sales Riches” course, he sells everything he’s talking about on this fr-ee DVD for $497. So why would he be giving it away for free? I’m not sure, but if I were you, I’d hustle over there now before he realizes what he’s doing.”

So ol’ Nathan is giving away a free DVD containing his short sale secrets? What a wonderful guy! Gotta love him.  

Except, of course, there’s no information on the sales page. Just the requisite overwritten hype, along with some amazingly low-quality videos. Plus the opportunity to buy his program for $1,497 . . . or $1,694 for two payments, the second just 15 days after the first. Except, of course, it really costs more, as you find out when you get to the order page. It’s $1,497  (or $1,694) plus a month of coaching for $1, followed by continued coaching at $197 a month. That’s a 1-year investment of either $3,861 or $4,058. That’s sure a far cry from “fr-ee.” (Hmmm. Maybe the definition of “fr-ee” in the real estate promotor’s dictionary is: “Four gRand-Each and Every.” 

Again, the program may or may not be worth it. You can be the judge of that. What I’m addressing is the crap . . . the hype . . . the claims versus the facts of the promotion.

This rates a 9 out of 10 on the Crap-O-Meter.

Larry Goins email pitching Nathan Jurewicz's short sale package. Note the reference at the bottom to the

Larry Goins email pitching Nathan Jurewicz's short sale package. Note his claim at the bottom that the information offered on a "fr-ee DVD."

Top of Nathan Jurewicz's pitch page for his short sale program

Top of Nathan Jurewicz's pitch page for his short sale program

 

Bottom of Jurewicz's Pitch Page. Here's the real price . . . sort of

Bottom of Jurewicz's Pitch Page. Note the price, but no mention of additional monthly payments for coaching.

Purchase page for Nathan Jurewicz's short sale package. Notice the $197 additional charge for coaching after the first month.

Purchase page for Nathan Jurewicz's short sale package. Note the additional $197 per month for coaching.