by Mario Rizzo

Investors’ eagerness to invest in mortgage debt helped drive mortgage rates to all-time lows this week, Freddie Mac said.

The average rate on 30-year fixed-rate mortgages was 4.78%, the agency said Wednesday, matching a record low set in April. That was down from 4.83% from the previous week and 5.97% a year ago

I am amazed that aggregate-demand economists can look at the housing market and simply wonder how to bring it back to normalcy. Today the Wall Street Journal reports that investors are flocking to invest in mortgage-backed securities now that the Fed has been buying them. Freddie and Fannie are too big to fail, and so forth. The risk premium relative to Treasuries has fallen to the narrowest point this year.

From the investor’s perspective these are relatively safe problem-free investments. On the other hand, from the social perspective these investments delay the necessary adjustment of resources out of housing — remember: the over-expanded bubble sector?

Our aggregate-demanders (aka “Keynesians”) do not need to worry because during recessions the allocation of resources is not important. All that matters is propping up spending and restoring “confidence” in something called “the economy.”

On November 5, 2009, Fannie Mae launched what they characterize as a Deed-For-Lease in lieu of foreclosure program. The program allows a financially-distressed homeowner who does not qualify for a loan modification to stay in his home as a tenant by exchanging title to his property for a one-year lease agreement. The program does not include a repurchase option.

To qualify, the homeowner must currently occupy the property as his primary residence and deliver title to the property clear of any liens junior to the Fannie Mae loan. Rent under the program is capped at 31% of the homeowner’s pre-tax income, with lease agreements for periods up to 12 months with a renewal or extension on a month-to-month basis. If the home is sold during the term of the lease, the buyer takes title subject to (“inherits”) the lease.

This program aims to alleviate the deterioration of neighborhoods caused by vacant properties and foreclosures, and to soften the financial and social impacts of a homeowner losing his house.

first tuesday take: At last the government, through its mortgage arm Fannie Mae, is getting realistic with negative equity homeowners in California, most of who do not qualify for modification as they are at loan-to-values (LTVs) in excess of 125%. Fannie Mae could not previously admit to the obvious: take a deed-in-lieu of foreclosure, and if it could not instantly be resold as a real estate owned (REO) property, lease back the property to the homeowner who could/would not pay on the loan. However, the government agency must still foreclose on homeowners who have second liens on their homes in order to convey title to the property on resale as an REO.

This is a meritorious step forward for a lender and but a simple variation of the short sale of the property negotiated by the homeowner and his agent. Under the deed-in-lieu program, the lender, not the owner, is required to find the buyer at current market prices. Stranger conduct by lenders has been observed, specifically the refusal to process short sales (since allowing the discount of the loan on a payoff is anathema for poker-faced lenders).

We will see prices bottom sooner under this type of program as properties (which are currently being withheld) are sooner placed on the market. However, the process will still elongate the recovery of the real estate industry from its deep-rooted recession. The reason: after the one-year lease period is up, properties will be dumped onto the market at a time the market would otherwise be going into a recovery or a sales volume upswing.

This sale lease-back situation will provide flexible agents and brokers an opportunity to earn a fee for negotiating the exchange of the title for the lease agreement. This sale-by-exchange for the leaseback will be part of the consideration given the homeowner for title to the deed-in-lieu documentation. Since no foreclosure took place, the homeowner did not suffer the social embarrassment of foreclosure or receive a ding on his credit score. However, lenders are quick to ask a homeowner about entering into a deed-in-lieu arrangement.

MLS inventory is replete with short sale candidate properties which are underwater way more than 25% and thus are ineligible for loan modification (which modifications typically see a re-default within six months, as has been the history of such “extend and pretend” programs). Most of these homes are presently owner-occupied and a large percentage of them are Fannie Mae loans. For the properties which fit under this criteria and have no junior trust deeds on title, listing agents can facilitate the erstwhile homeowner’s negotiation with the lender for the one-year lease. Then, during the year, the same agents can assist the ex-owner/tenant in finding a new property to purchase.

Further, the homeowner may have an investor-buyer who would have done a short sale acquisition of the property and would, concurrently with the deed-in-lieu/leaseback transaction, be willing to acquire the property from Fannie Mae subject to the lease agreement. The rental income schedule under the lease agreement would then be used to capitalize and set the value and price to be paid for the property.

We see fees for brokerage services at every turn in this program – if it ever hits the ground. We hope this one is a breakaway from past save-the-owner programs. Most of those have been dismal failures in the financial restructuring of California hundreds of thousands of underwater homeowners.

The next government-sponsored program needs to grant bankruptcy judges the authority to cram down loan balances to current market values so that homeowners can both stay in their homes and own them into the future. This would force lenders into fast action to make the adjustment in loan balances before the judges get to them. But most importantly for California’s economic growth, the homeowner would be able to stay put without the burden of a dead-end loan, negative personal net worth or the total inability to contribute to the consumer economy during the next ten years (which would be the situation if he irrationally decided to remain in the home and pay, pay, pay). If he stays-and-pays, he will need a flush of a different and more royal sort.
Re: “Avoid foreclosure: rent your own home” from CNNMoney.com

From the makers of bankrupt Social Security, indebted Postal Service, broke Fannie Mae, deteriorating Medicare and Medicaid, and broke Freddie Mac, comes health care.

JPMorgan Chase had a motion denied by a U.S. District Court judge in California to dismiss a lawsuit that alleges the bank illegally reduced a couple’s home equity line of credit.

Chase argued that the plaintiffs, Jeffrey and Jenifer Schulken, are former customers of Washington Mutual and they should sue the Federal Deposit Insurance Corp. – which approved Chase’s acquisition of WaMu – not Chase. But the judge sided with the Schulkens.

According to the plaintiffs’ attorney Jay Edelson, “Chase’s unprecedented position was simple: Chase can harm former WaMu customers with impunity and anyone who suffers damage should sue the FDIC.”

Chase acquired the troubled WaMu with the approval of the FDIC in September 2008. The bank moved to reduce the plaintiffs’ HELOC in March 2009, claiming their income had declined. Plaintiffs claim their income hasn’t changed and sued Chase for violating the Truth in Lending Act.

If the judge certifies the class act lawsuit, the plaintiffs’ attorneys want the class to cover all Chase HELOC customers as well as former WaMu customers. A Chase spokeswoman said the bank does not comment on litigation.

Chicago-based Kamber-Edelson LLC also is pursuing class action litigation against two large institutions that are among Chase’s peers for suspending and reducing HELOCs. An FDIC spokesman did not have an immediate comment pending a review of the case by the FDIC’s legal team.

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What a crazy Monday it is…but it’s a good one!

So, I don’t see a lot of wholesalers wholesaling Foreclosures that are owned by Fannie Mae. I wanted to touch base on this subject, since I think it can be tricky for people who are flipping FNMA (Fannie Mae) foreclosures.

There is a lot of confusion for a lot of wholesalers out there that are flipping REO properties to their cash buyers that are not FNMA properties. That is truely a remarkable thing, since its easy to mark them up as much as you want. Of course, you don’t want to mark them up to much or else you will lose business and barely close deals. The confusion that I see and have experienced with other wholesalers is the mark up on selling the property to their buyers. There is a specific percentage that you really need to calculate correctly that most wholesalers don’t know about and if you don’t properly increase them by that FNMA percentage you can and will get stuck with a property you cannot resell to your buyers….this will kill your deal and profits!

There is a seasoning issue on FNMA foreclosed properties if you are planning on wholesaling them. I wholesale these types of properties. WHY? Because, barely any other investors are doing it so this market is untouched. FMNA has a specific percentage that you are required to resell at if you do not plan on rehabbing the property and holding it for 3 months or more. This percentage will make or break your deal!

Although Fannie Mae prefers cash offers, many financing options will be considered. Down payment assistance programs, seller paid closing costs and home warranties are often considered. Remember, everyone’s goal is to provide affordable housing to owner occupants or cash investors. Fannie Mae encourages investors to purchase foreclosed homes, but the requirements to purchase are slightly different from that of an owner occupant. An investor is required to provide 10% of the purchase price in earnest funds when making an offer to purchase. If an investor purchases a Fannie Mae Foreclosure, there is a Deed Restriction placed on the property that the buyer/new owner cannot resale the property for more than 120% of the purchase price for a period of three months.

So guess what this means…..? You can still flip the foreclosure just as long as you stay within 120% of your purchase price within your first 3 months! For example, here are some numbers on a deal we did a couple months ago that was a FNMA REO:

North Miami Area
Single Fam. Res.
Purchase Price: $45,000
Re-Sell Price (next day): $54,000
10% Down Payment: $4,500
We paid all our closing cost on A-B Transaction ($2,200 closing costs)
End buyer paid all closing cost on B-C transaction

We walked away with a pretty sweet profit for a couple of hours of work!

FNMA foreclosures can be challenging at times, especially since you need 10% escrow, but can be profitable at the same time! Now, go out there and flipthisforeclosure!

Oh, btw don’t forget to get on our exclusive buyers list: http://reo.everlastingfoundationsonline.com/exclusive

* First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010. * Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit. Which Properties Are Eligible? The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops. How Much Is Available? The maximum allowable credit for first-time home buyers is $8,000. The maximum allowable credit for current homeowners is $6,500. How is a Buyer’s Credit Amount Determined? Each home buyer’s tax credit is determined by tow additional factors: 1. The price of the home. 2. The buyer’s income. Price Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less. Buyer Income Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit. These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit. If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit? Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit. Can a Buyer Still Qualify If He/She Closes After April 30, 2010? Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close. Will the Tax Credit Need to Be Repaid? No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

It is ironic that We the People   may have a communist dictatorship to thank for saving us from our own President and Congress.

Our President, Barack Obama went hat in hand and on bended knee to our nation’s banker this past week to beg that our mortgage be extended and even that we be allowed to take out an additional mortgage.  The man who holds the post that has been considered the most powerful in the world  due to his policies seemed to see no shame in begging another country  to  bail out and continue to finance the profligate spending of  the nation he is supposed to be governing and he is, because of his policies and agenda, demanding.

And what did China leaders say?    China which now holds over $500 billion in US Treasury Notes and that much again in actual US properties  told President Obama that they are seriously  concerned about the irresponsible spending  of his administration and think that his proposed health care reform bill  is more than our nation can afford considering  the money to fund this monster would have to come from China and the Chinese people’s  thrift and savings and doing without what they can not afford.

I am appalled that I would live to see the greatest nation ever known come to this in only a few short decades !  I watched C-span Washington Journal – C-SPAN last night  and listened to two very astute ladies discuss our economy and what has happened and what they feel is going to happen.  The videos are below and are rather long but well worth listening to.

First is Judy Shelton whom most of you may be more familiar with as a Wall Street Journal contributing OPED columnist.  Ms. Shelton is careful not to criticize any current or even past  official, she merely states what she feels should have been done instead and gives guidance for the future.   When asked point-blank what current official she  thinks is acting correctly ” Bernanke , Geithener”  she avoided the question altogether and named one of her most admired Economist instead,  and in that way not only answered the question beyond a doubt  but also changed the topic. You might take that to mean a resounding Nay! vote on any of  the people currently making decisions which affect our lives.

The second interview was Nomi Prins discussing her book It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street (Wiley; September 22, 2009) with Vermont Senator Bernie Sanders (I).  Ms. Prins is quite frank and open in discussing her views and placing blame.  She agrees that Wall Street is greedy and grasping and interested in nothing but profits.  She agrees that  Wall Street did build the situation that led to the Bail Out 2008-9  by taking a handful of what came to be called toxic mortgages and created  what she called an upside down pyramid of speculation and profiteering  with derivatives.

If you will recall I once explained derivatives as bets on nothing substantial..  I think  Iused a  fight between two opponents as my basis (mortgage).  This was substance and real and had some value as such.  Subject A and subject B bet on  who would win the battle or the outcome of the fight by choosing sides.  Still some substance and value at this point and little risk of their bet (money).  Subject C and Subject D came along  with a created derivative and bet on  who would be right Subject A or Subject B.  The derivative was based on nothing substantial, nothing but air, nothing but the opinion of another subject in this case.  The risk was greater as  they could lose their money if one of any number of things occurred:  they could lose if any one or all of the two combatants or the Subjects A and/or B  simply walked away  and removed themselves from the action for one example.  Now usually with these transactions this didn’t happen but instead of just dropping out the subject would try to sell his stake to another subject (at a profit of course).  Imaging this then becoming a pyramid of bets on the bets or opinions of others being bought and sold and bought and sold and piled higher and higher.

It was this speculation and play with derivatives that Ms. Prins  explains and blames for the Financial Crisis 2008-9. And  she agrees that  Wall Street’s greed caused all  of this.  However, she explained that it was the Federal government’s (Congress)  insuring any losses that encouraged and enabled this reckless behavior. Wall Street was the animal doing what Wall Street does: churning the paper and making profits.  If the federal government had not encouraged and enabled this risk taking so that the risk was minimized then it would not have happened.

Now let us go back to these toxic mortgages, or mortgages given to people who could not by any prudent lending measures afford the mortgages they were given.  The Federal Government enabled this by almost forcing banks to give these loans and it started with President Carter, picked up again with President Clinton and continued to run amok with the  under the direction of Representative Barney Frank and Senator Chris Dodd  as they  failed to enforce any of the regulation on the Federal Reserve, Fannie Mae and Freddy Mac.

President George Bush again and again called for enforcement of the regulation.  Senator McCain and others called for enforcement.  But because the then privately owned Freddie Mac and Fannie Mae and the Wall Street bankers were making such good campaign donations the Congress overlooked what was going on and allowed the disaster to happen.  The Bail Out   paid off all the “bet” made in the example above and then bought Freddie Mac and Fannie Mae.  Yes, you the tax payer now own the two largest mortgage holders in the world  along with all the foreclosed homes and lost mortgage payments!  And, no one was blamed for the mess.  No one was found guilty or even had to say I’m sorry.

On the topic of “too big to fail”  Ms. Prins  answers that these institutions are too big NOT to fail. They must in her opinion be broken up immediately.  But instead of doing this the Congress with new laws are encouraging them to merge and merge again into larger and larger entities that will eventually become impossible to contain or control and regulate.

And Ms. Prins goes on to explain that regardless of all the noise coming out of Congress (Frank and Dodd) the games are being encouraged , enabled and smiled upon again which is leading to an even greater disaster sometime soon.

This was not news to me since if some of you may recall I have been blogging about this and throwing the belief out at every opportunity to help prepare my readers and myself to the coming deep depression, but it was nice to have two such intelligent renowned economist as these two ladies back my beliefs up.  That is, this beat up old lady with obsolete degrees in education, psychology and avocations in philosophy and history could see it coming so it must be apparent to our congressmen and women so why are they not doing something about it?  Why are they instead continuing on this path of spending, spending, spending?  Why?

And what are We the People going to do about it?

I don’t know the answer to that question.  Congress seems deaf to all the shouting of the Tea Parties, Town-halls, Marches on Washington and probably more town-halls during this Thanksgiving Holiday.  And the elections of 2010 is really going to be too late to do a whole lot  IMO. Besides, I do not trust the American people not to elected again the same thieves and criminals they have been electing.  Rep. Barney Frank will die in his office being elected by a tiny,. tiny group of people and yet holding life and death power over the rest of us.  Congress has the ability to police itself and rid itself of these Rep. Murthas but has rarely done so and is not about to do anything now as far as I can see.  So what is the answer?

Perhaps as I stated in the beginning:  Communist China as our banker has the power and just may use it to save our nation.  You see we are at this time China’s golden goose; we are the consumers of China’s goods so it behooves them to temporarily keep us afloat.  In other words the United States is too big to fail—RIGHT NOW!  The future may be another story and if we don’t get our act together as a nation then we will die as a nation at some later date you can be sure of this.  China is expanding its market area and also growing a more afluent society that will  support its own industry so the time will come very shortly when we are no longer important to China.  It is this time we need to be prepared for and have our house in order so that we can reasonably repay our debt.    Or am I dreaming?  BB

By the way you might want to put C-span Washington Journal – C-SPAN on your to watch list when there is nothing else on TV  or to check on line their video library for topics that interest you.  It will become the most comprehensive “click” on your  blog list I am sure.  C-span is a daily must for me.  I may begin using features programing to post on in conjunction with the usual media.  BB

Here’s the video: (H/T Neil Simpson)

If the video is removed, try watching it here.

And here’s the transcript:

ANNOUNCER: We will now take you live to Beijing for the joint press conference already underway between U.S. President Obama and Chinese President Hu Jintao.

OBAMA: As I already said privately, I would like to thank President Jintao for his kind welcome and generous hospitality, and I hope that during this visit we can have a productive dialogue about the serious issues of concern that remain between our two countries — issues ranging from the unfair valuation of your currency to the trade imbalance, and most importantly, human rights. I believe there can be a great partnership between us but it will require compromise and understanding.

(Hu Jintao “speaks.”)

INTERPRETER: Thank you, Mr. President. I would like to add that I completely understand why you feel entitled to come here and lecture China on our shortcomings. After all, my country does owe the United States a great deal of money. Oh, wait. Hold on a moment. I believe I had that backwards. In fact, now that I think about it, it is your country that owes us a large sum of money. Is this correct?

OBAMA: Uh… yes.

(Hu Jintao “speaks.”)

INTERPRETER: Now, it’s coming back to me. I believe it’s $800 billion.

OBAMA: That is correct.

(Hu Jintao “speaks.”)

INTERPRETER: Such a large sum.

OBAMA: Yes, it is.

(Hu Jintao “speaks.”)

INTERPRETER: And yet you haven’t even mentioned it. That’s so odd.

OBAMA: Uh, look, you’re going to get your money.

(Hu Jintao “speaks.”)

INTERPRETER: Are we? Are we going to get our money? Because from what I read your country is in the middle of a serious recession.

OBAMA: Uh, while this is true, there are signs that our bailout has steadied the financial markets and our stimulus package has been effective in fixing the job crisis.

(Hu Jintao “speaks.”)

INTERPRETER: I’m curious. How many jobs has it created?

OBAMA: Uh, so far, none.

(Hu Jintao “speaks.”)

INTERPRETER: I see.

OBAMA: But our health care reform plan, we’re confident, is going to lead to enormous savings.

(Hu Jintao “speaks.”)

INTERPRETER: How exactly is extending health care coverage to 30 million people going to save you money?

OBAMA: I… don’t know.

(Hu Jintao “speaks.”)

INTERPRETER: And this “Cash for Clunkers” program– I have read that you purchased many clunkers with our money.

OBAMA: Yes, we have.

(Hu Jintao “speaks.”)

INTERPRETER: What does this word “clunkers” mean?

(Hu Jintao “speaks.”)

OBAMA: Well, a clunker is a car…

(Hu Jintao “speaks.”)

INTERPRETER: I know what a clunker is. And just so there is no misunderstanding, you are not allowed to pay us back in clunkers.

OBAMA:Of course not.

(Hu Jintao “speaks.”)

INTERPRETER: You know, as I listen to you, I am noticing that each of your plans to save money involves spending even more money. This does not inspire confidence.

OBAMA: I assure you, you’re going to get your money.

(Hu Jintao “speaks.”)

INTERPRETER: Will you kiss me?

OBAMA: Sorry?

(Hu Jintao “speaks.”)

INTERPRETER: Will you kiss me?

OBAMA: I don’t understand.

(Hu Jintao “speaks.”)

INTERPRETER: I like to be kissed, (shouts) when someone is doing sex to me!

OBAMA: There’s no need for that.

(Hu Jintao “speaks.”)

INTERPRETER: No? You know how many uninsured we have in China? One and a quarter billion, billion. But I’ll tell you this: We don’t owe anyone $800 billion.

OBAMA: Well, obviously, we take our debt to you very seriously.

(Hu Jintao “speaks.”)

INTERPRETER: I suppose if I really wanted to get my money I could call and say I was a Wall Street banker who needs his bonus. But really, why should I have to stoop to that level?

OBAMA: You don’t have to stoop to any level.

(Hu Jintao “speaks.”)

INTERPRETER: Please understand if it were my $800 billion I wouldn’t care, but it belongs to my country. I feel like I should bring it up.

OBAMA: You’re going to get your money.

(Hu Jintao “speaks.”)

INTERPRETER: Say, while you’re here, are you at least going to treat me to dinner and a movie?

OBAMA: I’m sorry?

(Hu Jintao “speaks.”)

INTERPRETER: I think it’s the polite thing to do, (shouts) before doing sex to me!

OBAMA: Mr. President, please.

(Hu Jintao “speaks.”)

INTERPRETER: Very well.

OBAMA: I assure you that as soon we solve this economic crisis…

(Hu Jintao “speaks.”)

INTERPRETER: Which one? The one that your country’s reckless real estate speculation caused? That one? I just want to make sure I know which one we’re talking about.

OBAMA: We are taking steps to make sure that what happened will never happen again.

(Hu Jintao “speaks.”)

INTERPRETER: What steps?

OBAMA: Uh, reform of banking regulations.

(Hu Jintao “speaks.”)

INTERPRETER: Do I look like Mrs. Obama?

OBAMA: What?

(Hu Jintao “speaks.”)

INTERPRETER: Do I look like Mrs. Obama?

OBAMA: Of course not.

(Hu Jintao “speaks.”)

INTERPRETER: Then why are you trying to (shouts) do sex to me like I was Mrs. Obama?

OBAMA: Now, now.

(Hu Jintao “speaks.”)

INTERPRETER: Just do it. Get it over with.

OBAMA: Mr. President!

(Hu Jintao “speaks.”)

INTERPRETER: Don’t be a tease.

OBAMA: I just…

(Hu Jintao “speaks.”)

INTERPRETER: I can take it.

OBAMA: This is not the time or place.

(Hu Jintao “speaks.”)

INTERPRETER: Very well. In that case, I call this press conference to a close, and Live from New York, it’s Saturday Night!

Fannie Mae, recently announced the Deed for Lease program designed to keep mortgage-challenged borrowers in their homes. As you can imagine, thousands of homeowners around the country are potentially eligible for the Deed for Lease program.

Here are some of the most commonly asked questions:

Who is eligible? In order to be considered for the Deed for Lease program, a borrower must meet these requirements: Have a Fannie Mae mortgage that is in a deed-in-lieu of foreclosure agreement; Requested a loan modification and been turned down; Show proof of income that the rental rate will not exceed 31 percent of the homeowner’s monthly income (e.g., If the rental rate is determined to be $1,500 a month, the borrower must show proof of a monthly gross income of at least $4,838) The homeowner can’t be involved in bankruptcy proceedings At least three payments have been made on the property from the time the loan started or since the last modification. The homeowner also cannot be more than 12 months past due on their payments.

What about the property? In addition to the requirements for the borrower, the property itself must also meet certain requirements: Be in good condition; The property in question must be a primary residence (not a second home or a investment property); In compliance with local rules and laws and Not targeted for any corporate, government or community plan that will need the property for non-residential use. The property manager hired by Fannie Mae will determine if the property meets these requirements.

What about properties that are already being rented out by their owners? Fannie Mae will work with the borrower to determine if the tenants are interested in renting through the Deed for Lease program. If they are, the property manager assigned to the property will work with the tenants to execute a lease. The property owner will give up his or her property and the property manager assigned by Fannie Mae will become the tenants’ landlord. If either the tenants don’t want to work within the Deed for Lease program or a tenant does not qualify for the program, the property will not be eligible for the D4L program. Basically, the tenants, not the owner, must agree to the program for it to move forward.

How much immediate relief can someone who enters the D4L program expect to get by renting? Since housing prices vary greatly from one region to the next, it would be difficult to pin down a single set of numbers that describes the potential savings of moving from renting to owning across the country. However, hypothetically current owners could save money each month by trading in the deed to their property and becoming tenants. Yes, you still have to give up your property to Fannie Mae and lose the equity (if any) in your home. But you wouldn’t have to move during an undoubtedly rough transitional period and would avoid hefty security deposits if you were to move to a new rental unit. It’s a desirable solution relative to immediately foreclosing on a home and having to search for a new place to live.

“This post used information from this article by Chris Thorman, who blogs at Software Advice.”

“These cases encourage debtors and other parties to defensively use the mortgage securitization servicing system to prohibit servicers and other non-lending parties from enforcing rights under a mortgage. This trend, if it continues, may have significant impacts for consumer-debtor lawyers, as well as law firms that enforce mortgages and participated in mortgage loan securitization.”

“A note and mortgage may go through multiple transfers. Documentation of these transfers is imperfect, and many assignments were not recorded at the local real estate filing offices.”

“The creation of Mortgage Electronic Registration Systems, Inc. (“MERS”) further complicated matters.”

“For instance, if a debtor raises these or similar defenses, it may only be necessary for the servicers and the mortgagees to complete and file the proper assignment documents.“

The fabricated fraudulant assignment.

4closureFraud
http://4closurefraud.wordpress.com/

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This Gorgeous well cared for Five Bedroom, 3 Bath Ranch sits on a spectacular finished basement! This home rests in a beautiful private wooded lot! The updated kitchen is enhanced with granite countertops and hardwood floors. If you are looking for a great Ranch home with a WOW basement, look no further!!
For more information, or for a tour of this home, please contact Mary Farkas.

Bloomberg reported that mortgage applications are at 12 year lows this week.  Nearly 1 in 6 FHA loans are in default.  Default means that the payments are late, but not necessarily in foreclosure.  The unemployment rate remains higher than its been in nearly 30 years.

Historically, the housing market has pulled the economy out of recession.  A very high unemployment rate and the fear of further job losses will keep many potential buyers on the side lines.  Most economists don’t think we’ll see any sustained recovery for over a year.

Just call me Mr. Doom and Gloom.

Indymac Bank F.S.B. v Yano-Horoski

“Upon the Court’s own motion, it is

ORDERED that the Adjustable Rate Note in the amount of $ 292,500.00 dated August 4, 2004 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. shall be and the same is hereby cancelled, voided, avoided, nullified, set aside and is of no further force and effect; and it is further

ORDERED that the Mortgage in the amount of $ 292,500.00 which secures said Adjustable Rate Note given by Diana J. Yano-Horoski to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. dated August 4, 2004 and recorded with the Clerk of Suffolk County on August 16, 2004 in Liber 20826 of Mortgages as Page 285, as assigned to IndyMac Bank F.S.B. by Assignment recorded with the Clerk of Suffolk County in Liber 21273 of Mortgages at Page 808 shall be and the same is hereby vacated, cancelled, released and discharged of record; and it is further

ORDERED that the Plaintiff, its successors and assigns are hereby barred, prohibited and foreclosed from attempting, in any manner, directly or indirectly, to enforce any provision of the [*7]aforesaid Adjustable Rate Note and Mortgage or any portion thereof as against Defendant, her heirs or successors; and it is further

ORDERED that the Judgment of Foreclosure & Sale granted under this index number on January 12, 2009 and entered in the Office of the Clerk of Suffolk County on January 23, 2009 shall be and the same is hereby vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on July 27, 2005 under sequence no. 172456, which was extended by Order dated September 2, 2008 shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on August 29, 2008 under sequence no. 199616, shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Clerk of Suffolk County shall cause a copy of this Order & Judgment to be filed in the Land Records so as to effectuate of record each and every one of the provisions hereinabove set forth with respect to cancellation of the instruments and items of record; and it is further

ORDERED that Plaintiff shall pay to the Clerk of Suffolk County, within ten (10) days from the date of entry hereof, any and all fees and costs required to effect cancellation of record of the Mortgage, Notices of Pendency and any other fees so levied; and it is further

ORDERED that within ten (10) days of the date of entry hereof, Plaintiff’s counsel shall serve a copy of this Order upon the Clerk of Suffolk County and the Defendant.

This shall constitute the Decision, Judgment and Order of this Court.”

2009 NY Slip Op 52333(U)
Decided on November 19, 2009
Supreme Court, Suffolk County
Spinner, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 19, 2009

Supreme Court, Suffolk County

Indymac Bank F.S.B., Plaintiff

against

Diana Yano-Horoski, Wells Fargo Bank Minnesota National Association as Trustee for Soundview Home Equity Loan Trust 2001-1 and Kimberly Horoski, Defendants.

2005-17926

Steven J. Baum P.C.

Attorney for Plaintiff

P.O. Box 1291

Buffalo, New York 14240

Diana Yano-Horoski

Defendant Pro Se

8 Oakland Street

East Patchogue, New York 11772-5767

Jeffrey Arlen Spinner, J.

This is an action wherein the Plaintiff claims foreclosure of a mortgage dated August 4, 2004 in the original principal amount of $ 292,500.00 recorded with the Clerk of Suffolk County, New York in Liber 20826 of Mortgages at Page 285. The mortgage secures an adjustable rate note of the same amount with an initial interest rate of 10.375%. The mortgage encumbers real property commonly known as 8 Oakland Street, East Patchogue, Town of Brookhaven, New York and described as District 0200 Section 979.50 Block 05.00 Lot 001.000 on the Tax Map of Suffolk County. Plaintiff commenced this action by filing a Summons, Verified Complaint and Notice of Pendency on July 27, 2005. The Notice of Pendency was extended by Order dated April 28, 2008 and a Judgment of Foreclosure & Sale was granted on January 12, 2009.

Thereafter and in accordance with the Laws of 2008, Ch. 472, Sec. 3-a and in view of the fact that the loan at issue was deemed to be “sub-prime” or “high cost” in nature, Defendant seasonably requested that the Court convene a settlement conference. That request was granted and a conference was commenced on February 24, 2009 which was continued five times in a series of unsuccessful attempts by the Court to obtain meaningful cooperation from Plaintiff. In view of Plaintiff’s intransigence in its continuing failure and refusal to cooperate, both with the Court and with Defendant’s multiple and reasonable requests, the Court directed that Plaintiff produce an officer of the bank at the adjourned conference scheduled for September 22, 2009.

At the conference held on September 22, 2009, Karen Dickinson, Regional Manager of [*2]Loss Mitigation for IndyMac Mortgage Services, division of OneWest Bank F.S.B. (“IndyMac”) appeared on behalf of Plaintiff. IndyMac purports to be the servicer of the loan for the benefit of Deutsche Bank who, it is claimed, is the owner and holder of the note and mortgage (though the record holder is IndyMac Bank F.S.B., an entity which no longer is in existence). At that conference, it was celeritously made clear to the Court that Plaintiff had no good faith intention whatsoever of resolving this matter in any manner other than a complete and forcible devolution of title from Defendant. Although IndyMac had prepared a two page document entitled “Mediation Yano-Horoski” which contained what purported to be a financial analysis, Ms. Dickinson’s affirmative statements made it abundantly clear that no form of mediation, resolution or settlement would be acceptable to Plaintiff. IndyMac asserts the total amount due it to be in excess of $ 525,000.00 and freely concedes that the property securing the loan is worth no more than $ 275,000.00. Although Ms. Dickinson insisted that Ms. Yano-Horoski had been offered a “Forbearance Agreement” in the recent past upon which she quickly defaulted, it was only after substantial prodding by the Court that Ms. Dickinson conceded, with great reluctance, that it had not been sent to Defendant until after its stated first payment due date and hence, Defendant could not have consummated it under any circumstances (Defendant, through Plaintiff’s duplicity, found herself to be in the unique and uncomfortable position of being placed in default of the “agreement” even before she had received it). Plaintiff flatly rejected an offer by Plaintiff’s daughter to purchase the house for its fair market value (a so-called “short sale”) with third party financing. Plaintiff refused to consider a loan modification utilizing any more than 25% of the income of Plaintiff’s husband and daughter (both of whom reside in the premises with her), the excuse being that “We can’t control what non-obligors do with their money” (the logical follow up to this statement is how does the bank control what the obligor does with her money?). The Court found IndyMac’s position to be deeply troubling, especially since a plethora of sub-prime loans in this County’s Foreclosure Conference Part have been successfully modified with the lender’s reliance upon the income of non-obligors who reside in the premises under foreclosure. The Plaintiff also summarily rejected an offer by both Plaintiff’s husband and daughter to voluntarily obligate themselves for payment upon the full indebtedness, thus committing their individual incomes expressly to the purpose of a loan modification. It should be noted here that Defendant did not even request any waiver or “forgiveness” of the indebtedness aside from some tinkering with the interest rate, just a modification of terms so as to enable her to repay the same. It was evident from Ms. Dickinson’s opprobrious demeanor and condescending attitude that no proffer by Defendant (short of consent to foreclosure and ejectment of Defendant and her family) would be acceptable to Plaintiff. Even a final and desperate offer of a deed in lieu of foreclosure was met with bland equivocation. In short, each and every proposal by Defendant, no matter how reasonable, was soundly rebuffed by Plaintiff. Viewed objectively, it is apparent that Plaintiff’s conduct in this matter falls within the definitions set forth in 22 NYCRR § 130-1.1( c)(2), which might well warrant the imposition of monetary sanctions.

On the Court’s own motion, a hearing was held on November 18, 2009 in order to explore the issues herein. At the hearing, Ms. Dickinson appeared as well as Mr. Horoski. IndyMac claimed a balance due, as of September 22, 2009 of $ 527,437.73 which included an escrow overdraft of $ 46,627.88 for taxes advanced since the date of default but did not include attorney’s fees and costs.. Plaintiff was unable to tell the Court the amount of the principal [*3]balance owed. Mr. Horoski advised the Court that according to two letters received from Plaintiff, the principal balance was said to be $ 285,381.70 as of February 9, 2009 and $ 283,992.48 as of August 10, 2009. Plaintiff stated was that Defendant must have made payments though it was conceded that in fact no payment had been made.Plaintiff insisted that it had remained in regular contact with Defendant in an effort to reach an amicable resolution, that it had extended two modification offers to Defendant which she did not accept and further, that due to her financial status she was not qualified for any modification, even under the Federal HAMP guidelines. Plaintiff denied that it had “singled out” Defendants, simply stating that her status was such that she fell outside applicable guidelines. All of these assertions were disputed by Defendant.

That having been said, the Court is greatly disturbed by Plaintiff’s assertions of the amount claimed to be due from Defendant. The Referee’s Report dated June 30, 2008, which has its genesis in a sworn affidavit by a representative of Plaintiff (presumably one with knowledge of the account), reflects a total amount due and owing of $ 392,983.42. The principal balance is reported to be $ 290,687.85 with interest computed at the rates of 10.375% from November 1, 2005 through August 31, 2006 ($ 25,118.62), 12.50% from September 1, 2006 to February 28, 2007 ($ 18,018.66), 12.375% from March 1, 2007 to March 31, 2008 ($ 39,126.39) and 11.375% from April 1, 2008 to June 24, 2008 ($ 7,700.24) totalling $ 89,963.91. Plaintiff also claims $ 20.00 in non-sufficient funds charges, $ 295.00 in property inspection fees and $ 12,016.66 for tax and insurance advances. The Judgment of Foreclosure & Sale dated January 12, 2009 was granted in the amount of $ 392,983.42 with interest at the contract rate from June 24, 2008 through January 12, 2009 and at the statutory rate thereafter plus attorney’s fees of $ 2,300.00 and a bill of costs in the amount of $ 1,705.00. Even computing the accrual of pre-judgment interest of $ 18,299.18 (using Plaintiff’s per diem rate in the Referee’s Report) together with post-judgment interest at a statutory 9% through November 19, 2009 (an additional $ 31,740.90), the application of simple addition yields a total amount due of $ 447,028.50. This figure is $ 80,409.23 less than the $ 527,437.73 asserted by Plaintiff to be due and owing from Defendant. The Court is astounded that Plaintiff now claims to be owed an escrow advance amount of $ 46,627.88 when, under oath, its officer swore that as of June 24, 2008 that amount was actually $ 34,611.22 less. Moreover, it now appears that the elusive principal balance is either $ 290,687.85, $ 285,381.70 or $ 283,992.48.

It is the province and indeed the obligation of the trial court to assess and to determine issues regarding credibility, Morgan v. McCaffrey 14 AD3d 670 (2nd Dept. 2005). In the matter before the Court, the pendulum of credibility swings heavily in favor of Defendant. When the conduct of Plaintiff in this proceeding is viewed in its entirety, it compels the Court to invoke the ancient and venerable principle of “Falsus in uno, falsus in omni” (Latin; “false in one, false in all”) upon Defendant which, after review, is wholly appropriate in the context presented, Deering v. Metcalf 74 NY 501 (1878). Regrettably, the Court has been unable to find even so much as a scintilla of good faith on the part of Plaintiff. Plaintiff comes before this Court with unclean hands yet has the insufferable temerity to demand equitable relief against Defendant.

The Court, over the course of some six substantive appearances in seven months, has been afforded more than ample opportunity to assess the demeanor, credibility and general state [*4]of relevant affairs of Defendant and Plaintiff. Although not actually relevant to the disposition of this matter, the Court is constrained to note that Defendant is afflicted with multiple health problems which outwardly manifest in her experiencing great difficulty in ambulation, necessitating the use of mechanical supports. Moreover, Defendant’s husband, Mr. Gregory Horoski, suffers from a myriad of serious medical conditions which greatly impede most aspects of his daily existence. Nonetheless, both of these persons, together with their adult daughter who resides with them and who is substantially and gainfully employed, receive income which they are more than willing to commit, in good faith, toward repayment of the debt to Plaintiff and indeed, despite their physical challenges, they have appeared at each and every scheduled conference before this Court. At each appearance, they have assiduously attempted to resolve this controversy in an amicable fashion, only to be callously and arbitrarily turned away by Plaintiff. This has been so even in spite of the Court’s continuing albeit futile endeavors at brokering a settlement.

As a relevant aside, the scenario presented here raises the specter of a much greater social problem, that of housing those persons whose homes are foreclosed and who are thereafter dispossessed. It is certainly no secret that Suffolk County is in the yawning abyss of a deep mortgage and housing crisis with foreclosure filings at a record high rate and a corresponding paucity of emergency housing. While foreclosure and its attendant eviction are clearly the inevitable (and in some cases, proper) result in a number of these situations, the Court is persuaded that this need not be the case here. In this matter, Defendant is plainly willing to make arrangements for repayment and both her husband and daughter are likewise willing to allocate their respective incomes in order to reach the same end. Were Plaintiff amenable, she would presumably continue to maintain the property’s physical plant, pay taxes thereon and the property would retain or perhaps increase its market value. Plaintiff would receive a regular income stream, albeit with a reduced rate of interest and without sustaining a loss of several hundred thousand dollars. In addition, no neighborhood blight would occur from the boarding of the property after foreclosure which would, in turn, avert problems of litter, dumping, vagrancy and vandalism as well as a corresponding decline in the property values in the immediate area. In short, a loan modification would result in a proverbial “win-win” for all parties involved. To do otherwise would result in virtually certain undomiciled status for two physically unhealthy persons and their daughter, leading to an additional level of problems, both for them and for society.

Since an action claiming foreclosure of a mortgage is one sounding in equity, Jamaica Savings Bank v. M.S. Investing Co. 274 NY 215 (1937), the very commencement of the action by Plaintiff invokes the Court’s equity jurisdiction. While it must be noted that the formal distinctions between an action at law and a suit in equity have long since been abolished in New York (see CPLR 103, Field Code Of 1848 §§ 2, 3, 4, 69), the Supreme Court nevertheless has equity jurisdiction and distinct rules regarding equity are still extant, Carroll v. Bullock 207 NY 567, 101 NE 438 (1913). Speaking generally and broadly, it is settled law that “Stability of contract obligations must not be undermined by judicial sympathy…” Graf v. Hope Building Corporation 254 NY 1 (1930). However, it is true with equal force and effect that equity must not and cannot slavishly and blindly follow the law, Hedges v. Dixon County 150 US 182, 192 (1893). Moreover, as succinctly decreed by our Court of Appeals in the matter of Noyes v. [*5]Anderson 124 NY 175 (1890) “A party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression…” 124 NY at 179.

In the matter of Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), Special Term stated that “The maxim of “clean hands” fundamentally was conceived in equity jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks relief.” 133 NYS2d at 925, citing First Trust & Savings Bank v. Iowa-Wisconsin Bridge Co. 98 F 2d 416 (8th Cir. 1938), cert. denied 305 US 650, 59 S. Ct. 243, 83 L. Ed. 240 (1938), reh. denied 305 US 676, 59 S Ct. 356 83 L. Ed. 437 (1939); General Excavator Co. v. Keystone Driller Co. 65 F 2d 39 (6th Cir. 1933), cert. granted 289 US 721, 53 S. Ct. 791, 77 L. Ed. 1472 (1933), aff’d 290 US 240, 54 S. Ct. 146, 78 L. Ed. 793 (1934).

In attempting to arrive at a determination as to whether or not equity should properly intervene in this matter so as to permit foreclosure of the mortgage, the Court is required to look at the situattion in toto, giving due and careful consideration as to whether the remedy sought by Plaintiff would be repugnant to the public interest when seen from the point of view of public morality, see, for example, 55 NY Jur. Equity § 113, Molinas v. Podloff 133 NYS2d 743 (Sup. Ct., New York County, 1954). Equitable relief will not lie in favor of one who acts in a manner which is shocking to the conscience, Duggan v. Platz 238 AD 197, 264 NYS 403 (3rd Dept. 1933), mod. on other grounds 263 NY 505, 189 NE 566 (1934), neither will equity be available to one who acts in a manner that is oppressive or unjust or whose conduct is sufficiently egregious so as to prohibit the party from asserting its legal rights against a defaulting adversary, In Re Foreclosure Of Tax Liens 117 NYS2d 725 (Sup. Ct. Kings County, 1952), aff’d on other grounds 286 AD 1027, 145 NYS2d 97 (2nd Dept. 1955), mod. on other grounds on reargument 1 AD2d 95, 148 NYS2d 173 (2nd Dept. 1955), appeal granted 7 AD2d 784, 149 NYS2d 227 (2nd Dept. 1956). The compass by which the questioned conduct must be measured is a moral one and the acts complained of (those that are sufficient so as to prevent equity’s intervention) need not be criminal nor actionable at law but must merely be willful and unconscionable or be of such a nature that honest and fair minded folk would roundly denounce such actions as being morally and ethically wrong, Pecorella v. Greater Buffalo Press Inc. 107 AD2d 1064, 468 NYS2d 562 (4th Dept. 1985). Thus, where a party acts in a manner that is offensive to good conscience and justice, he will be completely without recourse in a court of equity, regardless of what his legal rights may be, Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), York v. Searles 97 AD 331, 90 NYS 37 (2nd Dept. 1904), aff’d 189 NY 573, 82 NE 1134 (1907).

An objective and painstaking examination of the totality of the facts and circumstances herein leads this Court to the inescapable conclusion that the affirmative conduct exhibited by Plaintiff at least since since February 24, 2009 (and perhaps earlier) has been and is inequitable, unconscionable, vexatious and opprobrious. The Court is constrained, solely as a result of Plaintiff’s affirmative acts, to conclude that Plaintiff’s conduct is wholly unsupportable at law or in equity, greatly egregious and so completely devoid of good faith that equity cannot be permitted to intervene on its behalf. Indeed, Plaintiff’s actions toward Defendant in this matter have been harsh, repugnant, shocking and repulsive to the extent that it must be appropriately [*6]sanctioned so as to deter it from imposing further mortifying abuse against Defendant. The Court cannot be assured that Plaintiff will not repeat this course of conduct if this action is merely dismissed and hence, dismissal standing alone is not a reasonable option. Likewise, the imposition of monetary sanctions under 22 NYCRR § 130-1.1 et. seq. is not likely to have a salubrious or remedial effect on these proceedings and certainly would not inure to Defendant’s benefit. This Court is of the opinion that cancellation of the indebtedness and discharge of the mortgage, when taken together, constitute the appropriate equitable disposition under the unique facts and circumstances presented herein.

After careful consideration, it is the determination of this Court that the indebtedness evidenced by the Adjustable Rate Note dated August 4, 2004 in the original principal amount of $ 292,500.00 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. should be cancelled, voided and set aside. In addition, the Mortgage which secures the Adjustable Rate Note, given to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. dated August 4, 2004 and recorded with the Clerk of Suffolk County on August 16, 2004 in Liber 20826 of Mortgages at Page 285, as assigned by Assignment recorded with the Clerk of Suffolk County in Liber 21273 of Mortgages at Page 808 should be cancelled and discharged of record. Further, Plaintiff, its successors and assigns should be forever barred and prohibited from any action to collect upon the Adjustable Rate Note. In addition, the Judgment of Foreclosure & Sale granted on January 12, 2009 and entered on January 23, 2009 should be vacated and set aside and the Notice of Pendency should be cancelled and discharged of record. For this Court to decree anything less than the foregoing would be for the Court to be wholly derelict in the performance of its obligations.

Upon the Court’s own motion, it is

ORDERED that the Adjustable Rate Note in the amount of $ 292,500.00 dated August 4, 2004 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. shall be and the same is hereby cancelled, voided, avoided, nullified, set aside and is of no further force and effect; and it is further

ORDERED that the Mortgage in the amount of $ 292,500.00 which secures said Adjustable Rate Note given by Diana J. Yano-Horoski to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. dated August 4, 2004 and recorded with the Clerk of Suffolk County on August 16, 2004 in Liber 20826 of Mortgages as Page 285, as assigned to IndyMac Bank F.S.B. by Assignment recorded with the Clerk of Suffolk County in Liber 21273 of Mortgages at Page 808 shall be and the same is hereby vacated, cancelled, released and discharged of record; and it is further

ORDERED that the Plaintiff, its successors and assigns are hereby barred, prohibited and foreclosed from attempting, in any manner, directly or indirectly, to enforce any provision of the [*7]aforesaid Adjustable Rate Note and Mortgage or any portion thereof as against Defendant, her heirs or successors; and it is further

ORDERED that the Judgment of Foreclosure & Sale granted under this index number on January 12, 2009 and entered in the Office of the Clerk of Suffolk County on January 23, 2009 shall be and the same is hereby vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on July 27, 2005 under sequence no. 172456, which was extended by Order dated September 2, 2008 shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on August 29, 2008 under sequence no. 199616, shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Clerk of Suffolk County shall cause a copy of this Order & Judgment to be filed in the Land Records so as to effectuate of record each and every one of the provisions hereinabove set forth with respect to cancellation of the instruments and items of record; and it is further

ORDERED that Plaintiff shall pay to the Clerk of Suffolk County, within ten (10) days from the date of entry hereof, any and all fees and costs required to effect cancellation of record of the Mortgage, Notices of Pendency and any other fees so levied; and it is further

ORDERED that within ten (10) days of the date of entry hereof, Plaintiff’s counsel shall serve a copy of this Order upon the Clerk of Suffolk County and the Defendant.

This shall constitute the Decision, Judgment and Order of this Court.

Dated: November 19, 2009

Riverhead, New York

E N T E R:

______________________________________

JEFFREY ARLEN SPINNER, J.S.C.

4closureFraud
http://4closurefraud.wordpress.com/

Hurricane Katrina was one of the greatest catastrophes to hit the United States.  Nearly 1,600 died in Louisiana alone with massive flooding in New Orleans when its levees failed.  The storm displaced about 300,000 people and caused over $80 billion in damage.  While a natural disaster was initially blamed for the damage, it is now evident that our government had significant responsibility.

In a scathing decision, US District Court Judge Stanwood Duval Jr. placed significant blame for the damage to New Orleans during the Hurricane squarely in the lap of the Army Corps of Engineers.  Judge Duval found that:

“It is the court’s opinion that the negligence of the Corps, in this instance by failing to maintain the MRGO [Mississippi River Gulf Outlet] properly, was not policy, but insouciance, myopia and short-sightedness,”

“For over 40 years, the Corps was aware that the Reach II levee protecting Chalmette and the Lower Ninth Ward was going to be compromised by the continued deterioration of the MRGO … The Corps had an opportunity to take a myriad of actions to alleviate this deterioration or rehabilitate this deterioration and failed to do so.  Clearly, the expression ‘talk is cheap’ applies here.”

“This court cannot but comment that the Corps’ approach reminds the court of the old adage, ‘Close your eyes and you become invisible,’”

“It is beyond arbitrary and capricious — it flies in the face of the purpose of NEPA [the National Environmental Policy Act] and ignores the very heart of what ‘operation’ means,”

Referring to the Corps’ actions: “were in direct contravention of professional engineering and safety standards,” ……. “… Ignoring safety and poor engineering are not policy, and clearly the Corps engaged in such activities.”

According to Duval, the MRGO channel that was managed by the Army Corps of Engineers was not properly maintained.  As a result, it widened with erosion and deteriorated making the walls vulnerable to waves from Lake Borgne.  This led to levee failure and subsequent flooding of portions of New Orleans.

The Court’s ruling was in favor of a half dozen plaintiffs whose property was damaged by Katrina.  While the damages amounted only to about $700,000, there were 100,000 homes and businesses in the affected parish and Lower 9th Ward.  Judge Duval’s ruling will lead to compensation for many more.  So, first taxpayers pay to build the levees and maintain them and now we get to pay for the incompetence of our government.  Look for a multi-billion dollar bill added to our already ballooning deficit.

If government caused catastrophes like Katrina were isolated, it could be passed off as a bad mistake.  However, it is not.  Governments have a history of creating “mistakes” that are very expensive.  Whether it is construction projects such as Katrina, scientific/system failures as in the space shuttle Challenger disaster, wrongly predicting oncoming events such as Y2K, or not properly managing agencies such as Fannie Mae and Freddie Mac, the government’s track record is very poor.

Given the recent letdowns of the private sector such as the Wall Street banks, some Americans look to government for the cure.  If history is the judge, it indicates that the cure is often worse than the disease!

MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. and
COUNTRYWIDE HOME LOANS, INC.,

v

WARREN E. AGIN, TRUSTEE,

A Massachusetts federal judge has upheld a bankruptcy court ruling allowing a trustee to treat a mortgage as an unsecured claim, which strips the mortgage holder of foreclosure rights, because of defective mortgage paperwork.

4closureFraud
http://4closurefraud.wordpress.com/

In a recent WSJ piece, Edward Pinto links the housing bubble to liberal advocacy groups like Acorn.  The argument goes something like this: government polices aimed at increasing home ownership forced entities like Freddie Mac to lower lending standards and acquire large amounts of risky mortgages.

“The flood of CRA and affordable-housing loans with loosened underwriting standards, combined with declining mortgage interest rates—to 5% in 2003 from 10% in early 1991—resulted in a massive increase in borrowing capacity and fueled a house price bubble of unprecedented magnitude over the period 1997-2006.”

Groups like Acorn lobbied for “innovative and flexible” lending practices and helped “ignite” the housing bubble. Acorn is a large political advocacy group that pushes issues for low-income earners.  Pinto links Acorn’s efforts to increase homeownership to the recent housing bubble and financial crisis.

Does he have a case? First we should recognize his bias.  Mr. Pinto was chief credit officer at Fannie Mae from 1987-1989. Not surprising then that he would defend his former professional affiliation.  However, a massive increase in loans made without due diligence over the past 15 years is an undeniable cause for collapse.  As Pinto points out, loans made with less than 5 percent down increased from 9 percent in 1991, to 29 percent in 2007.  Default rates also increased.  Government-sponsored enterprises’ high-risk loans faced a 10.3 percent default rate.

Bankers and regulators should have known better.  Barney Frank, Chairman of the Financial Services Committee, argued to switch the focus from home ownership to rental properties.  This would have isolated the mortgage industry from reckless lending practices.  He made his argument back in 2002.

Lack of due diligence is the real crime here.  Why did the nation’s largest mortgage lenders ignore a fundamental principle of finance?   The answer to that question will help us avoid another meltdown.  You cannot blame a poverty-advocacy group for a banker’s lack of competence.  Yes, policies aimed at increasing homeownership failed.  But that is only part of the puzzle.  Financial innovation, de-regulation, derivatives, Glass-Steagall, China and Fed policy where other factors.

Though I agree with Pinto’s analysis, blaming community groups for advocating loose lending standards is a bit harsh.  Bankers need to take some responsibility.

Tom Powell

It’s probably an understatement when I say that our economy & housing market are certainly ever-changing as of late.  Seems as if almost daily there’s a new program or shift in this crazy ride.

Last week Fannie Mae gave us a new program called “Deed for Lease“.

The program is designed for homeowners who are facing financial hardships, possible foreclosure of their home, and cannot qualify for a loan modification, short sale or other type of rescue plan.

In a nutshell, the program offers homeowners whom either occupy the residence or have tenants with leases in place to turn their deed back into the loan servicer in exchange for the opportunity to lease the property back for up to twelve months (at market value).  There are also terms for re-purchase of the home at the end of the lease.

So, is this a good thing?  Definitely could be.  There’s a lot of folks out there that are under-water in their homes, especially in Las Vegas.  With interest rates adjusting to higher percentages, unemployment levels at extreme highs and the likes, this could be a definite saving grace for many people.

But what about twelve months from now?  Are we just putting off the inevitable? In theory the program is a win-win. In the game of life, well- I sure hope theory wins out- because, as I’m sure just about everyone agrees, we need to work our way out of this mess- pronto…

To read more about the Deed for Lease program, click HERE.

As always, if you have any questions about the Deed for Lease program, selling or purchasing a home in the Las Vegas Valley, please give me a call-

Citing FHA’s deteriorating financial position, Reps. Spencer Bachus (Ala.) and Shelley Capito (W. Va.) are urging committee chairman Barney Frank, D-Mass., to schedule a hearing as soon as possible.

Republican leaders on the House Financial Services Committee are calling for hearings on the financial health of the ailing Federal Housing Administration reserve fund, which recently reported a sharp drop in its capital ratio to 0.57%.

“If home prices do not recover, the economic value of the Mutual Mortgage Insurance Fund could fall below zero. We are concerned that such a drop could force HUD to request an appropriation from Congress,” the two Republican lawmakers say in a letter.

FHA officials maintain that they have taken corrective actions and the insurance fund is in no imminent danger of running out of cash. If necessary, the agency could raise the FHA upfront premium to keep the fund in the black.

However, Reps. Bachus and Capito also have concerns about FHA’s technological and management capacity.

“It is incumbent upon our committee to get prompt answers to many of the questions surrounding FHA’s risk management practices and finances,” the Republicans say in a letter to Rep. Frank.

_______________________

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BJ Bounds

In a few days you’ll receive your 7.2 packages in the mail.  Make sure you install this latest version as soon as possible so that you will be in complete compliance for 2010.  It’s a whole new ballgame beginning in January and you don’t want to be left out of the lineup!

 We gave you the GFE 2010 in August and since then many of you have taken our training class.  7.2 has other new compliance requirements that have developed since then.  Here is what we’ve packed into 7.2 for 2010 compliance:

•  GFE Provider List:  An add-on to HUD’s final rule of the revised RESPA Rules that requires loan originators to provide a new standardized Good Faith Estimate (GFE) starting January 1, 2010, also requires mortgage companies to list service providers on a separate form attached to the GFE.  This add-on has been addressed with the addition of fields within the GFE forms and the ability to print the additional form on a single page.
• Transmittal Summary (1008):  Fannie Mae has updated this form, effective January 1, 1010, to include new project classification codes for Refi Plus™ loans secured by properties that are located in condominium, PUD, or cooperative projects and for projects approved through the Project Eligibility Review Service (PERS).  The new form includes the codes V Refi Plus, T PUD, and T Co-op.
• Loan Application (1003):   In Announcement 09-11:  New Data Delivery Requirements, Fannie Mae published changes to the Uniform Residential Loan Application (Form 1003) to accommodate new data elements required by the Federal Housing Finance Agency (FHFA).  Fannie Mae is updating the Form 1003 to support the new loan-level data elements required by the S.A.F.E. Act.  The new form, which must be used for all applications taken on or after July 1, 2010, will contain extra fields at the bottom of Page 4 to capture the Loan Originator ID and Loan Origination Company ID.

 Want more information?  Check out our support site at http://www.calyxsupport.com/ or see what training is available at http://www.calyxsoftware.com/training/schedule.asp.

EXECUTIVE ORDER 13519

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ESTABLISHMENT OF THE FINANCIAL FRAUD ENFORCEMENT TASK FORCE

By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to strengthen the efforts of the Department of Justice, in conjunction with Federal, State, tribal, territorial, and local agencies, to investigate and prosecute significant financial crimes and other violations relating to the current financial crisis and economic recovery efforts, recover the proceeds of such crimes and violations, and ensure just and effective punishment of those who perpetrate financial crimes and violations, it is hereby ordered as follows:

Section 1. Establishment. There is hereby established an interagency Financial Fraud Enforcement Task Force (Task Force) led by the Department of Justice.

Sec. 2. Membership and Operation. The Task Force shall be chaired by the Attorney General and consist of senior-level officials from the following departments, agencies, and offices, selected by the heads of the respective departments, agencies, and offices in consultation with the Attorney General:

(a) the Department of Justice;

(b) the Department of the Treasury;

(c) the Department of Commerce;

(d) the Department of Labor;

(e) the Department of Housing and Urban Development;

(f) the Department of Education;

(g) the Department of Homeland Security;

(h) the Securities and Exchange Commission;

(i) the Commodity Futures Trading Commission;

(j) the Federal Trade Commission;

(k) the Federal Deposit Insurance Corporation;

(l) the Board of Governors of the Federal Reserve System;

(m) the Federal Housing Finance Agency;

(n) the Office of Thrift Supervision;

(o) the Office of the Comptroller of the Currency;

(p) the Small Business Administration;

(q) the Federal Bureau of Investigation;

(r) the Social Security Administration;

(s) the Internal Revenue Service, Criminal Investigations;

(t) the Financial Crimes Enforcement Network;

(u) the United States Postal Inspection Service;

(v) the United States Secret Service;

(w) the United States Immigration and Customs Enforcement;

(x) relevant Offices of Inspectors General and related Federal entities, including without limitation the Office of the Inspector General for the Department of Housing and Urban Development, the Recovery Accountability and Transparency Board, and the Office of the Special Inspector General for the Troubled Asset Relief Program; and

(y) such other executive branch departments, agencies, or offices as the President may, from time to time, designate or that the Attorney General may invite.

The Attorney General shall convene and, through the Deputy Attorney General, direct the work of the Task Force in fulfilling all its functions under this order. The Attorney General shall convene the first meeting of the Task Force within 30 days of the date of this order and shall thereafter convene the Task Force at such times as he deems appropriate. At the direction of the Attorney General, the Task Force may establish subgroups consisting exclusively of Task Force members or their designees under this section, including but not limited to a Steering Committee chaired by the Deputy Attorney General, and subcommittees addressing enforcement efforts, training and information sharing, and victims’ rights, as the Attorney General deems appropriate.

Sec. 3. Mission and Functions. Consistent with the authorities assigned to the Attorney General by law, and other applicable law, the Task Force shall:

(a) provide advice to the Attorney General for the investigation and prosecution of cases of bank, mortgage, loan, and lending fraud; securities and commodities fraud; retirement plan fraud; mail and wire fraud; tax crimes; money laundering; False Claims Act violations; unfair competition; discrimination; and other financial crimes and violations (hereinafter financial crimes and violations), when such cases are determined by the Attorney General, for purposes of this order, to be significant;

(b) make recommendations to the Attorney General, from time to time, for action to enhance cooperation among Federal, State, local, tribal, and territorial authorities responsible for the investigation and prosecution of significant financial crimes and violations; and

(c) coordinate law enforcement operations with representatives of State, local, tribal, and territorial law enforcement.

Sec. 4. Coordination with State, Local, Tribal, and Territorial Law Enforcement. Consistent with the objectives set out in this order, and to the extent permitted by law, the Attorney General is encouraged to invite the following representatives of State, local, tribal, and territorial law enforcement to participate in the Task Force’s subcommittee addressing enforcement efforts in the subcommittee’s performance of the functions set forth in section 3(c) of this order relating to the coordination of Federal, State, local, tribal, and territorial law enforcement operations involving financial crimes and violations:

(a) the National Association of Attorneys General;

(b) the National District Attorneys Association; and

(c) such other representatives of State, local, tribal, and territorial law enforcement as the Attorney General deems appropriate.

Sec. 5. Outreach. Consistent with the law enforcement objectives set out in this order, the Task Force, in accordance with applicable law, in addition to regular meetings, shall conduct outreach with representatives of financial institutions, corporate entities, nonprofit organizations, State, local, tribal, and territorial governments and agencies, and other interested persons to foster greater coordination and participation in the detection and prosecution of financial fraud and financial crimes, and in the enforcement of antitrust and antidiscrimination laws.

Sec. 6. Administration. The Department of Justice, to the extent permitted by law and subject to the availability of appropriations, shall provide administrative support and funding for the Task Force.

Sec. 7. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) authority granted by law to an executive department, agency, or the head thereof, or the status of that department or agency within the Federal Government; or

(ii) functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This Task Force shall replace, and continue the work of, the Corporate Fraud Task Force created by Executive Order 13271 of July 9, 2002. Executive Order 13271 is hereby terminated pursuant to section 6 of that order.

(c) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(d) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

Sec. 8. Termination. The Task Force shall terminate when directed by the President or, with the approval of the President, by the Attorney General.

THE WHITE HOUSE,

November 17, 2009.

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