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Tuesday, January 18, 2011
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17 comments:
What is/are the legal question(s) in discussion regarding the foreclosure crisis?
Can anyone post the relevant statute/law that has been torn asunder?
Is is the state requirements (wet ink signatures et al) on the transfer of real property?
Am curious as to what law was violated.
TN,
You can read about the cases in Utah and what the particular issue is. In my mind, after reading the article cited by contrarian, the issue is a matter of notice and who is a "party in interest".
My take is that Lenders got a little too cute in transferring these notes around and formed entities to avoid recording fee's on assignments.
States and locallities are more than peeved about the lost revenue (recording fee's). Some have laws on the books about the proper procedure to perfect a lien or transfer one. Virginia is attempting to enact legislation that will require all assignments be recorded.
Some states require that assignments be made only to certain persons or entities. It's really a technicallity in my opinion and certainly not a fraud on anyone, except perhaps state and local coffers that didn't get recording fee's.
It's a matter of whether the "owner" of the lien is the party proceeding with the foreclosure and whether another entity (say, a servicer) has standing to bring the foreclosure action.
It's clearly not a fraud on the debtor and all this ForeclosureFraud and ForeclosureGate stuff is ridiculous.
You could say that MERS is being hoisted on it's own petard (sp?). If the foreclosing party has to go back and "prove up" the debt and the owner of that debt, this will clearly slow things to a crawl.
I think the solution is an affidavit as to the owner of the debt and the authority to foreclose and a payment of any recording fee's that should have been paid.
A more interesting question for me is receiving some guarantee that the payments I am making are going to the right party.
CNBC on ibanez
i love the little conversation.
The way i see it, is the banks managed to damage the security interests.
Cheryl is right, the debts don't go away, but, I do believe they are mostly unsecured.
"All the Devils Are Here" - great book, especially for ppl on this board, I would think.
Authors interviewd in Planet Money podcast re: Fannie, Freddie & 30yr mtg.:
http://itunes.apple.com/us/podcast/243-the-frankenstein-mortgage/id290783428?i=90410330
If I try to foreclose on someone's home, I need to prove that I loaned out money and that money is not being repaid. How would you like it if I put in paperwork to foreclose on your house even though I have no right to do so? If the banks can't prove they have the right to do so then they have no more authority to do it than I do.
If someone borrows money from a lender to buy a house, there are records that the money was lent. The lender knows how much the person owes them. It's not as simple as being able to claim the house as yours outright just because they cannot show documentation that very second. Sooner or later, your ass will be out on the street if you stop paying.
jeff says
"If I try to foreclose on someone's home, I need to prove that I loaned out money and that money is not being repaid. "
Actually, you need to prove
"That you also hold a deed of trust
on the property".
I borrow from Visa, all the time, Sometimes I don't pay them that month, and that Visa needs to F Off if they want to seize my car or house.
TN
"Can anyone post the relevant statute/law that has been torn asunder?"
VA_I may be an expert on this.
The reason I ask is that I am certain I heard on one of the talking heads shows (think it was PBS News Hour or something similar) that is was how each state has very specific laws for transfer of real property.
And it goes back to the days of yore when we had debtor's prisons. Fast forward, and one of the ways our society guarantees safety for the debtor and guarantor is by requiring wet ink signatures on transfer. i.e. Ellen McGrinch can't throw Bob and Susan in prison for debts any longer unless Bob and Susan signed for the debt.
I was looking for the cite which I assumed is buried in each State's civil statues.
My Google Fu is weak today.
aha.
Looks like the answer is here:
VA 55-106
or else it's buried here:
Code of Virginia
and I don't have the know-how to find the answer. Will make for some light reading on the plane tonight....:)
http://franklymls.com/DC7406351
Assessed at 459K, sells for 279K,
Down 38%, for a clean property.
sat 64 DOM.
Nice area....
See, if you bought at the top of the bubble, you bled for years, and then lose your ass.
If you hold for another 15 years, you do pay off the mortgage or
get back above water, but it's like those prisoners in New Orleans jail, having to tread water, trapped in a cell,,,
The odds of getting tired are much higher, then the odds of getting rescued.
TN
yeah the details of this are buried in each states code, but, thats' why you pay a real estate attorney to do a closing.
buying foreclosures
http://www.calculatedriskblog.com/2011/01/apartments-consensus-has-high-price.html
cap rates at 5%, wow...
Pat-
Shouldn't the cap rate be based on current treasury rates/inflation rates. Sure 5% is low historically, but it is still a ~4% real return and 1% higher than the 30 year treasury. I would think both of these are decent. They are not great numbers, but they are at least decent.
hb and pat,
I have never considered cap rate. I just look at the leveraged return and anticipated appreciation and principle paydown over the long term. I also factor in that rent will increase with inflation.
Quite likely this is not the proper "business" approach. I know in CRE cap rate is very important. In the past it was my experience that small stuff (like 4-8 unit buildings) did not have the appreciation as individual units and that the cap rate was the important factor.
I don't know. I just do "my thing". I've also been told that paying extra principal on a 6% mortgage does not equal a 6% return on that money. I don't know if opportunity cost and/or tax considerations come into play.
I should probably look into this but I am fine with my "plan" even if it's not producing the optimal return.
Va_I said:
"I don't know. I just do "my thing". I've also been told that paying extra principal on a 6% mortgage does not equal a 6% return on that money. I don't know if opportunity cost and/or tax considerations come into play."
If I'm understanding the discussion correctly, here's how I would think about it.
Paying extra principal produces somewhat less than 6% return in this example, to the extent that you can deduct interest expense on your tax return (some people cannot, when they have a rental loss in that year, are not professional investors, and are in a certain income category, but they may be able to recapture or carry forward some of this). But it is also a risk free return. So, for example, if you are in a 20% marginal bracket and the interest is deductible, your "real" return is 6% - (20% of 6%).
The opportunity cost consideration would be something like this. Maybe you are considering rapidly paying down a $100K mortgage at 6%, but could make a riskier investment in the stock market, for example. You think would return 10% (though you would have to pay income tax on that gain when you sold the shares, so you might make 8% net of taxes). If the risks were the same and other factors equal, you would likely go with the stock purchase instead of paying down the mortgage. However, you may decide to take your risk free income by paying down the mortgage debt, since you could lose a lot in the market, but still would have the debt. The opportunity cost is moderate.
The number crunchers among us would figure in expected inflation, time value of money, etc.
All those years at the IRS were good for something, even though my memory isn't perfect.
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