Some housing officials are worried that too many mortgage companies are lending to buyers who have no money to contribute to a downpayment and who ultimately will not be able to make the payments. They point to the growing popularity of adjustable-rate financing as another red flag.

While some economists have cautioned that housing prices have risen significantly more than economic fundamentals would appear to justify, creating the risk of a bubble, others state that the rising household incomes and low interest rates that have spurred home prices will keep the market from being thrown into any significant turmoil.

A new Federal Reserve report shows that American households owned $16.6 trillion in real estate during the third quarter of this year, an increase of 15.4 percent or $2.2 trillion from the same period a year ago.

The Office of Federal Housing Enterprise Oversight, meanwhile, reports that house prices have shot up 13 percent in the last 12 months and nearly 5 percent in just the third quarter, although such markets as Nevada and the District of Columbia have seen even bigger gains.

The Mortgage Bankers Association reported December 9 that foreclosure inventory was down 1/10 of 1 percent (10 basis points) since the same quarter last year to the lowest level since 2000. Mortgage delinquency rates and loans entering foreclosure were also down since the same quarter of 2003. Foreclosure inventory for subprime loans was down a more substantial 1.67 percent (167 basis points) though delinquency rates in the subprime category were up 35 hundredths of a percent (45 basis points).

Some housing officials are worried that too many mortgage companies are lending to buyers who have no money to contribute to a downpayment and who ultimately will not be able to make the payments. They point to the growing popularity of adjustable-rate financing as another red flag.

Anecdoatal evidence locally points to a growing problem with no down purchases leading to foreclosure. When I started in the industry, the rule of thumb was that half of foreclosures (in this area) were divorce related. Recently, we’ve seen as many as 3 out of 4 foreclosures coming from either low down payment loans or large refinances (often to cover credit card debt which is then run up again as soon as the refinance closes). Recently I’ve even seen several cases where the homeowner failed to even make the first payment on the loan and was foreclosed in less than a year.

If rising interest rates cause more people to default on their adjustable-rate mortgages, investors could face a potential boon. Buying distressed properties — those that are in foreclosure or have a foreclosure pending — is one of the few opportunities to snag a bargain in this overheated real estate market.

Rising foreclosure rates would also mean an increase in REO inventories, larger portfolios for asset managers and lower returns as prices are pushed down. Of course, with interest rates still at near historic lows below 6 percent, a lot of this is just speculation.

By Robert J. Bruss
Inman News

U.S. Bank hired Fisher and Fisher, attorneys at law, to handle the foreclosure of its $140,000 residential mortgage loan to 69-year-old Mattie Sullivan-Moore, taken out in 2001. The law firm specializes in representing mortgage lenders in more than 4,000 foreclosure cases per year.

Working on behalf of U.S. Bank, Fisher and Fisher handled the foreclosure of Sullivan-Moore’s home at 7744 S. Carpenter St. But the proceedings got off to a bad start when the foreclosure papers incorrectly stated the address as 7742 S. Carpenter.

Purchase Bob Bruss reports online.

As a result, Sullivan-Moore never received notice of the foreclosure proceedings before the foreclosure judgment was entered, her home was sold, and she was evicted.

The foreclosure action contained the correct legal description of the property, but incorrectly listed the address as 7742 S. Carpenter, a house owned by Donna Lillybirde.

Not surprisingly, a process server was unable to personally find and serve Sullivan-Moore at that address because she lived next door, although the tenant did not know her.

Fisher and Fisher then obtained court permission to serve Sullivan-Moore with notice of the foreclosure sale by publication in the local legal newspaper, again listing the incorrect 7742 S. Carpenter address.

Attorneys Fisher and Fisher then arranged a default order, a judgment of foreclosure, and held the foreclosure sale. U.S. Bank purchased the house at the sale.

Shortly after the foreclosure sale, a Fisher and Fisher attorney discovered the error after receiving phone calls from the tenant and the owner of 7742 S. Carpenter. But instead of checking if Sullivan-Moore received notice of the foreclosure sale, the attorneys sought a court order for possession and a motion to correct a “scrivener’s error.”

Although she never received notice of the foreclosure sale, Sullivan-Moore was evicted from 7744 S. Carpenter. But she moved back into her house the next day.

Fisher and Fisher then sought re-eviction. At that hearing, associate attorney Michael Fisher appeared. The court ruled Sullivan-Moore had never been properly served, the error could not be corrected by a “scrivener’s error” motion, and the foreclosure sale must be voided.

A month later, the court issued an order requiring U.S. Bank and attorneys Fisher and Fisher to show cause why they should not be sanctioned for failure to review the foreclosure complaint, which should have listed Sullivan-Moore’s correct address.

The court ordered a sanction penalty that all Fisher and Fisher attorneys, including new hires, complete a 16-hour civil procedure course on subject-matter jurisdiction. But the Fisher and Fisher attorneys appealed, arguing their sanction is unreasonable.

If you were the judge would you rule the Fisher and Fisher attorneys must complete the 16-hour civil procedure course as their sanction penalty for the wrongful foreclosure and eviction of Sullivan-Moore?

The judge said yes!

“The discovery of the mistaken address should have prompted a reasonably competent second-year law student to move to vacate the sale and judgment, and then start over with proper service of process,” the judge began. Instead, Fisher and Fisher moved to correct a “scrivener’s error,” representing to the court that the correction would not prejudice any of the parties, he continued.

“Fisher and Fisher’s plea of ignorance is unavailing,” he commented, “and as we have repeatedly observed, an empty head but a pure heart is no defense.” “Neither the firm’s caseload nor its practice of shuffling cases from one attorney to another within the firm excuses the type of negligent action that caused Sullivan-Moore to be evicted,” the judge commented.

“Fisher and Fisher acknowledges that its mistake regarding the address came to the attention of at least two of its attorneys over two months before Sullivan-Moore was evicted,”” the judge emphasized. But in the interim, Fisher and Fisher sought and received a court order approving the sale and filed the motion to correct the so-called scrivener’s error, the judge added.

A court has wide latitude to determine what penalty sanctions should be imposed on attorneys for misconduct; non-monetary sanctions may be imposed to deter repetition of the offending conduct, the judge ruled. Therefore, the current and future attorneys of Fisher and Fisher must complete a 16-hour course in civil procedure as sanction for their unacceptable conduct in this case, the judge concluded.

Based on the 2005 U.S. Court of Appeals decision in U.S. Bank National Association v. Sullivan-Moore, 406 Fed.3d 465.

What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

BY STEVE PATTERSON Staff Reporter He’s about to leave for federal prison, where he’ll stay until 2015. He owes taxpayers $10.9 million. Owes others $11 million more. foreclose upon his $500,000 house. Duff, a political the foreclosure action filed Wednesday in Cook County Circuit Court, but said,’It’s all being worked out. The house is

Lien Holders Must Get In Line for Payment
Smythe is ordered to go to foreclosure on his home and is able to For those facing foreclosure, you may have creditors judgment liens on your house and not even

Out on the street
A devastating wave of foreclosures has hit some of Boston’s poorer neighborhoods, threatening to drive out the residents crucial to long-term urban stability.’’I have nowhere to go. I hope I don’t lose my house. I hope I can save it lock on my house.’’Delores Langford also knows the hardship and heartache of foreclosure. She has already

Pros& Cons
payments — and who may face foreclosure when they discover they’ve bought a house they can’t afford is up, and then their house payments increase dramatically when they have.

Days after her foreclosure notice appeared in the paper, three’very nice’men showed up on her door step and coaxed Trana into signing away her $400,000 home — for a song. flipping and other forms of real estate fraud — often fraught with insider action of so-called’foreclosure rescuers’has been triggered by a booming real estate market of fast

Buffalo real estate investor buys Lenox Hotel (The Buffalo News, N.Y.)
Sacramento, Calif.-based Blackburne and Brown acquired the property in a 2002 foreclosure auction for $2.49 million

The Journal News.com, NY – Aug 12, 2005 “The foreclosure is one of the scariest developments that there is,”said Tony Ciccone, his eyes tearing up”I’m afraid if I start crying I might not stop.”

Facing Bankruptcy or Foreclosure, Sell your Home in Seven Days
PR Web (press release), WA – Aug 1, 2005 We stop foreclosure on our house, how do we stop foreclosure on our home? We face bankruptcy, or we are facing bankruptcy and what do we do?

Real Estate Mailbag
Washington Post, United States – Aug 6, 2005 had filed for Chapter 13 bankruptcy, that would only have delayed foreclosure unless you I suggest you stop blaming yourself and, now that you are working again
”
“The Journal News.com, NY – Aug 12, 2005 “The foreclosure is one of the scariest developments that there is,” said Tony Ciccone, his eyes tearing up “I’m afraid if I start crying I might not stop.”

Facing Bankruptcy or Foreclosure, Sell your Home in Seven Days
PR Web (press release), WA – Aug 1, 2005 We stop foreclosure on our house, how do we stop foreclosure on our home? We face bankruptcy, or we are facing bankruptcy and what do we do?

Real Estate Mailbag
Washington Post, United States – Aug 6, 2005 had filed for Chapter 13 bankruptcy, that would only have delayed foreclosure unless you I suggest you stop blaming yourself and, now that you are working again

A bank foreclosure is when someone takes out a loan for a property then fails to make payments. The bank realizes that they are in great risk of losing money, so they take the title back on the house. This is completely legal because the bank fronted the money for the purchase of the property and have a contract that says that they assume title if the loan is defaulted on.

How a Bank Foreclosure Works
A bank foreclosure is something that the individual as well as the bank want to avoid. It is definitely a lose-lose situation. The individual is not only going to lose their home but their credit is going to be shot. The bank is going to auction the home off which means that they might not get their original amount back from the loan.
After the bank has sent several notices and called about a hundred times and not received any payment, they will simply assume title of the house. Nothing has to be signed by the occupant or the previous owner because it was all in the original paperwork. The house is legally the banks to do whatever they want with it.

Once they have assumed full title, they always auction the property off. This means that they are going to sell it to the highest bid, regardless of its comparison to market value. If you are looking to buy a property and are interested in saving money, you should get a hold of a bank foreclosure listing. You will be able to bid on a house and get it well under market value.

Real estate foreclosure refers to a bank repossessing a property that they have lent the money on. Until a property is completely paid off, the bank holds the rights to the title. As long as the person who owns it pays their bills and pays them on time, the ownership lies in the individual.
When the individual starts missing payments or stops payments completely, the bank has the right to repossess the property. It is similar to repossessing a car only to a much larger degree. They will give the owner enough notice and time to rectify the situation, but if they do not, the property gets turned over to the bank.

If you are in the real estate market for a property, you should look into foreclosed homes. There is a lot of money in buying, fixing and selling foreclosed homes. Or, if you are looking for a personal property to buy and occupy, you can get a great deal on foreclosures.

How to Buy a Real Estate Foreclosure

There is really only a few ways to buy a real estate foreclosure. You have to find out where the bank is auctioning it off and then go bid. Lists with addresses are readily available so you can go and see the property before you buy. You cannot necessarily go inside, but you can see the neighborhood as well as the outside of the house.

AFFIDAVIT: A sworn, notarized statement that’s signed by the affiant before witnesses.
AGREEMENT OF SALE: Also known as an agreement to convey. A signed, written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) under certain specific terms and conditions.
ALIENATION: The transfer of an interest in or title to property to another.
ALL-INCLUSIVE DEED OF TRUST (AITD): A junior trust deed that includes in its balance the amounts of the senior included trust deeds. Interest is charged on the over-all total of the AITD, invariably at a higher rate than that charged on the included trust deeds. The interest rate differential accrues to the benefit of the beneficiary of the AITD, boosting the effective yield on their equity in the all-inclusive. Also known as a “wrap-around”, or over-riding T.D.
ALTA: Refers to a type of title insurance adopted by the American Land Title Insurance Association and is used nationwide. It usually refers to a loan policy, but can also insure an owner.
AMORTIZATION: The gradual repayment of a debt in a series of equal periodic amounts until the total debt, including interest, is paid in full. Senior loans are typically amortized over 30 years, whereas junior loans are generally amortized over a much shorter time period.
APPRAISAL: Statement of value as of a certain date. It is commonly prepared by a licensed and/or credentialed expert who has complied with the training requirements of the state and/or one of several recognized appraisal institutes.
APPRECIATION: Increase in value or worth. The difference between the increased value of property and the original sales price.
ARREARS: Generally, being overdue in an installment payment.
ASSESSMENT: A bonded tax imposed to pay for public improvements (e.g. street/alley paving, curbs, sidewalks, etc.) beneficial to a limited area . Paid semi-annually over a 10 year period to the Bond Division of the city or county treasurer’s office where the property is located.
ASSIGNEE: One to whom a transfer of an interest is made (i.e. assignee of a deed of trust).
ASSIGNMENT: Written document by which property, other than real property, is transferred from one person to another. Assignment of mortgage, assignment of deed of trust, assignment of lease, assignment of rentals, etc. are common assignments. The “”assignee”” receives the property assigned.
ASSIGNMENT OF RENTS CLAUSE: An additional clause in a deed of trust wherein the trustor agrees to let the beneficiary collect the rents generated by the secured property in the event of a foreclosure action. Actually accomplished by getting a court appointed receiver installed.
ASSIGNOR: One who transfers property by assignment.
ASSUMPTION OF MORTGAGE: A formal agreement with a lender in which a new property owner agrees to be personally liable for the repayment of a pre-existing lien. Generally entails paying the lender an assumption fee and sometimes a higher interest rate. Doesn’t release the original borrower from further liability unless the agreement specifically provides for it.
ATTACHMENT: The seizing (by a Sheriff or other authorized officer) of property belonging to the defendant as security for any judgment the plaintiff may get in a court action.
ATTORNEY-IN-FACT: An agent authorized to act for another. Commonly evidenced by a recorded Power of Attorney. Holder of the power can exercise it only as long as it has not been revoked and the grantor remains alive and competent enough to act on their own behalf if need be.

With mortgage foreclosures rising to historic levels, many home buyers see foreclosure auctions as a smart way to enter overpriced markets.

There are in fact bargains to be had — if you’re willing to do a lot of homework and are financially secure enough to handle unexpected problems. Here’s what to look for when shopping for a home in foreclosure.

Know what’s available. Skip Stearns, principal of NewOld Homes in Stratham, Mass., encourages would-be bidders to check out the registry of impending foreclosure sales, usually found at your local county courthouse. These subscription-based foreclosure tip sheets typically are published by third parties who sell them to Realtors and investors, so you’ll find out when the pros do that a desirable property is heading for auction. There’s a charge for the registry, typically $150 to $400 a year. Mr. Stearns says, “”If you’re serious about purchasing a foreclosed home, it’s well worth the price.

[READ THE REST HERE]

“ABSOLUTE: Unconditional; complete and perfect in itself; without relation to or dependence upon other things or persons.

ABSTRACT: A succinct summary; (e.g. an abstract of judgment; an abstract of title, etc.)

ABSTRACT OF JUDGMENT: The essentials of a money judgment obtained via an adjudicated lawsuit. When an abstract is recorded in the recorder’s office the judgment becomes a general lien on all the debtor’s property located in that particular county.

ACCELERATION CLAUSE: Clause in a deed of trust or mortgage which “”accelerates”” the time when the indebtedness becomes due. For example, some deeds of trust contain a provision that the note balance shall become due immediately upon the resale of the land or upon the default in the payment of principal and interest.

ACCOMMODATION RECORDING: The recordation of title documents as a courtesy by a title company . . . without the assumption of responsibility for their correctness or validity.

ACCOMMODATOR: A party who temporarily holds the sale proceeds of a property, on behalf of the seller, who is involved in an IRS1031 exchange.

ACKNOWLEDGMENT: A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents, and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.

ACQUIESCENCE: Implied acceptance by an informed party. Witnessed by conduct that recognizes the existence of a transaction and permits it to be carried into effect; implied acceptance.

ACTUAL NOTICE: Notice in fact to a party . . . directly and personally.

ADJUDICATION: A judicial determination.

ADJUSTABLE RATE MORTGAGE (ARM): A loan with an interest rate that fluctuates based on a specified financial index, such as Treasury securities, or the 11th District Cost of Funds, etc.

ADVANCES: Moneys paid, on behalf of an owner, by a junior interest holder. Done to temporarily cure a delinquency on a senior encumbrance that threatens to extinguish the junior’s position. Thereafter the junior lien holder can start their own foreclosure if they are not immediately reimbursed for the advances paid out.

ADVERSE POSSESSION: A method of acquiring title to real property by physical possession of the property for a statutorily set time period, under certain conditions, by a person other than the owner of record. In California, see Code of Civil Procedure §324.
”

[ I will submit daily]

“Many new investors want to buy properties directly from the bank. You never hear anyone say, ‘””‘I want to buy a property from a mortgage company, credit union or savings and loan.’””‘

The attraction to bank owned properties is understandable, as it is the bank you borrow money from to buy a home. It is natural to assume that the bank owns the property. Whether a Deed of Trust or Mortgage, the title to your property is either held by a third party or pledged as security for the loan, so in fact the bank does not own the property.

You borrow money from and give a mortgage to the bank. The mortgage is the security instrument utilized to protect the bank from loss should you default on the loan. Unless you bought a bank foreclosure directly from the bank, the bank has never owned the property at all. ”

[READ THE REST HERE]

“The mortgage foreclosure process creates three sets of real estate investing opportunities: the ‘””‘Default/Pre-Foreclosure’””‘ phase, the ‘””‘Auction/Sale’””‘ phase and the ‘””‘REO’””‘ phase. This article discusses the risks and the rewards of each opportunity.

Buying Pre-Foreclosures

Buying pre-foreclosures involves working directly with the homeowner and sometimes the lender. Your goal is to create a Win-Win scenario. One win is for the homeowners (they make a sale) and one win is for yourself (you buy the property at a substantial discount).

To accomplish a successful purchase, most experts recommend the following: (1) locate loans in default, (2) evaluate and narrow selections to pursue, (3) inspect the property, (4) evaluate the property owner’s needs, (5) determine the market value of the property, fix-up costs, potential sales price and profits, (7) arrange default work out by negotiating with the owner and the lender, (8) close on the property, repair and resell it quickly.

Pros: This is a great investing opportunity if done correctly. Discounts off market value can range from 20% to 35% on average. A low cash down payment is possible if structured properly. You have ample time to research properties. Unique and flexible sales agreements are possible.

Cons: It is sometimes difficult to contact the property owner. You will usually have a lot of competition. The court house research can be cumbersome. You may need to negotiate with the lien holders. ”

[READ THE REST HERE]

Allen County looks to bring in $150,000 more a year by spiking its foreclosure filing fee tenfold.

Sheriff Jim Herman increased the sheriff’s sale fee Thursday from $10 to $100 to recoup his department’s cost for processing the sales. The state legislature this year allowed counties to charge up to $200 a sale, as long as the county could justify the expense.

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The meteoric rise in home prices has been accompanied by a sharp shrinkage in the size of down payments made by cash-strapped buyers, a trend that could portend a spike in future foreclosures, new research shows.
Nearly four out of 10 (38.1%) home buyers who bought houses in the first half of 2005 put down less than 5% of the purchase price, up from 30.6% in 2000, according to a study released Tuesday by SMR Research, a Hackettstown, N.J., firm that tracks mortgage debt. Nearly half (49.9%) of buyers put down less than 10%, up from 44.8% in 2000.

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The housing market is probably close to a peak right now in terms of sales activity, but there is tremendous momentum,’ said David Lereah, chief economist for the [National Association of REALTORS], in a statement. ‘Sales are expected to coast at historically high levels into next year, but they will trend slightly downward.

Lereah’s statement on Tuesday comes six months after the release of his book, Are You Missing the Real Estate Boom? Why Home Values and Other Real Estate Investments Will Climb Through the End of the Decade — and How to Profit From Them.

[READ THE REST HERE]

The guidance below (and in the “How to Avoid Foreclosure” pamphlet) is applicable to homeowners with FHA Insured loans. While a good deal of this information may apply to all homeowners in danger of losing their homes, not all of the foreclosure avoidance tools mentioned may be available to you if you have a VA or conventional loan. Additionally, HUD/FHA does not have any Loss Mitigation oversight over VA or conventional loans. Please contact your lender or a housing counseling agency.

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“The advantages to buying properties from homeowners in default can only be measured by the individual investor. Some do not see enough reward, some think it’s too risky, while others are plagued by moral issues. Are you helping the troubled homeowner or taking advantage of his misfortune?
Both the lender and the homeowner lose in a foreclosure action. Neither want it to happen. Both parties are motivated to resolve the situation. Motivated parties are key to the process.

The investing window of opportunity opens the day the Lis Pendens, the notice that a legal action is pending, is filed. The window closes the day the property is sold at auction. The time between these two events enables an investor to work with the homeowner and lender to create a workout strategy or a purchase of the property from the homeowner before the sale date.

The amount of time the window remains open depends solely on state and local laws, as well as the behavior of the property owner. Some states sell properties within 90-120 days from the first notice of default. In New York, the process can take a year or more.”

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