Weitz Law Firm - 520 Kirkland Way, Ste 103 - Kirkland, WA - (425) 889-9300

Friday, November 15, 2013

Seattle Housing Market- Regulation's future



Three Factors That Could Shape the Fate of Housing Overhaul



 At last month’s annual mortgage-industry trade show, most political and industry analysts agreed that there aren’t great odds that Congress will pass a bill addressing the future of Fannie Mae and Freddie Mac before 2014, let alone 2016.
Weitz - Congress CAN'T end Fannie or Freddie because they provide lending or guarantees for a majority of loans these days. Abolishing Fannie and Freddie would destroy the housing market and Congress knows it.
Several developments unfolding right now could make the next five or six months among the more consequential periods for housing-finance policy since the companies were taken over by the government five years ago. Here are three reasons why:
First, Fannie and Freddie are now reporting large profits. This could make it easier for the company’s defenders—who were silent when the firms were hemorrhaging cash during the bust—to more forcefully lobby in favor of less dramatic changes. By next February, when both companies report their fourth quarter earnings, both firms should be able to say that they’ve sent more in dividends to the U.S. Treasury than the amounts they were forced to borrow over the previous five years.
Rising profits could also trigger an important but obscure change in federal budgeting, where congressional accountants “score” the firms as revenue-generating entities. If that happens, Congress would either have to raise revenue or cut spending elsewhere as part of any overhaul.
Second, the Obama administration is moving ahead with plans to install a permanent director to the independent agency that oversees Fannie and Freddie, the Federal Housing Finance Agency. The director of the FHFA is an incredibly powerful job because it can stand in the shoes of the shareholders and board of directors of both companies, plotting long-term strategy and making day-to-day management decisions.
Third, the Senate Banking Committee is working in a bipartisan fashion towards constructing a comprehensive housing-finance overhaul bill that will address the future of Fannie and Freddie.
Bipartisan agreement is far from assured. It involves threading a needle between three general groups: the centrist supporters of the Corker-Warner bill, liberal Democrats who want to see a larger government role (particularly in affordable housing), and conservative Republicans who are wary of continued, heavy federal involvement in the mortgage market.
Whatever the committee produces will essentially mark the starting point for what, if anything, Congress is able to pass in 2015 or 2017. In other words, even if this is only the first inning, a number of key decisions could get made here that define the boundaries for the rest of the game.
House Republicans have advanced their own bill with no Democratic support, which should serve as one end point for any overhaul. How far the more-conservative House Republicans are willing to bend to support a greater federal role in housing could determine how soon a bill arrives on the president’s desk.
Lawmakers further out on the left, meanwhile, are likely to insist that this new system provides sufficient credit access to low- and moderate-income households. They’re wary of any market in which government guarantees mostly serve the borrowers that arguably need them the least. Among the key questions to unfold: what does the White House do if liberals decide that the centrist Senate bill doesn’t go far enough?
The upshot is that the next few months could show whether there’s any reasonable chance of getting legislation passed while Mr. Obama is in office, or whether these decisions will get kicked down the road beyond 2017. For 
Weitz - It will be interesting to watch, but our guess is much of this is classic congressional rhetoric that will not effectuate any materials changes for the indefinite future. Fannie and Freddie were a major reason why the market has recovered as they stepped in to fill the lending void when bank lending dried up. We simply don't see how that can be taken away and not lead a significant fall for Real Estate.
For more information contact a Kirkland Real Estate Broker

Monday, October 28, 2013

Seattle Real Estate Update


Tuesday's jobs report showed that construction employment is up strongly, but in many other ways, the report was bad for housing, according to a report by Trulia Chief Economist Jed Kolko.

 The reason: Young adults aren’t getting jobs, a factor that weighs on household formation — the single most important factor to long-term housing demand.

 About 75 percent of 25-to-34-year-olds were employed in September, about the same as September 2012 and closer to the depths of the recession than before the housing bubble started forming. Young people who don’t have a job are more likely to live with their parents and become “missing households” that aren’t renting or buying their own place.

That’s bad for the broader economy in all sorts of ways, such as lower spending on things such as furniture. These missing households are part of the reason why first-time homebuyers have been lagging in the housing recovery.
Weitz - this is an issue that will continue to linger over the economy. Most young graduates are entering the work force to find a very difficult job environment. I think 'under employment' is a huge problem as kids with degrees from great schools are being forced to work in jobs that do not utilize their education.


This coupled, with the huge increase in student loan debt over the past 10 years will be  a drag on the economy for years to come.

 The jobs report is just the latest piece of economic data to pour some cold water on this year’s housing recovery. Existing-home sales were down 1.9 percent in September from a month earlier, in part because of higher interest rates. The month-earlier pace was revised downward.

To be sure, housing is far better off than it was a year ago. The July/August sales pace was the best since 2009, and inventories, while up, remain low by historical standards.

 Still, it’s fair to say that housing has cooled off from the torrid pace seen in spring and summer. Online real-estate brokerage Redfin reported that its gauge of home bidding wars fell for the sixth month in a row in September.
Weitz - It will be interesting to see where the market goes from here. Based on inventory increasing, we anticipate that prices will lower, but much of it is interest rate driven and that is an unknown at the current time.
Rylee Park Properties 
520 Kirkland Way, Ste 103
Kirkland, WA 98033
(206) 306-4034

Wednesday, October 9, 2013

Fannie, Freddie ease lending crunch during shutdown

Fannie Mae and Freddie Mac have relaxed rules that would have kept banks from approving mortgages during the government shutdown.

Typically, Fannie and Freddie require lenders to verify a borrower's income with the Internal Revenue Service before closing on a mortgage. But last week, some lenders reported that they could not approve the mortgages because the shutdown had severely curtailed the IRS's operations.

The government-backed mortgage giants have since said lenders could continue to issue new loans even without the IRS's confirmation.

Borrowers who apply for mortgages will still need to sign an income verification request with the IRS. But verification can wait until after the government shutdown ends, and lenders can use other means to verify a borrower's income.

Wells Fargo, the nation's biggest mortgage lender, had originally said all mortgage applications would have to wait until the shutdown ends. But now it is telling underwriters they can move mortgage applications through the pipeline without the completed IRS verification, said Tom Goyda, a spokesman for the bank.

Some banks, however, may be more cautious, according to David Stevens, president and CEO of the Mortgage Bankers Association. Stung by a flood of defaults after the housing bubble burst, lenders are especially wary of borrowers who claim earnings from self-employment or who supplement their wages with freelance work, consulting or other less-thoroughly documented income sources.

In cases like those, said Stevens, lenders may seek to verify the information on a borrower's 1040 by asking for a copy of their bank statement from the month they deposited their 2012 tax refund or copies of the check they sent to the IRS to pay their taxes.

A small percentage of lenders -- perhaps 10% or fewer -- may decide that lending without the IRS income verification is too risky, said Stevens. If a mortgage defaults, Fannie or Freddie could force the lender to shoulder the losses.

"There's less appetite for risk, after the fiscal crisis," said Stevens. And that could be enough to scare some lenders into waiting until the shutdown ends.

For more information on your rights in Real Estate, consider contacting a Kirkland Real Estate Broker.

Our Firm:

Rylee Park Properties
520 Kirkland Way, Ste 103
Kirkland, WA 98033
T: 206.306.4034

Thursday, September 12, 2013

Rate increases continue to hamper Banks and the Market


Weitz - More evidence that the increase in interest rates is taking a negative toll on the RE market.
Bank executives have been hoping they could dull the pain of a plummeting mortgage-refinance market by shifting focus to loans for home purchases. So far, that isn't working out.

The Mortgage Bankers Association said Wednesday that mortgage applications dropped 13.5% in the week ended Sept. 6 from the previous week. The data, which include an adjustment for the Labor Day holiday, reflect a 20% drop in refinancing and a 3% decline in purchase loans.

"Demand is significantly down," said Glenn Kelman, chief executive of real-estate brokerage Redfin, which works in 22 U.S. markets. "Anybody who was going to buy a house this year tried to get it done in June or July because they saw the writing on the wall and worried about the rate increase."

Interest rates on 30-year fixed-rate mortgages rose to 4.80% from the prior week's 4.73% in the latest data from the mortgage bankers group. That is up from 3.60% at the end of April.
Weitz - As I've mentioned, that is a tremendous increase in a short period of time. Unless this trend changes, we'll see continued problems in the Seattle Real Estate market.
Refinancing has been a big casualty of the rate jump, starting with a sharp drop three months ago. Refinancings stand at the lowest level since June 2009 and are down 71% from a recent peak in May, the trade group said.

But recent data from the mortgage group show that demand for home-purchase loans also has softened, beginning in April. Purchase applications are still running 7% above their levels of a year ago but are less than expectations.

That bodes ill for lenders that have begun emphasizing loans for home purchases in hopes that it would help offset the refinancing slowdown.

To be sure, rising mortgage rates don't usually affect home purchases made in cash. Roughly one-third of all home purchases were made in cash in July, according to the National Association of Realtors.

Refinancing activity, meanwhile, is much more sensitive to rising rates than is purchase activity.

The MBA on Aug. 22 forecast that overall lending would shrink nearly 32% next year to $1.09 trillion, with a 60% decrease in refinancing but a 14% rise in home-purchase lending.

Still, the most expensive markets tend to get hit hardest when rates rise quickly.

Rising interest rates also mean house hunters might be forced to lower their sights in terms of what they can afford, resulting in smaller loans.
Weitz - Exactly, this is the problem.
Citigroup Inc., C -0.93% which scaled back its home-loan business after the financial crisis, is closing an office in Danville, Ill., that is dedicated to refinancings, a bank spokesman said Wednesday.

The New York lender had opened the office in the small eastern Illinois city "to handle the surge in demand for refinancing; however, due to the ongoing decline in refinance volumes, the excess capacity Danville provided is no longer needed," the firm said Wednesday. The bank notified its employees July 15.

The bank reported $17.2 billion in mortgage originations in the second quarter, down 4% from the previous quarter.

Citigroup is just one big bank o cut jobs in the mortgage business.

Wells Fargo & Co. has cut 3,000 jobs since July. Bank of America Corp. in late August told about 2,100 employees they were being let go due to a decline in refinancing activity. J.P. Morgan Chase JPM -1.92% & Co. is accelerating plans to cut as many as 15,000 jobs in its mortgage division by the end of 2014. The bank now expects to be roughly two-thirds of the way through with those reductions by the end of this year, a spokeswoman said.

All told, the Mortgage Bankers Association expects refinance volume to fall from $1.2 trillion in 2012 to less than $400 billion in 2014, which would be the lowest level for refinancing since 2000.

"What we're going through today is not a temporary, short-term anomaly," said David Stevens, the trade group's chief executive, at a banking conference in Raleigh, N.C., Tuesday. "This is a substantive change in the cycle of our industry."

A slew of lenders this week have warned investors to expect a significant drop in mortgage profits for the rest of the year.

"We're still making money out of it, but it's being really stressed," Kelly King, chief executive of regional bank BB&T Corp., BBT +0.03% said on Tuesday at a banking conference held by Barclays PLC.

BB&T, which is based in Winston-Salem, N.C., expects mortgage production to fall as much as 14% and revenue to drop as much as 28%.
For more information, contact a Kirkland Real Estate Broker
Our Firm:
Rylee Park Properties 
520 Kirkland Way, Ste 103
Kirkland, Wa 98033
(206) 306-4034
www.ryleepark.com/

Wednesday, September 11, 2013

United States Financial Industry - why nothing has changed


Weitz – A great opinion piece from the Wall Street Journal this morning. I will comment where appropriate.
Written by Alan Binder, a professor of Economics at Princeton and former Vice Chairman of the Federal Research.

Next Sunday marks the fifth anniversary of the fateful day that investment bank Lehman Brothers filed for bankruptcy, signaling the start of a frightening financial meltdown. It's a good time to ponder how the U.S. economy was nearly brought to ruin. But will we? Or are we already forgetting?
Consider the stark historical contrast between the 1930s and this decade:
Years of financial shenanigans in the 1920s, some illegal but many just immoral, conspired with a variety of other villains to bring on the Great Depression. Congress and President Roosevelt reacted strongly, virtually remaking the dysfunctional U.S. financial system, including establishing the Securities and Exchange Commission to protect investors, the Federal Deposit Insurance Corp. to protect bank depositors, and much else. The financial beast was comparatively tamed for almost 75 years.

Years of disgraceful financial shenanigans in the 2000s, some illegal but many just immoral, brought on the Great Recession with virtually no help from any co-conspirators. Congress and President Obama reacted comparatively weakly with the Dodd-Frank Act of 2010, which certainly did not seek to remake the U.S. financial system. I am a big supporter of Dodd-Frank, despite its timidity, because laws must be graded on a curve. Sadly, even this good-though-weak law now seems to be withering on the regulatory vine. Far from being tamed, the financial beast has gotten its mojo back—and is winning. The people have forgotten—and are losing.

Here are four examples. There are others.
1. Mortgages and securitization. Piles of unconscionably bad mortgages—underwritten by irresponsible bankers, permitted by somnolent regulators, and passed on like hot potatoes to investors via securitization—were a major contributor to the financial crisis.

One response in Dodd-Frank was a "risk retention" rule requiring issuers of asset-backed securities to retain at least 5% of the credit risk, rather than pass it all on to investors. The idea was that a little "skin in the game" would make Wall Street firms a bit more cautious about what they securitized.

But there was a catch. The 5% requirement does not apply to "qualified residential mortgages" (QRMs)—a term left to regulators to define, but intended to exempt safe, plain-vanilla mortgages with negligible default risk. Dodd-Frank does not ban mortgages that do not qualify as QRMs, nor even does it prevent such mortgages from being securitized. It only requires that lenders retain a tiny portion of the credit risk.
Weitz- what is the point?!...almost ALL of the loans securitized are for 'residential loans' that this makes this law virtually mute.
The law mandated that a specific rule be written within 270 days. More than 1,100 days have now passed, and the country is still waiting. 

Weitz - insert congress joke here.

Just days ago, the regulators issued yet another notice of proposed rulemaking, soliciting comments on (among many other things) two ways to define QRMs. The lighter-touch option would exempt almost 95% of all mortgages from the skin-in-the-game requirement. The "tougher" option would exempt almost 75%. Does anyone doubt which option will be favored by interested commentators? After that, what will be left of the Dodd-Frank requirement?

2. Derivatives. Disgracefully bad mortgages created a problem. But wild and woolly customized derivatives—totally unregulated due to the odious Commodity Futures Modernization Act of 2000—blew the problem up into a catastrophe. Derivatives based on mortgages were a principal source of the reckless leverage that backfired so badly during the crisis, imposing huge losses on investors and many financial firms. Dodd-Frank calls for greater standardization and more exchange-trading, which would create a safer and more transparent trading environment. Wonderful ideas. But the law exempts the vast majority of derivatives. Do you see a pattern here?
It gets worse. Gary Gensler, the chairman of the Commodity Futures Trading Commission, is one of the few real reformers. But he ran into a wall of resistance from the industry, from European regulators, and from some of his American colleagues when he tried to implement even the weak Dodd-Frank provisions for derivatives. And Mr. Gensler's days leading the CFTC look numbered.

3. Rating agencies. The credit-rating agencies also contributed mightily to the financial mess. These private, for-profit companies were presumed responsible for calling out hazards. Instead, they blessed financial junk with coveted triple-A ratings. Honest mistakes? Perhaps. But many critics have pointed out a flaw that cries out for fixing: The agencies are hired and paid by the very companies whose securities they rate.
Weitz - not just paid, but paid VERY well, and arguably, they are entirely dependent on the Banks for their survival. Its a very flawed system.
Unfortunately, Congress could not decide how to fix this flaw. So Dodd-Frank instructed the Government Accountability Office to study "providing incentives to credit rating agencies to improve the credit rating process" and report back within 18 months. The law also instructed the Securities and Exchange Commission to study "strengthening credit rating agency independence" and report back within three years. The GAO issued a report 18 months later, laying out a number of options; it has gathered dust ever since. And the SEC? Well, don't get me started. Amazingly, the rating agencies are still compensated as they were on the day Lehman Brothers crashed.

4. Proprietary trading. The Volcker rule, part of Dodd-Frank, bans proprietary trading by banks, to prevent them from gambling with FDIC-insured funds. President Obama embraced (and named) the rule very late in the legislative game, over the objections, according to multiple press reports, of his chief economic adviser at the time, Lawrence Summers.
The Volcker rule is not the only way to accomplish Paul Volcker's worthy objective. The United Kingdom and the European Union, for example, have proposed different means to the same end. But the Volcker rule is the law of the land here.
Sort of. In practice, the rule is hortatory until detailed regulations are written and promulgated. Dodd-Frank was signed into law in July 2010. The Volcker rule has been tied up ever since by internal bureaucratic squabbles and external pressure from the banking industry.

In sum, the Dodd-Frank Act is taking on water fast. What can be done to help Americans remember the horrors that led to its passage?

Here's one step. Mr. Obama will soon nominate a new chair of the Federal Reserve Board. The Fed chief is not a regulatory czar, but she or he is primus inter pares among the nation's financial regulators. The Fed's next chair can set a new, more determined tone going forward—or not. So it is vital that she or he be prepared to move bureaucratic mountains and fend off hordes of lobbyists opposing financial reform, not to bleed sympathy for Wall Street.
Weitz - obviously, these are just some of the many ineffective tools used to "regulate" the banks. The reality is that the 'Too-Big-To-Fail banks are bigger than ever with more power than ever. I find it repugnant. Its one thing to run a great business and grow to a large size (ie. Microsoft). If you recall, Microsoft faced incredible challenges from the Department of Justice as a monopoly. The banks, on the other hand, were effectively rewarded for their utter failure(s) via bailouts and other benefits that are too numerous to mention in this particular blog-post.
For more information on your rights against with your home loan, contact a Kirkland Real Estate Broker
Rylee Park Properties 
520 Kirkland Way, Ste 103
Kirkland, WA 98033
(206) 306-4034

Tuesday, September 10, 2013

Increase in interest rates begin to hurt market


AP - A rise in interest rates is slamming homeowners' demand for mortgages, prompting large and midsize banks to cut jobs and warn investors of declining profitability in the home-loan business.
SW- Exactly as we predicted…. See past article here.

Wells Fargo, the nation's largest mortgage company by loan value, on Monday told investors at a conference that it expects mortgage originations to drop nearly 30% in the third quarter to roughly $80 billion, down from $112 billion in the second quarter.

On Aug. 29, Bank of America Corp., notified about 2,100 employees that they were being let go largely due to a decline in refinancing activity, said a bank spokesman. Mortgage originations include loans for home purchases and refinancings.

Rates are rising on investor worries the Federal Reserve soon will take steps toward reducing an $85-billion-a-month bond-buying program designed to help stimulate the economy.

The average rate on a 30-year fixed-rate mortgage stood at 4.73% for the week ended Aug. 30, up from 3.60% at the end of April, according to the Mortgage Bankers Association.

SW- As discussed, that is a HUGE drop in purchasing power. For example, it would cost over $5000/ your more for a $500,000 mortgage.

All told, Mr. Miller expects lenders to originate $1.654 trillion of mortgages this year, down from $1.75 trillion in 2012. The decline is expected to bottom at $1.46 trillion in 2014 before rising again in 2015, according to FBR estimates.

The slowdown is the latest hurdle for the banking industry, which already is grappling with tepid loan demand from corporate borrowers and higher compliance costs as regulators crack down on a broad swath of banking practices.
The warnings come even though the U.S. housing market is posting its strongest year-over-year gains since the tail end of the real-estate boom in 2006. Many lenders had ramped up their mortgage businesses in the past two years to take advantage of a surge in refinancing activity that was spurred by historically low rates.

Ultimately, big banks should benefit as they will be able to raise interest rates on new loans. That will widen the gap between their cost of borrowing and the income they earn from lending. But that won't happen for several months, as banks work through pending applications and loans.
"We are bullish on the long term, but the short term is going to be rocky," said Mr. Miller.

San Francisco-based Wells Fargo, which financed nearly one in four U.S. mortgages in the second quarter, has already cut 3,000 jobs in the mortgage business since July. The reductions represent roughly 1% of the bank's total workforce.
At J.P. Morgan, mortgage originations are on pace to drop as much as 40% from the first half of 2013, said Marianne Lake, J.P. Morgan's chief financial officer, at the conference. She attributed the decline to a drop in refinancings. She said refinance applications are down more than 60% from the peak in May 2013.

Mortgage-banking income dropped 3% at Wells Fargo and 14% at J.P. Morgan in the second quarter from a year earlier. At Bank of America, the decline was 22% from the year-ago period.
The mortgage slump also is taking a toll on smaller lenders, some of which pumped up their home-loan business to help offset a slowdown in commercial lending.

The slowdown is perplexing to industry veterans like Gerald Lipkin, who has been chief executive of New Jersey lender Valley National Bancorp since 1989.
SW- As discussed, this is a very large issue that few are talking about. We believe it will take a toll in the RE Market, and is reflected with recent King County numbers with Inventory of properties for sale increasing and sales decreasing.
For more information, consider contacting a Kirkland Real Estate Broker
Rylee Park Properties 
520 Kirkland Way, Ste 103
Kirkland, WA 98033
(206) 306-4034
www.ryleepark.com

Monday, September 2, 2013

Nation & Seattle Housing Update

AP - A story from CNBC Realty Check discussing the drop in home sales for the month of July, 2013:



Overview:

1) Pending Home Sales Dropped 1.3% in July
2) Home Sales West Coast down 4.9%
3) Mortgage Rates increased to highest level since 2011
4) Jumbo borrowers could be effected by new regulations (Loans over $625,000) See definition of Jumbo Loan here.

Weitz:

What does this all mean for Home prices in Seattle?

Admittedly, I have been quiet on the blog due to 1) a lack of free time at the office; and 2) the real estate market hasn't been that interesting as of late. All the news has been positive, and as I've told everyone who will listen...this positive news is simply not warranted.

We believe the increase in prices is primarily due to two factors that are likely unsustainable:

1) Inventory of homes was extremely low by historical standards down to 3265 in March of 2013 (currently at 4602 for King County SFH)...that is a nearly 50% increase in inventory in just 6 months;

2) Interest Rates rates were historically lows (3.4% in May, 2012) but have since rose to nearly 4.5% (see Bankrate.com). That is a HUGE drop in purchase power for the average consumer According to mortgagerate.com, that increase would increase the payment for $500,000 30 year fixed mortgage from $2738 to $3074/ mo.

Accordingly, we are looking to see a decrease in sales and an increase in inventory and another fall in prices for the intermediate future. If you have questions for Seattle area Short Sale experts, please consider contacting a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033 425.889.9300

weitzlawfirm.com

Tuesday, February 12, 2013

Defending Washington Judicial Foreclosures




Defending Washington Judicial Foreclosures:

Judicial foreclosure is the exclusive method of foreclosing a straight mortgage as well as, although infrequently utilized, an option to foreclose statutory deeds of trust and real estate contracts. 18 Wash. Prac., Real Estate § 19.1 (2d ed.). Judicial foreclosure is advantageous in cases involving a deed of trust when the beneficiary (Lender) is seeking a deficiency judgment; when the party in default has assets to collect from, judicial foreclosure allows for a deficiency judgment whereas non-judicial foreclosure does not.

Washington Judicial Foreclosure Process:

The process involves filing a lawsuit to obtain a court order to foreclose and is used when no power of sale is present in the mortgage or deed of trust or upon the election of the debt holding. After the court declares a foreclosure, the property will be auctioned off to the highest bidder.
Defensive tactics that can be applied during judicial foreclosure proceedings.

(1) challenging perfection of the chain of title, and
(2) challenging the validity of the beneficiary when that party is not the holder of the promissory note.

I. Chain of Title Defense:

One possible foreclosure defense tactic is to challenge the perfection of the chain of title. In order for there to be “perfection” of the chain of title, there must be an unbroken, continuous record of ownership of the promissory note from the time it is sold until the present.
Currently, there have been some issues with the relatively new model for the recordation of mortgage documents called the ‘Mortgage Electronic Registration System’ Inc. (MERS). MERS is a private electronic recording company that tracks the ownership of said notes and was intended to “reduce the costs, increase the efficiency, and facilitate the securitization of mortgages and thus increase liquidity.” Bain v. Metropolitan Mortg. Group, Inc., 175 Wn.2d 83, 285 P.3d 34. During the lifetime of the mortgage/deed of trust, MERS tracks ownership interests and that mortgage/deed can be transferred between several MERS members (e.g. “Fannie Mae” and “Freddie Mac”). Id at 95. Problems can arise with multiple transfers with maintaining a clear and consistent chain of title. As a result of multiple transfers, MERS is vulnerable to recording errors, and broken links in the chain can be identified, it can nullify the ability to make a claim on the property.

II. Challenging the validity of the beneficiary instigating foreclosure proceedings.
In Bain, the court held that, according to the Deed of Trust Act, only the party actually holding the promissory note may be considered a beneficiary. Bain at 89. Consequently, if MERS does not actually hold the note, which it most likely does not, it is not a lawful beneficiary. The court in Bain states that “obligation and mortgage cannot be split, meaning that the person who can foreclose the mortgage must be the one to whom the obligation is due.” Id. at 97 (quoting 18 Stoebuck; Weaver § 18.18, at 334). Simply put, the note and the deed must be together. Given that many deeds are securitized, it is very likely that the party seeking foreclosure is not in possession of the note and, therefore, legally unenforceable. Additionally, when a deed has been securitized, a defense tactic is to argue that “once a loan has been securitized, or converted to stock, it is no longer a loan and cannot be converted back into a loan. That means that your promissory note no longer exists, as such. And if that is true, then your mortgage or deed of trust is no longer securing anything.”

For more information on your rights in Foreclosure, please consider contacting a SeattleForeclosure Attorney.

Our Firm:
Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

425.889.9300

Email (Click here)

 

Friday, February 8, 2013

Housing Market Update - Don't pop the champagne yet


A report on the AP from 2/7/2013:
A new string of grim housing data confirms what economists and analysts have long predicted: the housing market has yet to hit bottom, and once it does, it will be a long slog back to health and stability.

The nation’s heap of completed foreclosures remained steep, barely budging to 65,000 in February compared to 66,000 one year earlier, according to new data released by CoreLogic Thursday. The percentage of American homeowners more than 90 days delinquent on their mortgage payments, including those in foreclosure, rose to 7.3 percent in February compared to 7.2 percent a month earlier. However, the rate is still lower than the 7.8 percent of delinquent homeowners logged in February 2011. Bottom of Form

According to today’s report, 3.4 million properties have gone into foreclosure since the financial crisis in September 2008. About 1.4 million, or 3.4 percent of all properties with a mortgage, were in the foreclosure process in February—a 0.2 percent drop from February 2011.

That follows new data from the S&P/Case-Shiller Index that U.S. home prices sank in January for the fifth straight month to the lowest level since 2003. Additionally, separate reports from the National Association of Realtors and CoreLogic show existing home sales and previously owned homes under contract shrank in February. The number of bank-owned homes either in the foreclosure process or seriously delinquent—the so-called shadow inventory—remained unchanged from six months earlier at 1.6 million units.

“We’ve still got millions of foreclosed homes waiting to come on the market, so we’re not going to see any dramatic rebound in house prices,” cautioned Paul Ashworth, chief economist at Capital Economics. He predicts over the next few months that home prices will slowly start to rise, which will slowly nudge homebuyers back into the market and lead banks to start loosening lending criteria. “But property is a slow-moving asset, unlike stocks or equity where things can go up or down ten percent in a day. We’re not going to get a rapid rebound after the housing bust we just went through.”

Other economists expect home prices to plunge further. “Our view is that foreclosures, excess supply, and weak demand will drive home prices as measured by the Case-Shiller indices down at least another 5 percent,” said Patrick Newport, a U.S. economist with IHS Global Insight.

Despite the apparent examples of stagnation, and even decline, some housing analysts say there are signs that better times are ahead for struggling current and potential homeowners. “The housing market is showing some signs of shaking off the depression-like conditions that have plagued it for much of the past few years,” wrote Freddie Mac chief economist Frank Nothaft in his March 2012 Economic Outlook report, referring to modest rises in seasonally-adjusted housing starts over the past 12 months.

And the latest CoreLogic report notes that 61 of the 100 U.S. regions it tracks saw their foreclosure rates fall slightly compared to a year ago. Moreover, U.S. home sales currently embroiled in the foreclosure process accounted for a growing number of U.S. home sales last year, rising to 24 percent of all homes at the end of 2011, compared to 20 percent in the third quarter. That, some experts say, signals that delinquent property sales could boost the housing market this spring. “With the spring buying season upon us, the inventory may decline further as the pace of distressed-asset sales rises along with the rest of the housing market,” said Mark Fleming, chief economist at CoreLogic.

Friday, February 1, 2013

Increase in Foreclosures Nationwide

Weitz - while most pundits have been cheering the 'Real Estate' recovery, I have been quietly biting my lip as it is my opinion the problem is still far from over given the activity of clients in foreclosure/ planning foreclosure in our firm.

A recent AP article suggest that my 'cautious pessimism' may be warranted.

More than half of the nation’s largest metros experienced an upturn in foreclosure activity in 2012 compared to 2011, according to a report from RealtyTrac.

RealtyTrac observed foreclosure trends in 212 markets with a population of 200,000 or more and found 120 markets, or 57 percent, displayed an increase in foreclosure activity from 2011. At its peak, foreclosure activity was up in 181 out of 212 metros in 2010.

“Markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble,” said Daren Blomquist, VP at RealtyTrac.

“Meanwhile, the underlying fundamentals in many of those markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year — and that is particularly good news for buyers and investors hungry for more inventory to purchase in those markets,” he added.

Weitz - there is no question that the historical low interest rates, coupled with the low supply of homes have made this somewhat of a seller's market. The problem I see is this: 1) what happens if/when interest rates rise?.....prices will drop as the purchasing power of the average buyer will drop...simple mathematics there. 2) What about the large 'shadow inventory' of bank owned homes and properties in which mortgages are delinquent....the numbers are huge and they have to be addressed at some point. Perhaps the market can absorb them/ perhaps not?...only time will tell.  3) the new generation of buyers (20-30 yrs) are burdened with unprecedented student debt loans, and poor job prospects. Will the buyers be there to support this market over the next 5-10 years.? Its too soon to make call on this issue as political forces may alleviate the student debt problem. Nevertheless, it is certainly as issue that will play a role in the real estate market and general economy for years to come.

For more information on your rights in foreclosure, short sale or other real estate related issues, consider contacting a Seattle Foreclosure Attorney.

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