Monday, April 16, 2012
Saturday, May 28, 2011
How Robosigning Affected Our Foreclosure Crisis
All of us when we sign a legal contract we are supposed to read before we sign the dotted line. When documents are submitted to a court they are supposed to be true as submitted. When the documents submitted with a court a document in which someone swears that it has been personally verified the information contained within the document is true and it is not true, you and I would get real trouble. In the eyes of the courts that is considered fraud. This is exactly what the scandal that was unveiled in the latter part of 2010, when it was revealed that GMAC, JPMorgan Chase (JPM), Bank of America (BAC) and One West Bank employees routinely signed hundreds of documents without verifying what they were signing.The problem is that documents were submitted to courts as if the documents were true which enabled banks to foreclose on delinquent properties. Also, Wells Fargo (WFC) and Citigroup's (C) CitiMortgage has been involved in this scandal.
According to John Walsh, the acting head of the Office of the Comptroller of the Currency, in his testimony before Congress, “These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole.” The Federal Housing Administration Commissioner David Stevens talks about punishments will include fines paid to the government and affected homeowners may possibly get loan modifications or a partial forgiveness of their loans’ principal balance. However, if the fines are not sufficient to require a modification in their behavior to motivate them to avoid repeat occurrences in the future it would be basically just slapping these banks on the hand. When these banks have revenues in the billions of dollars and they are fined a couple of thousand of dollars, that’s peanuts to them; they will pay it laughingly.
In another example of potential Robosigning, Citigroup transferred a mortgage from Lehman Brothers to Citi in 2009, which has already ceased to exist. When confronted with its nonsensical filing, Citigroup decided not to foreclose. Instead, it gave the homeowner a meaningful mortgage modification -- $15,000 principal reduction, plus a 30-year fixed mortgage at 3% (oops). Can you imagine if this information was not made public? This family would have been wrongfully foreclosed on.
The cases making it to the news are from large national, international sophisticated banks. How can this be happening? The main reason is that when a bank wants to foreclose by law it has to prove it actually has the right to foreclose (that it owns the note and accompanying mortgage). Sometimes these sophisticated banks, due to the securitization of mortgages and the changes in property-ownership documentation that accompanied such deals can make it hard for the banks to establish clean chains of title and produce original documents. Every foreclosure is different since foreclosure processes vary from state to state and whether it is a Fannie Mae or Freddie Mac note. In addition, there’s all those little details banks don’t want to have to deal with like whether the note holder is on active military duty in a foreign land, whether the homeowner has been actively trying to sell the home as a short sale, whether the note could begin a trial HAMP period, whether the note would qualify for HAFA, other extenuating circumstances, etc. To add to the challenge is the large volume of foreclosures that they must be start and complete in a timely manner. Conclusion: So rather than take the time to generate the correct documentation, the banks cut corners. The probabilities that someone would find out are small, it would require for you and I to prove them wrong that the information being filed in court is incorrect.
This is a serious problem that we all need to be aware of, Banks sometimes don't know which properties they can foreclose on. For example, there has been reported cases of banks who have foreclosed on homes bought with cash and two banks have tried to foreclose on the same property. And so on. So when you are faced with a potential foreclosure, you must request that they produce the note and have your legal counselor help you review the details of it to protect you from a potential wrongfully filed bankruptcy. This problem of foreclosure bad documents have been turning up for years. So why is robosigning practice only coming to light now? the main reason is the volume of them filed in the last couple of years and most people facing foreclosure don't have attorneys to check the documents. Sadly enough, most homeowners don't even contest the foreclosure and banks are counting on this. You as the homeowner need to understand that in bankruptcy a bank has to prove it has the right to foreclose. It has to produce the necessary documents. Not all debtors in bankruptcy have attorneys, and not all those attorneys know what to look for.
Banks must remember that scorned customers will have a very long memory. Consumers have numerous options for their banking needs these days. Also, consumers are in need of the services offered by the banks in some form or another—checking, savings, car loans, home equity loans, mortgages, etc.—for nearly all their adult lives. This is a long-term marriage that can amount to 50-70 years. Why would banks want to alienate customers with that kind of longevity potential? Lots of bad media on these companies who were signing through thousands of foreclosure cases every week with little to no fact-checking. In many cases, these mega banks have been unable to prove they even still held the mortgages (oops). If you are facing a potential foreclosure ask the banks to prove it!
According to John Walsh, the acting head of the Office of the Comptroller of the Currency, in his testimony before Congress, “These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole.” The Federal Housing Administration Commissioner David Stevens talks about punishments will include fines paid to the government and affected homeowners may possibly get loan modifications or a partial forgiveness of their loans’ principal balance. However, if the fines are not sufficient to require a modification in their behavior to motivate them to avoid repeat occurrences in the future it would be basically just slapping these banks on the hand. When these banks have revenues in the billions of dollars and they are fined a couple of thousand of dollars, that’s peanuts to them; they will pay it laughingly.
In another example of potential Robosigning, Citigroup transferred a mortgage from Lehman Brothers to Citi in 2009, which has already ceased to exist. When confronted with its nonsensical filing, Citigroup decided not to foreclose. Instead, it gave the homeowner a meaningful mortgage modification -- $15,000 principal reduction, plus a 30-year fixed mortgage at 3% (oops). Can you imagine if this information was not made public? This family would have been wrongfully foreclosed on.
The cases making it to the news are from large national, international sophisticated banks. How can this be happening? The main reason is that when a bank wants to foreclose by law it has to prove it actually has the right to foreclose (that it owns the note and accompanying mortgage). Sometimes these sophisticated banks, due to the securitization of mortgages and the changes in property-ownership documentation that accompanied such deals can make it hard for the banks to establish clean chains of title and produce original documents. Every foreclosure is different since foreclosure processes vary from state to state and whether it is a Fannie Mae or Freddie Mac note. In addition, there’s all those little details banks don’t want to have to deal with like whether the note holder is on active military duty in a foreign land, whether the homeowner has been actively trying to sell the home as a short sale, whether the note could begin a trial HAMP period, whether the note would qualify for HAFA, other extenuating circumstances, etc. To add to the challenge is the large volume of foreclosures that they must be start and complete in a timely manner. Conclusion: So rather than take the time to generate the correct documentation, the banks cut corners. The probabilities that someone would find out are small, it would require for you and I to prove them wrong that the information being filed in court is incorrect.
This is a serious problem that we all need to be aware of, Banks sometimes don't know which properties they can foreclose on. For example, there has been reported cases of banks who have foreclosed on homes bought with cash and two banks have tried to foreclose on the same property. And so on. So when you are faced with a potential foreclosure, you must request that they produce the note and have your legal counselor help you review the details of it to protect you from a potential wrongfully filed bankruptcy. This problem of foreclosure bad documents have been turning up for years. So why is robosigning practice only coming to light now? the main reason is the volume of them filed in the last couple of years and most people facing foreclosure don't have attorneys to check the documents. Sadly enough, most homeowners don't even contest the foreclosure and banks are counting on this. You as the homeowner need to understand that in bankruptcy a bank has to prove it has the right to foreclose. It has to produce the necessary documents. Not all debtors in bankruptcy have attorneys, and not all those attorneys know what to look for.
Banks must remember that scorned customers will have a very long memory. Consumers have numerous options for their banking needs these days. Also, consumers are in need of the services offered by the banks in some form or another—checking, savings, car loans, home equity loans, mortgages, etc.—for nearly all their adult lives. This is a long-term marriage that can amount to 50-70 years. Why would banks want to alienate customers with that kind of longevity potential? Lots of bad media on these companies who were signing through thousands of foreclosure cases every week with little to no fact-checking. In many cases, these mega banks have been unable to prove they even still held the mortgages (oops). If you are facing a potential foreclosure ask the banks to prove it!
Sunday, May 8, 2011
How Avoid Get Rich Quick Schemes?
It is amazing that today we still have people falling victims of real estate and other Internet scams. Just in March of 2011 a con artist man who ran a defunct get-rich scheme agreed to settle a court order by paying the Federal Trade Commission $900,000 and surrendering the proceeds from the sale of his house and most of his personal property. Mr. John Stefanchik was found guilty of blatantly false claims that his "wealth building" (know as the "Stefanchik Program") program would teach consumers how to quickly make serious money by buying and selling mortgages. These get rich quick program sold them consumers the idea that they could earn huge amounts of money in their spare time, upwards of $10,000 every 30 days, if they purchased the Stefanchik program; instead most customers failed to earn a dime. Victims typically paid $5,000 to $8,000 for the worthless program, but only Stefanchik and his cronies got rich.
It is truly incredible that in today's environment this type of scams still happens. The sponsors of these schemes usually profit from selling the opportunity than from the opportunity itself. A get-rich-quick scheme is any project or method that promises a high amount of return for a relatively small investment. These get-rich-quick schemes also promise that these high returns will come with a minimum amount of risk or work. Something that most people seem to forget is that return is a function of risk which would make all the get-rich-quick schemes too good to be true. That should be the first alarm when one of this scams are presented to us. Another point to remember is that these scams have a low percentage of success stories relative to the number of participants. They will blast their websites with testimonials, showing their big checks they have made. However, what is their percentage of success when calculated over the total of participants in the program.
Due to the public scrutiny, most of the illegal programs have to chose underground methods to promote their programs, such as cold calling and spam emails. The reason is that the public scrutiny placed upon the traditional media channels, makes it difficult for illegitimate enterprises to prosper for long periods without being exposed. The illegitimate enterprises tend to use emotional triggers and confidence building to motivate participation. They often place emphasis on the exclusivity of the opportunity to make it more attractive.
Here are a couple of tips you can use to prevent falling victim of scams:
1. Surround yourself with good, wise people who can advice you well and then listen to them.
2. Become aware of your strong desires and their influence over your thinking.
3. Write down your decision and the reasons for it, then put it away for 24 hours and come back to it and check it.
4. Do not give in to impulsiveness.
5. Wait for a decision until your spirit is calm and your mind is clear.
6. Never violate your conscience.
7. Never do something if financial gain is the only reason that you are doing it.
8. When in doubt - don't. Trust your instincts when they tell you to pause and think it over.
9. Avoid manipulative people and high pressure situations.
10. Check the numbers and the fine prints before signing anything.
11. Stay in control, do not let others control your decision making.
12. Know the difference between character and personality and have a healthy distrust of "Charming People".
13. Know the difference between opinions, facts and projections.
14. Carefully look at all aspects of the opportunities - Strengths, Weaknesses, Opportunities, and Threats (SWOT)
15. Do not let pride and ego fashion your decision.
16. If it seems rash and risky it probably is. Ask Who gains and how?
17. Do not make major decisions without a moment of meditation.
18. Never make a decision when you feel harassed or stressed, tired or hungry.
19. If you have to rationalize the decision and manufacture excuses why you have to do it, then you are probably trying to do something that your better self knows that is dubious or wrong and it is trying to warn you.
I have provided to you 19 tips that will help you prevent potential mistakes in your business decision making. This list is not all inclusive and there are other steps you can take to prevent being a victim of a scam artist. The best thing to do is to take a moment and analyze the opportunity before rushing into a decision. One of the best tools that a scam artist has is to pressure into an immediate decision because they know if they let you go to think the chances are that you will discover their scheme.
It is truly incredible that in today's environment this type of scams still happens. The sponsors of these schemes usually profit from selling the opportunity than from the opportunity itself. A get-rich-quick scheme is any project or method that promises a high amount of return for a relatively small investment. These get-rich-quick schemes also promise that these high returns will come with a minimum amount of risk or work. Something that most people seem to forget is that return is a function of risk which would make all the get-rich-quick schemes too good to be true. That should be the first alarm when one of this scams are presented to us. Another point to remember is that these scams have a low percentage of success stories relative to the number of participants. They will blast their websites with testimonials, showing their big checks they have made. However, what is their percentage of success when calculated over the total of participants in the program.
Due to the public scrutiny, most of the illegal programs have to chose underground methods to promote their programs, such as cold calling and spam emails. The reason is that the public scrutiny placed upon the traditional media channels, makes it difficult for illegitimate enterprises to prosper for long periods without being exposed. The illegitimate enterprises tend to use emotional triggers and confidence building to motivate participation. They often place emphasis on the exclusivity of the opportunity to make it more attractive.
Here are a couple of tips you can use to prevent falling victim of scams:
1. Surround yourself with good, wise people who can advice you well and then listen to them.
2. Become aware of your strong desires and their influence over your thinking.
3. Write down your decision and the reasons for it, then put it away for 24 hours and come back to it and check it.
4. Do not give in to impulsiveness.
5. Wait for a decision until your spirit is calm and your mind is clear.
6. Never violate your conscience.
7. Never do something if financial gain is the only reason that you are doing it.
8. When in doubt - don't. Trust your instincts when they tell you to pause and think it over.
9. Avoid manipulative people and high pressure situations.
10. Check the numbers and the fine prints before signing anything.
11. Stay in control, do not let others control your decision making.
12. Know the difference between character and personality and have a healthy distrust of "Charming People".
13. Know the difference between opinions, facts and projections.
14. Carefully look at all aspects of the opportunities - Strengths, Weaknesses, Opportunities, and Threats (SWOT)
15. Do not let pride and ego fashion your decision.
16. If it seems rash and risky it probably is. Ask Who gains and how?
17. Do not make major decisions without a moment of meditation.
18. Never make a decision when you feel harassed or stressed, tired or hungry.
19. If you have to rationalize the decision and manufacture excuses why you have to do it, then you are probably trying to do something that your better self knows that is dubious or wrong and it is trying to warn you.
I have provided to you 19 tips that will help you prevent potential mistakes in your business decision making. This list is not all inclusive and there are other steps you can take to prevent being a victim of a scam artist. The best thing to do is to take a moment and analyze the opportunity before rushing into a decision. One of the best tools that a scam artist has is to pressure into an immediate decision because they know if they let you go to think the chances are that you will discover their scheme.
Friday, April 29, 2011
The Chinese Drywall Problem
During the housing boom, drywall, which is gypsum pressed between paper and used in walls and ceilings, was imported from China to fill a domestic shortage. A growing number of homeowners — there have been more than 3,810 reports in 42 states and other areas — complain that it generates sulfurous odors and corrosion that tarnishes metals and causes appliances such as air conditioners to fail. The government recommends consumers remove any possibly faulty drywall. Although no study has yet linked the drywall to specific health problems, homeowners have complained of respiratory issues and headaches. A 2010 report from the Consumer Product Safety Commission identified several brands of Chinese-made “problem drywall” and said that some Chinese-made samples emitted hydrogen sulfide at a rate 100 times greater than non-Chinese drywall boards.
So far, Florida is ground zero. Up to 1,000 homes in the southern part of the state may be affected, says Jack Snider, president of American Management Resources Corp. (AMRC). Working for homeowners and builders, the environmental consulting firm has tested drywall for gases and checked homes for odors and corrosion. AMRC first began investigating odor complaints in 2004 and found drywall to be the cause. Because most drywall doesn't identify its origin, Snyder says, it took until 2006 before foreign-made drywall became the focus. Based on import records, he estimates that up to 60,000 U.S. homes may be affected, with about half in Florida.
This is not a new issue here in Florida. This issue started showing up around 2004 and it does not stop. This problem can continue to spread throughout the United States as more homes will become inspected for this problem. Are these drywalls from China a real problem for our health? The more I read about it, the more I come to believe that it is problem. I think that the behavior of this product can be affected by the local weather of each state, so the results of Florida may not be experienced in Montana. However, it warrants that this issue be seriously investigated. Chinese drywall is typically mixed in with untainted drywall, which is why people should not assume that their home is fine if they find U.S. drywall. Moreover, U.S. drywall may have been manufactured in China and rebranded.
As builders were looking for more ways to address the housing demand, increased material costs, and demand from shareholders for higher returns may have driven these companies to select products of questionable standards. Now the question I have is, where else were housing safety standards sacrificed?
Here are some Chinese Drywall facts that you may find interesting:
* 20 mil sq. ft. of Chinese drywall entered the U.S. since 2001
* More than 65,000 American homes could be affected
* Emits harmful sulfur gases
* Corrodes copper wiring
* Contaminates furnishings & fabrics
* Damages air conditioners and appliances
* The presence of Chinese drywall has been reported in 42 states, the District of Columbia and Puerto Rico.
So far, Florida is ground zero. Up to 1,000 homes in the southern part of the state may be affected, says Jack Snider, president of American Management Resources Corp. (AMRC). Working for homeowners and builders, the environmental consulting firm has tested drywall for gases and checked homes for odors and corrosion. AMRC first began investigating odor complaints in 2004 and found drywall to be the cause. Because most drywall doesn't identify its origin, Snyder says, it took until 2006 before foreign-made drywall became the focus. Based on import records, he estimates that up to 60,000 U.S. homes may be affected, with about half in Florida.
This is not a new issue here in Florida. This issue started showing up around 2004 and it does not stop. This problem can continue to spread throughout the United States as more homes will become inspected for this problem. Are these drywalls from China a real problem for our health? The more I read about it, the more I come to believe that it is problem. I think that the behavior of this product can be affected by the local weather of each state, so the results of Florida may not be experienced in Montana. However, it warrants that this issue be seriously investigated. Chinese drywall is typically mixed in with untainted drywall, which is why people should not assume that their home is fine if they find U.S. drywall. Moreover, U.S. drywall may have been manufactured in China and rebranded.
As builders were looking for more ways to address the housing demand, increased material costs, and demand from shareholders for higher returns may have driven these companies to select products of questionable standards. Now the question I have is, where else were housing safety standards sacrificed?
Here are some Chinese Drywall facts that you may find interesting:
* 20 mil sq. ft. of Chinese drywall entered the U.S. since 2001
* More than 65,000 American homes could be affected
* Emits harmful sulfur gases
* Corrodes copper wiring
* Contaminates furnishings & fabrics
* Damages air conditioners and appliances
* The presence of Chinese drywall has been reported in 42 states, the District of Columbia and Puerto Rico.
Saturday, April 23, 2011
Proper Valuation of Your Green House
The value of green is many times lost in appraisals. Pitfalls are all over, but there are steps you can take make sure that they are taken into consideration in your appraisals. Green is something that is catching on in the United States and it should be something you should include in your marketing of your properties and be included in your appraisals. More buyers are interested in the green movement and want properties that are energy, water efficient. Unfortunately the lending community and appraisers seem to be behind on this concept and are not properly giving value to the investments made to make homes environmentally friendly.
It is the responsibility of the builders and real estate agents to insist that the lenders assign an appraiser that is trained in green construction. However, since real estate agents and builders are under the pressure of not influencing the appraisers decision on the value of the property, it falls on the borrower to insist on this requirement. Which it makes no sense since the borrower would prefer that those value be omitted to obtain a lower valuation of the property. This is a dilemma that needs to be addressed an insist from the lending and appraisal industry to take note and recognize the value of the efforts made to make homes that are ecologically friendly. It is imperative that the we obtain competent appraisers for this type of properties. I should be a requirement that homes with green features do have an properly trained appraiser that can recognize the value of them and properly value them. This can be accomplished without influencing the professional opinion of the appraiser.
When it comes to valuations, green is like any other feature in your property. Here are some suggestions on how to set your green home apart:
1. A rating from a recognized agency that shows how your green home stacks up against the same model built to minimally acceptable construction standards in energy efficiency.
2. A breakdown of the additional construction costs of green and energy efficient items.
3. Blueprints and detailed product specifications of the items that set your house apart from the rest.
4. A list of incentives, including tax breaks to the builder for green construction or the rebates to the buyer from the local power company, local, state or federal government.
5. A chart comparing green features with those in code-built houses.
It is the responsibility of the builders and real estate agents to insist that the lenders assign an appraiser that is trained in green construction. However, since real estate agents and builders are under the pressure of not influencing the appraisers decision on the value of the property, it falls on the borrower to insist on this requirement. Which it makes no sense since the borrower would prefer that those value be omitted to obtain a lower valuation of the property. This is a dilemma that needs to be addressed an insist from the lending and appraisal industry to take note and recognize the value of the efforts made to make homes that are ecologically friendly. It is imperative that the we obtain competent appraisers for this type of properties. I should be a requirement that homes with green features do have an properly trained appraiser that can recognize the value of them and properly value them. This can be accomplished without influencing the professional opinion of the appraiser.
When it comes to valuations, green is like any other feature in your property. Here are some suggestions on how to set your green home apart:
1. A rating from a recognized agency that shows how your green home stacks up against the same model built to minimally acceptable construction standards in energy efficiency.
2. A breakdown of the additional construction costs of green and energy efficient items.
3. Blueprints and detailed product specifications of the items that set your house apart from the rest.
4. A list of incentives, including tax breaks to the builder for green construction or the rebates to the buyer from the local power company, local, state or federal government.
5. A chart comparing green features with those in code-built houses.
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