It appears that President Obama’s idea that federal bankruptcy judges will be given the authority to modify mortgages is picking up steam. Actually, judges already have such authority to modify mortgages balances, including modifying the principal balance… but only in commercial bankruptcies. Thus, while it may take a few more months, it is now a likely scenario that if you are in bad financial shape, and your house is worth less than the mortgage that Banks will know that they will be forced to modify your loan. Simply put, they know you could file for bankruptcy or in the alternative they will begin to negotiate true modifications where the banks will be forced to take into account the true value of the home. If the home value is less than the mortgage, the Banks will have no choice but to negotiate based on the realities of the market place. So stay tuned. It will only get more interesting!
OK… so where is the silver lining to the news today that home sales are up but home prices are still falling like a rock? Well… first of all, we at least are seeing signs of a return to a rational market where appraisers can actually tell you what a house is worth today. Last year because there were not enough data points (closings) the market had come to a stand still. Sure, we may not like the idea that your home is under water… or has no equity… but at least you know where you stand.
So for real estate professionals the fact that the industry is showing any signs of life is positive. In addition, it is great news for first time homebuyers and folks who were priced out of the real estate market for a decade. The relationship between household income and price is starting to converge. As I have said for several years that is what caused the bubble to burst (the fact that prices exceeded what people could afford to buy based on their incomes). Now as prices drop those folks that still have jobs (92%) can get a great deal. In fact, almost half of all sales are now either short sales or bought from the banks after they foreclose.
Thus, the bailout will not come from Washington even after they spend and waste $3 TRILLION but from first time homebuyers and folks who maintained a good credit score during this crisis and begin to start seeing see value. Continue reading
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OK… so I go to court on Tuesday morning for what is called motion calendar. That is where you get maybe unto 5 minutes of face time with the Judge. We were there to move to dismiss a foreclosure for numerous procedural or due process grounds: including the fact that the note was lost and then assigned without recorded proof in the public records of an assignment of mortgage as well as other more technical grounds.
The other attorney had about 15 files stacked so high they partially obscured his face. He was a “Rent-A-Counsel” since the foreclosure was prepared on the other coast of Florida by a Foreclosure Mill. After hearing our argument, the judge read the motion and then decided to defer a ruling by putting the matter on a “special set calendar” in several weeks. The other counsel was silent since he was not knowledgeable about our case nor had he read our motion.
Interestingly, I suggested to the judge that it was likely that the other 14 files had similar problems and that some judges in other parts of the country have begun to look at actual paperwork being thrown together by the banks as part of their “foreclosure filings.” I asked the judge what he thought of that… and he commented in a tone that was partially sarcastic that it was not his role to look at each file if a party chooses to be unrepresented… but that “I should or could represent all these people!” I inquired why some judges elsewhere were taking it upon themselves to look at each file while in Florida the judges were not doing that. Now… getting annoyed he asked why he was even having this philosophical discussion with me and quickly whisked me out of his courtroom. Continue reading
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I guess what struck me most yesterday was the knowledge that I was watching and in some ways participating in the largest collective activity in the history of mankind. By all accounts more people watched and attended the Inauguration than any other worldwide event – including the Super Bowl and the Olympics! So the question is why? Sure, we all have the standard answer: First Afro-American elected President of the United States – but it is much more than that.
The sheer number of diverse people on the Mall created this rich imagery that words will NEVER describe. The fact that America, as she has done a few times in history, can completely reinvent herself is what is at the core. In essence, America as a nation gives hope to the rest of the world. We can shed light in corners of the earth where there is darkness. The change that we are seeing unfold before our eyes is truly transformative. The old is broken, which we all somehow knew. Institutions that have existed for years have crumbled, including big Wall Street firms as well as the economy, America’s status and its reputation in the world. We have ignored for too long the costs associated with our over dependence on fossil fuels and have ignored so many socioeconomic issues including the eroding middle class. We have, as a nation, become fat and lazy. We were becoming the frog that does not jump out of the heated pot, until it is too late. But, we did jump out and the WHOLE world was watching. Continue reading