Wednesday, June 29, 2011

Housing trouble ahead from the QRM provision in Dodd-Frank?

The best intentions of Washington can often result in negative, albeit unintended, consequences.

A perfect case in point i
s the QRM provision in Dodd-Frank!

The proposed Dodd-Frank Wall Street Reform and Consumer Protection Act includes a provision that goes by the acronym QRM, or Qualified Residential Mortgage.

I recently attended a meeting of the Empire State Mortgage Bankers Association (ESMBA) at which this piece of legislation was debated for quite some time.

The main focus of the attendees centered on the proposed requirements that lenders who sell their loans rather than portfolio them, set aside an amount equal to 5% of the loan as risk retention.

In other words, the QRM provision would mandate that they have some "skin in the game." This 5% risk retention rule would apply to any non-QRM loan.

Those lenders not falling into the "too big to fail" category of banks would simply not be able to tolerate or compete with that amount of capital in essence being locked up. It would further constrict a lending environment that is already quite constricted.

Some of the other findings concerning the current form of the QRM provision:

  • Regulators should go back to the drawing board on the proposed QRM rule. As written, it violates Congressional intent, makes home ownership more expensive for millions of responsible consumers, and jeopardizes the fragile housing recovery.


  • Congress left a down payment requirement off the list of suggested QRM standards in the Dodd-Frank Act because it determined that the cost of excluding responsible middle-class families would exceed the modest improvement in default rates.


  • Requiring strong underwriting; documentation of income and financial resources; and safe mortgage products is the best way to minimize defaults while making safe and affordable mortgages available to a wide range of creditworthy borrowers.


  • Existing homeowners, who have suffered declines in the value of their homes in the past few years, would be denied access to the best products and the lowest-cost credit when they attempt to refinance their existing mortgages if this proposed rule remains unchanged.



Calls for change in the language of the legislation has come from more than 250 members of the U.S. House of Representatives, many U.S. Senators and by industry groups such as The Coalition for Sensible Housing Policy.

Stay tuned!

Subscribe NOW to receive new articles published by The Hallmark Abstract Sentinel:

Enter your email address:

Delivered by FeedBurner


Subscribe in a reader







Enhanced by Zemanta

Tuesday, June 21, 2011

Is MERS is viable despite some significant losses in court?





















Does the controversy that's surrounding
MERS and the foreclosure process signal a death knell for the firm or is it much ado about nothing?

In an article here last week a New York State Appellate Court decision was discussed which held that the foreclosing entity needs to be in possession of both the mortgage and the note in order to have the proper "standing" to foreclose. This is an excerpt:

"... Finally, the recent New York State Appellate Court ruling upholds the idea that the entity foreclosing needs to be in possession of both the mortgage and the note! Because MERS was a mortgage registry and not a holder of the note, in essence this ruling says that MERS cannot assign the right to foreclose because it was never in the possession of the note - Strike Three?

Said the judge in the case: “... This matter involves the enforcement of the rules that govern real property and whether such rules should be bent to accommodate a system that has taken on a life of its own...”

While this ruling appears to be extremely detrimental to the operations and longevity of MERS, at HousingWire there is an article that offers a different view.

It provides the opinions attorney's who feel that while MERS is down it is definitely not out. This view stems partially from the fact that there are so many different courts around the country coming to different conclusions concerning the legality of foreclosures that MERS is involved in.

While the fix won't be quick, cheap or easy, they feel that MERS will ultimately survive.

It is an extremely informative article at HousingWire you can find here.

For email or feed delivery of new articles published by The Hallmark Abstract Sentinel the sign-up forms are below:

Enter your email address:

Delivered by FeedBurner


Subscribe in a reader


Enhanced by Zemanta

Friday, June 17, 2011

MERS, foreclosures, the mortgage note, the New York State Appellate Court decision and another nail in the coffin!


Important update: The court case referenced in the article is Bank of New York, etc., respondent, v Stephen Silverberg, et al., appellants, et al., defendants. (Index No. 17464-08), 2010-00131, SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT, 2011 NY Slip Op 5002; 2011 N.Y. App. Div. LEXIS 4899, June 7, 2011, Decided.

MERS
: Mortgage Electronic Registration System

A ruling out of the New York State Appellate Court is yet one more strike against MERS that will likely put a huge roadblock in front of the foreclosure process.

If you are not familiar with MERS, the video at MERS 101 will bring you up to speed.

In a nutshell MERS serves as an electronic database that allows mortgages to be sold with title transferred quickly. This was particularly important in the age of securitizations when mortgages could change hands many times over. One case was related to me where a mortgage was sold hundreds of times.

In addition to saving time MERS also allowed for a significant saving of money because after the original transaction was complete the loan documents from future transactions were no longer filed at the county clerks office.

The system was basically issue free until the collapse of the real estate market and the huge volume of foreclosures that resulted.

Because the mortgage was held in the name of MERS for tens of millions of mortgages, MERS would have to assign that mortgage back to the entity that was going to foreclose, or MERS would begin the foreclosures in its own name.

The problems are many, but for starters it has been determined that MERS cannot be the party to the foreclosure - Strike One

Because of the way that mortgage ownership was transferred in MERS by anyone who had a user name and a password, in many cases it is not known if the lender or servicer involved in the foreclosure actually has the "standing" to foreclose. Put another way, is the entity foreclosing actually the rightful owner of the mortgage and the note - Strike Two

Finally, the recent New York State Appellate Court ruling upholds the idea that the entity foreclosing needs to be in possession of both the mortgage and the note! Because MERS was a mortgage registry and not a holder of the note, in essence this ruling says that MERS cannot assign the right to foreclose because it was never in the possession of the note - Strike Three?

Said the judge in the case: “... This matter involves the enforcement of the rules that govern real property and whether such rules should be bent to accommodate a system that has taken on a life of its own...”

Stay tuned!

For email or feed delivery of new articles published by The Hallmark Abstract Sentinel subscribe here:

Enter your email address:

Delivered by FeedBurner


Subscribe in a reader

Thursday, June 9, 2011

Hallmark Abstract Service June Newsletter

Hallmark Abstract Service June Newsletter

If you would like to receive the newsletter by email in the future send your name and email address to mhaltman@hallmarkabstractllc.com or leave them in the comment box below.



Hallmark Abstract Service

Have you ever been to a closing where the title wasn't cleared?

Hallmark hasn't!

Visit our website to find out more

If your practice involves residential or commercial real estate transactions, you know that steering clear of any potential stumbling blocks and getting a deal closed is critical! At Hallmark Abstract Service our goal is to ensure, 100% of the time, that the title portion of any transaction will be seamless so that our clients can focus on the other aspects of a deal.


The Hallmark Abstract Newsletter - June 2011 Edition

Hallmark Abstract Service, Jericho, NY, 516.741.4723

More on MERS (Mortgage Electronic Registration System)

The foreclosure saga continues to drag on across the United States. One of the centerpieces of the crisis is a company or database that goes by the acronym of MERS (Mortgage Electronic Registration System).

The MERS database was a way for the mortgage industry and Wall Street to speed the transfer of mortgages from owner to owner which was particularly helpful in the age of mortgage backed securities.

The system bypassed the normal recording methods that have been around since the beginning of real estate transactions.

As is often the case, when the desired outcome is speed and cost avoidance, mistakes happen.

And the mistakes that have come out of MERS and the rest of the foreclosure mess will take years to clean-up.

Read "More on MERS" at The Hallmark Abstract Sentinel here.





New York State Foreclosure Activity

This map provides a look at the foreclosure activity in New York State broken out by region. As the map indicates the hotbed for activity is currently downstate.

Courtesy of RealtyTrac

Advice for your clients who are selling their homes



If you are fortunate enough to be in touch with your client early in the selling process it is important that they try to avoid some of the more common seller mistakes. In the buyers market that we are in, sellers have to put their best foot forward from the start!


  1. Pricing Your Home Too High
  2. Not Using Up to Date Information
  3. Not Utilizing Current Marketing Technology
  4. Ignoring the Importance of First Impressions
  5. Not Providing Easy Access for Showings
  6. Not “Staging” Your Property Correctly
  7. Not Knowing the Competition

  8. Believing Your Agent is Not Doing the Job When There Aren’t Any Offers
  9. Not Re-Evaluating the Marketing Plan
  10. Errors in Market Timing
  11. Not Giving the Sales Effort Enough Time
  12. Taking An Inflexible Position on Financing
  13. Not Making the Right Kind of Repairs
  14. Believing That Selling Property is Seasonal
  15. Not Screening Prospects Adequately
  16. Believing That You are Not Part of the Marketing Plan


(Source)

Hallmark Abstract Service
131 Jericho Turnpike, Suite 205
Jericho, New York 11753
516.741.4723 (P)
516.741.6838 (F)

orders@hallmarkabstractllc.com

The Hallmark Abstract Sentinel




Enhanced by Zemanta

More on MERS


When history looks back, what will the role of MERS in the financial meltdown be?

This article is courtesy of Chris Ryan who is a Senior Editor at Newswire

Countless courts and other appellants in the United States continually lambast the Mortgage Electronic Registration System, Inc. or the MERS for the last few months. MERS is currently under fire for several concerns on the rise in the number of foreclosures in 2010 and even early this year. MERS has been attributed to huge percent of foreclosures since 2007 until the present year. The unfortunate thing here is that the foreclosures issued by MERS were heavily contested as void. Although given that a particular person was not able to pay back for the mortgages, many appellants have contested that MERS has no right to issue a foreclosure. Moreover, many financial analysts have found problems with how the system of MERS works and how it contributes to the continuing crisis in the real estate industry.

It is said that even the transferring of records to MERS itself was already a violation of the laws underlying the real estate industry. According to one of the commissioners of the Bristol County Board of Commissioners, Commissioner John Mitchell, that banks and other mortgage loaning companies have missed out one particular thing that companies should do and that is to register the records of the mortgagors and mortgagees to the public. MERS has clearly broken this law as the company has somehow made a private registry of records rather than registering the records to the public registry. With this particular law broken, it has then branched out to several complications in the real estate industry.

One complication that has been spurred by this lawbreaking is the significantly increasing foreclosure rates in the US. One of the steps during a foreclosure process is by passing the foreclosure document to the court for scrutiny and approval. Since the records of the mortgagees and mortgagors are concealed within the confines of MERS, there would be nothing that a mortgagee could do. Usually, when the government looks into the records of mortgagees in the brink of foreclosure, there could still be settlements, resolutions, and restraining orders. By this, mortgagees can still have a chance of keeping their homes. However, as the MERS acts as a private registry, sufficient information can then be set aside as the records are bought and sold as it is registered in MERS. Eventually this may lead to an inevitable foreclosure.

Another complication is that mortgagees and mortgagors have already been experiencing confusion with regards to what banks or mortgage loaning companies mortgagees are tied up to. Basically, this particular method of registering the records to MERS is very painstaking as the records would be bought and sold to different investors. The banks and loaning companies register the records to MERS so that they won’t be paying for the registration fees implemented by the county. MERS then keeps the records or sells. With this, the records of the ownership of mortgage plans and other important details may drastically change to the point that it may be hard to determine who has the actual right to be the mortgagor. Mortgagees are then surprised that as they receive a foreclosure statement, it would then be under MERS, when supposed to be, the mortgagor itself should issue it.

Lastly, this particular lawbreaking has economically affected the real estate industry itself, the counties and other institutions tied up with MERS. For the banks and loan companies, this system has significantly decreased their registration fees but the thing here is that they have broken the law. According to the Bristol County Board of Commissioners, MERS owes the different states in the US millions of dollars for bypassing the requirements of registering the records to the county public registries. Added to that, the increasing foreclosures under MERS have somehow negatively affected the purchasing stimuli for potential buyers due to the fact that a lot of foreclosures are going on and that MERS is one way or another involved in what could be considered an anomaly in the real estate industry.


Enhanced by Zemanta