Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

U.S. Housing Market Buyers Sideline Foreclosed Properties Due to Unclear Titles

Housing-Market / US Housing Oct 11, 2010 - 11:40 AM GMT

By: Mike_Shedlock

Housing-Market

Best Financial Markets Analysis ArticleWould you buy a foreclosed home now, knowing full well the title may be clouded by mortgage fraud? I wouldn't. Anyone who would without title insurance is asking for a huge legal mess.

Moreover, because of fraudulent procedures, bank of America and other companies have halted all foreclosures. See 40 State Attorneys General to Investigate Mortgage Fraud; Bank of America Halts Evictions Nationwide; Senator Reid Calls for More Suspensions, A nationwide halt in foreclosures for details.


Halting of foreclosures cut home sales of distressed as well as add to already enormous shadow inventory of homes. In an ironic twist, median home prices may temporarily rise because of decreased sales of distressed properties.

Potential Distressed Sale Buyers Will Stay On Sidelines

Bloomberg reports Foreclosure Freeze May Sideline U.S. Homebuyers on Legal Concern

Revelations of mistakes in foreclosure proceedings are causing buyers to have misgivings about property titles, the right of home possession, said Richard DeKaser, chief economist at Woodley Park Research in Washington. Confidence in the legality of repossessions will cut foreclosure sales more than a reduction of available properties because the market already is flooded with repossessed homes, he said.

“The legal problems we’re seeing will hit sales as people worry about the legitimacy of the process,” DeKaser said. “The implications are that there’s been shoddy work.”

Bank of America Corp., the largest U.S. lender, extended a freeze on foreclosures to all 50 states Oct. 8 as concern spread among federal and state officials that homes are being seized based on faulty data. JPMorgan Chase & Co. and Ally Financial Inc.’s GMAC Mortgage unit stopped repossession cases in 23 states where courts supervise home seizures, amid allegations that employees submitted documents with unverified or false information to speed the process.

Foreclosure sales accounted for 24 percent of all home transactions during the second quarter, according to a Sept. 30 report by RealtyTrac Inc., an Irvine, California-based data seller. They made up a greater share in the states hardest-hit by the housing crisis, accounting for 56 percent of purchases in Nevada, 47 percent in Arizona and 43 percent in California.

In Florida, Massachusetts, Michigan and Rhode Island, the share was about a third.

“The broader concern is that if banks took shortcuts here, what else did they do?” [Rick Sharga, senior vice president of RealtyTrac] said. “Five years into this crisis, there’s no excuse for not having a process in place.”

Ownership questions may not arise until a home is under contract and the potential purchaser applies for title insurance, or even decades later as one deed researcher catches errors overlooked by another. A so-called defective title means the person who paid for and moved into a house may not be the legal owner.

In cases of lost or mishandled paperwork, attorneys in many cases are allowed to refile documents to correct omissions and establish a claim, said Kathleen Engel, a financial-services law professor at Suffolk University in Boston.

Most of the homes affected by the foreclosure freeze will eventually come on to the market because the dispute is about court documents, not about whether borrowers defaulted, said Lawler, the housing economist.

“Most of the delays will just be delays,” Lawler said. “All this is doing is creating severe uncertainty for people who were thinking of buying a distressed property.”

Delays Will Be Delays, and That's It?

In one sense, delays will just be delays. As I said in a previous post: "It is very important to remember that except in extremely rare and highly publicized cases, there is essentially no dispute that who were foreclosed on have not been paying their mortgages and are in default.

In other words, in nearly every case, these people are going to lose their homes and indeed should lose their homes. The question is not whether these people should or will lose their homes, but rather who has the legal right to foreclose."

At What Cost?


However, that only looks at one side of the equation. The other side of the equation can be summed up with the question "At What Cost?"

Clearly these delays will be very expensive to correct, assuming they can be corrected at all.

Except for a line at the end of her post blaming "free market ideology on steroids" Yves Smith has an excellent writeup covering many issues in 4ClosureFraud Posts Lender Processing Services Mortgage Document Fabrication Price Sheet

Failure of Regulation

Bear in mind, that none of this foreclosure mess or for that matter the housing mess in general has anything remotely to do with the Free Market. Yves continually and erroneously blames the Free Market when the cause for this mess is a Failure of Regulation rather than a failure to Regulate.

However, that one line comment should not distract you from reading an otherwise excellent post.

Would You Buy a Foreclosed Home?

If reading Yves post did not deter you from buying a foreclosed home, perhaps a read of the Ellen Brown's post FORECLOSUREGATE AND OBAMA'S 'POCKET VETO' will help.

If that does not deter you, perhaps a read of A Different Direction for the Foreclosure Mess? by Bruce Krasting will.

Repeating my opening question: Would you buy a foreclosed home now, knowing full well the title may be clouded by mortgage fraud?

Many will not be willing at all. Others may be willing if and only if they can get title insurance.

Can You Get Title Insurance?

Earlier this month a couple of title insurers stopped issuing title insurance for homes foreclosed on by J.P. Morgan Chase and Ally Financial's GMAC Mortgage.

Please consider the USA Today report Old Republic to stop writing policies for some foreclosures

Old Republic National Title Insurance, among the nation's largest title insurance companies, will no longer write new policies for homes foreclosed upon by J.P. Morgan Chase and Ally Financial's GMAC Mortgage unit –– a sign that concerns about faulty foreclosure paperwork could now endanger new sales of foreclosed homes.

Old Republic issued a bulletin to some agents stating that "the company will not insure title to any property which has been foreclosed by Ally Financial, Ally Bank or GMAC until further notice," according to a Sept. 29 copy of the memo. The concern is that other title companies will also refuse to issue policies for major lenders, which could have major ramifications for the housing industry.

And Maryln Weiner, a title agent and real estate lawyer in Boca Raton, Fla., said she received a bulletin saying that Old Republic would also not insure title policy to a purchaser who has bought a property from Chase when the bank has foreclosed on the home and are now selling it to third parties.

"They won't insure it after completion after the foreclosure," Weiner says. "This is going to set us back years. It's really going to be a mess. I think you're going to see actions to reopen foreclosures that already took place. This will have tremendous consequences and all title companies will do the same thing. We've never seen anything like this before."

Mark Stopa, a lawyer in Florida who represents homeowners, says the implications are huge. Buyers will not purchase homes that have been foreclosed upon if they don't have insurance that it's a clear title, he says.

"Would you buy the house? If there's questions about the title, you can't sell it, so who's going to buy it?" Stopa says.

And distressed homes, which include foreclosed properties and that now make up a significant number of housing sales, rose to 34% of sales in August from 32% in July; they were 31% in August 2009, according to the National Association of Realtors.

Much More Than Delays

All things considered, Lawler's comments “Most of the delays will just be delays. All this is doing is creating severe uncertainty for people who were thinking of buying a distressed property." while accurate on the surface, are enormously understated the deeper you dig.

However, this is what happens in two sentence soundbites. Lawler is aware of many other issues, including the very important question Who Will, and Who Should “Pay”?

Free Market Failure? Hardly! But Who Will Pay?

I discussed the question about who will pay for this mess as well a discussion of free market principles in SEC Failure to Regulate MBS Resulted in "Interconnected Ponzi Scheme with Various Types of Concurrent Fraud"

More Likely Than Not, Taxpayers Will Pay

Lawler says he does not have the answers to those questions, and right now I don't either. However, the attempt by the Senate to ramrod through that legislation shows the senate's intent to minimize the damage to the guilty parties.

Voters are extremely angry right now, and the next Congress is likely to be far more conservative than this one, but after the election the slate will be clear for another two years.

I hope I am wrong about this, but I smell another taxpayer sponsored bailout, possibly via some backdoor concocted scheme involving Fannie Mae. This trick will be to pass a bailout that does not look like one.

If that can be done, rest assured it will be done

Free Market Failure? Hardly!

Someone is sure to blame this mess on the "free market". Nothing could possibly be further from the truth. The Fed's loose monetary policies were the great enabler in this scheme. The mere existence of the Fed, Fannie Mae, Freddie Mac, and the FHA run counter to free market philosophies.

Note too, that the big three rating agencies (Moodys, Fitch, S&P) were sponsored by the SEC. Please see Time To Break Up The Credit Rating Cartel for details.

Regulators in Bed with Industries they are Supposed to Regulate

Finally, and as I have pointed out on many occasions, the one legitimate function of government is to protect civil rights and property rights, with everyone treated equally under the law. Regulation designed to prevent fraud, does just that.

However, and as is typically the case, regulators get into bed with those they are supposed to regulate.

How does this happen? Look no further than the appointment process itself. How many key players in the Bush and Obama administrations have ties to Goldman Sachs and JPMorgan? How many have other ties to Wall Street and other large banks?

Playing Field Purposely Dishonest

Cries for more regulators will not do a damn thing when people like Elizabeth Warren Tossed a Bone and Appointed Geithner's Lapdog

We do not have a level playing field for the simple reason Wall Street and the big banks do not want an honest playing field. Unfortunately, the corrupt way corporations buy politicians all but ensures the status quo, even as screams for more regulation reverberates from the mountain tops.

Along with taxpayers, we certainly need to add title insurers to the list to the list of those likely to suffer, not only for reduced income from all these delays, but also from the aspect they are very vulnerable for title policies they insured, whose titles are now very clouded, and may be clouded for months or even years.

Finally, anyone with a clouded title (a buyer of a previously foreclosed home), cannot sell. What a mess.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2010 Mike Shedlock, All Rights Reserved.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

leslie
16 Oct 10, 18:21
GOLDMAN SACHS EMBEZZLEMENT SCHEME - SECRET SECONDS

SUBJECT: GOLDMAN SACHS EMBEZZLEMENT SCHEME - SECRET SECONDS

THE LATEST SCAM – ALERT!!! DO NOT WAIT FOR THE FORECLOUSRE MILLS, SERVICERS OR LENDERS TO GIVE YOU FORECLOSURE DOCUMENTS OR ASSIGNMENTS - THEY ARE NOT GIVING YOU EVERYTHING - ORDER A TITLE SEARCH OR GO TO YOUR COUNTY RECORDER TO SEE WHATS BEEN RECORDED ON YOUR PROPERTY – WE DID AND THIS IS WHAT WE FOUND:

In May 2005 we deposited and invested $200,000 in Real Property, where we recently found out that $118,800 was embezzled out of our property from Mortgage Lenders and Trust Brokerage Companies, namely Goldman Sachs through an escrow Transaction. The $118,800 in funds was paid to these embezzlers from the Investors unbeknownst that the securitization happened by encumbering our property and making up a fraudulent fake Promissory Note and Deed of Trust.

See the link for further information: https://fdaaccount.box.net/shared/a1pjz9sz5c


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules