One of my searches led me to a couple of REO property flips involving a corporation represented by the same attorney.  All the properties are located in Brooklyn. One of the transactions, the spread was over $320,000! Nice profit, isn’t it?  So how did they do it?  Buyer took out a conventional mortgage of $635,000 and closed the beginning of November 2008.  Most, if not all, conventional lenders have seasoning requirements.  Did this corporation buy the property and hold for 90 days?  Nope.  Now I am sure you are wondering – well how does she know?  I know, because all of these transactions are part of the public record and, if you know what to look for, it is fairly easy to discern the methodology.  These particular parties are stupid. But, they also had to be aided by the title company. So what did they do?

Take a look at this snapshot of one of the transfer tax documents – the RP5217 – that I copied straight from the ACRIS system:

Now look at the crossed-out dates (this one is such a particularly poor job, but it closed). I propose that it did, in fact, close on September 10, 2008.  Look at the CRN number on the bottom of the form (circled in red). The CRN number starts with the year, month and day the property is supposed to change hands and is inputted by the drafter. These transfer tax returns are usually prepared within days of closing.  This vast time difference would never occur.  The parties needed to back date the transaction because of the bank’s seasoning requirements. Also, they needed to back date it far enough that they could avoid any additional value requirements for transactions taking place within 180 days of acquisition.

Suffice it to say this is only one of this buyer’s reo transactions and they rest follow the same trend.  It is all laid out there in the public record. This kind of trend would certainly supply law enforcement with enough probable cause to obtain a warrant to secure the documents from both the first and the second closings.  Perhaps there will be a show check, false income documents and other indicia of fraud – who knows?

Now ask yourself, if I can find this blatant evidence of REO fraud, who else could be looking?

Related posts:

1. Short Sales & No-Flip Clauses in the Approval Letter – Removing a Roadblock
2. Seasoning and FHA’s Time Restrictions on Resales – a Legal Analysis
3. Buyer $5,000 Short – How to Close the Gap…from a NY Point of View

Who Should Come?

RE BarCamp welcomes real estate industry related people, including real estate agents, real estate brokers, lenders, inspectors, home-stagers, title reps, attorneys, coaches, geeks, non-geeks, geek wannabes and anyone who is interested in learning and sharing knowledge in a freely collaborative environment.

The Calendar is most impressive – 28 webinars addressing each of the major social networks and how to incorporate them into your real estate business.  Some of the topics include:

• 7 Secrets to Facebook Page Success
• Twitter Essentials for 2010
• Seven Serious Social Media Mistakes Agents Make
• Mortgage Professionals: Learn Seven Strategies for Connecting With Agents
• Blogging Tips for Beginners
• Next Generation Brokerage
• Social Media Heresies
• and much more!!!

So click on the image to the right and I hope to “see” you all there!!!

Related posts:

1. The Twitter Craze – How to Jump In and Start Tweeting!
2. Nick the Webguy: Real Estate Websites
3. Real Estate Law Update: New York State Decisions of Interest

My son, Matt Desio, is a 4th Grader at Meadow School in Baldwin, NY.  He is participating in a fundraising Math-A-Thon to make it possible for St. Jude to treat childhood cancer patients regardless of a family’s ability to pay.

The benefits of Math-A-Thon add up to help a good cause. Matt will:

• improve math and comprehension skills
• solve age-appropriate math problems
• understand the importance of helping others

This all equals help for St. Jude patients battling cancer and other catastrophic childhood diseases.

Under the direction of Scholastic, the Math-A-Thon Funbook has designed a new curriculum of math activities to meet national standards in education and challenge today’s K – 8 students with age-appropriate math problems. The work the students will do as part of Math-A-Thon will also be subjects that must be covered in each grade level by the time the student leaves his or her current grade. The subjects are broken down into focal points, which will be covered in the new Funbook.

This exciting new addition expands the benefits of the Math-A-Thon program from the St. Jude campus to the classroom to school districts themselves. Not only does the new Funbook allow students to raise funds for St. Jude and help them practice their math skills, but it also serves as preparation for the standardized tests at the end of the school year.

I am asking you to sponsor Matt in the Math-A-Thon and encourage him to complete the Math Fun-Book for a worthy cause.  The event ends on December 4th so please make your sponsorship donations as soon as possible:

Thank you so much for supporting my son & such a worthy cause and Happy Holidays!!!

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I am thankful for my husband, Danny, who has shown me this year that I can lean on him and he will not only hold me up but will carry me when I cannot go on; for my children for making me smile even when I want to cry; for my sister-in-law, Donna, for all her support this year – you have no idea how much I needed it, for my mother-in-law and father-in-law for all their love, help and support, for the girls in my office keeping everything running like a machine when I was MIA and believing in me, for the good people in my profession and in our industry who stood by me because they know the truth and for God for giving me so many good people in my life, for showing me that there would always be a light at the end of the tunnel although it might not be the result I had expected and for giving me strength beyond measure so I could be “the titanium dolphin among sharks”.

God bless you all and may you have a wonderful Thanksgiving!

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It is that time of year, when the trees are stripped bare, there is a nip in the air and we are reminded that winter is almost here.  Thanksgiving is right around the corner and the planning is already underway in most American homes for a turkey dinner with all the trimmings (well, for most, but not us as we are going to be in Turks & Caicos this Thanksgiving!).  However, it is also a time to remember those who have lost their jobs, their homes – everything.  With unemployment  up to a staggering 10%, the ranks of those who are less fortunate are swelling with no end in sight.

Lets give them a hand this Thanksgiving:  LITweetup is sponsoring 3 events beginning this weekend and they are asking for donations of cash, supermarket gift cards & non perishable items.  Become a fan of their Facebook page, follow LITweetup on Twitter as @LITweetup and join in the  Twitter conversation by using the hashtag, #LITweetup.

Many churches and schools, including my kids’ elementary school, Baldwin Meadow School, are collecting non-perishable items as well.

Lastly, please remember that those who need help need it all year long – not just winter.

Related posts:

1. The Twitter Craze – How to Jump In and Start Tweeting!

CNN recently posted a video on their website detailing the “shocking” story of a woman who paid her mortgage but whose home is being foreclosed upon, jumping on the fraud bandwagon and telling the stories of homeowners preyed upon by the real estate & banking industry. The video leaves out more than it tells, in an obvious attempt to manipulate the truth for their story.

Maria Espinosa, a Nevada realtor, apparently purchased her home, without counsel and without purchasing an Owner’s policy of title insurance.  It appears that a previous owner in the chain of title had a VA mortgage that was never satisfied and as such, brought an action to foreclose.  She sought redress from Chicago Title who advised her to retain a lawyer and visit the ALTA website, wherein the message was to potential home buyers to purchase title insurance so that if there is a title claim, the title company will not only insure the property but pay to defend such title.  Ms. Espinosa finally retained an attorney who admits he has only 18 months of experience in real estate and foreclosure defense who just states “he has never seen anything like this before”.

I learned of this video through the New York State Bar Association Real Property List Serv’s forum wherein my esteemed colleagues brought up a valid point yet again – why would anyone, who is about to make one of the biggest purchases of their life, choose to do so without retaining a real estate attorney?  This topic is discussed, ad nauseam, on the listserv but is often not publicized…until today and here on my blawg.

I am amazed at the mentality of the realtors and abstract companies of other states who are so resistant to attorney involvement, nevermind the

Federal Trade Commission, which for years has lobbied heavily against having attorneys involved in residential
real estate transactions. However, it has become clear, in light of the collapse of the Housing Market, that the rationale was to keep the people blind to the greed of those certain mortgage brokers and bankers, realtors, appraisers and title companies who made fortunes selling homes riddled with toxic mortgages and funded with fraud, kickbacks and the like. They told those people, “We are saving you money”, “It is like buying a car” or “The attorneys are just trying to control everything and get rich in the process”.  What they didn’t tell them was “We want you at the closing table with NO ONE to look after your interests” or “We want you to take out a loan you can’t afford or understand”.

Numerous times I have engaged in discourse, in various internet forums, with members of the real estate industry who had been vocal and derisive of attorney involvement in real estate transactions. I heard their closing horror stories of deals falling apart because of the lawyer’s failure to prepare contracts in a timely manner or instructing their client to not move forward etc. While I agreed with them that retaining any attorney for a closing was not conducive, I argued that the retention of a real estate attorney was a necessity and would eliminate their apprehension. A real estate attorney has a far different focus than the average litigation attorney and the expertise to close a transaction without issue. Most importantly, the real estate attorney is the only party who only represents the interest of the buyer or seller and probably one of the least of the expenses paid at closing, especially compared to the thousands of dollars paid over to the realtors.

In New York State (particularly downstate), it is customary to retain attorneys for real estate transactions.  And it shows: New York had a 23% decrease in foreclosures in 1st Quarter 2009 as compared to 1st Quarter 2008 and compared to a 24% increase nationally!

So, while I am sympathetic to the plight of Ms. Espinosa and others out there in the same position, I can’t help but shrug my shoulders and say it all could have been avoided or at the very least, addressed with no out of pocket expenses, had she had a lawyer at her side when she bought that home.

Related posts:

1. Real Estate Law Update: New York State Decisions of Interest
2. Nick the Webguy: Real Estate Websites
3. Buyer $5,000 Short – How to Close the Gap…from a NY Point of View

Billionaire George Soros and Dell Inc. founder Michael Dell are part of a seven-member investor consortium that will purchase IndyMac Bank for $13.9 billion, according to an Associated Press report.

The report said the investors have formed a partnership called IMB Management Holdings LP, that includes MSD Capital, Dell’s investment firm, private equity firm Dune Capital Management, J.C. Flowers & Co., Paulson & Co., Soros’ Fund Management, and a fund controlled by Silar Advisors LP, all of New York City, and Stone Point Capital of Greenwich, Conneticut.

“We have assembled a group of experienced private investors in financial services to acquire the former IndyMac and operate it under new management with extensive banking experience,” Dune Capital Management co-CEO Steven Mnuchin said in a statement. “We will inject significant private capital into IndyMac so that it can once again effectively serve its customers and communities.”

Once the deal closes, the investment group will pour $1.3 billion in new capital into IndyMac and continue to operate the Pasadena, California-based bank, the Federal Deposit Insurance Corporation told the AP.

Under terms of the sale, the new investors will shoulder the first 20 percent of the bank’s loan losses, with the FDIC agreeing to take on the majority of any losses thereafter, according to the report, which added the FDIC said its bank insurance fund stands to lose $8.5 billion to $9.4 billion on IndyMac.

The IndyMac investors will continue the home-loan modification program that FDIC Chairman Sheila Bair launced in August.

The government seized IndyMac in July as the U.S. Housing market began collapsing. IndyMac was one of the greatest casualties of the fallout because of the number of mortgages it distributed with little down payment or proof of assets.

DSNews.Com Default Servicing In Print and Online – Formerly REO Magazine

Tags: Indymac, FDIC, subprime, mortgage, real estate, loan

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FHFA Announces Successful Implementation of Streamlined Modification Program

Carrie Bay | 12.18.08

Representatives of the Federal Housing Finance Agency (FHFA), Fannie Mae, Freddie Mac, and HOPE NOW announced today that the Streamlined Modification Program (SMP) was successfully launched December 15th as planned – three days after Fannie and Freddie sent detailed implementation instructions to their servicers. The SMP, which was developed by the four organizations in conjunction with mortgage servicers from the industry, is already making progress in preventing foreclosures, FHFA said in a press statement.

“Foreclosure prevention is critical for individuals and families, their communities, and the overall housing market,” said FHFA Director James B. Lockhart. “I am pleased that our program is being rolled out right on schedule and that servicers are already working at modifying delinquent loans with the goal of keeping people in their homes.”The SMP is designed to be a streamlined process for modifying the loans of a large number of borrowers who are seriously delinquent on their mortgage payment and are threatened by foreclosure. The new program replaces several time-consuming steps in a traditional loan modification with a uniform process that uses standard eligibility requirements and documents.

To be considered for the program, borrowers are instructed to contact their servicer, who will try to arrange an affordable monthly mortgage payment. If the servicer is unable to create an affordable payment with this streamlined program, it will further evaluate the borrower’s situation through a customized process. The key to success is the borrower’s ongoing cooperation and communication with the servicer, FHFA stressed. At the same time, servicers have been charged with proactively identifying distressed borrowers as early as possible to determine their eligibility for a workout or other foreclosure alternative, and reaching out to them by mail.

At a background briefing held earlier today, representatives of FHFA, Fannie Mae, Freddie Mac, and HOPE NOW outlined the guidelines and demonstrated the qualification tools being used to expedite the loan modification process.“This initiative builds on Freddie Mac's current loss mitigation efforts, which are on track to provide three out of five of our seriously delinquent borrowers with a workout this year,” said David M. Moffett, Freddie Mac's CEO. “Our alliance with FHFA, Fannie Mae, and the HOPE NOW Alliance will help our industry bring relief to thousands of distressed homeowners.”

According to Herb Allison, Fannie Mae's president and CEO, more than 10,000 delinquent borrowers every month will be able to get back on track under the new SMP and Fannie's recently announced Early Workout program, which allows servicers to modify troubled loans before they turn delinquent.Under the two mortgage financiers' new SMP, mortgage and escrow payments can be cut to 38 percent or less of an eligible borrower's gross monthly income by one or more of the following steps: reducing mortgage rates, extending the mortgage term up to 40 years, or forbearing part of the principal. Eligible borrowers must own and occupy the property as a primary residence, have missed at least three mortgage payments, and not filed for bankruptcy.

“FHFA has been working with program participants to get the program up and running as quickly as possible,” said Lockhart. “The SMP is on track and is fast becoming the industry standard for other loan modification programs also being developed. Together these efforts are expected to prevent hundreds of thousands of foreclosures, which will help homeowners, the housing market and ultimately, the economy overall,” Lockhart said.As FHFA indicated when the program was first unveiled in November, SMP is intended to help set standards in the mortgage servicing industry for conducting loan modification programs on a large scale as a foreclosure prevention measure.

For Freddie Mac's bulletin regarding the SMP guidelines, click here. For Fannie Mae's, click here.

DSNews.Com Default Servicing In Print and Online – Formerly REO Magazine

Tags: loanmodification, mortgage, fannie mae, freddie mac, default, servicer, real estate, subprime, delinquent, home, homeowner, wall street, market

Related posts:

1. Treasury Department’s “Making Home Affordable” Program Attempts to Tackle 2nd Lien Dilemna

The IRS's willingness to subordinate or even release Tax Liens is monumental and will provide relief to those homeowners trying to refinance or sell their properties to get out from under their often bone-crushing debt.  I cannot tell you how many closings have been postponed or adjourned indefinitely because of an IRS Tax Lien popping up in title. 
- Kathleen

IRS Speeds Lien Relief for Homeowners Trying to Refinance, Sell
Carrie Bay | 12.17.08
The Internal Revenue Service (IRS) yesterday announced an expedited process that will help prevent a federal tax lien block on the refinancing of mortgages or the sale of a home by financially distressed homeowners.

If taxpayers are looking to refinance or sell a home and there is a federal tax lien filed, there are options, the IRS said in a press statement. Taxpayers or their representatives, such as their lenders, may request that the IRS make a tax lien subordinate to the claim by the lending institution that is refinancing or restructuring a loan. Or, under certain circumstances, taxpayers or their lender representatives can petition the IRS to fully dismiss its claim if the home is being sold for less than the amount of the mortgage lien, the IRS explained.

The process to request a subordination or dismissal of a tax lien takes approximately 30 days after the submission of the completed application, but the IRS said it will work to speed those requests in the wake of the economic and housing downturn.
“We don’t want the IRS to be a barrier to people saving or selling their homes. We want to raise awareness of these lien options and to speed our decision-making process so people can refinance their mortgages or sell their homes,” said Doug Shulman, IRS commissioner.

“We realize these are difficult times for many Americans,” Shulman said. “We will ensure we have the resources in place to resolve these issues quickly and homeowners can complete their transactions.
”Typically, a federal tax lien is an involuntary lien on real estate for nonpayment of income or property taxes, and takes priority over bank liens securing the same property, placing the lender at a less than advantageous position in attempting to collect a debt from a delinquent borrower who also owes taxes. In some cases, a federal tax lien can be made secondary to another lien, such as a lending institution’s, if the IRS determines that doing so will ultimately help with the collection of the tax debt – a process called subordination.

Taxpayers or their lender representatives may apply for a subordination of a federal tax lien if they are refinancing or restructuring the mortgage. Without lien subordination, taxpayers may be unable to borrow funds or reduce their payments, the IRS explained, since lending institutions generally want their lien to have priority on the home being used as collateral.
Taxpayers or their representatives can also apply for a certificate of discharge of a tax lien if they are giving up ownership of the property, such as selling the property, at an amount less than the mortgage lien. The IRS may also issue a certificate of discharge in other circumstances if the taxpayer has sufficient equity in separate assets, can substitute other assets, or is able to pay the IRS its equity in the property. Without a tax lien discharge, the borrower may be unable to complete the homeownership change and the ownership title will remain clouded.
The IRS also urges people to contact the agency’s Collection Advisory Group early in the home sale or refinancing process so that it can begin work on their requests. People sometimes delay informing lenders of the tax liens, which only serves to delay the transaction, the IRS said.

Currently, there are more than 1 million federal tax liens outstanding tied to both real and personal property. The IRS issues more than 600,000 federal tax lien notices annually.

For additional information on the IRS' lien relief for homeowners and their lenders, click here.

DSNews.Com Default Servicing In Print and Online – Formerly REO Magazine

Tags: taxlien, refinance, mortgage, refinance, short sale, real estate, closing, subordination, release, claim, IRS, Internal Revenue Service, tax

Related posts:

1. Treasury Department’s “Making Home Affordable” Program Attempts to Tackle 2nd Lien Dilemna

I have been advising everyone in the real estate industry, that New York’s Foreclosure Prevention and Lender Responsibility Act went into effect September 1, 2008 and includes, among other items, strict requirements for those who seek to perform loss mitigation on behalf of distressed home owners.  These requirements include written, notarized contracts with a right to cancel and a prohibition against collecting fees upfront except for attorneys and non-profits. It seems to me that these loan modification companies are ignoring the law at their peril.
- Kathleen A. Scanlon, Esq.

Daniel Massey November 30, 2008

Shelly Ann Bell was only a month behind on her mortgage in August, but with the interest rate scheduled to adjust upward and $4,000-a-month payments staring her in the face, she knew it would soon be impossible to keep up.

So when the 28-year-old nurse manager got a call from a man promising to help modify the mortgage on her single-family home in Springfield Gardens, Queens, it sounded like a way out of her troubles. She says she paid $2,150 to the Loan Modification Group, a Florida-based company, and was told to cease making monthly mortgage payments. She’s now five months behind, and in danger of losing the home she bought in 2007 so her 3-year-old son could grow up with a backyard.“I haven’t gotten a loan modification,” she says. “I haven’t gotten anything from them.” The company could not be reached for comment.

With citywide foreclosures up 50% over a year ago, some of the same bankers and brokers who sold unaffordable, subprime loan officers are now joining the rapidly growing ranks of mortgage modification consultants. While some members of what an online ad called one of the “fastest-growing job markets in the country” run legitimate businesses, housing advocates say many are taking people’s money and doing little or nothing in return.

The burgeoning industry has caught the attention of the FBI’s New York office and the state attorney general. At best, loan modification companies provide homeowners with a service they could get for free from their lenders or nonprofit housing counselors, says the U.S. Department of Housing and Urban Development. Frequently, they ask homeowners for thousands of dollars up front, which is illegal in 12 states, including New York, unless the fee is made to a lawyer or nonprofit. As part of the sales pitch, homeowners are often advised to stop making mortgage payments, putting their homes in further jeopardy of foreclosure.Often, the companies do little to facilitate an affordable mortgage modification, advocates say.

Firms bombard homeowners with mailings and phone calls; they scour public records for homeowners whose properties are in danger of being foreclosed, and they advertise on Craigslist.

“You see one here and there, and then all of a sudden you realize it’s an epidemic,” says Jessica Attie, co-director of South Brooklyn Legal Services’ Foreclosure Prevention Project. “They sound very appealing. It’s hard for people to know many are not legitimate companies.”Attorney Adam Cohen of MFY Legal Services’ Foreclosure Prevention Project, says one of his clients paid nearly $5,500 to American Modification Agency, a Long Island company that also operates as Amerimod Modification Agency. He was drawn by a flier stating that AMA was the “only company that is registered, licensed, insured and bonded to modify mortgages in the United States that has a 100% success rate and money-back guarantee.”That cloak of professionalism is misleading, as there is no way to be licensed as a mortgage modification consultant, Mr. Cohen says. And AMA not only failed to produce an affordable modification for his client, but it also caused the client to fall $30,000 behind on his mortgage by telling him not to make his payments, Mr. Cohen says.

John Schaefer, an attorney for AMA, says the client was already substantially behind in his payments and that the company was able to facilitate a modification within 22 days, which the client reneged on. As for the claims in the flier, an AMA spokesman says the agency had “no record of authorizing or authenticating” the leaflet.

The company, which claims to have 400 agents, has raised concern among officials in New Jersey, where the Mercer County clerk recently issued a consumer alert that AMA purported in phone solicitations to be working with the clerk’s office.Law enforcement agencies are zeroing in. The Illinois attorney general last month filed seven lawsuits against modification firms that failed to negotiate workouts for clients. And the Colorado attorney general has filed 15 cease-and-desist orders against such companies.In New York, Attorney General Andrew Cuomo’s office is reviewing complaints, a spokeswoman says. The FBI’s New York office is also investigating.“We are aware of it and are working diligently to address the issue,” says Supervisory Special Agent Rachel Rojas. “This is a new scheme, and we assume it’s going to get worse.”

Free | Crain’s New York Business

Tags: loanmodification, subprime mortgage, American Modification Agency, foreclosure, New York law,

Related posts:

1. DON’T SAY I DIDN’T WARN YOU! NY Attorney General’s Crackdown on the Loan Modification Industry
2. Foreclosure Defense Bar: Heads Up! Forensic Exam of TBW Mortgage Corp Loan Docs Could Be Fruitful
3. Short Sales & No-Flip Clauses in the Approval Letter – Removing a Roadblock