I was, until today, known as Atomicktom. But, thanks to the good graces of the Dope’s intelligencia, I’m re-named (not that you were missing much, given that I lurk far more often than I post).
In recognition of my new user name, I’ve also decided to start this thread, which I’ve been thinking of for a while now. Given all of the news of late regarding the real estate crisis, I offer my experience.
I’m a foreclosure lawyer practicing in Florida. I don’t work for any of the biggest firms that are subject to the most scrutiny, but my office receives about 1,000 new referrals a month, and our clients include the largest mortgage servicers. My expertise is limited to Florida, and I’d prefer not to talk about any specific case.
About how much of its usual value will a foreclosed house go for? I realize that there can be significant variation on this, but you must have noticed patterns.
What are the most common causes of foreclosures? Too much house for not enough money, medical bills, job loss, something else?
Say I want to buy a foreclosed house, what should I know?
Once a house goes to REO ( real estate owned - the banks’ term for property they acquire), the bank generally wants to unload the property as soon as possible, since they now have carrying costs like taxes and insurance, so they generally will list the property for less than the appraised value, although I don’t usually watch the trends in prices, since I don’t del with the REO deals.
Many foreclosures are of investment properties that lost their tenant, and are too upside down to flip. Other people got caught up in the “keeping up with the joneses” and used all of the credit they could get during the past credit boom, and then lost some income. And some people ere befallen by a lost job or medical event.
When you buy REO, you are buying a property as-is. The bank is not going to
contribute to repairs. And the last owner was probably pretty disgruntled when they left (to say nothing of squatters). Get a really good inspection.
yes, it is, but that is not an effective defense, because the documents needed to enforce the mortgage (the original note) are nearly always presented to the judge.
This controversy, I believe, arose from the fact that banks keep the original notes in storage with a third party vendor, and have to retrieve them when they conduct a foreclosure. As such, they would allege they had lost the note before knowing if it could be found, which is permissible under the law as an alternative pleading. This style of pleading grew into disfavor, however, and now the banks no longer allege that the notes are lost.
Thanks. From my reading, I understood the problem to be that a) the signer was saying that he/she had “personal knowledge”-which I take to mean read/reviewed/skimmed the actual documents the documents related to the case. And by signing thousands of such claims in a day, created doubt that the signer had personal knowledge of all the paperwork, and b) I understood that the mortgage bundles tended to be so spread out that it was difficult to find papers related to a single piece of the bundle.
Are either of these situations at all common?
You describe a much simpler situation where the mortgage holder simply isn’t signing a claim that the paperwork is lost and so that the robosigning problem is likely much reduced.
Is that a correct understanding?
How much has MERS screwed things up in terms of finding all of the loan documents including the mortgage.
Isn’t it possible that although the originator might have the original documents, that they may have sold the note/mortgage on to different parties and now no longer have the right to foreclose even if they do in fact have the documents.
Won’t all of this create a cloud on the title of properties sold under a foreclosure? Are title insurance companies still willing to insure such titles and are they now demanding a premium?
The thing I always wondered about foreclosed properties (being the paranoid sort that I am) is: does it ever happen that the previous owner of the house comes back and causes trouble once the new owner moves in? I haven’t heard about it, but it always seemed to me that there might be at least some people who take it pretty hard that some new person has moved into “their” house and might take steps to make that person’s life unhappy.
Clearly, it’s not spending my time on the Dope! Mea Culpa for my long delayed reply: besides the business of work, I’m in the process of buying a house. I know that it is bad form to abandon a thread, and I do apologize.
I don’t consider my job boring at all. I like where I work. Granted, every job has its tedium, but, in Florida, a bank must sue the borrower in court, and obtain a judgment of foreclosure, before they can have the house sold at auction to pay off the debt. That means that each of my cases is a lawsuit that can potentially end up in trial (realistically speaking, about 98% of my cases ares resolved at a Summary Judgment hearing, since there is no genuine issue of fact to be tried, since the borrower is unquestioningly in default. In the remaining few cases, there is usually a payment dispute).
So, most of my day is spent drafting motions, responding to pleadings, and attending
motion calendar hearings (E.g. motions to dismiss). I also attend a lot of mediations with borrowers, which are generally mandated by the courts across the state. Because we offer representation all over Florida, much of these hearings and conferences are by phone.
Ultimately, I’m responsible for the “contested” issues in about 300 cases. Our system is completely computerized (we have no physical case files), and my day is a flurry of activity in dozens (hundreds?) of files, largely driven by emails, which include “fires” (our term for emergency situations, such as someone filing an emergency motion to stop a sale) and mail thats been scanned to each file.
You are describing two different situations. The “produce the note” argument is illusory, since the bank has the note most of the time. Even when they don’t, they can still enforce the note, by proving their ownership by other means (the degree of proof is not really well defined, but an affidavit or brief testimony usually will suffice. The key is that whoever comes forward to swear they own the note must indemnify the
borrower if anybody else came forward with the original document. This all goes back to centuries of common law regarding negotiable instruments).
The robo-signing thing came about because some people who signed affidavits attesting to the amount the borrowers owed were not reviewing the numbers before signing the affidavit. The reason was because the person who drafted the affidavit had reviewed the numbers, so they were nearly always correct, and there were lots of them to sign. It was laziness not to double check the numbers.
Now, you may be interested to know, mortgage companies under scrutiny (who I will not name, but who I have personal knowledge of) have taken the practice of review to an extreme (for example, they have people who’s sole job is to notarize signatures, and these people no longer rely on personal knowledge for any signature, which means their job is to log in the drivers license number of their co-workers each time they sign
their name, along with administering an oath. Their work station is like a little phone booth, and they work with the same few dozen signers all day long. Surreal). The drawback (for them) is that each team of prepaers, signers, and notarizers can only get out about 31 affidavits per day.
Mortgages, once recorded, don’t have to be produced in their original form. A certified copy of the recorded version will suffice. MERS isn’t losing documents.
The issue of the original note is one of the law of negotiable instruments, which goes back centuries. Holding the original is prima facie proof of ownership. If the defendant were to come forward with evidence that the original owner had them taken from them illegally (not going to happen in the institutional lender context of the modern foreclosure crisis), the holder could still enforce the note if they demonstrate that they acquired it for value and in good faith.
Because of this antiquated notion that the physical paper of the note is the best evidence of ownership (imagine if this happened with stock certificates), MERS was sort of a wharehousing idea, where notes could be stored safely, but sold without being physically transferred. Think of it like a safe deposit box. When the loan is sold, the only thing that changes hands is the “key” needed to open the box.
Here’s the deal: IF there was some controversy over ownership of the loans, it would be battled out amongst the investors. Borrowers in default would have no say - they owe the money to SOMEBODY, and they can only lose the home once. I personally feel that there is a lot of misinformation about foreclosures, and this idea that nobody knows who owns what seems to be the biggest one.
As to your last question, you raise an interesting point. Because the mortgage companies are relying on laws that don’t require assignments of mortgage, title examiners are having fits trying to construct a chain of title, and a lot of title insurance underwriters are uneasy about insuring title. It’s being done, though. My office represents Fannie Mae in the sale of REO (real estate owned), and we are insuring title with willing underwriters. The premium issue is kinda of a nonstarter - title insurance premiums are mandated by law.
God, I hope not. The house I am under contract to buy was sold at foreclosure over the summer! Of course, vengeance would have to go to the investor who bought it and fixed it up, and not me, who’s now once removed from the taint!
