There are a number of housing bills moving through the California State legislature. Their effect if passed will be to further delay the foreclosure process.
Irvine Home Address … 20 ROSE TRELLIS Irvine, CA 92603
Resale Home Price …… $1,250,000
Burn burn, house on fire
I'm so sick and tired
I can still remember your sound
And it's cut cut cutting me down
I'm locked and loaded
You're so milk and roses
And i am just a letdown of your hound
And It's cut cut cutting me down
Like slow poison
Cut down like slow poison
The Bravery — Slow Poison
The housing bust has been a slow trickling of mortgage poison. Too large a dose and prices crash, and too little… well, that means the banks allow a lot of squatting, a poison bound to find its way to the US taxpayer.
by JON PRIOR — June 4, 2010
The California State Senate passed legislation this week in an effort to prevent avoidable foreclosures.
Senate Bill (SB) 1275 requires mortgage servicers to notify borrowers of a right to seek options that would avoid foreclosure and attach an application for a loan modification or other alternatives before issuing a notice of default (NOD). Also before filing an NOD, servicers must evaluate a borrower who submits a written request for a loan modification. For those denied one, a separate letter must be mailed to the borrower informing them of the denial and reasons why.
This is some added paperwork for lenders, but it isn't onerous. Lenders already have a lengthy checklist of items for their loan files. Adding a couple of lines to the list and a few sheets of paper won't be too painful.
The bill was authored by Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento). The bill will now move to the California State Assembly for consideration by the Assembly Banking Committee.
Eligible mortgages must have been originated before Jan. 1, 2009 and must be a single-family, owner-occupied residential property.
Interesting that this bill doesn't apply to new mortgages. I guess if you bought last year, they can still kick you to the curb under the old rules.
Under the bill, servicers must file a new declaration of compliance before recording the NOD. It is a checklist of all of the requirements completed before the NOD is filed. If this new document is not filed, damages could be awarded to the borrower, and the foreclosure could be voided.
If they slipped in borrower damages, this will become an attorney graft measure.
Also, if the home is sold at auction out of servicer error, recourse is provided in the form of a private right of action. It allows eligible homeowners to seek limited damages and could even reverse the foreclosure sale. Before the bill passed, there was no recourse for erroneous foreclosure sales.
What exactly is an erroneous foreclosure? Aren't these people delinquent on their loans? Don't the banks have foreclosure rights at their discretion?
According to the Center for Responsible Lending, servicers are initiating the foreclosure process while handling borrower’s requests for resolutions.
“Simple fairness dictates that no one should lose their home while they are in the middle of trying to save it,” said Paul Leonard, director of the California office of the Center for Responsible Lending.
I might agree with the above statement if the borrower is genuinely trying to save their home. If they are just gaming the system, I don't like the idea of giving them tools to game it longer.
by JON PRIOR — June 2, 2010
A bill that establishes a foreclosure mediation program in California passed committee and will reach the California State Assembly floor this week.
Assembly Bill 1639 was introduced by a trio of Democratic members of the assembly — Pedro Nava (Santa Barbra), Ted Lieu (Torrance) and speaker emeritus Karen Bass (Los Angeles). If passed, the bill would establish the Facilitated Mortgage Workout (FMW) program. Through it, lenders are required to meet with borrowers to develop a modification plan before foreclosure.
Required to meet? What happens when borrowers refuse? Or when they agree and cancel to drag out the process? A requirement to meet is almost guaranteed to be a way to delay the process.
The loan must have originated before Jan. 1, 2009, and the home must be occupied by the borrower as a principal residence. The principal balance on the mortgage cannot exceed $729,750.
The jumbo loan market is so screwed.
The bill passed the Assembly Appropriations Committee last week.
“This legislation sends a strong message to the banking and mortgage industry — that business as usual is not working. We will force the industry to do more to help struggling California families facing foreclosure,” Nava said. “This legislation will require face to face meetings between homeowners and their lenders—so that a mutually acceptable plan can be implemented that keeps families in their home.”
What if the plan is not mutually acceptable? What bargaining power does the borrower really have? If borrowers don't like the deal they are presented, can they say no? What happens then?
The bill also requires lenders to include information regarding the program with the notice of default. The borrower must return a form to the administrator of the program requesting a mediation within 30 calendar days of receiving the notice of default and must send other information within 15 days of the request. Borrowers must deposit with the administrator of the program 50% of the current mortgage payment each month while he or she participates in the FMW program.
The assembly just guaranteed no borrowers will sign up for the program. The allure of strategic default and negotiated short sale is that the borrowers get to squat. If they actually have to make a partial payment, participation will drop off dramatically.
Lenders must meet with the borrower within 14 days of contact with the borrower. The program expires Jan. 1, 2014. According to RealtyTrac, an online foreclosure marketplace, one in 192 homes received a foreclosure filing in April 2010. It’s the fourth highest foreclosure rate in the country.
“This crisis has devastated thousands of California families and communities. We have to take a new approach to help families remain in their homes,” Nava said.
This Nava is posturing bureaucrat. His quotes are rather silly, but they appeal to a desperate constituency.
In better news, this headline excited me:
Wracked by distressed home sales in the wake of massive foreclosure volumes across the state, California may become the first state to implement a state-wide piece of mortgage reform legislation
The California State Assembly passed AB 260, a bill reforming mortgage lending and specifically banning predatory lending practices, according to a report filed at the California Chronicle today.
"We must enact landmark reforms to address the systemic failures in California's subprime mortgage industry," said California Assembly member Ted Lieu, according to the Chronicle. "These failures have not only devastated California's economy, they have contributed to a national and international financial meltdown."
So far, I appreciate the sentiment. We really do need to do something to prevent the house price casino from taking over. With unrestricted HELOC withdrawal at 100% value still a legal possibility (unlike Texas), then we will again inflate a housing bubble. Unfortunately, although the lead-in was promising, the proposals were not.
The legislation, if enacted, will create a fiduciary duty standard for mortgage brokers, eliminate compensation incentives that encourage the steering of borrower into risky loans, and establish regulations on prepayment penalties. The overall goal is to eliminate subprime lending, a leading cause of the state's foreclosure woes.
Are they really going after subprime lending? I don't think so. Can you imagine the uproar from advocates of low-income housing?
Putting a minimum standard of performance on mortgage brokers is a good thing, but that will do nothing to prevent the next housing bubble. As rhetoric to help pass legislation, it is probably effective, but it is not a protection against market bubbles they are selling it as.
California saw one in 138 housing units receive a new foreclosure filing in April, the third-highest state ranking, according to RealtyTrac.
The state experienced its 10th consecutive month of pick up in home sales during April, with foreclosures accounting for 53.6% of all southern California's resales in the month. California's foreclosure notices–the first step in the foreclosure process–dropped 18% in the month, indicating foreclosure sales may be on their way to slowing, despite the continued high volume of foreclosures in the state.
Write to Diana Golobay.
The shift away from foreclosure notices will not be permanent. Banking industry people I have spoken with have told me there will be a shift toward more short sales in 2010 since the foreclosure pipeline is already full past capacity. Lenders are struggling to find the level of market absorption that does not lower prices. The increasing inventory will continue to increase until lenders see prices weaken, then they will pull back. As the inventory increases, we will see if the banking cartel can hold it to a manageable level.
Another Ponzi that spent the house and squatted for a long, long time
I have a sneaking admiration for the guys who skillfully manipulated the system to extract the largest possible amount of cash and then squat for as long as possible. Although I find the behavior atrocious, I am impressed that they figured it out.
- Todays featured Ponzi bought this property on 12/9/2004 for $1,381,000. He used a $1,000,000 first mortgage a $242,600 second mortgage, and a $138,400 down payment.
- On 12/7/2005 he refinanced with a $1,267,500 Option ARM with a 1.25% teaser rate.
- On 12/7/2005 he also obtained a $97,500 HELOC.
- On 6/1/2006 he opened a $518,023 HELOC.
- On 6/13/2006 he got a $97,500 HELOC. It looks as if he applied and obtained HELOCs from two different banks at the same time.
- Total property debt is $1,880,033.
- Total mortgage equity withdrawal is $640,433.
- Total squatting is at least 24 months.
Recording Date: 05/19/2010
Document Type: Notice of Sale
Recording Date: 02/16/2010
Document Type: Notice of Default
Recording Date: 11/06/2009
Document Type: Notice of Rescission
Recording Date: 12/08/2008
Document Type: Notice of Sale
Recording Date: 09/02/2008
Document Type: Notice of Default
In his first two and a half years of living in this house, it provided him with a $250,000 per year spending stipend. Once the money ran out, he was able to stay there another two years — free.
I wonder how he feels about that?
Irvine Home Address … 20 ROSE TRELLIS Irvine, CA 92603
Resale Home Price … $1,250,000
Home Purchase Price … $1,381,000
Home Purchase Date …. 12/9/2004
Net Gain (Loss) ………. $(206,000)
Percent Change ………. -9.5%
Annual Appreciation … -1.8%
Cost of Ownership
$1,250,000 ………. Asking Price
$250,000 ………. 20% Down Conventional
4.91% …………… Mortgage Interest Rate
$1,000,000 ………. 30-Year Mortgage
$256,179 ………. Income Requirement
$5,313 ………. Monthly Mortgage Payment
$1083 ………. Property Tax
$375 ………. Special Taxes and Levies (Mello Roos)
$104 ………. Homeowners Insurance
$410 ………. Homeowners Association Fees
$7,286 ………. Monthly Cash Outlays
-$1449 ………. Tax Savings (% of Interest and Property Tax)
-$1222 ………. Equity Hidden in Payment
$474 ………. Lost Income to Down Payment (net of taxes)
$156 ………. Maintenance and Replacement Reserves
$5,245 ………. Monthly Cost of Ownership
Cash Acquisition Demands
$12,500 ………. Furnishing and Move In @1%
$12,500 ………. Closing Costs @1%
$10,000 ………… Interest Points @1% of Loan
$250,000 ………. Down Payment
$285,000 ………. Total Cash Costs
$80,400 ………… Emergency Cash Reserves
$365,400 ………. Total Savings Needed
Baths: 3 full 1 part baths
Home size: 3,400 sq ft
($368 / sq ft)
Lot Size: 6,252 sq ft
Year Built: 2004
Days on Market: 88
Listing Updated: 40254
MLS Number: S609494
Property Type: Single Family, Residential
Community: Turtle Ridge
Affordable 4 bedroom 3.5 bath Ledges home with approximately 3400 sqfeet of elegance behind the guarded gates of the prestegious Summit At Turtle Ridge. Huge master suite upstairs. Extra large gourmet kitchen with a sunny breakfast room. State of the art stainless steel appliances. Oversized family room with fire place. Large formal dining room and Living room. 2 Bedrooms and 1.5 Bath down and 2 Bedroom Suites upstairs. No Casitas. Beautiful courtyard. Fabulous resort like association facilities with club house,Gym, pool and spa. Peaceful walking trails throughout the neighborhood.