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  1. Massachusetts AG Calls For Congressional Investigation into Ally/GMAC Mortgage Practices

    By on December 8, 2011

    Last week Massachusetts Attorney General Martha Coakley announced a lawsuit against Bank of America, GMAC, Citi, JP Morgan Chase, Wells-Fargo, and MERS “in connection with their roles in allegedly pursuing illegal foreclosures on properties in Massachusetts as well as deceptive loan servicing”.  You can read the full lawsuit here.

    Yesterday she asked Sen. Tim Johnson, the Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs and Rep. Spencer Bachus, the Chairman of the U.S. House Committee on Financial Services to investigate GMAC/Ally’s conduct in Massachusetts and to consider holding Congressional hearings on the matter.

    Attorney General Coakley stated in the letter that

    “Last week, our office filed a lawsuit against Ally and four national banks for pursuing illegal foreclosures and deceptive loan servicing.  Ally and other banks charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law, which has exacerbated the nation’s foreclosure crisis.

    In light of Ally’s alleged deceptive and illegal actions against homeowners in Massachusetts and across the country, I respectfully request that your committees investigate Ally’s serious misconduct and consider what actions the federal government can take to ensure that Ally adheres to the law.

    The United States Treasury owns approximately 74% of Ally Financial.  In 2008, the United States invested $17 billion in Ally.  Unlike some of the other banks, Ally has only paid a small portion of that back to the federal government.”

    Although I don’t suspect Congress will take action, it seems to me that if a company that is 74% owned by the Treasury is accused of misconduct, it would be well worth Congress’ time to look into credible accusations of wrongdoing.

    It is worth noting that this move comes shortly after GMAC suspended mortgage lending in Massachusetts, citing increased costs in the mortgage business.  GMAC suspended lending on December 5, four days after Massachusetts filed litigation against the lender. I will leave it to you to decide if this series of events is related.

     

    Category: Mortgage Rates

  2. Massachusetts AG Sues MERS and Major Banks MERS Over Illegal Foreclosures, Corrupting Land Records

    By on December 1, 2011

    Massachusetts Attorney General Martha Coakley announced today that her office is pursuing a lawsuit against Bank of America, JP Morgan Chase, Citi, GMAC, and the Mortgage Electronic Registration System (MERS).  The suit is “in connection with their roles in allegedly pursuing illegal foreclosures on properties in Massachusetts as well as deceptive loan servicing”.

    In a press release, AG Coakley commented:

    “The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis.  Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law.  Our action today seeks real accountability for the banks illegal behavior and real relief for homeowners”.  

    The lawsuit alleges that these banks and MERS violated Massachusetts law through:

    • “Pervasive use of fraudulent documentation in the foreclosure process, including so-called ‘robo-signing’”.
    • “Foreclosing without holding the actual mortgage (‘Ibanez’ violations)”
    • “Corrupting Massachusetts’ land recording system through the use of MERS”
    • “Failing to uphold loan modification promises to Massachusetts homeowners”
    This is a fairly major development.  To my knowledge it is the widest ranging lawsuit filed against MERS and major lenders by a state attorney general.  Nevada AG Catherine Cortez Masto recently initiated a criminal lawsuit against several robo-signers that could easily grow in scope.  New York Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden have announced investigations in mortgage origination, foreclosure, and securitization processes, but have yet to file suits.
    The other ramification from this lawsuit is that it will likely finally kill off the 50 state attorney general bank settlement.  The aforementioned AGs, as well as those from California, Kentucky, and Arizona have all withdrawn from the agreement, and it seems very unlikely that the banks would agree to any sort of settlement that only partially releases them from liability.  The settlement has effectively been dead for some time, but this may do it in for good.
    In her press conference today, AG Coakley said that “banks have had a year to show they understood their role in this mess and would be held accountable – and they have failed”.
    Category: Mortgage Rates

  3. Massachusetts Court Ruling Casts Doubt Over Title on Thousands of Foreclosures

    By on October 19, 2011

    Yesterday the Massachusetts Supreme Judicial Court dropped a bombshell decision in the case Bevilacqua v. Rodriguez.  In a nutshell, the court ruled that a man who purchased a foreclosed property where the foreclosure was improperly conducted could not bring an action to clear the title of the home.  The idea is that the buyer never actually owned the home in the first place, and therefore could not clear the title (it should be noted that I am not a lawyer, and the matter is far more complicated than I stated.  For further background, I would highly recommend Attorney Richard Vetstein’s excellent Massachusetts Real Estate Law Blog).

    As the Boston Globe notes, “the decision leaves in limbo hundreds, if not thousands, of people who bought homes seized by lenders under questionable circumstances.  They are left with no easy recourse; among their options are to sue the lender behind the botched foreclosure, or “reforeclose” on the prior owner”.

    This ruling makes it entirely possible that many who purchased foreclosed homes may not own these properties.  If the foreclosing property did not foreclose legally, the deed is voided, and the foreclosing party can’t actually sell the home.  Massachusetts Attorney General Martha Coaxley commented: “In the rush to foreclose, the banks’ reckless origination and foreclosure practices have created a domino effect that has harmed Massachusetts homeowners as well as third-party purchasers who purchased properties after foreclosure”.

    While there may be some ways to clear the title (as Vetstein notes in the article I linked above), there is no real easy way to clean up the massive mess created by what Barry Ritholtz calls “a deadly combination of MERS, robo-signing, and illegal shortcuts”.  In the rush to originate and securitize mortgages, corners were cut, and hundreds of years of established property laws were abrogated, harming an untold number of homeowners.

    This is a huge problem, and it isn’t really clear what will be done to solve it.

    Category: Mortgage Rates

  4. Massachusetts AG Preparing Litigation Against Major Banks Over Foreclosures

    By on October 5, 2011

    Back in July, Massachusetts Attorney General Martha Coakley stated that she would not sign on to any foreclosure settlement that granted a broad release of liability to banks without futher investigation, saying: “we want to be clear we are not prepared to give a release of liability on any broad scope of MERS [Mortgage Electronic Registration System] issues.  We intend to complete the investigation”.

    Today, there is a Bloomberg report that Coakley may move forward with lawsuits against big banks, saying that “I have lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures.  Because our office for some time has anticipated that result, we have begun preparing for legislation”.

    This is the clearest indication yet that Massachusetts will pursue its own separate settlement with banks over foreclosure, mortgage origination, and securitization-related issues.  This comes shortly after California Attorney General Kamala Harris announced that her office would withdraw from the proposed 50-state foreclosure settlement agreement.  Now attorneys general from New York, Nevada, Arizona, Illinois, Delaware, and Kentucky have all backed out of the foreclosure settlement, effectively rendering it dead.

    The interesting thing is going to be whether or not the thread of a slew of state lawsuits will force banks to the bargaining table, or whether litigation will proceed.  Recently Nevada AG Catherine Cortez Masto was able to reach a settlement with Morgan Stanley over its role in subprime mortgages in Nevada.  The settlement included $30-57,000 per homeowner covered by the suit (about 700 homeowners).  Using this as a template for future settlements, major lenders could be looking at tens of billions of dollars in liabilities.

    This is starting to get interesting.

     

     

     

    Category: Mortgage Rates

  5. Massachusetts Judge Overturns MERS Foreclosure

    2 By on August 24, 2011

    Judge Melvin Hoffman of the U.S. Bankruptcy Court for Massachusetts overturned the foreclosure of a property transferred through MERS earlier in the week.  This case could potentially have widespread ramifications on foreclosures in Massachusetts, as well as other states.

    Attorney Rich Vetstein has an excellent write-up this morning (Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too) of the verdict (In Re. Schwartz) on the Massachusetts Real Estate Law Blog.  The same post was re-published on Barry Ritholtz’ The Big Lead today.  I highly suggest reading it because it goes further into the legal details of the case than I am able to.  Rather than attempt to summarize it, I’ll quote portions of Vetstein’s write-up:

    “The ‘lender’ on her [Sima Schwartz] original mortgage was Mortgage Electronic Registration Systems (MERS), as nominee for First NLC.  Many housing advocates have criticized MERS’ role in the foreclosure crisis, with the New York Times weighing in most recently.  The mortgage loan was securitized and subsequently transferred at least 3 times, ultimately winding up held by Deutsche Bank.  No assignments of mortgage were recorded with the registry of deeds until a day before the foreclosure sale on May 23, 2006.  That assignment was executed by Liquenda Allotey, one of the hundreds of deputized vice president of MERS, and an alleged ‘robo-signer’ for Lender Processing Service (LPS) which has come under fire for document irregularities.  The assignment ran to Deutsche Bank, which completed the foreclosure sale on May 24, bid its mortgage debt and purchased the property.

    There was no dispute that under the U.S. Bank v. Ibanez case, the late-filed mortgage assignment rendered the foreclosure defective unless Deutsche could establish its ownership of the mortgage loan when the foreclosure process started.  During the trial, Deutsche submitted all the various agreements documenting the securitization process including the pooling and servicing agreement (PSA), loan purchase agreement, bill of sale and custodial log.

    Continue Reading…

    Category: Mortgage Rates

  6. Massachusetts AG Will Not Sign Foreclosure Settlement That Grants Banks Broad Release of Liability

    By on July 26, 2011

    According to articles in the Boston Globe and Bloomberg this morning, Massachusetts State Attorney General Martha Coakley will not sign on to any foreclosure settlement that offers a broad releases of liability to banks.  She was quoted in the Globe as saying:

    “We want to be clear we are not prepared to give a release of liability on any broad scope of MERS [Mortgage Electronic Registration Systems] issues.  We intend to complete the investigation.”

    A little background: MERS is an electronic system designed to make it easier to bundle and securitize mortgages.  It also may have allowed banks using MERS to avoid various transfer and recording fees typically charged by the county offices where property transfers traditionally took place.  As of now there are varying court opinions as to whether this is legal or not.

    According to the article, Coakley intends to ask Massachusetts county registers to see if MERS is violating Massachusetts laws when seizing foreclosed properties.  She is also asking them to look into whether or not MERS allowed lenders to abrogate state recording laws.

    Continue Reading…

    Category: Mortgage Rates

  7. Massachusetts Register Rejects Robo-signed Documents as “Fraud Against Homeowners”

    By on June 8, 2011

    There is an interesting new development today in the ongoing MERS/robo-signing/foreclosure disaster that I learned of from a blog post at Barry Ritholtz’ The Big Picture this morning. John O’Brien The Register of Deeds for South Essex County in Massachusetts is refusing to record robo-signed documents.  Briefly, robo-signing was/is the practice of forging signatures on affadavits and documents needed in order to prove ownership to foreclose on a home (click here to see a 60 Minutes piece on this practice).  In a press release, O’Brien stated:

    “My Registry will not be a knowing participant in this fraud against homeowners.  From today forward, lenders be on notice, the Southern Essex District Registry of Deeds will not record robo-signed documents.”

    O’Brien noted that his office has documents signed by several alleged robo-signers, including 22 varying signatures for Linda Green.  He continued:

    “I find this practice very troubling on many levels.  It has completely jaded my understanding that a notarized document was something that could be relied upon.  If these documents are signed by anyone other than the noted signatories, these notaries and those that employed them should be held accountable for the fraudulent documents that they have produced and the havoc they have caused to chains of title everywhere.”

    This is not the first time O’Brien has pushed back against mortgage abuses.  Previously, we discussed O’Brien’s efforts to recoup millions of dollars worth of missed recording fees from MERS (the Mortgage Electronic Registration System).  Other country registers have taken similar actions, including Jeff Thigpen, the Register of Deeds for Guilford County, North Carolina. Officials in Suffolk County, New York have also mulled the possibility of suing MERS over missed revenue from recording fees.

    Continue Reading…

    Category: Mortgage Rates

  8. Mortgage Delinquency Still a Problem in Massachusetts

    1 By on February 7, 2011

    Generally speaking, the housing bubble has not hit as hard in Massachusetts as it has in other states.  The most recent S&P/Case-Shiller Home Price Index showed Boston homes declining in value by -0.8% over the last year. From 2000 to the peak of the market in late 2005, home prices in Boston increased around 80%.  From the peak through 2010, prices fell about 18 percent on average, far less than many other metropolitan areas.

    One of the reasons that Massachusetts didn’t experience the massive bubble that other states did is because there simply isn’t much available real estate to build on in Massachusetts, particularly the eastern section of the state. While some suburbs and rural areas saw larger declines in home values, many parts of the state went relatively unscathed (in comparison to places like Nevada, Arizona, Florida, and California).

    Despite this, an article from the Boston Globe by Jennifer McKim says that approximately 36,000 Massachusetts homeowners are at last three months late on their mortgage.  One-third of these people have not paid in mortgage than a year.  While high, this number has declined from 50,000 delinquencies about a year ago.  The main causes of foreclosure and delinquency are unemployment and loss of income.

    Massachusetts also has one of the longest foreclosure times in the country.  It takes 583 days on average for a bank to foreclose and seize a home.  The long wait is due in part to a state law that makes lenders wait 150 days before they can even file for foreclosure.  Some bemoan the long foreclosure times, saying it hurts the economy and the housing market.  Paul Willen, a senior economist with the Federal Reserve Bank of Boston was quoted as saying that: “there is a compelling public need to an efficient foreclosure process”.

    Although it faces many issues, the Massachusetts housing market is in much better shape than in many parts of the country.  Do you live in Massachusetts?  What is your take on the housing market for the coming year?  Let us know in the comments section below.

    Category: Mortgage Rates

  9. Zero Down Mortgages Rising in Massachusetts

    By on September 14, 2010

    Fun with punctuation.

    Last week, I wrote about the Fannie Mae Affordable Advantage Program, which allows a limited number of borrowers in Massachusetts, Wisconsin, Minnesota, and Idaho to purchase homes with as little as $1000 down.  The loans are originated through state housing finance agencies and sold to Fannie Mae.  These no-down payment mortgages are available to borrowers with good credit, documentable employment histories, and who have undergone mortgage counseling.

    This morning I read an article on the Boston Globe’s BostonRealEstateNow that says that MassHousing (a non-profit Massachusetts housing agency) is set to issue 400 no-down payment mortgages in the first year of the program.  Thomas Gleason, the head of MassHousing defends the mortgages on the grounds that high credit scores and low debt to income levels differentiate these loans from old zero-down loans from the subprime days.

    The purpose of MassHousing (and similar agencies) is to provide affordable homeownership opportunities to those with low and moderate incomes who might otherwise be shut out of homeownership.  If you believe that encouraging homeownership is a wise goal in and of it itself, this is a noble program (personally, I am not sure that promoting homeownership is necessarily a goal we as a country should be pursuing as vigorously as we have been, but that is somewhat beside the point).  The issue I have with this program is the position that it puts these lower income homeowners in.

    A person who puts down $1000 as a down payment on a home is a razor thin margin away from having negative equity in their house.  In a time of rising prices, no money down houses can make sense, but when prices are declining, they are not so great (and prices are declining).  Presumably the housing/credit counseling these borrowers undergo would make them aware of this possibility.

    Despite all the assurances that these borrowers have every intention to pay back their mortgage, I feel confident that most people that entered into mortgages only to succumb to foreclosure later did so with the intention of paying them back.  Circumstances and attitudes can change drastically when a borrower goes underwater.  I think we need to tread lightly with these zero-down loans.

    What do you think?  Let me know in the comments section below.

    Category: Mortgage Rates

  10. Affordable Mortgage Rates Available in Massachusetts

    1 By on July 30, 2010

    Great Low Mortgages Rates Available in MassachusettsTotal Mortgage currently has some of the most affordable mortgage rates in Massachusetts. Regardless of whether you are buying a house in the Boston area, on Cape Cod, or anywhere else in Boston there is a mortgage product that fits your financial needs.

    Adjustable rate mortgages (ARM) can be a great option if you are considering taking out a home loan. A 5/1 ARM currently has a 3.000 percent mortgage rate and a 3.481 percent APR. For borrowers with larger loans a jumbo ARM may be necessary. A 5/1 jumbo ARM has a 3.625 percent mortgage rate and a 3.657 percent APR. Continue Reading…

    Category: Mortgage Rates

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