Buying A Home Now Is A Real Crap Shoot

Here is some follow up information about the Shadow Inventory of homes why it is impossible to predict the trend of house prices.

I talked about the Banks and the Politicians messing up the marketplace. I should have included the courts.

Courts may reshape mortgage industry
NEW YORK – June 17, 2011 – A New York appellate court last week ruled that a Reston-based company that electronically tracks and transfers millions of mortgages did not have the right to foreclosure on a property or assign a mortgage it doesn’t actually own. The decision came only days after an appeals court in California took a different view, ruling that the firm indeed has the power to act on behalf of lenders.

The two cases, like dozens of others already decided or playing out in courtrooms across the country, highlight a protracted legal wrestling match that could determine the validity of foreclosures already in the pipeline and shape the mortgage market for years to come.

The cases also underscore the uncertainty that continues to surround Mortgage Electronic Registration Systems (MERS), which has allowed the financial industry to transfer and reassign millions of mortgages quickly and cheaply since the 1990s. The company also has acted as a proxy for banks in many foreclosure proceedings.

The MERS business model has increasingly come under fire since revelations last fall of widespread problems in foreclosure filings around the country – including forged documents and lingering questions about who actually owns the homes being foreclosed. Embattled borrowers and their attorneys continue to challenge the legitimacy of MERS, which doesn’t actually own any of the 65 million loans in its vast registry.

Those challenges have had limited success so far. But as cases are reviewed on appeal, the rulings could call into question countless foreclosures that have taken place since the housing bust. Perhaps more significant, if judges ultimately deem the MERS model invalid, it could mean massive lawsuits against banks that improperly bundled and sold mortgages to investors and could hinder the private securitization market, making it tougher for average Americans to get home loans in the long run.

“We know that MERS is a problem; we don’t know exactly what that’s going to mean,” said Adam Levitin, a Georgetown University law professor. “We still don’t have really definitive law on any of the issues involved. It’s going to take awhile before we really know the answers.”

MERS, which was created by the mortgage industry in the 1990s and became a key component in the securitization process during the housing boom, has had a range of legal wins and losses.

“The law must not yield to expediency and the convenience of lending institutions,” Justice John M. Leventhal wrote in the New York appeals court ruling last week, adding, “Proper procedures must be followed to ensure the reliability of the chain of ownership.”

Earlier this year, a Michigan court of appeals ruled against MERS, saying state law requires a foreclosing party to have a stake in the loan itself, which the firm did not. Those decisions came after other blows to MERS from courts in Maine, Kansas and California. In March, the company asked banks and servicers to stop foreclosing in the MERS name.

These are “extra precautionary steps that we don’t think are legally necessary, but may reduce some of the administrative headaches,” Tom Deutsch, executive director of the American Securitization Forum, said of the decision to end MERS foreclosures. Still, he said, “ I just don’t think it’s possible for the court system to roll back” the current system. “If you don’t allow electronic transfers of mortgages, it takes us back to the stone ages.”

At the same time, the company has won numerous victories in scores of other courtrooms, from Hawaii to Virginia – a tally that it publishes in quarterly and monthly publications. In Minnesota, legislators passed a law stating that MERS explicitly has the right to undertake foreclosures. And the company has spent more than $1 million in lobbying in recent years to garner support among lawmakers on Capitol Hill.

“The court decisions have overwhelmingly leaned in favor of MERS and validating MERS’s business model,” said Janis Smith, vice president of corporate communications for MERSCORP, the firm’s parent company. “Overall, the record is pretty clearly established.”

The company is fighting a multi-front war. It recently received a subpoena from the Delaware attorney general seeking information about its practices. New York’s attorney general also has undertaken an investigation into all aspects of the mortgage lending and securitization business, an examination that likely will involve inquiries into how mortgages were assigned and bundled.

In addition to its legal fight, MERS faces competition from Delaware-based Global Debt Registry, which plans to launch an alternative registry service later this summer.

“The more we researched it, the more it seemed there was a need for an alternative [to MERS],” said Mark Parsells, the firm’s executive chairman. “We see the need for a proper alternative that alleviates any ambiguity” related to the ownership of the underlying mortgages.

Copyright © 2011 washingtonpost.com, Brady Dennis and Renae Merle.

The shadow inventory of repossessed and soon-to-be repossessed homes

This is a follow-up to my Blog about the Shadow Inventory of homes that will eventually get to market. What the politicians do and how the banks respond will determing whether we have an immediate flood onto the market with major price drops or, if they trickle in-a long,gradual drop in house prices. It all depends. This article gives the numbers. They are enormous!

06/22/2011 By: Carrie Bay

The shadow inventory of repossessed and soon-to-be repossessed homes not yet visible to the market has been trimmed, according to new data released by CoreLogic Wednesday.
The company reports that as of April 2011, the industry’s shadow supply fell to 1.7 million units, down from 1.9 million units 12 months earlier.
CoreLogic attributes the decline to fewer new delinquencies and a high level of distressed sales – a combination which has helped to reduce the deluge of foreclosure properties that threatens to upend an already fragile market beset by a supply and demand imbalance.
CoreLogic estimates current shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services that are delinquent by 90 days or more, in foreclosure, and real estate owned (REO) by lenders. Shadow inventory is typically not included in metrics of unsold inventory.
The company’s April 2011 estimate is 18 percent lower that the shadow inventory peak of 2 million units hit in January 2010.
Mark Fleming, chief economist for CoreLogic said, “The shadow inventory has declined by nearly one-fifth since it peaked in early 2010, in large part due to a reduced flow of newly delinquent loans in recent months. However, it will probably take several years for the shadow inventory to be absorbed given the long timelines in processing and completing foreclosures.”
Of the 1.7 million properties currently in the shadows, CoreLogic says 790,000 are seriously delinquent, 440,000 are in some stage of foreclosure, and 440,000 are already in REO.
The overall sales pace has slowed so even with 200,000 fewer homes in the dark, the current shadow inventory represents five months’ worth of supply, according to CoreLogic’s calculations. The larger shadow inventory from a year ago also constituted a five-month supply. At the peak in January 2010, the supply was 8.5 months.
The total shadow and visible inventory was 5.7 million units in April 2011, down from 6.2 million units a year ago, according to CoreLogic. The decline occurred in both the visible and shadow inventories. The shadow inventory accounts for 29 percent of the combined stock.
CoreLogic notes that in addition to the current shadow inventory, there are 2 million borrowers who are current on their payments but “upside down” or in negative equity by more than 50 percent, or $150,000.
The company says these loans have increased risk of entering the shadow inventory if the owners’ ability to pay is impaired while significantly underwater.

The Russians Are Coming? No, The Russians Are Here!

I was reading eBay for Dummies this morning, getting ready to convince a power eBay seller her in Palm Coast to use my new site, PalmCoastGarageSale.com to sell his stuff. See my pilot site at http://www.creativepages.net/ted/

I was thinking about unique stuff to sell. Maybe do the site in Russian. I have a young Russian couple with two kids next door and an old Russian couple next to them on our four-house cul-de-sac (the fourth house is an old Italian couple, but they just left=snowbirds.)

We have a very large Russian community here in Palm Coast. The former Maffia ghetto on Coney Island has become the largest Russian community in the US.

We have three Russian grocery stores here and they all seem to be doing well. The Russian speaking real estate agents were doing great. There must be something I can sell that will have great appeal to this market.

Well, I haven't found the million dollar product yet, but I did find a very interesting Russian thing, a Russian massage gizmo. A Venic. Looks like fun! Take a look at the video and let me know what you think.

And if you have an idea of something our Russian Community would really like to be able to buy locally, but it isn't avaiable, please let me know. Our social security checks are not hacking it.

http://russian-bath.com/venik/















http://russian-bath.com/venik/