Marc's Mortgage Matter's

You can retire to Florida where.
1. You eat dinner at 3:15 in the afternoon.
2. All purchases include a coupon of some kind -- even houses and cars.
3. Everyone can recommend an excellent dermatologist.
4. Road construction never ends anywhere in the state.
5. Cars in front of you often appear to be driven by headless people.

I should have listened to my Mom and become a lawyer. In Florida, where palmetto bugs rule the earth, attorneys who take on foreclosure dismissal cases are accepting payments in the form of 2nd mortgages on their client's house. A lien is added if the foreclosure is dismissed and the homeowner's debt to the bank is reduced. Given all the press about sloppy processing of foreclosures, attorneys who specialize in property law are in demand but many of the clients are short on funds to pay the legal fees. "It's a new model, a new paradigm'' said Peter Ticktin of the Ticktin Law Group in Deerfield Beach. According to the story in the New York Times, each will be a contractual obligation with the law firm, labeled as a mortgage and structured like one, too, with the client paying a certain sum every month and using the house as collateral. If the Ticktin lawyers cause the original mortgage to be nullified or reduced because of the bank's misdeeds, the client must take out a new mortgage for 40% of the savings. (They'd better be sure they do the paperwork & disclosures correctly!)


"Why don't the strategic default people apply that 'walking away' logic to everything they borrow money to purchase? Their car is worth less the minute they drive it off the lot - why not quit making that payment? Common sense underwriting will return when the American public applies common sense to repayments. When they promise to pay back the loan they need to keep their promise, regardless of what the asset backing the loan is worth. The industry is trying to protect itself from the "strategic default" people....something we've never had to contend with before. So even if you have a "good loan" based on performance and risk, you still have to dot every "I" and cross every "T" twice so if the borrower executes their "strategic default", you don't have to repurchase (or make whole) the loan. We spend more time every day just trying to make our loans bullet proof than we do actually making the loan decision. OK - I'm done ranting - pass the Xanax."

The National Association of Realtors (NAR) is urging the lending industry to make things easier to qualified buyers to become homeowners. Appealing to the agencies, the NAR's president said that the government agencies are impairing their own mission to provide mortgage liquidity to home buyers with unnecessarily restrictive limits on the availability of credit. "These policies are delaying recovery both of the housing market and the larger economy." With home ownership hovering in the mid-60% range, high by world standards, it is important to define "qualified buyers".

Someone already wrote to me about this. "Extending credit to unqualified buyers, or qualified borrowers who are walking away, is a key piece of the entire mortgage credit mess. Hasn't the NAR been reading the newspapers over the last few years? Realtors have never been known for their underwriting prowess. How about we crank up the rating agency machine while we're at it, where investment banks pay rating agencies to grade securities issued by...investment banks?" 


Last week we learned that Bank of America won a dismissal, or at least another month of time, of a lawsuit claiming its Countrywide Financial Corp. unit made false statements about loan origination practices in selling mortgage-backed securities. The judge gave investors who brought the complaint 30 days to revise it. After they re-file the complaint, the court "will consider further the other grounds" in the bank's motion to dismiss it. According to the story in Bloomberg, the judge stated that "this was all too complicated to figure out" and slammed her gavel down. Ok, just kidding.

The judge actually said that investors didn't sufficiently demonstrate they suffered an injury for the securities they bought, and that the statute of limitations had expired for some claims. The suit claimed documents for mortgages originated by Countrywide and later securitized contained misrepresentations and omissions, and didn't follow the lender's own guidelines. Those failings must be addressed in the new complaint, she said. BofA said that, because the judge's ruling narrows the scope of claims that would be allowed to proceed in a revised complaint, it expects the securities at issue in the case would decline from 427 offerings with a face value of about $352 billion to about 22 offerings valued at about $31 billion. Pass the popcorn.

Financial stress can be devastating. Studies have shown that financial stress is one of the main causes of divorce. But in today’s society, the past stresses we’ve seen caused by credit card debt seem to have been replaced with the stress brought on by foreclosures. The stress has grown so great for some that we’ve even read reports of borrower suicide.

But this week, a Baltimore woman dealt with her upcoming eviction in a way I haven’t yet seen or heard of: a hunger strike.

Riddle of the Week:

Michael J. Fox has a small one.
Arnold Schwarzenegger has a big one.
Madonna doesn't have one.
The Pope has one but doesn't use it.
Clinton uses his all the time.
Bush is one...
Mickey Mouse has an unusual one.
Liberace never used his on women.
Jerry Seinfeld is very, very proud of his.
Cher claims that she took on 3.
We never saw Lucy use Desi's.

What is it?

The answer is: 'A Last Name.'

Now get back to work.