robo-signer“Why, anybody can have a brain. That’s a very mediocre commodity. Every pusillanimous creature that crawls on the Earth or slinks through slimy seas has a brain. Back where I come from, we have universities, seats of great learning, where men go to become great thinkers. And when they come out, they think deep thoughts and with no more brains than you have. But they have one thing you haven’t got: A diploma.” [The Wizard of Oz to the Tin Man]

If you’ve been looking for an official certificate or two to hang on your wall, now’s your chance! We have just the program for you!  It won’t require years of unnecessary education, boring professors, expensive text books, and– best of all – you won’t have to give up your day job!

Forget about being an attorney.  They’re too stodgy and stuffy, anyway.  For little or nothing, you can have the next best thing – a POWER OF ATTORNEY!  Yes!  An official document, saying that you’ve been duly appointed to sign IMPORTANT LEGAL DOCUMENTS.  You can even record your POWER OF ATTORNEY in the public records of your county, for the whole world to see.  Or, if you want, you can secretly keep it off the public record, adding to that air of mystery and intrigue.  Imagine how impressed your friends will be when your name begins to appear on IMPORTANT LEGAL DOCUMENTS that get recorded in the public records.  And best of all, some of the largest and most important publicly traded lending institutions are in need of your services today! Continue reading “ROBO-SIGNERS WANTED – No Experience Necessary”

Woodstove & Fireplace Insert Certification Law

As of August 1, 2010, Oregon law requires all sellers of “residential structures” to remove and destroy uncertified woodstoves or fireplace inserts (collectively “Inserts”) prior to closing of the sale.  A “residential structure” includes: (1) Any structure that contains one or more dwelling units and is four stories or less above grade; (2) A condominium, rental residential unit or other residential dwelling unit that is part of a larger structure, if the property interest in the unit is separate from the property interest in the larger structure; (3) A modular home constructed off-site; (4) A manufactured dwelling; or (5) A floating home.  Here’s a brief summary:

  • Exclusions. The primary exclusions are pellet stoves, central wood fired furnaces, antique stoves, masonry fireplaces and masonry heaters.
  • Removal and Destruction.  This entails removal of the Insert from the Property and destroying it. Woodstove retailers, chimney sweeps, or others may perform this task. Sellers removing an Insert may take it directly to a metal scrap recycler or DEQ-approved landfill.  Seller must obtain a receipt from the contractor or business certifying that the Insert has been destroyed.  As of August 1, 2010, DEQ will have a disclosure form posted on its website that may be used to notify DEQ of the destruction of the Insert.  See, link.  Failure to remove or destroy the Insert does not invalidate the sale.  However, it may constitute a Class A misdemeanor and/or result in a civil fine.  See, ORS 468A.990.
  • Certification Label. A certified woodstove or fireplace insert is one that bears a certification label located on the back and issued by the Oregon DEQ or U.S Environmental Protection Agency (“EPA”) which means that it has met certain particulate emission standards.  If the Insert does not bear such a label, it is “uncertified”, and must be removed and destroyed.  Sellers who cannot access the back of their Insert may look up the model number on the EPA’s certified woodstove list or call the manufacturer of the Insert.
  • Responsibility. The seller is responsible for removal and destruction an uncertified Insert located on the property. If the buyer accepts written responsibility for removal and destruction, the Insert must be removed and destroyed by buyer within 30 days following the closing date of the sale.
  • Additional Regulations. Sellers of residential structures located in Deschutes County, Jackson County, Klamath County, the town of Lakeview, and the cities of Bend and Medford currently have regulations that require homeowners to remove non-certified solid fuel heating device when a home is sold.  Sellers and buyers in these areas should check with their local agency to determine if other requirements might apply.
  • More Information.  See: DEQ Woodstove FAQs link and October 22, 2010 seminar; Contact DEQ – Heat Smart Program, 811 SW Sixth Ave., Portland, OR 97204; Review Oregon Revised Statutes 468A.460 – 468A.515.

Recently, Fannie Mae (FNMA), the giant secondary mortgage market purchaser, declared war on borrowers who engage in “strategic defaults.”  In their view, these are the borrowers who can afford to pay, but voluntarily choose not to.  It appears that in some instances, these decisions stem from reliance on some states’ laws that say a lender may not pursue personal liability against borrowers for certain loan “deficiencies.”  A deficiency is the difference between what the lender recovers in a foreclosure, and the remaining amount due under the borrower’s promissory note.

In some states, such as Oregon, lenders are prevented from recovering a judgment against their borrowers for  deficiencies arising after foreclosure of a first mortgage used to acquire their primary residence.  These anti-deficiency laws arose out of the 1930’s depression era, when banks pursued borrowers for repayment even after taking the home in foreclosure.  In 2010 Oregon passed another law (House Bill 3656) that extended anti-deficiency protection to borrowers who also took out second mortgages to pay the remaining purchase price.  These loan programs, sometimes known as “piggy-backs,” were designed by lenders to provide 100% of a borrower’s purchase price.  In the vernacular, borrowers had no “skin in the game.”  But that was OK to the banks.  They believed, like most, that if they ever had to foreclose, they could simply resell the home, perhaps at an even higher price.  Piggy-backs were not only offered, they were actively promoted, by many lenders during the 2005 -2008 period.  This was when credit was cheap, interest rates low, and real estate prices were skyrocketing.  Piggy-backs often came in the form of two simultaneous loans, the first mortgage (or in Oregon, the “trust deed”) for 80% of the purchase price, and another – the second mortgage or trust deed – for the remaining 20%. Continue reading ““Strategic Defaults” – Making Borrowers the Bad Guys?”

Real Estate Owned (“REO”). The abbreviation “REO” means “real estate owned.”  In banker-speak, it means that the lender has taken the home back from the defaulting borrower – voluntarily or involuntarily – and must now try to sell it to recover the unpaid balance on the loan.

The Bank Addendum. It has been my experience that when banks sell their REO properties, they do so in the following manner: Upon receiving a purchase offer, they counter it with an “addendum.”  This document is usually several pages in length, replacing many of the customary terms of the buyer’s offer.  While there may be some differences among these bank forms, the one characteristic they all have in common is their attempt to reinforce the notion that the property is being sold “AS-IS.”

Having reviewed a number of bank addendums (technically “addenda”) over the last several months, I have concluded that if we read them at another time, say three, four or five years ago, we would likely have been offended that anyone would think us foolish enough to agree to such harsh terms.  But this is today – banks have been taking properties back in droves.  These properties must be placed back on the market quickly, and with the least amount of expense.  In an effort to reduce future liability, banks have stretched the concept of an “AS-IS sale” to the breaking point.  Why?  Because they can. Even though it is a buyer’s market in Oregon and elsewhere, banks are selling some of their REOs at very attractive prices.  As a result, buyers are generally willing to accept the AS-IS terms in the bank’s addenda.

But Is It Legal? To me, this approach is of dubious legality.  Saying so does not make something so.  While I cannot presume to know the thinking of those who draft these documents, I suspect some of the AS-IS language is inserted more for psychological affect than substantive effect. As far as I know they have yet to be legally tested in Oregon.  Perhaps that means they are working….

Here are a few of the provisions I’ve seen in bank addenda that buyers (and the real estate agents representing them) should be aware of: Continue reading “Bank REOs And Property Disclosure”

Making Sausage

A quick note on what appears to be a source of confusion among consumers and others about their personal liability on home loans that go into foreclosure.

Before the credit and housing boom and bust, Oregon protected homebuyers on their first mortgage if there was a shortfall in loan repayment (a “deficiency”) following foreclosure.  The law said nothing about such protection if there was a second mortgage.

During the boom times in Oregon and elsewhere, “piggy-back” loans were not uncommon. Piggy-backs were two loans, that is, a first and second mortgage, say, for 80% and 20% of the purchase price.

When Oregon real estate values collapsed in the third quarter of  2007, this left many lenders unpaid…and borrowers fearful of collection action being filed against them personally.  The lender on the first mortgage could not recover for the deficiency, but the lender on the second could. Continue reading “Making Sausage – Observations on Some Recent Oregon Legislation”