As a follow-up to my recent post regarding the problem title carriers are facing when the Big Banks try to resell their REOs, it appears the lenders are starting to wake up to the fact that their Oregon foreclosures are patently illegal. The banks know it, and their foreclosure arms (aka “Successor Trustees”) know it as well. As repeatedly noted here, here, and here, the Oregon courts – both federal and bankruptcy – are giving short shrift to the argument that MERS has the ability as a “nominee” to actually conduct the pre-foreclosure activity it has been engaging in openly for years. Most recently, in the now-famous Oregon case of McCoy v. BNC Mortgage, Judge Frank R. Alley III, concluded in a succinct and persuasive opinion, that if the banks fail to follow ORS 86.735(1) which requires that all intra-bank assignments of the trust deed be recorded, their foreclosure are void. This case, coupled with several others summarized here, have apparently not gone unnoticed by the Big Banks and their foreclosure trustees. Continue reading “Why Banks Are Halting Foreclosures In Oregon”
Kelly Harpster, formerly a young brainiac associate from Davis Wright Tremaine, my alma mater, who left to make her mark on the Portland legal scene, is coming along just fine, thank you. Attached here is her legal memo in support of a Motion for a Temporary Restraining Order (“TRO”) against Bank of America and ReconTrust, its wholly owned foreclosure arm. Attached here is the Order of Oregon Federal Judge Anna Brown, granting the motion on February 23, 2011. What is remarkable – and perhaps somewhat telling – is that Judge Brown issued her 22-page memorandum opinion the same afternoon she granted the motion.
There are several object lessons in such cases as Kelly’s when seeking extraordinary relief against Big Banks. Here are a few:
Choose your battles: Don’t bring a claim if you don’t believe you can win. The bank has more money than you. They will fight as hard on losing cases as on winning cases. Why? Because they want to send a message that they take all cases seriously, and that there is no such thing as an “easy” case. So, if you’re going to climb into the ring with the Big Boys, you’d better be prepared to deliver a knockout punch. Besides, filing a weak or poorly prepared case does no one a favor if you set bad precedent for the little guy.
Go out of your way to notify all bank defendants before filing the TRO. Even if you have a great case, moving too fast can result in a denial of the TRO. Most judges strive to make sure that all defendants, including Big Banks, have a full opportunity to be heard.
Have a good paper trail before filing the TRO. The movant’s supporting memorandum should show that the lawyer has done their homework and that the borrower has clean hands. The events leading up to the TRO should also establish that the borrower and their attorney walked the extra mile with the bank to resolve the matter- the TRO was a “last resort.”
What is a “good case”? It is one that has an “Oh my God!” element. As in “Oh my God! I can’t believe the bank did that!!” In less hyperbolic terms, the equities should weigh heavily in your client’s favor. Equally important is that there must be a significant risk of irreparable injury if the court does not grant the TRO.
Kelly’s work in this case is a shining example of excellent lawyering. We wish her and her client the best.
– PCQ
SLAM! BANG!
Her: “Honey, is that you?”
Him: “Yeh.”
Her: “Another bad day at the Firm?”
Him: “Bad? Hellish!”
Her: “Is that alcohol on your breath? Have you been drinking at Lucifer’s Lounge with the other associates again?”
Him: “Yeh, it’s Friday, and we just go to shoot the breeze. Everyone’s pretty stressed out these days. This job isn’t cracked up to be what I thought it was.”
Her: “What do you mean? I remember how happy you were to be selected to work for the Firm. You said they did legal work for Big Banks. That sounds pretty impressive to me. And they do throw great parties!”
Him: “Well, no one ever told me that I’d be supervising a bunch of secretaries and paralegals, teaching them the fine art of speed signing. And whenever I go to court these days, I’m getting my head handed to me on a platter. I can see how those judges are looking at me…like some sort of demon. First, it was Rinegard-Guirma; then Burgett; then Allman; then Ibanez; then McCoy; and now Agard. Hell, some of these cases the banks are losing have been brought by pro se’ litigants without any attorney. How’d you like to lose a case to someone representing themselves? I’m starting to feel like a violist on the Titanic. I don’t see how the Big Banks are going to survive these decisions. And if they do, their reputation will be in tatters. Everyone is saying MERS is just circling the drain. Pretty soon there will be nothing left of them besides a bunch of electrons wandering around in cyberspace…come to think of it, that’s all they are right now.” Continue reading “A Bad Day At The (Foreclosure) Mill”
The Note and the Trust Deed had been married for years.
The union was good, with very few tears.
They were always together, going hither and yon.
But early one morning, the Trust Deed was gone.
Note searched for her lover, nearly out of her mind,
Her worst fears were confirmed – Trust Deed was assigned.
Unwilling to stop, she asked clerks far and wide,
“Have you seen my Trust Deed? He must be inside!”
But recorders responded, “Have you not heard of MERS?
We no longer record – we haven’t for years.”
“The best you can hope for,” friends told the Note,
“Is to check with the Registry – it’s your last and best hope.”
Then she remembered, with rising alarm,
Those 18 small numbers, tattooed on Deed’s arm.
So she rushed to the Registry, and entered the MIN.
With hope against hope, she’d see Trust Deed again.
When MERS finally replied, a cold day in December,
She learned Deed was assigned – but not to a member!
“Oh, what shall I do,” the Note softly cried,
“MERS took my dear Deed, but left me outside.”
The months turned to years, then one day through fate,
She saw him by chance – her wayward soul mate.
Trust Deed looked terrible, he’d developed a paunch,
Seems he’d wasted away, in some low level tranche.
“Oh Trust Deed, my Trust Deed, return home to me.
Wherever I go, is where you must be.”
But Trust Deed responded, holding Note oh so tight,
“Dear, the law says once split, we can never unite.”
Now lawyers will argue, with logic askew,
That MERS didn’t cause the split of these two.
“We’re only strawmen, why can’t you see?
All of our actions were as ‘Nominees.’”
But truth is the truth, it cannot be denied,
MERS is the reason, they’re not side-by-side.
Breaking News! An exciting new board game has just been introduced to the marketplace – THE MODIFICATION GAME! Not since the Great Depression have people had this much fun at home. Gathered around the kitchen table, your friends and family will squeal with delight as they compete against one another in this fast paced contest of wills and skills. Ethics not required.
The object of the game is simple: See which one of you can foreclose a family the fastest. And here’s the twist – while each family thinks they’re getting a loan modification, the joke’s on them! Actually, while they’re negotiating with a make-believe “home modification expert,” you’re actually setting them up for a foreclosure! Can you imagine the look on your opponent’s face when they learn that the home they thought they could keep, was actually being taken away from them?
With a game board that looks somewhat like its outdated predecessor Monopoly [who pays full price for a bunch of little green plastic houses anymore? They’ll be half price at the foreclosure auction!], all of the players start from the same place and with the same amount of money. But with one spin of the Moral Compass, things really change. The one whose spin is the farthest from true North, gets to be a “Belial Banker.” The loser has to be the Hapless Homeowner. Then with a roll of the dice, the excitement begins. Both players draw from their stack of cards. Each card tells them how many spaces they will get to move forward, and contains hilarious messages that will keep the whole family in stitches! Continue reading “THE MODIFICATION GAME – From Your Friends at Belial Bank”
As the Realtor® industry enters into 2011, there is little question but that short sales are going to be around for a while. It will take at least two more years as excess inventory from all sources – banks, distressed owners (current and non-current with lender), unsold new construction, new condos, and sellers waiting on the sidelines – depletes itself. However, this is not the only factor causing the current glut of real and shadow inventory. Significantly, the employment picture and general overall confidence in the state and national economy must improve substantially. The consumer exuberance during the holidays does not – in my opinion – necessarily translate into good news for the housing market. It says, at best, that the retail segment of our economy enjoyed some good news for a change.
The bottom line for short sale transaction is that for the foreseeable future, they are going to remain a significant part of many Realtors®’ book of business. Avoiding these transactions is a luxury reserved for the very few. For those Realtors®who saw short sales as a good marketing opportunity early on, they are to be congratulated. However, for those thinking about dipping the veritable “toe in the water,” it’s not too late. I say this because the conventional wisdom about short sales a couple of years ago – if any existed back then – is ancient history. Much has changed for 2011:
- Banks have come to accept short sales, and in so doing, they have streamlined their protocols in dealing with them;
- With the foreclosure fiasco in the fall of 2010, many lenders are seeing their REO inventory inflate, which suggests they may be more receptive to short sale approvals;
- With each new short sale, Realtors® are gaining more experience;
- Thanks to the Internet and other sources, the public is becoming more educated about short sales;
- Today, the typical homeowner confronting a distressed transaction (i.e. short sale, deed-in-lieu, or foreclosure) is generally not the old “sub-primer” or “flipper” of 2004-2007 who acquired their home with easy credit, no money down, and a “liar loan;”
- Today’s distressed homeowners are our neighbors and sometimes ourselves. Many had significant equity at one time. Continue reading “2011 – Realtor® Best Practices For Short Sales”
Background. The residential loan market experienced tremendous growth between 2004 and 2007. Lenders were able to accommodate millions of borrowers, because they quickly sold the loans they made into the secondary mortgage market, thus “recycling” their funds for further loans. Initially, the secondary mortgage market was dominated by two major players, Fannie Mae and Freddie Mac. Upon receipt of the loans they purchased from the banks, Fannie and Freddie, in turn, bundled them into pools, and sold them as securities to pension funds and other large investors.
The vehicle of choice for these mortgage-backed securities (“MBS”) was the REMIC. The term stands for “Real Estate Mortgage Investment Conduit.” In short, a REMIC is a trust into which pools of promissory notes (debt instruments – like an IOU) and mortgages or trust deeds (the security instruments which permit foreclosure if the notes are not paid).
These loan pools range in risk from the highest quality down the credit chain to the lowest quality. The loans are, figuratively speaking, sliced and diced into many “tranches” (French for “slice”), each one varying in degrees of risk of default. At this point, the loans lose their identity as individual notes and mortgages, and consist only of blended pieces of loans. The tranches are investment graded by their contents. Some tranches are rated safer than others, depending upon the loan mix each contains. The riskier the tranche, the better the yield. Although the safer tranches have lower yields, their investors receive returns before those holding the higher-yielding, but riskier tranches. Continue reading “What’s in Your REMIC?”
“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”
Much has been made lately of the claims that lenders have intentionally or negligently relied upon bogus documents when foreclosing folks out of their homes. Setting aside the ethical side of the issue – if that’s possible – let’s look at the legal side.
What follows is a short summary of the statutory laws that come into play when an interest in land is conveyed in Oregon. After review, ask yourself whether the use of bogus documents – if true – is a mere “technicality”?
- Oregon Recording and Conveyancing Laws. All conveyances of land, or any interest therein, must be made by: (a) A written document; and (b) Signed by a grantor of legal age; or the lawful agent of the grantor; (c) Whose signature is notarized; and (e) The document is recorded in the country where the property is located. (See, ORS 93.010, 93.020.) Continue reading “Just a Technicality?”
If I were one of the big lenders today, I would be losing some serious sleep over how to reduce my backlog of nonperforming loans. With the newspapers and blogs full of stories of bogus documents being used to provide the legal basis for their foreclosures, and with several banks voluntarily suspending action across the country, it is just a matter of time before they all come to a stop.
But I’m not sure what’s next. It is clear that the lenders will now have to forensically audit thousands of nonperforming loans. And not just the ones in foreclosure. What about those headed toward foreclosure? And what about those already foreclosed? I suspect the class action lawyers are sharpening their knives, not to mention numerous state and federal regulatory authorities and perhaps a few federal prosecutors.
So what does this mean for Realtors, most of whom have seen their fortunes slide as the economy and the real estate market continue to languish? It is way too soon to make firm predictions, but it is clear that there may be a silver lining in these storm clouds. Why? Well, if I’m a lender with billions of dollars in non-performing loans, I know that I will not be able to use the foreclosure process until my loan documentation process is thoroughly examined. I certainly don’t want to take more properties back into my already bloated REO department by accepting deeds-in-lieu of foreclosure. The best way to dispose of the distressed property, and at the same time avoid the scrutiny of lawyers, courts, regulators, Attorneys General, and the public, may be to consent to a short sale short sale and move on. This is not to suggest that lenders will start consenting to “any and all” short sale offers. But assuming the offering price is within the realm of reason, I would say there is greater likelihood of them being accepted today than a few months ago.
So for those Realtors actively engaged in the short sale business – or those wanting to do so – this may be a good time to sharpen your skills and get in front of as many distressed property owners as possible. Short sales that may have seemed impossible a few months ago may be much more possible – and faster – today. Time will tell.