Take the Bonus and RunIn January 2013, the Federal Trade Commission (“FTC”) published a study titled “The Structure and Practices of the Debt Buying Industry.”  The full report can be found here. It makes very interesting reading, and confirms a few things I’ve always suspected.

The reason this information appeals to me is that in some instances, homeowners involved in some form of distressed housing event, such as a short sale, are unable to get the lender or servicer to waive the unpaid balance of the debt, i.e. the difference between the lender’s net recovery in the short sale and the full amount of the debt due [often including thousands of dollars of accrued interest].

When asked by clients what they should do, I tell them the decision is theirs…but to me the choice is clear. Here’s why: Continue reading “Pssst! Wanna Buy Some Unpaid Mortgage Debt – Only 4 Cents On The Dollar!”

Chart02A change in how the most widely used credit score in the U.S. is tallied will likely make it easier for tens of millions of Americans to get loans.  ~Wall Street Journal Online, August 7, 2014.

According to a recent Wall Street Journal online article [FICO Recalibrates Its Credit Scores], FICO is going to get under the hood and re-jigger some of its proprietary algorithms, to deal with the realities of the damage wreaked on distressed homeowners over the past five years.  Continue reading “Fair Isaac Co. (aka “FICO”) Just Got Fairer!”

Thumbs down02“…the United States is still producing around $800 billion a year less in goods and services than it would if the economy were at full health, and as a result millions of people aren’t working who would be if conditions were better.” Neil Irwin, senior economics correspondent, N.Y. Times, Aug. 4, 2014.

If the U.S. economy were a person, we’d characterize them as suffering from chronic malaise, interrupted by occasional bursts of vitality. In a recent N.Y. Times article subtitled “A Recovery in Need of a Recovery” (here), author, Neil Irwin, the paper’s senior economics correspondent, does an excellent job identifying and discussing those sectors of the economy in need of a Venti Americano, with a few extra shots of caffeine. Continue reading “America’s Economic Malaise And The Importance Of Real Estate”

Pouting

“SunTrust had no effective document management system in place to process and retain the borrowers’ applications and supporting documentation. When the HAMP applications poured in, SunTrust put them in stacks on the floor without organization. At one point, the stacks of opened and unprocessed HAMP applications were so voluminous that their weight buckled the floor.”  [Page 12, Restitution and Remediation Agreement between Suntrust and the U.S. Department of Justice, July 3, 2104.] Continue reading “SunTrustMortgage – In Trouble With The Feds!”

Gavel“Trials are primarily about the truth.  Consent decrees are primarily about pragmatism.”  Appellate Panel  Opinion, Second Circuit Court of Appeals in United States Securities and Exchange Commission vs. Citigroup Global Markets, Inc.

As the Big Bank settlements and stipulated decrees have continued to fill the financial pages over the last few years, most Americans have grown ambivalent about their habit of leaving federal courthouses after paying huge fines, but declining to admit they had broken any laws. The rationale for permitting them to do so is a concession by prosecutors in deference to Wall Street’s fear that such admissions would open the floodgates to litigation from shareholder groups.  Apparently, it’s one thing to admit you were caught with your hand in the cookie jar, but quite another to admit that cookie theft is wrong.  Continue reading “The Rakoff Effect On Big Banks’ Refusal To ‘Neither Admit Nor Deny’”

MarketsAccording to a recent Wall Street Journal blog, here, the President of the Federal Reserve Bank of San Francisco, John Williams, says it will be another year before the Fed begins raising interest rates.  If the definition of “news” is “something new” this observation is not “news.”  Nevertheless, the article is newsworthy in one sense – it confirms pretty much what mainstream economists and the Fed have been saying for some time. To that extent, its consistency is newsworthy.  Here is a thumbnail of what appears to be the general economic consensus regarding interest rates today: Continue reading “Interest Rates, ‘Reverse Repos,’ and Liquidity Risk – What Happens When The Fed’s Bond Buying Ends?”

BooksFor those folks who remember the implosion of Enron in October 2001, they may also remember the collapse of its international accounting firm Arthur Anderson. The short version of the story is that when Enron’s financial scandal broke, Arthur Anderson’s management sent a missive to staff gently reminding them of the company’s “document retention” policies. This was interpreted by most as a not-so-subtle instruction to start shredding Enron paperwork, which they dutifully did. Continue reading “Swiss Miss: How Credit Suisse’s Conviction Avoided Arthur Anderson’s Fate”

Hands RaisedIn a recent Wall Street Journal article entitled “Mortgage Lenders Ease Rules for Home Buyers in Hunt for Business” by Nick Timiraos and Annamaria Andriotis, we continue to hear that banks are beating the bushes for borrowers; and they are relaxing some of the tough lending requirements that have stymied may would-be homebuyers over the past few years.  The reason? The refi boom which was triggered by ever lower interest rates has about run its course.  In the search for other profit centers, many banks are trying to fill the void with loan origination business.  Continue reading “Easing Bank Credit Standards And Lending Terms? It’s About Time!”

FAQs PicIntroduction. The FAQs below come directly from the most recent CFPB guidelines for January 2014.  Parts One and Two can be found here and here. As I go through the rules I will supplement the FAQs.  This information does not apply to the Big Banks, e.g. B of A, Morgan Stanley, JPMorgan, etc.  Rather, it applies to “small creditors” such as community banks. Unfortunately, the regulators have sought to apply the ATR/QM rules even to Mom and Pop who may sell an occasional rental unit or two.[1] The CFPB gives “small creditors” or “small entities” certain underwriting latitude in the application of the ATR/QM rules. Generally, these are persons or entities with no more than $2 billion in assets that make no more than 500 mortgage loans per year. Originally, the small entity exceptions were intended to apply only to “rural or underserved counties,” but until January 10, 2016, the exceptions will apply to all small creditors, regardless of location. Caveat: This material below is informational only and does not constitute “legal advice.”  Moreover, it is summary only; for more information, the actual regulations should be reviewed.  [For full article, go to link here.]



[1] I maintain vehemently that on the state and federal levels, the CFPB rules should not apply to the occasional sale of residential property owned by persons who are not in the business of making such loans, when they “carry back the paper,” e.g. on a contract or note and trust deed. The fact that Oregon’s DFCS insists otherwise is a sad and disturbing commentary on the uber-regulatory mindset of governmental bureaucrats who would rather regulate than cogitate.  Any sentient human being who has a passing familiarity with the housing and credit crisis would know that the occasional sale of residential property by Mom and Pop who carry back the paper was never meant to be subject to the ATR/QM and mortgage loan originator laws.

Chart02As 2013 recedes in the rear-view mirror of memory, I thought it high time to ask what were some of the significant developments of the year, and what do they bode for the real estate industry in 2014? I’ve identified the following five data points I believe are most worthy of discussion. They are arranged in no particular order of importance. ~PCQ 

The Portland-Metro Real Estate MarketUnless you’ve been on the Moon for the past 15 months, it’s hard to ignore the pleasant truth – the market is much improved.  But by no means is it fully recovered. It’s off life support, but still recuperating. There are certain aspects of today’s real estate market that continue to be in need of improvement. [For rest of article go to link here.]