NY Times- Fees deter loan modification effort

The New York Times reports on the impact that servicing fees have on a lender's willingness to modify a mortgage or otherwise assist a homeowner facing foreclosure.

Although the White House is calling on lenders to assist borrowers,

"industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans."

What's going on?

Legal experts say the opportunities for additional revenue in delinquency are considerable, confronting mortgage companies with a conflict between their own financial interest in collecting fees and their responsibility to recoup money for investors who own most mortgages.

“The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify,” concluded a recent paper published by the Federal Reserve Bank of Boston.

It's not a pleasant self- portrait that the mortgage industry is painting. But it goes hand in hand with the comments we get from potential borrowers that they can't modify their loans or get a new mortgage to replace the old when market values have declined. No one ever accused the mortgage industry of being altruistic, but good business sometimes requires that you protect your customer base, too.

One thing seems to be clear-- until home values begin to rise and people go back to work, we're go to see more mortgage defaults.

Read the full article Lucrative Fees May Deter Efforts to Alter Loans

For your next title order
or if you have questions about what you see here, contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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NY Times- Subprime brokers resurface as fixers

We've previously commented on the presence of folks in the mortgage market who bore some responsibility for the current mortgage crisis. (See Where's there a buck to be made and Would you buy a used loan from these guys?)

Now the Times reports,

From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.

By Mr. Soussana’s own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.

Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.

Where does it end? That's the same question being raised by actions of the Federal Trade Commission as it brings charges against Mr. Soussana's company, FedMod.

The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod’s practices, and compensation for customers.

Other companies are being targeted by the FTC. Read more in Subprime Brokers Resurface as Dubious Loan Fixers.

For your next title order
or if you have questions about what you see here,

contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Getting tax advice

Attorney Julian Block writing in Realty Times--

Internal Revenue Code changes have averaged one--per--day over the past eight years ---- with 500 revisions in 2008 alone. Who's counting? Nina Olson, the National Taxpayer Advocate, announced the statistics in her annual report to Congress. An independent organization within the IRS, the Taxpayer Advocate Service helps taxpayers resolve complaints with the agency when problems cannot
be resolved through normal channels.

Mr. Block asks and answers the question, "Will Advocate Olson's reports convince our lawmakers to draw back from their drawing board? Not during these troubled times. Expect them to enact even more alterations to an already confusing code in the immediate future."

Individuals turn to tax professionals, CPAs, and Enrolled Agents, "who are neither attorneys nor CPAs, but who are former IRS employees or have passed rigorous tax examinations administered by the IRS." But there are alternatives, such as inexpensive adult education courses.

Block warns, "But people who need financial advice should be wary of free lunch seminars that are actually showcases for hucksters. Seminar sponsors usually promote their programs as educational events, with free meals thrown in. But the seminars generally feature hard -- sell pitches for substandard investments designed to enrich the sponsors -- many may be Uncle Bernie wannabes -- and impoverish investors, especially unwitting seniors."

Read the full article, Calling for Tax Advice the Inexpensive Way

For your next title order
or if you have questions about what you see here, contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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More Monmouth County, NJ residents need flood insurance

Coastal residents of Monmouth County, New Jersey are facing a deadline for the purchase of homeowner's flood insurance.

The Asbury Press is reporting, "On Sept. 25, the Federal Emergency Management Administration's revised flood zone maps for 12 coastal Monmouth County municipalities become permanent."

Flood insurance has long been a staple of life at the Jersey Shore but the revised maps, based on laser technology, expand the "areas that have a 1 percent annual chance of severe flooding."

The impact on Monmouth County residents is substantial.

FEMA'S revised maps have expanded the Bayshore's municipal flood zone areas, adding an estimated 4,300 property owners to the Raritan Bay-Bayshore zone. The new maps, released March 2008, add 1,820 homes in Middletown; 1,810 homes in Keansburg; 640 homes in Hazlet; and 15 homes in Union Beach.

Most homeowners, as a condition of their federally insured mortgage, now will need flood insurance.

Combined, the added policies will cost coastal Monmouth residents hundreds of thousands of dollars.

One planning expert said such mandatory flood insurance will bring, aside from premium payments, other secondary economic costs. "It certainly will result in higher monthly housing costs," said James W. Hughes, Dean of the Edward J. Bloustein School of Public Planning & Policy, Rutgers University. "Even if the(operating) price stays the same, you've got an additional monthly insurance premium that you have to pay."

Not all the news is bad.

Bayshore residents can reduce their initial flood insurance cost, said FEMA executives, by purchasing a "preferred risk policy" before the maps take effect. PRPs are only issued for homes not currently in the flood hazard area.

Property owners are then locked into the policy rated by an insurance agent using a low risk zone upon renewal. The PRP rate remains in effect until the policy's first renewal date.

Flood insurance has long been required for federally related mortgage loans--just about all mortgages written in the United States--since the inception of flood insurance. It's a necessary evil, saving homeowners from many tens of thousands of dollars in out of pocket losses when floods strike.

Read the Asbury Park Press stories, FEMA maps expand zones and Time to buy insurance is now. For more about the go to http://www.floodsmart.gov/floodsmart/

For your next title order,
or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Notice re Hudson County Register

Notice re
Hudson County Register

The office of the Hudson County Register has moved from its 40+ year location at the Hudson County Administration Building at 595 Newark Avenue in Jersey City to the former Block Drug Company building located at 257 Cornelison Avenue in Jersey City.

Now called the Hudson County Center, the building also provides a new home for the Hudson County Sheriff’s Department. We understand the Hudson County Economic Development Authority, the County Board of Taxation, as well as the building’s owner, the Hudson County Improvement Authority which paid a reported
$13,000,000 for the 320,000 square foot building in 2005, and other Hudson County offices will be moving to the Center.

The Surrogate’s Court and County Clerk remain in their present locations which, frankly, makes it difficult for title searchers to complete a title examination without traveling back and forth between those offices in the Administration Building and Brennan Court House and the Center several times a day.

We are stymied by the lack of convenient or sufficient parking for visitors to the building. In addition, because the building is located on a curve at the midpoint of a steep hill we urge you to exercise caution when approaching by car.

Documents to be recorded may be mailed or sent by overnight service to:

Hudson County Register
257 Cornelison Avenue
Jersey City, NJ 07302

The Register’s telephone number is now 201-395-4760.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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It's "no money down" that got us into this mess

Professor Stan Liebowitz, a professor of economics and director of the Center for the Analysis of Property Rights and Innovation in the management school at the University of Texas, Dallas, looks at the root cause of the mortgage foreclosure crisis and comes away with a new take on the subject.

[T]he single most important factor is whether the homeowner has negative equity in a house -- that is, the balance of the mortgage is greater than the value of the house. This means that most government policies being discussed to remedy woes in the housing market are misdirected.

Liebowitz believes the statistics puts the lie to the belief that it was sub-prime lending that got us into the foreclosure pickle we are in now. It's not resetting of interest rates, either.

The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home.

News reports over the past year of "jingle mail" where the homeowner mails the keys to the lender and walks away from his home and mortgage are on-line. These mortgages are usually of the 100% kind because the homeowner had no equity in the property, i.e., it's nothing more than a "rental" in the mind of the borrower. Let's face it--would you toss away something in which you had invested hard cash?

A person's home is supposed to be his castle, something we protect when the need arises, not a flop-house room we walk away from when the urge hits us.

Read the full article New Evidence on the Foreclosure Crisis.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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