Land banks to the rescue!

Land banks - a municipality's new tool in its fight against housing decay.

Land banking is a relatively new concept developed in the face of rising cases of "zombie" properties that blight our towns, boroughs, hamlets and cities.  If you have never heard of a land banking, here are some

Frequently Asked Questions on Land Banking

 1) What is a land bank?

Land banks are governmental entities or nonprofit corporations that are focused on the conversion of vacant, abandoned, and tax delinquent properties into productive use.

 Vacant, abandoned, and tax-delinquent properties are often grouped together as “problem properties” because they destabilize neighborhoods, create fire and safety hazards, drive down property values, and drain local tax dollars. In some sense, these are properties the private market has altogether rejected.

 Land banks, in essence, are a direct response to this growing trend of vacancy and abandonment, created to strategically acquire problem properties and convert these liabilities into assets. In short, land banks are intended to acquire title to these problem properties, eliminate the liabilities, and transfer the properties to new, responsible owners in a transparent manner that results in outcomes consistent with community-based plans.

 Most land banks have special powers (see below) that enable them to undertake these activities more effectively and efficiently than other public or nonprofit entities. When thoughtfully executed, land banking can resolve some of the toughest barriers to returning land to productive use, helping to unlock the value of problem properties and converting them into assets for community revitalization.

 2) How are land banks created?

Typically, land banks are created as public entities by a local ordinance, pursuant to authority provided in state-enabling legislation. Land banking programs can also be developed within existing entities, such as redevelopment authorities, housing departments, or planning departments.

3) How many land banks are operating throughout the country?

Based on our knowledge of and experience within the field of practice, we estimate there are approximately 250 land banks and land banking programs in operation throughout the country (as of July 2021). The states of Michigan, Ohio, Georgia, Pennsylvania, and New York currently have statewide land bank associations that represent their large numbers of active land banks. For a national inventory of land banks and land banking programs, check out our new Land Bank HQ Interactive Map. [See below for more information - ed.]

4) How does land banking work?

Land banks are designed to acquire and maintain problem properties and then transfer them back to responsible ownership and productive use in accordance with local land use goals and priorities, creating a more efficient and effective system to eliminate blight.

 In order to accomplish these tasks, land banks are granted special powers and legal authority pursuant to state-enabling statutes. Though these statutes differ widely from state to state, the more recent examples of comprehensive land bank legislation generally grant to land banks the following powers:

 We want to stress that a land bank is not a “silver bullet” for communities struggling with blight. Though land banks are uniquely designed to help reduce problem properties, the policies, priorities, and activities of a land bank must complement other community strategies and activities, such as strategic code enforcement, smart planning and community development, and effective tax collection and enforcement.

5) Aren’t land banks competing with the private market, with an unfair advantage?

Not so. In fact, a land bank is a direct response to a growing inventory of problem properties that the private market has altogether rejected. Most vacant and abandoned properties have serious legal and financial barriers that detract responsible, private investors. For instance, many abandoned properties have a clouded title, which introduces a level of uncertainty and liability few responsible investors, if any, are willing to assume. Also, many tax-foreclosed properties have accumulated years of back taxes that far exceed the market value of the property. Similarly, many properties left vacant and abandoned for too many years require an investment in repairs that greatly exceeds what the market could ever return. A land bank, therefore, is designed specifically to address the inventory of problem properties the private market has discarded, and to convert these neighborhood liabilities into assets that advance community-based goals.

6) When does it make sense to use land banking?

Any community considering the creation of a land bank should assess a number of factors to determine if a land bank is needed or likely to be successful. Some common triggers for creating a land bank include:

 Large inventories of vacant and abandoned property

Properties with little to no market value

Properties with delinquent taxes in excess of fair market value

Properties with title problems

Inflexible policies that dictate the disposition of public property, denying local governments the chance to be strategic and nimble

The speculation and uncertainty inherent in the auction sale of tax-foreclosed properties

Some jurisdictions may already have an entity or agency (e.g. a redevelopment authority) that is empowered with tools to effectively take control of large inventories of problem properties and return them to productive use, obviating the need for a land bank. In some cases, however, such entities are focused primarily on development, rather than on blight elimination and stabilization strategies in more distressed neighborhoods. Where this is the case, the community may still want to consider creating a land bank or land banking program.

7) What does a typical land bank program look like?

While all land banks exist to serve the same primary purpose of acquiring problem properties and returning them to productive use, they are quite diverse in their structure and operations. We estimate there are approximately 170 land banks and land banking programs in operation throughout the country (as of January 2018), and they vary greatly in terms of the types of cities, regions, and economic conditions in which they operate, the size of their inventories, their staff capacity, their legal authorities, and their goals and programs. Despite this diversity, our experience has shown that successful land banks exhibit some similar characteristics:

 Strategic links to the tax collection and foreclosure process. Tax delinquency is often the most significant common denominator among vacant and abandoned properties, which explains why nearly all land banks have established strategic links to the tax foreclosure process as a primary source of acquisitions. This is particularly in communities where (a) a primary cause of vacancy and abandonment is an ineffective tax foreclosure process and (b) where there are statutory powers, intergovernmental agreements or policies in place for a land bank to acquire properties through the tax foreclosure process at little to no cost. Though auctions can generate positive outcomes for marketable properties, the speculative auction rarely if ever leads to positive outcomes for problem properties. Land banks can and should play a key role in acquiring and converting tax-foreclosed properties to productive use.

 Operations scaled in response to local land use goals. Successful land banks have established acquisition and disposition strategies that directly support the implementation of local land use goals and meet community needs. Some land banks tackle massive inventories of extremely unsafe and abandoned properties as part of an urgent stabilization and public safety strategy, while others operate selectively with extreme deliberation. Regardless of the scale of operations, land banks should always make decisions based on a strong understanding of community priorities and goals, and guided by neighborhood, local and regional revitalization plans.

 Policy-driven, transparent, and publicly accountable transactions. The acquisition and disposition of properties – especially those that have long been harmful eyesores – is an important and sensitive endeavor. Successful land banks have gone to great lengths to build and maintain trust with the public through complete transparency in the establishment of priorities, policies, and procedures that govern all actions. Land banks should make sure these ground rules and policies are established prior to any transactions, and annually revisited with public input to maintain a high standard of transparency and accountability. Moreover, land banks should strive to create websites that offer members of the public full access to accurate, up-to-date information pertaining to all land bank operations, programs, policies, and activities, including sales listings and past transactions.

 Engagement with residents and other community stakeholders. There is no substitute for engaged community stakeholders who understand a community’s history and goals — and whose lives are most directly by a land bank’s work. Successful land banks have found creative and consistent ways to inform, engage, and empower these active residents to help prioritize land bank interventions and develop long-term solutions. Whether establishing a community advisory board or regularly hosting neighborhood meetings, land banks should explore and implement practices that affirm a strong commitment to inclusiveness, engagement, and empowerment.

 Alignment with other local or regional tools and community programs. Because a land bank is a tool to support locally developed land use goals, and not a goal in and of itself, it is important to coordinate with other blight prevention tools and programs. Successful land banks have helped facilitate and work within diverse collaborations across the public, private, and nonprofit sectors that share similar economic and community development goals. We can’t stress enough that, in order to truly be effective, land bank activities must complement existing blight prevention efforts, including effective tax enforcement, strategic code enforcement, neighborhood investments, and community-based planning.

 Recurring, reliable source of funding. A land bank’s focus is on the inventory of problem properties the local property market has basically rejected, and therefore will always require some level of public support—whether cash or in-kind—that is proportional to the scope and scale of vacancy the land bank is expected to help resolve. With a recurring and reliable source of funding, land banks can focus on the types of creative interventions and community partnerships that are required to transform liabilities to productive use that meet and advance community goals.

 A land bank is not a panacea for all problems associated with blight, or even a necessary entity in many cities, but in the right environment and with the right legal structure, a land bank can be a key tool for returning vacant and problem property to productive use.

 8) What are some of the core powers of a land bank?

Depending on state and local law, land banks often have unique legal powers to support their activities and facilitate the return of problem properties to productive use. Though these statutes differ widely from state to state, they generally grant the following powers:

Obtain property at low or no cost through the tax foreclosure

Hold land tax-free

Clear title and/or extinguish back taxes

Lease properties for temporary uses

Negotiate sales based not only on the highest bid but also on the outcome that most closely aligns with community needs, such as workforce housing, a grocery store, or green space

 Using these special powers, land banks can streamline blight removal and create a nimble, accountable, and community-driven approach to returning problem properties to productive use.

9) How is a land bank different from a redevelopment authority?

In a few states, legislation has been passed that grants redevelopment authorities many of the same powers as land banks. In Louisiana, for example, some redevelopment authorities can also function as land banks. However, in most states, redevelopment authorities and land banks differ both in terms of their legal powers and their mission. Land banks typically implement disposition policies that allow greater flexibility than a redevelopment authority in terms of transferees and consideration. However, unlike many redevelopment authorities, land banks do not have the power of eminent domain, nor do land banks have the power to tax. As for mission, many land banks are focused on acquiring, stabilizing and returning to productive use those properties that are considered to have the most blighting influence in a community. These are properties that may not have an immediate redevelopment opportunity, but are destabilizing neighborhoods and undermining quality of life. In comparison, a redevelopment authority is typically focused on properties with near-term redevelopment potential and on large scale development projects that align with highly visible and long-term economic development goals. 

10) How is a land bank funded?

Land banks are generally funded through a variety of sources, which may include revenue from the sale of properties, foundation grants, general fund appropriations from local and county governments, and federal and state grants. Land banks in certain states have received significant funding from the federal Hardest Hit Funds (for example, Michigan and Ohio) and the National Mortgage Settlement Funds (for example, New York and Illinois).

 A couple of financing mechanisms unique to land banks have been included in state-enabling legislation. For instance, in Michigan and New York, land banks are able to recapture 50% of the taxes on properties returned to the tax rolls for five years. In Ohio, special fees imposed on delinquent taxpayers provide a dedicated source of funding for land bank operations. Finding consistent and preferably dedicated funding sources is critical to the success of land banks, as they incur significant costs converting unsafe liabilities the private market has rejected into assets that improve neighborhood vitality. Several of the more successful land banks from around the country are also capitalized by their local units of government either through yearly budget allocations or in-kind assistance such as shared staffing.

11) How many properties do land banks generally have in their inventory at any given time?

Land bank inventories vary greatly from jurisdiction to jurisdiction. Inventory sizes range anywhere from a few properties to thousands of properties. Reasons for this variation include the size of the community in which the land bank is located, the level of distress and disinvestment in each community, the land bank’s property acquisition process, strategy, and authorities (including whether state law grants the land bank the authority to pick and choose which properties to acquire out of tax foreclosure), and the mission and goals of the land bank.

12) What kinds of properties do land banks acquire?

Most land bank acquisitions are vacant, residential, tax-delinquent properties. In addition to tax foreclosed parcels, land banks can acquire Real Estate Owned (REO) properties and receive private donations and public land transfers. Although most properties are typically vacant residential single-family homes or vacant lots, land banks also acquire multifamily dwellings, commercial and industrial properties, and in rare cases, occupied rental properties. In fact, some land banks even have well-developed brownfields programs through which they acquire large scale, formerly industrial properties.

 See more at https://www.communityprogress.net/land-banking-faq-pages-449.php#What%20is%20a%20land%20bank?

Keywords land bank foreclosures zombie

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

a/k/a Dr. Title

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

Follow us on Twitter @vestedland

Disclaimer:

The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Vested Land Services LLC and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided.

Sphere: Related Content

Robo-signing still haunts borrowers

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.  Call us for a title insurance quote.

* * *

Borrowers, Beware: The Robo-Signers Aren’t Finished Yet



The New York Times' Gretchen Morgenstern writes about the lingering effects of the foreclosure mess created by robo-signing.

Remember the robo-signers, those mortgage loan automatons who authenticated thousands of foreclosure documents over the years without verifying the information they were swearing to?

Well, they’re back, in a manner of speaking, at least in Florida. Their dubious documents are being used to hound former borrowers years after their homes went into foreclosure.

 It seems the lenders are now pursuing deficiency judgments for amounts being the difference between the debt foreclosed and the amount realized after foreclosure sale.

“Sending these cases to debt collectors when the underlying foreclosures involved unlawful robo-signing is unfair and potentially even deceptive,” said Kathleen C. Engel, a research professor at Suffolk University Law School in Boston. “Fannie Mae is not entitled to collect on those debts when the foreclosure was unlawful.”

It's a story worth reading.  Which you can do here.

 

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

Sphere: Related Content

Mortgage Foreclosure Backlog Impacts Market

Foreclosure backlog impacts real estate marketplace.  That's the theme of an article in today's New York Times.

FORECLOSURES are taking significantly longer in states where lenders must go through the courts, and the delay may or may not be good for borrowers, depending on their circumstances. But some researchers say that dragging the process out hurts society at large.

The backlog in foreclosures hurts the real estate recovery in states using judicial foreclosure, such as New Jersey, because they impact the value of surrounding properties.

The long and short is that New Jersey is chock full of foreclosure properties, in the pipeline and in the marketplace.

"The best outcome is to prevent the foreclosure," said Paul S. Willen, an economist and policy adviser at the Boston Fed. "But if it’s clear that can’t be done, it’s in society’s interest to get the foreclosure done as soon as possible."

Read the full column here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

Sphere: Related Content

A bold approach - Principal Reduction Will Solve The Housing Crisis and Jumpstart The Economy

Realty Times has a super article about one way to solve the housing crisis.  Written by Arizona real estate broker Tanya Marchiol of Team Investments, her thesis could be summed up this way-

The American economy is chained to the crushing housing debt load. Chronic unemployment, foreclosures, and small business closings can all ultimately be traced back to the housing crisis. Working families across the country have seen their home values plummet, have had their life savings wiped clean, have been powerless to help when their loved ones lost their jobs, and in too many cases watched helplessly while they lost their homes to banks that continue to post billion-dollar profits and pay out billion-dollar bonuses. Add to that the trillions in bailouts and backstops that taxpayers gave to the banks, and one thing is clear: tax payers have already done their part. Now it is the banks' turn. Principal reduction will restore the American Dream, create jobs, and give the American family the ability to breathe again.

There's a bold approach in Ms. Marchiol's approach and it's one we can't disagree with.  Nothing else has worked to date, so in our view, it's worth a try.

Read the full story - Realty Times - Principal Reduction Will Solve The Housing Crisis and Jumpstart The Economy

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

Sphere: Related Content

Where’s the light at the end of the tunnel? Bad loans continue to rise for NJ banks

The Record reports that

“Toxic loans held by New Jersey-based banks continued to climb in the second
quarter even as bad loans at U.S. banks declined, according to new government
data.”

“The Federal Deposit Insurance Corp. said Tuesday in its quarterly industry
profile that loans more than 90 days past due or no longer accruing interest at
New Jersey's 117 banks and thrifts rose to 3.61 percent of total loans as of June 30, up from 2.91 percent a year earlier. Those banks' combined seriously delinquent debt climbed in each of the past four quarters.”

Even the once vaunted Hudson City Savings Bank is feeling the pain. As the Record notes,

"Paramus-based Hudson City Savings Bank, the largest thrift based in New Jersey and a high-end residential mortgage lender, had 123 foreclosed properties on its books at the end of June, up from 52 a year earlier.”

Why?

“A weak economy, persistent high unemployment and a slow foreclosure process
have all contributed to the recent rise in bad loans throughout the state, said
Bill Brewer, partner at the Livingston office of Crowe Horwath LLP, a community
bank auditor. "Banks have had a hard time moving this stuff off the books," he
said. "The banks have the capital to withstand this, but it is a continuing
problem.’"

Read more of the whys and wherefores here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

How home-sellers can take advantage of the foreclosure crisis

From Bankrate.com.  Risky foreclosures could help savvy sellers.

The cloud over foreclosures comes with a silver lining for homeowners looking for an edge when they sell real estate in a strong buyer's market.

The good news for sellers is that foreclosures look risky again. Savvy sellers -- at least, those who have equity and are current on their house payments -- might be able to turn the tables and use the robosigning follies to their advantage, experts say.

"I am not seeing buyers afraid (yet) to buy a foreclosure," says Elizabeth Weintraub, a real estate broker in Sacramento, Calif. "They should be."

The robosigning controversy has led to a slowdown in foreclosures. The lull is likely to be temporary and sellers' advantage from a drop in foreclosures potentially fleeting, with many markets still flooded with distressed properties, according to Katie Curnutte, a spokeswoman for Zillow.com. There might even be a boomerang effect later in the year after banks get back up to full speed again with auctions, she says.

For home sellers, here are some tips on how to seize the initiative during a rare (relative) lull in the foreclosure crisis.

Sell sooner rather than later.

If you absolutely, positively don't have to sell in this market, then don't. But if you must, whether now or five months from now, take the plunge now. Sure, the slowdown in foreclosure activity could mean somewhat less competition now.

But even more critically, there is the boomerang effect to take into account. The number of foreclosures is expected to skyrocket as we head deeper into 2011.

Get your story out.

Foreclosure sales were once rare. But in some markets now, they make up 20 percent to more than half of all sales. If you are a long-term homeowner who has kept up on your mortgage payments, you need to get that message out. This is your key advantage over a much lower-priced foreclosure, especially in light of the robosigning mess.

The buyer knows who he or she is buying the home from -- no title issues here. There are ways to tactfully get across this key point in your ads, with phrases like "long-term ownership" and "been in the family for decades," Weintraub says.

Do your homework.

You can bet savvy buyers these days are going to come in with a stack of comps, many of them rock-bottom foreclosures. Provide your own market analysis, one that can help highlight the challenges facing foreclosed properties.

The first report should be comparable homes sold in the last few months, with foreclosures broken out separately if mentioned at all, says Jim Kimmons, broker owner of Gallery Realty of Taos, N.M. The second should detail homes currently on the market. That will help you frame the decision on favorable terms: Buyers should consider homes like yours instead of foreclosures.

Price aggressively without undercutting foreclosures.

The aim is to sell your home and maybe come away with a small gain. Forget about making a killing. Few homeowners who are current on their mortgage can match a foreclosure price.

But buyers are still looking for low prices. Take a look at what other nondistressed properties are selling for in your neighborhood and then price below them. And drive home the point that the price is the price -- with foreclosures the bank can take a better offer right up to the day of the closing, Weintraub says.

Burst those foreclosure fantasies.

Many buyers haven't a clue about what it takes to buy a foreclosed home. In many cases, individual buyers don't stand a chance as they end up competing with investors ready to pay cash, Kimmons says.

If a buyer or agent doesn't know this, enlighten him or her. "There is a significant percentage of buyers (that) could not buy a foreclosure if they wanted to," Kimmons says


Read more from Bankrate.com- Home-selling tactics to beat the deadbeats

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Mortgage foreclosure settlement – a solution?

Sarah Portlock writing in The Star-Ledger reports on the settlement of the New Jersey Supreme Court’s involvement in the mortgage foreclosure crisis. The settlement “will require six of the country’s biggest mortgage lenders to disclose the specifics of how they foreclose on homeowners has been” court approved.

“Under the agreement, retired Judge Richard Williams will review the lenders’ foreclosure processes to ensure all filed documents are based on personal knowledge and accurate business records. He also has the power to periodically review a sample of future foreclosures.”

Nonsense. Can anyone define “personal knowledge” in the day of e-commerce where everything, absolutely everything is compiled, kept and disseminated electronically? We no longer live in the days of bookkeepers wearing eyeshades sitting hunchbacked over ledger books.

“The settlement was made public two weeks ago, and comes four months after Chief Justice Stuart Rabner issued a three-part initiative to investigate what could be rogue foreclosure filings, noting a staggering increase in caseload and concerns judges had inadvertently "rubber stamped" files that had inadequate or inaccurate paperwork. In response, the banks argued they had already revised their foreclosure procedures.”

Read - Judge approves settlement to review mortgage foreclosure process

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Are you tough enough to buy at a foreclosure auction?

Bankrate.com has a wonderful article, “Hassles of buying foreclosures at auction,” written by Clark Palmer.

We get calls from time to time from prospective foreclosure property bidders who just can’t pass up a bargain. The article will set you straight.

Highlights:

• The process has plenty of snags to snare the unwary foreclosure buyer.
• The condition of a foreclosed home is a mystery; it could be plumbing-free.
• Consider the time and expense of repairing a handyman's special.

“An expert's single word of advice for folks who dream of buying a foreclosed house at auction: Don't.”

"’I caution anyone who isn't in the (real estate) business: Buying (at auction) can be one of the worst decisions you'll ever make," says Jim Hamilton, a Realtor in Los Gatos, Calif. Another bit of counsel from Hamilton: If you want to buy foreclosures at auction, plan on making that your full-time job.”

If you consider that “buying a house is like navigating an obstacle course, then buying a foreclosure is like crossing a minefield.”

Traps for the unwary.

First of all, you have to pay cash.

“And you're paying for all of the loans, back interest, taxes and attorney's fees on the property. So if the house is worth $300,000, the opening bid could actually be $400,000. By the time you outbid everyone, you could be paying a lot more than that.”

If the homeowner files bankruptcy on the day of the auction, or, in New Jersey, within 10 days of the sale, you won’t get your deed and will have to wait for return of your deposit.

A perfect house for stargazers.  Even if you work out those issues, you don't know the condition of the property.

People could still be living there. The house could be gutted -- missing copper and plumbing fixtures, or even roofless, Weintraub says.

Finally, “the bank isn't going to tell you all that much about the house.” Inspect on your own if you can.

And, if you find them, who will fix the problems?

Ask yourself if you have the money, time, patience and support from the people around you to repair any problems with the house. "You need to be realistic about those questions. If the answers to any of those questions is 'no,' this probably isn't the house you're looking for," Hamilton says.

Read the full article.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Soldiers foreclosed. How could it happen?

The New York Times reports,

“The Justice Department is investigating allegations that a mortgage subsidiary of Morgan Stanley foreclosed on almost two dozen military families from 2006 to 2008 in violation of a longstanding law aimed at preventing such action.”

It seems that

“Saxon Mortgage Services, is one of several mortgage and lending companies being investigated by its civil rights division. The inquiry is focused on possible violations of a federal law that bars lenders from foreclosing on active-duty service members without a court hearing.“

“[A]s many as 23 military foreclosures were under scrutiny in the Justice Department investigation.”

Federal, and many state, laws have what’s called a “civil relief act” designed to protect active duty service men and women from being foreclosed. Federal law requires a judge to

“hold a hearing at which the service member is represented before granting a lender the right to foreclose on the service member’s home, even in states where a court order is not required for civilian foreclosures. As early as 2005, advocates for military families were complaining that banks and other lenders were frequently violating the law.”

Read the full article U.S. Inquiry on Military Family Foreclosures

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Mortgage lenders fight back on foreclosure abuse cases

NJ.com picks up an AP story on the New Jersey Supreme Court’s get tough attitude in foreclosure abuse cases. 6 of the biggest mortgage lenders say N.J. high court overstepped its boundaries

“State Supreme Court Chief Justice Stuart Rabner made a splash in December when he ordered six of the nation's biggest mortgage lenders into court to show why their foreclosure operations shouldn't be suspended over reports of widespread irregularities.

“State attorneys general around the country have increased pressure on lenders over the past year, but New Jersey is believed to be the first state whose Supreme Court has stepped into the fray so boldly.

“Too boldly, according to the banks' court filings. With the court hearing looming next month, the banks say they'd already begun remedial action months before New Jersey's court order and that suspending their operations would damage already shaky housing markets and lead to further deterioration of hard-hit neighborhoods.”

The legal argument centers on constitutional issues. Mainly, “the order violates due process and equal protection clauses because it targets six lenders while omitting others and doesn't arise from any specific complaints, according to the filings.”

The court is trying to "remedy what it perceives as a public policy issue," attorneys for Ally Financial's GMAC Mortgage unit wrote. "Such powers are the province of legislators and regulators."

The lenders targeted by the court’s order are GMAC Mortgage, OneWest Bank, formerly IndyMac Federal Bank; BAC Home Loan Servicing, a subsidiary of Bank of America; JP Morgan Chase's Chase Home Finance; Wells Fargo Financial New Jersey and CitiResidential Living, a subsidiary of Citibank. The companies process almost half of New Jersey’s foreclosure actions.

This may seem as good news for borrowers in foreclosure, but all it does is delay the inevitable.

Read the full story.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Court Voids Foreclosures by U.S. Bancorp and Wells Fargo

From the New York Times:

OK, so now we have Massachusetts court knocking foreclosure judgments out of the box.

The name of the game is balance the rights of lenders against defaulting borrowers.  Just what is that balance?

Read, Court Voids Foreclosures by U.S. Bancorp and Wells Fargo

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

N.J. foreclosures coming to a court ordered halt?

Hot off the wire, New Jersey's Supreme Court is threatening to halt foreclosures by six lenders for "irregularities."

According to NJ.com, the state's chief justice writes that the court

"has become increasingly concerned about the accuracy and reliability of documents submitted to the Office of Foreclosure."

A special master could be appointed to review the foreclosure practices of companies including Wells Fargo, JP Morgan Chase and Citibank.

Of course, nothing is said of the substance of the "irregularities" or about the underlying fact that the loans are in default. More to follow.

Read the full report N.J. Supreme Court intervenes in mortgage foreclosures by six lenders NJ.com

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Foreclosure mess ignores one thing-the borrowers

From the New York Times’ Gretchen Morgenson’s column,

“LAWYERS representing delinquent homeowners have been shouting for years about documentation problems in residential mortgages. Now that their complaints have gained traction with investors, attorneys general and some state court officials, the question of consequences looms large.

“Is the banks’ sloppy paperwork a matter of simple technicalities that are relatively easy to cure, as the banks contend? Or are there more far-reaching consequences for banks and the institutions that bought mortgage-backed securities during the mania?

“Oddly enough, the answer to both questions may be yes.”

All through this new crisis, one comment has been missing. The homeowners (and the hundreds, if not thousands, of sham owners) who borrowed money in a rising economy have simply stopped paying their mortgages.

Some defaults are legitimate. People lose jobs, catastrophic illness brings medical bills. But these reasons have always been there. Others plan to lose their home as some sort of leverage to get the lender to reduce the rate of interest, the principal amount or both. Others just want to move away. These so-called “strategic defaults” demonstrate the feckless nature of America’s homeowners.

There’s no doubt in my mind that there are violations of Truth-in-Lending and other consumer protection laws that address wrongs from the time of loan origination. But the lawyers I know wouldn’t know the underpinnings of the Federal “right to cancel” and what a violation of its rules could mean to a homeowner.

The bottom line is that the problem should not be placed solely at the feet of the mortgage servicers, Fannie Mae or Freddie Mac. It started at the very highest reaches of the Clinton administration and continued through the Bush administration. The bottom line is that loans were extended by hook or by crook through the efforts of dishonest mortgage brokers and bankers to people who had no right to buy a home and those loans were bought by Fannie and Freddie.

Problem loans are here, and they’re in foreclosure. Let the market do what it has to do…fall or rise. All lawyers will do is increase the cost and make it harder for deserving borrowers to get the loan they truly qualify for.

That's what I think.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

From Realty Times - Bank of America ends foreclosure freeze

From Realty Times, back to business for Bank of America.

Part of the freeze is over for 23 states. Bank of America has announced that foreclosures are resuming in over two dozen states. The bank says in its review, it has not found a single occasion where a foreclosure proceeded in error.

The foreclosure freeze was brought about by allegations of wrongdoing by lenders across the country. Here in New Jersey, where foreclosures are supervised by a division of Superior Court, the allegations should prove erroneous. The safeguards are already there.

Read the full report: Real Estate Outlook: Freeze Over In Many States

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

AP Story - No Foregone Conclusion - background on the foreclosure mess

From the Associated Press-

Good article by Alan Zibel and Candice Choi on the scope of the foreclosure mess. I do not agree with all the statements made, but, hey, they wrote the article.

Erroneous documents. A freeze on foreclosures. Charges of fraud.

A flurry of developments have sketched an alarming scenario: that major U.S. banks rammed through foreclosure after foreclosure without giving many borrowers a fair shot at keeping their homes.

Questions have arisen about the scope of the problem, the effect on the nation's foreclosure epidemic and the likelihood that some people could regain their foreclosed homes.

Here's what you need to know about the unfolding foreclosure mess:

Q: What's the problem I'm hearing about foreclosures?

A. Four of the nation's largest banks — JPMorgan Chase & Co., Ally Financial's GMAC Mortgage unit and PNC Financial — have stopped foreclosures in some states. The biggest bank, Bank of America Corp., has done so in all 50 states. JPMorgan has done so in 41. They're checking to see if their employees made errors in loan documents needed to complete foreclosures. The banks say they think they'll resume foreclosures in those states within weeks. Others think it could drag on longer, especially as more state and federal officials intervene.

Q. What kinds of errors?

A: Evidence has surfaced of mistakes in the documents that mortgage companies present to a judge to foreclose on a home. Lenders failed, for instance, to show they have a legal right to foreclose on borrowers' homes. And some mortgage company employees have acknowledged they signed foreclosure documents without reading them. Many documents also appear to have been signed without a notary public witnessing that signature. That's a violation of law.

Q: How did this happen?

A: Mortgage companies have been overwhelmed by paperwork involving millions of foreclosures and defaults. Consumer advocates say the companies took shortcuts to manage the onslaught rather than hiring more staff. One way was to have a bank or a bank representative "robo-sign" thousands of documents he or she hadn't actually read.

Q: How widespread is the problem?

A: Only JPMorgan Chase has spelled out how many foreclosures it's suspending: about 115,000. But consumer advocates say the problems with foreclosure documents are widespread. Two of the biggest lenders, Wells Fargo & Co. and Citigroup Inc., say they have no plans to suspend foreclosures. They say they're confident they complied with state laws.

Q. Why is this all becoming known just now?

A. Consumer advocates had warned for years about shady foreclosure practices at mortgage companies and law firms they used. But the practices seized national attention only after GMAC's Sept. 20 announcement that it would halt some foreclosures. GMAC acted after evidence surfaced in Maine and Florida that a company employee had signed thousands of foreclosure documents without reading them. Another likely factor in GMAC's move was the Florida attorney general's August decision to review foreclosure practices at two law firms GMAC used.

Q: Why did some lenders halt foreclosures only in 23 states?

A: Those states require foreclosures to be approved by judges. Statements before a judge are made under oath. Any falsehoods are subject to perjury charges. If false documents in such cases aren't corrected, it's possible these foreclosure cases could be dismissed.

Q: What about the 27 other states and Washington, D.C.? What's happening with foreclosure cases there?

A: Except for Bank of America, major lenders are still pursuing foreclosures in those states — for now, anyway. But attorneys general in all 50 states are reviewing whether mortgage companies violated their states' laws. Many of those states require mortgage lenders to complete detailed paperwork before homeowners can be evicted. It's harder for homeowners to challenge foreclosures in these states. They can still do so by filing their own lawsuits. But it's an uphill battle.

Q: What do banks mean when they say they're halting foreclosures?

A: It all depends on the bank. Most, like GMAC, are still initiating foreclosures but are no longer evicting people or selling foreclosed homes in states that require judges' approval. Others, like Bank of America, have stopped seizing foreclosed homes but continue to sell homes that had already been foreclosed on and are still processing new foreclosures.

Q: Why is the paperwork for mortgages so complex?

A: A big reason is that mortgages have increasingly been bundled into investments that were sold from investor to investor. Accurate ownership records weren't always kept. An electronic system was set up so banks could track a mortgage and avoid paying fees each time a mortgage was transferred. This system is called the Mortgage Electronic Registration System — MERS for short. Lawyers have argued that MERS lacks the documentation to prove mortgage ownership. They say that means banks foreclosed on some homeowners whose loans the banks didn't actually hold. JPMorgan says it no longer uses MERS.

Q: What does all this mean for the foreclosure crisis?

A: The foreclosure freeze should cause only a temporary slowdown in the number of homes seized by lenders. One reason is that four states hardest hit by foreclosures — Nevada, Arizona, California and Michigan — aren't among the 23 states where many lenders are halting foreclosures. Even if the pace of foreclosures slows, some analysts say it should pick up again by spring.

Q: How will all this affect home prices and sales?

A: In home markets where foreclosures are on hold, prices could stop falling, at least for a while. That's because fewer foreclosed homes will be for sale. Agents who manage sales of foreclosed homes are already seeing some of those sales put on hold. These agents can't complete transactions involving mortgages handled by the lenders that have halted foreclosures. And a major title insurance company, Old Republic National, has said it won't insure foreclosed homes sold by JPMorgan and Ally Financial. It says it worries that flawed foreclosure paperwork could put the home's ownership in doubt. Another, Stewart Title, is clamping down on sales of foreclosed homes that may be linked to flawed documentation.

Q: Title insurance companies? What are they, and how are they involved?

A: Title insurers protect a homebuyer and mortgage provider in case any unpaid taxes, questionable ownership or other problems surface. Lenders won't issue mortgages without title insurance. Title insurers are trying to come up with a way to ensure they don't have to pay claims to the buyer of a foreclosed home if inaccuracies end up voiding the home purchase.

Q: What if I'm a homeowner in the middle of foreclosure? Could I get my home back?

A: You can hire a lawyer or approach a housing counselor who will examine your mortgage and foreclosure paperwork. Lawyers for homeowners will look for errors and use them to pressure lenders to at least forgive a portion of the homeowners' loans. But most experts say people who have lost homes to foreclosure don't have much hope in the long run, especially if banks can show judges that they have corrected any errors.

Q: What if I bought a foreclosed property? Could somebody take it back?

A: Not in most cases. Previous owners can sue the lender that sold the property. That won't be easy. Even if such lawsuits succeed, title insurance protects homebuyers from any claim on the property that surfaces after the deal has closed.

Q: Is anybody doing anything about this?

A: The attorneys general of all 50 states have announced a joint investigation. The federal agency that regulates government-controlled mortgage buyers Fannie Mae and Freddie Mac has told mortgage companies to fix their problems. Federal bank regulators are also examining the issue, as is Attorney General Eric Holder.
_____

AP Real Estate Writer Alex Veiga contributed to this report from Los Angeles.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Foreclosure chaos - who benefits?

Bankrate.com’s Marcie Geffner writes about the pros and cons of the recently announced pause in mortgage foreclosures in many states.

“Recently, several major lenders suspended foreclosures as they review irregularities in legal paperwork. These suspensions could have a significant impact on today's homebuyers and sellers.

“The extent of disruption will depend largely on how long banks hold up foreclosures in the 23 states that require a judicial foreclosure process. During these suspensions, banks will review affidavits that have been challenged.

“If the problems are resolved quickly, the impact may be minor, according to Rick Sharga, senior vice president at RealtyTrac, a national foreclosure-tracking service in Irvine, Calif.”

The slowdown will, in our opinion, be temporary. The result of the banks’ review of foreclosure files will find them to be in order. We’ll then see a surge in foreclosures going to auction in the beginning of 2011.

How does it affect sellers?

“Homeowners in foreclosure who hope to sell may get a "temporary break" before the process moves forward, according to Nick Libert, broker/owner of Exit Strategy Realty in Chicago. That would allow them to live in their home a while longer and potentially close a short sale. Or, they could negotiate a loan modification to avoid foreclosure.”

“Homesellers who aren't in foreclosure also may benefit since banks have taken foreclosed homes off the market and the diminished supply could put upward pressure on prices.”

For buyers,

“Potential homebuyers who previously considered shopping for foreclosures may be scared off by the recent negative news reports. But Libert says there's no reason for buyers to delay their plans as long as they can get clear title to the property and title insurance.”

For everyone, “The bottom line is that affected housing markets are now in a state of heightened uncertainty that presents both risks and opportunities.”

Read the full report.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

Sphere: Related Content

Mortgage program a bust with 50% dropout rate?

We have previously written about the Obama Administration’s program to encourage mortgage modifications.  Well, the news is in and it’s not good.

According to the Associated Press,

“Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

“The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday's report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say.”

 “Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government program have been cut loose through July, according to the Treasury report. That's about 48 percent of  those who had enrolled since March 2009. And it is up from more than 40 percent through June.”

 Who is to blame?

“Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.

“The banking industry said borrowers weren't sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.”

 One thing is clear—we are facing more foreclosures.

Read the full report.

 

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

Sphere: Related Content

How many foreclosures in a million? A lot.

One million is the number being bantered about of houses that may be lost in foreclosure actions this year.

Rosalyn Dalebout rents out space in her home to three tenants, has cut off her phone service and canceled her earthquake and life insurance — all to pay her mortgage every month.

So far, she's one of the lucky ones.

More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.

Nearly 528,000 homes were taken over by lenders in the first six months of the year. If foreclosures continue at that rate, the yearly number would eclipse the more than 900,000 homes repossessed in 2009, RealtyTrac Inc., a foreclosure listing service, said Thursday.

Whatever the actual number, things do not look well for American homeowners or the banks who gave them the mortgage. Does government have a fix? Perhaps loosening up mortgage modifications for those who are current on their loans but whose homes are valued for less than the amount of mortgage would be a good first step.

What do you think?

The Associated Press story by Alex Viega can be found here - Homes lost to foreclosure on track for 1M in 2010

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

Sphere: Related Content

Foreclosures Offer Deals, But Be Wary - The New York Times

The Times picks up on our article regarding buying foreclosed homes.
In Saturday's section on Your Money, the Times' Tara Siegel Bernard writes,

So you’re looking to buy a new home, and you think a foreclosed house may be the best deal. You’ve probably noticed, then, that many of the big banks' Web sites are beginning to look a bit like real estate brokerages, showcasing the many properties that they’ve repossessed.

While prices may be much lower, the Times points out

Despite the seemingly high inventory, though, anyone considering buying a distressed property should heed the classic warning: Caveat emptor, or let the buyer beware.

There are risks aplenty in trying to get a good deal in the REO market and, as the Times says, "Closing a deal in a desirable neighborhood can be hard to do."

To read the Times' take on this aspect of the real estate market, read the full article.

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
We're the New Jersey Specialists

Sphere: Related Content

Brooklyn Judge Takes on the Big Bad Lenders

The New York Times reports today on Judge Arthur M. Schack who has taken the time to review mortgage foreclosure complaints and discovered that many of them are plain wrong.
He

"fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, fore- closure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.

"He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years."

I understand the judge's pique at sloppily presented papers, but I think he overeaches a bit when he puts the blame solely on lenders who made sub-prime loans. Don't borrowers who pocketed tens of thousands of dollars in cash-out refinances deserve part of the blame for gambling with their residence?

Read the full article, A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style

What do you think?

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

Sphere: Related Content