MERS – Who’s to blame?

The New York Times lays part of the blame for the mortgage collapse at the feed of the Mortgage Electronic Registration System, Inc., we all know as MERS. In a report headlined “MERS? It May Have Swallowed Your Loan” By Michael Powell and Gretchen Morgenson.

“Never heard of MERS? That’s fine with the mortgage banking industry—as MERS is starting to overheat and sputter. If its many detractors are correct, this private corporation, with a full-time staff of fewer than 50 employees, could turn out to be a very public problem for the mortgage industry.”

“Judges, lawmakers, lawyers and housing experts are raising piercing questions about MERS, which stands for Mortgage Electronic Registration Systems, whose private mortgage registry has all but replaced the nation’s public land ownership records. Most questions boil down to this:

“How can MERS claim title to those mortgages, and foreclose on homeowners, when it has not invested a dollar in a single loan?

“And, more fundamentally: Given the evidence that many banks have cut corners and made colossal foreclosure mistakes, does anyone know who owns what or owes what to whom anymore?”

As courts have stepped in to protect defaulting homeowners from the specter of foreclosure, every angle to stick it to the banking industry (and thereby the rest of the consuming public.)

We in the title industry were introduced to MERS as a convenient way to insert a nominee in the chain of title to a mortgage. Gone would be the days of lost assignments of mortgage and deeds of trust—something that gave us many a nightmare.

Instead, this admitted convenience to lenders and the real estate industry has now jumped up and bit the banking industry in the butt.

Examples:

“The Arkansas Supreme Court ruled last year that MERS could no longer file foreclosure proceedings there, because it does not actually make or service any loans. Last month in Utah, a local judge made the no-less-striking decision to let a homeowner rip up his mortgage and walk away debt-free. MERS had claimed ownership of the mortgage, but the judge did not recognize its legal standing.”

“And, on Long Island, a federal bankruptcy judge ruled in February that MERS could no longer act as an “agent” for the owners of mortgage notes. He acknowledged that his decision could erode the foundation of the mortgage business.”

MERS was designed to streamline the ownership system in the days of mortgage securitization “but critics say the MERS system made it far more difficult for homeowners to contest foreclosures, as ownership was harder to ascertain.”

Challenges to MERS were raised by county clerks around the country. After all, they would be cut out of a lucrative source of income raised from recording assignments of mortgage, but they lost in light of the nation’s desire to speed up the mortgage process.

“We lost our revenue stream, and Americans lost the ability to immediately know who owned a piece of property,” said Mark Monacelli, the St. Louis County recorder in Duluth, Minn.” (Oh please.)

“Some experts in corporate governance say the legal furor over MERS is overstated. Others describe it as a useful corporation nearly drowning in a flood tide of mortgage foreclosures. But not even the mortgage giant Fannie Mae, an investor in MERS, depends on it these days.”

In any event, MERS is being made the whipping post for a larger problem—greed of lenders and borrowers.

Read the full article at MERS? It May Have Swallowed Your Loan

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

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Is the bad news about the housing market coming to an end?

Simon Constable writing in the Wall Street Journal thinks

“There might finally be some good news this year about the nation's dismal housing market. Or, at least, the bad news could stop.”

“Either way, it will be welcome relief for current homeowners as well as for potential real-estate investors. Reasons to be optimistic have been sadly lacking since the housing bubble burst in 2006.”

Constable points to the continuing decline in the S&P/Case-Shiller home-price index that fell again for the fifth month.

What are the signs that the bottom is close?

“Houses Are a Good Deal. Housing is the most affordable it has been in decades, according to analysts at Moody's Analytics. They don't just look at house prices. They also look at incomes.”

“Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years. Prices usually average close to two years' pay, although that varies nationally.”

“Investors Stepping Up. Here's another sign the market is nearing a bottom: Investors have started to buy up houses and condos, in some instances paying entirely in cash. That's a far cry from the heady bubble days when borrowed money seemed the key to riches. The bubble-era speculators who got burned tended to buy at the peak and borrowed heavily to do so. When the crash came, they quickly saw their wealth erased.”

“Plan to Stay Put. Buy and hold. While the good news is that the worst of the housing crash might be over, the bad news is that the fast gains of the glory days of 2005 and 2006 won't be back any time soon. So to cover the costs of buying and selling, and what could be a prolonged recovery, plan to own for more than 10 years, explains Jack Ablin, chief investment officer at Chicago-based Harris Bank.”

“Home Buying Without a House. There are other ways to benefit from a real-estate rebound than directly buying a house. Such investments include stocks, mutual funds or exchange-traded funds. Unlike homes, which typically cost tens of thousands of dollars, these financial investments can be made in smaller amounts and typically are easy to sell.”

Is this the light at the end of the tunnel or a locomotive bearing down on us.  Time will tell.

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

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Getting an F.H.A. mortgage will cost more

From the New York Times, Lynnley Browning writes about the increase in F.H.A. insurance premiums scheduled to take effect for loans taken out on or after April 18, 2011.

“FEDERAL Housing Administration mortgages, the government-insured loans that have surged in popularity in recent years, will be getting slightly more expensive this spring.

“The F.H.A. announced this month that it was raising the annual mortgage insurance premium for borrowers by a quarter of a percentage point — to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans, and 0.25 or 0.50 for 15-year or shorter-term loans.”

While the F.H.A. is calling the rise a “marginal increase,” “industry experts say that some consumers, especially those considered marginal borrowers, may now be prevented from buying or refinancing a property.”

This is the second change in premium rates in the past 12 months, having last gone up in November 2010.

“The increase does not apply to F.H.A. loans already in place, or to F.H.A. reverse mortgages or home-equity conversion (HECM) loans.”

The raise is necessary because F.H.A. reserves have fallen below required levels.

Read more, F.H.A. to Raise Insurance Premiums.

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

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Ah, “deregulation for the sake of competition. Bad days ahead for telephone customers?

This Star-Ledger story caught my eye because it affects me. Well, it affects everyone in New Jersey who doesn’t use cellular service to obtain residential telephone service.

According the S-L,

“Most of the state’s regulation of basic cable and land line telephone service would come to an end under a controversial bill that passed the state Assembly on Thursday.

“Supporters of the "Market Competition and Consumer Choice Act" (A3766) say it removes outdated rules that go back to the era of Ma Bell.

“But Stefanie Brand, the state ratepayer advocate, said in a letter to lawmakers that it would leave New Jersey residents "at the mercy of cable and telephone companies."

“And local officials are complaining it allows Verizon to go back on pledges it made to towns in exchange for getting a statewide franchise in 2006 so that it would not have to negotiate town-by-town to offer its FiOS service.”

What’s the fuss?

“Currently, companies offering basic telephone and land line services have to get the okay from the Board of Public Utilities before they can raise rates. The bill, which passed 66-7 with four abstentions, would eliminate that oversight.”

“It would also roll back rules requiring cable companies to give credits to customers whose service is out for more than four hours, correct billing errors and protect customers from "slamming," in which their telephone company for local or long distance service is switched without their permission.”

Now you know we are in trouble when a bill sponsor says,

"This is a competition bill," said Assembly Majority Leader Joseph Cryan (D-Union), a sponsor. "The telecommunications industry is one of the industries we can point to where deregulation actually works."

So, if you use a telephone in your home, you might want to read the full article and contact your elected representative.

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

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E-mail nails down the contract. Watch what you write!

From the New York Times,

“BE careful when clicking “send.” That is essentially the message to brokers and their clients from a [New York] state court, which ruled recently in a real estate dispute that e-mails can carry the same weight as traditional ink-on-paper contracts.

“’Given the vast growth in the last decade and a half in the number of people and entities regularly using e-mail,” handwriting and e-mail should now basically be considered one and the same, according to the decision in Naldi v. Grunberg, which was handed down on Oct. 5 by the Appellate Division, First Department of State Supreme Court in Manhattan. The ruling, which attracted little public notice when it was announced, was appealed on Monday to the Court of Appeals, the state’s highest court.”

“’As much as communication originally written or typed on paper, an e-mail retrievable from computer storage” is proof of a deal, according to the court’s opinion, which was written by Associate Justice David Friedman.”

What’s this all about? It’s about a 300+ year old law called The Statute of Frauds. Every state has one and it basically requires that contracts involving real estate be in writing before they are deemed binding on the parties.

As you can imagine, e-mail wasn’t around in England when the first statute of frauds was developed. States are now recognizing that e-mail may be used to make some contracts binding and that’s what the appellate court did,

“saying that if e-mail can be used for financial transactions like taking out business loans, it should be good enough for home purchases, too.”

“Though e-mail is hardly a new form of communication, uncertainty persists about how binding it is, which means the ruling in Naldi v. Grunberg could bring some clarity.”

“In most cases a disclaimer can inoculate senders from having e-mail backfire, real estate lawyers said. Mario J. Suarez, a lawyer at Thompson Hine who handles many commercial transactions, suggested that the wording might say the communications “shall not be deemed an offer, as no documents are binding unless and until executed.” Kirk Henckels, an executive vice president of Stribling, said he was under the impression that e-mails are “what we used to do over the phone,” and that property cannot truly change ownership until a paper document is signed by both parties. Mr. Henckels said the thinking was, “I can call this off unless I’ve received it back,” alluding to a signed contract.”

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

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