TheREALTYgram Blogger

Will The Whoremasters Have Their WayAs HUD Designs RESPA Reform?

Inman Blog reports that HUD will make an announcement tomorrow about reform of the Real Estate Settlement Procedures Act, or RESPA. HUD Secretary Alphonso Jackson withdrew a rule last month that would have permitted the packaging of settlement services, made the good-faith estimate disclosure form more understandable, and increased the certainty of settlement cost estimates given to consumers.

Will the word "reform" really mean "reform" this time, or will that poor, misused, and maligned word take on the tertiary meaning assigned in Capitol Hill's rewrite of the lexicon?

v. re'form v. tr. 1. To improve by alteration, correction of error, or removal of defects; put into a better form or condition.
2. a. To abolish abuse or malpractice in: reform the government. b.To put an end to (a wrong).
3. To spin the facts and otherwise conceal the true intent of the law or regulation to gain public favor (i.e. recent tort reform and bankruptcy reform legislation).

We're crossing our fingers for meaning number One or Two. But we are not holding our breath.

Georgia 'Rent-A-Banks' Face LockupFor Predatory Lending Practices

On June 10, 2005, the 11th Circuit Court of Appeals issued an important ruling that validates the ability of states to regulate "rent-a-bank" relationships between state chartered banks and payday lenders. The 11th Circuit ruled that the Federal Deposit Insurance Act does not preempt Georgia's state law on payday lending, according to Responsible Lending.org. Most payday lenders charge interest rates of 380%!

A Georgia law prescribes harsh felony penalties for lenders who make loans of $3,000 or less in violation of Georgia's existing lending and consumer protection laws. Passed with bipartisan support and signed by Gov. Perdue in April 2004, SB 157 caps small consumer loans at 60 percent per year, Georgia's small loan usury rate. The law explicitly bars non-bank lenders from partnering with out-of-state banks in order to avoid Georgia's usury limit.

Four out-of-state banks that make loans through Georgia payday lenders have filed lawsuits in federal court challenging the Georgia law.

FHA Streamline Repair Mortgage ProgramAvailable For Home Repairs $5,000-15,000

The Federal Housing Administration has launched an alternative to it 203(k) Home Repair program that enables homeowners to sell their properties "as-is" to FHA borrowers if only basic repairs are needed. The Streamline (K) Limited Repair Program allows FHA borrowers to add $5,000 to $15,000 to the loan amount to make repairs such as roof replacement, heating system replacement, and exterior painting after loan closing.

What is more, FHA borrowers can use the Streamline (K) product to correct problems that have been identified by a home inspector; and the only documentation needed for any work is a written estimate from a licensed contractor. The program—which took effect on June 6—does not cover work that involves paid consultants, engineers, or plan reviewers.

Corrupt Mortgage Lender Servicing Sonnet:How Can I Screw Thee? Let Me Count The Ways

Just when you thought you'd heard it all you hear more disturbing news about high crimes and misdemeanors in the mortgage industry. I added a link to Mortgage Servicing Fraud, a web site devoted to the crimes that are committed when a lender or lender's servicer manipulates performing loans to falsely indicate a default by:

• Entering on-time payments as late, to exact illegal and unauthorized fees.
• Charging force-placed insurance when the homeowner already has full coverage.
• Falsely reporting a default to the credit bureaus when it is the servicer creating the default.
• Paying property taxes late, then charging the late penalties to the borrower.
• Paying taxes and insurance on the wrong property.
• Refusing payments to guarantee default.
• Adding thousands of dollars in unearned legal fees to create a default.
• Ignoring customer complaints and "qualified written requests".
• Arrogantly violating numerous laws and regulations.
• Coercing the homeowner into signing a forbearance agreement to strip away their legal rights.
• Falsifying records.
• Commit fraud upon the courts by stating they are the holder and owner of the Note - when in fact - they do not even own the Note.
• Intentionally cause delays to run up your legal expenses.
• Forgery.
• Apply to the trust for reimbursement after deducting the fees from the borrowers p&i payments. (Known as double dipping.)
• Rounding up ARM rates when on a downward trend.
• Not adhering to the terms of the loan documents.
• Creating additional false deficiencies through a variety of questionable practices.
• Adding miscellaneous fees to purposely create a deficiency with the borrower's next payment.
• Not applying payments to principal and interest.
• Committing perjury through flagrant misrepresentations to the courts.
• Withholding or redacting discovery evidence.
• Conjuring up events that never happened and refusing to provide documentation to support these fallacies.
• Refusing to cooperate with other lender's attempts to refinance and stop the illegal foreclosure.

Real Estate History Lesson: Where Was NARWhen Property Rights Were Abrogated In Virginia?

The National Assn. of REALTORS^® is some 1.3 million strong and proclaims itself to be the strongest trade lobby in the the United States. It assumes great offensive and defensive postures when its own self interests are on the table, but the group took a mighty to-hell-with-them attitude when property rights were sacrificed in last year's legislative debacle in Virginia.

Virginia lawmakers passed the Marriage Affirmation Act last summer. All but unnoticed on the national stage during a highly contentious election cycle, the law was crafted so that ANY contract between two individuals of the same sex  that can be CONSTRUED to validate a romantic association should be considered invalid under the law.

This is not a joke or an Internet hoax. This is a true report about a successful attempt by religious theocrats to subvert property rights in Virginia.

The following appears in an ESSAY - For lovers? In Virginia, some exceptions apply.

"The language of the Marriage Affirmation Act is incomprehensibly broad. Does its ban on 'partnership contract or other arrangement' include wills, custody agreements, medical powers of attorney, or joint bank accounts? Is my mortgage shared with my partner, for example, an 'arrangement... purporting to bestow the privileges of marriage'?

"This session, the legislature moved to make the marriage and civil union bans immune to legal challenge by passing them as a constitutional amendment. If the same body approves the bill again next year, it will go to voters to decide in 2006 whether to write this blatant discrimination against a class of people into the Virginia constitution."

Colorado REALTOR® Board SaysEmail Is Public Information

Rocky Mountain REALTORS® declares that all digital messages are the property of the association and therefore should be considered public. Whoa, cowboys, doesn't that resemble the argument some of these antitrust folks are trying to make about MLS data residing in the public domain?

"The Steamboat (CO) Springs Board of REALTORS® computers and the data stored on them are and remain at all times the property of the Association. As such, all messages created, sent, or retrieved over the Internet or the Association's electronic-mail system are the property of the Association, and should be considered public information. Employees have no right to privacy as to any information or file transmitted or stored through the Association's computer systems, voice mail, electronic mail, or other technical resources. The Association reserves the right to retrieve and read any message or file. Employees should be aware that, even when a message is erased or a visit to a Web site is closed, it is still possible to recreate the message or locate the Web site. Accordingly, Internet and electronic mail messages are considered a public communication, not private." -- Rocky Mountain REALTORS®

'Get Rich Quick' Real Estate Seminars;Good Business Or Foreclosure 'Rescue' Scams?

This is a MUST READ! DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity Stripping Foreclosure  "Rescue" Scams is a 68-page report issued this week by the National Consumer Law Center. The report contains numerous individual stories and reports of foreclosure "rescue" tactics used around the country, plus a special section of exhibits. One Maryland homeowner who lost her home to this scam tells her story and the report  documents why it hasbeen so hard to beat these scams and how foreclosure "rescue" tactics have become a major part of many nationally-advertised "get rich quick in real estate" seminars. Almost all those cited in the report are willing to be interviewed by the news media about their experiences and what might be done to combat these scams.

NAR Gets Ready For The Main Event;Will Banks Get The Green Light To Enter Real Estate?

Michael Oxley (R-OH) and Barney Frank (D-MA) have introduced a bill that would allow certain financial firms to engage in real estate brokerage activities. The bill would amend the Bank Holding Company Act to clarify that real estate brokerage and real estate management activities are authorized financial activities for financial holding companies and financial subsidiaries of national banks. The legislation would allow those firms to act as agents for buyers and sellers of property and to list property for sale.

This bill runs counter to the National Assn. of REALTORS®' perennial favorite “Community Choice in Real Estate Act,” which would permanently bar banks from the real estate business.

Federally chartered mega banks that are allowed to conduct real estate will be exempt from state regulation. Their agents and employees would not need real estate licenses to buy or sell property. They would not have to pass licensing exams or pay licensing fees. They could ignore state laws or regulations governing the business of real estate such as consumer disclosure, environmental protection, and dual agency. Nor would these banks have to comply with state banking regulations, including those covering predatory lending.

We confess to some confusion about Barney Frank's involvement here considering that this bill seems to fly in the face of another bill that he  is sponsoring, very consumer-friendly legislation that will stem predatory lending.

We predict that the Oxley/Frank effort will fail but we think that NAR would have a more plausible argument if the group was not also engaged in strong lobbying efforts that will strip states' authority in health care benefits and delivery, and predatory lending,

Maryland Bill Stems Foreclosure Scams

Gov. Robert Ehrlich of Maryland has signed into law a bill that aims to prevent "foreclosure rescue consultants" from stripping the equity of cash-strapped homeowners who turn to them for help, reports The Washington Post.

When these consultants require homeowners to turn the deed over to them while they make the overdue mortgage payments but then take permanent ownership of the home before the rightful owner has a chance to buy it back, they will face misdemeanor charges carrying jail sentences of up to three years.

The legislation also requires lenders to inform homeowners of pending foreclosures within two days of filing the necessary paperwork. Previously they had to make the notification only 10 days before the actual foreclosure sale.

NAR Political Doublespeak On Preempting State Rights;'No' For Banks And 'Yes' On Health Care Benefits

Is it any wonder that the National Assn. of REALTORS® is losing credibility? In the same week that it announces a $1.2 million effort to support the Small Business Health [Un]Fairness Act to supercede state laws regarding health care benefits, the group testifies before the FDIC to urge them to block a preemption petition:

"NAR testified Tuesday before the Federal Deposit Insurance Corp. against a petition asking the FDIC to preempt state laws to permit state banks to operate nationally under the laws of their home states.

"NAR urged the FDIC to deny the petition, sought by the Financial Services Roundtable, because it would harm the ability of states to protect their citizens. The petition would result in undue concentration of banking services and fewer choices for consumers, open the door to the mixing of banking and commerce, undermine the state banking system, and disrupt the competitive balance among financial service providers, NAR said.

" 'Because real estate is local, the issue of preemption of state and local laws applicable to lenders is of great concern to REALTORS®,' testified Pat Vredevoogd, NAR first vice president. 'NAR and its members have been deeply involved in issues relating to competition among federal banks and thrifts, state banks, and non-depository institutions because they play such an important role in helping American families buy their homes.'"