With recent revelations of the fraudclosure scandal, and a spike in interest toward all things REO, we decided to go back to basics and present some "appendices" over why this process of excess bank inventory clearance is so important and what its implications are, especially in a world in which foreclosing has suddenly become legally impossible.
First, courtesy of UBS, an outline of the Foreclosure process:
The Foreclosure Process
The foreclosure process may vary significantly across states and even across countries, but the following description is general enough that it should be applicable to most of the US.
Delinquency and foreclosure. After a homeowner with a mortgage loan has missed three monthly payments, he or she is considered to be “90 days delinquent,” and the servicer of the mortgage (the company to which the mortgage payments are made) can initiate foreclosure proceedings.
Auction. At some point, the borrower will be asked to vacate the home, and if necessary at some later point, the borrower will be compelled to vacate the home by local authorities. The home will then go up for auction.
REO. If the auction bids do not reach a high enough level to cover the outstanding balance of the loan, the lender can take ownership of the property. Once the lender owns the property (referred to as real-estate-owned or REO), it will typically remain vacant until the lender is able to sell it.
A quick back of the envelope analysis that shows how much incremental inventory foreclosure creates:
A flow chart of the foreclosure process:
The charts below show the geographic/spatial concentration of foreclosure filings, as well as concentration of GSE in selected states:
The states where foreclosure accounts for the bulk of transactions:
A snapshot of contagion effects of foreclosure on homes in the same naighborhood:
Those who wish to dig into the fascinating topic of contagion (in foreclosures, not in default European countries), can find more info below:
As those who have been following our RealtyTrac updates know, in the last quarter the discount between a regular home sale and that in foreclosure just hit an all time record. Here is how the pricing matrix looks like by state and nationally:
And possibly the scariest chart of all: the end buyer of all the REOs, the properties that end up having the lowest salvage value, for the most part end up being acquired by the nationalized GSEs. And since the GSEs are on the US shadow balance sheet, these are simply more "assets" that collateralize US treasurys, and therefore, the US currency.
Take all the data above, and layer on top the complete confusion courtesy of the self-imposed foreclosure moratorium, and the utter confusion in the market becomes apparent.
Foreclosure Deposition Clip
More examples from Matt Weidner’s Blog for a Florida perspective…
Attorney Signatures – The Next Fraud Battle Ground
The Florida Rules of Civil Procedures require that all pleadings filed in a case be signed by a licensed Florida attorney.
I have started to examine files and am becoming increasingly
suspicious that this important rule is not being followed by the foreclosure mills.
I
am therefore starting to examine all my pleadings closely and I
encourage each of you to do the same. Ultimately I would like to
build a database of these signatures to compare, so for those of you
out there that are spending time looking at court filings, please
start examining the signatures and making a cut and past document
similar to the one I attach below.
My first example of gross
irregularities in the signature of an attorney who makes filings in a
court case comes from Ohio. The document was prepared by a reader
of this blog and it comes from an Ohio foreclosure mill attorney.
Please look at the sheet. There really is no commentary necessary
regarding whether these were signed by the same person….
Given
what we know about the foreclosure mills and their operations
(particularly the offshore components of their practice) I cannot
imagine that they are following this rule. (I mean the violate every
other rule)
Foreclosure Fraud – Attorney Signatures – The Next Battle Ground
Foreclosure Fraud - Attorney Signatures - The Next Battle Ground
You can read more about Matt’s excellent work here…
Next up, Patrick J. Loughren’s Complaint in Equity…
Patrick J. Loughren Complaint in Equity
Patrick J. Loughren Complaint in Equity
Far-Reaching Consequences
Loughren declined to talk with DailyFinance
(nor would he even give us the complaint, which is electronically
available from the court), and as of now, GMM hasn’t returned our calls
either. (We learned of the case from Walter Roche’s story in the Pittsburgh Tribune-Review.) But
Loughren’s complaint is so detailed, and the partners’ admissions so
damning, that if this case is decided on the merits, it’s hard to see
how Loughren could lose.
If Loughren does win, the consequences could be far-reaching: All
current foreclosure actions filed by GMM could be dismissed on the
grounds that lawsuits filed by nonlawyers are a “nullity,” meaning they
don’t count. That’s hundreds, potentially thousands, of cases across Pennsylvania.
All completed foreclosures that were brought using this method could also be called into question for the same reason, and given that the practice has been going on for years, a Loughren win could throw into question the title to thousands of Pennsylvania properties. In addition, any homeowners who paid legal fees to the banks and GMM during their foreclosures could get that money back.
Bank of America Knew
Loughren notes that in both cases involving the partners’ testimony about the practice, Bank of America (BAC)
was the foreclosing bank. It was actually present during the December
2009 trial when the admissions were first made. Loughren points out
that BofA’s representative at that trial, John Smith, is himself a
lawyer, and so presumably understood the legal significance of GMM’s
admission.
Other BofA employees surely learned about the
practice too, given that the December case was an effort by the U.S.
Bankruptcy Trustee to sanction both the bank and GMM for misconduct,
and evidence submitted for it showed the involvement of “high-ranking”
BofA people not normally involved in a foreclosure, such as its
assistant general counsel.
Although the practice of having
nonlawyers file suit wasn’t at issue in that case, learning of it upset
U.S. Bankruptcy Court Judge Thomas Agresti so much he wrote in his
Oct. 5, 2010 order:
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
bench craft company scamArrowheadlines: Chiefs <b>News</b> 12/8 - Arrowhead Pride
It's Wednesday and we still have a 2 game lead in the West with 4 games to play. I just like saying that. Lots of Kansas City Chiefs news today. Enjoy!
The arrest of Julian Assange: as it happened | <b>News</b> | guardian.co.uk
Follow the latest reaction and fallout as the WikiLeaks founder Julian Assange is denied bail, and the latest leaked cables reveal US plans to defend Poland and Baltic states against Russia.
<b>News</b> Corp. COO: Please Don't Associate Us With Our Newspapers <b>...</b>
Rupert Murdoch may have printer's ink flowing through his veins, as is often said of the News Corp. chairman, but for his No. 2, president and COO Chase Carey, newspapers are more like an albatross around the neck.
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