It's not just mortgage payments that are behind anymore....

Americans are not just behind on their mortgages anymore....now we can't pay our car payments or our heating bills, either.

Besides leading the nation in home foreclosures, Nevada has seen a 50% increase in deliquent utility accounts from one year ago. In New York, there has been a 12% increase in deliquent utility bills in the last 90 days. Many of the midwestern states do not allow heat to be shut off during the winter months, so families use the opportunity to let the bill slide for a month or two so they can pay their mortgage and/or car payment.

With Michigan having the highest unemployment rate in the nation, and some of the highest heating costs, families are struggling to keep up with their utility payments.

Though it seems that natural gas is super expensive to heat with, propane and heating oil are even worse! And, because the companies that furnish propane and heating oil are generally smaller and not regulated, they do not offer shut off protection programs.

Last spring, 1.2 million households were without heat after being shut off for nonpayment. Those families were an average of $850 behind on their payments and many were unable to scrape together the balance due before this winter hit and so still do not have heat!

Mark Wolfe, executive director of the National Energy Assistance Directors' Association, states "We're back at the point of crisis again this winter." Congress is considering adding $1 billion to the existing $2.57 billion funding for heating assistance under the Federal Low Income Home Energy Assistance Program.

Gosh, I can't wait for spring!

'Til next time, it's all good!

Deb

Who is going to help Michigan?

I have talked before about Michigan helping Michigan....it is a point that I cannot stress enough, it seems.

We opened our doors two years ago in April, and have contacted literally thousands of Michigan companies. We asked for one or two orders per month from each of our new contacts....not too much to ask, is it? One or two orders per month from each of our new contacts would not put their current appraisal company out of business and would give us the boost in sales that we need as a relatively new startup. We received some response to our request, but not nearly enough!

I say again - "If Michigan won't help Michigan, who the h*ell will?"

Every business in Michigan has the responsibility to help each other, or none of us will survive! Send us work - we will not disappoint you! Get out of your comfort zone a couple times a month - it will do you good to talk to and to meet new people!

On the same note, Senator Clinton announced in January her plan to assist homeowners that are in jeopardy of losing their homes to foreclosures; the Mortgage Refinancing Initiative Act. Clinton says that those states with the highest foreclosure rates will receive the greatest assistance. (Michigan is number 1 - not something to be proud of in this case!)

Clinton's plan includes a 90 day moratorium on subprime foreclosures, a five-year freeze in rates on subprime adjustable rate mortgages, and $30 billion in assistance to states and communities to fight foreclosures and offset the costs associated with mounting home vacancies.

Clinton states that any plan to jumpstart the economy is useless without tackling the foreclosure crisis.

And, I state, Amen to that!

So, 'til next time, it's all good!

Deb

21 Lenders Being Sued for Causing Foreclosure Mess

Hhhmmm, this is an interesting twist on the whole real estate mess.

The city of Cleveland, Ohio, is suing 21 of the nation's top lenders for violating Ohio's public nuisance law. Mayor Frank Jackson, along with his Law Director Robert Triozzi have announced that the city is seeking damages from the lenders for their part in the mortgage meltdown currently plaguing the US.

Jackson and Triozzi allege that underhanded lending practices have wreaked havoc on Cleveland's neighborhoods, creating a public nuisance.

Mayor Jackson claims that it is extremely costly for a city to rebound from the declining tax revenues caused by the fallout of foreclosures and believes that the 21 lenders should be responsible for partial reimbursement to the cities affected by their reckless lending practices.

The 21 defendants named in the suit are as follows:

Ameriquest Mortgage Company
Bank of America Corp.
Bear Stearns Companies
Citigroup, Inc.
Countrywide Financial Corp.
Credit Suisse (USA)
Deutsche Bank Trust Company
Fremont General Corporation
GMAC-RFC
Goldman Sachs Group
Greenwich Capital Markets, Inc.
HSBC Holding, PLC
Indymac Bancorp, Inc.
J.P. Morgan Chase Co.
Lehman Brothers Holdings, Inc.
Merrill Lynch & Co, Inc.
Morgan Stanley
Novastar Financial, Inc.
Option One Mortgage Corporation
Washington Mutual, Inc.
Wells Fargo & Company

This is the second lawsuit of its kind filed in 2008. The City of Baltimore also announced that they are suing Wells Fargo Bank, claiming that the lender harmed Baltimore's African American and minority communities and created high rates of foreclosure with unscrupulous lending practices.

So, the band plays on....
'Til next time, it' all good!
Deb

Bank of America buys Countrywide Home Loans and FHA certification for appraisers no longer necessary!

WOW! Big news day for the appraising business, folks!

On Friday, Bank of America announced that it is purchasing Countrywide Home Loans for a mere $4 BILLION. The purchase is certainly to rescue Countrywide from bankruptcy after the crash of the sub prime housing market.

For appraisers that have been long time Countrywide/Landsafe vendors, this raises some big questions. Will Landsafe continue to manage appraisal assignment for Countrywide and, if so, in some sort of diminished capacity?

LSI handles appraisal assignment for Bank of America - will all of the appraisal assignments be turned over to them? I contacted the chief appraiser at LSI, George Vann, on Friday via email and asked these very questions. He replied that he does not know at this time what will happen to the appraisal assignments or how, if at all, the appraisal process will be restructured.

This will be interesting....I have always believed that Landsafe was a huge conflict of interest for Countrywide, as they openly owned the company. What is the point of having an outside management company assign your appraisals, if the company is not "outside" at all?

Even bigger news - I received a bulletin from HUD/FHA on Wednesday that I had to read over and over and am still not sure that I am reading it correctly. If I am, it states that effective February 7, 2008, there will no longer be ANY FHA certification necessary for FHA appraisals! In other words, any state licensed appraiser will be able to perform FHA appraisals!

The bulletin goes on to say that the FHA certification process was found to be duplicative and therefore, unnecessary.

WOW! That is a bombshell.....and has both good and bad connotations for appraisers. Those that are already FHA certified are certain to lose some business to licensed appraisers that may not really be qualified to perform an FHA appraisal. On the other hand, FHA appraisers will no longer have to worry about falling behind on their own personal FHA mortgages and being removed from the FHA roster as a result.

I am putting the link to the bulletin here, as well as the little paragraph that I believe states that any licensed appraiser may perform an FHA appraiser come February 7th.

http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/08-8.pdf

All- Department of Housing and Urban Development24 CFR Part 200[Docket No. FR-5112-F-01] RIN 2502-AI53TITLE: FHA Appraiser Roster Requirements; Final AGENCY: Office of the Assistant Secretary for Housing--Federal Housing Commissioner; HUD.ACTION: Final rule.DATES: Effective Date: February 7, 2008 SUMMARY: This final rule explicitly conforms the eligibility requirements for applicants to the Federal Housing Administration (FHA) Appraiser Roster to longstanding HUD practices, as well as to existing nationwide industry practice. Only appraisers on the roster may perform required appraisals of properties that are to serve as security for FHA-insured single-family mortgages. Among other requirements, the current regulations require that an applicant must be a state- licensed or state-certified appraiser and pass a HUD examination on FHA appraisal methods and reporting. This final rule codifies HUD's longstanding practice and the nationwide practice that such certification or licensing comply with national criteria for education, experience, and passage of a state-administered examination. This final rule also eliminates the requirement for applicants to pass a HUD test on FHA appraisal methods and reporting, because the test has become duplicative of the national examination requirements for state licensure and certification and, therefore, unnecessary.

Take a look and let me know if that is what you read into this, too!

Big news day! And, as always, 'til next time, it's all good!

An unbelievable story of fraud rocks Bear Stearns in Atlanta

With a scheme that reads like a made for TV movie, a group of young and not so young hustlers managed to convince Bear Stearns to give them $6.8 million in real estate loans!

One of those loans was a mortgage to Calvin Wright and his wife for 1.8 million. With fraudulent papers, companies, and cohorts to back him, he is documented at Bear Stearns as being an investment banker, and papers show his wife to be a top officer at a marketing firm. The documentation shows that Mr. and Mrs. Wright were earning upwards of $50,000.00 per month, with assets to back them of roughly of $3 million. In reality, Calvin Wright is a telephone technician and earns about $100K per year, and his wife does not work outside of the home at all!

The FBI states that mortgage fraud cases now make up 28% of their workload, as compare to 7% in 2003. (2003 is probably just about when all these schemes were being cooked up!) Suspicious Activity Reports, which lenders are required to file, are up 700% from 2000 and 2006.

Estimates show that losses from mortgage fraud could total a record $4.5 billion for 2006, which is up 100% from the previous year. In some regions, it is widely thought that fraud accounts for about half of all foreclosures.

But, who is to blame for all this mess? There is no simple answer, and no one entity that is responsible. The fraud necessarily needs a lender, sometimes a broker, the criminal that is either forging documents or creating shell companies, appraisers that are willing to inflate values for a cut of the loan, and support companies such as the ones that produce the forged documents.

The stated income loan was truly a calling for deception, hence, it's nickname, the "liar's loan". A recent review of such loan documentation revealed that 60% of the loan paperwork overstated income by 50% or more.

Many lenders outsourced the verification process to brokers and competition became fierce to speed up the process and volume of paperwork that passed over each desk to keep business with the lender.

Overall, the most unbelievable aspect of the Atlanta scheme is that it was, in large part, perpetrated by a 23-year-old college dropout named Gregory Jerome Wings, Jr. aka G-Money. His cohorts included a young club owner, and a director of an underground documentary called "Crackheads Gone Wild", a tale of drug addiction gone overboard.

Maybe the lenders need to hire street folk to sniff out the scammers. I would bet that a large percentage of Atlanta's population knew who Gregory Jerome Wings, Jr. really was - and I'm sure some street folk would talk for some cash in hand.

So, the scheme went like most others. First, find some borrowers with good credit to apply for gigantic loans, using stated income terms, false income documentation and asset statements. Then, find a mortgage broker who was willing to submit the false documentation. Lastly, find an appraiser willing to over value the property. (It is important to note that no appraisers were indicted when the case was finally cracked - it was never found that the appraisers got any extra cut or dividend for over appraising the property - they were just desperate for work to stay alive!)

The same week that Mr. Wright obtained his $1.8 million dollar mortgage from Bear Stearns, he also obtained a $1.9 millions mortgage on a second property near Atlanta. This time the lender was BankFirst, a unit of Minneapolis-based Marshall BankFirst Corp.

Mr. Wright's attorney states that the crimes were incredibly easy, and as Mr. Wright made more and more cash, it was not difficult for him to talk other young people into joining him in his scam. Luckily, some Atlanta residents became suspicious when properties in their areas started selling for sky high prices and then were never occupied, and alerted authorities. One homeowner who assisted in exposing the fraud now carries a loaded handgun in his truck at all times. "We are putting people in prison for many, many years. This is serious stuff."

Though skeptics claim that this relatively inexperienced group of thieves should never have been able to carry this scheme on for so long and to such a high degree, the chagrined prosecutors for the lenders claim that these schemes were very sophisticated, an claim that they had no reason to doubt the authenticity of the forged and falsified documentation.

I am quite certain that many more tales like this one are going to come to light in the coming months. I sincerely hope that this will pretty much be a thing of the past by the third quarter of 2008 and the market will return to normal. Although "normal" may be quite different than it was five or ten years ago.

And, hats off to the appraisers who refused to play the game of grab the money and run! We will be the ones still standing when this whole mess is behind us and will no only not be in jail, but working again!

So, 'til next time, I say, it's all good!
Deb

More on the SEC probe into appraisal inflation for Washington Mutual

This is a sad, sad, state of affairs!

The SEC is investigating banking giant WaMu for allegedly having its loan officers pressure their appraisal management company, eAppraiseIT LLC, to increase values on properties that came in too low to make the loan.

An email has surfaced in which eAppraiseIT's president wrote that the company would "roll over" and submit to WaMu demands for higher appraisals. Later, in another email, he stated that the bank was in violation of federal regulations, which prohibit pressuring appraisers for value.

And, do you want to know what the saddest part of this whole mess is? eAppraiseIT LLC only pays $135.00 to the appraiser for a full single family 1004. So, for a third of the normal fee for an appraisal, some of these appraisers broke their own USPAP regulations just to get work in house. Which, sadly, is what sometimes happens when appraisers are desperate for work.

Appraisers have families that need to eat - they have house payments, car payments - children that expect a Christmas, just like everyone else.

Appraisal management companies were formed to put an end to hand picking appraisers and manipulating property values. Well, obviously, the situation has not changed, except that the honest appraiser is either not going to get any work at all, or be paid 1/3 of his entitled fee, while the crooked management company walks off with the rest.

Should be interesting to see how the rest of the story unfolds.....

And, 'til next time, it's all good!

USB and WaMu struggle to pull out of mortgage crisis

In articles released on the same day, mortgage giants Washington Mutual and USB AG both reveal massive losses and plans to regain footing in the mortgage market.

Of the country's top five mortgage lenders, Washington Mutual has the most at risk, with 29% of it's 2006 mortgages in the high cost category, mostly subprime, and an additional 15% backed by homes other than the owner's primary residence. WaMu has revealed that it expects a fourth quarter loss for 2006 due to a $1.6 billion goodwill write-down on its home-loans business. Shares have fallen almost 60% in the company's stock in the past 12 months.

Speculators are wondering whether banks such as J.P. Morgan Chase & Co. will look to buy out WaMu, as they have long been seeking to expand on the west coast. Also under speculation is whether Chief Executive Officer Kerry Killinger should still be running the company.
And, finally, WaMu announced that it will cut an additional 3,000 employees as it gets out of the subprime mortgage business altogether.

USB AG has announced that it will take a $10 billion writedown and is trying to sell a chunk of itself to the government investment arm of Singapore and an unnamed Middle Eastern investor. The fact that USB has always been considered a conservative lender is sparking even further alarm on Wall Street about the real effects of the mortgage meltdown.

USB is Zurich based and was formed from the 1998 merger of SBC Corp. and the Union Bank of Switzerland. It employees nearly 83,000 employees and reported a net profit of 12.26 Swiss francs in 2006. USB has never posted a full-year loss, mainly due to the strength of its wealth-management operations. It is unknown at this time if that record will hold for USB for 2007. Chief Executive Marcel Rohner states "This is a very bleak outlook" for the U.S. housing market. He is referring to the fact that banks and other lenders are looking overseas for investment help in this mortgage crisis, which could make for national security problems in the future.

Well, despite all of the gloomy news, I believe 2008 will be good for all of us in real estate as we all become more involved and creative in ways to clean up this mess!

And, so, as always, 'til next time, it's all good!