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Central KY residential sales

From LBAR.com:  According to LBAR President Anthony de Movellan, “The Central Kentucky housing market is still looking for stabilization beyond the tax credit boom. Year-to-date comparisons are very steady, but the market activity report for September 2010 must be taken with a grain of salt.”

For the year-to-date 2010 vs. year-to-date 2009, total activity decreased just 1 percent. Residential sales reported dropped from 5,367 in 2009 to 5,327 in 2010. The median price also remained stable, falling just 1 percent from $140,950 to $140,000.

Residential sales reported during September 2010 vs. September 2009 fell 34 percent, most likely due to the slow sales season and the displaced buyers who took advantage of the tax credit in April. There were 651 sales reported closed during September 2009, compared to 430 in September 2010. The median sales price increased 4 percent over September 2009, rising from $140,000 to $144,950. Another positive indicator was a rise in the percentage of list price attained. It increased to 96.11 percent in September 2010 from 94.62 percent in September 2009.

Consumer attitude shift?

Here’s an interesting post from the Public News Service out of Frankfort:  Some mortgage lenders have stopped foreclosures in states like Kentucky, under mounting concerns about banks’ mishandling of foreclosure documents. Now, a multi-state investigation is being launched to uncover the truth.

Don McNay, a financial advisor and “Huffington Post” columnist, says allegations that some mortgage providers used questionable paperwork and practices to evict delinquent borrowers may give struggling homeowners an excuse to stop payments.

“Foreclosure is a legal process, and you have to follow all the legal steps. But there are people who can rationalize and justify in their minds, ‘I shouldn’t have to pay this because they didn’t treat me properly, and they didn’t follow the law.'”

. . . .

A recent study by the Pew Research Center found that an increasing number of Americans – 36 percent – believe it makes sense to walk away from a from a house note, under certain circumstances.

McNay contends the current system makes it smart for cash-strapped homeowners to do the wrong thing.

“The morally correct thing is to pay your bills. But the economically correct thing is to stick it to your lenders any way you can. If you pay your mortgage, even if you’re suffering unemployment or economic hardship, you’re going to be worse off long-term than your neighbor who doesn’t pay the mortgage.”

Reforms to the mortgage system on the horizon?

From Kentucky.com:

A joint investigation by every state and the District of Columbia could force mortgage companies to settle allegations that they used flawed documents to foreclose on hundreds of thousands of homeowners.

It could take months, at least, for any settlement to be reached. But legal experts say lenders could be forced to accept an independent monitor to ensure they follow state foreclosure laws. The banks could also be subject to financial penalties and be forced to pay some people whose foreclosures were improperly handled.

Read more: http://www.kentucky.com/2010/10/13/1478462/states-probe-of-foreclosures-could.html#ixzz12OArvTFB

Kentucky’s Attorney General joins in investigation of banks

From Business First, this certainly can’t be good news for the foreclosure industry, having almost every Attorney General’s office in the United States investigating loans and the paperwork behind the loans:  “Kentucky Attorney General Jack Conway announced Wednesday that his office and attorneys general from 48 other states have formed a multistate group to inquire into whether individual mortgage servicers have improperly submitted affidavits or other documents in support of home foreclosure actions filed in state court.

The facts uncovered in the investigation will dictate the scope of the inquiry.

“Due to the recent information uncovered, it was important to act quickly in a coordinated and uniform fashion to protect consumers,” Conway said in a news release.

His office said that It has come to light that a number of mortgage loan servicers have submitted affidavits or signed other documents in support of either judicial or nonjudicial foreclosures that appear to have procedural defects.

In particular, it appears that affidavits and other documents were signed by persons who did not have personal knowledge of the facts asserted in the documents. It also appears that many affidavits were signed outside the presence of a notary public, contrary to state law — a process known as “robo-signing.”

Read more: Kentucky joins foreclosure investigation – Business First of Louisville

More investigations coming

From Kentucky.com: In a new foreclosure crisis that has gone national, attorneys general in all 50 states plus the District of Columbia have launched a sweeping probe of the country’s lenders, even as new figures showed banks repossessed a record number of homes in September.

The joint investigation announced Wednesday, led by Iowa Attorney General Tom Miller, seeks to find out whether mortgage servicers and banks have been using flawed documents in court proceedings that have dispossessed hundreds of thousands of distressed homeowners.

The announcement comes at a time when the foreclosure debacle – which encompasses millions of now-questionable documents, foreclosure-shy title insurers and law firms processing paperwork at a dizzying pace – has mushroomed in magnitude.

Read more: http://www.kentucky.com/2010/10/14/1478870/as-foreclosures-hit-record-nationwide.html#ixzz12OAOKW3p

Complaint filed against MERS – Part 1

Click on the link below to see the first part of the complaint against various banks and MERS for filing false foreclosures.  For simplicity sake, we will refer to this case by the first plaintiff listed in the class action, Foster v. MERS.  The other banks involved include:  GMAC, Deutsche Bank, NationStar, Aurora, BAC Loans, CitiMortgage, and US Bank, along with 5 of the largest foreclosure law firms in Kentucky.

More to come.

Click here:  MERS Complaint 01

What the heck is MERS, anyway?

This original post can be found at Examiner.com.  As we have reported, a federal lawsuit has been filed against banks and MERS.  The suit alleges, among other things, that the banks and MERS conspired to file foreclosures against homes that the banks did not actually have a lien against.  Confused yet?  Don’t worry, I am too.  I’ll try to shed some light on what the HECK is MERS anyway . . . ?

Kentucky is a title lien state, wherein title is actually held by the owner of the real property.  Then a bank or other financial institution loans money to the owner to purchase the property via a promissory note or contract.  As collateral for the note or loan, the bank will take a mortgage or lien against the property.  The theory being that if the owner defaults on their payments to the lender, the lender can foreclose its lien or mortgage, sell the property and recoup its losses.

MERS stands for Mortgage Electronic Registration System and is based in Virginia.  From its website: “MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.”  www.MERSinc.org.  Also from their website: “MERS acts as nominee in the county land records for the lender and servicer. Any loan registered on the MERS® System is inoculated against future assignments because MERS remains the nominal mortgagee no matter how many times servicing is traded.”

Where this all gets confusing is the lender or note holder often has a third party company actually “service” the loan.  Often, the original company that made the first loan will simply sell off the paper to another company, so the first one can make its money back more quickly and move on to finance another deal.  The servicer is the company that collects payments, monitors if an account is in default, and takes the appropriate action.  Meanwhile, the lender or note holder sits back and collects its money, makes more loans, and generally is not an active player in the process.  So the note, or “paper”, will get sold several times over to different investment companies on down the line.

Essentially, MERS acts as a middleman, wherein it becomes the permanent “nominee” of the company who holds the actual note.  Thereby, a company only has to record one mortgage or lien, that being in the name of MERS.  Then it does not matter how often the loan is sold and to how many different companies.  In the county clerk’s office where public records are filed, you only have to have one recorded lien, in MERS’s name, and then whichever company owns the actual note, can sell it off as needed.

The lawsuit was filed under the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, and brought as a class action.  If successful here in Kentucky, this case could certainly have wide ranging, national effect on the mortgage industry.  We will watch this case as new developments come up.

Foreclosures up in Kentucky

Courier-Journal.com:  Foreclosure filings in Kentucky were up 4.5 percent in August over the same period last year but down almost 11 percent in Indiana, according to figures from real estate data company RealtyTrac.

Nationally, filings were down 5 percent from last year, according to RealtyTrac. The firm tracks all stages of foreclosure, from default notices to bank repossessions.

Foreclosures have been much less common in Kentucky than nationwide. One in every 1,669 Kentucky housing units received a filing last month, according to the firm, compared to one in every 381 units for the nation as a whole.

In Indiana, one in every 488 housing units was in the foreclosure process.

RealtyTrac counts 1,151 Kentucky residences in foreclosure, 5,722 in Indiana and 338,836 for the nation as a whole.

Lawsuit against banks and MERS for false foreclosures

This is simply not to be taken lightly.  We will be posting a copy of the complaint as soon as possible.  It’s over 100 pages long and over 400 counts.

Bloomberg.com reporting:  “The lawsuit, filed as a civil-racketeering class action on behalf of all Kentucky homeowners facing foreclosure, also names as a defendant Reston, Virginia-based MERS, the company that handles mortgage transfers among member banks. The suit claims that through MERS the banks are foreclosing on homes even when they don’t hold titles to the properties.

“Defendants have filed foreclosures throughout the state of Kentucky and the United States of America knowing that they were not the ‘owners’ or beneficiaries of the loan they filed foreclosure upon,” the homeowners wrote in their complaint filed Sept. 28 in federal court in Louisville, Kentucky.

Lawsuit filed against banks for filing false foreclosures

This is highly unusual and a very interesting situation.  We’ll try to follow this closely and see if we can get a copy of the pleadings.  If we do, it will be posted here.

From Real Estate Journal Online:  “A popular bank and a mortgage servicer are being sued by homeowners in Kentucky for conspiring with a mortgage transfers company for falsely foreclosing on loans. It is a serious allegation and when proven true, then a lot of homeowners who are currently facing foreclosures just might get a chance to save their homes.

Homeowners in Kentucky have filed a lawsuit against Citigroup Inc. and Ally Financial Inc., alleging that the two have conspired with Reston, Virginia-based Mortgage Electronic Registration Systems Inc. in falsely foreclosing on loans. Filed as a civil-racketeering class action on behalf of the Kentucky homeowners facing foreclosures, the lawsuit claims that banks – via MERS, which handles mortgage transfers among banks – are foreclosing on homes to which they don’t hold titles to properties. The complaint was filed in a federal court in Louisville, Kentucky on the 24th of September.

The complaint reads, “Defendants have filed foreclosures throughout the state of Kentucky and the United States of America knowing that they were not the ‘owners’ or beneficiaries of the loan they filed foreclosure upon.”

According to the lawsuit, the defendants either filed or caused to be filed mortgages through forged signatures. It also stated that foreclosure actions were filed months before any legal interests are acquired in the properties. Own notes executed with mortgages were also falsely claimed by the defendants, the lawsuit further says.”