Dennis' Mortgage Blog

Question of the week:  I bought my home from a major Bank that does business in America, do I have to worry that they did not own it legally and it can be taken from me?

Answer:  No.  Especially if the property is in California.  Over the past few weeks I have had several conversations with attorneys and title companies and the consensus is that, particularly in California, the latest brouhaha on foreclosures will not affect your homeownership. 

A quick recap for those on vacation abroad recently.  It has come to light that in processing tens of thousands of foreclosures a week most major lenders were using “robo-signers” to process foreclosure documents.  In some cases it was discovered that the paperwork used in court to foreclose on property was inaccurate or fraudulently attested to by bank employees.  The explosive nature of the news caused Bank of America to halt all foreclosures in process nationwide until they could conduct a review.  Attorneys General for all states created a join investigation process to determine if their state laws and federal laws were violated that resulted in illegal foreclosures.

The question that was part of the story is, if someone was foreclosed upon in what was proven to be an illegal process can that someone sue to get their home back?  Sure they can sue but will they win?  Probably not if the bank has resold the home and probably not, but less so, even if the bank still owns the property. 

In California the answer is almost absolutely not since California practices non-judicial foreclosures for residential real estate.  Meaning the foreclosure process does not involve a judge and a hearing as it does in other states.  Because of this the chances greatly decrease that a judge revokes a prior ruling of foreclosure.

Should the prior owner of your home make a claim to title and for some reason a court rules in favor of returning title, chances are very high that your title policy will cover the claim and either pay-off the prior owner or buy you out.  Almost everyone I spoke to about the matter however was of the opinion that the likeliness of such a claim being successful is very, very slim.

Why?  The primary reason such a claim would not make it very far is because of the root cause of the problem.  Someone signed a Promissory Note.  That note said in part above the signature line “…I promise to pay….”  Someone at some point failed to make payments.  Failure to make payments results in foreclosure.

Go ahead and redecorate the living room and plan the kitchen remodel, you are safe at home.

Have a question for me?  Ask me!

Sort of a yawner week for economic data.  A bit of good news in housing with new home starts for September up though very modestly.  More important than the actual number is that it is the third month in a row the number grew.  New unemployment claims increased less than the prior week, but still over 450,000.  State-by-state unemployment statistics were released and in the report 23 states and Washington DC saw joblessness declines in September and up in “only” 11. 

Lay-offs are slowing, which is good news unless “slowing” means you got a pink slip in which case they have not slowed enough.  Slowing lay-offs need to occur before reverse lay-offs occur.  Evidently this trend is not quite picking up in California which in September maintained an official 12.4% unemployment rate, up 0.3% from September 2009.  We it not for the massive layoffs in education across the state caused by Sacramento’s fiscal ignorance the State’s unemployment rate year over year would be about even.

Britain changes course.  Relatively new British Prime Minister David Cameron presented his Conservative Party’s budget yesterday.  Sobered by the economic situations of Greece, Spain and Ireland; and looking to avoid the political and social turmoil now in the streets of Paris, the budget is a dramatic reversal from the Keynesian policy of the Labor government they replaced.  Cameron’s budget calls for a four pound reduction in spending for every one pound in tax increases (a British pound is equivalent to about $1.56 today); far more aggressive than the supposed “Pay-Go” standard our Congress is supposed to be following which is a dollar in taxes or a dollar cut in spending for every new dollar in spending.  Most dramatic in the budget is the reduction in the public workforce with the elimination of 490,000 jobs.  Britain is one-fifth the size of the U.S. so 490,000 laid off government workers is a tremendous number.  Finally Cameron has set the plans for a balanced budget by 2015.

Germany and now Britain have gone against the desire of the U.S. Administration in not increasing government spending as a means to stimulate their economies, but instead are cutting government spending and issuance of debt to unburden their economies from that growing debt.  France is attempting this, albeit with much less austere measures.  The primary cause for the rioting on the Seine is the French government’s proposal to increase the retirement age in France.  From 60 to 62.  Sacre Bleu! Vive Les Pensions!

Rates for October 22, 2010:  With the Dow up for the week mortgage backs were in a bouncy mood daily.  The net result is no change across the board.  Investors have an eye on upcoming 2^nd Quarter GDP numbers and making bets on another Fed move—having already priced into rates continued easing.  Floaters are gamblers once the GDP numbers are out.

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional                             3.875%             Flat

30 year conforming-jumbo                    4.25%               Flat  

30 year FHA                                         3.875%             Flat

30 year FHA jumbo                              4.000%             Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. 

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment with an impound account for taxes and insurance and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

A great time to look at houses in Southern California with the significant rainfall this week, it is not often you have the chance to see how rain impacts a home and this week has provided that chance.  Does water pool around certain parts of the foundation?  Leaks around any windows or through vents in the roof?   Does the landscaping hold the rain or does half the garden end up on the sidewalk?  If you are searching for a new home the silver lining in the rain clouds is the opportunity to see how weather-proof your potential new home is.  Some who purchased their home in the Spring or Summer could be discovering issues this week that were not apparent when they inspected their home in the midst of months of sunshine.

We have eleven days until Election Day.  Please do your homework and research on the candidates and propositions and do not rely on the television and radio ads or mailers for critical information you need to make your decision.

Have a great week,

Dennis