Page 486 – Safeguard Properties

Atlanta City Councilman Pushes to Fight Blight with Conservatorship Proposal

Posted on September 13, 2018 by Safeguard

On October 15, Creative Loafing Atlanta released an article titled Could blight-burdened neighborhoods take control of abandoned homes and sell them?

Could blight-burdened neighborhoods take control of abandoned homes and sell them?

Vine City and English Avenue are a case study in how Atlanta’s vacant properties can decay for years, seemingly bulletproof to code enforcement. Now Atlanta City Councilman Ivory Young Jr., who represents the area, is pushing for a new weapon against blight: conservatorship.

His “Abandoned and Blighted Property Conservatorship” proposal would allow a court-appointed third party to take possession of a blighted property to rehab it, then sell it for fair market value. The current owner would get first dibs on buying it.

“About half to three-quarters of my district is in what I would call a state of emergency. The amount of abandonment…has turned parts of my district into a public safety nightmare,” Young tells CL. “[Conservatorship] is an awesome tool for us to have when we are left at the mercy of these investors…who hold onto properties without any sign of doing anything with those properties.”

Right now, the city has only two main options against blighted sites: ticket the heck out of them, and order their demolition if they’re too far gone. Young says that has little impact on the main causes of blight: absentee investors waiting to flip properties, and heirs who inherit houses they can’t afford to maintain.

“We simply have not developed good policy around how we manage property that is not code-compliant,” says Young, describing the current program as citation-focused. “Occupancy is the only solution.”

Cities in many other states have conservatorship programs; Young cites Pennsylvania as one inspiration. Conservatorship also is frequently cited as a “best practice” against abandoned and blighted properties by members of the United States Conference of Mayors.

“The threat of [conservatorship] is oftentimes enough to convince the owner to do something with it, to rehabilitate it,” Young says.

Melissa Mullinax, a senior advisor to Mayor Kasim Reed, says the administration thinks the conservatorship idea is a “worthwhile conversation.”

But she also spoke cautiously about its details: “The question is whether there can be a policy solution that respects private-property rights of investor-owned properties on the one hand and the desire of communities not to have vacant/blighted properties in their neighborhoods, given the well-documented adverse effects blighted properties have on communities.”

Young said pushback has yet to materialize on property-rights issues, or the possibility of conservatorship letting longtime scofflaws off the hook for code violations. He emphasized that neighborhoods are ultimately paying the biggest penalties for blighted properties in them.

Conservatorship has “overwhelming support” from council members, Young says. But a previous version he floated last year didn’t move ahead, and the current version he’s pushing has been held in committee.

The big reason: Atlanta can’t create conservatorship by itself. State government would need to pass a law to permit it.

Young wants that to happen quickly. He says he’ll ask the council to approve the general idea in a non-binding resolution. Then he will press for conservatorship to be included in the city’s official list of legislative requests that will be submitted to the Gold Dome when state lawmakers convene in January. Mullinax said she can’t yet comment on what the legislative package will include.

Meanwhile, Young is also contacting leaders in other major Georgia cities asking them to support conservatorship, which he says could be a powerful option for them as well. “You’d be surprised at the number of smaller cities and towns that have the same issue,” he says.

Please click here to view the article online.

About Safeguard
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally.
Website: www.safeguardproperties.com.

National Foreclosure Mitigation Counseling (NFMC) Program

Posted on September 13, 2018 by Safeguard

In a recent update, the National Council of State Housing Agencies, (NCSHA) discusses the final evaluation of the National Foreclosure Mitigation Counseling (NFMC) Program by the Urban Institute (UI). Congress created the NFMC program in 2008 to address the nation’s foreclosure crisis through foreclosure mitigation counseling operated through state and local agencies and nonprofits.

NeighborWorks America (NeighborWorks), the organization responsible for administering the program, commissioned UI to conduct periodic progress reports on NFMC to fulfill Congress’ requirement that NeighborWorks report on the program’s results. This latest report focuses on funding rounds 3 through 5, which is represented by borrowers who received program counseling between July 2009 and June 2012, with the outcomes of these clients observed through June 2013.

To view the NCSHA update, please click here.
To view the UI final evaluation, please click here.

Five Star Conference 2014 Summary

Posted on September 13, 2018 by Safeguard

Host Sponsor Safeguard Properties Attends Five Star Conference and Expo.

2014 Five Star Conference and Expo
Dallas, Texas
September 14-16, 2013

Safeguard was honored to be the hosting sponsor for the 2014 Five Star Conference and Expo, which was held once again at the Hilton Anatole in Dallas, TX. This year’s conference included a special Q&A session featuring President George W. Bush, Former First Lady Laura Bush, and their daughters, Barbara Bush and Jenna Bush Hager. Additionally, Lt. General Leroy Sisco (Ret.) and Kathy Ireland were featured speakers during the Military Warriors Support Foundation home donation presentation, along with a special live performance by renowned recording artist Wynonna Judd. The sessions during the conference focused on compliance, foreclosure, investment, property management, REO and servicing. Safeguard participated on three panels. Summaries of these sessions are below.

Tomorrow’s Elements of High Risk

Moderator:
Ann Thorn, Bank of America

Panelists:
               Robert Klein, Safeguard Properties/SecureView
               Rick Sharga, Auction.com
               Edward B. Kramer, Wolters Kluwer
               Adam Codilis & Associates, P.C.

Identifying Risk
During this roundtable session, panelists offered insight on how they identified future elements of high risk. Participants agreed that due to complicated regulatory standards it can be difficult to pinpoint exactly what those risks might be when executing a foreclosure. It was suggested that past and present guidelines set forth by the CFPB could potentially stifle future lending if regulations are not made clear. When evaluating future elements of high risk panelists agreed that compliance was at the crux of this discussion.

Credit Resets Create Future Risk
Rising home values over the last several months will most likely create positive equity for many homeowners; however, we should still proceed with caution. Borrowers with a HELOC that’s due to reset should contact their lenders to become aware of how this with affect their rates.

Negative Effects of Lengthy Foreclosure Timelines
It is widely accepted that extended foreclosure timelines can cause distress to homeowners, servicers, and communities when properties are vacant. In the past decade charge-offs and walk-aways have been a looming obstacle. To solve this problem law makers nationwide are crafting legislation to establish a definition for vacancy and shorten the foreclosure process for these homes.

Procedural Issues Arising With Vacant Properties
A major challenge in the creation of these rules is how a servicer establishes vacancy and what steps should be taken to protect the rights of homeowners. Achieving this balance creates a degree of risk for lenders. Participants concluded that while not all laws are created equal and crafting them should be done so with respect to the homeowner, recognizing this problem is a step in the right direction.

Property Preservation in the New Regulatory Environment

Moderator:
Edmund Buckley, Aspen Grove

Panelists:
               Paul Carlson, Assurant Field Asset Services
               Alan Jaffa, Safeguard Properties
               Brandon Kirkham, VRM
               Chad Mosley, MCS

Compliance with Local Ordinances
Field services vendors must manage the assignment from servicers to achieve compliance with regulations. To do so, it is important to receive accurate data from clients and from local vendors who have a presence in communities. Partnerships with municipalities also enables field services companies to stay knowledgeable of changes – sometimes even before they are enacted. However, it is a challenge for the industry to ensure full compliance since there is no technological solution today. Additionally, the interpretation of the data also presents a challenge. VRM has a process by which key business partners are part of implementation discussions and a change board meets regularly to understand global impact.

Vendor Background Checks
Background check requirements for vendors are applicable at the same level for all vendor types. Applying a different level of check to vendors based on the type of service they will provide could aid field services providers by opening up more vendor options for jobs. However, implementing a system like that would change the vendor management approach throughout the industry.

Validating Completion
Validating data is accurate is vital within this industry. One way discussed to ensure accurate completion was to capture who was where and at what time. Then have the ability to obtain validation through a third-party. However, the financial impact of these new requirements is still unknown to the industry. Therefore, the panel recommended collaboration across field services companies to raise these issues.

It was suggested that the conversations start even further upstream, with investor requirements. As technology and compliance requirements evolve, using video to validate work completion and condition reporting will soon become a reality. Taking advantage of this tool and other new ideas is one critical way the industry can get properties looking better more quickly.

Industry Collaboration
It was proposed that field services vendors work with one another on a global technology solution for the industry, instead of each building their own systems. However, members of the panel pointed out that this may not be the best idea given that each company has their own standards and requirements which need to be honored. Additionally, this path might hamper progress to integrate with client systems.

The Cost and Consequences of Compliance

Moderator:
Donald Lampe, Morrison and Foerster

Panelists:
              Mike Greenbaum, Safeguard Properties
              Barry Hays, TeleVoice,
              Marc Hinkle, MCS
              Maria Moskver, Walz Group
              Kevin Wall, First American Mortgage Services

New Regulations
During this session, discussions focused on the increase in new regulations, in particular the involvement and regulations that have been implemented by the Consumer Financial Protection Bureau (CFPB). The panelists looked at how these new regulations have affected the way companies manage their processes, adopt and invest in new technology, enlist third-party assistance, and even recruit and retrain staff, all of which increase the cost of servicing. Each panelist discussed how their operations were handling and implementing these new regulations.

Field Services Companies Response
Looking at the changes to regulations, field services companies have had to add additional procedures and controls. In doing so, it is important to start with an intentional design of the company’s process. This needs to include diagraming out how work flows to the company’s network, how results are produced and then how the results flow back into the company’s operations. Making sure the right controls are in place to ensure the information being received is what’s expected is the key to developing a compliant process. It is important to make sure these control offer the ability to gather data so immediate reporting can be produced to support that the operation is meeting the regulators, clients and company’s expectations.

When Management Listens
Safeguard’s consumer complaint response and tracking started with management listening to complaint calls. From this experience the management team designed a process and scripts so the staff could respond to the complaints that were being received. The staff was then trained on the process. Management continues to listen to calls so that the process can be updated and improved. As updates are made the team is brought back in and trained on the updates. This process continues and includes our clients listening to calls. The entire time all calls are tracked to allow for detail and immediate reporting.

Higher Expectations
The group discussed the ever-increasing expectation from regulators and how important it is for organizations to have the ability to adapt to change swiftly, technology resources that allow for data retrieval and retention, and a system that allows for the documentation of operational changes. The future holds an environment that will continue to be heavily regulated and we as an industry provider need to be prepared to respond and compile.

To view a recent DS News article featuring session comments from Safeguard VP of Operations Mike Greenbaum, please click here.

To view a recent DS News article featuring session comments from Safeguard Founder and Chairman Robert Klein, please click here.

FHA’s Distressed Asset Stabilization Program (DASP)

Posted on September 13, 2018 by Safeguard

Recently, the Center for American Progress (CAP) released a report providing an overview of the FHA’s Distressed Asset Stabilization Program (DASP). This analysis, is based on HUD’s recently released post-sale results report.

To view the CAP report in its entirety, please click here.
To view HUD’s post-sale results report, please click here.

Following is the Introduction and Summary to the CAP report:

In the summer of 2012, the Federal Housing Administration, or FHA, announced it was launching a new program to auction off pools of delinquent mortgages that had not yet gone through foreclosure but for which foreclosure was inevitable.

According to FHA, selling these loans prior to foreclosure would save the agency money and provide a better financial outcome for taxpayers. Selling would also provide homeowners more options than were available under FHA rules due to statutory limitations, helping families and stabilizing neighborhoods. In short, the Distressed Asset Stabilization Program, or DASP, “creates the opportunity for everyone—the homeowner, the new mortgage holder, FHA and the community—to walk away a winner.”

Since September 2012, FHA has made available for auction nearly 100,000 loans. According to the Department of Housing and Urban Development’s, or HUD’s, new report on DASP outcomes, the program has helped reduce FHA’s loss rates from 63.5 percent in the first quarter of 2010 to 52.9 percent in the second quarter of 2014, although the report does not disaggregate the impact of a variety of FHA policy changes, including improvement of its loss-mitigation options for servicers. Additionally, bids on these auctions have risen from approximately 40 percent of the loans’ unpaid principal balances to an average closer to 60 percent.

The report also suggests that homeowners have benefited from the program as well. Of the 50 percent of DASP loans that have reached resolution, 34 percent have avoided foreclosure, including the 11 percent of loans that are classified as “reperforming,” which means that homeowners are again paying their mortgages regularly. The outcome report contains no information on what enabled these mortgages to reperform, such as whether the homeowner obtained a permanent modification, a forbearance, or simply became reemployed. These numbers are significantly higher for the pools with specific neighborhood stabilization requirements, in which 58 percent have avoided foreclosure and 23.5 percent are reperforming.

As DASP reaches its two-year anniversary, it is time to evaluate its performance and explore ways to strengthen it. FHA still insures more than half a million seriously delinquent loans, meaning there are still many loans potentially eligible for the program. Moreover, the program serves as a critical model for the Federal Housing Finance Agency as Fannie Mae and Freddie Mac begin to sell nonperforming loans. Indeed, Freddie Mac auctioned its first pool of nonperforming loans this past August, so this possibility is now more than theoretical.9 Between them, Fannie Mae and Freddie Mac still hold close to 700,000 seriously delinquent loans.

This report provides an overview of DASP, including information on how it facilitates loan sales, who buys loans through it, and the information FHA has released concerning the outcomes of the purchased loans. The report then offers recommendations to enable DASP to better serve homeowners and neighborhoods while continuing to strengthen the FHA insurance fund.

Specifically, it recommends several programmatic changes that FHA could make to ensure that DASP buyers manage the loans they purchase in a way that most effectively stabilizes surrounding neighborhoods. For example, the pools with community stabilization requirements appear to be significantly more advantageous for homeowners and communities and sell at comparable prices to pools with fewer requirements. Right now, however, the program only places such requirements on about 10 percent of the loans it sells. With investor demand for nonperforming loans growing, FHA is well-positioned to ask more of buyers while continuing to protect taxpayers.

Boomerang Buyers are Back

Posted on September 13, 2018October 29, 2018 by Safeguard

On August 21, The Washington Post featured a report on “boomerang buyers” people who are reentering the housing market after a foreclosure or short sale.

After losing their homes in the foreclosure crisis, boomerang buyers are back

Chris Noblejas, a former real estate agent, got hit by a double whammy during the housing crisis. His income declined drastically, and so did the value of the Gaithersburg, Md., townhouse he bought for $480,000 in 2006. He ended up selling the townhouse in a “short sale” in 2010 for $320,000. A short sale occurs when a lender agrees to accept a sales price for a home that is less than the amount owed on the property.

But Noblejas was able to buy a single-family house in Silver Spring this year. He is part of a wave of “boomerang buyers” — people who are reentering the housing market after a foreclosure or short sale.

“I wanted to buy a house again, but I was still nervous because I made such a bad mistake before,” Noblejas says. “Even renting was hard when I first lost my house. I didn’t even know if I could buy again, but I talked to a loan officer and was able to qualify for an FHA [Federal Housing Administration] loan. I plan to refinance that loan into a conventional loan as soon as I can to get rid of the mortgage insurance payments.”

Boomerang buyers who lost a home to a foreclosure or short sale between 2007 and 2013 are projected to make about 10 percent of all U.S. home purchases in 2014, according to John Burns Real Estate Consulting (JBREC). The Washington area is among those regions that are expected to have even higher levels of activity involving boomerang buyers. JBREC expects boomerang buyers to make 17.5 percent of the region’s existing- and new-home purchases this year. According to JBREC, the number of boomerang buyers will increase in 2015 and 2016 as more former owners become eligible for new loans.

How quickly someone can bounce back from a foreclosure or a short sale depends on the reasons for the past financial problems and on the person’s current credit score. A would-be borrower who had good credit history before a job loss, for instance, is more likely to qualify for a new mortgage than one who had bad credit and continues to demonstrate poor financial habits.

Ashley Lawrence and her husband, Joel, bought a house near Orlando in July 2007 for $200,000 with a zero-down-payment loan. Then, in October 2008, Joel was laid off by CarMax, along with about 600 other employees. After struggling to modify their mortgage, the couple negotiated a short sale in 2010 for $77,400.

“We always wanted to buy again, so we rented for a while and moved in with family for a year to save money,”Ashley Lawrence says. “We rebuilt our credit, and my husband got a good job in Virginia now, but we’ve moved every year since we lost our first house, which has been tough on our kids, who are now 7 and 4. ”

The Lawrences recently qualified for an FHA loan and bought a home in Spotsylvania County with the help of Jami Harich, a real estate agent with Avery-Hess Realtors in Fredericksburg, Va.

“Most buyers I work with now, especially if they lost a home in the past, don’t want to get in over their heads,” Harich says. “They start with a monthly payment that they want to stick to, and then I show them what they can find on the market that fits in that budget.”

For buyers on the rebound

When someone can borrow again depends, in part, on whether the loan is a conventional mortgage or a government-insured mortgage.
“FHA loans are easier to get after a short sale. In fact, some borrowers don’t have to wait at all if they never had any late payments on their mortgage,” says Steve Cohen, a senior mortgage banker with Talmer Bank and Trust in Rockville, Md. “Borrowers who were in default on their loan have to wait three years to qualify for an FHA loan.”

After a foreclosure, VA loans — guaranteed by the Department of Veterans Affairs — have the most lenient rules, with just a two-year waiting period to qualify for a new mortgage, says Hope Morgan, branch manager of Mortgage Network in Salisbury, Md. And no down payment is required.

Cohen says conventional loans require a two-year wait after a short sale for borrowers who can make a 20 percent down payment. The wait is four years with a 10 percent down payment and seven years with a 5 percent down payment. Borrowers who lost a home in a foreclosure — and, therefore, were in default on the mortgage — typically must wait seven years to qualify for a new conventional loan, he says.

“However, all of these waiting periods can be shortened with extenuating circumstances, such as a job loss, a divorce, a serious illness or the death of the person who was the primary wage earner,” Cohen says.

The FHA introduced a Back to Work loan program in 2013 to address the needs of individuals and families who lost their homes because of the housing crisis and recession. The program requires housing counseling before a new loan can be approved.

“The Back to Work program lets people reapply in as little as 12 months after a foreclosure or bankruptcy, as long as the borrowers can prove that their income dropped by 20 percent or more due to a job loss or cut in pay,” says George Beylouny, branch manager of Silverton Mortgage Vinings in the Atlanta area.

“The borrowers need to be able to document the reason for the foreclosure or short sale and show that they’ve been responsible with their credit before and after they lost their home. A drop in credit score is okay as long as they can show they had good credit before the crisis.”
Morgan worked with one recent buyer who lost his job in July 2009 and then lost his home to foreclosure in January 2011 when he couldn’t keep up with his loan payments.

“He got a full-time job just before the foreclosure, but the lender told him it was too late,” Morgan says. “Now he was able to buy again because he waited three years and was able to outline his whole story and explain that he tried as hard as he could to be responsible and repay the loan.”

Cohen says the same guidelines apply to boomerang buyers as other would-be borrowers — the same minimum credit score, typically 620 or 640 for an FHA loan; down payment requirements; and debt-to-income ratio, which generally must be under 43 percent.

Lessons learned

Most borrowers have learned that they need to be more careful about what they buy and to avoid overextending themselves, Cohen says.
They “want to build equity and want to make as big a down payment as they can,” Cohen says. “Even if it’s a 3.5 percent down payment on an FHA loan, that’s better than the old days of zero-down-payment loans. In this area, saving up 3.5 percent for a $300,000 home means you need at least $10,500, plus you need more for closing costs and cash reserves, so that represents a good effort to save for most people.”

Cohen says borrowers today typically plan to stay in their homes at least five to seven years, instead of assuming that they can buy and sell within a year or two. In addition, he says, borrowers are telling him that they don’t want to know the maximum amount they can borrow; they just want to know what they can comfortably afford.

Morgan tells another cautionary tale.

“One woman I worked with recently told me that when she graduated from college, she took every credit card she was offered and had no concept of managing money,” Morgan says. “She and her husband had kids and bought a house, and then her husband left and she lost the house. Now she’s rebuilt her credit and has a good job and could qualify for a $350,000 loan, but she’s buying a $150,000 home because she wants to feel more comfortable that she can afford the payments.”

Ashley Lawrence says she and her husband saved up for a 3.5 percent down payment, unlike the first time they bought a home, when they made no down payment.

“Next year, I finish nursing school, so as soon as we have two incomes, we plan to finish the basement to add equity to our home and to refinance into a conventional loan so we can get rid of the mortgage insurance we pay on the FHA loan,” Lawrence says. “We were so naïve when we bought our first place and realize now that we paid way too much for it. This time, we did a lot of research and found a Realtor and a lender we could trust to help us make a smarter decision.”

Noblejas also used 100 percent financing to buy his first home, but this time, he saved enough to make a 10 percent down payment.

“I was preparing to make a down payment of 20 percent so I could avoid mortgage insurance, but I decided to keep some more money in cash reserves for now,” he says. “I plan to refinance out of my FHA loan and into a conventional loan as soon as I can. The biggest lesson I learned is how important it is to save a lot more money than you think you need because you never know when you’ll need it.”

Noblejas says he understands better now than he did before how big a decision it is to buy a home and how important it is to be prepared financially for the consequences if you make a bad choice or experience economic hardship.

And if the bottom falls out? It’s possible to recover, Beylouny says.

“If you’ve lost your home to a foreclosure or short sale, the important thing to remember is that it’s not the end of the world: Life has its ups and downs,” Beylouny says. “You should talk to a lender because even if you can’t be approved today, we can set you up with a road map for the future so you can buy again.”

To view the online article, please click here.

White House and Financial Services Companies Pledge Committment to Service Members

Posted on September 13, 2018 by Safeguard

On August 26, President Obama announced a new voluntary partnership with financial lenders across the country that will help deliver important financial and home loan-related protections to our military community.

White House, Financial Services Companies Pledge New Commitments to Service Members

FSR releases report on financial industry’s donations of homes to veterans, families

Washington, DC— In partnership with the White House, five member companies of the Financial Services Roundtable and its Housing Policy Council pledged anew voluntary commitment today to broaden their efforts to offer and apply financial protections to active duty military customers who may be eligible under the Service Members Civil Relief Act (SCRA).

Wells Fargo, Bank of America, Quicken Loans, Citi and Ocwen Mortgage Servicing have all voluntarily pledged to broadentheir efforts to identify, contact and offer financial protections to military personnel who may be eligible. These benefits and protections are required by the SCRA, a law that protects active duty and deployed service members by granting temporary relief from certain financial obligations, including default judgments and foreclosure proceedings, when called to serve their nation. Active duty personnel are not always aware of or do not apply for these benefits and protections and these companies are voluntarily increasing efforts to contact potentially eligible personnel to offer them the benefits and protections.

“The financial services industry remains deeply dedicated to the brave men and women serving our nation,” said FSR’s Housing Policy Council President and 70th Secretary of the Navy John Dalton. “We are proud that the voluntary commitments made in partnership with the White House today reinforce the industry’s overall mission to give back to those who sacrifice the most for this country.”

The pledges include the companies regularly checking their portfolio of military mortgage holders against Department of Defense records to determine active duty status, proactively informing SCRA-eligible service members about their protections and standardizing procedures to allow eligible service members to take advantage of their benefits.

FSR and HPC also released a report today, “Project Patriotism: Home for Heroes 2.0,” detailing the growing efforts of financial services companies to refurbish, revitalize and donate Real Estate Owned (REO) homes to veterans and their families. An estimated 5,500 homes have been donated in the last two years alone through companies’ partnerships with third party nonprofits, and the total number of donated homes could double to nearly 11,000 over the next year if additional companies and the government continue to join the effort.

Home recipients are typically living with injuries or other challenges from their military service, so homes are often outfitted with new wheelchair ramps, railings and other assistive features. The average investment to renovate each property is typically from $15,000 to $45,000.

FSR and HPC encourage more banks, mortgage lenders, financial services institutions and the government to join these efforts.

To read “Project Patriotism: Homes for Heroes 2.0” and to learn more about the financial services industry’s work to serve the nation’s military, visit: fsroundtable.org/project-patriotism.

To view the online press release, please click here.

NC Court Issues Non-Judicial Foreclosure Ruling

Posted on September 13, 2018October 29, 2018 by Safeguard

DSNews reported on a recent North Carolina Court of Appeals ruling that mortgage note holders in North Carolina can no longer voluntarily dismiss more than one non-judicial foreclosure without being banned from filing additional non-judicial foreclosures.

NC Court Issues Non-Judicial Foreclosure Ruling

Mortgage note holders in North Carolina can no longer voluntarily dismiss more than one non-judicial foreclosure without being banned from filing additional non-judicial foreclosures, the North Carolina Court of Appeals ruled earlier this week.

Note holders can still, however, file a judicial foreclosure after voluntarily dismissing more than one non-judicial foreclosure, the court ruled.

The court issued the ruling as a result of Lifestore Bank’s attempt to initiate a judicial foreclosure on land owned by one of its trustees, Mingo Tribal Preservation Trust, after previously voluntarily dismissing two non-judicial foreclosures against Mingo.

South Carolina-based law firm Rogers Townsend and Thomas said in a statement that the appeals court decision “may have a significant impact on non-judicial foreclosures in the state (of North Carolina).”

“The more far-reaching and problematic aspect of the ruling is that it may be interpreted as holding that all of the NC Rules of Civil Procedure apply to non-judicial foreclosures,” the law firm said in the statement. “We can anticipate that counsel for borrowers and mortgagors will argue exactly that. This opens the possibility for countless motions, lengthy discovery requests, challenges to service of process, and arguments for sanctioning holders and trustees that file a non-judicial foreclosure after two voluntary dismissals.”

Mingo originally signed two promissory notes in 1993 with Lifestore to secure land owned by Tuscarora Rand and Pitchfork Basin (formerly EAC Rev No. 6). Lifestore brought non-judicial foreclosure proceedings in both 2010 and 2011, but all voluntarily dismissed them without prejudice in both cases. In June 2012, Lifestore brought judicial foreclosure proceedings against Mingo in Superior Court, seeking judgments for both promissory notes. Mingo argued for summary judgment on Lifestore’s claims, citing Rule 41 of the NC Rules of Civil Procedure and seeking collateral estoppel for the suit on the two notes. The trial court denied the summary judgment as far as claims on the notes but allowed the judicial foreclosure.

The case was taken to the North Carolina Court of Appeals by Mingo. The appeals court ruled on August 19 that the judicial foreclosure filing by Lifestore was legal despite the two previous voluntary dismissals without prejudice of the non-judicial foreclosures on the part of Lifestore. The court did rule, however, that Lifestore could not legally file a third non-judicial foreclosure due to the two previous voluntary dismissals without prejudice.

“We are not yet certain how courts will interpret this decision,” Rogers Townsend and Thomas said in the statement. “There are earlier decisions that significantly limit the application of the Rules of Civil Procedure and it is arguable that this decision can be narrowed to only apply to Rule 41. It is also possible that an argument of continuing default could be successfully made; this would allow a new non-judicial foreclosure based on a new default, even where two prior proceedings alleging different default circumstances have been voluntarily dismissed. Essentially, each new missed payment is a new default. This was not addressed at all in the ruling.”

To view the online article, please click here.

Governor Quinn Vetoes Illinois SB 2664 Tied to Foreclosed Condo Sales

Posted on September 13, 2018September 13, 2018 by Safeguard

A recent article from the Chicago Tribune discussed Illinois SB 2664 (Condo Assessments/Non-Payment Liens) and the amendatory veto issued by Governor Quinn.

Please below for the article followed by Governor Quinn’s amendatory veto message to the Senate.

Quinn kills bill to cap assessments tied to foreclosed condo sales

Pat Quinn on Tuesday killed a bill that would have limited the amount of money due to a condominium association when a foreclosed unit is sold.

The governor, who had to act on the bill by Wednesday, used an amendatory veto to change the bill, shifting some of the costs tied to the sale of a repossessed condo unit onto the bank that foreclosed on it.

Senate Bill 2664, introduced in January by Sen. Michael Hastings, D-Tinley Park, was designed to limit the costs that a buyer of a foreclosed condo unit would be responsible for covering, namely the unpaid regular and any special assessments that could have accrued while the unit was going through the foreclosure process.

The bill would have amended the state’s Condominium Property Act by capping what a condo association can require a buyer to pay to nine months of regular assessments. That would have stopped the surprises that were occurring at closing tables, when buyers found themselves with hefty extra bills to pay. But the proposal also meant that condo associations — and their homeowners — would have been on the hook for any extra or special assessments that went unpaid because a unit was in foreclosure.

Real estate trade groups backed the measure while condominium associations opposed it.

“Any changes to the foreclosure process must ensure that the interests of homeowners are protected and that the proper entity bears the cost when someone loses their home,” Quinn said in a letter to the General Assembly. “While it is reasonable for a new homeowner to pay up to nine months of regular assessments when they purchase a property out of foreclosure, the lender should also contribute to the costs that the homeowners in a condominium association incur when a lender forecloses on a property.”

By shifting the responsibility for costs above and beyond the nine-month period onto a lender, or an agency like Fannie Mae and Freddie Mac that also sell foreclosed homes, the governor is bringing another group of lobbyists into what had become a passionate debate during the legislation process.

“The thing that we will have to consider is whether we will try to override this and have the original language protected,” said Jon Broadbooks, a spokesman for the Illinois Association of Realtors.

Hastings said he was unsure whether he seek to override Quinn’s action, and said that perhaps the statute as a whole needs to be reviewed.

“I really do hope it spurs a discussion,” Hastings said. The amendatory veto “will continue to slow down (the home-buying process) but the housing market is recovering. I want it to be able to move faster.

“If you add banks into it, it brings a whole other dynamic into it.”

To view the online article, please click here.

Governor’s Amendatory Veto Message

August 19, 2014

To the Honorable Members of the
Illinois House of Representatives, 98th General Assembly:

I hereby return Senate Bill 2664 with specific recommendations for change.

As Governor, it is my duty to ensure that people can stay in their homes. Any changes to the foreclosure process must ensure that the interests of homeowners are protected and that the proper entity bears the cost when someone loses their home.

SB 2664 limits condominium associations from collecting more than the sum of nine months of regular monthly assessments from the purchaser of a foreclosed condominium. Following the procedure in SB 2664 would force the rest of the homeowners in the condominium association to bear the costs of a foreclosure. While it is reasonable for a new homeowner to pay up to nine months of regular assessments when they purchase a property coming out of foreclosure, the lender who owns the mortgage should also contribute to the costs that the homeowners in a condominium association incur when a lender forecloses on a property.

Therefore, pursuant to Article IV, Section 9(e) of the Illinois Constitution of 1970, I return Senate Bill 2664, entitled “AN ACT concerning civil law.” with the following specific recommendations for change:

on page 10, line 20, by replacing “The” with “Following a foreclosure sale, a consent foreclosure, common law strict foreclosure or the delivery of a deed in lieu of foreclosure, the mortgagee shall have the duty to pay to the association those amounts required by subdivision (g)(1) of Section 9 of this Act, except that, the”; and

on page 12, line 9, by replacing “subdivision ~~subdivisions (g)(1) and~~” with “subdivisions (g)(1) and”.

With these changes, Senate Bill 2664 will have my approval. I respectfully request your concurrence.

Sincerely,

PAT QUINN
Governor

MA Banks Sue to Overturn Local Foreclosure Laws

Posted on September 13, 2018September 13, 2018 by Safeguard

Updated 11/18: On November 14, telegram.com published an article titled Ruling means no change in Worcester foreclosure ordinance.

Link to article.

Updated 8/19: On July 15, Itemlive.com published an article titled Lynn ‘Proceeding as Usual’ with Foreclosure Ordinance as Injunction Looms.

Link to article.

On July 1, The Boston Globe published an article titled Banks Sue to Overturn Local Foreclosure Laws.

Link to complaint. Following is the aforementioned article.

Banks sue to overturn local foreclosure laws
Lynn, Worcester sued over foreclosure laws

Seven Massachusetts banks are suing Lynn and Worcester over foreclosure regulations adopted in the aftermath of the housing bust, saying that cities are exceeding the authority allowed to local governments.

The lawsuit, filed on Monday in US District Court in Worcester, argues that only the state can set the rules governing foreclosure proceedings. If communities are allowed such powers, the banks say, it could open the door to a burdensome patchwork of rules conceivably spread across the state’s 351 cities and towns.

“The ordinances are invalid as they are preempted in whole or in part by Massachusetts foreclosure statutes,” the banks said in the civil complaint. The suit was first reported by the Boston Business Journal.

The lawsuit is potentially a blow to Massachusetts cities that have sought to take on big banks, take control of the ongoing foreclosures in their communities, and protect homeowners and neighborhoods. In recent years, many cities were hard hit by foreclosures, which led to evictions of tenants, vacant buildings, blight, and crime.

The Lynn and Worcester ordinances require banks to negotiate alternatives with delinquent homeowners through a formal mediation process before they begin the property-seizure process, which is not a requirement of state regulations, according to a complaint. The regulations also make lenders responsible for the upkeep of vacant properties and homes in foreclosure — even before they legally have possession of the real estate, according to the Massachusetts Bankers Association, a trade group.

Lenders would be required to provide cash bonds to local governments to ensure they maintain vacant properties. Those that don’t comply would be penalized under the local laws.

The institutions suing are Eastern Bank, the largest locally owned Massachusetts bank, and six other community banks: Hometown Bank of Oxford, Country Bank for Savings of Ware, Avidia Bank of Hudson, Rollstone Bank of Fitchburg, North Brookfield Savings Bank, and Southbridge Savings Bank.

Bank representatives and local officials clashed about the regulations for months before the suit was filed.

“The banks that ultimately filed felt they had no other choice,” said Jon Skarin, senior vice president of the Massachusetts Bankers Association. “These are local banks who all feel strongly that there needs to be some resolution to these questions.”

A 2012 state law already requires lenders to offer loan modifications before pursuing foreclosures on certain high-risk loans, but officials in Lynn and Worcester say the law doesn’t go far enough and hasn’t been effective in pushing banks to negotiate with struggling homeowners.

“Foreclosures are so destabilizing to communities,” said Worcester City Manager Edward Augustus Jr. “The City Council felt very strongly that given the huge impact foreclosures have had on the city of Worcester, it was important to try to bring some pressure to bear on banks that weren’t responsive to homeowners who found themselves in an upside down position.”

Augustus said Worcester will not enforce its new ordinance until the court cases are resolved.

But in Lynn, city officials are moving aggressively to enforce new rules.

Lynn has hired a Salem-based mediation company to force dialogue between homeowners and lenders, and the company is already involved with 176 cases, said James Lamanna, city attorney.

“It’s consistent with state law,” Lamanna said in defense of Lynn’s ordinance. “State law requires banks to work out loan modifications. As a practical matter, it’s not working, particularly with big banks.”

Another group of banks has challenged a law governing foreclosures in Springfield, passed three years ago. The ordinance is on hold as the case awaits a ruling from the First Circuit Court of Appeals. The federal court has also asked the state Supreme Judicial Court to weigh in on the decision. A ruling is expected later this year.

A spokeswoman for the attorney general’s office declined to comment on the local regulations.

Foreclosure levels today are well below the worst of the crisis, which peaked in 2007 and 2008. In May, lenders initiated 573 petitions more than double the number from a year earlier, but a fraction of the more than 2,100 started in May of 2007, the Warren Group, a real estate tracking firm, reported Tuesday.

Timothy Warren, chief executive of the Warren group, blamed the jump foreclosure starts on a backlog created while lenders waited for new federal regulations to go into effects. Many foreclosures that are started are never completed as lenders and borrowers negotiate new payment plans or properties are sold.

Lenders completed 151 foreclosures in May, down from 251 a year earlier and more than 1,400 in May 2008.

Please click here to view the online article.

Class Action Complaint over Rental Fees in Hammond, IN

Posted on September 13, 2018September 13, 2018 by Safeguard

On July 18, nwitimes.com published an article titled Class Action Complaint Filed over Rental Fees.

Class action complaint filed over rental fees

HAMMOND | A class action complaint has been filed against the city and Board of Public Works and Safety regarding rental property late fees.

According to the lawsuit, the Board of Works has been operating in a quasi-judicial capacity by conducting rental registration hearings and assessing fines and penalties against landlords and property owners for violations of a city ordinance.

Hammond has an ordinance requiring landlords to pay an $80 rental registration fee for each rental unit to be paid annually by April 15. Those who miss the deadline are brought before the Board of Works for a hearing to determine if they will pay a $500 per unit late fee.

The complaint says those hearings are in direct violation of an Indiana code that affords City Courts exclusive jurisdiction over all city ordinances.

“The statute says if you are going to have this rental registration that if you are going to fine someone in violation of the fee then you have to bring it into City Court,” said attorney Carla Pyle, of Rubino, Ruman, Crosmer & Polen LLC, in Dyer.

Pyle, who is counsel for plaintiffs Randy Chariton and Paul Malarik and “others similarly situated,” said the Board of Works is also not an impartial board because it is funding itself.

The three Board of Works members named as defendants in the lawsuit are Stan Dostatni, Ed Krusa and Jeffery Smith.

Hammond city attorney Kris Kantar said the city gets sued all the time and there is “nothing special or magical about this case.”

“All you need to sue the city is an idea and a filing fee and sometimes the filing fee gets waived,” she said. “The whole complaint is based on a false premise.”

Kantar said there is no fine or fee imposed by the Board of Works, that it’s only the grant or denial of an appeal.

“The city of Hammond’s rental registration ordinance states if you don’t register your units by April 15, there is a late fee added on,” she said. “If you don’t register, then the fee is applied to the cost. The city can – and does – take you to City Court. City Court can – and does – impose a fine.”

Kantar said late fees can be large – one manager of a multi-unit property was facing $40,000 in late fees this year alone – so the city allows an appeal of that late fee imposed by the ordinance and not by the Board of Works. The board grants the appeal and says to register at the normal rate or denies it.

“It does not create anything that didn’t previously exist,” Kantar said. “The appeal can be for various reasons, such as the property is not a rental, it was vacant, you have the wrong owner, the owner was in the hospital or dead when the deadline passed.”

Please click here to view the online article.