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WV SB 600 Regulates Maintenance and VPR of Uninhabitable Properties

Posted on September 13, 2018October 4, 2018 by Safeguard

On March 6, West Virginia SB 600 passed the House and went before Governor Earl Ray Tomblin for consideration. Governor Tomblin signed the bill on March 28 and it goes into effect June 4. The bill clarifies responsible parties for compliance with municipal ordinances regarding the registration, maintenance, and regulation of dwellings unfit for habitation, vacant buildings, and vacant properties.

Link to Enrolled SB 600

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.

Weight of Foreclosure and Ohio HB 223

Posted on September 13, 2018October 4, 2018 by Safeguard

On March 16, Akron Beacon Journal published an article titled Weight of Foreclosure.

Please click here for prior reporting. Link to current bill text. Following is the aforementioned article.

Weight of foreclosure

Housing starts, home prices and purchases have been trending up, if somewhat fitfully, in Ohio. Foreclosure activity has declined. Still, new filings exceeded 70,000 in 2012, and the crisis continues to cast a long shadow, remaining a drag on the slow climb out of the housing debacle that triggered the 2007 recession.

A report released last week by the Federal Reserve Bank of Cleveland indicates the acuteness of the problem in Ohio and other states where foreclosures are handled through the courts. As the study notes, the amount of time it takes to complete the process — at least six months at its quickest in Ohio — adds significantly to the overall cost of foreclosures and slows the economic recovery. Vacant and abandoned properties present the highest expense.

It isn’t difficult to see why. Vacated houses deteriorate faster and reduce the value of surrounding properties. While they sit, they are of little benefit to mortgage lenders and do not generate revenue for local authorities, including school districts. Instead, they cost local governments money to protect against the properties becoming crime and health hazards.

By the study’s estimate, roughly 20 percent of Ohio’s foreclosed houses are vacant. Fast-track the judicial process for abandoned properties and clear other bottlenecks such as deed transfers, and the state would shorten the duration of foreclosures, reduce the inventory of foreclosed houses and substantially cut its losses. The report estimates the state could eliminate between $24 million and $129 million a year in losses.

One way to relieve the impact of the foreclosure crisis is to create an efficient process that moves abandoned properties more swiftly through the court system. House Bill 223, under consideration in the Ohio House, begins to push Ohio in that direction. Introduced last summer, the bill recently won approval in the House Financial Institutions, Housing and Urban Development Committee.

The bill takes reasonable steps to remove some of the barriers to quick resolution of foreclosure cases involving vacant and abandoned residential houses and unoccupied parcels designated as blighted. Among other provisions, it defines the criteria for declaring a residential property vacant and abandoned and thus eligible to be fast-tracked. It would permit a mortgage lender or a municipality to file summary action on vacant and abandoned residential houses, which would reduce the number of hearings.

The bill also would create a pilot program for foreclosing on blighted, unoccupied properties. One provision would eliminate the minimum-bid requirement if a property does not sell at first auction. At their convenience, municipalities would be permitted to dispose of any property that fails to sell at a sheriff’s auction. To prevent the trashing of houses, a homeowner who knowingly causes damage to a house in foreclosure would be guilty of vandalism.

Ohio is saddled with lingering costs and a backlog of foreclosure cases in the courts. House Bill 223 is a promising bipartisan effort to lift a weight that is slowing the economic recovery in communities across the state.

Please click here to view the online article.

WA HB 2723 Modifies Certain Provisions Governing Foreclosures

Posted on September 13, 2018 by Safeguard

On March 31, Washington Governor Jay Inslee signed House Bill 2723, which modifies certain foreclosure fairness act provisions. The bill becomes effective June 12, 2014.

Link to enrolled bill. Following is a summary of the bill.

Modifies foreclosure fairness act provisions regarding:

(1) Location of preforeclosure meeting and mediation;
(2) Mailing requirements for notices of preforeclosure
options;
(3) Changes to the foreclosure loss mitigation form;
(4) Borrower and beneficiary agreement to enter the
foreclosure mediation program;
(5) Required documentation for mediation purposes;
(6) Referrals to mediation; and
(7) Allocation of funds from the foreclosure fairness
account.

Senate Passes Flood Legislation

Posted on September 13, 2018 by Safeguard

On March 14, Mortgage Daily published an article titled Senate Passes Flood Legislation.

Link to H.R. 3370 bill text. Following is the aforementioned article.

Senate Passes Flood Legislation

President expected to sign bill

The U.S. Senate gave final approval Thursday to a sweeping bill designed to unravel much of a 2012 flood insurance reform law that led to soaring premiums and plunging real estate values on New York’s Long Island and other costal regions.

The measure, approved earlier by the House, eased through the Senate with a vote of 77 to 22, including support from 20 Republicans. The bill now heads to President Barack Obama, who is expected to sign it.

“Homeowners throughout the New York area can let out one big sigh of relief,” Sen. Charles Schumer (D-N.Y.) said in an interview after the vote.

The legislation would unravel key parts of a once-popular effort to save the National Flood Insurance Program from insolvency. The law, which took effect three months before superstorm Sandy, ended many of the subsidized premiums that have helped make costal homes affordable but have left the government-run insurer $24 billion in debt.

Those reforms, however, hit a backlash after Sandy. The premium increases hit as flooded homeowners struggled to rebuild. Congress, in turn, backpedaled.

Real estate lobbyists have cheered efforts to end the reforms, saying rising premiums were too much for property owners. But environmentalists and deficit hawks contend the move only prolongs reckoning with a program that they say increases national debt and encourages development in flood zones.

“Lawmakers have undone desperately needed reforms,” said Steve Ellis, of Taxpayers for Common Sense.

Private insurers don’t provide flood coverage, saying it is too risky. So the government offers it. But roughly 20 percent of the 5.5 million policies nationwide are subsidized, which has left the program in debt.

Thursday’s bill ends plans to end those subsidies. On Long Island, where roughly one-third of flood policies are subsidized, the measure’s biggest impact could be allowing homeowners to resume the practice of passing those discounts to buyers when houses are sold. The reforms ended that grandfathering system, which has hurt local home values.

To offset the cost of continuing those subsidies, the bill calls for charging policyholders an annual surcharge — a move that helped the measure draw Republican support.

Sen. Kirsten Gillibrand (D-N.Y.) urged the president to sign the bill quickly as a way to help families recovering from Sandy. “Allowing an insurance rate increase would be kicking families while they are down,” she said.

Please click here to view the online article.

Residential Rental Investors Form Trade Group

Posted on September 13, 2018 by Safeguard

On March 26, Mortgage Daily published an article titled Residential Rental Investors Form Trade Group.

Residential Rental Investors Form Trade Group

Association based in D.C.

How do you know when an industry is getting serious?

When it forms a trade group.

And that’s what the burgeoning business of big-money-backed single family rental homes did today.

A handful of the single-family rental giants that scooped up at least 130,000 homes in Southern California and elsewhere over the last two years launched the National Rental Home Council on Wednesday, a Washington, D.C.-based operation that will “educate” and “advocate” about the “professionally-managed single-family rental industry.”

The coalition includes arms of Wall Street giant Blackstone Group, Santa Monica-based Colony Capital, Agoura Hills-headquartered American Homes 4 Rent, and Oakland’s Starwood Waypoint Residential Trust. Combined, these firms and a few others have spent billions of dollars over the last two years buying up thousands of homes, with an aim to become giant landlords.

The group’s website is full of data and stories about the upsides of renting instead of owning your house, the benefits of “professionalizing” property management and the neighborhood and economic impacts of all this home-buying.

“Our investment in local communities helps to create new jobs through renovation and property management, and drives economic growth by providing income for local businesses and tax revenues for state and local governments,” said Justin Chang, chief executive of Colony American Homes, in a statement. “Our investment in local communities contributes to a vibrant and stable single-family rental market nationwide.”

And while the Home Council has no stated legislative agenda, it could also provide a forum to push back against growing criticism of the big buy-to-rent sector from housing groups and homeownership advocates, who say it’s crowding out first-time buyers and potentially driving up rents. Earlier this month, 78 such groups sent a letter to federal regulators asking for new safeguards to protect buyers and tenants as the single-family rental industry evolves.

“There are some eerie parallels between what’s happening now and the mortgage meltdown,” said Kevin Stein, associate director of the California Reinvestment Coalition. “In both cases, the overarching similarity is a drive for higher and higher profits without regard for harmful impacts on families and communities.”

A spokesman for the National Rental Home Council said the trade group was not formed in response to that criticism and has been in the works for some time.

Please click here to view the online article.

CA Congressman Goes on REO-to-Rental Warpath

Posted on September 13, 2018 by Safeguard

On March 6, HousingWire published an article titled California Congressman Goes on REO-to-Rental Warpath.

California Congressman goes on REO-to-rental warpath

Takano pushing four federal bodies to investigate

Longtime critic of REO-to-rental U.S. Rep. Mark Takano, D-Calif., is on the warpath Thursday, firing off letters to four federal entities asking for a detailed investigation into the growth of REO operations and REO-to-rental as an investment — and what they are doing to effectively regulate the emerging asset class.

Takano sent letters Thursday morning to the Consumer Financial Protection Bureau, the U.S. Department of Housing and Urban Development, the U.S. Securities and Exchange Commission, and Treasury Office of Financial Research.

Takano is concerned that rental prices are going up, and a surplus of investors in rentals — along with new rental-backed securities deals — could have the effect of artificially raising rental prices, making housing even more costly in parts of California and elsewhere.

Takano cites a Federal Reserve report, which claims if unchecked, investor activity in local housing markets may lower the quality of neighborhoods, while pushing up prices.

Investor purchasers have been an outsized figure in recent years in housing. Normally, about 85% of home sales are individuals purchasing with a mortgage, about 10% are all-cash sales, and about 3-5% are distressed sales. In 2013, something like 40% of home sales were individuals using a mortgage, 40% were all-cash, more than about 15% were distressed sales and 5% were flips.

Takano’s office wants a number of detailed questions investigated by the federal entities, including clarification on how single-family rental bonds are structured, what their metrics are, how their performance criteria could affect operations, and what is the risk that when bonds mature, the borrower would be unable to refinance the bonds and be forced to sell properties to repay bondholders.

From the SEC, Takano wants to know details about the investors who are purchasing the bonds, how the riskier tranches are sold and whether they are being re-packaged into collateralized debt obligations and resold with higher ratings.

He wants the CFPB to provide a list of local housing markets with high concentrations of rental properties linked to rental-backed securities, and analysis of common trends within these communities, so that they can examine the impact of REO-to-rentals and rental-backed securities on mortgage credit availability, rental prices, and housing prices in highly impacted communities.

Further, he wants the CFPB to perform a comparison between the rehabilitation, ongoing maintenance, and management costs that large investors spend on REO-to-rental properties with other actors, and how that impacts local neighborhoods.

From HUD and the Federal Housing Administration, Takano is asking for detailed information about the impact of large investor purchasers on first-time homebuyers’ ability to enter the market, and an evaluation of trends in FHA-approved mortgages in impacted communities.

To date only two REO-to-rental deals have been securitized.

Blackstone Group (BX) spent the past two years building an expansive portfolio of single-family rental homes via subsidiary Invitation Homes, spending $7.5 billion to acquire 40,000 houses. Blackstone then packaged rental income from single-family homes into a pass-through security, which is functionally not unlike a mortgaged-backed security.

Goldman Sachs (GS) started coverage on American Homes 4 Rent at a neutral rating and a price target of $18, reports say. American Homes 4 Rent has spent some $3.5 billion to acquire more than 21,000 rental homes.

“If vacancy rates rise or renters are unable to pay their rent, Blackstone and others may be forced to sell off vast amounts of property to make their investors whole,” Takano explained. “Selling a large amount of properties quickly would not only deprive renters of their home, but destabilize the market for homebuyers and send housing prices into a freefall.”

Jed Kolko, chief economist with Trulia, told HousingWire that the outsized and growing number of single-family rentals’ affect on rental rates in general is negligible.

Using American Community Survey data from 2005 and 2012, Kolko looked at the change in metro housing units that were single-family rentals.

Most metros had a large increase in the share of their housing stock that was single-family rentals. Among the 100 largest metros, Kolko looked at the top 10 with the biggest increases in institutional investments (from one to ten) – Las Vegas, Nev.; Phoenix, Ariz.; Cape Coral-Fort Myers, Fla.; Memphis, Tenn.; Riverside-San Bernadino, Calif.; Tuscon, Ariz.; El Paso, Texas; Lakeland-Winter Haven, Fla.; Fresno, Calif., and Sarasota, Fla.

Please click here to view the online article.

NJ A-955 Would Help Homeowners Facing Foreclosure

Posted on September 13, 2018 by Safeguard

On February 22, NJ.com published an article titled Measure Would Help NJ Homeowners Facing Foreclosure.

Link to introduced bill. Following is the aforementioned article.

Measure would help NJ homeowners facing foreclosure

A bill that would help homeowners struggling to avoid foreclosure was released by an Assembly committee Friday.

The bill (A-955) would create a pilot program that would allow homeowners who have fallen behind on their mortgage payments to reduce the principal on the loan. In exchange, the homeowner would give New Jersey Housing and Mortgage Finance Agency shares of equity in the property that would be paid when the home is sold or over a 10-year period after the mortgage is paid off.

“The goal of this pilot program is to help homeowners afford to stay in their homes while discouraging distressed homeowners, who are still current on their mortgages, from defaulting,” Assemblyman Wayne DeAngelo (D-Mercer) said in a statement. “If we can reduce foreclosures and short sales, we can help eliminate the factors that are stifling the recovery of our housing sector.”

According to its sponsors, the bill would help ease the state’s housing crisis by allowing distressed homeowners to have their principal lowered by as much as 30 percent while also lowering interest rates.

New Jersey has the second-highest foreclosure rate in the country behind Florida.

“We cannot remain stuck while other states continue to rebound from the housing crisis that crippled our economy,” Assemblyman Jerry Green (D-Middlesex) said in astatement. “This program can help stem the tide of foreclosures and jumpstart our economy.”

Please click here to view the online article.

NH SB 341 Eviction Procedures on Foreclosed Properties

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

Updated 3/28: On March 14, SB 341 was referred to an interim study.

On January 8, New Hamphire introduced legislation that establishes a separate, abbreviated eviction process for foreclosed properties. SB 341 was referred to Commerce Committee.

Link to SB 341

MO SB 676 Notice to Vacate Requirements Following Foreclosure Sale

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

On January 8, Missouri introduced legislation that changes the notice requirement a new owner must give to a tenant following a foreclosure sale from ten business days to vacate the premises to ninety days. This act is identical to HB 485 (2011), SB 554 (2012), and SB 151 (2013).

Link to SB 676 Please note: On January 30, the bill had a second reading and was referred to the Judiciary and Civil Criminal Jurisprudence Committeee. As of April 10, there has been no further action.

Judicial States Struggle with Foreclosure Backlog

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

On February 25, MBA NewsLink published an article titled ‘Judicial’ States Struggle with Foreclosure Backlog.

‘Judicial’ States Struggle with Foreclosure Backlog

ORLANDO, Fla.–It’s a given: if a borrower goes into foreclosure in a “judicial” state, expect a long, ungainly process.

The Mortgage Bankers Association’s 4th Quarter 2013 National Delinquency Survey released last week showed states with judicial foreclosure processes (which involve extra steps through the state’s court system) still account for most loans in foreclosure. The NDS said of the 17 states that had a higher foreclosure inventory rate than the national average, 15 were judicial states. And while the percentage of loans in foreclosure dropped in both judicial and non-judicial states, the average rate for judicial states was 4.92 percent compared to the average rate of 1.52 percent for non-judicial states.

Caren Jacobs Castle, attorney with The Castle Law Group, Denver, said here at the recent MBA National Mortgage Servicing Conference & Expo that judicial delays in the foreclosure process, while well-intentioned, continue to keep thousands of borrowers and servicers in limbo, despite the courts’ working their way through resulting “bubbles.”

But in some of those states, sentiment appears to favor moving the process forward, particularly in New York, New Jersey and Florida, which have the highest number of foreclosures and make up nearly half (with Nevada) of all foreclosures in the U.S.

Rosemarie Diamond, managing partner with Phelan Hallinan & Diamond LLP, Philadelphia, said New Jersey represents a case study of the judicial process. In response to concerns raised in 2010, the state courts took a more active role in the process to ensure transparency–slowing the process down to perform longer reviews.

Diamond said many of these concerns have been resolved; in the second half of 2013, the courts reactivated a rule that allows them to dismiss cases perceived as “inactive,” issuing notices on more than 90,000 cases it still showed as being on the record demanding to know why these cases were still pending.

“This rule is going to be part of our ‘new normal’ and can affect whatever negotiations you have with a borrower,” Diamond said. “The rule ensures that the courts are not wasting resources. While this has sped up the process, it has also created confusion among some borrowers, who don’t understand why their cases have been dismissed.”

As the industry moves forward, New Jersey courts have been given only a finite amount of resources by the state, which affects their ability to manage the process. “Going forward, the state has allowed for electronic filing to streamline the process–which it has–but we now also have a significant number of loans that have to be addressed through the judicial process,” Diamond said. “This is resulting in a strain in court resources.”

Another statute expedites the process to close out abandoned and vacant properties, which Diamond said represents a very positive step. “For servicers and the community at large, and even for borrowers who have decided to move on with their lives, this is a very useful resource,” she said.

Daniel Consuegra, managing partner with the Law Offices of Daniel Consuegra, Tampa, Fla., said Florida continues to be the epicenter of foreclosure activity, with the highest rate of foreclosures in the country. He said backlogs as a result of the judicial process have pushed the process to more than two years in some cases.

A new foreclosure law in Florida, in effect since July, temporarily slowed the process even further, but he said the process has accelerated since then. “There is some movement to accelerating the process,” Consuegra said. “But there are statutes of limitations; and if it runs out, you have to start all over again, which drags out the process even longer.”

Susan West, senior associate of foreclosure with Rosicki, Rosicki & Associates, Plainview, N.Y., said New York faces similar issues to other foreclosure states, bogged down by the sheer numbers of foreclosures and the length of the process, one of the longest in the nation.

West said the state is experimenting in some cases with “bulk trials,” in which a representative from a single servicer provides testimony on numerous cases on the docket. She said in some cases, this cuts the foreclosure timeline by half. But other issues continue to drag the process.

“We’re still seeing loss mitigation as a major factor in the timeline,” West said. “We have 62 counties, all of which handle loss mitigation differently. It can be a real challenge.”

Consuegra said Florida has also used bulk trials as a means of cleaning up the process, setting up thousands of trials. Unfortunately, the trials required servicers to be in many places at the same time. “While it has reduced the backlog, it’s been very problematic logistically,” he said. “It’s required servicers’ witnesses to be well-prepared and servicers’ attorneys to be well-trained. They are up against sophisticated law firms with plenty of resources.”

Richard Rothfuss, president and CEO of Lerner Sampson and Rothfuss, Covington, Ky., said Ohio–and in particular, Cuyahoga County (Cleveland)–presents unique challenges. He said new legislative proposals and regulatory proposals appear to be more dialed in to resolving the foreclosure process more quickly and efficiently, although few have emerged from the legislative process. Rothfuss said part of the issue in Ohio, as well as other states, is that the foreclosure process is dependent on a public documentation system with limited resources.

“There’s nothing truly overwhelming right now,” Rothfuss said, “but neither are things changing quickly. There needs to be a flow to the process; what we’re seeing in Ohio and Kentucky is a lot of fits and starts.”

Please click here to view the online article.