Re: While the overall rate of foreclosures in the Eugene-Springfield area doesn’t come close to those in some of the nation’s hot spots — Nevada, California, Florida, Michigan and Ohio top the list — the dramatic local increase in 2007 has drawn the attention of observers.

from 2005:
A bipartisan legislative proposal establishing a pilot program for Federal Housing Administration (FHA) insurance of zero downpayment mortgages would significantly increase homeownership opportunities for the nation’s working families, NAHB told Congress on June 30.

Appearing before the House Subcommittee on Housing and Community Opportunity, NAHB President David Wilson testified in support of H.R. 3043, the “Zero Downpayment Pilot Program Act of 2005,” which was introduced by Reps. Patrick Tiberi (R-Ohio) and David Scott (D-Ga.).

“This legislation continues a long tradition of innovation at the FHA by addressing a primary obstacle preventing many minority and low- and moderate-income families from becoming home owners — the lack of funds necessary for a downpayment,” said Wilson.

Designed to be financially self-supporting while building a record of success, the pilot program established by the bill would enable the FHA to insure up to 50,000 zero downpayment mortgages for first-time home buyers.

Home buyers would be required to pay a 2.25% mortgage insurance premium (MIP) for the loan upfront, compared to the 1.5% that is required for an FHA single-family loan with a 3% downpayment, and an annual MIP of 75 instead of 50 basis points for the first five years of the loan.

>>>>>retards!

No, people are angry about banks and financial institutions. You have gotcha credit card offers, unjustifiably high fees for minor screw-ups (they weren’t regarded as a profit center 25 years ago), and examples of people regularly reported in the press of misrepresentation by mortgage brokers of the terms of the mortgage (along with plenty of reporting of borrowers being greedy, dumb, or unlucky).

In days of yore, if a borrower got into trouble, everyone knew the best solution in the vast majority of cases was a renegotiation of the terms. Now as has been widely discussed, banks have cut way back on their workout staffs and don’t seem to think it’s worth the bother and expense to try to see if it makes economic sense not to foreclose (admittedly, their hands may be tied by the servicing agreement).

So the public likes these stories because its shadenfreude. If a consumer didn’t understand the terms of his mortgage or credit card agreement, tough, he has to live with them. And if the banks didn’t bother keeping good enough files to satisfy a judge that they really do have the right to foreclose, too bad for them. That’s what’s at work here.

An attorney general sticking his nose in private suits is one matter, that clearly is pretty questionable. But the judges have been dismissing the cases without prejudice, Yves said that.

If the banks can’t satisfy the documentary requirements on a second or third go, that’s their problem. It says they’ve done a pretty crappy job of record-keeping. Any party to a private contract has to prove the validity of their standing, whether it’s a bank or just two individuals dealing with each other. I don’t see the point in getting exercised about this.

This is a non-issue beyond the press orgy on it.

I’m getting pretty tired of reporters interviewing defendant’s counsel and then writing a story on it as if it were the gospel. See this post for a recent ruling in Ohio that might have surprised AG Marc Dann and some reporters, but isn’t a surprise to anyone who actually knows this stuff.

From the magistrate’s ruling:

[Those saying the original note is needed] conflate the need for real property transactions to be in writing with Ohio’s recording statutes….under the Uniform Commercial Code as codified in Ohio, parties to a Note, subsequent holders of the Note, nonholders in possession of the Note who have the rights of holders, and persons not in possession of the Note who are entitled to enforce the Note pursuant to other statutory requirements, may enforce the terms of the note as to each other. Parties falling within these legal categories may enforce the terms of the Note even if the Note is lost, stolen, or destroyed.

California is pretty much the same way. Judges often decide to rule in ways that meet the whims of the public they serve, but it doesn’t mean they’re following the law or that borrowers get to keep their home.

There is only one way to keep a home, and that’s by paying a mortgage. We can bicker all we want about who is to blame for putting borrowers into mortgages they can’t afford, we can brainstorm plans to keep them there — we can even discuss who subsidizes such a move — but to suggest that homes are “free” because of a lack of recording is just plain inane.

Agreed, that’s why I said in my intro to the article that I had no sympathy with the people quoted who were accusing judges of favoritism towards the locals or saying their demands that the plaintiffs prove they had standing (the right to pursue the claim) was “a waste of time.” Guess banks believe in the rule of law only when it works in their favor.

The judges are following the law. In the US, a lender bears the burden of proof in establishing its right to foreclose. Otherwise, they are stuck on equal footing with all unsecured lenders to the debtor. This is nothing new.