Foreclosure Moratorium Update

Moratorium on foreclosure sales empties bargain bin

Bargain buyers have to look harder to find foreclosed homes as bank-owned properties were yanked from the South Florida market during the past three weeks.

Four lenders froze foreclosure proceedings several weeks ago after allegations that paperwork was faulty, or in some cases even fraudulent.

It’s unknown how fast Bank of America, which said Monday that it was restarting its foreclosure proceedings, will be able to get its repossessed homes into circulation, but Realtors and investors say they hope the uncertainty clouding the process clears soon.

Also Tuesday, the White House said that an interagency task force on financial fraud has launched an investigation into the foreclosure process.

“If this turns into a lengthy situation, it could really destabilize the marketplace as discount buyers compete for properties or decide to sit on the sidelines.

The reduction of bank-owned homes leaves fewer than 4,000 foreclosures on the market in South Florida, including 1,650 single-family homes and 2,271 condominiums.

“The person I wouldn’t want to be is the listing agent on bank-owned properties because effectively they are going on vacation for the next quarter,” Zalewski said.

Some economists have said a foreclosure delay will pump up the economy by slowing the number of discounted properties going to market, which could even out or bolster home prices.

But investor Don Cameron, who owns a South Florida franchise of We Buy Ugly Houses, disagrees. Cameron buys many of his homes at Palm Beach County’s thrice-weekly foreclosure auctions, carefully researching the condition and history of each property before bidding.

When sales are pulled because of the moratorium, that research is wasted, he said.

Also, Cameron’s business involves rehabilitating homes, which means hiring people for construction jobs. Through the sales of the houses, Realtors make commissions, title companies have business, and taxes get paid.

“It’s all a domino effect and it’s stunting and halting economic recovery here,” Cameron said.

Two federal agencies look for fraud

WASHINGTON – Oct. 20, 2010 – The Obama administration said Tuesday that it has started its own investigation into mortgage foreclosures, joining the nation’s 50 state attorneys general in probing the alleged use of faulty or fraudulent documents to seize tens of thousands of homes.

White House press secretary Robert Gibbs released a statement Tuesday morning saying two federal agencies “have undertaken their own regulatory and enforcement investigation into the foreclosure process.”

The statement came the morning after Bank of America announced it would resume seizing more than 100,000 homes in 23 states next week, lifting a moratorium it imposed Oct. 8. The bank said that despite accusations that documents filed in courts were flawed, it had found no significant problems with its foreclosure actions.

Foreclosure laws are set by states, which makes federal prosecution difficult, defense lawyers said. The administration could pursue lenders and mortgage servicers under various federal statutes such as mail, wire or bank fraud, said attorney Daniel Mestaz of Scottsdale, Ariz.

In past federal investigations of big lenders, “It almost always ends up being some kind of settlement or arrangement, and the people who go to prison are the little guys,” Mestaz said.

Portland, Ore., lawyer Robert Calo suspects investigators will look at individuals such as notaries, but if fraud is “pervasive enough, if enough people are looking the other way, including higher officers, then they’ll tag the bank.”

Despite investigations of Goldman Sachs, Countrywide and AIG, no major player has been convicted in the subprime mortgage crisis, said former federal prosecutor Robert Mintz, now a New Jersey defense lawyer.

State attorneys general announced a 50-state probe on Oct. 12 into foreclosure practices. On Oct. 6, Attorney General Eric Holder said federal officials “are looking at” reports of mortgage fraud. Gibbs’ statement Tuesday goes further than Holder’s remark in saying that an “investigation” is underway by the Federal Housing Administration and the Financial Fraud Enforcement Task Force.

The task force, created in November, includes senior officials from 24 departments and agencies including the Justice and Treasury departments.

Task force leaders, including Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan, are scheduled to meet privately today to discuss the foreclosure crisis.

Rob Skeel , Realtor- e-Pro - Cell --305-393-6300 Email--rob@robskeel.com
Century 21 Keysearch Realty--877-660-4637
Web Site-- www.RobSkeel.com