Category Archives: Real Estate

Today in Real Estate

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We do live in strange times, especially when it comes to real estate.  Here are just a couple of fun stories for your entertainment:

In Texas an obscure law might have enabled a man to take possession of a $300,000 home for $16 and three years of his time:

In other news it looks like the robo-signing practices that mortgage companies promised to halt have continued:

"Robo-signing is not even close to over," says Curtis Hertel, the recorder of deeds in Ingham County, Mich., which includes Lansing. "It's still an epidemic."

In Essex County, Mass., the office that handles property deeds has received almost 1,300 documents since October with the signature of "Linda Green," but in 22 different handwriting styles and with many different titles.

Linda Green worked for a company called DocX that processed mortgage paperwork and was shut down in the spring of 2010. County officials say they believe Green hasn't worked in the industry since. Why her signature remains in use is not clear.

"My office is a crime scene," says John O'Brien, the registrar of deeds in Essex County, which is north of Boston and includes the city of Salem.

In Guilford County, N.C., the office that records deeds says it received 456 documents with suspect signatures from Oct. 1, 2010, through June 30. The documents, mortgage assignments and certificates of satisfaction, transfer loans from one bank to another or certify a loan has been paid off.

Suspect signatures on the paperwork include 290 signed by Bryan Bly and 155 by Crystal Moore. In the mortgage investigations last fall, both admitted signing their names to mortgage documents without having read them. Neither was charged with a crime.

 

This Might Not End Well

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The NY Appellate Division has found that MERS does NOT have the right to foreclose on a mortgage in default, nor can it assign that right.  From the story (found via VDM):

The ubiquitous Mortgage Electronic Registration Systems, nominal holder of millions of mortgages, does not have the right to foreclose on a mortgage in default or assign that right to anyone else if it does not hold the underlying promissory note, the Appellate Division, Second Department, ruled Friday. "This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation," Justice John M. Leventhal wrote for a unanimous panel in Bank of New York v. Silverberg, 17464/08. "Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property." The opinion noted that MERS is involved in about 60 percent of the mortgages originated in the United States.

This could, and maybe should, end very badly for the mortgage industry.

Lewisville, er, Western Forsyth Development Almost Complete

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Did any of you catch the interesting play by the town council of Lewisville, NC to annex roads just outside its current borders?  You read that right – Lewisville's town council tried to annex roads, but not the land surrounding those roads, and in the process ticked off just about every state legislator from the area.  Basically the town was trying to control the access and delivery of services in the immediate vicinity because it wasn't granted extraterritorial jurisdiction and it wanted to prevent a development being put right outside its borders, thus increasing use of Lewisville's resources without contributing to its tax base.  You ever wondered what might have prompted this concern? I'd venture a guess that the soon to be completed Lake at Lisarra development had something to do with it:

Construction on the upscale Lake at Lissara residential development in western Forsyth County is slated for completion this month, capping a more than $60 million project.

Lake at Lissara, a 254-acre project developed by Lang Wilcox, Brant Godfrey, Pete Ramey and Beau Dancy, features a man-made lake and 102 lots off Shallowford and Conrad Roads. Homes prices range from the $400,000s to more than $1 million.

Read more: Forsyth development nearly complete | The Business Journal

 

Foreclosure Map of Forsyth County

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I'm going to warn you ahead of time that this is potentially a very depressing post.  Have you ever wondered how many houses in your area are in foreclosure?  No need to wonder.  Just go to Google Maps and do the following (found via Fec's blog):

Google Maps Foreclosure Listings

1. Punch in any US address into Google Maps.

2. Your options are Earth, Satellite, Map, Traffic and . . . More. (Select “More”)

3. The drop down menu gives you a check box option for “Real Estate.”

4. The left column will give you several options (You may have to select “Show Options”)

5. Check the box marked “Foreclosure.”

Below is a screen shot of a Google Map after I plugged in a Forsyth County, NC address and zoomed out.  Those aren't measles you're looking at.

WinstonForeclosureMap

Clear Title

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Clear title is becoming a serious issue in the residential mortgage sector. It might be more accurate to say that clear title has been a serious issue in the residential mortgage sector, but it's now becoming a more commonly known problem. It appears that what's happening is people are realizing that the banks have done some pretty crappy, and sometimes fraudulent paper work on the mortgages that they're now trying to foreclose, and as the courts have started calling them on it the title insurance companies have decided that they can't insure what the banks are trying to resell.  Here's the scoop:

So why is it a big deal that Old Republic National Title isn’t going to insure Chase’s or GMAC’s foreclosures?

Because if a house doesn’t have clear title, you can’t get a title insurance policy for it. If you can’t get a title insurance policy for a property, lenders won’t lend because there is a huge risk that someone else is going to come forward with a valid title claim and take away the property and they will lose the investment they’ve made in the mortgage.

Clear title is one of the main tenets of homeownership in this country. If lenders can’t be assured that the seller (in this case, the banks who are reselling millions of foreclosures as REOs) have clear title to the property, they won’t issue a mortgage.

Which means homeowners can’t buy homes.

Which will be the perfect storm scenario that tanks the already crippled housing market.

If you think the current foreclosure freeze is bad news, think about what will happen if the millions of homes that are already in foreclosure and the millions more heading into foreclosure can’t be resold.

You know where all this is heading, right? Hello class action lawsuits.

(h/t to Fec for the link)

 

The HIDC

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Is home ownership the American dream or the American nightmare?  (No this isn't another post about my family's homeownership woes.  One can only write so much about buying and living in a lemon).  David Stockman writes about the "Housing Investment & Debt Complex" and posits that we should pull the plug on the government's program of homeowner subsidies. What he proposes, letting all those homeowners go belly up and making the financiers realize losses on all those loans, will never happen but it's fun to think about in a makes-you-sick-to-your-stomach kind of way:

Before Richard Nixon initiated the era of Republican “me-too” Big Government in the early 1970s — including his massive expansion of subsidized housing programs — there was about $475 billion of real estate mortgage debt outstanding, representing a little more than 47% of GDP.

Had sound risk management and financial rectitude, as it had come to be defined under the relatively relaxed standards of post-war America, remained in tact, mortgage debt today would be about $7 trillion at the pre-Nixon GDP ratio. In fact, at $14 trillion or 100% of GDP the current figure is double that, implying that American real estate owners have been induced to shoulder an incremental mortgage burden that amounts to nearly half the nation’s current economic output…

At the end of the day there are upward of 15-20 million American households that can't afford their current mortgages or will be strongly disinclined to service them once housing prices take their next — and unpreventable — leg down. But Pimco’s gold-coast socialism is exactly the wrong answer. Rather than having their mortgages modified or forgiven, these households should be foreclosed upon, and the sooner the better. In that event, there's absolutely no danger that impacted families will go without shelter. The supply of rental units is swelling by the day and rental rates will come down further as speculators buy up REO and recycle back to the rental market.

Stated differently, pulling the plug on HIDC will rescue millions of households from mortgage-payment slavery and put them into a buyer's market for rented-housing services — a social welfare gain under present circumstances. To be sure, they'll loose their credit and probably their credit cards in the process. But the days of living off the housing ATM and bank-issued plastic are over for the American people anyway. Creating an honest financial environment where households are required to rebuild their balance sheets and consume within their means isn't a disservice or injustice to anyone. 

Likewise, millions of additional families that can, in fact, service their mortgages or that own their homes debt-free will face a further shrinkage of their paper wealth. The $16.5 trillion of household real estate value reported by the Fed in its Flow of Funds for the first quarter of this year was already down about 30% from the 2006 peak, and could readily decline by another 20%. But would the implied $3 trillion loss of paper wealth be avoidable in any event? 

Found via Fec

Who Joins Zoning Boards?

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Apparently someone has studied the composition of zoning boards and has come to the conclusion that people who join them are disproportionately people who have something to gain from their service:

What kind of person would volunteer to serve on a zoning board?  It’s not exactly a lucrative position. So it’s perhaps unsurprising that a new study byJerry L. Anderson, Aaron Brees, and Emily Renninger finds that most zoning board members have something to gain from their positions.

It's shocking, SHOCKING, I tell you.  One might argue that with my job I fall into that category with my service on the Lewisville Planning Board, but I joined the Zoning Board of Adjustment and then the Planning Board before I took my current job.  In fact before I took my current job I had no experience in real estate and I had absolutely no business reason for joining the ZBOA or Planning Board.  I was, however, really interested in learning about how things worked in town and so I happily volunteered to serve.  I guess I'd add one caveat to the findings outlined above, and that is there are geeks like me out there who actually like sitting through planning sessions and find the topic interesting whether or not we benefit from the position.  Mind you there aren't many of us, but we are out there.

Lake at Lissara

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A front page article (subscription required) in this week's Triad Business Journal profiles the Lake at Lissara project in western Forsyth County, just outside the Lewisville Town Limits.  I'm embarrassed to say I didn't know much of anything about this project even though it's virtually a stone's throw from my house.  From the article:

Four Triad developers are teaming up to create a 112-home subdivision on 255 acres in western Forsyth County that will feature a large man-made lake and could reach $50 million in total investment, making it one the largest residential projects in the county since 2008…

By summer, builders and individuals can purchase lots ranging in size from one-fifth of an acre to 30 acres. Wilcox expects the homes to eventually sell for $300,000 to more than $1 million over the next seven years…

To create Lake at Lissara, the developers purchased six parcels of land for around $4 million from six different families, Wilcox said. Godfrey’s firm, Westview Development, previously owned 100 acres of the land slated for the subdivision.

Wilcox estimates total build-out costs, infrastructure and home construction to be $50 million. Once the land is plotted and recorded next month, Coldwell Banker Residential Mortgage will begin selling home lots ranging from $70,000 to about $300,000, Wilcox said.

The goal of the project is create a unique subdivision dotted with waterfront homes, sprawling estates, views of Pilot Mountain and a 64-foot-deep lake where homeowners can swim, sail and fish. The lake itself stretches some 3,000 feet end to end and has an estimated three miles of lake frontage.

From the standpoint of Lewisville I'm not sure this is a great development. There's a pretty decent impact on infrastructure since the quickest access to US-421 is through town, and that section of town already experiences a great deal of traffic volume. On the other hand, since this development is in Forsyth the town won't recognize any tax revenue from it, and considering these are going to be high end properties that would be a decent chunk of change.  Maybe the town will get a little indirect bump if the development helps raise the value of surrounding properties, but I don't think it will be enough to make up for the infrastructure hit.

Update: More from the Winston-Salem Journal