San Francisco Chronicle

Reuters reports that one in ten homeowners hold mortgages that are upside down.

I feel the numbers are substantially worse than generally reported and that many homeowners have a gut feeling that they are in real trouble because their homes have depreciated.   They are frightened, concerned, and confused.

We really don’t know how far values have plummeted and there’s no way to predict when the crises will end.

Never before has there been such a legitimate need and opportunity for title companies to connect with consumers.  Build credibility in local markets by offering information and resources to people who are frightened and in need.  Partner with churches, non-profits, real estate offices to host gatherings to discuss the realities of foreclosure, selling short, mortgage fraud schemes, communicating with lenders, etc.  Start a blog to stay connected with the people you meet and to keep sharing valuable information.

Re-invent your title company as the local “go-to” place for the real estate needs of real people.  After all, you are the expert.  No one knows their way around a transaction the way you do!

What are you waiting for?  Do it now … your future customers are waiting to hear from you!

Your future customers need to hear from you! 

The New York Times  describes a shift in the perceived value of homeownership as precipitated by the housing meltdown.

I’ve said it repeatedly on Title-opoly: the nature of homeownership in this country is about to change forever.

BusinessWeek bashes the Clinton administrations use of creative public policy to ramp-up homeownership numbers. 

The article makes for an interesting read.

Peter Miller offers an expanded view of “mortgage fraud for profit” that includes the practices of predatory lenders. 

Last fall, I wrote a piece for OpEdNews.com to eradicate any misnomer that there is somehow a difference between predatory lending and mortgage fraud.  There’s not!  I was responding to a  white paper wherein the Mortgage Bankers Association defined mortgage fraud in clear, certain terms while cloaking predatory lending with ambiguity.   Both are criminal acts with a nearly identical cast of characters and foreclosure as an inevitable by-product.

The conceptual root of “mortgage fraud for profit” is a single fraudster exploiting mortgage lenders by siphoning ill gotten gains from numerous transactions.  Think of it as the “lender as victim” syndrome. 

Miller’s broadened definition of “mortgage fraud for profit” reaches to the heart of a problem that elected officials can’t seem to grasp and industry groups want to conceal.  While many consumers participate in the fraud that’s at the core of the housing meltdown, they aren’t the masterminds of the crimes.  In some cases, industry insiders coach consumers while facilitating questionable deals to earn commissions or fees.  In other cases, as Miller suggests, industry insiders actively prey upon unsuspecting borrowers.  

Keep in mind, my definition of industry insiders includes real estate agents, title agents, loan originators, appraisers, etc.  Peter Miller refers specifically to unscrupulous lenders, but his perspective clears a path for a new definition of “mortgage fraud for profit” that includes anyone who violates the integrity of a real estate deal to turn a profit.

From Reuters: Stewart Information Services Corp. “reported a fourth-quarter loss and its first annual loss since 1974, and said it plans deeper job cuts to cope with the nation’s severe decline in the housing market.”  Stewart eliminated about 1,500 jobs and closed about 145 offices in 2007 alone.

Losses were attributed to:

• the sub-prime collapse
• the credit crunch
• the foreclosure crises
• tanking home prices
  

Hhhhm!  Shouldn’t title claims and defalcations be included on the list?

I found an interesting article, Realtors’ culture not tough on fraud, on the St. Petersburg Times’ website.  Dan Dewitt alleges that two real estate agents with Exit-Success Realty altered published listing prices and structured deals with contracts written for much more than actual selling prices.  The accusations point strongly to the possibility of mortgage fraud.

In comes a third real estate agent into the scenario who was fired by Exit-Success Realty’s owner after voicing an opinion that her colleagues weren’t innocent of the claims of illegal activity.  The alleged fraudsters remain associated with the brokerage.

Dewitt possibly stumbled upon a diseased corporate culture where impropriety flourishes because it’s indirectly rewarded. Those who don’t play the scandalous game are punished.  If, in fact, it could be shown that listing prices were altered in a pattern consistent with mortgage fraud, the owner of Exit-Success Realty sent a clear public signal regarding the company’s values and unpublished mission statement. 

Ed Carr, the director of the local Association of Realtors maintains that his responsibility ends with the education of members and doesn’t extend as far as sanctioning known perpetrators of mortgage fraud within the organization or notifying authorities. 

Does Carr’s self-styled complacency create a smokescreen that effectively veils and encourages illegal activity by the membership of his professional association?

And so, the corrupt culture of individual companies infects the next layer, and so forth, of an industry that acquiesces in a culture of silent greed. 

And so, commission dollars pour into real estate brokerages, as do membership fees into associations, while mortgage fraud steadfastly destroys communities, families, and lives.

The situation reminds me of the cowardice of title underwriters that ignore audit reports suggesting that high dollar agents are tampering with escrow accounts. 

It reminds me of a national trade association that lacks the integrity to challenge it’s largest members as their criminal escapades are exposed by media, regulators, and consumer advocacy groups.

From an article in USA Today:

In the past year, the bureau created 34 mortgage fraud task forces and working groups with investigators from departments including Housing and Urban Development, Treasury and Veterans Affairs.

They investigate suspicious activity such as deceptive pricing and falsified documentation by mortgage brokers, lenders, appraisers, real estate firms and others …

Reuters reports that 1.775 million foreclosures were filed last year.

… featured again in The New York Times .

From the article:

In addition to the declining value of her home, Ms. Harris, 53, will soon be hit with a sharply higher house payment. She has an option adjustable-rate mortgage, a loan that allows borrowers to pay less than the interest and principal due every month. The unpaid interest gets added to the principal balance. She is making the minimum monthly payments due on her loan, about $2,400.

But she knows she will not be able to pay the $3,400 needed to cover her interest and principal, which she will be required to pay once her loan balance reaches 115 percent of her starting balance. And under the terms of her loan, which was made by Countrywide Financial, she would have to pay a prepayment penalty of about $40,000 if she chose to refinance or sell her home before May 2009.

And:

Credit counselors say many borrowers like Ms. Harris were cajoled or pushed into risky mortgages that they never had the ability to repay.

Blogger Carlos Gasca Yanez has proposed an innovative solution to this nation’s looming social blight: housing markets in crises.  The idea championed in a post titled Subprime Crises calling for Social Entrepreneurs is to partner nonprofit initiative with corporate enterprise.  Carlos envisions a real estate model that embraces a marriage of compassionate sensitivity to the profit motive.  Essentially, cooperative education would occur at every level beginning with professional development and the implementation of best practices.  Businesses and nonprofits would then endeavor to protect and inform borrowers likely to be victimized by predatory lenders.

A ridiculous proposition?  I think not.

Years ago, I participated in a social experiment with a nonprofit named People’s Homesteading Group.  To make a long story short: homes were awarded to participants based on an equation that favored need over financial qualifications.  My company facilitated thirty or more closings and the quasi-governmental funding that served as the financial mantle of the project.  While it might be said that corporate resources could have been used more profitably from the perspective of balance sheets, it could also be said that my horizons grew in ways that transcended dollars and cents.  The homesteading project was successful overall.

Don’t miss the comment thread on Carlos’ post.  Chris describes personal experiences with a radical and remarkable housing initiative unfolding in Scotland and Norway.  Cheryl gives an incredible dissertation on the importance of teaching credit fundamentals.

I left the post with a realization that housing is possibly the paramount global issue.

Earlier this week, I submitted an article, my first, to a site named OpEdNews.com.  I’m not sure if OpEdNews.com is a communal blog, in the same vein as Active Rain, or a syndicated news feed, but I enjoy the writing there a great deal.  The typical post tends to be more provocative and better written than ordinarily encountered in the blogosphere at large.  There’s also an unmistakable political bias.    Dave Wirshing brought the site to my attention after Title-opoly was quoted by M. Davis in a post named It’s going to be a lawsuit moment: class actions slated to restructure real estate market.  Mark Pilatowski graciously mentioned it in his blog.   I highly recommend that you read everything on OpEdNews.com that’s been penned by M. Davis.  She’s a talented, intuitive, and gutsy writer who understands the perils faced by real people during these challenging times in real estate markets.

 My article, The Cult of Plausible Deniability, is more likely than not to offend the sensibilities of many who make a living visa vie commissions earned in real estate transactions.  The term “real estate professional,” used in the broadest possible context, is intended to describe all licensed disciplines that contribute to a successful close for a mutual client.  A number of readers on Active Rain disagree with my judicious use of the term to describe anyone other than a real estate agent.  I’m sorry, but the words “real estate” are characteristically generic and aren’t the exclusive domain of those who list and sell property.