Weekend Open Thread (2012-07-27)

NOTE: If you are subscribed to Seattle Bubble’s RSS feed and are seeing these open threads in the feed, please switch to our official feed at http://feeds.feedburner.com/SeattleBubble Thanks!

Here is your open thread for the weekend beginning Friday July 27th, 2012. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!

NOTICE: If you have comments to make about politics or economics that do not somehow directly relate to Seattle-area real estate, they may be posted in the current Politics & Economics Open Thread. If you post such comments here, they will be moved there.

0.00 avg. rating (0% score) - 0 votes

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

37 comments:

  1. 1

    Facebook hit a new low today. Something about investors and earnings. ;-)

    http://www.google.com/finance?client=news&q=fb

  2. 2
    Lurk57 says:

    I haven’t been reading all of the threads lately. Has anyone noted that some banks are voluntarily forgiving HELOCs recently?

  3. 3

    RE: Lurk57 @ 2 – They might be settling them for pennies on the dollar, but I don’t know why they would just release.

    Are you sure you’re not just hearing about them “writing off” the loan? That doesn’t mean they are releasing the debtor.

  4. 4
    The Tim says:

    RE: Kary L. Krismer @ 1 – $23.70 – ouch.

    Good thing Galen was lying when he said he was “betting my retirement on Facebook” back on May 18 (the post has since been changed), when it was trading at $38 a share. Hope nobody took that advice.

  5. 5
    One Eyed Man says:

    RE: Kary L. Krismer @ 3RE: Lurk57 @ 2

    Several lawyers on the King County Bar Real Estate Section link serve have said on a thread in the last few days that they are now seeing the settlement banks do an about face on some short sales and walking away (loan forgiveness) from HELOC’s as big as 200+K that the lenders had previously said they wouldn’t forgive. One attorney said there is talk nationally that lenders have also been sending unsolicited letters offering forgiveness on large ARM HELOC’s that are in default but not necessarily in foreclosure or the subject of a short sale application. They seem to be assuming its part of the settlement and relates to certain types of HELOC’s, but they just know the HELOC’s are being forgiven, they don’t seem to know the specifics of whether the settlement is actually the cause for sure or what the guidelines are for the change in position by the lenders.

  6. 6
    Lurk57 says:

    RE: Kary L. Krismer @ 3 & One Eyed Man @ 5

    That’s my source of information as well. For the most part, they all mention the same bank. It’s like a backwards lottery out there.

  7. 7
    Blurtman says:

    RE: One Eyed Man @ 5 – Freaking deadbeats. Why must taxpayers subsidize these boobs?

  8. 8

    RE: One Eyed Man @ 5 – Are you on a different system than the one I am? I’m on a Yahoo based KCBA Real Estate one, and I’ve seen no such discussion.

    Also, assuming it is different, has there been much talk there of banks doing judicial foreclosures?

    And what are the terms of the releases?

  9. 9
    David Losh says:

    RE: Lurk57 @ 2RE: One Eyed Man @ 5

    A person I know has a second, and a first for that matter, that is in extremely questionable condition. This person took loans from an investor, who then sold the loans, and the loans have been sold again.

    The second was sold to Country Wide, and now Bank of America supposedly owns the loan. For the first year Bank of America owned the loan they didn’t record the payments to the loan, but did run up fees. There is no talking to Bank of America, so when they were confronted with the cancelled checks they reluctantly showed the payments, but didn’t waive the fees.

    Now the second position lien holder is asking the first position lien holder if there is a second on the property. The first lien holder is asking the home owner if there is a second lien. What would be a proper response to that? He’d have to see the documents.

    I don’t know, but I think there are a lot of Country Wide documents that are in boxes some place that could never be proved in court.

    Any thoughts on that?

  10. 10

    By David Losh @ 9:

    Now the second position lien holder is asking the first position lien holder if there is a second on the property.

    Rather obviously you don’t know what you’re talking about. There’s no reason a second lien holder would ask a first position creditor whether their own lien exists.

    Also, FYI, BOA bought CW.

  11. 11
    David Losh says:

    RE: Kary L. Krismer @ 10

    The letter is specific in it’s request for information about a second lien. My seculation is they are building a case to prove a lien exists, and wasn’t paid off in some fashion.

    BofA was forced to buy Country Wide, it was a part of a larger deal.

    Really Kary, if you have a comment to make, or some information, great! Bothering to make a commnet about something that there is no way, and obviously, you would have knowledge of is weird.

  12. 12

    By David Losh @ 11:

    The letter is specific in it’s request for information about a second lien. My seculation is they are building a case to prove a lien exists, and wasn’t paid off in some fashion. .

    There’s something about the situation you’re not explaining. Here’s my guess.

    The only reason I can think of that a second would “ask” a first about their lien is if the second was actually prior in time to the first, but unrecorded. If the first somehow knew about the unrecorded deed of trust, they would be subordinate to it, despite it being unrecorded.

    The other thing that I’ve seen happen is a property will be refinanced, paying off a HELOC, but the HELOC doesn’t get cancelled. The owner then runs up the HELOC again, and since it was recorded first, it would arguably be prior (depending on a lot of things).

    But if you just have a true first and a true second, where the first was dated and recorded first, there’s no reason a second would ask a first anything about its own lien right. If the second was not recorded, it could be recorded now. They wouldn’t have to contact the first to do that, and they would only lose out to some third party entity which recorded in between the time if the first’s recording and the second’s recording.

  13. 13
    David Losh says:

    RE: Kary L. Krismer @ 12

    Oh my goodness, you wrote another commnet.

    Alright I went and got the letter and it is pretty funny. All the second lien holder has is a copy of the original recorded Deed of Trust, and a relase of information form from the borrower, with no documentation of the sale to Country Wide, or the transfer to Bank of America.

    In other words it’s a fishing expedition.

    How many of those do you think there may be?

    So, counselor, what would be the response of the home owner? Should the home owner jump up and put in writing, “Oh yeah, that’s me, I owe the money, come and get it?”

  14. 14

    RE: David Losh @ 13 – How would you expect me to form an opinion when you can’t even explain what is going on? Now it sounds more like you’re talking about a collection effort.

    BTW, there may not be a transfer from CW to BOA. As I recall they left those separate entities because of concerns about the total liabilities of CW.

  15. 15
    David Losh says:

    RE: Kary L. Krismer @ 14

    Because Kary you are commneting about something that doesn’t require to to comment.

    My comment is in response to the Lurk57 commnet, and old One Eye, not to say that he is old.

    We are in interesting times, and yes it is all collection efforts. The question is if Bank of America can collect, or has the ability to collect, or has the right to collect. We don’t know, that will be for the courts to decide.

    In the mean time Luk57 asked a question and I would like to know if there is an answer.

  16. 16

    By David Losh @ 15:

    RE: Kary L. Krismer @ 14 – Because Kary you are commneting about something that doesn’t require to to comment.

    Just because you can’t understand my answer, that doesn’t mean it doesn’t “require” a comment, whatever that means. What world do you live in?

    If you don’t want things that you write commented on, don’t post. Once you post, it’s fair game. It’s as simple as that.

  17. 17

    By David Losh @ 15:

    We are in interesting times, and yes it is all collection efforts. The question is if Bank of America can collect, or has the ability to collect, or has the right to collect. We don’t know, that will be for the courts to decide.

    In the mean time Luk57 asked a question and I would like to know if there is an answer.

    Wow, all that just to figure out we’re dealing with a collection effort. Still, what I commented on at first makes no sense.

    Now the second position lien holder is asking the first position lien holder if there is a second on the property.

    But as to your question, nothing you’ve posted would indicate that the party doesn’t have the right to collect. And assuming they do, they are not going to just voluntarily give up that right for no consideration. It will require some sort of payment, and if they didn’t require payment it might not be binding on them. Keep in mind several legal issues may exist in settling such a claim, including possible tax issues.

    As to the tax issues, If you owed me $10,000 and I said you didn’t have to pay that back to me, you would typically have $10,000 of income. There might be exceptions to owing tax on that amount, such as being insolvent, and in your friend’s case possible the Mortgage Debt Relief Act might apply, although it doesn’t sound like that would apply. Your friend probably needs to see both an attorney and his/her tax preparer. Depending on the amount at stake, and the current ownership of the property at issue, your friend might be better off filing bankruptcy, because that provides another exception to recognizing discharge of indebtedness income.

  18. 18
    David Losh says:

    RE: Kary L. Krismer @ 16RE: Kary L. Krismer @ 17

    Lurker57 asked an interesting question. I happen to have the same question from a letter that I read. You don’t have insight, but you do have an opinion.

    I know how debt forgiveness, and the Debt Relief Act works, but it’s meaningless.

    According to the letter I saw the second position Note holder, which is Bank of America, doesn’t have documentation of the loan.

    I might as well look up county records, and start asking for people to pay me.

  19. 19

    RE: David Losh @ 18 – It’s possible there might be some good deals out there for debtors due to that settlement of the big banks with the various attorney generals. I haven’t read that much about it, but if there’s money there they have to forgive, they might not care much who they benefit.

  20. 20
    Pegasus says:

    RE: One Eyed Man @ 5 – It is the bank fraud settlement that has the settlement banks agreeing to walk away from completely or partially on the HELOCS. The bank fraud settlement allows them to treat the HELOCS the same as first mortgages and get settlement credit.

    The banks that agreed to the settlement are focusing on those loans that they know they don’t have a chance in hell in recovering anything if the home goes into foreclosure. The banks that service about half the nation’s mortgages on behalf of investors are able to share losses on their junior loans with bondholders and get credit toward the cash they pledged to spend in the settlement. The five banks in the mortgage settlement own 42 percent of the second liens. This makes it very likely a servicer of the primary mortgage will hold a property’s junior loan. The five banks in the mortgage settlement own 42 percent of the second liens. The banks also will be able to get credit from another government program, the HAMP program to help out homeowners, when they do make mortgage writedowns.

    Before in order to write down any part of the first they had to wipe out the second. Now they can treat them both the same. Since most of the first mortgages have been securitized the bondholders are taking the hit and the banks are not only getting settlement credit they can also get HAMP credit. The tax payers and the investors are paying the lion’s share of the bank settlement penalty and the banks are getting the credit for their losses. Our Kleptocracy is hard at work. The bankster got away with running a completely fraudulent mortgage system, nobody went to jail, they are getting a stealth bailout of their mostly worthless HELOCS that they own and the majority of their agreed upon settlement is coming out of other peoples pockets, mainly by those who got their clocks cleaned by the banksters in the first go-around.

  21. 21
    Blurtman says:

    RE: Pegasus @ 20 – To your point: http://www.commondreams.org/headline/2012/02/17-0

    So why would anyone vote for that boob, Rob McKenna?

    Mortgage Settlement ‘Whitewash’: US Taxpayers Will Pay for Big Bank Settlement
    Mortgage Deal or Not, Abusive Foreclosures Continue

    A clause in the provisional agreement allows the banks to use the government’s Home Affordable Modification Plan, or HAMP, to cover the principal reductions. Neil Barofsky, the former special inspector-general of the TARP, described the clause as “scandalous.” Says Barofsky: “It turns the notion that this is about justice and accountability on its head.”

    A little refresher on the HAMP plan: Banks receive payments from the government when they negotiate with underwater homeowners to avoid default. The taxpayer reimbursement is used to help cover the banks’ costs to write down principal balances and keep homeowners in their homes. Last month, the Treasury department announced it was tripling the incentive payments to owners of mortgages who agree to reduce loan balances. The timing of the settlement is therefore perfect.

    As the FT notes, “by reducing those balances under HAMP, investors — including the banks who agreed the settlement — now will receive cash payments of up to 63 cents on the dollar for every dollar of loan principal forgiven. They also will receive additional funds when borrowers keep current on their restructured mortgages.”

  22. 22
    David Losh says:

    RE: Blurtman @ 21RE: Pegasus @ 20

    I came to the conclusion is 2008, 2009, 2010, that no one should be playing these games with the bank. I’m sorry bankruptcy, and foreclosure are bad words in the American vocabulary, but in my opinion the home owner should use the tools they have been given.

    It’s like the guy who used the HAMP modification, and in the end owed more than he did originally because of the fees, penalties, and interest.

    I’m sure there is a way to make it all work for the consumer, but I have yet to hear about that.

    Anyway, thank you for the great information.

  23. 23
    Blurtman says:

    What more can be said about Rob McKenna’s hopelessy staged and phony campaign ad, except – jiggly man boobs. Really, Rob, cover up.

  24. 24

    RE: Blurtman @ 23 – I don’t watch many campaign ads, because I DVR everything and watch next to nothing live, but I did see one of his ads. Clearly he’s not going to win any acting awards, unless maybe there’s a category for acting for one of the Nobel Prizes. ;-)

  25. 25
    One Eyed Man says:

    RE: Pegasus @ 20

    Thanks Pegasus. I assume the banks probably have enough uncollectable HELOC’s that (subject to any limits set in the Settlement) they can release and substitute for all payments due on the settlement. I’ve never checked the numbers or read about the terms of the settlement or looked into what the settlement technically requires and how the mechanics of the parties duties work. I assume the banks have some time limits so now the banks are in a mad race to document HELOC releases to get settlement credit so that they don’t have to make any cash payment or can at least limit the amount they must pay.

    If the banks can collect enough HELOC releases, their only expense to comply with the settlement is limited to doing the admin work to document the releases and perhaps a few cents on the dollar that collection companies might have paid for the collection rights. But I guess there probably is some limited macro economic value to our economy in that the settlement should help clear some of the short sale, foreclosure and legal system log jam to move the housing market a little closer to historically normal condition.

    Just a little brain teaser in the FUBAR world of financial accounting: Did a bank book an increase in their current operating profit by agreeing to what the world was told was a settlement payment? I don’t follow bank earnings very closely and I almost never look at their financials, but I know at least one (I think JP Morgan Chase) had what some commentators referred to as low quality of earnings last quarter. The earnings were low quality because they decreased their loss reserve. I wonder if that was because Chase could substitute HELOC releases for settlement payments on a bunch of HELOC’s they had already reserved against and written off. That could mean, somewhat ironically, that the settlement may have actually increased the current operating profit for Chase. It might be possible that Chase (or one of the other banks) has essentially booked a profit on the settlement.

  26. 26
    Blurtman says:

    RE: One Eyed Man @ 25 – Great! Yet another bank bailout. Why?

  27. 27
    pfft says:

    When will the Case-Shiller house price index turn positive Year-over-year?
    http://www.calculatedriskblog.com/2012/07/when-will-case-shiller-house-price.html#XS7ZWBTYaItvtlDb.99

  28. 28
    ARDELL says:

    A little something for your Sunday

    http://activerain.com/blogsview/3382393/call-me-maybe-

    Have it it! :)

  29. 29
    Howard says:

    How does one determine “what is owed” on a King County property? I see a property that has deeds of trust recorded 3-4 times after the initial purchase. None of the documents are scanned or online. House purchased in 1993, Deeds of trust rerecorded in 1997,2003, 2005, and 2007.. The kitchen looks nice from all the remodels though!

  30. 30
    Howard says:

    RE: Howard @ 29

    Should have asked the important question..

    Would you rent a house that is currently listed as a short sale?

  31. 31
    pfft says:

    Great article. well worth the read.

    the Affordable Care Act will give $11 billion to community health centers, a sum that will double the numbers and capacity of centers nationwide.

    http://www.nytimes.com/2012/07/29/magazine/what-can-mississippis-health-care-system-learn-from-iran.html?pagewanted=1&ref=magazine&src=me

  32. 32
    sofwarenginer says:

    RE: pfft @ 31

    Its a Well Worded Plan Too

    The only chapter missing is how to pay for it, ask 86% of the doctors who threaten to quit practice over its puny bill paying capacity.

  33. 33
    David Losh says:

    RE: ARDELL @ 28

    Which is exactly why I object to Active Rain, or Trulia, or Zillow, or redfin, or any of the other lead generation sites out there.

    The women do look cute, maybe we should call them.

  34. 34
    Blurtman says:

    RE: pfft @ 31 – Nice story. Thanks for the rural health care delivery model! But we are still going to bomb you and kill your people.

  35. 35
    ARDELL says:

    RE: David Losh @ 33

    Enjoy it while you can. It will likely get pulled by YouTube over the song rights. I don’t like it as a real estate ad, but a lot of work went into it.

  36. 36

    By Howard @ 29:

    How does one determine “what is owed” on a King County property? I see a property that has deeds of trust recorded 3-4 times after the initial purchase. None of the documents are scanned or online. House purchased in 1993, Deeds of trust rerecorded in 1997,2003, 2005, and 2007.. The kitchen looks nice from all the remodels though!

    Real estate agents have tools that give them those amounts, although sometimes they are incorrect. I think you can go down to the recorder’s office and view the DOTs (not sure). If I ever need one I get it from the title company.

    Here’s a tip though. If you click on the related documents for the deed of trust, it will typically (but not always) show a “reconveyance” if it’s been paid off.

  37. 37

    By Howard @ 30:

    RE: Howard @ 29

    Should have asked the important question..

    Would you rent a house that is currently listed as a short sale?

    I don’t see him mentioning it being for rent, but I always laugh at houses listed both for rent and for sale. It’s a good way to accomplish neither, IMHO.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.