A number of properties were sold last week at Sheriff Sale foreclosure auctions. All of them well below the judgment price.

31 B South Maple Ave, Park Ridge NJ -  had a winning bid of $57,600, much less than the $184,874.05 judgment awarded to Wachovia Bank. The 1,449 sq ft condo last sold in 2008 for $345,000.

104 Munn Ave, Teaneck, NJ - received a winning bid of $193,000. The 1,146 sq ft home sits on a 4,000 sq ft lot. It was last sold in 2005 for $350,000. Zillow estimates the value at around $277k. The foreclosure judgment was for $314,210.60.

81-83 Brook St, Bergenfield NJ - received a winning bid of $226,000. About half of the $459,462.56 foreclosure judgment awarded to IndyMac. This 1810 sq ft two-family home sits on a 4560 sq ft lot at the end of a dead end street and was last sold for $425k in 2004.

130 Wallace St, Red Bank NJ - received a winning bid of $242,000, about 58% of the $418,935.81 foreclosure judgment awarded to CitiMortgage. The 1,652 sq ft home built in 1925 sits on a 18k sq ft log and was last sold in 2007 for $427k.


What is Quantitative Easing :


Somehow hearing Quantitative Easing explained by cute cuddly cartoon characters doesn't seem so bad.

Very good work by malekanoms regarding QE and related issues.

See the video below.



River Vale Buys a Foreclosed Country Club


Did you see the foreclosure listing for 660 Rivervale Rd, River Vale, NJ and think to yourself "hey! I have $6.6 million laying around I think I'll pick myself up a country club at the Sheriff Auction!"

Well if you did, you're too late. The township of River Vale purchased the River Vale Country Club yesterday for $17.5 million in municipal bonds.

Last July the deal almost closed for $16.95 million but the owner, Kwang Ho Keh backed out of the deal. Then in September River Vale filed papers to claim the property under eminent domain.

Keh's company Chemitek 2006 LLC purchased the property in 2006 for $22 million planning to build housing on parts of the country club but that never happened due to permit disputes and lack of financing.

From NorthJersey.com:

“I really believe this is a watershed moment,” said River Vale Mayor Joseph Blundo. The township hopes to eventually turn a profit from the club while also protecting the course from further development.

A management company that the receiver hired to run the club will remain in place until at least January, when the township will conduct a competitive bidding process to hire a new management firm that will hire and fire employees, keep track of membership roles, and maintain the 99-acre club’s greens.

Now that the golf course will be municipally-owned, the town will forfeit more than $400,000 yearly in property taxes, but township officials say that that money will be more than made up in revenues from the course. The township will also be paying an untold amount yearly in bond payments related to the sale’s financing.

The township will now target an adjacent lot, known as the Mesker site, for a small-scale development, leaving the course, built in 1939, intact.



The Ohio Attorney General and a Cleveland Judge are taking a stand against robo signers. The issue started when James Renfro's home was being foreclosed by Ally Financial Inc.'s GMAC Mortgage unit. Two affidavits submitted in Renfro's foreclosure case were signed by "Jeffery Stephan a GMAC employee who said in sworn depositions in Florida and Maine that he hadn't read thousands of affidavits he'd signed."

Ohio AG Richard  Cordray asked Cuyahoga County Court of Common Pleas Judge Nancy Russo to not let GMAC off easy by allowing them to simply submit new documents without consequences. Cordray also indicated "This is just the first".

The judge in Cleveland set an accelerated schedule on Monday for evidence-gathering in the case, leading up to a Feb. 17 hearing on the integrity of the loan documents. Cordray's office plans to file a motion today asking to take part in the case and participate in so-called discovery.

Perjury by False Affidavit is a crime. A felony in fact. All these robo signers and the lenders and attorneys that knew what they were doing were committing a crime.

Perjury in civil cases seems to rarely be enforced but there are instances where it has.  The local District Attorney would have to choose to prosecute.

I wonder if the Judge can also issue a contempt of court order? Knowingly submitting thousands of false affidavits seems like an attempt to impede the court's duties to this non legal expert.

The effect of this action in Ohio could have broad implications. Yesterday I posted how State Bank Regulators were denied help from the Office of the Comptroller of Currency  when they wanted to look into the foreclosure operations of some of the largest banks. The State's inquiries could have exposed robo signer's three years ago.

State regulators and the OCC, which regulates national banks, frequently butt heads over jurisdiction. Unfortunately the OCC has prevailed when the States have tried to intervened. If the OCC didn't intervene on behalf of the banks back in the early part of the century we might not have a predatory lending or subprime problems in NJ.

If the State regulators work with their respective AG's or DA's, it's possible they can regain some control over what banks are allowed to do in their States by prosecuting lenders and other parties for the crimes they committed. The OCC can't overrule AG's and DA's.

This type of pressure can persuade mortgage servicers to work on modifying loans instead of pushing them to go to foreclosure. Servicers are just the middlemen between borrowers and investors. Because the housing bubble finally burst and house values decreased significantly it's often better for the investors if the borrower makes lower payments rather than foreclosing. From More on the Mortgage Mess:

Take, for example, underwater borrowers — the millions of Americans who owe more on their loans than their homes are worth. For them, the best modification is often to reduce the loan’s principal balance, lowering the monthly payment and restoring some equity. That could be best for investors too, because even reduced payments are often better than a foreclosure sale. A bank’s servicing fee is based on the principal balances of the loan — a strong incentive not to reduce a troubled borrower’s balance.

Thanks to Mike Konczal's post which helped me find that article.


Should State Regulators Have More Power Over Banks


Could this whole housing bubble including the nationwide foreclosure mess have been avoided or at least been arrested before things got so out of hand?

According to the article Regulators flawed in foreclosure oversight published in The Washing Post this morning, three years ago some state bank regulators were concerned that some of their residents were losing their homes unnecessarily and "asked the biggest national banks for details about their foreclosure operations."

Two banks, J.P. Morgan Chase and Wells Fargo refused to cooperate and the state regulators asked The Office of the Comptroller of Currency to intervene. John Dugan, the comptroller at the time, refused because they were planning on collecting their own foreclosure information and thought that the states' inquiries risked "confusing matters". The Office of the Comptroller of Currency then "chose itself not to scrutinize the foreclosure operations of the largest national banks, forgoing any examination of their procedures and paperwork. Instead, the agency relied on the banks' in-house assessments. These provided no hint of the problems to come until they had tripped the nation's housing market, agency officials later acknowledged."

Why are robo signers suddenly big news?

For some reason robo signers have become big news back in October of this year. I personally don't understand why this is big news all of a sudden. Lenders rubber stamped loans without proper review causing the bubble, why would anyone expect them to behave differently when foreclosing?

The way mortgages were split up and securitized and the poor records keeping of the lending industry made it difficult in some instances for the lenders to prove they still owned the mortgages and had the right to foreclose.

Before going to court lenders are supposed to verify certain information about the property and mortgage. You know, simple things like they property location, owner, that the borrower is actually in default and oh yeah, that they actually own the note and have a right to foreclose.

But lenders were lax with their reviews and for years attorneys used this to help stay a foreclosure and gain leverage in negotiating a way to clear the complaint.

Back in 2008 Enrie Harpster in Florida  was able to delay his foreclosure for nearly a year by forcing his lender to prove their case.

"About 80 percent of foreclosure lawsuits don't contain the original mortgage note - the proof that the lender has a right to foreclose, lawyers said. This is because mortgages often were sold in bundles to investors during the housing boom. The notes were sometimes misplaced."

There were numerous instances even before this including a class action suit in Boston. Why is this news all of a sudden?

"Based on what we were seeing and what we were concerned about, it felt like a chronic underreaction at the federal level," said John Ryan, a senior official with the Conference of State Bank Supervisors

Even when the mortgage industry itself identified possible flaws in foreclosure paperwork, the agency was slow to act. In September, Ally Financial suspended foreclosures after discovering problems with tens of thousands of cases. But even then, the OCC did not begin to examine the operations of other major banks. Instead, the agency asked them to undertake internal reviews and told them it would conduct its own examination later, an OCC official said.

If the states were allowed to inspect the lender's foreclosure processes would it be possible that robo signers wouldn't be a hot topic?

Even worse, was John Dugan (a former bank lobbyist) and the Office of the Comptroller of Currency conspiring with the banking industry because they all knew that there were problems with the bank's foreclosures and didn't want to hold up bank ability to repossess property or was he just negligent in his duties?

This isn't the first time the OCC has intervened on behalf of banks when states tried to stem their local foreclosure problems.

Back in Aug '08 I wrote an article about how states tried to stem predatory lending as early as 2002. New Jersey was one of the states that tried to prevent the sub-prime mortgage crisis when it enacted the New Jersey Home Ownership Security Act of 2002.

Abusive mortgage lending has become an increasing problem in this State, exacerbating the loss of equity in homes and causing an increase in the number of foreclosures in recent years. One of the most common forms of abusive lending is the making of loans that are equity-based, rather than income-based. The financing of points and fees in these loans provides immediate income to the originator and encourages the repeated refinancing of home loans. The lender's ability to sell loans reduces the incentive to ensure that the homeowner can afford the payments of the loan. As long as there is sufficient equity in the home, an abusive lender benefits even if the borrower is unable to make the payments and is forced to refinance. In addition, the financing of high points and fees causes the loss of precious equity in each refinancing and often leads to foreclosure.

It basically says lenders were flipping mortgages to earn fees and since they could easily sell mortgages to the secondary market it didn't matter to them if the borrower could pay or not because the bank gets paid with fees and from selling the loan, not when the borrower makes monthly payments.

In response to these regulations the rating agencies implemented policies that made it difficult to pool loans that originated in these states. This is bad for the secondary mortgage market but it's good for the housing market because it would force lenders to be more selective of who they lent money too since they couldn't sell any piece of paper to the secondary market.

Unfortunately all the State's actions were nullified when the Office of the Comptroller of Currency issued regulations in 2004. There was a press release issued by the OCC where then Comptroller of the OCC John D. Hawk Jr. indicated in a speech at a lunch hosted by the Federalist Society on July 24, 2003 that the OCC would overrule the State laws but that press release is now missing from the OCC site.

A portion of that speech is available on Mike Konczal's blog post CFPA I, Preeption, or What  A Bad CFPA Would Look Like.

The OCC will, of course, continue to defend the right of national banks to be free from state efforts to regulate their business…

The GFLA [Georgia Fair Lending Act] imposes severe restrictions on so-called “high-cost” mortgage loans, requiring lenders who offer them to comply with a range of substantive and procedural requirements. The practices proscribed under the Georgia law include the financing of credit insurance, debt cancellation or suspension coverage, limitations on late fees and payoff statement fees, pre-payment penalties, negative amortization, increases in interest rates after default, and balloon payments. Certain categories of loans are restricted as to the number of times they could be refinanced and the circumstances under which a refinancing could occur.

I thought the OCC was supposed to regulate banks, not stand up for them? They haven't been doing a very good job even when addressed with concerns from State regulators.

The States are the ones most affected by foreclosures. They have to deal with the impact to their local economy as well as the cost to handle all these foreclosure cases and auctions. Shouldn't the states have more authority especially considering what a poor job the OCC has done?


Week of October 25 Auction Results


It's been a while since I've posted an auction results report, ever since I added the functionality to view previous auctions on the site but it's been a while since I blogged anything so here are 4 properties that sold at Sheriff Sales last week.

Many of the properties auctioned recently have been going for less than the judgment amount awarded to the forclosing bank. Sometimes well below as the case of one of the properties in Wayne below.

After reading about these properties you can visit the rest of the site to view properties that haven't been auctioned yet.

222 Coolidge Ave, Hasbrouck Hights, NJ  (Bergen County)

This 1,240 sq ft home sits on a 5,000 sq ft lot. It had a judgment of $327,613.51 and received a winning bid of $253,000 from Nahum Meir. That's 77% of the judgment awarded to Flagstar Bank, FSB. Comparable homes in the area have sold for just under $300,000.

7 Risa Benjamin Way, Freehold, NJ (Monmouth County)

This 6 year old home is 5,542 sq ft and sits on a 2.3 acre (over 100k sq ft) lot surrounded by other recently built large homes on large lots. At it's peak the valuation on this property was $1.7 Million. The winning bid at the Monmouth County Sheriff's Sale was far less. Only $478k, 72% less than the $664k judgment.

The property's value took a big dive after the housing bubble burst and hit a low of around $450k in 2008 but has rebounded a bit to around $840k.

61 MacDonald Drive, Wayne, NJ (Passaic County)

This 3,089 sq ft home sits on a half acre lot. In 2006 it sold for $950k. In the past few months it's been on the market listed between $499k-$600k. Last week the winning bid by Value Realty was only $395,100, 46% of the $867k judgment. That's about what the house sold for in 2001.

 180 Oldham Road, Wayne, NJ (Passaic County)

This 1,404 sq ft ranch home sits on a 0.439 acre property. It received a winning bid of $151,000. The judgment was only $43,208.38. Similar homes in the area have been selling for $400k and up.


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