Goldman to Fight Over Hancock

A Goldman Sachs Group Inc. real-estate fund that has walked away from a number of struggling investments is taking a different approach with a Chicago skyscraper, deciding to fight its creditors rather than surrender ownership of the building.

Goldman Fund Plans Fight Over Hancock Tower

A Goldman Sachs Group Inc. real-estate fund that has walked away from a number of struggling investments is taking a different approach with a Chicago skyscraper, deciding to fight its creditors rather than surrender ownership of the building.

LPS: Mortgage Originations Among Highest Quality Ever in 2010-2011

The Lender Processing Services (LPS) Mortgage Monitor Report for December show
improvement in a number of the metrics it tracks. Many measures of delinquency
rates are down, inventories are clearing in some states, and recent loan
originations are “among the best quality on record.”

The overall delinquency rate did not
change from November, remaining at 8.15 percent but is down 7.7 percent since
December 2010.  Seriously delinquent
loans, those 90 or more days overdue or in foreclosure decreased 0.6 percent to
7.67 percent, a -5.9 percent change from one year earlier.

The foreclosure rate which was 4.16
percent in November fell to 4.11 percent in December and is down 1.0 percent
year-over-year.  Foreclosure starts
showed the most dramatic change.  There
were 159,092 starts in December compared to 165,205 in November, a -3.7 percent
change and starts were 38.7 percent below the level in December 2010.   This is the lowest level of foreclosure starts
since at least 2008.

While 90+ day delinquencies are about
the same in judicial and non-judicial states there remains a large distinction between
these states in other measures of foreclosure activity.  LPS found that half of all loans in
foreclosure in judicial states have not made a payment in more than two years
as the foreclosure process drags on.  The
foreclosure sales rate in non-judicial states is four times that in judicial
states (6.8 percent vs. 1.6 percent). 
Foreclosure inventories stand at about 3.5 percent nationwide; in
non-judicial states those inventories are about 2 percent while in judicial
states they are 2.5 times greater – over 6 percent.  Still, pipeline ratios (the time it would
take to clear through the inventory of loans either seriously delinquent or in
foreclosure at the current rate of foreclosure sales) has declined
significantly from earlier this year in judicial states while remaining flat in
non-judicial states.


Loan
originations
(month ending November 11) numbered 537,720 compared to 597,888 in
October, a decline of 10.1 percent and 29.3 percent below originations one year
earlier.  The loans originated over the
last two years
, however, are among the best quality on record according to
LPS.  2010-11 vintage originations showed
90-day default rates below those of all other years, going back to 2005.
December origination data also shows that recent prepayment activity – a key
indicator of mortgage refinances – has remained strong, with 2008-09
originations, high credit score borrowers and government-backed loans having
benefited the most from recent, historically low interest rates.

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Distressed Property Sales, Discounts Steady in Third Quarter

Sales of distressed homes, those in some
stage of foreclosure or bank owned (REO), accounted to 20 percent of all U.S.
home sales during the third quarter of 2011
compared to 22 percent of sales in
the second quarter according to information released Thursday by
RealtyTrac.  One year earlier such
distressed sales represented 30 percent of the housing market.

There were 221,536 such distressed
property sales to third parties, 11 percent fewer than revised second quarter
figures and 5 percent fewer than in the third quarter of 2010.  Pre-foreclosure sales (generally referred to
as short sales) totaled 92,824 sales or 9 percent of all sales, down 9 percent
from the second quarter and nearly identical to the number one year earlier
when pre-foreclosure sales represented 12 percent of the market.  Sales of REO totaled 128,712 properties, down
13 percent quarter over quarter and 8 percent from the previous year.  REO sales made up 12 percent of all sales in
the quarter compared to 13 percent in Q2 and 18 percent of sales a year
earlier.

Prices for distressed homes averaged
$165,322, up one percent from Q2 but down 3 percent from one year earlier.  The average discount from the market price
for distressed properties was 34 percent, the same as in the second quarter of
2011.  The discount one year earlier
averaged 37 percent.  There were
substantial differences, however, between the prices for pre-foreclosure
properties which averaged $191,119, a discount of 24 percent below the average
market price, and REO.  The latter had an
average sales price of $146,437 in the third quarter, a discount of nearly 42
percent, unchanged from Q2 and down from 45 percent a year earlier.  In the second quarter the discount for pre-foreclosed
properties was 23 percent and was it 24 percent in the third quarter of
2011. 

In six states distressed properties
sales accounted for a larger share of the market than the 20 percent national
average.  The states were Nevada (57
percent), California (44 percent), Arizona (43 percent), Georgia (34 percent),
Colorado (26 percent) and Michigan (23 percent).

The states with the largest
discounts for distressed property sales were Missouri (56.5 percent) and Massachusetts
(51 percent.)

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District Court Upholds MERS Rights to Assign and Foreclose

Mortgage Electronic Registration
Systems, Inc. better known as MERS won a significant victory in court on
Tuesday as the U.S. Court of Appeals for the 11th Judicial Circuit validated
its rights to assign a security deed and/or foreclose on secured property.  The decision upheld the decision of the U.S.
District Court for the Northern District of Georgia in Smith V. Saxon Mortgage.

The plaintiff in the original case had
contested the foreclosure of her home on the grounds that:

1).   The assignment of the security deed was
invalid because MERS, as nominee of a defunct lender could not assign the documents
of its own volition.

2.
    The “splitting” of the mortgage and
the note rendered the mortgage null and void and therefore notices of
foreclosure were invalid as not coming from a secured creditor.

In the original District Court opinion in March 2011, U.S. Magistrate Judge
Janet F. King pointed to the standard language in the Georgia security deed
signed by all borrowers at closing which grants MERS the power to act on behalf
of the current and future owners of the loan. 
.   “Unless the instrument
creating the power specifically provides to the contrary . . . an assignee
thereof . . . may exercise any power therein contained,” Judge King wrote.
“[T]he Security Deed . . . transfers rights to MERS, and MERS’ assigns may
exercise any power contained therein.”

The 11th District Court which has jurisdiction over federal cases
originating in the states of Alabama, Florida and Georgia, agreed with Judge
King’s recommendation.  “It is not
disputed that plaintiff executed the Security Deed which granted MERS the power
to sell the Property, if plaintiff was not able to comply with the terms of the
Note,” Senior U.S. District Judge William O’Kelley wrote. “Furthermore, the
Security Deed expressly states that it applies to MERS ‘[and] to the . . .
assigns of MERS.’ Pursuant to the terms of the Security Deed, MERS had
authority to assign the Security Deed.”

MERS issued the following statement in response to the District Court
decision. 

“A significant body of clear and specific federal case law is coming
together with this decision from the 11th Circuit Court of Appeals, along with
favorable rulings from the First, Fourth, Fifth, Eighth, Ninth, and Tenth circuit
appellate courts and U.S. District Courts in a number of states,” said Janis L.
Smith, MERSCORP’s vice president of corporate communications. “The 11th
Circuit’s ruling underscores the soundness of MERS’ business model by
solidifying the legality of MERS’ role in the security deed, explaining how
that role came about, and clarifying MERS’ power to act on behalf of the
lender.”

…(read more)

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