What Slowdown? Rent Growth Accelerated in 2014

What Slowdown? Rent Growth Accelerated in 2014
Rents grew a healthy 4.7 percent last year, the highest level since 2011, according to MPF Research.
By: Les Shaver, Multifamily Executive

Apparently fears of the apartment market slowing were overblown, according to a recent report from RealPage's MPF Research.

Rent growth accelerated to 4.7 percent in 2014, the highest figure since 2011. Usually the pace of rent growth slows after the first couple of years of a cycle, but this upturn is behaving differently, driven by strong job growth in higher-paying jobs in 2014.

“The overall economic performance was stronger than typical at this stage of the recovery,” said MPF Research vice president Greg Willett. “Job production went up 20 to 25 percent over the previous three or four years. In past years, 60 percent of those jobs were in low-paying industries. In 2014, 60 percent of those jobs were in higher paying industries.”

One surprising driver of growth was the fourth quarter, when things usually slow. Rents actually rose 0.6 percent during the last quarter of 2014, which was only the second time in the last decade rents rose so much at the tail-end of the year (the other time was 2005).

“The overall economic performance was stronger,” Willett says. “And, certainly if you compare it to last year, the weather was really cooperative, as well.”

Absorbing the Supply
The industry’s strong performance in 2014 came despite a 14-year high of 246,579 new completions in the nation’s 100 largest metros. But with demand at 268,532 units, the supply/demand equation was still in favor of landlords, as occupancy climbed 30 basis points to 95.3 percent.

Supply should increase this year as well. During 2015, 290,145 new units are expected to be delivered, which will put more pressure on apartment owners. But MPF expects actual deliveries to be less than that because of construction delays due to labor shortages in many markets. As such, the research firm forecasts 2015 new supply to be around 250,000 to 260,000 units, which will be on par with 2014’s tally.

MPF expects the market to be able to absorb those 250,000 to 260,000 new units. Overall, MPF expects rent growth of 3.5 to 4 percent for the year ahead. But the growth won’t be even.

“I do think we are in late innings for the urban core/really expensive apartments,” Willett says. “There just aren’t that many households out there who can afford that. Those units tend to be built for Millennials, but honestly they’re too expensive for them.”

But in other spots, outside of the urban core, 2015 looks a lot better.

“We still have a lot of runway for suburban or even urban fringe, where you’re just coming down from that 'Main and Main' price point by 10 or 20 percent,” Willett says. “The middle market is still going strong. The concern about the middle market was affordability. But if wage growth is getting better, maybe that’s not as big a problem as we thought it should be.”

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! Click Here to Pre-Qualify for a Loan Online!

Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

What is the Cap Rate and NOI on Rental Properties and are they Important?

Found this great blog on Linked by Mark Ferguson posted on March 4, 2014. If you are looking for a Boise investment property such as a fourplex, duplex or commercial investments, please visit us at www.ironeaglere.com.

If you have been around Boise investment properties you have probably heard the term cap rate and NOI.  The cap rate on an investment property is a measure of what the returns will be assuming you pay cash for a property.  I don’t use cap rate on my investment properties, because it doesn’t factor financing costs.  I prefer to use the cash on cash return on my properties, but the cap rate can still give you a basic idea of a property’s returns.

NOI is the net operating income on a rental property and does not factor in debt service.  The NOI can be another indicator of rental property returns, but can also be easily manipulated.

How do you figure the cap rate on a property?

The cap rate is a very simple formula; net operating  income divided by the price of a property.  For example if you buy a home for $100,000 and the net income is $10,000 a year, the cap rate is 10%.  ($10,000/$100,000=10%)

What is the net operating income? (NOI)

The net operating income is how much money a rental property produces after expenses.  This is another simple calculation and can be figured using our cash flow calculator.  The NOI does not include debt service, which our calculator includes, but you can enter the mortgage payments as zero to determine the NOI.  For example if the rents are $10,000 a year on a rental property and the yearly expenses are $3,000, then the NOI is $7,000.

What expenses are included in the NOI?

You will find different investors include different expenses to determine the NOI.  Some investors may include vacancies and property management and others may not.  Some investors may not even include any maintenance in their NOI projections to make their properties appear more profitable.  If you are basing a purchase decision on the cap rate then you need to make sure all the expenses are accounted for.  If the total rent for a property is $10,000 a year and the NOI is $10,000, then there are obviously expenses being left out of the equation.

How can the cap rate vary greatly on the same property?

The NOI greatly affects the cap rate.  If the NOI does not include all expenses on a property, then the cap rate is going to be artificially inflated.  I don’t like using the cap rate as an indicator of returns, because it does not factor into account debt service and the cap rate can be easily manipulated.

Why Cash flow is more important than the NOI

I think the  cash flow on a rental property is much more important than the cap rate.  The cash flow tells you exactly how much money you are going to make including expenses and debt service.  Our cash flow calculator even helps you determine what the maintenance and vacancies may be on a property per month.

Why the cash on cash return is better than the cap rate

The cash on cash return tells you what returns you are getting on your cash invested into a property.  The cash on cash return takes into account the amount of money invested based on leverage.  The cap rate completely ignores leverage, which will make a huge difference in the actual returns an investor sees.  Our cash on cash calculator can help you calculate the actual returns on a rental property including the debt service.

What can the cap rate tell you about different markets?

The cap rate gives a very basic idea of the return rate on rental properties.  If you are looking to invest in long-distance properties, the cap rate can give you an idea of the returns in that area.  Average cap rates in the country can range from 5% to 15%.  There are many other factors to consider when determine where to buy, but cap rate can give you an idea on returns.

How can cap rates help you decide on single family versus multifamily

The cap rates can also give you an idea of the different returns on single family homes versus multifamily homes in an area.  In Colorado the cap rate for a multifamily property tends to be around 5%.  For a single family home you can see cap rates at around 8% in my area.  I buy my properties below market value and see cap rates at 10% or higher on the purchase of my single family rentals.  In other markets those percentages may be reversed on single family and multifamily homes.

Conclusion

The cap rate and NOI can be used to help determine the returns on rental properties, but there are also many other factors to consider like the cash flow and cash on cash returns.  I personally do not pay attention to cap rate or NOI, because it does not giving me a clear picture of my returns.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! Click Here to Pre-Qualify for a Loan Online!

Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Investor frenzy over housing has peaked

Here's an interesting article from CNNMoney.com about investors pulling back from the real estate market.

By Nin-Hai Tseng, Writer April 5, 2013: 5:00 AM ET

Signs that the big money has retreated from the foreclosure boom may be good for the housing market overall.


FORTUNE – When the U.S. housing market crashed in 2007, millions lost their homes to foreclosure. With their finances in shambles, they picked up the pieces by renting rather than buying. Big institutional investors quickly caught on, snapping up foreclosed properties on the cheap and renting them out.

All this has helped drive the recovery we're seeing today: Investors effectively absorbed the excess inventory of homes for sale, which in turn has helped push home prices higher. Prices for rentals have also risen rapidly, as families who either lost their homes or put off buying found rentals to live in.

While this has gone on for some time, the investor frenzy might have peaked. Rents for single-family homes have essentially flattened -- rising just 0.1% in March from a year earlier, according to a report released Thursday by real estate listing website Trulia. What's more, in some cities where investors had the biggest appetite for properties on the cheap, rents have fallen: Take Los Angeles, where rents fell 1.9%; rents in Orange County slipped down 0.7%; Las Vegas saw a 1.9% drop. And in two other key investor markets -- Atlanta and Phoenix -- single-family home rents remained flat, rising less than 1%.

Meanwhile, rents for apartments have continued to rise, climbing 2.9% in March from a year earlier.

MORE: Why higher mortgage rates will help the housing market

The change suggests good news. It hints that the broader housing market is normalizing, as the role of big investors in the recovery wanes. They bought so many properties that the supply of single-family homes for rent has met demand. Nationally, there were nearly 4 million more homes for rent in 2012 since the housing market last peaked in 2005. With rents softening, investors may start selling off their properties, adding to the tight supply of homes for sale, says Jed Kolko, Trulia's economist.

Of course, there's risk that this could dampen momentum of the recovery. Some have argued that once big investors stopped buying, home sales and subsequently home prices could start flattening then falling again.

There's more to it, however. While institutional investors have played a big role in reversing the housing market, their part isn't as big as some might think. Investors fall under two categories: There's the big corporate kind. And then there's the individual investor: High earners who buy multiple homes.

As The Wall Street Journal highlighted recently, small investors accounted for a good chunk of home sales in areas where the Blackstones (BX) of the world also drove sales. In Phoenix, small investors who bought more than five homes accounted for 26% of home sales at the end of 2012; Atlanta, 24% and Las Vegas, 22%.

It might not make financial sense for institutional investors to keep buying if the payoff continues to soften, but it could be different for small investors. They may very well still be willing to buy, analysts say.

"If all the big funds went out of business today, we'd still be talking about investors," says a housing analyst quoted in the Journal.

And as for renters in search of single-family homes, they might enjoy cheaper rent.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! Click Here to Pre-Qualify for a Loan Online!

Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Mortgage Debt Forgiveness Act Extended

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! Click Here to Pre-Qualify for a Loan Online!

Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

REO inventories drop even as banks hold on to them longer

Foreclosure starts drop in Arizona, Nevada, Oregon
BY INMAN NEWS, WEDNESDAY, AUGUST 15, 2012.
Inman News®

Inventories of bank-owned properties fell year over year across four Western states in July even as lenders took longer to get those properties off their books, according to the latest report from real estate data company ForeclosureRadar.

The report covers foreclosure trends in California, Arizona, Nevada, Washington and Oregon. Of the five states, only Oregon did not see its bank-owned inventory drop last month.

In California, the number of homes repossessed by lenders but not yet resold, known as bank-owned or real estate owned (REO) inventory, was down 36.4 percent to 66,000 properties last month. Banks sold REOs in 283 days on average, up from 232 days in July 2011. By contrast, homes bought by third parties at auction, usually investors, were resold in an average 138 days, up from 128 days a year ago.

Nonetheless, there are some signs the pipeline of foreclosures in the Golden State is speeding up a bit. Foreclosure starts rose 12.3 percent year over year in July to 21,175. The average number of days between the initial notice of default and the end of the foreclosure process (with the property either sold to a third party or repossessed by the bank) was 276 days last month (equivalent to about nine months), down from 310 days (about 10 months) a year ago.

Among the California homes in the foreclosure process whose fates were decided in July, most (10,398) experienced a cancellation of the process due to a successful loan modification or short sale, among other possible reasons. The number of properties that went back to the bank as REOs declined 54.2 percent on an annual basis to 4,512. Foreclosure sales to third parties fell 6.6 percent to 3,269.

In Arizona, foreclosure starts fell 28.2 percent year over year in July, to 4,433. Foreclosure cancellations were down 4.4 percent annually, to 3,575. The number of properties that went back to the bank as REOs decreased 33.8 percent year over year, to 2,191. Those sold to third parties rose 3 percent on an annual basis, to 1,630.

Arizona's REO inventory fell 38.1 percent last month, to 14,784. While the time to foreclose declined to an average 136 days from 175 days in July 2011, the time between when the bank took back the property and the property was resold rose a whopping 64.9 percent, to an average 244 days in July. Third parties resold properties in less than half that time, 107 days, up from 94 days a year ago.

Foreclosure activity in Nevada has slowed to a trickle, likely as a result of a Nevada state law that went into effect in October designed to crack down on documentation irregularities by foreclosing lenders.

In July, Nevada foreclosure starts were down 61.8 percent, to 1,618, compared with 4,235 a year ago. Foreclosure cancellations were down to 800, a nearly 60 percent drop from July 2011, but the number of properties becoming REOs dropped even more precipitously, 77.8 percent, to only 394 properties. The number of properties sold to third parties on the courthouse steps fell 34.4 percent, to 429.

The state's REO inventory was down 63.8 percent to 5,541 in July with the number of homes in the foreclosure pipeline dropping by more than half year over year. It took nearly 46 percent longer to foreclose on a property last month than it did in July 2011: an average of 471 days -- the equivalent of nearly 16 months. Banks also took considerably longer to sell homes once they'd repossessed them -- an average 221 days, up from 154 days a year ago. Third parties resold in an average 133 days, up from 98 days.

In Washington state, time to foreclose was virtually unchanged from a year ago in July: 102 days on average. Foreclosure starts were up 13.1 percent to 2,527. Cancellations fell 59.5 percent to 601. The number of properties that went back to the bank as REOs fell 67.1 percent to 595. Foreclosure sales to third parties fell 36 percent to 151.

As in the aforementioned states, REO inventory in Washington fell substantially last month: down 42.2 percent to 6,554. Banks took an average of 249 days to resell an REO property, up 25.9 percent. By contrast, third parties took an average 107 days to resell, down 24.1 percent.

In Oregon, foreclosure starts were down 58.6 percent year over year in July, to 426.

"This is most likely related to both the new Oregon law, SB 1552, that gives homeowners at risk of default, or in default, the right to request mediation to avoid foreclosure, as well as the Oregon Court of Appeals ruling that may force some lenders to proceed judicially with foreclosures," the report said.

"It is still not clear whether this is a temporary decline or part of a move toward judicial foreclosure in Oregon."

Nonetheless, time to foreclose fell to an average of 143 days from 162 days a year ago. Foreclosure cancellations in Oregon fell 11.9 percent on an annual basis last month, to 761 properties. At the same time, the number of properties reverting to REOs rose 93.6 percent year over year, to 395. Sales to third parties rose 73.7 percent, to 66 properties.

In contrast to the other four states in the ForeclosureRadar report, REO inventory in Oregon rose in July, up 39.7 percent to 3,153 properties. Banks also resold REOs at a quicker pace -- an average of 203 days, down from 219 a year ago. Third parties resold in an average of 79 days, up from 66 in July 2011.



The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! Click Here to Pre-Qualify for a Loan Online!

Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Foreclosures Down to 69,000 in March, Inventory Also Down

DSNEWS.com
BY: ESTHER CHO

Year-over-year, the number of completed foreclosures decreased about 19 percent to 69,000 in March 2012 compared to 85,000 in March 2011, according to CoreLogic’s National Foreclosure Report for March. Month-over-month, with the number of completed foreclosures in February 2012 at 66,000, foreclosures increased about 4.5 percent in March 2012.

On a quarterly basis, foreclosures decreased to 198,000 in the first quarter of 2012 compared to 232,000 through the same quarter a year ago.

Overall, since the start of the financial crisis in September 2008, there have been approximately 3.5 million completed foreclosures.

In addition to the yearly and quarterly decreases in completed foreclosures, the number of loans in the foreclosure inventory decreased by nearly 6 percent, or 100,000, in March 2012 compared to the year before.
“Since the foreclosure inventory is also coming down, this suggests that loan modifications, short sales, deeds-in-lieu are increasingly being used as an alternative to foreclosures to clear distressed assets in our communities. This is what was envisioned with the recent National Foreclosure Settlement, and can often be a better outcome for both borrowers and investors,” said Anand Nallathambi, CEO of CoreLogic.

Out of all homes with a mortgage, approximately 1.4 million homes, or 3.4 percent were in the national foreclosure inventory as of March 2012 compared to 1.5 million, or 3.5 percent, the same month a year ago, and 1.4 million, or 3.4 percent, in the prior month of February.

Delinquencies are also down, with the share of borrowers nationally that were more than 90 days late on their mortgage payment, including homes in foreclosure and real estate owned (REO) assets, dropping to 7 percent in March 2012 from 7.5 percent a year ago, and remained unchanged compared to the prior month.
“The overall delinquency level was unchanged in March, remaining at its lowest point since July 2009,” said Mark Fleming, CoreLogic’s chief economist.

The distressed clearing ratio for March was up at 0.81 compared to 0.76 in February 2012. A higher ratio indicates a faster pace of REO sales relative to the pace of completed foreclosures.

As for individual states, strides were more notably made with non-judicial states.

“Non-judicial foreclosure markets like Nevada, Arizona, and California are experiencing significant improvements in their shares of delinquent borrowers. Some judicial foreclosure states are also improving, like Florida, but not to the extent of non-judicial markets,” said Fleming.

Year-over-year, the percentage of 90-plus delinquencies in Nevada decreased 3.7, while in Arizona the drop was 3.2 percent and in California 2.2 percent. Judicial state Florida saw a 1 percent decrease in its percentage of delinquent borrowers.

Highest % of Foreclosure Inventory
Florida (12.1 percent)
New Jersey (6.6 percent)
Illinois (5.4 percent)
Nevada (4.9 percent)
New York (4.9 percent)

Lowest % of Foreclosure Inventory
Wyoming (0.7 percent)
Alaska (0.8 percent)
North Dakota (0.8 percent)
Nebraska (1.1 percent)
South Dakota (1.4 percent)

Five States with the Most Foreclosures
(Over 12 months ending in March 2012)
California (150,000)
Florida (92,000)
Michigan (62,000)
Arizona (58,000)
Texas (57,000)

The five states account for 49.1 percent of all completed foreclosures nationally.
CoreLogic is a provider of consumer, financial and property information, analytics, and services to businesses and the government.


The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! Click Here to Pre-Qualify for a Loan Online!

Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Get Your Short Sales Approved Instantly

If only this were true! Short sales are a lot of work; there is no secret way to get them closed. Please call us at 208 939 9033 if you have any questions.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor

Click Here to Search 24/7 for The Best Real Estate Deals in Boise!
Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan!
Click Here to Pre-Qualify for a Loan Online!

Regards, Michael Hon, REALTOR®
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Massive Backlog Freezes Foreclosures

Interesting article from UPI.com about foreclosure delays. If your doing a short sale, you may have a higher probability of getting it done.

Published: May 12, 2011
By Steve Cook Real Estate Economy Watch


Massive delays in foreclosure processing brought the number of new foreclosures to a 40-year low in April, extending the average foreclosure timeline to 400 days but reached 900 days in some states.


RealtyTrac reported foreclosure filings in April 2011 fell 9 percent from March and decreased 34 percent from April 2010.


"Foreclosure activity decreased on an annual basis for the seventh straight month in April, bringing foreclosure activity to a 40-month low," said James J. Saccacio, chief executive officer of RealtyTrac. "This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure.


"The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales and possibly other disposition alternatives," Saccacio continued. "Data from the Mortgage Bankers Association shows that about 3.7 million properties are in this seriously delinquent stage. The second delay occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process."


Nationwide, foreclosures completed (REOs) in the first quarter of 2011 took an average of 400 days from the initial default notice to the REO, up from 340 days in the first quarter of 2010 and more than double the average 151 days it took to foreclose in the first quarter of 2007.


The foreclosure process took much longer in some states. The average timeframe from initial default notice to REO in New Jersey and New York was more than 900 days in the first quarter of 2011, more than three times the average timeline in the first quarter of 2007 for both states.


The average foreclosure process in Florida took 619 days for foreclosures completed in the first quarter, up from 470 days in the first quarter of 2010 and nearly four times the average of 169 days it took in the first quarter of 2007.


The average foreclosure process in California took 330 days for foreclosures completed in the first quarter, up from 262 days in the first quarter of 2010 and more than double the average of 134 days in took in the first quarter of 2007.


Default notices (NOD, LIS) were filed for the first time on a total of 63,422 U.S. properties in April, a 14 percent decrease from the previous month and a 39 percent decrease from April 2010. After spiking 16 percent in March, default notices in April dropped back down close to the 48-month low hit in February.


Scheduled foreclosure auctions (NTS, NFS) hit a 31-month low in April, with a total of 86,304 U.S. properties scheduled for an auction for the first time during the month — down 7 percent from March and down 37 percent from April 2010.


Lenders foreclosed on 69,532 U.S. properties in April, down 5 percent from March and down 25 percent from April 2010, but bank repossessions (REOs) were still above a 22-month low hit in February 2011.


States with a judicial foreclosure process registered a 3 percent decrease in overall foreclosure activity from March and a 47 percent decrease in overall foreclosure activity from April 2010. States with a non-judicial foreclosure process posted an 11 percent month-over-month decrease and 26 percent year-over-year decrease in overall foreclosure activity.


Nevada posted the nation's highest state foreclosure rate for the 52nd straight month in April, with one in every 97 housing units receiving a foreclosure filing during the month. Overall foreclosure activity in Nevada decreased 9 percent from the previous month and was down 27 percent from April 2010. Bank repossessions increased 23 percent from March and were up 12 percent from April 2010 to 4,606 — an all-time monthly high since RealtyTrac began issuing the report for Nevada in April 2005.


Arizona REOs decreased 3 percent from March but were still up 22 percent from April 2010, helping the state maintain the nation's second highest foreclosure rate for the fifth consecutive month. One in every 205 Arizona housing units received a foreclosure filing during the month, and overall foreclosure activity decreased 15 percent from March and was down 17 percent from April 2010 despite the year-over-year jump in REOs.


Overall, foreclosure activity in California was down monthly and annually in April, but a 22 percent month-over-month jump in REOs helped keep the state's foreclosure rate at the third highest among all states for the sixth consecutive month. One in every 240 California properties received a foreclosure filing in April.


One in every 322 Utah housing units received a foreclosure filing in April, the fourth highest state foreclosure rate, and one in every 325 Idaho housing units received a foreclosure filing in April, the fifth highest state foreclosure rate.


Other states with foreclosure rates ranking among the top 10 in April were Michigan, Florida, Georgia, Colorado and Oregon.


10 states account for 70 percent of total foreclosure activity


Ten states accounted for 70 percent of U.S. foreclosure activity in April, led by California with 55,869 properties receiving a foreclosure filing during the month.


A total of 19,649 Florida properties received a foreclosure filing in April, the second highest state total despite a 59 percent decrease from April 2010. Florida overall foreclosure activity in April was still up marginally from a 46-month low set in February, and default notices and scheduled auctions increased from March.


Arizona tallied the third highest state total, with 13,419 properties receiving foreclosure filings in April, followed by Michigan, with 12,996 properties receiving foreclosure filings, and Nevada, with 11,761 properties receiving foreclosure filings.


Other states with foreclosure activity totals among the nation's 10 highest in April were Illinois (10,055), Texas (8,793), Georgia (8,479), Ohio (7,962) and Colorado (4,379).

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor

Click Here to Search 24/7 for The Best Real Estate Deals in Boise!
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Regards, Michael Hon, REALTOR®
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Ask a Realtor - Should I Buy a Short-Sale Property? by Jill Geise

This is a great post from Jill Giese at Keller Williams in Boise from her monthly newsletter. Here's the link and the text is below.

Question - We've found a property on the MLS and the description says it's a "short sale." It seems like such a great deal, should we make an offer on it?

Well, the short answer is ... maybe!

Short sales are a reality in today's real estate market and they aren't going away anytime soon. Many of them appear to be priced very competitively and, because of this, we are asked this question frequently by our clients.

Whether or not making an offer on a short sale makes sense depends on a number questions. I'll walk through the main points below.

First, what is a "short sale"?

A short-sale is when a homeowner owes more on their property than it's worth on the market - they are upside down - and, due to a "financial hardship", they are forced to sell the property.

Because of this hardship, the bank MAY agree to "sell it short" - that is, sell the property for less than what is owed on it. A financial hardship can be a job loss, job relocation, medical issues, divorce, reduction in income, etc.

What do we need to know?

There are a few things we need to know in order to determine if you should make an offer on a particular short-sale property:

Does the listing agent know how to negotiate a short sale and get it to closing?
Does this particular short sale seem likely to close?
Does your (the buyer's) personal situation make a short sale desirable/feasible?
Getting the 411 on the listing agent

Short sales require a lot of work, skill, and experience from a listing agent. Negotiating with banks requires finesse, persistence, patience, and a special tolerance for dealing with bureaucracy that many realtors don't have. If the agent who has the short sale listed doesn't have that combination, the short sale won't go through and the home will be foreclosed by the bank. In other words, you'll wait a long time and you won't be able to buy your dream home.

We have a page-long questionnaire we ask listing agents to ascertain their level of experience with short sales. If we feel they do not have what it takes to get the deal done, we will recommend you not proceed with an offer.

Determine if the property is likely to close

Other questions on our questionnaire pertain to the property itself. How many liens are on the property? Who are the lien holders? How much is owed on the property? The answers to these questions can also help us determined if you'll actually be able to close on this property after waiting months to hear back.

Will it work for you? Did I mention it could take a long time?

Speaking of waiting a long time, short sales really should be called "red-tape" sales. And whenever there is a lot of red tape involved in anything, the process is slow. Short sales can take 6, 9, even 12 months or more to close! Does your personal situation allow for that much time? Do you want to put your life on hold for this particular home? Do you have the patience to wait - potentially with little update from the listing agent - while the gears slowly grind through the process?

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

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Real Estate Sales Expected To Go Up in Spring

Interesting post from KPVI.Com regarding the real estate market in Eastern Idaho.

Page Last Updated: Monday April 11, 2011 10:18pm MDT

Housing By Diana Nguyen


Spring is in the air, and that means real estate sales are going up.


While many are renting, most realtors say it could cost just as much to own as it does to rent. Which is why this upcoming spring means a growth in real estate in East Idaho.


Realtor Chalmers Hass says,"The real estate right now is a fairly stable market even though you hear bad news about the economy."


Despite news about a tough real estate market, he says many factors will contribute to a boost in home buying this spring, "There's more listings coming on the market, more people are putting their house on the market. But there's also more buyers out there. So for buyers there's more to choose from, for sellers it's a good time to sell because you have more buyers."


Potential home buyer Jenna Wright says the time to buy couldn't have come at a better time, "There's a lot to choose from so it's just a matter of location I want to be at and deciding for the perfect home for me and my son."


Haas says, "This is a good time to buy because interest rates are low so monthly payment is going to be pretty low. Even people who are renting they can actually buy a home for the same amount as they are paying in rent."


For home buyers like Wright, she easily found a home for just as much as she is renting now.


Wright, I purchased a home in 2007 and interest rates were high, so me its just a good time to buy. I can purchase a home for the same cost."


Realtors say that once unemployment numbers improve, home buyers will gain more confidence to purchase. A growth in home owning is expected, as well as an increase in interest rates.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles:     
 

More Work, Fewer Sales, Less Money?

I came across an article from the Idaho Statesman published on 3/27/2011. It's discusses how difficult the real estate business is these days. It truly is; it's not for the faint of heart. Here's an interesting excerpt.


"The number of licensed real estate agents in Idaho has fallen nearly by half, from its peak of 12,994 in 2007 to 6,872 at the beginning of March 2011. Just under half of the remaining agents work in Ada or Canyon county. (There are just under 3000 agents in Ada County and probably about 300 - 400 in Canyon - MH) And some of those active licenses are held by people who have long-since left the professions.

“A lot of them have just parked their licenses,” says Idaho Real Estate Commission Executive Director Jeanne Jackson-Heim.

There are fewer agents — and fewer sales to generate commissions. At the 2007 peak, the Treasure Valley recorded 18,486 sales worth $3.6 billion. By 2010, however, annual sales in the Valley had fallen to 8,819, with a value of $1.3 billion."

So what does this mean for buyers and sellers in today's Boise Idaho Real Estate market? 

In Ada County in 2010, the bottom 1000 agents sold ZERO Homes, the middle 1000 agents sold an average of 1 - 5 homes (by the way, you can't put food on the table by selling 1 - 5 homes unless real estate is a hobby for you), and the next top 1000 agents sold the remainder. So if you did the math, there were 7389 properties sold in Ada County in 2010. The top 1000 agents sold approximately 4900 properties. Applying the 80/20 rule, the top 200 agents sold 3920 properties. or an average of 20 properties. 

The Iron Eagle Realty Team was involved in over 40 transactions last year; so what it all means is that if you want to buy or sell a home, you should engage with a Well Above Average Realty Team (like us ;)) to help you meet your real estate needs in the Boise Real Estate Market. 

Read more: http://www.idahostatesman.com/2011/03/27/1582066/more-work-fewer-sales-less-money.html#storylink=misearch#ixzz1IqqYKepq
The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles:     
 

Japan Earthquake and Tsunami: How to Help

As in the case of the recent earthquakes in New Zealand, NAR has identified four funds that we believe are well equipped to provide disaster-relief services. We urge NAR members who want to make a donation to consider one of these four organizations. The star-ratings (four stars being the highest) and descriptions of the funds were pulled word-for-word from the Web site CharityNavigator.org. Some members have reported receiving scam e-mails from organizations, some calling themselves real estate associations, purporting to collect money for Japanese tsunami relief. Here are helpful giving tips that Charity Navigator has provided for those who want to make sure their donations reach those in need.

NAR is also staying in touch with local REALTOR® associations on the West Coast that have close ties to Japan. If they plan any specific relief efforts, we will let members know.

1. AmeriCares

Overall Rating: Four Stars

AmeriCares is a nonprofit global health and disaster relief organization whose passion to help is matched by its ability to deliver. In times of epic disaster, daily struggle or civil conflict, AmeriCares restores health and saves lives by delivering donated medicines, medical supplies and humanitarian aid to people in need around the world and across the United States. Since its founding in 1982, AmeriCares has delivered more than $9 billion in aid to 147 countries. AmeriCares is able to maximize the impact of each donation due to its gift-in-kind model and the contributions received from pharmaceutical and medical supply manufacturers, as well as our partnerships with local health care providers around the world. Historically, for every $100 donated, AmeriCares is able to deliver more than $3,500 in humanitarian relief to people in need, including medicines, medical supplies, nutritional supplements and other vital aid. Donate to AmeriCares' Japan relief.

2. Habitat for Humanity International

Overall Rating: Four Stars

Founded in 1976, Habitat for Humanity International (HFHI) is an ecumenical Christian housing ministry. HFHI seeks to eliminate poverty housing and homelessness from the world, and to make decent shelter a matter of conscience and action. Habitat invites people of all backgrounds, races and religions to build houses together in partnership with families in need. Habitat has built more than 300,000 houses around the world, providing more than 1.5 million people in more than 3,000 communities with safe, decent, affordable shelter. Habitat is founded on the conviction that every man, woman and child should have a simple, decent, affordable place to live in dignity and safety. Donate to HHI's Japan relief.

3. UNICEF-USA

Overall Rating: Four Stars

The United States Fund for UNICEF was founded in 1947 to support the work of the United Nations Children's Fund (UNICEF) by raising funds for its programs and increasing awareness of the challenges facing the world's children. The oldest of 37 national committees for UNICEF worldwide, we are part of a global effort to save, protect and improve children's lives. Every moment of every day, UNICEF is on the ground providing lifesaving help for children in need. We provide families with clean water and sanitation, we vaccinate against childhood illness, and we help protect children against malaria. We provide nourishment to fight malnutrition, and we care for children affected by AIDS. We protect children from abuse, and we give them an education. We are here to make sure that all children lead a healthy, humane, and dignified life. Donate to UNICEF's Japan relief.

4. WorldVision

Overall Rating: Four Stars

World Vision is a Christian humanitarian organization dedicated to working with children, families and their communities worldwide to reach their full potential by tackling the causes of poverty and injustice. Motivated by our faith in Jesus Christ, World Vision serves alongside the poor and oppressed as a demonstration of God's unconditional love for all people. World Vision serves all people, regardless of religion, race, ethnicity, or gender. Donate to WorldVision's Japan relief.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles:     
 

Financial Services Committee Will Markup Bills to Terminate Failed Programs

Thought you might find this interesting. Also, here's a link to my blog post from last Nov. about loan mods.

WASHINGTON: Financial Services Committee Chairman Spencer Bachus announced a subcommittee hearing and full committee markup of four bills that will terminate failed and ineffective housing foreclosure programs.

The four proposals – which terminate the troubled Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program, the FHA Refinance Program, and the Emergency Homeowner Relief Fund – will be the subjects of a hearing on March 2 by the Insurance, Housing and Community Opportunity Subcommittee and a full committee markup on March 3.

“In an era of record-breaking deficits, it’s time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners,” said Chairman Bachus. “These programs may have been well-intentioned but they’re not working and, in reality, are making things worse.”
Insurance and Housing Subcommittee Chairman Judy Biggert said: “We need to break down barriers that have delayed the housing recovery, including expensive and ineffective government programs that have failed to helphomeowners. Unfortunately, these programs were set up in haste, executed poorly, and have done little to restore stability in the marketplace. A government program that spends more to save a single borrower than it costs to buy a home is no help at all – it’s just a waste of taxpayer money. We need to stop funding programs that don’t work with money we don’t have.”
The Committee will consider the following bills:
The HAMP Termination Act. The Obama Administration’s signature anti-foreclosure effort, the Home Affordable Modification Program (HAMP), has failed to help a sufficient number of distressed homeowners to justify the program’s cost. According to the Administration, HAMP was supposed to help 4 million homeowners. Instead, only 521,630 loans have been permanently modified under this program and the re-default rate is high. To date, the Administration has spent approximately $840 million of the $29 billion earmarked for HAMP from the Troubled Asset Relief Program (TARP).

Far from helping at-risk homeowners, HAMP has actually made many worse off, according to a report from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP):

People who apply for modifications via HAMP sometimes “end up unnecessarily depleting their dwindling savings in an ultimately futile effort to obtain the sustainable relief promised by the program guidelines. Others, who may have somehow found ways to continue to make their mortgage payments, have been drawn into failed trial modifications that have left them with more principal outstanding on their loans, less home equity (or a position further ‘underwater’), and worse credit scores. Perhaps worst of all, even in circumstances where they never missed a payment, they may face back payments, penalties, and even late fees that suddenly become due on their ‘modified’ mortgages and that they are unable to pay, thus resulting in the very loss of their homes that HAMP is meant to prevent. While it may be true that many homeowners may benefit from temporarily reduced payments even though the modification ultimately fails, Treasury’s claim that ‘every single person’ who participates in HAMP gets ‘a significant benefit’ is either hopelessly out of touch…or a cynical attempt to define failure as success.”
(Office of the Special Inspector General for the Troubled Asset Relief Program)

In a separate report, the SIGTARP noted HAMP “continues to fall dramatically short of any meaningful standard of success.”

(Office of the Special Inspector General for the Troubled Asset Relief Program)
The HAMP Termination Act ends the Treasury Secretary’s authority to provide new assistance under the program but preserves assistance already offered to homeowners through HAMP prior to the bill’s enactment.

The Neighborhood Stabilization Program Termination Act. Congress has appropriated $7 billion for the Neighborhood Stabilization program, including $2 billion in the Obama Administration’s stimulus plan. Two rounds of NSP funding have already been provided to states and localities. The Neighborhood Stabilization Program Termination Act ends the program and rescinds the unobligated third round of funding of $1 billion.

Critics have argued that the NSP does not benefit at-risk homeowners facing foreclosure, and may instead create perverse incentives for banks and other lenders to foreclose on troubled borrowers – arguably worsening the housing crisis.

The FHA Refinance Program Termination Act terminates the program and rescinds unobligated funding. The price tag for this program is $8.12 billion, of which only $50 million has been disbursed thus far. For this large outlay, the taxpayers have seen minimal return on their investment. As of December 13, 2010, only 35 applications had been submitted for this program.

The Emergency Mortgage Relief Program Termination Act ends the program and rescinds unobligated funding. The Dodd-Frank Act reauthorized the long-expired Emergency Homeowners’ Relief Act of 1975 and provided $1 billion to authorize HUD to make emergency mortgage relief payments to homeowners facing foreclosure for up to 12 months, with a possible extension of another 12 months. These loans will serve to increase the amount of the borrower’s indebtedness, so a borrower who is unable to pay back either the original amount of principal or the additional loans made under the program will be worse off in the long run.


The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles:     
 

Merscorp Lacks Right to Transfer Mortgages, Judge Says - Bloomberg

Thought you might find this repost from Bloomberg interesting. Throws another wrench in the foreclosure process.

Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said.

U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.

“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”

Merscorp was created in 1995 to improve servicing after county offices couldn’t deal with the flood of mortgage transfers, Karmela Lejarde, a spokeswoman for MERS, said in an interview last year. The company tracks servicing rights and ownership interests in mortgage loans on its electronic registry, allowing banks to buy and sell the loans without having to record the transfer with the county. It played a major role in Wall Street’s ability to quickly bundle mortgages together in securitized trusts.

MERS was still reviewing Grossman’s decision and didn’t have an immediate comment, Lejarde said in an e-mail Feb. 11. Lejarde didn’t immediately respond to an e-mail seeking comment today.

Proper Status

“‘Don’t come around here no more,’ is basically the message to MERS,” said April Charney, a senior attorney with Jacksonville Area Legal Aid in Jacksonville, Florida. “The judge basically deconstructed MERS and said there’s no possible way in any case you can come in and show you have this appropriate proper status to transfer the note.”

“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process,” Grossman wrote. “The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

Automatic Shield

In the case Grossman ruled on, Credit Suisse Group AG’s Select Portfolio Servicing, a mortgage servicer, sought to bypass the automatic shield against legal claims triggered by Ferrel L. Agard’s filing for personal bankruptcy in September.

Select Portfolio wanted permission to foreclose on Agard’s home in Westbury, New York, on behalf of U.S. Bancorp’s U.S. Bank unit, the trustee for the mortgage-backed trust the home loan was in. The house is worth about $350,000 and the mortgage amount was $536,921, according to the decision.

Grossman ruled in favor of Select Portfolio because he couldn’t overrule a November 2008 foreclosure judgment the servicer won in state court, he said. Without that state-court ruling, Select Portfolio wouldn’t have had the right to bring its motion, Grossman said.

He then addressed whether a mortgage transfer by MERS is valid, because “MERS’s role in the ownership and transfer of real-property notes and mortgages is at issue in dozens of cases before this court,” including those where “there have been no prior dispositive state-court decisions,” he wrote.

Original Lender

Select Portfolio argued in part that MERS’s February 2008 assignment of the mortgage to U.S. Bank was valid because Agard agreed that MERS would hold title to it for the original lender,Bank of America Corp.’s First Franklin, and for whichever banks it was further assigned to. First Franklin transferred the promissory note the mortgage secured to Lehman Brothers Holdings Inc.’s Aurora Bank and Aurora to U.S. Bank, according to the decision.

“An adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” Grossman wrote. “It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices.”

MERS intervened in the case and argued that Agard’s mortgage, the terms of its membership agreement and New York state law gave it the authority to assign the mortgage. MERS says it holds title to mortgages for its members as both “nominee” and “mortgagee of record.”

Select Portfolio

Grossman said Select Portfolio had to show that U.S. Bank owned both the note and the mortgage, and there was no evidence that it held the note. The judge disagreed with Select Portfolio’s argument that U.S. Bank held the note because the note “follows” the mortgage, which it said U.S. Bank owned.

“By MERS’s own account, the note in this case was transferred among its members, while the mortgage remained in MERS’s name,” Grossman wrote. “MERS admits that the very foundation of its business model as described herein requires that the note and mortgage travel on divergent paths.”

The judge said that the membership agreement wasn’t enough to assign the mortgage and that to do so the lender would have to give power of attorney or similar authority to MERS.

MERS’s membership rules don’t create “an agency or nominee relationship” and don’t clearly grant MERS authority to take any action with respect to mortgages, including transferring them, Grossman wrote. Because the interests at issue concern “real property” -- land and buildings -- under state law, any transfer has to be in writing, which isn’t done under the MERS system, he said.

‘Nominee’ Status

“Without more, this court finds that MERS’s ‘nominee’ status and the rights bestowed upon MERS within the mortgage itself, are insufficient to empower MERS to effectuate a valid assignment of mortgage,” the judge wrote. “MERS’s position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best.”

Grossman said parties coming to him to seek to lift the automatic ban on legal claims in cases involving MERS will have to show they own both the mortgage and the note.

The case is In re Agard, 10-77338, U.S. Bankruptcy Court, Eastern District of New YorkCentral Islip).

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court attweidlich@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles: