Saturday, November 12, 2011

What is the Castle Doctrine issue in Wisconsin?

Wisconsin law is currently awaiting the expected signing by Governor Scott Walker of AB 69 into law. Both houses of the State Legislature passed the legislation relating to presumptions of self-defense in defending private property.

AB 69 clarifies and expands a property owner's right to use deadly force against someone who unlawfully and forcibly enters a dwelling, vehicle, or place of business regardless of whether deadly force is reasonably necessary.

A “dwelling” is "any premises or portion of a premises that is used as a home or a place of residence and that part of the lot or site on which the dwelling is situated that is devoted to residential use" and also includes driveways, sidewalks, porches, garages, etc.

If and when Governor Walker signs the bill into law, there will be a change in the presumption relating to defending such a dwelling. Under current law, the Court must determine whether a person who kills an intruder reasonably believed the force was necessary to defend against imminent death or substantial harm. Under the new law, the Court must presume that the person defending their property was justified in killing an intruder.

The presumption applies if a intruder entered or was in the process of entering a dwelling, vehicle, or place of business unlawfully and by force. If the property owner is present and reasonably believes that an unlawful or forcible entry is occurring, the property owner is presumed justified to use deadly force.

The presumption does not apply if the intruder is a self-identified “public safety worker.” The presumption also does not apply if the property owner is engaged in criminal activity.

The presumption applies both to limit criminal prosecution of the property owner and to bar civil suits against a property owner.

Attorney James N. Graham, real estate attorney with Accession Law LLC

Saturday, November 5, 2011

More Taxpayer Aid to Freddie Mac?

Freddie Mac Requests $6B More in Taxpayer Aid
11/03/2011 By: Carrie Bay

The nation’s second largest mortgage company is asking the U.S. Treasury for another $6 billion in capital support after posting its largest quarterly loss in over a year.

Freddie Mac said Thursday that it recorded a net loss of $4.4 billion for the quarter ended September 30, 2011, compared to a net loss of $2.1 billion over the previous three-month period and $2.5 billion for the third quarter of 2010.

Wednesday, September 7, 2011

What is "Flopping" and when is it illegal?

The term "flopping" in real estate transactions is an offshoot of the term "flip." Anyone who watches late night TV knows that "flipping" a property usually means to buy a fixer-upper, fix it up, and then sell it. Ideally this occurs in a relatively short time period (to reduce the holding costs to the buyer/fixer/seller).

"Flopping" typically refers to a flip in which the purchase occurs at a short sale and in which the buyer may already have a subsequent purchaser lined up for a higher price. A lender agrees to sell the property for less than is owed on the mortgage note, the buyer then acquires and quickly resells the property.

Buy low, sell high. What could be wrong with that? The problem occurs if there is fraud. Lenders, and their guarantors such as Fannie Mae, do not have the resources to conduct due diligence on the properties on which they hold mortgages. So, Fannie Mae relies upon the short-sale buyer to provide it with information about the property?!? The buyer obviously has an incentive to overestimate needed repair costs and to underestimate the value of the property.

Once the buyer resells the property, Fannie Mae may complain that it was given fraudulent information by the buyer (or by the real estate agent, or by the seller) as to the value of the property and/or the existence of other interested parties.

Shelley Poland, a vice president at Freddie Mae, and Robert Hagberg, the associate director of fraud investigations, said in a blog post that they believe such fraud is on the rise.  Freddie is requiring buyers to sign an affidavit that the transaction is "arms-length." 

What can a short-sale buyer, particularly an investor looking to flip, do to avoid an allegation of fraudulent "flopping?"  1)  Have nothing to do with the listing agent or broker's price opinion as to the value.  2) Use reasonable estimates for repair costs or any other information submitted to the seller's lender when seeking short sale approval. 3) Do not exchange anything with the seller that is not reflected on the HUD1 settlement statement.
Also, beware.  Freddie, and its fraud prevention unit, claim that it is fraud if a buyer/investor enters into a short sale purchase contract, identifes and contracts with a subsequent purchaser, and closes on the short-sale purchase without identifying the subsequent purchaser to the lender.  see

Real estate attorney James N. Graham

Saturday, April 23, 2011

Safety, Security and Home Sellers

One uncomfortable fact associated with selling your house is that, to the extent that one is successful in getting "traffic" through the residence, one will have strangers coming into the house.  Prospective buyers will look into closets, cupboards and virtually any other area of the home.  Further, they may have an ulterior motive for entering the home.

The "buyer" might be a thief looking for a quick and easy score.  Prescription drugs and valuables must be locked away during any showings or risk the loss when they disappear.   

The "buyer" also may be a thief casing the home for future re-entry.  In Menasha, Wisconsin, recent news reports reference three burglars who may have accessed the property during a showing.  The invasion occurred the night after a real estate agent had shown the property.  The home was entered, the home-owners tied up, and the house burglarized.

Even worse than theft or home invasion was the tragic 2008 case of the murder of 71 year old Cambridge real estate licensee Ann Nelson by a man to whom she was showing a home for sale.  Other high-profile attacks following similar circumstances are the recent cases of Ashley Okland, an agent murdered in Iowa and Vivian Martin who was robbed of $56 and strangled by "home buyer" thiefs.

There is no fail-safe way to guard against these risks, but it is important to know with whom one is dealing, to be vigilant in alerting someone else whenever a stranger is in the home, and to use common sense in guarding one's safety and property.

Real estate attorney James N. Graham,

Friday, April 22, 2011

What is happening to commercial real estate markets?

Where is the commercial real estate market headed?

According to Moody’s Investors Service, commercial real estate property prices fell the past 3 months and the market is “dangerously close to double dip territory." The service’s REAL Commercial Property Price Index (CPPI) showed prices near the market’s “post-peak low” set in August of 2010.

Yet two days ago, USA Today reported "The once-dismal commercial real estate market is turning around far more quickly than analysts expected, with troubled loans falling, occupancy rising and office building sales surging in the largest markets."
Commercial real estate's improving health exceeds forecasts

Prices are falling, but foreclosures are down and occupancies up?  True, some of this inconsistency can be explained by the old adage "all real estate is local."  One really must examine the particular market.  But is something else happening in the aggregate that is apparently creating this strange dynamic?

Thursday, April 21, 2011

WSJ Reports on Bank Regulations Relating to Foreclosure

The Wall Street Journal reports on penalties and enforcement orders relating to the foreclosure practices conducted by many of the largest home lenders. 

Big Banks Get Foreclosure Orders

Regulators Detail Steps Lenders Must Take to Revamp Processes; Fines Are Still to Come

U.S. regulators hit the nation's largest banks with a first round of sweeping penalties for improper home-foreclosure practices, issuing detailed orders to revamp the way they deal with troubled borrowers.  The orders issued on Wednesday to 14 financial institutions didn't include fines. Officials said they are coming.
"There will be civil money penalties; the question is timing and amount. But we're not letting that clock run forever," Acting Comptroller of the Currency John Walsh told reporters. The orders were issued by his office, the Federal Reserve and the Office of Thrift Supervision.
The regulators issued the orders to the nation's four largest banks—Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. Also receiving orders were Ally Financial Inc., HSBC Holdings PLC, MetLife Inc., PNC Financial Services Group Inc., SunTrust Banks Inc., U.S. Bancorp, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank.  Bank of America, Wells Fargo, J.P. Morgan and Citigroup were ordered to revamp mortgage-lending practices.
Under the orders, banks have 60 days to establish plans to clean up their mortgage-servicing processes to prevent documentation errors.  The orders also direct banks to take steps to ensure they have enough staff to handle the flood of foreclosures, that foreclosures don't happen when a borrower is receiving a loan modification and that borrowers have a single point of contact throughout the loan-modification and foreclosure process.
Banks must hire an independent consultant to conduct a "look back" of all foreclosure proceedings from 2009 and 2010 to evaluate whether they improperly foreclosed on any homeowners and require each company to establish its own process to consider whether to compensate borrowers who have been harmed.  Critics, including other regulators, believe this process and other aspects of the orders leave too much discretion to banks.