January 14, 2014
How to Make NYC Affordable?
The Community Service Society released a report, An Affordable Place to Live (written by Waters and Bach). The report is intended to state “What New Yorkers Want From the New Mayor” from the perspective of low-income New Yorkers. Given that Mayor De Blasio campaigned on the theme of a Tale of Two Cities, this report is very timely. It focuses on the “growing mismatch between rents and incomes” which results in low- and moderate-income New Yorkers paying a greater and greater percentage of their income in rent. (1)
The report’s recommendations include
- eliminating the sizable payments that the New York City Housing Authority must pay to the City so that those monies can be invested in NYCHA’S strained operating and capital budgets.
- implementing mandatory inclusionary zoning, a policy which the Mayor had highlighted during his campaign.
- tying real estate tax exemptions to affordable housing.
There are a lot of good ideas in the report. But some of the ideas avoid the tough questions. For instance, the report argues that plans to infill NYCHA land with additional housing should be halted. Such a step would be inconsistent with other proposals in the report such as making affordable housing the highest priority for city-controlled land.
Another drawback of the report is that it did not attempt to quantify how much housing its proposals would actually create or preserve. This may be beyond the scope of what the authors intended, but I was left with the impression that even if many of the proposals were adopted, they would fail to actually make a big dent in the affordability issue that they identify.
That being said, the report is a very helpful contribution to what will be an essential and ongoing policy discussion during the De Blasio Administration.
January 14, 2014 | Permalink | No Comments
January 13, 2014
Social Security Numbers for Mortgages
McCormick and Calahan have posted Common Ground: The Need for a Universal Mortgage Loan Identifier, a Department of the Treasury Office Financial Research Working Paper (#0012). They argue that
The U.S. mortgage finance system is a critical part of our nation’s financial system, representing 70 percent of U.S. household liabilities. It is also highly complex, with many finance channels, participants, and regulators. The data produced by this system reflect that complexity; unfortunately, no single identifier exists to link the major loan‐level mortgage datasets. The establishment of a single, cradle‐to‐grave, universal mortgage identifier that cannot be linked to individuals using publicly‐available data would significantly benefit regulators and researchers by enabling better integration of the fragmented data produced by the U.S. mortgage finance system. Such an identifier could additionally serve as the foundation of a system that could benefit private market participants, as long as such a system protected individual privacy. (1)
This is a very important initiative, although the privacy concerns are very important to address. Regulators have been many steps behind the private sector in tracking developments in the mortgage markets and a cradle-to-grave identifier, like a Social Security Number for an individual, will help them (and private sector analysts for that matter) to track patterns among borrowers and loan products.
The authors identify a number of serious privacy concerns:
a mortgage identifier would have to be designed to prevent market participants from re‐identifying individuals. No links from public documents to mortgage identifiers should be allowed. Otherwise the identifier could be used to identify individuals, rendering all datasets containing the identifier personally‐identifiable information. Such a designation would create concerns about the use of individual data in the private sector and trigger burdensome requirements for government researchers using the data. (3)
Researchers have proven resourceful at mashing up data sets to identify supposedly anonymous individuals, so the privacy protections that are ultimately implemented would need to be airtight. That being said, there is a lot of value in working toward the goal of a universal identifier.
January 13, 2014 | Permalink | No Comments
Florida Appellate Court Holds that Mortgagee is not Required to be the Mortgage Holder and Owner to have Standing for Foreclosure Action
The District Court of Appeal of Florida in Wells Fargo Bank, N.A., v. Morcom, 2013 WL 5575634 (Fl. Ct. App., 5th Dist. 2013), held that mortgagee was not required to be both holder and owner of promissory note in order to have standing to foreclose.
On August 6, 2010, Wells Fargo Bank (“Plaintiff”) initiated a foreclosure action against homeowners Daniel and Sharon Morcom (“Defendants”). One year later on August 9, 2011, the Defendants filed a motion for summary judgment claiming that the Plaintiff was not the owner of the promissory note and mortgage and therefore did not have standing to initiate the foreclosure. The trial court granted Defendant’s summary judgment motion challenging Plaintiff’s standing to initiate the foreclosure. The Court had found that a party initiating a foreclosure must be the holder and owner of the promissory note in order to have standing pursuant to Florida’s Uniform Commercial Code and controlling case law.
The Florida Appellate Court reversed the trial court’s decision and held that a mortgagee was not required to be both holder and owner of promissory note in order to have standing to foreclose a mortgage.
January 13, 2014 | Permalink | No Comments
New York Appellate Court Holds that Plaintiff Bank Did not Have Standing as Mortgage Holder
The New York State Appellate Division, Second Department in Midland Mortg. Co. v. Imtiaz, 110 A.D.3d 773 (2d Dept. 2013), held that the Plaintiff did not have standing to initiate the action because it failed to establish its status as the mortgage-holder in the case.
The Plaintiff, Midland Mortgage Company (“Midland”), filed an action on January 25, 2010, alleging that it was the valid mortgage lien holder for the Defendant Misbah Imtiaz’s (“Imtiaz”) property. On April 26, 2010, Imtiaz moved to dismiss Midland’s claim and alleged that MERS, as nominee for Opteum Financial Services, LLC, was the true mortgage holder and that Midland therefore did not have standing for to initiate the action. Midland later conceded that it did not have standing for the action since it was not the mortgagee, but a servicer of the mortgage, and instead filed a joinder motion to substitute U.S. Bank National Association (“U.S. Bank”) as the plaintiff, claiming that MERS had sold the mortgage to U.S. Bank. Although Imtiaz opposed the substitution, the trial court granted Midland’s motion and allowed the substitution of U.S. Bank as the plaintiff. Imtiaz appealed the decision.
The Second Department reversed the trial court’s decision and held that neither Midland nor U.S. Bank had standing to maintain the action. The Second Department found that Midland failed to show that U.S. Bank was the actual mortgage holder because Midland did not provide sufficient evidence of the alleged assignment from MERS to U.S. Bank to prove its status as the valid mortgage holder. The Court also found that the Plaintiffs failed to show that U.S. Bank, as a potential intervenor in the action as a substitute plaintiff, had a “real and substantial interest in the outcome of the proceedings” pursuant to CPLR 1012(a)(3).
January 13, 2014 | Permalink | No Comments
January 10, 2014
Tax Incentives for Sustainable Homeownership
Harris, Steuerle and Eng have published New Perspectives on Homeownership Tax Incentives in Tax Notes. The report presents
three tax reforms designed to promote homeownership that are fundamentally different from earlier proposals. Many of those earlier proposals would convert existing deductions into credits but would mistakenly, in our view, perpetuate flaws in the current system — namely, the failure to adequately promote the accumulation of home equity. The reforms examined here instead share the common characteristic of subsidizing homeownership through a channel other than the deductibility of mortgage interest, which is the largest tax expenditure for housing. These reforms include a first-time home buyer tax credit, a refundable tax credit for property taxes paid, and an annual flat amount tax credit for homeowners — all largely paid for by restricting the home mortgage interest deduction to a rate of 15 percent. Although far from perfect, these reforms would provide a better and more efficient allocation of housing subsidies and ultimately provide a somewhat larger incentive for wealth accumulation than current policy does. Our simulations show that relative to existing incentives, each policy would raise home prices and make the tax code more progressive. (1315)
This report has some drawbacks, such as overstating the case that empirical studies reinforce “the notion that homeownership improves American communities.” (1315) In fact, the empirical literature is decidedly ambiguous about the spillover and wealth accumulation effects of homeownership, particularly when the last few years are taken into account (I discuss these ambiguities here).
But the report also presents some creative ways to change the incentives that are found in the tax code. They argue, for instance, that it is better to incentivize the accumulation of home equity than unfettered mortgage borrowing. And they make proposals that would do just that. Worth a read.
January 10, 2014 | Permalink | No Comments
January 9, 2014
Weigh in on Mortgage Closing “Pain Points”
The Consumer Finance Protection Bureau has issued a Request for Information Regarding the Mortgage Closing Process. The CFPB wants
information from the public about mortgage closing. Specifically, the Consumer Financial Protection Bureau (CFPB) seeks information on key consumer “pain points” associated with mortgage closing and how those pain points might be addressed by market innovations and technology.
The CFPB seeks to encourage the development of a more streamlined, efficient, and educational closing process as the mortgage industry increases its usage of technology, electronic signatures, and paperless processes. The next phase of CFPB’s Know Before You Owe initiative aims to identify ways to improve the mortgage closing process for consumers. This project will encourage interventions that increase consumer knowledge, understanding, and confidence at closing.
This notice seeks information from market participants, consumers, and other stakeholders who work closely with consumers. The information will inform the CFPB’s understanding of what consumers find most problematic about the current closing process and inform the CFPB’s vision for an improved closing experience. (79 F.R. 386)
The CFPB is particularly interested in responses to the following questions:
1. What are common problems or issues consumers face at closing? What parts of the closing process do consumers find confusing or overwhelming?Show citation box
2. Are there specific parts of the closing process that borrowers find particularly helpful?
3. What do consumers remember about closing as related to the overall mortgage/home-buying process? What do consumers remember about closing?
4. How long does the closing process usually take? Do borrowers feel that the time at the closing table was an appropriate amount of time? Is it too long? Too short? Just right?
5. How empowered do consumers seem to feel at closing? Did they come to closing with questions? Did they review the forms beforehand? Did they know that they can request their documents in advance? Did they negotiate?
6. What, if anything, have you found helps consumers understand the terms of the loan? (79 F.R. 387)
It is rare that a federal agency requests information and comments from the Average Joe, Joe Sixpack and Joe the Plumber. So this is a chance for educated consumers of mortgages to be heard at the highest levels about the flaws in the home loan closing process. I encourage readers of REFinblog.com to make their voices heard!
January 9, 2014 | Permalink | No Comments
Oregon Court Dismisses Plaintiff’s Oregon Revised Statute § 86.745(1) Claim
The court in Woods v. United States Bank N.A., 2013 U.S. Dist. LEXIS 146485 (D. Or. 2013) ultimately granted the defendants’ motion to dismiss, and dismissed with prejudice.
Plaintiffs sought a declaratory judgment voiding and setting aside the foreclosure of their property on the ground that the May 25, 2011, notice of default and election to sell listed only MERS as the beneficiary and did not identify USB as beneficiary, and, therefore, the Notice of Default did not comply with the requirements of Oregon Revised Statute §86.745(1).
Defendants asserted that plaintiffs’ claim was barred by Oregon Revised Statute § 86.770 because plaintiffs did not and could not allege they did not receive the notice required under Oregon Revised Statute §86.740, the foreclosure sale was completed, and the property was sold to a bona fide purchaser.
The court noted that this court, other courts in this district, and Oregon state courts have held §86.770 bars rescission of a foreclosure sale when a borrower has received the notice required under §86.740 and the property is sold to a bona fide purchaser.
Here, Plaintiffs admitted they received notice of the foreclosure sale within the time required under the OTDA, that the property was sold to a bona fide purchaser, and that the sale of the property was recorded.
The court thus concluded that plaintiff’s claim was barred under §86.770(1) and, therefore, granted defendants’ motion to dismiss.
January 9, 2014 | Permalink | No Comments
