HELVETICA HARD MONEY

Beware of risks when buying distressed real estate at a discount

The title insurance industry has for all practical purposes eliminated an important layer of coverage provided by both owner's and lender's title insurance policies. This coverage, embodied in what is called the "creditors' rights endorsement," protected real estate owners and lenders from risks that would customarily arise when either the party from whom the insured owner purchased the property, or the mortgagor who granted the insured lender a mortgage, files for bankruptcy. Real estate purchasers and lenders will have to evaluate these bankruptcy risks themselves rather than relying on the title insurer to do it for them.

This creates additional risks to consider when closing that "discounted deal." Technically, under the bankruptcy code, a creditor may look back in time to "fraudulent transfers" and in an effort to unwind prior transactions to pay their claims.

This may pave the way for future lawsuits from unsecured creditors that will have the benefit of 20/20 hindsight if and when the market recovers, to look back to discounted deals in an effort to get their unpaid, unsecured claims paid.

Read more @ http://www.klgates.com/newsstand/detail.aspx?publication=6216

House Prices Fall for third straight month

Home prices forecast to decline additional 5-10% in 2011.

clipped from www.mortgageservicingnews.com Home prices fell in October for the third month in a row and it appears the housing market is headed for a double dip, according to the Standard & Poor's/Case-Shiller house price index. "The double dip is almost here," said David M. Blitzer, chairman of S&P's index committee.  House prices began a recovery in mid-2009 that lasted into July of this year -- thanks to home buyer tax credits that expired during the summer.  Since the peak in home prices in June 2006, prices are down 29.6% nationwide.

Lawmakers See Systemic Threat from Foreclosure Problems

More delays but with ultimately same result i.e., foreclosure. Real estate recovery will be hindered and recession will be prolonged without clearing the inventory. The delays are costing tax payers although popular with politicians.

clipped from www.americanbanker.com WASHINGTON — At a hearing in which protestors attempted to shout down a witness from JPMorgan Chase & Co. as he testified on ongoing foreclosure problems, lawmakers were clearly worried that there were still more damaging revelations to come. Senate Banking Committee Chairman Chris Dodd and other Democrats said that accusations of improper documentation practices by major servicers were proof the current foreclosure process was broken. But they also suggested the problems may be worse than have come to light. "The focus on the robo-signing problem is too limited," Dodd said at the outset of the hearing. "Many believe that the robo-signing errors are simply the tip of a much larger iceberg, that they are emblematic of much deeper problems in the mortgage servicing business, problems that have resulted in homeowners losing their homes in unjustifiable foreclosures. In fact, servicing practices may be putting homeowners at risk."