...and here's our next problem in the real estate and mortgage industry. MERS. Read on for an outline of a presentation I recently concluded introducing real estate agents to the concept of yet another mortgage securities fraud scheme.

1. New Crisis Overviewa. Lenders have frozen foreclosures due to allegations of improper documentation and review of files b. Main problems i. Robo-signers ii. Missing documentation iii. Failure to properly review documents 2. An introduction to property transfers a. Gretchen Morgenson quote “…For centuries, when a property changed hands, the transaction was submitted to county clerks who recorded it and filed it away. These records ensured that the history of a property’s ownership was complete and that the priority of multiple liens placed on the property – a mortgage and home equity loan, for example- was accurate. During the mortgage lending spree, however, home loans constantly changed hands, Those that ended up packaged inside of mortgage pools, for instance, were often involved in a dizzying series of transactions. To avoid the costs and complexity of tracking all these exchanges, Fannie Mae, Freddie Mac, and the mortgage industry set up MERS to record loan assignments electronically. MERS did not own the mortgages it registered, but it was listed in public records as the nominee for the actual owner of the note or as the original mortgage holder. As long as real estate prices rose, this system ran smoothly. When that trajectory stopped, foreclosures brought against delinquent borrowers began flooding the nation’s courts. MERS filed many of them… As cases filed by MERS grew, lawyers representing troubled borrowers began questioning how an electronic registry with NO ownership claims had the right to evict people. ” 3. The underlying problem - MERS a. What is MERS? i. MERS is a shell company that created an electronic database for the trading of mortgages ii. MERS would claim to package millions of loans, with or without delivering the promissory notes, into loan pools or mortgage back security trusts, then flip the loans by selling bonds to investors b. Who created it? i. Fannie Mae’s CEO James Johnson ii. Countrywide’s CEO Anthony Mozilo 1. Who was later indicted on securities fraud charges in 2009 2. Mozilo acknowledged Countrywide was increasing risky loans and did not tell investors iii. Countrywide and Fannie Mae were the lead organizers/shareholders/”members” of MERS iv. It is a wholly owned subsidiary of big financial institutions (see printout) c. Why was it created? i. Servicers used it to trade mortgages without having to record the mortgage change, as MERS remain the mortgagor on paper ii. Package sub-prime loan and resell to third parties (i.e. international banks) iii. Quickly flips unqualified loans to 3rd party investors iv. Allowed banks to report exceptional profits and key players (who are on the board of MERS) to receive bonuses v. Now it makes sense why lenders wrote mortgages for sub-prime - they KNEW they would sell the loan ASAP d. How come no one knows about it? i. No lobbying or promotion ii. Stayed under the radar e. People have begun to question how a shell company call MERS could foreclose on homes when they had no ownership claim f. To this day, MERS has never originated a single loan nor loaned a dime to a single borrower 4. Traditional Filing System a. Traditionally filed by: i. Traditional note is assigned to the mortgagor and recorded with the county ii. If the note is sold to a third party, the actual promissory note must be delivered to the third party, and recorded with the county b. Structured mortgage securities typically constructed as Trusts 1. Trust hold mortgage note, which allows bundling of notes 2. Note is physically transferred to Trust c. Creation of a legal Residential Mortgage backed securities (RMBS) and Collateralized Debt Obligation (CDOs) i. The physical note the bank hold must be deposited into the Trust 1. Note holder entitled to receive payments and interest 2. Has the right to foreclose/take property in event of default 5. MERS Filing System a. Has completely ignored the structuring process i. Proper filing of the mortgage note every time the product changed hands did not happen under MERS ii. Instead, they issued “blank” mortgage assignments all along the channel of transfers, skipping the actual physical recording of the mortgage at the county registry of deeds b. MERS filing/record keeping i. MERS does not keep documents, it is a “paperless” system 1. Many of the so-called mortgage backed security trusts do not actually hold the promissory notes which evidence the debts that are supposed to be backing the bonds purchased by these investors ii. Causes improper construction of Trusts 1. Note is never reassigned to Trust 2. Requisite filing of mortgage lien with county never done 3. There is no documentation, as it is a “paperless” system 6. Why are banks using MERS? a. Saves on recording fees b. Allows lenders to package and resell sub-prime loans ASAP c. Keeps MERS as mortgage holder, even though they have sold off the notes d. Most importantly, allows MERS to receive an investment grade rating by assigning bankruptcies to a single purpose subsidiary of MERS – Merscorp (approx. 60 employees, mostly lawyers) e. Shell company i. No employees, but thousands of assistant secretaries and vice presidents ii. hires “foreclosure experts” such as Walmart workers, assembly line workers, hair stylists, etc to sign documents iii. You can purchase a MERS corporate seal for $25.00 online 1. Robo-signers 2. One secretary stated her signature had no legal meaning, etc. 3. An assembly worker stated he really didn’t know what a mortgage or assignment was… 7. Additional information a. 60% of all American mortgages held by MERS shell company i. MERS has saved banks over $1 billion by blank assignment b. See handout for banks who are shareholders of MERS c. **MERS does not process foreclosures – it outsources to foreclosure mills or back to the servicers, just as the assignment of mortgage was outsourced to them d. States currently looking into MERS i. Supreme Courts in Kansas, Arkansas, and Maine ruled MERS is not the mortgagee and has no legal standing to foreclose ii. SC (so far) says they can foreclose, even though MERS cannot produce the note e. Potentially sold same loans multiple times to 3rd party investors 8. Public review - Can MERS foreclose on a home when it cannot produce the note? a. Office of Federal Housing Enterprise – May 23, 2006 i. Highly critical report published 1. “an arrogant and unethical corporate culture where Fannie Mae employees manipulated accounting and earnings to trigger bonuses for senior executives from 1998 to 2004…Senior management manipulated accounting; reaped maximum, undeserved bonuses, and prevented the rest of the world from knowing…” b. 2001 – New York Supreme Court i. orders Suffolk County Clerk to accept MERS mortgages for recording as a purely ministerial duty, ii. BUT refuses to issue judgment declaring MERS “lawful in all respects.” iii. New York Court of Appeals agreed with the decision iv. MERS did not pursue issue – as they did not want to risk having a published opinion that MERS has no standing as a creditor c. South Carolina i. Dismissed a MERS action to foreclose for lack of standing even though a MERS officer claimed MERS was in possession of the promissory note ii. SC court was informed that MERS previously told Nebraska court of appeals that it never held promissory notes d. California adopted a rule of practice which requires all foreclosure trustees or other plaintiffs produce the original promissory note e. Kansas, Arkansas, and Maine have ruled MERS has no legal standing to foreclose 9. Ramifications a. Loans may become unsecured debt, similar to a credit card instead of a mortgage b. If ruled an equitable mortgage (typically done when there’s a technical defect) judges would have considerable leniency with different options, such as readjusting an ARM loan down to a traditional interest rate in the “interest of justice.” c. Title becomes cloudy, both on foreclosed homes and performing mortgages d. Who has the note – does it still exist – and how many times was it transferred/sold? i. Many lenders and pools who bought these mortgage securitizations don’t have the proper documentation to prove they even hold the mortgage e. Lawsuits i. If MERS cannot produce note, it raises the question as to whether these mortgages are really lost or might have been fraudulently used in multiple securitizations, according to Wall Street veterans ii. Investors will be seeking to recover their losses or receive the promissory notes from the National Banks who used MERS – (ex. Ordered a Ferrari, given a Hyundai) iii. Homeowners can take action demanding promissory note to be produced and file the with lien holder. 10. What should you & your clients do? a. Look on mortgage document and see if you are in the MERS system b. If so, call your mortgage company and tell them you would like verification in writing of: i. Any title assignments to third parties ii. Verifications your payments are going to the current holder of your note iii. A “blue-ink” copy of your original agreement 11. In conclusion a. It’s time to force all members of MERS to fix all the titles they have damaged, at their expense, and record true and accurate information i. But wait…what if the assignments never happened…that could get messy b. “At the root of the crisis we find the largest financial swindle in world history, where counterfeit mortgages were laundered by banks.” (Noted by a prominent economist)

What makes a property a good buy? There are so many different things to take into consideration: location, price, product...just to name a few. Chances are, if the price, property, or product (the home itself) is sub-par, the property will sit (and sit...and sit) on the market.

The point of Weekly Steals and Deals is to highlight areas and properties of interest in the Hilton Head Island and Bluffton, South Carolina areas. We sift through the huge amount of homes, villas/condos, and land to bring you the best of the best. The best price in today's market, the best location in the community, and the best built proprety we can find.

Weekly Steals and Deals has been extremely effective for our (many) past and current clients. Weekly Steals and Deals allows you to narrow your focus to only properties that are ready to move. We monitor new homes/condos coming on to the market so you can hear about them first!

Many of clients are concerned about financing. Well, we have exciting news for you! A lender we work with, South Carolina Mortgage Associates, has many different options available when it comes to financing. They can still do 100% loans! Also on their product list is: asset backed loans, lot loans at 60/40 LTV (wow...most are at 90/10LTV), FHA, VA, and jumbo loans. With interest rates at all time low and market prices still low, this is the perfect time to buy. We also have the LPTO program, which helps you out to avoid foreclosure or get into a home even if you cannot qualify for a mortgage. While our site is still under construction, feel free to take a sneak peek at http://www.wix.com/tmmlpto/total-mortgage-management.

Our featured property for today:

Calling all 2nd home buyers and investors! Oceanfront penthouse on the south end of Hilton Head Island, South Carolina. The price is absolutely incredible! Offered at $249,000!!!! Ocean Dunes - one of the best managed communities on the island. No debt. No history of foreclosures. Ample reserves. Seriously....a great deal! 

Top floor ocean views from this South Forest Beach gem! This well-maintained ocean front 1-BR villa gives you all the options of beach front relaxation and living at a very affordable price. Use as a second home or income-producing vacation property. Complex includes elevator and beachfront community pool.

Interested in learning more? Email me at ashley.lashbrook@century21.com or call 843.301.8550.

Agent Bootcamp is here! This course will run 12 weeks, and help you improve (and master) the most important aspects of managing your real estate business. We will extensively cover website development and management, blogging, creating listing presentations, marketing online, REOs, Short Sales, and much more!

All sessions will be held on Tuesday mornings at 9:00am via Skype video conferencing.One of the biggest complaints we receive about seminars is that you learn useful information, but never have time to implement the changes…so here’s the fix. Each session will take maximum of 2.5 hours, plus up to one hour per week to complete assignments outside of class. The reason for the longer class is to allow time to actually implement what we are learning. For example, when we review websites, we will update your website during the session.

1st class is free, all others are $10. Save $20 and sign up for the entire session (total cost: $90 instead of $110).

Oct. 19th - Session #1 - Websites - Review current website 21online.com – creating a personal site MLS personal site – create personal search page Activerain.com –managing your profile That Art of Blogging Assignment: Complete time management worksheet based on your current schedule Session

#2 - Contact Organization/Time Management - Post blog Review assignment Techniques for increasing available time Implement contact organization to manage colleagues, clients, prospects, and vendors Assignment: Script memorization Session

#3 – MLS (Utilizing Tempo) - Post Blog Creating a Prospect Search CMAs Document Manager Importing contacts Script practice/Roleplaying Assignment: One page Vision Session

#4 – Marketing - Post Blog Branding yourself Niche marketing Drip campaigns (import contacts and create campaigns) Assignment: list of referring people/businesses Session

#5 – Lead Generation - Review where your business comes from – how to capitalize Going after your niche market – who, why, where Post Blog Effective lead generation tools: online, personal touch, mailings Develop Lead Generation Plan (LGP) Assignment: Script memorization – listing request Session

#6 – Listing Presentations - Post blog Incorporating your strengths Create via 21online.com Review presentations Craft short video for website Develop Power Point Script review/Roleplaying Assignment: Script memorization Session

#7 – Working with Buyers - Post Blog Body Language Common discussions Script review/Roleplaying Assignment: Memorize script Session

#8 – Prospecting - Post blog Farming techniques Develop Farming Campaign Scripts/Roleplaying Assignment: Write down Top 5 common issues found in both Buyers and Sellers Session

#9 – Overcoming Obstacles - Post Blog Review assignment Buyer obstacles and solutions Listing obstacles and solutions Pricing scripts Assignment: memorize pricing scripts Session

#10 – Marketing Session #2 - Post blog Quick review: pricing scripts Find your niche Mailer designs Branding review Assignment: Note where you need clarification or assistance Session

#11 – Open Session -  Post Blog Review assignments Open Session Assignment: Review “One Year Goals and Vision” and Niche; consider specific goals for coming year Session

#12 – Bringing it all together - Post Blog Implementing the overall plan Set 2011 Goals Close

During a recent brainstorming session at the office, we stumbled across what (may) be an extremely good idea. Lease purchases. Say those two words to the average real estate agent, and they'll be running for the hills in the blink of an eye. Scary! As real estate agents, it is our duty to provide the best assistance possible to each and every client.

Why do we hate lease purchases? Well, let's take a look at a few "facts" surrounding lease purchases.

"Fact" #1 As a real estate agent, I will never make any money off of lease purchases. It's a waste of time.

Hmmm...that's not quite true. Sure, you won't make any commission if you don't handle the transaction properly (or if you run away), but there are money-making opportunities available. If you find the potential buyer/tenant, as well as an acceptable property, why shouldn't you get paid? Provided you figure out the terms before showing any property, of course. Have the tenant direct the payment towards your realty firm, which you in turn send to the current owner. Take a commission! Long-term property management commissions tend to run in the 5-15% range (in the Hilton Head Island, SC area)...talk about generating relatively passive income! Then, when the property sells, you still collect the real estate commission you had previously agreed upon. Make sense, doesn't it?

"Fact" #2 Too many landlords are heading into foreclosure...it's not worth the risk.

Yes, foreclosures are running rampant across the country. To avoid any potential issues, require the seller provide you access to his/her mortgage account. Your office can check up once a month and make sure the payments are being received. Hold the buyer/tenant's deposit and downpayment income in your escrow or trust account....no the seller's! Problem solved. If the seller defaults, the additional funds from the lease purchase agreement can be returned to the buyer. They'll be out the rental payments....but hey, would they have been able to buy a house otherwise?

"Fact" #3 The odds of closing a lease purchase are horrible.

Kind of true. In the past, lease purchases have been seen as a way to make some evtra money. I have heard investors who utilize the lease purchase programs state their default rate is as high as 90%. Wow! Keep in mind, in the past, a lease purchase has always been treated a nothing more than a glorified lease. Not exactly encouraging the tenants to act as owners, are we? By establishing the lease purchase through a reputable realty firm, you are helping to create a more structured environment. The tenant/buyer has someone to answer to...not just a landlord.

What do you think? It seems to me that this may be the wave of the future for real estate, with so many potential buyers having credit dings and difficulty qualifiying for traditional loans. We'll see. I, for one, am jumping in with both feet...lease purchases here I come!

Looking forward to hearing any thoughts/comments!

Ashley

Location: Eagle's Pointe, Bluffton, SC (Muirfield Drive)

List Price: $189,900 

Cty Tax Rec Liv Area: 1,703  Approx Heated SqFt: 1,703 

Foreclosure: Y

Lovely home in Eagles Pointe on a corner lot, Three bedroom, two bath with Carolina Room, Two car garage. Recently painted - in great shape! This is a wonderful community close to Bluffton, Beaufort, and Savannah. Community pool, tennis courts, and very popular golf course (with reasonable rates). Very light and bright home. Contact me if you might be interested. It is a foreclosure, but not worry...we know how to negotiate a foreclosure!

Happy Monday to all! Weekly Steals and Deals is a blog devoted to the best priced real estate on Hilton Head Island and in Bluffton, South Carolina. Consisting of minimum once weekly updates, this blog will help buyers to sort through the over abundance of properties on the market in order to find the Best Buys.Best Buys are based on list price, and meet our criteria due to location, price per square foot, and neighborhood value. We bring you real estate for sale from starter homes to luxury oceanfront properties.

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