Backtalk Requested: Bot Update

Posted by Cliff Tuttle

A new family of Zombie Bots has shown up recently. They profess to enjoy my posts so much that they offer to translate them into German and “link back”. Of course, when you try to send an email to the sender it comes right back as undeliverable.

Some Bots are there for the purpose of advertising a blog or website. I used to let some of them post comments, even when they were inane and off the point. Some can fool you once or even twice. But when they keep coming back with the same comment they give themselves away.

If you have a bot story you’ld like to share, please leave a comment. If you know what to do about them, pray tell us all.

CLT

Category: Uncategorized

Mortgage Foreclosure: Allegheny County Common Pleas Court Will Announce the Inception of its Much-Awaited Owner-occupied Residential Mortgage Foreclosure Mediation Program Soon.

Posted by Cliff Tuttle

The Allegheny County Common Pleas Court is working out the last technical details for implementation of a much anticipated mortgage foreclosure conciliation program. After a meeting this week with Allegheny County officials, President Judge Joseph James expects to sign the order of court launching the program on Friday.

The Department of Court Records is establishing procedures to create a separate series of docket numbers for owner-occupied residential mortgage foreclosure cases. These cases will then be monitored separately from other Civil Division cases.

The segregation and monitoring of owner-occupied residential mortgage foreclosures is likely to begin in January. When the Sheriff serves the complaint in a new case, the defendant will also receive a special notice on colored paper containing a telephone number to enroll in the mediation program. Cases involved in such mediation would then be stayed for 90 days to enable the parties to negotiate a settlement. Established consumer credit counseling organizations such as Action Housing will provide assistance, as they have for many years with consumer applications to the Pennsylvania Housing Finance Agency under Act 91. Also, free legal assistance will be provided through the Allegheny County Bar Association Pro Bono Committee. It is hoped that, with legal and credit counseling assistance, borrowers who are financially able to make partial payments can propose a short-term plan that would enable them to stay in their homes while making payment of an amount sufficient to enable the account to be brought current in the forseeable future. Of course, the long term goal would be the eventual repayment of the loan in full.

These cases will be conciliated by Common Pleas Court Judge Michael McCarthy. However, only newly-filed cases will be eligible for the program. The developers of the program decided that it would be too difficult to include older cases that were awaiting sheriff’s sale. Moreover, older cases were burdened with filing fees, attorneys and sheriff’s costs that made settlement more difficult.

Once the Notice of Intent to Foreclose (Act 91 Notice) has been sent, most lenders will not accept payment of an amount less than the total needed to bring the case current. However, as the volume of foreclosures has continued to break all records, many lenders have admitted that the resale prices brought by foreclosed properties in an overloaded real estate market do not justify continuing the high volume of forclosure activity. This situation has recently resulted in suspensions of foreclosures by Fannie Mae and Freddie Mac (click here for details) and by several of the largest national mortgage lenders. A growing number of states, such as California, New Jersey, Connecticut and Colorado are also discussing plans for moratoria on new foreclosures, to be followed by various types of mediation programs.

Pittsburgh Legal Back Talk has followed local trends in this area since we came on line in early summer. We will continue to report developments in this vital program regularly.

CLT

Category: Uncategorized

Real Estate:The Coming Disclosure Boom: Who is the Real Beneficiary?

By Cliff Tuttle

As though in atonement, HUD and federal regulators are beginning to announce extensive new rules under RESPA (“Real Estate Settlement Procedures Act”) and other consumer lending laws. The RESPA Rules are not going to go into effect until January 2010, reflecting the long lead time apparently needed for software producers to roll out new products.

Pennsylvania has come alive as well, with a complete revision of its mortgage banking licensing statutes, amendments to its primary consumer lending laws and its regulation of appraisal practices, to name the most significant.

These changes will overhaul the way home mortgage business is done, we hope for the better. However, consumer disclosures are based upon the premise that choices can be better informed and guided by more disclosures. As the number and size of disclosures increase, that conclusion is questionable.

There is no doubt that most disclosures given to consumers have put useful, even essential, information in front of them. But, too frequently, what is given with one hand is taken away by the other. Information made available in the residential purchase and finance process has long ago reached the saturation point.

Consider the Standard Agreement of Sale used by Pennsylvania Realtors. This lengthy and complex document usually begins the process of home purchase. The agreement itself is daunting enough. Long ago, I used to try to explain it section by section to clients, only to find that limited time and the short attention span of most humans required a severe abridgement. The Agreement itself is long enough. But on the back of about half of the pages are lengthy disclosures to the buyer in small print. If you consider the accompanying property disclosure form, completed by the seller and delivered at the same time, the agreement and disclosures are about equal in length.

The truth is that people who are about the business of making an offer to purchase real estate are, at that moment, too busy to learn and apply more than a limited amount of the information contained in these disclosures. At best, they can scan over the disclosure pages and perhaps ask a few questions.

The same principle applies to the loan application process. The borrower is focused on the details of the loan. Again, the ability of a person to aborb and evaluate new information is limited. The disclosures are relegated to the background. They are simply not as important to the borrower at that moment as the financial details of the loan.

The closing is the worst place of all to make disclosures. By that time, the terms of the sale are cast in concrete. The settlement sheet and the dollars to be allocated among the assembled parties take center stage. Since few of us (perhaps none of us) can read and absorb the dense maze of information presented by the loan documents at the closing table, a signer must be content to rely on quick verbal summaries (at best) by the closing officer. This may have been adequate in the days when closings were conducted by lawyers who knew the subject matter. But in the recent era, closings are usually conducted by non-professional notaries who often know little about the documents beyond where to sign and are increasingly being instructed by lenders to make no explanation of content whatsoever.

Moreover, the buyer in a sale may have no ability to walk the deal (or even postpone it) at that point. Thus, if a disclosure presented at the closing table actually does cause a buyer to reconsider the transaction, he or she has no power to act upon the information disclosed. The number of disclosures required by government has been greatly augmented (perhaps multiplied) by those invented by the lenders themselves. Many lender loan packages increase in size by at least a page per year.

An example of a too-late disclosure is the Coal Notice required in Pennsylvania deeds for properties in the coal-bearing regions. Grantees are required to sign a notice in constrasting color (traditionally red) that they may not be acquiring the right of subjacent support and their new home may collapse into a giant sink hole due to mine subsidence. Most Western Pennsylvanians already know about and are reconciled with the risk of mine subsidence. But there are people are actually surprised and disturbed to learn this news at the closing table. After the shock of this information passes, they quickly realize that, at this belated moment, nothing can be done. After an embarrased silence, buyers are reassured that cheap subsidence insurance is available from the State. Then, the closing rolls on and the matter is forgotten forever.

So who benefits from all of these disclosures? If the disclosures are made fully and correctly, it is primarily the party giving the disclosure. Later, when a problem arises, the buyer/borrower cannot claim that he/she was not informed of the risk. The more comprehensive the disclosure, the more effective it usually is for this purpose. One page grows to two, then five. One disclosure is replaced by two, then five. Signatures are required on every one of them. The obvious purpose is to prove that the consumer actually laid eyes on the disclosure document, however fleetingly. Some even require that the signatory certify that he or she has read and even understood it. Some documents require initials on every page. With a keystroke in a check box, the preparer of a two hundred page loan package can require initials on almost every one of the pages. I have encountered borrowers at loan closings who were physically unable to sign and initial all of the required documents in the loan package.

But there is an unintended and even less salutory consequence to this process. The consumer is kept so busy signing, over and over, page after page, that there is no time to read, think or ask a question. Consistently signing the correct full name and filling in dates may become the primary focus of this marathon exercise. And — this is the point — the more disclosures you quickly pass before those glazed-over eyes, the more effectively future avenues of attack upon the transaction can be foiled and even negative information can be slipped through. Yes, this pile of documentation, signed and initialed everywhere, effectively cuts off any future protest that the consumer wasn’t informed or didn’t understand.

True, this phenomenon has been addressed in some circumstances by rights to rescind, advance disclosure and the like. But there is still far too much information overload at decision points and far too little opportunity for the recipient to do anything about it. Each new wave of consumer disclosures simply makes the conundrum worse.

Solutions? The only meaningful road to true disclosure is pre-education of consumers. Blogs like this one can provide thought-provoking information to consumers well in advance of transactional decisions. Then, the consumer can be familiar enough with the basics that the data presented later can be understood and inform a choice.

One primary mission of this blog is to de-mystify and explain information likely to be encountered in the heat of a real estate or other consumer transaction. Read Pittsburgh Legal Back Talk in the coming year to get a handle on the perplexing new disclosures that will be eminating from Washington and Harrisburg. Then, go concentrate on the deal.

CLT

Category: Uncategorized

Back Talk Requested: The Invasion of the Zombie Bots.

Posted by Cliff Tuttle

One of the persistent annoyances in the life of a blogger is the proliferation of “zombie bots” responding to every new post and numerous old ones. Some appear within seconds after a post. They work all night, so it is not uncommon to wake up to a mailbox full of zombies. Sometimes they are disguised to be real comments, often attempting flattery. However, these simulations are soon unmasked by repetition.

The most scary looking of these includes a page of code. No blogger would ever post such nonsense. Unlike bots set loose for the purpose of bringing readers to the sender’s site, these are sent anonymously. The only purpose they serve is to be a pest.

I’ve heard a few ideas on how to address this menace, but I’d like to hear some from readers, including other bloggers. No responses from zombies will be considered.

CLT

Category: Uncategorized

SEC v. Cuban: Is it Personal?

Posted by Cliff Tuttle

The Wall Street Journal Law Blog contains a post which suggests that an employee of the Securities and Exchange Commission held a grudge against Dallas Mavericks’ owner Mark Cuban. Based on an extended email exchange between the two, questions have been raised by Cuban that this person may have been behind the SEC insider trading suit. Cuban claims total innocence of the alleged insider trading. The SEC claims that this employee, who is currently under investigation,had nothing to do with the development and prosecution of the case. Here is the WSJ Law Blog post.

CLT

Category: Uncategorized

Real Estate: The Risky Business of Buying Foreclosure Properties.

Posted by Cliff Tuttle

Foreclosure properties are being dumped on the real estate market in numbers greater than ever. As we all know, when supply grows faster than demand, prices drop. Moreover, the sellers are motivated to move properties, since real estate taxes and other cost mount up while the property deteriorates. All true. But there is a down and dangerous side to buying foreclosure properties. Here are a few things to think about:

1. The real estate title industry is just starting to recognize serious potential title problems in the way foreclosures of securitized properties are handled. During the fast-paced process whereby new mortgage loans were passed along and bundled into pools, little attention was paid to the legally tried and true methods of assigning mortgages on the record and assigning promissory notes by endorsing the note and delivering it to the purchaser. This has lead to situations where foreclosures have been stalled and even stopped dead for lack of traceable provinence. Now title companies and lawyers are questioning whether gaps in the chains of mortgage assignments constitute title defects in properties that have already been foreclosed. Where this will lead, nobody knows. Title companies may refuse to insure some properties outright or require curative action — like redoing the foreclosure or quieting title. Foreclosure properties frequently have a lot of other title problems to address. Expect more scrutiny and fewer waivers.

2. Faced with big losses on resale of properties, foreclosure sellers are insisting upon attaching addenda to agreements of sale that can only be described as draconian. Typically, the buyer must pay every possible cost and be put in a straight jacket where he/she may be in technical default the minute the agreement is signed. Then, the foreclosure seller wields the power conferred by the agreement of sale to manage the transaction to its specifications. Trying to get a case to closing for a foreclosure buyer when the seller and the lender are both trying to run the show can be quite harrowing.

3. Lenders are becoming cranky again. They are apt to surprise you with unique contingencies in their commitments. You may not be able to back out of the deal because the agreement has placed you into default, even when the loan commitment is denied, withdrawn or made subject to untenable conditions.

4. The regulators are back — and they are just getting started. That means Fannie Mae, as well as Treasury, OCC, OTS, etc. Don’t forget the Pennsylvania Department of Banking. They are all going to be trying to prevent the subprime mortgage crisis from happening again by writing acres and acres of new regulations.

CLT

Category: Uncategorized

Real Estate Tax Exemption Available for Needy Disabled Vets.

Posted by Cliff Tuttle

Section 8902(a) of the Pennsylvania Military Affairs Act provides for an exemption from real estate tax liability for Veterans of the United States armed forces who have been honorably disharged as a result of permanent disability suffered in the line of service, provided that the State Veterans’ Commission determines that there is a need for the exemption. Such an exemption is not contrary to the Pennsylvania Constitution, as Article VIII, section 2(c) permits such an exemption for disabled war veterans and their surviving spouses.

The Pennsylvania Commonwealth Court recently ruled on a case where a County Board of Assessment had adopted a policy of exempting the disabled veteran’s residence and only one acre of land.

Thomas Vanderhoef, a totally disabled Vietnam War Veteran, owned 2.15 acres and a house, his principal residence. In 2007, he received a tax bil which exempted only the house and one acre, leaving the additional 1.15 acre subject to taxation.

When asked to explain the failure to exempt the additional 1.15 acre, Chief Tax Assessor Ellen O’Malley testified that “one acre works best” in the present County tax system. The Commonwealth Court, in an opinion written by Judge Bernard L. McGinley, stated:

“However, it is not entirely clear from the record if the Commission made the requisite determination of ‘need’. If the Commission in fact, determined that Vanderhoef was in need of an exemption from the payment of real estate taxes then it was incumbent on the Assessment Board to grant the exemption of the payment of real estate taxes, without exception. . . .The exemption of one acre was completely arbitrary and had no correlation to the individualized need of Vanderhoef which was a decision of the Commission. Consequently, the trial court’s acceptance of the Assessment Board’s exemption of only one acre was cleary an error of law which must be reversed.”

If you know a disabled veteran who is in need and who is currently paying real estate taxes on a home owned either singly or with a spouse, make him or her aware of the opportunity. To learn more about this and other Veteran’s rights and to contact the State Veterans’ Commission, click here.

Category: Uncategorized

In Harm’s Way: the not-so-nice side of internet advertising.

Posted by Cliff Tuttle

During the last week of the Presidential campaign, AVVO, the lawyer rating web site, sent an email newsletter pointing out that Barack Obama and Michelle Obama, both admitted to practice law in Illinois, had pages on AVVO. Like many lawyers, though, they hadn’t “claimed” their pages. The information contained in the websites had been posted by AVVO from other sources. AVVO often does this, relying on law firm websites and similar internet posting for information.

This does not reflect any special treatment, positive or negative. Every lawyer, living and dead, who is or was licensed in the states covered by AVVO has a page. Abraham Lincoln, who once was an Illinois lawyer, too, has a page on AVVO.

However, if you went to the Obama pages, at least during the campaign, you would have discovered a McCain campaign ad on the right hand side of the page. However, the ad doesn’t say positive things about McCain, it contains negative comments about Obama. Yes, they call them “attack ads.”

AVVO didn’t authorize these ads, by the way. They came by way of Google advertising. Most of the time, the Google ads on the sidebar are just a list of classified-type ads. However, someone who wanted to spend the money could purchase all of the available space on the page and run a display ad. That’s what the McCain campaign did.

AVVO says that it is going to replace Google advertising with its own sidebar advertising in the future. When it does so, we urge AVVO to reject placing advertisement next to a lawyer’s AVVO page that attacks or criticizes that lawyer. This would be especially important when the AVVO page has not been claimed.

Since it is impossible for a lawyer in a state AVVO covers to have his or her unclaimed page removed, it is only fair to prohibit others from running negative advertising about the lawyer on the same page. That should apply to public figures and politicians as well.

CLT

Category: Uncategorized

Back Talk Requested:Well Done, Mac!

Posted by Cliff Tuttle

This blog is not about politics, but I cannot refrain from posting the following observations about Tuesday’s election.

John McCain has been drawing post-mortem flak from the cable news talking heads over campaign decisions and to this I must vigorously dissent.

To begin with, no Republican but McCain could have run a halfway creditable race against the Democrats in 2008. Despite hundreds, perhaps thousands of negatives, McCain managed, over and over, to bring a left-for-dead campaign back to life. He risked everything by actively supporting the surge in Iraq at a time when it was widely regarded by the electorate as a fool’s errand. When the public blamed the Bush administration for soaring gasoline prices, he recognized a turnaround issue in offshore drilling, seizing it as a rallying point that helped drive his floundering campaign back into contention.

Then, he stole the post convention bounce from his opponent by choosing a highly unconventional running mate. The emergence of the McCain-Palin ticket dominated the headlines, raised a lot of cash and even stole the momentum from the opposition for a while. Coming into October, the contest was more or less even in the battleground states.

Then the bottom fell out. A Republican ticket headed by George Washington could not have survived in the most turbulent month that the world securities markets have ever seen. Yet, in the midst of it all, McCain rallied during the last debate and re-charged his campaign with the Joe the Plumber phenomenon and harping on Obama’s expressed intention to “spread the wealth.” Once again he had found a fresh line of attack and was making headway when he ran out of time.

This is not to say that he would have won if the election had been later. Quite the contrary. The collapsing economy would probably have buried him deeper. But that does not detract from a noble effort. In the movies, Indiana Jones and Rocky Balboa always triumph against incredible odds. Its not like that too often in real life.

As it happened, he was up against a candidate and political organization that was nothing short of the high end of excellent. No shame in losing to competition like that!

So, in the end, no excuses or apologies are required.

CLT

Category: Uncategorized

Mortgage Foreclosure: Change in the Air?

Posted by Cliff Tuttle

News reports indicate that Texas Attorney General Greg Abbott is proposing to the legislature the enactment of legislation increasing the period for cure of default before notice of sale from 20 days to 45 days. The same legislation would allow 30 days to vacate after sale. Texas is a non-judicial foreclosure state, meaning that it is not necessary to file a complaint, get service, take judgment, issue a writ of execution and schedule a sale. A 20 day notice is very quick by any standard. Forty five days is hardly much better. In Pennsylvania, an unopposed judicial foreclosure takes a minimum of five months and the defendant can bring the mortgage current at any time up to one hour before the sale. Texas would still be a pretty dangerous place to miss a mortgage payment.

Nevertheless, times are changing. On October 31, J P Morgan Chase announced a nationwide self-imposed 90 day foreclosure moratorium while it puts together a new mortgage foreclosure prevention program. Initially, the program would apply to J P Morgan Chase owned mortgages only, not those that are being serviced by Chase. However, they will try to encourage investors whose mortgage portfolio is serviced by Chase to participate. One stated goal of the program is to eliminate negative amortization loans from the portfolio by modification. Chase has had a mortgage modification program that has been criticized as taking undue advantage of borrowers by internet web sites.

Foreclosure moratoria are being seriously discussed in California, where Governor Schwarzenegger is reported to be proposing a 90 day moratorium and in Colorado where a moratorium after filing for negotiation and mediation has been discussed by public officials. New Jersey Governor Corzine is also proposing mediation in that State. In Florida, a nonprofit corporation named Earth Angels United has been engaged to administer a mortgage foreclosure mediation program in Seminole County.

Meanwhile, in Allegheny County, much awaited proposals for the imitation of Philadelphia’s foreclosure mediation program surface periodically in the news. Here is one of the latest.

CLT

Category: Uncategorized

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Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

Pittsburgh Legal Back Talk

Legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus.

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Backtalk Requested: Bot Update

Mortgage Foreclosure: Allegheny County Common Pleas Court Will Announce the Inception of its Much-Awaited Owner-occupied Residential Mortgage Foreclosure Mediation Program Soon.

Real Estate:The Coming Disclosure Boom: Who is the Real Beneficiary?

Back Talk Requested: The Invasion of the Zombie Bots.

SEC v. Cuban: Is it Personal?

Real Estate: The Risky Business of Buying Foreclosure Properties.

Real Estate Tax Exemption Available for Needy Disabled Vets.

In Harm’s Way: the not-so-nice side of internet advertising.

Back Talk Requested:Well Done, Mac!

Mortgage Foreclosure: Change in the Air?

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