Friday, July 30, 2010

Obama Mortgage: A real life nightmare

Obama Mortgage: A Real Life Nightmare
Comments from attorney Jeffrey O'Brien, Partner at Mansfield, Tanick & Cohen
The Obama Administration's "Making Home Affordable" program is supposed to
work like this: if you qualify for the program, your lender was to notify
you. You then submit a package of information and ultimately you are
approved for a "trial modification" where your payment is adjusted (i.e.,
reduced). Make the trial modification payment for three months and,
theoretically, you qualify for a permanent modification.

Simple enough, right? Not where the Federal government is involved.

My clients were granted a trial modification late last year. In theory,
they should have been done with their trial period in April and should have
received word on their permanent modification. Instead, in late June the
best that their lender can do is to tell them when they call that they're
approved but, for some reason, they cannot seem to send out a written
confirmation of the approval and inform my clients of what their new
mortgage payment will be.

In an effort to break the logjam, I agreed to place a call to the lender
(who happens to be one of those "too big to fail" lenders who begged
Congress for a bailout last year) to find out what was going on.

a.. Attempt #1: Lender could not talk to me yet since the authorization
form (signed by my clients granting the lender permission to talk to me) was
only received that day; I was told to call back after 48 hours.
Surprisingly, the day after my call, my clients received a call saying that
their matter had been forwarded on for final review, which we all naively
assumed meant that my one call had spurred the lender into action (silly us
for thinking that).

b.. Attempt #2: It took the representative at least ten minutes to confirm
that I had an authorization on file; thereafter, I was told that the reason
that my clients had not yet received written notification of their approval
for permanent modification was due to a computer glitch which they assured
me had been fixed as I was on the phone with them (what a coincidence,
right?) At the end of the call, I was told that the written notification
was being sent out immediately.

c.. Attempt #3: A full three days after the alleged written notification
was sent, my clients still had not received any word and asked if I would
call again. This time, after being on hold for twenty minutes, I was told
that my authorization - a form that I have used for years and which has been
accepted by every lender imaginable, including this particular lender on
other matters - was not in the proper form. The problem? My contact
information was on a fax cover sheet and not on the actual authorization. I
was told to resubmit my authorization with the contact information on the
same page and call back in 48 hours. Funny how we've come full circle in
just three phone calls.

The only thing I can surmise from the runaround given to homeowners by their
lenders under the MHA program is, not surprisingly, that the lenders do not
want to modify any mortgages, that they would prefer a short sale or
foreclosure where they will be paid as much as possible sooner rather than
later. To that end, it is my further conclusion that the endless delays are
all part of the plan to make these modifications and the program promoting
them fail miserably.

My point in writing this firsthand account of how this program works - or
should I say, does not work - is to point out that the Making Home
Affordable program has nothing to do with providing actual assistance to
homeowners and everything to do with making elected officials appear as if
they're doing something to deal with the problem.

Thursday, July 22, 2010



For the 12th consecutive quarter, Fannie Mae has posted a loss. Not only
that, but the mortgage financing giant has seen about $148 billion go down
the drain over that time. That's almost the entire GDP of Chile. FreddieMac
has $68.6 billion in cumulative net losses for eight of the previous

FannieMae and FreddieMac HAVE NEVER SEEN THE APPRAISALS for the home loans
they purchased. Ever. They will actually start getting appraisals for the
loans they are purchasing in June of 2011.

This shocking fact was discussed in the semi-monthly appraiser meeting at
the Realtors Association, who has contracted a technology company to help
export the MLS data to the new format required by FannieMae and FreddieMac.

"They're going to replace us with all this technology", whinned an

"I've heard that comment the last ten years I've been writing appraisal
software", said the tech guy. "And its just not true. When was the last time
any of you were asked to do a drive by appraisal?"


"That practice is pretty much gone. And the automated models are based on
property tax information which varies so much from state to state. Its just
used early in the process to produce a range to see if it makes sense to
order an appraisal."

The appraisers complaint reminded me of the critical thinking talk I heard
last weekend by member Ray Seth. Ray was one of the first to use data base
technology in the 70s. An auto insurance company hired him to determine
which of the 65 data points they collected on the application were most
important in assessing risk. His research determined there were only 6 of
these factors that had predictive power, including age of the car - older
cars had less claims. The auto insurance company was rejecting 5% of their
applicants and most of the rejects were low risk. They could increase their
income substantially by implementing Ray's technology. Ray did the same
study for a bank for their mortgage applications -- the first credit score

Ray was so excited to present his data to the auto insurance mortgage
underwriters. Ray thought he was really hot stuff! But, like the appraiser
in the meeting this week, the underwriters only saw Ray's technology as a
threat to their jobs and they all said they would quit if it was
implemented. So the technology was shelved.

Ray's reading on how the brain functions shows the impact that Dopamine has
on this fear of change that this new technology invokes. Dopamine affects
brain processes that control movement, emotional response, and ability to
experience pleasure and pain. Dopamine can distort our ability to think
critically and recognize this new technology as a tool instead of a threat.

There must be a lot of Dopamine at FannieMae and FreddieMac.

Thursday, July 15, 2010

Board of Review Reduced Valuation by 56%

Pay 2011 Valuation Reduced 56% by Board of Review

When you get your property tax valuation notice there is a little blurb about attending the local board of review in a few weeks. My limited experience with the Local Board of Review is that its typically the City Council who typically rubber stamps their assessor's value.

You need to submit to your Local Board of Review first to appeal to the County Board of Review. While I can't speak for other counties, I was impressed with both the process and the Board in Hennepin County. Each Commissioner appoints a representative. The only one I recognized is a former city councilman. From listening to comments I figured there was a developer, couple realtors, not sure about the rest.

Public speaking skills are important in this process. I had 10 minutes to present my case and a Hennepin County Assessor had 5. We each submitted written reports. A lawyer buddy commented that it would be hard to present a shopping center in 10 minutes. The process may not be appropriate for complex properties. On the other hand, the Board of Review forces the assessor to respond on a timely basis; but the property owner must be ready as well.

The Board was very engaged and asked lots of questions. From their questions and comments, the result, mailed 2 weeks after the hearing, came in exactly where I thought it would:

The original assessment was $1,378,900. Hennepin's assessor came to the board with $1,039,000. I came in with $532,000. The board ruled at $600,000, a 56% reduction.

The Board of Review vs Property Tax Court.

Board of Review
Tax Court

Couple weeks
Can be couple years

Around $380 w/service

Can Appeal?
To Tax Court
To Court of Appeals

Presentation Time
10 minutes
As long as you need

Attorneys Needed?
Not at all
Highly Recommended

Can they raise the value?

Values change on website

I have been told by a developer client that when it came to financing, appraisals tend to come in at values listed on the County website. This is completely inappropriate but I see inappropriate appraisals all the time. So its something to consider when deciding whether the board of review process makes sense for you because the revised value may be published on the County's website.

I really liked The County Board of Review process, especially as I have one county that is still dragging their feet on Pay 09' petitions. I plan to at least consider it next year for all the cases I review for Pay 2012.

Tuesday, July 6, 2010

Greenfield: The Saga Continues

Greenfield: The Saga Continues

When we last visited this former bucolic town on the western plains of
Hennepin County:

*a city councilman brought his gun to a Council meeting

*the League of Minnesota Cities had cut off their insurance policy

*Mayor "Queen Jill off with their head" had resigned

*Jill's cronies, "The Mad Hatter" Mark Lee and his buddy Howard Veldhuizen
are still on the council

What's new in Greenfield today? Even with Queen Jill abdicating her throne,
Greenfield continues to amaze and entertain us.

*They are still trying to pass a Comp Plan which requires a 4-1 vote,
something you have to go through The Looking Glass to find in Greenfield.

*Resident and Developer Chuck Alcon filed a Data Practice Request with the
City asking for the cell phone records and emails between the three during
the period they served on the Council together, suspecting violations of the
Open Meeting Laws.

*In response, our "Wonderland Trio" filed a suit against the City of
Greenfield, proposing remedies in excess of $50,000 apiece relating to the
data requests.

The council rounded up their remaining three votes to hire attorney Paul
Reuvers, an expert in Open Meeting Laws, who believes the trio violated

As these costs are not covered by insurance, all property owners will be
contributing. The Plaintiffs, win or lose, will be responsible for some
portion of the mounting fees.

"The people", says attorney Reuvers, "who are bringing this suit are,
effectively, suing themselves."

Greenfield, like many lawsuits clogging our court system, is driven by
emotions that are out of control. Instead of calling in the lawyers,
Greenfield should have called The Sant Rajinder Sing Maharaj, who will be in
town this coming weekend.

The Sant Rajinder Sing Maharaj was invited to speak on promoting peace to
the United Nations at their 50th anniversary. And he had them meditating.

Daily meditation calms the emotions.

Functional MRI studies have demonstrated that the frontal lobe, the part of
the brain where critical thinking occurs, actually grows larger with regular

Meditation helps you make decisions based on fact, not emotions.

Meditation improves your concentration.

Physical benefits include lowered blood pressure, decrease headaches,
stronger heart, better sleep and stronger immune system.

Meditation helps you decrease anxiety and increase happiness. And decrease
frivolous lawsuits.

You don't have to go off and live in a cave. Or even a formerly peaceful
place like Greenfield. You can experience these benefits any physical place
by sitting quietly 15 - 20 minutes a day. Like golf, you need to learn the

This weekend is your chance to sample meditation at 2 FREE talks by The Sant
Rajinder Sing Maharaj, an internationally known meditation teacher.

This amazing man is trained as an engineer and worked at Bell Labs in
Chicago before succeeding his father and grandfather as the head of Science
of Spirituality, an international non denominational organization that
promotes meditation. (

I had the privilege of attending his talks last summer at VeggieFest in
Chicago. Its been 15 years since he has visited Minnesota and many will be
traveling to Minneapolis for these events. So don't miss this chance to
attend one of his FREE talks this weekend:

Saturday, July 10th, 2:30 Hindu Temple, 10530 Troy Lane, Maple Grove

Topic: "Lasting Happiness and Peace"

Come at noon for a free vegetarian lunch and see the largest Hindu Temple in
North America. Note: there are many events at the Hindu Temple going on
Saturday as part of their Anniversary Celebration. Come early. You may need
to park on the street. Shuttles will be available.

Sunday, July 11th, 2:30 Crown Plaza Hotel, 11 East Kellogg, downtown St.

Topic: "Unfold Spiritual Secrets"

Questions on the programs? Call Laurie at 763-420-4757.