November 15, 2010 Newsletter

The New York Times ran an interesting article last Thursday explaining further the document problem lenders are facing in the current foreclosure crisis. As discussed in the last newsletter here, the lenders are having difficulties producing the documents necessary to establish a paper trail to the actual Note Holder. In the article it explained that MERS (Mortgage Electronic Registration System) which is owned by several of the larger lenders, acts as a document clearing house for lenders buying and selling loans. What the article proposes is that MERS replaces what was traditionally done when a loan was sold. Traditionally, if Bank A sold the mortgage to Bank B, an assignment of the loan is recorded in the land records where the original mortgage is recorded, so it was clear who now owns the loan. The cost to record each assignment was $30.00, not including the cost of preparation and sending it to the courthouse. Under MERS the transfer of the loan is evidently recorded electronically, but no notice is filed in the land records, saving the lender the cost of the assignment prep and recordation. Today we rarely see recorded assignments, which is why when we schedule a closing with you we ask “Who are you making your payments to now?” as our title search will only reveal the original lender. It should be evident that this is not a perfect system and possibly the “old way” was better.

Interest rates continue to be exciting. Today November 15th, they are around 4.25% and there is a split of opinion as to where they are going. The Fed under its new QE2 plan will be buying billions of securities in order to LOWER long term rates. If that strategy does not work, the rates will probably stay level and gradually rise over time. If the Fed’s plan does work, we may see rates in the THREEs. Those of you who refinanced into the low 5’s and High 4’s may have to rethink and do it again. And more importantly for the economy, potential buyers should take the opportunity to move into the marketplace.

In our practice we are seeing more willingness by the lenders to approve short sales or loan modifications. If you have questions about loan modifications, short sales or other real estate matters, please call. We want to be your title company and law firm. I can be reached at 410 884 1160 x 3007 or tee.tillman@colonytitle.com.