Posted by PAW on 7/17/09 12:38pm
Msg #296253

98% of mortgages have missing paperwork

Press Release
July 16, 2009 - KCSA Strategic Communications

CONSUMER MORTGAGE AUDIT CENTER REVEALS THE FIVE MOST COMMON MORTGAGE VIOLATIONS

98% of mortgages have missing paperwork making them potentially eligible for renegotiation

Ninety-eight percent of all mortgages are potentially eligible to be renegotiated due to Truth in Lending Act violations according to a review of thousands of mortgage documents undertaken by the Consumer Mortgage Audit Center (CMAC). The vast majority of the violations tend to take the form of missing paperwork, bad “good-faith” estimates, hidden and misrepresented payments, double-dipping brokers, and the lack of documentation of income for borrowers.


Read the entire article at MortgageMag: http://www.mortgagemag.com/news/2009/0716/1000011008070.htm

Reply by Michelle/AL on 7/17/09 12:47pm
Msg #296255

Wow! Thanks for the post, PAW. n/m

Reply by MW/VA on 7/17/09 1:38pm
Msg #296268

Oh, I love the part about "double-dipping brokers".

Reply by 101livescan on 7/17/09 3:21pm
Msg #296280

I wonder how many of these were prior to funding conditions. Just got a package back from lender, there are six additional PTF conditions that they want met IMMEDIATELY. If it doesn't fund Monday, borrower loses his rate, and LO has to forfeit...before they could rush these things through without collecting all the paperwork, but not any more!

Reply by Kay/IL on 7/17/09 6:22pm
Msg #296300

Very Informative. Thanks PAW! n/m

Reply by Linda Juenger on 7/17/09 7:10pm
Msg #296303

Re: Very Informative. Thanks PAW!

My daughter built a house in a subdivision that pays homeowner's assoc dues. There was not a PUD in her pkg. They caught it months later and called her, but still have not sent it to her to sign. They cannot collect her dues without it signed. She hasn't had to pay for the last 2 years.

Reply by BrendaTx on 7/17/09 7:57pm
Msg #296307

No dues, cloudy title.

*They cannot collect her dues without it signed. She hasn't had to pay for the last 2 years. *

The dues are mounting whether or not she signed the document. The association deserves the income. Now...who has to pay them since the documents were not handled properly? The association is an entity and there should be covenants and restrictions filed of record giving "notice" of the dues. The lack of the PUD may or may not be enough to get her off the hook if she received a copy of the covenants and restrictions.

Two years past and no dues paid...in my HULO (humble uneducated legal opinion) which is worth what you pay for it that means there's possibly a cloud forming over the title. Maybe your daughter won't have to pay it but it's up to the HOA to decide if they'll let it go. Now, how do you do that? By board of directors' vote? By membership vote? (And, quorums ain't easy to get to those meetings.) The association deserves to collect. But who'll pay? The originating lender? Fat chance.

If I were your daughter I'd be seeking to make sure that there's no reason to be concerned over a cloudy title for the future.. But you are a title person, aren't you? You probably know more than I would ever know about IL. Just speaking from an abundance of caution in Texas.

Here, the local TCs would, in the case of a refi or a sale, and ask the HOA if there's any dues owing on that particular lot...and if there are, someone will need to cough it up to clear it up.

Reply by PAW on 7/17/09 8:07pm
Msg #296308

Re: No dues, cloudy title.

That's an interesting situation which has some pretty major ramifications here in FL due to homestead rights. Technically, without the PUD addendum to the Mortgage, the HOA can't put a lien on the homeowner's homestead property. However, it doesn't excuse the homeowner from paying the dues either. Finally, if the sales contract indicated a HOA with dues, and the GFE showed certain payments to a HOA, especially on new construction, then the lack of a PUD may cause a lot of legal action, but in the end, the HOA will win (and has won) against the homeowner.

Reply by BrendaTx on 7/17/09 8:26pm
Msg #296309

Re: No dues, cloudy title.

*then the lack of a PUD may cause a lot of legal action, but in the end, the HOA will win (and has won) against the homeowner.*

Exactly...they may not "have" to pay it from but they'll have issues in the end clouding the title.

And...if you have to fight legal action, wouldn't it have just been more fiscally logical to pay?

The other thing is...what if you just paid cash for the lot? The PUD (in this context) in a mortgage package is the notice of the Planned Unit Development. But, the buyer/owner has probably received other notice. (Again, at least in Texas!!!)

Wouldn't the original earnest money contract clearly state it giving notice, or wouldn't the title work show a reference (aka notice) as to the dues requirement or to the HOA's rights (CCRs we call them here.) I guess our office makes darn sure our client (if buyer) is aware one way or the other OR if our client is the seller there WILL be a revelation as to the HOA dues. Contracts for our developer-types ALWAYS have an addendum detailing the HOA requirements thereby giving the buyer notice. Deeds...there's notice.


My name is brenda; I am not an attorney, would not want to be one, but I'd like to play one on tv one of these days.

Reply by Linda_H/FL on 7/17/09 9:13pm
Msg #296313

Re: No dues, cloudy title.

"what if you just paid cash for the lot? The PUD (in this context) in a mortgage package is the notice of the Planned Unit Development. But, the buyer/owner has probably received other notice. (Again, at least in Texas!!!)"

Warranty Deed or whatever Deed of Conveyance is used in the particular state - property is conveyed "together with and subject to...."

And I believe HOA dues are forecloseable....at least in my experience...

My name is Linda..I'm not an attorney either and I didn't stay in a Holiday Inn last night...

Reply by Pat/IL on 7/17/09 10:12pm
Msg #296321

Re: No dues, cloudy title.

Brenda and Linda, I am with you in your befuddlement. I just don't see how a rider on a mortgage could affect the HOA's ability to collect dues from a unit owner. In Illinois, the HOA has the right to lien the unit for nonpayment.

My name is Pat. My name is not Brenda or Linda, but I do have a wife named Linda. She is not related to Linda H/FL. Or Brenda.

Reply by BrendaTx on 7/18/09 7:10am
Msg #296333

Re: No dues, cloudy title.

And, I'm pretty certain about the "inalienable" right of an HOA to its dues...in a secret life I am a mean HOA President who has just sent out a huge notice to all property owners that under my evil regime liens will be filed of record if the problems are not cured within 10 days once the dues have hit a certain mark. It's in the CCRs...it's not fiscally responsible for this evil regime NOT to put the liens out there. Lord knows how many liens we should have collected during the refi boom (according to our attorney) but they weren't of record.

Would NEVER promote foreclosure based on HOA dues but the evil regime does have that right. People should always read their HOA rules...just like the notary rules...they should not be passed along by word of mouth, legend and urban myth.

Reply by PAW on 7/18/09 8:14am
Msg #296340

Re: No dues, cloudy title.

We have both HOA's and CDD's that homeowners have to deal with. And yes, when the property is purchased there is usually a notice about HOA (managed by the association or developer) and CDD payments (managed by the county property tax authority) if applicable. HOA's can foreclose on homestead property (along with the mortgagor and tax authority). However unless the PUD Addendum is recorded, the mortgagor could possibly be left out in the cold in case of a foreclosure. The HOA/builder/developer must file a PUD Plan (which may be as many as 4 different plans depending on the stage of development), plat maps and owner affidavits. It's the owner affidavit that is the kicker for the homeowner, and is signed at closing whether or not there is a lien against the property, plus the deed usually includes a PUD paragraph as well as the encumbrances to the property owned and/or managed by the HOA.

My name is Paul. My name is not Pat, Brenda or Linda, but I do have a friends named Pat. I also have a fried named Linda. She is related to or the same person as LindaH/FL. I also have a friend named Brenda who is not the same person named Brenda that I dated in high school.

Reply by BrendaTx on 7/18/09 8:56am
Msg #296346

Re: No dues, cloudy title.

I agree with Paul.

My name is Brenda and I don't have any friends named Pat, Paul or Linda, except those in this thread. I do, however, know a loan officer and HOA/property owner on my resident property who is named Brenda, but she is not me. To my knowledge there are no Pats, Pauls or Lindas who live in the units near me, although one named Linda owns a unit and she has a daughter living on the property in said unit. The daughter's name is not Linda.

As I said earlier, my name is Brenda, and I approved this message.

Reply by ReneeK_MI on 7/18/09 6:12am
Msg #296332

I'm a bit skeptical ....

CMAC provides forensic audits (marketing aimed at the legal world). Though the article about the CMAC statistics does say "98% of all mortgages ...", CMAC words it differently to say:

"Missing paperwork. The federal Truth in Lending Act states that lenders must clearly disclose key loan terms and costs at time of mortgage application and home closing; however, if paperwork is missing, buyers may never see the final mortgage terms and costs. Ninety-eight percent of mortgages CMAC reviews include this violation"

Well - the mortgages they review would be primarily ones brought to them by attorneys representing borrowers - I have to reason that borrowers seek legal counsel for a reason, and these would be loans most likely to have SOMETHING wrong.

It is a bit early in the morning, but HOW does a person obligate themselves on a Note without ever SEEING the Note, and if they SIGNED the Note, how could they "never see" the final terms?

Shades of fear-mongering, me thinks - not on Paul's part, but on the part of CMAC (who stands to directly benefit) and the media gobbling this up w/out questioning it.

Reply by Stamper_WI on 7/18/09 7:29am
Msg #296334

Re: I'm a bit skeptical ....

The federal governmant is actively recruiting mortgage auditors all over the US. While we won't see results for years most likely, you have to wonder how their results would ne the same.