Justices split on rental restriction case

The Indiana Daily Lawyer reports The Indiana Supreme Court came down on the side of a homeowner/landlord against a homeowners association. The following is from Justices split on rental restriction case:

"The state's highest court has been quiet on the issue since hearing arguments in October 2006, but it simultaneously decided to grant transfer and issue an opinion in the case of Villas West II of Willowridge v. Edna McGlothin, No. 34S02-0805-CV-266. The case involved a covenant that the Indiana Court of Appeals described as being 'subterfuge for excluding minorities from renting homes' and a case of first impression that could affect how neighborhoods across the state implement no-rent provisions."

What makes this case even more interesting is the Indiana Supreme Court sent this back down to the trial court to determine if there was intentional discrimination.

New Real Estate Case from the Indiana Court of Appeals

The Indiana Court of Appeals handed down Hays v. Hays (PDF format) yesterday. At issue was interpreting a deed's first-right-of-refusal clause and Indiana's partition statute. The parties involved were the son of the grantors and the wife of a deceased son.

Two things come to mind as I read the case. First, that good drafting follows having a good enough imagination to foresee the reasonable contingencies that might follow out of the relationship of people to the subject of the deal. Lacking any means for deducing the grantors' intentions, they may have considered that one son would die leaving a wife and then, too, maybe not.

The second thing coming to my mind is the operation of the partition process. The property will now be sold. Not part of it, but all of it. From my reading, I think saying that is not the result desired by the son is a gross understatement. Whether selling the property is best for the property is a question that cannot be answered by the opinion.

Sheriff's Sales

Indiana Commercial Foreclosure Law posted Indiana Sheriff's Sales - Local Rules, Customs and Practices Control which provides some good information about sheriff's sales and links to online sources:

Although the Indiana Code covers the fundamentals of the sheriff's sale process, the specific rules and procedures vary by county. I presented at a foreclosure-related seminar last month, and one of my co-presenters accurately stated, in essence, that there are 92 counties in Indiana and therefore 92 different sets of rules applicable to sheriff's sales. My advice is to call or visit the local civil sheriff's office to confirm the hoops through which you must jump, and when, to start and finish a successful sheriff's sale

With Indiana foreclosures still continuing at a good pace, I suspect this area is one that we all need more about.

Mr Waller did not mention Madison County but you can find some useful information about us in my post Foreclosure sales - Madison County, Indiana.

Indiana Commercial Foreclosure Law Blog on Sheriff’s Sales

A shoutout to Indiana Commercial Foreclosure Law Blog and for its post, Sheriff’s Sales Of Separate Tracts: Principal’s Real Estate First, Surety’s Second:

The Keesling v. T.E.K. Partners case has produced a second appellate court opinion. I wrote about Keesling I on March 23, 2007. That post dealt with the liability of sureties (or accommodation parties) when an original obligation is materially altered. The latest opinion, decided March 6 (2008 Ind. App. LEXIS 431) (KeeslingII.pdf), discusses among other things the order (sequence) of the sheriff’s sales when there are multiple tracts to be sold. So, Keesling I discusses liability issues, and Keesling II addresses judgment enforcement-related matters. Commercial lenders may want to note Keesling II in the event they need guidance where there is more than one parcel of real estate subject to a foreclosure sale.

I gauge Indiana Commercial Foreclosure Law Blog as being more of a lawyer blog than for the general public. John Waller does a great job of keeping his blog focused and well-written. His chosen area of law is a bit outside of my own but his writing makes it interesting enough to keep an eye on what his blog.

Mortgage, Refinance Advice | Truthful Lending dot Com

I do not know much about Truthful Lending dot Com but so I offer its Mortgage, Refinance Advice without any endorsement:

"Irvine, California - At Truthful Lending dot Com we believe that the more educated you are about the mortgage and refinance process, the more likely you are to make the best decision. That's why we have a library of mortgage and refinance articles for you to read so that there are no surprises during the loan process and so that you can protect yourself against unscrupulous mortgage and refinance practices."

Consumer: The Indiana Foreclosure Prevention Network

Indiana remains a hotbed for mortgage foreclosures. If you are facing this problem, take a look at Indiana Foreclosure Prevention Network (IFPN)

The Indiana Foreclosure Prevention Network (IFPN) is a public-private partnership of community-based organizations, government agencies, lenders, realtors, and trade associations that has devised a multi-tiered solution to Indiana’s foreclosure problem. This statewide initiative includes a targeted public awareness campaign, a telephone helpline, an educational website, and a network of local trusted advisors.

Tax sales and bankruptcy: New Indiana Court of Appeals Decision

Debtor owning real estate files bankruptcy. Debtor owes property taxes and so real estate put up for a tax sale which freezes out lender. Buyer at tax sale file to quiet title and mortgage company wins at trial level and then at the Indiana Court of Appeals.

Decided on January 31, 2008, ATFH REAL PROPERTY, LLC, v. STEWART (PDF format) has a good description of the process of buying real estate at a tax sale and a warning for buyers of tax sale property.

Buying a foreclosed home?

I found some good advice in Foreclosure 'bargains' may be costly to the unwary from today's Indianapolis Star:

A fast-growing crop of businesses offers to sell lists of bank-owned homes. One of the best known is RealtyTrac, which charges $50 per month (after a seven-day trial) for access to its database of more than 650,000 properties in (or near) foreclosure nationwide.

But you don't need to pay for such leads. Banks typically hire real estate agents to put their properties in the multiple listing service. That means any agent who belongs to that MLS can search at no charge for properties that are coded as a foreclosure, pre-foreclosure (as noted by the seller) or a short sale in which the bank agrees to accept less than the full mortgage amount owed.

If you plan to make an offer on a foreclosed property, insist on a professional inspection.

Also, don't buy a foreclosed home without taking the optional title insurance. That would protect your investment if old liens appear after closing.

Except I never think title insurance should be optional.

Initiative to aid families facing foreclosure | IndyStar.com

The Indianapolis Star yesterday published Initiative to aid families facing foreclosure | IndyStar.com:

"INDIANAPOLIS -- The Federal Home Loan Bank of Indianapolis, one of 12 government-sponsored regional banks, said it will lend $100 million in Indiana and Michigan to financial institutions to assist families facing foreclosure. The money could be used to modify or refinance mortgages. The initiative is called HomeRetain. (Star report)"

Mortgage Foreclosure Case for the Guiness Book of World Records

Read Determined Homeowner Staves Off Foreclosure for 11 Years. I am amazed. That beats my personal best by about nine years. I will only say that I do not think this will be easily duplicated.

Indiana Commercial Foreclosure Law: From The New York Times: "Foreclosures Hit A Snag For Lenders"

Indiana Commercial Foreclosure Law has a post that seems to fit into what I wrote earlier about Ohio foreclosures. I still have nto time to read all of From The New York Times: "Foreclosures Hit A Snag For Lenders" but hope to do so this weekend.

"If you deal with mortgage security pools, and in particular the foreclosure of mortgages within such a pool, you should read today's interesting article from The New York Times: 'Foreclosures Hit a Snag For Lenders'. The article addresses federal court foreclosure litigation in Ohio and specifically an opinion by Judge Boyko dismissing fourteen cases because the plaintiff (foreclosing entity) failed to prove it had standing to pursue the cases. I located the Judge's October 1 order referenced in the article: .pdf. My colleague Chris Jacobson helped find the October 31 opinion: BoykoOpinion.pdf.

Homeowners must follow health codes

From last week's Indiana Lawyer Homeowners must follow health codes:

"Owners of houses or mobile homes they construct themselves still must follow Indiana health codes, the Indiana Court of Appeals ruled today. The appellate court overturned a trial court's ruling that a section of Indiana code exempted certain homeowners from obtaining a permit for septic systems."

Foreclosures Investigated

From the New York Times of last week, Foreclosures by Lender Investigated :

"The federal agency monitoring the bankruptcy courts has subpoenaed Countrywide Financial, the nation’s largest mortgage lender and loan servicer, to determine whether the company’s conduct in two foreclosures in southern Florida represented abuses of the bankruptcy system."

***

In Florida, one of the trustee’s inquiries involves Manuel Del Castillo and Maria E. Pena, Miami borrowers who filed for protection last May under Chapter 13 of the bankruptcy code. In July, Countrywide Home Loans filed a claim, saying that the borrowers owed almost $279,000 on their loan.

Included in the figure, court documents show, was an $11,924 advance Countrywide said it had made to an escrow account before the borrowers filed for bankruptcy as well as an insufficient- funds fee of almost $683.

In the second case, the trustee has asked for documents relating to Countrywide’s claim for almost $101,000 against William and Joyce Chadwick, borrowers in Boca Raton, who filed for Chapter 13 protection in October 2005. Included in that figure was $2,400 in overdue mortgage payments.

The borrowers in both cases objected to Countrywide’s claims of what was owed. In court documents, the Del Castillos argued that Countrywide had not provided an itemized list of the charges, while the Chadwicks contended that their mortgage payments were current.

Actually, delay may have been a good thing. Reading this news with the news coming out of Ohio (see my article on that here), I think we might have a trend of lenders behaving badly.

Ohio Foreclosures - What in the world?

This blog concerns itself (mostly ) with Indiana law and my practice does not include foreclosures (well, not much since I left behind consumer bankruptcy), but I get curious when I run across articles on two different blogs about Ohio and its foreclosures.

Bank Lawyer's Blog (which appears to be a very interesting blog on its subject) published Tale of Two Judges, and what was to me a very interesting and long paragraph:

There's been much back-and-forth over the past few days on various discussion boards about these decisions, especially Judge Boyko's. Some assert that this is evidence of massive documentation deficiencies in the mortgage backed securitization arena. As one commentator alleged in the linked New York Times article, notes may have been "assigned" to more than one loan pool, with no actual written "assignment" ever prepared. Other consumer representatives claim that they've seen instances of what appear to be the mass production of fraudulent assignments, with one claiming that "[w"]e have one woman, with VERY unique name, acting as Notary, officer, and various other positions in six different states for over 20 different companies. Also, dozens of different 'gestations' of her 'mark' which is a simple initial to her first name." That consumer advocate vows that they will wage a scorched earth policy that challenges every bit of evidence of assignment presented, and that "EVERYTHING a lender and their counsel will now do will be questioned in our answers and NOTHING will be accepted as fact until proven up via hard evidence since so many complaints, pleadings, affidavits, and accountings are boilerplate and produced by OTHERS, not the actual LENDER or their servicer, sub servicer or special servicer!"

Now, if the problems described above with assignments do exist then this is a huge problem. I agree wholeheartedly with the sentiment that ends that article.

Meanwhile, over at Business Law Prof has The Home Foreclosure Mess and Ohio Court Stops Foreclosures by SIVs.

I think others have noticed our high foreclosure rate (see Foreclosures Down in East Central Indiana). If the problems happening in Ohio have substance, then we may see a repeat here. I think it may be a good idea to keep an eye on things next door. I will advance a theory of mine about how we handle foreclosures in Indiana. We look to federal bankruptcy law to save our clients, try to work a deal that saves the home, or retreat and let the foreclosure take place (and then send the clients off for a bankruptcy, if need be). Between federal bankruptcy law and the economic dislocations that have wracked my part of the start for most of the past twenty to twenty-five years, we really do not know foreclosure law in any detail. I will certainly want to see any assignments in any future foreclosure cases that come my way.

Problems with King's Title

Most home buyers do not understand how important the title company is to their purchase. The State of Indiana closing King's Title shows their importance if from an angle no one really wants to see.

From Richmond's Palladium-Item:

Officials accuse manager after money missing from King's
Richmond title and abstract office affected after Shelbyville official's license suspended

SHELBYVILLE, Ind. (AP) -- A title company that has a Richmond office has halted much of its work at nine statewide sites after its license was suspended over the disappearance of more than $900,000 from an escrow account.

State officials have accused the Shelbyville office manager of King's Title & Abstract Co. of taking the money. Also, the company's insurer has canceled its policy over the missing funds.

New Castle-based King's is one of the state's largest title companies, with offices also in Fort Wayne, Marion, Anderson, Richmond, Franklin, Rushville and Winchester.

And this from the Indianapolis Star, Suspected fraud brings title company to a halt:

"The disappearance of more than $900,000 in homebuyers' money has led the state to suspend the insurance license of manager John K. Branam and order King's to stop writing new business at its nine offices in Indiana."

A federal mortage law? Congressional Rsearch Service Study

Thanks to Inter Alia for the lead to this article: Understanding Mortgage Foreclosure:
Recent Events, the Process, and Costs. (PDF format)

The article contains a question I have never heard of before - would a federal foreclosure law be a good thing?

Finally, even if a federal foreclosure law were structured to represent a compromise, the impact on costs would be ambiguous. A process designed to take longer than a few months, but completed in less than two years, may result in costs increasing for lenders in states where the process moves rather quickly and declining for lenders in states where the process moves slowly. The net effect on a national cost estimate, therefore, is indeterminate. Under a federal foreclosure law, however, it may become easier to obtain a much more reliable national estimate of the actual foreclosure costs, since lenders would follow similar foreclosure procedures nationwide.

I say that paragraph contains all the ambiguities and contradictions of our federal system. I do not think that a federal foreclosure law would be of any great benefit - not compared with removing the onerous provisions of the bankruptcy "reforms".

Foreclosures Down in East Central Indiana

So reports the Muncie Star-Press: Foreclosures in Delaware County appear to be decreasing.

RealtyTrac reported Wednesday that 120 Delaware County properties were in some stage of the foreclosure process, compared to 446 in June.

Foreclosure numbers were also down in Madison County -- 715 compared to 2,245 in June -- and in Grant County -- 175 compared to 273 in June.

However, I think the number of sheriff's sales may be more telling:

Not every indicator of local foreclosure activity was showing improvement. The Delaware County sheriff's department, which oversees sales of foreclosed properties, has not seen a decrease.

"It hasn't slacked off at all," said Lisa Scroggins, the sheriff's department office manager who oversees foreclosure sales.

Scroggins noted that the sheriff's office has scheduled 702 sales this year, a small increase over the 698 scheduled last year.

But Scroggins noted that sales of another 82 properties are waiting to be set in 2008.

Mortgages - foreclosures, fraud, and also Madison County

The Anderson Herald-Bulletin has now two articles on local foreclosures and the local real estate market.

The first article has the headline Facing foreclosure in Madison County.

As companies started investing more and more money into businesses that offer subprime home loans, more and more people started getting loans they could not afford to pay back. Now these people are stuck deciding if they should pay for the mortgage or pay for food.

In 2006, the Madison County Sheriff’s Civil Department sold 1,082 homes through sheriff sales. This year will be similar to last year....

The Herald-Bulletin had the good sense to interview Larry Robbins for the article. While one anecdote does not make a trend, it does call for asking more questions about 2005's bankruptcy reform.

Larry Robbins, an Anderson bankruptcy lawyer, said he thought that the mortgage foreclosures have led to some bankruptcies, but there are fewer people filing for bankruptcy because of the law that passed in 2005 that made penalties for bankruptcy stronger.

The headline for the second article is Subprime time: Falling housing market exposes problems. That article quotes our local Chapter 7 bankruptcy trustee:

Randall Woodruff, bankruptcy trustee for Madison County, serves on a panel of bankruptcy trustees for the southern district of Indiana. He said subprime lending has been a main culprit in the massive foreclosure rate sweeping Anderson and other Central Indiana communities.

“If you are in foreclosure, there aren’t many ways to get out of that problem other than to file for bankruptcy,” said Woodruff, who sees every bankruptcy filed in Madison County. “Whether it’s subprime lending, my gut instinct is that it certainly is one of the problems. The fact that we have so many folks buying homes that they really can’t afford and obtaining mortgages that are going to adjust is clearly one of the main causes of bankruptcies.”

I can only criticize the series for not explaining the difference between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy. An absurdly simplistic explanation is that a Chapter 7 debtor has an insufficient income to fund a plan while a Chapter 13 debtor does have sufficient income.

We all want to own a home. What we may not to do is educate ourselves on mortgages and interest rates - all those tedious details lying between us and our dream home. For those who fail to give those tedious details their proper attention, foreclosure and bankruptcy may be in their future.

For those wanting to keep track of these issues, I suggest bookmarking or adding to your RSS feeds The Mortgage Fraud blog.

Foreclosure sales - Madison County, Indiana

Finding information on Madison County's Sheriff's sales is not so easy, as I found out in the past half hour. First, the Madison County Sheriff decided that his website looks good in the same brown used in their uniforms. Dark brown with black lettering does not work with my aging eyes. Luckily there is a search function and this is this blog. Here are two direct links needed for finding out about Madison County foreclosures:

1. General information on sale procedures: Sheriff Sale Procedures
2. 
   
3. Sheriff Sale Newsletter

Tip for anyone interested in buying real estate at a sheriff's sale but from outside of Madison County: take a look at the web pages for your local sheriff to see if that county has its sheriff sale information online.

No probate, a house and the owner died years ago

What to do after paying on the mortgage for years and having two siblings? I got asked this question a while back and after some thought decided to blog about this kind of problem. What was my answer?

- Bite the bullet and get an estate opened and hope for the best.

The person asking the question did not like my answer. Without a Will, Indiana's intestacy statute divides the house between the three siblings. That puts the sibling who made the house payments for years (and we will call her sibling #1 from here on) on edge. She wants to keep the house and is far from happy that the non-contributing siblings might get a piece of it.

Sibling #1 does not seem to realize that she has one major problem with her situation. She has been paying the on real estate to which she has no title. Without opening an estate, she cannot get title.

What is meant by title? Title means the ability to show that you own the real estate. Specifically, title means a deed. If you would like a more formal definition, try this one:

Title
n. 1) ownership of real property or personal property, which stands against the right of anyone else to claim the property. In real property, title is evidenced by a deed, judgment of distribution from an estate or other appropriate document recorded in the public records of the county.

So what is the big deal about having good title to the land? Having good title means that the person having title owns the land and if one does not have good title then they cannot sell the land. So let us say sibling #1 pays off the mortgage, she will not automatically own the land. The mortgage company sends a deed to the dead person. Now sibling #1 could record that deed but what happens when she wants to sell the property? Oops, she is not the owner.

Now, if sibling #1 has lived in the house for ten (10) years she might be able to claim title to the house on the basis of adverse possession. I call that very tricky and a good deal more expensive than opening an estate.

If she does open an estate and wants to keep the house, sibling #1 has some options. First, I say the estate owes her for the mortgage payments and other costs of upkeep for the house. Second, she has the right to offer to buy the house house by paying to the other siblings their share of the house. So take the amount paid on the house against the shares of the other siblings and pay the difference - if any.

Let me be brutally frank about all those schemes about avoiding probate - I think they are scams. They made a lot of money for the people selling those books and schemes but they did so by working on the buyer's biases against paying inheritance tax and paying attorneys. Unlike attorneys, the sellers of these schemes will not be around when the problems come up and cost more than consulting an attorney, more than Indiana's inheritance tax and far, far more than the book on avoiding probate cost. If you want to avoid probate then talk to a lawyer and do not do it on your own.