Thomas Cox – Maine Attorneys Saving Homes from foreclosure


Thomas Cox is the lawyer who broke the robo-signing story. It resulted in a $25 billion settlement. He helps families avoid foreclosure and has trained hundreds of other lawyers to do the same. All the work is done pro bono.

He once was an expert on foreclosures and wrote a book about how to do them in Maine. When real estate imploded. he found himself foreclosing on people he knew on a first name basis. It tore him up. He quit law and came back a few years later to help those being foreclosed.

Defending a woman named Nicolle Bradbury, Cox uncovered the “robo-signing” scandal, conducting depositions that contributed to a $25 billion settlement and exposed some of the most egregious practices of the mortgage industry. Today Mr. Cox is involved in training hundreds of lawyers around the country to better defend victims of illegal mortgage practices.

Maine Attorneys Saving Homes

Rental prices on the rise, foreclosures a primary reason

The price for renting an apartment or house is rising steadily nationwide as those who used to own homes are being foreclosed upon, or they are walking away from properties that are now worth far less than what they paid for them. This puts steady, upward pressure on rentals, as more and more people look for places to rent rather than to own.

Silicon Valley is both an exception to the general trend and a prime example of it, as it is currently experiencing a tech boom, which is spiking rental prices even more. Plus, home values are increasing again. Santa Clara County had a whopping 12.9% increase in rents year-to-year, with San Mateo County up 10.7%. In both counties, rents are now at pre-recession levels. The biggest increase was in Cupertino. Rents were up a stunning 17.9% compared to the previous year.

The Silicon Valley tech boom is being driven by social networking companies, many of whom have yet to go public but enjoy enormous valuations based on trading in the private market. Facebook has an estimated market cap of $82.2 billon, which is more than Abbott Laboratories or the Royal Bank of Canada, and close to that of McDonald’s. Whether such huge market caps are sustainable for a company that is still private and making comparatively small profits, I will leave as an exercise for the reader to determine.  Many other similar companies also have valuations that are bubbly too. And we all know what happens when bubbles burst.

But for now, the tech bubble is expanding in the Valley. Home prices start at about $600,000 for a 3 bedroom / 2 bath condo or house in Cupertino and rise sharply from there. So, that’s about $125,000 down and a mortgage of $2,500 a month for a small tract home built in the 1950’s. However, that same home sold for considerably more at the peak in 2007. But the bubble popped, prices fell, and many homeowners found themselves underwater. That’s when foreclosures start happening. The current number of foreclosures in Silicon Valley combined with rising real estate prices means that renting is the only option for many.  The days of getting a NINJA (No Income No Job or Assets) mortgage are gone. You need 20% down and excellent credit as well. More and more people can’t qualify. This means increased competition for existing rentals, which in turn raises rent prices.

Silicon Valley is unique and doing way better than most. Areas like Vallejo, which have no current economic boom, are hurting badly. Foreclosures are everywhere, and rents are rising there too. Having to rent after owning is a double hit for most people. It costs more to rent than to own, plus there’s no home mortgage deduction to help cut taxes. Thus, a higher percentage of income generally goes to housing for those who rent as compared to those who own.

For those who still have assets, home and condo prices in areas like Sacramento are becoming attractive, since prices have fallen so sharply.  They could be cash flow positive rental properties. Some properties there are 40-50% lower than their 2007 highs. Yet, perhaps oddly, there aren’t that many properties on the market. It is quite possible that banks are holding onto their foreclosed properties rather than selling them in hopes than prices rise sometime in the next several years.

There’s a disconnect here. There are many foreclosed properties in California that are vacant. Yetm rental prices are rising steadily, primarily because those foreclosed upon need a place to live. We need a plan to make these properties available to renters, and to do so in bulk and immediately.

(Crossposted from CAIVN)

Secret docs show foreclosure watchdog doesn’t bark or bite

The government’s supervision of the program has apparently ranged from nonexistent to weak.

I knew you’d be shocked. Apparently Rule of Law in this country is becoming as non-existent as it is in Italy, aided and abetted by the curiously passive Obama Administration.

Perhaps we should do what Greeks are now doing and disrupt foreclosure auctions. If it happened in one court, they could stop it. If it happened in thousands, they couldn’t.

Wall Street jackals bundling foreclosure debt

House is gone but debt lives on,” says WSJ. Those who walked away from their homes assuming the bank would eat the difference between what the house is now worth and what is owed on it are getting a nasty surprise. Deficiency judgments are becoming more common. That’s when the foreclosed owner is legally told to pay the difference.

Yes, I do have a problem with people walking away from homes sticking someone else with the bill (and that someone is often taxpayers since the government buys or guarantees such debt.)

However, as might be expected, Wall Street sees deficiency judgments an exciting new income opportunity. Buy this toxic slop of debt, grind the previous homeowners into dust trying to collect, then package it all in bundles of securities. What could go wrong with that?

The increase in deficiency judgments has sparked a growing secondary market. Sophisticated investors are “ravenous for this debt and ramping up their purchases,” says Jeffrey Shachat, a managing director at Arca Capital Partners LLC, a Palo Alto, Calif., firm that finances distressed-debt deals. He says deficiency judgments will eventually be bundled into packages that resemble mortgage-backed securities.

Then they can buy and sell credit default swaps on these noxious poo piles, creating ever more fictitious capital and increased risk and instability in the financial system until it inevitably blows up in their faces again, just like in 2008. Some of this debt is selling for 2 cents on the dollar, which seems just a teensy bit risky to me.

None of this helps the economy at large nor does it create jobs in any appreciable way.

Karl Denninger on Strauss-Kahn, IMF, and more

His latest 30 minute podcast is on BlogTalkRadio now.

The IMF, Greece, the US Debt position (breach day is today, incidentally) and more. 30 minutes of, well, “grab the popcorn” discussion.

Denninger is co-founder of the original Tea Party, which was founded specifically in opposition to the bailouts of insolvent banks by the federal government. He’s neither racist nor a loony and has nothing but scorn for the Tea Parties who jacked his idea and turned it into “pablum; God, guns, and gays.”

From the show:

Did you know that a woman in Florida had her house broken into twice by thugs from banks with no paperwork and the police did nothing? The house was not in default. Geithner wants to grab money from our retirement funds and increase the debt limit. This so the banksters can be paid off at the full amount on their bonds. There’s no talk of restructuring, the US taxpayer is expected to bend over and take it for the banksters.

It’s like the allegations against Strauss-Kahn, isn’t it? He takes, someone gets raped. How apt that he has raped countries via the IMF for bankster bondholders.

Denninger says if DSK didn’t do it, then someone set him up. This creates a ‘battle of the lions’ whereby they try to destroy each other, something we benefit by as the truth eventually comes out. As an aside, he says, Eliot Spitzer was set up, but you can’t be set up if you don’t take your pants off.

I find Denninger’s bluntness, genuine anger, and courage a welcome change from the increasingly tepid liberal / progressive blogosphere which is mostly preoccupied with blogging about what those horrid Republicans are doing. Hey, Strauss-Kahn is (at least nominally) a socialist, so I guess the problem isn’t just one political faction, is it? Rather, the system itself is rotten and corrupt.