What is the REAL Unemployment Rate?, by Dave Kennelly, Summit Business Advisors

Have you ever wondered where the unemployment data comes from? What the process is for gathering information to determine the level of unemployed in the United States? Read the below, copied from the Bureau of Labor Statistics website and pasted here. I don’t know about any of you, but my household has never received a call – not once, in the 28 years I have been in the workforce. Have you ever been contacted? Ask people you know if they have ever been contacted. I have asked numerous people and not one of them have ever received a phone call. Makes you wonder about the numbers doesn’t it.


Where do the statistics come from?
Early each month, the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor announces the total number of employed and unemployed persons in the United States for the previous month, along with many characteristics of such persons. These figures, particularly the unemployment rate—which tells you the percent of the labor force that is unemployed—receive wide coverage in the media.

Some people think that to get these figures on unemployment, the Government uses the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs. But some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for benefits. So, quite clearly, UI information cannot be used as a source for complete information on the number of unemployed.

Other people think that the Government counts every unemployed person each month. To do this, every home in the country would have to be contacted—just as in the population census every 10 years. This procedure would cost way too much and take far too long. Besides, people would soon grow tired of having a census taker come to their homes every month, year after year, to ask about job-related activities.

Because unemployment insurance records relate only to persons who have applied for such benefits, and since it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940, when it began as a Work Projects Administration project. It has been expanded and modified several times since then. For instance, beginning in 1994, the CPS estimates reflect the results of a major redesign of the survey. (For more information on the CPS redesign, see Chapter 1, “Labor Force Data Derived from the Current Population Survey,” in the BLS Handbook of Methods.)

There are about 60,000 households in the sample for this survey. This translates into approximately 110,000 individuals, a large sample compared to public opinion surveys which usually cover fewer than 2,000 people. The CPS sample is selected so as to be representative of the entire population of the United States. In order to select the sample, all of the counties and county-equivalent cities in the country first are grouped into 2,025 geographic areas (sampling units). The Census Bureau then designs and selects a sample consisting of 824 of these geographic areas to represent each State and the District of Columbia. The sample is a State-based design and reflects urban and rural areas, different types of industrial and farming areas, and the major geographic divisions of each State. (For a detailed explanation of CPS sampling methodology, see Chapter 1, of the BLS Handbook of Methods.)

Every month, one-fourth of the households in the sample are changed, so that no household is interviewed more than 4 consecutive months. This practice avoids placing too heavy a burden on the households selected for the sample. After a household is interviewed for 4 consecutive months, it leaves the sample for 8 months, and then is again interviewed for the same 4 calendar months a year later, before leaving the sample for good. This procedure results in approximately 75 percent of the sample remaining the same from month to month and 50 percent from year to year.

Each month, 2,200 highly trained and experienced Census Bureau employees interview persons in the 60,000 sample households for information on the labor force activities (jobholding and jobseeking) or non-labor force status of the members of these households during the survey reference week (usually the week that includes the 12th of the month). At the time of the first enumeration of a household, the interviewer prepares a roster of the household members, including their personal characteristics (date of birth, sex, race, Hispanic ethnicity, marital status, educational attainment, veteran status, and so on) and their relationships to the person maintaining the household. This information, relating to all household members 15 years of age and over, is entered by the interviewers into laptop computers; at the end of each day’s interviewing, the data collected are transmitted to the Census Bureau’s central computer in Washington, D.C. (The labor force measures in the CPS pertain to individuals 16 years and over.) In addition, a portion of the sample is interviewed by phone through three central data collection facilities. (Prior to 1994, the interviews were conducted using a paper questionnaire that had to be mailed in by the interviewers each month.)

Each person is classified according to the activities he or she engaged in during the reference week. Then, the total numbers are “weighted,” or adjusted to independent population estimates (based on updated decennial census results). The weighting takes into account the age, sex, race, Hispanic ethnicity, and State of residence of the person, so that these characteristics are reflected in the proper proportions in the final estimates.

A sample is not a total count, and the survey may not produce the same results that would be obtained from interviewing the entire population. But the chances are 90 out of 100 that the monthly estimate of unemployment from the sample is within about 290,000 of the figure obtainable from a total census. Since monthly unemployment totals have ranged between about 7 and 11 million in recent years, the possible error resulting from sampling is not large enough to distort the total unemployment picture.

Because these interviews are the basic source of data for total unemployment, information must be factual and correct. Respondents are never asked specifically if they are unemployed, nor are they given an opportunity to decide their own labor force status. Unless they already know how the Government defines unemployment, many of them may not be sure of their actual classification when the interview is completed.

Similarly, interviewers do not decide the respondents’ labor force classification. They simply ask the questions in the prescribed way and record the answers. Based on information collected in the survey and definitions programmed into the computer, individuals are then classified as employed, unemployed, or not in the labor force.

All interviews must follow the same procedures to obtain comparable results. Because of the crucial role interviewers have in the household survey, a great amount of time and effort is spent maintaining the quality of their work. Interviewers are given intensive training, including classroom lectures, discussion, practice, observation, home-study materials, and on-the-job training. At least once a year, they attend day-long training and review sessions. Also, at least once a year, they are accompanied by a supervisor during a full day of interviewing to determine how well they carry out their assignments.

A selected number of households are reinterviewed each month to determine whether the information obtained in the first interview was correct. The information gained from these reinterviews is used to improve the entire training program




Summit Business Advisor’s Blog

Can I get Financing For A Second Home? by Jason Hillard, Homeloanninjas.com

VA Home Loan Eligibility in Eugene/Springfield Oregon can be confusing, by Fred Chamberlin, Myfhamortgageblog.com

VA Guaranteed Home Loan eligibility in Eugene/Springfield Oregon can be very confusing. Who is and who is not eligible may be a surprise to those that are eligible that may not realize it. As a Vietnam Era U.S. Air Force veteran with 10 years of service, my eligibility is pretty easy to see.

Some are obvious (like mine), others are more obscure:

Veterans with active duty service (who were not dishonorably discharged) during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.
Veterans and active duty military personnel who served during peacetime must have had more than 180 days of active service. Veterans of enlisted service starting after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.
Veterans who have served after August 2, 1990 (Gulf War period) must have completed 24 months of service or at least 90 days of active duty for which you were called or ordered to active duty. Most of this is written in “militaryeze” so the easiest way is to submit for a certificate of eligibility or COE. Reservists and National Guardsmen will often qualify for the 90 days of active duty provision if they had been called up for duty.
Active duty personnel with at least 181 days of service or 90 days during the Gulf War.
The VA does not require that you have a certain credit score in order for approval. The actual mortgage lenders, however, are allowed to set their own standards for VA loan requirements and that is normally either 620 or 640 mid score.

Changing economic conditions and increased losses due to loan defaults have motivated lenders to limit who they will lend to.

Since early 2010, most VA lenders in the U.S. have tightened their lending and credit score requirements, making home financing harder to come by for those with credit issues or other criteria that makes their loan more risky.

As a result, getting a loan without a down payment is more difficult, though one of the few remaining options for 100% financing is a VA loan. Major lending groups have generally resolved to set the minimum credit score requirement at 620.

To learn more about this, our article Credit Score Requirements For VA Mortgages (in a later post) is a great place to start.

There are several specific pieces of documentation a lender will need to determine your eligibility:

A DD214 for discharged veterans.
A NGB Form 22 for Army or Air National Guard
A statement of service for active military personnel.
A certificate of eligibility (COE) to determine you have VA entitlement.
Widows/widowers of service personnel that died while on active duty.

Because each lender has different qualifying guidelines, the next step is to contact me to find out if you meet their VA loan requirements such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out about maximum loan amounts with and without a down payment.

I can help you attain your certificate of eligibility on your behalf.

Lastly, if you have either had a divorce, filed bankruptcy, or had a previous home go into foreclosure, you are not immediately disqualified from a VA loan, although there are some additional restrictions.

You can find more information regarding these future topics in our articles titled Divorce And VA Loan Eligibility, Does A Bankruptcy Mean I Can’t Get A VA Loan? and Can I Get A VA Loan If I’ve Had A Recent Foreclosure?

Contact me

Navigating the mortgage approval process doesn’t have to be daunting. With me on your side those hurdles can be overcome. I am available right now to help you with the loan process and know the ins and outs of FHA, VA, USDA and conventional financing. If you want to buy a home using an FHA loan or refinance using VA, I am here to help. Contact me at Alpine Mortgage Planning, 1200 Executive Pkwy., Ste. 100, Eugene OR 97401, 541-342-7576/541-221-3455 cell or by e-mail. Only you can make the choice it is time to get the process started.

OregonRealEstateWanted.com: New Buyer Posting

New buyer (SG14) has been posted on the OregonRealEstateWanted.com web site. This buyer is an investor and they are looking for residential multifamily opprotunities under $200,000 in the Portland Metro area. Buyer is looking for seller financing opportunities only. To learn more about this buyer and others that may be looking for real estate you have for sale. Please visit OregonRealEstateWanted.com

Oregon Real Estate Wanted

Fred Stewart
Stewart Group Realty Inc.

Why Are Appraisals So Bad?, by Brett Reichel, Brettreichel.com

Ok – so….blinding flash of the obvious here….Appraisals are serious problems for real estate transactions right now. Lawrence Yuen, the Chief Economist from the National Association of Realtors said this week “Home sales are being constrained by the twin problems of unnecessarily tight credit and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers”.

Many of you have experienced first hand the effects of a low real estate appraisal. Maybe you were denied the ability to refinance to a lower interest rate or worse yet, maybe you had a sale blow up on a home you were trying to purchase. Or, if you are a Realtor or lender, you’ve had clients you can’t help due to a low appraisal.

The appraisers say, that they are just reading the market. To a degree, that’s true. Nearly no one’s house is worth what it used to be, and with the market making that move downward, clearly there are going to be lower appraisals (another blinding flash of the obvious).

Mortgage guys(used in a gender neutral way here) and Realtors will blame the Home Valuation Code of Conduct (the HVCC, which has been recently replaced by a new law with similar restrictions). It’s true the HVCC has created some issues.

Personally, I can live with an accurate appraisal, even if it doesn’t give me my desired outcome. That’s life, appraisals should be as accurate as possible, and lenders need a good report to base their analysis of the collateral on. But, we aren’t getting accurate appraisals. Why?

Here are a few reasons:

First – the HVCC created a monster by leading most lenders to decide to order their appraisals through appraisal management companies. Many appraisal management companies require cheap and quick appraisals. The biggest national appraisal management companies that the “big 4″ lenders require the market to use, order appraisals from wherever they can get the cheapest fee’s and the quickest turn-around times. Little consideration is given to the qualifications of the appraiser, other than appropriate licensing, certification, insurance, and bonding. Sometimes, this means an apprasier is coming from two or three hours away from the subject property!

Why is this an issue? Because all real estate is local. Identical houses just blocks apart, sometimes across the street, can have significant differences in value because of market perceptions. Differences in schools, addresses, and many other factors create value differences in markets. If you are from two hours away, you probably don’t know all these nuances. It’s easy to miss that a buyer will pay $25,000 more for a house within certain elementary school boundaries, and that the boundary can be in the middle of the street. If the appraiser isn’t extremely familiar with the market they shouldn’t do the appraisal there, or they should learn and quantify these differences really quickly and complete an accurate report.

Second – appraisers have a tendency to forget markets are driven by psychology. In the stock market, the “efficient market theory” has been proven to be inaccurate. Psychology affects an illiquid investment like real estate even more. Too many appraisers approach appraisal from a technical viewpoint that ignores market psychology. The reason we need good appraisers is to quantify these nuances that make differences in value that a computer can’t pick up on. That’s why lenders rely less and less on “Automated Value Models” run through computers, and instead rely on an expert in the local market.

Third – seasonality is an issue. Most markets have seasons where houses don’t sell as readily. Maybe it’s too much snow, maybe too much heat, maybe it’s the holidays, but really these seasons affect sales prices, and this too should be quantified and reflected in reports.

Fourth – lender meddling is another issue. FannieMae and FreddieMac (the agencies)force repurchases of loans on to the big lenders, who force them on smaller lenders. Repurchasing loans creates huge losses for lenders. The agencies use flimsy excuses, like claiming valid appraisals are invalid, to force these repurchases, and scare the other lenders to death. Thus lenders get more conservative and pressure appraisers to bring appraisals in lower through their underwriting practices. The agencies create additional pressure on the appraiser through the use of the Form 1004 MC, which was created to analyze market conditions, but is really an ill-conceived form that can lead to poor analysis of the market by both underwriters and appraisers.

Fifth, incompetence is all too common in the appraisal profession. A recent appraisal report done in a suburb of Seattle indicated that the appraiser depreciated the value of the house at 1/2% a month because median prices dropped in that Multiple Listing Service area by 6% over the last twelve months. On the surface this would appear to be an appropriate decision. But, median prices are not the best indicator of values. Appraisers and underwriters will not accept median prices to determine appreciation, why would they be appropriate in a declining market? In fact, many appraisal text books identify this practice as wrong. We see this poor reasoning time and time again in appraisal reports and it is invalid analysis.

What do we do about this? Apply pressure to get accurate appraisal reports! Your loan officer might not be able to do much, but maybe someone higher up can. Make sure your complaints are based on sound data, and not just your emotional involvement in the transaction. If you are in the real estate or lending industry, learn more about appraisals so that you can know what to look for and give your clients better advice. In any event, we need to continue calling attention to this ongoing problem.

Brett Reichel’s Blog http://brettreichel.com

An Old Idea is New Again: Second Homes in Oregon , By Fred Stewart, Stewart Group Realty Inc.

2011 may be the year buyers start considering second homes again. Our mountains, high desert and coastlines have long been considered legendary vacation destinations. Both urban dwelling Oregonians and people from out of state go home from visits to these places with a dream of returning as often as possible.

Owning a second home is a good idea – one that makes family life more enjoyable. It is the dream of many to finally have that special getaway. With the retraction of home values down to levels not seen in nearly 10 years, coupled with still historically low interest rates, this dream may once again be an opportunity whose time has come.

But of course, there is the flip side to this rosy picture: it has become increasingly difficult to obtain financing. And the barriers are even higher for second homes then they are for people seeking to finance their primary residence. Lenders and banks have taken a lot of losses over the past few years. A significant portion of these losses is due to the second home market that developed between 2003 and 2006. Because of this, expect a lot more work to get financing then what you may have experienced in the past. It is important that you work closely with a loan officer that has a lot of experience in residential lending and is working with a Mortgage Banker or Bank. However, you may have found a truly awesome deal and still be unable to prove yourself sufficiently to a lender. It is time to think about this in new ways.

Seller financing options such as land sales contracts and lease options should not be ignored. These options will sometimes be the only options that will allow a successful transaction to occur in the present financial climate. Do not hesitate to begin by speaking with a loan officer and exploring the possibility of traditional financing. At the same time, don’t waste precious time you begin to feel as if you are not making satisfactory progress. The “miracles” that good loan officers could pull off for borrowers in the past, are simply not happening these days.

If you have exhausted the bank loan route unsuccessfully, educate yourself about the various seller finance options. When you do reach mutually acceptable terms with your seller, be sure to draft an agreement that would last at least 3 to 5 years, if possible. It will take at least that long for lending to return to some normalcy and for you, the buyer, to develop a financial profile that would be encouraging for a lender or bank to work with them. Here your favorite loan officer can be of great assistance, and work with you during that time period to assist you in understanding and attaining eligibility for bank financing. Three to 5 years of good credit, stable employment and a healthy dedication to making the contract and mortgage payments on time will show the lender that you have the economic and character resources to deserve the credit for the loan. The three C’s (Capability, Creditworthiness and Character) will always be the basis of bank lending. What is different now is the stringency applied to each of these criteria.

As always when looking to buy an investment property or a second home you should talk to your tax and financial advisors and get their opinion on how this will affect your tax exposure and your financial planning. A real estate purchase properly structured and managed will improve your financial standing. A second home can be a wonderful and satisfying improvement on your lifestyle.


Fred Stewart
Stewart Group Realty Inc.

Freddie Mac Bars Foreclosure Actions in the Name of MERS, by Carrie Bay, DSNEWS.com

Freddie Mac

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Freddie Mac issued new policy guidelines to its servicers this week that prohibit foreclosures in the name of Mortgage Electronic Registration Systems Inc. (MERS). MERS was developed by the industry to keep track of the servicing rights on home loans. It was designed as a paperless property registry to facilitate the quick transfer of mortgages between lenders, as well as investors in mortgage-backed securities.

In certain jurisdictions, servicers use the MERS name to initiate foreclosures on properties listed in its registry on behalf of the creditor. But this approach has been challenged repeatedly by homeowners who say the electronic system has no standing to act as the mortgagee nominee in foreclosure actions.

MERS argues that borrowers are required to sign documents stating that MERS can assume rights and responsibilities on behalf of creditors, and this reasoning has led a number of state courts to uphold MERS’ right to foreclose.

Still, the electronic registry has come under heavy fire lately. It became a focus of last fall’s robo-signing scandal when the MERS name appeared within defective affidavits and regulators extended their servicing investigations to include the system and its role in the foreclosure process.

Fannie Mae told its servicers last spring that they were no longer allowed to foreclose in the name of MERS, and now Freddie Mac is following suit.

Freddie has updated its servicer guide to eliminate the option for the foreclosure counsel or trustee to conduct a foreclosure in the name of MERS. The new rule is effective for mortgages registered with MERS that are referred to foreclosure on or after April 1, 2011.

LPS’ Data Show Declines in Delinquencies and Foreclosure Inventories, by Carrie Bay, Dsnews.com

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Lender Processing Services, Inc. (LPS) gave the media an advance look Monday at the company’s February mortgage performance report to be released later this week. In what can be viewed as an anomaly of the current housing crisis, LPS’ data show that both the national mortgage delinquency rate and the share of homes that are in the process of foreclosure drifted lower last month.

The Florida-based analytics firm reports that the total loan delinquency rate for the U.S. mortgage market dropped to 8.80 percent. LPS calculates this stat based on loans that are 30 or more days past due, but not yet moved into foreclosure.

The February delinquency rate is 1.2 percent below the rate recorded by LPS in January and 18.4 percent lower than it was in February 2010.

The industry’s foreclosure inventory rate, which LPS defines as loans that have been referred to a foreclosure attorney but have not yet reached the final stage of foreclosure sale, slipped 0.2 percent last month to 4.15 percent. Foreclosure activity was bottlenecked last fall when the news of improper affidavit filings surfaced and several large servicers temporarily froze proceedings to review internal processes, causing foreclosure inventory numbers to swell as loans languished in the pipeline.

Although LPS’ month-to-month reading indicates foreclosure cases have begun to progress again, the company notes that the U.S. foreclosure pre-sale inventory rate remains 7.4 percent above that in February 2010.

Altogether, LPS says there are 6,856,000 properties in the United States with mortgages that are currently 30 or more days delinquent or in foreclosure.

Of these unpaid loans, 2,196,000 are part of the foreclosure inventory, meaning the lender has initiated foreclosure proceedings on the property but it has not yet advanced to the foreclosure sale stage.

The other 4,659,000 are 30-plus days overdue but not in foreclosure. Within this bucket, 2,165,000 have been delinquent for at least 90 days – and in most cases, longer – but have not been referred to an attorney to start the foreclosure process.

LPS reports the states with the highest ratio of non-current loans – meaning the combined percentage of both foreclosures and delinquencies – are Florida, Nevada, Mississippi, New Jersey, and Georgia.

States with the lowest percentage of non-current loans included Montana, Wyoming, Arkansas, South Dakota, and North Dakota.

LPS will provide a more in-depth review of this data in its monthly Mortgage Monitor report, scheduled for publication March 25. The company’s statistics are derived from its loan-level database of nearly 40 million mortgage loans.

The basics – VA Home Loans | from homeloanninjas.com

The VA home loan has helped many of our country’s Veterans achieve the American Dream that they have served to protect, and for that reason we absolutely LOVE IT! The qualifying factors and underwriting guidelines are just a little different than that of an FHA or Conventional home loan, though.

As we said in the video, current members of the Armed Forces, those who have been honorably discharged, National Guard/Reserve members with 6 years of service, as well as unmarried surviving spouses of Veterans qualify for the VA home loan. We have a lot of those folks in Oregon & Washington, and as a result many of the homes for sale here are amenable to VA financing.

Another reason to love the VA home loan is that there are built-in safeguards for our Veterans, such as a limit on the fees that can be charged directly to the Veteran, and property criteria designed to ensure that no major home repair expenses are incurred by the Veteran after buying the house.

Put these reasons together with the fact that there are no monthly mortgage insurance premiums, and you have a spectacular loan program that takes care of those who take care of us. Thanks to all of our Veterans out there, and if you have any questions about VA financing, or home loans in general, remember we are here to help! Visit our website, sign up for email or rss updates, or hit us up on Facebook or Twitter.

FDIC Sues WaMu Execs and Their Wives, by Kirsten Grind, Bizjournals.com

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The Federal Deposit Insurance Corp. filed suit against former executives of Washington Mutual, including former CEO Kerry Killinger, former President Steve Rotella, and their wives, in a case that seeks to recover unspecified damages at trial.

The suit, filed in the U.S. District Court in Western Washington, also seeks to freeze the estates of the Killingers and Rotellas. It also names David Schneider, the former head of WaMu‘s home loans division, who now works at JPMorgan Chase.

Earlier, the FDIC said it would seek $1 billion in damages, but the amount wasn’t specified in the suit.

In its 63-page complaint, the FDIC said that it’s suing the former, “highly-paid” WaMu executives to hold them responsible for losses in WaMu’s mortgage division. WaMu was closed by the federal Office of Thrift Supervision and its assets turned over to the FDIC in September 2008, marking the largest bank failure in U.S. history.

The complaint alleges that Killinger, Rotella and Schneider caused WaMu “to take extreme and historically unprecedented risks with WaMu’s held-for-investment home loans portfolio. They focused on short term gains to increase their own compensation, with reckless disregard for WaMu’s longer term safety and soundness.”

The executives and their attorneys could not immediately be reached for comment. In a statement, the FDIC said it files suits against former officers directors and other “professionals of failed institutions “when the case has merit and is expected to be cost effective.”

“This is done on behalf of creditors of the failed institution,” the FDIC said in its statement. “The FDIC investigates every failure to determine whether there is a solid basis for legal action and a sound source for recovery.”

The suit does not specify damages, although the FDIC previously said it would seek to recover up to $1 billion from all three former WaMu executives.

The suit also alleges that Killinger and his wife, Linda, sought to defraud WaMu’s creditors by transferring their multi-million dollar home in Palm Beach, Calif., into two personal trusts in August of 2008, a month before the bank failed. Linda Killinger was appointed trustee of those accounts. Killinger also transferred half of the couple’s property in the Highlands area of Seattle into a trust in Linda Killinger’s name.

Both these actions were “made with actual intent to hinder, delay or defraud Kerry Killinger’s present and future creditors,” the FDIC suit alleges. The government agency notes that Killinger faced numerous lawsuits at the time, and WaMu had lost more than $9 billion in a bank run.

Similarily, the suit alleges that Rotella and his wife, Esther, transferred their house in Orient, New York, into two residential trusts in the spring of 2008, and Rotella also transferred $1 million to Esther Rotella after WaMu failed, according to the complaint. “… the transfers were not disclosed to or were concealed from his present and future creditors,” the suit alleges.

KIRSTEN GRIND covers banking, finance and residential real estate for the Puget Sound Business Journal. She is currently on book leave.


Hundreds of Oregon foreclosure sales stopped after judges’ rulings by Brent Hunsberger, The Oregonian

Sales of hundreds of foreclosed homes in Oregon have been halted or withdrawn in recent weeks after federal judges repeatedly questioned their legality, according to a number of real estate attorneys in the state.

Lenders have withdrawn more than 300 foreclosure sales since February in Deschutes County alone, one of the Oregon area’s hardest hit by the housing collapse. About 130 of those notices were filed in the past week, attorneys say.

Dozens of foreclosure listings by ReconTrust Co., the foreclosure arm of Bank of America Corp., have disappeared from its website, attorneys say. A BofA spokeswoman said the bank was canceling certain sales to ensure that those homeowners had fully explored options to avoid foreclosure.

Since October, federal judges in five separate Oregon cases have halted foreclosures involving MERS, saying its participation caused lenders to violate the state’s recording law. Three of those decisions came last month, the key one in U.S. Bankruptcy Court in Eugene.

Attorneys say it’s not clear whether lenders in Oregon will simply start over or head to court to foreclose, steps that could prolong the crisis for months and drive up costs, attorneys say. Some suggest lenders might not have access to the documents they need to comply with state law.

“A lot of us are questioning whether there is a solution,” said David Ambrose, a Portland attorney who represents lenders in mortgage transactions. “It’s pretty amazing. There are a lot of unanswered questions.”

MERS is listed as an agent for lenders on more than 60 million U.S. home loans, about half of all such loans.

Homeowners nationwide have challenged its standing. In New York last month, a federal bankruptcy judge ruled that MERS lacked authority to foreclose on homes it didn’t own.

In Oregon, lenders can foreclose without going to court. But state law also requires that the loan’s ownership history, or assignments, be recorded with local county governments before proceeding with a nonjudicial foreclosure.

In the Eugene court case, Donald E. McCoy III filed for bankruptcy protection in part to block U.S. Bank from foreclosing on his Central Point home. He then sued the bank and MERS, along with his original lender BNC Mortgage Inc., claiming they had not properly recorded BNC’s subsequent sale of the loan to investors.

Chief Bankruptcy Judge Frank R. Alley III found McCoy’s allegation persuasive and refused to grant the bank’s request for a dismissal.

“Oregon law permits foreclosure without the benefit of judicial proceeding only when the interest of the beneficiary (lender) is clearly documented in a public record,” Alley wrote. “When the public record is lacking, the foreclosing beneficiary must prove its interest in a judicial proceeding.”

In response to that ruling, First American Financial Corp., one of the nation’s largest title insurers, began warning lenders and buyers in title documents that it wouldn’t insure titles with a cloudy public record in Oregon, company attorney Alan Brickley said.

“It’s simply saying we have a concern, and you should have a concern,” said Brickley, who’s based in Portland.

But attorneys representing lenders and consumers say that warning will have a chilling effect on the sales of foreclosed homes in which MERS is involved.

“If you can’t get title insurance, that almost stops the process,” Ambrose explained.

And, in a potential deal breaker for other foreclosure cases, one of the nation’s largest title-insurance companies is warning lenders that it might not guarantee title in some cases.

The developments underscore that the challenges disrupting foreclosures in other states have finally hit home in Oregon. Foreclosure sales in the state totaled 10,500 last year, or 28 percent of all home sales, according to RealtyTrac Inc. Federal agencies and state attorneys general are investigating the foreclosure and loan-modification practices of the nation’s largest banks.

The legal concerns revolve around Mortgage Electronic Registration Systems Inc., a Reston, Va., corporation set up in the mid-1990s by the mortgage banking industry to rapidly record the ownership of mortgages so they could be packaged and sold as securities.

MERS essentially allowed lenders to sell loans without recording each transaction with county recorder offices, experts say. That rapid and sometimes reckless securitization of such loans contributed to the 2008 financial crisis and housing slump. The problems clouding the foreclosure process — including last year’s robo-signing scandal that forced several big banks to suspend foreclosures in about two dozen states — continue to drag down the housing market today.

U.S. District Judge Anna J. Brown last month blocked two foreclosure sales by CitiMortgage Inc. and BAC Home Loan Servicing, saying the lenders had failed to properly record documents.

Also last month, MERS told its member lenders in a memo distributed nationally to stop foreclosing in its name while it works to address the legal challenges.

“It’s a fundamental change that they have to deal with and the question is whether they can,” said Margaret E. Dailey, a real estate attorney in Newport.

The full impact of these developments is only now beginning to play out in Oregon. Not all foreclosures involve MERS.

Dailey on Friday counted more than 70 foreclosures rescinded at the Lincoln County recorder’s office since the start of the year, including 45 in February.

A review by The Oregonian of Deschutes County clerk’s office records shows that BofA’s ReconTrust withdrew more than 60 foreclosure sale notices Friday and 35 on Thursday.

BofA spokeswoman Jumana Bauwens said the cancellations resulted from a review late last year of its foreclosure process. The bank wants to ensure that homeowners nearing a foreclosure sale have exhausted other opportunities, including loan modifications and short sales, she said.

“We are not going through and saying rescind everything,” Bauwens said late Saturday.

Experts caution that the rulings eventually could be overturned. But buyers and lenders probably will look to the Oregon Legislature for a potential fix, attorneys say. Already, one bill has been introduced, Senate Bill 484, that would make it harder for banks to sell or foreclose on properties using MERS.

Treasury Done ‘Very Little’ to Fix Gov’t Foreclosure Prevention Program, Says Watchdog, by Marian Wang, Propublica.org

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Making the argument that the Treasury Department has done “very little” to improve a foreclosure prevention program that has failed to meet its goals, the government’s TARP watchdog testified at a hearing on Wednesday that the case for keeping the program alive has worn thin and is “all but exhausted” .

We’ve documented many of the major weaknesses in the government’s loan modification program—not least of which is its failure to hold banks accountable for withholding permanent loan modifications from struggling homeowners that the program was intended to help.

House Republicans are now considering a bill to end the troubled program. As the Washington Post reports, consumer advocacy groups have argued for fixing the program rather than ending it at a time when so many homeowners still need housing help.

That’s also what the program’s watchdogs have advocated—though they’re now voicing doubts that Treasury will make any meaningful fixes.

“Treasury, it seems, stands alone in defending the status quo,” testified Neil Barofsky, the special inspector general for the TARP program. Barofsky noted that last month, a Treasury official attended a Mortgage Bankers Association conference to discuss enhancements to the loan modification program and said there would be no “major new programs coming out.”

“We may tweak around the edges,” HousingWire reported the official as saying.

The Treasury Department has continued to defend the program, arguing that while the program has fallen short of its goals, it has still helped modify about 600,000 mortgages. Ending the program, Treasury has argued, would hurt the housing market.

“It would cause a huge amount of damage to a very fragile housing market and leave hundreds and hundreds of thousands, if not millions, of Americans without the chance to take advantage of a mortgage modification that would allow them to stay in a home they can afford,” Treasury Secretary Tim Geithner said yesterday.

Geithner may be right about one thing. As our data shows, by the end of last year, the program had given nearly 1.5 million households “a chance” of a mortgage modification through a trial modification. For most, that chance never turned developed into permanent help.

The New, Old Paradigm’s….., by Brett Reichel, Brettreichel.com

Is we no longer use the word “Paradigm”……

Do you, like me, have a hard time keeping up with all the latest buzzwords, catch-phrases, and schools of thought? Here’s a tip – forget them all.

It’s interesting to look over recent history and realize that no matter how much we think things have changed, things have stayed the same. As wise old King Solomon said “there is nothing new under the sun”.

What have we learned from the last two economic “busts”? Mainly that old wisdom still applies. In the “Tech Boom” or the “Dot Com Bubble” we were told that there were new metrics to measure companies by and that earnings didn’t matter. Guess what? Whoever told us that was wrong. Earnings and good corporate governance are still a necessity to make a good company and a good investment.

In the recent “Real Estate Bubble”, we were told that house prices always went up, and that it didn’t matter if a home buyer was credit worthy or had income. Guess what? You’re right, whoever told us that was wrong. Having decent character (credit), and enough income to meet your obligations creates a successful homeowner.

There are some wrong thoughts out there bouncing around the world right now as well. If you follow blogs, opinion posts, comments on articles, etc., you will see constant negativity out there right now. Really, if there was a time to be negative, it’s understandable why people would think now is that time. The economy remains in a shambles. Unemployment is high. Many feel that both the Democrat’s and Republicans have abandoned the “little guy” and small business, and are trying to give everything to the big banks, and wall street. Pretty much everyone thinks things are bleak, and there is no reason for positivity.

In my business, regulation grows and grows like an ugly alien weed from a bad sci-fi flick and threatens to choke everything out in its path. My comrades in the Real Estate market bemoan the millions of foreclosures coming on the market. Self-proclaimed experts predict further collapse and decay.

But a few weeks ago, I was watching a series on the history of America on the History Channel and what struck me was that we’ve been here before. In the history of this country, it has faced many economic challenges and has always overcame those challenges. The economic forces of capitalism and its “creative destructionism” have always created opportunity for those willing to seize it.

“Creative destructionism” is a concept that was first recognized by Marx, and he viewed it as a negative. But, like much of the rest of his thoughts, his viewpoint was wrong. Economist Joseph Schumpeter recognized this force as one of innovation and progress.

Really, what we want to take from this is that we don’t live in a time of collapse and decay, we continually live in a time of this “creative destructionism” where, yes, things will change and change rapidly, but there will still be opportunity for us to thrive.

That’s the “old paradigm” – that’s where the old wisdom comes in to play. In a capitalist society (and for those of you who are more negative, even a “semi-capitalist” society), there is always opportunity.

I’m re-reading an old book from the self-help section called “Think and Grow Rich” by Napoleon Hill. I got it for 99 cents on my Kindle through Amazon (Wow …. there’s new and opportunity). He said something on early in the book that really caught my attention and struck me as being very up to date and modern, and remember this book was written back in the 30′s in the “Great Depression” :

“Never in the history of America has there been so great an opportunity for practical dreamers as now exists. The six-year economic collapse has reduced all men, substantially, to the same level. A new race is about to be run. The stakes represent huge fortunes which will be accumulated within the next ten years. The rules of the race have changed, because we now live in a CHANGED WORLD that definitely favors the masses, those who had but little or no opportunity to win under the conditions existing during the depression, when fear paralyzed growth and development.”

I guess what I’m trying to say is that, yes, a lot of things have changed and will change. Yes, our time right now has it’s serious challenges. But, really, now is the time to apply old wisdom. It’s a time, no matter what our failures have been, to pick ourselves up by our bootstraps, to work hard, to be positive, to seize these new opportunities and to run this “new race” we’ve had to run before.

It’s up to us, it’s up to me, it’s up to you. Opportunity is out there. We just have to grab it.