Through the Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the Hardest Hit Fund), there $2 billion of  assistance that will be made available to those having difficulty making their loan payments due to unemployment.   This fund will be distributed to states that have been hardest hit by the downturn in the economy.  Alabama will receive over $60 million.  Arizona is not on the list published by the government.

The U.S. Department of Housing and Urban Development (HUD) is in the process of launching another program whereby $1 billion in assistance will be provided through the Emergency Homeowners Loan Program.  That loan program will provide interim assistance for not more than 24 months to people who are or may face foreclosure due to unemployment, underemployment or medical problems. 

Get more information about the foreclosure assistance programs.

In the case of Saguaro Highlands Community Association v. Jack C. Biltis and Leigh Biltis, a dispute arose as to whether the home owner’s swing set violated the CC&R’s.  The association filed a lawsuit to obtain an injunction to have the owners remove the swing set.  The owners sought to dismiss the action and force the association to arbitrate the dispute.  The Superior Court disagreed and the Court of Appeals affirmed.  Both held that the association retained the right to pursue an injunction in Court based on the wording of the CC&R’s for that community, although the Courts noted the strong public policy favoring arbitration and based on which arbitration clauses are broadly construed.

The Court next considered whether the deed of trust was superior to a later recorded deed of trust, even though the first deed of trust was recorded without the legal description.   The Court held that it was, notwithstanding the initial defect in the first deed of trust, since the party holding the second deed of trust had received actual notice that there was a prior/superior deed of trust against the property. 

This case reinforces the law that the recording system is for the benefit and protection of non-parties to the transaction and parties who do not have actual notice of a prior recording.

On June 14, 2010, Mr. Foltz filed his answer to the Complaint and a counterclaim against Realty Executives.

Such claims have already been investigated by, for example, the Massachusetts attorney general against Morgan Stanley.   In one case involving Morgan Stanley’s reported “partner,” New Century Mortgage, the Massachusetts attorney general alleged that Morgan Stanley provided New Century with financing to provide high risk loans to low income borrowers and then Morgan packaged the loans as securities and sold the securities to investors.  The loans were allegedly not correctly underwritten and violated Massachusetts laws that required the lender to ascertain the borrower’s best interests.  Without admitting any wrongdoing Morgan Stanley agreed to pay a total of $102 million, including $58 million to 1,000 homeowners and $23 million in investment losses to a pension fund.

Although Arizona does not have a “borrower best interest” statute, there are Arizona laws that may provide a basis for civil claims against those that sold defective securities, including consumer fraud and securities fraud statutes, as well as common law claims for fraud and negligent misrepresentation.   Berk & Moskowitz, P.C. handles most types of disputes, including claims for fraud and misrepresentation.  If you or your company bought defective mortgage backed securities or other related investments, contact us.

There was an overall increase in mortgage fraud reports (suspicious activity reports) of 5% to 8% from 2008 to 2009.  Arizona now ranks 4th in the Country for incidents of mortgage fraud, having about 58% more reported fraud than expected for its volume of new loans in 2009.  Notably, fraud in the appraisal increased from 22% of all fraud reported in 2008 to 33% in 2009.

Vigilance and diligence are the keys.  Lenders should ensure that they verify and double check all data provided in connection with a loan.

H2511 – Would prohibit cities from levying a tax on the transfer of a property to a lender in foreclosure.

H2739 – Would require mediation (settlement discussions) before a residential foreclosure. Foreclosure would be stopped during mediation.

H2740 – Would allow homeowners to elect to rent the home after foreclosure, as long as they use it as their primary residence.

H2766 – Would require a landlord of a home in foreclosure to notify the tenant at least 60 days before the foreclosure.

H2270 – Would require mortgage brokers to investigate the borrower’s ability to repay the loan before making the loan.

H2626 – Would require lenders to try to contact borrowers to discuss options to foreclosure, including loan modifications, at least 30 days before a foreclosure notice.

H2309 – Would regulate foreclosure consultants in order to combat a growing number of foreclosure scams.

Visit the Arizona State Legislature for more information