Saturday, December 19, 2009

California Mortgage Defaults Trend Down Again research 20091020

RRFor091020.aspx

California Mortgage Defaults Trend Down Again

October 20, 2009

La Jolla, CA.--The number of mortgage default notices filed against California homeowners fell last quarter compared with the prior three-month period, the result of lenders' evolving foreclosure policies, an uncertain legislative environment and an uptick in the number of mortgages being renegotiated, a real estate information service reported.

A total of 111,689 default notices were sent out during the July-through-September period. That was down 10.3 percent from 124,562 for the prior quarter, and up 18.5 percent from 94,240 in third quarter 2008, according to San Diego-based MDA DataQuick.

The number of recorded default notices peaked in the first quarter of this year at 135,431, although that number was inflated by deferred activity from the prior four months.

"It may well be that lenders have intentionally slowed down the pace of formal foreclosure proceedings. If so, it's not out of the goodness of their hearts. It's because they've concluded that flooding the market with cheap foreclosures in this economic environment may not be in their best financial interest. Trying to keep motivated, employed homeowners in their homes might be the most cost-efficient way to stem losses," said John Walsh, DataQuick president.

The median origination month for last quarter's defaulted loans was July 2006, the same as during this year's first and second quarters. A year ago the median origination month was June 2006, so the foreclosure process has moved one month forward during the past 12 months.

"There's a batch of truly nasty loans that were made in mid 2006. There's another batch made in late 2006. These are worse than the mortgages before and after, and it's taking a long time to process them," Walsh said.

The lenders that originated the most loans that went into default last quarter were Countrywide (7,583), Washington Mutual (5,146) and Wells Fargo (4,425). Along with Bank of America (1,979) and World Savings (4,237), they were also the most active lenders in the second half of 2006. Last quarter's default rate on loans originated in the second half of 2006 ranged from 1.7 percent for Bank of America to 11.9 percent for World Savings.

Smaller subprime lenders had far higher default rates for that period: ResMAE Mortgage was at 73.9 percent, Ownit Mortgage 69.5 percent, BNC Mortgage 61.4 percent, Argent Mortgage 59.9 percent and First Franklin 59.4 percent. While these and most other subprime lenders are long gone, their loans were bundled, resold and now live on as "troubled assets".

Indeed, many, if not most, of the loans made in 2006 are owned and/or serviced by lending institutions other than those that made the loans. The servicers pursuing the highest number of delinquencies last quarter were ReconTrust Co, Quality Loan Service Corp and Cal-Western Reconveyance Corp.

While most foreclosure activity was still concentrated in affordable inland communities, the foreclosure problem continued to slowly migrate into more expensive areas. The state's most affordable sub-markets, which represent 25 percent of the state's housing stock, accounted for 52.2 percent of all default activity a year ago. In third-quarter 2009 it fell to 42.9 percent.

On primary mortgages, California homeowners were a median five months behind on their payments when the lender filed the notice of default. The borrowers owed a median $12,665 on a median $343,200 mortgage.

On home equity loans and lines of credit in default, borrowers owed a median $3,948 on a median $62,800 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

Although 111,689 default notices were filed last quarter, they involved 108,372 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit). Multiple default recordings on the same home are trending down, DataQuick reported.

Mortgages were least likely to go into default in San Francisco, Marin and Santa Cruz counties. The probability was highest in Merced, San Joaquin, and Riverside counties.

Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 50,013 during the third quarter. That was up 9.5 percent from 45,667 for the prior quarter, and down 37.1 percent from 79,511 for third-quarter 2008, which was the all-time peak.

In the last real estate cycle, Trustees Deeds peaked at 15,418 in third-quarter 1996. The state's all-time low was 637 in the second quarter of 2005, MDA DataQuick reported.

There are 8.5 million houses and condos in the state.

Foreclosure resales continued to decline as a market factor, accounting for 42.8 percent of all California resale activity last quarter. It was 49.9 percent the prior quarter, and a year ago it was 47.5 percent. It peaked at 57.8 percent in the first quarter of this year. Foreclosure resales varied significantly by area last quarter, from 9.6 percent in San Francisco County to 70.2 percent in Merced County.

Of the homes foreclosed on statewide in an 18-month period ending this July, about 82 percent have re-sold on the open market, while 18 percent, or more than 57,000 homes, have not. Of those that have not re-sold, it cannot be determined from public records what portion is currently being marketed for sale, as opposed to, among other things, being used as rentals or being left vacant and not for sale. Over the past year California buyers have snapped up an average of nearly 18,000 foreclosure resales a month.

A year ago the percentage of foreclosures that had not yet re-sold was about twice as great, while the number of unsold foreclosures from the 18-month period ending in July 2008 was about 50 percent higher than it is now.

Notices of Default (first step in foreclosure process)
houses and condos

County/Region	2008Q3	2009Q3	Yr/Yr%

Los Angeles	17,073	21,850	28.00%
Orange	5,692	7,436	30.60%
San Diego	7,062	8,702	23.20%
Riverside	11,714	12,113	3.40%
San Bernardino	9,110	9,833	7.90%
Ventura	1,676	2,146	28.00%
Imperial	568	692	21.80%
SoCal	52,895	62,772	18.70%

San Francisco	353	607	72.00%
Alameda	3,482	3,940	13.20%
Contra Costa	4,103	4,753	15.80%
Santa Clara	2,814	4,035	43.40%
San Mateo	797	1,263	58.50%
Marin	258	428	65.90%
Solano	1,934	2,164	11.90%
Sonoma	1,021	1,282	25.60%
Napa	265	340	28.30%
Bay Area	15,027	18,812	25.20%

Santa Cruz	342	419	22.50%
Santa Barbara	593	739	24.60%
San Luis Obispo	370	539	45.70%
Monterey	1,260	1,115	-11.50%
Coast	2,565	2,812	9.60%

Sacramento	5,541	6,098	10.10%
San Joaquin	3,432	3,371	-1.80%
Placer	973	1,414	45.30%
Kern	2,774	3,166	14.10%
Fresno	2,202	2,758	25.20%
Madera	499	570	14.20%
Merced	1,399	1,245	-11.00%
Tulare	883	1,178	33.40%
Yolo	405	443	9.40%
El Dorado	342	629	83.90%
Stanislaus	2,636	2,482	-5.80%
Kings	140	247	76.40%
San Benito	202	210	4.00%
Yuba	307	312	1.60%
Colusa	68	62	-8.80%
Sutter	269	403	49.80%
Central Valley	22,072	24,588	11.40%

Mountains*	526	932	77.20%

North Calif*	1,155	1,773	53.50%

Statewide*	94,240	111,689	18.50%

* includes additional counties

Trustees Deeds Recorded (signal homes were lost to foreclosure)
houses and condos

County/Region	2008Q3	2009Q3	Yr/Yr%

Los Angeles	11,690	7,927	-32.20%
Orange	3,997	2,238	-44.00%
San Diego	5,797	3,601	-37.90%
Riverside	10,813	6,776	-37.30%
San Bernardino	7,930	4,999	-37.00%
Ventura	1,420	793	-44.20%
Imperial	476	365	-23.30%
SoCal	42,123	26,699	-36.60%

San Francisco	192	179	-6.80%
Alameda	2,521	1,760	-30.20%
Contra Costa	3,662	2,053	-43.90%
Santa Clara	2,165	1,237	-42.90%
San Mateo	515	370	-28.20%
Marin	149	110	-26.20%
Solano	1,754	1,025	-41.60%
Sonoma	933	585	-37.30%
Napa	202	143	-29.20%
Bay Area	12,093	7,462	-38.30%

Santa Cruz	276	158	-42.80%
Santa Barbara	629	340	-45.90%
San Luis Obispo	248	223	-10.10%
Monterey	1315	575	-56.30%
Coast	2,468	1,296	-47.50%

Sacramento	5,643	3,384	-40.00%
San Joaquin	3,862	1,919	-50.30%
Placer	766	610	-20.40%
Kern	2,488	1,855	-25.40%
Fresno	1,891	1,279	-32.40%
Madera	433	355	-18.00%
Merced	1,639	819	-50.00%
Tulare	687	536	-22.00%
Yolo	364	238	-34.60%
El Dorado	243	243	0.00%
Stanislaus	2,816	1,476	-47.60%
Kings	82	88	7.30%
San Benito	191	100	-47.60%
Yuba	297	196	-34.00%
Colusa	40	41	2.50%
Sutter	291	152	-47.80%
Central Valley	21,733	13,291	-38.80%

Mountains*	324	424	30.90%

North Calif*	770	841	9.20%

Statewide*	79,511	50,013	-37.10%

* includes additional counties

Source: DataQuick Information Systems

Media calls: Andrew LePage (916) 456-7157 or John Karevoll (909) 867-9534

Wednesday, December 9, 2009

Subprime Suits Unlikely to Succeed, Insurer Says 20091209 research Fwd: CAALA Eclips - Wednesday, December 9, 2009

Subprime Suits Unlikely to Succeed, Insurer Says

Subprime mortgage-related lawsuits against company executives or board members have little chance of succeeding, according to a firm that provides insurance against such claims. XL Capital Ltd. CEO Michael McGavick said yesterday that it will be tough for investors to meet the legal threshold required to extract damages. Investors filed about 100 class-action securities lawsuits in 2008 seeking to recover losses related to more than $1.7 trillion in global writedowns and other credit losses. Jamie McGee, Bloomberg 12/09/2009

Read Article: Bloomberg

http://www.bloomberg.com/apps/news?pid=20601103&sid=aT1Y2wmqS91s#

Subprime Losses Don't Warrant Lawsuits, XL CEO Says (Update1)

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By Jamie McGee

Dec. 9 (Bloomberg) -- Investors have little chance of extracting damage awards from executives and board members at firms that lost money betting on subprime mortgages, said the chief executive officer of XL Capital Ltd., which insures directors and officers against legal claims.

"It's very hard to pick out the management team that did something wrong to the level that the law requires," Michael McGavick said yesterday at a Goldman Sachs Group Inc. conference in New York. "Being collectively stupid is not a basis for a lawsuit."

U.S. securities class action suits climbed to a four-year high in 2008 with almost half of the 210 claims related to the collapse of the subprime mortgage market, according to a report by Stanford Law School and Cornerstone Research. Investors are seeking to recoup losses from a crisis that contributed to more than $1.7 trillion in writedowns and credit losses worldwide.

XL is among insurers, including Ace Ltd. and Chubb Corp., that sell coverage for lawsuit costs tied to management errors or negligence. The Bermuda-based insurer and reinsurer said claims rose in its professional liability business in 2008 as the pace of lawsuits increased.

XL reported 45 claims related to Bernie Madoff's $65 billion Ponzi scheme and said it had three new subprime-related claims in the third quarter. The insurer said in October it has confidence in its reserve levels for claims.

'Early Days'

"You also have this global economic downturn, which will give rise to greater failure and greater opportunity for losses as well, and I think that's still pretty early days in evaluating" losses, McGavick said.

Federal securities class actions fell to 87 claims in the first half of 2009, a 22 percent drop from the year-earlier period, Stanford and Cornerstone said in a separate statement.

"The market was much more volatile in the second half of 2008," John Gould, vice president of Cornerstone research, said in the statement. "Moving forward, greater market stability may signal a reduced number of securities class action filings."

New directors and officers claims at Chubb dropped 5 percent in the third quarter, the insurer's Chief Operating Officer John Degnan said in October.

"The predicted wave of directors and officers litigation does not seem to be materializing yet," Degnan said in a conference call in July. "We are now about two years into this developing claims scenario in an arena which has been traditionally characterized by a rush to the courthouse on the part of plaintiffs' lawyers."

'Really Big'

Chubb's rates for the coverage increased 22 percent in the three months ending Sept. 30 for financial companies, Degnan said. This compares to a 5.8 percent rate decline in overall U.S. commercial insurance in the same period, according to the Council of Insurance Agents and Brokers.

"This is an issue that was six months ago a really big topic for insurance investors, and it has largely kind of gone away and the reason is we just haven't seen the lawsuits," Paul Newsome, an analyst at Sandler O'Neill & Partners LP, said yesterday in an interview.

XL has more than quadrupled this year and is the best performer in the 24-company KBW Insurance Index. The company closed at $17.74 yesterday after dropping 33 cents in New York Stock Exchange composite trading. Chubb, based in Warren, New Jersey, has fallen 4.7 percent this year.

McGavick said the acquittals last month of two former Bear Stearns Cos. hedge-fund managers bode well for the industry, and similar defenses will "for the most part hold ground."

Acquitted

Ralph Cioffi and Matthew Tannin were acquitted of six counts including conspiracy and fraud in the first trial stemming from a federal probe of the subprime crisis. The men were accused of misleading investors about the health of two hedge funds that later collapsed, erasing $1.6 billion of investor assets.

"You had at least some damning evidence," McGavick said. "And yet the defense was in essence, 'We were caught up in tsunami not of our own making, we didn't see it for what it was, we were more optimistic than that, but that's no crime.' And the jury agreed. That message I think is very positive and powerful for where this all goes."

The Bear Stearns hedge funds collapsed in 2007. Bear Stearns itself failed less than a year later and was bought by JPMorgan Chase & Co.

To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net.

Last Updated: December 9, 2009 09:09 EST

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Wednesday, December 2, 2009

research Justices Weigh Case Over Attorney Bankruptcy Advice Fwd: CAALA Eclips - Wednesday, December 2, 2009

Justices Weigh Case Over Attorney Bankruptcy Advice

The U.S. Supreme Court heard arguments Tuesday in a case that challenges a 2005 law that restricts what advice bankruptcy lawyers may give their clients. At issue is whether provisions of the law are in violation of free speech protections. The justices seemed to indicate that they might. "Congress often forgets about the First Amendment," Justice Anthony M. Kennedy said, "but lawyers don't." Adam Liptak, The New York Times 12/01/2009

Read Article: The New York Times

http://www.nytimes.com/2009/12/02/us/02scotus.html?_r=3&ref=us

December 2, 2009

Federal Law Limiting Legal Advice Draws Particular Interest at the Supreme Court

By ADAM LIPTAK

WASHINGTON — Several justices seemed convinced on Tuesday that a federal law restricting the advice bankruptcy lawyers may offer was a bad idea. But they had differing ideas about what the Supreme Court should do about it.

"It's a stupid law," Justice Antonin Scalia said. "Where is the prohibition of stupid laws in the Constitution?"

Chief Justice John G. Roberts Jr., on the other hand, appeared receptive to the argument that the law violated the First Amendment by intruding into the relationship between lawyers and clients.

The justices, all of whom are lawyers, seemed to take particular interest in the case, presumably because it concerns lawyers' free speech rights.

"Congress often forgets about the First Amendment," Justice Anthony M. Kennedy said, "but lawyers don't."

The law forbids advising clients "to incur more debt in contemplation of" a bankruptcy filing. Piling on debt just before filing for bankruptcy in the hope that it will not have to be repaid is, all concerned agreed, an abuse of the system and may amount to fraud. But state ethics rules already forbid lawyers to advise their clients to break the law.

On the other hand, some new debt is both legal and prudent. It may be a good idea to refinance a mortgage to pay down credit card debt or to take out a loan to buy a car to get to work. The 2005 law seems to forbid lawyers to give advice about that second sort of action.

Justice Ruth Bader Ginsburg asked about medical expenses. Suppose, she said, that a woman was "just told by her doctor that she has a serious cancer that needs operation and radiation and she is at the end of the line on resources." Could the woman's lawyer advise her to take on more debt to treat the cancer?

It depends, said William M. Jay, a lawyer for the government. Lawyers may not advise clients to add debt in two situations, he said: in an effort to abuse the bankruptcy system or to defraud creditors.

That answer did not satisfy Chief Justice Roberts. "Under your construction," he told Mr. Jay, "it seems to me that a lawyer trying to give correct, legal, ethical advice has got to pause before every sentence" and worry about whether the advice will later be seen as a violation of the law.

The case, Milavetz, Gallop & Milavetz v. United States, No. 08-1119, was brought by a Minnesota law firm that objected to three parts of the law. In addition to the core First Amendment challenge, the firm argued that Congress had not meant to cover lawyers in the first place. That argument did not seem to gain much traction with the justices.

The firm also objected to a requirement in the law that its advertising include this statement or something like it: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code."

Justice Samuel A. Alito Jr. said he was troubled by that requirement. "A prospective client looks at that," he said, "and they say, 'Well, I don't want a debt relief agency, I want a lawyer.' "

Mr. Jay said the firm was free to add to and clarify the statement. "There is no restriction on what content goes in the ad," he said, "only that it include this disclaimer."

As for the part of the law restricting legal advice, Mr. Jay said it should be narrowed rather than struck down.

The law, the government said in a brief, should be read to bar "only advice to take on debt with an intent to abuse the bankruptcy laws, such as advice to charge a vacation, concert tickets or some similar purchase to a credit card, knowing that the purchaser will enjoy the full benefit of the purchase and then shed most or all of the debt in bankruptcy."

But G. Eric Brunstad Jr., a lawyer for the Minnesota law firm, said the law "whipsaws the attorneys who are trying to apply it." State ethics rules "say you have to give unfettered, candid advice to your client," he said, while the federal law says "you must give truncated advice."

---------- Forwarded message ----------
From: <stuart@caala.org>
Date: Wed, Dec 2, 2009 at 11:10 AM
Subject: CAALA Eclips - Wednesday, December 2, 2009
To: EClips for CAALA Members <eclips_caala@lists.trialsmith.com>

CAALA Eclips

• CAALA Home • Search Litigation Bank • About	December 02, 2009

-	Texas Settles Suit Over Parking Permits for Disabled
-	Justices Weigh Case Over Attorney Bankruptcy Advice
-	City Settles Firefighter Promotion Lawsuit
-	Amazon Denied Overtime Pay, Lawsuit Claims
-	High Court Could Hear Pennsylvania Vaccine Case
-	Court to Consider Mass-Tort Status for Employee Benefit Suit
-	Jury to Weigh Case of Brain Injured Soldier
-	Lawsuit Filed Over Alleged Pension Switch

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Laws/Cases

Texas Settles Suit Over Parking Permits for Disabled

The state of Texas has agreed to pay $24 million to settle a long-running class-action lawsuit over a fee charged for disabled parking placards. According to the Texas suit and others filed nationwide, the practice violates the Americans with Disabilities Act. The settlement must still be approved by a federal judge before it becomes final. Eric Dexheimer, Austin American Statesman 12/02/2009

Read Article: Austin American Statesman

Justices Weigh Case Over Attorney Bankruptcy Advice

Read Article: The New York Times

City Settles Firefighter Promotion Lawsuit

A Connecticut fire department has agreed to promote twelve white firefighters who claimed they were discriminated against when the department threw out the results of a 2006 lieutenant promotion exam. Attorneys for the Bridgeport firefighters said that this summer's U.S. Supreme Court decision involving white firefighters in New Haven strengthened their case. In addition to promotions, the settlement calls for Bridgeport to compensate the plaintiffs for back pay and lost seniority. Keila Torres, The Connecticut Post 12/01/2009

Read Article: The Connecticut Post

Amazon Denied Overtime Pay, Lawsuit Claims

Attorneys filed a lawsuit last week on behalf of a former Amazon.com worker that accuses the online retailer of failing to pay overtime wages to warehouse employees nationwide. According to the lawsuit, Amazon.com rounded off overtime hours by requiring workers to clock in and clock out prior to their scheduled start and end times. The lawsuit seeks class-action status. Steve Green, Las Vegas Sun 12/01/2009

Read Article: Las Vegas Sun

High Court Could Hear Pennsylvania Vaccine Case

In a closely watched case, Georgia parents who claimed a childhood vaccine caused their son's neurological problems have decided to drop their lawsuit – at least for now. The move opens the door for a similar Pennsylvania case to be heard by the U.S. Supreme Court. In the Georgia case, the state high court previously ruled that drug makers could be held liable for vaccine-related injuries. Alyson M. Palmer, Law.com 12/02/2009

Read Article: Law.com

Court to Consider Mass-Tort Status for Employee Benefit Suit

An attorney for hundreds of former Prudential Insurance Co. employees is urging the New Jersey Supreme court to grant mass-tort status to a group of lawsuits alleging that the insurer conspired to defraud workers out of employment benefits. Attorney Angela Roper filed an application Monday to add the matter to the mass-tort docket. An attorney for another group of plaintiffs reportedly is opposed to a mass-tort designation. Henry Gottlieb, Law.com 12/01/2009

Read Article: Law.com

Jury to Weigh Case of Brain Injured Soldier

A federal jury is scheduled to hear arguments this week in a case involving a former soldier who suffered severe brain damage after slipping into a coma in an Arkansas jail. According to the lawsuit, the Garland County Sherriff's Office violated the plaintiff's civil rights by failing to provide necessary medical care. The sheriff's office maintains that the plaintiff's brain damage was caused by drugs he ingested prior to his arrest. Ginny LaRoe, Arkansas Democrat-Gazette 12/02/2009

Read Article: Arkansas Democrat-Gazette

Lawsuit Filed Over Alleged Pension Switch

A group of Verizon Communication retirees has filed a class-action lawsuit accusing the telephone company of illegally moving their pension funds to a now defunct company, the Boston Herald reports. In the lawsuit, plaintiffs claim their retirement funds were involuntary switched to the bankrupt spin-off company Idearc. The lawsuit seeks for class members to be returned to Verizon's pension plan Thomas Grillo, Boston Herald 12/01/2009

Read Article: Boston Herald

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