Disclosure alert for North San Diego County REALTORS

Posted on October 17, 2010 by Kevin Forrester

Memo to North San Diego County Realtors®: The North County Times has just published a report that:

For five years, San Marcos city officials kept from public view a color-coded map showing varying degrees of risk to residents from catastrophic wildfires ---- including two neighborhoods judged to be in "extreme" danger of property loss, death or injury ---- for fear insurance companies would use the information to justify dropping policies or hiking rates, officials have acknowledged. 

In 2005, San Marcos commissioned a study to assess wildfire risks for the city's communities. The study rated two communities as having "extreme" and five as having "very high" risks during wildfires.

City officials said in a series of recent interviews that they decided not to publicly release a color-coded map from the study that marked Coronado Hills and neighboring Attebury in a shade of deep red ---- signifying extreme wildfire hazard ---- opting instead to circulate a version showing all wildfire areas in a uniform shade of green.

(EXCLUSIVE: Worried about insurance, San Marcos officials kept fire risk map secret) 

Are the properties referred to in this article at risk of wildfire damage? Potentially.

Are Realtors® negotiating purchases and sales of these properties at risk of liability for failing to disclose the information contained in this article? Absolutely. 

If you are an agent, broker, or seller involved in any transaction concerning the properties located in any of the areas referred to in this North County Times article, you will want to have a copy of this article in your file initialed by the buyers and sellers. Consider it liability insurance. 

 

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More on MERS' role in the real estate financial crisis

Posted on October 12, 2010 by Kevin Forrester

Andrew Leonard reminds us, in his Salon magazine article entitled "A foreclosure mess of their own design - How the real estate finance industry wrecked itself: The sorry tale of the Mortgage Electronic Registration System", of the integral role played by the Mortgage Electronic Registration Systerm (MERS) in precipitating the current real estate financial crisis, and other reports predict years being added to the real estate market recovery by foreclosure "paperwork problems".

Is paperwork standing in the way of the real estate market returning to "normalcy"? Yes, and rightfully so.

In the words of a federal bankruptcy judge cited by Christopher L. Peterson, Associate Dean of Academic Affairs and Professor of Law, University of Utah, SJ. Quinney College of Law (and quoted by Mr. Leonard):

Lest one think that the ... Courts have exalted form over substance, it is critical to note several concepts.... [W]e are dealing with interests in Land -- not a security interest in an inventory of plumbing fixtures, in chinchillas, in canned corn, or in a lawn and garden tractor. Land. Land is certainly the asset which people deem to be their most important "possession": There is no other "thing" more important historically in our culture tha[n] an interest in land, whether that interest be in a condominium, in a house, or in farm. Land. The transferring of interests in land has been entrusted to a system of records that allows people to be certain that this single most important asset in their lives is indeed going to be theirs, and that the encumbrances recorded with respect to this asset are in fact accurate and valid. It is therefore absolutely imperative that transactions in land be guaranteed to vest title in the people who invested in those transactions, and that the investors know definitively the interests in the land in which they invest which may affect their interests in this singularly important asset. The record of land transactions in the Recorder's Office provides this critical assurance. Perhaps the most critical aspect of this "chain" of assurance is to guarantee as much as possible on the face of an instrument that a person purported to have signed a document which affects interests in land actually did sign that document.

 (See A foreclosure mess of their own design; and Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, University of Cincinnati Law Review, Volume 78, Number 4, 1395 - 1396 (2010).)

MERS was a creation of convenience designed to facilitate the recording and re-recording and assignment and transfer of millions or mortgages and deeds of trust during the run up to the current financial crisis.  (Its involvement has been reported earlier on this site in the post Security follows the note, but only the note can foreclose.)

The MERS chickens have now come home to roost, and the legal process due borrowers, lenders and investors in this international real estate debacle will, indeed, take a very, very long time.  Their rights cannot be ignored for the efficiency's sake.

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