William A. Miller, Esq.

Mortgages bundled into securities were a favorite trick of Wall Street at the height of the big bubble. The securities changed hands frequently, the French bought billions, and the investment banks profiting from mortgage payments were often not the same parties that made the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing mortgage pools to transfer without the necessity of recording. The point was investment banker fees without responsibility or accountability to the home owner!

MERS was made for the banks, but courts are now slamming down the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. As MERS has acknowledged that MERS is a “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.

The latest decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERSbecause it was a mere nominee; and that as a result, plaintiff Citibank could not collect on its claim. The judge opined:

Since no evidence of MERS’ ownership of the underlying note has been offered, and
other courts have concluded that MERS does not own the underlying notes, this
court is convinced that MERS had no interest it could transfer to Citibank.
Since MERS did not own the underlying note, it could not transfer the
beneficial interest of the Deed of Trust to another. Any attempt to transfer
the beneficial interest of a trust deed without ownership of the underlying
note is void under California law.

While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue. Call Bill Miller at 480-948-3095 a long standing Arizona Trial and Real Estate Lawyer located in Scottsdale.

In 1988, one of my first legal projects was to get a bank from Colorado off the back of a local developer who had built a shopping center. It turns out the bank was fearful that Arizona was about to enter a bad season in commercial real estate, the only problem was the developer was really not in default. The judge slammed the bank & by the time we cut a settlement deal with them, the market had really corrected. They should have waited and played fair. Declaring bogus defaults hurt them.

Now, the next shoe is about to drop because of commercial loan resets. Commercial landlords continue to lose office & retail tenants at an accelerating pace, indicating that the industry’s troubles are worsening.

The amount of occupied space in U.S. shopping centers and malls declined a net 8.7 million square feet in the first quarter of 2009, according to real-estate-research company Reis Inc. The amount of occupied space lost in that one quarter was more than the total amount of space retailers gave back to landlords in all of 2008 and any other year in recent history, according to Reis. It makes 1988 look like a cake walk. If you need help dealing with the ever changing real estate market give the Scottsdale law firm of William A. Miller a call at 602-319-6899.

At the law firm of William A. Miller in Phoenix Arizona, we take Arizona-granted licenses as a privilege. You cannot build a house without a contractor’s license. You cannot give legal advice without a law degree and license to practice law. Good luck suing in this State if you do not possess one. If you build a house without proper authority, good luck suing the homeowner, our Courts will toss you out.

The same goes for trying to sell beers at a burger joint, no license, no beers.

We just filed a multi-million dollar suit against a group of entrepreneurs who bought bank loans with unused lines of credit for pennies on the dollar. Now they are trying to foreclose. The law does not allow such and over the next few weeks, we will be reminding the Court and the entrepreneurs that acting like a bank requires a license! We’ll keep you posted on the results.

I know I am aging myself but like Bob Hope used to say in the “Road Show” flicks, “no ticky, no laundry.”

If some non-licensed group has hampered you, be it selling you worthless stock without a securities license or giving you liposuction without a medical license, give us a call to discuss your rights. Our number is 480.948.3095.

No one wants to even think about the F-word — “Foreclosure.” It is so sad to see so many good folks losing their homes in foreclosure. It is also good to see some banks playing “fair” and trying to work with defaulted borrowers. Yet note something curious in Arizona law. Normally after a default and foreclosure, all the bank can do is get your house and sell it in the open market. If it does not fetch a higher price than the loan, it is not your problem, other than botched credit. They cannot sue you for the difference (deficiency).

Arizona’s laws that prohibit deficiencies are found in Arizona Revised Statutes Sections 33-814.G and 33-729(A).  These types of laws are also called “anti-deficiency legislation.”

A.R.S. § 33-729(A) states: “. . . if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.

A.R.S. § 33-814(G) states: “If trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling is sold pursuant to the trustee’s power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.”

At the law firm of William A. Miller in Scottsdale, Arizona, we can help you sort through these laws to give you as much protection as possible. So give us a call at 480.948.3095 if you want to have us look over your case. LAW is not a four letter word.

At the Law Firm of William A. Miller in Phoenix we manage a number of high-profile estates. On Jan. 1, the amount exempted from federal estate taxes rose to $3.5 million from $2 million, which means that estates at or above the new limit would save $675,000 in estate taxes (at the 45% rate) compared to last year. So, party on, trust fund preps, heirs and heiresses. But wait, this may all end sooner than expected.

Under the current law, the estate tax is scheduled to disappear altogether in 2010, so the heirs of millionaires who go to their reward next year stood to inherit everything without Uncle Sam taking a cut on any of it.

While that is how the law stands, the notion of uber-rich being able to pass on their millions tax-free never squared with common sense reality. Of course, there are good arguments against the so-called death tax, especially that it taxed income twice; first when it originally was earned, then when it was saved and invested over time.

We are more than happy to help you properly plan your Estate at the law Firm of William A. Miller. Give us a call at 480.948.3095.

A San Francisco landlord for defunct white shirt law firm Heller Ehrman won a key court ruling earlier this month that means bankruptcy is now possible. What this means is the landlord accelerated all future rent due and has tied the Heller Ehrman partner hands from a midnight move or fire sale of its assets.

A Superior Court granted the landlord, 333 Bush Associates, a writ of attachment for $48 million on Dec. 19. The move makes the landlord a secured creditor, freezes a portion of Heller’s assets for the landlord, and leaves other unsecured creditors at a disadvantage, essentially waiting in line behind the landlord for dibs on leftover assets. This is ultimate hardball and is a tactic available in Maricopa County Superior Court under certain circumstances.

“The fact that they have reached the point where the landlord has gotten a writ, has obtained legal process to take their money on this scale, means that it is very likely they will file bankruptcy or be forced into bankruptcy,” said William McGrane, of McGrane Greenfield, who represented the three landlords that forced Brobeck, Phleger & Harrison into bankruptcy in 2003. Who would ever hire a law firm who cannot even pay its rent? This is a shame. At the law firm of William A. Miller in Scottsdale, Arizona, we applaud the landlord for playing hard ball against a powerful law firm. We handle all landlord tenant matters and can be reached at 602-319-6899.

An affinity fraud is one in which a member of a religious or ethnic group, works over members of that same group. It can be a church or high school booster club. At the Scottsdale, Arizona based real estate and litigation law firm of William A. Miller we have seen this happen over and over again. In the Madoff fraud, it was the Jewish community. Investigators dug through financial records at Bernard Madoff’s investment firm as the list of victims of his alleged Ponzi scheme widened to include real-estate magnate Mortimer Zuckerman, the foundation of Nobel laureate Elie Wiesel, Sen. Frank Lautenberg and a charity of movie director Steven Spielberg. Talk about the powerful.

The Madoff scandal reverberated around the world, with banks including Spain’s Grupo Santander and France’s BNP Paribas saying on Sunday that their clients and shareholders together face billions of euros of losses. At the Miller law firm in Phoenix, Arizona we often tell even well heeled clients to remember what your dad told you, ‘if it sounds too good to be true, then it probably is.’

The Valley’s median resale price for detached single-family homes fell by more than 7 percent from October to November, bringing the year-over-year median-price decline to about 35 percent, according to Arizona State University. November’s 3,370 resale transactions represent a 31 percent increase from the 2,580 transactions in November 2007. In addition, there were 3,095 foreclosures, up about 178 percent from 1,115 foreclosures a year earlier.

This is not as good of news as the bottom fishers may think! This statistic is totally flawed because mainly distressed properties are in the sample. So, take those who are NOT ABOUT TO SELL, put their values in the pool and the percentage shoots way back up. Those who are waiting out the market may be in for a surprise when the capital markets free up.

A judge denied bail on Thursday for a New York lawyer accused of selling sham investments to hedge funds. Hmmm… a shyster lawyer selling worthless real estate to a ‘hedge fund’. Can you say ironic? Things like this happen in Phoenix too and since the Charlie Keating days we have been involved in fighting a number of these con men in the Maricopa County Courts.

The case against Marc Dreier, founder at the 250-attorney law firm Dreier LLP in New York, has stunned the city. The Harvard Law School graduate is a 30-year veteran lawyer, whose firm has specialties in bankruptcy, litigation and employment law. They handled a case or two in Federal Court in Phoenix over the years.

Assistant U.S. Attorney Streeter said in court the actual monetary losses in the case may now exceed $380 million.

He said the fraud has likely been going on since January 2006. Dreier was ordered to remain in custody. He was arrested on Sunday for what authorities called a “stunning” and “brazen” scam.

Streeter said Dreier had been fooling some of the world’s most sophisticated investors. He is accused of scheming to market fake debt from a New York-based real estate developer to hedge funds and other institutional investors. Prosecutors say he cajoled his way into real estate and pension fund offices and created fake documents to try to convince investors that the worthless debt securities he touted were real. So, the next time you see a well dressed outsider ‘using’ your conference room, watch out, he may be claiming to be your company CEO, while he is actually signing away the deed to your building with some bogus financing instrument.

At the Law Firm of William A. Miller located in Phoenix, Arizona we specialize in these type of cases. Feel free to call at 602-319-6899 if someone has ripped you off in the greater Phoenix area in a real estate scam or hoax.

If you could invest in a law firm, this would be a good time. According to the WSJ, the number of consumers with delinquent mortgages is poised to almost double by the end of next year, hitting its highest level in at least 16 years, according to a leading credit bureau.

TransUnion LLC, which analyzed about 27 million consumer records in its database, predicted that the proportion of consumers with mortgages that are 60 days or more past-due will hit 7.17% in the fourth quarter of 2009.

That would be the highest level reached since the Chicago credit bureau — which is releasing the data on Tuesday – started keeping track. I wonder how many of these defaults are occurring because the lenders have told the shaky borrowers that the must miss payments  before they can rework the loan. As my kids say, this is just great. There is little doubt this will lead to many more Arizona lawsuits.