Trust This. October 13, 2023.

👋 Happy Friday! Of course, today is Friday the 13th 🐈‍⬛, the second and final one of 2023 (the other one was in January which seems like a lifetime ago). It happens at least once every year, and can occur up to three times in a year.

According to History.com: “Long considered a harbinger of bad luck, Friday the 13th has inspired a late 19th-century secret society, an early 20th-century novel, a horror film franchise and not one but two unwieldy terms—paraskavedekatriaphobia and friggatriskaidekaphobia—that describe fear of this supposedly unlucky day.”

I’m not superstitious, but I’d still be careful of walking under ladders while carrying a mirror as a black cat crosses your path today.

Situation Awareness: Real property tax bills should be coming out within the next few weeks. We’ll do our best to get all 2000+ scanned, uploaded to the portal, and shared with all trust beneficiaries as quickly as possible. Watch your e-mails for Clio portal notices, which shouldn’t be ignored.

Also, the state sales tax on commercial leases falls from 5.5% to 4.5% on December 1. County discretionary tax rates must still be added to the state sales tax rate.

1 big thing: Courts can’t re-write mortgages

Florida’s Fourth District Court of Appeals held recently that a trial judge doesn’t have the equitable power to re-write the terms of a mortgage during a foreclosure.

Why it matters: Many real estate investors purchase properties out of foreclosures, and REALTORs sell homes that may be in the middle of a foreclosure. This case clarifies how far a trial judge can go in fashioning a remedy between the borrower and lender.

In May 2022, Judge Croom denied foreclosure in a case brought by US Bank. Instead of simply dismissing the foreclosure action, Judge Croom carved out over a decade of missed payments and disregarded several key terms of the mortgage agreement. And he slashed $6,700 in deferred principal.

It was a bold move, and US Bank was less than thrilled. The bank appealed, arguing that the judge had provided relief that hadn’t even been requested.

  • The lender also argued that the trial court had overstepped its own authority by rewriting the original agreement between the two parties.

  • The Florida Fourth District Court of Appeals agreed with the bank.

With a cutting statement that’s sure to be quoted in future legal textbooks, the Appeals Court declared, “

[I]n determining whether to grant the equitable relief of foreclosure, the trial court is not at liberty to modify terms of a note and mortgage that are unambiguous and undisputed.

Yes, but: While Judge Croom was within bounds when he denied the foreclosure, rewriting the terms of the agreement was a bridge too far.

  • What’s next: The appeals court recommended that the judge only deny the foreclosure to move the case forward.

The bottom line: Foreclosure proceedings are nuanced, complicated, and fraught. This difficult stew can almost beg for intervention in the form of judgments that fall outside the court’s authority.

Our thought bubble: Stay informed to stay ahead if you’re in the real estate sector. Understanding the boundaries of legal and equitable authority in the complex world of agreements and contracts is critical so you don’t inadvertently go along with an unauthorized action that could be more than you bargained for.

2. Mortgage Fraud: Trends and Risks

Mortgage fraud is declining, but there was a slight uptick in Q2 2023.

  • Lenders are screening loans more carefully due to the current economic environment.

  • False income schemes, undisclosed debt, and occupancy misrepresentation are top concerns.

Why it matters: Mortgage fraud is a complex beast.

  • Staying informed about it is critical in the real estate sector. Knowledge is protection.

By the numbers: According to the latest CoreLogic Mortgage Fraud Report, mortgage application fraud is declining.

  • In 2023 Q2, mortgage fraud was 3.1% less when compared to 2022 Q2.

  • It’s a move in the right direction, but there’s fluctuation in this trend.

If we just look at 2023, there was a slight uptick in mortgage fraud from Q1 to Q2. And in 2023 Q2, 1 in 134 applications were estimated to contain elements of fraud.

What they’re saying: Bridget Berg of CoreLogic points out the stats have a lot to do with lenders screening loans more carefully due to the current economic environment and the risk of costly error. The industry is shifting away from refinances and toward purchases, too, resulting in more new mortgages, so lenders are reviewing loan applications with a fine-toothed comb.

Their top concerns? CoreLogic’s report identifies six types of mortgage fraud: identity, occupancy risk, income risk, transaction, property, and undisclosed real estate debt.

Out of these six, five of these fraud subtypes increased year over year. (The only one that plummeted compared to last year was undisclosed real estate debt.

One type of mortgage fraud really stands out: Occupancy misrepresentation has nearly tripled since 2020. This type of fraud involves investors claiming their investment properties as primary residences to snag favorable rates.

Where is this happening? New York and Florida have recently experienced decreases in mortgage fraud, but they’re still the states most exposed to mortgage fraud risk — followed by Connecticut, California, and New Jersey.

The bottom line: Mortgage fraud is a complex beast, but education can help you avoid it.

3. Catch up fast

Photo: Kahari King
  1. The ten worst places to buy a home if you want to gain value (hint: stay out of Michigan). MSN

  2. The best places to remotely view and buy a home for remote working. DSNews

  3. The top 5 home improvements that agents should recommend to sellers. HousingWire

  4. Mortgage rates continued their upward trek toward 8% last week as mortgage applications surprisingly also increased slightly (but still near a 30-year historical low). National Mortgage Professional

  5. Listings ticked up by 2%, but buyers are backing off as the home-buying season ends, and interest rates continue to increase. Move-in ready homes priced right are still selling as they always have. Redfin

  6. FBI warns of an increase in elder financial abuse. Reverse Mortgage Daily

4. Pic of the day

Last week, while in Asheville (my former hometown), we saw some cool houses and condos with even cooler views. Photo: Joe Seagle

As I wrote in last week’s newsletter, I’ve spent much time in intensive seminars and coaching events over the past month, trying to become a better leader.

Why it matters: A great leader requires heaps of self-awareness and emotional intelligence.

  • You must recognize your ego when it asserts itself.

  • Humility, as I’ve written here before, is a vital trait to possess.

  • You have to attract great talent and then let them do their thing.

So, how do we become self-aware?

  • Take personality tests to figure out “how” you naturally work and interact with people.

  • Take assessments to determine “why” you do what you do.

  • Use talk therapy regularly with a mental health counselor.

  • Create an environment where you’re surrounded by others who will use radical candor to tell you the truth about yourself.

The bottom line: Before you can lead others, you must know yourself so your “self” doesn’t get in their way.

Now, after the past week’s tragic events, we need some music of hopepeace, and love.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

Be on the lookout for our next issue! 👋

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