Spring Conference Review - reomac

Ma y / Ju n e 2009 

REOMAC® 

updatetm 

t h e o f f i c i a l n at i o n a l p u b l i c a t i o n o f t h e 

As s o c i at i o n o f Re a l Es t a t e Ow n e d Ma n a g e r s , In c . 

Spring Conference Review

REOMAC® 2009 

Board of Directors 

OFFICERS 

Shelley Kaye, President 

Beatrice Davis, Vice President 

Benton Neese, Vice President 

Donna La Porte, Secretary 

Kathy Jeffers-Volk, Treasurer 

BOARD MEMBERS 

Art Acosta 

LeeAnn Axcell 

Ivan Choi 

Frank Lougher 

John Murray 

Cynthia Nierer 

Mia Semo 

Sara Waite 

REOMAC® Headquarters 

Jennifer Blevins, CMP 

Account Executive 

John Berkowitz 

Publications Director 

Nathan Carlson 

Sponsorships 

Michael Cochran 

Webmaster 

Joseph Davis 


Jessica Drake 

Administrative Assistant / 

Membership Coordinator 

Kim Ingersoll 

Advertising Administrator 

Erin René Nelson 

Meeting Planner 

Anissa Routon 

Director of Education 

Stephanie Schoen 

Special Projects 

Tricia Schrum, CPA 

Accountant 

Ma y / Ju n e 2009 

REOMAC® 

updatetm 

De pa r tm e n t s 

President’s Message – Shelley Kaye.......................................... 3 

Editor’s Message – Kathy Jeffers-Volk ......................................... 4 

Headquarters Happenings – Jessica Drake................................... 7 

Conference Wrap-Up – Diana Kendall........................................ 8 

Fe a t u r e s 

REOMAC® 2009 SPRING Conference — 

Thank You, Sponsors and Exhibitors! ............................................10 

SESSION I: Keynote Speaker, Christopher Gardner – Gary Tatar................ 25 

SESSION II: Economist, Christopher Thornberg, PhD. – Jim Conway. .......... 29 

SESSION III: Town Hall Session – Ronald S. Deutsch, Esq........................ 33 

EARLY BREAKOUT 1: Fraud: From Origination to REO – Mark Dorris ........... 37 

EARLY BREAKOUT 3: Commercial Properties + 

Mortgage Default = Are You Prepared? – Bruce Juenger.................... 41 

LATE BREAKOUT 2: Foreclosure and Loss 

Mitigation Evolvement – Benton Neese.................................... 43 

LATE BREAKOUT 3: Litigation Update – Berry F. Laws III, Esq................... 45 

REOMAC® Update Editor 

Kathy Jeffers-Volk 

REOMAC® 

2520 Venture Oaks Way, Suite 150 

Sacramento, CA 95833 

916-239-4090 • 916-924-7323 fax 

www.reomac.com • info@reomac.com 

Copyright 2009 © by the Association of Real Estate Owned Managers. 

No portion of this magazine may be printed without express written 

consent of REOMAC®. The writings within these pages do not 

necessarily reflect opinions of REOMAC®. 

REOMAC® is a not-for-profit corporation dedicated to the professional 

advancement of its Regular, Affiliate and Associate members 

nationwide. REOMAC® provides resources to anyone whose career 

interest revolves around pre- and post-foreclosure, loss mitigation 

and the management and disposition of distressed assets. 

The membership includes lenders and servicers; attorneys and 

vendors; and real estate brokers from across the country. REOMAC® 

members are dedicated to improving the quality of service they 

provide each other and the industry at large. 

With the exception of products or services, or articles specifically 

under REOMAC® control and supervision, it is the policy of REOMAC®, 

its Officers and board of directors and the Editor of this publication, 

NOT TO ENDORSE ANY PRODUCTS, SERVICES, OR OPINIONS 

EXPRESSED IN THIS PERIODICAL. 

REOMAC ® update tm Ma y / Jun e 2009 1

2 Ma y / Jun e 2009 REOMAC ® update tm

Shelley Kaye 

2009 REOMAC® President 

Here we are, half way 

through the year. Our 

Spring Conference has 

taken place and it was definitely 

the biggest and best educational 

conference that REOMAC® has 

ever presented. Thank you 

to Cynthia Nierer who put 

together the most compressive 

educational sessions that I have 

ever attended. Our conference 

chair, Diana Kendall did an 

incredible job in putting the 

conference together. And 

of course, our management 

company, led by Jennifer 

Blevins and Joseph Davis, 

made sure that everything ran 

smoothly and with their staff, 

assisted all attendees in all 

situations. There has been so 

much said and printed about 

the conference, that I would 

like to offer my overview. 

REOMAC® moved the 

conference to the Marriott 

Desert Springs hotel in order 

to safely and comfortably 

conduct our sessions in a 

place large enough to hold the 

amount of people attending 

this conference. The hotel 

staff expressed their thanks 

to the REOMAC® conference 

attendees for their kindness 

and professionalism at the 

hotel. Every staff member was 

impressed by how nice they 

were treated by our group and 

are looking forward to the 2010 

Spring Conference. 

The pre-conference certification 

classes were attended by over 

900 people. We hope to offer 

these types of certification 

courses on an ongoing basis. 

During the opening ceremonies, 

No Paws Left Behind was 

presented a check for $5,000 

to assist them in their fight 

to aid the animals left behind 

in vacant homes and those 

needing placement in a home 

when the owners cannot take 

them when they move out of 

the property. Cheryl Lang of No 

Paws Left Behind let me know 

that they raised over $10,000, 

due to the generosity of our 

attendees. Good job everyone. 

We can each make a difference 

in this great endeavor. 

Our keynote speaker, 

Christopher Gardner is an 

outstanding, inspirational 

s p e a ker. H i s s t or y of 

homelessness, and his desire 

to be the best father that he 

could be, reached out and 

affected all of us. Each of us, 

in our own way, could relate 

to his story and appreciate the 

desire and drive to be the best 

that one could be, even in the 

worst situation. REOMAC® 

was proud to present his 

story to the attendees and 

hoped everyone learned a 

lesson about perseverance and 

determination, and doing the 

right thing. 

As always, Dr. Christopher 

Thornberg presented a 

comprehensive analysis of 

the economy and the housing 

market, capturing the attention 

of every single person attending 

that session. Our Town 

hall session was incredibly 

stimulating with the panelists 

entering into heated debate 

on the state of the housing 

crisis. John Vella moderated 

the interactive debate with 

Dr. Thornberg, Peter Monroe, 

California State Senator Ronald 

S. Calderon and Rocky Rushing, 

Chief of Staff for Senator 

Calderon. Our closing session 

of the day discussed doing 

business with the companies 

that will be handling REO 

products for the FDIC. 

Tuesday’s sessions were also 

engrossing and timely and filled 

with information presented by 

the best and brightest people 

in the default industry. The 

finale of the afternoon was 

the opportunity to hear from 

the lenders/outsourcers that 

are responsible for selling the 

nations REO’s. 

The REOMAC® Board of 

Directors, along with our 

Management Company, and 

all of our committee members, 

worked endless long hours to 

ensure that this conference 

continued on page 47 

REOMAC® 

Committees 

Conference Committee 

Board Chair – LeeAnn Axcell 

Membership Committee 

Board Chair – Frank Lougher 

Education Committee 

Board Chair – Cynthia Nierer 

Certification Committee 

Board Chair – Sara Waite 

Chair – Art Acosta 

Public Relations/ 

Marketing Committee 

Board Chair – Donna La Porte 

Scholarship Committee 

Board Chair – Mia Semo 

Publications/ 

Communications Committee 

Board Chair – Benton Neese 

Chair – Kathy Jeffers-Volk 

Technology/ 

Web Site Committee 

Board Chair – Ivan Choi 

Commercial Committee 

Board Chair – John Murray 

For information to participate on 

a committee, please contact the 

committee chair or REOMAC® at 

info@reomac.com. 



Editor 

What a wonderful 

educational conference 

we had in April. 

Christopher Gardner – fabulous, 

Christopher Thornberg – right 

on the money, Town Hall – 

rabble rousing ... well, you get 

the picture. The speakers for 

all sessions were outstanding 

– I came away feeling I had 

learned something from each 

of the sessions attended. I am 

looking forward to our Fall 

Conference. 

I have often written and said 

the conference could not be 

what it is without the many 

volunteers we rely upon. This 

conference was no exception. 

Within 30 minutes of sending 

out my request for volunteers 

I received over 400 responses – 

UNBELIEVABLE! We had first 

time attendees volunteering as 

well as those who attend and 

volunteer every year. Some 

attendees even had their whole 

family helping with the bag 

stuffing. THANK YOU ALL! 

2009 Publication Calendar: 

Issue: 

The reporters for this 

conference did an outstanding 

job. Thanks to all the reporters 

for taking time from their busy 

schedules to provide us with 

their coverage of the sessions. 

Gary Tatar, Millenia Real 

Estate, covered the Keynote 

Speaker, Christopher Gardner. 

Talk about an inspirational 

speaker! I believe everyone 

left the room with a positive 

“pursuit” attitude. 

Once again, Jim Conway of 

Regional Realty Group shared 

what he took away from the 

Economic Forecast as presented 

by Christopher Thornberg. 

Christopher’s sessions are 

always well attended – so 

much of the information he 

has provided over the last few 

years has been spot on. 

The Town Hall session was 

reported on by my “go-to” 

writer, Ron Deutsch of Cohn, 

Goldberg & Deutsch LLC. 

This was one of my favorite 

sessions – to have debate, 

disagreement and concurrence 

all on one stage and even from 

the audience (Judge Goldberg) 

made the time fly by. This 

session could have gone on 

for hours. 

Mark Dorris, First Team Real 

Estate, provided us with a 

detailed write up on the Fraud 

panel. He wrote on the panel’s 

insight into current fraud 

trends, what to look for when 

suspecting fraud is occurring 

and fraud prevention. 

Bruce Juenger of M.D. Webb & 

Associates, Inc., a Past President 

of REOMAC® and former 

Update Editor, reported on our 

first time Commercial Session. 

This standing room only session 

looked at the anticipated loan 

default market relating to 

commercial properties. 

Loss Mitigation was reported 

on by REOMAC®’s Vice 

President, Benton Neese 

Articles Due: 

Jul/Aug — Topics TBD.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July 10 

Sep/Oct — Topics TBD.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 11 

Nov/Dec — Fall Conference Wrap-Up Edition....................................November 6 

of RMIC. Changes in the 

mortgage industry, emphasis 

on loan modifications and 

the increasing number of 

delinquent loans were topics 

covered in this session. As 

professionals in the default 

industry it is imperative that 

we not only look at foreclosures, 

but aid homeowners in the 

short sale and loan modification 

process. Our emphasis 

should be to prevent as many 

foreclosures as possible. 

The litigation session was 

reported by Berry Laws III of 

Martin, Leigh, Laws & Fritzlen, 

P.C. This session not only 

covered issues in California 

but addressed other State and 

Federal concerns also. Knowing 

the law was a recurring concern 

of the panelists. Much of the 

discussion was on bankruptcy 

and debtor’s rights. 

Remember – when you talk, 

you repeat what you already 

know; when you listen, you 

often learn something. Thank 

you, speakers and panelists, for 

sharing what you know and 

allowing each of us to learn 

something new. 

If you would like to write for 

the Update or be a reporter 

at one of the conferences 

please contact me at kjvlk@aol. 

com. I’m looking forward to 

receiving your article. 




Jessica Drake 

Membership Coordinator 

It is hard to believe, but 

REOMAC® is already half 

way through 2009! Finding 

ourselves a few months out 

from our Fall Conference in 

Hollywood, Florida, there is a 

lot happening. 

For those interested in 

exhibiting and/or sponsoring 

at our Fall Conference, our 

Web site already has the 

necessary forms available, 

and it can all be done online. 

By the time you are reading 

this column, registration 

for attendees for the Fall 

Conference will open online 

for members. For nonmembers, 

registration will 

become available August 1 st . 

Our Web site stays up-to-date 

as things become available, so 

check frequently for pertinent 

conference information as the 

date approaches. 

In July REOMAC® will be 

awarding a minimum of 

fifteen scholarships with a 

maximum level of $3,000 

each. These scholarships are 

awarded based on academic 

achievement, financial need, 

extracurricular activities, 

community involvement 

and the letter enclosed in 

the application. Further 

requirements and details can 

be found on the application, 

which is available on our 

Web site. 

This summer is going to be 

busy with Dinner Meetings 

throughout the country. Our 

June 25th Dinner Meeting in 

Philadelphia included a predinner 

certification course on 

short sales. The dinner topic, 

presented by a distinguished 

panel, covered REO financing. 

Denver will be the host city 

for our August 19th Dinner 

Meeting. Don’t forget to mark 

your calendars now! 

REOMAC® would also like 

to introduce and welcome 

Anissa Routon as Director of 

Education. 

In closing, I have included 

some of the FAQs I receive 

here at Headquarters 

regarding membership and 

event registration: 

Why is membership for all 

categories closed right now? 

At this time, the Board 

of Directors is hard 

at work revising the 

application process to 

allow more people into 

the membership who 

will contribute to the 

REO industry and our 

organization. Please 

see the “Join REOMAC®” 

section of our Web site 

and click on the ‘notify 

me’ but ton for you r 

membership category 

so we can e-mail you 

when membership has 

reopened. 

Can a non-member attend 

REOMAC® events? How can 

I register? 

YES! Non-members are 

invited to attend our 

conferences and dinner 

meetings throughout the 

year. Event registration 

can be completed online 

as it’s available. 

Where and when is the Fall 

Conference happening, and 

how can I book my hotel 

room? 

The Fall Conference will 

be held in Hollywood, 

Florida at the Westin 

Diplomat. Thanks to our 

new registration system, 

y o u c o m p l e t e y o u r 

registration and book 

your hotel room online. 

Calls received by the hotel 

or Headquarters will be 

redirected to the Web site. 

You must be registered for 

the conference to book 

a room at the Westin 

Diplomat. 


Jennifer 

Blevins, CMP 


Joseph Davis 


John Berkowitz 

Publications 

Director 

Nathan Carlson 

Sponsorships 

Michael Cochran 

Webmaster 

Jessica Drake 

Membership 

Coordinator 

Kim Ingersoll 

Advertising 

Administrator 

Erin René Nelson 

Meeting Planner 

Stephanie Schoen 

Special Projects 

Tricia Schrum, CPA 

Accountant 

Anisa Routon 

Director of 

Education 


Diana Kendall 

2009 Conference Chairperson 

Thank you for attending the 

Spring Conference this 

year: “Quest for Excellence 

In a Changing Market.” The 

venue was beautiful and offered 

outstanding accommodations 

for our event – which had 

over 2500 attendees. The 

educational sessions were 

opened by our memorable 

and inspirational keynote 

speaker, Chris Gardner. 

The Education Committee 

organized an outstanding 

and informative program 

throughout the Conference. 

The Conference was kicked off 

with our Members’ Only Event 

with a Cirque du Soleil theme. 

Attendees enjoyed the golf 

tournament on Sunday, and – 

on Monday evening – enjoyed 

our Live and Silent Auctions 

followed by DJ Mario. 

Please thank the Conference 

Committee for their hard 

work to make this the best 

conference ever for you: 

Shelley Kaye 

President 

LeeAnn Axcell 

Board Liaison 

Anngel Benoun 

Scholarship, Auction 

Marie Chung 

Sponsors and Exhibitors 


Volunteers and Auction 

Donna LaPorte 

Public Relations 

Dorothy Macias 

Sponsors 

Cynthia Nierer 

Education 

Carole ONeill 

Auction 

Mia Semo 

Golf Tournament 

Patty Spano 

Auction 

Connie White 

Lender Roundtables, 

Scholarship 

The Spring Conference 

was better than ever this 

year – thanks to these great 

committee members and to 

you – our Sponsors, Exhibitors 

and Attendees – who help 

us continue our “Quest for 

Excellence in a Changing 

Market.” 

For questions regarding the 

Fall 2009 Conference, you 

may contact me at Diana@ 

dianakendall.com. We look 

forward to seeing you at the 

Fall Conference in Hollywood, 

Florida! 


Thank You Platinum Sponsor 


Thank You Gold Sponsor 


Thank You Silver Sponsor 


Thank You Bronze Sponsor 


Thank You Keynote Sponsor 


Thank You Keynote Sponsor 


Thank You Economist Sponsor 


Thank You Key Auction Sponsor 


Thank You Golf Sponsors 

Grand 

Platinum 

Grand 

Gold 


Sunday 

Welcome Reception Sponsor 

Thank You Sponsors 

Monday 

Welcome Breakfast Sponsor 

Monday 


Monday 


Monday 

Morning Break Sponsor 

Monday 

Luncheon Sponsor 

Monday 

Dinner Entertainment Sponsor 

Monday 

Dinner Entertainment Sponsor 

Mid State Realty 

Shannon Martin 

Monday 

Dinner Service Sponsor 

Monday 


Monday 


Monday 


David Secrest 

Joe Mayol 

Monday 


Monday 


Monday 


Monday 


Nancy Nelson 

Olsen & Associates, Inc. 

Bob Siegmeth 

REO Sales and Services 

Tom Christensen 

Tuesday 

Breakfast Sponsor 

Tuesday 


Tuesday 


Tuesday 


All Pro Realty, Inc. 

Mary Berry 

Classic Estates 

Juan Cevallos 

Robert Hellman 

Tuesday 


Tuesday 


Tuesday 


Tuesday 


Jim Krasno 

Kimberly Brunson 


Tuesday 


Thank You Sponsors 

Tuesday 


The Realty 

Team, Inc. 

Tuesday 

Reception Sponsor 

Tuesday 


Robert Smith 

David Golden 

Tuesday 


Grand Prize Sponsor 

Conference Tote Bags 

& Hotel Key Cards Sponsor 

Java Sleeves Sponsor 

DeAnna Allensworth 

Gladwin D’Costa 

Golf 

Continental Breakfast Sponsor 

Golf 

Continental Breakfast Sponsor 

Golf 

19 th Hole Sponsor 

Golf 


Dave Silverstein 

Sherman Oaks 

Phil Boroda 

Tom Daves 

Golf 


Golf 

Margaritaville Sponsor 

Golf 

Corona Corner Sponsor 

Golf 

Beverage Cart Sponsor 

Golf 


Golf 


Golf 

Eagle Tee Sponsor 

Golf 


Jim O’Rourke 

Golf 


Golf 


Golf 


Golf 


Associates San Diego 

Robert Weichelt 

of Santa Clarita 

Louie Guerrero 

Jeff Russell 


Thank You 

Sponsors 

Golf 


RELIABLE Realty Inc. 

REO DIVISION 

Kellee Spillman 

Golf 


Donna Sanfilippo 

We Salute Our Spring Conference Exhibitors for Their Support! 

Arcstone Financial Aspen Grove, Inc. Asset Management Servicing, LLP 

Asset Valuation & Marketing Britannia Development Co. Crest REO 

Cyprexx Services, LLC DS News Elite Escrow Services 

Energy Construction 

First American 

Document Solutions 

Gamut Construction & 

Preservation 



Great Street Properties InSource Financial, LLC Instaclose Real Estate 

Island Advantage Realty, LLC Keystone Asset Management, Inc. Lender Processing Services, Inc. 

Marshall & Swift NationsREO No Paws Left Behind 

Nordhagen & Daughters 

Exterminating Nu-Set Lock PropertyFireSale.com 

Quantum Realtors RC Godsey – MGA Services Realtybid.com 

RealtyTrac, Inc. REO Allegiance, Inc. REO Maestro 



REO Network REO Office Manager REOMAC® 

REOMagic REOTrans Res.net 

Ridgegate Escrow Safeguard Properties Sellstate NRES 

Sellsate Realty Systems 

Network, Inc. [no photo available] Sovereign Title Agency, LLC 

Tiempo Escrow II Titanium Solutions, Inc. Unifund 

Vacant Property Security, Inc. 

WinREO / Gadish Properties 


“SOUTH JERSEY REO” 

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PROUD MEMBER OF REOMAC® 

ADAM PALMISCIANO 

Broker/Owner 

adam@southjerseyreo.com 

Servicing South Jersey Counties 

Atlantic, Cape May, Cumberland 

Salem, Gloucester, Camden 

Burlington, Ocean 

Please visit our website: 

www.southjerseyreo.com 



GENERAL 

SESSION I: 

Keynote 

Speaker, 

Christopher 

Gardner 

By Gary 

Tatar 

Three Words ... Great Motivational 

Speaker.... A real treat to hear a 

speaker that has not forgotten where 

he came from or what it took to be the 

success he is today. 

I had to ask myself, “What was so 

impressive about a man that went from rags 

to riches as a Stock Broker?” Many have 

done it before and many will do it again. 

Many have gone from the bottom to the 

top in business. Sure he had to overcome 

some obstacles, again many have and 

many will. It is not much different than 

the REO/Loss Mitigation business. Many 

have gone from entry level file clerks to 

Sr. Asset Managers, Retail Store Clerks 

to REO Brokers. Many have done it and 

many will do it again. 

First, a quick summary on Christopher 

Gardner. He was employed but disliked his 

job (like many). He saw a guy in a luxury 

sports car and asked him what he did for a 

living – he was a stock broker. Christopher 

decided that he wanted that job (like many 

others). He was married at the time and 

also had a very young son. He took a big 

risk and quit his job. His wife left him and 

took their son. She later showed up and 

gave him custody of his son right when he 

was starting an internship at a major stock 

brokerage firm. It’s a classic story. It could 

have been a movie ... oh wait, IT WAS. 

Many family members and friends would 

have told him that he should step up and 

get a real job (as some call it) to support his 

family. He was obviously capable of getting 

a job that paid more than the internship 

at the brokerage firm. So why did this 

intelligent and motivated man choose the 

path of poverty and homelessness? And 

yes, he did choose this because he could 

have changed paths at anytime and taken a 

so-called real job. When you do not make 

enough money for daycare, rent and food 

you need to make more choices, 99.99% of 



Session I – continued from page 25 

the population would have quit and taken 

the easier path. 

That is what was so impressive about 

Christopher Gardner. He did something 

about it! He chose and pursued the career 

path he wanted. He had more faith in 

himself than thousands of other people 

put together. He was a man that knew in 

his mind and in his heart that he would 

be a success and was not willing to allow 

anything to stand in his way. He knew 

that hard work plus determination equaled 

success. He did not just sit back and dream 

about what could have been. He did not 

just sit and wait for something to happen 

in his life. He stepped up and did what 

it took to be the best he could be, with 

blinding determination and tenacity so far 

above the average person. It’s important 

to understand though that it was not the 

sports car he saw that day that he wanted. 

It was the independence and financial 

freedom. The Success…! 

Mr. Gardner did not make a few phone 

calls a day to build his book of business, 

he made 200. He didn’t make excuses, he 

created results. When he ran out of money 

for food and rent, he and his son lived and 

ate wherever they could. But everyday, 

he still made 200 phone calls. He did 

not let the circumstances of his life, his 

personal issues, his current financial issues 

dictate his future. He believed enough 

in himself. He knew that success would 

come if he worked hard and never gave 

up. When his break came, he was ready 

to seize the opportunity because he had 

laid the foundation that is so important 

in business and life. 

Christopher Gardner did not get to 

where he is today because he is a lucky 

man. He is where he is because he knew 

what he wanted out of life and worked 

very hard every single day to overcome 

major obstacles while staying focused on 

the prize. 

So, what I learned from this speaker is 

that ANYONE and everyone can be the 

person they want to be in life with a desire 

to succeed, extreme determination and 

a focus on the end result. But, this can 

only be accomplished if we don’t let our 

daily worries and obstacles take our eyes 

off of the prize. Very few if any are in the 

position that this man was in when he 

started on his road to success. Like Mr. 

Gardner, all of us started somewhere at 

the bottom and made choices to be where 

we are at today. Some of our choices have 

been good and some bad. It is our choices 

that determine our futures. 

The most memorable part of the 

presentation was when Mr. Gardner told 

the story of the time he met one of his 

largest clients. This client was a gentleman 

that always told racial jokes before placing 

his trade orders. He did not know that Mr. 

Gardner was African-American. At the 

end of meeting with his client personally 

for the first time (of which the client was 

obviously embarrassed and apologized for 

his remarks), Mr. Gardner told his client “It 

is not a Black Thing, It’s not a White Thing, 

It is a Green Thing.” After that, his client’s 

jokes went from racial in nature to knockknock 

jokes and the trades kept coming. 

And Yes ... Fortunately or Unfortunately 

Life is a Green Thing. 

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GENERAL SESSION II: 

Economist Speaker, 

Christopher 

Thornberg, PhD. 

By Jim 

Conway 

Dr. Thornberg gave the REOMAC® 

Conference attendees his semiannual 

update on the state of 

the U.S economy with an emphasis on 

the troubles being experienced in our 

financial markets and the government’s 

efforts to both ameliorate the economic 

distress and to re-stimulate the real 

estate and financial markets. Christopher 

Thornberg is an expert in the study of 

regional economies, real estate dynamics, 

labor markets and business forecasting. In 

2006, he co-founded Beacon Economics, 

an economic research and consulting firm 

that specializes in real estate markets, 

local economic development, and public 

and private policy issues. Dr. Thornberg 

has established a reputation as one of the 

State of California’s leading economic 

forecasters. Prior to launching Beacon, he 

was an economist with UCLA’s Anderson 

Forecast where he regularly authored 

economic outlooks for California, Los 

Angeles and the East Bay. 

Dr. Thornberg believes that we are currently 

in a recession and not a depression and that 

we should be in a recovery by 2011. He 

stated the collapse of Lehman brothers 

in 2008 was not as big a factor in the 

subsequent troubles the U.S economy has 

experienced as many think. Dr. Thornberg 

believes that the housing plans that are 

aimed at keeping people in their homes are 

counter-productive in some cases and may 

even bury some homeowners who may not 

ever be able to build up equity or even be 

able to sell their homes due to the size of 

the mortgage. The plans, according to Dr. 

Thornberg, won’t work because they don’t 

deal with homeowners that are seriously 

under water. He also stated that it will 

have limited impact in turning around 

both banks and financial markets. 

As a possible curative, he offered what he 

called the: “Mulligan Solution.” In Golf, a 

Mulligan is a do-over of a bad shot (such as 

hitting your tee-shot into a water hazard). 

He proposes that the government legislate 

that anyone that had their home foreclosed 

between 2002 and 2009 be given a clean 

slate on their credit report which would 



Session II – continued from page 29 

allow them to buy a home now at today’s 

greatly reduced prices and at today’s low 

interest rates. He did state that adjustable 

and gimmick loans should be eliminated 

and that buyers must be required to put 

5-10% down. Dr. Thornberg believes that 

this plan would also cause the lenders 

holding many of today’s upside-down 

mortgages to have a strong incentive to 

work harder at restructuring loans and 

short sales. The homeowners would be 

able to walk away from their current 

loan/home and immediately purchase 

another home at today’s market price 

and benefit from the lower mortgage 

rates. This program would allow for a 

quicker resolution and recovery and would 

cost all parties involved (government, 

homeowners, banks, tax-payers) less 

money. Dr. Thornberg then demonstrated 

with charts how a 40% reduction was 

necessary to get the Los Angeles areas 

real estate prices back in line with the 

70 year trend of 1% home value increases 

per year. These historical increases were 

directly tied to and moved in sync with 

average incomes and income/housing 

payment ratios. 

He summarized and concluded his 

presentation by looking at our present 

situation and looking forward with 

predictions for the next three years. 

He believes that we are currently in a 

recession but are about to enter a healing 

phase as prices are getting closer to their 

historical levels. Consumer weakness will 

continue, but won’t last forever. Business 

weakness will get worse based on profit 

issues, commercial REO’s are about to 

takeoff over the next 2 years. There is also 

a significant danger of inflation taking 

off due to the Federal Reserve’s huge 

expansion of the money supply (done in 

an effort to stimulate the economy). He 

referred to this huge expansion as a “big 

pile of kindling” that could turn into a big 

fire. Lastly, he concluded we are in the 

worst recession since World War II, but 

not in a depression. If everything goes the 

way he is predicting, the economy should 

begin to recover in early to mid 2010. A 

housing recovery should be in full-swing 

by 2012. Let’s hope he’s right. 


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GENERAL SESSION III: 

Town Hall Session 

Moderator: 

Panelists: 

John Vella, GMAC 

Senator Ronald S. Calderon, (D – Montebello) 

Peter Monroe, Esq., Wilhurst Oxford Venture Capital 

Rocky Rushing, Chief of Staff for Senator Calderon 

Christopher Thornberg, Ph.D, Beacon Economics 

By Ron 

Deutsch, Esq. 

A 

panel of distinguished speakers 

addressed a full auditorium at the 

REOMAC® conference held in Palm 

Desert, CA. These speakers included, John 

Vella of GMAC Mortgage LLC, Senator 

Ronald S. Calderon of California and a 

member of the Senate Banking Committee, 

Dr. Christopher Thornberg of Beacon 

Economics, Peter Monroe, former President 

of the RTC Oversight Board and Rocky 

Rushing, Chief of Staff to Senator Calderon. 

They discussed many topics including 

hastening foreclosures, proper government 

policy, loan workouts and other solutions to 

the banking problems facing the industry 

and country. 

Senator Calderon stated that a desired 

government goal is to have fewer homes 

on the real estate market and helping 

homeowners stay in their homes. Although 

he recognizes that foreclosures may still 

be inevitable in many cases, and keeping 

the homeowner in the house may not 

be possible. Senator Calderon also 

recognized that foreclosures benefit first 

time homebuyers to enter the real estate 

market and purchase their first home. 

Peter Monroe stated that he is “mad as hell” 

with respect to the current policy. In his 

prior role, the RTC seized banks and their 

assets. They did not prop up failing banks, 

instead allowing weak banks to fail. That 

said, he believes he sees the first ray of 

sunshine in Geitner’s PPIP program. The 

program provides for toxic assets to be 

purchased by creating a fund comprised of 

7% private investor money, 7% TARP funds 

and 86% non recourse capital. Monroe 

believes that private banks have no chance of 

surviving if asset values drop precipitously. 

The drop in asset values, reduce a bank’s 

regulatory capital requirements. 

Chris Thornberg, always a vocal presenter, 

stated that massive foreclosures are not 

the problem. He recognized that many 

people purchased homes that they could 

not afford or committed fraud in applying 

for their acquisition loans. Compounding 

the existing problem is a bad real estate 

market. He firmly believes that, Senator 

Calderon’s stated goal of keeping individuals 

in their homes, although well intentioned 

is misguided. Instead foreclosures should 

be allowed to occur quickly to flush the 

system. However, he advocated, that a 

“mulligan” rule should be implemented to 

benefit foreclosed borrowers. That is, the 

fact that a foreclosure occurred should be 

deleted from a borrower’s credit report. 

That would allow the former homeowner 

to enter the housing market again and to 

purchase a home again at a much lower 

affordable price. 



Session III – continued from page 33 

Dr. Thornberg also stated that the 

government PPIP program is not a solution. 

It is encouraging investors to pay 80 cents 

for an asset worth 50 cents. Due to the 

non-recourse aspect of the program, the 

purchaser wins if it is a good purchase 

and the FDIC loses if it is a bad one as the 

FDIC will absorb the loss. That, he said, is 

equivalent to heads I win and tails you lose. 

Finally, he stressed, that the government 

is giving money to banks not to fail. He 

believes that this does not address the 

problem with the economy. He lays blame 

on consumers who were “spoiled brats” and 

demanded more than they could afford. He 

did note that consumers are now saving 

more. 

John Vella of GMAC Mortgage next 

discussed that banks are doing what 

they can to maintain home owners in 

their homes and to convert as many nonperforming 

loans into performing ones. 

It was noted however that the workouts 

are experiencing almost a 50% failure rate. 

New underwriting is necessary. 

Chris Thornberg, responded to John Vella’s 

position, by stating that home prices went 

to astonishing prices in California. One 

can’t modify a loan where home prices 

tripled and expect it to work. Even if an 80 

year loan at 1% was offered, a homeowner 

could not be successful in repaying a loan 

and equity would never be acquired. He 

strongly felt that the best program would 

be one to allow foreclosure, and permit 

borrowers to start over with a clean slate 

(the “Mulligan rule”). 

John Vella, countered Dr. Thronberg, by 

stating that many borrowers have emotional 

attachment to their homes and will continue 

to make payments even if making those 

payments do not make sense. 

Rocky Rushing relayed the current situation 

to the situation faced by farmers in 

Steinberg’s novel The Grapes of Wrath. A 

farmer watching a tractor driver about to 

level his home notices the tractor driver is 

a former neighbor. The driver states to the 

farmer it is the bank not me. Who is the 

bank? There is no face to the bank. 

Chris Thornberg then stated that the 

situation is not as desperate as portrayed. 

Former homeowners, in fact have a place to 

go. They can become renters. He stressed 

that renting is not bad and that 75% of 

residents of New York City currently rent 

their homes. He further stated that policy 

makers, although also well intentioned, 

were misguided in establishing a public 

policy to increase unsustainable home 

ownership rates. Moreover, he stressed that 

after non-paying homeowners are forced out 

after foreclosure, home prices will decline, 

creating demand from new buyers who can 

now afford a home. Although, he again 

suggested the “Mulligan” rule for those 

foreclosed upon. 

Senator Calderon, however, mentioned that 

it will be hard for those who are foreclosed 

upon to recover from the scar of the event. 



Session III – continued from page 34 

Peter Monroe also noted that local liens 

slapped on properties destroy incentives 

to purchase vacant homes. 

Judge Goldberg, a California bankruptcy 

judge and an attendee of the discussion, 

offered that it is not helpful to make 

borrowers a slave to loans and to keep 

them in homes that they cannot afford. 

Equity participation sharing was also 

discussed in return for lowering interest 

rates and payments for homeowners during 

a workout. 

Chris Thornberg next discussed that since 

owners of loans are diverse; it is not easy 

to renegotiate defaulted loans. Pension 

funds in Norway and hedge funds are 

among owners of loan pools. He noted 

that homeowners sometimes purchase an 

identical home down the block and hand 

the first owned home back to the bank to 

force the bank to deal with it. Flushing 

the system is what he suggested is the 

solution. 

Peter Monroe next stated that propping up 

banks that have become too big to fail is 

only postponing the inevitable. This policy 

did not work in Japan and stagnation ensued. 

He also expects commercial defaults to 

triple or quadruple in the near future. 

John Vella, next stated that defaulting home 

owners might participate in short sales. 

Energizing local real estate brokers to help 

is another solution to the problem. Chris 

Thornberg disagreed and stated that banks 

are not part of the solution but are in fact 

the problem as they have not negotiated 

properly. Monroe disagreed and stated 

that vacant properties are causing greater 

problems and banks are in fact part of the 

solution. Vella reminded the audience that 

92% of loans are performing and accepting 

the “Mulligan” rule would create a moral 

hazard. Thornberg thought the real moral 

hazard was allowing Richad Fuld of Lehman 

Brothers to walk away with 400 million 

dollars. The only solution according to 

Thornberg is to flush the system and tighten 

underwriting standard for new borrowers. 

Borrowers should be required to invest at 

least 5%-10% as a down payment and prove 

creditworthiness. 

Monroe stated that propping up institutions 

results in propping up and rewarding the 

worst banks. This is a moral hazard and 

penalizes the whole system. Thornberg 

agreed and the country should not coddle 

banks, instead the worst banks should be 

allowed to fail. Stress test that are being 

utilized are “pure crap” according to 

Thornberg, and it is only diverting attention 

from the bank’s failure. The problem is at 

the top and legislators cannot allow the 

bottom to fix. Instead, government must 

force the banks to face reality. Banks should 

be allowed to fail, but they should be kept 

operating. Bankruptcy does not wipe out 

jobs, it just rejiggers equity ownership. 

Senator Calderon felt that since banks 

created problems they should help pull 

borrowers out. 

John Vella suggested PPIP will be successful 

since it will allow bad assets into the hands 

of asset managers who will work out the 

problems. On the other hand, Chris 

Thornberg, felt that taxpayers should be 

told the truth and the system in place is 

a big sham with no hold of taxpayers ever 

seeing the money repaid after given to the 

failing banks. Forcing write downs on 

principal abrogates constitutional property 

rights and tosses out a long history of legal 

precedents. 

Rocky Rushing stressed that human factor 

must be considered. Disagreeing with 

Chris Thornberg, he stated that you can’t 

just flush the system. Tossing folks out of 

homes with banks wiping out the family 

dream are issues that need to be considered. 

Economics cannot be taken in a vacuum. 

Bailing out blue bloods at banks but not blue 

collar workers in Detroit is not fair. 

Chris Thornberg disagreed and said 

neither the blue bloods at banks nor blue 

collar workers should be bailed out. There 

are 8000 banks in the United States and 

regulatory nightmare is being created. 

Allowing bank CEOs to take in big risks, 

hide it, make extraordinary profits and then 

walk away to leave the problems created for 

the government to correct is certainly one 

result that cannot be permitted, he said. 

It is clear, our country’s problems are quite 

complex and easy solutions are not possible. 

In the meantime debate stirs thought. 



EARLY BREAKOUT SESSION 1: 

Fraud: From Origination to REO 

By Mark 

Dorris 

Moderator: 

Panelists: 

Paul Saffron, Attorney at Law, Becker & Poliakoff 

Steven Garfinkel, Special Agent, Federal Bureau of Investigation 

Eileen Newhall, Principal Consultant, Senate Committee on Banking, Finance, and Insurance 

Maureen Rodriguez, Esq., Deputy City Attorney, City of Los Angeles 

Alice Sorenson, COO, Lighthouse Real Estate Solutions 

Paul Saffron opened the discussion 

with what may be a wake up call 

to most of us. He shared that some 

may have assumed, as a result of the 

sub prime meltdown, that incidents of 

mortgage fraud would have declined given 

the extinction of the no income verification 

type loans and stricter underwriting 

guidelines. He believed a fair assumption 

is that mortgage fraud would have at least 

declined somewhat in the last year. But, 

he revealed results from a recent report, 

prepared by the Mortgage Asset Research 

Institute to the Mortgage Banker’s 

Association, indicating that last months 

numbers revealed that mortgage fraud 

has actually increased by 26% between 

2007 and 2008. Although we may have 

closed some loopholes for opportunities 

for mortgage fraud and fraud in general, 

for every loophole we closed it appears 

that people have found a way to open up 

another opportunity to commit fraud or 

take advantage of the system. 

TRENDS IN FRAUD 

Special Agent Steven Garfinkel was asked 

what he is seeing on the Federal end, in 

respect to trends in the mortgage fraud 

arena. Agent Garfinkel cited a recent 

article in the Wall Street Journal in which it 

stated large lending companies are veering 

away from working with mortgage brokers 

and Private Mortgage Insurance companies 

refusing to underwrite loans that originate 

with a mortgage brokers. In New York, 

most of their cases are with loans that 

originated with mortgage brokers. Also in 

New York, the mortgage broker business 

is filled with previous attorneys who have 

been disbarred, CPA’s who have lost their 

licenses, and people who have abandoned 

the securities industry. Agent Garfinkel 

mentioned a case he had two years ago, 

where an attorney was stealing escrow 

funds and had just finished his probation 

sentence. After bumping into him on 

the street one day, he found out that the 

ex-attorney was now a mortgage banker, 

Steven said he wasn’t surprised. 

Many of the types of schemes he is seeing 

are appraisal fraud, where there is collusion 

between the appraiser, seller and mortgage 

brokers engaged in property flipping. Also, 

the use of straw buyers and in conjunction 

with straw buyers, identity fraud. Identity 

fraud is becoming a major component in 

a number of these cases. So throughout 

the entire underwriting process it is 

very important to continually verify the 

person’s identity. 

Next, the discussion went to Maureen 

Rodriguez, who was asked about the post 

foreclosure arena and what she is seeing in 

the schemes in post foreclosure scenarios. 

Being in Los Angeles she can only speak to 

California Law, but realizes this problem 

runs across the country. She also wanted to 



Early Session 1 – continued from page 37 

make it clear that she was speaking her own 

opinions and not necessarily the opinions 

of her employer, the City of Los Angeles. 

The area of concern they are seeing is in 

foreclosure process, particularly with 

unaware real estate agents who are 

attempting short sales when the property is 

in the foreclosure process. The problem is 

with people moving into those properties. 

Maureen outlined the following three basic 

ways she has seen situations with people 

moving into the property. 

1. They will move in for occupancy, where 

they actually move in and live in the house. 

These are people who can be individuals or 

rings in the Los Angeles and San Fernando 

Valley area. There was actually someone 

teaching classes on how to do this. What 

they do is move in and when the police 

show up they show the police a lease which 

gives them the right to be there. When 

the property goes to eviction, if it goes 

quickly, some go to the extent of filing 

bankruptcy and filing false claims on the 

deeds. She prosecuted one person who 

she traced back 11 years and had not paid 

rent. These people are very bold! 

2. The second scheme is where the people 

occupy the property to collect the cash for 

keys. As agents and brokers you must be 

careful because there are strict laws for 

cash for keys. In Los Angeles, there are 

situations where the minimum you can 

pay for cash keys is $ 7,000. In one case, 

the defendant was on the stand and there 

were three different agents who had each 

paid cash for keys to this person in the 

same month. 

3. The last scheme is rent skimming where 

someone has access to the property, but 

does not own it. They change the locks 

and advertise the property in Craig’s List, 

newspapers or by word of mouth. They 

rent the property and collect first, last 

and security and do this to several people 

before they skip town. 

The moderator, Paul Saffron commented 

that in Florida, the more complicated the 

process, the more ripe the opportunities 

for fraud and for misdealing. 

RED FLAGS 

Alice Sorenson was asked what the pink 

and red flags were in mortgage fraud. 

Being in operations, she made a list of all 

the things that came to mind. There are 

many flags that can alert you to fraud that 

is going on in a loan as follows: 

Title: Inconsistencies with title documents, 

appraisal documents and your sales 

contract. Multiple change of ownership 

within a 12 month period and depending 

on the market may extend from 6 to 18 

months. Watch for documents where 

there are lots of cross outs or whiteouts on 

the loan documents or the sales contract. 

Also, the use of straw buyers and being 

able to pin down the identity of your 

borrowers and knowing who they are is 

imperative. 




Loan application stage: Looking at 

cross outs again. If you have a borrower 

that is a renter and is purchasing it as an 

investment, you want to find out if this 

is their first endeavor into investing or 

is it a side business where they have had 

experience. Legitimate reasons need to 

be ascertained. If a borrower cannot 

explain exactly what they are doing with 

the money, maybe they are a straw buyer 

and haven’t been schooled well enough 

to give the right answers. Language and 

communication issues are other indicators 

of straw buyers. 

Processing Step: Multiple mortgage 

inquiries in last 90 days or unusually high 

income for the profile of the applicant. 

She once had a loan where the applicant 

stated that they were a gardener and 

making $19,000 per month after only one 

year in business. That is a good example 

of a red flag. 

Underwriting: This position is key. 

Underwriters need to be good qualified, 

well trained people. They are the 

ones responsible for qualifying the 

loan. They are the ones that should be 

catching inconsistencies of information 

on the application, sales contract and the 

preliminary HUD I. Change of ownership 

in the past 12 months, comparables used 

that do not seem reasonable. Inability 

to verify income, bank statements with 

several different types of font or huge 

balances, but showing NSF charges. One 

person getting multiple loans within a 

short period of time. Excessive repair 

bills on HUD I. 

Funding: This is the last chance to catch 

fraud before it actually becomes a loan. 

This is where you catch things like notary 

issues, forged documents, unrecorded 

deeds that are being paid off during your 

closing, pay offs to fake improvements, 

and down payments that come from 

third parties. 

Next, Eileen Newhall was questioned 

about what role the legislature plays in 

helping to reduce mortgage fraud. She 

stated that we have got to keep our eyes 

and ears open so we can close loopholes 

when they are identified. We also have to 

be careful that when we add law, we also 

add enforcement mechanisms to them. 

There is no single law that is going to 

prevent fraud, mortgage or otherwise if it 

cannot be enforced. One of her favorite 

enforcement mechanisms is making the 

law a licensing violation. She also warned 

that there must be adequate resources to 

enforce the violations. For example, The 

California Department of Real Estate is 

responsible for overseeing the activities 

of about 530,000 licensees and they have 

a staff of only 340 people. 

PREVENTION 

The panel was asked what agents can 

do to minimize exposure to foreclosed 

properties. Also, what checks and balance 

can be implemented and at what points to 

help protect against mortgage fraud. 

Ms. Rodriquez stated that she recommends 

taking pictures and changing the locks 

as soon as you know the property was 

foreclosed. Go to your local police 

department for a trespass letter and keep 

an eye on Craig’s list to make sure your 

property is not being advertised. 

Ms. Sorensen stated that there are many 

opportunities to implement checks and 

balances to protect ourselves. The first 

one and probably the strongest one is the 

staff you hire. Know your staff. She has 

a client who will not hire anyone unless 

they come through an internal referral 

and there has to be at least two people 

who already work for the company and 

know the prospective employee. They 

have very little turnover and zero incidents 

of fraud. Training of your staff, internal 

programs put in place and staff knowing 

how you do your business. Having 

processes in place that are adhered to 

and followed, that are documented so 

that when you have a brand new person 

who comes in, they have something that 

they can look at, a manual that step by 

step takes them through the process that 

they are supposed to follow. Have a very 

strong underwriting department, this is 

a key role in a company and is extremely 

important to a company’s success. Giving 

your underwriters the authority to check 

and to stop a loan if they see something 

wrong. Also let them know they will not 

be reprimanded for stopping a loan if they 

have concerns. 

Policies and procedures at the corporate 

and department level are very important, 

as well as ensuring that those policies 

procedures are followed. Internal audits 

should be performed to make sure they are 

following all the steps they are supposed 

to follow. 

Have an exception desk. Even if you 

have the best staff and processes, there 

will always be the deals that do not fit 

into the square box. There needs to be 

a procedure to handle those exceptions 

and the best way to do that is to have an 

exception desk. 

According to Ms. Newhall it is vastly 

easier to stop fraud if it is stopped before 

it occurs. She agreed with Alice in that 

clearly the best way of stopping fraud is to 

have great internal policies and procedures 

before it happens. 

Moving on to some of the legislation, she 

talked about a loophole closer. Senate Bill 

1737 was enacted last year and prevents 

real estate licensees that have lost their 

license to work in other aspects of real 

estate such as title, escrow, etc. 

Senate Bill 223 which was enacted on 

an emergency basis in 2007 made it a 

clear violation of the law to attempt to 

improperly influence an appraiser either 

through coercion, extortion or bribery. 

Senate Bill 385, also enacted in 2007, states 

that anyone being considered for a loan 

must be qualified at the fully indexed rate 

vs. the teaser rate. 

The panel agreed that prevention of fraud 

is the best way to eliminate it. The panel 

took time to answer questions from 

the audience. This session was most 

informative and all attendees should 

have gained valuable insights on how to 

be aware of different types of fraud and 

how it can be prevented. 



By Bruce 

Juenger 

EARLY BREAKOUT SESSION 3: 

Commercial Properties + Mortgage Default = 

Are You Prepared? 

Moderator: 

Panel: 

Mathew Mandell, REO Property Specialists 

Brandy White Elk, Innovative Real Estate Strategies 

Don Rigsbee, JP Morgan Chase 

John Kohut, KCG Kohut Capital Group 

This session focused on the seldom 

mentioned, but growing potential, 

of commercial loan defaults and the 

consequential rise of financially distressed 

commercial properties that will need 

to be resolved, and the opportunities 

for individuals to become experts on 

what could be a highly active niche of 

the default industry. Most of the recent 

attention of the public, media and default 

servicing professionals has been focused 

on residential foreclosures. However, there 

is an immense level of commercial loan 

defaults lurking as a very real possibility 

in the near future. This will have profound 

repercussions on the real estate market and 

those who work in the industry. 

The session was opened by the moderator 

Mathew Mandell of REO Property 

Specialists who presented a PowerPoint 

that demonstrated the growing issue of 

commercial loan defaults. Mr. Mandell 

remarked that this topic was recently 

reported by the Wall Street Journal in a 

March 26, 2009 article titled: “Commercial 

Property Faces Crisis.” 

In the presentation it was noted that while 

less than 3% of the default industry is 

in commercial, the commercial default 

services niche is still in its infancy. In the 

recession of the early 1990’s there was 

a failure rate of approximately 1.8% in 

commercial loans. In the next five years, 

the number of commercial loan defaults is 

expected to soar to levels that will dwarf 

those. In the last six months alone the 30 

– 60 day delinquency rate has soared 300- 

400%. The aggregate delinquency rate is 

expected to reach 3.5% by the end of 2009, 

and as high as 5-6% by late 2010. 

The soaring commercial delinquencies 

are due to several factors. Of course 

the continuing economic recession is 

decreasing demand for retail and industrial 

real estate deflating rents and property 

values as much as 45%. There are as many 

as 700 banks that are in danger of failing 

over the next three years. Adding to the 

threat is the high number and the large face 

value of high-risk 5 year loans that are due 

in 2010-2012. 

This is creating a climate for a “perfect 

storm” of defaults in commercial real estate, 

one that will present major crises and 

opportunities for the experts in this field. 

The next panelist was Don Rigsbee, Special 

Assets Division Manager for J P Morgan 




Chase. Mr. Rigsbee came to Chase through 

their recent acquisition of WaMu from 

the FDIC. He has a long history in the 

commercial default industry with several 

preceding institutions including American 

Savings Bank. The former WaMu loan 

portfolio represents the majority of their 

commercial real estate loans with 40,000 

loans, compared to Chase’s original 2,000 

commercial loans. The portfolio consists of 

primarily loans on multi-family residential 

properties with an average loan balance of 

$1.5 million. 

Rigsbee’s department takes an active 

approach in working on their commercial 

delinquencies. They keep current on 

values, primary through the use of real 

estate brokers to predict net present 

values combined with discount rate. The 

resolutions used include: loan restructures; 

discounted payoffs; short sales; foreclosure 

and REO sales. Each note is handled 

individually and they are not putting pools 

together at this time. Mr. Rigsbee noted 

that the large number of declining markets 

is creating new opportunities for those 

working in commercial loan default. 

Brandy White Elk with Innovative Real 

Estate Strategies discussed the next section 

of the session in which she outlined some 

of the details and nuances in working with 

commercial loan defaults. Ms. White 

Elk outlined how there are often many 

more moving parts in working through a 

commercial default scenario than there are 

in the typical residential default resolution. 

One primary method is to work off the 

premise of doing a short sale. It is important 

to find out exactly what the bank needs 

for a complete package before submission. 

Knowing and having the precise items and 

documentations required by that institution 

in the initial submission package will 

greatly increase the likelihood of reaching 

a successful resolution. 

In working thorough these transactions 

the industry professional must be prepared 

for the unusual and the unexpected and 

be resourceful to find solutions to those 

obstacles that may appear. For example, 

cross-collateralization with other assets 

is very common for many commercial 

borrowers, and these commitments must be 

worked with in the process. Issues like these 

will separate the experts from the novices 

in being able to resolve a commercial 

default transaction. And it will also make 

those experts a valued contributor to the 

process. 

The final panelist was John Kohut of KCG 

Kohut Capital Group, who discussed capital 

markets and what drives capital. Mr. Kohut 

is active in commercial mezzanine loans 

and preferred mezzanine loans, with $100 

million funded in 2008 and now reaching 

towards ½ billion in 2009. He spoke on 

how the historically low interest rates are 

impacting the value of everything. These 

low rates can drive capital and markets, 

sometimes in directions not always 

expected. He gave an example of the time 

period between 1969 and 1984 when the 

Dow Jones Industrial average closed exactly 

where it had started at 874, no increase 

in value for a 15 year period. He thought 

there is the potential for another prolonged 

stagnation in the stock and equities markets 

in the near future. 

Mr. Kohut gave comparison for how large 

this pending wave of commercial loan 

defaults could become. In the early 1990’s 

when 1,000 banks failed, there was a 

combined $48.5 billion in losses, of which 

approximately 7.9% was commercial debt. 

Today there is approximately $6.5 trillion 

of commercial real estate in the entire 

U.S., of which about 47% or $3.1 trillion 

is financed. So far in this recession, these 

commercial values have declined 35-45% 

from their peak, setting the stage for a 

massive default rate. By 2012, $154 billion 

in securitized commercial loans will need 

to be refinanced. And an additional $524 

billion in commercial whole loans held by 

banks will have to be rolled. Clearly, many 

institutions will not be able to survive 

this calamity. His advice: “Be aggressive 

in finding your information because the 

rules have changed.” 

This session was packed with new 

information on a branch of the default 

industry that many in the crowd had 

previously not paid much attention to in the 

past. However, once the scope and breath 

of the potential business in this particular 

niche was demonstrated, it was clear that 

this is a subject that has now become a much 

more important segment of the default 

industry. And it will likely become one of 

such significance that it will be impossible 

for any professional working in the default 

services industry to ignore. 


By Benton 

Neese 

LATE BREAKOUT SESSION 2: 

Foreclosure and Loss Mitigation Evolvement 

Moderator: 

Panel: 

Randy Miller, Esq., Randall S. Miller and Associates, PC 

Rick Sharga, RealtyTrac 

Courtenay Dunn, Esq., Goldbeck, McAfferty & McKeever 

Rhoan Burnard, Freddie Mac 

With the default industry changing 

so dramatically over the past 

couple of years, we have all had 

to adjust to survive. The changes will have 

to continue as our environment changes. 

This session was intended to present the 

challenges and opportunities facing our 

industry and some options available to the 

industry and the borrowers to deal with 

those challenges and opportunities. 

Mr. Miller started the session with a 

few brief comments. He congratulated 

everyone for taking the initiative to come 

to this conference to learn how we all must 

change and be the best we can be to the 

customers, clients and our companies 

in these difficult times. He stressed the 

importance of everyone to work towards 

a common goal of helping borrowers stay 

in their homes but being educated to the 

situation and realizing, in some situations, 

the best help for everyone is the smooth 

disposition of the property with minimum 

anxiety to the borrowers. He also said 

we all have to face the fact that the loss 

mitigation environment is changing and 

we have to be willing to change as well. 

Ms. Dunn, Esq. stated that many of the 

foreclosure laws and procedures are 

changing to assist with loss mitigation. 

In the Philadelphia area the sheriffs are 

trying to work with the lenders to assist 

with potential loss mitigation actions, 

including delaying foreclosure sales. 

In Pennsylvania, when the foreclosure 

action is filed, a hotline telephone number 

is sent to the borrower. The borrower 

is given a housing counselor prior to 

the foreclosure hearing. This housing 

counselor reviews the borrower’s situation 

and searches for any loss mitigation 

opportunities that may be available. The 

borrower may even be offered attorney 

assistance at no costs to the borrower. 

Mr. Sharga stated foreclosures were up 30% 

in February 2009 vs. February 2008! The 

number of REO properties shows an even 

greater increase. He said it is estimated that 

60% of American households will receive a 

foreclosure notice this year! His company, 

as well as nationwide lenders; have to stay 

on top of all of the law changes taking place 

right now in almost all of the 50 states. 

Most all of these changes are centered on 

giving the lender/ borrower more time to 

work out a mitigation solution. Mr. Sharga 

feels currently Pennsylvania and Colorado 

are the two states which seem to be more 

aggressive in helping the borrowers in 

a default situation. He also stated, with 

concurrence of the other panel members, 

that the key to the borrower receiving 

assistance is the ability to get the borrower 

and the lender together to discuss the issue 

with open minds. 

Ms. Dunn and Mr. Sharga agree that, 

in Pennsylvania, 75% of the potential 

foreclosures can be saved if the lender 

and the borrower get together prior to 

the foreclosure. The good news is that 

more and more of the states are making 

a stronger effort to assist borrowers with 

generous loss mitigation opportunities 

and longer timelines in the foreclosure 

process. 

Mr. Burnard with Freddie Mac started 

his discussion by stating that in a 2005 



Late Session 2 – continued from page 43 

survey of borrowers 60% said they did not 

know they had the option to contact their 

lender and review assistance opportunities. 

He stated that Freddie Mac had made 

a strong push to improve this through 

borrower and lender education but when 

the survey was completed in 2007, 58.7% 

of the borrowers surveyed still said they 

did not know they had that option! Freddie 

Mac continues to address this problem by 

paying substantial fees to the servicers 

who complete borrower assistance and 

will counsel with servicers who maintain 

low workout numbers. Freddie Mac will, 

in some situations, lower the number of 

loans the servicer is managing for Freddie 

Mac and will, in severe cases, withdraw 

the servicer’s rights as a Freddie Mac 

servicing agent if the loss mitigation results 

remain low. 

Mr. Burnard pointed out that Freddie 

Mac is dedicated to supporting servicers’ 

early intervention efforts, reducing 

the percentage of borrowers who go to 

foreclosure without contact with their 

servicer and trying to address borrower 

anxiety by promoting servicer efforts 

to assist borrowers who want to avoid 

foreclosure. 

Some interesting statistics that came 

from this session was the fact that 

unemployment or loss of income remains 

the number one reason for default, by an 

overwhelming margin (43.0% in 2007 

to 44.2% in 2008), but the number two 

reason moved from illness in family from 

2002-2007 to excessive obligations in 2008. 

This simply supports the contention of 

borrowers being pushed into homes they 

cannot afford and others living above 

their means. 

Everyone agreed, as an industry, we 

need to educate the borrowers that their 

responsibilities include making their 

mortgage payment their first priority, 

tighten their budgets to assist with the 

reduced income and try very hard to build 

their savings for future financial crises. 

At the same time, servicers must realize 

they must remain very strong in their 

proactive loss mitigation efforts and 

continue with these actions all the way up 

to the foreclosure sale. 

Fraud investigations with the FBI have gone 

from 102 in 2001 to 1,210 in 2008 and the 

Mortgage Fraud Suspicious Activity Report 

within the Freddie Mac Financial Crimes 

Enforcement Network reported 4,225 

cases in 2001 up to 46,717 in 2008! There 

has to be an awareness campaign to assist 

borrowers in being aware of predatory 

lenders and “foreclosure prevention” scams. 

Borrowers have to understand there is 

assistance available, but it needs to be 

through reputable companies or non-profit 

organizations such as HOPE Hotline or 

CCCS agencies. 

The panel agrees that cures of delinquent 

loans will not come from the government, 

but from the private sector working with 

the borrowers on a regular basis to prevent 

the number of foreclosures continuing 

to climb. It must be a team effort for our 

industry to survive but we will survive by 

all working together for the common goal 

of keeping as many borrowers as possible 

in their homes while minimizing losses 

for the lenders/investors. 


By Berry 

F. Laws III, 

Esq. 

LATE BREAKOUT SESSION 3: 

Litigation Update 

Moderator: 

Panel: 

Dean Talaganis, Morris, Hardwick, Schneider 

Greg Ruzicka, Ruzicka & Wallace 

Matt Abad, Burke, Constanza, Cuppy LLP 

Donna LaPorte, Wright, Finlay & Zak, LLP 

Judge Mitchell Goldberg, Bankruptcy Judge (retired), California 

The discussion began on the issues 

of federal, state and local trends. 

Current trends in federal and state 

courts include activism by judges and 

legislation to slow the foreclosure process, 

and court-ordered mediation (in the 

states of New York and Indiana). Money 

judgments are more difficult due to the 

requirement of proving debt; the lender 

must produce the note. 

Donna LaPorte emphasized the need to 

actually know the law. In California, 

both state and federal courts, “one must 

be well versed in the practice of law and 

have a strong knowledge of the rules of 

evidence.” 

Dean Talaganis addressed the issue of 

eviction, stating “it was essential to pull 

chain of title prove the date of the Deed 

of Trust.” Also in California, the file must 

reflect a return of service of process, as 

debtors are now challenging proof of 

service. 

Judge Mitchell Goldberg spoke regarding 

trends, which he divided into several 

categories: Trend 1, which was the 

prevailing course of action in the ‘90s to 

2005, that the courts’ view on relief from 

stay was very balanced. It was a simple 

philosophy, if debtor was not staying in 

the property, why make the plaintiff jump 

through hoops. This course of thinking 

changed in approximately 2005, when the 

outsourcing system (3 rd party outsourcers) 

became prevalent. Judge Goldberg 

explained that attorneys were coming to 

court with little authority, and the judges 

were unhappy with the results. In addition, 

in Chapter 13 bankruptcies, the judges 

believed the payoffs were incorrect, with 

hidden charges, and that often debtors 

got overcharged by thousands in late fees, 

time and time again, but only one party 

out of 100 were challenging. 

The second trend began to occur when the 

economy began to slide. With the advent of 

“securization,” new issues arose. Attorneys 

did not have any authority, and the loans 

were fractionalized in CDO’s. Another 

question was raised, “who was the real 

party in interest.” Debtors were unaware 

of who they were dealing with; the courts 

required full disclosure and transparency 

as to the owner of the note. 

Another trend has emerged in California 

courts. Debtors are going to state court, 

and Sheriff’s departments were requiring 

a higher standard. Before this trend, the 

courts would not give long breaks to 



Late Session 3 – continued from page 45 

tenants, but the state courts are not letting 

lenders expel tenants as easily. This trend 

came about in part because the residences 

were not properly cleaned and maintained. 

Mr. Talaganis gave an example of the overbilling 

for yard mowing; a $300 charge 

was assessed. 

Greg Ruzicka commented that he believed 

the days of old are over, stating “now 

creditors must be much more prepared.” 

They must be armed with certified copies 

of the Deed of Trust and have common 

addresses, further commenting that “the 

courts are shifting towards borrowers and/ 

or tenants, as society and the courts do not 

want empty vacated houses.” 

Ms. LaPorte also commented that unlawful 

detainers are now much harder to prove. 

The commissioners don’t know the law or 

are not up to date, and UCC rules are more 

difficult. Now defense counsel will not 

stipulate in cases where the commissioner 

does not know the law. 

Judge Goldberg emphasized that attorneys 

must know the law and recite it. “If 

creditors want courts to be in compliance 

with UCC and the law, then their attorneys 

must know the law,” he said. If attorneys 

are knowledgeable, the commissioner will 

listen to you. In a nutshell, he states, “be 

prepared.” 

Mr. Ruzicka further spoke about California 

loss mitigation, stating “the trend is to 

contact the borrowers and give them their 

rights.” Otherwise, it would be a matter 

of time until the borrowers advised that 

“you did not work with me to mitigate.” 

He advised the panel of adverse jury 

verdicts and separate actions brought to 

challenge sales. Attorneys were merging 

UD actions with challenges to sales and 

taking the issues to the Supreme Court, 

and Mr. Ruzicka stated that the UD 

judges were taking on issues beyond their 

jurisdiction. 

A discussion was lead by Ms. LaPorte 

regarding TILA actions. She said, “Be very 

selective on local counsel.” They must be 

knowledgeable, as there are fewer summary 

judgments granted. Matt Abad added that 

attorneys must be knowledgeable, but 

must be vigilant when courts go above 

and beyond the decider of law. He gave 

an example of when the Rules of Civil 

Procedure would not allow a plaintiff’s 

attorney to decide to use a special process 

server. 

Mr. Ruzicka commented that some judges 

in California were blatantly not following 

the law. He said that due to the costly 

appellate process, it was often better to 

dismiss and restart your action. 

Mr. Talaganis advised on Northern Ohio 

law, giving the example of a judge advising 

a debtor on the law to file Chapter 13, 

requiring mediation, dismissing cases if 

notes were not produced, and following 

a second dismissal rule, that if a case is 

dismiss twice, it becomes final. He stated 

that this occurred mostly in state courts, 

rather than federal. 

The topic of legislative activity was then 

discussed. Ms. LaPorte spoke on rent 

control and vacant property ordinances. 

She advised that Los Angeles required 

registering of property, with a right to 

recover. The eviction control ordinance 

limit was one year to avoid blight and 

empty houses and to prevent property 

devaluation. The key is that the rent is 

not controlled. Ms. LaPorte advised that 

the cash for keys issue was a “ticking 

time bomb,” that she believed it was only 

a matter of time until brokers begin to 

get sued. 

Ms. LaPorte further advises that the 

broker should ensure the rent was not 

controlled and they should make new 

rental agreements or leases and leave out 

the attorney’s fees. You can then demand 

rent, and if not paid, you have a remedy. 

She cautioned brokers to be extremely 

circumspect and make no demand until 

they know the facts. She stressed that 

there were eight suits in the City of 

Oakland against brokers and attorneys, 

and she advised that you should make 

sure you check with counsel and follow 

rules assiduously. 

Mr. Abad stated that he believed there 

will be an initiative to train borrowers and 

their attorneys on how to stop foreclosure 

and how to sue/counterclaim. Judges do 

not know who are the parties in interest 

if the plaintiff is a pools or a trust. An 

example is Countrywide, who has been 

sued for questionable underwriting and 

abusive lending practices, as evidenced by 

a settlement with the Attorney General. 

Mr. Abad also commented about the 

inability of a borrower to modify. “How 

can a borrower honor a modification if he 

or she cannot pay the loan?” Mr. Ruzicka 

gave an example of a $686,000 loan that 

was modified to $520,000 on the same 

tract. He believes the Obama initiative 

is not working because borrowers are 

already so far under water; it is a fallacy 

that borrowers can modify their way out 

of their predicament. 

Judge Goldberg further commented 

on Fannie Mae’s non-allowance of 

modification of principal. He believes a 

practice of cutting interest rates due to a 

temporary loss of job or cut back in hours 

could affect borrowers because the cost 

would be less than renting. He further 

believes the debtors will make payments on 

something they believe has equity. If the 

mortgage doubles, what is the price of the 

property? The value will never reach equity 

level, and a debtor is in servitude because 

the house is not worth the mortgage. 

In summary, the common thread of 

the panel discussion was that creditors’ 

attorneys should be completely up to date 

on the law and have all of their evidence 

on hand, with copies of the relevant 

documents and information on the correct 

parties in interest. The trend is shifting 

toward debtors’ rights in this economy, 

and creditors’ attorneys must be prepared 

to respond to this trend. 


President’s Message – continued from page 3 

Headquarters Happenings 

– continued from page 7 

offered something for everyone. No 

member of the Board of Directors or our 

committees receives compensation for 

the many hours of hard work that it takes 

to prepare and put together a conference 

of this magnitude. REOMAC® is here to 

offer networking and education. We resent 

the perception that this conference is for 

anything other than to bring together 

industry professionals to network and 

learn from the brightest and best. We 

want to inspire you and offer you the 

experience and friendship of others doing 

the same type of work that you do. Any 

pre-conference or post conference events 

that are not presented by REOMAC®, are 

not sponsored or endorsed by REOMAC®. 

Should you throw an event or attend one 

of these unauthorized events, you should 

conduct yourselves in a professional 

manner. What you do during the time of 

this or any other conference is a reflection 

on those of us that attend these conferences 

to gain information and knowledge. The 

country is in a crisis. Millions of people 

are losing their jobs and their homes. We 

try to offer assistance to make it an easier 

transition for those that have to move 

out due to foreclosure. Please be more 

cognizant of the perception of those that 

do not know how hard you all work to do 

your jobs in the most ethical and honest 

way that it can be done. 

I am so honored and proud to be 

REOMAC®’s President this year. I have 

met the most incredible, hard working 

and kind people through my association 

with REOMAC®. I cannot and will not 

tolerate the bad press or misinformation 

that has circled around this industry and 

our conferences. I promise to do whatever 

I can to insure that we are perceived as 

professionals, now do your part. 

Our attitude toward 

life determines life’s 

attitude towards us. 

– Earl Nightingale 

Can I take any certification courses 

offered at the Fall Conference without 

attending the conference itself? 

No. The certification courses offered 

are in conjunction with the conference, 

for which you must be registered. 

What exactly is a conference guest 

registration? 

A guest registration is for a spouse 

or significant other of an attendee. 

Guests are only permitted to the 

social functions (i.e., the exhibit hall, 

the Gala Dinner, and the continental 

meals provided) and are not able to 

book a separate hotel room from 

the primary attendee of whom the 

individual is a guest or attend any of 

the educational sessions. 

Finally, if I may be of any service to 

you, please contact me or any of us 

at Headquarters. Thank you for your 

continued support of REOMAC®. 


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REOMAC ® 2009 

Fall Conference 

Quest for 

Excellence in 

a Challenging 

Market 

October 14-17, 2009 • Westin Diplomat • Hollywood, FL 

— Save the Date —

Sid Covers Connecticut! 

More than 36 years of real 

estate experience, including 

21 years in REO exclusively! 

State-of-the-art computerization with electronic capability for BPO’s, digital 

photographs, listing agreements, purchase and sale agreements, and invoicing 

Cradle-to-Grave Capability 96% Sales Price to List Price Ratio 

REOs Exclusively Since 1990 Average 32 DOM Per Property 

• GRI • CRB • Professional Real Estate Association • 

• Greater Hartford Association of Realtors • Fairfield County Board of Realtors • 

• Eastern Connecticut Board of Realtors • Chamber of Commerce • 

Member of REOMAC®, REO Connection & 

The Connecticut Statewide MLS Service 

Sid F. Manning 

Coldwell Banker Manning Realty 

36 School Street 

Glastonbury, CT 06033 

(860) 633-1300 x102 

(860) 831-1000 – eFax 

(860) 202-5482 – Cell 

sidneymanning@aol.com 

www.sidcoversct.com

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