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» "It's clear that the low supply of homes for sale is continuing to pressure prices," Harris said. "And there is definitely concern that such steep price spikes will cause an affordability issue." Condominium sales statewide also dropped for the second straight month in March. They fell more than 2 percent to 1,211, the group reported. A total of 3,083 condo sales were recorded in the first quarter, a near 1 percent increase from 3,057 last year. The median price for condos sold in March was $261,000, up 1.5 percent year-overyear. The first-quarter median condo price was also up, rising 1.6 percent to $250,000. Meanwhile, Massachusetts experienced a steep 82 percent year-over-year drop in foreclosure starts in March. For the month, lenders in the Bay State filed 284 petitions to foreclose in March compared to 1,621 a year ago. Petitions represent the first step in the foreclosure process in the state. In Q1, lenders filed 2,080 petitions, down 52 percent from 4,348 from last year. "Overall, we're seeing foreclosures drop all over the country, but Massachusetts is exceptional in its reduction. The Mortgage Bankers Association reports that we rank 48th in foreclosures started in the first quarter of 2013," said Timothy M. Warren Jr., CEO of the Warren Group. "Foreclosure prevention efforts combined with a booming real estate market are leading to fewer foreclosures." Foreclosure deeds, or completed foreclosures, also made a sharp drop, decreasing by 74 percent to 227 in March compared to 899 a year ago. In Q1, the Bay State saw 716 completed foreclosures, down nearly 71 percent from 2,465 during the same quarter a year ago. The Warren Group also tracked auction announcements and found the total fell 67 percent to 398 in March compared to 1,214 a year ago. Over the first quarter of this year, auction announcements declined to 1,102, down more than 73 percent compared to a year ago. STAT INSIGHT 7.5% Massachusetts' mortgage delinquency rate as of March. Source: Lender Processing Services Michigan rank: 39 90+ Day Delinquency Rate Foreclosure Rate March 2013 2.5% Unemployment Rate 1.5% 8.5% year ago 3.0% 2.3% 9.0% year-over-year change -15.0% -36.3% -5.6% Top County SanilaC CounTy 90+ Day Delinquency Rate March 2013 2.9% Foreclosure Rate 2.6% year ago 3.7% 3.6% year-over-year change -20.8% -27.9% Top Core-Based Statistical area ColdwaTer, Mi 90+ Day Delinquency Rate Foreclosure Rate March 2013 2.6% 2.4% year ago 2.5% 3.8% year-over-year change 4.2% -35.2% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the March 2013 foreclosure rate. All figures are rounded to the nearest decimal. The unemployment rate reflects preliminary March 2013 figures released by the Bureau of Labor Statistics. All other data courtesy of LPS Applied Analytics. FROM THE BENCH Appellate Court Rejects Condo Association's Argument of Interest Conveyance It appears that the continued legal wrangling in Michigan between mortgage servicers and condominium associations may be coming to an end. Ever since a controversial trial court decision in 2005, the Condominium Bar has been promoting an interpretation of the Condominium Act that claims an assignment of the first mortgage after the recording of an association lien results in the mortgage losing its priority, Greenbrooke vs. Hubble & Midfirst Bank, Oakland County No. 12-2005 (11-2-05). This claim was based on the assertion that an assignment was a "conveyance" of an interest in the unit, thus triggering section 211 (MCL 559.211), which requires a fee payoff request to the association. Those who disputed this conclusion pointed out that such an interpretation ignores (or at least VISIT US ONLINE @ DSNEWS.COM contradicts) clearly stated language found in other relevant provisions of the act, most notably Sections 211 and 158. The intended effects of this theory were clear: to disrupt the foreclosure of the first mortgage by causing it to fail to extinguish the junior condominium lien and subsequently subjecting the mortgagee to all past unpaid assessments, late fees, and condominium attorney fees. Unfortunately, this seemingly tenuous legal theory was given additional creditability by the decision of most title insurers to refuse to insure over the junior condominium lien when the first mortgage was foreclosed. This unresolved legal tension led to a number of trial court battles. Despite the fact that a significant majority of the decisions found in favor of the assignee of the first mortgage maintaining its priority position, the litigious back-and-forth continued. After years of debate, the issue was heard by the Court of Appeals on October 10, 2012, and a published decision was issued on October 25, 2012, Coventry Parkhomes Condominium Assoc. vs. Federal National Mortgage Association, _____ Mich. App._____, No. 304188 (10-25-2012); reconsideration denied 12-18-12. The Court of Appeals did not agree with the association and upheld normal "racenotice" principles. The strongly worded decision states there is nothing in the Condominium Act that could or should be interpreted to change the longstanding principal that an assignee stands in the shoes of the assignor. During oral arguments, the court displayed little sympathy for the association's arguments, going so far as to make it clear that, in the opinion of the court, such an idea could inject an element of chaos into the mortgage market. While this decision resolves what has been a nagging problem for the mortgage industry—and, in the process, promises to eliminate hundreds of thousands of dollars in improper association charges—other issues continue to generate similar discussion and debate. One of the most noteworthy of these is the issue of precisely when a sheriff's deed vests its title. While that question has been consistently answered by dozens of published opinions over the century and a half (and was recently restated in In re Receivership of 11910 South Franklin Rd. 492 Mich. 208, 821 NW2d 503 (730-12)), some members of the Condominium Bar continue to argue otherwise. This "From the Bench" article was contributed by Charles L. Hahn, a senior litigation attorney with Trott & Trott, P.C., in Farmington Hills, Michigan. 95

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