of 2015
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Est ab li s h e d 1 8 7 2
THE
FINANCIAL
www.bankerandtradesman.com
WEEK OF MONDAY, SEPTEMBER 7, 2015
SERVICES
AND
REAL
ESTATE
WEEKLY
FOR
MASSACHUSETTS
A Publication of The Warren Group DISTRESSED PROPERTY
FORECLOSURES IN FLUX
House Of Cards
Title Insurers Won’t Insure Foreclosure Titles Without JUDICIAL DECREE Pinti Decision May Result In Expensive New Requirements
Foray In Investing Turned Sour For Auctioneer BY STEVE ADAMS BANKER & TRADESMAN STAFF
Foreclosures Through The Years Median Sale Price Number of Petitions
14,939
Number of Auctions
13,703
Number of Deeds
6,587
2011
$285,000 8,202
$290,000
2012
Continued on Page 10
9,071 4,888
11,368 7,201 4,422
LESSONS FROM THE CRISIS
The Rise Of The Chief Risk Officer Expensive Position Still Out Of Reach For Community Banks BY LAURA ALIX BANKER & TRADESMAN STAFF
$322,000
2013
A
s lenders pick up the pace of foreclosures in the commonwealth, First American, one of the largest title insurance companies in state, announced last month it won’t insure the titles to properties entering the foreclosure process after July 17, 2015, unless the foreclosing entity has been compliant with the state’s foreclosure laws and “has procured a final decree from a court of competent jurisdiction that shows compliance with the Pinti case.” The announcement, written by First American special counsel Gene Gurvits, included a summary of Pinti v. Emigrant Mortgage Co. Inc., where the Supreme Judicial Court reversed a foreclosure because while the mortgagee followed the state’s foreclosure law, it failed to follow its own requirement to notify the mortgagor of their right to challenge the foreclosure in court. That decision troubled title insurance companies doing business in the Bay State because that sort of error is not ordinarily part of the title record. Any property that a lender begins to foreclose on after July 17, 2015, could have an “invisible” title defect, like Pinti,
and that increases the title insurer’s risk. “The Pinti decision will result in a treasure hunt of the registry of deeds ‘contrary to the purposes of the recording system,’” Gurvits wrote. Gurvits’ memo gave examples of potential problems with insuring titles in light of the Pinti decision, noting that various lenders have different internal requirements and ensuring compliance with them individually will be complex. In addition, the person who signs the affidavit that the default notice was sent out may not be the same person who actually sent it out. “These factors make the insurability of titles based on such affidavits questionable at best,” Gurvits wrote. In a recent interview, Gurvits said he thought the memo was a reasonable response to the Pinti decision and wouldn’t necessarily result in a lot of additional expenses or delays. “I’m not sure it’s going to add a lot of additional work,” Gurvits said. Prior to the decision, the borrower had to vacate the property prior to foreclosure. In the process, the borrower had the right to challenge the foreclosure. It’s the difference between the contract being void [comContinued on Page 8
2010
$295,000
BY JIM MORRISON BANKER & TRADESMAN STAFF
D
aniel Flynn built a lucrative auction business by helping banks and municipalities sell thousands of distressed properties during the real estate downturn of the last decade. In the midst of the collapse, Flynn saw an opportunity to profit by investing in properties directly to leverage his insider’s knowledge of the market. That was the pitch that Flynn, the 52-year-old founder of Daniel J. Flynn Realty Inc., gave when he created DJF Real Estate Opportunity Fund in 2007 and began raising capital from acquaintances. Many knew Flynn through his involvement with groups such as the Doug Flutie Foundation and Boston Bruins Foundation, for which he hosted charity fundraising auctions. Others recognized the Boston College graduate as the wisecracking emcee of the St. Patrick’s Day breakfast in his hometown of Quincy, where he is a longtime
3,409 3,609 2,143
2014
$330,000 5,162 3,180 2,146
CONTENTS
In Person .................................................................. 7
Commercial & Industrial ........................................ 10
Points ....................................................................... 4
Residential .............................................................. 8
Classified Sections ................................................. 12
By The Numbers ....................................................... 6
Banking & Lending .................................................. 9
Records Section...................................................... B1
T
here’s a new sheriff in town and you can call him (or her) “Chief Risk Officer.” If you don’t already have a chief risk officer, or haven’t given it much thought, you can hardly be blamed. It’s a relatively new position, born largely out of the depths of the financial crisis and regulators’ desire to see a more centralized oversight of a bank’s exposure to various types of risk. A chief risk officer, in a nutshell, is a member of the executive team whose job it is to take a holistic view of the bank’s exposure to various kinds of risk – across credit, operations, IT, audit, legal and more – and to help integrate that bank’s risk appetite and risk management into the overall business plan. As recruiters will tell you, finding a good chief risk officer is a tall order – in no small part because the role is largely still evolving. “They’re actually very challenging searches,” said Laura Goode, co-managing partner of the executive talent search Continued on Page 9