California Association of REALTORS® Sends Letter To Major Lenders

The letter written by CAR President Beth L. Peerce was address to major top 4 lenders and services urging improvements in the short sale process.  They include Bank of America, JP Morgan Chase, Citigroup, and Wells Fargo.

In the letter, C.A.R. President Beth L. Peerce stated, “As public attention continues to be focused on the real estate industry in hopes of signs of a housing recovery, we trust you’ll agree that change in your short-sale process is critical.”

“We believe banks, investors, homeowners, and real estate professionals all have a common interest in conducting these transactions expeditiously and efficiently. The housing market recovery is in everyone’s best interests, and your urgent focus on these issues will help achieve that end,” Peerce continued in her letter.

Listed below are the suggestions to improve the short sale process.

• Provide realistic time frames and then meet those time frames.
• Provide a comprehensive list of information needed upfront.
• Provide approval requirements upfront that, if satisfied, would assure the borrower of a short sale approval.
• Disclose whether a loan you service is owned by you or if others own it. If others own it, provide time frames for approval. Be clear on who has final authority.
• Pre-approve the short sale and price upon request, prior to the property being listed.
• Review and respond with an approved offer to a borrower’s short-sale request within 30 days of receipt of the request. If rejected, be explicit on why, and how it can be corrected.
• Do not “restart” files from square one if something is missing. Allow the correction and continue, without bumping it to the back of the line.
• Have a person available who can inform the borrower about the file’s status and shortcomings, and who can assist in problem-solving.
• Increase the speed of processing files. Often, a single home goes through the process numerous times, resulting in months elapsing and buyers losing interest. The pre-approvals and cumulative files discussed above will dramatically assist this effort.
• Increase the amount junior lienholders receive. This is a common reason why short sales fail.
• When the property is cleared for sale, be explicit that there will be no recourse on the notes as required by SB 458, which now is in effect.

I believe these suggestions would go a long way in improving the short sale process. Most believe having a short sale is better on a neighborhood than a foreclosure.  The foreclosure process is taking way to long and the home sits empty and uncared for in the process.

SB-458 has taken away the risk for most homeowners of having a junior lender come back after them for recourse.  Improving the approval time frame and giving a green light early on in the process will keep buyers from having to write multiple offers in the hopes of finding one short sale that is approved.

Visit our short sale category for more details.

Photo courtesy of Flickr.

California Tops In Short Sale Fraud

First the FBI announced a crackdown on short sale fraud, and then Freddie Mac  they are teaming up to go after bad real estate agents.  Freddie Mac short sales have increased from 4% of completed workouts in 2000 to nearly 14% in 2010.  The California Department of Real Estate has also issued a consumer alert.

As you can see from the image above, California is in the top states for short sale fraud.

Why are they going after real estate agents?

Since short sale fraud requires the cooperation of one or more real estate professionals involved in the transactions, we have begun reaching out to Realtor associations in target markets to educate them about the latest trends in short sale fraud, the red flags to watch for, and what actions they can take to stop it. We strongly believe responsible Realtors are America’s natural first line of defense against such scams.

There should be a special circle of H*ll for agents that participate in such deception.  The article goes on to give examples of possible short sale fraud.

Falsely indicating on a new short sale listing that there is an offer on a property in order to discourage legitimate offers and protect an accomplice’s planned low bid.

Manipulating the short sale listing price by making the house look more distressed than it really is (“reverse staging”), inflating repair estimates, or using similar tactics designed to obtain an artificially low home value on the Broker Price Opinion. (Our requirements prohibit the buyer, buyer’s agent, buyer’s attorney, or a third-party short sale negotiator to be the contact point for the agents preparing the BPO.)

“Flipping” schemes where the fraudster “buys” a house at a short sale without putting down any of his own money and then sells it a few hours (or days) later to a legitimate buyer at a much higher price. These are complex multi-step schemes that use falsified title and/or loan documents to fool a lender into approving the ultimate buyer’s mortgage, which the fraudster uses to settle the earlier closing on the house he “acquired” at the short sale for a much lower price.

Manipulating the HUD-1 settlement statement so the fraudster can skim away net proceeds from the sale for himself or other parties in the transaction without the seller’s or investor’s knowledge. (The HUD-1 is the document that itemizes all fees, charges, and other funds involved in a home sale.)

Download full FBI report by clicking image below:

Photo courtesy of Flickr

Hat tip to Jacques Albrecht for sending me this article on The Street titled “A Huge Housing Bargain — But Not For You.”  I had seen the Request For Information (RFI) earlier in the month, and had not really struck home what direction the Government may be going in.  As you know I always try to be balanced in my perspective on San Diego Lifestyle and provide facts, not spin to my readership.  This however really stinks.

The source of this article was from Real Money in a column by Roger Arnold that suggests the Request For Information (RFI) is just a way for the Federal Government to get input from from the private sector to accomplish the goals set out in the RFI.  This is just a facade according to the article since the RFI was structured by the investors to begin with.

You can view or download a copy of the Request For Information below and judge for yourself from the link at the bottom of this post.

Here is what the article had to say Roger Arnold article had to say:

NEW YORK (RealMoney) — The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors — vulture funds.

These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.

You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs(GS_) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.

What can be done about this?  I will be keeping a close eye on this as it develops. If indeed, it goes in the direction that the article suggests, I will be very surprised if there won’t be heavy push back from the Taxpayers and from the National Association of REALTOR®.  Once again, in my mind the taxpayer is bailing out another special interest group and paying the bill.

Assuming taxpayers don’t push back, the next step will be to issue a Request for Proposals (RFP). The RFP will be the bid and plan for these homes by investors.

The way to keep taxpayers from pushing back is to structure the RFI so that the real intention, the bulk sales, is masked by feel-good goals, such as stabilizing neighborhoods and increasing the supply of rental properties.

Is the American taxpayer really that stupid?

View of download the RFI by clicking the image below.

Bank of America specialists will be at the San Diego Convention Center to help those in financial need from this Thursday through Saturday, August 11th – 13th, 2001.  You can find more information about the outreach at the official site.  This is only for customers of Bank of America.

The specialists are supposed to have information on loan modifications, assistance programs, and other options available to you.

According to an article on Sign On San Diego written by Lily Leung, Bank of America is one of the 3 banks that failed to make the grade in the Federal HAMP program.

In June, Bank of America and two other loan servicers failed to make the grade in a federal program that modifies mortgages to help families stay in their homes, the Obama administration said.

Bank of America, JPMorgan Chase Bank and Wells Fargo Bank were cited as “in need of substantial improvement” in the Home Affordable Modification Program, or HAMP, which aims to permanently modify mortgages.

To schedule an appointment call  1-855-201-7426 and here is what you will need to bring according to them.

Photo courtesy of Flickr

One of the biggest mistakes a distressed homeowner can make is to rely on advice from family, friends, or real estate agents regarding alternatives to foreclosure.  Real Estate agents are licensed and experts in real estate matters, and they are breaking the law by dispensing any legal or tax advice.  Since a real estate agent has a opportunity to make a sales commission on a short sale, and does not on a foreclosure, guess which one unscrupulous agents recommend?

One resource that I often refer is a service offered by Pete Solecki he calls “distressed property” review.

We all know that Attorney’s are expensive and work on a per hourly basis from $300 to upwards of $500.00 per hour.  What you don’t want to be in a distressed position is “penny wise” and “pound foolish”.  The “distressed property” review may save you thousands of dollars from making the wrong decision on a loan modification, short sale, or foreclosure.

For this program Pete Solecki charges $375.00 which is his normal hourly rate.  With that you get much more than an hours worth of value as the program covers the following after you have mailed or e-mailed the requested documentation.  He will take personal checks or credit cards, talk with his office regarding your payment options.

• Set up either an in-person office or telephone conference at your preference.
• Focus on the three primary questions that homeowners have which are how will this effect my credit, how will this affect my taxes, and can or will a lender come after me for a deficiency?

At our meeting I do not tell you what to do, rather I try to give you a road map of what to expect so you can anticipate issues and determine how best to proceed.  For tax issues, only your tax advisor, who knows your personal tax situation, can give you definitive answers but I tell you the tax framework so that you know what to ask your tax advisor.  That meeting or phone call usually lasts about an hour and a half.  Thereafter I take follow-up calls at no additional charge.  I have done this hundreds of times and my clients have found the information to be quite useful when facing this type of situation.

To get started on this program give Pete’s assistant Brandy a call to set up and appointment.  She will supply you in an e-mail all the documentation that you’ll need to scan and e-mail or mail into the office.  The office phone number is 877-309-4747.  They are in the process of moving from Rancho Bernardo to the Bankers Hill area.

If you would like to know more about Pete Solecki please visit his website or read a post about him that I wrote several years ago.

The important thing to remember is that you’re not along in this.

The first step towards a better life is for you to take action and reach out for help – waiting only makes your options disappear one by one.  I know from personal experience how difficult, confusing, and stressful this can be.  Please read “Financial Hardship, Don’t Let Fear Keep You From Action”.

For more information on Short Sales, Short Sale Help, or Foreclosure please visit our categories.

Photo Courtesy of Flickr

The California Department of Real Estate has just published a consumer “Loan Modification Self-Help Guide” with tips for doing your own loan modification to save your home.  This process can be done by the homeowner who should avoid at all costs paying someone up front to do a loan modification.

A loan modification is basically a re-structuring of your current loan term, interest rate, and/or payments.  Sometimes some of the principle balance (loan amount) could be forgiven  or the loan terms could be extended.  Loan modifations are a tool to avoid a “short sale” or foreclosure for those homeowners that qualify.

How do you qualify?

• You must have consistent and sufficient income to cover your new payments or your request will likely be denied.
• If a foreclosure on your home is imminent and the sale date is soon, your request will be denied.
• You cannot be in a bankruptcy proceeding.
• The home needs to be your principle place of residence.

Thought I would update everyone regarding the foreclosure timeline in California.  This information is provided by the California Association of REALTOR® and is current of March 2011.  If you want more information please visit our Foreclosure or Short Sale Category.  We also offer foreclosure search by City of Zip code here. Please keep in mind that this is subject to change without notice, but is accurate as of March 2011.

In California, lenders who intend to foreclose on a property when the loan is delinquent typically use the nonjudicial foreclosure process also known as a trustee’s sale. This process is less expensive for the lender than the judicial foreclosure process. A nonjudicial foreclosure doesn’t require a court proceeding and, thus, is a more expeditious process. From here on, whenever the term “foreclosure” is used, it is referring to a trustee’s sale.

With foreclosures being so prevalent and with so many homeowners being at risk of losing their homes to foreclosure, REALTORS® need to be able to assess whether they have sufficient time to market the property and close escrow before the property is lost to foreclosure. Therefore, this article provides a foreclosure timeline to assist REALTORS® in their assessment of the time remaining before a possible foreclosure occurs.

Several recent laws have impacted the foreclosure timeline. The California legislature added an additional 90-day extension period after the recordation of the Notice of Default (NOD)—California Civil Code Sections 2923.52-2923.55. However, those statutes were repealed effective Jan. 1, 2011.

Another law which expires Jan. 1, 2013—California Civil Code Section 2923.5–affects the foreclosure timeline but only for loans made between Jan. 1, 2003 and Dec. 31, 2007 on residential one-to-four unit owner-occupied properties. This law adds a 30-day borrower contact period before the lender may record the NOD.

“Days” in the foreclosure timeline are “business days,” defined as all days other than Saturday, Sunday, and holidays. See California Civil Code Sections 7.1 and 9 for more information.

The California Association of REALTORS® breaks the process down depending on when the loan was taken out.  The first time frame for the California Foreclosure process is January 1, 2003 to December 31, 2007.

Loans Made Between Jan. 1, 2003 and Dec. 31. 2007 on Residential One-to-Four Unit Owner-Occupied Properties:

DAY 1: CONTACT THE BORROWER:

Under Cal. Civ. Code § 2923.5(a) the lender must contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure.  During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days.  The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.

Note:  In the 2010 case, Mabry v. Aurora Loan, the court held that a borrower can file an injunction to postpone the foreclosure sale if the lender doesn’t comply with this law, but cannot overturn the foreclosure once it has been conducted.

DAY 31:  RECORD THE NOD:

The NOD must be filed in the county where the property is located. The language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).

The NOD must include the lender’s declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property (Cal. Civ. Code § 2923.5(b)).

Within 10 days after recordation of the NOD: A copy of the NOD must be mailed by registered or certified mail to the borrower/trustor and to any parties with a recorded Request for Notice as indicated in Cal. Civ. Code § 2924(b)(1).  (Cal. Civ. Code § 2924b(b).)

Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3).

DAY 116 – 121:  RECORD THE NOTICE OF TRUSTEE’S SALE:

The Notice of Trustee’s Sale must set forth the date, time, and place of the auction.  It must also include the total amount of the unpaid balance and reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice.  It must be recorded, posted, published, and also mailed by registered or certified mail as well as first class mail to the borrower (Cal. Civ. Code § 2924f).

25 days prior to Trustee’s Auction:  Notice of Sale sent to IRS in case there is an IRS lien recorded more than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4); 26 U.S.C. 7425(b)).

20 days prior to Trustee’s Sale:  Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Auction: Notice of Sale publication begins (must run once a week for 3 consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Sale:  Notice of Sale must be mailed by registered or certified mail to everyone who is entitled to receive a NOD.  In addition, the Notice of Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ. Code § 2924b(b)-(c)).

DAY 135:  LAST DAY TO CURE DEFAULT:

Up to 5 business days before the Trustee’s Sale, the borrower may reinstate the loan (bring the loan current) by paying the missed payments plus allowable costs. Note:  If the auction is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).)

DAY 141:  TRUSTEE’S SALE FORECLOSURE:

After the last day to cure the default, the borrower still has the right to redeem the property but he/she must pay the entire debt, plus interest and costs before the bidding begins at the Sale (Cal. Civ. Code §§ 2903, 2905).

At the Trustee’s Sale, the property is sold through a public auction to the highest bidder.  Title is transferred to the successful bidder by Trustee’s Deed.

All Other Loans:

DAY 1:  RECORD THE NOD

The NOD must be filed in the county where the property is located.   The language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).

Within 10 days after recordation of the NOD: A copy of the NOD must be mailed by registered or certified mail to the borrower/trustor and to any parties with a recorded Request for Notice as indicated in Cal. Civ. Code § 2924(b)(1).  (Cal. Civ. Code § 2924b(b).)

Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3).

DAY 86 – 91:  RECORD THE NOTICE OF TRUSTEE’S SALE

The Notice of Trustee’s Sale must set forth the date, time, and place of the Sale.  It must also include the total amount of the unpaid balance and reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice.  It must be recorded, posted, published, and also mailed by registered or certified mail as well as first class mail to the borrower (Cal. Civ. Code § 2924f).

25 days prior to Trustee’s Sale:  Notice of Sale sent to IRS in case there is an IRS lien recorded more than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4); 26 U.S.C. 7425(b)).

20 days prior to Trustee’s Sale:  Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Sale: Notice of Sale publication begins (must run once a week for 3 consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code § 2924f(b)).

20 days prior to Trustee’s Sale:  Notice of Sale must be mailed by registered or certified mail to everyone who is entitled to receive a NOD.  In addition, the Notice of Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ. Code § 2924b(b)-(c)).

DAY 105:  LAST DAY TO CURE DEFAULT:

Up to 5 business days before the Trustee’s auction, the borrower may reinstate the loan (bring the loan current) by paying the missed payments plus allowable costs. Note:  If the Sale is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).)

DAY 111:  TRUSTEE’S SALE FORECLOSURE:

After the last day to cure the default, the borrower still has the right to redeem the property but he/she must pay the entire debt, plus interest and costs before the bidding begins at the Sale (Cal. Civ. Code §§ 2903, 2905).

At the Trustee’s Sale, the property is sold through a public auction to the highest bidder.  Title is transferred to the successful bidder by Trustee’s Deed.

Bottom Line:  The minimum time for a trustee’s sale foreclosure (nonjudicial foreclosure) is 110 days after the NOD is recorded for most loans (plus 30 days for loans made between Jan. 1, 2003 and Dec. 31, 2007 on owner-occupied residential one-to-four unit properties).

If you would like to preview or download a printable version of this document please check here.

If you are looking for alternatives to Foreclosure visit out short sale help category including Deed For Lease Option, and know your options before loosing your home.

Readers who require specific advice on the California Foreclosure Process should consult an attorney.

San Diego Lifestyle Adds Foreclosure Data for San Diego.

I have finally had some time to add the latest foreclosure statistics which are updated business days from Foreclosure Radar.

You can search for foreclosure data based on location, city, state, zip, or street address HERE.

You can find individual foreclosure statistics for:

• Del Mar
• Coronado
• Downtown San Diego
• La Jolla
• Mission Hills
• Rancho Santa Fe
• San Diego County

If you are interested I can prepare an e-mail a complete foreclosure report for the area you are interested in.  For an example of what these charts look like check out San Diego County listed below:

One of the important factors in deciding what to price a home in San Diego County for sale, or to purchase a home is how many foreclosures and in the immediate area.  The more distressed properties the more likely the prices may continue to move downward as Banks bring the real estate owned (REO) homes at aggressive prices.

I would suggest that you bookmark this page as it is updated on a regular basis.  If you want to search for active distressed properties please visit our Foreclosure page which includes a chart of the foreclosure process.

The chart above shows San Diego County foreclosures including both Notice of Default and Notice of sale for the last 12 months.  Notice of Default (NOD) is the first public notice that the owner is in financial difficulty and starts the foreclosure process.  Historically this can be filed as early as several missed mortgage payments, but Banks may take months to record the NOD.  The Notice of Trustee Sale can be recorded as early as 3 months from the filing of the NOD.  Once the Notice of Trustee Sale has been recorded the initial auction date can be scheduled as little at 20 days, but many are postponed for up to one year.

The second chart indicates cancellations of auction dates, percentage of homes that went back to the Bank (REO), and those purchased by a third party.  Third party sales are cash investors that are flipping the properties for profit or holding for investment.

The third chart indicates the change in percentage from the previous year on Pre-foreclosure homes or Notice of Default, scheduled for sale, and bank owned properties (REO).

Finally the 4th chart shows the time to foreclosure percentage change from the previous year, time to re-sell on a Bank Owned Property, and time to re-sell on a 3rd party (investor) sale.

Deed For Lease  - Another Know Your Options

Many people don’t realize that Fannie Mae has a Deed-for-Lease Option available for those homeowners that want to stay in their home.  This program may be available for those that:

• Are ineligible to refinance or modify their mortgage.
• Facing long-term hardship.
• Several months behind on your mortgage payments.
• Owe more on your home than it’s worth.
• Have not been able to sell your home.
• You want to remain in your home and neighborhood.

The first step is to find out who owns your loan.  Other lenders may or may not have similar programs so be sure to check with your lender.  You can find out if Fannie Mae owns your loan and the Deed for Lease Option on the loan lookup page.

So what are some of the benefits of the Deed For Lease Option?

• Eliminate or reduce your remaining mortgage debt
• Resolve your delinquency and avoid foreclosure
• Stay in your home and neighborhood—no need to move or relocate
• Lease at current market rate rent for up to 12 months with a possible option to extend the term
• Pay no security deposit
• Assistance for relocation may be available at the end of your lease
• Start repairing your credit sooner than if you went through a foreclosure
• May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) by executing a DIL than if you went through foreclosure (at least 7 years)

How does the Deed for Lease Program work?

• Your mortgage must be owned by Fannie Mae
• Your mortgage company will refer you to a property management company that will inspect your property and review your financial information
• You will sign a lease agreement (if you qualify for the program)
• You will sign a Deed-in-Lieu of Foreclosure (DIL) to transfer title to the property to them
• Your lease becomes effective once the DIL is complete/accepted by them
• You will remain in the property according to the lease terms paying monthly rent
• The property management company will manage the property and collect the monthly rent

If you want to know your options visit the Fannie Mae website or our HAFA short sale page.  More information can also be found in our Short Sale and Foreclosure categories.

Fannie Mae has just announced www.knowyouroptions.com.

Another resource for people in real estate financial hardship was launched the other day by Fannie Mae called Know Your Options.  The Fannie Mae site has lots of information links and an interactive video.

Here are a few of the major links to resources:

• Contact a housing counselor at 888-995-HOPE.
• Check to see if your loan is owned by Fannie Mae here.
• Financial Checklist from Fannie Mae.
• Refinancing options or loan modification options.
• Deed for lease program.
• Options for leaving your home like a short sale or Deed-in-Lieu.

Unfortunately many of the people offering hope and assistance are frauds.  Check out loan scam alert and prevent loan scams.

Most important find out how you can take action.  Nothing will get better by delaying the process, but taking the first step towards getting help will.

A HUD-approved housing counselor is an experienced, trained professional who can advise you on preventing foreclosure, buying a home, protecting your credit, and other issues. The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country and counseling is available in many languages.

A housing counselor can talk to you about your situation and help you decide what mortgage options are best for you, whether you are concerned about falling behind on your mortgage or are preparing to buy a home. There is no charge to work with a HUD-approved housing counselor—help is free!

If you have missed any mortgage payments, are about to miss a payment, or if your loan already has been referred to an attorney for foreclosure, a HUD-approved housing counselor can help you assess your circumstances, identify your options and prepare you to talk with your mortgage company.

The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country and counseling is available in many languages.

Foreclosure Avoidance Counseling

There is no charge for working with a HUD – approved counseling agency.  Before calling you should have the following information together.

• Mortgage statements including any 2nd or Junior mortgages.
• Other monthly debt like car, student, or other loans.
• Your income details including pay stubs and income tax returns.

Fannie Mae has put together a handy form to gather this information.  Financial checklist or Contact Information Sheet.