San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists

If you sell a lot of Common Interest Developments (CID) or condos and townhomes like me, then you and the seller feel violated every time you are required to order the HOA document package from the HOA.  They have absolute control over you because the HOA is the only entity which can certify and reproduce these documents.  You are not able to sell a condo or a townhome unless these documents are provided to the prospective buyers.

I have not heard about $1,000 bundled fees, but I have never seen a $75 HOA documentation fee either, it is always $300 or $350 from my experience.  This is my opinion, but running documents through a high speed double sided copying machine, does not warrant a $350 up-front fee and 10 days to produce these documents.  I have heard repeated complaints from sellers who have to fork over these charges and receive a bundle often consisting mostly of HOA newsletters and meeting minutes of association meetings along with the requisite insurance and financial documents about the health of the HOA.  Most people do not seem to object to having to pay the HOA to reproduce needed documents, but they do seem to object to paying so much money once they see what they received; thereby challenging the assertions that the feels were “reasonable” charges to actually reproduce said documents.  The law also will create a form which will detail what is required and how much it will cost to obtain said documents.

Governor Brown Signs Bill Preventing Gouging of Condominium/Townhome Buyers

The CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) applauds Gov. Jerry Brown for signing AB 771, a bill that prevents home buyers in a common interest development (CID), such as a condominium or townhome, from being charged excess document fees.

Homeowner associations (HOAs) are required to provide specific documents to prospective purchasers of homes in a CID — a form of real estate ownership in which each homeowner has an exclusive interest in a unit and a shared interest in the common area property. In addition to the standard residential property disclosures, purchasers of a unit within a CID must receive basic information about the structure, operation and management of the HOA that operates the CID.

Current law requires that this information come from the HOA and prohibits it from charging fees in excess of what is “reasonable,” not to exceed the actual cost of processing and producing these documents. HOAs generally have provided the documents for approximately $75 to $250. Increasingly, HOAs have been delegating document preparations to third party vendors or contractors who, under a 2007 court decision, are exempt from this fee limitation. This delegation of responsibility by HOAs sometimes resulted in home purchasers being forced to pay additional fees, as much as $1,000, for other documents which were “bundled” with the required documents.

Assembly Bill 771 (Betsy Butler, D-Torrance) addresses this situation by specifying that only fees for the required documents may be charged when such documents are provided, effectively prohibiting any “bundling” of fees for other documents with these fees. The bill also creates a new form detailing which documents are required, and requires the provider to disclose the fees that will be charged for the documents before they are provided. The seller of a CID must complete this form and transmit it to the prospective purchaser along with the required documents. This will eliminate any uncertainty for the prospective purchaser as to exactly which documents are being provided and the precise fees being charged for those documents.

Leading the way…^® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS^® (www.car.org) is one of the largest state trade organizations in the United States, with more than 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered inLos Angeles.

CALIFORNIAASSOCIATION OF REALTORS^®
Lotus Lou, 213-739-8304

Here is an open letter from CAR’s president, Beth Peerce, discussing the need to get lawmakers and other involved parties to create a more standardized short sale process.  It is a good explanation of the challenges that stand in the way of getting a short sale approved.

When the Federal Government rolls out a new program, it does so by rolling out the program first, then working out the details and bugs after the launch.  Ideally, it would be nice to work out the details and bugs before the program were to be launched.  But when politics are involved, rolling out the program is more important than insuring its efficacy before the rollout.    The same was true for HAMP (Home Affordable Modification Program) when it first rolled out, it took many months before the number of permanent modifications started to increase to acceptable levels.

The Federal Short Sale program called HAFA (Home Affordable Foreclosure Alternative) suffered the same fate.  It was rolled out with much fanfare as it was designed to get all lenders to participate in and streamline the very complicated and fractured short sale process.  The intention to serve the homeowners in distress was certainly there; but the initial execution was much to be desired.

Eight months after its launch in April 2010, there is major make-over or policy update of the program to work out the kinks as that were identified by short sale practitioners like myself from CAR (California Association of Realtors).

Some of the more significant changes involve:

1. Loan Servicer no longer being required to verify financial information
2. Properties now being permitted to be vacant or rented out for up to 12 months
3. 6% cap on second liens being withdrawn
4. Loan Servicers are required to respond within 30 days to short sales request

The full text of the HAFA policy update is attached below.

The changes  were designed to speed up the slow process by which many of the loan servicers were handcuffed and still pushing paper,  rather than moving quickly towards the approval process to fight off  foreclosures, which is the ultimate goal.  Hopefully these changes will permit them to reach that goal.

I had written a little while back about Senate Bill 1178 to extend the anti-deficiency protection to those homeowners who sought to lower their interest rates by re-financing.  Unbeknownst to them, that simple act of wanting to lower their monthly mortgage payments stripped homeowners of an important legal protection.   CAR (California Association of Realtors) sponsored the bill and issued a consumer alert and prompted consumers to contact their local representatives to voice their opinion.

It seems consumers heard and contacted their local politicians.   Now it needs to pass the State Assembly.   This bill would truly address an inequity which needed to be addressed. People should not lose their homes and still be indebted to banks just because of their desire to lower their monthly payments by re-financing their mortgages.

C.A.R. issues consumer alert on refinanced mortgages
C.A.R. issued a consumer alert yesterday warning borrowers of the liability associated with refinanced mortgages.  To help protect consumers, C.A.R. is sponsoring Senate Bill 1178 by State Sen. Ellen Corbett (D-San Leandro) to extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and now are facing foreclosure. The Senate may vote on the bill as early as next week.

Currently, if a homeowner defaults on a mortgage used to purchase their home, the homeowner’s liability on the mortgage is limited to the property itself.  While this law has helped protect borrowers since its inception in the 1930s, it does not extend the protection for purchase money mortgages to loans that refinance the original purchase debt—even in cases where the loan was refinanced to achieve a lower interest rate.

The above is an alert issued by C.A.R.  (California Association of Realtors)

Most of the clients who come to me to discuss short sales  do a lot of research online and come with the knowledge that California is a Non-Recourse State.  This means the lenders cannot come after the homeowners beyond the property itself (for any deficiency)  if the original intent  the mortgage was to purchase the property, as mentioned above.

What most borrowers  do not realize is that the moment they re-finance to take advantage of lower interest rates, the intent of the money changes to their detriment. Whether the borrower took advantage of a lower interest rate, or cashed out to pay down credit card bills, or to use as down payment on a second property, or to start a business, the nature of the money changes and the protection disappears.   Most loan brokers who were pushing re-finances during the past few years did not inform their clients of the elimination of  this important legal protection.  To be fair, most loan brokers or real estates agents probably were not even aware of such consequences.   But the fact remains,  that for many borrowers, if they were aware of such protection disappearing, perhaps they would not have been so quick to refinance.

SB 1178 is designed to extend that protection once again.   This truly is something that all of us consumers must rally behind, it is simply the right thing to do.   A homeowner should not lose this important legal protection because they want the opportunity at qualifying for lower monthly payments when times are tough.   But guess who is fighting against this measure: the Banks and their lobbyists.

Contact your local State Senator and make sure your voice is heard.   Take back your legal protection.

The buzz in the recent weeks around here for me has been about the newly resurrected California Tax Credit.  It is certainly causing the fence sitters, who thought they did not have enough time to qualify for the Federal Tax Credit,  to dive head first into the purchase market now they have more time to qualify for another program that is possibly worth more.  HOWEVER, THERE IS A SMALL WINDOW OF OPPORTUNITY where a buyer may BE ABLE TO QUALIFY FOR A TOTAL OF $18,000 combined credit.

To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.   Please check with your tax professional for specific details.

The issue for the California Tax Credit is that it is limited to $200 Million in total, hence it the fund runs out before the deadlines, you will be left holding the bag like last year.  First come First Served basis again.

Here is a quick side by side comparison to help clarify matters of concern.