Tag Archives: chase

Pay your Homeowner Association Due, even if you don’t pay your mortgage

Posted on by

 

This is one thing I advise all of my clients who have HOA (Home Owner Association)  payments: please do not fall behind on HOA dues.  HOAs are playing hardball and much harder to negotiate with than lenders.

As a matter of fact, I have one right now, where we are dealing with the attorneys that the HOA hired due to back dues not being paid.  It is a sticky mess with threats and the attorneys demanding fees and refusing to settle for less, etc…

Richard provides an excellent breakdown and it is actually happening to one of my clients as he described in his post.

Steve

 

Via Richard Zaretsky, Florida Real Estate Attorney (Richard P. Zaretsky P.A. – Board Certified Real Estate Atty):

My law practice today involves dealing with lots of borrowers (for foreclosure solutions) and lenders (for foreclosure prosecution).  One of the most prevalent financial situations with a borrower whose property is subject to a condominium, homeowner or property owner association is that they stop paying the association’s assessments.  Although this usually amounts to the smallest lien on the property, it often is the hardest part of a solution for a homeowner.

In most states, and particularly in Florida, the association obligation is like real estate taxes, meaning it can result as a lien upon the property and that lien can be foreclosed, just like a mortgage, forcing the sale of the property.  But the association obligation is in one respect even more powerful than real estate taxes, which are not a “personal” financial obligation of the property owner (meaning the taxing authority cannot sue you personally for the unpaid financial obligation). Association obligations are both a lien on the property AND a personal financial obligation.  This makes it the same as a recourse promissory note secured by a mortgage.

THE ADDED COST OF ATTORNEY FEES AND COURT COSTS

Collection of unpaid association obligations can be expensive for a homeowner.  I can point to several examples where the amount of the “dispute” regarding the association fees was a few thousand dollars, and the costs and attorney fees regarding the collection of the few thousand dollars amounted to 4 or 5 times the disputed amount.  Imagine, you did not pay (rightly or wrongly) $1,000 in association fees and you end up owing $6,000 to the association to save your home from foreclosure.  That example is all too much of a reality.

BE A GOOD NEIGHBOR

Consider also that if you want to sell your home in a short sale, you want to have the obligations of the community as up to date as possible, so a buyer is scared away by unknown and expected special assessments.  Do you want to be part of the solution (that will ultimately help you and your neighbors) or part of the problem?  Usually the amount of the monthly or quarterly assessments is a fraction of the mortgage not being paid.

BARE BONES EXISTENCE

Associations now have the right to refuse common area amenities.  This can be resident access to the community, cable, and recreation amenities. The Florida condominium language on point says: If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association, the association may suspend the right of a unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid.  The homeowner association statute is similar:  If a member is delinquent for more than 90 days in paying a monetary obligation due the association, an association may suspend, until such monetary obligation is paid, the rights of a member or a member’s tenants, guests, or invitees, or both, to use common areas and facilities and may levy reasonable fines of up to $100 per violation, against any member or any tenant, guest, or invitee.

ASSOCIATIONS GRAB RENTAL INCOME

Associations now have the right to collect the rent as if they were the landlord of your unit, if your unit is rented.  Or they can refuse to allow you to rent if you are delinquent. See COLLECTION OF DELINQUENT ASSESSMENTS THRU RENT – POWERFUL TOOL FOR FLORIDA ASSOCIATIONS and COMMUNITY ASSOCIATION AS LANDLORD – WHO GETS THE RENT?

LOSE YOUR PROPERTY AND STILL HAVE TO PAY

Let’s say your property goes up for a foreclosure sale and the bank or a third party acquires the property in the court mandated sale.  You STILL owe the association for any assessments that were unpaid at the time of the foreclosure sale and you can be sued personally wherever you may be for up to 5 years – and a judgment against you could be good for up to 20 years.  And it does not matter that you moved to another state or another country.  See CAN YOU RUN AWAY FROM A MONEY JUDGMENT?

BANKRUPTCY IS NOT A SOLUTION

We never advise our client to not pay an association. Even a property owner going through bankruptcy cannot avoid the effect of the association lien – it remains on the property as only the personal obligation up to the time of discharge by the bankruptcy court is uncollectable against the property owner.  But the assessment lien can still be foreclosed as a lien on the property.  And the debtor, if they still reside in the property after the discharge, again become personally liable for the assessments that became due after the bankruptcy discharge.

Brokers, Agents and their clients need to understand the important issues surrounding association assessments.  If you are taking a listing, or buying the property, find out in advance the procedures for approval of a buyer and the status of the property owner regarding the obligations.

————————————————————–

Copyright 2011 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com  - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW -FORECLOSURE SOLUTIONS - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com     New Website www.Florida-Counsel.com .

See our easy to understand articles at:

TABLE OF CONTENTS – SHORT SALE AND LOAN MODIFICATION ARTICLES

 

My numbers are 48, 99.25 and 1. Why should a home-seller care?

Posted on by

 

My numbers are 48, 99.25 and 1.  What am I talking about?   Let me explain.

 

I was asked to find a listing agent for a friend who lives in the LA area.  As I am in the business, he thought I would have a better chance of finding him a good listing agent, rather than filtering through the tons of marketing material he receives which didn’t give him much information on determining how effective an agent was at selling homes.  He wanted to cut through the fluff.

 

I must agree, trying to find a good agent on the web and even calling managers of brokerages to ask for referrals of top producing agents in their respective offices did not seem to work out well for me either.  I guess I am seeing the struggles that the consumers have in finding specific and useful information about real estate agents out there.  As practitioners in our local areas, we all sort of take it for granted we know the power players in the area.  What we need to provide more of is hard data and less hyperbole about what good real estate agents we all are.  It is precisely these types of data that consumers need to make informed decisions.  And consumers, ask for performance data, you have to do your own due diligence to find the right agent to represent you.  At the end of the day, it is your decision and you must choose wisely.

 

What really puzzled me was why managers would give me names of agents who were not their top producing agents and who did not have the extensive listing experience when those two specifics qualities were what I requested.   I asked for people who were top producing listing agents and ones who had a good inventory of listings in or around my friend’s neighborhood.

 

Of the several names I was given, when I went to their websites and other resources to check up before I made contact, I discovered several were “new agents” with no listing inventory at all and others who were supposed “top producers” really did not have much volume of business in the past couple of years.  I was not trying to embarrass anyone, but I had asked for specific type of agents, but on several occasions, I was given  candidates that did not match the requests.   And the term “Top Producer” is obviously used very loosely out there because everyone claimed to be in that category.

 

Of the others who did carry the inventory and the volume that I had requested, when I asked for their average DOM (days on market) and list/close price ratio, only one was able to give me straight a straight answer.  Others gave me double talk and said they did not know the exact numbers, and would get back to me.  These were supposed to be top produces in their respective offices, yet they did not know their stats?   I’m pretty certain most top producers in a real estate office know their sales stats inside and out; or at least these two that most realtors discuss in their listing presentations.  It may be different in LA, but here in Silicon Valley, where we are over-represented by engineers, data reign supreme, so we need to know our numbers.

 

What are my numbers?  48 days is my average Days On Market (DOM);  99.25% is my average list/sale price ratio and #1 was my office ranking in 2010 at Keller Williams Cupertino.  I am proud of my stats because I worked very hard at them over the years and I certainly know them and am willing to share.  So all those self professed “Top Producers” out there, let’s use data to support our claims.  What are your numbers?

 

The perfect time for a short sale – top 3 reasons

Posted on by

 

 

It is this San Jose Short Sale Agent’s opinion that  HAFA and the new California anti deficiency law make the time ideal now for homeowners who cannot make their mortgage payments solve their problem without having to worry about extended obligations to the lenders after the sale.  If a homeowner has made the difficult decision that letting go of the home is the best solution available for their current situation, here are the top 3 reasons or benefits* available to them.

1.  HAFA allows the proceeds of the sale to be used to pay off all of the parties including commissions to the realtors and a $3000 relocation fee to the homeowners and possibly $6000 to pay off a second mortgage.  So there is potentially no out of pocket costs to the homeowner to market and sell the home.   A big burden off the minds of those who are not familiar with the process.

 

2.  One of the tactics the second lien holders tried to use to extract extra money from the homeowners was approving the short sale but refusing to release the homeowner of the deficiency obligation.   Unless you had an astute Realtor who was aware of this trick and refused to go forth without first obtaining a waiver of the deficiency, homeowners were often stuck owing money to the lenders after they sold off the house.   NO MORE.  The new law says once you permit a short sale approval, the lenders cannot try to retain their deficiency claims.

 

3.  Finally, until the end of 2012, Mortgage Debt Relief Act,  relieves the homeowners of the capital gains tax obligations of their mortgage debt being forgiven.  Homeowners were often blind-sided by the notion of the forgiven debt being considered capital gains and having to pay taxes on it.   Well, until the end of 2012, this potentially huge tax obligation is waived.   This could be tens of thousands of dollars.  This is huge.

 

For those who have made up their mind that they need to get out from under their mortgage obligations, the situation is now ideal.  All of the potential hurdles that lay in front of them have now been pushed down.  The only thing that may be problematic is if the homeowner is in a state of shock or denial and unable to take action, and forcing the lenders to take action for them.
These are general overviews, for specific details, please contact us.

Please always deal with people who have actual experience and have data to prove they have successfully completed and closed multiple short sales.  Do your own research, be a smart consumer.  There is much at risk if a short sale goes awry.

 

*These are my opinions.  I am not an attorney or a tax professional, so please confirm with them first before making your decision.

 

New Law: No more deficiency claims on Short Sales in California!

Posted on by

 

Woo Hoo!  SB 458 is now the law in California!  This means the second mortgage holder must relieve a homeowner of any deficiency claim if they approve a short sale.  SB 931 made the same type of deficiency waiver mandatory for first mortgage holders, but the second mortgages were exempt.  This led the seconds to put a stranglehold on many homeowners, making unreasonable demands on distressed homeowners. NO MORE.  Short Sales mean paid in full.

As a San Jose Short Sale Agent, I believe this announcement is one of the most significant in the Short Sale process because it permits homeowners to simply walk away after the sale.  I spent many many hours negotiating with seconds to permit the homeowners to walk away without paying anything or paying as little as possible. The passage of this new law eliminates that whole unpleasant process.

Kudos to Governor Brown for having the compassion to help distressed homeowners.  Finally, some protection for the homeowners and not  just for the large banks.  We must allow short sales to process quicker and more efficiently, rather than drag on because of the seconds want to squeeze more blood out of homeowners who already suffered from negative equity and are losing their homes.  This new law makes it easier California homeowners to do a short sale now and avoid foreclosure because that little sticky issue with the deficiency claim is preserved after a foreclosure sale.   Now the reason for doing a short sale over a foreclosure becomes infinitely more clear.

 

 

CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law

LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.

“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

SB 458 contains an urgency clause making it effective upon signing.

 

Bank of America permits Back-Up buyers to slide right in without delay

Posted on by

 

Ask a San Jose Short Sale Agent like myself what the biggest potential headache in trying to get a short sale completed is, and I will bet the single most repeated response is the impatient buyer walking out in the middle of a transaction.   There is nothing as troublesome as working for weeks and months to convince a lender that the perfect buyer will close escrow and stop the foreclosure process, only to have that heroic buyer say they are moving on to another property or they are just tired of the waiting and want to take a break.

We listing agents try to overcome this havoc by having back-up buyers in place, however, the short sale apporval system was designed so that if the original buyer backs out, even if you had a back-up buyer in place, you would have to re-start the entire process.  Most of the time, you will be assigned to a different negotiator and the whole process which could have taken months, start over from zero.  And even if you had a willing back-up buyer who was extrememly excited, once they had been in back-up position for several weeks or months, they also lose interest or go out and buy something else.

The problem is the system, that triggers a “re-boot” if you will, when the buyer walked away.  The underlying hardship which caused the property to become distressed did not change; the verification of the financial condition did not change; the market condition did not change; the only thing that changed is the buyer and sometimes you can get the a buyer willing to pay the same amount.   So why have the whole process repeat? There is no rational purpose in starting from zero when a lot of the other procedures would have progressed.

Well, today Bank of America announced something which breaks from this ridiculous tradition and permits a back-up buyer to slide right in without having to start the whole process over.   Kudos to Bank of America. They are definitely going in the right direction and are living up to their declaration more than a year ago on their stance on short sales and whom they consider to be the clients in the process.  They are focusing on making the process go smoother, not just follow the trend.

As Bank of America is utilizing Equator to accomplish this, hopefully the other lenders and servicers who use the same system will follow suit and also do the rational thing.
BofA Announcement

What are the qualifications of a HAFA short sale?

Posted on by

Urban Legend: HAFA automatically causes delays in short sales

Posted on by

The internet is great for getting information quickly.  I love the fact that I can go to one of the search engines and type up a questions and get a list of responses which I can quickly look over.  However, there is so much unfiltered information out there; sometimes you become more confused about the topic after reading a lot of conflicting information.

 

This obviously applies, and perhaps more so, in the world of Short Sales and Foreclosures. There seems to be so much incorrect and half correct and sometimes completely wrong floating around out there.

 

The one that I hear frequently and had to deal with today was the one about HAFA.  There seems to be a consensus out there that HAFA slows down the short sale process.

 

I’ve heard of this before and interestingly I heard it from a negotiator with Chase who flat out told me that HAFA will tack on 90-120 days to the overall process (I didn’t bother grilling her on how she arrived at these statistics).  I’ve often heard Realtors on the buy side of my transactions tell me that they are not interested if the sellers were going for a HAFA short sale because it would add months to the process.   I try to explain that is not a universal truth, and that things are different on a case by case basis; but some listen most don’t.  To combat these issues, revisions were made to HAFA as of February 2011, one of the key revisions specifically states that a request or application for HAFA (with an executed contract) MUST BE responded to within 30 days. New information takes time to filter downward.

 

HAFA Request

 

I just received an approval from Chase today.  And it was a huge surprise for the buyer’s agent.  As you can see from the filing of the request to the issuance of the approval letter, it took 12 days (within the revised 30 days requirement and not 120 days as claimed by the negotiator).  The Request was made on June 2, 2011 and the approval letter was generated on June 14, 2011.  Granted this particular one only involved one loan so there was no second to deal with, but it still took less than two weeks.

 

Chase Approval Letter

 

This particular agent repeatedly asked me who was the third party handling the HAFA, but I always assumed he was asking me who was servicing the loan.  And as such, I never paid too much attention to his query about the HAFA third party.

 

When I emailed him a copy of the approval letter, he was obviously happy about the quick turn around time but again asked me about the third party handling HAFA.  This time I asked him to what he was referring?

 

This Realtor was under the impression that HAFA was a government program, so there was a central clearing house where all HAFA files went and that a third party was somehow responsible for getting the approval from HAFA.  In our case, it was his belief that the Chase negotiator would simply collect the documents and then forward everything to a “HAFA negotiator” who would then take months to get the approval from this entity called HAFA and then refer the approval or denial back to the Chase negotiator.

 

Now I understood why he thought simply doing a HAFA short sale would delay the approval process by several months.  (Now I appreciated him taking my word and sticking out the waiting period).   I had to explain to this seasoned Realtor that HAFA is not a thing or a place which de-toured the short sale process; rather, it was just another process or a set of guidelines by which the participating lenders all agreed to abide to actually shorten the process; not cause further delay.  He seemed surprised to learn this.

 

So what was my take-away from this experience?  There is a lot of mis-information regarding HAFA and other things associated with short sales and distressed properties out there.  Even the negotiators inside the banks are under the false belief that HAFA automatically means there will be a delay in the process and are not up to date on changes to the program.  This is quite ironic in that HAFA was designed to expedite the short sale process; but the rumor has it complicating and delaying the process instead.

 

HAFA could take more time once the reponse has been granted but need more information or denied and must pursue a traditional short sale, but from my experience, it has to do with number of issues such as: not using the correct forms to initiate the request, or not providing sufficient documentations requested, not responding to requests in a timely manner, or a myriad of other reasons.  After all, this is a new program which is only one year old, so there is the learning process by which everyone subjected to endure some discomfort.  But one thing is certain: simply by requesting a HAFA short sale DOES NOT AUTOMATICALLY cause months of delay.

 

Don’t buy into the Urban Legend and continue to feed it more misinformation or half-truths.

 

What does a Notice of Trustee Sale look like?

Posted on by

We discussed previously, the Notice of Default (NOD) which is essentially the first step in the foreclosure process.  You are officially put on notice and have certain timeframes which will dictate the process by which the home will be separated from the homeowners.

 

After the three months or 90 days which are given to cure the default, the next step is the filing of the Notice of Trustee Sale (NOT or NOTS).   This is otherwise known as the Auction Date or Auction Sale where the home is sold to the highest bidder at the steps of the County Court House.  If a homeowner were unlucky, they may receive this simultaneously as their loan modification is being rejected – a victim of dual track foreclosure.

Sample NOTS
As you can see, the instrument is used to answer the following:  a) how much is owed after penalty and interest, b) who is owed this money and c) where the auction will take place.  It is sort of the Who, What and Where of the foreclosure process.

 

 

This is the last step in the foreclosure process.  The homeowner can stop the foreclosure process by paying the full amount listed there before the sale date; or seeking alternative options like a short sale or deed in lieu.  When you receive this notice, you really must act fast.

 

What does a Notice of Default look like?

Posted on by

 

You hear the term all the time.  Notice of Default, (NOD).  If you google the term, you get pages and pages of definitions and suggestions on what to do.  But after reading all of the material, could you identify it if you saw it?

 

As the San Jose Short Sale Agent, I try to explain the significance of this document and try to describe what the documents looks like to my clients, but most cannot visualize it.   However, I don’t blame them, because even for me, in order for me to learn or absorb something: I need to see it, feel it or experience it before it will register in my brain.  I supposed we are all the same in this regard.

 

Instead of always trying to describe this document, I decided I would show everyone a sample.  This way, they will know when the official foreclosure process has begun and certain timelines have been established.   This is when things get very serious.

 

 

 

Sample NOD
As you can see from a real NOD from one of my clients (relevant information removed), the document simply identifies three things:  a) how much do you owe, 2) to whom do you owe said money and 3) when the sale date (a.k.a. auction date)  can take place if said money is not paid.   If the default amount is not paid by the end of 90 days, then the agent of the beneficiary can file a Notice of Trustee Sale (NOT or NOTS), which will describe when and where the property will be sold.

 

If you see one of these documents in the mail, then it is time you seek help from someone who can stop the foreclosure process.

 

 

Costs of Strategic Default

Posted on by

 

More and more people are talking about Strategic Default and the more people talk about it, the more nervous and angry the lenders become. This is a situation where the homeowner has the financial wherewithal to make the payments, but simply choose not to.   The homeowners are choosing to go into foreclosure voluntarily, presumably because they came to the conclusion it was better than keeping the property and paying the mortgage.

 

Contrary to popular belief floating out there in the internet world, there are consequences to walking away.  And the lenders are trying to make it more onerous on those who they identify as strategic defaulters.

 

The single biggest consequence to homeowners is the harm to their ability to borrow money in the future.  Yes, the homeowners can walk away and let the house foreclose, but that does not mean that the lenders will take it lying down.   Once the homes foreclose, the homeowners  will have to answer “Yes” on their future mortgage applications (form 1003) or other loan applications when asked if they had ever been a party to foreclosure.  These defaulters will be tagged as greater risks, so the cost of obtaining any type of consumer loan products will be higher with this item tagged on their credit histories and it will take longer to get this derogatory item off their credit reports.   Huge opportunity costs involved here.

 

Another cost is the deficiency claim that the lenders will most likely preserve.  In California, if the homeowners have two loans, the junior lien holder will most likely preserve their deficiency claim after a foreclosure.  Because the homeowner simply walked away from the loan, the lenders will preserve their claim to the loss they endured.

 

Effects on future employments is another consequence to bear in mind.  More and more employers are doing checks on credit reports prior to hiring new employees.  In these days of 10%+ unemployment rate, these homeowners do not want to give the employers any reason to gloss over their resumes and pass along to the next applicant.

 

Homeowners should not simply walk away from their homes.  Seek out other alternatives.