These are both financially and emotionally difficult times for these homeowners and also ideal climate for swindlers to come swooping in. However, there is a solution available for these homeowners without falling victim to fraud. I invite you to do your due diligence and find an agent who can help you out of this dilemma who has the experience, the skill set and references to protect your financial future.

Change the Course Report

A prospective client came asking for help.  She had a short sale specialist working on her case for over a year.  The thing was, this agent was not even local (from San Diego) and would only tell her that things were going well for well over a year; not much communication, just that things were OK every few months.  The distance probably had something to do with the lack of continual communication.

Only recently, did she receive a call from him saying the lender would not be approving the short sale and would now be foreclosing. This came as a complete shock to her.  This was obviously a case of dual track foreclosure or simple negligence on the part of the agent.  She said the agent was basically backing out and telling her that he could no longer help her.  She wanted to know if I could help by replacing him.

It’s easy to wonder why someone would simply trust an agent for over a year and not ask questions or demand that she be kept apprised of the status of the short sale more frequently than a few times a year.  I pulled up the county record to see how much time was remaining on a Notice of Trustee Sale (NOT) and to see if we could save the short sale.  My search found that the NOT was filed over 3 months ago.  I needed to get more information.

I asked her to get a copy of her file since the agent was essentially firing himself and I needed to know what type of communication had been initiated and what the lenders had agreed to in writing.  I also asked her to get me a copy of the NOT to find out the attorney service handling the sale.

After a week or so, I followed up and not surprisingly, she got nothing from this agent.  Nothing in writing.  Not a copy of the NOT; not a rejection of the short sale letter from the lender; not a copy of the short sale package that was submitted on her behalf; not even a cancellation of the listing agreement; nothing.  Only words.

I wanted to help her, but with no documentation and only verbal statements, I could not commit myself to help her out of her predicament.  Given her particular situation, I seriously doubt anyone could help her with no documentation of what had happened before and being asked to step in only with the verbal understanding that foreclosure is imminent.

How could this individual have avoided this type of crisis?  I’m not going to go into allegations here without seeing any documentation, but it seems like the agent who professed to be a specialist perhaps was not so experienced.

I believe she did not have to be in this situation.  The best way to have avoided this crisis, in my opinion, was for her to have done her due diligence when hiring someone to help her out initially.   You really do not get a second chance when you are dealing with foreclosures.

First, she should have hired someone locally rather than someone who is 500 miles away to market and sell her home.  From what was described to me, he really didn’t know the local market and did not price it correctly nor put in a lot of effort to get it marketed correctly.  If she were not getting answers, she could have dropped in on a local agent to demand answers in a more timely manner.

Secondly, she is a young computer literate woman; she should have done some research into who she was hiring.  After all, she found me online.  She should have Googled the person’s name and see what was said about the individual.  She may not have gotten everything she needed, but she would have discovered if someone were alleging bad service or worse.  People may not write nice things about you, but if they felt mistreated, they will let the world know, from my experience.

Please distressed homeowners, do your due diligence before hiring someone to help you.

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.

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.

I got a call yesterday from an out of area agent who wanted to get some information about short sales because he searched on the web and found me as one of the top San Jose Short Sale Agent.  Like many Real Estate Agents, he did not really understand and did not want to learn about short sales, so he wanted to get some information that he could pass along and refer the relative to me.

One problem: a Trustee Sale date was scheduled one week ago.  For those who are not familiar, a Trustee Sale is also known as an Auction Date.   The homeowner wanted to stop the foreclosure but the Agent was not aware of the Trustee Sale Date.

This illustrates and highlights an issue I want to discuss today: when dealing with foreclosures, inaction leads to action.  Being afraid of the prospect of losing one’s home is understandable, but allowing that fear to transform us into acting like a deer in the headlight is not an option.  You must take action one way or another.

In the case above, the homeowner was afraid and did not know what to do and that fear led her into inaction.  But we must remember, she had months of notice as to what was eventually coming.

The typical non-judicial foreclosure process looks something like this in California (remember, this is a simplified description for illustration purposes only, each case and timeline will be different):

• Homeowner misses 2 to 3 mortgage payments.
• Lender sends Notice of Default – giving 90 days to re-pay delinquent payments plus interest and penalty or will lead to Trustee Sale or Auction Sale
• Typically within 21 days of missing the deadline issued on the Notice of Default, a Notice of Trustee Sale date is scheduled at the courthouse steps
• On the scheduled date and time, the property will be put on auction for sale

In a typical scenario like above, we are looking at minimally 6 months, from missing the first payment, before an auction date is set to sell the property; sometimes it takes much longer.   During this time, in addition to the numerous phone calls, letter and the actual notices are sent to the homeowner’s mailing address.   The homeowner had plenty of notice as to what was eventually coming, so whether she wanted to pay off the delinquent monies, or request a loan modification or do a short sale, she could have contacted the lender to slow down the process or find out alternative options available to her.  There are methods to delay or extend the trustee sale date.

What is my point?  She knew she wanted to stop the foreclosure, but by the time she decided to do something about it and reached out to someone for help, it appears, it was too late.

The lenders generally do not want to foreclose on a property because they can make more money using other foreclosure prevention methods. So if the intention is to prevent a foreclosure, the homeowner must take action, reach out to the lenders to request a loan modification or to a Realtor to do a short sale, or call me and I can answer questions you may have if you are in Silicon Valley, but take some sort of action before the trustee sale  date is scheduled.   In a foreclosure situation, by not doing anything, you have actually chosen to expedite the foreclosure process.

Things are back to business as usual in the Foreclosure arena.

As more and more economic data is released, more and more, we are beginning to realize how severe our current foreclosure situation truly seems to be.   The news media seems to want us to believe that the worst is behind is in the foreclosure crisis, but the reality paints a picture which is quite different.

The Mortgage Bankers Association (MBAA) recently released the Q3 2009 statistics about mortgage delinquency which revealed some truly alarming statistics which blew a lot of minds.

14.32% of all mortgages in the nation are in default (at least 30 days behind in payment)  and of those, 4.38% are actually in foreclosure process where they have been served a Notice of Default.  These numbers are the highest they have ever been since this organization kept track of these types of numbers.  I REPEAT:  14.32% OF ALL MORTGAGES IN THE NATION IS IN DEFAULT!

And we all know what is causing these historic default activities: unemployment.  Unemployment was at 10.2% while underemployment was at 17.5% for October.   Unemployment is up while housing  values are dropping, creating the perfect  storm for foreclosures.  Look at all of the categories listed above, in every single loan category MBAA tracked, 10% or more of said  loans are in default.  These are astronomical statistics, they had never seen numbers like  that before.

The numbers for states like California will be even worse that these because we were at 12.3%.  We must address the unemployment issue if we are to get out from underneath this 800 lb. gorilla sitting on our shoulders.