Tag Archives: wells fargo

How do you save money and heartache? Pay your HOA dues.

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As a San Jose Short Sale Agent, I can tell you that one of the most difficult situations to deal with in a distress scenario involves an HOA which has filed a lien on the property for non-payment of dues.   What is even worse is an HOA that hired an attorney to sue the homeowner for non-payment of dues, slapped on a bunch of indiscriminate fees and penalties and demonstrated absolutely no willingness to compromise to reach a mutually agreeable settlement because they have a default judgment in their hands.

 

Asking for the unpaid dues is obviously expected, however, the attorneys piled on additional fees and surcharges in the complaint, among them items like: interest of 12% per annum, late charge of 10% per month, lien fee of $1300, collection cost of $500, litigation guarantee fee of $600, plus additional collection and attorney fees.  The total of lien amount was roughly $16,000 but the non-dues fees came out to be approximately 50% of the total amount.

 

When dealing with lenders, whether it is the first or second, everyone is operating on the principal that compromise is necessary to achieve the ultimate goal of completing a short sale to avoid a foreclosure.  In this case, that goal was punctuated by a Trustee Sale scheduled only weeks away.  Whether the second lien holder tries to negotiate for 10% or 50%, there is the underlying understanding that everyone has to give a little to make the deal happen in the end.   This fundamental concept, by which everyone operates in the distressed market, gets tossed out the window when an attorney with a default judgment is on the other end of the phone.  WE DO NOT NEGOTIATE becomes the mantra.  And because of the default judgment, there is no incentive to take less, even though the other parties are taking substantially less.  They knew she had a steady job, so even if the property foreclosed, they would pursue her after the foreclosure.

 

Negotiating with these attorneys has been the worst experience to date for me.   It would be a bit different but for the default judgment in their hands; at least there would be some sort of room to maneuver.  After literally having begged for some relief, we managed to reach a settlement for 90% of the value of the lien.  The relentless threat of pursuing her after the foreclosure, in conjunction with the seller not wanting to have to file for bankruptcy to protect herself from the attorneys and the impending foreclosure, led to the signing of a promissory note plus some cash.   At least it was finally over and they agreed to release the claim and let the short sale proceed.

 

What did the seller and I both learn from this experience?  Pay the HOA dues at all cost.  Had she paid it, we would not have dealt with the 50% ancillary fees and costs that were padded on the complaint.   She certainly would have saved a lot more money and we both certainly would have endured less emotional distress.

More arrests in Silicon Valley for loan modification fraud

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I have said this many times, but my personal pet peeve is hearing of scammers who try to take advantage of people who are victims of these economically difficult times.    It is bad enough that many homeowners are suffering and find themselves in a situation where they are unable to pay their mortgages.  But far worse to believe they are victimized again a second time when they put their hopes on people who profess to be there to help.  Sometimes even the lenders are engaged in practices that are bordering on scams called dual track foreclosure.

 

Every time one of these scammers is identified, I get worked up and get into my crime busting mode…….   So here we go again.

 

The first tell tale sign of a fraud or scam is that the so called service providers are asking for payments up front, before any work has been performed.  ALWAYS BE LEERY OF THESE REQUESTS.  There are multiple variations of these pay-first scams.

A recent scam identified by the California Department of Real Estate (DRE) involves up front payment to join a class action lawsuit which promises extraordinary home mortgage relief.  A brief description of the con has been reposted below for review purposes.

 

QUESTIONABLE AND/OR FALSE CLAIMS OF THE SO-CALLED MORTGAGE LOAN

DEFENSE OR “MASS JOINDER” AND CLASS LITIGATORS.

A.  What are the Claims/Sales Pitches?

They are many and varied, and include:

1. You can join in a mass joinder or class action lawsuit already filed against your

lender and stay in your home.  You can stop paying your lender.

2. The mortgage loans can be stripped entirely from your home.

3. Your payment obligation and foreclosure against your home can be stopped when

the lawsuit is filed.

4. The litigation will take the power away from your lender.

5. A jury will side with you and against your lender.

6. The lawsuit will give you the leverage you need to stay in your home.

7. The lawsuit may give you the right to  rescind your home loan, or to reduce your

principal.

8. The lawsuit will help you modify your home loan.  It will give you a step up in the

loan modification process.

9. The litigation will be performed through “powerful” litigation attorney

representation.

10. Litigation attorneys are “turning the tables on lenders and getting cash settlements

for homeowners”.

In one Internet advertisement, the marketing materials say, “the damages sought in your

behalf are nothing less than a full lien strip or in otherwords [sic] a free and clear house if

the bank can’t produce the documents they own the note on your home.  Or at the very

least, damages could be awarded that would reduce the principal balance of the note on

your home to 80% of market value, and give  you a 2% interest rate for the life of the

loan”

There are many varieties of scams identified and collected by the DRE over the years, some of them are listed below in the Consumer Alerts page for your benefit.    http://www.yourhome.ca.gov/fraud_warning.pdf

 

Homeowners in distress, I know you are in desperate situation and are seeking any and all assistance you can find, but please don’t let your situation cloud your judgment.  Be the wise consumer that you always have been.  Please check on the people who profess their desires to help you.  Know who you are dealing with before you give them any money.

Which do lenders prefer? Strategic default or short sale

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I got a chance to watch a couple of agents go at it with each other in a real estate forum trying to answer a question about doing short sales.   It was interesting, to say the least.  Besides the two main agents who proclaimed themselves the “experts” and hijacked the conversation, there were a few others who chimed in and made some comments.  But the question was never specifically answered.

 

The question posed was whether a lender will approve a short sale if the borrower had assets. He didn’t provide a lot of detail but wanted to either do a short sale or let his home go into foreclosure and he specifically asked not to get into a debate about the ethics in not paying his mortgage.

 

The argument or “discussion” in the forum quickly evolved into a big debate about the ethics of what people considered to be strategic default.  One expert proclaimed it was morally and ethically wrong to engage in strategic default and the lenders would not go for it. The other expert proclaimed morality and ethics had nothing to do with his decision and it was more about money.

 

As a San Jose Short Sale Agent, I tend to agree with the latter expert.  When you are dealing with short sales with lenders, the department you deal with is called Loss Mitigation.  Let me say it again:  Loss Mitigation.  Their job description is patently obvious: it is to mitigate or lessen the loss for the lenders.

 

Yes, there obviously are moral and ethical implications of not paying your mortgage when you have the financial ability to do so.   I firmly believe you should pay when you can and live up to your contractual obligations.  However, the question posed specifically asked not to judge the ethical implications but sought opinion as to whether a lender would agree to a short sale when the borrower stopped paying and was headed towards foreclosure.

 

There is no definite yes or no answer in these matters as the answer lies in the details.  It has a lot to do with how much assets the borrower has or does not have.  However, if the lender is faced between foreclosure and short sale, from my experience, the loss mitigation department chooses short sales over foreclosures.   At the end of the day, the primary decision will be about which method loses less money for the lenders, then, other factors like ethics and mortality can be entertained.

 

Why do you think big lenders like Chase and Wells Fargo are offering people up to $35,000 to do a short sale without even verifying their financial information?   HAFA recently amended its rules to state that servicers are no longer required to verify any financial information, but only to collect signed hardship letters.  Do these actions by large lenders and servicers sound like they are overly concerned about the ethical or moral issues surrounding foreclosures?

 

I can’t speak for other States, but in California, the recent changes in the law means if the lenders agree to permit a short sale, then the issues about deficiencies become null and void.  Once a short sale has been approved, the seller can walk away clean without looking over their shoulders.  Yet, another procedure that make completing a short sale more effective and efficient and preferable to foreclosure.  It’s all about money; if the institutions can make more money foreclosing, they will certainly choose that method, but everything recently is geared towards choosing short sales.  Yes, the lenders hate strategic defaulters, but they hate losing money even more.

 

So back to the question about would a lender approve a short sale if the borrower has assets?  It would depend on how much assets the borrower had and whether foreclosure would yield more money for the lender or a short sale.

A day of celebration for another family.

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Let us celebrate because I got another short sale approved today and another family can move forward with their lives.

As a San Jose Short Sale Agent, my days are frequently filled hearing many sad stories about the difficulties that distressed homeowners go through, or I am fighting with robot-like negotiators who just repeat company policies, rather than trying to exercise some discretion to help out and treat people as individuals rather than loan numbers.  You want to do the right thing to help folks in distress, but sometimes the situations and the institutions involved make it very difficult to do the right thing…..  It’s obviously not like this all the time, however, sometimes it can be very emotionally taxing.

So on those days when a successful approval letter comes flying through the fax or the email like today, it becomes a bright day worthy of celebration.  Yes, I know it is not polite to be crowing about my successes, but it is really more than that.  It is a celebration for the families who are enduring things most of us cannot imagine.

It is about another family being able to walk away without having to constantly worry about fear of a foreclosure sale date looming around the corner or the prospect of the Sheriff’s Department knocking on their doors to evict the family………

It is about another family fearing to answer the phone because the lenders or collection agencies are calling for the 5th or 10th time this day with more threats……….

It is about another family trying to explain to their children why the bank is trying to take away the only home they have ever known in their young lives and why they don’t know where they may be going next……..

It is about another family trying to explain to the world that they are not dead-beats, but victims of circumstance; that they are in this position because the mortgage had a hidden clause which stated if their balance rose above 115%, of their original principal borrowed, then their monthly mortgage payments would increase by 250% - but no one mentioned this when the mortgage documents were signed………

It is about another family finally having no other choice but to give up the home, but trying to preserve some sense of dignity to keep the family unit in tact during the difficult process in which they unfortunately found themselves………..

If I can help accomplish – especially the last point – then I have done a good job.   If I have helped another family move on to the next chapter of their lives, then I can feel like what I am doing really matters more than simply making another buck or completing another transaction.    If I feel like celebrating and crowing because another family can sleep better starting tonight, then please allow me to have this moment.  You see, because this celebration is about more than just me, it is more about another family.

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

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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.

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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?

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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

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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!

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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

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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?

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