Two fairly common "non standard" transactions which therefore do not merit California 580b protection are:
1. an unsecured note
2. an action for recovery against a guarantor of a note. I also saw a note about letters of credit not being subject to 580b protections.
There are other exceptions.
Wednesday, August 8, 2007
pre-foreclosure - non-recourse loan?
Does the second have right to go after the borrower. It seem that there is a basic rule and a caveat
The basic rule is that 580b protection would apply in standard transactions with sold out juniors.
However the 9th circuit has made a ruling which seems to leave this area of the law somewhat open to good arguments. In the Prestige case the court distinguished cases in which the security was exhausted by a senior sale without giving us much further guidance.
I am just thinking this through but we seemed to be left with the the strange conclusion that an upside down homeowner worried about deficiency may be "incentivised" to make sure the second is "sold out".
Also note this information does not necessarily apply to non standard transactions or construction loans. And seriously please have your situation reviewed by a California attorney. The above information is a quick overview at best. If you were my client I would do a great deal more research before giving any "advice".
The basic rule is that 580b protection would apply in standard transactions with sold out juniors.
However the 9th circuit has made a ruling which seems to leave this area of the law somewhat open to good arguments. In the Prestige case the court distinguished cases in which the security was exhausted by a senior sale without giving us much further guidance.
I am just thinking this through but we seemed to be left with the the strange conclusion that an upside down homeowner worried about deficiency may be "incentivised" to make sure the second is "sold out".
Also note this information does not necessarily apply to non standard transactions or construction loans. And seriously please have your situation reviewed by a California attorney. The above information is a quick overview at best. If you were my client I would do a great deal more research before giving any "advice".
antideficiency, recourse and non recourse loans
Many of the questions I have been getting lately come from people with a first and a second loan. The second is usually very underwater and the question is - will the bank come after me. So in with respect to this scenario lets answer the question.
Answer - it depends.
Purchase money loans were once characterized as loans for the seller of the property. California extended the law to third parties who provided loaned funds to the buyer to purchase the property from the seller.
California Code of Civil procedure section 580b in general stands for the fact the buyer is protected from deficiency judgments after foreclosure from the seller of the property. A buyer would also be protected from third parties who provided funds for the purchase of the property.
For the purposes of this discussion please remember that lenders can and do attempt to get around the 580b protection by arguing the transaction was not a standard transaction. (which is why I have all the disclaimers at the bottom of the page about having your facts reviewed by licensed attorney.)
Answer - it depends.
Purchase money loans were once characterized as loans for the seller of the property. California extended the law to third parties who provided loaned funds to the buyer to purchase the property from the seller.
California Code of Civil procedure section 580b in general stands for the fact the buyer is protected from deficiency judgments after foreclosure from the seller of the property. A buyer would also be protected from third parties who provided funds for the purchase of the property.
For the purposes of this discussion please remember that lenders can and do attempt to get around the 580b protection by arguing the transaction was not a standard transaction. (which is why I have all the disclaimers at the bottom of the page about having your facts reviewed by licensed attorney.)
Monday, August 6, 2007
No Money Down Disappearing as Mortgage Option - washingtonpost.com
No Money Down Disappearing as Mortgage Option - washingtonpost.com
No money down mortgages or 100% financing are becoming rare as major lenders have pulled out of the market.
I remember back in the late 90s when people needed to put down 20% or get very unfavorable rates. In fact even in 2003, going with less than 10% down sometimes caused a penalty in your rates
No money down mortgages or 100% financing are becoming rare as major lenders have pulled out of the market.
I remember back in the late 90s when people needed to put down 20% or get very unfavorable rates. In fact even in 2003, going with less than 10% down sometimes caused a penalty in your rates
SignOnSanDiego.com > News > Metro -- Foreclosure agents bask in bad times
"SignOnSanDiego.com > News > Metro -- Foreclosure agents bask in bad times: "Today, of the nearly 24,000 listings of resale houses, condominiums and mobile homes, roughly one-fifth were identified by Sandicor, a local multiple listing service, as distressed properties either in foreclosure or approaching the stage where owners could lose their homes.
Agents who specialize in the properties, known as real-estate-owned homes, or REOs, say they're having a field day. While it may be a bit morbid there is a certain side of the real estate industry which does well in bad times."
If one fifth of the properties are distressed one would have to wonder what is keeping the prices up. Over the weekend I noticed some home in Carlsbad which were REO listings. And these listings were priced significantly below the market. Homes were for sale for 700 thousand or less which buildes were attempting to sell for over 800,000 in January.
Agents who specialize in the properties, known as real-estate-owned homes, or REOs, say they're having a field day. While it may be a bit morbid there is a certain side of the real estate industry which does well in bad times."
If one fifth of the properties are distressed one would have to wonder what is keeping the prices up. Over the weekend I noticed some home in Carlsbad which were REO listings. And these listings were priced significantly below the market. Homes were for sale for 700 thousand or less which buildes were attempting to sell for over 800,000 in January.
Sunday, July 29, 2007
LIVING THE AMERICAN NIGHTMARE / FORECLOSURES ON THE RISE: As the housing market softens, a combination of consumer naivete and aggressive lending mean
Here is a quote from a Bay area newspaper.
LIVING THE AMERICAN NIGHTMARE / FORECLOSURES ON THE RISE: As the housing market softens, a combination of consumer naivete and aggressive lending means owners with subprime loans are increasingl: "Some observers say that many of those facing foreclosure should never have bought a house. To be sure, many consumers were seduced by the American dream of homeownership and so financially unsophisticated that they didn't apply due diligence. For Bay Area residents, more than a decade of consistently rising home prices may have led to a mob mentality of people overeager to jump into the real estate market, confident they would quickly gain equity.
On the other side of the equation, many lenders pushed the envelope. For example, Ameriquest Mortgage Co., the nation's leading subprime lender, is now paying $325 million to 725,000 borrowers nationwide for allegedly improper sales practices, including failing to adequately disclose home-loan terms and rates, refinancing borrowers into inappropriate loans, inflating home appraisals, and charging excessive fees and prepayment penalties.
Foreclosures have a much broader impact than just misfortune for the people who lose their homes. Within neighborhoods, they cause real estate prices to sink because houses on the verge of foreclosure or already foreclosed upon often are resold at lower prices. That, in turn, has a ripple effect on the"
LIVING THE AMERICAN NIGHTMARE / FORECLOSURES ON THE RISE: As the housing market softens, a combination of consumer naivete and aggressive lending means owners with subprime loans are increasingl: "Some observers say that many of those facing foreclosure should never have bought a house. To be sure, many consumers were seduced by the American dream of homeownership and so financially unsophisticated that they didn't apply due diligence. For Bay Area residents, more than a decade of consistently rising home prices may have led to a mob mentality of people overeager to jump into the real estate market, confident they would quickly gain equity.
On the other side of the equation, many lenders pushed the envelope. For example, Ameriquest Mortgage Co., the nation's leading subprime lender, is now paying $325 million to 725,000 borrowers nationwide for allegedly improper sales practices, including failing to adequately disclose home-loan terms and rates, refinancing borrowers into inappropriate loans, inflating home appraisals, and charging excessive fees and prepayment penalties.
Foreclosures have a much broader impact than just misfortune for the people who lose their homes. Within neighborhoods, they cause real estate prices to sink because houses on the verge of foreclosure or already foreclosed upon often are resold at lower prices. That, in turn, has a ripple effect on the"
Real Estate Blog - Mortgage Fraud + Shielding a Client--Part I
Real Estate Blog - Mortgage Fraud + Shielding a Client--Part I
I was driving around Carlsbad California today with a friend who is a Real Estate investor. When I mentioned that I saw this same no money down sign all over Encinitas and Carlsbad.
He said yes, and a few weeks ago there was a sign all over which spoke of an apprentice job where they were looking to pay the apprentice 20,000. My investor friend figured they were looking for someone with good credit to pull a fraudulent real estate deal.
The link above is an example of the type of fraud that seems prevalent in the San Diego Real Estate market, according to my investor friend. As we were driving through his neighborhood he pointed out two homes which involved homes that were marked up too high and then sold with cash back to the buyer.
Therefore, at least 2 of the 4 recent comps for a very popular neighborhood are fraudulent.
Buying a home in Carlsbad or other parts of San Diego - make sure you know what you are doing or you are working with someone who knows what they are doing.
I was driving around Carlsbad California today with a friend who is a Real Estate investor. When I mentioned that I saw this same no money down sign all over Encinitas and Carlsbad.
He said yes, and a few weeks ago there was a sign all over which spoke of an apprentice job where they were looking to pay the apprentice 20,000. My investor friend figured they were looking for someone with good credit to pull a fraudulent real estate deal.
The link above is an example of the type of fraud that seems prevalent in the San Diego Real Estate market, according to my investor friend. As we were driving through his neighborhood he pointed out two homes which involved homes that were marked up too high and then sold with cash back to the buyer.
Therefore, at least 2 of the 4 recent comps for a very popular neighborhood are fraudulent.
Buying a home in Carlsbad or other parts of San Diego - make sure you know what you are doing or you are working with someone who knows what they are doing.
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