If your real estate was upside down and damaged in the recent San Deigo fire, you may want to consider all your options before you rebuild.
If you had been considering a short sale you may wish to consider a deed in lieu with certain conditions set up to either preserve the status quo or improve your position vis a vis a short sale and deficiency judgments or tax liability for loan forgiveness.
Before entering into any agreement you should have your deal reviewed by san diego attorney familiar with pre-foreclosure solutions.
Wednesday, October 24, 2007
Tuesday, October 23, 2007
Bankruptcy change and foreclosure remedies
This proposed change to the bankruptcy laws could give consumers more leverage with the lenders when negotiating to avoid foreclosure
Bankruptcy change could save 600,000 homeowners - Oct. 1, 2007: "NEW YORK (CNNMoney.com) -- One consumer group estimates that 600,000 foreclosures could be avoided over the next two years by making a simple change to the bankruptcy code. The Center for Responsible Lending (CRL) calls it a tweak, but it could be a significant change for homeowners and the market for mortgage-backed securities."
Bankruptcy change could save 600,000 homeowners - Oct. 1, 2007: "NEW YORK (CNNMoney.com) -- One consumer group estimates that 600,000 foreclosures could be avoided over the next two years by making a simple change to the bankruptcy code. The Center for Responsible Lending (CRL) calls it a tweak, but it could be a significant change for homeowners and the market for mortgage-backed securities."
Violations of truth in lending
A short sale and foreclosure attorney may be able to help you review your loan documents.
Mortgage ads may still be deceiving consumers, FTC says - MarketWatch: "Some of the ads were for rates as low as 1%, but didn't disclose that the stated rate was a 'payment rate,' and not the interest rate, which applied only during an initial period, according to the release. Also not disclosed in some of these ads was the loan's annual percentage rate, the uniform measure of the cost of credit that consumers can use to comparison shop for mortgages. Other ads that promoted very low monthly payments failed to give adequate disclosure of payment increases or final balloon payments."
Mortgage ads may still be deceiving consumers, FTC says - MarketWatch: "Some of the ads were for rates as low as 1%, but didn't disclose that the stated rate was a 'payment rate,' and not the interest rate, which applied only during an initial period, according to the release. Also not disclosed in some of these ads was the loan's annual percentage rate, the uniform measure of the cost of credit that consumers can use to comparison shop for mortgages. Other ads that promoted very low monthly payments failed to give adequate disclosure of payment increases or final balloon payments."
Mortgage ads may still be deceiving consumers, FTC says - MarketWatch
Before negotiating with a bank - you may wish to inquiry into this are of the law. It may give you a great deal leverage when negotiating a short sale
Mortgage ads may still be deceiving consumers, FTC says - MarketWatch: "CHICAGO (MarketWatch) -- Some of the mortgage advertisements currently appearing in Web sites, newspapers, magazines, direct mail and unsolicited email and faxes may be violating federal law, and on Tuesday the Federal Trade Commission said it was sending warning letters to more than 200 advertisers and media outlets informing them of the possible violations. Some of the claims made in the ads are 'potentially deceptive,' or violating the Truth in Lending Act, according to a FTC news release. The advertisements were identified in June during a review of claims that touted very low monthly payments or interest rates without fully disclosing other important loan terms."
Mortgage ads may still be deceiving consumers, FTC says - MarketWatch: "CHICAGO (MarketWatch) -- Some of the mortgage advertisements currently appearing in Web sites, newspapers, magazines, direct mail and unsolicited email and faxes may be violating federal law, and on Tuesday the Federal Trade Commission said it was sending warning letters to more than 200 advertisers and media outlets informing them of the possible violations. Some of the claims made in the ads are 'potentially deceptive,' or violating the Truth in Lending Act, according to a FTC news release. The advertisements were identified in June during a review of claims that touted very low monthly payments or interest rates without fully disclosing other important loan terms."
Friday, October 19, 2007
San Diego short sales or no sales
Homedex reported the median real estate property in North County San Diego, declined by 5% in september. The number of single family detached homes declined by 39% since same time last year.
In my opinion we have 3 major factors contributing to the lack of sales. Homes were overpriced because of the availability of cheap money inflating the prices.
Now we have the flip side, although interest rates are fine, only people with steady income, 2O% downpayments and 6 mos of deposits can get the good loans. (there are some other loan products coming back on the market, but you get my drift).
So lets say you are considering a $1,000,000 dollar house in Carlsbad or a similar area in San Diego like Poway, Rancho Bernardo, Ecinitas etc. If you can even get a jumbo loan for $800,000 you will still need a very high paying steady salary, (perhaps over 200 thou a year and about a quarter million in cash.
That cash number is no longer pretend equity in your current home, it is real cash. How many people in that situation are going to buy a short sale or foreclosure in Carlsbad right now when they suspect they might have a shot at ocean view property in in Del Mar or La Jolla next year.
The other fact that is contributing to the drop is the way short sales are being marketed in California and florida. Ironically although I hate the concept I have advised my clients and Realtors that have to be out ahead of the pack. Mark the property low and bring in offers. Who cares if the bank rejects the first one, it gives the buyer and seller a chance to feel out the bank. After the first offer is rejected my client will know whether he or she will have to push the bank on TILA or Respa issue or if the bank is going to agree to refrain from collecting on the deficiency an or agree the debt is disputed.
Personally, I believe it will be better for everyone if the MLS would refuse to allow listings which have meaningless prices which are "subject to third party approval". Short sale clients will be much better served if the banks are forced to pick a price.
In my opinion we have 3 major factors contributing to the lack of sales. Homes were overpriced because of the availability of cheap money inflating the prices.
Now we have the flip side, although interest rates are fine, only people with steady income, 2O% downpayments and 6 mos of deposits can get the good loans. (there are some other loan products coming back on the market, but you get my drift).
So lets say you are considering a $1,000,000 dollar house in Carlsbad or a similar area in San Diego like Poway, Rancho Bernardo, Ecinitas etc. If you can even get a jumbo loan for $800,000 you will still need a very high paying steady salary, (perhaps over 200 thou a year and about a quarter million in cash.
That cash number is no longer pretend equity in your current home, it is real cash. How many people in that situation are going to buy a short sale or foreclosure in Carlsbad right now when they suspect they might have a shot at ocean view property in in Del Mar or La Jolla next year.
The other fact that is contributing to the drop is the way short sales are being marketed in California and florida. Ironically although I hate the concept I have advised my clients and Realtors that have to be out ahead of the pack. Mark the property low and bring in offers. Who cares if the bank rejects the first one, it gives the buyer and seller a chance to feel out the bank. After the first offer is rejected my client will know whether he or she will have to push the bank on TILA or Respa issue or if the bank is going to agree to refrain from collecting on the deficiency an or agree the debt is disputed.
Personally, I believe it will be better for everyone if the MLS would refuse to allow listings which have meaningless prices which are "subject to third party approval". Short sale clients will be much better served if the banks are forced to pick a price.
Thursday, October 18, 2007
California short sale addendum - Legal comments
California Association of Realtors short sale addendum with this authors lawyers comments to follow.
- Advises that the seller may be required to bring in funds to close
escrow or to obtain lenders' agreement to accept less than what's
owed.
- Advises that alternatives to a short sale may be more appropriate,
such as refinancing, bankruptcy, or foreclosure, depending on the
seller's own circumstances.
- Authorizes the listing agent to advertise a property as a short sale.
- Authorizes the listing agent to contact lenders concerning their
approval of a short sale.
- Advises the seller that a short sale has possible tax, credit, and
other legal consequences and that Broker has advised seller to consult with tax and legal counsel. Broker cannot give legal or tax advice.. "
The new addendum accomplishes two things, it rather mildly puts sellers on notice they should seek legal advice and illustrates when Realtors begin to practice law without a license.
1. Conspicuous by their absence are the words "negotiate" with banks or "represent". Real estate agents in California may be authorized (by the seller) to seek approval of the short sale transaction from the lender. Notice -- how limited the Realtors role may be. The Realtors may advertise a short sale and seek approval of the short sale from the lender.
California Real Estate agents are not hereby authorized to review a homeowner's financials, send those financials to the lenders as part of a short sale package or negotiate agreements with the bank in which the bank agrees to refrain from seeking deficiencies or report loan forgiveness to the IRS.
2. Note California homeowners are hereby advised there may be superior options to a short sale such as refinancing or foreclosure. So, before a California home or real estate owner agrees to a short sale, she should be aware a FORECLOSURE may be a more appropriate option.
(I am surprised that a Deed in Lieu of Foreclosure is not mentioned as this option when negotiated by an attorney is far superior to short sale in most situations for California homeowners. Realtors are not licensed to discuss this effects of the wide array of pre foreclosure options.)
3. Sellers are also advised that there may be possible tax, credit and legal consequences. Again, it seems pretty clear this addendum is not giving permission to Realtors to advise sellers about these consequences.
I think this addendum is a good first step. At least now some of the public will realize they need to find out from a lawyer if a short sale makes sense. (in my opinion it almost never does unless certain releases are negotiated drafted and signed by the lenders. )
- Advises that the seller may be required to bring in funds to close
escrow or to obtain lenders' agreement to accept less than what's
owed.
- Advises that alternatives to a short sale may be more appropriate,
such as refinancing, bankruptcy, or foreclosure, depending on the
seller's own circumstances.
- Authorizes the listing agent to advertise a property as a short sale.
- Authorizes the listing agent to contact lenders concerning their
approval of a short sale.
- Advises the seller that a short sale has possible tax, credit, and
other legal consequences and that Broker has advised seller to consult with tax and legal counsel. Broker cannot give legal or tax advice.. "
The new addendum accomplishes two things, it rather mildly puts sellers on notice they should seek legal advice and illustrates when Realtors begin to practice law without a license.
1. Conspicuous by their absence are the words "negotiate" with banks or "represent". Real estate agents in California may be authorized (by the seller) to seek approval of the short sale transaction from the lender. Notice -- how limited the Realtors role may be. The Realtors may advertise a short sale and seek approval of the short sale from the lender.
California Real Estate agents are not hereby authorized to review a homeowner's financials, send those financials to the lenders as part of a short sale package or negotiate agreements with the bank in which the bank agrees to refrain from seeking deficiencies or report loan forgiveness to the IRS.
2. Note California homeowners are hereby advised there may be superior options to a short sale such as refinancing or foreclosure. So, before a California home or real estate owner agrees to a short sale, she should be aware a FORECLOSURE may be a more appropriate option.
(I am surprised that a Deed in Lieu of Foreclosure is not mentioned as this option when negotiated by an attorney is far superior to short sale in most situations for California homeowners. Realtors are not licensed to discuss this effects of the wide array of pre foreclosure options.)
3. Sellers are also advised that there may be possible tax, credit and legal consequences. Again, it seems pretty clear this addendum is not giving permission to Realtors to advise sellers about these consequences.
I think this addendum is a good first step. At least now some of the public will realize they need to find out from a lawyer if a short sale makes sense. (in my opinion it almost never does unless certain releases are negotiated drafted and signed by the lenders. )
Sunday, October 14, 2007
Short sale and foreclosure warning
Realty Times - Real Estate News and Advice: "Furthermore, you want to make absolutely sure that even should the lender approve the short sale, you will not be obligated to make up this difference, which is called a deficiency. Unfortunately, most lenders will not put their agreement in writing, so your legal advisors will have to satisfy themselves -- and you -- on this matter."
Other real estate lawyers are starting to warn Realtors (at least implicitly) that the short sale paperwork must be reviewed by an attorney. In California is particular important that a san diego homeseller or a seller in any other part of the state understand what their exposure to deficiency is.
this is becoming my mantra. Because of the protections built into the are of foreclosure law, some Californians are better of accepting a foreclosure than a short sale. Do not do a short sale until you have been advised by someone licensed to give you an opinion which is backe up by mal practice insurance. (in my legal opinion). Too many people have contacted me after it is too late. They did a short sale and now the lender is seeking to collect on the deficiency after a successful short sale
Other real estate lawyers are starting to warn Realtors (at least implicitly) that the short sale paperwork must be reviewed by an attorney. In California is particular important that a san diego homeseller or a seller in any other part of the state understand what their exposure to deficiency is.
this is becoming my mantra. Because of the protections built into the are of foreclosure law, some Californians are better of accepting a foreclosure than a short sale. Do not do a short sale until you have been advised by someone licensed to give you an opinion which is backe up by mal practice insurance. (in my legal opinion). Too many people have contacted me after it is too late. They did a short sale and now the lender is seeking to collect on the deficiency after a successful short sale
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