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Website Resources for Foreclosure Help

Here are some legitimate resources to help you fight the foreclosure crisis.

You’ve been warned about foreclosure scams. But sometimes it’s really hard to tell if something is a scam or not. Some less-than-reliable outfits have even taken to including “hud” or “gov” in their URLs to fool you into thinking they are legitimate foreclosure counselors. It pays to be wary. Below are some websites from government and non-profit agencies that can help you with foreclosure. Some are seeking volunteers and donations to help stop the foreclosure crisis.

HOPENOW.COM
Research your options with this web form (http://www.hopenow.com/homeowner-options.php)
Find your mortgage lender (http://www.hopenow.com/mortgage-directory.php)
Find a foreclosure counselor in your area (http://www.hopenow.com/hopenow-counseling.php)
Focused on helping homeowners in crisis, this alliance helps you determine your options

FTC.GOV
Find a foreclosure counselor (http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm)
Raise your own credit score (http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre03.shtm)
Fix mistakes on your credit report (http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm)
The Federal Trade Commission has expert advice

FINDAFORECLOSURECOUNSELOR.ORG
Find a legitimate foreclosure counselor near you (http://www.findaforeclosurecounselor.org/network/nfmc%5Flookup/)
This non-profit organization was created by Congress to provide financial support, technical assistance, and training for community-based revitalization efforts

MAKINGHOMEAFFORDABLE.GOV
Making Home Affordable (http://www.makinghomeaffordable.gov/)
Making Home Affordable: short sale documents (https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html)
Making Home Affordable: deed in lieu documents (https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html)
The official government site for loan modifications and foreclosure alternatives

PORTAL.HUD.GOV
Find resources to avoid foreclosure in your state (http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure/local)
Consult state and local resources

MYFICO.COM
Improve You Credit Score
(http://www.myfico.com/CreditEducation/ImproveYourScore.aspx) Credit Q&A (http://www.myfico.com/crediteducation/questions/)
Credit Basics ( http://www.myfico.com/crediteducation/articles/)

Understand credit and your credit scores

ANNUALCREDITREPORT.COM
See your credit report (https://www.annualcreditreport.com/cra/index.jsp)
Get all the details on late payments and other information, but not your actual credit score

RESPONSIBLELENDING.ORG
The Center for Responsible Lending (http://www.responsiblelending.org/)
A non-profit organization that works to stop predatory lending practices

CREDITEDUCATION.ORG
Volunteer to be a credit counselor (http://www.crediteducation.org/Become-a-Volunteer.aspx)
Non-profit agency that works to provide financial literacy

LIVEUNITED.ORG
United Way (http://www.liveunited.org/income/)
Donate or volunteer to decrease the number of families that are financially unstable

NCRC.ORG
Donate to the National Community Reinvestment Coalition (http://www.ncrc.org/index.php)
Send a donation to help NCRC “ensure that people in traditionally underserved communities are treated fairly and justly when applying for credit, opening a bank account, getting a mortgage, a loan, or other financial product or service.”

IRS.GOV
The Mortgage Forgiveness Debt Relief Act (http://www.irs.gov/individuals/article/0,,id=179414,00.html)
Get the details about when you might owe taxes on any debt that is canceled through a short sale or deed in lieu of foreclosure

OCC.GOV
Download a PDF on identifying a loan modification scam (http://www.occ.gov/ftp/advisory/2009-1.pdf)
The Office of the Comptroller of the Currency provides detail about scams, including “10 Warning Signs of a Loan Modification Scam.”

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

5 Tips for Buying a Foreclosure

By: G. M. Filisko

Get prequalified for a loan and set aside funds, and you’ll be ready to purchase a foreclosed home.

When lenders take over a home through foreclosure, they want to sell it as quickly as possible. Since lenders aren’t in the real estate business, they turn to real estate brokers for help marketing their properties. Buying a foreclosed home through the multiple listing service can be a bargain, but it can also be a problem-filled process. Here are five tips to help you buy smart.

1. Choose a foreclosure sale expert. Lenders rarely sell their own foreclosures directly to consumers. They list them with real estate brokers. You can work with a real estate agent who sells foreclosed homes for lenders, or have a buyer’s agent find foreclosure properties for you. To locate a foreclosure sales specialist, call local brokers and ask if they are the listing agent for any banks.

Either way, ask the real estate professional which lenders’ homes they’ve sold, how many buyers they’ve represented in a foreclosed property purchase, how many of those sales they closed last year, and who they legally represent.

If the agent represents the lender, don’t reveal anything to her that you don’t want the lender to know, like whether you’re willing to spend more than you offer for a house.

2. Be ready for complications. In some states, the former owner of a foreclosed home can challenge the foreclosure in court, even after you’ve closed the sale. Ask your agent to recommend a real estate attorney who has negotiated with lenders selling foreclosed homes and has defended legal challenges to foreclosures.

Have your attorney explain your state’s foreclosure process and your risks in purchasing a foreclosed home. Set aside as much as $5,000 to cover potential legal fees.

3. Work with your agent to set a price. Ask your real estate agent to show you closed sales of comparable homes, which you can use to set your price. Start with an amount well under market value because the lender may be in a hurry to get rid of the home.

4. Get your financing in order. Many mortgage market players, such as Fannie Mae, require buyers to submit financing preapproval letters with a purchase offer. They’ll also reject all contingencies. Since most foreclosed homes are vacant, closings can be quick. Make sure you have the cash you’ll need to close your purchase.

5. Expect an as-is sale. Most homeowners stopped maintaining their home long before they could no longer make mortgage payments. Be sure to have enough money left after the sale to make at least minor, and sometimes substantive, repairs.

Although lenders may do minor cosmetic repairs to make foreclosed homes more marketable, they won’t give you credits for repair costs (or make additional repairs) because they’ve already factored the property’s condition into their asking price.

Lenders will also require that you purchase the home “as is,” which means in its current condition. Protect yourself by ordering a home inspection to uncover the true condition of the property, getting a pest inspection, and purchasing a home warranty.

Be sure you also do all the environmental testing that’s common to your region to find hazards such as radon, mold, lead-based paint, or underground storage tanks.

More from HouseLogic
What you need to know about the homebuyer tax credit (http://www.houselogic.com/articles/homebuyer-tax-credit-what-you-need-know/)

How to claim your homebuyer tax credit (http://www.houselogic.com/articles/claim-your-homebuyer-tax-credits/)

Other web resources
How to buy a foreclosure from Fannie Mae (http://www.fanniemae.com/homepath/homebuyers/buying_fanniemaeowned.jhtml)

What to consider when buying a foreclosure as your first home (http://www.nolo.com/legal-encyclopedia/article-29589.html)

G.M. Filisko is an attorney and award-winning writer who purchased a foreclosed condominium and found herself in the middle of a months-long dispute between the former homeowner and the bank over whether the foreclosure was conducted properly. Six months after paying the full purchase price, she was finally able to enter the property. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Top 5 Craziest Foreclosure Rescue Attempts

Treasure hunting, demolition, forgery–even a telethon. Our picks for the top five most bizarre foreclosure rescue attempts.

Three years after the recession hit, Americans still are losing their homes to foreclosure in record numbers. Not even celebrities are immune. Wanting to do anything you can to avoid losing your home is only natural. There are a wealth of resources on HouseLogic (http://www.houselogic.com/guides/finances-insurance/home-finance/foreclosure-guide) to help you take action. Still, some homeowners have tried other, less-proven methods. Here’s a countdown of some outlandish foreclosure rescue attempts:

5. I pimped my yard to PETA.
This past March, “Octomom” Nadya Suleman was reportedly approached by PETA when word got out about her mortgage woes. The offer: A billboard sign urging pet owners not to let their dog or cat become an “Octomom” in a campaign to raise awareness about controlling the pet population. Suleman ended up letting PETA advertise on her front yard for $5,000. In April, Suleman reached an agreement (

http://www.cbsnews.com/stories/2010/04/15/entertainment/main6399349.shtml ) with the mortgage holder for a sixth-month extension to pay off the $450,000 debt.

4. God made me do it.
Earlier this month, a Montana man, Brent Arthur Wilson, was convicted for removing For Sale signs and forging ownership papers on a foreclosed home in a bizarre effort (

http://www.msnbc.msn.com/id/38242178/ns/business-real_estate/) to keep a roof over his head. During his trial, Wilson claimed that “Yaweh,” or “the creator,” gave him the home. The jury was out for less than an hour before finding Wilson guilty. He now faces up to 30 years in prison and is scheduled to be sentenced August 19.

3. Buy my T-shirt, save my house.
To raise the $250,000 he needed to avoid foreclosure on his Port Washington, Wis., pad, former Saved by the Bell star Dustin Diamond sold T-shirts (

http://www.foxnews.com/story/0,2933,199934,00.html) with his photo and a caption reading, “I paid $15 to save Screeech’s house.” (The extra “e” in “Screeech” was to get around copyright laws.)

The down-on-his-luck comedian turned his money problems into a publicity ploy, telling his story on The Howard Stern Show and even scheduling an online telethon to raise more money. The appearance was canceled moments before it went on the air. Despite all that, it looks like Diamond is still going to lose his home. Wells Fargo started foreclosure proceedings in April.

2. If I can’t live here, no one can.
This past February, Ohio carpet business owner Terry Hoskins decided that he’d rather bulldoze his $350,000 house to the ground (

http://www.wwlp.com/dpps/news/strange/ohio-man-bulldozes-home-to-avoid-foreclosure-jgr_3244918) than let the bank have it. Hoskins also basically confirmed that he’d do the same to his carpet store if he had to. Thankfully, it didn’t come to that. Although Hoskins didn’t technically break any laws, the bank did hold a sheriff’s auction of his business property to pay off the $600,000 debt he owed.

1. Superman saved our house.
On a more positive note, a rare comic book (

http://www.foxnews.com/us/2010/07/27/faster-speeding-bullet-superman-saves-familys-home/) (an Action Comic #1-the issue that introduced Superman to the world) was recently found in the basement of a couple facing foreclosure. Although it hasn’t been valued yet, Stephen Fishler, co-owner of ComicConnect.com, guarantees that the comic will bring in more than enough to pay off the mortgage at auction time. Other rare finds like this have been valued at more than $1 million.

The NATIONAL ASSOCIATION OF REALTORS® is dedicated to providing resources that help families facing foreclosure take every step they can to keep their home. To find out how to (legitimately) fight foreclosure, visit the HouseLogic Foreclosure Resource Guide (

http://www.houselogic.com/guides/finances-insurance/home-finance/foreclosure-guide/).

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Notice of Default & Investor Purchase Agreement

A general understanding of the Home Equity Sales Contracts Law (California Civil Code Sections 1695 through 1695.17, referred to as HESC below) is essential for any real estate professional who handles sales of residential properties.  This law applies only if ALL four of the following conditions are met:

(1)  the property being sold is residential one-to-four units;
(2)  the owner currently occupies the property;
(3)  a Notice of Default (NOD) has been recorded against the property; and
(4)  the buyer does not intend to occupy the property (i.e., buyer is an investor).

If any one or more of the four conditions has not been met, then the HESC doesn’t apply and none of the conditions or restrictions discussed below apply (e.g., no special contract need be used, there is no special rescission period).

The primary purpose of this legal article is to assist the real estate licensee in adequately and safely handling such a transaction when all four conditions are met, and to present the licensee with a working knowledge of general concepts for dealing with such situations. The highly technical forms, precise language, and exacting notice requirements mandated by law are not included here.

Whenever in doubt of their individual circumstances, readers should seek the advice of an attorney for legal advice in this highly technical area.

1.  Why did the legislature enact these laws?

A   These laws were enacted in response to practices that occurred in connection with sales of property in foreclosure. Although a variety of schemes were used, the results of such practices were generally the same. For example, loans, offers of services or sales contracts often involved an unsophisticated homeowner under financial duress signing complex documents with contractual terms which were financially impossible to meet. They frequently included transferring title to the equity purchaser at the same time as the contract was signed, giving the seller no opportunity to consider the transaction. Sometimes, by way of clandestine financial structuring or by hidden transfer language, the homeowner’s equity and/or title was mistakenly transferred without the owner’s intention to do so. The ultimate result was that the homeowner lost his/her property and/or equity to these unscrupulous individuals.

2.  What is the intent and purpose of Home Equity Sales Contracts law (HESC)?

A   The intent and purpose of this law is to:

  • Provide homeowners with information necessary to make informed, intelligent sales decisions;
  • Require written sales agreements;
  • Safeguard the public against deceit and financial hardship;
  • Insure fair dealing in the sale and purchase of homes in foreclosure;
  • Prohibit misleading representations;
  • Restrict unfair contractual terms;
  • Provide homeowners reasonable opportunity to rescind sales to equity purchasers; and
  • Protect homeowners’ equity.

(Cal. Civ. Code § 1695.)

II.  Definitions

3.  What is a Home Equity Sales “Contract”?

A   Basically, a Home Equity Sales Contract is any contract of sale between an equity purchaser and an equity seller of a residence in foreclosure.   However, see the exemptions in Question 15.  (Cal. Civ. Code § 1695.1(e).)

4.  In the above general definition, the word contract has been emphasized. Why is that?

A    The law defines a Home Equity Sale Contract in very particular manner. This contract is defined as any contract, agreement, or arrangement, or any term thereof between an equity purchaser and equity seller incident to the sale of a residence in foreclosure. However, the Code additionally defines an equity contract as any offer incident to the sale of a residence in foreclosure between these parties.  (Cal. Civ. Code § 1695.1(e).)

5.  Why would a mere offer be given the same protection as a contract?

A    Here again, the law provides a far-reaching special protection to residential owners in foreclosure. Even before entering into a traditional contract, it is unlawful for any person to initiate or negotiate a sale of a residence in foreclosure to an equity purchaser if the person takes unconscionable advantage of the seller.  (Cal. Civi. Code § 1695.13.)

6.  Who is an equity purchaser?

A    An equity purchaser is defined as any person who acquires title to any residence in foreclosure unless exempt as discussed in Question 15 (Cal. Civ. Code § 1695.1(a)).

7.  What is a “residence in foreclosure”?

A    A residence in foreclosure means residential real property consisting of one-to-four family dwelling units one of which the owner (seller) occupies as his or her principal place of residence, and against which there is an outstanding notice of default properly recorded (Cal. Civ. Code § 1695.1(b)).

The court of appeal has found this law to apply only when the owners/victims actually live in the residence subject to foreclosure.   (In re Phelps, 93 Cal. App. 4th 451 (2001).)

III.  Legal Effects

8.  What actions must the equity purchaser avoid?

A   This law require precise and exact conduct of the equity purchaser and the various prohibitions are as follows:

  • Do not make any untrue or misleading statements regarding value, proceeds, contract terms, seller’s rights, or obligations (Cal. Civ. Code § 1695.6(d));
  • Do not induce equity seller to execute or accept any executed instrument of conveyance until the seller’s 5-day cancellation period has elapsed (Cal. Civ. Code § 1695.6(b)(1));
  • Do not record any instrument of conveyance signed by the seller until the seller’s 5-day cancellation period has elapsed (Cal. Civ. Code § 1695.6(b)(2));
  • Do not transfer or encumber or purport to transfer or encumber any interest in such property to any third party until the seller’s 5-day cancellation period has elapsed (Cal. Civ. Code § 1695.6(b)(3));
  • Do not pay equity seller any consideration until the seller’s 5-day cancellation period has elapsed (Cal. Civ. Code § 1695.6(b)(4));
  • Return any documents signed by equity seller within 10 days following receipt of notice of cancellation, without any conditions (Cal. Civ. Code § 1695.6(c)).

9. What are the remedies of an equity seller in the event these laws are violated?

A   An equity seller has been provided a multitude of legal rights under these laws in addition to the traditional legal rights of a party to a contract.  If the equity purchaser violates any requirements in Question 8 or takes unconscionable advantage of the owner in foreclosure, the seller may file a court action for recovery of all damages, injunction, other equitable relief, or a combination of these remedies (Cal. Civ. Code § 1695.7).

Furthermore, fraud or deceit upon the equity seller may result in criminal penalties on the equity purchaser up to $25,000 or up to one year in jail (Cal. Civ. Code § 1695.8).

10. What are the damages that an equity seller can recover?

A    In an action for damages, the equity seller can recover:

  • Actual damages;
  • Attorney’s fees and costs; and
  • Mandatory exemplary damages in an amount not less than three times the seller’s actual damages or a civil penalty of up to $2500 if no exemplary damages are awarded.

(Cal. Civ. Code § 1695.7.)

11.  What are the legal rights of an equity seller under the HESC?

A    The seller has the following legal rights:

  • FIVE-DAY CANCELLATION PERIOD: Cancellation of the purchase contract by the equity seller forfive full business days from when the equity seller signs the contract or up to 8:00 a.m. of the trustee’s sale date whichever occurs first;
  • TWO-YEAR CONTRACT RESCISSION PERIOD: Rescission of any transaction found to be unconscionable within two years of recordation of the conveyance (Cal. Civ. Code § 1695.14);
  • NO WAIVER BY SELLER: Any waiver of any provision of these laws by the equity seller is void (Cal. Civ. Code § 1695.10); and
  • NO LIMITATION ON PURCHASER’S DAMAGES: Any contract provision which attempts or purports to limit the liability of the equity purchaser from damages resulting from the statement or conduct of his/her representative is void (Cal. Civ. Code § 1695.16).

12.  Who is a “representative” of the equity purchaser?

A   Under the law, a representative of the equity purchaser is a person who in any manner solicits, induces, or causes any property owner in foreclosure to transfer title to the equity purchaser (Cal. Civ. Code § 1695.15(b)).

A representative of an equity purchaser is also a person who solicits any member of the property owner’s family or household to induce or cause the equity seller to transfer title to an equity purchaser (Cal. Civ. Code § 1695.15(b)).

13.  What does HESC require of a representative of the equity purchaser?

A   A representative of the equity purchaser must:

  1. Provide written proof to the equity seller that the representative has a valid, current “California Real Estate Sales License” (Cal. Civ. Code § 1695.17(a)(1));
  2. Provide a written statement, under penalty of perjury, that the representative of the equity purchaser has the above license.  The written statement under penalty of perjury must be provided to both the equity seller and equity purchaser prior to transfer of any interest in the subject real property. (Cal. Civ. Code § 1695.17(a)(2).)

Should these requirements not be fulfilled, the equity seller may choose to have the purchase contract voided by the court.  Even if the seller cancels, the equity purchaser is liable for all damages caused by the failure to comply with these requirements. (Cal. Civ. Code § 1695.17(b).)

C.A.R. form DPL, “A Declaration and Proof of Real Estate License” satisfies this written statement requirement.

14.  What about the bond requirement found in Civil Code Section 1695.17?

A    The Fourth District Court of Appeal in Schweitzer v. Westminster Investments held that the bond requirement under Civil Code Section 1695.17 for an equity purchaser’s representative is “void for vagueness under the due process clause and may not be enforced.” The California Supreme Court has declined to review this case which means that the previous bond requirement has been eliminated from HESC. (Schweitzer v. Westminster Investments, 157 Cal. App. 4th 1195 (2007),review denied March 26, 2008.)

Equity purchasers and their representatives, however, must still comply with the other requirements of HESC as discussed in this article.

IV.  Exemptions from the Home Equity Sales Contract Law (HESC)

15.  When does HESC not apply?

A    HESC applies only if ALL four of the following conditions are met:

(1)  the property being sold is residential one-to-four units;
(2)  the owner currently occupies the property;
(3)  a Notice of Default (NOD) has been recorded against the property; and
(4)  the buyer does not intend to occupy the property (i.e., buyer is an investor).

If any one or more of the four conditions has not been met, then HESC does not apply and none of the conditions or restrictions discussed in this article apply (e.g., no special contract need be used, no give-day cancellation period, and there is no two-year rescission period). (Cal. Civ. Code § 1695.1.)

In addition, HESC does not apply when a buyer acquires title in the manner as follows:

  • By a deed in lieu of foreclosure of any voluntary lien or encumbrance of record;
  • By a deed from a trustee acting under the power of sale contained in a deed of trust or mortgage at a foreclosure sale;
  • At any sale of property authorized by statute (such as a tax sale);
  • By order or judgment of any court (such as probate or family law court); or
  • From a spouse, blood relative, or blood relative of a spouse.   (Cal. Civ. Code § 1695.1(a).)

16.  What if an notice of default (NOD) is recorded while the transaction is in escrow or right after the contract is signed but before opening escrow?

A   The language of Civil Code Section 1695.1(b) in defining a “residence in foreclosure” refers to a residence against which there is an outstanding recorded notice of default.  HESC does not address the issue of whether the law applies if the NOD is recorded after the execution of a sales contract.  There is no appellate case dealing with this issue.  However, a Riverside County Superior Court has considered this issue and has made the determination that HESC does not apply if the NOD has not been recorded at the time the parties entered into the sales contract.  (Davis v. Varney, Case No. RIC 425604.)

With no recorded NOD, the transaction is not subject to HESC when the parties sign the contract.  It certainly does not seem reasonable to make the transaction subject to HESC and to force a purchaser, in essence, to start all over again just because an NOD is later recorded.

Unfortunately, a superior court decision is not binding law.  Thus, the law is not clear on this issue.

V.  Agency and Other Issues

Q 17.  Is a real estate licensee subject to the civil and criminal penalties imposed by HESC when representing the equity seller or equity purchaser?

A   No. HESC imposes these penalties on the equity purchaser. (Cal. Civ. Code § § 1695.7, 1695.8, 1695.15, 1695.17(b).)  Of course, all the penalties for violation of the real estate law and laws governing fiduciaries still apply.

18.  My buyer claims to be purchasing for the purpose of using the property as a personal residence. However, I don’t feel comfortable about that statement. What should I do?

A  Normally a licensee is not responsible for the hidden undisclosed true intent of a buyer. However, be aware of possible red flags that may arise. For example, the conduct and actions of the buyer may raise questions about his/her veracity when the loan application indicates non-occupier status or title vesting in another person.  You may want to urge the buyer to comply with HESC to avoid the potential civil and criminal penalties to which the equity purchaser is liable.  (Cal. Civ. Code § 1695.8 ($25,000 fine and/or imprisonment in jail for a up to a year).)

19.  Does C.A.R. have the applicable forms required by this law?

A  Yes.  The following forms for HESC transactions are available at http://store.car.org  or on WINForms®:

  • Notice of Default Purchase Agreement (C.A.R. Form NODPA). The NODPA is the purchase agreement to be used for HESC transactions printed in the statutorily-required format.
  • Declaration and Proof of California Real Estate License (C.A.R. Form DPL). The DPL satisfies the duty of the representative to provide proof .
  • Notice of Cancellation of the Notice of Default Purchase Agreement (C.A.R. Form HENC). The HENC is the form for the equity seller to use if the seller desires to cancel the sale within 5 business days of signing the contract.   Two copies of the HENC must be completed in full except for the equity seller’s signature.  The cancellation date and time to be written on this form is midnight of the date 5 business days after the equity seller signs the contract or 8:00 am of the trustee’s sale if that will occur sooner (Cal. Civ. Code § 1695.4(a)).

20.  Where can I obtain additional information?

A  This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit car.org.

Readers who require specific advice should consult an attorney. C.A.R. members requiring legal assistance may contact C.A.R.’s Member Legal Hotline at (213) 739-8282, Monday through Friday, 9 a.m. to 6 p.m. and Saturday, 10 a.m. to 2 p.m.  C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at (213) 739-8350 to receive expedited service. Members may also submit online requests to speak with an attorney on the Member Legal Hotline by going to http://www.car.org/legal/legal-hotline-access/.  Written correspondence should be addressed to:

CALIFORNIA ASSOCIATION OF REALTORS®
Member Legal Services
525 South Virgil Avenue
Los Angeles, CA 90020


The information contained herein is believed accurate as of March 9, 2011. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney. Revised by Sonia M. Younglove, Esq.

Copyright© 2011 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Permission is granted to C.A.R. members only to reprint and use this material for non-commercial purposes provided credit is given to the C.A.R.Legal Department. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R. Legal Department. All rights reserved.

Short Sales Tips for Sellers

If you’re thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as: Refinancing your loan at a lower interest rate; providing a different payment plan to help you get caught up; or providing a forbearance period if your situation is temporary. When a loan modification still isn t enough to relieve your financial problems, a short sale could be your best option if:

* Your property is worth less than the total mortgage you owe on it.
* You have a financial hardship, such as a job loss or major medical bills.
* You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest. A qualified real estate professional can:

* Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
* Help you set an appropriate listing price for your home, market the home, and get it sold.
* Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
* Ease the process of working with your lender or lenders.
* Negotiate the contract with the buyers.
* Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale  package that accompanies any offer typically must include:

* A hardship letter detailing your financial situation and why you need the short sale
* A copy of the purchase contract and listing agreement
* Proof of your income and assets
* Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender s review of the short-sale package can take several weeks to months. Some experts say:

* If you have only one mortgage, the review can take about two months.
* With a first and second mortgage with the same lender, the review can take about three months.
* With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don’t expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

* You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can t pay back the balance, talk with your real estate attorney about your options.
* Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
* Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

6 Tips for Buying a Home in a Short Sale

By: G. M. Filisko

By preparing for a real estate short sale, you can emerge with a great home at a favorable price.

When sellers need to sell their home for less than they owe on their mortgage, they’re shooting for a short sale. Short sale homes can sometimes be bargains, but only if you do your homework, stay patient, and remain unemotional during the sometimes lengthy and difficult short sale process.

Here are six tips for protecting yourself emotionally and financially when bidding on a short sale.

1. Get help from a short sale expert
A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they’ve represented in short sales and, of those, how many successfully closed the transaction.

2. Build a team
Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you’re interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase.
A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.

3. Know the home’s fair market value
By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home’s fair market value, it may be rejected. Your agent can help you identify the price that’s good for you. The lender will determine whether approval is in its best interest.

4. Expect delays
There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale.
The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.

5. Firm up your financing
Lenders will weigh your ability to close the transaction. If you’re preapproved for a mortgage, have a large downpayment, and can close at any time, they’ll consider your offer stronger than that of a buyer whose financing is less secure.

6. Avoid contingencies
If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it.
Also, consider ordering an inspection so you’re fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You’ll probably have to purchase the home “as is,” which means in its present condition.

This article includes general information about tax laws and consequences, but isn’t intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

More from HouseLogic
What you need to know about the homebuyer tax credit (http://www.houselogic.com/articles/homebuyer-tax-credit-what-you-need-know/)

(http://thegreenists.com/food/ted-talk-being-a-weekday-vegetarian/5803) How to claim your homebuyer tax credit (http://www.houselogic.com/articles/claim-your-homebuyer-tax-credits/)
Other web resources
More on short sales (http://www.nolo.com/legal-encyclopedia/article-30016.html)

Real-life discussions of short sales (http://www.npr.org/templates/story/story.php storyId=104803015)

G.M. Filisko is an attorney and award-winning writer who luckily has avoided the need for a short sale on her properties. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

MARS Rule and Real Estate Professionals

The Federal Trade Commission today issued a statement announcing that it will forbear from enforcing most provisions of its Mortgage Assistance Relief Services (MARS) Rule against real estate brokers and their agents who assist financially distressed consumers in obtaining short sales from their lenders or servicers.

As a result of the stay on enforcement, these real estate professionals will not have to make several disclosures required by the Rule that, in the context of assisting with short sales, could be misleading or confuse consumers. As more and more American homeowners seek short sales, it is especially important that the Rule not inadvertently discourage real estate professionals from helping consumers with these types of transactions.

The MARS Rule was issued pursuant to authority granted by Congress in 2009. The issuance of the Rule followed numerous FTC and state enforcement actions against companies that claimed to be able to obtain from consumers’ mortgage lenders or servicers a loan modification or other relief to avoid foreclosure. The Rule covers companies or individuals, among others, who assist consumers in obtaining approval of a short sale from their lender or servicer.

A short sale occurs when a home is sold for an amount less than the balance owed on the mortgage loan, and the lender or servicer agrees to accept the proceeds of the sale instead of pursuing foreclosure. Short sales can benefit consumers by allowing them to escape from a mortgage that they cannot afford, while avoiding foreclosure. Many real estate professionals assist distressed homeowners by providing both traditional services associated with selling their homes (e.g., listing the property) and working to seek lender or servicer approval of a short sale.
The MARS Rule requires companies offering mortgage assistance relief services to disclose certain information to consumers about the services they provide, bans collection of advance fees, and prohibits false or misleading claims. After the Rule went into effect, a number of real estate professionals who help consumers with short sales raised concerns about complying with the Rule. These professionals pointed out that some of the required disclosures could confuse consumers or could be inaccurate in this context.

At this time, the Commission has announced that it will not enforce most of the provisions of the MARS Rule against real estate professionals who are engaged in obtaining short sales for consumers. The stay applies only to real estate professionals who: 1) are licensed and in good standing under state licensing requirements; 2) comply with state laws governing the practices of real estate professionals; and 3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes. The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. These professionals, however, remain subject to the Rule’s ban on misrepresentations.

The Commission stated that the stay does not apply to real estate professionals who provide other types of mortgage assistance relief, such as loan modifications. In addition, the FTC will continue to enforce the Rule and Section 5 of the FTC Act, which prohibits unfair and deceptive practices, against all other providers of mortgage assistance relief services.

The Commission vote approving the MARS Rule enforcement policy was 5-0. It can be found on the FTC’s website and as a link to this press release. More information about the Rule can be found here, and information about consumers’ mortgage rights can be found here.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.

FTC Will Not Enforce Provisions of MARS Rule Against Real Estate Professionals Helping Consumers Obtain Short Sales

FTC Rule to Protect Struggling Homeowners

Rule Outlaws Advance Fees and False Claims, Requires Clear Disclosures

Homeowners will be protected by a new Federal Trade Commission rule that bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable.

“At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results,” FTC Chairman Jon Leibowitz said. “By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”

The FTC is issuing the Mortgage Assistance Relief Services (MARS) Rule to protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis. Bogus operations falsely claim that, for a fee, they will negotiate with the consumer’s mortgage lender or servicer to obtain a loan modification, a short sale, or other relief from foreclosure. Many of these operations pretend to be affiliated with the government and government housing assistance programs. The FTC has brought more than 30 cases against operations like these, and state and federal law enforcement partners have brought hundreds more.

Advance fee ban

The most significant consumer protection under the FTC’s new rule is the advance fee ban. Under this provision, mortgage relief companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. The companies also must remind consumers of their right to reject the offer without any charge.

Disclosures

The Rule requires mortgage relief companies to disclose key information to consumers to protect them from being misled and to help them make better informed purchasing decisions. In their advertising and in communications directed at individual consumers (such as telemarketing calls), the companies must disclose that:

  • they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
  • the lender may not agree to change the consumer’s loan; and
  • if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

Companies also must explain in their communications to consumers that they can stop doing business with the company at any time, can accept or reject any offer the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. The companies also must disclose the amount of the fee.

Prohibited claims

The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:

  • the likelihood of consumers getting the results they seek;
  • the company’s affiliation with government or private entities;
  • the consumer’s payment and other mortgage obligations;
  • the company’s refund and cancellation policies;
  • whether the company has performed the services it promised;
  • whether the company will provide legal representation to consumers;
  • the availability or cost of any alternative to for-profit mortgage assistance relief services;
  • the amount of money a consumer will save by using their services; or
  • the cost of the services.

In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. Companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

Attorney exemption

Attorneys are generally exempt from the rule if they meet three conditions: they are engaged in the practice of law, they are licensed in the state where the consumer or the dwelling is located, and they are complying with state laws and regulations governing attorney conduct related to the rule. To be exempt from the advance fee ban, attorneys must meet a fourth requirement – they must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts.

All provisions of the rule except the advance-fee ban will become effective December 29, 2010. The advance-fee ban provisions will become effective January 31, 2011.

The FTC rulemaking proceeding was conducted pursuant to Congressional legislation sponsored in 2009 by Senators Jay Rockefeller and Byron Dorgan. The Final Rule applies only to entities within the FTC’s jurisdiction under the Federal Trade Commission Act, which excludes, among others, banks, savings and loans, federal credit unions, common carriers, and entities engaged in the business of insurance. In June 2009, the FTC issued an Advance Notice of Proposed Rulemaking seeking comment on the practices of for-profit mortgage relief companies. In February 2010, the FTC announced a Notice of Proposed Rulemaking and sought comments from interested persons, including advocates for consumers, the business community, and the legal profession.

Click here for facts about mortgage consumers’ rights.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.

Funding And Closing A Short Sale

The Trustee is the owner of the property, not the Trust itself.
The Beneficiary has the power to direct the Trustee to deal with the title and proceeds of the property. They also have the right to manage, possess, use, control, sell, rent or mortgage the property. The beneficiary has an economic interest in the property.
When a homeowner puts a property into a land trust they convey fee simple absolute ownership to the Trustee. The land trust will state that legal and equitable title is vested soley in the Trustee with the homeowner named as the beneficiary.
The beneficiary can direct the Trustee to manage the property. Any liens remain in place but do not get paid off at this time. The land trust protects the property from other creditors by making sure no more liens are placed; this is good information for the short sale lender to know.
The homeowner will also sign a purchase agreement with the investors company as the buyer. The trustee is not named as the buyer. Once the trustee owns the property, a purchase agreement can be signed with the Trustee as Seller. Once the contract is accepted, the buyers lender will order a title search and find that the Trustee is the owner of the property and has the right to sell. This is the part of the process that typically stops the transaction. It all boils down to how the underwriter interprets the FHA guidelines.
Lenders (notably FHA and nonconforming) instituted an underwriting requirement that title must be seasoned for varying lengths of time (3 months etc). The rationale is based upon an observation that where properties were sold multiple times, within a short period of time, the loans had a higher default rate and tended to have artificially inflated appraisals and various other forms of loan fraud. Thus, the seasoning requirement was born. Note the key term “sold”, not transferred. The transfer of the property from the Seller to the Trustee is without consideration and constitutes a mere change of identity and therefore, does not reset the title seasoning clock.
Transferring the ownership of the Land Trust is akin to a corporation selling its shares to someone else, while selling some property that it holds title to – it has no bearing on the transaction contemplated between the Trust itself and the bona fide purchaser for value. Nor is there any reason why a personal transaction, that does not affect title to the premises, would be presented to the purchaser’s Lender. Again, it is the Trustee who holds legal and equitable title and is empowered to convey the premises not the beneficiaries who merely have a beneficial interest in the land trust – personally not realty. New York State, for instance, considered such interest to be an economic interest in real property thereby creating a blend of the two interests – a quasi real estate interest that does not rise to a fee simple interest – so that it may collect transfer taxes upon the transfer of such interest.
Once financing is in place, a qualified real estate attorney can help you proceed to purchase the beneficial interest in the property. Beneficiaries have economic interest in real property; therefore, transfer tax returns must be filed and transfer taxes paid when the interest is transferred to a new beneficiary.
This type of closing should always be performed by a real estate attorney who is familiar with land trusts. He will prepare the HUD-1 as if you were purchasing the property; the short sale lender is paid off at this time. The land trust stays in place; the trustee remains the same. Now the property can be sold to an end buyer with no problems.
The process can vary slightly from state to state and should only be done with a qualified real estate attorney who is familiar with the process. Proper structure with attention to the treatment of the beneficial ownership of the land trust is critical.
Due to the increase in real estate fraud and scams, many states have enacted stringent legislation concerning distressed assets. A qualified real estate attorney who has experience with short sales and land trusts will know what you can and cannot do concerning pre-foreclosed homes.
Jodi Funke is the founder of http://www.cashforshortsales.com a company who specializes in short sale transactions. Jodi is a transactional lender who provides funding for the investor to purchase a property on a short sale and sell the property for a profit the same day. Their team of real estate professionals, attorneys and title companies are experienced at handling these transactions while working at the highest level of integrity.

Article Source: http://www.articlesnatch.com

About the Author:
Jodi Funke is a transactional lender who understands this dilemma. “Lack of funds is the number one reason most real estate investors cannot close a short sale deal,” said Jodi. “We provide one-day funding for the investor to buy the property and our nationwide team of closing professionals, attorneys and title companies are experienced in doing back-to-back transactions so the investor can fund the deal and resell the property the same day. It”‘s a win-win deal for all parties involved.” Learn more about wholesale funding at http://www.cashforshortsales.com

Read more: http://www.articlesnatch.com/Article/Funding-And-Closing-A-Short-Sale-/747172#ixzz1hJXXUSXX
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Real Property Report – California, April 2015

Real Property Report – California, April 2015 California Median Home Price Soars Past $400,000 Mark Highest Since December 2007 Home Sales Up 9.0 Percent from March CALIFORNIA, MAY 19, 2015 — California single-family home and condominium sales were up 9.0 percent in April 2015. April sales were 37,009 up from 33,946 in March. The increase in sales volume was predominantly due to the 9.2 percent gain in non-distressed property sales that accounted for 83.0 percent of total sales. On a year-over-year basis, sales volumes were up 5.8 percent from 34,995 in April 2014 to 37,009 in April 2015. Regionally, year-over-year sales...

The post Real Property Report – California, April 2015 appeared first on PropertyRadar - previously ForeclosureRadar.

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