Distressed Properties: Foreclosure, Short Sale, REO, Deed-In Lieu of Foreclosure, Strategic Default,Loan Modification, Underwater Homeowner
HOMEOWNERS:If you are visiting this page, it is likely that you are considering a strategic default. Most people we speak with owe more on their property than it is worth and often the neighborhood has declined as well. Often they come to us because they are considering applying for a loan modification or have tried to work with their bank and did not get anywhere. The people we speak with are either behind on their mortgage payments or trying to decide whether or not to make their next payment. For better or worse, we have a lot of experience helping property owners in this situation evaluate their options.On average we speak with a dozen property owners every week that are considering a foreclosure, short sale, deed-in-lieu or other strategic default of their home.We offer a $400 flat fee consultation that takes about 45 minutes to an hour. If you would like to schedule an in-person meeting or phone consultation, our hours and contact information is listed on the "Contact Us" page. We take cash and checks. STRATEGIC DEFAULT CONSULTATION:If you have an appointment scheduled with us we need to know:
1. If
your property is in California. The laws around this issue are state
specific and we can only advise property owners whose homes are in California.
2. How many loans you have.
3. If you obtained each loan upon your purchase or thereafter, like a refinance, second loan or equity line of credit after close of escrow.
4. How much you owe on each loan.
5. If you have more than one loan, who the investor is (not just the servicer, you should be able to obtain this by calling the servicer, but this information is not crucial before our meeting).
6. Roughly what you, your realtor or Zillow feels that your property is worth.
7. If you bought the property as your primary residence, a second home or as an investment property.
8. If you have a VA loan.
BUYERS: We also speak extensively with buyers who are looking to purchase a short sale or REO (bank owned property). We review bank addenda and other documents on a quarter hour basis.
"I was in need of some foreclosure / short sale home information and needed someone to help me filter through all of the internet information my brain filled with. I met with Jean Shrem and then had a follow-up call with her a month later. She helped focus me on the pertinent information and was very accommodating to my schedule. I would strongly recommend her for someone trying to figure out what our rights as homeowners are."
~Gordon J.
"If you are underwater in your home I HIGHLY recommend that you consult with Jean Shrem. First we called to give her our scenario, decided to meet with her and left with invaluable information. Although it is an awful feeling to be in a predicament such as ours, she was able to provide us with great solutions and resources. We are so grateful to her. Thanks Jean!"
~Gina B.
"I recently referred my clients that are currently in a short-sale that was approved by the first and second loans for review. Jean reviewed the approved documents and gave great advice and direction to my clients. She even went out of her way to respond to the negotiator on behalf of the clients at no additional charge! If anyone is in a short-sale or needs contracts to be reviewed by an attorney; Jean is the person to go to."
~Mark C.
APPLICABLE LEGAL TERMS:
California Code of Civil Procedure § 580 This is the code section that governs the Recourse/Non-Recourse nature of a loan.
Cancellation of Debt The amount of a Deficiency that a lender writes off, also referred to as C.O.D.
Deed-in-Lieu
This is the process whereby a homeowner deeds the property back to the lender instead of the lender foreclosing on the property. Deficiency A negative number composed of the difference between the value of a property and what a borrower owes a lender(s) for that property.Sometimes also referred to as a homeowner being underwater.
Foreclosure
Foreclosure is the process by which a bank goes through the necessary legal steps to take ownership of a real estate property that is in default or has delayed payments. With real estate foreclosures, there will often be a sale at the "Court House Steps". This is where buyers who have 100% cash, usually in the form of a cashier's check, attempt to purchase the property for the outstanding balance prior to the bank entering the court house to finalize the foreclosure. For buyers with all cash who do their homework, there are some great real estate deals to be had.
HARP
“Home Affordable Refinance Program”
is a government-backed refinance program for underwater homeowners with a
Freddie Mac or Fannie Mae loan.The
program has been extended through June 30, 2012.It is part of the government’s Making Home
Affordable mortgage assistance program and is a companion to the Home
Affordable Modification Program or “HAMP”.
Judicial Foreclosure
Judicial foreclosure is a process whereby the lender forecloses on the property of a defaulting borrower by filing a lawsuit in court. Judicial foreclosure is more common in California for commercial and multi-unit properties and retains the lender's ability to obtain a deficiency judgment.
Keep Your Home California
Effective February 7, 2011, a federally funded Program aimed at helping homeowners keep their homes. Programs generally require that the property must be the borrower's primary residence, the loan must be less than $729,750, the borrower cannot own any other property, borrower must execute a hardship affidavit, borrower must have adequate income to make modified payments, borrower cannot be in an active bankruptcy:
1. Transition Assistance Program. Provides up to $5000 for relocation costs in the event of a short sale or deed in lieu of foreclosure. 2. Principal Reduction Program. Over a three year period, the program matches up to $50,000 in capital, on a dollar for dollar basis, with participating first mortgage lenders. 3. Mortgage Assistance Program. Provides up to $15,000 in mortgage payments for homeowners that have experienced a change in household circumstance due to their military service which has led to default.
4. Unemployment Mortgage Assistance Program. A federally funded program for homeowners eligible for unemployment that pays up to $3000/month for up to 6 months.
Loan Modification
This is the process whereby a homeowner works out an arrangement with their lender to modify their home loan due to some economic hardship. Most lenders, who are willing to offer a loan modification at all, will usually lower the monthly payments by extending the term of the loan, allowing interest only payments or reducing the interest rate for a fixed period of time. The government program is called Home
Affordable Modification Program or "HAMP".
Non-Judicial Foreclosure
Non-judicial foreclosure is a process whereby the lender forecloses on the property of a defaulting borrower by virtue of evoking the power of the trustee. Non-judicial foreclosure is the most common form of foreclosure in California and limits the lender's ability to obtain a deficiency judgment.
Non-Recourse Loan
Non-recourse loan is a loan for which a borrower is not liable for repayment after the property is foreclosed upon.
Promissory Note Sometimes a lender will ask a borrower whose repayment is deficient to execute a note promising to make additional payments to the lender.
Purchase Money A loan that is secured upon close of escrow such that the money obtained from the lender goes directly to the seller to pay for the property.
Real Estate Owned (REO) Property
A Real Estate Owned (REO) is a property where the owner of the property is the bank that has foreclosed on the property. Real Estate Owned properties are usually sold as-is with no disclosures or reports of any kind. Real Estate Owned properties and homes are often in severe disrepair.
Recourse Loan
Recourse loan is a loan for which a borrower is still liable for repayment even after the homeowner defaults or the property is foreclosed upon. This is usually a loan that has been refinanced.
Senate Bill 94
As of October 2009, California law prohibits any person, including real estate agents and attorneys, from
collecting an advance fee from a consumer for loan
modification assistance or mortgage loan forbearance services affecting 1 – 4 unit
residential dwellings. Fees may only be collected after all services have been performed - which in our mind would mean a loan modification has been finalized.
Short Refinance
Effective September 7, 2010, non-FHA borrowers who are current on their existing mortgage but owe more on their primary residence than it is worth, and have a 500 credit score or greater, may qualify for a new FHA-insured mortgage through 2012. Lenders must voluntarily agree to participate in the program and a successful Short Refinance may negatively impact a borrower's credit score. As of yet, we have not learned of a single lender who is participating in this program.
Short Sale
"Short Sale" means that the homeowner is selling the real estate property but owes more on the home than he can sell it for. Short sales must be approved by the bank and are often delayed in closing or do not close at all. Often, with short sales, the homeowner is trying to beat the clock and sell the property before it falls into foreclosure.
Strategic Default
Strategic default is the intentional decision homeowners make to walk away from their properties despite their ability to pay the mortgage. Strategic default is often based on the fact that the property is severely "underwater" (outstanding mortgage exceeds current value) and many times compounded by the fact that the neighborhood has declined.
Underwater Underwater is slang for the fact that a homeowner’s outstanding mortgage exceeds the current value of her property.
