New Foreclosure Law SB 1137

SB 1137 became effective July 8th as an urgency measure. However, requirements pertaining to the notice of default and the posting and mailing of an entirely new notice will not become operative until 60 days after the effective date.

The provisions of the new law outlined below apply to loans secured by owner occupied residential real property and made between January 1, 2003 and December 31, 2007. These provisions will remain effective until January 1, 2013. The requirements are extensive and the full act text should be consulted for details.

1. A Notice of Default (NOD) may not be filed by the trustee or lender until 30 days after contact is made in person or by telephone with a borrower to assess their financial situation and explore options to avoid foreclosure, or until 30 days after satisfying specified due diligence requirements.

2. During the initial contact the borrower must be advised of the right to request a subsequent meeting. If a meeting is requested then it must be scheduled within 14 days.

3. An assessment of the borrower's financial situation and discussion of options may occur at the first contact or at the subsequent meeting, but in either case the borrower must be provided a toll-free number for HUD certified housing counseling agencies.

4. A NOD must include a declaration that the borrower as been contacted or due diligence has been used to try to contact the borrower or that the borrower has surrendered the property. Due diligence includes having a link to information on the options to avoid foreclosure on the website of the beneficiary or their agent.

5. If a NOD was filed prior to the effective date of the new law, without a subsequent notice of rescission, then a new declaration must be included as part of the notice of sale. The declaration must state that the borrower either was contracted to assess their financial situation and explore options to avoid foreclosure or that no contact occurred; in which case the efforts made to contact the borrower must be listed.

6. A NOD may be filed when a borrower has not been contacted as required by the new law if the failure to contact the borrower occurred despite the due diligence of the lender or their agent. The actions that constitute due diligence are listed in the new law.

7. A new notice has been created by the law and must be posted and mailed at the same time a notice of sale is posted. The notice advises residents that the property may be sold and that their right to continue to reside in the property may be affected, along with certain other information.

If you're facing the foreclosure monster visit OCForeclosureOptions.com and we'll review our situation at no cost and point you in the right direction.

Loan Modifications Helped by Fed Cuts

Maybe you've heard of the following concept and maybe not. One of the modifications we're able to get done for you is what's called a Short Refinance. Simply put, you're given a new loan at a payment that you can reasonably afford. Lenders don't even let you know that this option exists. And even if you ask, they do everything they can to keep you out of the loop enough not to know how to get it.

Our attorneys have successfully conducted several of these short refinances and can do one for you too. Just call 800-765-3150 x111

Did you know the Fed cut the rate by .50%. This is good for people who are in need of loan modifications because it eases the pain that the lenders are feeling when having to do modifications. Granted the cut does not tie directly to the long term rates like mortgages do but it is a trickle down effect that will make a modification more bearable for the lender and easier to get for you.

Here's the Fed Cut Details.

The Federal Open Market Committee reduced its target for the federal funds rate by 50 basis points to 1.0% today, matching market expectations for monetary policy. The discount rate was also cut by the same amount to 1.25%. The rate cut today follows an emergency, inter-meeting half point rate cut earlier this month. This is the lowest fed funds target set by the FOMC since June 2004. The policy statement released after the meeting indicated clearly that weakened economic activity brought on by reduced spending and tight credit was at cause for the easing. The Fed noted declining prices and expects inflation to moderate further from here, essentially taking it off the table for now in terms of monetary policy. That leaves the many downside risks to economic growth for the Fed to contend with, indicating perhaps there is more easing in the pipeline when the Committee meets again in December.

Federal Open Market Committee Policy Statement

(Italics/highlight indicate material changes in wording from last statement) Release Date: October 29, 2008

For immediate release

The Federal Open Market Committee has decided today to lower its target for the federal funds rate 50 basis points to 1 percent.

The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A Duke: Richard W. Fisher ; Donald L. Kohn; Randall S. Kroszner; Sandra Pinalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-1/4 percent. In taking this action, the Board approved the submitted request by the Board of Directors of the Federal Reserve Bank of Boston, New York, Cleveland and San Francisco.

Deed in Lieu of Foreclosure - Watch where you step

In Luke 16:11 it says "If therefore you have not been faithful in the use of worldly wealth, who will entrust true riches to you?"

This is a quote by Jesus implying that everything on earth belongs to God. You are given the opportunity to manage the things on the earth on God's behalf. Regardless of your beliefs if you simply did a Deed in Lieu of Foreclosure without attempting to at least have a professional negotiator try to work something out with the lender or do a short sale, you're doing yourself a great disservice. And you're causing the lender more harm than good. This is not a good thing.

If you'd like to learn more about how to get a proper loan modification, please feel free to call me directly. I'm here to listen. There are still options.
Anthony Nitz
800-765-3158

Reverse Mortgage Modification

Huh! What's a reverse mortgage modification? Yeah, I know it's not something you've heard about before. But after I grilled a local Reverse Mortgage specialist with a major lender we both kind of stumbled upon this idea.

Here's how it goes. Your parents have a mortgage on their home for say $300,000 and the value is about $450,000 and because they're now on Social Security and have a little pension money coming in they are barely squeaking by. Unfortunately you (the kids) are having to shell out hundreds or thousands every month to your elderly parents simply because they won't be able to eat if you don't. Maybe you're paying their mortgage or utilities or buying them groceries. Isn't it funny how things come back around?

Anyway, how would you like it if mom and dad had no mortgage payment at all?

But wait a minute, Reverse Mortgages are very conservative and are not going to give you the total amount you need to cover their entire outstanding loan. Also, all lenders that I know of will never give mom and dad a second loan for the balance that's not covered by the Reverse Mortgage. So, a regular reverse mortgage is simply not an option. This is where my Reverse Mortgage Modification comes into play. I'm not going to spill the beans of how it works here but if you would like to know more, feel free to call me directly.
Anthony Nitz
800-765-3150 x111

Schwarzenegger's Loan Mod Law

In mid July Governor Schwarzenegger signed a hopeful new loan modification law that would help handle the current California Housing crisis. The law states that lenders must properly contact borrowers by phone or in person discussing possible loan modifications before proceeding with any foreclosure process.

What does this mean for you?
This law will help make loan modifications and adjustments more readily available to those in trouble. To be honest, there are a good percentage of homeowners who have never even heard of loan modifications. What this also means is that if you are facing foreclosure and the lender did not comply with the California State law while processing the foreclosure, the foreclosure may be invalid and they have to start all over or may incur a liability on their part.

If you're currently in foreclosure, give me a call and I'll look at your foreclosure paperwork and let you know what your options are. You can also visit www.OCForeclosureOptions.com and enter your information for a free consultation.

Banks Speeding Up Loan Mods - Your Benefit or Not?

In a recent article posted on Wall Street Journal's Market Watch they report on how some companies are now accepting online orders for loan modifcation agreements.
Well, some of us would consider that a good thing right? I mean after all, it's time the banks got on board with an automated method of processing loan modifications. But I wonder if that's actually a benefit to the borrower or the bank?

In the article it says that by requesting loan modifications online, lenders can now instantly create changes to their loan document packages if workouts are necessary. These modified agreements, which have been available since the end of 2007, also enable lenders to remain in compliance with changing lending legislation and requirements.

Progress is generally a good thing. But something to ask yourself is if the banks are able to make quick decisions online regarding the modification of your loan what is it they truly have to gain by moving so fast?

Well, the first thing that comes to mind is the insurance industry. When someone is in an accident it seems an insurance adjuster is not only available and making offers 24 hours a day but they will show up on your door step or in your hospital room with a check. Why? They know if they can get you to settle right away their losses and your entitlement is severely diminished.

Right now in a time when more and more people are considering the alternatives to foreclosure, Loan Modifications rise to the top for those who want to keep their home. So just like the individual who rushes to accept the quick offer from the eager to settle insurance company, they later realize they should have played a little more hard ball.

According to Congress it is estimated that 80% of the people who engage in a modification directly with the lender end up failing to keep up with the terms they were given. I think the reason for this is simple.

If YOU contact the bank directly, they know that you don't likely know what options are available to you and why you may be entitled to those different options. Also, the bank is looking out for THEIR best interest not yours. Therefore the less they're able to give away, the more they mitgate their loss. Sound like the insurance companies? Perhaps the concept is similar.

So what do you do? Simply put, you need to find someone who knows what the options are and let them negotiate on your behalf. Much like you see commercials urging you to call the attorney hotline when you've been in an accident, I have interviewed many attorneys who handle negotiations on behalf of my clients. Unlike the hotline where you end up with a random attorney, these attorneys have been personally scrutinized by me. They have reduced interest rates, reduced principal balances, eliminated 2nd mortgages and more importantly they actually have a heart for helping people. Of course each situation is unique and every resolution is different. If you'd like additional tips on getting the right loan modification, feel free to call.
Anthony
800-765-3150 x111

Deed in Lieu of Foreclosure - A little trickier than you thbought

A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of repossession, and additional advantages if the borrower subsequently files for bankruptcy.

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the outstanding indebtedness of the borrower exceeds the current fair market value of the property.

Other things to consider before a "deed in lieu of foreclosure" is simply that banks can be sneaky. If they agree to take the property back without going through the foreclosure process they usually don't let you know the additional ramifications you will endure.

You'll still have a foreclosure on your credit, you can receive 1099's or deficiency judgments against you even after you thought you did the right thing and just handed the keys back to the bank.

Even if you know you might be subject to these things you won't know how much liability you'll have to endure until you are notified usually by mail. What do I mean? Consider this. If you do a short sale and go through the process, you are actively participating in helping to mitigate the loss to the bank. Likewise you have some control over the price at which the property is offered. When the bank takes the keys back they don't ask you for your opinion on what price they should sell it at. In the current state of things you can be assured that the bank wants this property off the books and they'll probably sell it for less than what it might sell for so they can get a quick sale.

Lets do some math:

Lets say you owe $300,000 on your current loan and the current value is $250,000.
That's a $50,000 loss to the bank on the loan itself.
If they do a foreclosure their cost can be an additional $50,000. O.K. that's $100,000 loss.
Then because the bank wanted a quick sale they sold it for $220,000. That's $130,000 loss.
Then add an additional 7% in costs (roughly) to cover expenses for the sale costs. $15,400 for a loss of $145,400.
Even after you did the right thing and handed the keys back you could still be liable for this loss.

If you're considering a Deed in Lieu of Foreclosure, contact us first to evaluate your current situation. There are other options and perhaps they haven't been explained to you properly.

If you are set on doing a Deed In Lieu of Foreclosure call us and we'll connect you with one of our attorneys who can negotiate on your behalf and limit or eliminate your liability after the fact. There's never any obligation or cost just to talk.