Archive for the 'Government' Category

The Foreclosure Timeline

Published
by
kevin
on December 15, 2008
in Banks, Government and Lending
. 0 Comments

Starting September 8, 2008, California has a special foreclosure timeline for loans originated between 2003 and 2007, which are secured by owner-occupied residences.  Loans involved in short sales are likely to be owner-occupied loans from the years 2003 to 2007, which was the heyday for sub-prime lending.  The special foreclosure timeline does not apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations.  The special foreclosure timeline will remain in effect until January 1, 2013.


Day 1: Lender Contacts Borrower


For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure.  During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days.  The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.


Day 31: Filing of Notice of Default


For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure.  The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice.  The notice of default informs the borrower of the default.  It must also include the lender’s declaration that it has contacted the borrower to explore options for avoiding foreclosure, attempted to contact the borrower, or the borrower has surrendered the property.


Day 121: Filing of Notice of Trustee’s Sale


Three months after the filing of the notice of default, the lender may record a notice of trustee’s sale setting forth the date, time, and place of the upcoming trustee’s sale. The notice of trustee’s sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.


Day 145: Deadline to Cure Default


Up to five business days before the trustee’s sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs.  After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee’s sale.


Although California law allows a trustee’s sale to take place 20 days after the posting of the notice of trustee’s sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens.  At the trustee’s sale, the property is sold through a public auction to the highest bidder.

Contact a qualified REALTOR® EARLY on in this process (ideally before missing a payment) to ensure all options for avoiding foreclosure are identified.

Kevin

Was Anyone Listening???

Published
by
sandy
on September 29, 2008
in Government, Lending and sub prime mortgage
. 2 Comments

By Sandy Haney

CEO, MCAR

Below is a letter written by one of our REALTOR® members and former MCAR Director, Eugene Ferris.  Eugene wrote of his concerns regarding the loose lending practices in January, 2005 and sent it to three of our local newspapers. His prediction was six months prior to when the market started its downturn.  Like many of our members, Eugene saw the train wreck about to happen and tried to send out the warning.  MCAR did the same.  We saw and heard horror stories regarding lender fraud, over inflated fees, loans being made to buyers who certainly would not be able to keep their homes.  We shared that information with regulatory agencies, law enforcement offices and anyone else we hoped would be able to correct the direction in which we were headed.  Unfortunately, due process is much longer than the loan process!

Letter from Eugene, January 2005

As I read the reference to Salinas in last week’s Wall Street journal article on housing affordability, it struck me that blind trust in the short term real estate value and some mortgage lenders’ practices are going to hurt a lot of people throughout our country.

In 1849 the word went out that gold, and therefore fortune, was readily available for those brave souls who reached California. Some, very few, indeed prospered from their time spent stooping on a river bank in the Sierras. But most who toiled in summer heat and winter frost went broke and scores stayed broke for many years. The people made rich by the gold rush were those selling the dream of the fortune, mineral rights dealers, and supply brokers of simple shovels, pans and goods. It’s now important to look at the period with vision clarified by time, and then apply those lessons to our local housing train chugging down the tracks in the fog.

Owning a home changes everything; options for the future immediately expand, the vision of retirement becomes considerably clearer, education options for your children broaden and provide generational improvements, not to mention the huge benefit it has for growth in a participating society that has a vested interest, and our revenue basis. But it is so important that buying a house is in fact, building equity and a future. Paying interest only on a home loan is gambling three ways against the odds: A) That your home value goes up; B) That your personal income goes up; and C) That the prevailing interest rates stay low. A and B may go your way, but the obvious news is that sooner or later interest rates are going to rise. As referenced in the WSJ, 60% of home buyers in Salinas during 2004 have interest-only loans.

The secondary market that buys mortgages and dictates the terms of lending policies may well reel in financial pain if the move in interest rates is up and quick. But the real sufferers of such a move will be the thousands of new home owners left financially marooned, and a real estate market left wounded for years. The secondary market must create home ownership options that provide stability and affordability, such as longer term loans with no prepayment penalties. The government authorities should compliment such home ownership opportunities by sensible planning for generations to own their own homes, easing zoning and arduous building processes.

Like man of the mineral rights dealers and supply brokers of the 49ers, the mortgage lenders of today know that what they sell to dreamers for home ownership probably won’t deliver. Worse still, their tools are going to cause big trouble to some home owners if A, B or C don’t happen. Some mortgage lenders may have a lot to answer for in the coming years. Are they doing anything illegal? No. Do they have an obligation to look out for the interests of their clients? Yes, and I know some that do that every day, every client. But others have a churn and burn production mentality that will crush the dream of many and hurt all of us in the long run.

Eugene Ferris

Records…What Records?

Published
by
lorelingner
on September 19, 2008
in Banks, Government, Permits and Records and Salinas
. 2 Comments

The County, Cities and Water Management have failed to accurately keep track of permits.  I have spoken with several escrow officers to see if they would be agreeable to record documents and permits for properties in order to have a permanent, accurate record.   As Realtors, we so often encounter problems where a governmental agency states there was no permit for whatever.  Water Mgmt. has incorrect records (I just went thru this on a CV property).  If the plans and permits had been recorded, it could have saved the Seller money, saved the Realtors many hours and a lot of gas driving from one governmental agency to another.

As Realtors, looking out for our Buyers’ and Sellers’ interests, I think we would do them a great service to immediately implement a procedure where all plans and permits are recorded through the title companies,   Just like CC&R’s, deed restrictions, easements, the plans and permits would be preserved, long after specific properties have changed hands once, twice or more times.

Too often, we run into issues where cities dig in their heels and state there was no permit for whatever.  An example, I sold one house in Monterey three times over the years.  The first two sales had City Inspection Reports and passed without an issue.  The third time, the City said there was a porch enclosure without permit.  The neighbor who lived next door for over 30 years stated the house had been the same during the entire time she lived there.  When I approached the City with the two prior City Reports and the neighbor’s written statement, their response was “we are not responsible for our errors”. (Only the governmental agencies can get away with a statement like this.)  The net result was that the Seller had to pay thousands of dollars to hire a structural engineer, architect, contractors and pay for a permit to bring the porch up to current code requirements.

Another example - the City Inspector said the second bath was without permits, it had to be taken out.  No one had the plans on the house that was over 50 years old (the City has no documentation and the owner/builder was deceased).  Luckily, the agent representing the Buyer had gone thru this before and was smart enough to check with the Assessor’s office.  As it turned, out the Assessor had been taxing the house with two baths.  Once we got the document from the Assessor, the City had to back off.  What astounds me is that cities can make a statement without documentation - they no longer had the building permit or plans yet, were able to state there is no record of a 2nd bath.

How many Sellers have been blackmailed into paying for something, at point of sale, that was legally permitted but no one had the old records?

Water Management was a major recent issue.  The home I sold was going to the third owner.  Water Management had come to the house at the time of sale from owner one to owner two.  At the time of the sale to my Buyer, Water Mgmt. declared that we had seven wash basins, their records only showed five.  The current owner stated that the house was exactly as the way it was when the purchased it (did not add two wash basins).  We had two sets of plans that showed seven wash basins.  Without the “permit stamp”, Water Mgmt. did not want to accept the plans as a “legal record”.  Phil Smith went to Water Mgmt. and Water Resources and bought permits for the two “additional sinks” in order to get the transaction closed.  Water Mgmt. also showed one showerhead in the Master bath - it had dual showerheads.  We got a letter from a contractor stating that the plumbing fixtures in the Master shower were discontinued in the 80’s.  That did not matter, Water Mgmt. took the position it was added and needed a permit.  Phil Smith went to Water Mgmt. and paid for the second showerhead, which resulted in a deed restriction. I went to the Mty County Building Dept. because the County Building Report showed that the plans had been microfilmed.  Unfortunately, the County got rid of the microfilm.  I went to the Assessor’s office, they only had the number of baths, no fixture count.

(Mty County Building said they will only keep the plans for about three months after the permit is finalled and will not microfilm.)

My Buyer and I requested a meeting with Water Mgmt.  We went in armed with the plans, the contractor’s letter and photos of all the baths.  Showed them the photos which helped our case that the prior inspector may have missed two sinks if they ran through quickly.  We were able to convince them that (a) it appeared that the sinks and showerhead were all original and (b) they made an error on their prior inspection.  The Seller did get some of his money back from the additional permit fees and we were able to get the deed restriction released.

I believe Water Mgmt. went on the basis of the original permit application which showed 5 sinks when, in fact, 7 sinks were built into the house.  Probably what happened, they used that for their basis and just kept going with the original application document, not paying attention to what was built.

Had we had recorded plans and permits, we could have saved many hours on everyone’s part, gas and unnecessary permit fees and a lot of aggravation.  It demonstrated to me how careless the government agencies are and Sellers are forced to pay for something that was already permitted.  The only way to avoid these issues is for owners to record their documents with the title companies so there is a permanent record.  It could all be so simple.

Sincerely,

Lore Lingner
Realtor, Previews Property Specialist
Coldwell Banker Del Monte Realty
www.LoreLingner.com
Lore@LoreLingner.com

A Money Line

Published
by
galencall
on September 11, 2008
in Banks, Government and Lending
. 5 Comments

  I read with great interest, an article in the New York Times yesterday, reviewing the government’s takeover of Fannie Mae and Freddie Mac. A little over a year after the credit crisis formally began, I was struck again by the enormity of the problem facing our country. Historically, from an economic stand point I find that what is happening to be absolutely incredible, exciting in the overall scale of size, and compelling to stay alert to change. I was equally struck how it reminded me of being back in college and overwhelmed with multiple courses trying to keep them sorted by information, meeting deadlines or due dates on exams, labs or presentations it is no small coincidence that we have a college student living at home. Focusing on course and curriculum for a college student is similar to a working adults task in the mortgage business today of sorting through the barrage of current day information and subsequent timelines so as to adequately and efficiently deliver needed education to community and clients. The governments Treasury Department takeover, on top of the newly released Housing and Economic Recovery Act of 2008 (July 2008) and the critical provisions in HR 321combined, can only keep one on their toes or suggest not getting out of bed in the morning less there be more information to digest. The purpose of the legislation is to stimulate activity in three areas: One, to stimulate additional buying activity, particularly at the entry level or first-time home buyer market. Two, is to provide relief to current homeowners experiencing difficulty or who are in foreclosure. Third, is to enact legislation and standards that are aimed at the lending business; Federal licensing requirements are coming that are aimed at taking the villains off the street.

 The implications, the timelines, the mere “change is in the wind concept” is exhausting, daunting to sort through and at minimum confusing to those who might not be watching and teaching it day in and day out.  There are so many varied changes happening at light speed; loan limits, tax implications, down payment options, reverse mortgages can say goodbye to Fannie Mae’s home keeper program, HUD counseling cost issues, 1st time home buyer tax credit, mortgage insurance, changes effective October 1, November 1 and January 1, 2009 and more.

To teach, to educate and instill hope in the future is one of the hallmarks of today’s mortgage originator. Substance will outperform style.  For example, did you know that today 2 out of every 3 FHA loans includes seller funded DPA (down payment assistance)? Fannie Mae has already removed this option from the table moving forward after October 1, but there is a ground swell lobbying to keep it and this effort may well prove to be successful. Stay tuned as the changes are constant. Mortgagee letters are the benchmarks for underwriting decisions and as the letters are published the facts can hit the streets. It will be a fall season packed full of change!

Galen Call, CMPS®
Mortgage Planner
Treehouse Mortgage Group
451 Washington Street
Monterey, CA. 93940
direct: 831.645.1164
fax: 831.643.1161

 

Taxation vs. the Economy

Published
by
kevin
on August 29, 2008
in Government and Salinas
. 0 Comments

This week, both proponents and opponents anxiously awaited the results of Measure W, Salinas Valley Memorial Hospital’s $400 million bond effort. Much to the hospital’s dismay, the effort failed. The real news story here however, is not that the measure failed, it is that its’ failure was not unique. That same night, three hours east of Salinas in a small town named Oakdale, Oak Valley Hospital awaited the voters’ decision on their bond effort and received the same results.

District Hospitals all over the state are rushing to meet state seismic requirements by 2013 and in their quest to raise taxes in order to meet a legislative mandate, they are bumping up against what I like to call the Bond Ceiling. Looking across the state it appears as though somewhere in the last two years voters have lost their tolerance for self-taxation and managed to erect a ceiling that nary a public agency has yet to break through. Tough economic times are upon us all, our houses are worth less, our cars and groceries cost more and our jobs are not keeping up with the cost of living. The excesses of the late 90’s and early 2000’s have caught up with the energy industry, the banking industry, Wall Street and now the average American. Unlike its’ big corporate brothers, the average American, with less than $1000 in savings, is unable to pull out of the rut very quickly. Alas, the only thing the average person can control is the measure to which he or she will tax themselves.

So here is my question: is the post Prop 13 California, coupled with an economic downturn, a place where no bond can be passed for the foreseeable future? If so, what are special districts and municipalities to do? While I don’t think there is one right answer to this question, a possible answer might be: nothing. Well, maybe not nothing, but very little…let me explain.

Financial experts will tell you if you don’t have money, don’t spend money. As such, in lean economic times certain projects should be put off until a person has more disposable income. For example, in lean times when the kitchen sink breaks, you pay to fix the sink. When your house was worth 30% more and your sink broke, you may consider taking the opportunity to remodel the kitchen. The average person can appreciate the distinction between a necessary repair and a job that can wait.

It appears that local governments have entered into very lean times, along with the rest of the country. The voters are saying they won’t tolerate big projects and big spending by government because they themselves aren’t spending. Yes, this means deferring some projects that would be really nice to have done, like the building of better roads and new schools. But if government is of the people and for the people, shouldn’t it be like the people? Eventually, the economy will progress and people will begin to shout for better streets and bigger schools, and as such, maybe they will then be willing to pay for it.

The Incentivised Approach

Published
by
kevin
on July 23, 2008
in City of Monterey, Government and Green
. 0 Comments

California is changing. Californian’s typically take the role nationally of being the facilitators of change. Whether its race, religion, sexual orientation, politics or the environment, California typically leads the way - for better or for worse. Unfortunately, as we continue to evolve, governments have begun adopting onerous policies or mandates in an effort to achieve desired results and achievements without fully vetting the long term cost or impacts of the adopted policies. The lack of thorough analysis and forethought of consequences has left many of us confounded. There appear to be workable solutions readily available and awaiting implementation without the need for additional bureaucracy.

So, what’s the solution? Cities are driving agendas that demand a change in the way business, real estate and development are done within their boundaries. It is imperative that we engage ourselves in this process and provide the essential data and analysis needed for proper decision making and if necessary, policy change. But unfortunately this isn’t always enough. How do we adequately address local government concerns while maintaining proper boundaries in regards to our interests?

Providing incentives as a primary tool to facilitate change seems like a straightforward concept. It’s simple in its implementation and does not restrict or impose detrimental policy changes. In most instances, it actually provides a more efficient vehicle for delivery of the proposed solution. By incorporating incentives, you provide for the opportunity of voluntary gifting of the desired service. At the very core of this approach lies the true key to its success. It’s simply human nature to work progressively towards a goal when there is a benefit in achieving it. On the other hand, mandates for performance are generic and when doled out they usually elicit the minimum output. The private business sector exceeds in the areas of creativity and service delivery. So why not let business do what it does best? Providing incentives is the way to achieve success. We all want projects that will benefit our communities and this certainly seems like a better use of resources than a set of mandates that only half helps everyone.

The city of Monterey recently adopted a new set of Green Building Regulations. All new construction and remodels, both commercial and residential will be subject to either the Leadership in Energy and Environmental Design (LEED for commercial) or the Build It Green (BIG for residential) standards with subsequent adherence to an adopted green point rating system. The new regulations will be phased in over a year with the first year being voluntary, incentivising adherence to the new policy with such things as: expedited permitting, flexibility in setbacks and receiving priority inspections. The incentives approach certainly makes the new level of reg’s somewhat more palatable, but what happens after the year long phase-in sunsets? All projects will require the new green standards and the incentives either disappear or lose their benefit altogether. The imagined panacea now has the potential to negatively impact the overall intent of those who originally conceived and subsequently adopted the policy. I’m sure you can imagine the desire of some to circumvent the new requirements only to pursue improvements void of the appropriate permitting process.

This is certainly not a judgment on either the LEED’s or Build it Green programs. Both have proven to be beneficial and have delivered levels of success in achieving energy efficiency and environmental benefit. This is however an opportunity to evaluate the level of success prior to the mandatory green building standards taking effect a year from now.

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