There has been no shortage of foreclosures on the market over the past several years, so it’s no surprise that unscrupulous individuals are finding ways to intervene in these transactions and ultimately take advantage of homeowners. As such, the Federal Government recently released a list of tips for homeowners to help them avoid being taken advantage of by foreclosure scam artists.

Tip #1 – Work only with a HUD approved counselor

If a homeowner is being foreclosed upon, the federal government recommends working only with their recommended counselors.  These counselors have been assessed and approved to handle foreclosures and have been deemed credible.

Tip #2 – Don’t overpay for services

Most HUD sponsored foreclosure counselors offer free or very low cost services.  Homeowners should never be lured into spending excessive amounts of money on foreclosure counseling.  Individuals requesting such high fees can often be a red flag for scams.

Tip #3 – Be cautious of guarantees

A reputable foreclosure counselor will not promise the homeowner  that the foreclosure will be stopped for them.  Specific circumstances ultimately determine the fate of a foreclosure, and, therefore, anyone who makes guarantees should not be trusted.

Tip #4 – Know what is being signed

Homeowners should never allow a counselor to fill out or sign paperwork on their behalf, and unfortunately this happens more frequently than many people realize.  Clients get pressured and overwhelmed and suddenly they have signed their home away.

Tip #5 – Unbelievable deal?  It probably is.

As the old adage states, if it’s too good to be true, it probably is.  If a homebuyer encounters an amazing solution from a supposed foreclosure counselor, and it sounds like too great of a deal to be true, it probably is. Be wary of “perfect solutions,” as they generally do not exist.

In a commercial property foreclosure, the lender will usually ask the judge to assign a Receiver to take “control” of the property. Receivers are normally nominated by the lender; however, they are considered agents or officers of the court and are a neutral third party. The Receiver (typically individuals, companies, or attorneys) will “protect, preserve and secure rents” and aid in restoring order to the business after a loan default on the foreclosed property.

Receivers have authority to:
Hire tradesmen to maintain the building
Make decisions about the operation of the property and the business
Notify tenants of the receivership
Execute leases
Collect Rents
Pay Taxes
Pay Utilities
Maintain insurance
Hire a real estate broker to list and sell the property

To learn more about foreclosure and receivership laws, visit: www.receivers.org

Several new laws affecting the real estate industry became effective this year. In a previous post, we discussed SB 931: Short Sale Deficiency Protection for Sellers, in which lenders who have agreed to a short sale will not have the ability to obtain a deficiency judgment against the seller after the short sale is completed (applying only to first mortgage loans).

In this series of posts, we will highlight and give an overview of the other laws that also went into effect in January.

Foreclosure Protection for Tenants:
Senate Bill 1149 states that tenants that remain in a property after is has been foreclosed must be provided a notice of their statutory rights for one year, and must be explained in a separate cover sheet or included in a 90-day termination notice. This law also prohibits a landlord from harming a tenant’s credit score by revealing unlawful detainer records, unless the landlord prevails in court. Read More

Energy Efficiency Audit in Home Inspection Report
Effective January 1, 2011, a home inspection and inspection report may include a Home Energy Rating System (HERS) home energy efficiency audit if requested by a client. The inspection may be performed by a home inspector who meets the HERS regulations requirements. REALTORS are encouraged to provide the HERS booklet that explains the statewide HERS program to residential buyers. Read More

Whether you are a REALTOR considering getting into the niche business of dealing with REO’s, a buyer looking to find a deal on a home by seeking a foreclosed property or a seller looking for information on what happens when a foreclosure proceeding is started, you need to know and understand the foreclosure process. By understanding this process, you will know how long the process may take, which entities are involved, and when the proceedings can be halted. Below is a simplified version of the process.

Defaulting on one’s loan causes the start of foreclosure, the process by which the lender takes over the home in order to recover their principal investment. Once the house is either sold on the steps of the title company or the court house at the Trustee’s Sale or “repossessed” by the lender, it is sold and the former owner must vacate at the discretion of the new owner. When there is a power of sale clause in the deed of trust the non-judicial process of foreclosure is used.

Notice of Default:

In California, the timeline of non-judicial foreclosure begins when the trustee files a notice of default. This is a letter that is sent to the owner/trustor notifying him or her of their default of the loan. This notifies the owner of the intent of the lender to follow through on their right to collect on the debt. The copy of the notice, which is recorded at the County Recorders Office of the appropriate county, is mailed to the address of notice as per the deed of trust.

Notice of Trustee’s Sale

No sooner than ninety (90) days after the trustee records the Notice of Default, the Trustee must publish a notice of trustee’s sale in the local paper and simultaneously file that notice with the county recorder’s office. No sooner than twenty days (20) after the notice of trustee sale is filed, the home may be sold at public auction for the amount of the debt plus foreclosure costs. If no one bids at the auction, the lender assumes ownership of the property, and may dispose of that property to recover their cash investment.

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