Thursday, April 7, 2011

The State may be your new 'Knight in shining armor" and don't forget BofA

California has decided that people who stripped equity out of their homes deserve taxpayer help after all.

The California Housing Finance Agency said Tuesday that people will no longer be excluded from three of the four Keep Your Home California programs just because they took out a home equity line of credit or did a cash-out refinance.

Keep Your Home California is a state-run program getting $2 billion from the U.S. Treasury's Hardest Hit Fund. It is designed to help low- and moderate-income people who are unemployed or owe more than their home is worth pay their mortgage.

There are four individual programs under the umbrella program. Eligible homeowners can get up to $50,000 in assistance from one or more of the four programs combined.

When Keep Your Home started taking applications in early February, it barred people from all four programs if they had tapped the equity in their homes.

"We knew we didn't have enough money to serve everyone," says Diane Richardson, CalHFA's director of legislation. "We wanted to help people who were in some kind of trouble through no fault of their own, who weren't upside down because they had taken out equity."

Of the roughly 28,000 people who have called the program seeking assistance, about 10,000 were found ineligible. Of those, about 40 percent or 4,000 were turned down because they had taken equity out of their homes.

CalHFA has now decided that people who can't pay their mortgage because they are unemployed or suffered a financial hardship shouldn't be penalized just because they robbed their homes of equity.

Under the new rules, people who took equity out of their homes will be eligible for the unemployment mortgage assistance, mortgage reinstatement assistance and transition assistance programs if they meet all the other program requirements.

These same programs have also been expanded to include mortgages that were originated after Jan. 1, 2009.

The program originally excluded mortgages originated after that date because they also are excluded under the federal Home Affordable Modification Program. "We wanted to be consistent with HAMP," Richardson says.

But CalHFA found that a lot of homeowners in trouble had refinanced after that date and it did not want to exclude them.

Homeowners who took cash out of their homes or whose mortgage was originated after Jan. 1, 2009, remain ineligible for the fourth program, which offers principal reduction.

To qualify for any of the four programs, homeowners must fall below certain income limits ($119,300 in San Francisco, San Mateo and Marin counties; $108,350 in Contra Costa and Alameda counties).

They also must be living in the home and cannot own a second home, but there are no other asset limits. Applicants will not be asked how they spent any cash they took out of their homes or how much they have in bank or investment accounts.

For other requirements, see

Richardson says that "a couple hundred" people have received help from the program and that about 2,000 more are in the final stage of confirming their eligibility.

CalHFA is contacting people who were previously disqualified but would qualify under the new rules. These homeowners can also contact the program at (888) 954-5337.

Some people have been turned down because their loan servicer is not participating in one or more of the programs.

All of the major private-sector servicers - Bank of America, Wells Fargo, Chase, CitiMortgage and GMAC - are participating in the unemployment mortgage assistance plan, which makes mortgage payments on behalf of unemployed homeowners in imminent danger of foreclosure. The plan will pay 100 percent of the borrower's payment, up to $3,000 a month, for six months.

None of those servicers are participating in the principal reduction program, but BofA has agreed to join a pilot program that will start in a few weeks, Richardson says.

This program will provide capital to reduce the principal balances of qualifying borrowers who are underwater, or owe more than their homes are worth. For every dollar the program contributes, BofA will also reduce the borrower's principal by a dollar, Richardson says.

For borrowers who have received no other assistance from Keep Your Home California, this program could reduce their balance by up to $100,000 - $50,000 from the program and $50,000 from BofA.

However, the program cannot reduce loan balances to less than 115 percent of the home's market value and it won't reduce the borrower's debt-to-income ratio to less than 31 percent, Richardson says.

California is one of 18 states receiving money from the Hardest Hit Fund. Each state could set up its own program, within limits. Many never prevented homeowners from receiving assistance because they had withdrawn equity from their homes. However, many also have much less generous payouts than California.

To learn more, go to, then click on Programs.

Reprinted from the official website of the S. F. Chronicle

Wednesday, April 6, 2011

California Association of Realtors unveils it's Short Sale website

In the latest of C.A.R.'s efforts to address the difficulties of completing short sales, the association is proud to launch a new website, California Short Sales. This website helps members and consumers stay on top of all the latest news and insider tips on the ever-changing short sale process.

With information for both consumers and REALTORS®, the website is full of need-to-know resources about short sales, and provides up-to-the-moment news, legislative information, legal tips, and lender requirements.

Short Sales California is also a place to stay up-to-date on C.A.R.'s activities to enable more families to arrange a short sale.

Monday, April 4, 2011

Short Sale Terminology


Short Sales are a hot topic today in real estate.

Short Sales are a distinct process supported by its own terminology. We often forget sometimes that not everyone is in the real estate business, and the language can seem confusing! The following is a summary of the most common terms that a buyer and seller should be aware of when purchasing or selling a short sale property:

•Short Sale: When a lender agrees to accept less than what is owed on the mortgage and release its lien on the property.
•The Property is "upside down": This phrase is commonly used to describe a situation where the amount due on the existing loan is higher than what the property is appraised for or will sell for.
•Loss Mitigation Department: The department at the lender that is responsible for reviewing all short sale documentation, ordering a BPO, and approving or denying short sale.
•BPO: Brokers Price Opinion (BPO), typically ordered by lender, is a property valuation report to help determine what the property might sell for.

Friday, April 1, 2011

Department of Real Estate says "Protect yourself from getting ripped off...."

Consumer Alert: What You Can Do to Protect Yourself from Getting
Ripped Off in Real Estate and Home Loan Relief Scams
By Wayne S. Bell Chief Counsel – California Department of Real Estate

I. Introduction.
The New Year has unfortunately not brought about the end to real estate and mortgage
relief scams. While a deep recession continues to affect the national and California
economies, the business for swindlers is very good.
They continue to sell false hope to and prey on vulnerable and unsophisticated
consumers, and the bad players far outnumber those of us in the government who
prosecute them.
They advertise and cast their nets widely, using the Internet, newspapers, magazines,
mail pieces, and radio and television,
This alert is written to remind you to be continually cautious and vigilant, and to give you
some important tools and red “warning” flags so that you do not fall victim to real estate
and home loan relief scammers.
The California Department of Real Estate (DRE) has issued prior topical warnings and
alerts to consumers about the rise of fraud in connection with pre-foreclosure and
foreclosure-related rescue, forbearance and forgiveness services, including loan
modifications, forensic loan audits, and short sales.
The DRE has also written about problems with “Cash for Keys” programs, imposter
landlords using bogus and absurd evidence of ownership to take advantage of
unsuspecting renters, and the increased use of questionable and possibly misleading
terms such as "expert", "certified", and "specialist" in the marketing and advertising of
assistance to anxious homeowners and other real estate and mortgage consumers.
The fraud comes in many shapes and sizes, and there seems to be absolutely no
shortage of ingenuity, creativity, marketing ploys and tricks used by unscrupulous
fraudsters to capitalize on the desperation and vulnerability of unsophisticated and/or
financially strapped California consumers.

II. What You Can and Should Do to Avoid Becoming a Scam Victim.

In addition to telling you that you really need to always be wary and cautious when
thinking about retaining the services of people and companies offering assistance in the areas of mortgages, foreclosure rescue, and real estate, you should check out and read
prior alerts and warnings of the DRE.
Also, and importantly, you are wise to never pay for such services or assistance in
advance of seeing results. It is extremely risky to do so, and it may be illegal for the
“service provider” to ask you for or to collect fees in advance for some services, like
loan modification, short sale, and mortgage forbearance services.
Further, you may be able to do some of the advertised services yourself, especially in
the area of loan modifications. In other cases, such as with forensic loan audits, there is
a serious question about the value of such services. In still other cases, there are free
services that might be available to you through HUD-certified housing counselors.
If you choose to use the real estate and/or mortgage related services of third parties for
a fee(s), ask them questions, lots of questions, and then verify, verify, and still verify
some more.
Check them out on the DRE website, at Make certain that they are
licensed by the State of California. If they are licensed, see if they have been
disciplined. If they are lawyers, check them out on the State Bar's website, at Again, look at their disciplinary record, if one exists.
Check them out through the Better Business Bureau.
Check them out through a Google or related search on the Internet. You may be
amazed at what you can and will find out doing such a search. Often consumers who
have been scammed will post their experiences, insights, and warnings long before any
criminal, civil or administrative action has been brought against the scammers.
The purpose of the next section is to give you some specific, detailed questions that you
can ask of those people and entities who/which have offered to assist you. Remember
that legitimate service providers will not mind the questioning and scrutiny.

Suggested Questions to Ask (This List is Not Exhaustive, But It Will Give You
Information on Which You Can Make a Reasoned Decision) –

1. Are you licensed by the California Department of Real Estate? If not, why not?
What exemption from the licensing laws do you claim? Remember that most real estate
and mortgage related services require a license issued by the DRE. There are some
exceptions for California licensed lawyers who are engaged in the practice of law, and
some other very limited exceptions. If they are licensed, ask them for their DRE Real
Estate License Number, and check to see if they have been disciplined by the
Department (go to
It should be noted that certain mortgage lending and mortgage related activities require
a special Mortgage Loan Originator (MLO) endorsement, and that requires the issuance
of a unique identifying number. So ask the service provider if he or she has an MLO
endorsement number as well, and then verify that information with the DRE.
If the person is a real estate salesperson, he or she must work through a real estate
broker. Therefore, you will want to question the salesperson about the identity and
experience of his or her broker, and then check on the broker’s license at the DRE
website shown above. If the salesperson says that he or she can do the work
independent of a broker, do not work with or hire that person.
2. How many transactions or services of the type you are advertising or offering have
you successfully performed? If they have offered to perform loan modification services,
ask them how many “permanent” loan modifications they have negotiated. Make
certain to get specifics and contacts, and do further checking.
3. Do you have a list of current and past “satisfied” customers? If so, get it and call
them. Ask them if they would use this person or entity again. Do your own background
check. And note that even if the person or company is "highly recommended" by socalled
satisfied customers, the risk of a scam is not eliminated entirely.
4. Do you have a list of business and banking references? If so, get the list and check
them out.
5. How long have you been providing loan modification, short sale, mortgage relief, or
other relevant services? Alternatively, you can ask, how long have you been in this
6. Are you a specialist in this area? If the answer is yes, ask what specialist
qualifications do you have and what does that mean? And what course of study did you
undertake to become certified or specialized?
7. What are you actually going to do for me? (What specific services will you be
providing?) Get that in writing, and take the time to fully understand what the contract
says and what the end result will be before proceeding with the services.
Remember to always ask for and demand copies of all documents that you sign.
8. Where and when was your business formed? (Ask this question where there is a
corporation or other form of business entity involved). You can then look at the website
of the California Secretary of State to verify that information and/or to determine if the
business is able to operate in the State of California. You can also check on the agent
or agents for service of legal process, and the current status of that business entity.
The Secretary of State’s website is

III. Are there Surefire Ways or Red Flags to Detect Fraud?

Fraudsters are good at what they do. Many are sophisticated rings using fake websites
and important sounding names. Others are just rogue criminals on their newest scam.
They all continue to adapt and modify their schemes as soon as their last ones became
It is really difficult to identify a “surefire” way to detect fraud in the area of real estate
and mortgage relief services. But there are some red warning flags to look out for so
that you do not become the latest casualty of the scammers. Those things include:
1. Advice that you can “walk away” from your home loan and repair your credit by quitclaiming
your property to some third party.
2. Assertions that you can “delete” or fully satisfy your mortgage by assigning it to a
third party.
3. Claims that you can get your home “free and clear” by suing your lender for
something like failing to get your approval to assign the loan to some other party.
4. Letters that appear to be from a government agency claiming to help you obtain
mortgage relief assistance, or offers of “official government assistance” or “government
approved” mortgage relief.
5. Requests that you pay only in cash, or by wire transfer or a cashier’s check.
6. Discussions of “side deals”, paying for something “outside of escrow” or “after
7. An unwillingness to meet in person.
8. “Attorney-backed” or “attorney affiliated” entities that do not disclose the name or
names of California licensed lawyers who are responsible for those entities.
9. The use of more than one contract for the same services.
10. Advice that you do not need to read an agreement that you have been asked to
sign. Always remember that you should not be pressured into entering into an
agreement that you do not read and understand.
11. Unsolicited help, such as people showing up at your home, or cold-calling you and
professing their expert services. You need to fully research all of those who you
consider paying for real estate and mortgage relief services.
12. Unqualified guarantees or promises that the service provider can get your loan
modified, that they can get a short sale approval for you, or that they can stop a
foreclosure action.
13. Requests that you provide personal financial information over the phone or over the
14. Requests for upfront payment before any services have been provided.
15. Requests giving the service provider a power of attorney.
16. Statements that you must act immediately, or without any delay.
17. Requests that you must sign a deed of trust, grant deed, quitclaim deed, or any
document that has not been fully completed (such as where lines are left blank).
18. Advice that you should not talk with your lender, servicer, attorney, accountant,
and/or anyone else.
19. The use of lofty language that you cannot understand.
20. Advice that you can make some false statements in documents to get mortgage
relief since “everybody is doing it”.
21. Assertions that they have found some secret loophole in the banking laws that will
help you eliminate or modify your mortgage.
22. Assertions that you can avoid foreclosure by giving “fractionalized” interests in your
property to persons or entities that are in bankruptcy.
23. Assertions that you are a “sovereign person” not subject to the laws of California or
the United States.
24. Assertions that bankruptcy is an easy fix and will save your home from foreclosure.
Filing for bankruptcy is a major event, with large implications for your life and credit, and
it does not wipe out your secured mortgage lien. Bankruptcy should not be taken lightly,
or commenced without serious contemplation and the advice of a credible and reputable
bankruptcy specialist.
IV. Conclusion.
Fraud by predators in the area of real estate and mortgage relief scams requires that
you be skeptical, proceed cautiously and do your homework. There are legitimate,
reputable, licensed and competent professionals in the real estate and mortgage field.
If you need or want their assistance, you need to do some homework.
Ask questions, get referrals from people you know and trust, and always remember the
following points. If it seems too good to be true, it probably is not true. Do not abandon
your common sense. And if you feel alarm bells going off inside of you (and something
does not feel right – the “uh-oh” feeling), you should pay close attention and rethink
moving forward.