You're Invited! Free Stop Foreclosure Conference Call with Christina Papworth The Real Estate Doctor

In the video above I invite you to join me on Tuesday for a FREE Stop Foreclosure conference call at 6:30pm. Homeowners can become frustrated, stressed and even depressed when they don't know their options when it comes to avoiding foreclosure. Join me on Tuesday at 6:30pm by calling (605) 475-4800 and entering the conference PIN 886097 to access this call. You won't be disappointed. In fact, you just might be relieved. "See" you Tuesday!

Video: Homeowner Bill of Rights

It is very important that homeowners and those of us who work with homeowners understand SB900/AB278. In this video I will talk more about what has come to be known as the Homeowner Bill of Rights, foreclosure statistics and how this bill affects those of us helping our clients with loan modifications and short sales.

Watch this important video now and let me know what you think.

Be well!

The Homeowner Bill of Rights (SB900 AB278) - What Does it Mean to You? Part 2

As always when people writing the bills are not necessarily proficient in the profession the laws are written to protect, there are several ambiguities.  These should be of some to great concern to those of us involved in this process.  Can you see what they may be?

Here’s my short list:

1. Already I am experiencing instances where, though we are in the middle of a short sale being negotiated, the lenders are sending letters to the seller offering loan mods(which are often bogus) in order that the lender is compliant with the law. The typical left hand/right hand scenario. With there being so few properties on the market and buyers struggling to get a home, if the sellers choose to do a loan modification now (often they have been turned down numerous times before being practically forced to short sell)I am afraid the sellers will be sued or shot(jk) if they change their minds after buyers have hung in there for months waiting for the lender to finally approve the short sale.  Disclosure of the negative possibilities could become a disaster in both directions. This is highly volatile! 
2. The language of the law does not mention short sale specifically in a few very important places. Senator Anderson assured me the intent was that it apply to short sale as well as mod…but….it doesn’t really say that. We will proceed as if it does and see how that pans out. The Senator told me he would write corrective verbiage and present it right away, if necessary. I think it is!
3. I already have attorneys and their representatives telling me the bill gives homeowners recourse against the lenders. It looks to me like the $7500 goes only to the government in the form of fines. Even if it does go to the homeowner…what do they have to do…sue? We know who wins in those situations. Same deal with the $50,000 recourse. How do the homeowners get it? How much does it cost? How long does it take? What’s the process?
4. The law says it applies only to owner occupied first deeds of trust. Why not investment properties? They are all short too? Many of my families are losing 3-6 houses in this crisis. Investment properties are upside down in as large percentages as owner occupied properties. The law should apply to investment properties .
5. Second deeds of trust are a huge problem in getting loan mod or short sale approval! Some are particularly heinous to work with…and this law would have given us teeth to make them comply and be reasonable. This is also new verbiage that should be added  to the bill.
6. What is the definition of a complete package? The lenders get to determine what that means and if the sellers are in compliance. We all know and have heard the horror stories of the lender loosing the package or portions of it…or saying they have never received it. Can they continue to do this to avoid this law? The fact of the matter is, these packages in most cases are received electronically. You can’t lose one piece or another. You either have it or you don’t. I am concerned this may be a big loophole for the lenders to slip through.

This isn’t my complete list. More to follow.

I am the homeowner’s advocate and real estate doctor. Working together, I believe we can use this law to the advantage of the individual, the community and even the lenders. Watch for more updates and queries.  Meanwhile... Be Well!

The Homeowner Bill of Rights (SB900 AB278) - What Does it Mean to You? Part 1

Before interviewing State Senator Joel Anderson on my radio show recently (see podcast 1/19/13 at www.TheRealEstateDr.com), I determined to download and read the bill in its entirety. I wanted to be prepared with questions for him. In reading it, I can see how the lawmakers endeavored to make it user friendly for the homeowner.  The paragraph that clarifies their intent is very inspiring and provides us with statistics that perhaps many were not aware of prior to reading it in the bill.  It’s reassuring to know that our lawmakers are coming to terms with the horrible situation we have been living with since 2006. This preamble, of sorts, also enlightens us as to where California stands within the realm of the entire Country as to financial individual, municipal, and Statewide hardship.  I quote from the bill (with emphasis):

SECTION 1.  The Legislature finds and declares all of the
following:
   (a) California is still reeling from the economic impacts of awave of residential property foreclosures that began in 2007. From 2007 to 2011 alone, there were over 900,000 completed foreclosure sales. In 2011, 38 of the top 100 hardest hit ZIP Codes in the nation were in California, and the current wave of foreclosures continues apace. All of this foreclosure activity has adversely affected property values and resulted in less money for schools, public safety, and other public services. In addition, according to the Urban Institute, every foreclosure imposes significant costs on local
governments, including an estimated nineteen thousand two hundred twenty-nine dollars ($19,229) in local government costs. And the foreclosure crisis is not over; there remain more than two million "underwater" mortgages in California.
   (b) It is essential to the economic health of this state to mitigate the negative effects on the state and local economies and the housing market that are the result of continued foreclosures by modifying the foreclosure process to ensure that borrowers who may
qualify for a foreclosure alternative are considered for, and have a meaningful opportunity to obtain, available loss mitigation options. These changes to the state's foreclosure process are essential to ensure that the current crisis is not worsened by unnecessarily
adding foreclosed properties to the market when an alternative to foreclosure may be available. Avoiding foreclosure, where possible, will help stabilize the state's housing market and avoid the substantial, corresponding negative effects of foreclosures on
families, communities, and the state and local economy.
   (c) This act is necessary to provide stability to California's statewide and regional economies and housing market by facilitating opportunities for borrowers to pursue loss mitigation options.

You can read the bill in its entirety from the link on my website and here are the highlights of the bill as I understand it:

1. The terms of the bill apply only to owner-occupied properties 1-4 units, though I believe we will see the lenders using these rules on every residential property, just to be safe.
2. NO DOUBLE-TRACKING. Once a lender has a completed application from a homeowner or their representative for a foreclosure alternative program such as loan modification or short sale, the lender cannot initiate or continue with the foreclosure process until a determination is made as to eligibility of the homeowner for the alternative they are requesting.
3. TIMELINES: The lender must acknowledge their receipt of a complete package (the lender determines what that is) within 10 days of receipt. The lender must have a call with the borrower or their representative within 14 days of receiving a request for a foreclosure alternative/loan modification. Upon declaring the package complete, the lender must give an answer to the request within 30 days. 
4. If a lender sells or assigns the loan which has been approved, IN WRITING, for a short sale or loan modification, the new lender must abide by the terms of that approval. THIS IS HUGE! 
5. Lenders must assign a “single point of contact” live person to the homeowner or their representative. 
6. If the lender is robo-dialing homeowners in an attempt to contact the homeowner to comply with the anti-foreclosure alternative offer, there must be a live person to handle the homeowner’s return call.
7. If a trustee sale is postponed, the lender must send a new sale date to the homeowner in writing.
8. A short sale or loan modification, with full written approval from all parties, cannot be foreclosed upon, as long as the homeowner is in compliance with that approval.
9. If a trustee sale has not been recorded, a homeowner may bring “injunctive relief” if they determine there has been a violation of this statute, which shall stop the recording or the sale until the lender has proved they are in compliance with the law.
10. There is recourse, not for the homeowner if the lender violates the rules of the bill, but to the regulatory agency having jurisdiction over the lender, of up to $7500. The rules are surprising specific and lay out within the verbiage of the bill.
11. There is recourse to the homeowner if the lender forecloses fraudulently (Can you spell robo-signing?) up to $50,000. (Also pretty specific verbiage.)

There are several ambiguities that should concern those of us involved in this process. Tomorrow I will talk about those.

Introduction to the Homeowners Bill of Rights

Hi there! This is just a quick video of what's to come on tomorrow's blog post. For the next couple of days it's all about the Homeowners Bill of Rights. Yes, as a homeowner you have rights and I'm going to dissect it for you the next couple of days.

Have an awesome day and enjoy this little video!

Stop Foreclosure Clinic on March 2nd - You're Invited!

I hope you are enjoying this beautiful day! I wanted to take a minute to personally invite you to my Stop Foreclosure Clinic on March 2, 2013. Here's a little video I made with the details. After you watch it, you can go to my website at http://www.TheRealEstateDr.com to register. It's free! I can't wait to meet you there!

Arms Length Transaction - What Does it Really Mean?

In today's video I explain what an arms length transaction means when you are short selling your home. Does it mean you have to sign contracts at least one arms length apart? Does it mean the buyer and seller can't be related? Or does it mean you can't know each other at all?

Watch this video now to find out!

Video: More Than One Option for Taxes and Forgiven Debt

Yesterday I shared about the Mortgage Debt Relief Act and other options you have. Today I have a special video for you where I go a little deeper into explaining different options including a brief discussion on bankruptcy as well as individual state taxation issues.

I've kept this video under 5.5 minutes so you can get the important information you need to protect yourself or your clients quickly.

Click the video to watch this important video on mortgage taxes and relief now:

Debt Forgiveness Act - What Does it Mean to You?

Does it Matter?????

Everywhere I look today on Facebook, emails and texts, there are myriad agents and government entities shouting with glee over the one year extension of the Debt Forgiveness Act.  I agree this is a good thing, however, more for mindset and lessening the fear factor than for actual help.

Keep in mind that the law, passed in 2008 as Bush was leaving office, protects a homeowner who either allows a home to go to foreclosure or closes on a short sale with debt- forgiveness  from being taxed on the loss (to the lender), which is considered a gain like ordinary income to the homeowner. In either case the homeowner will likely receive a 1099c stating they have a gain in income…just as if the homeowner were self-employed and received a 1099 declaring how much income they had made that year.  Even if they do not receive a 1099c they are obliged to declare the income anyway to the IRS.

The bill states that there can be NO taxation IF (and this is a huge IF): 1) The home is their personal primary residence under IRS code (owner-occupied 2 of the last 5 years), and 2) The loan on which the debt was forgiven is PURCHASE MONEY (meaning the original loan taken out when the property was first purchased by said owner) period. 

Do You Know How Few People this Law Actually Protects?...

In California, less than 20%. If you refinanced your original loan to send your kid to college, to buy another home, to throw to the winds of the sea…this law does not protect you…never did. And , no, if you just refied to get a lower interest rate and took no cash out it is still questionable as to whether this act actually kicks in even for you.

Do you know the other ways to protect yourself against taxation after a foreclosure or short sale or loan mod with a principle reduction? There are several and one of them is available to almost anyone who finds themselves in this situation of losing or short selling a home.

Listen to my radio show this Saturday, 10 am, 1360 AM KFIV to get the answers.  IHeart radio, too. HOUSE CALLS with Christine Papworth, the Real Estate Dr.  Anyone out there disagree with me? Let’s talk.