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!