Sacramento Helps Sinking Borrowers Stay in Homes

This week we saw some major developments in Sacramento in regards to the State of California through Governor Brown, will protect mortgage holders from foreclosure and aggressive bank practices such as, home seizures while the homeowner is in the negotiating process to lower the mortgage payments.  

Through a pair of Assembly and Senate bills known as AB 278 and SB 900, the state is preparing for some of the toughest restrictions and regulations in the country regarding banking industry practices while dealing with a homeowner experiencing financial hardship.

Key parts of the bills passed by the state Legislature:

• Prohibit lenders from "dual tracking," or pursuing a foreclosure even though the homeowner is negotiating to modify the mortgage loan.
• Outlaw "robo-signing," or mortgage servicers' improper or faulty processing of foreclosure documents.
• Allow homeowners and state agencies to sue financial institutions for economic and civil damages, under limited circumstances.
• Require banks and loan servicers to provide a single representative for a borrower to work with, to prevent bureaucratic mazes.

If you or someone you know is experiencing financial hardship and unable to fulfill the terms of the deed, call me for a confidential conversation to assess your alternatives in today's real estate market.

AG Harris: "Good-Faith" Pause While Introducing "Homeowner Bill of Rights"

Huffington Post and DS News learn of letter sent by California Attorney General, Kamala Harris, requesting Fannie Mae and Freddie Mac to halt foreclosures in the state while Federal Housing Finance Agency (FHFA) considers whether principal reductions are an appropriate strategy for the GSEs. 

California Attorney General, Kamala Harris

Harris states, "about a half million homes in California have been foreclosed, and another half million are either in foreclosure or on the brink of foreclosure."  In light of the national development in the settlement where principal reductions were discussed, California homeowners with mortgages from Fannie or Freddie are not included within the first round of discussions.  Currently, 60 percent of homeowners in California have mortgages backed by Fannie and Freddie.  Hence, Harris has requested a moratorium while further discussions continue with the Acting Director of FHFA, Edward DeMarco.

With DeMarco's recent analysis noting ultimately, Foreclosures never serve the long-term interest of the taxpayer when compared to Principal Reduction methods with forbearance ensuring better returns for investors while the $18 billion share of the national plan would not cover the needs of California. 

Harris along with Senate President Pro Tem, Darrel Steinberg and Assembly Speaker John A. Prez will announce the "Homeowner Bill of Rights" today.  The deal would benefit an estimated 466,000 homeowners in California.  

With this initiative, Harris is to announce sponsorship of six bills designed to guarantee: 

• Basic standards of fairness in the mortgage process, including an end to dual-track foreclosures
• Transparency in the mortgage process, including a single point of contact for homeowners 
• Community tools to prevent blight after banks foreclose upon homes
• Tenant protections after foreclosures 
• Enhanced law enforcement to defend homeowner rights - paid for by fees imposed on banks 
• A special grand jury to investigate financial and foreclosure crime

Let the Solar Shine!

Designed by architect, Volker Traub in 1961, The Warshawsky Residence is now being offered at a very reasonable price for this 2 bedroom / 2 bath mid-century modern home for sale at 2433 Solar Dr, 90046.  In over 1,452sf of living space, you can enjoy the serene landscape of Runyon Canyon with walls of glass leading to the outdoors and a private ridge top garden.  

2433 Solar Dr, 90046

Recognized by Dr. Thomas Hines for making a significant contribution to the Neutra office, Traub has, in the Neutra tradition, masterfully sited the home to capture dramatic city & valley vistas. 

The living area is spacious, light and bright.  The dark stained hardwood floors have been laid in a herringbone pattern, while the fireplace separates the living area from the dining area. 

The wood paneling in the dining area makes the mid-century modern statement with built-in cabinets and drawers.  You have direct access to the kitchen through the doorway.

The kitchen is in need of appliances.  Other than that, you are good to go!  Other areas of the house need much more love and care. 

 I kinda dig this wallpaper in one of the bedrooms.

Talk about a view!  The question is just how many others are trying to enjoy it?  It is Runyon Canyon, after all...

Being that this is a foreclosed home, there are many things that need attention.  Don't be fooled though, with a little TLC, this place will come back to life in no-time!

  The home has a 2-car carport.

Currently listed at $799,990 and the property rests on 5,600sf of land atop a ridge overlooking Hollywood.  Listing courtesy of Robert Walters, Lel Prp, MLS 11-569585.

Steve Ward
Realtor®, SFR®
Mid-Century Modern Architecture Specialist
modernhomeslosangeles
Keller Williams Realty - Los Feliz
DRE Lic #01871422
213.305.8537 direct
steve.ward.la@gmail.com
MODCOM - LA Conservancy Modern Committee

Buying Real Estate at Auction - Trustee Sale or Tax Deed

Buying of properties at trustee sale auctions is tricky and risky, and you should hire an experienced Realtor to help you with that. Any experienced realtor can provide you with oodles of information regarding foreclosed homes. Just remember, it is the trustee, not the bank, that sells the home. Since the lender clearly has the most to lose in the transaction, and because they are the beneficiary of any funds received from the sale, they are allow to place the first bid, and are allowed to credit bid (bid without bringing cash to the sale), up to the amount they are owed.

Just know in the state of California, winning bidders pay the entire price in cash or cashier’s checks. You are unable to finance these purchases. Hence, the strong presence of investors at these sales(Foreclosure & Tax Deed) is quite apparent.  With our current economy, I am seeing more and more cash deals transpire by investors than ever before.  Hard money always talks and speaks loudly to any seller, including bank asset managers and the county's assessor's office.

WHY PAY AN EXPERIENCED REALTOR TO WORK WITH YOU?

Not every real estate agent understands the nuances of these particular sales, let alone the common buyer looking for a deal.  There is a great deal of process involved to end up with the deal everyone is looking for nowadays.  Working with an agent who does have the experience will greatly benefit any buyer in the marketplace as it is yet another alternative to the "BOX".  

Bite the bullet and just forecast an additional 3% to your purchase price and BOOM, you are taken care of for a minimal price considering the investment being made.  It is wise to do as much homework as you can on these properties and having an experienced agent by your side to inform and guide you through the process is well worth the nominal fee to ensure as much disclosure as they can.

Properties about to be auctioned at foreclosure auctions can be found through court records, legal notices in newspapers, the real estate classifieds or websites like RealtyTrac. The easiest way is to work with an experienced agent who understands all the nuances to these transactions.

While savvy investors can find deals at foreclosure auctions, not all properties are a steal. The unsophisticated buyer without a real estate professional by his or her side may get carried away during the excitement of an AUCTION. Funny as it sounds, it is true. The euphoria of an auction can sometimes take people over the edge and hence, produce the unwanted 'overbid'.  Having a professional by your side is helpful to keep you on track of the objectives and budget of the transaction.

WHAT AM I GETTING WITHOUT AN INSPECTION?

One of the biggest concerns with purchasing at Tax Deed Auctions is the fact most buyers cannot inspect the property before their bid. The last thing anyone wants to find out later is missing and damaged items.  Trustee Sales are very similar to the County Tax Deed auctions, as buyers are unable to inspect prior to bidding.  Where'd that toilet go?  What happened to all of the electrical wiring?  Forget copper, where's the plumbing?  Again, buyers of auctioned properties incur more risk because of their inability to investigate the home as thoroughly as they could if they bought contingent on appraisal and inspection.

For those who elect to inspect prior to purchase, the Real Estate Owned(REO) properties are better for those buyers.  Bank owned listings are easily generated and can afford a buyer with plenty of information via the Multiple Listing Service(MLS).  The distressed property market is strong here in Los Angeles.  And, you can inspect prior to an offer!  Contact me for a complete list of REO listings in your area/s of choice. 

TITLE CONCERNS

The other consideration to use caution is finding out what title looks like. The last thing someone wants is someone else's baggage.  No one ever wants a clouded title: mechanic's lien, abatements, bank liens, you name it...  The new buyer will be responsible for paying these encumbrances.

Cut through the fog and allow a real estate professional to guide you through the auction process.

WHAT'S THE PROPERTY WORTH?

Get a realistic fair market comparable(Comp) prior to bidding on ANY property at ANY type of auction.

Just be aware the courthouse steps are loaded with cash buyers, seasoned and savvy investors looking to buy. Typically these investors have done their homework and know the fair market values of the properties of interest. You don't want to be the person at the end of the day who goes home and then discovers the value. You want to make sure you have a sound fair market value researched prior to any purchase.  

Do your homework or work with a professional to help guide you. Don't allow yourself to be the buyer with buyer's remorse. Due diligence, folks!

WHERE DO TRUSTEE AUCTIONS TAKE PLACE?

Los Angeles County foreclosure auctions located:

12400 Imperial Highway
Norwalk, California 90650
Auctions take place outside on the steps.


Buyers should be aware and due diligence should take place with every transaction.  For friendly and professional assistance, contact www.modernhomeslosangeles.com.

FirstLook, Fannie Mae's HomePath.com Program

Not sure if many real estate buyers who meet the requirements of Fannie Mae's FirstLook program are aware of such a great program.  Let modernhomeslosangeles.com explain to you the advantages of the program.  Here it is, plain and simple...

NO INVESTOR COMPETITION on HomePath.com listed properties, typically for the first 10-15 days on market!  Now, do you understand?

Fannie Mae's innovative First Look period contributes to neighborhood stabilization by encouraging home ownership. During this period, owner occupants, public entities, and their partners can submit offers and purchase properties without competition from investor offers. The Neighborhood Stabilization Program was created to address the housing crisis, create jobs, and grow local economies by providing communities with the resources to purchase and rehabilitate vacant homes. The NSP grants that HUD has awarded are helping state and local governments, as well as non-profit developers, acquire land and property; demolish or rehabilitate abandoned properties; and/or offer downpayment and closing cost assistance to low- to middle-income homebuyers. Are you a teacher, Fireman, Police Enforcer?  Welcome to real estate.  This plan directly effects those who work within municipalities, schools and other non-profit agencies.  It's time you took advantage of some benefits especially for you within the Los Angeles real estate market and elsewhere around the country.

Fannie Mae initially rolled out its First Look initiative last fall.  Julia Dugger, Fannie Mae’s senior manager of marketing communications, says the First Look policy provides buyers looking for a primary residence with a “real opportunity” to find an affordable home without having to worry about being outbid by an investor.

Public entities, too, are taking advantage of the no-investor marketplace provided by First Look, particularly those agencies that have been awarded federal funding through HUD’s Neighborhood Stabilization Program (NSP) to purchase, rehabilitate, and resell foreclosed and abandoned properties. 

The Neighborhood Stabilization Program (NSP) was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment. Through the purchase and redevelopment of foreclosed and abandoned homes and residential properties, the goal of the program is being realized. NSP1, a term that references the NSP funds authorized under Division B, Title III of the Housing and Economic Recovery Act (HERA) of 2008, provides grants to all states and selected local governments on a formula basis.

If you would like to explore more or have further questions, www.modernhomeslosangeles.com.

More on the Robo-Signing Foreclosure Debacle.

As the Foreclosure crisis continues, I found this article from the Washington Post to shed the most light into the practices involved with the Robo-signing debacle being revealed as week after week, the exposure into the bank's practices is starting to shed some light.  

 

 

Regulators flawed in foreclosure oversight
By Zachary A. Goldfarb
Washington Post Staff Writer
Monday, November 8, 2010; 12:02 AM 



As foreclosures began to mount across the country three years ago, a group of state bank regulators suspected that some borrowers might be losing their homes unnecessarily. So the state officials asked the biggest national banks for details about their foreclosure operations.
When two banks - J.P. Morgan Chase and Wells Fargo - declined to cooperate, the state officials asked the banks' federal regulator for help, according to a letter they sent. But the Office of the Comptroller of the Currency, which oversees national banks, denied the states' request, saying the firms should answer only to inquiries from federal officials. In a response to state officials, John Dugan, comptroller at the time, wrote that his agency was already planning to collect foreclosure information and that any additional monitoring risked "confusing matters."
But even as it closed the door on state oversight, the OCC chose itself not to scrutinize the foreclosure operations of the largest national banks, forgoing any examination of their procedures and paperwork. Instead, the agency relied on the banks' in-house assessments. These provided no hint of the problems to come until they had tripped the nation's housing market, agency officials later acknowledged.

"Based on what we were seeing and what we were concerned about, it felt like a chronic underreaction at the federal level," said John Ryan, a senior official with the Conference of State Bank Supervisors.

Even when the mortgage industry itself identified possible flaws in foreclosure paperwork, the agency was slow to act. In September, Ally Financial suspended foreclosures after discovering problems with tens of thousands of cases. But even then, the OCC did not begin to examine the operations of other major banks. Instead, the agency asked them to undertake internal reviews and told them it would conduct its own examination later, an OCC official said.

Over the following weeks, most of the major national banks announced one after the next that they were reviewing their foreclosure practices and putting thousands of cases temporarily on hold. While the freeze offered new hope to thousands of distressed borrowers, it also threatened to undermine the real estate market, which was already struggling to recover from crisis.

Two weeks ago, for the first time, the OCC began sending its staff into the banks to examine their foreclosure operations, interview bank employees and review paperwork.

The OCC is one of the nation's four federal bank regulators and has primary oversight over the largest banks, while the other three - the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision - share responsibility for many small and medium-size financial firms. All the agencies failed to spot problems in the foreclosure process.

The OCC's recent initiative is part of a broad federal effort to assess the U.S. foreclosure breakdown. Regulators said they hope to complete a preliminary report this month but have not decided whether it will be made public.

In monitoring the financial health of banks over the years, the OCC had been far more aggressive. Agency staff members have been assigned to work full time inside the largest banks, checking to see whether the banks are taking excessive risks, for instance, by analyzing their holdings.

But the agency did not look closely at how banks foreclose when borrowers don't make their mortgage payments. OCC officials treated foreclosures as the simple act of filing documents to seize ownership of a home once a borrower couldn't pay.

"We looked at the final stage of the process and thought of it as one that would be governed by standards and procedures in internal controls," said Julie Williams, the OCC's top lawyer. "You would only be able to know for sure if there was a problem with the document-signing process if you were standing in the room watching someone sign documents. That is not traditionally part of the bank examination process."

'Gouging consumers'

Even as the OCC and other federal regulators were failing in recent years to detect flawed foreclosure practices, evidence was building that abuses were widespread, according to interviews with federal regulators and outside lawyers. It was surfacing in academic studies, court cases, complaints that other regulators brought against mortgage companies, and reports by federal watchdogs.

There was much evidence, for instance, that mortgage servicers - responsible for collecting payment from borrowers and foreclosing when loans default - were charging improper fees and engaging in other questionable practices.

A 2007 study by Kathleen Porter, a University of Iowa law professor, found that servicers often tried to seize people's homes improperly, adding new fees when borrowers wanted to try saving them. She found that many servicers "lack the required documentation necessary to establish a valid debt."

Her findings prompted a hearing by the Senate Judiciary Committee held in May 2008. Afterward, Sen. Charles E. Schumer (D-N.Y.), who chaired the hearing, concluded that mortgage servicers have "failed to keep even the most basic records to justify their claim."

Meanwhile, the Federal Trade Commission, which traditionally regulates non-bank financial companies, had been receiving complaints from consumers for several years. In 2003, the FTC reached a $40 million settlement with Fairbanks Capital over defrauding borrowers by not crediting them for payments.

Then in 2008, the FTC reached a $28 million settlement with EMC Mortgage, later bought by J.P. Morgan Chase, to resolve complaints about defrauding borrowers and failing to properly keep track of mortgage documents.

Joel Winston, associate director of the division of financial practices at the FTC, said the two cases were a warning sign about the foreclosure industry. "The conclusion could certainly be drawn that the practices at these companies were at best sloppy and in many cases they were deliberately gouging consumers," Winston said.

He said the FTC routinely passed complaints on to banking regulators and often coordinated with them in sorting out which agency had jurisdiction. "It's fair to say that, over this span, there were frequent and regular communications between us and the bank agencies about servicing issues and companies that might be engaged in problematic practices," he said.

The courts also highlighted abuses. In 2008, for instance, a federal judge in Texas sharply criticized Countrywide Financial, later acquired by Bank of America, for hiring lawyers who ignored the rights of borrowers and being part of a "corrosive assembly line culture of practicing law." The Justice Department was a party to the case.

Then, last year, a pair of reports by federal watchdogs highlighted troubles inside the mortgage business that were undercutting efforts by the Obama administration to help distressed borrowers modify their mortgages to avoid foreclosure. The reports, from the Government Accountability Office and the Congressional Oversight Panel for the government bailout of the financial industry, warned that mortgage servicers were understaffed, gave borrowers inaccurate information, failed to track complaints and lost important paperwork.

More oversight failures

Some critics say the OCC's failure to effectively regulate the foreclosure operations of banks echoed other oversight failures in the lead-up to the housing crisis. For instance, state officials criticized the OCC for preempting local laws that restrict risky lending practices, which could have protected many borrowers against taking on unaffordable loans.
"They were a light-touch regulator all along the way," said Kathleen Keest, a consumer lawyer at the Center for Responsible Lending.

While acknowledging they did not police foreclosure practices, OCC officials defended their oversight of banks' mortgage operations. They cite multiple cases brought against loan servicers in recent years. In an instance where the agency caught a manager allowing legal documents to be improperly signed, the OCC fined her $5,000 and told her not to do it again.
OCC officials said they have put their energies into examining whether banks take steps to help borrowers avoid foreclosure. The agency has sent staff into banks to review their mortgage-modification efforts and instructed the firms to hire more staff. The OCC says banks have complied.

"With the benefit of hindsight, would it have made more sense to look more at the foreclosure process?" said Williams, the OCC official. Without answering her question, she said: "In the context of the need for preventing avoidable foreclosures, we put emphasis on the modification process."

© 2010 The Washington Post Company

Bank of America Foreclosure Freeze

The real estate industry got clobbered yesterday by the news of Bank of America (BofA) freezing their foreclosure process in ALL 50 States.  Many homeowners with mortgages with Bank of America are happy to hear the moratorium news yesterday freezing all Foreclosures nationwide, opening the scope wider from the original 23 states originally affected (not California). 

Bank of America has to review it's process for handling loan related documents.  A lot of this is due to the electronic systems the banking industry set up to package loans for Wall Street.  In the midst of all of this changing of the guards, i.e. Bank of America purchasing the lethal Countrywide Home Loans, Wells Fargo purchasing Wachovia, Chase purchasing Washington Mutual.  Remember, the taxpayers were the ones paying for these buyouts through the 'bailout program'.  During all of these transitions, the banks got careless with documenting signatures properly and are now seeing the results of their management of these loans.

My buyers and some distressed sellers have asked me in the past 24 hours how this new guideline affects those of us in California?  Allow me to answer a few questions you may have.

The moratorium is only related to Bank of America loans, here in California.  If you do not have a mortgage with them, you are still at risk of the bank moving forward with a trustee sale if you have been notified of such sale.

If you are an owner in foreclosure with a Bank of America mortgage and have been notified the property is to be sold in a trustee sale, the bank, as of today will not proceed with the trustee sale until the freeze has been lifted.

During the freeze, if an owner who received a Notice of Default, but have not received notification of a trustee sale, the bank will stop the process of foreclosure.

The bank will not stop the bank foreclosure on a property where the owner is behind in payments and have not received a formal Notice of Default.  The bank can still move forward with placing the mortgage into default as they will track late payment history and will decide as to whether or not to place you into default.

Many industry insiders see the freeze a negative in regards to our overall economic recovery and of the real estate industry.  They believe the moratorium will only prolong the process and not fix the problems of upside down mortgages and high unemployment.  On the other hand, I think it may give a person more time to find employment and gather themselves in order to resurrect themselves financially.  (Hey, I'm a glass half full kind of guy.)  

Maybe the bailout program will finally hit Main Street as we all get a break from the banks' heavy hands?