I just attended a company sponsored legal update class on the subject of Properly Advising Distressed property owners in Washington State (possibly facing foreclosure or short sale)
I mostly learned I want to stay away from that situation, but life being what it is, I am sure my turn will come. I did quite a few short sales in the early part of my real estate career, and was not much fun then either.
New legislation just passed (May be our state of WA only, check it out in your state)
- Creates obligation to attempt to contact borrower prior to serving a Notice of Default in order to explore non-foreclosure options.
- Requires that the NOD cannot be served for at least 30 days after initial contact has been made, or when no contact has been made lender has done "due diligence" in attempting to make contact.
- Will apply only to loans made in a window between 1/1/03 and 12/31/07, (targeting presumably sub-prime purchasers.) on owner occupied residential real property and excludes seller financing,
- Extends the period of time any tenant of subtenant may lawfully occupy the property from 20 days after foreclosure to 60 days.
- Creates a right for the borrower to bring a civil claim after foreclosure against the lender for fraud, misrepresentation, breach of contract, violation of the Mortgage Brokerage License law or failure of the Trustee to comply with foreclosure process.
- Imposes on Trustee a duty of good faith to all persons having an interest in the property subject to foreclosure.
In short all of this gives homeowner an additional 90 days of occupancy and a remedy for improper conduct of lender.
Obamas plans to help homeowners include
- Home Affordable Loan Modification Program
This program is for borrowers who are risk of default or already in default who are experiencing a hardship. Reduces the monthly payment by reducing interest rate as low 2% for 5 years. and in some cases extends the loan to 40 years. Principal forgiveness is permitted. This program in effect until 12/31/12
Eligibility:
- Occupant of 1-4 unit property
- Have an unpaid principal balance that is equal to or less than $729,750 (Higher limit for 2-4 units)
- Have a loan that was originated on or before January 1, 2009
- Have a mortgage payment(PITI & HOA dues) that is more than 31% of gross mo. income
- Have a mortgage payment that is not affordable due to something lika a change in finances
- Home Affordable Refinance Program
Eligible borrowers may refinance loans that Fannie Mae or Freddie Mac owned or guaranteed. (about half of all outstanding mortgages).
- Must be current in making loan payments, have loan to value ratios above 80%m but not more than 105%, have sufficient stable income, and meet other requirements.
- This program ends in June, 2010.
I have a friend who got his 6.75% loan modified down to 3.8% for 5 years. It will help him greatly. Of course, if he thought twice before assuming that 660k mortgage.....
Agents should know the rules if they are active in the foreclosure and short sale sector. Too many give bad advice. Some short sale sellers do not realize that the lenders may make collection efforts to recover the deficiency. See the articles in today's Wall Street Journal.
Roy,
Thanks, I will read that.
Amen about staying away from short sales. I do them but only on the buyer side. It is too risky in my opinion to do them on the seller side unless you really know what you are doing
I'm going to have to do some digging to see if anything changes in Georgia. It's a none judicialforeclosure state and at closings clients sign a waiver of rights about foreclosures. They just have to run your property in the legal origin paper in the county for 4 weeks and them bam court house steps and the bam eviction notice. Have called a local real estate attorney to see if any of the new rules will change things in Georgia.
I think it is tough on the Buyer's side too, as it take so long to get any answers. You have to have a very patient buyer.
Roy,
They talked about that, and said to get the lender to sign an anddendum stating there would be no deficiency recovery and if lender won't sign, then don't do the short sale.
Sandra - I do like the extension to tenants. I am not ok with the right to sue, unless the lender also gets the right to sue those who misrepresented themselves also.
Good point. I have not met a predatory lender since I moved out of CA. I am really sick of hearing that term. Washington State is all about the consumer.