I was recently contacted for an answer to this question and found the answer to be one that I was not aware of. The answer was graciously provided to me by a Senior Title Officer with Chicago Title.
Q. Is there a restriction in the state of California that prevents a buyer who purchased a home through a property tax auction from transferring title during the first year following the auction? In other words, if an investor or buyer purchases a property through a property tax lien sale or auction, is he restricted from reselling that property for a period of time because he cannot obtain title insurance when it transfers it to a subsequent buyer?
A. The buyer at tax auction can re-sell the property within a year however they may have trouble obtaining title insurance. Title companies typically will not insure until one year has passed due to the fact that there is a one year right of redemption if a junior lien holder or former owner was not properly notified of the tax sale. After a year the title company requires a letter from the Tax Collector showing proof of all notifications sent, this is reviewed before insurance can be issued.
I have several short sale listings. A majority of them are occupied by the homeowner. Occassionally I have sellers who are fed up with the process and wind up moving out prior to the short sale completion but they typically remain in the area and continue to check on the status of the property as we also do. However, I currently have a short sale listing where the homeowner has moved on and out of the state completely. After the home had been vacant for about a month the lender slapped a vacancy sticker on the window and changed the locks. I immediately contacted the lender to inform them that I have a buyer in escrow ready to close the short sale transaction. The bank sent me the key Fedex.
After two buyers have walked during the purchase process the home has remained vacant and unfortunately vandalized several times. Apparently the rear slider doors have been lifted out of the tracks and removed for easy access. I believe that I resolve this security breach with each subsequent visit only to find another avenue discovered for entry. The condition of the home is slowly disintegrating to the point that it is far more of a burden on me than an asset. The particularly interesting aspect to this story is that Bank of America has never set a foreclosure date on the home. It appears as if they do not want to take it back. So I ask myself, who is ultimately on the hook for liability with regards to this home?
Look Out for Upcoming Changes to the HARP ProgramHARP allows homeowners facing difficulties refinancing their mortgage through conventional methods to apply for a refinance of their mortgage. A homeowner that is current with their monthly payments but unable to refinance due to a drop in the value is the typical prime candidate for the HARP program. The ultimate goal is to allow a homeowner to do a mortgage refinance for a lower interest rate and overall monthly payment. Here are the general eligibility guidelines for HARP:
The following is a summary of key changes found in HARP 2.0. Some key underwriting details are not yet announced, and are expected to be released before March 2012.
Limited Liability
What’s new: A key provision of the new HARP is that it limits lenders' liability in cases of loan default. Essentially, Fannie and Freddie will not force the lender to buy back a non-performing loan.
Effect on the borrower: This change should greatly expand HARP's reach. Lenders will be much more eager to offer HARP loans, where they were previously reluctant. With more lenders participating, you will have an easier time getting a HARP mortgage.
Lender Fees Dropped
What’s new: Fees that Fannie and Freddie charge lenders for high LTV loans are being cut.
Effect on the borrower: The reduced fees are passed on to you, making your loan cheaper. If you are financing to a 15-year or 20-year loan, the fees are cut even further.
Credit Score and Income Requirements Relaxed
What’s new: As long as your new HARP monthly payment is not more than 20% greater than your current payment, specific credit and income guidelines do not apply. The lender will have to determine that the borrower is an “acceptable credit risk” (and what that means is yet to be determined).
Effect on the borrower: A low credit score or high DTI is not enough to automatically disqualify a borrower. Also, if your family is now a one-income family when it was a two-income family on the original loan, you only have to show proof of one income, as opposed to conventional loans where all borrowers listed on the application must document income.
Underwriting Requirements Relaxed
What’s new No. 1: Mortgage Payment History: A HARP lender can approve a loan that has one late mortgage payment in past 12 months as long as it did not take place in the last six months.
Effect on the borrower: You won't be counted out for a mortgage late, when that could normally eliminate your ability to get refinanced at the lowest rates available. If you have a recent mortgage late, you can still apply for HARP once you meet the relaxed mortgage late requirements.
What’s new No. 2: Relaxed Foreclosure & Bankruptcy rules: Your HARP loan could be approved, regardless of how recently a borrower filed bankruptcy or experienced a foreclosure.
Effect on you: Normally, if you filed for bankruptcy or experienced a foreclosure you would have to wait years before you could successfully refinance.
Occupancy Requirements Relaxed
What’s new: Owner Occupancy: HARP loans are no longer restricted only to owner-occupants.
Effect on the borrower: You can now use HARP to refinance your second home or investment property.
Lenders Must Show that a Borrower Benefits from the Program
What’s new: Lenders must show that the HARP mortgage borrower derives one or more of the following four benefits in the new loan:
1. Reduce the size of the monthly payment.
2. Change to a more stable loan product, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage.
3. Reduce the interest rate.
4. Reduce the loan amortization term (moving to a shorter-term loan).
Relaxed Condominium Requirements
What’s new: HARP eligibility used to require that no more than 10% of units in the complex be owned by one person and that no more than 20% of owners in the complex be behind on their HOA dues. These requirements are now removed.
Effect on the borrower: More condo owners will now qualify for HARP. If you own a condo, qualifying for the HARP program is no longer dependent on your neighbors' finances.
Condominium owners have perhaps the best reason to be optimistic. Lenders are being relieved of the responsibility (for HARP refinance loans only) to ensure that condo projects meet the often strict project approval requirements of Fannie Mae and Freddie Mac.
Borrowers living in condominium projects that have seen a sharp increase in the number of renters or those that have experienced some level of budgetary stress will be much more likely to find relief under HARP 2.0 than they have under existing programs (as long as their loans are owned by Fannie or Freddie).
Although applications could be submitted for the new HARP 2.0 mortgages in December 2011, there are those who believe the bulk of HARP mortgages will not be approved until March, 2012. Both Fannie and Freddie must update their automated loan underwriting/approval software by March 2012. Until then, while lenders may approve HARP mortgages by manually underwriting the loans, loans that are manually underwritten expose the lender to greater risk. If a manually underwritten loan defaults, the lender will be required to buy back the loan.
Given the protections that the lender will have once the automated underwriting programs are updated and ready in March 2012, it seems very likely that most loan originators will wait until March 2012. Be ready to move forward with an application, once lenders start taking them but be prepared for a very long process before your loan closes.
Before refinancing, borrowers should know whether their current loan is a recourse or non-recourse loan and also be familiar with their state’s anti-deficiency laws. Refinancing a non-recourse loan could expose the borrower to responsibility for a potentially huge financial obligation where no such obligation currently exists.
In some states, refinancing can remove the consumer protections, called anti-deficiency laws, which protect underwater homeowners who default on their mortgages. It is recommended that homeowners learn the anti-deficiency laws in their states, and determine if a mortgage refinance changes their rights. Anyone with a non-recourse loan should carefully weigh the decision to turn a non-recourse loan into a recourse loan.
Not every upside-down home qualifies for HARP 2.0. Here is a summary of the basic requirements:
How does mortgage insurance impact qualifying for HARP 2.0? Mortgage insurance on a loan should not block a refinance under HARP 2.0.
Readers who do not have Fannie, Freddie, or other GSE loans are not eligible for HARP 2.0. In late January 2012, President Obama proposed a similar plan for non-GSE home loans. See Obama Refinance Plan for more information on this proposal.
More HARP updates will be released both by lenders and by Fannie and Freddie, so keep checking with MoveUpProperties.com to stay updated on details of the new HARP program.
We all know that the passage of California’s SB458 on July 15th changed how we process short sales. It’s most important aspect is barring junior lenders from having recourse against the borrower/seller or asking them for a monetary contribution or promissory note. Although the decline of short sale approvals has not occurred as severely as expected, real estate agents have been struggling to get junior lenders to cooperate in needed negotiations to successfully complete the short sale transaction. Instead a number of “work-arounds” have been created to get the junior lender’s full participation in final negotiations.
I define a “work-around” as an alternate method used to achieve a task or goal when the typical method does not work. In the case of short sales, junior lenders who aren’t satisfied with what they may get from the first lender’s sale proceeds and barred by SB458 from receiving any funds from the borrower may refuse to do the short sale and hope they can do better if they sue the borrower after the first lender forecloses. Here are a few of the ways that creative and successful real estate agents are using “work-arounds” to save their clients from foreclosure:
1. Get Money from Someone Else - SB458 simply says that no lender can request a contribution from the Seller/Borrower as part of a short sale. It does not say that a lender cannot get contribution from others. First Lender: Typically the only money offered to junior lenders comes from the First Lender who gets the lion’s share of the sale proceeds. Generally, first lenders make more money from a short sale than they could from a foreclosure but they regularly refuse to give the juniors any more than $6,000. But if a foreclosure action should bring much less to the first lender than a short sale would, they could be convinced to share more with the junior to gain their cooperation and close the deal. Buyer: It is the Buyer who is bringing the money to the table. If the Buyer really wants the property, they may be willing to contribute money to the junior lender to make the deal happen. The Buyer’s lender may allow this contribution to be paid through escrow as a closing cost. Real Estate Agents: Although agents don’t deserve this, it is not unusual for lenders to look to the agents to cut their commissions to satisfy the demands of the junior lender. This is a “Hail Mary” approach that unfortunately penalizes those parties who put the deal together in the first place.
2. Voluntary Seller Contribution - SB458 states that a lender cannot “require” the seller/debtor to make any contribution. But nothing says that the seller cannot “volunteer” a contribution. While in reality, no one would imagine voluntarily providing money to a lender that is not demanded for, the drafters of SB458 allowed that a seller may do just that if they have the funds and they want to get the deal done. Typically this would be performed to satisfy a junior lender’s request that they receive “x” dollars more in order to proceed. While SB458 does not state who must pay this, the language of the request is that any other party in the short sale can do so, including the seller.
3. Re-write the Buyer’s Offer - If the junior lender holds out for more money than what is agreeable, the deal could die. If so, then some agents have gone back to the buyer and written a new short sale offer for a lower purchase price than the original deal… lower by the additional amount the junior lender wants to receive. The new offer is submitted and, if the first lender accepts the offer terms, the junior lender counters at the original offer price with the increased money going only to the junior lender. This has been proven to work although it can cause added delays in closing due to the processing of a brand new purchase contract.
4. Discount the Junior Loan - If the first lender refuses to allow money to be paid by the seller to the junior lender, then the sale could die and the home would go to foreclosure. Instead, prior to selling the home, the seller could negotiate with the junior lender to accept a discounted payoff of their loan. For example, the seller pays money to the junior lender and the junior lender accepts this as satisfaction of the debt and releases their lien. Then escrow can open without the threat of the junior making any monetary demands. Only the first lender is in the deal and the short sale closes. I’ve seen discounted loan payoffs occur for .10 to .20 cents on the dollar.
5. Discounted payoff before short sale - For some sellers who are upside-down on a property but have substantial other assets, there is a danger in doing a short sale in that the Hardship Application process requires that they disclose their personal assets. This can cause a junior lender to reject a short sale because they believe they can collect from the seller in a post-foreclosure lawsuit. In this scenario, it could also be better to negotiate a discounted payoff with the junior lender before you ever start the short sale. Now it is simply a business transaction: how much will the junior lender accept in exchange for a lien release? Again, 10-20% is common but generally no financial statements are required. If this works and the junior loan is extinguished, then the seller has a much better chance of concluding their short sale transaction as it is always easier to negotiate with just one lender rather than two or more.
All of the foregoing concepts are foreclosure-avoidance, short sale success strategies that real estate agents and their clients are actually using in today’s California real estate market. If you are having success with other creative approaches, please let us know. It is important to note that all agreements made before, during or after a short sale must be disclosed to the principle parties to adhere to the definition of an “arms length transaction”. All funds exchanged must appear on the Final Settlement Statement (HUD-1). No secret “on the side” deals are allowed as they would constitute mortgage fraud which bears severe legal consequences.
The information presented in this Article is not to be taken as legal advice. Every individual’s situation is different. If you are upside-down on your loan(s), especially if you’re facing a lender lawsuit, get competent legal advice in your State immediately so that you can determine your best options.
Well Bank of America did it again. They foreclosed on a home owned by a single mother of five children, one a newborn last Monday after we were told numerous times that her short sale was approved.
This hard working mother of five commutes to work every day from Victorville to Manhattan Beach, a 103 mile one-way trip in order to keep a roof over her family’s head. With the job market in such a slump she cannot afford to risk her current employment and has been making this commute for nearly 4 years now. Until now.
She attempted a loan modification with Bank of America two years ago but was declined. She attempted the process again only to be turned down for allegedly not returning her documents to the bank by their deadline. When we met her earlier this year, her loan was not in default yet. With the news of her recent pregnancy, she began falling behind in her mortgage payments.
In April 2011, we listed her home in attempt to short sell it so that she could retain some hope of home ownership again by making every effort to avoid foreclosure. I am a HAFA certified real estate broker trained to work out short sales. She was a prime candidate for the program.
In May 2011, we received a full price offer on her home at $99,000 all cash. She was also served with a notice of default that same month from Bank of America. We tried to assure her the best we could that the short sale would be approved and not to worry about the bank foreclosing on her. We had plenty of short sale negotiations on homes with Bank of America that have been postponed for months if not years before the threat of foreclosure.
After submitting her complete short sale package, the new offer and estimated HUD-1 through the Equator system, we received a counter offer from the negotiator basically accepting the terms of the purchase agreement with some minor tweaks. The closing date was to be completed by September 23, 2011. Not a problem. We accepted all the terms. This was in July 2011.
This process was moving along quite quickly in comparison to other files we have worked. But no indication of any red flags or reasons to question the system. After submitting her most recent updated pay stub and bank statement, Bank of America stated that they were waiting on final investor approval before we would open escrow.
On August 10, 2011 she received a notice of trustee sale notice posted on her front door. The sale date is scheduled for September 6th at 9:00 a.m., the day after Labor Day (no pun intended but ironic since she just gave birth to her new baby boy).
We began to call the negotiator immediately in an effort to postpone this looming sale date in light of the short sale approval we were waiting on. Bank of America assured us that the foreclosure date would be postponed but that it may not show up in the system until three days before the sale date. We called the trustee directly to verify that the sale date had not been postponed yet. On the first of the three days before the sale date we began to make repeated calls, email requests, Equator notifications regarding the pending sale date. Each time we are told that it should be postponed at any time. The trustee notifies us that an opening bid has been published for $64,000. What? How could that be possible when Bank of America is working on the $99,000 all cash offer we submitted two months ago? It must be a mistake. We kept calling.
Bank of America did not postpone the foreclosure sale as it promised to do. The home went to sale for $64,500. Oddly enough, it was not purchased by a third party. It reverted to the beneficiary to be sold as an REO. Fannie Mae failed this hard working woman, Bank of America failed her. And ultimately, we failed her miserably too.
How could this happen? What could we have done differently? We are attempting to contact the asset manager for Fannie Mae to inform them that we have an offer for $99,000. Bank of America told us that it would take a few weeks for the property to be assigned. I didn’t believe that and was correct when I was told that Fannie Mae introduced himself to my client by knocking on her door with the news.
My head is still spinning with ideas and attempts to understand why this home went to sale without a single postponement when so many others we have with Bank of America are declared “cancelled” for other unknown reasons. I’m furious and saddened by this foreclosure system we are forced to bargain with. Any thoughts?
DISCLAIMER:
****DIANE WHEATLEY IS NOT A LICENSED ATTORNEY. THIS INFORMATION IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION PROVIDED HERE.****
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I WILL CLOSE YOUR REFERRALS!! Active HAFA Certified Broker specializing in San Bernardino, Riverside, Orange and LA Counties with 20 years experience.
Diane Wheatley is a Licensed Real Estate Broker with nearly 20 years experience working primarily in Southern California. This economic down turn is one of three she has experienced in her career and she keeps bouncing back. She is a survivor and that can be hard to find in today's market.
She has excelled at assisting homeowners with their short sale solutions by becoming HAFA certified and a designated SFR (short sale and foreclosure resource). Diane has sold hundreds of homes to first time home buyers and understands the financial aspects and restrictions associated with FHA, VA and conventional financing. How soon can you purchase a home after filing bankruptcy? How long do you need to wait before purchasing a home again after a foreclosure? after a short sale? Common questions that need solid answers in this phase of the real estate market.
Of course Diane is not an attorney and in no way represents herself as a legal authority however, after a long road of dealing with the scandalous mortgage meltdown so many Americans are experiencing she is very knowledgable about the process and may provide suggestions on how to proceed based on her own experience.
Not too many individuals are as passionate about the rights of the homeowner going up against the all mighty lending institution as Diane is. Homeowners need to educate themselves through blogs like ActiveRain.com, Trulia.com, Zillow.com, Redfin.com as well as other helpful mortgage relief websites. Try to keep up on the ebb and flow of the economy, know the laws, bills and other statutes regarding default and foreclosure in your state and most of all, understand that you are NOT ALONE.
You can reach Diane anytime by calling her direct at (909) 981-5589 or email diane@moveupproperties.com.
Good Luck and Have a great day! I cannot sell you anything and will never make an attempt to compromise your right to privacy. I'm here for YOU in any capacity I'm able to provide some sense of sanity or relief as no one can listen and understand better than one who has been there, done that.
Move Up Properties has been selling homes in the Inland Valley for 20 years. We have recently expanded our presence into the Palm Springs area by opening our first branch office in September 2011 with plans to further our reach to the High Desert and the Temecula Valley.
We hold a valued reputation as a brokerage who has continued to serve the foothill communities consistently through good times and challenging ones. We are survivors with experience and a unique understanding of how our client will best fit with the ever changing real estate market.
Each agent at Move Up Properties provides the team with a broad background in a variety of real estate services. We offer hands on experience with mortgage, finance, escrow, title, contract law, paralegal services, property management, eviction, notary and mobile home sales.
We have attended trustee sales, listed and sold REO and investment properties, understand how bankruptcy laws apply, assisted with rehab and resale properties.
Our agents have extensive builder relationships through years of new home sales, in-house licensed appraisal services, leasing specialists including office, industrial and commercial properties.
In today’s real estate climate a brokerage must shift gears to relate to the needs of the client. Our agents have become experts in negotiating short sales, applying intensive mortgage analysis, facilitating foreclosure transactions with an emphasis on loss-mitigation.
Our long history of effectively and successfully listing and selling properties of all kinds have invariably resulted in a win-win for all. Confidence and trust are commodities so hard to find and absolutely invaluable in your decision making. We offer 100% disclosure with each and every step we make together towards achieving your goals.
Ask about our short sale guarantee and easy to opt out programs. If your needs have changed, we change with you. If you are not satisfied, our satisfaction guarantee will provide you with no stress options.
Feb 24, 2010
The sellers were pushing for a 30 day escrow, so we had a very tight schedule to close an FHA loan. Diane went above and beyond the call of duty to ensure that our new home met the FHA inspectors guidelines. I would recommend Diane to any buyers or sellers looking for a competent, conscientious, and ethical representative for a real estate transaction.
$305K, House Buyer (Closed) 7532 Amethyst St, Rancho Cucamonga, CA 91730
Feb 19, 2010
Diane is absolutely the best realtor you could hope to find. My family now owns a beautiful home thanks to her tireless efforts. Diane has detailed knowledge of the short sale process as well as a professional work ethic that enables her to produce success in the face of challenging circumstances. I will trust Diane and her staff without reservation on my next home purchase. Although, our new home is so nice that I can't imagine selling it anytime soon.
$285K, House Buyer (Closed) Customer withheld address Corona, CA [Trilogy]
Diane Wheatley is very knowledgeable and profession, she knows her area and I would highly recommend her!
Posted 7-1-2010 by Rancho Cucamonga Condo Seller
I had a very positive experience with Diane Wheatley as my broker when I sold my home. As a first time seller, she made the process so much easier and less stressful than I thought it would be. Because of Diane, my home sold quickly and successfully, despite the challenging economic environment. I highly recommend her and her team at Move Up Properties. I couldn't have had a better experience!
Posted 1-15-2010 by another local real estate agent.
Thank you so much from myself and my buyers for your hard work in making this transaction a reality. My buyers have put many offers in on homes and were just so frustrated with the market and the lack of participaton from the listing agents. It was rare to get a call back or even an acknowledgment that our offers had been seen.
Your staff returned our call the first day and were so polite and courteous as you were too. This is so refreshing and encouraging to work with you and your office. My buyers love the home your office listed and are looking forward to calling it home very soon. Our thanks and gratitude,
Nancy and Sarah
Posted by a former buyer on June, 2009.
I'm writing to you today in regards to my recent home purchase as well as my experiences along the way in my search for the perfect home. My realtor of choice was Diane Wheatley of Keller Williams Realty. I chose Diane after meeting with her and discovering her knowledge of the industry; specifically the cities within San Bernardino county, market values and the ability to explain how and why we need to step up our offers for homes in today's demanding and competitive real estate market. She was right and we are now in a home we can be proud to call our own. Thank you Diane!
Cheryl M., Upland Home Buyer
Thank you Diane for your super service in selling our parent's home during such a difficult time. We will refer you to anyone looking for sell or buy in the San Bernardino County. Thanks again, Joyce & Jeff
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