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When a lender files a foreclosure or schedules a home for public auction, the matter becomes public record – easily accessible at any county clerk or recorder's office. Scam artists often access these records and target people in financial distress. 90 Days of Hope seeks to educate homeowners about these risks to help them avoid being defrauded. This campaign will shine the spotlight on some common scams below. However, according to Department of Consumer Affairs director Carrie Lopez, the best advice for consumers to follow is, "if it sounds too good to be true, it is."
In this scam, a con will offer to buy the victim's home and promise the victim that they can live in the house for a fixed rent until they can buy back the home. The victim signs a document that turns over the title, but doesn't release them from responsibility of the mortgage (sometimes called a "quit claim deed"). Subsequently, the new "owner" collects the rent without paying the mortgage and lets the loan default. When the lender forecloses the victim is left with no home, a foreclosed mortgage, and bad credit.
In this scam, often targeted at non-English speakers, someone shows up at a home claiming to be with the homeowner's loan company. The con asks the homeowner to sign documents so that they can keep their homes. They sometimes even promise to eliminate the debt owed.
The homeowner needs a way out and is overwhelmed by the sheer number of documents they are being asked to sign. One of those documents is a "grant deed" that passes the home's title to a third party – the scammer the scammer who then allows the loan to default. The victim is then evicted, left with no home, a foreclosed mortgage, and bad credit.
Opportunists who advertise to homeowners that they can offer "advice" on staying in the home until they are evicted make it seem as though walking away from your foreclosed home has few consequences while charging hefty fees for their products. Don't be fooled - foreclosure is never the first option and comes with adverse consequences to the homeowners and the state. It can take years for homeowners to repair their credit after a foreclosure.
Steve Mun, Silicon Valley Realtor
www.stevemungroup.com
A substantial portion of my client base is Non-English speaking because I am bi-lingual. But as one navigates through the ‘ethnic” markets, one learns of the high number of abuses and fraud that is prevalent in these markets. Especially so, during economically difficult situations like now, when opportunities arise for those who want to take advantage of the less informed and more vulnerable segment of our communities.
It is ironic, as these homeowners facing difficulty come to the “ethnic” service providers because they fear being taken advantage of and feel their “own community” will treat them more fairly. And this is probably a true statement for the most part, but there is a segment in these communities that prey on the less informed and those who need help.
So here is one thing that I feel a need to inform these communities: if you received a NOTICE OF DEFAULT from your lender, DO NOT PAY UP-FRONT FEES TO ANY ‘FORECLOSURE SPECIALISTS” OR “FORECLOSURE CONSULTANTS who claim they can stop the foreclosure. And don’t be fooled by those who say they will provide a full refund if they cannot stop the foreclosure; it is too late, you already gave them your money, getting it back will be much harder.
Because a notice of default frightens homeowners, they are often in a panic mode and are led to believe that they have to pay someone to stop the foreclosure. This is often just the opportunity that scammers are looking for. Homeowners in default will miraculously receive phone calls or mails because these scammers can buy lists of people who received notices of default. Here is a list of what “foreclosure specialists” can and cannot do. Beginning next month, all “mortgage consultants” must be registered with the State Attorney General and must also put up a $100,000 bond.
For children and grand-children of Non-English speaking homeowners, if your loved ones are having difficulty paying their mortgage payments, share this information with them, just in case they get a call from someone speaking their language, willing to help them out of their foreclosure situation because the “consultant” heard they received a notice of default.
Steve Mun, Silicon Valley Realtor
We are all aware that times are tough and the economy is not re-bounding as quickly as everyone wants: unemployment is at 11.2% in Silicon Valley and more homeowners are falling behind in their mortgage payments. It is unfortunate, things look bleak and people fall into despair, all of this is naturally understandable.
But what I am seeing in my clients, and often times those whose primary language is not English, is something that can be avoided and benefit their situation in the long run.
What I am seeing in some of my san jose short sale clients is that that sense of despair is forcing them from making any decision. Not making a decision, unfortunately, is making a decision in a foreclosure situation. By not making a decision, you are essentially telling the lender that you are choosing not to get involved in the resolution of your non-payment: you are essentially giving them the middle finger. Obviously they do not take kindly to this type of behavior.
If you look at the Fannie Mae Underwriting Guideline for re-establishing credit (i.e. time it take before you can qualify for a home loan again), a foreclosure is worse than bankruptcy. After a foreclosure it takes 5 years before that individual is eligible to qualify for another home loan (seasoning); after a bankruptcy, the seasoning time is 4 years; after a san jose short sale, it is only 2 years.
Those folks who are shocked and overwhelmed and are just waiting and doing nothing (not paying their mortgage) are essentially making a decision to foreclose on themselves. Even if you feel the end result will be the same, do something to demonstrate to the lenders that you are doing your part to resolve the situation. Contact the lender directly or have someone do it on your behalf if there is a language barrier and try to get a loan modification. Remember, there is a concerted effort by the government and the lenders who took bailout money in trying to help borrowers if they qualify. Granted, not everyone may qualify, but you will not know, unless you make contact. If you qualify, then you can get some relief from your current payment structure; if you don’t qualify, then it opens up other alternative avenues (e.g. short sale or bankruptcy) which you must now explore. Either way, you are moving forward and making informed decisions which will help you.
Steve Mun, Silicon Valley Realtor
www.stevemungroup.com
Following the Federal Government's effort during the Holiday Season, California today imposed the 90 moratorium. Hopefully this will help my silicon valley short sale clients and other people in California.
SACRAMENTO, Calif.—California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday.
The law is expected to make lenders try harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.
But supporters acknowledge the California Foreclosure Prevention Act won't stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.
The bill passed in February is similar to the Obama administration's Making Home Affordable Program that began in March.
Both encourages lenders to cut interest rates or rewrite loans to affordable levels.
Steve Mun, Silicon Valley Realtor
www.stevemungroup.com
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Steve Mun, Silicon Valley Realtor
www.stevemungroup.com
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