San Diego Short Sales, San Diego Real Estate

Why does Realtor.com charge Realtors to promote their seller's listings?

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Tue, 17 Nov 2009 12:21:56 -0600

I just read a thread where NAR announced some new price tracking tool. As I read the comments a beta tester said that agents will eventually have to pay for it.

Why does the National Association of Realtors need money?

Why does NAR give our listings to Realtor.com anyway?

Why does Realtor.com charge Realtors anything? Should it be the venue for the intellectual property created by Realtors?.

As a member of NAR I would like to know how this financial arrangement works.

If someone says it was a conract entered into years ago, I would like to explain whether its true that right after NAR officials negotiated the contract they went to work for parent company of Realtor.com?

The entire internet is being driven by the content and date collected arranged and promoted by the work of local real estate agents.

We are the ones getting the listing. As agents we have intellectual property in our work product and our pictures.

I think we should start charging Realtor.com, zillow and all these other vendors.

I have a vision of listing agents forming together to control their own intellectual property in a cooperative manner and charging these intellectual property scrapers for access to info they use to derive millions in profits.

At the very least every display of our listings should have a link back to our clients main web site. If a consumer wishes to get added information from the source, they should be able get it.

Short Sales - Citi and others are attempting to collect after the short sale

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Wed, 11 Nov 2009 13:12:37 -0600

Lenders seem to stepping up their collections efforts after short sales.

Question / Comments: I just completed a short sale on my house in Corona, CA and Citibank is the second on the house is coming after me even though the house is sold and I am insolvent. What should I do?
Info Request: Short Sale

Answer:

The first thing I would do is go over all the documents and communications involved in your transaction and recreate the terms of the deal.

There is a chance you were released from the remaining loan balance in writing.

Some lenders provide clear releases of liablity from the remaining loan balance.

Some lenders clearly state you will be liabile for the remaining loans.

Some lenders ignore the subject

Some lenders provide misleading releases

And some lenders provide a multitude of different types of releases and you have to read them all.

----

Also based on the terms of the transaction and what actually happened, you might be able to argue the lender has no right to collect after releasing its lien. This is a complicated argument and I would review the case law and compare and contrast your facts with the cases.

---

Finally you might want to talk to an attorney to discuss all your options. I have always wondered who advises people to close on short sales if they do not have a law license.

I have a whole section on California short sale law at UpsideDownRealEstate.com

Is your price negotiable? Real Estate Prcing Strategies

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Thu, 05 Nov 2009 15:13:41 -0600

here was a very interesting blog by Larry Bergstrom.

He gave a thoughtful answer to a very familiar question.

I really liked the fact he brought up the agency concerns.

http://activerain.com/blogsview/1315653/-did-you-set-the-price-or-did-the-seller-

Are our Real Estate Agency Rules outdated?

Why are we supposed to avoid telling agents and or the public price is negotiable. (unless our sellers specifically say price is not negotiable)

Whether we are trying to stimulate a new offer or trying to negotiate an improved offer, we are working on behalf of the seller. How could trying to bring in an offer or bring a current offer higher not be to our sellers advantage. We are not signing deals for our sellers.

My thought is that unless we are also working with a specific buyer and a specific buying opportunity we should be at liberty to say, sure the current listing price may be high for some buyers, but our price is negotiable.

Since we already know most Realtors are always negotiating price why don't we insist that agency rules conform to real estate reality.

(I exclude a situation in which the listing Realtor is also represents the buyer. )

Carlsbad Real Estate

Short Sale guidelines, Bank of America's memo

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Thu, 05 Nov 2009 13:43:57 -0600

Short Sale guidelines from Bank of America

This is a summary from and “internal memo” sent to me.

multiple appraisals may be conducted because investors or third party insurance may require current appraisals
B of A will pay sellers traditional closing costs like real estate commissions, appraisals taxes etc.
B of A will postpone foreclosure dates but the earlier you start the Short Sale process the better.
The closer the buyers offer is to the appraised value the more likely a short sale is to be approved.
B of A will not consider short sales from borrowers who are current unless imminent hardship is demonstrated.
Tax implications should be reviewed by an attorney or accountant.
Transaction must be arm's length
Promissory notes or cash contributions from seller may be required
BofA will usually require the borrower or agent to negotiate junior liens and the junior lien may delay the short sale.

Bank of America Short Sale Info

short sales in California - CA FTB clears up the non recourse loans issue

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Tue, 27 Oct 2009 23:12:30 -0500

Non Recourse Loans (see CCP 580b)

Short Sales and Taxation by the State of California has become a little less risky.

In July of 2009 the California wrote this in one of their tax newsletters

"The most common situations when a foreclosure or a short sale does not result in cancellation of debt (COD) income involve a non-recourse loan. A non-recourse loan means the lender’s only remedy in case of default is to repossess the property the lender cannot pursue you personally in case of default. A purchase money loan (that is, a loan taken to “purchase” your home) is generally considered to be a non-recourse loan in California. Refinances, second mortgages, and “cash out” loans are generally recourse loans."

http://www.ftb.ca.gov/professionals/taxnews/2009/July/Article_9.shtml

This was a very important clarification of their position. There had been a debate regarding how the FTB would treat short sales of non recourse loans. In fact in the early part of 2009 the California Franchise Tax board was telling people on the phone they would have to pay taxes on the 1099 income.

I know this is a fact because one of sellers with an approved short sales opted to take a foreclosure rather than risk the tax burden to California. ( I suggested they call because they were asking very good questions about the applicablity of IRS tax law to California.)

for more info on

Taxation of Short Sales in California

Who does short sales in San Luis Obispo

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Mon, 19 Oct 2009 17:23:46 -0500

We completed a short sale for a client here in North County San Diego.

Now they have another short sale to do in San Luis Obispo and they asked if I I would over see it.

I suppose this means that I would have to take a referall fee to oversee what is happening on the file.

The property is supposed to worth between 250 and 300 thousand.

Send me an email or give me a call if you are interested.

The more experience you have the better.

But if you have none, I could do the negotiating and do a co - listing or take a larger referral fee.

I am flexible.

short sale info

Bank of America Short Sale - May Release your deficiency in Certain circumstantces

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Fri, 09 Oct 2009 19:14:21 -0500

It took 14 months but last week we got an approval from BofA. The initial approval carried the usual Bank of America language.... BofA and its investors reserve the right to pursue the deficiency - Standard Bank of America short sale language

I called up our negotiator and left a message in my nicest tone:

1. Thank you for the approval- I appreciate your effort and attention.

2. As you know this is a CCP 580 b protected loan. I said, we already negotiated away the second lien and loan on with a short pay and therefore the other thing left is to close this short sale with one loan or accept a foreclosure.

I sort of begged her to not make me tell my client that a foreclosure is the only safe way to avoid exposure to 150 grand plus taxes to CA.

3. I stated that in the past BofA told me they will not pursue a client who has purchase money loans. I nicely said that if I could get the lanaguage then I might also be able to protect my seller from the CA tax board. I said please do not let all our hard work go to waste.

4. 2 days ago we got an email with the language we needed.

As and added bonus I will be able to use this langauge going forward on many of my Bank of America Short sales in California

For more on San Diego short sales and California anti deficiency law

Sometimes you get a little lucky during negotiations - even with Bank of America.

Listing agent's Reponse to an-open-rant-to-short-sale-listing-agents-in-south-florida

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Mon, 21 Sep 2009 16:46:57 -0500

http://activerain.com/blogsview/1248323/an-open-rant-to-short-sale-listing-agents-in-south-florida-a-select-few-you-may-recognize-yourself-here-

is a link to an interesting rant about listing agents.

I thought I would give a little response on behalf of listing agents.

1. Please stop calling us for information which is disclosed for all agents to read on the MLS listing. Do buyer's agents have so much time on their hands they do not mind asking silly questions? As a listing agents you know the lenders are already wasting an larger amount of our time. Have some consideration. If the status of the short sale is marked on the MLS as - offer submitted - , why not believe the status. If you have a cash buyer ready to go - send me an email, we will call you if our current buyer drops out.

2. Please stop submitting offers with terms you know will be countered by the lenders. If your buyer really wants someone else to pay for the 400 dollar warranty, consider having the buyer pay for it or pay for it yourself. (seriously). By putting that request in your offer you are making the banks negotiator do extra work on your client's offer. (which is a good reason to move it to the bottom of the file.)

3. Please stop picking the escrow agent - we have to work with escrow to get huds in to the bank... put some thought into how the process works. (at least here in California)

4. If you agree to use our escrow agent over the phone - please honor your word when it comes time to move through escrow.

5. If we say your offer is in a backup position (or on the short sale bench) do not put us on one of your drip emails that asks for updates every week.

6. Please make sure your buyers are really qualified to close on the property. We are seeing pre-approvals which are useless. Now we have to ask for the DU.

Those are just a few - but here is the big one...

STOP LYING ABOUT YOUR CLIENTS ABILITY and INTENTION TO CLOSE ON THIS PARTICULAR PROPERTY.

DO NOT TELL listing agents that if we get the approval your buyer will close, (If your buyer is out making multiple offers and planning to close on the first offer he or she gets accepted.

short sales in orange county and short sales in san diego

Does the state of California tax the "short" money? Or does it forgive like the IRS?

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Mon, 03 Aug 2009 17:39:15 -0500

Question - Does the state of California tax the "short" money? Or does it forgive like the IRS?

Response -

good question. CA mortgage debt forgiveness act expired on Jan 1 2009.
Whether you owe taxes on the loan forgiveness depends on multiple factors.

Such as whether the loans are CCP 580 b loans
whether you do a short sale or a foreclosure (perhaps)
whether you are insolvent

and other factors.

I would go to the Franchise Tax Board webiste or hire an attorney experienced in loan workouts.

Short sale taxation

short sale negotiations with Chase - JPM Morgan Chase short sales

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Sat, 01 Aug 2009 16:11:01 -0500

John,

Some of the articles on your blog hit awfully close to home for us. We have been seeking a Short Sale and finally have approval from the HELOC holder (Chase). We are disinclined to accept it because it does not address the deficiency. We are pushing our negotiator (The San Jose office of Intero Real Estate has 2 people that specialize in negotiating short sales although, so far, they have been nothing more than coordinators) to get the deficiency negotiated prior to our acceptance of the bank's terms. We wonder if we would be better off if we stopped making payments to the HELOC holder and continue paying to the mortgage holder (we are not in default to either, yet). They would get a little less than half of the $577K balance if they foreclosed leaving a deficiency over $300K.

Here's a little background.

1. We are in the process of a short sale in California. Mortgage $323K. HELOC $577K. We have not missed any payments, yet, and have the option of continuing to pay.

2. We recognize that our credit score is going to take a hit but are interested in minimizing that as much as possible - everything else being equal.

3. Our purchase money mortgage is not at risk ($323K). Our HELOC with WaMu/Chase ($577K) is at risk and the deficiency is over $300K.

4. We have a buyer and they have been approved by Chase but Chase hasn't yet given anything on the deficiency.

Is it reasonable to expect Chase to forgive the entire deficiency or at least a large portion and negotiate a payment plan for the remaining deficiency? Are we right to get this done before accepting their terms on the short sale (about the only leverage we're going to get)?

Would we encourage Chase to forgive all or a portion by stopping payments to them and therefore threatening a foreclosure situation?

NOTE: we understand that if we let our mortgage holder foreclose, Chase (2nd position - non-purchase money) can pursue all avenues available to recover their money (recourse). We suspect that if Chase were to foreclose, since California is a one action state, they would be limited to whatever they could get from a sale of the property (I believe the property is the only security they have - does that sound right?). Therefore, one possible course of action would be to keep paying on the mortgage (the smaller amount) and stop making payments on the HELOC.

HELP

If your heloc was taken out after the purchase - your are correct - that loan is most likely a recourse loan.
I have negotiate five or six short sales with chase recently and if you have assets or a salary
(and perhaps even if you do not) you can expect that chase is going to request that you make a financial
"contribution" towards your short sale.

They may even offer you one contribution for a release from the deficiency and a smaller amount to just
release their lien.

Thats when the negotiations begin. You should be prepare all your leverage.
Yes, you might consider getting current with the first and forcing the second to foreclose (hopefully non - judicially). Then perhaps you would even start the short sale again and hope to be assigned to a different negotiator.

Negotiations with lenders are dynamic, hopefully you are working with someone who can show short sale approval letters from chase in which they have agreed to release the deficiency in writing.

Be prepared for a professional but tough negotiation.

orange county short sale information

san diego mls

Is it right to walk away from your Mortgage - The law says yes in CA

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Thu, 09 Jul 2009 13:01:06 -0500

I blogged on this subject many months ago. Recently the debate has popped up again.

A recent study determined that homeowers are willing to walkaway after their homes start to decline by more than 10%.

http://news.prnewswire.com/ViewContent.aspx?ACCT=109&STORY=/www/story/06-26-2009/0005051034&EDATE=

There is a debate here on activerain about whether this is a moral issue or not.

1. By giving credit to anyone with a pulse the banks allowed to demand to outpace supply. Prices went up.

(The fed created the bubble by allowing credit to loosening during a bubble. The fed is owned by regional member banks. Those banks are owned by shareholders. Banks like JP Morgan Chase own those shares.) Therefore the banks created a bubble and then they created the contraction by tightening lending standards.

By controlling credit, the banks allowed prices to rise, and then by tightening credit the banks forced prices to fall.

It can be argued the banks as a group do not deserve the benefit of their bargain.

Real homowers who have lost their equity seem to have entered into the arrangement in good faith.

I can not say the same for many if not most lending institutions.

2. The banks were in league in with the builders. The builders took large blocks of relatively worthless land and built new overpriced, over upgraded homes on formerly almost worthless lots. Because homes look good people wanted them. By forming joint ventures with the lenders the banks found ways to have under qualified buyers overpay for properties. When those buyers could not flip for a profit they stopped paying. Leaving their neighbors hundreds of thousands in the hole. The lenders sold and the banks lent on over developed homes. This should be the real function of an appraiser. They should stop over payment for over developed properties. Oh wait the lenders were rigging those as well.

3. The banks did not just accept an borrowers promises to pay. In california they secured that promise to pay with real property. In doing so they entered into a statutory framework which in my opinion replaces doing the right thing with following the law.

For instance with CCP 580b California decided that the risk of a property being over priced should be placeed on the sellers and the lenders -- not the purchasing homeowner. If a person defaults and the bank forecloses on a residence with purchase money loans, the bank gets the property back as full settlement. see CCP 580b for full details. Therefore, the borrower pays off the entire loan after a foreclosure in this situation.

The bank was the short term profit making "fool" who took the risk by not requesting 20% down. The lenders irresponsible actions (and short term profits) have virtually bankrupted america.

While I think every situation is different, in many cases I see walking away from the property as the right thing to do. Especially for those who can not afford the tax consequences of a short sale.

for more on walk away

for more on short sales

Bank of America, Short Sales in San Diego, Countrywide Short Sales and CCP 580B and Non Recourse loans

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Wed, 01 Jul 2009 17:38:54 -0500

Bank of America’s short sale approvals and Countrywide short sales approvals are issued with similar “flaws” (from the standpoint of home sellers).

Their short sale approval letters reserve their right to come after the seller for the deficiency and they do so in writing.

However, they also seem to include a vague disclaimer which states that these terms apply as long as they are allowed by state law.

Almost every short sale negotiator to whom I have spoken states they advise their clients to go ahead and do the short sale as long as their clients have "Purchase money loans".

This happens so much I have just had to bite my tongue. It annoys me when people give out legal advice in such a brainless manner.

However, just this week a tax attorney told a Realtor in my office that Bank of America can not go after sellers with purchase money loans because of CCP 580b.

I just wish one person making this statement would back it up with case law.

This is legal advice which could expose many sellers to 6 figure collection actions and I just do not get how people can make statements so cavalierly.

So far I have had at least 20 phone calls from people facing post short sale collection activity and quite a few of these people had CCP 580 b protected loans.

When I read the case law, the cases refer to foreclosure sales and non judicial foreclosure sales. I have seen no cases extending the law to short sales in San Diego or short sales in California.

If anyone has any reason to believe CCP 580b applies to short sale and you are correct, I will anoint you my favorite person on the internet.

I promise to be respectful of all submissions as I know you just may be playing devil’s advocate.

Lets settle this issue.

In the meantime I advise anybody who has a future to protect to consider compromising their second loan via a short payoff prior to listing a property for a short sale.

Most of these banks have become very reluctant to release the deficiency in writing since the TARP and Fed trillions have floated into their accounts.

Also when you could be facing hundreds of thousands of dollars liability – I highly suggest you “trust but verify” and demand your short sale advisor put their advice in writing.

Bank of America short sales

Can we Beat zillow and Housevalues at the lead generation game?

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Sat, 20 Jun 2009 19:55:25 -0500

This new real estate values mapping tool was provided to San Diego Realtors as part of their subscription to the San Diego MLS.

Real Estate Homes for Sale Real Estate Values

I was recently going through the san diego tax records via Realist when I noticed a new link to software which mapped sold properties and for sale properties.

(just like zillow it does not seem to do too good a job pricing property, but hey that is our job anyway.)

I said to myself wow that would be a zillow killer if they provided that to us.

Two days later I got an email from the mls saying we could frame this into our sites.

I suggest we confer with a seo guy but that 20 -200 of us here at active rain set up pages on our websites for doing property valuation for each area and then we provide backlinks to each other's pages.

If you have this setup on your site in your area.

I suggest you make a comment below and do a back link to your site.

If an SEO guys says this is wrong. I will be happy to remove any links people make.

I am open to any suggestions which would help Realtors compete with the larger lead generation companies.

I have nothing against lead generators... I would just like to beat them at their own game.

Realtor.com - you may not want to be a short sale expert anymore

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Fri, 19 Jun 2009 11:13:32 -0500

Quote from the this week's Realtor.com mass email to Realtors:

"Legal specialists have recommended that practitioners avoid identifying themselves as experts in foreclosures and short sales, because such self-identification can expose them to legal liability if a deal collapses. A safer approach from a liability standpoint is to identify their experience and training but not refer to themselves as an expert."

This goes under the category of "you think".

As an attorney and a Realtor, I have always wondered how Realtors could be so bold as to call themselves short sale experts. The name implies a skill set which will almost make any failed short sale a liability trap.

short sales and foreclosure information

san diego real estate values

Does California have new 90 day moratorium on Foreclosures

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Thu, 18 Jun 2009 02:20:24 -0500

Well maybe - see my updated comment below. Not really

The new foreclosure act signed by the governor does not really buy any more time for Califonia homeowners.

We still have the same 110 day countdown from the Notice of default and the extra 90 days does not really gain any more time.

I am not aware of any homeowner who has seen a Notice of Default prior to being 90 days in default.

Most if not all residential notes or loans in California require an acceleration time period which require a letter of accelaration and then 30 days period in which the property owner is given at least 30 days to get current.

The lender frequently waited at least 30 to 60 days before they sent out those notices. For all pratical considerations this new act does nothing.

If the California legislature really wanted to do something interesting they would focus on two things:

1. requiring lenders who recieved TARP money to release the borrowers from the deficiency if they complete a short sale: and

2. have the attorney general enforce a law they already have on the books which states lenders should offer loan mods which tie payments to the fair market value of the property. I belive that act was passed as SB 1137.

for more on san diego short sales and negotiating with lenders.

California Attorney General says foreclosure consultants must register - short sales

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Wed, 03 Jun 2009 11:35:20 -0500

Here is a quote for the California attorney generals website.

http://ag.ca.gov/consumers/general/foreclosure_reg.php

"After July 1, 2009, with certain limited exceptions, it is illegal to operate as a mortgage foreclosure consultant in California unless the foreclosure consultant has obtained from the Department of Justice a Certificate of Registration as a Mortgage Foreclosure Consultant. In order to obtain the Certificate of Registration required by California Civil Code section 2945.45, a foreclosure consultant must complete the application and provide all required documents to the Department of Justice.

California Association of Realtors says Realtors are short sale consultants when they are contacting the banks on behalf fo upside down homeonwers who have received Notices of Default. (see the car legal letter on short sale.)

After July 1, 2009, realtors will need to change the way they do short sales.

1. Full service Realtors might consider engaging and attorney to do they negotiating after the Notice of Default is filed. or

2. They might consider having the homeowner do all the communicating with the lender. However, before a Realtors instructs a homeowner to do this, they might wish to have the homeowner speak with an attorney about the downside of speaking with the lenders collection department personally.

In summary - this looks like the Caliornia Attorney General is putting teeth into the foreclosure consultant law.

Realtor magazine- negotiating with banks could be practicing law

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Sun, 17 May 2009 20:21:45 -0500

Realtor magazine sent out an email warning Realtors about legal pitfalls.

If you have the email, you may wish to click on the link to the article.

the director of legal affairs for the state of maryland is quoted warning Realtors that negotiating with banks may be seen as the unauthorized practice of law.

http://www.realtor.org/RMODaily.nsf/pages/News2009051503?OpenDocument

Does any one see a pattern between the New York times last weekend warning that lenders are seeking repayment for deficiencies and Realtor.com now doing this little cya.

short sales

Lenders pursuing sellers for deficiencies after short sales

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Fri, 08 May 2009 14:44:49 -0500

Did you see the headline in our emails today from Realtor magazine?

"Lenders Chase short sale sellers"

The Wall Street Journal quoted Bank of America, HSBC and other lenders and they

The take away from the article is the the lenders look at a number of factors before they start to collect.

http://online.wsj.com/article/SB124104990739271023.html

For more information about short sales and relief from a deficiency go to www.FavoriteRealEstate.com or UpsideDownRealEstate.com

How does a short sale effect Credit - short sale vs foreclosure

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Thu, 30 Apr 2009 14:06:25 -0500

There seems to be a growing consensus among the Mortgage lenders and loan brokers that a short sale is just as damaging as a foreclosure to a persons credit. FICO reports a short sale will drop your credit score just as much as a foreclosure. Does that mean everyone who said short sales preserve you credit are wrong? (I am thinking back to those billboards and direct mail pieces I have seen where the lead was SAVE YOUR CREDIT.) I think it depends on the context. There may still be some benefits to a short sale: 1. Fannie Mae and Freddie Mac may be willing to back you loan more quickly. Within 2-4 years. Depending the circumstances. 2. Investment bankers have told me that can get peoples credit history going back 20 years. They say that having a short sale or a Deed in Lieu on your record looks far more responsible than having a foreclosure on your record. My take way from this is that in some circumstances your credit history may be more important than your computer score. 3. Some industries frown upon foreclosures. If your job involves security (as in miltary or homeland) or securities (as in wall street) you probably do not want a foreclosure on your record. sorry about the format I will reformat later.

President Obama's plan to destroy Real Estate

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Thu, 26 Feb 2009 20:27:39 -0600

President Obama announced today that people making over $250,000 a year are going to lose some or all of their their mortgage interest tax deduction.

1. Give away taxpayer trillions of dollars to zombie banks.

2. Destroy those banks underlying assets by making the assets securing big residential loans much less valuable.

3. Annouce gun control laws.

Does anyone see a pattern?

short sales - who should be doing the negotiating

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Sun, 22 Feb 2009 21:06:05 -0600

There is an interesting current thread started on activerain discussing who should be doing the short sale negotiating.

There were various answers - the agent, the broker, someone hired by the broker, the title company, an attorney.

I suggest a combination.

Getting short sales approved is not that hard if the buyer's offer comes in near the appraisal. Getting a release from a deficiency in writing is much harder. Doing all that and getting the approval while the buyer is still interested, is even more impressive.

Even though I am an attorney - I advise the Realtors in my brokerage to outsource the clerical part of the short sale package to someone who has a proven record of getting short sales approved in a reasonable period of time. It may even help if the submission person their own negotiatior at the bank. For instance... we frequently get to work with the same negotiator at Countrywide, so I choose to do countrywide short sales myself.

The toughest part of the clerical side of the job is the time on the phone. No reaon that can't be handled by any diligent person. But, what happens when the approval comes or the negotiator wishes to talk terms?

In my opinion that is when the lawyer should get involved. Especially if the terms are less than a full release from deficiency. I have no idea how a non attorney can tell anyone to accept anything less than a full release from the deficiency and not be practicing law without a license.

I have found that letters from an attorney - discussing the lender's duty of good faith under california law, backed with specific requests for info and clarification of the approval, can change the lender's negotiating position substantially.

For those who do this without attorneys - are you allowed to cross out words on your Realtor forms? Are you allowed to change the terms of Escrow? Do you go over your client's loan docs and cross out paragraphs related to remaing loan balances? Do you advise sellers about federal and state taxes? Do you really tell your client to sign the lender's approval and close?

short sales

Can a lender collect on the Deficiency collection after a forceclosure

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Wed, 18 Feb 2009 15:21:09 -0600

uestion from R (contact info withheld)

Subject: HELOC debt collection (Sent via Activerain)

My home foreclosed back in Oct. We had an offer on the house, but the the two lenders could not come to an agreement on how much the second (WAMU) would get. The first lender decided to let it go to auction, no one bid on it and they got it back and proceeded with the sale. Second lender WAMU didn't get anything. I saw on my credit that WAMU charged off the loan, so I thought it was taken care of, then I got a letter from a collection agency in New Jersey. Apparently WAMU sold the debt to them. What I want to know is can they really come after us for it? We can't afford to pay anything to the collection agency, but we don't want to file bankruptcy if they can't even collect from us. What is your advice?

Your answer depends on quite few factors. (this is only general advice - I would need more facts to answer your question directly and give you legal advice)

1. State the property is in?

2. If it is in CA - was the loan a purchase money loan as described and protected by CCP 580b

3. Was the second a sold out junior of a recourse debt? see and understand cases surrounding CCP 726.

4. Is there a chance the doctrine of merger applies?

5. Don't be fooled by charge off language. Banks and collection agents use charge off many different ways.

(As an aside I had one collection agent say to me - you client has to pay us in 48 hours; if they do not pay we will charge off this loan. I said great will you release your lien?. he said no. I said does that mean my client does not have to pay. He said no. So, I said, your point is?

He had no response. (his best response would have been the charge off will effect my client's credit.) Citi plays this game all the time. Chase has played it with me once.

Before you jump into a bankruptcy, you should determine if you actually owe the money. If you do, then you might want to offer a few cents on the dollar.

This is very general advice. There are exceptions to every rule. You shoud have your facts reviewed by an experienced attorneys

San Diego short sales and California loan modification information

Short sales in CA - Warning to Realtors about the new foreclosure consultant law

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Sat, 31 Jan 2009 14:57:54 -0600

Only July 1, 2009 California is going to require foreclosure consultants to have a surety bond of 100,000 dollars. It also states a foreclosure consultant can not take a power of attorney from the homeowner for any purpose.

Note: an Authorization to Release Information is a Power of Attorney. It is even called a Power of Attorney by some "loss mitigators" on the east coast.

This is my legal opinion - once the NOD is filed – a non attorney will no longer be able to represent borrowers in short sales or Loan Modifications – unless they can find a way to do so with a signed authorization. DRE license holders are going to have to get attorneys to do their negotiating.

There are many other requirements being added to California Mortgage foreclosure consultant law see assembly bill 180. ---

The question becomes who is a foreclosure consultant.

Question 29 on "CARs foreclosure- scams" letter points out that the a short sale consultant is someone who counsels and helps a homeowner sell a property by negotiating with the homeowners lender about a short payoff. If the short sale involves a residence in foreclosure and the short sale consultant offers to stop or postpone the foreclosure sale for compensation (Realtors do get paid) the foreclosure consultant law applies.

CAR does say the foreclosure consultant law can apply to short sale consultants. CAR states there may be an exemption to the Foreclosure consultant law when Realtors engage in typical real estate activities such as taking a listing, marketing the property and representing the seller in a subsequent sale.

Note how carefully CAR crafts their advice on exemptions. If a Realtor is acting as a typical Realtor CAR suspects they are exempt from the foreclosure consultant law. However, taking a power of attorney and negotiating short payoffs with lenders is obviously not a typical Realtor activity.

Nothing about a Realtors license allows them to represent owners and draft and review documents which alter a borrower’s or sellers legal rights. Realtors are not even allowed to cross out words on CAR form contracts. Any way you slice it taking power of attorney is not a typical Realtor activity.

It is pretty clear to me that the minute a Realtor has seller sign and limited power of attorney or the Authorization to Release info - they are no longer working within CAR's stated exemption. Therefore, in my opinion unless some other exemption can be found: As of July 1, 2009 Realtors will be in violation of the Mortgage foreclosure consultant law if they attempt to take an authorization from the homeowner and negotiate a short pay with the lender. (once a Notice of Default is filed on a residence)

If you can think of some exemptions let me know. I will discuss how this law effects loan modification soon. note - Loan modification company may not take up front fees after a Notice of Default is filed on a residence - whether they have a “no opinion letter” from the California Department of Real Estate or not

If you read this post and think it may be a little self serving. You are right. I am a lawyer and a Real Estate broker. That is why I am so sensitive to this issue. Lawyers should be doing the legal work and Realtors should be doing what they are licensed to do... market and sell real estate.

Mortgage Cram down bill, will it give loan modifications and short sale offers teeth

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Thu, 08 Jan 2009 20:43:27 -0600

The wall street journal just reported that the new mortgage cram down bill just passed a big hurdle in the United States Senate. Apparently Citibank is not opposing the proposed bankrutpcy measure.

It is designed to give people who file a chapter 13 the ability to cram repayment plans down the lenders throats. It is said to aid in principle reduction.

This would be amazing.

In chapter 13 you could strip out a second lien and then cram down a principle reduction on the first.

How much more fun will it be to tell the lender to accept this reasonble short sale and relieve my client from the deficiency or we will file bankruptcy strip the second and cram a principle reduction down your throat matches or exceeds this short sale offer.

Obviously this will give Loan Modification negotiation some teeth as well. You can reduce principle now or we will cram down your throat later.

We might start seeing T.V. shows about lawyers again.

For more on Mortgage Cram Downs and Loan Modifications

Of course there are some downsides to this bill.

What do you think this will do for prices and sales of existing homes?

California Loan Modification - When are advance fees allowed

San Diego Short Sales, Orange County Short Sales (John McConnin, Esq) — Sun, 04 Jan 2009 13:54:36 -0600

Loan Modification advance fees seem to be the subject of a big debate, but, in reality the rules are simple.

Before an NOD - brokers with no action letters from the DRE, and attorneys holding active licenses with the California State Bar can collect advanced fees.

After an NOD - only California lawyers within their own practice may collect advance fees.

In my opinion most of the so called "attorney backed" operations are not law firms. Since they are not law firms they probably are subject to the foreclosure consultant act. (In fact some of these "attorney backed" operations seem to lack a DRE license holder... in which case they may be illegal foreclosure consultants.)

California Civil Code 2945 (the foreclosure consultant Act) prohibits anyone who falls under the broad defintion of foreclosure consultant, including real estate licensees, from taking advanced fees from california real etate owners. This rule appies even if the licensee has submitted a retainer aggreement to the department of real etate and received a no action letter.

California licensed attorneys are exempted from this prohibition if they are rendering services in the course of their practice. (according to the California department of Real Estate) In my opinion, "attorney backed" is turning into a sham or even a scam. Marketeers getting around the restrictions of CC 2945 and the DRE and the lawyers lending their name to many of these operations my be running afoul of ethical and legal standards. (lawyers are not allowed to work for others who peddle their legal services - it is a basic tenant of being a lawyer). There is a legal prohibition against lawyers working for say the Sears legal services department. For the very same reasons lawyers can not be working for All California Federal and International Loan Mods. (hopefully this is not a real name). Law firms are not be be owned or controlled by non lawyers.

Before the Notcie of Default is filed

quote from DRE website:

"If a Notice of Default has not been recorded against your property, it may be permissible for a real estate broker to assist you in working out a loan modification or otherwise negotiate a possible resolution to your problem with your lender or loan servicer and ask you for payment in advance for their services." In order to charge an up fron fee the loan broker must have submitted his agreement to the california department of real estate and received an approval. Here is a list of the brokers who may be allowed to charge up front fees:

Advance Fee Agreement Listing

Please note the DRE says "it may be permissible for a real estate broker to assist you in working out a loan modification." I request the DRE elaoborate on what is permissible and what it not permissible. "it may be" may be very misleading.