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DELINQUENT PAYMENTS, PENALTY FEES, FORECLOSURES, NOTICE OF DEFAULTS, SHORT SALES, NOTICE OF TRUSTEE SALE, TRUSTEE SALES, DELINQUENT PROPERTY TAXES, IRS LIENS, REO's - PART I

Are you a couple months behind in your mortgage payments? Have you failed to pay your property taxes? Are you behind in payment of Homeowner Association (HOA) fees? Do you have second or third trust deeds on your property? Do you owe the IRS money and they have filed a lien on your property? Do you owe home improvement contactors money and they have filed mechanics liens?

If you answered yes to any of these questions you are at serious risk of going into foreclosure and losing your property. Don't panic and put your head in the sand hoping the problem will resolve itself.

There are steps you can take to save your home and preserve your credit rating. However the longer you wait the tougher it will be.

First determine if you still have equity in the home or are you upside down. By upside down I mean you owe others (mortgage companies, lien holders, county tax collector, etc.) more than your home is worth and thus a sale of your home will leave you with debt liabilities. This could leave you with no choice other to file bankruptcy.

If you still have equity, you will want to preserve it rather than have your lender take it away from you. If you are upside down you need to make a decision whether you want to keep the property or find a way to sell it and satisfy your debts and preserve your credit.

To get a rough estimate of your homes value, go to Zillow.com and type in your address. If you want a more accurate estimate contact me or a Realtor in your area for a CMA. I provide these at no cost for the Huntington Beach and surrounding cities in Orange County, California. You can get my contact information on MikeStankewich.com. Be wary of unethical real estate agents who will over inflate your homes value because all they are interested in is getting your listing. The most accurate estimate is obtained from a professional appraiser, however this will cost you about $350.00, which you probably do not have the funds to spend right now.

Now, if you have positive equity or are upside down but want to keep the home, there are options available. Most real estate agents will just tell you to sell the home, as they are only interested in getting the listing and hopefully the commission if it sells in time. Again do not panic. Find a Realtor, such as myself who is willing to help you save your home. I may not earn a commission, however my help may lead to referrals from you that lead to future sales.

Contrary to many beliefs, lenders and lien holders do not want to foreclose properties. Lenders do not want to be homeowners or REO's (Real Estate Owned) as termed in the real estate and lending industry. There is a pecking order on who gets the proceeds in a foreclosure sale. The first trust deed holder, the IRS, and the County Tax Collector have the higher priority. Thus second and third trust deed holders, other lien holders, and HOA's stand to lose all their money in a foreclosure. And in many cases your debts will remain outstanding such as back taxes owed to the IRS and contractor claims, which will severely affect your credit rating and could lead to bankruptcy.

The key is everyone is willing to negotiate to avoid a foreclosure sale. If you have equity a refinance may allow you to pay off debts and get you out of the delinquency. However not every lender will offer you a package because of your delinquency. Again contact me or a Realtor in your area to refer you to lenders who will help you with a refinance.

If there is no or insufficient equity for a refinance, negotiation with the parties will usually yield modified payment plans that will fit your budget and assure the parties that you owe payments in part. Often this is hard for an individual homeowner to do. It is hard to determine lien holders and note holders. Trust deeds are sold to investors and other banks. Your mortgage processor (the one you send your monthly checks to) may not hold the note, and thus has no interest or ability to negotiate. Contractors may sell your debt that you owe them to a collection agency at a discount. I or a Realtor in your area has access to tax, title, and trust deed information that is not available to the public. We can help you identify the proper companies that hold the trust notes and those that have actual liens against you and then advise and assist you with the negotiation process.

Timing is important in this process. It takes time to negotiate solutions. Do not wait until you receive a NOD (Notice of Default). Contact me or a knowledgeable Realtor in your area for free no obligation assistance. I want to help you keep your biggest investment.

This is part one of a series of blogs I will be posting. I will go into Short Sales next, followed by the Foreclosure process, and finally information for bargain hunters looking for foreclosure properties. Stay tuned.

Posted by <i>Mike Stankewich, MBA, e-PRO - ZipRealty, Inc.</i> on 03/20/2007 08:13 PM

Comments (10)

delinquent payments, penalty fees, foreclosures, notice of defaults, short sales, notice of trustee sale, trustee sales, delinquent property

This post has been included in California Information Orange County, CA Information Huntington Beach, CA Information
Post is included in group: ForeclosureFocusUSA - An Unvarnished Truth

10 Comments on DELINQUENT PAYMENTS, PENALTY FEES, FORECLOSURES, NOTICE OF DEFAULTS, SHORT SALES, NOTICE OF TRUSTEE SALE, TRUSTEE SALES, DELINQUENT PROPERTY TAXES, IRS LIENS, REO's - PART I

MAR

2007

Hello California! Would you provide a summary of applicable 'foreclosure consultant' and other restrictions placed upon those who interact and/or do business with the owners of foreclosed homes? Thanks.

I am not quite sure about what you are asking for. I do not know what you mean by a foreclosure consultant.

I know there are restrictions prior to the trustee sale regarding agents representing an investor buyer, unless they are bonded. Since we cannot obtain the required bond in California, we cannot represent an investor who will not be living in the property. This regulation is to protect the Seller who is in default from being taken advantage of.

I presume it also applies to licensed agents if they intend to purchase the property themselves.

I am not an attorney nor a CPA, so I cannot provide legal nor financial advise. However I can present options to the owner prior to the NOD and during the redemption period of the foreclosure process. The owner can either work it out with his lenders and lien holders or he can list the home for sale.

These owners are distraught and need assistance. Otherwise they either put their head in the sand and let the foreclosure take place or get angry and strip and trash the home. Either way they lose. I try to get them out of the bad situation with as few scars as possible.

I can assist them with a short sale as long as we can sell the home during the redemption period. We generally have about 3 and a half months after the NOD to do this and if we are in escrow the banks will generally extend the foreclosure time frame. They do not want REOs.

Maybe another ActiveRain member can provide a better answer to your question.

OK, for anyone who is interested:

a) The Legislature finds and declares that homeowners whose residences are in foreclosure are subject to fraud, deception, harassment, and unfair dealing by foreclosure consultants from the time a Notice of Default is recorded pursuant to Section 2924 until the time of the foreclosure sale. Foreclosure consultants represent that they can assist homeowners who have defaulted on obligations secured by their residences. These foreclosure consultants, however, often charge high fees, the payment of which is often secured by a deed of trust on the residence to be saved, and perform no service or essentially a worthless service. Homeowners, relying on the foreclosure consultants' promises of help, take no other action, are diverted from lawful businesses which could render beneficial services, and often lose their homes, sometimes to the foreclosure consultants who purchase homes at a fraction of their value before the sale.
(b) The Legislature further finds and declares that foreclosure consultants have a significant impact on the economy of this state and on the welfare of its citizens.
(c) The intent and purposes of this article are the following: California Code

I did not know there were these preditors out there, however it does not surprise me. Thanks for the information. I will use it to warn owners of property in default to be wary.

I am a licensed Real Estate Professional in the State of California. The advise I offer is at no cost to the owner. I basically offer him options and steer him in the right directions. I do not get involved with the negotiations with the lenders and lien holders. Statistically only 5 to 10% of NODs can negotiate an equitable settlement, however this is what they should try first. Especially if it is a case where a party has lost a job and is looking for employment. The lender knows there is a high probability he or she will obtain new employment and will work up a temporary plan to span the unemployment period.

Because I am licensed and do not charge for this advise, I am exempt from the "foreclosure consultant" definition in the California Civil Code.

Statistically less than 5% of NODs actually go to a Trustee Sale. So what about the other 85 to 90%? Most are sold on the market and those that are up-side down are sold as "Short Sales". "Short Sales" must be negotiated with the creditors both with regard to the listing price and acceptance of offers as some are going to lose the full value of their liens and the primary (1st trust deed, IRS, and County Tax Collector) are going to have to accept a lower value than what they are owed. The owner sits on the sidelines and usually the 1st trust deed holder makes the decisions.

I am surprised that the "Foreclosure Consultants" can make any money through filing a lien. They would be on the bottom of the pecking order and usually would get nothing. Maybe they only prey on properties that still have equity and are not up-side down. I would find it hard to believe they could buy an up-side down property prior to the trustee sale as "Short Sales" require the approval of the 1st trust deed holder. It must be those NODs with still enough equity that these guys go after. This is probabily why a licensed real estate agent cannot represent an investor in a sale of a NOD property without a bond. Since nobody will sell these bonds in California, agents must stay clear of thes investor types.

I help people in the stage I step of negotiating with creditors since statistially 85 to 90% are going to sell. This is good prospecting and rapor building. Everyone asks them to list right away which they do not want to do. Those that offer free service are rewarded with the listing or with referrals if the negotiations with the creditors work out.

Obviously there is only about 3 and a half months available to sell the home, which in the year 2005 would not be a problem. Today it is unless a very competitive listing price can be established. That is why we need to educate the public to start taking action on delinquent payments before the NOD clock starts. Time is really of the essence.

If the home does not sell it goes to a trustee sale that is advertised for three weeks prior to the sale. The 1st Trust Note Holder usually establishes the minimum bid. If he does not get it it becomes a REO. They then list it with an agent to sell it on the open market. if I had the listing initially, there may be a possibilty rhat thay will use me, but most lenders have an established list rhat they prefer.

MAR

2007

Thanks, Mike, for your comprehensive response(s). If more realty professionals warned distressed homeowners about "wolves in sheep's clothing" the problem would subside. Many CA realty predators have found the legislation so restrictive they are hitting the road and plying their craft in other states where the laws are more relaxed.

MAR

2007

There is excellent information here, both from Mike and David. It's great to be involved in AR where so much relevant information is available.

Best advice here was to the homeowner in foreclosure (or at least in default) - talk to your lender. Communicate.

Thanks you.

Looking forward to Part II of Mike's Series.

David - look up Scott Bilker (in AR, too) and at www.debtsmart.com. He's in NJ and has his own approach to credit and debt solutions.

I am busy with two showings this weekend, a new referral contact, and a negotiation on a sale. I will post Part II on monday or tuesday.

APR

2007

Well Im excited that your that busy but I can not wait till the second post

MAY

2007

Mike is correct, they only prey on properties that still have equity. Every example I have read is exactly that. There was a recent news story with two or three of these predators who were convicted.

Unfortunately that group makes us all look bad.

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