kcaa-network-20091008

Welcome to the Foreclosure Freedom Network Show!  I’m Connie Saunders and am a licensed California Realtor and have a goal of helping people pull themselves up by their own boot straps by understanding this mortgage crisis better and what the right solution is for you.

Today in the first section I’ll be going over what to do if you actually lose your home.  Then after the break I’ll come back with some current news, new laws and more.

This week a woman called who just discovered her home was lost in Foreclosure.  First words from her mouth were “Well, it appears the house is no longer mine so nothing I can do, right?”  Definitely the words of a broken spirit..  She had been trying to save her home for 8 months talking with the bank about getting a loan modification.  She wasn’t using any assistance to get this, just called them and nudged them for an answer and provided all the documents they requested.

I gave her tons of advice but she was weary of the fight and will likely not follow it.  Too bad.

In California Civil Code 2923.5 (a) (2) says” A mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.  She had been requesting this for 8 months and that entire time not one actual authorized agent or lender negotiator was afforded her to discuss options for her loan despite requesting this repeatedly.

Part of the problem with many lenders is they simply don’t have systems in place to allow any of their borrowers to talk to someone actually authorized by them as an agent.  Key to the solution of this is to understand the words authorized and agent.

Webster’s Online Dictionary defines Authorized as:
authorized definition

au·thor·ized (-īzd′)

adjective

1. established or justified by authority
2. given authority my authorized agent

agent definition

agent (ā′jÉ^TMnt)

noun

1. a person or thing that performs an action or brings about a certain result, or that is able to do so
2. an active force or substance producing an effect a chemical agent
3. a person, firm, etc. empowered to act for another
4. ☆ a representative of a government agency revenue agent
5. ☆ Informal a traveling salesperson
6. Gram. the word or words designating the person or thing that performs the action of the verb in a sentence

Etymology: L agens (gen. agentis), prp. of agere, act

intransitive verb, transitive verb
to act or work as an agent (on)

Yes, there are people who pick up the phone at lender establishments but it is very rare to actually get to speak with an authorized agent for the lender or investor directly.  More specifically with someone who can and is authorized to bring about a result of actually doing a workout.  With Bank of America/Countrywide, which is unfortunately the lender she had, they don’t provide this until someone has waited minimally 45 days and then only after one has squawked enough to get bumped up several levels and even then that person will often times tell you “I’m not authorized” or “I need to bring this to my superior”  I’ve also been told that for me to speak with someone authorized I would need to sue them, that they would not talk directly to me or my client and when I told them and read them these lines of the code, they told me that if I continue to quote from the law they were going to hang up on me.  Not naming any names here, but lenders do need to realize that truly just having an authorized agent speak with their borrowers is a simple way to solve this dilemma.

Wouldn’t it be nice if you could just call your lender, get them on the phone, ask for a loan modification, they are authorized to consult with you and make a decision, like any loan officer, a real pro, and they ran the numbers right there and then to see ‘net present value’ comparisons between foreclosure and loan modification and ran your finances through a waterfall process to see what they could do to get you into an affordable loan.

Even if you could have such a conversation with a lender and them tell you that it will take a few weeks to run the numbers and then if it looks good and all the application data is submitted properly they would put it into underwriting and this would take a few weeks (not more than 2 or 3) and off you go with an approval or denial, but whatever it was it was done professionally and done on the basis of what is the greatest good for the greatest number.

http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0301-0350/sb_306_bill_20090806_chaptered.pdf
Link to California Civil Code 2923

If you read through the rest of this Civil Code 2923, you can see that it was intelligently constructed to solve the situation we are in.  One must, however, apply IT.  I invite every State to take a look at this, in terms of real solution.  Civil Code 2923.6 requires lenders to evaluate the actual ‘anticipated recovery’ from foreclosure and the ‘anticipated recovery’ from the loan modification and if the recovery from the modification is greater, go with it.  Great idea isn’t it!

So what recourse does this girl have for her home?

First of all she can write up a detailed summary of every call she made and what was said by both her and the lender.  This will help an attorney to see if her rights were violated.  In her case it’s a no brainer that to never give her the opportunity to talk with an authorized agent, after demanding and pleading for this for months, her rights were violated, so just write this up as best as you can remember.

Then find an attorney who can and will go to bat for you.  Be sure you have an attorney that you can say something like “they violated 2923.5″ to and they would take out their pad and ask you questions like, Didn’t they call you?  Did you not get your notices?  And when you describe that they didn’t have an authorized agent talk with you after many calls demanding this, they are picking up legal documents and writing up an injunction request for the court, to prevent eviction because your rights were violated.  In other words, get an attorney who knows this section of the law, it’s very specialized.  Study it yourself.

I put a transcript of this Radio Show every week on my Blog at www.foreclosurefreedomnetwork.com.  Just click the Blog button and look in the left-hand side bar for the show.  There I’ll put links for this civil code, so that you can print it off and read it yourself.  Sections 2923.5 and 2923.6 are the key ones that apply and that’s only two pages of reading, but powerful pages for Californians.

I’m going to take a break now and we’ll return in a minute to The Foreclosure Freedom Network Show where I’ll cover Senate Bill 94, which is sitting on the Governor’s desk for signature right now!

Welcome Back to the Second half of The Foreclosure Freedom Network Show!

To end off on the previous section this girl could potentially save her home, even though she’s lost it to Foreclosure; by getting an aggressive attorney who knows Civil code 2923 to confront the lender and the Foreclosure Trustee and go over the violations of this civil Code that occurred and demand that this Foreclosure be ‘rescinded’.

In today’s world ‘Rescissions’ are becoming a common term, used to be these were very rarely done.  But what this document does when recorded is to turn back the clock to the day before the Foreclosure happened, as if it did not occur.  It restores the loan as well and all is back de way it wuz (good or bad).  It’s a simple document and in the lending industry even when it was rare, I’ve executed dozens of these without a hitch, so don’t be shy, it can be done!

If the lender won’t Rescind it, the attorney will likely need to get an injunction filed against eviction while he prepares your case.  Keep in mind you don’t have much time for this, I believe you have about 30 days or your window is closed and do check this out right away if your considering it, not a minute to waste.  But it can be done!

But let’s talk about the how to save your home from Foreclosure.  Let’s say you read Civil Code 2923 and convince the lender to put an ‘authorized agent’ on the phone to do a workout with you.  How will you prepare for this conversation?  I’ll give you some tips here on What the lender is looking for.

1. What is the Current Market Value of your home?
2. What is your Gross monthly income?
3. What is your hardship?  Why can’t you pay?  If you are out of work, good luck on getting a loan modification.  You may be able to get a temporary forbearance of 3 months and some can get a year but you have to fix the machine so that you have the wherewithal to continue to pay this loan before they will modify it.
4. You’ll need to provide a Financial Form with all the data accurate so that they can calculate two ratio’s for Debt To Income

Per Investopedia

Debt-to-income ratio formula is the percentage of a borrower’s monthly gross income that goes toward paying debts. It is usually expressed as two numbers:

The ‘Front End’ and the ‘Back End’. The ‘Front End’ refers to the percentage of income that goes toward paying off a mortgage principal and interest, mortgage insurance, hazard insurance, property taxes, and homeowner’s association dues.

The ‘Back End’ refers to the percentage of income that goes toward paying all recurring debts, including the ‘Front End’, and other debts such as credit card payments, car loan payments, and child support payments.

Most small banks and local lenders require a debt-to-income ratio of 36% or less to qualify for a mortgage, but larger lenders will often permit a ‘Back End’ Debt to Income Ratio of up to 45% on a 1st Mortgage and 50% on a 2nd Mortgage. If you have a higher ‘DTI’ than 45% there are many Sub-Prime’ lenders that will allow your ‘Back End’ ratio to be as high as 55%. Federal Housing Administration loan ratios are typically 29/41.

5. They will then get out a mortgage calculator and determine incrementally how much they have to lower interest and/or principal before you can fit into their ratios.  Sometimes if you have credit card debt that’s too high, you first need to consult with a Credit Counselor to get this debt lowered.  Minimums on a 26% Credit Card can be pretty scary and these cards have the bad habit of raising interest to its highest legal limits with nearly no cause or notice, particularly if the person is in trouble.

I’ve referred my guys to a Credit Advisor who has been a non profit for 30 some years and they can reduce your  interest on your cards down to 5 and 6% and sometimes less and only charge $35/month for their services and you make one payment to them each month and they pay the creditors and all is good.  Their name is Credit Advisors Foundation and I’ll put their phone number on the transcript in the Blog, but quickly it’s 1-800-942-9027.

This has been highly worthwhile for people in trouble on their cards.  I’ve had them come back to me after a couple of weeks saying all done, now they have one low payment and all is good.

http://info.sen.ca.gov/pub/09-10/bill/sen/sb_0051-0100/sb_94_bill_20090910_enrolled.pdf
Senate Bill 94

California Senate Bill 94 is sitting on the Governors desk-awaiting signature after having passed through the Senate and Assembly.  This bill will require all Realtors and Mortgage Brokers under Department of Real Estate it.  This Bill introduces a new Section into the Civil Codes, 2944.6 and 2944.7.
“It shall be unlawful for any person who negotiates, attempts to
negotiate, arranges, attempts to arrange, or otherwise offers to
perform a mortgage loan modification or other form of mortgage
loan forbearance for a fee or other compensation paid by the
borrower, to do any of the following:
(1) Claim, demand, charge, collect, or receive any compensation
until after the person has fully performed each and every service
the person contracted to perform or represented that he or she
would perform.
(2) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation.
(3) Take any power of attorney from the borrower for any
purpose.”

Violation is punishable by a fine not to exceed 10,000, imprisonment not to exceed one year or both.  If it’s a business entity, the fine is not to exceed 50,000 but is in addition to any other remedy provided by law.

So remember to keep your noses clean!  It’s so much better to pull yourself up by your own bootstraps and look forward to blue skys in your future!