DISTRESSED PROPERTY OWNERS OPTIONS CHART: Alternative Solutions for Californians to Avoid Foreclosure

November 23, 2011 By Leave a Comment
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The following chart is a short-cut to understanding the options for a distressed California property owner. To read the chart, the property owner should identify on the far left column the type of property and loans secured by the property. After the type of property has been identified, the chart gives the owner options on the right. A detailed explanation of the options for each type of property and loan structure is included in Howard L. Hibbard’s book, How to Avoid Foreclosure in California, 2012 Edition. If you are a distressed property owner needing assistance, contact the Law Office of Howard L. Hibbard for a free consultation.

DISCLAIMERS
1) This Distressed Property Homeowners Options Chart gives general guidelines for distressed property owners. Owners should consult legal counsel prior to taking any course of action based on any option listed … more

Type of Property*

*Explanation for each type of property is listed in booklet How to Stop Foreclosure: Quick Easy Guide.

Loan Modification

Short Sale

Foreclosure Relief

Live Off Equity

Deficiency Liability

1099 A or C Liability

Deed in Lieu option

1. Single Family Dwelling, Owner Occupied,
Purchase Money First Loan

Yes

Yes

Yes

Yes, until 12.30.2012 Mortgage Relief Act expires

None, until 12.30.2012 Mortgage Relief Act expires

None, until 12.30.2012 Mortgage Relief Act expires

Yes

2. Single Family Dwelling, Purchase Money First and Second Loan

Yes

Yes

Yes

Yes, until 12.30.2012 Mortgage Relief Act expires

Yes, until 12.30.2012 Mortgage Relief Act expires

No, until 12.30.2012 Mortgage Relief Act expires

Yes

3. Single Family Dwelling, Purchase Money First and Second Loan (Line of Credit) Obtained at Purchase of Home

Yes

Yes

Yes

Yes, but use Deed in Lieu before foreclosure

Yes, if First Loan Forecloses

Yes, for Second Loan Amount

Yes

4. Single Family Dwelling, First and/or Second Loans Refinanced

Yes

Yes

Yes

Yes, but use Deed in Lieu before Foreclosure

Yes, for Second Loan if First Loan uses Non-Judicial Foreclosure

Yes

Yes

5. Single Family Dwelling, Not Primary Residence, 2nd Home or Vacation

Yes, Some Banks which do not require owner occupied

Yes, Some Banks which do not require owner occupied

Yes, Some Banks which do not require owner occupied

Not
Applicable

Yes

Yes

Yes

 

 

 

 

 

6. Residential Property 4 Units or Less, Owner Occupied, Purchase Money Loans

Yes if Owner Occupied, Yes, Some Banks which do not require owner occupied

Yes, Some Banks which do not require owner occupied

Yes, Some Banks which do not require owner occupied

Yes, if Owner Occupied

No, if Owner Occupied

No, if Owner Occupied

Yes

7. Commercial Residential

No

No

No

Not Applicable

Yes

Yes

Yes

8. Commercial Business

No

No

No

Not Applicable

Yes

Yes

Yes

Copyright © November 23, 2011 • Law Office of Howard L. Hibbard • www.HLHibbardAttorney.com


Disclaimers (continued)

… in the chart as there are many twists and turns dependent upon the exact circumstances of each homeowner. 2) This chart does not apply to loans where any type of fraud occurred in obtaining the loan such as “stated income” which is not accurate to owners actual income. 3) This chart is dated as of November 23, 2011 and the legal basis for the chart options may change without modification to the chart. Legal counsel should be consulted prior to taking action on any choice outlined in the chart to determine change of law or inapplicability for any reason. 4) This chart was designed to apply to real estate owned and financed within the state of California. 5) This chart applies only to homes in which the lender uses non-judicial foreclosure. For judicial foreclosures you must consult legal counsel.

Filed Under: Bankruptcy, Distressed Homeowners, Real Estate Law, Short Sales and Foreclosures Tagged With: , , , , , , , ,

GAVE MY HOUSE KEYS TO THE BANK — NOW I’M BEING SUED! Homeowners Facing Foreclosure Beware

November 4, 2011 By 1 Comment
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You are unable to make your mortgage payments.  You received a foreclosure notice from the bank so you surrendered your keys, moved out, and canceled your homeowner’s insurance.  You think you are off the hook.  So, how can you be sued for problems on your vacant property?

The problem is that while the bank gave notice of pending foreclosure, the homeowner is still liable for any problems on their property until the title transfers to the bank.  Complaints others make to the City, County or Homeowners’ Association against your property, i.e. not being maintained; nuisances like kids throwing parties; or homeowner fees still due, are examples of the homeowner’s continued personal responsibility.

If you are still on title, you are still personally liable for all criminal liability for failure to maintain the property; civil liability for any person injured on your property; still owe homeowner fees; and more.

The solution is simple.  Until you are off title, you are still liable.  As long as you are on title, you need to keep paying your homeowner’s insurance premiums.

The best way to solve the problem if the bank does not complete the foreclosure on your home is to record a DEED IN LIEU OF FORECLOSURE.  However, in some states, the bank must approve the Deed In Lieu.  California is not one of those states, but there are issues to be considered which are too are lengthy for this blog for which you should obtain legal counsel.

A Deed In Lieu of Foreclosure is a deed from the owner to the first or second deed of trust or mortgage holder.  It should be a Quitclaim Deed which bears the title, “DEED IN LIEU OF FORCLOSURE,” next the title Quitclaim Deed.

To obtain more information about Deeds in Lieu, read the book:  MORTGAGES, DEEDS OF TRUST AND FORECLOSURE LITIGATION, CONTINUING EDUCATION OF THE BAR, CALIFORNIA OAKLAND, CALIFORNIA, January 2010, Chapter Title, Debtor’s Strategies, section 7.11, page 523; 7.127.21, page 524 and 7.21A, page 530.

To find more information on the web try doing a search using the phrase, “Deed In Lieu.”

Filed Under: Real Estate Law, Short Sales and Foreclosures Tagged With: , , , , ,

FORECLOSURE DANGERS: Beware of Scams to Collect on Purchase Money 2nd or 3rd Deeds of Trust

September 2, 2011 By Leave a Comment
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Senate Bill 931 which enacts California Code of Civil Procedure §580e became effective January 1, 2011.

C.C.P. §580e prohibits recovery of a deficiency on a first deed of trust following a short sale of real property of four (4) units or less because C.C.P. §580e(a), read, in part: “….Written consent of the holder of the first deed of trust or first mortgage to that sale shall obligate that holder to accept the sale proceeds as FULL PAYMENT and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage.”  (Emphasis added).

This means you should not get a 1099-A or 1099-C from the holder of the first deed of trust following a short sale!  For more information on 1099-A or 1099-C, please read our blog: If You Are a Distressed Homeowner Facing a Short Sale or Foreclosure, Read This Article!!

What C.C.P. §580(e) does not address are second deeds of trust or other non-purchase money loans on real property.  Lenders with second or third deeds of trust and/or lines of credit may still, and have been, suing short sale borrowers to recover monies borrowed.

The question then becomes, what is the state of the law for when both the first and second deed of trust were used to purchase the property? Interestingly in 2009, the Northern District of California, ruled that a second deed of trust, made concurrently with a first deed of trust for the purchase of real property is a purchase money loan within the meaning of C.C.P.  §580(b).  See Herrera v. LCS Fin. Servs. Corp. (ND Cal. 2009)

BEWARE OF SCAMS TO COLLECT ON

PURCHASE MONEY 2nd or 3rd DEEDS OF TRUST

The Herrera case holds that purchase money 2nd or 3rd deeds of trust are subject to anti-deficiency law as outlined in C.C.P. 580c.  Some lenders are attempting to collect on junior purchase money deeds of trust after foreclosure or demand a deficiency in a short sale.

The lender is not entitled to demand a deficiency after foreclosure on a purchase money 2nd or 3rd deed of trust. 

Any attempt to collect on an uncollectable debt, without the collection agency stating re-payment is not mandatory, may be grounds to sue the collection agency for violation of California Fair Debt Collections Act.

 STRATEGY TO REQUEST MINIMUM OR NO DEFICIENCY ON A PURCHASE MONEY 2ND OR 3RD DEED OF TRUST UNDER A SHORT SALE

As a realtor, if you are negotiating the short sale with a junior purchase money deeds of trust, you must make it clear to the lender that through the short sale, the lender is actually saving: (1) months of non-payments on the loan, (2) months of vacancy, (3) costs of foreclosure proceedings, and (4) costs of resale.  In addition, there is no right to a deficiency after a foreclosure.  Disclosure of these realities should create a stronger bargaining position to facilitate a short sale for a minimum or no deficiency.

Our office specializes in real property law and a significant portion of our business in this area comes directly from other attorneys and local area real estate professionals. For more information  regarding the above or with other legal questions,please contact our office:

Law Office of Howard L. Hibbard

http:/hlhibbardattorney.com/contact us

or call (650) 347-5010 for a free consultation

Filed Under: Real Estate Law, Short Sales and Foreclosures Tagged With: , , , , , , , ,
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