Showing posts from September, 2012

Real Estate Brokers & Advanced Fees

A real estate broker who collects an advanced fee must deposit it in a trust account with a bank or other recognized depository. Amount may not be withdrawn for the agent's behalf until actually expended for the benefit of the principal or five days after a verified accounting as specified is mailed to the principal in compliance with Section 2972 of Title 10 of the California Code of Regulations.

What is a Short Sale Consultant?

A short sale consultant is someone who advises on short sales. Depending on the agreement between the parties involved, the typical short sale consultant assists a homeowner or listing agent to prepare a short sale application package, submit it to the homeowners lender, and negotiate with the lender on the homeowners behalf to approve the short sale.

Special Risks When Negotiating a Short Sale

Realtors who assist borrowers should be aware of and warn their clients of one particular short sale risk. If the borrower was less than completely honest when using the stated income method in applying for the loan, this information may become apparent to the lender when the documentation (such as tax returns and paycheck stubs) are submitted to the lender in the application for short sale approval. This may put the borrower at great risk of potential liability.

Lender's Options Upon Borrower's Loan Default

A lender may foreclose on the defaulting borrower's real property which secures the loan. There are two types of foreclosures available to a lender. A trustee's sale and a judicial foreclosure. Technically, a trustee's sale is not a foreclosure but the term has been used for both a trustee's sale as well as a judicial foreclosure.

For certain loans, a lender has no choice and must conduct a trustee's sale. With a trustee's sale, a lender cannot go after a deficiency judgement. A deficiency occurs when the current market value of the property is less than the loan on the property.

The lender may also be able to pursue 'guarantors' of the debt who have signed written guarantee agreements.

Short Sales Affect Credit Rating

A short sale adversely affects a borrower's credit rating. Lenders will report the short sale as being settled for less than the full balance. This would show up on the borrower's credit report as a negative mark for seven years.

Wiped Out Junior Loan

If you have two mortgage loans and the senior lender forecloses by a trustee's sale, you may not be protected against a deficiency judgement brought by an unpaid junior lender whose security interest was wiped out by that foreclosure.

Make sure you know the risks before taking action that is later irreversible.

Trustee's Sale

You are generally protected against a deficiency judgement from your lender if that lender elects to foreclose by a trustee's sale. California has two types of foreclosures:

Judicial foreclosure through a civil lawsuit and non-judicial foreclosure using a trustee's sale.

Most lenders in California opt to foreclose through a trustee's sale.

Bankruptcy: A Brief Explanation

Bankruptcy is a federal court proceeding for settling your debts with your creditors under a judge's supervision. If you face foreclosure, the filing of a bankruptcy case may provide an 'automatic stay' to temporarily stop the foreclosure proceedings.

If, however, you file for liquidation under Chapter 7 of the Bankruptcy Code, the court may, in time, lift the automatic stay to allow the mortgage lender to resume its foreclosure proceedings. Alternatively, if you file under Chapter 13, you may be able to keep your property, but you must generally repay the overdue amount in a 3 to 5 year plan along with your regular mortgage payments.