We are totally focused on
our client's needs, and we
work to realize their
dreams as if they were
our own.
GOLD FORTUNE REALTY
our client's needs, and we
work to realize their
dreams as if they were
our own.
GOLD FORTUNE REALTY
| (707)299-6405 |
CONTACT ME NOW
FREQUENTLY ASKED QUESTIONS ABOUT FORECLSOURES AND SHORT-SALES
What is a Foreclosure?
Foreclosure is the legal proceeding in which a lienholder, usually a lender, obtains a court ordered
termination of a borrower's equitable right of redemption and reposseses the property.
What is the difference between a Deed in Lieu of Foreclosure and a Short Sale?
A Deed in Lieu of Foreclosure is a disposition option in which an owner of a property voluntarily
deeds the collateral property in exchange for a release from all obligations under the mortgage from
the lender.
A Short Sale is a disposition option in which an owner of a property with the approval of a lender sells
his property at a specified price in which the sales price is insufficient to pay the total cost of all liens
including the costs of the sale.
What is the best option? A Deed in Lieu of Foreclosure or a Short Sale?
It is highly recommended you consult with an Attorney specializing in Real Estate laws and/Tax Laws
and/or a Certified Public Accountant to discuss both legal and specific tax implications including future
credit implications specific to your case.
Generally, either option will keep you as the homeowner from losing your house or avoid potential
damage to your credit score. Nonetheless, it is less embarrassing than a foreclosure process which
the lender repossesses your property because of your failure to meet your mortgage obligations.
Bear in mind that either options would benefit the homeowner rather than going to the foreclosure
process. Why? Generally, the borrower will face a shorter waiting period before they can obtain
another mortgage in the future.
First, Fannie Mae generally will not buy loans made to borrowers involved in a short in the past two
years. It’s more favorable than the four-year wait time if the borrower has a deed in lieu of foreclosure
and the five-year wait time if the borrower has a foreclosure on record. At this time, there is no policy
for borrowers with a short sale.
Secondly, Freddie Mac generally will not guarantee loans made to borrowers who have had a
foreclosure in the past four years.
If you’re thinking of just walking out and let the foreclosure process take its toll…Think again!
Conversely, find out what kind of mortgage debt you have. Your note should state whether it is a non-
recourse debt or not. A non-recourse debt is a secured loan that secured by a collateral (your property)
for which the borrower is not personally liable. If the borrower defaults on the loan, the lender can
generally seize the collateral but the lender’s recovery is limited only to the collateral.
A recourse debt gives the lender the option to obtain a deficiency judgment against you. A deficiency
judgment is a lien against a borrower whose foreclosure sale did not produce sufficient funds to pay
the mortgage in full.
There may also be tax consequences. Check the IRS website under the Mortgage Forgiveness Debt
Relief Act 2007.
Either which way or option you choose, consider all the implications first and consult with an Attorney
and/or CPA.
What you should know about a “Foreclosure Consultant.”
Excerpts from the California Civil Code:
"2945.1. The following definitions apply to this chapter:
(a) "Foreclosure consultant" means any person who makes any
solicitation, representation, or offer to any owner to perform for
compensation or who, for compensation, performs any service which the person in any manner
represents will in any manner do any of the
following:
(1) Stop or postpone the foreclosure sale.
(2) Obtain any forbearance from any beneficiary or mortgagee.
(3) Assist the owner to exercise the right of reinstatement
provided in Section 2924c.
(4) Obtain any extension of the period within which the owner may
reinstate his or her obligation.
(5) Obtain any waiver of an acceleration clause contained in any
promissory note or contract secured by a deed of trust or mortgage on
a residence in foreclosure or contained that deed of trust or
mortgage.
(6) Assist the owner to obtain a loan or advance of funds.
(7) Avoid or ameliorate the impairment of the owner's credit
resulting from the recording of a notice of default or the conduct of
a foreclosure sale.
(8) Save the owner's residence from foreclosure.
(9) Assist the owner in obtaining from the beneficiary, mortgagee,
trustee under a power of sale, or counsel for the beneficiary,
mortgagee, or trustee, the remaining proceeds from the foreclosure
sale of the owner's residence.
2945.4. It shall be a violation for a foreclosure consultant to:
(a) Claim, demand, charge, collect, or receive any compensation
until after the foreclosure consultant has fully performed each and
every service the foreclosure consultant contracted to perform or
represented that he or she would perform.
(b) Claim, demand, charge, collect, or receive any fee, interest,
or any other compensation for any reason which exceeds 10 percent per
annum of the amount of any loan which the foreclosure consultant may
make to the owner.
(c) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation. That security shall be void and unenforceable.
(d) Receive any consideration from any third party in connection
with services rendered to an owner unless that consideration is fully
disclosed to the owner.
(e) Acquire any interest in a residence in foreclosure from an
owner with whom the foreclosure consultant has contracted. Any
interest acquired in violation of this subdivision shall be voidable,
provided that nothing herein shall affect or defeat the title of a
bona fide purchaser or encumbrancer for value and without notice of a
violation of this article. Knowledge that the property was
"residential real property in foreclosure," does not constitute
notice of a violation of this article. This subdivision may not be
deemed to abrogate any duty of inquiry which exists as to rights or
interests of persons in possession of residential real property in
foreclosure.
(f) Take any power of attorney from an owner for any purpose,
except to inspect documents as provided by law.
(g) Induce or attempt to induce any owner to enter into a contract
which does not comply in all respects with Sections 2945.2 and
2945.3.
(h) Enter into an agreement to assist the owner in arranging, or
arrange for the owner, the release of surplus funds prior to 65 days
after the trustee's sale is conducted, whether the agreement involves
direct payment, assignment, deed, power of attorney, or assignment
of claim from an owner to the foreclosure consultant or any person
designated by the foreclosure consultant."
ADVISORY NOTICE
On October 11, 2009, Governor Schwarzenegger signed Senate Bill 94), and the legislation took effect
immediately upon his signature. California law now prohibits any person, including real estate
licensees and attorneys, from demanding or collecting an advance fee from a consumer for loan
modification or mortgage loan forbearance services affecting 1 – 4 unit residential dwellings.
The full text of the legislation is below:
http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0051-0100/sb_94_bill_20090910_enrolled.html
A $10,000 fine plus one-year imprisonment for individuals, or a $50,000 fine for businesses for
violation of state law.
Foreclosure is the legal proceeding in which a lienholder, usually a lender, obtains a court ordered
termination of a borrower's equitable right of redemption and reposseses the property.
What is the difference between a Deed in Lieu of Foreclosure and a Short Sale?
A Deed in Lieu of Foreclosure is a disposition option in which an owner of a property voluntarily
deeds the collateral property in exchange for a release from all obligations under the mortgage from
the lender.
A Short Sale is a disposition option in which an owner of a property with the approval of a lender sells
his property at a specified price in which the sales price is insufficient to pay the total cost of all liens
including the costs of the sale.
What is the best option? A Deed in Lieu of Foreclosure or a Short Sale?
It is highly recommended you consult with an Attorney specializing in Real Estate laws and/Tax Laws
and/or a Certified Public Accountant to discuss both legal and specific tax implications including future
credit implications specific to your case.
Generally, either option will keep you as the homeowner from losing your house or avoid potential
damage to your credit score. Nonetheless, it is less embarrassing than a foreclosure process which
the lender repossesses your property because of your failure to meet your mortgage obligations.
Bear in mind that either options would benefit the homeowner rather than going to the foreclosure
process. Why? Generally, the borrower will face a shorter waiting period before they can obtain
another mortgage in the future.
First, Fannie Mae generally will not buy loans made to borrowers involved in a short in the past two
years. It’s more favorable than the four-year wait time if the borrower has a deed in lieu of foreclosure
and the five-year wait time if the borrower has a foreclosure on record. At this time, there is no policy
for borrowers with a short sale.
Secondly, Freddie Mac generally will not guarantee loans made to borrowers who have had a
foreclosure in the past four years.
If you’re thinking of just walking out and let the foreclosure process take its toll…Think again!
Conversely, find out what kind of mortgage debt you have. Your note should state whether it is a non-
recourse debt or not. A non-recourse debt is a secured loan that secured by a collateral (your property)
for which the borrower is not personally liable. If the borrower defaults on the loan, the lender can
generally seize the collateral but the lender’s recovery is limited only to the collateral.
A recourse debt gives the lender the option to obtain a deficiency judgment against you. A deficiency
judgment is a lien against a borrower whose foreclosure sale did not produce sufficient funds to pay
the mortgage in full.
There may also be tax consequences. Check the IRS website under the Mortgage Forgiveness Debt
Relief Act 2007.
Either which way or option you choose, consider all the implications first and consult with an Attorney
and/or CPA.
What you should know about a “Foreclosure Consultant.”
Excerpts from the California Civil Code:
"2945.1. The following definitions apply to this chapter:
(a) "Foreclosure consultant" means any person who makes any
solicitation, representation, or offer to any owner to perform for
compensation or who, for compensation, performs any service which the person in any manner
represents will in any manner do any of the
following:
(1) Stop or postpone the foreclosure sale.
(2) Obtain any forbearance from any beneficiary or mortgagee.
(3) Assist the owner to exercise the right of reinstatement
provided in Section 2924c.
(4) Obtain any extension of the period within which the owner may
reinstate his or her obligation.
(5) Obtain any waiver of an acceleration clause contained in any
promissory note or contract secured by a deed of trust or mortgage on
a residence in foreclosure or contained that deed of trust or
mortgage.
(6) Assist the owner to obtain a loan or advance of funds.
(7) Avoid or ameliorate the impairment of the owner's credit
resulting from the recording of a notice of default or the conduct of
a foreclosure sale.
(8) Save the owner's residence from foreclosure.
(9) Assist the owner in obtaining from the beneficiary, mortgagee,
trustee under a power of sale, or counsel for the beneficiary,
mortgagee, or trustee, the remaining proceeds from the foreclosure
sale of the owner's residence.
2945.4. It shall be a violation for a foreclosure consultant to:
(a) Claim, demand, charge, collect, or receive any compensation
until after the foreclosure consultant has fully performed each and
every service the foreclosure consultant contracted to perform or
represented that he or she would perform.
(b) Claim, demand, charge, collect, or receive any fee, interest,
or any other compensation for any reason which exceeds 10 percent per
annum of the amount of any loan which the foreclosure consultant may
make to the owner.
(c) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation. That security shall be void and unenforceable.
(d) Receive any consideration from any third party in connection
with services rendered to an owner unless that consideration is fully
disclosed to the owner.
(e) Acquire any interest in a residence in foreclosure from an
owner with whom the foreclosure consultant has contracted. Any
interest acquired in violation of this subdivision shall be voidable,
provided that nothing herein shall affect or defeat the title of a
bona fide purchaser or encumbrancer for value and without notice of a
violation of this article. Knowledge that the property was
"residential real property in foreclosure," does not constitute
notice of a violation of this article. This subdivision may not be
deemed to abrogate any duty of inquiry which exists as to rights or
interests of persons in possession of residential real property in
foreclosure.
(f) Take any power of attorney from an owner for any purpose,
except to inspect documents as provided by law.
(g) Induce or attempt to induce any owner to enter into a contract
which does not comply in all respects with Sections 2945.2 and
2945.3.
(h) Enter into an agreement to assist the owner in arranging, or
arrange for the owner, the release of surplus funds prior to 65 days
after the trustee's sale is conducted, whether the agreement involves
direct payment, assignment, deed, power of attorney, or assignment
of claim from an owner to the foreclosure consultant or any person
designated by the foreclosure consultant."
ADVISORY NOTICE
On October 11, 2009, Governor Schwarzenegger signed Senate Bill 94), and the legislation took effect
immediately upon his signature. California law now prohibits any person, including real estate
licensees and attorneys, from demanding or collecting an advance fee from a consumer for loan
modification or mortgage loan forbearance services affecting 1 – 4 unit residential dwellings.
The full text of the legislation is below:
http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0051-0100/sb_94_bill_20090910_enrolled.html
A $10,000 fine plus one-year imprisonment for individuals, or a $50,000 fine for businesses for
violation of state law.
 |
 |
 |
 |
 |
 |
 |
 |
GOLD FORTUNE REALTY
© 2008 Gold Fortune Realty