In California, according to the Lender Processing Service, there were 160,541 completed short sales during a 12-month period ending June 30, 2012. In this same period, Florida’s short sale tally topped 99,620 and Arizona’s count came in at 51,872. As the volume of short sales continues to grow, and with the aforementioned states constituting some 45 percent of all short sale transactions nationwide, a provision to help struggling homeowners keep their homes is potentially a really big deal to a great many people! And it all started right here in California with Governor Jerry Brown wielding the might of his pen and signing into law the “California Homeowner’s Bill of Rights.”
Let’s summarize the key provisions of the Bill, also known as Assembly Bill 278 and Senate Bill 900 which will officially come into effect on January 1, 2013.
Who is affected by the Bill? Owner occupied properties which are one-to-four residential units and are secured by first trust deeds. “Owner-occupied” means the property is the principal residence of the borrower. Please Note: Someone who has filed bankruptcy, surrendered the secured property [Deed in Lieu] or engaged a company / organization who advises people how to prolong the foreclosure process and/or avoid their contractual obligations to pay their lenders will not be able to benefit from this bill.
No Dual Tracking! If a foreclosure prevention alternative, such as a short sale or loan modification, has been approved in writing by all parties including the junior lien holder, then the mortgage servicer or lender cannot record a Notice of Default [NOD] or Notice of Sale or conduct a Trustee’s Sale aka 'Auction' on the borrower’s property. This in essence prevents them from proverbially "pulling the rug out from underneath" the homeowner, buyer and/or Realtor(s) who havebeen working diligently and with good faith only to find at the 11th hour, while in the last phases of the escrow that the home is sold at Auction.
Single Point of Contact: For those requesting a foreclosure prevention alternative the mortgage servicer must, upon request, promptly establish and clearly provide a direct means of communication to the homeowner or 'Third Party Negotiator' (Realtor) with a single point of contact. This contact will stay in place throughout the entire process. This single point may consist of an individual or a ‘team’ all of which are intimately familiar with the file and have access to those 'higher up' with the authority to stop foreclosure proceedings or if the borrower requests a referral to a supervisor. So, no more starting over from the beginning with each person who picks up the call.
Acknowledgement of the application: The mortgage servicer must provide the borrower with written acknowledgement of receipt of a complete first lien modification application or short sale package, within 5 business days of the borrower’s submission. The operative word here is “complete” application. The acknowledgement from the lender must provide a description of the loan modification process, time line for decisions and highlighting any deficiencies in the borrower’s application.
I have placed emphasis on "complete package" and as a Realtor and Short Sale/Loan Mod specialist, I can assure you this the primary source of stress, failure and consternation for homeowners who try to slog through modifying or short selling their homes themselves. When contemplating either one of these approaches consult with a professional a Realtor. We can explain both process' and perhaps offer solutions you might not have considered; it will not cost you anything, other than an hour of your time.
These are but a few of the important points covered in the new bill. For a complete copy of the California Homeowner Bill of Rights contact me. It’s free and there is no obligation.
The first line of defense of your rights, is to know what they are!