Real Estate Investing

In California, Governor Arnold Schwarzenegger signed Senate Bill 94 today which bans the collection of advanced fees for a loan modification.  The Foreclosure Industry blog spoke against the measure,

To summarize, the bill prohibits persons from charging advance fees to borrowers in connection with the modification of the terms of the borrower’s loan, require those who wish to charge a fee for loan modification services (after performing them) to provide a specified notice to borrowers regarding other options available  to the borrower, prohibit servicers from imposing any interest or charge for performing services for borrowers in connection with loan modifications or other forms of loan forbearance of forgiveness; and close a loophole in the California Finance Lenders Law.

The post complains that the the state’s attorney general’s office labels everyone in the loan modification field as a scam artist.

The California Attorney General’s advice to do your own loan modification is highly irresponsible. He assumes that the banks have borrowers’ best interests at heart, which we all know is not true. If you’re worried about scammers, let’s take a look at the banking industry, which is the biggest scam artist of them all.

On the flip side, the California Reinvestment Coalition was disappointed the Governor didn’t sign another stronger measure proposed by the General Assembly,

Kevin Stein of the California Reinvestment Coalition expressed disappointment in the Governor’s action. “All the evidence that we’ve seen, or the bulk of the evidence, is that that there’s a huge amount of fraud in this industry.”  Stein said he was only modestly pleased that the Governor chose to sign Senate Bill 94 by Senator Ron Calderon of Montebello. That bill would ban the collection of advanced fees for a loan modification. He called it better than nothing, but weaker than AB 764.

It will be very interesting to see if he loan modification industry in California survives. I suspect it will, perhaps with higher fees on the tail end.

Although short sales have become fairly commonplace in the last year, lenders have parameters that must be met to qualify to sell a home “short” of the payoff amount.  Parameters that *most* banks require, that is.  Some still don’t pay attention.  In a very illuminating post by Pacita Dimacali, an East Bay, North CA real estate agent in Alameda, one specific lender gets a pretty powerful dressing down.  She also writes on ActiveRain what conditions are defined as “hardship”:

HARDSHIP conditions include, but are not limited to:

Unemployment
Reduced income
Divorce
Separation
Medical bills
Too much debt
Death of spouse
Mortgage payment increases
Business failure
Job relocation
Illness
Damage to property
Military service
Incarceration

A friend of mine qualifies at least four of the 14 items listed here, but also deals with this bank that’s mentioned as being one of the worst for short-sales.  I think she’s bound for foreclosure before they ever get the paperwork done for a short-sale.  I hate that she’ll go through this, but she is not alone - there are a lot of people who sympathize with her position. In fact one commenter wrote (regarding the bank),

I know many say had our all-wise government just let the banks go ahead and fail it would have caused world-wide disaster. Well, I wish they had stayed out of it and let the chips fall where they may. No one comes to my aid or yours if we make bad decisions. As for the world-wide disaster, I think the banks are causing it themselves right now.

They do not care. That’s all. The top brass got their bonuses and that’s all that really mattered.

Read the entire article along with the comments.  Very very enlightening and I’m all about informing the consumer!

“Mortgage Mentor” Bill Ladewig posted something over at Active Rain about those ridiculous little postcards we all get trumpeting the 4.5 percent loans that are still available. He reviewed in detail all the fine print, made phone calls, and learned that maybe things weren’t as they appeared.

1. It is questionable to me the advertised rate was ever available.
2. The California Department of Real Estate requires the advertised company name and license number match exactly.
   
3. hey also require the company to be a legal entity. Two DRE strikes? This guy is either gutsy or really stupid.

I believe RESPA requires the advertised rate and APR be shown in the same print size. I also believe the loan amount basis for the APR calculation must also be disclosed.

His findings and declaration that we need to do something about it remind me of this scene from Network.  Also interesting is that actor Peter Finch playing Howard Beale was ranting about the economy, the jobless rate, and more!  How timely!

CAUTION:  Very strong language.  Very strong.  Careful if you’re watching from work.