2009 Survey of California Home Buyers

The 2009 Survey of California Home Buyers was just released from the California Association of REALTORS. Here is an excerpt:

After back-to-back years of steep decreases in sales, annual sales in the California housing market bounced back and increased 27 percent to 439,830 in units in 2008.

The first quarter of 2009 extended the rally in sales and showed a strong performance with a seasonally adjusted annualized sales figure of 590,390, an 83 percent increase from the same quarter of 2008. Annual sales are projected to increase 25 percent to 550,000 in 2009.

The increase in sales was due in large part to the growth in the absorption of distressed properties with huge mark-down in prices. Results from the Home Buyer Survey suggest that distressed sales made up more than half of the sales in California:

• Forty-nine percent of all buyers bought a home through a regular market sale
• Thirty-eight percent bought an REO/bank-owned property
• Thirteen percent bought a short-sale property

Interested in reading more? Click on the links below to download the 2009 and 2008 surveys in PDF format:

2009 Survey of California Home Buyers (26.8 MB)

2008 Survey of California Home Buyers (9.79 MB)

2008 Survey of California Home Sellers (16.2 MB)

Brown Sues Foreclosure Consultant and Attorney Who Conned Homeowners into Paying Thousands for Phony Lawsuits

Los Angeles - Attorney General Edmund G. Brown Jr. today sued a foreclosure consultant and an attorney -- Paul Noe Jr. and Mitchell Roth - who conned 2,000 desperate homeowners into paying exorbitant fees for "phony lawsuits" to forestall foreclosure proceedings.

These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home's value.

"Noe and Roth ripped off homeowners desperate for help by charging unconscionable fees for phony lawsuits," Brown said. "Instead of aggressively pursuing the lawsuits, Noe and Roth strung them along so they could continue to rake in fees."

Beginning in mid-2008, Noe promised homeowners facing foreclosure or default he could help them lower or eliminate their mortgage debt.

He convinced more than 2,000 homeowners to sign "joint venture" agreements with his company, United First, and hire Roth to file suits claiming that the borrower's loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower's mortgage debt.

After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth's firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

Under the terms of the agreement, United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner's debt, the homeowner would be required to pay the company 80 percent of the value of the home.

Brown's lawsuit contends that Noe, Roth and United First:
- Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
- Inserted unconscionable terms in contracts;
- Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating California Business and Professions Code 6150; and
- Violated 17500 of the California Business and Professions Code.

Brown's office is seeking $2 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

Paul Noe Jr. was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004. Mitchell Roth resigned for the California State Bar in late May 2009, after the State Bar closed his law firm.

VICTIMS

P.J. -- After receiving default notices and conducting unsuccessful negotiations with his lender, P.J. of Panorama City contacted United First and was promised his home could be saved. In November 2008, P.J. signed a contract with United First and hired Roth's law firm, paying nearly $5,000 in upfront and monthly fees. Even as P.J. was paying United First, Roth did nothing to advance his case, and his lender foreclosed on his home earlier this year.

A.S. -- In June 2008, A.S. from La Mesa, Calif. received notices that his mortgage payments were going to increase from $3,700 to over $5,000 per month. A.S. was referred to United First by a member of his church. Representatives of the company assured him that his mortgage debt could be eliminated. A.S. paid over $10,000 to retain Roth's firm. Shortly after signing a contract, A.S. received foreclosure notices from his lender. He called United First about the notices but was told not to worry and that his case was moving along. In January 2009, A.S. received a notice to come to United First's office to pick up his file. Roth had abandoned his cases, and the State Bar had shut down the firm.

Tips for Homeowners

DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON'T transfer title or sell your house to a "foreclosure rescuer." Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called "rescuers" use to evict homeowners and steal all or most of the home's equity.

DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer."

DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.

Brown's Actions to Help Homeowners and Stop Loan Modification Fraud

Sued Countrywide For Predatory Lending And Secured $8.6 Billion Settlement. In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans, once the largest lender in the county, after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers' ability to afford loans.

Obtained Guilty Plea From Woman Who Operated Sophisticated Loan Scam. In May 2009, Brown obtained a guilty plea from Anna Santos, 22, who used forged documents to convince more than 100 desperate homeowners to hand over an average of $3,000 for non-existent loan modification services.

Shut Down "Foreclosure Freedom" And Announced Arrest Of Two Loan Modification Scam Artists. In March 2009, Brown shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing loan modification services. The two scam artists were charged with 24 counts of grand theft and 25 counts of foreclosure consultant statute violations.

Broke Up "First Gov" And Sent Five Members To Prison. In November 2008, Brown shut down First Gov, a company that demanded $1,500 to $5,000 in up-front fees to modify loans it never renegotiated. In March 2009, five members of the ring were sentenced to a total of 18 years in prison.

Ended "Federal Land Grant" Foreclosure Rescue Scam. In May 2008, Brown ended a scam in which hundreds of homeowners were convinced to pay $10,000 to place their property in a land grant, a phony and worthless real estate document, and then convinced to sign over the deed to their home.

Shut Down Six Predatory Lending Companies. In March 2008, Brown shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions for promising homeowners unrealistically low mortgage payments and then switching them to loans that did not match the original agreement, many with hidden fees of up to $20,000. The three scam artists who operated the scheme have been sentenced to three years in prison.

A copy of the complaint is attached.

Source: Office of the Attorney General

CA Attorney General Directs Foreclosure Consultants to Register and Post Bond

California Attorney General's Office News Release
Attorney General Edmund G. Brown Jr. issued a directive June 1, 2009 forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009. Those who fail to do so will be in violation of California Civil Code Section 2945.45 (of the Mortgage Foreclosure Consultant Law) that goes into effect July 1, 2009, and be subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation.

However, Section 2945.45 does not apply to real estate licensees provided the licensee complies with Section 2945.1. Real estate licensees are exempt from the Mortgage Foreclosure Consultant Law (including the Section 2945.45 registration and bond requirements) when the licensee:

"makes a direct loan or

when the person

(A) engages in acts whose performance requires licensure under that part,

(B) is entitled to compensation for the acts performed in connection with the sale of a residence in foreclosure or with the arranging of a loan secured by a lien on a residence in foreclosure,

(C) does not claim, demand, charge, collect, or receive any compensation until the acts have been performed or cannot be performed because of an owner's failure to make the disclosures set forth in Section 10243 of the Business and Professions Code or failure to accept an offer from a purchaser or lender ready, willing, and able to purchase a residence in foreclosure or make a loan secured by a lien on a residence in foreclosure on the terms prescribed in a listing or a loan agreement, and

(D) does not acquire any interest in a residence in foreclosure directly from an owner for whom the person agreed to perform the acts other than as a trustee or beneficiary under a deed of trust given to secure the payment of a loan or that compensation.

For the purposes of this paragraph, a “direct loan” means a loan of a real estate broker's own funds secured by a deed of trust on the residence in foreclosure, which loan and deed of trust the broker in good faith attempts to assign to a lender, for an amount at least sufficient to cure all of the defaults on obligations which are then subject to a recorded notice of default, provided that, if a foreclosure sale is conducted with respect to the deed of trust, the person conducting the foreclosure sale has no interest in the residence in foreclosure or in the outcome of the sale and is not owned, controlled, or managed by the lending broker; the lending broker does not acquire any interest in the residence in foreclosure directly from the owner other than as a beneficiary under the deed of trust; and the loan is not made for the purpose or effect of avoiding or evading the provisions of this article." (Cal. Civ. Code 2945.1.)

For a copy of the law modifying the Mortgage Foreclosure Consultants Law, AB 180, click here.

For more information about the AG news release, click here.

Short Sale, Deed-in-Lieu, Foreclosure – How do Each Affect When You can get Your Next Mortgage?

by Drew Sygit
President of The Leading Edge

Too many homeowners act on bad advice, false assumptions or allow themselves to be conned when choosing one of these options.

DETROIT, MI – Over the last couple of weeks, in speaking with numerous homeowners, real estate agents and investors, I’ve noticed that there’s a lot of confusion and misunderstanding about the impact of Short Sales, Deed-in-Lieu’s and Foreclosures on one’s ability to get a new mortgage.

Over and over again, I’ve heard self-proclaimed experts make many incorrect statements. So many, that I felt compelled to do my best to separate reality from myth, fact from fiction.

GETTING A NEW MORTGAGE
It’s actually pretty easy to provide concrete proof of when it’s possible to qualify for a new mortgage after a Short Sale, Deed-in-Lieu or Foreclosure. The mortgage meltdown has reduced the main players in the mortgage industry to FNMA, FHLMC, FHA, VA and RD. Gone are the numerous subprime and Alt-A players that seemed to have a mortgage program for anyone.

FNMA – Federal National Mortgage Association
Guidelines changed regarding these issues on June 25, 2008 with Announcement 08-16.

Short Sale: FNMA refers to these as “Preforeclosure Sales” and requires a 2 year waiting period after the sale, with acceptable re-established credit.

Deed-in-Lieu: minimum waiting period of 4 years, with a minimum of 10% down required for 7 years. There is a 2 year exception for extenuating circumstances.

Foreclosure: standard of 5 years waiting period, with minimum of 10% down & 680 credit score for 7 years. Primary residences only, no second homes or investment property loans for 7 years. There is a 3 year exception for extenuating circumstances.

Bankruptcy: Chapter 7 requires a 4 year waiting period, but there is a 2 year exception for extenuating circumstances.
Chapter 13 is 2 years from discharge date or 4 years if the Chapter 13 is dismissed (not completed).

FHLMC – Federal Home Loan Mortgage Corporation
Guidelines changed regarding these issues with the release of Bulletin October 17, 2008. For some reason FHLMC isn’t as user-friendly with their updates in comparison to FNMA. Instead of listing the specific changes in their Bulletins like FNMA, they force you to refer to their guidelines to find the changes. The ones related to our topic are found in Chapter 37-7. FHLMC could definitely use some PR coaching to be more user-friendly.

Short Sale: FHLMC refers to these as “Short Payoffs” and requires a 4 year waiting period after the sale, with acceptable re-established credit. There is an exception for extenuating circumstances of 2 years.

Deed-in-Lieu: minimum waiting period of 4 years, with a minimum of 10% down required for 7 years.

Foreclosure: standard of 5 years waiting period, with minimum of 10% down for 7 years. Primary residences only, no second homes or investment property loans for 7 years. There is an exception for extenuating circumstances of 3 years.

Bankruptcy: Chapter 7 requires a 4 year waiting period.
Chapter 13 is 2 years from discharge date or 4 years if the Chapter 13 is dismissed (not completed).

FHA – Federal Housing Administration
FHA is a part of HUD and as of this point does not differ in how they address Short Sales, Deed-in-Lieu’s or Foreclosures. They’re all treated the same. Their great source for their guidelines can be found at HUD 204155r-5.

All: standard of 3 years waiting period required. There is an exception for extenuating circumstances.

Bankruptcy: Chapter 7 requires a 2 year waiting period, minimum 12 months with extenuating circumstances.
Chapter 13 requires 12 months of timely payments and must have court’s authorization.

VA – Veterans Administration
The credit requirements are the same as FHA. More information can be found at: VA Loans.

RD – Rural Development
A part of the U.S. Department of Agriculture. The credit requirements are mostly the same as FHA & VA. More information can be found at: GRH Underwriting Guidelines.

Bankruptcy: minimum 3 year waiting period required, no difference between Chapter 7 or 13. Extenuating circumstances may be considered for exceptions.

I highly recommend checking out some of the links I’ve included. Direct anyone giving you contradictory information to them, so they may reference the correct facts.

Source: Drew's Mortgage News

The Crisis of Credit Visualized

This is a great video for a simple explanation on the credit crisis:

Screw the TARP Accepting Banks

Quinn's Daily Dose of Reality

Click here for a list of the TARP Accepting Banks

"This is the list of every bank that has taken $100 million or more TARP funds. There are 8,000 banks that have not taken TARP funds. Let's reward these banks with our deposits. They did not make systematic risk bets. They were prudent in their lending. They should be rewarded for these actions. The list of banks below should be punished for their actions.

If you have money in one of these banks, consider a withdrawal to put in a non-TARP bank."

Source: The Burning Platform

Homebuyer Tax Credit Chart

For California homebuyers, tax time is now tax relief time too. Thanks to two recent laws, a California homebuyer may qualify for $18,000 in tax credits for buying his or her piece of the American dream. The two tax credits are a first-time homebuyer credit up to $8,000 under federal law, and a new home credit up to $10,000 under California law.

Click on the image below to see a quick summary of the two tax credit laws:



Source: C.A.R. Legal Department