A Bill of Rights...For Homeowners?

Hi Folks,
   I hope everyone had a great weekend, and welcome back!

   It had to happen. We knew it was coming. We didn't know how, or when, however, we do know what it is, from whom, and why! It started with our "Bill of Rights" here in the United States a few hundred years back. Fast forward those few hundred years, and we have seen the creation of a different Bill of Rights for Airline Passengers. And on January 1, 2013, the "Homeowner Bill of Rights" takes effect in the state of California.

   The legislation was actually passed in July, however, this "landmark law", as it's been referred to, is making a big splash from coast-to-coast. Emerging from the dust and ashes of the "Robosigning" scandal, as well as the vulnerability of homeowners during the mortgage modification and foreclosure process, this Bill of Rights is actually a "series of bills enacted to protect California homeowners", to which the California Attorney General Kamala Harris said, "will give struggling homeowners a fighting shot to keep their home" (as per a recent story by Barry Paperno on Credit.com).

   In terms of lenders and loan servicers, the Bill of Rights imposes requirements on them, such as prohibiting “dual track” foreclosures (simultaneous foreclosure process and loan modification negotiation with the servicer), guaranteeing a single point of contact from the lender/servicer "for a borrower with a loan modification application pending", writes Paperno. Additionally, banks will need to be much clearer in explaining a rejected loan modification to a borrower, and similarly, allows borrowers to sue lenders for "significant, material violations” of the law, writes Paperno. The Robosigning fiasco was also addressed in the requirement that servicers "document their right to foreclose and imposes fines of $7,500 per loan on fraudulently signed mortgage documents".

   These sound like some great components, however, as Paperno writes, consumer advocate critics of the bill have charged that "only first-lien mortgages for owner-occupants apply", that by first taking effect in 2013, "hundreds of thousands of troubled homeowners won’t benefit from these protections". Additionally, additional criticism included the lack of obligation by servicers to "consider applications for loan modifications or appeals before January 1, 2013."

   "Opposition to the Homeowner Bill of Rights was mounted by the large banks, the California Chamber of Commerce, title companies, real estate agents, trustees and securities industry representatives", writes Paperno.

   There may be some minor drawbacks, and there may be some tweaks needed, however, this looks like a solid piece of legislation in a state that has been pummeled by Foreclosures, and these new laws could have been quite helpful all along. Will they start sprouting up in other State Legislatures? I certainly believe so, but help is needed now in states such as Arizona, Nevada, Florida, and many more. How soon do you think these and the other states will see light at the end of the tunnel?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
Rent to Own Homes and Real Estate Blog for HomeRun Homes: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com


TAGS: #Homeowners #BillofRights #California #Robosigning #mortgagemodification #foreclosureprocess #loanservicer #lender #borrower #firstlien

Strategic Default To Stop The Bleeding

Happy Friday,
   Hope it's been a great week for you.

   The thought of picking up and leaving your home behind, while still owing money on it, might seem like an extreme option, but for some, it might be their only option.

   An Arizona couple with an "underwater mortgage" was recently profiled in a story on Yahoo Finance ("What Happens When You Walk Away From Your Home?" by Chris Taylor). The couple's home was appraised at nearly $400,000, but with the market downturn, they were told they'd be "lucky to get $200,000 for it", so with their $260,000 loan, they were substantially under water. The couple was faced with a tough decision; make the payments on their new home plus the payments on this older one, or stop paying the mortgage on the older one.

   Strategic Default.

   "I constantly get the saddest e-mails from people saying, 'I've exhausted all my life savings, my retirement is gone, and now I have to default,'" said Jon Maddux, CEO of YouWalkAway.com, in a comment included in Taylors' article. As applied to these particular Arizona couple, they had to "wrestle with it", with the reasoning that they work so hard and so long to build strong credit, with an element of pride as a factor, as well. Ultimately, they looked at the numbers and realized that just cannot continue paying both loans.

   With some numbers Taylor provided from CoreLogic, almost 11 million homes are underwater, with 1.5 million of them already in the foreclosure process (as per RealtyTrac). These numbers are due to spike, with a far-reaching impact on housing prices and the market in general. What's an underwater homeowner to do?

   Taylor lists a few things to keep in mind, for example, "companies default on their obligations when it makes financial sense for them to do so, via the bankruptcy process", and that "It's not personal; it's business". As for penalties, your Credit Score will bear the brunt, and a few years will need to go by to start removing the bruises and the blemishes.

   What else should you keep in mind?

   Taylor suggests that a Strategic Default should be a "last resort", and you should consider refinancing, as well as government programs "designed to keep you in your home". Your location is key, since each State "has its own rules and regulations regarding foreclosures". You should also talk to a professional about the implications, including tax implications, before deciding.

   "Strategic default isn't a decision to be taken lightly, of course", Taylor says, and adds that it's not desirable, "but not the end of the world either".

   Has a Strategic Default been an option you have considered at some point?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #Arizona #underwatermortgage #StrategicDefault #strongcredit #foreclosureprocess #housingprices #homeowner #bankruptcy #refinancing #governmentprograms

From Foreclosure To Eviction...Why So Long?

Hi Everyone,

   Welcome back!

   A major trend that is (sadly) happening all around us is the foreclosure process, which entails a long and drawn-out process which usually ends in the eviction of the current homeowners...or not!

   Today, let's focus on the "or not!", and see what is really going on out there.

   A recent CNN story written by Les Christie, titled, "Squatter Nation: 5 years with no mortgage payment", examined this in detail, and said that Nationwide, "it takes an average of 565 days to foreclose on borrowers in default from their first missed payments to the final auction. In New York, the average is 800 days". One such example of "Squatters", as they are referred to, is a Florida couple, that, "have not made a mortgage payment in nearly five years -- but they continue to live in their five-bedroom West Palm Beach, Fla. home.". I find that absolutely incredible !

   As incredible as it may sound, this is not a new trend, says Patrick Hohman of Louisville, KY, who says that when his dad was a little boy, "they lived in their foreclosed home from 1933 to 1937. Due to the volume of foreclosures in the 1930s, they stayed in the home for 4 years before being put on the street."

   Lesley A. Hoenig, a bankruptcy attorney practicing in Michigan, says that "the foreclosure process can take an insanely long time in some cases, especially if the owner has filed chapter 13 to catch up.", and that, "Ultimately, the lender may eventually kick the person out (Likely if the person isn't making any effort to get the loan modified or catch up)", and adds that, "until the number of foreclosures die down, people are going to be able to spend up to two or three years in their house before getting kicked out".

   Hoenig thinks that the main reason people manage to stay in their house is, "because lenders aren't really itching to have vacant houses in their inventory.". Marc S Hyman JD, a Licensed Real Estate Agent in Santa Barbara CA, says basically the same thing; "The last thing a bank wants to do in this market is actually take possession of a home so banks are letting the foreclosure process drag out as much as possible.", he says, adding, "During a normal market banks foreclose quickly in order to get their "investment" back as soon as possible and put it back to work."

   The reason Hyman provides is that in this market, "a bank does not want to own a home that it will need to maintain and insure. The bank will become responsible if anyone gets hurt while on the property. Furthermore a bank will not be able to sell the house quickly. Banks are looking at any solution that does not mean taking back the house.".

   Hyman does say, though, that once it does complete the foreclosure, "it does quickly evict tenants in order to avoid the legal obligations of being a landlord eg timely repairs, insurance coverage etc.". Referring back to the Christie piece from CNN, one such "Squatter" says that, "Living in this foreclosure limbo is "Hell,"", and adds, "I feel like I'm locked in a box. I work for a financial organization and if this came out, it could cost me my job."

   Ultimately, Hyman offers up this interesting point, and perhaps something for everyone to chew on; "The squatters are getting a longer break than in the past but it will come to an end.", and says that, "The sad thing is that the squatters are spending everything they are saving while living rent free. If they did not have the squatter mentality they would be saving the money and looking to buy somewhere else with the windfall they are getting by squatting."

   Hyman makes a very good point. We need to realize that a lot of these "Squatters" are families (with children), who had been working hard for years to pay on time, until hardships arose with the Economic downturn. It does not make it right, but it's quite possible that this category of folks would never have imagined being in the foreclosure process and being a "Squatter". It seems as if the whole definition of everything we believe(d) in has taken a 180-degree turn. Tough Times!

   What are your thoughts on this hot topic?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #foreclosure #eviction #squatter #mortgage #foreclosureprocess #RealEstate