Results Advisors

Arizona Deficiency and Foreclosure Rules

craig — Wed, 23 May 2012 19:39:53 +0000

Like California, Arizona uses primarily the non-judicial foreclosure process. That means no court, no judge and no jury; it is a paperwork only automatic process. Arizona’s run time on foreclosure is shorter than California’s in that it does away with the separate Notice of Default, followed by the Notice of Trustee Sale. Arizona allows the immediate filing of the Notice of Trustee Sale, followed by a 90 day wait. At the conclusion of the 90 day period, the sale takes place. Anecdotal evidence from Arizona is that the time period from stopping payments to foreclosure completion is about a year; but it varies greatly from bank to bank. In addition, the recent national mortgage settlement will likely accelerate the process. For deficiencies, the majority of the time for our clients, there is no deficiency. Arizona prohibits a deficiency on a purchase money loan on a single family residence or duplex in which the lot size is less than 2.5 acres; it appears to apply to the property type regardless of whether or not it is owner occupied. There are procedural rules which must be followed that do benefit the foreclosed party. First, if the loan, even a second trust deed, was a purchase money loan (used to buy the property or improve the property) there is no deficiency judgment. ARS 33-729A, the deficiency rule, applies to both first and second deeds. Second, if a deficiency action is to be filed, the foreclosing lender must file within 90 days of the trustee sale. Third, the deficiency is limited to the difference between the deed of trust value and the sales price. If the sales price seems unfairly low, ARS 33-814A and ARS 12-1566C allow the borrower to petition the court to determine the fair price, which is considered determinative. Arizona does allow for judicial foreclosures; that is a foreclosure by court action. In those circumstances, a deficiency is allowed. In the recent case of Helvetica vs. Gold an Arizona appeals court held that in a judicial foreclosure, a deficiency could be pursued by a lender after a refinance of a purchase money loan. The deficiency was limited to money taken out in the refinance which was not used for construction or purchase costs (i.e. money taken out and used for jet skis, for example). While the judicial process was used, there was nothing in the opinion which precluded its reasoning from being applied to non-judicial foreclosures, so this bears watching. As to second trust deeds, if the property is foreclosed on by the first, the second may have the right to sue. As discussed earlier, if the second was purchase money (taken out the same day as the first) there is no deficiency and no right to sue; that situation is covered by the anti-deficiency statute. If the second was used for any other purpose, or was a HELOC, the second has the right to pursue a deficiency against you. The statute of limitations for that is six years from the date of the foreclosure sale. The 90 day rule does not apply to seconds. Short sales are also an interesting issue. Short sales are by definition not foreclosures and are not covered by the anti-deficiency rules. In the case of a short sale, the first trust deed is barred from pursing a deficiency judgment; their loan is considered satisfied from the proceeds of the sale, especially if it was purchase money or a refinanced loan. Second trust deeds are not covered, however. If you are negotiating for a short sale with a property that has a second trust deed, the second trust deed holder must agree to give up their right to pursue a deficiency. Also note that Arizona lenders have adopted the position that a refinanced first trust deed that is short sold is not subject to the anti-deficiency statute (the Arizona statute is specifically worded, and refinance is nowhere mentioned) so in a short sale situation, the right to pursue a deficiency must be bargained away. Worse, the Arizona Statute of Frauds requires that the party to be charged in the contract (the party giving something away) must sign the contract for it to be enforceable. This means that the ghost written lender agreements generated by the word processing department may not be valid unless there is a real live human signature. The Arizona legislature has before it a bill to clarify the short sale rules, HB 2584, which contains many of the short sale protections now found in California. As of this writing (May 23, 2012) this bill has not become law. There is good news in Arizona in the event your second is charged off. If a 1099 has been issued, collecting on the debt may be barred. ARS 47-3604 provides that a voluntary action such as a write off of a debt serves as a bar to collecting on it. Better, under Amtrust Bank vs. Fossett issuing a 1099 is considered prima facie evidence of the debt write off taking place; barring collection activity.

Nevada Foreclosure and Recourse Rules

craig — Fri, 18 May 2012 19:12:18 +0000

This week we look at Nevada foreclosure and deficiency judgment rules, and conclude next week with the Arizona rules. The Nevada foreclosure process is similar to California’s. Nevada uses a deed of trust to secure the real property loan, and the trustee of the deed of trust carries out the trustee sale. The details of the process are a little different, however. Like in California, the process begins with the filing of a notice of default. The defaulting property owner then hast 35 days to correct the default by paying the past due amounts of the mortgage. After day 36, the entire mortgage balance must be paid to cancel the foreclosure. These time frames are much different from California’s, which allows 90 days to pay the past due amounts. 90 days after the notice of default is filed, the Trustee sale notice is filed. There is a 20 day waiting period, and then the sale can take place. The total run time is 111 days. If an owner occupied single family residence is involved, there are additional steps to the foreclosure process. The first is that the foreclosing entity must give the homeowner the opportunity to meet and mediate to see if a loan modification or short sale can be worked out. This rule does not apply to rental or investment properties. If the homeowner elects to participate in mediation, there is a $200 fee. After foreclosure, Nevada does allow recourse against borrowers, but an additional wrinkle is involved. For mortgages issued before October 1, 2009 for any property, the foreclosing entity had six months from the foreclosure date to apply to the district court where the property was located to set a deficiency hearing. At the hearing, the court would hear evidence and determine the amount of the deficiency. If the foreclosing entity did not apply for the hearing within six months, their right to the deficiency terminated by operation of law and expired. (NRS 40.455) After October 1, 2009, owner occupied single family residences were exempted from the recourse requirement; no recourse for the loans is available. Again, this prohibition does not apply to rental or investment property. (NRS 40.458) As a practical matter, for a very long time, Nevada foreclosed properties did not have a deficiency judgment because it was not worth the time and effort to hire a lawyer and appraiser for the hearing. This is beginning to change, and in a big way. In the summer of 2011, to combat robosigning, the Nevada Legislature (which is part time, meets for only a few weeks every other year and is actually effective most of the time) passed a set of pre-foreclosure rules that essentially required the big banks to prove their chain of title before the foreclosure can take place; if they could not do so, the homeowner could sue to stop the foreclosure. The banks responded to this by hiring lawyers and filing for judicial foreclosures. Just like California, Nevada does allow judicial foreclosures also. So why the sudden change? The judicial foreclosure process allows the banks to (1) sidestep the new robosigning law and (2) seek a deficiency judgment at the same time. So the odds of a new foreclosure resulting in a deficiency judgment in Nevada are actually increasing. What about seconds and HELOCs that were foreclosed on? Nevada, like California has a one-action rule (NRS 40.430), so you either sue or foreclose, not both. So the seconds and HELOC holders do have the right to sue for essentially a breach of contract claim on the promissory note. As part of the anti-robosigning rules passed in July, 2011, new rules were enacted here as well. If a property was foreclosed on, or short sold, after July 1, 2011, the second trust deed holder has six months from the foreclosure or short sale date in which to sue for a balance due. The six month rule also applies to loans issued on or after October 1, 2009. What about the earlier stuff? Well, it appears, even after the law changes, that second trust deed and HELOC holders can sue for investor and rental properties up until the statute of limitations expires. The bad news? The Nevada statute of limitations is 6 years, not the 4 years Californians are used to. Upshot: Nevada rules are tricky, and if you are facing foreclosure or short sale, talk to a Nevada attorney familiar with the real property rules there before making a decision.

California Deficiency Rules

craig — Thu, 10 May 2012 17:20:44 +0000

Reviewing the Southwest’s Anti-Deficiency Laws

Just in Time for the Flood

With the national mortgage settlement signed off on by a federal judge on April 6, 2012, and the banksters having been given time to bring their minions up to speed just in time for the summer buying season, it’s time to review anti-deficiency laws for homeowners. We are doing this because the settlement will speed up the termination process for homeowners in the foreclosure pipeline. Over the next few months, we can expect all the temporary loan modifications and short sale bottlenecks start to clear up. That also means the number of foreclosures will accelerate as there are a large number of homeowners who don’t fit into either the loan modification or the short sale box. For them, their outcome is foreclosure – it’s more cost effective. So when the house is foreclosed on, short sold, or the loan modification denied, what happens to the mortgage balance? Can the mortgage lender, or more accurately, the mortgage lender’s junk debt buyer come after you for more money? The answer is “it depends”. It depends on whether or not the mortgage balance is ‘recourse” or “non-recourse”. It also depends upon the sale price of the home, and whether or not the sale price creates a “deficiency”. A deficiency is a net loss on the mortgage balance after the sale of the home. If there is no deficiency, you have nothing to worry about, since there was no loss on the home. Whether a loan is recourse or non-recourse depends on state law and the nature of the loan. A non-recourse loan means that, whether or not there is a deficiency, the lender cannot go after the borrower for any loss. Non-recourse loans are entirely creations of state law. A recourse loan is defined by exclusion; if the loan is not covered by the state law non-recourse rules, it is a recourse loan. Since we blog from California, we’ll concern ourselves with the rules there, as well as in Nevada and Arizona, since there’s lots of interplay with the real estate market in those three states, and many clients had properties in all three. California Rules Any purchase money loan (the money was used in the initial sale of the home, NOT a refinance or cash out) regardless of lien priority (a first, second, third, whatever loan) or any seller financed loan secured only by the property is non-recourse, whether or not the foreclosure is judicial or non-judicial. This means for purchase money transactions, the homeowner cannot be pursued for a deficiency in California. This is true about 98% of the time. See, California Civil Code Section 580d. Naturally, there are a couple of exceptions to this – purchasers at trustee sales may pursue the homeowner for “bad faith waste” to the property. For example, if you pour concrete down your toilet after the foreclosure sale, the lender can come after you for the repair costs. It’s also subject to criminal prosecution for vandalism. The other, more interesting exception is when the foreclosing loan was either Federal Housing Administration (FHA) or Veteran’s Administration (VA) mortgages may contain a guarantee agreement under their mortgage default insurance plans (MIP). If your paperwork contains an MIP guarantee, the FHA and the VA have the right to come after you for a deficiency. Why? Because these loans are controlled by federal, not state law, and the feds have a deficiency provision. This provision is rarely applied, but it does exist. And with (1) FHA becoming the new subprime loan of choice and (2) an upcoming war with Iran to pay for (3) Congress may well decide that one way of doing so is to pursue deficiencies against foreclosed FHA loans, so stay tuned. Any debt which is not defined as non-recourse is recourse debt, which means the lender, can come after you. Basically, unless the loan is secured by a 1-4 unit residential property that you live in, the lender has recourse. This means all the investment condos you purchased in Bakersfield, Temecula and Silicon Valley before the market imploded. What about refinancing? Basically, if you took cash in the refinancing, you created recourse debt. If the refinancing was “rate and term” only, you are probably OK. If you modified a purchase money loan in a loan modification program, you are probably OK. Some loan modifications contained provisions waiving the non-recourse rules; this is probably not enforceable, but the banksters are gambling they won’t be called on this. The Really Murky Part: Short Sales and Foreclosures Foreclosures are controlled by what is called the one-action rule, California Code of Civil Procedure Section 726. This rule basically says that if you are behind in your payments, the lending bank can either sue you for damages or take the property back, sell it, and recoup as much money from the sale as possible; they cannot do both. The vast majority of the time, the bank simply forecloses on the property and moves on. If the loan was non-recourse, the foreclosing bank is done; they cannot do anything more to you. What if you have a stand-alone second, or a stand-alone HELOC, or if you’re HELOC money were used to buy really cool toys? The second’s right to foreclose on the property was eliminated when the first foreclosed; there cannot be multiple foreclosures on the same property. When the foreclosure took place, the second became unsecured debt, just like a credit card or medical bill. Their only remedy to get their money is to sue you for damages. The bad news, they have four years from the date of the foreclosure to do this. Expect to see lots of this in a few years as the foreclosed seconds are bundled up and sold to debt buyers after two or three years as homebuyers get back on their feet and have money again. As to short sales, if a second trust deed lender agrees to any payout in a short sale agreement for a residential property after July 15, 2011, there is no deficiency. The rules don’t apply to investment property. The rules don’t apply if the borrower is not a natural person (corporations, limited liability companies, partnerships, etc. are not covered). There is no protection in the event of “short sale fraud” or strategic defaults. There is also no protection if you go the concrete down the toilet route, either. Finally, the exclusion applies only to properties sold after July 15, 2011, so if you were involved in a short sale before that date, the second lender may still have the right to come after you. Conclusion If you are facing foreclosure, or wanting to do a short sale, get competent help. Neither of these are a job for amateurs. The impact of your decision will go on for years after the fact; so make the smart choice. Next Week: Nevada rules and exceptions.

Robo-Signing: Not Just for Mortgages Anymore!

craig — Wed, 04 Apr 2012 18:20:30 +0000

Unless you have been living under a rock for a while, you have no doubt heard about “robo-signing” as it pertains to mortgages. Robo-signing is when the employee of a bank, or bank related company, prepares and signs documents to be used in court to foreclose on mortgages. These documents are prepared by the thousands, and the testimony of the document signers indicate they have little idea of what they are signing or even if the statements they are signing are accurate. Because of this scandal, in several states, the foreclosure process has slowed to a crawl as lawyers and judges begin to question the process. But this is an isolated case, and the banks only did that with mortgages, right? The process they use for other loans, like auto loans, credit cards, and that kind of thing is solid, and there’s nothing to worry about there, correct? Guess again. Have you heard from Chase lately on the credit card you haven’t been paying on? Bet you haven’t. Here’s why. Linda Almonte was employed by Chase’s “Credit Card Litigation Group” in San Antonio, Texas. She had been there about six months, and frankly had butted heads with the powers that be at Chase over the accuracy of the bank’s records. In November, 2009, Chase fired her. She sued for wrongful termination. Just another disgruntled employee with an axe to grind; you are thinking. Almonte also contacted the Office of Comptroller of Currency (OCC). This is the federal office which oversees the large national banks (Most of the brand name; too-big-to-fail-and-too-big-to-care-about-you banks are federally chartered, making them the OCC’s problem). Usually just a rubber stamp for whatever the banks want to do, the OCC for whatever reason, took Almonte seriously. Almonte told them that Chase’s records were badly messed up. For example, Chase used several computer programs for their accounting. The customer account information varied from computer program to computer program, and no effort was made to reconcile the accounts. There were incomplete records on many accounts, which were sent out for collection anyway. And there was the robosigning of the documents necessary to file the collection actions. Between the OCC and Almonte’s civil suit, lots of Chase employees and lots of Chase internal documents were provided. Most of the testimony and documents demonstrated something rather unsettling: Almonte was right. So right, in fact, that Chase stopped sending their credit cards out for collection. They instituted a sweeping review and are supposedly cleaning up their act. Stay tuned. But this is only one of the too-big-to-fails; surely none of the others have stooped to this level? Well, not exactly. In 2006, Bank of America acquired a credit card issuer called MBNA. MBNA was not known for the accuracy of its records, or even if the debts could be collected. The MBNA debts were bundled up and sold by Bank of America in 2009 and 2010 to an outside collection agency. The debts were sold “as-is” which basically means we wash our hands of our own records. What? The document which sold the debt actually tells the debt collection agency that the bank may have no records on the accounts, or if pressed, would be unable to produce records on the accounts. It also warned the debt collectors that, among other things, the debt being sold had either been paid off in full before it was sold or was discharged in bankruptcy; the bank had no way to tell. US Bank, in a similar sale, warned debt buyers that the information may be inaccurate. Inaccurate in the way that some payments may not have been credited, or that the balances of the accounts have a 10% margin of error. If you and I keep our books with a 10% margin of error, we have our accounts frozen. If he big banks do it, they just sell the debt off. So what to do? Challenge them. Don’t believe a word the debt collection agency tells you. Demand verification of the debt. Demand proof of their authority to collect the debt. Make them do their jobs! Most of the time they cannot, and the problem will go away, at least for a while. There’s more, much more about this over at American Banker. It’s worth your time to read about it at: www.americanbanker.com What can you do to strike back? MOVE YOUR MONEY. The too-big-to-fails understand only one thing: CASH. It’s what keeps them in private jet fuel and cocaine. If you are banking with them, you are part of the problem. For more information: moveyourmoneyproject.org Don’t feed the vampire squids!!

How Much does a Low Credit Score Cost You?

craig — Wed, 28 Mar 2012 21:17:57 +0000

How Much do High Interest Rates Cost You? Everyone who has ever been exposed to advertising has seen a car commercial, furniture commercial or some other pitch to buy something on credit. Normally there’s a freeze image of a payment, and beneath that payment is several lines of indecipherable type you are supposed to read. The pitch person also mentions something about “on approved credit” for you to get the advertised rate. On approved credit means that you need to meet certain criteria for the advertised rate to apply to you. Normally, to get the best rates, you need to have a credit score above 720. Credit scores are determined in bands, or tiers. A common tier layout looks like this: ◦ 330-619 Poor Credit ◦ 620-659 Fair Credit ◦ 660-720 Average Credit ◦ 721-750 Good Credit ◦ Above 750 Excellent Credit In working to improve your credit score, understand that moving within a tier, for example from 660 to 680, is not going to have much impact on the interest rate you receive. Moving from tier to tier, for example from 680 to 721, will impact the interest rate you pay. But how important is a good credit score over the life of a loan? The answer is it is worth thousands of dollars. Consider a $729,500 value (the current maximum FHA amount in Southern California) for a 30 year fixed rate mortgage. This mortgage is not available to people with credit scores below 620 due to underwriting regulations, but take a look at the additional interest charged between “barely qualifying” with a 620 score and the “excellent” credit of 760:

Score APR Payment Payment Difference

760-850 3.998 $3479 -0- 700-759 4.211 $3573 $33,840 680-699 4.389 $3650 $61,650 660-679 4.603 $3742 $94,680 640-659 5.035 $3933 $163,440 620-639 5.583 $4182 $253,080 Over the life of the loan, the difference is over a quarter-million dollars. Think working to improve your credit score is worth the time and money investment? To a lesser extent, the same principals work for car payments as well. It took a little digging, but we discovered the value of a car loan nationally is $26,700, and that money is now financed over 60 months. Based on these figures, the financing difference is shown in the following chart:

Score APR Payment Payment Difference

760-850 4.229 $493 -0- 700-759 5.805 $512 $1140 680-699 7.954 $539 $2760 660-679 10.989 $578 $5100 640-659 16.043 $647 $9240 620-639 17.061 $670 $10,620 Even over the term of this loan, a low score will cost the consumer an additional $10,000 plus. There is no magic and no hidden secrets to improving your credit score. It just takes time and discipline on your part, and some persistence on the part of the person attempting the credit improvement. If you are looking to re-enter the credit market, and your score is not what it should be, contact us today for an evaluation. We will tell you if we can help you or not, and if we can, approximately how long it will take. Let’s see what can be done to improve your scores today!

Condos, HOA dues, foreclosure and eviction

craig — Thu, 22 Mar 2012 17:52:04 +0000

A friend was recently impacted by a Florida law that led me to think about condos, home owner association (HOA) dues, and what happens when HOA dues are not paid by a condo owner, and who is responsible for paying HOA dues in the event of a foreclosure. My friend was a tenant in a condo in Florida. Apparently the owner of the condo was collecting rent from my friend the tenant and not paying the HOA association the dues owed. He then received a letter from the HOA telling him to start paying them the rent directly to make up for the lost dues. He was then threatened with eviction by his landowner. So what to do? Resisting my suggestion that moving out, then a Molotov cocktail thrown into the kitchen would solve the problem for all involved, we did some digging. It turns out that Florida has a state law, FS 718.116, which allows the HOA to collect the rent from the tenant to offset past due HOA dues. The law also protects the tenant who is making their rent payments to the HOA from being evicted by their landlord for non-payment of rent. The law also says that if the HOA makes this demand to the tenant, and the tenant does not pay the HOA, the HOA, not the landlord, can evict for non-payment of rent. We are not lawyers and know Florida law only thanks to effective use of search engines, so this is not legal advice at all. This nugget is directed to the several California clients we have who do own condos in Florida. The message to them is clear- keep current on your HOA dues or risk having your rent confiscated by the HOA. What about California? We have heard anecdotally that HOA associations are using the Florida model on tenants to try to get past due HOA assessments. California does not have the same rule as Florida, although as soon as this is published some bright bulb in Sacramento will read this and Shazam! It will be the California rule soon enough. As of spring, 2012, California HOA associations cannot force a tenant to pay them rent directly. Their leverage is against the owner, not the tenant. To enforce their right to collect, the condo association has the right to foreclose. Foreclose? Yes, just like your typical, everyday too big to fail bank. The only difference is hopefully the HOA’s paperwork is more in order, and they actually have an interest in what they are foreclosing on, but I digress. The HOA foreclosure process is the same non-judicial foreclosure process used for mortgage foreclosure. The HOA, if it completes the process, retains the right to then evict the tenant and sell the property to satisfy the claim. The procedure is set forth in Civil Code Section 1367, et seq. After the foreclosure takes place, the former owner has 90 days to reimburse the HOA for all past due fees, assessments, costs, etc. or the HOA can sell the property. If the property is rented, the existing tenant’s lease can be honored and the rent paid to the HOA directly. Another problem faced by a client is this. She was facing foreclosure and moved out of her condo. After she moved out, she filed bankruptcy and moved on with her life. The too big to fail bank doing the foreclosure took its own sweet time completing the process, and the paperwork was completed, and the new owner moved in, about a year after the client moved out. The HOA then sent a collection letter for past due HOA fees for the year long gap. The client protested, correctly we thought, that the matter had been discharged in bankruptcy, so go away. We did some digging around, and found out this. There’s a wrinkle in bankruptcy law. Apparently the unpaid HOA dues which accrued prior to the bankruptcy are discharged; no issue there. But the clock starts again on the HOA dues the day after the bankruptcy filing and continues to run until title is changed. Because this debt arises after the bankruptcy discharge, it stays with the debtor and can be collected by the HOA, and is not discharged. Lesson – if you are in foreclosure on a property with an HOA assessment, if you are thinking of moving out, make sure you file a “deed in lieu” on the property to get your name off of it. This way, the HOA fees are a problem for the too big to fail crew, not you.

Ignore debt collection lawsuits at your own risk!

craig — Wed, 21 Mar 2012 17:55:05 +0000

A common problem today is a collection lawsuit. Debt collection now is a massive industry. In 2010, there was $150 billion in debt that was placed out for collection. There are 4100 debt collection companies in the United States, and they employ 450,000 people. It’s considered a growth industry, and the Bureau of Labor Statistics says that debt collection employment will grow 23% over the next four years. So, other than calling you every 20 minutes, what do all those people do every day? A fair amount of time is also spent suing people. When the debt collection industry sues you, they expect you to do nothing; that happens probably 3 times in 4. Here’s what happens when you become a member of the “just ignore it” club. When you are sued, you have a set time frame in which to file a written response with the debt collector and the court, called the “answer”. Depending on local rules, you have between 20 and 30 days to do this. If you don’t file the answer, the debt collector will take your “default”. This is a document filed with the court which blocks your answer from being filed. Essentially it says that you have waited too long and nobody expects you to answer and appear in the lawsuit. After the default is taken, the debt collector will apply for a “default judgment”. This normally means that a sworn statement and a group of documents are supplied to the court in an attempt to prove the case to the satisfaction of the judge. The case is essentially tried and found against you on the strength of this paperwork. The paperwork, unless you object to it, will be accepted and admitted at face value; whatever the court is told is what the court will believe. After the court has reviewed the default judgment materials, the court will issue a money judgment against you. Once this is issued, you have a certain amount of time, normally 30 days to six months, to object to the judgment. If you don’t object, the judgment becomes “final” and the debt collector can begin judicial collection against you. The debt collector normally starts by filing a “notice of judgment” or “abstract of judgment” with the county recorder or clerk. This puts everyone on legal notice that you owe the money. This also appears on your credit report and trashes the report. If you own a house and later sell it, the proceeds of the sale will be used to satisfy the abstract of judgment. The debt collector can also file a “writ of attachment” or “writ of garnishment” at that point. This is a court order authorizing the garnishment, or seizing of your paycheck. The amount that can be seized varies from state to state, but it is normally between 25% and 33%. This payment comes off the top, before you receive the check, and is submitted by the employer to the debt collector or state official responsible for collecting. Having this suddenly appear can put a real dent in the family finances. After these two things are done, the debt collector will seek to have a “judgment debtor’s exam” scheduled. This is an interview, under oath, normally conducted at the courthouse. Unlike what you see on TV, in the judgment debtor’s exam you must answer all the questions presented; there’s no privileges and protections, you have missed that opportunity already. You can also be required to produce lots of books and records like bank statements, tax returns, title documents to cars, etc. If you don’t produce this information, you can simply be ordered to get it and return at another date. If the judgment debtor’s exam seems like a huge hassle, it is. The bigger hassle is when you blow off appearing. If you don’t show up at the appointed time and location, the court will issue a “bench warrant” against you. A bench warrant means that you are in contempt of court, and a police officer who runs across you has the authority to arrest and jail you for contempt of court. Depending on where you live, police handle this in one of two ways. In the first situation, they are not actively looking for you, but run your information if you are pulled over for example, a traffic stop. The police officer will run your name, the bench warrant will come back, and you can be arrested on the spot for the failure to appear. In the second situation, the police department has figured out that arresting you is a source of revenue, and they come actively looking for you to arrest you. Once arrested, you get to appear in front of the court, pay some substantial fines and costs (this is the revenue source) and then have to make arrangement to pay the judgment. It’s hard to do that from a jail cell. Think this doesn’t happen? Think again. The debt collectors have figured out that the threat of jail is a huge incentive to get paid. And like the IRS, they don’t need to audit everybody to get high compliance; they just need to jail a few people to keep everyone else in line. Conclusion: don’t ignore summons and complaints. File a response. If you don’t do so bad things can and will eventually happen.

Free Reports for You

craig — Wed, 21 Mar 2012 17:09:42 +0000

Here are 3 Free Reports for you. A free report on how to improve or repair your credit, on your own, may be downloaded here: RESULTS ADVISORS CREDIT REPAIR EBOOK A free report on what to expect if you are planning on buying a home in today’s market may be downloaded here: BUYING IN TODAY’S MARKET – WHAT YOU NEED TO KNOW A free report on the foreclosure process and what happens afterwards may be downloaded here: THE FORECLOSURE PROCESS AND WHAT HAPPENS AFTER FORECLOSURE

Our Resident Bulldog gets Kudos

craig — Thu, 15 Mar 2012 18:29:31 +0000

Dana Cochran is our primary credit card negotiator. She’s the best around in getting results that our clients love. Here’s a client testimonial about Dana we recently received:

I had a very unusual debt situation and my former husband's bankruptcy
attorney recommended Dana Cochran to me.  From our
first conversation and subsequent stream of emails which lasted at
least a year, Dana was professional, knowledgeable and supportive all
the way throughout the debt resolution process.  She saved me a great
deal of money, time and heartache.  I just couldn't fight the two
credit card companies alone.  They would not listen to reason.  Dana
guided me as to what letters, forms and conversations I should have
and should not have.  She warned me that one credit card company was
going to be very hard to work with.  They were, but we persisted and
finally settled for what Dana and I thought was reasonable.  Dana
helped me to see a light at the end of a the tunnel and move on with
my life.

Holly S.


Call us today to see what kind of results Dana can get for YOU!

When should a homeowner consider a short sale?

craig — Wed, 14 Mar 2012 17:15:18 +0000

There’s a lot of buzz regarding the upcoming changes to HARP which go into effect on March 17. The biggest change is that the loan to value ratio (LTV) of homes with a Freddie Mac or Fannie Mae mortgage is lifted. Previously, the LTV on these loans was 125%. With this gone, refinancing may actually become a viable option. But there are still circumstances in which a homeowner should consider a short sale. In this article, we will take a look those circumstances in more detail. The decision should be driven by four factors: income, the loan involved, the home location, and your psychology. The first factor is household income. To do a refinance or a loan modification, there must be household income. What is considered income varies from lender to lender, and from desk to desk within the lender, but there must be some cash flow. Ideally, the cash flow is such that a house payment is less than 33% of the gross income, called the debt to income ratio (DTI). To determine this, simply divide your house payment by your gross income. For example, if you’re household income is $3000 and your house payment is $1000, your DTI is 33%. If your DTI is really high, like 50% or above, you may not qualify for either a refinance or a loan modification. At that point, you should begin to think about a short sale instead as the math becomes difficult, and refinancing becomes less likely. The second factor is LTV. This is the value of the house divided by the principal amount on the first position trust deed or mortgage. For example, if you owe $300,000 on a $150,000 house, your LTV is 200%. Your first step, assuming there is income, is to determine if a refinance is possible under HAMP or with your existing lender. Experience with short sales and loan modifications in the past has shown that a LTV above 150% is problematic in that even a refinanced or modified house payment puts the monthly payment above either rental value or a replacement property. This is especially true of high foreclosure areas. If your LTV is exceptionally high, and you are just making ends meet as it is, you may want to consider selling. The third factor is location. There were definite bubble areas: California, Nevada, Arizona and Florida (Michigan and Ohio have a separate set of problems). These areas saw prices rise far out of proportion to the underlying economic conditions. In addition, there were a massive number of new subdivisions build progressively farther away from city centers. It is entirely possible that due to energy and demographic changes in the years ahead (gasoline will not be below $3.50 per gallon nationwide anytime soon and there is a reduced number of potential home buyers due to economic conditions, student loans, and the drop in numbers from baby boom times) that properties in outer boom areas. We are in Southern California. If you purchased in 2006 or 2007 in the high desert, Apple Valley, Temecula and environs, I submit to you property values may never recover, or the process will take decades to complete. Your acid test is simple. Print out a map of Southern California. Find LAX, Ontario Airport and John Wayne Airport. Draw a triangle between these. If you drive more than 30-45 minutes to hit one of the points of the triangle, you are in grave danger of stagnated prices for decades. For the homeowner in these areas, this could mean that a refinanced or modified loan will put you in a position that the existing LTV is so far above actual market price, that it makes no economic sense to refinance or attempt to modify a loan. In that situation, your best bet is the economic decision of selling now to minimize losses. Finally, there is the psychological stress involved. Refinancing is very time consuming, not easy, and will be plagued with lots of false starts and dashed expectations. Attempting a loan modification is simply cruel; at our shop we call it the “Gauntlet of Hell”. Everybody laughs when they are told this. Nobody laughs at the end. Unless you are mentally prepared, and tough enough to deal with lender and servicer abuse for weeks and months at a time, your best bet is to cut your losses and move on. For a free consultation regarding this and other loan matters, email or call us today.