First day set up to help distressed homeowners
Residents in danger of foreclosure found a variety of resources
gathered at the Veterans Memorial Building Feb. 25 as part of the
2010 City/County Housing Expo. The two-day event focused on
foreclosure intervention the first day and on programs for
potential homebuyers on the second day.
”
We are excited to have these resources here,
”
said CJ Valenzuela, the housing program coordinator for San
Benito County.
”
The targeted audience will get a quality level of education.
”
First day set up to help distressed homeowners
Residents in danger of foreclosure found a variety of resources gathered at the Veterans Memorial Building Feb. 25 as part of the 2010 City/County Housing Expo. The two-day event focused on foreclosure intervention the first day and on programs for potential homebuyers on the second day.
“We are excited to have these resources here,” said CJ Valenzuela, the housing program coordinator for San Benito County. “The targeted audience will get a quality level of education.”
Valenzuela said his office and the city redevelopment agency have long been fielding calls from residents concerned about losing their homes.
“We get phone calls every week,” he said.
One the first day of the event, Valenzuela and his staff gathered Realtors, lenders, housing and urban Development certified foreclosure counselors, housing advocates and lawyers all to help homeowners who are interested in trying to keep out of foreclosure.
“We are hoping to connect them to the right resources and help them leave with a plan,” Valenzuela said, “Start the process and the paperwork.”
Those interested in getting some help, checked in at a front registration table and then were escorted to rows of chairs set up in front of the stage where the guest speakers were talking. Some chairs had labels on them for different lenders or agencies, and as lenders or others became free to talk with the homeowners or residents, they would come up and get them from the audience. A room to the side of the main ballroom was set up as a loan pre-package room, where homeowners could talk privately and one-on-one with lenders or others.
Some of the guest speakers who talked throughout the day tried to clear up confusion about the foreclosure process and the financial responsibility of the homeowners, and they talked candidly about the issues surrounding foreclosures.
Eric Gravink, an attorney at law at Rossi, Hamerslough, Reischl and Chuck, said that most residential foreclosure are nonjudicial, or trustee sales. So for instance, if a homeowner owes $600,000 on the first deed of a house that sells for $300,000, the homeowner does not owe the additional $300,000 to the homeowner.
If a homeowner has a first and second deed with the same lender, they may not owe on the second loan, either. The state laws around anti-deficiency are meant to protect homeowners from lenders who might give them a smaller first deed and then a larger second loan, knowing that if the person defaults they will recoup more of their costs.
“It would kick the door open for lenders playing games,” he said. “California anti-deficiency public policy does not want to allow that door to get the slightest bit wedged open.”
However, if a homeowner has a second deed with a different lender, that lender has four years to take them to court from the time of breach – usually when the home goes into foreclosure or the date from the first payment.
“If they have a second deed with a different lender, they probably are liable for up to four years,” Gravink said. “California is the most borrower-friendly and protective of all the states.”
He added that even if a second deed is used to do improvements on the home, the homeowner is still liable for paying it back.
“Even if you didn’t spend it on cars, boats and fancy vacations, it is still not purchase money,” he said.
Gravink also explained a homeowner’s financial liability in a short sale. A short sale is when the homeowner themselves sells the home for less than they still owe on their mortgage.
“Depending on the hardship, many lenders have been relatively cooperative,” he said.
He suggested homeowners find a Realtor with experience with short sales and said they need to make sure they get a letter from the lender that they are accepting the loss.
“You need to see two things,” he said. “That they agree to release the security and that they agree to forgive the balance of the debt.”
If there is a second deed on the home, the homeowners will need to get a security release from that lender as well but they may still be liable for the money.
When it comes to preventing foreclosures, Gravink said there are three ways to do it.
The first is to persuade the lender not to go forward with the foreclosure.
“One is to file a lawsuit in superior court with a reason such as predatory lending,” he said. “But it will cost $10,000 to $15,000 for a lawyer just to stop the sale.”
The final way is filing bankruptcy, which he stressed can have it’s own complications.
“Does it really make sense to keep the property?” Gravink asked. “Even if the economy improves, how long will it take to get out of the loan? Unless it’s some family heirloom home, you can go rent a better place. You have to take a business and financial look instead of an emotional response.”
Maeve Elise Brown, the executive director of Housing and Economic Rights Advocates, a nonprofit advocacy group, talked next about the foreclosure process and a tenant’s rights during the process.
She said homeowners should be contacted by a servicer, someone from their lending company, before they receive a three-month default notice. They make contact 30 days before the default and they are supposed to offer “an opportunity for a real discussion about options to avoid foreclosure,” Brown said.
But she said many homeowners are so overwhelmed with collection calls that it can be hard to distinguish those calls from any others. She said most lenders will not start the foreclosure process until someone has missed two to three payments.
“It’s costly and it takes time,” she said.
There are loan modifications available, but Brown stressed that a loan modification application does not mean the lender will stop the foreclosure process. The next step is a notice of sale, which is sent to the homeowner by registered or certified mail. If a homeowner is in a loan modification program, the sale of the home may be postponed month to month. The lender does that so if the homeowner defaults they don’t have to restart the process since they already have a sale date set up.
After the sale of the house, the homeowners get three days to vacate the home
“Most people are not prepared to leave in that time,” Brown said.
They can buy some time by filing a summon or complaint through the self-help services at most courthouses that will given them 30 to 35 days to leave the homes. Tenants who are renting a home that has been foreclosed on get 90 days to leave the premises.
Brown also mentioned what has been referred to as “cash for keys.”
She said some Realtors will have someone come to a home that has been foreclosed and offer the homeowners or tenants cash for vacating the home within 10 days and turning over their keys.
“There is no law that covers this,” Brown said. “If you can arrive at an agreement to move out without eviction, it can help with the moving cost. It saves the newer sometimes. But whatever you negotiate, get it in writing.”
Other presentations included a lecture on tax consequences by Kris Nolan, a certified public accountant at Bianchi, Kasavan and Pope, and bankruptcy information presented by Merrill Zimmershad, a bankruptcy attorney.
“It was exciting,” said Valenzuela, of planning the event. “This is the first time we’ve ever done anything like this and we were amazed at the response from different agencies that were willing to be here.”
Potential homebuyers listen in
Staff Report
On the housing expo’s second day, city and county housing officials laid out two programs available to potential homeowners for low-interest downpayments, with the major difference between the programs being that one is just for low-income households.
County Housing Coordinator CJ Valenzuela and Hollister RDA Projects Manager Francisco Casas broke down the programs.
The programs offered by the City of Hollister and San Benito County, in collaboration with the state, offer loans for help on downpayments for homeowners with 2 percent simple interest and deferred payments, according to the officials. There is a total of $2.4 million available for both programs.
They also discussed a rehabilitation program run through the RDA that involves the city acquiring properties, rehabilitating them and reselling them to moderate- and low-income families. Two properties are currently available in the program, they noted.
“They are almost like brand-new units,” Casas said of the pilot program.
Money from the homes’ sales will go back into the program.
“The idea is to have a revolving fund,” Casas said.
Residents interested in applying for the programs can visit the RDA at Monterey and Sixth streets in the Porter House building or at the county office at 3220 Southside Road.
