FORECLOSURE SCAMS AND THE FORECLOSURE CONSULTANT LAW

Unfortunately, foreclosure issues are at the forefront of real estate today. Recently the California Association of Realtors Legal Department put together an indepth question and answer monograph on this very topic. The following is reprinted with the permission of CAR for the educational purposes of the readership.

Please, please, be very careful when you are moving into short sales, foreclosure or loss mitigation/refinancing. The number of organizations that are popping up to "help" you is amazing and what is more amazing is that the majority are scammers trying to make a buck on your misfortune. Please don't compound one problem with another. If you need a referral, please do not hesitate to contact me. And, don't sign anything nor pay anything to anyone until you have verified and double verfied you are dealing with a legitimate organization. I hope this helps!

REALTORS® commonly consider the filing of a notice of default as the beginning of the foreclosure process. However, it may also be the start of something sinister. The public recording of a notice of default can act as a beacon to unscrupulous people who, under the guise of offering assistance, seek to take advantage of homeowners in distress. To protect homeowners in foreclosure, California’s foreclosure consultant law strictly regulates the activities of people who perform foreclosure-related services, including real estate agents to a limited extent.

This legal article discusses the issues surrounding foreclosure-related scams, with special attention given to the ways that REALTORS® and their clients can distinguish between legitimate and illegal enterprises. This article also provides REALTORS® with legal and practical guidelines for complying with the foreclosure consultant law.

FORECLOSURE-RELATED SCAMS
Q 1. What is a foreclosure-related scam?
A A foreclosure-related scam is a loose term for fraud, deceit, or trickery perpetrated against homeowners facing foreclosure or others involved in the foreclosure process. With the rise in foreclosures in the mid-2000s, foreclosure-related scams have exploded onto the real estate scene. Some con artists offer to help homeowners in foreclosure, but in truth, merely intend to dupe the distressed homeowners out of their money or property (see, more specifically, Question 5). Other scams target real estate agents, investors, buyers, lenders, tenants, or other people involved in the foreclosure process.
Q 2. How could someone fall victim to a foreclosure-related scam?
A A scam artist generally knows which victims to target and which buttons to push. Homeowners facing foreclosure are highly vulnerable to scams. They are often unable to comprehend or get help for the complicated legal, financial, and tax issues surrounding foreclosures, short sales, loan modifications, and bankruptcies. Moreover, they often experience difficulty handling the stress and stigma of possibly losing their homes through foreclosure. Because homeowners are likely to consider purchasing a home as one of the most important things that they have ever done, the anxiety from possibly losing that home may cause them to make bad decisions. Some homeowners are specifically targeted by scam artists because they are perceived as easy prey, such as people who are elderly, have language barriers, have limited resources, or lack knowledge. Given all these circumstances, homeowners in foreclosure can easily succumb to a scam artist's lure of a quick fix. As a victim of the Community Home Savers scam discussed in Question 6 said, "When you’re down and out you'll believe anything."
Aside from homeowners, real estate agents and others involved in the foreclosure process are also vulnerable to scams, especially given the financial strain brought about by a down real estate market. Some agents merely get caught in the crossfire between the scam artist and homeowner in foreclosure. Others are reeled in by design because their participation may facilitate or lend legitimacy to the fraudulent schemes. Agents are also targeted for their leads as they are often the first point of contact for a homeowner in distress, such as outfits that claim they will do short sale consulting. Agents may also get tricked into paying for bogus foreclosure related marketing tools, farming lists, training seminars, coaching services, and other products or services.
Q 3. Is there a simple way to detect if someone is a scam artist?
A No. Outwardly, scam artists do not act or appear dastardly. On the contrary, the typical scam artists look nice and clean-cut, and they seem kind, helpful, patient, and trustworthy. Their purported companies or organizations often have names that sound altruistic, such as Community Home Savers or Housing Assistance Services (see Question 6).
Scam artists commonly engage in "affinity marketing" tactics which means they attempt to lure people by being, or pretending to be, members of the same racial, religious, social, or other group as their victims. For example, a scam artist may claim to be in the military and use military terms and mannerisms in an attempt to befriend someone in the military. Or another scammer may join a church to gain the trust of other members of that church before attempting to defraud them. Scam artists may also use many other tactics, such as claiming to be conducting official business for a government entity, claiming to be a non-profit organization, or offering a money-back guarantee, just to name a few.
Q 4. When dealing with someone, what are the red flags of a foreclosure-related scam to watch out for?
A Homeowners in foreclosure and their real estate agents should be wary when dealing with someone who does any of the following:
• Asks for money upfront before providing any service;• Asks for payment only in the form of cash, cashier’s check, or wire transfer;• Asks for a transfer of title or an interest in the property;• Gives an unqualified promise to stop foreclosure or other assurances;• Offers to buy a home for a price above its market value;• Asks for something to be done immediately without delay;• Asks for the homeowner to give a power of attorney;• Asks for signatures on a grant deed or deed of trust;• Asks for signatures without giving homeowner a lot of time to review the documents;• Asks for signatures on a document that has lines left blank;• Fails to provide copies of documents signed;• Refuses or fails to provide an oral promise in writing;• Instructs a homeowner to make mortgage payments to someone other than the lender; or• Instructs a homeowner not to discuss the situation with the lender, housing counselor, accountant, attorney, family, friends, or others.
Additionally, for acts prohibited under the foreclosure consultant law, see Question 40. For things a person can do to take a proactive stance against scams, see Question 9.
Q 5. How does a foreclosure scam work?
A There are many different types of foreclosure-related scams, and new types of scams sprout up every day. These foreclosure-related scams can be loosely categorized as follows:
• Phantom Help: In this type of scam, the scam artist offers to negotiate with the lender or perform other foreclosure-related services for the homeowner in exchange for a fee. However, in reality, the scammer performs little or no service at all and eventually absconds with the money. Whatever services the scam artist does provide, the homeowner could have probably done on his or her own. The homeowner ends up not only losing the money, but often loses valuable time to make other arrangements to save his or her home from foreclosure.
• Bail-Out: This scam involves a con artist who offers some sort of plan or scheme to get the homeowner out of his or her predicament. One common example is the rent-to-buy scheme where the scam artist promises to take title to the property, cure the default, and rent the property back to the homeowners until they get back on their feet again and buy back the property. What in fact happens is that the scam artist reneges on these promises by, for example, not curing the default, not honoring the rent-back agreement, or selling the property to an unsuspecting buyer.
• Bait-and-Switch: This is another common type of scam where, for example, the scam artist tells the homeowner to sign one thing, but the homeowner ends up signing something else altogether, such as the grant deed to the property.
In addition to the above categories, there are many other types of foreclosure-related scams, including forgeries, theft, identity theft, property flipping scams, loan fraud, predatory lending practices, pyramid schemes, ponzi schemes, bankruptcy fraud, landlord-tenant fraud, short sale consulting fraud, and bank-owned property or REO fraud. A scam can be a highly elaborate scheme or as crude and simple as a "We Buy Homes" or "Stop Foreclosure Now" sign on a telephone pole at the side of a road. For real-life examples of foreclosure scams, see Questions 6 and 7.
Q 6. What are some real-life examples of foreclosure-related scams that target homeowners?
A Here are some real-life examples of foreclosure-related scams perpetrated in California:
• Housing Assistance Services in Garden Grove, California: Marc Sheckler’s company, Housing Assistance Services, Inc. (HAS), targeted homeowners in Orange County when they received notices of default. HAS mass marketed official-looking "Fresh Start Program" letters in the mail offering to provide counseling on the options for avoiding foreclosure and to negotiate loan modifications with the lenders. To sign up, a homeowner paid an upfront basic fee of $750 to $1,250 and agreed to pay additional fees for credit reports, "docusave" services, processing reinstatements, monitoring repayment plans, and financial education materials. HAS representatives instructed homeowners not to talk to their mortgage lenders. Whenever homeowners voiced concern about the impending foreclosure sale, HAS reassured the homeowners that things would be worked out. The California Attorney General’s Office received numerous complaints from consumers who paid the fees, but claimed that HAS never provided the services as promised. In 2004, California Attorney General Bill Lockyer filed a $2 million lawsuit against HAS and obtained a court order freezing HAS's assets.
• Rodriguez in Downey, California: From 2003 to 2005, Martha Rodriguez and others ran a foreclosure rescue scam in Southern California. They located their victims using computerized lists of properties going into foreclosure. The defrauders promised to help homeowners refinance their loans and save their credit, but what they did in reality was arrange for straw buyers to buy the homes. By the time the defrauders were finally caught by the authorities, they had victimized over 100 homeowners and amassed over $12 million. Rodriguez ran this scam while awaiting sentencing on another loan fraud scheme. In February 2007, she pleaded guilty to criminal charges for the foreclosure rescue scam and faces a possible sentence of 40 years in federal prison.
• Rice in Orange County, California: In 1990, Evelyn Onofrio’s home was in foreclosure when Marshall Rice paid her a house call. He offered to help her but did not give her a written foreclosure consultant contract. He arranged a secured loan for her, but at 35% interest payable to Rice's own wife. When Onofrio defaulted on the loan, Rice and his wife commenced foreclosure proceedings and acquired the property at the trustee’s sale. Onofrio sued Rice for, among other things, violating the foreclosure consultant law and breaching his fiduciary duties as a real estate broker. Rice violated the foreclosure consultant law by, among other things, acquiring an interest in the property and failing to provide a written foreclosure consultant contract. The court awarded Onofrio monetary damages, attorneys' fees, and costs, and cancelled not only the transfer of title to Rice, but the relevant deeds of trust as well. This case is Onofrio v. Rice (1997) 55 Cal .App. 4th 413.
• Alburez and Silva in Alameda, California: Sonia Alburez and Verena Silva went by several names, such as Community Home Savers and California Home Saver Program. They used lists of homes in default from the county recorder's office to send out mailers to homeowners in foreclosure. They allegedly told homeowners that, for an upfront fee plus additional monthly payments, they could save their homes from foreclosure. In reality, Alburez and Silva merely transferred a fractional interest of a home to a sham corporation. The sham corporation would then file bankruptcy, but as soon as the foreclosing lender challenged the bankruptcy, the sham would be uncovered and the foreclosure would resume. Alburez and Silva were arrested in Alameda County in March 2008.
• Hutchings in San Diego, California: William Hutchings and his cohorts ran a foreclosure rescue scam in San Diego for over two years, and duped hundreds of homeowners out of their homes and money. Targeting mostly non-English-speaking homeowners, Hutchings held seminars on how he could help homeowners stop foreclosures by transferring title to their homes to his company. He claimed he could file a governmental land grant on their behalf which would extinguish their mortgages in four years, at which time the homeowners could reacquire their homes from Hutchings free and clear. He bolstered his claims by using visual aids, such as antiquated maps and land surveys. In reality, the last legitimate use of a land grant was in 1848 when Mexico ceded property to the U.S. at the end of the Mexican-American War. Yet, someone who attended one of Hutchings’ seminars observed that, when the seminar concluded, the homeowners would flood to the back of the room to stand in line to sign up for the program by signing over their properties and paying up to $10,000 upfront. Hutchings and the others were arrested in May 2008 and face over 100 felony charges.
Q 7. What are some real-life examples of foreclosure-related scams that target people other than homeowners?
A Many people other than homeowners may be victimized by foreclosure-related scams, including real estate agents, investors, buyers, lenders, tenants, and others. Some real-life examples of this type of foreclosure-related scams in California are as follows:
• Standefor in Pasadena, California: Jeanetta Standefor of Accelerated Funding Group operated a fraudulent foreclosure reinstatement scheme for over two years. She convinced over 600 people to invest a total of $18 million by claiming the funds would be used to cure defaults for distressed properties and promising a return of 50 percent in one month. What Standefor was actually doing was operating a ponzi-like scheme using the money from new investors to pay previous investors. She also used $1.9 million of the funds for her own lavish wedding, cars, jewelry, and other personal expenses. In 2008, Standefor was charged with both civil and criminal fraud and securities violations, and faces a statutory maximum sentence of 180 years in federal prison.
• Davis of Tiburon, California: Mark Allen Davis placed over 100 newspaper ads around the country from 2004 to 2007 offering callers a list of government foreclosures in their areas for a one-time fee of $83 to $93. Customers were told to call a toll-free phone number, and then instructed to leave their names and bank account information for verification purposes. Davis never sent the lists. Instead, he withdrew $126 to $185 from the accounts of 800 people, totaling over $400,000. When caught, Davis was fined over $328,000 and sentenced to 81 months in federal prison for identity theft, mail fraud, and wire fraud.
Q 8. What are the legal remedies for a victim of foreclosure-related scams?
A In theory, there are various legal remedies for a victim of foreclosure-related scams, but in reality, the legal remedies may leave a lot to be desired. As in the real-life examples mentioned above, one legal remedy for a foreclosure-related scam is criminal prosecution. A fraud victim may pursue criminal prosecution by reporting the offense to local, state, and federal law enforcement authorities. However, law enforcement authorities have a broad discretion for which crimes to investigate and prosecute, and they often devote their limited resources towards pursuing other crimes, such as murder, robbery, and drug violations.
A foreclosure-related scam is also a civil offense. In addition to pursuing a criminal offense, a fraud victim may file a civil lawsuit to obtain a monetary judgment for damages suffered or other relief as appropriate. However, the typical fraud victim’s obstacles to filing a lawsuit for fraud include, without limitation, locating the defrauder’s whereabouts, locating the defrauder’s assets, proving the elements of fraud, and having the resources to hire and pay for an attorney if needed.
Depending on the circumstances, a foreclosure-related scam may also be the subject matter of a complaint to a governmental agency, such as the California Department of Real Estate (DRE) or Department of Corporations (DOC). The DRE or DOC may issue an order to stop unlicensed activity. However, the function of the DRE, DOC, or even criminal prosecutors is to stop violations of the law, not necessarily to get fraud victims their money back or other relief sought. Nevertheless, the actions of the governmental agencies may occasionally result in recovery for the individual fraud victim as well.
A list of government enforcement agencies and other organizations for reporting fraud activities is set forth in Question 48. Some of these agencies and organizations are also good resources for obtaining more information about foreclosure-related fraud.
Q 9. What should homeowners and others do to protect themselves against foreclosure-related scams?
A The basic rule is "if it sounds too good to be true, it probably is." Other measures to take to protect against scams include, but are not limited to, the following:
• Do not panic. Do not make any rash decisions. It’s precisely when our chips are down that we must keep a clear head.• Before entering into any agreement or other arrangement with anyone, understand every aspect of what it entails. Read documents carefully and thoroughly before signing. If you cannot understand a document, seek the advice of an attorney or other professional as appropriate. If you do not speak the same language as the person you’re negotiating with, don’t use that person’s interpreter or translator -- bring your own instead.• Do not sign your name to any false statements or documents with spaces left blank, especially if you’re told that signing will be harmless or inconsequential.• Get as much information as you possibly can before making a decision. Ask questions. Conduct as much research and investigation as you can upfront (see Question 10). Do your best to understand the legal, financial, and tax consequences of your situation. Look into different options. Ask for advice and help from trusted family, friends, and professionals if appropriate.• Always try to stay a step ahead of scam artists. As society comes to know to watch out for one type of scam, con artists attempt to catch their victims off guard by devising new schemes. For example, with greater public awareness that a "foreclosure consultant" representative must, among other things, be licensed and bonded (see Question 42), scam artists may start presenting themselves as something else, such as loan mediators, loan facilitators, legal officers, and so on.
Q 10. How does someone check on the legitimacy of a foreclosure consultant or other foreclosure-related business?
A There are many ways to check the legitimacy of a foreclosure consultant or other foreclosure-related business. Before doing business with anyone, ask for references and check out those references. Also check someone's background, credentials, and reputation. Check with licensing agencies, trade groups, friends, family, and other people you trust. However, even if someone has the proper credentials or comes highly recommended, the risk of a scam is less, but is not eliminated entirely. Some of the resources for checking licensing and registration include the following:
• To check whether a corporation or limited liability company (LLC) is registered with the California Secretary of State, go to its Web site at http://kepler.sos.ca.gov/list.html.• To check whether a fictitious business names is registered, check with the local county recorder’s office.• For real estate licensed activities, to check whether someone has a real estate license, go to the California Department of Real Estate (DRE) Web site at http://www2.dre.ca.gov/PublicASP/pplinfo.asp. To check whether someone is licensed with the DRE, the Office of Real Estate Appraisers, the Department of Corporations, or the Department of Financial Institutions, go to http://www.dre.ca.gov/gen_lic_info.html. Short sale consultants and representatives of foreclosure consultants should generally be real estate licensees (see Question 43).• For legal services, to check whether someone is licensed to practice law in California, go to the State Bar of California Web site at http://members.calbar.ca.gov/search/member.aspx.
Q 11. Where can homeowners find legitimate help for foreclosure-related matters?
A The conventional wisdom is for homeowners facing foreclosure to contact their lender immediately. Homeowners may also seek the advice of a reputable housing, financial or credit counselor, attorney, or other qualified professional. The U.S. Department of Housing and Urban Development (HUD) has a Guide to Avoiding Foreclosure on its Web site at www.hud.gov/foreclosure/index.cfm. For a list of HUD-approved housing counseling agencies in California, go tohttp://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?&webListAction=search&searchstate=CA. Also, the non-profit organization Homeownership Preservation Foundation has a 24/7 toll-free Homeowner’s HOPE Hotline at (999) 995-HOPE or visit its Web site at http://www.995hope.org.

FORECLOSURE CONSULTANT LAW
California has very stringent rules for foreclosure consultants who offer to perform certain foreclosure-related services, such as stopping or postponing a foreclosure sale or assisting a homeowner in foreclosure in obtaining a loan. The foreclosure consultant law is a very complicated body of law. However, knowing these rules helps REALTORS® and their clients distinguish between legitimate and illegal enterprises.
A. GENERAL OVERVIEW OF THE FORECLOSURE CONSULTANT LAW
Q 12. What, in a nutshell, is the foreclosure consultant law?
A The foreclosure consultant law generally regulates the activities of people who provide, or offer to provide, foreclosure-related consultation services, such as helping a homeowner stop or postpone a foreclosure sale. This law requires that foreclosure consultant contracts to be in writing in the manner specified (see Questions 33 to 35). It also provides other safeguards for homeowners in foreclosure (see Questions 31 and 32). Most notably, it prohibits a foreclosure consultant from collecting an upfront fee (see Question 40). The law requires representatives of a foreclosure consultant to be bonded real estate licensees (see Questions 41 and 42). Effective July 1, 2009, a foreclosure consultant must also be bonded and registered with the California Department of Justice (see Questions 44 and 45).
Real estate agents are generally exempt from the foreclosure consultant law except when engaging in certain activities, such as acquiring an interest in the property or making a direct loan. The applicability of this law to REALTORS® is discussed in Questions 19 to 25.
Q 13. Is this a new law?
A No. The foreclosure consultant law is not a new law. It was originally enacted in 1979. However, on September 25, 2008, the California legislature enacted major revisions to the law with the passage of Assembly Bill 180 (see Question 32).
Q 14. Where can I find the foreclosure consultant law?
A This law is called the "Mortgage Foreclosure Consultant Law" (but is referred to in this article as foreclosure consultant law) and can be found in section 2945 to 2945.45 of the California Civil Code, available at www.leginfo.ca.gov. References in this legal article are made to the foreclosure consultant law as revised in 2008 and effective July 1, 2009, unless otherwise indicated.
Q 15. What is the purpose of the foreclosure consultant law?
A The purpose of the foreclosure consultant law is to safeguard the public against unscrupulous foreclosure consultants. According to the California legislature, homeowners in foreclosure are susceptible to fraud, deception, harassment, and unfair dealings. Scam artists who offer to help in fact want to take advantage of the homeowners’ predicament. These so-called foreclosure consultants may charge exorbitant fees, and even secure payment by a deed of trust on the home in foreclosure, yet ultimately perform no worthwhile service at all. Homeowners relying on their foreclosure consultants' promises of help may take no other action to stop the foreclosure process. As a result, they may end up losing their homes and their equity, sometimes to the foreclosure consultants who buy the homes at a fraction of their true value. The California legislature intends for the foreclosure consultant law to be liberally construed to prevent these unscrupulous practices. (Cal. Civ. Code § 2945.)
Q 16. Is the foreclosure consultant law different from the home equity sales contracts law for buyers who are investors?
A Yes. The foreclosure consultant law and home equity sales contracts law are similar to each other, but different bodies of law. Both laws pertain to "residences in foreclosure" as defined (see Question 17). However, the foreclosure consultant law generally regulates people who offer to perform foreclosure-related consultation services for residences in foreclosure, whereas the home equity sales contracts law generally regulates investors who offer to buy residences in foreclosure.
More specifically, the home equity sales contracts law imposes certain requirements when all four of the following conditions are met:
• The existing owner occupies the property as a principal residence;• The property is one-to-four family dwelling units;• There is an outstanding notice of default recorded against the property; and• The buyer will not use the property as a personal residence.
(Cal. Civ. Code § 1695.1(b).)
When these four conditions are met and no exemption applies, the law requires a sales contract to provide the seller with a right to cancel within five business days (or by 8 a.m. of the day of the trustee’s sale if sooner) (Cal. Civ. Code § 1695.4). The contract must also be in 10-point bold font and in the same language principally used by the parties to negotiate the sale (Cal. Civ. Code § 1695.2). Furthermore, under the home equity sales contract law, the buyer’s representative must provide proof of a real estate license (Cal. Civ. Code § 1695.17).
To comport with these and other requirements, C.A.R. offers a standard form Notice of Default Purchase Agreement (Form NODPA) and two attachments, the Notice of Cancellation of Notice of Default Purchase Agreement (Form HENC) and the Declaration and Proof of Real Estate License (Form DPL). For more information about home equity sales contracts, REALTORS® may refer to C.A.R.'s legal article NOD and Investor-Buyer Transactions: Home Equity Sales Contracts.B. APPLICABILITY OF FORECLOSURE CONSULTANT LAW
Q 17. Under what circumstances does the foreclosure consultant law apply?
A The foreclosure consultant law generally applies when someone performs, or offers to perform, foreclosure-related services for compensation for a "residence in foreclosure" (see Question 18). A "residence in foreclosure" is defined as follows:
• The owner occupies the property as a principal residence;• The property is one to four family dwelling units; and• There is an outstanding notice of default recorded against the property.
(Cal. Civ. Code § 2945.1(f) (citing Cal. Civ. Code § 1695.1).)
Q 18. What types of activities fall within the scope of the foreclosure consultant law?
A A very broad range of activities fall within the scope of the foreclosure consultant law. In brief, a foreclosure consultant is someone who assists a homeowner with an impending foreclosure. More specifically, the law defines a "foreclosure consultant" as someone who, for compensation, performs or offers to perform any of the following services for an owner of a residence in foreclosure:
• Stopping or postponing the foreclosure sale (Cal. Civ. Code § 2945.1(a)(1));• Obtaining a forbearance from a lender (Cal. Civ. Code § 2945.1(a)(2));• Saving the owner's residence from foreclosure (Cal. Civ. Code § 2945.1(a)(8));• Helping the owner obtain a loan or advance of funds (Cal. Civ. Code § 2945.1(a)(6));• Avoiding or ameliorating the impairment of the owner's credit resulting from the notice of default or foreclosure sale (Cal. Civ. Code § 2945.1(a)(7));• Assisting the owner in exercising the right of reinstatement under section 2924c of the California Civil Code (Cal. Civ. Code § 2945.1(a)(3));• Obtaining an extension for the owner to reinstate his or her obligation (Cal. Civ. Code § 2945.1(a)(4));• Obtaining a waiver of an acceleration clause contained in a mortgage loan secured by a residence in foreclosure (Cal. Civ. Code § 2945.1(a)(5)); or• Assisting the owner in obtaining, from the lender or trustee under a power of sale, the remaining proceeds from the foreclosure sale of the owner’s residence (Cal. Civ. Code § 2945.1(a)(9)).
Under the foreclosure consultant law, an "offer to perform" these foreclosure-related services includes any solicitation or representation to perform these services (Cal. Civ. Code § 2945.1(a)).
Foreclosure consultant services also include, but are not limited to, the following:
• Providing debt, budget, or financial counseling of any type (Cal. Civ. Code § 2945.1(e)(1));• Giving any advice or explanation on curing a default, reinstating an obligation, fully satisfying an obligation, postponing a trustee’s sale, or avoiding a trustee sale (Cal. Civ. Code § 2945.1(e)(7));• Contacting creditors on the owner’s behalf (Cal. Civ. Code § 2945.1(e)(3));• Arranging or attempting to arrange for any delay or postponement of a foreclosure sale (Cal. Civ. Code § 2945.1(e)(5));• Arranging or attempting to arrange for an extension for owner to cure a default and reinstate an obligation under section 2924c of the California Civil Code (Cal. Civ. Code § 2945.1(e)(4));• Receiving money to pay a creditor of any obligation secured by a lien on the residence in foreclosure (Cal. Civ. Code § 2945.1(e)(2));• Advising on, or assisting in preparing, any document for filing with a bankruptcy court (Cal. Civ. Code § 2945.1(e)((6)); or• Arranging or attempting to arrange for the payment by the lender or trustee under power of sale of the remaining proceeds of a foreclosure sale of the owner’s residence, including instances where the owner transfers or assigns such right to the foreclosure consultant or the foreclosure consultant’s designee (Cal. Civ. Code § 2945.1(e)(8)).
Q 19. Is a real estate agent exempt from the foreclosure consultant law?
A In most cases, yes. As a general rule of thumb, a real estate agent who engages in typical real estate licensed activities is exempt from the foreclosure consultant law (but see Question 20). For example, the foreclosure consultant law is unlikely to apply in the typical situation where a listing agent takes a listing for a residence in foreclosure, markets the property for sale, and represents the seller in a subsequent sale. The foreclosure consultant law is also unlikely to apply in the typical situation where a buyer’s agent represents the buyer in purchasing a residence in foreclosure (but see, in contrast, the home equity sales contract law discussed in Question 16). The foreclosure consultant law is also unlikely to apply if a real estate licensee helps a homeowner in foreclosure to modify an existing loan or refinance with a third-party lender.
More specifically, a real estate licensee engaging in licensed activities is exempt from the foreclosure consultant law when making a direct loan as specified (see Question 22) or when all of the following conditions are met:
• The licensee engages in acts whose performance requires a real estate license;• The licensee is entitled to compensation for the acts performed for selling a residence in foreclosure, or arranging a loan secured by a lien a residence in foreclosure;• The licensee does not claim, charge, or receive any compensation until the acts have been performed, or cannot be performed because of an owner’s own failure to: (1) disclose any outstanding liens of record or the correct current vested title (under California Business & Professions Code section 10243); or (2) accept an offer to buy or make a loan on the residence in foreclosure from a ready, willing, and able buyer or lender based on the terms in a listing or a loan agreement;• The licensee does not acquire any interest in a residence in foreclosure directly from the owner other than as a trustee or beneficiary under a deed of trust given to secure the payment of a loan or that compensation; and• The licensee does not assist the owner in obtaining, from the lender or trustee under a power of a sale, the remaining proceeds from the foreclosure sale of the owner’s residence.
(Cal. Civ. Code § 2945.1(b)(3) and (c). )
Q 20. Under what circumstances could the foreclosure consultant law apply to a real estate agent?
A A real estate agent may implicate the foreclosure consultant law when engaging in any of the following four activities. Stated another way, even though the law is complex, a simple way for REALTORS® to ensure that they do not implicate the foreclosure consultant law is to avoid engaging in any of the following four activities:
• Direct Loan: Making a direct loan for a residence in foreclosure (Cal. Civ. Code § 2945.1(b)(3)) (see Questions 22 and 23);• Property Interest: Acquiring an interest in a residence in foreclosure (Cal. Civ. Code § 2945.1(b)(3)(D)) (see Question 24);• Advance Fee: Claiming or receiving any compensation before performing real estate services for a residence in foreclosure (Cal. Civ. Code § 2945.1(b)(3)(C)) (see Questions 25 to 27); or• Foreclosure Proceeds: Assisting an owner in obtaining the remaining proceeds if any from the foreclosure sale of an owner’s residence (Cal. Civ. Code § 2945.1(c)).
Q 21. In practical terms, what are some examples of situations where the foreclosure consultant law may apply to a real estate agent?
A Let's say, for example, a listing broker offers to lend his or her own money to a homeowner in an exchange for obtaining a listing on a residence in foreclosure. Perhaps the listing broker offers the money to help the homeowner pay to fix up the property for sale or to get the homeowner out of foreclosure. In this situation where the broker makes a direct loan, the foreclosure consultant law may be implicated. For more information about making a direct loan, see Question 22.
As another example, a broker seeks to obtain a listing of a residence in foreclosure. The broker promises the homeowner that, if the broker cannot get the property sold by the date of an upcoming foreclosure sale, the broker will personally buy the property from the seller to avoid foreclosure. This scenario involving the broker acquiring an interest in the residence in foreclosure may implicate the foreclosure consultant law. For more information about acquiring an interest in a residence in foreclosure, see Question 24.
As another example, a couple is not only in foreclosure, but also upside down on their loan. A real estate broker offers to help modify their existing loan with more favorable terms. The broker, however, wants to collect an upfront fee to make sure that he or she gets paid, regardless of whether the lender agrees to the loan modification. This scenario involving an advance fee may implicate the foreclosure consultant law. For more information about advance fees, see Questions 25 and 26. Q 22. Can a real estate broker make a direct loan without implicating the foreclosure consultant law?
A Yes, if certain requirements are met. A real estate broker can make a direct loan without implicating the foreclosure consultant law, but only if all of the following conditions are met:
• The real estate broker makes a loan of the real estate broker’s own funds;• The loan is secured by a deed of trust on the residence in foreclosure;• The 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;• The broker makes a good faith attempt to assign the loan and deed of trust 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;• Any foreclosure sale of the deed of trust must be conducted by a disinterested party. More specifically, the law states that "if a foreclosure sale is conducted with respect to the deed of trust, the person conducting the foreclosure sale [must have] 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;" and• The loan is not made for the purpose or effect of avoiding or evading the provisions of this law.
(Cal. Civ. Code § 2945.1(b)(3).)
The foreclosure consultant law does not specifically define what constitutes a "good faith attempt" to assign the loan and deed of trust to a lender.
Q 23. Can a real estate salesperson make a direct loan without implicating the foreclosure consultant law?
A Apparently not. According to the plain reading of the law, the exemption to the foreclosure consultant law for making a direct loan pertains to a real estate broker's own funds, not real estate salesperson (Cal. Civ. Code § 2945.1(b)(3)).
Q 24. Can a real estate agent acquire an interest in a residence in foreclosure without implicating the foreclosure consultant law?
A Probably not. A real estate agent engaging in licensed activities who acquires an interest in a residence in foreclosure implicates the foreclosure consultant law, unless such acquisition is as a trustee or beneficiary under a deed of trust given to secure the payment of a loan or the agent’s compensation (Cal. Civ. Code § 2945.1(b)(3)). To be prudent, any loan made by a real estate agent should comply with the direct loan requirements set forth in Question 22 above.
Q 25. Can a real estate agent collect an advance fee from a homeowner in foreclosure without implicating the foreclosure consultant law?
A No, in most cases. It's a double-edged sword. A real estate agent generally cannot collect an advance fee without implicating the foreclosure consultant law (Cal. Civ. Code § 2945.1(b)(3)(C)). Furthermore, if the foreclosure consultant law is implicated, it prohibits a foreclosure consultant from collecting any compensation until after the foreclosure consultant has fully performed the services as agreed (Cal. Civ. Code § 2945.4(a)).More specifically, the law does not exempt a real estate agent from the foreclosure consultant law if he or she claims or collects any compensation before the licensed activities have been performed or cannot be performed because the owner fails to: (1) accept an offer from a buyer or lender who is ready, willing and able to buy or lend on terms set forth in a listing or loan agreement; or (2) make loan disclosures under section 10243 of the California Business and Professions Code (Cal. Civ. Code § 2945.1(b)(3)(C)).Even if the foreclosure consultant law prohibits a real estate agent from collecting an advance fee, it is problematic for an agent to collect an advance fee anyway under general real estate licensing rules (see Question 26). Moreover, even if the foreclosure consultant law generally prohibits a real estate agent from collecting an advance fee, an agent can collect a fee upon performance of the agreed-upon services (see Question 27).
Q 26. What are the requirements for a real estate broker to collect an advance fee under general real estate licensing law?
A A real estate broker cannot collect an advance fee unless certain requirements are met. An advance fee is a fee charged upfront for services not yet performed. An advance fee is broadly defined to include a fee claimed, demanded, charged, received, collected or contracted from a principal for listing real property or negotiating real estate loans (Cal. Bus. & Prof. Code § 10026). Among other things, no less than ten calendar days before collecting an advance fee, a real estate broker must submit to the California Department of Real Estate (DRE) for approval the advance fee agreement and all other materials to be used for advertising, promoting, soliciting, or negotiating the advance fee (10 Cal. Code Reg. § 2970). Furthermore, a broker who collects an advance fee must deposit it into a trust account with a bank or other recognized depository, because the funds are not the broker’s funds (Cal. Bus. & Prof. Code § 10146). Amounts may not be withdrawn on the broker’s behalf until actually expended for the benefit of the principal or five days after a specified accounting is mailed to the principal (10 Cal. Code Reg. § 2972).
For a list of real estate brokers who have received "no objection" letters for their advance fee agreements, go to the DRE Web site at http://www.dre.ca.gov/mlb_adv_fees_list.html.
Q 27. If I do not collect an advance fee, how can I make sure that I get paid when I perform counseling, loan modification, or other real estate services for homeowners in foreclosure?
A Instead of collecting an advance fee, a real estate broker may collect a fee from a homeowner after performing a service that the broker has agreed to provide. The parties may agree in writing that the broker will perform certain services and charge the homeowner a fee upon performance of each distinct service. For loan modification services, a broker and homeowner may agree, for example, that the homeowner will pay a certain dollar amount after the broker provides an initial consultation, another dollar amount after the broker prepares and submits a loan modification package to the lender, and another dollar amount after the broker has negotiated the loan modification with the homeowner's lender. Alternatively, the broker and homeowner may agree that the broker will charge a certain hourly rate for services rendered, and that the broker will collect that fee after performing each hour of work.
In sharp contrast, a foreclosure consultant falling within the foreclosure consultant law is prohibited from claiming or collecting any compensation until after the foreclosure consultant has fully performed each and every service foreclosure consultant contracted to perform or represented he or she would perform (Cal. Civ. Code § 2945.4(a)).
Q 28. Aside from real estate agents, are there any other exceptions to the foreclosure consultant law?
A Yes. Aside from real estate agents, the following is a list of other exemptions to the foreclosure consultant law. Other than an owner’s attorney, however, anyone who assists the owner in obtaining from the lender the remaining proceeds from a foreclosure sale of the owner’s residence is deemed to be a foreclosure consultant (Cal. Civ. Code § 2945.1(c)).
• An attorney rendering legal services who is licensed to practice law in California;• A licensed accountant (under Cal. Fin. Code §§ 5000 et seq.);• A person or his or her agent acting under the authority of the Department of Housing and Urban Development (HUD) or other federal or state agency;• A person doing business under federal or state laws relating to banks, trust companies, savings and loan associations, industrial loan companies, pension trusts, credit unions, insurance companies, title company, escrow company, or HUD-approved mortgagee;• A finance lender or broker licensed under the California Finance Lenders Law (at Cal. Bus. & Prof. Code §§ 22000 et seq.). The Commissioner of Corporations, however, has the authority to terminate this exclusion, after notice and hearing, for any licensee who has defrauded, deceived, harassed or unfairly dealt with a homeowner in foreclosure;• A person licensed as a residential mortgage lender or servicer under the California Residential Mortgage Lending Act (at Cal. Fin. Code §§ 50000 et seq.);• A person who holds or is owed an obligation secured by a lien on any residence in foreclosure when the person performs services in connection with this obligation or lien; or• A prorater as defined under Cal. Fin. Code §§ 12000 et seq. A prorater is a person who, for compensation, engages in the business of receiving money or evidence of money for the purpose of distribution among creditors to pay a debtor’s obligations (Cal. Fin. Code § 12002.1).
(Cal. Civ. Code § 2945.1(b).)
Q 29. Does the foreclosure consultant law apply to a short sale consultant?
A It depends. A short sale consultant is generally someone who counsels and helps a homeowner sell a property by negotiating with the homeowner’s lender to accept a loan payoff of less than the balance owed. A short sale may or may not involve a residence in foreclosure. If the short sale does involve a residence in foreclosure, and the short sale consultant offers to, for compensation, help the owner by, among other things, stopping or postponing a foreclosure sale, saving the home from foreclosure, or giving advice on satisfying an obligation, the foreclosure consultant law may be implicated (unless one of the exemptions applies). For more information about short sales, C.A.R. offers its members a legal article, Short Sales.
Q 30. Does the foreclosure consultant law apply to a buyer who is a real estate licensee?
A It depends. If a buyer who is a real estate licensee acts on his or her own behalf in an arms-length transaction with a homeowner in foreclosure, the foreclosure consultant law should not apply. A prudent licensee acting as a buyer should not only use C.A.R.'s standard form Seller Non-Agency Agreement (Form SNA) to document the lack of an agency relationship, but should also refrain from acting as the seller’s agent. On the other hand, if a buyer offers to, for example, help the homeowner in an impending foreclosure, the foreclosure consultant law may be implicated depending on the specific circumstances. For applicability of the home equity sales contracts law to buyers who are investors, see Question 16.
C. REQUIREMENTS OF THE FORECLOSURE CONSULTANT LAW
Q 31. What is currently required under the foreclosure consultant law?
A The following is a summary of the current requirements under the foreclosure consultant law:
• Written Contract: Anyone who engages in activities that fall within the scope of the foreclosure consultant law must enter into a written contract with the homeowner in foreclosure in the manner specified (Cal. Civ. Code § 2945.3(a)) (see Questions 33 to 35).• Notice of Cancellation: The foreclosure consultant must provide the homeowner with a copy of the contract and attached Notice of Cancellation (Cal. Civ. Code § 2945.3(g)) (see Question 37).• Owner's Right to Cancel: A homeowner may cancel a foreclosure consultant contract if the foreclosure consultant does not provide a written contract in the manner prescribed by law (Cal. Civ. Code § 2945.3(h)). Furthermore, until June 30, 2009, a homeowner has the right to cancel a contract within three business days after signing. Starting July 1, 2009, a homeowner has the right to cancel with five business days after signing (Cal. Civ. Code § 2945.2(a)). See Questions 38 and 39.• Prohibited Acts: A foreclosure consultant is also prohibited from engaging in certain acts as set forth in Question 40.• Representatives: A representative of the foreclosure consultant must provide both a written statement and proof that the representative is a bonded real estate licensee (Cal. Civ. Code § 2945.11) (see Questions 41 and 42).
Q 32. What will be required under the recent 2008 amendment to the foreclosure consultant law?
A On September 25, 2008, the California legislature enacted Assembly Bill 180 which includes major revisions to the foreclosure consultant law. The new requirements, effective July 1, 2009, are in addition to the existing requirements set forth in Question 31.
Highlights of the new revisions effective July 1, 2009 are as follows:
• Certificate of Registration: A foreclosure consultant must register with the California Department of Justice (Cal. Civ. Code § 2945.45(a)(1)) (see Question 44);• Surety Bond: A foreclosure consultant must obtain and maintain a $100,000 surety bond (Cal. Civ. Code § 2945.45(a)(2)) (see Question 45);• Other Languages: A foreclosure consultant must, depending on the circumstances, provide the homeowner with a copy of the foreclosure consultant contract in certain languages (Cal. Civ. Code § 2945.3(c)) (see Question 37);• Owner’s Right to Cancel: The new law extends the homeowner’s right to cancel from three business days to five business days after signing a foreclosure consultant contract (Cal. Civ. Code § 2945.2(a)) (see Question 38). The new law also clarifies that notice of cancellation may be given by mail, fax, or e-mail (Cal. Civ. Code § 2945.2(b)) (see Question 39).• No Power of Attorney: A foreclosure consultant cannot take a power of attorney from the homeowner for any purpose (Cal. Civ. Code § 2945.4(f)).• No Surplus Funds Contract: A foreclosure consultant cannot enter into an agreement to arrange or assist the homeowner in arranging for the release of surplus funds from a trustee’s sale (Cal. Civ. Code § 2945.4(h)) (see Question 40).
Q 33. What are the requirements of a foreclosure consultant contract?
A A foreclosure consultant contract must meet all the following requirements:
• Must be in writing (Cal. Civ. Code § 2945.3(a)).• Must fully disclose the exact nature of the foreclosure consultant’s services (Cal. Civ. Code § 2945.3(a)).• Must fully disclose the total amount and terms of the foreclosure consultant’s compensation (Cal. Civ. Code § 2945.3(a)).• Until June 30, 2009, the first page of the contract must contain, in a type size no smaller than that generally used in the body of the document, the name and address of the foreclosure consultant to whom a notice of cancellation is to be mailed. Effective July 1, 2009, the first page of the contract must contain, in a type size no smaller than that generally used in the body of the document, the name, mailing address, e-mail address and fax number of the foreclosure consultant to whom a notice of cancellation is to be sent. (Cal. Civ. Code § 2945.3(e).)• Must contain, on the first page of the contract, in a type size no smaller than that generally used in the body of the document, the date the homeowner signed the contract (Cal. Civ. Code § 2945.3(e)).• Must contain certain language as set forth in Questions 34 and 35.• Must be dated and signed by the owner (Cal. Civ. Code § 2945.3(d)).• Any provision in a contract which attempts to require arbitration of any dispute arising under the foreclosure consultant law shall be void, at the owner’s option, on the same grounds as contract revocation (Cal. Civ. Code § 2945.10(a)).
Q 34. What is the exact wording required in a foreclosure consultant contract?
A A foreclosure consultant contract must contain the language set forth in the table below with the blank spaces completed (Cal. Civ. Code § 2945.3). The formatting requirements for these contractual provisions are set forth in Question 35.
Part A
NOTICE REQUIRED BY CALIFORNIA LAW
______________________________ (Name) or anyone working for him or her CANNOT:(1) Take any money from you or ask you for money until ______________________________ (Name) has completely finished doing everything he or she said he or she would do; and(2) Ask you to sign or have you sign any lien, deed of trust, or deed.
Part B
You, the owner, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.
Attachment A (Effective Until June 30, 2009)
NOTICE OF CANCELLATION
_____________________________(Enter date of transaction) (Date)
You may cancel this transaction, without any penalty or obligation, within three business days from the above date.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to_____________________________________________________(Name of mortgage foreclosure consultant)at_____________________________________________________ (Address of mortgage foreclosure consultant’s place of business)
NOT LATER THAN MIDNIGHT OF ________________________ (Date)
I hereby cancel this transaction
____________________________________ (Date)
____________________________________ (Owner’s signature)
[Please Note: Effective July 1, 2009, the above statutorily-required language changes. The words “third” and "three" must be replaced by “fifth” or "five" respectively, and the Addendum must include some additional language.]
Addendum A (Effective July 1, 2009)
NOTICE OF CANCELLATION_____________________________(Enter date of transaction) (Date)You may cancel this transaction, without any penalty or obligation, within five business days from the above date.To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or anyother written notice, or send a telegram,to __________________________________________________ (Name of foreclosure consultant)at __________________________________________________ (Address of foreclosure consultant's place of business)You may also cancel by sending a facsimile (fax) of a signed and dated copy of this cancellation notice,or any other written notice, to the following number:_____________________________________________________(Facsimile telephone number of foreclosure consultant's place of business)You may also cancel by sending an e-mail canceling this transaction to the following e-mail address:_____________________________________________________ (E-mail address of foreclosure consultant's business)I hereby cancel this transaction____________________________________________. (Date)
___________________________________________'' (Owner's signature)
Q 35. What are the formatting requirements for the language in Question 34?
A The required language of a foreclosure consultant contract, as indicated in the answer to Question 34, must be formatted in the following manner:
• Part A must be completed and printed in at least 14-point boldface type immediately above Part B (Cal. Civ. Code § 2945.3(b)).• Part B must be a conspicuous statement in at least 10-point bold type and in immediate proximity to the space reserved for the owner’s signature (Cal. Civ. Code § 2945.3(c)).• Attachment A must be completed in duplicate and captioned “Notice of Cancellation.” It must be in at least 10-point type and attached to the contract, but easily detachable. It must be written in the same language as used in the contract. (Cal. Civ. Code § 2945.3(f)).
Q 36. Does C.A.R. offer a standard form foreclosure consultant agreement?
A No. C.A.R. does not currently offer a standard form agreement that comports with the requirements of the foreclosure consultant law.
Q 37. What are the requirements for delivering a foreclosure consultant contract to the homeowner?
A The foreclosure consultant must provide the homeowner with a copy of the contract and the attached notice of cancellation (Cal. Civ. Code § 2945.3(g)). Also, the foreclosure consultant contract must be written in the same language as principally used by the foreclosure consultant to describe his or her services or to negotiate the contract (Cal. Civ. Code § 2945.3(c)).
Additionally, effective July 1, 2009, the homeowner must, before signing the foreclosure consultant contract, be given a copy of a completed contract written in any other language used in any communication between the foreclosure consultant and homeowner (Cal. Civ. Code § 2945.3(c)). Also effective July 1, 2009, if the foreclosure consultant principally uses English to describe his or her services or to negotiate the contract, the foreclosure consultant must notify the homeowner orally and in writing before the homeowner signs the contract that the owner has the right to ask for a completed copy of the contract in Spanish, Chinese, Tagalog, Vietnamese, or Korean (Cal. Civ. Code § 2945.3(c)).
Q 38. What is a homeowner’s right to cancel a foreclosure consultant contract?
A Until June 30, 2009, a homeowner has the right to cancel a foreclosure consultant contract until midnight of the third business day after the owner signs the contract. Starting July 1, 2009, a homeowner has the right to cancel until midnight of the fifth business day after the owner signs the contract (Cal. Civ. Code § 2945.2(a)). For the purpose of this law, a "business day" is defined as any calendar day except Sunday or the following business holidays: New Year's Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day, and Christmas Day (Cal. Civ. Code § 1689.5).
Q 39. What constitutes a proper cancellation under the owner’s right to rescind?
A Until June 30, 2009, cancellation occurs when the owner gives written notice of cancellation to the foreclosure consultant at the address specified in the foreclosure consultant contract. The owner’s notice of cancellation need not take the particular form as provided with the contract. However expressed, the owner’s notice of cancellation is effective if it indicates the owner’s intent not to be bound by the contract. If the notice of cancellation is given by mail, it is effective when deposited in the mail properly addressed with postage prepaid.
Starting July 1, 2009, cancellation occurs when the owner gives written notice of cancellation to the foreclosure consultant by mail at the address specified in the contract, or by fax or e-mail at the number or address identified in the contract. The owner’s notice of cancellation need not take the particular form as provided with the contract. However expressed, the owner’s notice of cancellation is effective if it indicates the owner’s intent not to be bound by the contract. If notice of cancellation is given by mail, it is effective when deposited in the mail properly addressed with postage prepaid. If given by fax or e-mail, the notice of cancellation is effective when successfully transmitted. (Cal. Civ. Code § 2945.2.)
Q 40. What is a foreclosure consultant prohibited from doing?
A A foreclosure consultant is prohibited from, among other things, engaging in any of the following activities:
• No Advance Fees: A foreclosure consultant cannot claim, demand, charge, collect, or receive any compensation until after the foreclosure consultant has fully performed each and every service the foreclosure consultant contracted to perform or represented he or she would perform (Cal. Civ. Code § 2945.4(a)).• No Interest in Subject Property: A foreclosure consultant cannot acquire any interest in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted. Any such interest acquired is voidable, except as against a bona fide purchaser or encumbrancer for value and without notice of a violation of this article. Knowing that the property was "residential real property in foreclosure" does not constitute notice of a violation of this article. This rule does not abrogate any duty of inquiry which exists as to rights or interests of persons in possession of residential real property in foreclosure. (Cal. Civ. Code § 2945.4(e).)• No Secured Payment: A foreclosure consultant cannot take any wage assignment, real property lien, personal property lien, or other security for the payment of compensation. Any such security shall be void and unenforceable. (Cal. Civ. Code § 2945.4(c).)• No Mortgage Broker Fee Over 10%: A foreclosure consultant cannot claim, demand, charge, collect, or receive any fee, interest, or other compensation for any reason which exceeds 10% per annum of the amount of any loan which the foreclosure consultant may make to the owner (Cal. Civ. Code § 2945.4(b)).• No Undisclosed Fees: A foreclosure consultant cannot receive any consideration from any third party in connection with services rendered to an owner unless that consideration is fully disclosed to the owner (Cal. Civ. Code § 2945.4(d)).• No Power of Attorney: A power of attorney generally authorizes a person to act on another person’s behalf. Until June 30, 2009, a foreclosure consultant cannot take any power of attorney from a homeowner, except to inspect documents as provided by law. Beginning July 1, 2009, a foreclosure consultant cannot take any power of attorney from an owner for any purpose whatsoever. (Cal. Civ. Code § 2945.4(f).)• No Invalid Contract: A foreclosure consultant cannot induce or attempt to induce any owner to enter into a contract which does not comply with the foreclosure consultant law (Cal. Civ. Code § 2945.4(g)).• No Surplus Funds Contract: Until June 30, 2009, a foreclosure consultant cannot, within 65 days after a trustee’s sale, enter into an agreement to arrange or assist the owner in arranging for the release of surplus funds (which are funds remaining after a trustee’s sale). Moreover, such an agreement must comply with certain requirements. Effective July 1, 2009, a foreclosure consultant cannot, at any time, enter into an agreement to arrange or assist the owner in arranging for the release of surplus funds. (Cal. Civ. Code § 2945.4(h).)
Q 41. Who is a “representative” of the foreclosure consultant?
A A “representative” of the foreclosure consultant is a person who in any manner solicits, induces, or causes any homeowner to contract with a foreclosure consultant, to pay any consideration, or to transfer title to the residence in foreclosure to the foreclosure consultant. A representative is also someone who solicits, induces, or causes any member of the owner’s family or household to induce or cause any owner to pay any consideration or transfer title to the residence in foreclosure to the foreclosure consultant. (Cal. Civ. Code § 2945.9.)
Q 42. What does the law require for representatives of a foreclosure consultant?
A Any representative (as defined in Question 41) deemed to be the agent or employee of the foreclosure consultant shall be required to do all of the following:
• Provide the homeowner with written proof that the representative has a valid current California Real Estate Sales License (Cal. Civ. Code § 2945.11(a)(1));• Provide the homeowner with written proof that the representative is bonded by an admitted surety insurer in an amount equal to at least twice the fair market value of the real property that is the subject of the contract (Cal. Civ. Code § 2945.11(a)(1)); and• Provide all parties to the contract (before transfer of any interest in the property) with a written statement, under penalty of perjury, that the representative has the required real estate license and bond, and has provided the owner with written proof of same (Cal. Civ. Code § 2945.11(a)(2)).
Any failure to comply with these requirements for representatives of the foreclosure consultant shall, at the option of the owner, render the contract void and the foreclosure consultant shall be liable to the owner for all damages proximately caused by noncompliance (Cal. Civ. Code § 2945.11(b)). A foreclosure consultant is also generally liable for damages resulting from any statement made or acts committed by his or her representative (Cal. Civ. Code § 2945.9).
Any provision in a contract which attempts to limit the foreclosure consultant’s liability for these requirements pertaining to representatives shall be void and, at the owner’s option, render the contract void. The foreclosure consultant shall be liable to the owner for damages proximately caused by that limitation of liability provision. (Cal. Civ. Code § 2945.10(a).)
Q 43. Does a foreclosure consultant have to be a real estate licensee?
A Possibly so. Although the foreclosure consultant law specifically requires a representative of the foreclosure consultant to have a real estate license, it does not specifically state that the foreclosure consultant must have a real estate license. In any event, under general licensing laws, a real estate broker’s license is required for anyone who, for compensation or in expectation of compensation, does or negotiates to do certain activities for another (Cal. Bus. & Prof. Code § 10131). Such activities include, among other things, negotiating loans or performing services for borrowers or lenders in connection with loans secured by real property (Cal. Bus. & Prof. Code § 10131(d)). If a foreclosure consultant falls within these parameters and undertakes any of these tasks, and no exemption applies, a real estate license is required.
Q 44. What is the new registration requirement for a foreclosure consultant?
A Effective July 1, 2009, a person must not take any action as a foreclosure consultant unless the person registers with the California Department of Justice and is issued and maintains a certificate of registration. The registration must include, without limitation, the following:
• All the names, addresses, telephone numbers, Internet Web sites, and e-mail addresses used or proposed to be used for foreclosure consulting;• Statement that the person has not been convicted of (or pled nolo contendere to) any crime involving fraud, misrepresentation, dishonesty, or a violation of the foreclosure consultant law;• Statement that the person has not been held liable in a civil judgment for fraud, misrepresentation, violation of the foreclosure consultant law, unfair competition (Cal. Bus. & Prof. Code § 17200), or false or misleading advertising (Cal. Bus. & Prof. Code § 17500);• Copies of all advertising and promotional materials, including print, electronic, telephone scripts, broadcasts, and other statements used or proposed to be used for foreclosure consulting; and• Copy of the requisite bond (see Question 45).
Furthermore, a foreclosure consultant must file with the Department of Justice an update of certain material changes to the registration information (Cal. Civ. Code § 2945.45(a)(1)).
The Department of Justice may refuse to issue or revoke a certificate of registration if someone does any of following:
• Makes any misstatement in the registration form;• Is held liable for fraud, misrepresentation, unfair competition, or false or misleading advertising;• Commits any violation of the foreclosure consultant law; or• Fails to maintain the requisite bond (see Question 45).
(Cal. Civ. Code § 2945.45(c).)
Q 45. What is the new bond requirement for a foreclosure consultant?
A Effective July 1, 2009, a foreclosure consultant must obtain and maintain a $100,000 surety bond from a corporate surety admitted to do business in California. The bond shall be made in favor of the State of California for the benefit of homeowners for damages caused by the foreclosure consultant. The bond must be filed with the Department of Justice and the Secretary of State. (Cal. Civ. Code § 2945.45(a)(2)).)
Q 46. Can an owner waive any of the requirements of the foreclosure consultant law?
A No. Any waiver by an owner of the provisions of the foreclosure consultant law shall be deemed void and unenforceable as contrary to public policy. Any attempt by the foreclosure consultant to induce an owner to waive his or her rights is a violation of this law. (Cal. Civ. Code § 2945.5.)
Q 47. What is the potential liability for violating the foreclosure consultant law?
A An owner may, among other things, bring a civil action against a foreclosure consultant who violates the foreclosure consultant law. The owner may recover actual damages, reasonable attorneys’ fees and costs, and appropriate equitable relief. Furthermore, a court not only has the discretion to award exemplary damages, but for certain violations, the court must award exemplary damages equal to three times the compensation received by the foreclosure consultant (or actual damages suffered by the owner). The violations for which a court must award exemplary damages are those pertaining to improper advance fees (§ 2945.4(a)), exorbitant mortgage broker fees (§ 2945.4(b)), and undisclosed fees (§ 2945.4(d)) (see Question 40). An owner has four years from the date of the alleged violation to bring such action. (Cal. Civ. Code § 2945.6.)
Furthermore, any person who violates the provisions set forth in the answer to Question 40 above may be criminally punished by one year imprisonment, plus a fine of $10,000 (Cal. Civ. Code § 2945.7).
Additionally, effective July 1, 2009, a person who fails to comply with the certificate of registration and surety bond requirements may be punished by a fine up to $25,000 for each violation, plus one-year imprisonment.

ADDITIONAL INFORMATION
Q 48. Where does someone report a foreclosure-related scam?
A The following is a list of government enforcement agencies and other organizations for reporting fraud activities. Some of these agencies and organizations are also excellent resources for obtaining more information about foreclosure-related fraud.Office of the Attorney GeneralCalifornia Department of JusticeAttn. Public Inquiry UnitP. O. Box 944255Sacramento, California 94244-2550(916) 322-3360(800) 952-5225 (in California only)http://ag.ca.gov/consumers/mailform.htm (Consumer complaints)California Department of Real EstateP. O. Box 187000Sacramento, California 95818-7000(916) 227-0864http://www.dre.ca.gov/cons_complaint.html (Consumer complaints)Federal Bureau of Investigation (FBI) HeadquartersJ. Edgar Hoover Building935 Pennsylvania Avenue, NWWashington, D.C. 20535-0001(202) 324-3000Or contact your local FBI field officehttps://tips.fbi.gov/ (FBI tips and public leads)Department of Housing and Urban Development (HUD) HeadquartersHUD Office of Inspector General Hotline (GFI)451 7th Street, SWWashington, D.C. 20410(800) 347-3735Or contact your local HUD field officehttp://www.hud.gov/offices/oig/hotline/ (Office of Inspector General hotline)Federal Trade CommissionConsumer Response Center600 Pennsylvania Avenue, NWWashington, D.C. 20580(877) 382-4357http://www.ftc.gov/ftc/contact.shtm
Better Business BureauThe Council of Better Business Bureaus4200 Wilson Boulevard, Suite 800Arlington, Virginia 22203-1838Contact your local bureauhttp://www.bbb.org/
Q 49. Where can I obtain more information about foreclosure scams?
A Some of these agencies and organizations listed in Question 48 are good resources of foreclosure-related scams. Another commonly cited resource is the National Consumer Law Center’s publication "Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-Stripping Foreclosure 'Rescue' Scams," available at http://www.consumerlaw.org/news/ForeclosureReportFinal.pdf.
Q 50. Where can I obtain more information?
A This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.'s legal products and services, please visit C.A.R. Online at www.car.org.
Readers who require specific advice should consult an attorney. C.A.R. members requiring legal assistance may contact C.A.R.'s Member Legal Hotline at 213.739.8282, Monday through Friday, 9:00 a.m. to 6:00 p.m. C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at 213.739.8350 to receive expedited service. Members may also fax or e-mail inquiries to the Member Legal Hotline at 213.480.7724 or legal_hotline@car.org. Written correspondence should be addressed to:
CALIFORNIA ASSOCIATION OF REALTORS®Member Legal Services525 South Virgil AvenueLos Angeles, California 90020
The information contained herein is believed accurate as of October 30, 2008. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney.

How AIG's Collapse Began a Global Run on the Banks

This was an email sent to me by a friend and title rep., Susie Jones with Stewart Title. It really explains what happened to AIG and then you will understand how the cards all began to fall...

Something very strange is happening in the financial markets. And I can show you what it is and what it means...

If September didn't give you enough to worry about, consider what will happen to real estate prices as unemployment grows steadily over the next several months. As bad as things are now, they'll get much worse. They'll get worse for the obvious reason: because more people will default on their mortgages. But they'll also remain depressed for far longer than anyone expects, for a reason most people will never understand.

What follows is one of the real secrets to September's stock market collapse. Once you understand what really happened last month, the events to come will be much clearer to you...
Every great bull market has similar characteristics. The speculation must – at the beginning – start with a reasonably good idea. Using long-term mortgages to pay for homes is a good idea, with a few important caveats.

Some of these limitations are obvious to any intelligent observer... like the need for a substantial down payment, the verification of income, an independent appraisal, etc. But human nature dictates that, given enough time and the right incentives, any endeavor will be corrupted. This is one of the two critical elements of a bubble. What was once a good idea becomes a farce. You already know all the stories of how this happened in the housing market, where loans were eventually given without fixed rates, without income verification, without down payments, and without legitimate appraisals.

As bad as these practices were, they would not have created a global financial panic without the second, more critical element. For things to get really out of control, the farce must evolve further... into fraud. And this is where AIG comes into the story.

Around the world, banks must comply with what are known as Basel II regulations. These regulations determine how much capital a bank must maintain in reserve. The rules are based on the quality of the bank's loan book. The riskier the loans a bank owns, the more capital it must keep in reserve. Bank managers naturally seek to employ as much leverage as they can, especially when interest rates are low, to maximize profits. AIG appeared to offer banks a way to get around the Basel rules, via unregulated insurance contracts, known as credit default swaps.

Here's how it worked: Say you're a major European bank... You have a surplus of deposits, because in Europe people actually still bother to save money. You're looking for something to maximize the spread between what you must pay for deposits and what you're able to earn lending. You want it to be safe and reliable, but also pay the highest possible annual interest. You know you could buy a portfolio of high-yielding subprime mortgages. But doing so will limit the amount of leverage you can employ, which will limit returns.

So rather than rule out having any high-yielding securities in your portfolio, you simply call up the friendly AIG broker you met at a conference in London last year.
"What would it cost me to insure this subprime security?" you inquire. The broker, who is selling a five-year policy (but who will be paid a bonus annually), says, "Not too much." After all, the historical loss rates on American mortgages is close to zilch. Using incredibly sophisticated computer models, he agrees to guarantee the subprime security you're buying against default for five years for say, 2% of face value.

Although AIG's credit default swaps were really insurance contracts, they weren't regulated. That meant AIG didn't have to put up any capital as collateral on its swaps, as long as it maintained a triple-A credit rating. There was no real capital cost to selling these swaps; there was no limit. And thanks to what's called "mark-to-market" accounting, AIG could book the profit from a five-year credit default swap as soon as the contract was sold, based on the expected default rate.

Whatever the computer said AIG was likely to make on the deal, the accountants would write down as actual profit. The broker who sold the swap would be paid a bonus at the end of the first year – long before the actual profit on the contract was made. With this structure in place, the European bank was able to assure its regulators it was holding only triple-A credits, instead of a bunch of subprime "toxic waste." The bank could leverage itself to the full extent allowable under Basel II. AIG could book hundreds of millions in "profit" each year, without having to pony up billions in collateral.

It was a fraud. AIG never any capital to back up the insurance it sold. And the profits it booked never materialized. The default rate on mortgage securities underwritten in 2005, 2006, and 2007 turned out to be multiples higher than expected. And they continue to increase. In some cases, the securities the banks claimed were triple A have ended up being worth less than $0.15 on the dollar. Even so, it all worked for years. Banks leveraged deposits to the hilt. Wall Street packaged and sold dumb mortgages as securities. And AIG sold credit default swaps without bothering to collateralize the risk. An enormous amount of capital was created out of thin air and tossed into global real estate markets.

On September 15, all of the major credit-rating agencies downgraded AIG – the world's largest insurance company. At issue were the soaring losses in its credit default swaps. The first big writeoff came in the fourth quarter of 2007, when AIG reported an $11 billion charge. It was able to raise capital once, to repair the damage. But the losses kept growing. The moment the downgrade came, AIG was forced to come up with tens of billions of additional collateral, immediately. This was on top of the billions it owed to its trading partners. It didn't have the money. The world's largest insurance company was bankrupt.

The dominoes fell over immediately. Lehman Brothers failed on the same day. Merrill was sold to Bank of America. The Fed stepped in and agreed to lend AIG $85 billion to facilitate an orderly sell off of its assets in exchange for essentially all the company's equity.
Most people never understood how AIG was the linchpin to the entire system. And there's one more secret yet to come out...

AIG's largest trading partner wasn't a nameless European bank. It was Goldman Sachs.
I'd wondered for years how Goldman avoided the kind of huge mortgage-related writedowns that plagued all the other investment banks. And now we know: Goldman hedged its exposure via credit default swaps with AIG. Sources inside Goldman say the company's exposure to AIG exceeded $20 billion, meaning the moment AIG was downgraded, Goldman had to begin marking down the value of its assets. And the moment AIG went bankrupt, Goldman lost $20 billion. Goldman immediately sought out Warren Buffett to raise $5 billion of additional capital, which also helped it raise another $5 billion via a public offering.

The collapse of the credit default swap market also meant the investment banks – all of them – had no way to borrow money, because no one would insure their obligations. To fund their daily operations, they've become totally reliant on the Federal Reserve, which has allowed them to formally become commercial banks. To date, banks, insurance firms, and investment banks have borrowed $348 billion from the Federal Reserve – nearly all of this lending took place following AIG's failure. Things are so bad at the investment banks, the Fed had to change the rules to allow Merrill, Morgan Stanley, and Goldman the ability to use equities as collateral for these loans, an unprecedented step.

The mainstream press hasn't reported this either: A provision in the $700 billion bailout bill permits the Fed to pay interest on the collateral it's holding, which is simply a way to funnel taxpayer dollars directly into the investment banks. Why do you need to know all of these details? First, you must understand that without the government's actions, the collapse of AIG could have caused every major bank in the world to fail.

Second, without the credit default swap market, there's no way banks can report the true state of their assets – they'd all be in default of Basel II. That's why the government will push through a measure that requires the suspension of mark-to-market accounting. Essentially, banks will be allowed to pretend they have far higher-quality loans than they actually do. AIG can't cover for them anymore.

And third, and most importantly, without the huge fraud perpetrated by AIG, the mortgage bubble could have never grown as large as it did. Yes, other factors contributed, like the role of Fannie and Freddie in particular. But the key to enabling the huge global growth in credit during the last decade can be tied directly to AIG's sale of credit default swaps without collateral. That was the barn door. And it was left open for nearly a decade.

There's no way to replace this massive credit-building machine, which makes me very skeptical of the government's bailout plan. Quite simply, we can't replace the credit that existed in the world before September 15 because it didn't deserve to be there in the first place. While the government can, and certainly will, paper over the gaping holes left by this enormous credit collapse, it can't actually replace the trust and credit that existed... because it was a fraud.
And that leads me to believe the coming economic contraction will be longer and deeper than most people understand.

You might find this strange... but this is great news for those who understand what's going on. Knowing why the economy is shrinking and knowing it's not going to rebound quickly gives you a huge advantage over most investors, who don't understand what's happening and can't plan to take advantage of it.

How can you take advantage? First, make sure you have at least 10% of your net worth in precious metals. I prefer gold bullion. World governments' gigantic liabilities will vastly decrease the value of paper currencies. Second, I can tell you we're either at or approaching a moment of maximum pessimism in the markets. These kinds of panics give you the chance to buy world-class businesses incredibly cheaply. A few worth mentioning are ExxonMobil, Intel, and Microsoft. I have several stocks like these in the portfolio of my Investment Advisory.
Third, if you're comfortable short selling stocks (betting they'll fall in price), now is the time to be doing it... simply as a hedge against further declines.

Keep the fraud of AIG in mind when you form your investment plan for the coming years. By following these three strategies, you'll survive and prosper while most investors sit back and wonder what the hell is going on.

My challenge is to keep you all informed with what is going with our markets today and what we are dealing with in this historical time. I strive to get the most updated information to you as it comes out.

NEW HOME SALES RISE IN SEPTEMBER

Sales of newly built single-family homes posted a slight increase in September, rising 2.7 percent to a seasonally adjusted annual rate of 464,000 units, according to a U.S. Dept. of Commerce report released Monday. The report also indicated that builders are making substantial progress depleting the supply of unsold units on the market.The number of new homes for sale fell to 394,000 units in September, compared with 425,000 units in August. At the current sales pace, there was a 10.4 months' supply of unsold new units on the market, compared with an 11.4 months' supply in August. Conversely, the median number of months that completed new homes have been on the market hit a new record of 9.1 months.

Regionally, sales activity gained 22.7 percent in the West and 0.7 percent in the South in September, but at the same time declined 21.4 percent in the Northeast and 5.8 percent in the Midwest.


Fast Facts
Calif. median home price - September 08: $316,480(Source: C.A.R.)
Calif. highest median home price by C.A.R. region September 08: Santa Barbara So. Coast $935,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region September 08: High Desert $159,720 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)
Mortgage rates - week ending 10/23/08 30-yr. fixed: 6.04% Fees/points: 0.6% 15-yr. fixed: 5.72% Fees/points: 0.6% 1-yr. adjustable: 5.23% Fees/points: 0.5%(Source: Freddie Mac)

2008 THE NEW FINANCIAL WORLD AND ITS IMPACT ON REAL ESTATE! Presented by: Gary Watts

Gary Watts is a local area (Orange County, California) real estate economist that has been doing his forecasts/predictions on the market for years. He is very well respected and seems to know what is going on and where it is all going. The following was an outline of his most recent presentation.

How Did This Mess Happen?
I. Repeal of the Glass Steagall Act!
Prior to the stock market crash in 1929, both investment and commercial banks took on too much risk, with depositors' money by using those funds for active speculation in the stock market. These banks became greedy, taking on huge risks in the hopes of even bigger rewards. Banking became sloppy and unsound loans were made. Congress deemed that these banks had been the culprit in the crash. In 1933, the Glass Steagall Act was passed to separate investment and commercial banking activities. Now moving to the 1990s . . . after many years of investment bank lobbying, Congress passed the Gramm-Leach-Bliley Act in November of 1999, once again allowing the consolidation of commercial and investment banks into one entity.

II. Now Let the Fun Begin!
From 1999 to 2002, demand for houses and the ensuing price rises could be attributed to economic fundamentals such as low unemployment, expanding household incomes and population growth. Congress told both agencies, in 1999, to ease the credit requirements to low-income buyers. With the events of 9/11 and the Fed's later decision to lower the discount rate to 1%, future home buyers were lured (by lower interest rates) into acquiring property sooner than they had planned. At this time, the biggest players (in home mortgages) were Freddie Mac and Fannie Mae, which actively issued and purchased conventional, conforming mortgage-backed securities.
Loan volume grew to $5 trillion by 2002.
Pay-Option ARMs represented only 3% of loans.
In 2002, federal regulators found (in both companies) irregularities and mismanagement by senior officers, who later resigned. By 2003, regulatory and political factors forced both Freddie and Fannie overstated earnings by $9 billion, which significantly slowed down their future lending volume. With the Gramm-Leach-Bliley Act in place and demand for housing still increasing, the "new" investment banks created private funding in the form of mortgage and asset-backed securities, which replaced the standard conventional lending with looser underwriting standards. In 2004, these investment banks were successful in changing their reserve requirements on securities, which required $1 in reserves for every $12 loaned. The new reserve ratio became $1 to $40! Now new loan programs could be designed to meet the needs of the investment bankers' clients, who were demanding higher returns.
By 2005, loan volume had grown to $9 trillion. 68% of home mortgages were securitized, 33% were non-prime loans, and Pay-Option ARMs grew to 30% of securitized non-prime mortgages. 40% of loans were low or no doc loans These new lending programs allowed less-than-credit-worthy borrowers to obtain loans. With rapidly appreciating home prices, home equity loans were added to the mix and the consumer was living large! Wall Street was now in love with their creation, Structured Investment Vehicles!
(Sources: Glass Stegall Act, Gramm-Leach-Bliley Act, UC Irvine's Paul Merage School of Business, FDIC -1- III. The Structured Investment Vehicle (SIV))

Even by 2005, charge-off rates for mortgages and home equity loans were well below the long term averages (0.05/0.10 versus the long term average of 0.10/0.20). This allowed Wall Street's new credit environment to continue to offer looser lending standards and increased tolerance for riskier, high-yield loan products. The structured investment vehicle was designed to help diversify these risks.
Their Structure: Sub-Prime, 8.3%; Alt-A ,6.7%; Prime, 13.3%; Residential Mortgage-Back Securities, 0.2%. Asset Backed Securities, 12.1%; Collateralized Debt Obligations, 15.4%. Collateralized Loan Obligations, 6.3%; Nonfinancial Corporation Debt, 0.2%. ? Commercial Mortgages, 7.7%; Financial Institution Debt, 28%; Insurance Debt, 1.8%. Ownership Participation: U.S./Foreign Banks, 59%; Hedge Funds/Sovereign Trusts, 28%; Insurance Companies, 6%. Pension Funds, 2%; Corporations, 2%; Mutual Funds, 2%; Others, 1%.
What It Allowed Them To Do:

• Credit was made available to various types of borrowers (sub-prime, businesses, credit card users, leasing contracts, commercial loans, manufacturing, auto loans, etc.) who would otherwise have not been able to obtain such credit.
• Transferred risk to their off-balance sheets (OBSEs), to reduce reserves.
• Permitted exposure to remain mostly undisclosed to regulators and investors.
• Improved loan liquidity; generated fees; obtained relief from regulatory capital requirements.
• From 1997 to 2006, U.S. home prices rose 85% an historical high!
• Their Problems: Default rates exceeded earlier assumptions. The three main credit rating agencies were forced to make precipitous downgrades on a large number of these SIVs.
• Freddie Mac's Alt-A loans are 10% of its portfolio but more than half of its credit losses.
• Option ARMs were 19.5% of loan volume in 2005 and 28.7% in 2006.
• Freddie Mac had a projected model (risk factor) of price declines of 13.4%.

To make matters worse, they made long-term loans with short-term deposits. Investors did not have a clear idea of what portion of an SIV they owned, with whom they owned it with, what portion (if any) was insured, what was their "tranche" position, and were any of the insuring companies covering any of the losses. Due to a lack of this knowledge, many investors withheld funding from these very complex structured products, even those with high-quality underlying assets. By the summer of 2007, the securitization market was dead and the credit crunch hit all aspects of the lending markets. With little money for refinances and rapidly falling housing prices, short sales and foreclosures began to dominate the market. Today, these types of sales contribute to almost 50% of all recorded sales in southern California.

(Sources: Federal Reserve, Standard & Poor's, Federal Deposit Insurance Corporation)

II. The Current State of Orange County Housing As of October 16th:

• 12,722 the lowest number in 18 months and a current housing supply of 4.76 months.
• 49.7% of our entire inventory is priced below $500,000, representing 69% of the demand
• 42.9% of our entire inventory (5,458) is distressed properties, representing 64.2% of demand.
• Short-sales make up 77% of distressed properties with a market time of 6.08 months.
• Bank-owned make up the remaining 23% and have a market time of only 1.22 months.
• In southern California last month, 45.5% of all sales were foreclosed properties.
• 67.5% of distressed properties are priced below $500,000 93.0% of distressed properties are priced below $750,000
• 38.2% of attached homes are vacant
• 25.5% of detached homes are vacant
• 12.0% demand for homes above $750,000
• With 14 months of declining sales in jumbo purchases, the actual median sales price is greatly distorted. Normally, 40% of all sales are jumbo purchases; today they are only 12%!
• Fewer sales reduces the sample size, thus reducing the validity of the conclusions.
• The dominance of foreclosures and short-sales usually concentrated in a smaller area.
• Median sales price is now being distorted by the low-end/smaller property market.
• Larger price declines on distressed sales actually distorts factual metro sales prices.

(Sources: Altera Orange County Market Time Report, John Burns Real Estate Consulting.)

IV. Our Government to the Rescue?

This year, the federal government has tried to "prop-up" both the housing and financial markets through various measures: 1. Economic Stimulus Act of 2008. The IRS mailed out 132 million rebate checks in an effort to help stimulate the economy. Unfortunately, 78% of the rebates went to the payment of bills not to purchase goods and services in the economy! 2. Housing and Economic Recovery Act of 2008 This was to shore up Freddie Mac and Fannie Mae so that they could continue to bring a steady supply of mortgage capital to homebuyers. The Treasury Department was to inject $100 billion into each company. Conforming loan amounts were raised and FHA was authorized $300 billion to help troubled homeowners by refinancing their loans. Increasing the loan amounts was also to help lower interest rates for high-priced areas. A new $7,500 tax credit was given to first-time homebuyers, and $4 billion was allocated go to Community Development Block Grant funds to purchase and fix-up foreclosed homes. 3. The Federal Reserve opened its discount windows and allowed troubled banks to borrow from them through "auction securities." This would allow the banks to strengthen their capital reserves and begin making both residential and commercial loans again. By September, banks had borrowed over $500 billion dollars but banking problems still persisted. At the end of September, the Fed agreed to advance another $228 billion in auction securities, through November. 4. Emergency Economic Stabilization Act of 2008 . . . or "Re-arranging cards in the House of Cards!" A massive plan designed to provide the Treasury with $850 billion to buy or insure troubled securities, with the hope that it frees-up the capital markets and helps stabilize future banks from failing. The plan raises the new FDIC limit to $250,000; limits pay and ends "golden parachutes" for those companies who participate; and directs federal agencies to modify troubled loans whenever possible. FDIC has only $45 billion left after paying out $9 billion for IndyMac Bank. Total insured deposits exceed $4.5 trillion, with $3.5 trillion in money market funds.

More Potential Problems on the Horizon! U.S. Credit Card Debt . . $ 1 Trillion

Corporate Debt . . . . . . . . . . . . . $ 12 Trillion

Mortgage Debt . . . . . . . . . . . . . . . $ 14 Trillion

Credit Default Swaps . . . . . . . . . $54 - $62 Trillion

Derivatives . . . . . . . . . . . . . . . . . .$370 - $583 Trillion

Note: AIG had $1 trillion in assets to back insurance policies. Their problem was the $500 billion of exposure to corporate debt and credit default swaps. On Oct. 10th, Lehman's bankrupt bonds sold for 8.62¢ on the dollar and the credit default swap holders (insurers) paid out 91¢ on each dollar!

(Sources: FDIC, Federal Reserve, Economy.com, Bureau of Economics)

The Challenges Our Economy is Currently Facing Various Headwinds:

1. Wealth Effect - due to declining assets The Federal Reserve reported that real estate "net" equity declined $879.6 billion in 2007. Household equity is at 46.2% vs. 57% ten years ago a record low since post-WWII. CA foreclosures in 2007 totaled 94,969 versus 110,282 for the 1st half of 2008. Through September, Orange County is averaging 1,012 foreclosures monthly. 2. Price Effect - due to higher energy and food prices Commodity prices are on the rise due to a weak U.S. dollar. As prices rise, consumer and business spending decreases. 3. Income Effect - due to higher unemployment Current U.S. unemployment is at 6.1% 760,000 jobs have been lost in the past year. California's current unemployment rate is 7.7%, the highest in 12 years. Orange County's unemployment rate is 5.7%, with job losses exceeding 29,600 in the past year. Less income, less paid taxes, more pressure on federal, state and personal budgets. 4. Funding Conditions - due to the "credit crunch" This is the 20th month since sub-prime, housing woes, and weak financials were reported. Regulators and thus the banks have tightened credit standards for all types of loans. Many loans require larger down payments, actual verification of assets and income. Appraisers are "adjusting" appraisals for the market conditions 5. "Spill-Over" Effect The September delinquency rate on single-family loan balances were 12.5%. If prices continue to decline, another tier of properties with exhausted home equity lines or increasing loan balances could set off another round of very large foreclosures. 75% of Option ARMs borrowers are paying the minimum payment. This is causing the recast date to be reached earlier than had been projected. There is $500 billion worth of Option-ARM mortgages that have yet to recast, with $300 billion worth of mortgages on California properties.

(Sources: Mortgage Bankers Association, U.S. Bureau of Labor, Ca. EDD, Federal Reserve, DataQuick)

VI. How The Financial World Is Changing Real Estate For The Buyer:

There are 71% fewer mortgages available than a year ago. There are no more "Bail & Buy" loans. All assets and income must be verified. Larger down payments are required, with points to be paid on the loan. Fixed rate mortgages account for 69% of funded loans. FHA is the new "big" player. (a) up-front insurance premium is now 1.75%. (b) "Kiddy Condos" for kids in college. (c) down payment goes to 3.5% on Jan. 1st. (d) gift still available for down payment

For The Lender: FHA appraisers must be certified, which will cause a decrease in the number of appraisers. Some lenders may no longer use "in-house" appraisers. Financial institutions will be held liable for any misleading advertising. Adjustable sub-prime loans cannot have a pre-payment penalty for 4 years. Fixed sub-prime loans can not have a pre-payment penalty for 2 years. Truth in Lending statement must be printed in the native language of the borrower. Jumbo loans will be set at $625,500, as of January 1st.

For The Investor: 25% down or more offers the best rates. 20% down will cause rate to rise approximately 3/8% less than 20% down, introduces PMI; higher rates; added approval by insurance companies.

For The Seller: Foreclosures and short-sales will continue to dominate the 2009 real estate market. Listing prices must be competitive with these properties for a successful sale. Regardless of their expectations, their house will be appraised conservatively. Expect the short sale process to take 4 to 6 months. The buyers are still in control of pricing: (a) give careful consideration to a counter offer. (b) expect to pay for all termite work and repairs disclosed by the inspection report. (c) length of escrow will be the buyer's choice, but market conditions can push it longer. (d) making necessary repairs and improvements ahead of time will help the marketing.

(Sources: FHA, Mortgage Bankers Association)

VII. A Final Perspective For 2009: Delinquent December tax bills should give us a peek into potential problem properties. It will be early January before we know the full impact of the latest bailout. The housing market below $250,000 has most likely reached the bottom. Prices now in the $350,000 range are close to the bottom. The rest of the housing market still must suffer a restructuring of price levels. Expect foreclosures and short sales to dominate the market through 2010. Listing inventory should rise due to the large number of foreclosures set to enter the market.

The Light In The Tunnel: The credit conditions should greatly improve, bringing more buyers into the market place. Demand for properties will continue to be higher than the past three years. American households have $7.4 trillion in checking, savings, and money market funds. Americans have $4.1 trillion stashed in Treasury bills and other bonds. This total of $11.5 trillion could pay off every home mortgage in America! Investors have "parked" $3.5 trillion dollars in money market funds and it has to eventually move someplace. Hopefully, a large chunk goes into real estate lending. Most lenders will recover 70% of their outstanding loan balances through repossessing homes and then reselling them. If not, they can sell them off to the Treasury at auction, at the current rate of "X" cents on the dollar (unknown at time of print). Price declines have allowed first-time buyers back into the real estate market. Pent-up demand from buyers, who have been "fence-sitting" for the past couple of years and are now re-entering the housing market, should help reduce our current housing supply. The U.S. income this year will be $14 trillion, while global income will be $53 trillion. The U.S. economy earns $26 billion every day and, even with loan write-downs in the hundreds of billions, it will represent less than ½ of 1% of the combined assets of all U.S. households and non-financial corporations.

Orange County: It has 4 of the top 20 income-earning cities (NB, YL, IR, MV) in America. It has the 5th lowest unemployment rate in the State and job growth is projected to grow next year at a rate of 1% - adding 14,000 new jobs. There are 94,000 small-business employers, of which 62% have fewer than 5 workers and 95% employ fewer than 50 people - leading to stability through diversity. There are 8 billionaires who call this county home. This county ranks 4th in the nation with 315,396 millionaires Rents are up 4.5% (June to June), making OC the 6th highest rental market in the U.S.

(Sources: OC Business Journal, WSJ, Federal Reserve, World Wealth Report, U.S. Census, EDD, REIS Inc. )

On Success "Every man should make up his mind that if he expects to succeed,he must give an honest return for the other man's dollar." Edward Harriman

Some Fast Facts on California Real Estate

To keep you updated with our local real estate marketplace, here are some fast facts:

Calif. median home price - August 08: $350,140(Source: C.A.R.)
Calif. highest median home price by C.A.R. region August 08: Santa Barbara So. Coast $930,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region August 08: High Desert $169,200 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)
Mortgage rates - week ending 10/16/08 30-yr. fixed: 6.46% Fees/points: 0.6% 15-yr. fixed: 6.14% Fees/points: 0.6% 1-yr. adjustable: 5.16% Fees/points: 0.6%(Source: Freddie Mac)

List of Lenders Who Are Participating in the HOPE for Homeowners (H4H) Program

I received this from the California Association of Realtors and thought that it would be good to post on my blog to get the word out.

NOTE: Homeowners, contact your existing lender and/or a new lender to discuss how you may qualify for the H4H program.
The lenders listed below have indicated an interest in refinancing loans under the HOPE for Homeowners program. When contacting any of the lenders listed below, you are strongly encouraged to contact your servicing lender and any subordinate lien holders since their participation is vital for you to refinance into a HOPE for Homeowners mortgage. It is important to remember that the HOPE for Homeowners program is voluntary and your servicing lender may offer different solutions for avoiding foreclosure.
If you are experiencing difficulty in communicating with your current servicing lender and/or subordinate lien holders, you may wish to contact a housing counseling agency to ask for advice and assistance in reaching a mutually agreeable solution for avoiding foreclosure.
To view the list of lenders who are participating in the HOPE for Homeowners program click on the link below. Your browser will open an Excel Spreadsheet.
The H4H Lender List was updated on October 17, 2008. We will refresh the list on most Fridays.

This was in an excel spreadsheet, so if you can't follow it, let me know by sending me an email and I will forward the information that you need.

Copy of LIST OF H4H PARTICIPATING LENDERS

Pan American Mortgage, LLC
John Palla
6232 N Pulaski, Chicago, IL 60646
Alaska, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Missouri, North Carolina, Nebraska, Nevada, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Wisconsin
773-493-8979
773-493-8981
Citizens Home Loans
Chris Rines
7601 Paragon Rd Ste 104, Dayton, OH 45459
Indiana, Kentucky, Michigan, New York, Ohio, Pennsylvania, West Virginia
888-342-6550
937-886-6588
Chicagoland Mortgage Services, Inc.
Nathan Reynolds
15 Spinning Wheel Rd Ste 15, Hinsdale, IL 60521
Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Tennessee, Wisconsin
630-734-3900
630-734-7583
Kinetic Mortgage Group
Christy Celi
5300 NW 77 Ct, Doral, FL 33166
Alabama, Florida, Georgia, Mississippi
305-592-9265
305-592-1782
Valley National Mortgage
Mark Gutweiler
4400 E Broadway Blvd Ste 805, Tucson, AZ 85711
Arizona, California, New Mexico, Nevada
520-323-3811 x101
520-323-2050
Trenchant Mortgage
Tory Teunis
8778 S Maryland Parkway Ste 105, Las Vegas, NV 89123
Arizona, California, Nevada, Idaho, Oregon, Utah
866-728-3560
866-728-1340
Amera Mortgage Corporation
Thomas Ciotti
20300 Superior Rd Ste 260 Taylor, MI 48180
Illinois, Indiana, Michigan, Ohio
734-530-2002
734-287-4747
American Liberty Mortgage & Loan Corporation
Gloria Kapurch
195 Lake Ave, Worcester, MA 01604
Connecticut, Massachusetts, Maine, New Hampshire, New Jersey, New York, Rhode Island, Maine
508-793-8637
508-793-1919
Great Lakes Mortgage Funding
Jeffrey Marsack
14460 Lakeside Circle Ste 180, Sterling Heights, MI 48313
Illinois, Indiana, Michigan, Ohio,
586-421-1639
586-532-0700
American Security Financial
Leeann Simpson, Cynthia Ruiz
1501 F St, Modesto, CA 95354
Arizona, California, Nevada, Oregon
209-544-3164
209-593-5713, 209-593-5722
First Universal Financial, Inc
Concha Taylen
8630 Technology Way Ste C, Reno, NV 89521
Arizona, California, Idaho, Nevada, Oregon
775-850-1070
775-850-1080
Primary Residential Mortgage Inc.
Al Norman
126 Wilshire Blvd Ste 160, Casselberry, FL 32707
Alabama, Florida, Georgia, Mississippi
407-622-2020, 866-310-3999
866-208-9185
First Florida Financial Group, LLC
Ashley Cochran
907 Jennifer Ln, Fort Myers, FL 33919
Alabama, Florida, Georgia, Mississippi
239-206-1115
954-919-6330
American Eagle Mortgage
Joe Kowalczyk
1505 Tamiami Trail S #401A, Venice, FL 34285
Florida
941-496-9800
941-492-6300
Kinetic Mortgage Group
Lilliam Fernandez
5300 NW 77 Court, Doral, FL 33166
Florida, Alabama, Georgia, Mississippi
305-592-9265
305-592-1782
Security One Mortgage Corp
Valerie Jones
1051 Winderley Place Ste 100, Maitland, FL 32751
Florida, Alabama, Georgia, Mississippi
407-681-9800
407-681-9877
1st Lending Solutions, inc
Alan J. Vogan
6370 Magnolia Ave Ste 350, Riverside, CA 92506
Arizona, California, Nevada, Oregon
951-684-3307
951-684-3962
Ace Mortgage Funding, LLC
Jeremiah Wean
7820 Innovation Blvd Ste 300, Indianapolis, IN 46278
Arkansas, Alabama, Alaska, Arizona, California, Colorado, Connecticut, Washington D.C., Delaware, Florida, Georgia, Hawaii, Idaho, Iowa, Illinois, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Maine, Minnesota, Michigan, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Hampshire, New Jersey, New York, Nevada, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, West Virginia, Wyoming
317-246-5740
317-227-2684
Edwards Mortgage LLC
Erich Edwards
210 E Mount Vernon St, Nixa, MO 65714
Colorado, Iowa, Kansas, Missouri, Nebraska, Oklahoma
417-724-0300
417-724-0329
Tandem Mortgage
Rita Moskalenko
19520 Nordhoff St Ste 7, Northridge, CA 91324
Arizona, California, Nevada, Oregon
818-700-6300
818-993-9914
HomeTeam Equity, LLC
Quita Williamson
670 N Orlando Ave Ste 1003, Maitland, FL 32751
Alabama, Florida, Georgia, Mississippi
407-599-6888
407-599-6889
Allied Home Mortgage Capital Corp
Michael Huffman
858 Cherry Rd, Rock Hill, SC 29732
South Carolina, Tennessee
803-619-5251
803-948-0264
Southwest Funding
Rich Juge
15280 Addison Rd Ste 120, Addison, TX 75001
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
972-485-5300, 866-594-9200
972-485-5301
American Capital Financial
D.J. Davenport
1905 Sherman St Ste 810, Denver, CO 80203
Colorado, Kansas, Nebraska, New Mexico, Utah, Wyoming
303-830-2208
303-830-2213
Red Brick Mortgage/ Artisan Mortgage, LLC
Sherod McGuire
9101 Antares Ave, Columbus, OH 43240
Indiana, Kentucky, Michigan, New York, Ohio, Pennsylvania, West Virginia
614-785-9900 x123
614-802-3010
ARISE MORTGAGE LLC
Julia Sotomarino
15800 Crabbs Branch Way Ste 120, Rockville, MD 20855
Washington D.C., Maryland, Delaware, North Carolina, New Jersey, Pennsylvania, Virginia, West Virginia, Virginia
301-978-9722
301-978-9726
Regal Lending Group Inc
Ana Young
5220 S University Drive Ste C-201, Davie, FL 33328
Alabama, Florida, Georgia, Mississippi
954-680-5650 x308
954-323-5093
Saab Financial Corp DBA Saab Mortgage
Kathy Saab
2070 Chain Bridge Rd Ste G3, Vienna, VA 22182
Washington D.C., Maryland, Delaware, North Carolina, New Jersey, Pennsylvania, Virginia, West Virginia, Virginia
703-288-0777
703-288-0300
SD County Financial, Inc.
Mark Revetta
860 Jamacha Rd Ste 208A, El Cajon, CA 92019
Arizona, California, Nevada, Oregon
619-889-6275
619-334-7790
Nunez Corporation / Lender Name: Professional Mortgage
Bo Nuñez
2101 S Bristol St, Santa Ana, CA 92704
Arizona, California, Nevada, Oregon
714-436-9990
714-436-9991
American Pacific Mortgage Dba Beaver Mortgage Services
1. Kristin M. Eklund, 2. David Kimmer, 3. Don Beazely
3309 SW Arrowood Drive, Portland, OR 97219
California, Idaho, Nevada, Oregon, Washington
Eklund: 503-768-9270, Kimmer: 503-780-7783, Beazely: 503-780-7783
503-452-4140
1st Alliance Lending, LLC
John DiIorio, Huong Do
111 Founders Plaza Ste 1102, East Hartford, CT 06108
Connecticut, District of Columbia, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia
866-546-7298
860-289-0557
American Bancshares Mortgage Corporation
John Cosculluela
14211 Commerce Way Suite 100, Miami Lakes, FL 33016
Alabama, Florida, Georgia, Mississippi
305-817-2160
Stateline Funding Incorporated
Debbie Arthur
1401 Hillshire Drive #150, Las Vegas, NV 89134
Arizona, California, Idaho, Nevada, Oregon, Utah
702-871-7800
JMO, Inc.
David Connelly
27290 Madison Ave Suite 205, Temecula, CA 92590
Arizona, California, Nevada, Oregon
Priority Partners Lending Group
Anthony Lombardo
15005 Telegraph Rd Ste 201, Flat Rock, MI 48134
Illinois, Indiana, Michigan, Ohio
951-296-1234
Del Sol Financial Corporation
Joe Del Sol
251 North Avenue W 3rd Floor, Westfield, NJ 07090
Connecticut, District of Columbia, Delaware, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, Virginia
Chesapeake Residential Finance Corp.
Bill Hicks
4275 Hawthorne Rd, Indian Head, MD 20640
District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia
301 743 6622
301-743-6623
NorthStar Mortgage Group
Sue Botelho
543 Harbor Blvd Ste 102, Destin, FL 32541
Alabama, Florida, Georgia, Mississippi
850-424-6866
850-424-6873
Strydio Mortgage Corporation
Sarah D. Cabrera
6435 Coral Way, Miami, FL 33155
Alabama, Florida, Georgia, Mississippi
305-266-1190
305-266-1055
OrlandoHomeMortgages.com, Inc.
Jeffery Perdue
4725 S Orange Ave, Orlando, FL 32806
Florida
407-816-3863, 888-511-6060
407-209-3582
Liberty Residential Mortgage
David D McElroy
5151 Belt Line Rd Ste 600, Addison, TX 75001
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
214-830-9078
866-380-3988
Net Rate Mortgage Inc.
Rich Mitchell
108 4th Ave S, Safety Harbor, FL 34695
Alabama, Florida, Georgia, Mississippi
727-796-7200 x211
727-796-7205
Equilliance LLC
Adriana S. Gibbs
3501 Quadrangle Blvd Ste 100, Orlando, FL 32817
Alabama, Florida, Georgia, Mississippi
888-682-6556
407-470-1771
All Western Mortgage
Lisa Walters
5580 W Flamingo Rd Ste 106, Las Vegas, NV 89103
Arizona, Idaho, Nevada, Oregon, Utah
702-369-0905 x251
702-253-0630
Brown Lending Group Inc
Adelheide Dixon
2033 N University Dr, Sunrise, FL 33322
Alabama, Florida, Georgia, Mississippi
954-326-0904
954-318-4004
Washington Capitol Financial Corporation
Tony Scardelletti
1700 Research Blvd Ste 210, Rockville, MD 20850
District of Columbia, Delaware, Maryland, North Carolina, New Jersey, Pennsylvania, Virginia, West Virginia
301-309-0084
301-309-8953
Interstate Mortgage Service
Ryan Ingram
4135 S Power Rd Ste 133, Meza, AZ 85212
Arizona, California, New Mexico, Nevada
480-926-1118 ext.101
480-926-8557
Great Western Financial Group, Inc.
Joe Mueller
41391 Kalmia St Ste 300, Murrieta, CA 92562
Arizona, California, Nevada, Oregon
951-696-4401 x207
951-696-4413
Top Flite Financial
Steve Tardiff
22705 Northline Rd, Taylor, MI 48180
Illinois, Indiana, Michigan, Ohio
734-287-5962
734-287-6407
WCS Lending, LLC
Miles N. Rosenthal
6501 Congress Ave 3rd Floor, Boca Raton, FL 33487
Alabama, Florida, Georgia, Mississippi
561-864-2562
561-864-2662
Mortgage Services, Inc
Ronald A. Giannamore
193 Grand St 2nd Floor, Waterbury, CT 06702
Connecticut, Massachusetts, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont
800-922-3210
203-841-2513
Universe Financial Corp
Alex Bejerano
2530A SW 87th Ave, Miami, FL 33165
Alabama, Florida, Georgia, Mississippi
305-557-0507
305-557-4646
Capital Mortgage Finance Corp.
Jim Nixon
6310 Stevens Forest Rd, Columbia, MD 21046
District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia
800-836-6670
443-656-0232
Skofed Mortgage Funding Corporation
Brenda Bloomer
2610 S Jones Blvd Ste 1, Las Vegas, NV 89146
Arizona, California, Idaho, Nevada, Oregon, Utah
702-362-2626
702-362-2169
Melody Mortgage, LLC
Ken Ziehm II
2 Winnhaven Dr, Hudson, NH 03051
New Hampshire
603-886-1980
603-883-9528
Grewal Mortgage Company
Christie Lo Iacono
3120 Pine Tree Rd, Lansing, MI 48911
Michigan
517-393-3400 x323
517-393-1488
Group Capital Mortgage, Inc
Sandra Mosley
18000 Studebaker Rd Ste 795, Cerritos, CA 90703
Arizona, California, Nevada, Oregon
562-207-6840 x550
562-207-6858
Affinity Home Loans, Inc
Heidi Lawler
10650 Treena St Ste 103, San Diego, CA 92131
Arizona, California, District of Columbia, Florida, Michigan, Nevada, Oregon, Virginia
866-365-6428
858-764-2835
Flagship Financial Group
Peter Brown
1349 Galleria Drive Ste 110, Henderson, NV 89014
Arizona, California, Idaho, Nevada, Oregon, Utah
702-476-9000
702-982-4367
Kaiser Financial Services
Roger Chandler
7290 Engineer Rd Ste B, San Diego, CA 92111-1413
Alaska, Arizona, California, Colorado, Florida, North Carolina, Nevada, Oregon, Tennessee, Washington
858-751-0700 x104
858-751-0744
Black Mountain Community Bank
Claude Rosenthal
1700 W Horizon Ridge Parkway #101, Henderson, NV 89012
Arizona, California, Idaho, Nevada, Oregon, Utah
702-990-5920
702-990-5950
Mortgage House, Inc.
Ferry Ajdari
6351 Owensmouth Ste 102, Woodland Hills, CA 91367
Arizona, California, Nevada, Oregon
818-227-0922, 800-645-1301
818-227-0911
Peoples Mortgage Inc.
Jeff Ocasio
309 Little Grove Lane, North Fort Myers, FL 33917
Florida, Kentucky, Tennessee, Indiana, Kentucky
239-652-6800
239-652-0600
Mortgage Source Lakeland
Trina Kingery
4732 U.S. Highway 98 North, Lakeland, FL 33809
Alabama, Florida, Georgia, Mississippi
863-858-6700
CasaBanc Mortgage Corp.
Janye Seppinni
17870 Skypark Circle #106, Irvine, CA 92614
California, Arizona, Nevada, Oregon
949-681-7280
949-681-7290
Primary Residential Mortgage Inc.
Vonda Allen
2201 South W S Young Dr Ste 104C, Killeen, TX 76543
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
254-554-7764
254-554-7765
United Capital Financial, Inc.
Ruben B. Gonzales
8560 Vineyard Ave, Rancho Cucamonga, CA 91730
Arizona, California, Nevada, Oregon
909-980-4611
909-495-1961
Topline Mortgage Solutions
Bonita Turner
102 E Cary St, Richmond, VA 23219
District of Columbia, Delaware, Kentucky, Maryland, North Carolina, New Jersey, Pennsylvania, Tennessee, Virginia, West Virginia
804-225-9566
804-225-9266
M2 Lending Solutions
Chris Murphy
2000 S Colorado Blvd, Tower One Ste 1-3400, Denver, CO 80222
Colorado, Kanasas, Nebraska, New Mexico, Utah, Wyoming
720-529-1880 x12
720-529-1880
Progressive Lenders Inc
Bernard Cohen
12490 NE 7th Ave Ste 201-202, North Miami, FL 33161
Alabama, Florida, Georgia, Mississippi
305-895-6055
305-895-6056
Direct Access Lending
Dennis Thomas
650 White Drive Suite 200, Las Vegas, NV 89119
Arizona, California, Idaho, Nevada, Oregon, Utah
702-617-9900
702-617-9970
APMC dba TreeHouse Mortgage Group
Lorisa M. McKelvey
451 Washington St, Monterey, CA 93940
Arizona, California, Nevada, Oregon
734-782-5626
Delta Home & Lending Inc.
Mark Anya
931 Howe Ave Ste 101, Sacramento, CA 95825
Arizona, California, Nevada, Oregon
916-565-3856
916-848-3359
Patriot Home Funding, Inc.
John Seybert
101 Wymore Rd Ste 320, Altamonte Springs, FL 32714
Alabama, Florida, Georgia, Mississippi
407-389-5132, 866-701-4346
321-281-4725
All Western Mortgage
Emelie Maybrook
5580 W Flamingo Rd Ste 106, Las Vegas, NV 89103
Arizona, California, Idaho, Nevada, Oregon, Utah
702-369-0905
702-974-1973
Sky Valley Financial, Inc.
Mitchell Chernock
1090 Adams St Ste L, Benecia, CA 94510
California
707-745-9600, 800-557-9944
707-748-5960

SPOTLIGHT ON THE BRIGHT SIDE OF THE MORTGAGE MARKET

I read this article today by syndicated columnist Kenneth R. Harney and felt that those of us that need to see the glass as half full would appreciate this interesting perspective on the current real estate market.

"Credit squeeze, credit freeze, credit-system seizures: Everybody knows how severe and painful the global financial breakdown has been, with banks unwilling to lend even to other banks. But what about mortgages and real estate? Can you still get a home loan with less than a 20 or 30 percent down payment? Or with a credit score below 720? Absolutely.

It would be a big stretch to label housing the sunny side of the market at the moment, but there's a lot more light there than in most other financial sectors. Consider these facts:

• There is no shortage of money for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the mortgage market effectively has been federalized — at least for the time being. More than 90 percent of new loans now are being made through the Federal Housing Administration (FHA) insurance program, plus Fannie Mae and Freddie Mac. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservatorship. All three have unfettered access to global capital markets at rock-bottom costs because their borrowings are fully guaranteed by the Treasury. Ginnie Mae, which is FHA's pipeline to the bond market, recorded an all-time high of $29 billion in new mortgage-backed securities issued in August.

• Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on certain Fannie Mae and Freddie Mac loan programs with private mortgage insurance. FHA's credit standards are generous and forgiving; the agency exists to help people with less-than-spotless credit histories. Fannie Mae and Freddie Mac have raised their credit-score requirements over the past year, but buyers and refinances with scores in the upper 600s can still qualify for loans having reasonable rates and fees.

• Despite the global financial system's quakes, mortgage rates not only remain low by historical standards but have actually declined. For the week ending Oct. 8, according to the Mortgage Bankers Association, average 30-year fixed rates nationally dropped to 5.99 percent, and 15-year mortgages averaged 5.71 percent. Freddie Mac said 30-year rates dropped to 5.94 percent.

• Maximum loan amounts through FHA, Fannie and Freddie in high-cost local markets on the West and East coasts, such as Seattle, continue to be $729,750 through December. In January, the high-cost maximum is projected to dip to approximately $625,000.

• Home prices — pushed by foreclosures and short sales — have rolled back to 2003 and 2004 levels or lower in many former boom markets. As a result, buyers are coming off the sidelines, making offers and writing contracts. The pending home-sales index jumped by 7.4 percent based on purchase contracts signed in August, according to the National Association of Realtors.
The heaviest increases — pointing to higher closed sales in the coming two to three months — were in California, Florida, Nevada and the Washington, D.C., area. Housing and mortgage leaders say consumer worries about the stock market have obscured positive developments in real estate, where pricing pain and downsizing have been facts of life for 2-½ years.

David Kittle, president and CEO of Principle Wholesale Lending and incoming chairman of the Mortgage Bankers Association, says, "the mortgage market has never shut down" despite the global financial crisis. Money is "clearly available as long as you can qualify for it" with at least a modest down payment and decent credit history," Kittle says. Matt Vernon, a national retail mortgage-sales executive for Bank of America, said, "We've got more than enough liquidity" to handle mortgage demand. "We are open for business." Most of the bank's production is now funded through FHA, Fannie and Freddie.

On the front lines, mortgage-company owner Jeff Lipes, president of Family Choice Mortgage near Hartford, Conn., says: "I don't think consumers really know how free-flowing capital is right now in the residential mortgage market. There are no shortages, no breakdowns. People ought to be aware of that." Bottom line: Scary as the news has been about stocks and banks, this is not the case for mortgages. Besides shopping at large national lenders, check with local banks and credit unions that may be originating loans for their own portfolios — not for Fannie, Freddie or FHA. Many of them are healthy, have cash to lend and may be surprisingly competitive on terms and rates with the big boys.

Kenneth R. Harney: kenharney@earthlink.net
Copyright © 2008 The Seattle Times Company

Part II: 2008 Economic & Housing Report Presented by Gary Watts, Real Estate Economist

THE SUB-PRIME AND PRIME LOAN MARKET

Today’s various media outlets play up bad economic news more than ever, which leads to misconceptions about economic reality. In dealing with the news about sub-prime loans, they have greatly over-exaggerated the true situation. David Wyss, chief economist at Standard & Poor’s in New York said on January 4, 2008: “You look at the magnitude of the sub-prime problem, and it’s just not that big relative to the size of the economy or the financial market.”

It may surprise you to know that including Alt-A loans (less than prime but better than sub-prime) with sub-prime loans only makes up 13.1% of mortgage market.

Market Share of Loans: Sub-Prime Prime Loans FHA/VA
Fixed ARMs Fixed ARMs

U.S. 6.3% 6.8% 63.1% 14.5% 9.3%
California 15% 83% 2.0%


Delinquencies – 3rd Quarter Findings:

A delinquency in a mortgage payment occurs when just one monthly payment has been missed. In California, 21% of the loans that are delinquent are non-owner occupied home loans. The U.S. average is 13%.

Sub-prime: Fixed & ARMs Prime: Fixed & ARMs FHA VA Combined

U.S. 16.31% 3.12% 12.92% 6.58% 5.59%
California 12.6% 14.20% 1.00% 3.25%(2Q)

Notice that the combine d rate of delinquencies for all loans in the U.S. is 5.59%. The media never asks, “What was the all-time low delinquency rate?” The answer is 4.0%, which occurred in the 4th quarter of 2005! Also notice that 84% of sub-prime buyers have never missed a payment!

Notices of Default – 3rd Quarter Findings:

Notices of Default are filed when lenders’ loans have been delinquent for a specific period of time. This begins the foreclosure process. Most of the rise in this process is due to Florida, Ohio, Michigan, and California loans.

Sub-prime: Fixed & ARMs Prime: Fixed & ARMs FHA VA Combined

U.S. 1.38% 4.72% 0.22% 1.02% 2.22% 1.03% 1.69%
California Figures for California could not be found

Although the four states of California, Florida, Nevada, and Arizona currently have the largest amount of loans in foreclosure, in the 1st quarter, 24 states saw a decline in foreclosure starts. By the 2nd quarter, 36 states saw a decline. California and Florida hold 28.1% of all sub-prime ARMs, yet 33.7% are in the foreclosure process.

The media will report that 72,571 notices of default were filed in the 3rd quarter – a new record for California, surpassing the 1st quarter of 1996 with 61,541 filings. Nowhere do they say that since that time, California has built 2 million more homes and condos. By the way, those filings were on 68,746 properties.

Foreclosures – 3rd Quarter Findings:

Foreclosures occur when the buyer has been unsuccessful in curing the debt, and either a lender or an investor has acquired the property.

Sub-prime Prime: Combined vs. 2006

U.S. 3.12% 0.79% 1.45% 1.09%
California n/a n/a 2.08% 1.17% (2Q)

Sub-prime adjustable loans represent only 6.8% of the market, yet they create 43% of all foreclosures. Over the past 20 years, the average foreclosure rate in the U.S. has been 1.09%. The lowest foreclosure rate ever was 0.86%. In California, 54.6% of homeowners emerge from the foreclosure process by bringing their payments current, refinancing, restructuring their loan or successfully selling their home and paying off what they owe.

Last year, 43 states had fewer foreclosures in 2007 than in 2006. Only 7 states have a foreclosure problem. One third of all foreclosures come from just two states – California and Florida. The other two thirds come from Nevada, Arizona, Indiana, Michigan, and Ohio.

Reasons for Foreclosure:

The #1 reason: Fraud and/or Speculation! As of 12/1/07, the FBI reported 46,717 cases of mortgage fraud. As of 8/30/07, California investors (those not living in the home) represented 21% of the loans in default. In Nevada, the number is 33%, Arizona is showing 26%, and Florida has 25%.

The #2 reason: Unethical Lending! The government has enacted new standards for lenders including more education and licensing. New Truth in Lending guidelines are being put in place and so far 21 states have enacted new rules and regulations, including California.

The #3 reason: Loss of a Job, Medical Problems or a Change in Marital Status

Financial Support for Housing:

Since housing is so important to the overall economy, it will always receive help when things go wrong. Today, lenders are modifying existing loans to prevent foreclosure. Other lenders are not adjusting the interest rates upwards when the rollover period comes due. Congress has passed legislation allowing Freddie Mac and Fannie Mae to buy more sub-prime loans. FHA may raise their loan limits and cut in half, the down payment. The Federal Reserve has reduced the discount rate, and is pumping money into the credit markets. The European banks put $400 billion dollars into the credit markets in December. Investment firms, private equity companies, giant bond companies, and hedge funds are all planning on buying up delinquent mortgages. The big money houses have pretty much written off their bad loans’, getting ready to institute new underwriting standards, and will once again enter the home lending business.

(Source: Mortgage Bankers Association, Federal Reserve, FBI, Inside Mortgage Finance, U.S. Congress, and DataQuick Information Systems)

2008 Economic & Housing Report Presented by Gary Watts, Real Estate Economist

The following are the notes provided by Gary Watts to attendees to share with their clients. He feels that only as buyers and sellers are knowledgable about the market will the market start to improve. His first comments included "If you don't have to sell, then get off the market!"

FACTORS EFFECTING AND AFFECTING HOUSING

The Economy:

Over the past 12 months, our economy grew at a very healthy rate of 2.8% and creted a $11.52 trillor dollar economy. Since 2003, the U.S. has created over 5 million new businesses and almost 8.3 million new salaried jobs - employing 1.3 million more people over the past year. Add the 16 million self-employed and the 25 million part-time workers, and you can see why the government has received a lot of extra tax revenue this last year. Last year our government projected a deficit of $177 billion dollars. that would have been a 28.7% reduction from the previous year's budget. As the government's fiscal year came to an end, the deficit was only $162.7 billion dollars.

Since 1980, the Gross Domestic Product has risen 70% and helped to shrink our federal deficit. Today, our national debt is less than 1.2% of the GDP, compared with 6.0% in the 1980s and 4.7% in the 1990s. this current percentage level of 1.2% is below the 40 year average.

Corporate Profits:

The 3rd quarter numbers showed that U.S. corporations are still doing very well. They now have 21 straight quarters of double digit earnings, and corporate profits are running at an annual rate of $1.62 trillion dollars. These profits have almost doubled during the past 5 years.

Financial Corporations:

The media only talks about their huge write-downs due to the sub-prime crisis, and fails to mention that the majority of these financial companies still have surprisingly strong cash flows, and continue to pay big dividends. Since the market has already driven down their share prices, they have very little to lose by writing off any potentially bad loan. These write-offs include bad: business loans, credit cards, leasing contracts, currency fluctuations, bond devaluations, collateralized debt obligations, structured investment vehicles, mortgages, and failed mergers. If they hold these securities to maturity, they will likely get 98 cents on the dollar.

During the 3rd quarter of 2007, banks took write-downs of $43 billion dollars, yet they still made a net profit of $28.7 billion dollars - even after putting aside reserves (a 20 year high) for more potential loan losses. Here is a look ats some of the larger banks' profit positions (in billions) from the 3rd quarter; Citigroup: $2.38; Bank of America: $3.7; JP MOrgan Chase: $3.4; Wells Fargo: $2.8; Morgan Stanley: $1.54; and Goldman Saks: $2.85

(Source: Bureau of Labor Statistics, Bloomberg, Bureau of Economic Analysis, Federal Reserve)

Income Growth:

In 2006, the IRS reported that wage earners in the U.S. had their highest income growth in 5 years, and that personal income grew more rapidly than spending in 2007. Since the housing slowdown began two years ago, personal income has risen 7% leading to a $1.35 trillion dollar rise in the nation's income.

Employment:

December marked the 52nd consecutive month of job growth - this is the longest period of uninterrupted job growth on record. Over the past year, 1.3 million new jobs were created and the current unemployment rate is at 5.0%. Since 3% of the population won't work, even if you give them a job, we are near full employment. for 2007, the unemployment rate averaged 4.6%, the same as 2006.

Interest Rates:

Current conforming rates for mortgages are within 3/4 of a percent of historical lows. Last summer, rates rose to 6.75%, but by the end of the year they had fallen into a range of 5.75% to 6.12%.

With the benchmark 10-Year Treasury trading around the 4% range, interest rates for home mortgages should be around 5.5%. The reason they are higher is the lenders are still adding extra basis points for the fear premium.

Lending:

The financial markets have been in turmoil since summer. This was largely due to an over reaction in the subprime market, whereby financial institituions had bundled all types of loans into mortgage-backed securities. With investors not knowing exactly how much of their portfolio was sub-prime, they panicked and pulled the plug on additional funds being available for mortgages. As the investors either put on hold or adjusted their lending criteria, the whole landscape of lending changed.

(Source: Federal Reserve, U.s. Treasury, U.S. Bureau of Labor, IRS, Mortgage Bankers Association)

South Orange County Real Estate Blog

It is February and properties are coming on the market when our old inventory is still sitting. This is going to make a really tough Spring unless the economoy bounces back with a flourish. Homeowners please note, the old rules don't apply right now. Putting your home on the market now for it to sell by May is not the way this market is moving - unless of course you have priced your house based on 2004 comps. Sellers do not want to hear this news, but please wake up and take note. If you don't have to sell, DON'T! Get your property off the market. There are way too many real estate agents out there that are not being honest with you. They want the listing and will tell you whatever you need to hear. Agents are even letting sellers set the sales price. Why bother with an agent if you are not going to take their advice?

Our preview sheet this week there were 48 listings; 20 in Dana Point, 2 in Laguna Niguel, 19 in San Clemente, and 7 in San Juan Capistrano. If you are looking for a large flat lot with a quaint New England feel and beautiful gardens, there is just the property for you in San Juan Capistrano, 4 bedrooms, 3 baths with about 3,000 square feet on the market at $1,345,000.

In San Clemente's newer community of Talega there is a bank owned property with a huge backyard that has a canyon/hills view in the neighborhood of Farralon Ridge. The home has 3 bedrooms, 2.5 baths with approximately 2,000 square feet - it is listed at $761,000!

There are a number of new listings or re-listed listings in Southwest San Clemente. Unfortunately, many of these remain over-priced for today's market. One listing has been on the market for over 8 months and the price has still not been adjusted.

L.A. Times Article On Real Estate Agent Blogging

In today's L.A. Times, author Ann Brenoff, Times Staff Writer talks about agents blogging. The article goes onto say that working with an agent that doesn't blog is a disadvantage, since you can get to know an agent and their personality by the flavor of the blog. Many agents are blogging, but it is really difficult to keep up. Life has so many ups and downs and dedicating to writing about property when the market is slow takes alot of creativity.

A great super new construction property is just about ready for sale listed at $4.4 million in San Clemente. The homes boasts 6 bedrooms and 6.5 baths in about 5,800 square feet. What is so amazing about this property is the attention to detail as well as the spectular views that the home has been built around. It is currently bank owned and as they say today "make us an offer".

There is a nice roomy family home on the market in Capistrano Beach with 4 bedrooms, 4 baths at a little over 2900 square feet for $1.15 million. Recent remodel and the owners are relocating out-of-state. The home has a room addition over the garage built out for a mother-in-law with kitchenette and ocean view balcony. Well done and maintained off of Camino Capistrano.

Great listing up in Richmond Pointe with sitdown ocean views. This is a 3 bedroom, 2.5 bath with approximately 1800 square feet on the market for $875,000. This is a wonderful kid-friendly neighborhood.

The deals are out there we just need buyers to realize this is a fabulous time to buy!

Tax Break for Mortgage Debt Forgiveness

Just a reminder that President Bush signed into law the end of last year, a new measure that gives tax breaks to homeowners who have a mortgage debt forgiven. Prior to this new measure, if your lender forgave part of your debt under a short sale or refinance, you were responsible to pay income tax on that debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does NOT have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

This tax break applies to debts discharged from January 1, 2007 until December 31, 2009. This applied to principal residences up to $2 million for refinances. To read the full text of this Act, go to http://www.govtrack.us/congress/bill.xpd?bill=h110-3648

Real Estate Update: San Clemente, Dana Point, San Juan Capistrano and Laguna Niguel

Welcome to the new year and what our local area real estate has to offer. Broker preview is back for the new year and there were a total of 39 properties on the preview sheet for this week. Of these listings, 14 of the properties have been on the market for over 30 days - which means these are repreviews, trying to generate interest in a property that might have been overlooked - or was overpriced and has gone through a price adjustment recently.

Dana Point had 7 properties on preview this week, all single family residences with 2 properties having been on the market for over 30 days. One very interesting property to note is a new listing from my office, Keller Williams OC Coastal. This is a property on the bluffs in Capistrano Beach with fabulous ocean views. It is legally two lots, with a house on one. There are a multitude of options with this property and it has not been on the market for over 40 years. The current list price is $5,565,000 - but the agents say "make us an offer". If you have been looking for great ocean views on the bluff - you can't afford to miss this one.

Laguna Niguel only had one condo on the preview sheet this week, its a 1 bedroom, 1 bath with 747 square feet for an unbelievable price of $249,000! It seems the owner started to remodel - and never finished so it needs work, but what a deal less than two miles to the beach!

San Clemente had 23 listings on the sheet this week with only 3 of these being condos. One property in Talega is a short sale in the neighborhood of Seaside. It's amazing how there are still new properties coming onto the market that are overpriced for the current market conditions. One really cute single level detached home in New Providence is just adorable with 2 bedrooms and 2 baths with less than 1,000 square feet. This would be a great starter home or a move down for empty nesters and it even has ocean views! Another single level home to note is in the Broadmoor track (above from San Clemente H.S.) This is a 4 bedroom, 2 bath home with loads of potential. It has an end of cul-de-sac location with a nice rear yard and lots of privacy. One property that was on a repreview is on Avenida Salvador with great views! The price on this one has been reduced $200,000 so it is starting to come into line. Shows very well with 3 bedrooms and 3 baths in 2400 square feet - it has already been done so it is in move-in condition. There was also a very noteworthy property on preview this week in Sea Pointe Estates. It has 4 bedrooms and 3.5 baths in 3800 square feet of custom Italian delight! It is extremely tastefully done with so much attention to detail. It is on the market for $1,995,000.

Only five properties in San Juan Capistrano this week with three of them having been on the market for over 30 days. One condo in Captain's Hill has recently been staged and is a great 3 bedroom, 2.5 bath unit that shows beautifully. This one should have sold! An add-on listing in San Juan is a horse property on 3 acres off Ortega Highway with a 4 bedroom, 4.5 bath, 3000 square foot home. Property has 4 stall barn and is on the market for $2.7 million.

A Tall Ship In The Distance From The Bluffs On Camino Capistrano

On a grey and foggy morning during broker preview, this tall ship was spotted on the horizon from the rear yard of a property on Camino Capistrano.

South Orange County Real Estate Update

Well, I haven't been on blogging for the past several weeks for a couple of great reasons. First, my 9 year old doberman Deon, broke his femur on December 9th, so everything else was on a temporary hold due to his hospitalization and surgery. Then Christmas was upon us, and the market comes to a grinding halt. Then the New Year, and now kids are back at school and life resumes.

The market trends statistics are out on December 2007. The good news is that our inventory is shrinking in San Clemente, Dana Point, San Juan Capistrano, and Laguna Niguel. With current inventory numbers for each of these areas being closer to the inventory we started the year with. Obviously, pendings and solds are down with closed sales representing only around 5% of the current inventory for the month. This is low, but it is some activity with a total of 92 closed sales in these four communities. Market analysts are predicting that sales will continue to be slow for the first quarter of 2008, with some market recovery happening here locally come the later part of March 2008.

There are still some really great real estate opportunities in the marketplace and if you are looking for what is still considered a great investment, now is the time to enter the market since I don't think we will see prices this low again.

San Clemente Real Estate Blog

There were only forty-one properties on the South Area Preview Sheet this week and many were re-previews of listings that have not sold. Since it is not humanly possible to see all of the listings on preview every week, you have to choose, and from my selection, I blog on what was interesting and/or great deals.

In Dana Point this week there is a new listing for a 2 bedroom, 2 bath condo with really great ocean views. This is on the pricey side, but shows like an "artists" getaway. A little funky and you need good knees for all of the stairs, but worth seeing.

For seniors, a new listing in Sea Bluffs at Dana Point has recently come on the market. This two bedroom, two bath unit has wonderful ocean views. This is a single level condo within a full-service retirement community. There is a monthly clubhouse fee of $2,640 which covers utilities, maintenance, housekeeping, two meals per day, insurance, parking, security, transportation, etc.

San Clemente had several new listings that were noteworthy this week. A new listing in Forester Highlands for a 5 bedroom, 2.75 bath home with 3000 square feet. The home is nicely done and has great curb appeal.

There are several new listings in the Vilamoura condo development in Rancho San Clemente. All units that were on the preview sheet this week were 2 bedrooms with either 2 or 2.5 baths. They ranged in price from a low of $499,000 to a high of $749,500 for an end unit with an ocean view.

Another great condo property in Ocean Hills came on the market and this unit has just been redone - it shows like new and has fabulous ocean views for a 3 bedroom, 2.5 bath unit.

I previewed two great homes that just have a ton of potential - both in Southwest San Clemente. The first is a 4 bedroom, 3 bath with approximately 3000 square feet that backs onto the coastal canyon with an amazing feel. This property has so much potential for the right buyer who can enjoy and appreciate a part of San Clemente many don't even know exists. The mature trees and creek running by lend a very serene and relaxing atmosphere with wonderful decks to take it all in.

The second noteworthy home is also located in Southwest San Clemente and is a 3 bedroom, 3 bath single level home with 1800 square feet. This home shows like a staged property and the attention to detail is amazing. Behind the detached over-sized garage is a small studio that is detached and would make a great office/studio and playhouse. The large grassy yards, front and rear lend themselves to children or dog play or the house can be expanded. This has loads of potential and feels great!

San Clemente Real Estate Blog: November 2007 Update

The November 2007 market trends reports are in and are based on data and/or estimates provided by the Southern California MLS (Multiple Listing Service). I will review this data by city.

San Clemente active real estate listings continue to be up over the same period last year. At the end of the month we had 534 active listings in the city compared to 466 for the previous year. Pending sales were down slightly being 55 in 2007 compared to 61 in 2006. And, solds were down to 44 this year over 52 for the same period last year. As you can understand the market is down, but not to the huge extent that the media wants you to believe.

Dana Point active real estate listings were also up over the same period last year, with 332 active listings this year compared to 273 for the prior year period. Pending sales were down to 27 in Dana Point over 2006 who posted 37 during the same time period. Solds were also down to 20 from 26 during the previous year's period.

San Juan Capistrano had 301 active real estate listings during November 2007 compared to 228 during November 2006. Pending sales were down to 21 from 35 during the same period the previous year. Solds were down slightly to 23 from 27 during 2006.

Our inventory is slowly shrinking which is what it needs to do to help the market recover. I continue to hear the experts predicting that by the 2nd quarter of 2008, we will start to see prices start in increase and the market here locally recover.

San Clemente Real Estate Blog

I took a peek today at the MLS to see what the activity has been in certain communities in San Clemente. For instance, in Talega as of today, there are 162 active listings. 31 of these are condos and the remaining 131 listings are single family residences (SFR). On the low end with price, a two bedroom, two bath condo with 1358 square feet is on the market for $419,999 - while on the high end, the pricest home is listed at $2,899,000 with 5633 square feet, 5 bedrooms and 5.5 baths.

This indicates that the real estate inventory in Talega is slowly shrinking. At the beginning of November, there were 183 properties in Talega on the market. Average list prices for condos is in the low $600,000's while for SFRs, the average list is in the $1.2 million range. It is still taking on average over 80 days to sell.

This time of year the market usually picks up slightly for those corporate transfers that want to be in place by the beginning of the new year. This is also an excellent time to pick up good deals since homeowners are usually motivated to sell.