February 23rd, 2011 at 10:29 pm
I got a call last week about a new short sale scam that was, at least, new and interesting.? ? In this transaction, shortly before listing the property for sale, the seller transferred the property into a family trust.? ? Then, after it was put on the market, an investor offered to buy the property.? ? Understanding that short sale lenders prohibit flip transactions these days, the parties came up with a new, “creative” structure.? ? Rather than buy the property in the first, short sale transaction, the buyer instead agreed to purchase the beneficial interest in the trust.? ? That way, when the bank approved the short sale and was paid off, the property would not transfer.? Instead the investor/buyer would become the beneficiary of the existing owner of the property, the trust.? ? Then, when the property was sold to the ultimate buyer who the investor had already located, title would transfer for the first time, therefore theoretically not violating the “no flip rule.”
Of course, it is very easy to see what is really going on here.? ? This is really a flip transaction, just structured in a way so as to get around the bank’s prohibition of such deals.? ? Of course, no one is telling the bank what is really going on and, as a result, we refused to be involved.? ? As we have said many times, the short sale “professionals” are very clever in their scams and keep coming up with new ones so they can stay one step ahead of the banks.? ? Regardless, it is our job to stay vigilant and stay away from fraudulent transactions such as this.? ? As always, let us know if you have any questions.
February 17th, 2011 at 10:28 pm
As you know, electronic signatures are becoming more and more common in real estate transactions.? While there are many good things about this new practice (ease of obtaining signatures, reduction of storage costs), there are concerns that we should all be aware of.? Below is a link to an article written by Bob Hunt in Realty Times addressing some of these issues, both good and bad.? Pay close attention to the concerns he identifies at the end of the article.? I think Mr. Hunt is especially correct to identify the diminishing “face time” agents have with their clients as a result of getting electronic signatures.? As most of you know, I strongly believe that managing your client is a big part of your job. That “managing” consists of, in large part, educating the client about the transaction and making sure they understand the documents they are signing.? If you are getting electronic signatures, and therefore not seeing the client, are you explaining the documents as completely as you should be?? Obviously, using electronic signatures and doing a good job explaining documents are not mutually exclusive.? However, it does become harder and you should remember that the explanation and advice given to your client is part of your duties and must be accomplished someway, no matter how documents are signed.? As always, let us know if you have any questions.? Thanks.
February 17th, 2011 at 10:27 pm
With the market the way it is, short sales and foreclosures have become part of every day business.? ? Agents are often asked by their clients about the foreclosure process and while agents should always refer their clients to seek the advice of an attorney, you might want to know the basic time line in a non judicial foreclosure which is a trustee sale with no filing with the Court.
? After a default occurs, a? notice of default? is recorded in the county in which the property is located. This does not necessarily occur after one or more payments are not met but for logistical reasons may occur after a loan is in substantial default — sometimes six months or more past due. The foreclosure process does not move forward for a minimum of 60 days following the filing of the notice of default. This is known as the redemption period.
? A notice of sale containing the name and address of trustee, certain disclosures (including that the property is about to be lost to foreclosure sale), the name of the? beneficiary, and other information must be recorded in the county in which the property is located at least 14 days before any foreclosure sale. This is known as the publication period.
? The borrower must receive a twenty (20) day notice before any foreclosure sale. Additionally, the notice of the foreclosure must: (a) mailed to the defaulting borrower (and other creditors whose liens affect the property) and; (b) be posted at the property being foreclosed upon and in a public place in the county where any sale would occur. The defaulting borrower may prevent the foreclosure sale by paying all arrearages up to five (5) days before the sale. The trustee’s foreclosure sale then occurs no earlier than? twenty one (21) days after the first publication.
? Foreclosure sales must take place on a business day between the hours of 9AM and 5PM and must occur at the location referenced on the? notice of sale. The trustee will? auction the property to the highest bidder, including the lender. The borrower is permitted to postpone the sale for one (1) day.
? Following the sale, the property is transferred to winning bidder. By default this will be the lender if no bid higher than the lender’s opening bid is received.
February 12th, 2011 at 10:25 pm
As you know, the CAR Purchase Agreement provides that, within 7 days of contract acceptance, the buyer must provide the seller with verification that they have the funds necessary to close the transaction.? From the broker’s perspective, the question is how do we want to handle this part of the transaction, either from the buyer’s or seller’s side.? In some instances, we will need to collect and forward those documents to our sellers and then properly prepare them for our file.? In others, we will need to confirm and document that our seller has received those documents, then provide that confirmation to our file.? Most importantly, when we represent the seller, we must make sure they get the verification documents in every instance.? Ignoring that clause of the contract is unacceptable.? With that in mind, let’s talk specifics.
First, understand that we would prefer not to have the verification documents in our file.? Those documents contain a lot of confidential information that have the potential for causing identity theft issues.? Obviously, if we do not have the confidential information, we cannot be responsible for it being stolen.? As a result, in a deal where escrow has been opened before the verification documents are provided, we should instruct the buyer’s agent to gather the documents, redact (black out or white out ) account and social security numbers and then forward them to escrow.? Escrow can then send the documents to the seller.? In this case, we don’t receive the documents at all and the buyer is not contacting the seller directly.? As the listing agent in this scenario, we should confirm with or seller that they received the documents and send an e-mail to them documenting that confirmation.? Ask the seller to respond, agreeing with our confirmation, and print out the e-mail and response for our file.? This confirmation will establish that we did our job and ensured that the seller got the information they are entitled to.
Next, there are instances where, despite our wishes, the agent will have no choice but to receive verification documents.? For example, if the property is very popular, the seller may want those documents before they decide which buyer to choose.? Or, the REO lender may require that the listing agent provide these documents.? In that case it is fine to take the documents, but we must handle them properly.? Remember that once those documents are received, the DRE requires that we keep them in our file for 3 years.? So, in this instance we should also make sure that social security and account numbers are redacted before the documents are given to our sellers.? We should also be sure that they are not on the documents we keep in our file.
So, try not to take confidential information if possible.? But if you must receive that information, handle it carefully and properly.? Being careful will help ensure that identity theft is not a problem for our Company.? Thanks and as always, feel free to contact us if you have any questions.
February 9th, 2011 at 10:25 pm
I attended the Monarch Beach office meeting today and heard an interesting story about one of their deals.? In the RPA, the parties attached the WPA and provided that the seller would pay for section 1 work while the buyer would be responsible for section 2.? When the buyer’s lender asked for and received a copy of the termite report, they required that the buyer complete the section 2 work before close of escrow.? That was the first time I had heard of such a requirement, but was told that it is becoming more common.? As a result, be aware of this issue as we go forward since bank requirements seem to be getting universally more stringent.
