Foreclosure Even When You Pay Your Mortgage: Usually, when someone gets foreclosed upon, it is due to nonpayment on a mortgage or line of credit on the house. However, there are other, less well known circumstances that can lead to foreclosure that you ought to know about. These fall generally into the classification of "tax liens", and result from nonpayment of a tax or tax-based bill on the property. If you don't pay your property tax, it could be sold at foreclosure. What gets really surprising is that in some towns and counties, utility or other similar services are provided by the municipality and billed accordingly. If the homeowner doesn't pay, they are sold at foreclosure as unpaid tax liens, often for very small amounts of money. In one case in New Jersey, a man lost his home over a $140 water bill that wasn't paid on time. An investor bought the home at foreclosure for the $140, and then, after negotiations, resold it to the original owner for about $37,000. Nice profit, huh? Because of the cash shortages that many cities and towns now face, this is becoming an increasingly common practice. The city needing cash sells the lien to an investor, who then forecloses on the home. In another equally ridiculous, but very legal, case, a Washington, DC owner found his home being foreclosed over an allegedly delinquent property tax bill. It seems the city had erroneously removed a homestead tax exemption, resulting in an increased tax bill. He was not aware of the change as the removal of the exemption was erroneous and continued to pay what he thought was his correct property tax when due. The home was foreclosed by the purchaser of the tax lien, and the owner has had to hire an attorney and sue to reverse the tax sale and get his home back. Results still pending, but, as he notes, he did nothing wrong. The city erroneously revoked the exemption about 6 years ago, and has acknowledged the error by restoring it subsequently. So, the word here is keep just as close watch on your tax obligations and municipally provided services as you would your mortgage. Good luck.

What If You're Foreclosed? Those of you who regularly follow this blog know that it's designed to help you avoid foreclosure if at all possible. With that in mind, I regularly post the latest helpful info as I learn of it, often referring you on to additional information sources for still more info. But for some of you, no matter what you do to avoid the dreaded foreclosure, or for those of you who find yourself involved due to the problems of an unrelated owner (if, for example, you're a tenant), the axe does fall and the bank now owns the property. What do you do? Well, obviously the lender that has foreclosed wants the property vacant as soon as reasonably possible. If you don't go willingly, they can and will file an eviction action to get you out. Do you have to move? Most likely, yes. The bank, after all, does own the property and, like any homeowner, can evict folks that it doesn't want in the property. However, in many cases, they are willing to allow you a little bit of time to get your things packed and moved to where-ever you're going. Usually, the first person you'll see representing the bank is the real estate agent they've hired to handle the property's sale to a new owner. The Realtor is instructed to determine if anyone, former owner, tenant, whatever, is living there and what their plans are--how soon are they vacating; are they determined to stay as long as possible; whatever. In many cases, you will be able to negotiate the time you'll be allowed to stay as you prepare your departure. You very well may even be able to negotiate some cash from the foreclosing lender as a payment for your departure. These funds are generally referred to in the trade as Cash For Keys (CFK), and the amount you may receive varies from lender to lender and is also related to how long you plan to stay before leaving. The amounts I have seen offered have ranged from a few hundred dollars to as much in a couple of cases as $10,000. The payment is not usually per person. In other words, it makes little difference if there's just you there or if you have a family of ten. There is still only a single payment made, whatever the total. Some factors affecting the time you'll be able to remain involve such things as school term schedules, availability of your planned new residence to move in; or other important 'life' issues. My advice: if the foreclosure is legitimate, don't fight with the agent over when you'll leave. He/she is just the messenger, not to mention, your only point of contact with the bank for now. Explain your situation and why you want to be allowed to stay as long as you do. The agent will forward your wishes along to the bank that owns the property for their response. The agent will also usually be the one to provide the options of CFK, if it is offered. Again, the sooner you move, usually the more you get. If CFK isn't offered, you can tell the agent that you've heard that occupants frequently receive funds to help them move and could he see what the bank is willing to pay you in your case. Again, nothing ventured, nothing gained. There are no guarantees here, but asking never hurts. Finally, a word of caution: if you are provided with Cash for Keys, remember, it's definitely taxable as normal income. You'll receive a 1099 at the end of the year to file with your tax return next April 15. However, in spit of that ugly fact, usually the CFK payments can be a welcome bit of assistance at this very dark time in your life, so don't let their taxability defer you from accepting the payment. As always, good luck.

California Homeowners Bill of Rights--Update: This bill, previously discussed here, was signed into law on the eleventh by Governor Brown. These provisions take effect January 1, 2013. If you think you were wronged due to some of the actions undertaken by your lender in foreclosing or trying to foreclose on your home, call an attorney, or contact the state Attyorney General's office. Good luck.

Were Your Wronged By Wells?: Yesterday a settlement with the Federal Givernment on claims of racial discrimination in making loans was agreed to by Wells Fargo. They will write a rather large check to settle the claims arising from a Federal investigation that alleged independent brokers steered minority borrowers to Wells, where they were placed in higher interest rate loans than white borrowers in similar economic circumstances. Wells did not admit any guilt in mkaing the settlement. Oh, you ask how much was the check Wells wrote to settle? It was $175 million. Begs the question if you ar4e a minority borrower with a mortgage from Wells, were you discriminated, and, if so, do you have a potential action against them for damages based on any discrimination that may have occured? Check with your attorney if you think so. Good luck.

As If We Didn't Have Enough to Worry About! Well, I'm sure that all of you out there are aware of foreclosures due to mortgage nonpayment issues. However, not paying the mortgage is only the most common area for foreclosure. However, there is a major second foreclosure issue that has always existed, and is now growing at such a pace that it thre3atens to become a second foreclosure wave. What is this? It is foreclosures for failure to pay real estate taxes and/or any related late fees. In many states a home may be foreclosed upon via the familiar public auction route for even the smallest of amounts due. Even a few hundred dollars is not too small an amount! Where it gets really sticky is the local laws' provision to somewhat protect the defaulting homeowner. In most cases (check your local laws to get exact details), once the home is foreclosed, the homeowner has the right to buy it back from the foreclosing buyer for what the buyer paid. The catch? Well, most statdes also allow the foreclosing buyer to charge a fee to the former homeowner in addition to the amount paid at foreclosure. So, you say, how much of a fee can it be? Well, in some states the fee can be as much as 20% of the home's value. Let's do the math. Let's say you lost your home for a delinquent tax of $200. So, you scrape together the $200, contact the auction buyer and he says he'd love to sell you your house back. Just one thing--he's had "expenses" and related activities to handle relative to its purchase/ownership and so forth, so he 'needs' to add a fee to the cost for you. But it's "only" 20%. Well, if your home is valued at $100,000, that "only 20%" is $20,000! Not so "only" is it? What can you do? You might want to call your state legislator and any pro-housing group and start pushing for a change in the law to eliminate or at least severly reduce these fees. Also, for more info, check out the National Consumer Law Cdenter (NCLC). They can be found on the web: www.nclc.org . If you're affected, good luck.

Confusing Forms?: When you consider taking out a mortgage or equity line of credit, do the forms, and there are so many of them, seem confusing? If so, then you share a complaint with many others that has existed over the years. Unfortunately, this is what happens when attorneys draft forms that cover a loan and still protect their clients, the lenders. Well, under a recommendation, non-binding, of course, by the Consumer Financial Protection Bureau (CFPB), this issue would become a thing of the past. They have recommended that forms used in the lending be more easily understandible & less confusing. Sample forms would be provided after loan applications are filed and before closing. Want more info? Contact either the CFPB or your lender about these forms and their availability. Good luck.

California Homeowners Bill of Rights--The Details: A few days ago, I wrote of the passage in the California Assembly of the bill for what is now called the Homeowners Bill of Rights. Well, it has now passed the state Senate as well, mostly on a straight party line vote (one Republican did vote to support--just one!). The Governor, Jerry Brown, has said he will sign the bill and it would then go into effect on January 1, 2013. There are six major provisions: 1.) it effectively bans 'dual tracking', the current method by which banks maintain the foreclosure process on a home at the same time they are considering a loan modification. The result in many cases, is a home is foreclosed before any mod can be done due to constant delays in the mod process. Under the new law, if you seek a mod, the lender cannot proceed with a foreclosure until the mod decision is final and, presumably, rejected. 2.) Contacts: a lender MUST provide a borrower with ONE point of contact in the bank. That one person will be responsible for updating the homeowner with any details or actions on his/her home be they foreclosure or loan mod. This way should eliminate the current situation where all too often the right hand doesn't know what the left is doing. 3.) If a borrower's loan mod request is rejected, the bank MUST clearly explain why it was rejected. 4.) Borrower Recourse: This gives borrowers the right to sue lenders for "significant, material violations" of the law. 5.) Fines: Provides lender fines of $7500 per loan for filing and recording unverified documents (and, before you ask, no, I don't know exactly what constitutes such a document, but your attorney should know). 6.) Limits: This law ONLY applies to first mortgages for owner occupants. So, if your issue is with a Home Equity or 2d mortgage, or if the property in difficulty isn't your primary residence, you have to look elsewhere for help because this is just for your primary residence first mortgage. Looking forward to January 1, 2013, I wish you Good Luck.