Realty World Tri-Shasta

Recently the Shasta County District Attorney’s Office sent out a press release regarding their Real Estate Fraud Unit. This press replease discussed the annual report, the fees collected, the number of complaints received, its

District Attorney Jerry Benito

 public relations, and the most common scams.

The Real Estate Fraud unit was formed last summer and upon The Board of Supervisors approving the new program, they also approved for it to be funded through the fees collected through certain real estate documents that were recorded through the assessor’s office.

The total amount of fees that were collected over the fiscal year totaled more then $80,000. Ten percent of that amount went to the Assessor’s-Recorder’s office to reimburse them for incured expenses, the remaining $80,000 was given to the investigation postition at the District Attorney’s Office.

Since the beginning, even a little bit before, the creation of this department, right around 66 calls of complaints have been received. Some cases have lead to criminal prosecution, some have been referred to other jurisdictions (where the case joined to other cases against the same suspect who was already under investigation within that jurisdiction or had already been prosecuted within that juridiction), some have been referred to the California Department of Real Estate based on the unethical behavior of realtors, and some in some other cases the investigator intervened on behalf of local citizens and was able to recover money that was paid to loan modification companies.

The public outreach programs that the Real Estate Fraud Unit have been involved in are: Press releases, radio appearances, and presentations to groups. The District Attorney Jerry Benito has also met with U.S. Attorney Benjamin Wagner to coordinate efforts related to mortgage fraud here in the Shasta County area.

There are two scams that have been the most common – Nigerian Rent Scams and Loan Modification Scams.

The Nigerian Rent Scam is where criminals in Nigeria surf the Internet for homes that are for sale. They then take the information regarding that listing and create a rental ad for that same property. The Nigerian claims that they

District Attorney Investigator Bob Angulo

are out of the area for work, offers to rent the property, and requests a deposit. After the interested party sends them the deposit, they then learn that the property is not for rent – not even owned by the person they were dealing with.

The Loan Modification Scam is where a company offers to assist troubled homeowners to modify their home loan. These companies will often request an upfront fee to perform their services – many of these companies are out-of-state. After sending of the fee the homeowner may see delays, little work, never see a modification, and they will not see their money paid upfront. Under California law, loan modification companies are not allowed to charge an upfront fee. It is also important to know that even while working with a loan modification company, your home is still at risk for foreclosure. Remain in close contact with your lender during the loan modification.

• Forebearance – lender may allow the borrower to skip a payment or make a partial payment if the borrower can suggest a reasonable plan to catch up on the amount in arrears.
• Reinstatement – borrower agrees to make a lump sum payment in the future to bring the mortgage current.
• Repayment Plan – lender may allow the borrower to catch up on what is owed by increasing the monthly payments until the missed payments are brought current.
• Loan Modification Plan – Modify a mortgage – converting it to a fixed rate mortgage at a lower interest rate and extending the years of the mortgage to reduce monthly payments. Giving more years to pay off – adding the missed payments to the balance of the mortgage.
• Forgiving Part of the Loan – makes payments affordable.
• Deed in Lieu of Foreclosure – it is a friendly foreclosure, the loan amount must be lower than the anticipated sales price.
• Cash for Keys – the lender and the homeowner agree to exchange cash from the lender for the keys to the property.
• Sell the Home – set a price that will attract many qualified buyers. Upside down property – the financial institution may be willing to forgive some of the mortgage to make a sale possibly in order to avoid foreclosure – Short Sale.

• Credit card debt is out of control.
• Paying for necessities with credit cards.
• Cannot meet monthly financial obligations.
• Borrowing from friends and family.
• Loss of employment or reduction in hours or wages.
• Major illness which can cause loss of work and increase in health expenses.
• Divorce, separation or other traumatic family or personal situations.
• Death of a spouse or significant other.
• Cannot pay the new Adjusted Payment on the ARM mortgage loan.
• Major unbudgeted maintenance expense.
• Excessive debt is the number one cause of financial collapse and foreclosure.

• Be proactive about the problem when the first warning signs appear.
• Contact your lender when you become aware that you have a problem.
• Read the mail.
• Contact HUD approved housing counselor or call a real estate agent for advice.
• Prioritize your spending by paying for the necessities of life first.
• Look for ways to generate cash.
• Do not get scammed by a private “foreclosure prevention specialist.”
• Make an appointment with a real estate agent to discuss the problem and to get their advice.

1. If the Seller is current with their payments even though they may be upside down in their home.
2. When there is no real hardship that has caused the delinquency of payments.
3. If the property is a second home or an investment property. There have been some exceptions.
4. When the Seller has filed for bankruptcy protection under Chapter 7 or Chapter 13.
5. A recent cash-out refinancing of the home prior to the Seller deciding to sell the home or the Seller has recent Home Equity Line of Credit.
6. When the proceeds of the sale are not sufficient to satisfy the Lender in the first position and giving sufficient percentage to those junior liens after all closing costs are paid in full.
7. Clouds on the title due to outstanding liens.
8. The time frame for the sale process is not adequate to complete the sale.
9. The Seller has access to enough funds to be able to satisfy the outstanding debt from the proceeds of the sale of the home.
10. The Seller wants to receive monies from the sale of the home after the discounted payoff to the Lender and all closing costs.
11. Potential zoning or building code violations.
12. The Short Sale Submission Package is incomplete.

• It is estimated that the average cost of handling a foreclosure for the financial institutions is right around $50,000.
• REO properties sell for more than comparable Short Sale properties because of the cost incurred by the financial institution in acquiring the property.
• Disclaimers on REO properties are not available from the lender because they cannot represent the condition of the property or neighborhood information.
• The average REO listing is for 90-days, this is based on a national average not the Shasta County real estate market.
• Most REO properties are sold in “As Is” condition.
• REO purchases are less of a risk than buying at a foreclosure auction, but contain considerably more risk than a Short Sale.
• REO properties can usually be purchased faster with less problems than a Short Sale.
• REO properties are usually priced to sell. Making ridiculously low offers is a waste of time and may not elecit a counter offer.

Following are five definitions related to the foreclosure process. Yes, these definitions are even for the foreclosures within our Shasta County real estate market.

Redemption

Redemption is the borrower’s right to buy back the property or bring the mortgage current while the property is being foreclosed or after the it has already been foreclosed on.

Notice of Default

Notice of default is a notice send from a financial institution to the borrower when the borrower’s mortgage payment is past due, the letter states that the mortgage is in default. The notice discloses the date at which the foreclosure proceedings will begin if the mortgage is not brought current.

Real Estate Owned

Real Estate Owned, or REO, is the real estate owned by the financial insitution including real estate obtained through the pre-foreclosure process or through the foreclosure.

Bankruptcy

Bankruptcy is the legal declaration of an individual’s inability to pay their debts.

Deficiency Judgement

A deficiency judgement is a judgement lien against a debtor whose foreclosure sale did not produce sufficient funds to pay the mortgage in full. Some states do not allow deficiency judgements for this purpose.

The four factors contributing to the rise in foreclosures are: Predatory lending, declining prices, unemployment, and increased debt.

Predatory lending is when borrowers are approved for a loan but do not have the financial capabilities to meet that debt. The lender also fails to provide the necessary information that shows any future adjustments in the interest rates – such as you would see in an Adjustable Rate Mortgage (ARM).

Declining prices is a factor because many homes out there are worth less than what is owed on the loan, which means some home owners are upside down in their homes. With home values sitting where they are at, homeowners are choosing to walk away from their property if they are having problems making their monthly payments. This allows foreclosure and foreclosed properties tend to be sold below the market prices, thus lowering home values.

The job market and real estate market are tied together; if there is a rise in unemployment, this will affect the real estate market. The creation of new jobs increases the need for homes, it would take approximately 1.2 new jobs to create the need for one home.

The number in credit card debt and installment debt has been ever increasing over the years, along with the interest rates of those loans. That is why increased debt is one of the contributing factors in the rise in foreclosures.

Here in Shasta County, we are facing all four of these factors and as long as we continue to have these factors our real estate market will continue to be governed by these foreclosures on the market.

When it comes to owning real estate, may people want their homes to be just as attractive on the outside as they try to make it on the inside. The way to achieve that goal is plain and simply the right landscaping. Beautiful landscaping, even if one does not have the greenest of thumbs, is attainable no matter who you may be. Here are a few tips that will hopefully get you on your way:

• Select plants that thrive in your area but require little maintenance, this is especially important for you busy people here in Shasta County.
• Stick to a simple palette using different plants that have various textures and various shades in the same colors.
• Soften edges of walkways with low, mounding plants.
• Create interest between pavers with prostrate plants that tolerate both dry conditions and foot traffic.
• Accent vertical lines of your house with climbers, for points of interest.
• The yards that people tend to make the most fuss about are the ones with stone pathways, cozy gazebos, inviting gates, and pretty pots filled with colorful plants (When a pathway is desired but your budget is tight, which is understandable in this economy, using recycled materials is a great option).

If you are still unsure about what to do or still have questions about what is right for you, your home, your area, or even your pocket, here are some other ways to gain ideas for improving your homes curb appeal:

• Visit Botanical Gardens. Visit your local botanical garden, or even ones while you are traveling, to gain a wealth of ideas. Take a pencil and paper and write down any ideas you like or even sketch your ideas.
• Go to Nurseries. When wondering through your local nursery take note of the way trellises, sheds, and container gardens are situated. Borrow those ideas for your own yard.
• Go on a Tour. Many towns have garden club tours. It will not hurt to sign up and attend one of these tours. You will be able to gain a better understanding of what works the best for your area. Ask plenty of questions and take your camera along for pictures.
• Visit Your Library. Any library will have a plethora of gardening books. Spend an afternoon going through them and jotting down any ideas that catch your interest.
• Hire a Garden Designer. Certified garden designers can help to come up with different ideas that can be used within one season or over several years. They know what elements will work the best in your yard, and have the resources to get exactly what you want. You can ask any one of your local nurseries about why they would recommend.

Hey there Shasta County, here is a cute real estate type joke to cheer you up on this beautiful day.

Two By Fours

Some men in a pickup truck drove to a lumber yard. One of the men walked into the office and said, “We need some four-by-twos.”

The clerk asked, “You mean two-by-fours, don’t you?”

The man said, “I’ll go check,” and went back to the truck. He returned shortly and said, “Yeah, I meant two- by-fours.”

“All right. How long do you need them?”

The customer paused for a moment and said, “I’d better go check.” After a while, he returned to the office and said, “A long time… we’re gonna build a house!”