July 2020

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THE FORECLOSURE PROCESS IN CALIFORNIA

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text]In California, a lender can choose to do either a Judicial or non-Judicial foreclosure. Since a non-judicial foreclosure allows the lender to sell your property without any government oversight, almost all foreclosures in California are Non-Judicial.[/vc_column_text][vc_empty_space][vc_column_text] NOTICE OF DEFAULT [/vc_column_text][vc_empty_space][vc_column_text]The Non-Judicial Foreclosure Process Starts with the filing of a Notice of Default, also called an NOD. This document is “recorded” with the County where the property is located. It is recorded by the “Foreclosure Trustee” who works for the lender. The document states that you are in default under the terms of your loan agreement, and that the lender is going...

07 July

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REDUCING PRINCIPAL BALANCE & REMOVING MORTGAGES (FIRST AND JUNIOR) IN BANKRUPTCY

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text] CRAM DOWNS & LIEN STRIPPING (REMOVAL) [/vc_column_text][vc_empty_space][vc_column_text]‘Cramming down’ refers to reducing the amount of the lien to the market value — in other words, if a mortgage balance is greater than the market value of a property, the balance can be reduced down to the market value amount. Cramming down of liens can be done through Chapter 11 on properties that are not a primary residence. Liens that may be crammed down include mortgage, HELOC (home equity line of credit), HOA (Homeowners’ Association), and judgment. In a Chapter 11 bankruptcy, you can also remove fully unsecured liens from your rental properties (i.e....

07 July

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FACING FORECLOSURE? WHAT CAN A LENDER DO AFTER DEFAULT?

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text]In the event that a trustor (or borrower) defaults on the payments owed under the note, a beneficiary (or creditor) holding a deed of trust generally has three legal options to enforce his rights. The beneficiary can: (i) sue to enforce the note obligation by bringing an action to collect on the debt; (ii) seek judicial foreclosure of the property securing the debt; or (iii) have the trustee exercise its power of sale, if such power is expressly granted in the deed of trust. The timeframe in which a beneficiary can exercise these options (the “statute of limitations”) differs.[/vc_column_text][vc_empty_space][vc_column_text] SUIT...

07 July

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FACING FORECLOSURE? WHAT DOES THE BANK HAVE TO DO BEFORE THEY CAN SELL MY HOME?

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text] HOMEOWNER BILL OF RIGHTS [/vc_column_text][vc_empty_space][vc_column_text]As part of the California Homeowner Bill of Rights (a series of laws which took effect in January 2013 in response to the foreclosure crisis affecting the state), prior to filing a notice of default to commence a nonjudicial sale, the law (California Civil Code Section 2923) now requires that a mortgage servicer, beneficiary, or trustee contact the trustor/borrower in person or by phone in order to assess the borrower’s financial situation and discuss options available to the trustor/borrower that may avoid foreclosure. Cal. Civ. Code § 2923.5(a)(2). After this initial contact is made, the mortgage...

07 July

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DOES THE BANK HAVE TO ACCEPT MONEY I OFFER THEM TO CURE THE DEFAULT (REINSTATE THE LOAN)?

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text] STATUTORY RIGHT TO REINSTATE LOAN BY PAYING DEFAULT [/vc_column_text][vc_empty_space][vc_column_text]A lender/bank cannot refuse to accept your payment for the full amount of default at any point prior to 5 business days before the sale. Up until then, per California Civil Code Section 2924, you have a statutory right to “reinstate” the loan by paying the default amount (plus other fees, such as interest, penalties, and costs), and they are required to file a Notice of Rescission of the Notice of Default. Cal. Civ. Code § 2924c(a)(1) The lender (or its servicer) is also required to provide the borrower with a “beneficiary statement,” which contains...

07 July

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USURY LAW (LIMITATIONS ON INTEREST RATES CHARGED ON LOANS)

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text]The California Constitution prohibits loans that are made primarily for personal, family or household purposes from having interest rates above 10% per year. This is California’s general usury law. However, there are many exceptions. First, as implied from the above, loans made for business purposes are not capped at 10% interest (although there are other caps).[/vc_column_text][vc_empty_space][vc_column_text] HOME LOAN EXEMPTION [/vc_column_text][vc_empty_space][vc_column_text]Second, a loan that is taken out to be used primarily for buying a home (i.e. a mortgage) or improving a home (i.e. a construction loan) are not considered loans for personal, family or household purposes, and thus are not capped at 10%...

07 July

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THE IMPORTANCE OF THE “ESTOPPEL CERTIFICATE”: ENSURING POSITIVE RETURNS FROM THE PURCHASE OF AN INCOME PROPERTY

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text] ABSTRACT [/vc_column_text][vc_empty_space][vc_column_text]An Estoppel Certificate is a document typically used in performing due diligence prior to the purchase of tenant-occupied property. The purpose is for a lender and purchaser to have written confirmation from tenants of certain terms. Important amongst these are: the rental amount; security deposit; duration of lease, renewal options; and, as discussed further below, a “subordination” clause. The subordination clause is used to confirm that the tenants have agreed, in their lease, that their interest is subordinate to future mortgages. Without such confirmation, the tenants’ leases have priority over mortgages that are subsequently obtained. Furthermore, only a tenant whose...

07 July

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A BRIEF OVERVIEW : MECHANIC’S LIENS

Posted by Kevin Hellon

[vc_row triangle_shape="no"][vc_column][vc_column_text]In California, contractors who perform work on real property can issue a mechanic’s lien against the property. If a contractor is not paid for the work they performed, they can issue a mechanic’s lien that allows them to collect payment by forcing a sale of the property where the work was done. Subcontractor, material suppliers, and equipment lenders can also issue mechanic’s liens. However, there are strict procedures and deadlines that must be followed to ensure that the claim is valid. If these are not followed, a mechanic’s lien will not be valid and the right to enforce may...

07 July

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HOW TO PUT A LIS PENDENS ON PROPERTY IN CALIFORNIA

Posted by Kevin Hellon