What is AB284 and What Does it Mean for Homeowners?

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Recently I got asked the question about what is AB284, so I thought it would be a good time to clear up some misconceptions people have about this new state law.  In short, AB stands for assembly bill.  This new state law took effect on October 1, 2011.

The new law requires that any notices of default include an affidavit that also includes information regarding the deed of trust, the amounts due, the possession of the note and deed of trust, and the authority to foreclose.  Lenders who fail to comply are subject to civil penalties.  Anyone making false representations concerning property title are also subject to a class C felony.

Obviously, this is big news and has slowed down the notices of default that have been filed in our county.  In fact, it slowed it down so much that there were only about 55 notices of default filed in October. When you compare that with the preceding months where more than 3000 defaults were filed each month, you can see that there's a huge difference.

There is No Free Lunch Folks

Unfortunately, many people are under the mistaken assumption that this means that they can default on their mortgage loan and then live in their house for free as long as they want.  This is not the case.  Although the new law will slow down foreclosures for a few months until the banks get their acts together, you can better believe that they will find a way to comply with these new regulations and get the foreclosures moving again.

You see, right now banks are scrambling to make sure that they get their paperwork together so that they can continue with the process of issuing defaults.  But what does this mean for homeowners right now?

There is a Silver Lining for Homeowners Who Hurry

If you are a homeowner who is teetering on the edge of default, this opens the opportunity for more short sales right now.  Lenders who were previously not interested in working with owners are going to be much more inclined to do so since they can't follow through with foreclosure is easily right now.  Now is the time to take the chance on working on a short sale with your lender.

You can start healing your financial picture right now so that you can buy again in the future.  This might be the time to get things squared away so that you and your family can move forward without worrying about being foreclosed upon.

Don't make the mistake of listening to some of these hyped up attorneys that are trying to convince people they can live in their homes free of charge for years and years.  That is simply not the case.  Remember the banks have millions of dollars invested and will solve this crisis soon.  I estimate about 90 days before banks will have it figured out, so time is ticking for sure.

I would love to speak with you about your current situation to see if a short sale would be a good option for you.  Give me a call today so that we can start healing your financial picture.

Need More Time? How To Stay in Your House Longer and Avoid Foreclosure

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Falling behind on payments is not a very uncommon occurrence anymore and as homeowners watch their home literally slip through their fingers, there is little time to figure out what to do in the long run.  But with some careful strategy, there is a way to buy some more time so you can figure out how to manage the situation and maybe even avoid foreclosure in the first place.

Here are three steps homeowners can take to gain additional time prior to the foreclosure process:

1. File for Bankruptcy Relief

If you have fallen behind on your payments, it is safe to say that you are experiencing a financial crisis of some sort.  Whether as a result of job loss, change in ability to work, downsizing, divorce or death in the family or changes in your health affecting your ability to earn the same as before – something will need to be done to rectify the situation.  While filing for bankruptcy protection will not change your foreclosure proceedings from going forth once the bankruptcy process is complete – it will give you time to step back and consider all options and how to proceed.  During the bankruptcy filing and until it is final – all foreclosure processes are put on hold.

2. Request State Mediation

Most states have a mandatory mediation statute that gives homeowners and avenue to dispute or at least ask for verification that the lender has the authority to file foreclosure on the property. In fact, lenders are required to provide the homeowner with an application for mediation along with the notice of default action.  Though there is a fee involved (ranging anywhere from $300 to $3000 depending on how you pursue it) you will automatically buy about three months’ time, giving you and your family a chance to cope with the situation and establish some alternatives.  The added breathing room comes from the time it takes to receive a response once an application is sent to the agency managing your mediation request.

An added advantage of the mediation process is that the lender’s representative may very well assist you in coming up with other alternatives and depending on your situation, work with you to pursue a loan modification.  This could help you avoid foreclosure and be able to hold on to your home.  If that is not an option – you can also seek additional time to pursue a short sale.

3. Talk to the Lender

The department handling foreclosures at the bank is used to seeing many distressed homeowners and may assist you in exploring other avenues, especially since banks do not want any more foreclosure properties on hand than they have to. If anything, you may be able to get approval to put your home on the market for a short sale without having to spend the money needed to apply for mediation.
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Unbeknownst to many homeowners in financial strife and facing foreclosures, their Realtor is a great resource of information, support and references to other people that can provide the same relief.  Be sure to consult with your Realtor to find out what avenues they can assist you with during this very difficult but manageable situation.