FF   F    oreclosure    and Short Sale             Guide
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F         Page 1: Foreclosure Summary          Page 2: Foreclosure - Types Defined          Page 3: Foreclosure - Steps   ...
Foreclosure                               and Short Sale Guide                             F     -                        ...
Foreclosure  and Short Sale GuideF     -ORECLOSURE          TYPES DEFINEDTwo types of foreclosures proceedings are permitt...
4                      Foreclosure                        and Short Sale Guide                      F     -               ...
Foreclosure          and Short Sale Guide        F     -          ORECLOSURE   TIME LINE CALIFORNIA (NON-JUDICIAL)        ...
Foreclosure                                    and Short Sale Guide                                  F     -              ...
Foreclosure  and Short Sale GuideB  F       P   UYING ORECLOSED-                                 ROPERTIES       PROS AND ...
Foreclosure                                       and Short Sale Guide                                     H  A           ...
Foreclosure      and Short Sale Guide                                                                                     ...
Foreclosure                                                 and Short Sale GuideHOW TO AVOID A FORECLOSURE Q AND A CONTINU...
Foreclosure  and Short Sale GuideW   -   HAT IS A      SHORT SALEHow does a Short Sale work?Completing a successful short ...
Foreclosure                                 and Short Sale Guide                               S S -                      ...
Foreclosure  and Short Sale GuideS S - HORT     ALE    THE ESCROW SIDE - CONTINUED                                        ...
Foreclosure                         and Short Sale Guide                       S S -                       HORT     ALE   ...
Foreclosure GuideF    -ORECLOSURE        HOW CCTN CAN HELP   CalCounties TitleNation company has a wealth of knowledge and...
Foreclosure                 and Short Sale Guide               G     T                  LOSSARY OF ERMSAbsolute Auction: A...
Foreclosure                 and Short Sale Guide               G     T                  LOSSARY OF ERMSForeclosure: A lega...
Foreclosure GuideNOTES
Office Locations      Pasadena Office790 E. Colorado Blvd., Suite 400      Pasadena, CA 91101     Office: 888.282.5855  Ne...
Foreclosure short sale guide for Homeowners
Foreclosure short sale guide for Homeowners
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Foreclosure short sale guide for Homeowners

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forkels4title Team Forkel Divisional Management Team at Cal Counties Title Nation share Foreclosure short sale info for information only and advise anyone exploring such options be sure to consult with Licensed Professionals as Laws do vary from State to State and we have seen many changes this last year alone. We would be happy to refer you to a professional in your area through our network or direct you to resources available to help get answers to your questions.

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Foreclosure short sale guide for Homeowners

  1. 1. FF F oreclosure and Short Sale Guide
  2. 2. F
  3. 3. F Page 1: Foreclosure Summary Page 2: Foreclosure - Types Defined Page 3: Foreclosure - Steps Page 4: Foreclosure - Time line (non-judicial) Page 5: Foreclosure - Bank and Lender Page 6: Buying Foreclosed Properties - Pros/Cons Page 7-9: How to avoid a Foreclosure Q-A Page 10: What is a Short Sale Page 11-12: Short Sale - Escrow Side Page 13: Short Sale Hazard Page 14: How CalCounties Title can help Glossary of Terms Personal Notes Foreclosure and Short Sale Guide Table of Content:All information contained in this book is for informational purposes and is not intended to offer advice - legal, financial or otherwise - about specific situations or problems. This information is a general guideline only, consumers areurged to consult legal councel regarding their rights and responsibilities under state and federal law. The information contained is deemd reliable but not guaranteed.
  4. 4. Foreclosure and Short Sale Guide F - ORECLOSURE SUMMARY Foreclosure Summary A foreclosure begins when a lender has not received a mortgage payment within a specific amount of time (generally 3-4 months). After taking certain steps to recover the money owed and failing, the lender will then foreclose on the property. The property will then be auctioned off on the steps of the court house or on the property itself to the highest bidder.FORECLOSURE - SUMMARY A Few things to Remember The following terminology is used in the foreclosure process: Borrower = Trustor Lender = Beneficiary Trustee = Third party, usually a Title Company.01 Foreclosure Time Line Lien Filed Notice of Default Notice of Sale Trustee Sale REO Property if not filed. filed (Auction) sold. 30 Days 90 Days 21-25 Days
  5. 5. Foreclosure and Short Sale GuideF -ORECLOSURE TYPES DEFINEDTwo types of foreclosures proceedings are permitted in the State of Cali-fornia. One is the Non Judicial-Foreclosure which is the most commonform of the two proceedings and the other being Judicial Foreclosure. Inthis section of the guide both Foreclosure proceedings will be explained. FORECLOSURE - TYPES DEFINED“Non-Judicial” means not regulated by the courts, which in the foreclosureprocess limits time and money spent while protecting the rights of both lenderand borrowerNon-judicial ForeclosureWithout court intervention Non-Judicial foreclosures are processed within therequirement of the state statues for foreclosures. In many states, upon a loandefault the homeowner will be mailed a default letter and at the same time aNotice of Default (NOD) will be recorded. If the Notice of Default is not satis-fied by the borrower, it then progresses to the next step in the foreclosureprocess and becomes a Notice of Sale, which will be mailed to the homeowner,posted in public places, along with being recorded at the county recorder’s of-fice and published in area legal publications. A public auction will be held afterthe legally required time period has expired and depending on the receipt andrecordation of the deed, the property will be then given to the highest bidder. 02Generally, at a Non-Judicial Foreclosure auction, a payment in cash is requiredor the equivalent at the time of sale or very shortly thereafter.Judicial ForeclosureJudicial Foreclosures are monitored and processed through the courts, initiallybeginning with a complaint and a notice of Lis Pendens filed by the lender.The complaint will state all pertinent information such as what the debt is,and why the loan in default should allow the lender to foreclose on the prop-erty. The borrower will then have an opportunity to be heard in court afterbeing served the notice of complaint either via mail, direct service or publica-tion. A judgment will then be issued by the court for the amount owed andall detriments of the foreclosure process. The judgment only transpires if thecourt finds the debt valid and in default. The court will then enter in writing astatement authorizing an auction after the judgment has been issued. Open tothe public, auctions usually take place on the steps of the courthouse or on theauctioned property itself.
  6. 6. 4 Foreclosure and Short Sale Guide F - ORECLOSURE STEPS The Non-judicial Foreclosure process consists of these steps. The Lender files a Notice of Default (N.O.D) with the courts and the 1 borrower. Borrower is required to respond to the complaint to avoid a foreclo- 2 sure on his/her property and is able to explain the issues at a court hearing. The Borrower can get the lawsuit dismissed if the entire payment due is made during the court proceedings. If the borrower does not respond and the court accepts a default 3FORECLOSURE - STEPS then a judgment is filed in favor of the lien holder and against the borrower. A Lis Pendens notice is issued by the lender explaining the type of foreclosure and all information on the property. During the redemption period the borrower can pay the amount owed and retain the property. - Many Real Estate Agents Specialize in assisting borrowers at this stage of the transaction. A sale of the property may be arranged al- lowing the lender to receive the full amount owed on the loan and discontinuing the foreclosure process. 03 - Some lenders will allow a “Short Sale”, where the lender accepts less than the full amount of the debt, discontinuing the foreclo- sure process (see the Short Sales section of this booklet for further information) If the borrower neglects to pay and redeem the property within the 4 redemption period, ownership is then lost. In order to verify there is not an additional third party defendant a title examination is conducted. 5 Before the sale of the property the Notice of Sale must be posted and published for a specified period of time. The property is then sold to the highest bidder at an auction which takes place on the property or on the steps of the court house in the county the prop- erty is located. 6 Past due taxes and other liens are paid off by the winning bidder. If the minimum bid is not met, the property will revert back to the lender and then becomes an REO (Real Estate Owned). When the property becomes an REO it can be purchased by contacting the lender directly.
  7. 7. Foreclosure and Short Sale Guide F - ORECLOSURE TIME LINE CALIFORNIA (NON-JUDICIAL) FORECLOSURE - TIME LINE CALIFORNIA (NON-JUDICIAL)Beginning (Day 1-3) Notice of Default recorded with the county recorder.Within 10 business Trustee mails Notice of Default to borrower(s) and anyone with a spe- Days cial Request for Notice. Within a Month Mail Notice of Default to all parties with an interest in title. After 3 Months Set sale date. 25 Days Prior to Send Notice of Sale to IRS, if pertinent Sale Date 20 Days Prior to Publish Notice of Sale - Post Notice of Sale - Mail Notice of Sale - Begin publishing Notice of Sale in a newspaper for consecutively 3 Sale Date weeks. 14 Days Prior to 04 Record the Notice of Sale with the county recorder’s office. Sale Date7 Days Prior to Sale Trustee cannot sell for 7 days after expiration of bankruptcy court Date order. 5 Business Days The borrower’s right to reinstate expires. Prior to Sale Date Sale Date The property is sold to the highest bidder or reverts back to the lender.
  8. 8. Foreclosure and Short Sale Guide F - ORECLOSURE BANKS AND LENDERS Changing your outlook on Foreclosure When a foreclosure process approaches, never assume the lender wants to foreclose on your property without working with you first. Giving up on the foreclosure processFORECLOSURE - BANKS AND LENDERS will not help you keep your home. Be advised that most lenders never want to fore- close on a borrower’s home, but only do so as a last resort to regain the money owed. Having this knowledge of working with a lender to protect your home can give you an advantage during this unpleasant situation. Filing for a foreclosure, dealing with the court proceedings and the time and costs that go into the foreclosure process, is a huge inconvenience for the lender. When a lender forecloses on a property, they do not receive the interest that was expected when they loaned you the money to purchase your home. Realistically, foreclosures are costly to lenders and they are not in the business of spending money, they are in the business of making money. Lenders will often work hard with the homeowner to help keep their home. It is imperative, when working with the lender towards an agreement to keep your home, to unquestionably maintain contact and communicate your needs with the05 lender. Lenders in most cases are more than willing to work with the borrower to establish an agreement or payment method in order to avoid the foreclosure process. Here are 3 things you can do to work with a lender to avoid a foreclosure: 1. Communication is the key: Communicating with the lender can only bring good things out of a bad situation. 2. Financial Positioning: If the lender agrees, you may ask for a deferment of loan payment by providing evidence to the lender that you are able to position yourself in a better financial situation. 3. And finally….Having the right attitude: Having the attitude to NOT give up in a bad situation not only helps strengthen you in a foreclosure process but also in life in general. Never give up and never speculate, learn the facts and continue pressing on.
  9. 9. Foreclosure and Short Sale GuideB F P UYING ORECLOSED- ROPERTIES PROS AND CONS BUYING FORECLOSED PROPERTIES - PROS AND CONSAuction buying of foreclosed properties is the most profitable and common way to makea fortune in the real estate business. If you do not know how to buy a foreclosed property,it could turn out to be the easiest ways to lose a fortune. Most disasters occur due to overbidding on the properties without properly assessing the real market value and fix up costsof the property under the hammer. Research can make or break the fortune one could makeon a foreclosed property.Auctions of foreclosed properties are held at public auctions that are conducted under thesupervision of the county or state court where the property is situated. This works towardsthe advantage of the buyer since the transfer of title is immediately executed upon winningthe bid. In most cases the winning bidder is the lender who has requested foreclosure of theproperty in the first place.The AdvantagesThe main advantage of buying a foreclosed property through auctions is the profitability,the difference between the highly discounted price and the estimated value you can sell it.Normal foreclosure property auctions have a six week notice enabling the interested buyersto inspect the property and assess its total cost including fix ups and liens and other is-sues and research the market price at which it can be disposed of. It is always important toremember that bidding at a foreclosed property auction need not be competitive but basedon your own assessment. AThe DisadvantagesThe main disadvantage in buying a foreclosed property from a court auction is that it 06requires a lot of capital investment. The payment period is very short and should be readeven before bidding to successfully buy a foreclosed property. Another major disadvantageis that the transfer of title involves great risk. If your research is not correct or incomplete itcould lead to major losses in the process of buying and selling foreclosed property. Higherthe risk, higher the gain, therefore one should be doubly careful and do significant researchbefore bidding on an interesting property.Buying a foreclosed property is a science in itself and involves a lot of learning. Financiallysmart businesspersons have been known to have burnt their fingers buying and selling fore-closed properties. If one is careful, a fortune can be made. But, if one a little careless, they Dcould be bankrupt in a matter of weeks.Written by Tim Lee | http://www.real-estate-foreclosed-home.info/
  10. 10. Foreclosure and Short Sale Guide H A OW TO F Q A VOID A ORECLOSURE AND Avoiding a foreclosure is all about communication. When your not able to make a paymentHOW TO AVOID A FORECLOSURE Q AND A or are in financial trouble, communicating with your lender is the best way to work things out. Do not ignore the warning signs regarding your mortgage payment, ignoring them will result in a credit score hit and the foreclosure of your home. Q&A Q Q: What Happens Wh I Miss My Mortgage Payments? ppens W ens When A. Foreclosur may occur. T is the legal means that your lender can use to repossess (take over) your A Foreclosure This home. When this happens, you must move out of your house. If your property is worth less than the home. this total amount you owe on y total your mortgage loan, a deficiency judgment could be pursued. If that hap- pens, you not only lose your home, you also would owe HUD an additional amount. Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if possible. Q: What Should I Do? A. 1. DO NOT IGNORE THE LETTERS FROM YOUR LENDER. If you are having problems making your payments, call or write to your lender’s Loss Mitigation Department without delay. Explain your situation. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to07 help. 2. Stay in your home for now. You may not qualify for assistance if you abandon your property. 3. Contact a HUD-approved housing counseling agency. Call (800) 569-4287 or TDD (800) 877-8339 for the housing counseling agency nearest you. These agencies are valuable resources. They frequently have information on services and programs offered by Government agencies as well as private and community organizations that could help you. The housing counseling agency may also offer credit counseling. These services are usually free of charge. Q: What Are My Alternatives? A. You may be considered for the following: Special Forbearance. Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses. You must furnish infor- mation to your lender to show that you would be able to meet the requirements of the new payment plan.
  11. 11. Foreclosure and Short Sale Guide HOW TO AVOID A FORECLOSURE Q AND A CONTINUED H A OW TOF Q AC VOID A ORECLOSURE AND ONTINUEDQ: What Are My Alternatives? (continued..)A. Mortgage Modification. You may be able to refinance the debt and/or extend the term of yourmortgage loan. This may help you catch up by reducing the monthly payments to a more affordablelevel. You may qualify if you have recovered from a financial problem and can afford the new pay-ment amount. Partial Claim. Your lender may be able to work with you to obtain a one-time pay-mmen from the FHA-Insurance fund to bring your mortgage current.ment A Insurance suraQ&AYou may qualify if: ouWhe Yo y qu1. Your loan is at le st 4 months d Yo r oan least t begin gin delinquent but no more than 12 months delinquent;2. You are able to begin making full mortgage payments. f fuWhen your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay yourlender the amount necessary to bring your mortgage current. You must execute a Promissory Note, and a Lienwill be placed on your property until the Promissory Note is paid in full.The Promissory Note is interest-free and is due when you pay off the first mortgage or when you sell the prop-erty. Pre-foreclosure sale. This will allow you to avoid foreclosure by selling your property for an amount lessthan the amount necessary to pay off your mortgage loan.You may qualify if:1. The loan is at least 2 months delinquent;2. You are able to sell your house within 3 to 5 months; and3. A new appraisal (that your lender will obtain) shows that the value of your home meets HUD program guidelines. 08Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily “give back” your property to thelender. This won’t save your house, but it is not as damaging to your credit rating as a foreclosure.You may qualify if:1. You are in default and don’t qualify for any of the other options;2. Your attempts at selling the house before foreclosure were unsuccessful; and3. You don’t have another FHA mortgage in default.Q: How Do I Know if I Qualify for Any of These Alternatives?A. Your lender will determine if you qualify for any of the alternatives. A housing counseling agency can alsohelp you determine which, if any, of these options may meet your needs and also assist you in interacting withyour lender. Call (800) 569-4287 or TDD (800) 877-8339.Q: Should I Be Aware of Anything Else?A. Yes. Beware of scams! Solutions that sound too simple or too good to be true usually are. If you’reselling your home without professional guidance, beware of buyers who try to rush you through theprocess. Unfortunately, there are people who may try to take advantage of your financial difficulty.Be especially alert to the following:
  12. 12. Foreclosure and Short Sale GuideHOW TO AVOID A FORECLOSURE Q AND A CONTINUED H A OW TO F Q AC VOID A ORECLOSURE AND ONTINUED Equity skimming. In this type of scam, a “buyer” approaches you, offering to get you out of finan- cial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of Q&A your obligation on your loan y you our loan. Phony cou Phony counse ing agen y counseling agencie Some groups calling themselves “counseling agencies” may approach g agencies. yo nd you and offer t perform certain services for a fee. These could well be services you could do for to erform cecert yo yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre- yourself free fr neg nego fo for closure sale If you have a doubt about paying for such services, call a HUD-approved housing foreclosure sale. any cou counseling agency at (800) 569-4287 or TDD (800) 877-8339. Do this before you pay anyone or sign anything. Q: Are There Any Precautions I Can Take? Here are several precautions that should help you avoid being “taken” by a scam artist: 1. Don’t sign any papers you don’t fully understand. 2. Make sure you get all “promises” in writing. 3. Beware of any contract of sale of loan assumption where you are not formally released from liability for your mortgage debt.09 4. Check with a lawyer or your mortgage company before entering into any deal involving your home. 5. If you’re selling the house yourself to avoid foreclosure, check to see if there are any com plaints against the prospective buyer. You can contact your state’s Attorney General, the State Real Estate Commission, or the local District Attorney’s Consumer Fraud Unit for this type of information. Q: What Are the Main Points I Should Remember? 1. Don’t lose your home and damage your credit history. 2. Call or write your mortgage lender immediately and be honest about your financial situation. 3. Stay in your home to make sure you qualify for assistance. 4. Arrange an appointment with a HUD-approved housing counselor to explore your options at (800) 569-4287 or TDD (800) 877-8339. 5. Cooperate with the counselor or lender trying to help you. 6. Explore every alternative to keep your home. 7. Beware of scams. 8.Do not sign anything you don’t understand. And remember that signing over the deed to someone else does not necessarily relieve you of your loan obligation. Act now. Delaying can’t help. If you do nothing, YOU WILL LOSE YOUR HOME and your good credit rating.
  13. 13. Foreclosure and Short Sale GuideW - HAT IS A SHORT SALEHow does a Short Sale work?Completing a successful short sale transaction requires the cooperation of all parties in thetransaction. In agreeing to accept a short payoff, the lender will normally have restrictionson the amount of closing costs, repairs, and even commission that is paid by the seller. Fol-lowing are some suggestions when handling a Short Sale.What is Required for a Short Sale? WHAT IS A - SHORT SALEThe short sale Lender will require certain documentation in order to make a decision onapproving the short sale. The following is a list of common requirements, but there may beadditional items requested:Documents required for a Short Sale.- Listing agreement.- Purchase Agreement and Escrow Instructions.- Preliminary Title Report.- Estimated Seller’s closing statement. This statement has to be as accurate as possible, these figures will be the lender’s base of approval for short sale.- Written notice from junior lien holders of their willingness to release their liens even though they receive little or no proceeds from closing.- Broker Price Opinion (BPO). 10Required from Seller:- Hardship Letter.- Completed Financial Statement or credit report.- Appraisal.- Documentation proving hardship.- Federal tax returns, including W-2’s and all schedules for last two years, from all mortgagors.- Pay stubs for last two months, from all mortgagors.- 401K/IRA Account Information.- Closing statement from original purchase of home.- Self-employed Sellers will be required to provide additional business documentation as required by the lender.Who Qualifies for a Short Sale?Usually, the mortgage lender will only accept a short sale if you are a month behind on your currentmortgage payments, have a buyer for the home ready and can provide the adequate information tothe lender about your hardship. Lenders will also qualify you for a short sale if you find your selfwithout a job or making substantially less money then before.
  14. 14. Foreclosure and Short Sale Guide S S - HORT ALE THE ESCROW SIDE Short Pay/Short Sale Contingency: Close of this escrow is contingent upon Seller’s successful negotiation with Lender(s) of record to accept payoff(s) of current loan(s) of less that the actual amount(s) owed. Es- crow Holder’s receipt of a copy of Lender’s written payoff statement, requirements, andSHORT SALE - THE ESCROW SIDE conditions, approved by Seller, shall be deemed satisfaction of this contingency without further instructions required. Escrow Holder is instructed to furnish the Lender with any necessary documentation, in- cluding estimated closing statements, required by Lender to issue short payoff state- ment. Seller is hereby advised to obtain independent legal and/or tax advice regarding any legal and/or tax ramifications of a short pay/short sale transaction. Escrow Short Sale Steps - Read the prelim and look for the over encumbered or highly encumbered property. - Review contract carefully. Enter all costs and charges immediately when known and/or received to keep up to the minute on monies owed at close of escrow. - Have the Title Officer do weekly date downs and see if a Notice of Default has been11 recorded. - Ask Listing broker if the lender has been contacted regarding the short sale. If not, contact lender and get list of requirements. As soon as they are received, immediately send these requirements to the listing broker. Working with Agents and Buyers: - When a short sale is approved, make sure all parties are fully aware that this transac- tion involves a short sale. - Communicate with the lender the time limit of the escrow, regarding this short sale. Approving a short sale can take several weeks to obtain. The lender often makes the short sale acceptance period only good for a certain amount of time. If the payoff of the loan is not received, during this given period, the transaction will be void. Flexibility and patience is needed in a short sale to make this transaction fully work for all parties involved in the process. Continue on next page
  15. 15. Foreclosure and Short Sale GuideS S - HORT ALE THE ESCROW SIDE - CONTINUED SHORT SALE - THE ESCROW SIDE - CONTINUEDWhat to look for in the Lender’s Approval Letter- Must be addressed to escrow holder.- Maximum allowable closing costs and charges associated with the sale.- Maximum allowable real estate commission.- Expiration date of lender’s approval.- Restrictions in allowable payments to be made from seller’s proceeds such as: payments to junior lien holder’s, unpaid taxes, past due homeowner’s association fees, credits to buyer for closing costs, payment for rent-back after close of escrow, payment for mortgage insurance.Escrow Process- The escrow will use the following phrase in the escrow instruction (will be added to fast INS phrase group as “Short Sale Contingency”). “Close of Escrow” is contingent upon escrow holder having received from (Name of Lender) a “Read, Approved and Accepted” Pre-closing Seller’s Statement and/or a letter from said lender approving all items listed on the Preclosing Seller’s Statement.”- Make sure the statement gets faxed to the lender before close of escrow and that the lender approves it, including any amount going to the seller (which they may allow). 12
  16. 16. Foreclosure and Short Sale Guide S S - HORT ALE HAZARDS New Hazards - Equity lines that are taken out after close of escrow. Lets say the seller pulls out equity lines on a property, and problems arise. The seller having taken the equity lines out of the property, might not have the funds available to pay for the closing costs. (Rounded to about 6% Commission) - Existing loans on a property (depending on the loan amount) may have huge prepa- ment penalty attached to them. - New Loans with options like “Interest Only” payments and Negative Amortization canSHORT SALE - HAZARDS cause your loan balance to rise. - Using bank handled escrows or signing services can result in loss of information on refinances that a seller acquired prior to the sale. The seller might not have been in- formed correctly about the loan plan and documents in conjunction with the refi- nance. - California Withholding. It is possible for the seller not to sell at a “loss” as determined by the CA Franchise tax Board, even if they don’t have the funds for the closing. If the seller decides to pull their equity out on a non-owner occupied property, they may have to pay the State of California 3⅓ of the purchase price, regardless of not having the funds for it. - IRS and State Tax Liens13 - Negotiated items (i.e. credits for closing costs, termite repairs) unless approved by the lender, these types of costs can jeopardize the short sale transaction.. FYI... Remember, a Lender approving a short sale is not guaranteed. Also a lender will ask the seller for financial contributions. The lender also requires an unsecured note, to be signed by the borrower. During a short sale or prior to a short sale, a borrower is still required to pay the mortgage payments as negotiations continue. Failure to pay the mortgage payment on time or at all, can result in a credit score hit. It is greatly advised to the seller, that they find independent legal counseling or tax advice having to do with tax ramifications on the short sale transaction.
  17. 17. Foreclosure GuideF -ORECLOSURE HOW CCTN CAN HELP CalCounties TitleNation company has a wealth of knowledge and experience with HOW CALCOUNTIES TITLENATION CAN HELP foreclosure and short sale properties. CCTN title has the resources you need to help you with your foreclosed home, whether it be buying or selling. The information products and lists we have available can help you expand your investment with a secured transaction all the way through. Title Services and Property Information - Contact your local CCTN title representative for more information on property profiles, comparable sales and property tax information. - NOD Lists (Notice of Default) and NOT Lists (Notice of Trustee’s Sale) are of public record - CCTN title team can help with today’s laws and requirements for your foreclosure or short sale transaction. Short Sale Escrows Your CCTN title team is in place to help you through your short sale escrow. There are special require- ment so be sure to discuss the transaction procedures with your CCTN title Escrow Officer when your 14 escrow is opened. - When your short sale escrow is open, be sure to advice your escrow officer that the property is poten- tially a short sale. The preliminary title report will show all liens, vested owners and borrowers located on the property. The Seller will be asked to complete a Statement of Information ( also known as an “SI” ), which will help with determining any outstanding judgements. - Payoff Demands on the existing loan should be requested after the seller has negotiated with the lender - Demands on other existing judgements and liens should be requested after the seller has negotiated with the other creditors. - Once the lender approves the HUD proposal, no changes can be made unless the escrow officer re- ceives written confirmation from the lender.
  18. 18. Foreclosure and Short Sale Guide G T LOSSARY OF ERMSAbsolute Auction: Auction with no minimum bid Closing (also called settlement): The completion of aamount. The highest bidder wins. real estate transfer, where the title passes from sellerAbstract (of title): A history of all transactions shown to buyer or a mortgage lien is given to secure debt.in the public records affecting a particular tract of Closing Costs: Expenses involved in closing a realland. estate transaction over and above the price of the land.Acceleration Clause: A provision in a promissory note Clouded Title: A land title having an irregularity,that specifies conditions under which the lender may possible claim or encumbrance that, if valid, wouldadvance the time when the entire debt which is se- adversely affect or impair it.cured by the mortgage becomes due. Contract of Sale: Agreement by one person to buyAdjustable Rate Mortgage (ARM): Mortgage loans and another person to sell a specified parcel of land atunder which the interest rate ie periodically adjusted, a specified price.in accordance with some market indicator, to more Conveyance: The transfer of title property from oneclosely coincide with the current rates. person to another.Affidavit: A written statement made under oath be- Deed: An instrument for conveying real estate.fore a notary public or other judicial officer. Deed of Trust: A form of security instrument forAgreement: A legally binding contract made between mortgage loans.two or more persons. Default: A failure to meet legal or contractual obliga-Appraisal: A report from an independent third party tionsdetailing the estimated value of real estate. Deficiency judgment: When The Proceeds from aBalloon Note/balloon Payment: A promissory note foreclosure sale are less than the amount due on thewith amortization payments scheduled for a long term, debt.usually 30 years, but maturing in a shorter term, often Encumbrance: Any interest, right, lien or liability at-five to seven years. It requires a substantial final bal- tached to a parcel of land (such as unpaid taxes or anloon payment for the remaining principal. unsatisfied mortgage) that constitutes or represents aBankruptcy: A fedeal court proceeding under the burdon upon the property.United States Bankruptcy laws where an insolvent Equity: The market value of real property, less thedebtor either has its estate liquidated and debt dis- amount of existing liens.charged, or is allowed to reorganize its affairs underthe protection of the bankruptcy court. Escrow: closing a real estate transaction when all required documents and funds are in place with a thirdBeneficiary: A person or entity that is legally entitled party for processing and disbursement.by a will, trust or insurance policy to receive money orproperty. Execute: To sign a legal instrument, A deed is said to be executed when it is signed, sealed, witnessed andChain of Title: The history of successive ownership delivered.and transfer in the title to a tract of land. Federally-insured Loan: A mortgage loan that origi-Clear Title: Real property ownership free of liens, de- nates in a federally-insured government program likefects and encumbrances or claims. the Federal Housing Authority (FHA).
  19. 19. Foreclosure and Short Sale Guide G T LOSSARY OF ERMSForeclosure: A legal proceeding following a default by Redemption: The right of the owner in some states toa borrower in which real estate secured by a mortgage reclaim title to property if he or she pays the debt toof deed of trust is sold to satisfy the underlying debt. the mortgage within a stipulated time after foreclo-Instrument: A written document. sure.Judgment: The decision of a court regarding the rights Release: To relieve from debt or security or abandon aof parties in an action. right, such as release of a mortgage lien from a part orJunior Mortgage: A mortgage lower in lien priority all of the land mortgaged.than another. For example, a second mortgage or home RESPA: The Real Estate Settlement Procedures (12equity line. U.S.C. 2601 et. seq.) that, together with regulation XLawsuit: A dispute between two or more parties that promulgated pursuant to the Act, regulates real estatehas been filed in the court system by one of them. transfers involving a “federally-related mortgage loan” by requiring, among other things, certain disclosures toLien: A monetary Charge imposed on a property, usu- borrowers.ally arising from some debt or obligation. Satisfaction: An instrument releasing the lien of aMarket Value: The average of the highest price that a mortgage.buyer would pay and lowest price a seller would ac-cept. Senior Lien or Mortgage: If there is more than one lien on land, those liens are ranked by priority. A seniorMortgage: A conditioned pledge of property to a lien or mortgage is entitled to be paid first in foreclo-creditor as security for the payment of a debt. sure or bankruptcy, before a junior lien.Note: (also called a Promissory Note): A written prom- Tenant: One who has right of possession of land byise to pay a sum of money, usually at a specified inter- any kind of title.est rate, at a stated time to a namd payee. Title Defect: Any possible or patent claim or right out-Power of Attorney: A written instrument by which standing in a chain of title that is adverse to the claimone person, the principal, authorized another, the of ownership.attorney-in-fact, to act on hiss or her begalf. Title Insurance Policy: A contract of title insurancePrincipal: A sum of money owed as a debt on which under which the insurer, in keeping with the terms ofinterest is payable. the policy, agrees to indemnify the insured against lossPublic Records: Records which by law disclose con- arising from claims against the insured interest.structive notice of matters relating to the land. Trustee: Person or entity who is given the legal au-Real Estate (also called real property): Land and thority to manage money or property on behalf ofanything permanently affixed to the land such as somebody else. In a foreclosure action, this is often thebuildings, such as plumbing and heating fixtures, or title company.other such items that would be personal property if Trustor: A person who creates a trust by transferringnot attached. property to a trustee. When a borrower signs the DeedRecording: The noting in a public office of the details of Trust, the borrower becomes a trustor.of a legal document, such as a deed or mortgage, af-fecting the title to real estate.
  20. 20. Foreclosure GuideNOTES
  21. 21. Office Locations Pasadena Office790 E. Colorado Blvd., Suite 400 Pasadena, CA 91101 Office: 888.282.5855 Newport Beach Office4667 MacArthur Blvd., Suite 150 Newport Beach, CA 92660 Office: 877.727.3900 www.calcounties.com

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