Foreclosures are declining in number, but they’re still occurring at above-normal rates. Whether you’re new to foreclosure practice or have been in it for years, these tips will help you meet the challenges of newly adopted and heavily revised statutes and regulations governing mortgage foreclosure in California.
The much heralded California Homeowner Bill of Rights went into effect on January 1, 2013. It expands urgency legislation, enacted four years ago, that amended the trustee sale foreclosure processes to reduce foreclosures and increase workouts, loan modifications, and short sales. See Stats 2012, chs 86–87 (AB 278 and SB 900). It’s well intended, but is it actually going to reduce the foreclosure rate in the long run?
As reported in the California Bar Journal, the California State Bar is clamping down on attorneys who prey on distressed homeowners. Three more Southern California attorneys have been prohibited from practicing law based on their foreclosure-related misconduct and thousands of other investigations are underway. Interestingly, the errant attorneys often do not have direct contact with the homeowners, who instead deal with non-lawyer representatives of the loan modification companies.
Real estate brokers and agents get into trouble over loan modifications more often than attorneys, and when they do, they seek an attorney to represent them before the Department of Real Estate (DRE). CEB’s California Real Estate Brokers: Law and Litigation (Cal CEB 2009), covers this issue (along with broker responsibilities in short sales). The issues involved in representing someone before the DRE and in any subsequent appeal are covered in California Administrative Hearing Practice (2d ed Cal CEB 1997).
Loan modifications are often an excellent tool to avoid foreclosure, but they are apparently also fodder for unethical behavior. On proper workouts of problem loans, including loan modification agreements, see CEB’s California Mortgages, Deeds of Trust, and Foreclosure Litigation §§10.23-10.24 (4th ed Cal CEB 2009). Also check out CEB programs RESIDENTIAL MORTGAGES: Litigation, Short Sales, Loan Modifications and Other Alternatives to Foreclosure and Foreclosure: The Future in California, both available On Demand.
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Here’s an all-too-common scenario these days: A property goes into foreclosure, the owner who buys the foreclosed property wants to evict the current tenants, who are living there lawfully. The owner decides to skirt the normal legal processes and engage in aself-help eviction. This is a very risky and potentially illegal course of action!