“Stewardesses” is the longest word typed with only the left hand .. And “lollipop” is the longest word typed with your right hand.

TYPEWRITER is the longest word that can be made using the letters only on one row of the keyboard.

The sentence: “The quick brown fox jumps over the lazy dog” uses every letter of the alphabet.

“Dreamt” is the only English word that ends in the letters “mt”. ?

There are only four words in the English language which end in “dous”: tremendous, horrendous, stupendous, and hazardous.

There are two words in the English language that have all five vowels in order: “abstemious” and “facetious.”

What does that have to do with real estate? Not a darn thing.
But I thought it was kinda interesting.

Last year the Legislature passed Senate Bill 931 adding Section 580e to the California Code of Civil Procedure.  This new Section established that the beneficiary on a loan secured by a first deed of trust on 1 to 4 unit residential property could not pursue a deficiency judgment after a short sale which they had approved.  The law applies equally to purchase money, hard money and refinance loans.

 This year the Legislature passed Senate Bill 458 which amended Section 580e by making it applicable to junior liens as well.  It also applied additional limitations to the loans subject to the section. In addition to not being able to get a deficiency judgment it provides at Section (a)(1) that after a short sale no deficiency shall be owed or collected and no deficiency judgment shall be requested or rendered provided the short sale closed escrow and the lender was paid the amount they agreed to accept.

 Although the law does not specifically say so it is likely the courts will interpret that section to mean that it applies to a short sale closing either before or after July 15, 2011, the effective date of the new section.  That analysis is based on the provision that the short money cannot be collected and no deficiency can be requested.  It also will bar lenders from turning these loans over to a collection company which some lenders were doing even though the earlier section barred a deficiency judgment.

 The amended law provides at Section (b) that the holder of a note shall not require the seller to pay any additional compensation, aside from the proceeds of the sale, in exchange for their consent to the short sale.

 Some people have taken the position that, since only the seller is prohibited from providing additional compensation, the 2^nd lender can request the buyer or real estate brokers to pay them additional money above that the 1^st has agreed they can receive from the sale. 

 That might be true if only this code section applied.  But if the 1^st lender has based their approval on their consent to the 2^nd only receiving a specified amount then any attempt to pay the 2^nd more without the consent of the 1^st would likely be considered loan fraud.  If the 1^st finds there is more money available in the transaction they will rightly feel it should go to them rather than to the 2^nd.  That is the purpose of being in 1^st position.

Section 580e (c) provides that if the borrower commits loan fraud the limitations of the section would not apply.  The lender would then be able to pursue the entire unpaid balance. If you are the broker in a transaction where the 2^nd lender requests the broker or buyer to pay them some additional money either within or outside escrow you need to make sure that either the 1^st lender specifically approves the additional money being paid to the 2^nd or you run away from that transaction as quickly as possible.  Participating in a fraudulent transaction can expose you to monetary liability to the lender, revocation of your license by DRE and criminal prosecution.

The real question remaining to be answered is whether this new law will be a great protection of the seller from liability after a short sale or whether it will lead to lenders denying short sales in favor of pursuing foreclosure where a deficiency by a junior lien holder may be possible.

If you have any questions on this article or any other aspect of real estate law please contact the Hanson Law Firm at 916 447-9181 or log on to our website at www.HansonLawFirm.com.

Calling a Bank about a loan is THE most frustrating experience … even more so than sending in a loan mod request package — for the 15th time.

From a legal perspective, it gets worse, especially when “Joy” or “Nancy” tells you one thing (like, “You’re approved for our internal Loan Modification Program…”) but refuses to put it in writing. Or the letter you get says something different than the Bank’s representative said on the phone.

What do you do to protect yourself?

Try this:

When someone from the Bank calls, tell them: “I am recording this call for LEGAL purposes. Please state your full name and your birthdate – for identification purposes.”

How much you wanna bet the call will end – right there?

It will. And that’s OK.

If the Bank representative won’t agree to be recorded – END THE CALL. Nothing that is said in it will will matter anyway. The Bank will change its position. And you won’t be able to prove a thing. (And having the Bank’s representative refuse to be recorded, can work to your advantage later in court…)

Oh, and when Joy or Nancy balks, remind her that the Bank is recording the call already. For “training purposes.”

In a recent California case (as reported by firsttuesday) “an owner of property defaulted on a mortgage encumbering the property, causing the lender to record a notice of default (NOD). Prior to the trustee’s sale, the owner’s loan broker arranging financing to pay off the delinquent mortgage requested the lender postpone the trustee’s sale, which the lender did. The lender’s representative also orally promised to further postpone the sale on a further request from the loan broker. Before the trustee’s sale, the loan broker called the lender’s representative and left messages requesting a further postponement of the trustee’s sale. The lender’s representative did not respond. The trustee’s sale was not postponed and the property was sold. Unaware of the foreclosure sale, the broker and owner completed the financing and forwarded the payoff funds to the lender. The lender refused receipt of the payoff funds. The owner suffered money losses due to the loss of his property by the lender’s foreclosure and the cost of obtaining the payoff funds. The owner made a demand on the lender for the losses, claiming the lender was liable since the owner relied on the lender’s oral promise to postpone the trustee’s sale on request. The lender denied liability for the owner’s losses, claiming the oral promise to postpone the trustee’s sale was not enforceable since the lender received no consideration for the promise. A California court of appeals held an owner of property is entitled to money losses from a lender who orally promises to postpone the trustee’s sale of the owner’s property when the owner relies on the promise to his detriment since the owner’s detrimental reliance on the lender’s promise serves as a substitute for the consideration necessary to enforce an oral promise. [Garcia v. World Savings (2010) 183 CA4th 1031]”

What does all this mean?

It means that – in some very limited circumstances – a borrower CAN compell the Bank to honor an ORAL agreement NOT to foreclose. It is a very difficult promise to enforce, and most judges (especially one particular one in Contra Costa County) simply don’t give a damn; they feel overloaded with “just another mortgage case.”

If you think you have a situation where a foreclosure should not have happened, give us a call…

In July, the California legislature passed SB 458, which revised Ca Code Civ Procedure 580e to prevent “short sale” deficiencies on second position loans.

So, here’s the rub. No one knows for certain if it is retroactive.

If you closed a deal in 2010, and the Bank has not yet sued for a deficiency on that second loan, can it do so now? What if it HAS filed suit, can you get out of the lawsuit now based on CCP 580e?

There are arguments – pro and con.

HLF can represent borrowers who have been subjected to these kinds of claims – and brokers/agents who are being brought in for indemnity cross complaints because a borrower is being sued by a Bank for a deficiency.

The latest and greatest news is that FHA will allow borrowers who are unemployed up to one year of deferred mortgage payment relief (read: live for free) while they get back on their feet.

This represents about 4% of the troubled California mortgages.

Fannie Mae and Freddie Mac loans are NOT included in this program. Neither are portfolio residential loans held by banks (like all those pesky seconds out there…).

So, for the very few that the “new” program will help (the unemployed, FHA insured, one loan only borrower), congratulations!

For the rest of us: Isn’t it grand how the Government is here to help?

Next.

“The goal is to reinstate as many borrowers in a modification that performs well,” said Tony Meola, a servicing executive with Bank of America. “It also is likely to lead to faster resolution in those unfortunate situations where foreclosure is inevitable. While not a desirable outcome, the recovery of the housing markets depends on moving through the foreclosure process as quickly and fairly as possible.”

Thus reported the New York Times.

You might want to read this: We settled with the investors, now we have to move this garbage through the system and foreclose on everything. If only the Bank would.

8 Billion (with a B) is a lot of money. But it’s a drop compared to the amount of underwater residential (we haven’t even touched commercial) loans out there.

Want to get the economy running again? Take the hits needed on these bad loans. Re-balance the balance sheet (yes, you WILL BE a smaller Bank), and then let’s get back to business.

My $0.02.

The Allen Matkins/UCLA Anderson Forecast states that real estate “investors” are optimistic and buying up “class A” properties at above market value. The Orange County Register wonders is this is the beginning of a new real estate “bubble.”

Only for bubble brains, I’d say.

At the conference of bankers (senior asset managers for three SF Bay Area Banks) I attended this morning, the story was very different.

No, they are not lending on commercial properties – unless those LTVs are in the mid-60′s and the DCRs are at or above 1.35. Hell, we’d all lend on those terms.

As for their forecast: a flat bottom for the next five years.

I’d bet on the bankers. This time.

 Last month I wrote about the new law requiring the installation of carbon monoxide (CO) detectors and its impact on the TDS as of 1/1/11.  This month I want to clarify what the new law does and does not require.  To begin I will repeat the opening paragraph of last month’s article.

Effective July 1, 2011 all single family residences in the State of California must have at least one CO detector installed as required by California Health and Safety Code Section 17926, et seq. Multiple dwelling units have until January 1, 2013 but a prudent landlord would get the property in compliance as quickly as possible. The only exceptions are for dwellings that are not designed to burn fossil fuels and do not have an attached garage.

The law seems relatively straight forward and might be more so if it were not inconsistent with other laws we have learned to comply with over the years.  For many years we have dealt with smoke detectors and water heaters and the certifications sellers must make to buyers.  In those two instances the seller must certify the property will be in compliance at close of escrow.

This new law is different.  It only requires that the seller disclose if the property has a CO detector installed.  Although the law requires the detectors be installed in all SFR by 7/1/11 there is no requirement that the property be in compliance at close of escrow any more than there is a requirement that properties be up to other code requirements at close of escrow. If the seller does not state there is a CO detector installed and the buyer proceeds to close escrow no violation has occurred based upon the sale transaction.  The only the violation of the law that at least one be installed in the property has now become the buyer’s violation.

Does that mean the seller can ignore the law?  Not necessarily.  We are hearing that lenders have been requiring appraisers to confirm that the CO detector is installed as an appraisal condition.  If one is not installed at the time of the initial appraisal there may well be an additional fee for the appraiser to come back and confirm that the detector has been installed before the loan can fund.  It would be in the buyer’s best interest to insure the CO detector is present before the appraiser sees the property.

If you are taking a new listing on an SFR it would be best practice to suggest to the seller that they get the CO detector installed before the home is listed if the seller has not already complied with the law. If you are the selling broker it would be best practice to place a provision in the purchase agreement that an operable CO detector will be installed within ten days of acceptance, or some other period, so it will be present at the time of the appraisal,  .  It may save arguments and/or delays later on over a less than $30 item.

SB 458 – effective July 11, states no liability will inure to sellers of short sale 1-4 unit properties in California with respect to second position loans. (Recall that first position loans sold short lost recourse liability becasue of SB 931 in 2010).

Good news? Or bad?

Some say it will actually hurt sales in California, becasue banks won’t have any incentive to deal and will just foreclose. Maybe.

I’d bet neither law stays on the books very long. Huh? Why not?

The US and State Constitutions have Ex Post Facto laws. Fancy words that mean, in essence, “Thou shalt not pass a law that interferes with a preexisting contractual relationship.”

Isn’t that just what these laws did? Change the preexisting contractual relationship between a bank and a borrower?

With hundreds of BILLIONS of dollars at risk, don’t you think the banks will challenge the laws? I would.

We’ll all find out in about three years. That’s how long it takes for a trial, and then an appeal. (Longer if it goes to either of the Supreme Courts – state or federal.)