CalHFA Debacle with San Jose Short Sale

CalHFA Debacle with San Jose Short Sale

My client requested a loan modification from CalHFA and was denied.

The reason stated was “large surplus of funds.”

Client contacted me to assist with a San Jose short sale.  Value of property is $180,000.

 Loans on property:

  • 1st with CalHFA in the amount of $309,000
  • 2nd with CalHFA in the amount of $15,000
  • 3rd with CalHFA in the amount of $15,000
  • 4th with the City of San Jose in the amount of $65,000
  • 5th with the Housing Trust of Santa Clara County in the amount of $6,500

    • Total Loans = $410,500

 Property was listed and short sale package submitted.  Short sale DENIED.  Reason: “large surplus of funds.”

I don’t know what financial documents the person was looking at because the package I submitted clearly shows a shortage of funds. 

The clown said to me, and I quote: “Often times borrowers overstate their financials. We go by the bank statements. The borrower over stated food costs.”  Huh?

My response:  Really.  If there is a large surplus of funds, and you go by the bank statements, then why are there numerous over draft fees showing on the bank statements? 

The more questions I asked the more I realized I was speaking with an idiot! 

Not uncommon when working with lenders and servicers.  The problem is the people working the files don’t have a clue what they are doing. San Jose short sale agents know more than the people assigned to work the files.

After twenty plus minutes going over the financial documents I uncovered the fact that he failed to factor in $1,210.00 which was listed on the financial statement under credit cards/loans.  The borrower has been paying this amount on a debt consolidation for nearly one year.

Drum roll please!  This amount clearly shows on the bank statements, which “they go by.”  However, because Mr. Bright One did not see it on the credit report, he unilaterally decided it was “overstated” and denied the short sale.

After sending him more “proof” of the debt consolidation he reopened the file and sent it to the loan modification department (again)!

Now that they are factoring in the $1,210 payment for debt consolidation, the borrower qualifies for a loan modification

They recommend that the borrower work with Keep Your Home California to get a $50,000 principal reduction.

You do the math!

CalHFA states that they will not approve a short sale if a borrower qualifies for a loan modification.  If the borrower does not want a loan modification they will foreclose.

I was told by another Bright One at CalHFA “we are human and we make mistakes.”

Yes, indeed you do. You made two of them back to back and you were paid to do it!  You had all the documentation in your possession and you still could not connect the dots. Adding insult to injury, rather than picking up the phone and asking a few questions, you simply DENY and close the file. 

The bottom line:  I have spun my wheels working a short sale only to discover that the two people who have touched my clients file can’t find their ass with both hands.

The borrower did all the right things.  The San Jose short sale agent did all the right things.  Is it any wonder why some people simply walk away and let their home foreclose? It’s no wonder in this case.  CalHFA left the homeowners with no viable option other than the forced foreclosure which CalHFA will proceed with.

CalHFA Debacle with San Jose Short Sale – CalHFA opts to foreclose rather than cooperate with a San Jose short sale!

San Jose Short Sales – Borrowers Sue Wells Fargo

San Jose Short Sales – Borrowers Sue Wells Fargo

One of my morning routines is to spend an hour or so reading updates on what’s happening in the world of banks, lenders, servicers, Robo-Signing, foreclosures, short sales, etc. This is what I refer to as “The Land of Oz” because when dealing with Big-Bad-Banks we are often dealing with people without hearts or brains.

As I was perusing DSNews, one headline caught my eye:

Defaulted Borrowers file Lawsuit against Wells Fargo.

After working San Jose Short Sales for over two years, I am intrigued by reading that borrowers are taking action against their beloved banks and loan servicers and attempting to hold them accountable for their dubious business practices. There is rarely a day that goes by that I do not hear about yet another way a borrower is screwed-over by their BIG-BAD-BANK.

This morning a DSNews article reported that a law firm filed a class action suit against one of the Biggest of the Badest Banks – Wells Fargo Bank and America’s Servicing Company (“ASC”), its servicer.

The premise of the lawsuit is that America’s Servicing Company told borrowers they would not be eligible for a loan modification as long as they were current on their payment. The effect of this advice was to encourage borrowers to default on their mortgages if they wanted a loan modification.

The claim in the class action lawsuit is that America’s Servicing Company induced borrowers to default on their mortgages in order to charge penalty and fees associated with the late payments. Bad-Bad-Bad!

“As a loan servicer, ASC generates a significant portion of its revenue from fees, penalties, and interest collected on the non-performing loans it services. Consequently, it is in ASC’s financial interest to avoid, delay, and deny loan modifications and to pursue foreclosures because doing so will lead to increased revenue.”

OUCH – Truth Hurts those Big-Bad-Banks!

A Borrower, who has not defaulted, yet is financially distressed and facing imminent default may be eligible for a loan modification if financial hardship can be demonstrated, according to the Home Affordable Modification Program guidelines. Guess who determines financial hardship? BIG-BAD-BANKS!

Alleged in the class action lawsuit: “By making loan default a prerequisite for modification, without regard to whether a borrower otherwise qualified for a modification due to financial hardship, ASC caused borrowers to unnecessarily suffer ruined credit and subjected them to significant fees, penalties and interest.”

Wells Fargo said: “We believe, as we have from the beginning of this crisis that it is in our customers’ and the country’s best interests to assist customers who can afford their homes – with some help – to remain in them. And, it is our goal to exhaust all options before moving a home to foreclosure sale.”

I say the proof is in the number of successful loan modifications – which relatively speaking – are very few indeed!

Are you facing foreclosure? You can avoid foreclosure. There are foreclosure alternatives that can help save your credit.

Call 1-800-972-1822 or visit San Jose Short Sales and request a free consultation to discuss foreclosure alternatives.

Search San Jose Homes for Sale – including short sales.

San Jose Short Sales – Borrowers Sue Wells Fargo Bank – by Kathleen Daniels, San Jose Real Estate Agent

A New Foreclosure Bill – Senate Bill 1275

On Thursday, June 3, 2010, the California Senate approved a new foreclosure bill SB 1275. With a 21 to 12 vote, SB 1275 will be heard by the Assembly Banking Committee before it goes to the full Assembly for a vote.

Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento) are the authors of SB 1275 which has provisions that are intended to discourage careless, negligent, sloppy, laidback behavior from servicers … ultimately designed to prevent California foreclosures which would otherwise be avoidable.

SB 1275 would provide homeowners a means of recourse if the homeowner lost their home to foreclosure due to servicer errors. In addition, servicers would not be allowed to start the foreclosure process until a homeowner receives the final decision on the loan modification.

There is currently no means for a homeowner to seek recourse if their home is sold in foreclosure due to a servicer error. Senator Mark Leno and Senate President Pro Tem Darrell Steinberg intend to change this by providing recourse through a private right of action. Homeowners would be able to seek limited damages that relate to the degree of the servicer’s errors. This may include a homeowner’s right to reverse the foreclosure sale.

According to the Center for Responsible Lending (“CRL”), Bank of America executive Jack Schackett admitted during committee hearings that they “have not handled [their] customers to the standards Bank of America is accustomed to.”

Even when homeowners are following all the rules in applying for a loan modification and when they are making trial modification payments, servicers are still initiating the foreclosure process.

“Simple fairness dictates that no one should lose their home while they are in the middle of trying to save it,” said Paul Leonard, director of the California office of the Center for Responsible Lending. “A foreclosure that starts because a servicer’s left hand doesn’t know what the right hand is doing is the most preventable foreclosure of all.”

Will SB 1275 pass?

Servicers must do better at helping homeowners avoid foreclosure.

Intero San Jose Ca

Certified San Jose Short Sale Specialist

Copyright © 2010, All Rights Reserved by Kathleen Daniels,CDPE, RDCPro *A New Foreclosure Bill – Senate Bill 1275*

California Governor Schwarzenegger takes Action for Californian’s facing Foreclosure!

An emergency measure taken this week, Senate Bill 94 is effective immediately and will remain in effect through January 1, 2013. The action taken by California Governor Arnold Schwarzenegger was designed to prevent distressed homeowners from being taken by companies charging upfront fees for loan modifications and then abandoning them.

Senate Bill 94 prohibits foreclosure consultants, which includes attorneys who specialize in loan modifications and loan modification companies, from taking any compensation or fees before completing the service.

This new law may likely cause many law firms and individual legal practitioners previously engaged in providing loan modifications services to close their doors. The same may be true for loan modification companies which have historically provided services only with payment of upfront fees regardless of whether the loan modification was approved or denied by the servicer.

Only time will tell how many individuals and companies will remain committed to helping distressed homeowners facing foreclosure now that upfront payment for providing such services are prohibited.

Many truly dedicated real estate professionals provide loan modifications services at no cost to the homeowners with the understanding that if the loan modification is not approved, the homeowner will list the property with the agent and attempt to complete a short sale.

Senate Bill 94 is a big win for California homeowners facing foreclosure. It is now against the law to charge before completing a loan modification service.

Kathleen Daniels – Certified Short Sale Specialist

Intero San Jose Ca

Intero San Jose Ca

Number One in Silicon Valley

Copyright © 2009, All Rights Reserved by Kathleen Daniels *Schwarzenegger takes Action for Californian’s Facing Foreclosure*

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