Timothy McCandless Esq. and Associates
Northern and Southern california
(866)717-0415
FAX (909) 382-9956
tim@saharaoasis.com
Our team of dedicated legal professionals is well-versed in defense of the foreclosure process and Loan Modification we have a unique approach to many consumer law areas. We will not advocate for you in an area we are not experienced in. Our team brings a diverse background to the table, allowing us to advocate for you in many areas of law. This gives Timothy McCandless Esq. and Associates an edge when dealing with complex legal matters as it applies to Foreclosure Bankruptcy and defense of eviction after sale. Often, more than one area of expertise is required. No need to hire a multitude of attorneys. We can provide you with comprehensive legal support in many areas.
Timothy McCandless Esq. and Associates offers free initial consultations.
Solutions
to Default & Foreclosure!
Help Homeowners Keep Their Homes, and
Lenders Keep Their Loans www.thestopforeclosureplan.com
Service Hotline Information Line: (866)
717-0415
NOTICE:
The lending industry has indicated that it wants borrowers to know
that it is willing to work out creative solutions to mortgage payment default
and foreclosure problems!
INHERENT PROBLEM & WARNING:
The borrower has less
expert knowledge of potential loan workout deal structures, is in financial
trouble and acts with less
bargaining power. This often causes the borrower to accept a loan workout deal
that he/she either cannot afford, or does not understand.
For example only,
most deals wherein the lender forgives certain amounts of debt due on the
loan(s), are subject to (1) income tax due the I.R.S. as
“Forgiveness of Debt” income, and (2) personal liability for the “deficiency” of
the forgiven loan balance – which most lenders will demand or sue to collect as
a “deficiency judgment” within one year thereafter. These and many other items
are negotiable with the lender, with great limitations on the I.R.S. potential
liability.
Congress understands
that borrowers don’t want to talk to their lender (servicer) or the lender’s
foreclosure attorney. From embarrassment to conflict of interest there
are real reasons that cement the communication divide. Partly for this reason,
approved HUD consultants and select attorneys are offering to act as neutral
representatives between the borrower and the lender, or give credit counseling
advice.
The provider of this pamphlet www.the
stopforeclosureplan.com and the law offices of
Timothy McCandless, offers specialized loan workout solutions for the lender
and the borrower. Using this booklet will assist you in understanding some of the
potential options available to distressed homeowners. Avoiding the lender will
only result in foreclosure, loss of your home, loss of your good credit, and a
potential deficiency and tax liability or judgment.
On the other hand,
desire and willingness alone will usually not suffice to fashion a loan workout
solution. The lender will require a detailed explanation of the borrower’s financial
ability (or inability) to repay the loan. Most, but not all, loan
workouts require the borrower to pay and make up the default or foreclosure
costs, attorney fees, including late fees and associated principal and interest
due and other costs. However, increasingly, lenders will agree to compromise as
the inventory of real estate owned (REO) by the lenders increases, day by day.
One must understand
that lenders are not required to work anything out for the barrowers benefit
the main reason for these workout solution is that the lender could be stuck
with a non-performing asset and the barrower could string things out in such a
way that the lender’s losses will increase.
These are workout
options short of a workout, the borrower has two legal options . One to sue the
lender for some malfeasance on the part of the lender; or two file Bankrutcy and propose a payment plan
to pay back the full loan over 5 years on the back payments. Borrowers may
resort to bankruptcy protections, which may or may not save the home. Borrowers
may also have legal claims against lenders, servicers, brokers, or Wall Street
firms for predatory lending, fraud, RICO, misrepresentation, negligent product
development, breach of good faith duties, breach of warranty of fitness for a
particular purpose, breach of Federal or State laws, among many other causes of
action. Each and all of these may or may not have merit for a particular
borrower.
In addition to recent
(2007) great loan losses, two bankrupt Bear Stearns Funds, over 137 lenders out
of business, or operating in a very limited capacity, a credit crunch and a
liquidity crisis under way, lenders and investment banks are forced to take
back property that they are not set up to resell.
As most people can’t currently get loans to
buy foreclosures, or refinance out of a loan, REOs owned by Wall Street
investment banks are rising at an alarming rate. Take note of the chart
indicating the rate of change from 2006 to 2007 for REOs of Bear Stearns, Citigroup,
JP Morgan Chase, Merrill Lynch, Morgan Stanley, and Lehman Brothers. The rate
of firms taking back ownership of property has jumped as high as 497%.
You or your attorney,
or HUD representative, should and must call your lender and embark on a plan to
resolve your financial woes. Here are
some of the ways workouts can work to every ones advantage:
1. Pre-Foreclosure
Loan Refinance –You would refinance to avoid resets, or “unaffordable” payments,
etc. Currently loan “eligibility” is based upon new federal regulations
requiring the “fully adjusted indexed interest rate”, not the teaser rate. Lack
of equity as a result of the devaluation in home prices has restricted borrowers options. This could result in many
borrowers failing to qualify for the refinance option.But if the borrower can
qualify, this may be the most immediate solution. However, if the type of loan
and terms, including any adjustments or resets, simply postpone the resulting inability
to pay, then this may not be a solution at all. Brokers and lenders must also
now document that any loan they give you has a “net tangible benefit”.
Refinancing may not be possible for many borrowers in the current real estate
market bcause:
(1) the market price
or value may have fallen to a point where your equity
is insufficient to
qualify for a refinance,
(2) the fully indexed
interest rate may reveal an inability to qualify, and/or
(3) the revised or
eliminated loan programs are more stringent than when you
obtained the loan you
are attempting to refinance, precluding you from qualifying
with the available
loan programs.
Key issues of concern
for a refinance depend upon:
A. Amount of Income
and/or or Assets (whether you can document it or not),
B. Credit score and
credit report (high scores can place you in easy qualifying
loan programs)
C. Value or appraisal
of home (a high valuation will result in more equity to
allow you to qualify
in more loan programs)
D. Amount of home
equity (depending upon the requirements of the particular
loan program you are
seeking)
E. Amount of Cash for
upfront loan fees
F. Availability of
easy qualifying loan programs (loan programs change all the
time; you need a
broker who can shop many differing programs to meet your
unique situation; if
you have negative default marks on your credit, you may
need a lender who has
a loan program that will give you a second chance)
If you succeed in a
refinance, the default or foreclosure will be cured or null and void.
2.
Short Refinance – A short refinance would
allow a refinance to a new affordable loan, at a loan amount less than the current loan balance
owed.
This would require
the lender(s) to agree to refinance your loan to another loan to an amount less
than the amount due on the defaulted or troubled loan.
There are many
reasons that a lender might agree to do this, all of which will require you to
prove that you could afford the new loan, as opposed to the troubled loan,
probably for reasons beyond your control or fault. The goal is to refinance to
avoid loss in asset devaluation and pending resets, etc. This would allow
homeowners to stay in homes, create part of the ‘equity’ that was lost in the
massive home devaluation and obtain “eligibility” and “affordability”.
3.
Pre-Foreclosure Sale – If you can’t refinance your home for any reason, you should consider
selling it. However, this option may not be possible if the market price is
below the loan amount, unless you do a short sale. The resale market is
currently limited. It’s a options. This could result in many borrowers failing
to qualify for the refinance option.
But
if the borrower can qualify, this may be the most immediate solution. However,
if the type of loan and terms, including any adjustments or resets, simply
postpone the resulting inability to pay, then this may not be a solution at
all. Brokers and lenders must also now document that any loan they give you has
a “net tangible benefit”. Refinancing may not be possible for many borrowers in
the current real estate market because:
(1) the market price
or value may have fallen to a point where your equity
is insufficient to
qualify for a refinance,
(2) the fully indexed
interest rate may reveal an inability to qualify, and/or
(3) the revised or
eliminated loan programs are more stringent than when you
obtained the loan you
are attempting to refinance, precluding you from qualifying
with the available
loan programs.
Key issues of concern
for a refinance depend upon:
A. Amount of Income
and/or or Assets (whether you can document it or not),
B. Credit score and
credit report (high scores can place you in easy qualifying
loan programs)
C. Value or appraisal
of home (a high valuation will result in more equity to
allow you to qualify
in more loan programs)
D. Amount of home
equity (depending upon the requirements of the particular
loan program you are
seeking)
E. Amount of Cash for
upfront loan fees
F. Availability of
easy qualifying loan programs (loan programs change all the
time; you need a
broker who can shop many differing programs to meet your
unique situation; if
you have negative default marks on your credit, you may
need a lender who has
a loan program that will give you a second chance)
If you succeed in a
refinance, the default or foreclosure will be cured or null and void.
Take
& Toll Agreement: If you inform your lender that you are
trying to sell
your home, or have
your home listed with a real estate professional, the lender
may be willing to
take the foreclosure sale off calendar and toll the timeline
pending its sale for
a certain period of time (Take & Toll). At the end of the
agreed period, the
lender will have the right to immediately start up the remaining
time on the
foreclosure clock and move to sell the home at foreclosure without
restarting the
foreclosure notice clock over again. Some lenders have differing
rules about when they
allow certain solutions or not. Some lenders or loans (i.e.:
federally insured
mortgages) may require that you meet HUD appraisal
requirements, are at
least 2 months behind in payments (delinquent), and expect to
be able to sell the
home within 3-5 months.
If you can’t sell the
home for at least the amount of the loan and any related default or late fees
and costs, then you need to consider the following options.
4A.
Extension of Adjustable Rate Loan Reset Dates or Terms- Extending
the adjustable loan reset dates will help delay the current or expected
increase in monthly payments. However, this is not a long term solution. This
is an interim loan measure only. It may only delay the “unaffordable”. As a
result of the recent subprime meltdown, lenders and servicers have indicated at
trade conferences that most will be willing to extend or toll the dates that the
loan terms are scheduled to reset at higher interest rates, resulting in higher
monthly payments, or dates requiring certain additions to loan balances upon
which payments are calculated. This should be an easy thing to accomplish, but
lenders are creating the rules as we go, so negotiate strongly to achieve a workable
result. Certain major servicers, including Litton, have indicated that merely extending
“reset” dates is not a solution at all, but a deferral of the inevitable
default or foreclosure. This author agrees. It has been suggested at industry
conferences that
lenders, servicers,
and investors agree to more substantial changes to achieve a realistic workable
and affordable result.
4B. Extension of Resets & Long-Term
Modification of Resets – Helping
Homeowners
Keep Their Homes, and Lenders Keep Their Loans! - Immediate
“affordability” must be infused into the national sub-prime loan portfolio or
the foreclosure fallout may threaten us with a serious recession. Price must be
paid for risk, but voluntarily (or by industry or congressional mandate)
lenders, borrowers, and investors must share in the price for this risk.
Lenders and servicers with the approval of investors (by industry or
congressional authority) should extend the mortgage resets immediately, and/or
modify each adjusting loan by maintaining the lower (teaser) interest rate for
at least 7-15 years even if it is an Interest Only (IO) or Negative
Amortization (NA) (with balance accrual limits) payment (or agree on some low market
interest rate approximation) and/or add a fee to the loan balance (of
$5,000-20,000 (or calculate same by some market percentage) or a fee within
Section 32 limits even if not required), which is then re-amortized over the
life of the loan, or longer (i.e. 40 or 50 years).
5.
Lump Sum Cash Payment Loan Reinstatement - This is a typical
loan workout or loss mitigation solution. It requires the borrower to have
available “cash” to make up past arrears and associated costs. This is not a
doable solution for most borrowers after they are in trouble, or after loan
resets. Many borrowers in trouble, without sufficient knowledge or bargaining
power, will borrow from family members to get the makeup payment, make the
deal, only to renege because they truly cannot afford to carry that loan burden
as cast. If you can raise or pay a cash lump sum on a date certain in the near future
of the amount of the past due payment amounts along with late fees, attorney
fees, and associated costs, then you may be able to work out a Reinstatement
Agreement. If you can meet the key requirements, a Reinstatement will be an
easy way to achieve a loan workout. REASONING: You will need to explain why you
got behind in the first
place and why you
will be able to pay in the near future.
6.
Repayment Installment Plan - Maybe the most common
solution is to agree to repay the amounts in default over time or in
installments while you also pay your regularly scheduled payments. This is
commonly called a Repayment Plan Agreement.
This plan is also available
as a matter of law thru a Bankruptcy Chapter 13
plan.
REASONING: Past
Short-Term Hardship/Hardship is Now Over: The lender will not agree to this if
your financial situation is unstable or reveals that you can’t afford to make such
payments. You will need to show the lender the reasons why you got into
short-term financial trouble, and why you are no longer in financial trouble.
You will need to show the lender that your financial situation is such that you
can afford to pay the amounts due under this agreement. The lender may agree
that: (1) 20-50% of past due amounts be paid upon signing of the agreement, and
(2) the remaining past due amounts be paid over a time certain to fit with your
current ability to pay same, for example, over 6-24 months, and (3) the
regularly scheduled payments also be paid in a timely fashion. This is an interim
loan measure only.
7.
‘Loan Modification’ to New Loan Note Agreement - The
borrower can currently afford to make regularly scheduled payments but can’t
afford past due amounts.
REASONING: CAN AFFORD
PAYMENTS/CAN’T AFFORD PAST DUE
AMOUNTS: Loan
modifications are all about negotiations, especially in this newly troubling
real estate climate (2007-2010). The borrower should seek to have the lender add
all past due payments, interest and associated costs and fee amounts to the
principal balance of the loan, and reset same to a new “affordable”
amortization schedule. You may find it advantageous to negotiate the longest
amortization period possible to lower your monthly payments. For example, Amortization
Term: (i.e. 30, 40, 50 years); Interest Only (Fixed for at least
5-10 years); Graduated Payment Plan (GPP) (agreeing to pay noor low
payments in the early months, rising in direct relationship to what the
borrower can “afford” in later periods). The borrower should expect to execute
a new loan note and related loan documents, and receive a positive or neutral
credit reporting of the current or prior loan and note agreement, resulting in
a new loan note and agreement.When in doubt, make sure of this in writing in
plain language. For example, confirm that
no negative marks
will be recorded on “credit report”.
8.
Loan Forbearance - Forbearance means time-out! Stop the lawsuits! Stop the
foreclosure sale!
Stop my payments! Lenders will consider a forbearance agreement to give you
a time out from making payments or full payments for a limited time period
allowing you to regroup.
REASONING: Buy
Time/Regroup: The borrower will have to agree to another option to bring the
loan current when the forbearance period expires. Repayment or
Reinstatement may be the agreed option to resolve the situation. Borrowers
should only negotiate and agree to a plan that is doable, workable and
affordable. If a hardship will result in a temporary or short term payment
problems, the borrower will need to prove to the lender the reasons for such
hardship and the reasons for recovery from such short term hardship. Lenders
may agree to combine the Forbearance with other solution options as
well. For example, it is common to use theforbearance agreement with a Reinstatement
or a Repayment Plan. The question is always:
CAN YOU BRING THE
ACCOUNT FULLY CURRENT, WHEN, WHY & HOW?
In the current
climate, the borrower will need to ask for what is needed, not for what he thinks
the lender will allow. If one needs Forbearance for certain reasons with an
exit option other than Reinstatement or Repayment Plan, then it should be
sought and negotiated. Borrowers should only negotiate and agree on a plan that
is doable, workable, and “affordable”! Otherwise, a very capable foreclosure
and litigating attorney will be at the borrower’s doorstep in due time.
9.
FHA HUD Partial Claim –
Certain types of
loans have certain prescribed procedures that may help or hinder your success.
For example, if you have an FHA insured loan, you may be entitled to money for payments
from HUD (Department of Housing and Urban velopment). This program is called the FHA HUD
Partial Claim Program. This program will afford the borrower with a
payment from the FHA Insurance Fund.
HUD REQUIREMENTS: You
must be:
A. At least 4 months
but no more than 12 months delinquent on your
regularly scheduled
loan payments,
B. Be financially
stable and able to make fully amortized payments
thereafter,
C. You must execute a
new HUD promissory note you must accept a lien
against your home of
such amounts as a HUD loan, without interest and
due when you
transfer, sell, or cease use as your home
10.
“Pre-Foreclosure Short Sale” for less than mortgage amount due –Short Sale:
Can’t Afford: Can’t Sell on MLS: Move Out: Save Good Credit:
In the event the
borrower wants to move out, and has found a third party buyer that will only
offer an amount less than the amount of the loan balance, a Short Sale may be
the answer. The borrower will have to make a series of written representations
to the lender in a Short Sale Package, including a Financial, Medical or Legal
Excuse Hardship Letter with supporting documentation on (1) the borrower, (2)
the home and (3) real estate market, including: bank statements, repair
estimates, three to four months failed listing results (from the “multiple
listing service”), rebuttal price opinions, purchase contracts, HUD-1 or
settlement statement, proof of funds or prequalification letter from buyer’s bank,
etc. The lender will also attempt to establish a fair market price for the
house. The price the lender will propose is called the Broker’s Price Opinion
(BPO). It will usually differ greatly from the price that the borrower expects
to sell the home for based upon the seller’s experience of at least 3 months of
failed sales. This reconciliation of the fair market price will cause great
delays and drag the process on for months (and months).
Notwithstanding, this
stage will lend it self to buying a ‘short sale’ at a price below the amount
due on the mortgages and usually 20-40% below market. This will also require the
lender(s) to agree to take less than the amounts due, which will require 1-4
months of negotiations. However, it is
critical to understand that, although laws are pending in Congress, the
homeowner presently may be subject to (1) income tax on the amount of forgiveness
of debt, and/or (2) a deficiency liability for the difference
between the sale proceeds and the mortgage balance outstanding, plus costs and
fees. In California, the lender may not seek a deficiency Judgment on a
non-judicial foreclosure and likewise the borrower has no Rights of Redemption
therefrom; however, a short sale is not a nonjudicial foreclosure. It behooves
both the buyer and the short seller to negotiate the waiver of both the deficiency judgment
and the income tax (1099 reporting) liability.
An attorney should be
consulted by the buyer and seller to avoid unwanted results. You need to make a
hard decision about this possibility before accepting a short sale, or negotiate
with the lender that it will not report a 1099 on these amounts for tax characterization
or other factual or legal reasons. Note that bills are pending in Congress to
forgive certain amounts from taxation.
11.
Deed In Lieu of Foreclosure –
HAND IN KEYS EARLY:
WALK AWAY CLEAN: STOP FORECLOSURE
PROCEEDINGS: CAN’T
MAKE PAYMENTS: CAN’T SELL BUT TRIED: WANT OUT: WANT TO SAVE CREDIT SOMEWHAT:
EARLY BIRD PRE-FORECLOSURE SOLUTION!
If you can’t afford
the payments on the loan and need to get out, contact the lender and offer a
deed in lieu of foreclosure. The borrower is seeking an immediate release from the
loan and all indebtedness, and cessation of the foreclosure proceedings. This potentially
will save the lender much money, time and hassle from pursuing the foreclosure
remedy against the borrower. Credit will typically show a negative mark from
this situation, but much less serious than a foreclosure. As in a short sale,
the borrower will have to show that he/she attempted to sell the home but could
not. Unlike the short sale, he/she may have tried for only 30 days or so.
Different lenders will have different requirements, including that you must
offer the deed in lieu 30-60 days prior to the foreclosure sale date, the
property must be vacant, and an exterior and interior appraisal must meet their
requirements.
12.
Reverse Mortgage (for Seniors) – Seniors need to understand
that they may seek a reverse mortgage that would replace their current loan
requiring monthly current payments with a Reverse Mortgage that would NOT
require current monthly payments. The reverse mortgage is paid off when the
property is transferred or sold, or at death.
Reverse mortgages are
generally legitimate and should be considered by seniors with all of the other
factors unique to each borrower, and his or her estate, succession and life insurance
plans.
.
13.
Defenses to foreclosure and bankruptcy -
FAIR NOTICE AND DEFENSES
TO FORECLOSURE: Borrowers have legal rights independent of the solutions
offered herein. Borrowers are always advised to contact an attorney experienced
in this area of the law. Borrowers may resort to bankruptcy protections, which
may or may not save the home. Borrowers may also have legal claims against
lenders, servicers, brokers, or Wall Street firms for predatory lending, fraud,
RICO, misrepresentation, negligent product development, breach of good faith
duties, breach of warranty of fitness for a particular purpose, breach of
Federal or State laws, among many other causes of action. Each and all of these
may or may not have merit for a particular borrower.
Conclusion: The options are both
plentiful and at the same time limited. A professional should be contacted to
help determine the avalible options and evauate a course of action. The worst
decision is no decision!
Let
The Experts Try to Save Your Home Call 1-866-717-0415!
We analyze your situation to determine what is the
best course to save your home, whether it be finding a new loan, renegotiating
a new loan with your present lender, or suing your lender if appropriate for
violations of the Truth In Lending and RESPA laws.
Send your information and we will call you with in a
few minutes and get you the solution you need!
Call 7/24, we are waiting for your call.
Newest Success - Homeowner 90+ days down on mortgage
- Successful negotiation to resolve all back payments & fees with a 30 year
fixed rate mortgage at 2%!!
We are attorneys with decades of experience working
clients who were cheated by their lenders working to STOP your foreclosure
fast. We work hard to create retention programs, loan modifications, loan
restructuring plans, and forbearance agreements. And, when all else fails, we force your
lender to court to correct their mistakes.
It does not matter how far behind you are, the size
of your mortgage, your income, your credit history, or if you have been unable
to get help before. We have solutions, and we get results! We will talk with
your lender, handle the paperwork, get an immediate stop to your foreclosure,
then negotiate the best plan for you.
Some of our programs include :
Loan Modifications, Loss Mitigation, Foreclosure
Financing, Lines of Credit, Reverse Mortgages, Forbearance Agreements, Loan Restructuring,
Redemptions, Hard Money Loans,
Reinstatement Plans, Forbearance Restructuring, Short Sales, Bankruptcy chapter
7 and 13, Short Refi’s, FHA workouts,
the worst decision is no decision. Time is ticking! Submit your application and
we will call you within a few Minutes and get your foreclosure stopped!
Help Homeowners Keep Their Homes, and
Lenders Keep Their Loans www. foreclosurelitigator.org
Service Hotline Information Line: (866)
717-0415