NHORA presents HAFA education event

In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program took effect on April 5, 2010—although some servicers may implement it sooner, if they meet certain requirement--and sunsets on December 31, 2012.

HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. 

NHORA (National Hispanic Organization of Real Estate Associates) is presenting an education event at Maggiano's Restaurant in San Jose, on April 14th.

Here's a brief video describing the event:



Click the title of this post above to reserve your seat at this important luncheon seminar.

Best to you,

Jim Herrera

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Where's the note?

The following is a re-publication of an blog post that may be of use to real estate agents and homeowners trying to fend off foreclosure. It was originally written by Rick D. Misitano, Senior Paralegal, Law Offices of James M. Bosco & Associates, Methuen, Massachusetts.

I have not spoken to Rick or to a real estate attorney practicing in California about this defense. But as a homeowner or agent representing a homeowner in this situation, it bears following up. If you don't know a real estate attorney in Silicon Valley, please let me know. I can refer someone to you.

Text as follows:

"When a lender can’t produce the original note, allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party in the future. Therefore, great caution must be taken before a judge can allow someone who can’t produce the original note to cash in on your home.

What if Your Lender CAN’T Produce the Note?

So, what happens when the lender tells the Court it can’t produce the original note, because it is lost? Let’s start with the basics. If a lender wants to foreclose on a property, it has to be able to show that it is, in fact, the appropriate person to whom the money is owed. That right to foreclose belongs ONLY to the person who has legitimate POSSESSION OF THE ORIGINAL NOTE - not a copy, not an electronic entry, but the original note itself with the original signature of the person(s) who allegedly owes the money along with appropriate raised notary seal and signature. So, if you are faced with a foreclosure, you have every right to demand that the person or entity trying to take your property, first prove to the Court that they have the legal right do to so in the first place by proving they have legal possession of the original promissory note.

In my opinion, an original mortgage note is much like legal tender and should be guarded and protected as such by the person holding such an asset. Loosing an original mortgage note is like loosing a $100 bill or a gift card or a lottery ticket. What if I scratched that million dollar ticket and just stuck it somewhere and misplaced it? Do you think I could just show up at lottery headquarters and claim my prize without having the winning ticket? The same principle applies to the person or entity claiming to be the legal holder of an original mortgage note. He who holds the note holds the key.

What the Lender Must Do
What often happens, however, is that the lender claims it doesn’t have the original note, because that note has been lost or destroyed. If the lender is making such a claim, the law requires the lender to prove all of the following under the “Uniform Commercial Code”, which is a set of laws governing commercial transactions that many states have adopted. It contains a specific provision on this subject (Section 3-309) which states that a person can enforce a promissory note without having the original, BUT only under certain limited circumstances.

1. The person or entity has to swear and attest that it no longer has the original note;
2. The person or entity has to prove that it was properly in possession of the note and was entitled to enforce it WHEN it lost possession of the note;
3. The person or entity has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and
4. The person or entity has to prove that it cannot produce the original note because the instrument was destroyed or its whereabouts cannot be determined or it was stolen by someone who had no right to it.

All of these matters have to be definitively proven by the person or entity trying to foreclose on the property. It is not the obligation of the borrower to prove or disprove any of this. The borrower can challenge the right of the person or entity trying to foreclose and demand proof.

The Court’s Important Role
It is up to the Court to determine whether the lender has satisfactorily proven why it no longer can produce the original note. The Court also has to be satisfied that when the original note was lost, the person trying to foreclose on the property had possession of the note at the time it was lost. Until the Court has been satisfied of all of this, the foreclosure cannot proceed.

It is also important for the Court itself to understand that this issue is not merely a “technicality” and the judge should not be satisfied with anything less than full proof of this issue. The Court itself needs to appreciate the fact that if it should agree that an original note has been legitimately lost (and allows the foreclosure to proceed) it is the borrower who is still at risk.

Why? Because incredibly, even if a Court has found that the original note is lost and the foreclosure sale is finalized, if someone later turns up with the original note and proves that it is the proper holder of the note, and not the person who foreclosed on the property, the original borrower is STILL LIABLE.

That’s right. Someone took your home and the Court allowed it because it believed that the lender proved that the note was lost and it was the proper party. Then someone legitimate shows up in the future with the actual note and you still owe that person the money even though your property was taken with the blessing of the Court. Trust me, this is a very serious issue regarding post foreclosures and post pre-foreclosure short-sales. It has happened to three of our own clients! These homeowners had the need to sell their property by means of a negotiated short-sale (so they could avoid a foreclosure) only to find out that the entity claiming to have the legal right and authority to enter into such negotiations and accept such settlements sold their note to another entity and weren’t even aware of it. Several months later, the newly assigned lenders (now claiming to be the rightful owners of our client’s original notes) have since come forward and have also filed suite seeking to recover their entire outstanding principle balances owed to them (prior to the homeowners closing their short-sale transactions with the wrong note holders).

How fair is that?!?! It’s not! And that’s why homeowners need to start fighting back when someone is trying to take their home by foreclosure, especially since an overwhelming percentage of mortgages granted over the last 3 to 5 years have been packaged into securities and re-sold and re-assigned numerous times since the inception of the borrower's original note and mortgage. In some states, homeowners have better than a 50/50 chance of being successful in defending themselves against a completed foreclosure. Why wouldn’t anyone who owns a home do everything in their power to protect and defend it? "

I hope this article has helped. Let me know.

Best regards,

Jim Herrera

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What's A Good "Buyer's Agent"?

As an MLS professional, I have the privilege of working with many brokers and agents in the Silicon Valley. The real estate professional's ideal situation is one in which they have a listing (that is, they represent the seller) and they can also represent a buyer who wants that same house. This "double-ending" practice can cause potential conflicts of interest. While CAR has forms which agents must complete to disclose this type of transaction, a buyer may not understand what this means.

With that caveat, as a buyer I'd like to list a few things that I would request of an agent representing me.

First and foremost, this is not a "deal". I don't buy houses for a living so I'm probably not experienced in this type of transaction. This is one of the most important personal and financial decisions I can make. If you're more interested in "closing escrow" than in representing me, then you should take the opportunity to bring in partner who can assist me.

As a buyer's agent I'm looking for you to oversee:
• create a comparative market analysis for my potential new home
• explain to me the market conditions and the neighborhood conditions
• all deadlines in the contract
• all inspections, including home and pest inspections
• the appraisals (and be able to discuss with me the reasons for the valuation)

Additionally, I want you to help me with:
• identifying my needs in a new home. (In fact, if you have a method for doing that, you'd get bonus points!)
• scheduling property showings
• get me the latest new listings to me electronically: via email, text message and cell phone.
• getting additional listing information from listing agents (e.g., seller's disclosures)

You should also:
• help me find the right mortgage company
• sit with me and the mortgage broker to explain the mortgage commitments
• prepare a Comparative Market Analysis (CMA)
• explain to me in plain terms, what a CMA is, why you selected the properties in the report and how this affects the offer WE will make)
• review home inspection reports with me
• assisting me in presenting repair lists for sellers
• negotiate for me on all of these issues.

I know this is a lot of activity, but I'm paying for this experience.

For agents out there, it will be interesting to hear your opinion. For consumers, I'd definitely like your opinion.

Raising the Bar

I have the great fortune to be able to work with many real estate professionals. My job is to reach out and support them from an MLS perspective. In the past, that meant explaining how to use our particular flavor of a search engine software. However, my passion is to provide them with the tools, techniques and education to become better practitioners - people who can connect to their clients and are willing to "do what is right" even when it sometimes is not as profitable for themselves.

To "do what is right" may take a lot of soul searching. In the February 9th issue of Inman News, Kris Berg, broker-owner of San Diego Castles Realty, wrote an article: "The Weakest Link in Real Estate". In that article, she identifies the weakest link: the weakest, least competent agent." For now, I'd like to quote from Kris' article:

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Sure, as real estate agents we are regulated. We are tested, we are licensed, and we are thumb-printed. Now in California, our license numbers must appear on all of our "first point of contact" marketing materials as a nod to the concept of consumer protection, but not until June. (I guess it takes time to implement such bold, sweeping changes.) And then we are set free to roam the earth and do whatever we please in whatever way we might wish under the banner ad of delivering the American dream.

So far so good, but this is where everything becomes backwards. The familiar employer-employee relationship is replaced with an industry of anarchy. Brokers may control the boardroom, but the licensees are calling the shots. The 1099 system turns the food chain on its head. Agents have been compared to plankton feeding a sea of bigger fish -- brokers, technology companies, and a long list of settlement and other service providers -- but agents are really the hunters and gatherers (or as some might call us, the predators) upon which an entire industry relies for their share of the spoils. And it is ultimately the licensees who are making this bed in which we all must lie.

The traditional brokerages are partly to blame, certainly. We are entrenched in a backwards system of agents interviewing and hiring their "employers," and the agent's choices are limitless. The brokerages make money because of the work that their agents do, and the temptation is simply too great to strip-mine a licensed populace in the pursuit of a few, shiny diamonds. Yet it is ultimately the work of each agent that reflects on every other agent and on the entire industry.

I have spent many hours on the "higher barriers to entry" bandwagon, and rest assured that I am still occupying my seat. Argue that the free market will weed out the less adept, but I seem to recall having heard that argument before. Oh yes, the banking system. And Wall Street.

It's much more than just an issue of licensing standards. Once crowned "licensee," no minimum standards exist for job performance. There are no annual reviews, no measures for excellence other than the production board, and few consequences for bad behavior. I run a small brokerage, but I am not a corporate muckety-muck. I am first and foremost a working agent, the first point of contact, and the things I see daily from my vantage point beneath the rhetoric and on the ground continue to amaze. I see many stellar agents who hold themselves to the highest standards even while their brokers don't, but we are all only as strong as the weakest. Tough times bring out not only the best but the worst in people, and I am seeing more of the worst lately, ranging from gray-area ethical breaches to huge storm clouds of malpractice and incompetence.

Common sense can't be regulated, of course, and ethics, being subjective, can't truly be prescribed in check-list form. Laziness is not a crime, and excellence will always be measured on a sliding scale of consumer expectations. But by leaving 3 million little businesses largely unmanaged, unchecked and unaccountable, we continue a dangerous precedent.

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Kris' article hints at the heart of how to improve the real estate industry:

• To train every agent to be their own CEO
• To demand that every agent's business activities be transparent, like a company's financial statements
• To require brokers to manage and hold their agents accountable for their activities.

This is a tall order. But a wonderful opportunity. We live in a time when people are looking for leadership and leaders who are willing to model the example of transparency and accountability.

Are you ready for this challenge?

The Old Rules Don't Apply

A look back... September 29, 2007. The following is a segment on the Today Show. Jim Cramer and the President-Elect of NAR Charles McMillan "spar" on whether to buy a house. Mr. McMillan was KO-d.




The "new conventional wisdom" was that, as Matt Lauer says at the beginning of this clip: "Whatever happened to that pot of gold that not too long ago if you put cash into the real estate market it was pretty easy money." We can debate at a different time whether the consumer's perception of the real estate industry is shaped by segments like these or whether these segments reflect the perceptions of the marketplace.

What I believe needs to be addressed is how real estate professionals responded then (and respond now) to the "real estate market collapse". Mr. McMillan didn't really address the fundamental issue here: Real Estate was NEVER supposed to be an "investment vehicle"! The unprecedented property value increases were aberrations, NOT the norm. This type of response, as well as the availability of property data from a variety of sources has created a wary and demanding consumer that professionals in the real estate industry must address. And address them on the consumers' terms.

The old rules don't apply.