Santa Cruz short sales can have pitfalls with some lenders; Santa Cruz Reo's maybe safer

According to this recent article that I read as a Santa Cruz, California Realtor, some lenders are trying to get money they should not be getting. The essence of a loan sequence is this. The first is first in line when they need to collect the money, the second is second in line, and while there are not many in Santa Cruz real estate, the third is in last place.

As so many property values have plunged and or the loans that were made were foolish ones, the second loans are often being wiped out, meaning that lender get's nothing or virtually nothing. Can you imagine as a banker going to your boss and saying,"hey boss, I just lost you $200,000" how that would go? The reality is that many of these loans were not bad loans, but were loans that should have never been given in the first place. That being said, some of these lenders are so desperate that they are trying to recoup any of their money, even by illegal means. Read below what the California Association of Realtor's Association has to say on the matter.

So an agent participating in this exercise can be subject to many disciplines from state and federal sources.Think carefully if the risks are worth it.

Many short sale seconds really gum up the works as they still have some power.You the seller cannot sell your home without all the lienholders signing off for the transfer to occur. So they yield some small power to extract some money from the buyer or the first position lienholder.Sometimes the demands are so onerous,that a seller decides to choose bankruptcy. Before you embark on any course of action,Santa Cruz short sales or Santa Cruz REO's it is advisable to consult an attorney on these matters.

This is from the California Association of Realtors......

"UNDISCLOSED SHORT SALE PAYMENTS MAY BE ILLEGAL

Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws.  Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lienholders and others, oftentimes outside of escrow.

One common scenario is when a short sale seller's senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender( often a second)demands that the buyer pays an additional $9,000 outside of escrow. 

Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine. Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act.  

Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent's participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.

Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

Attorney General's Office
California Department of Justice
800-952-5225 Phone
http://ag.ca.gov/consumers/mailform.htm

Department of Housing and Urban Development (HUD)
HUD Office of Inspector General Hotline (GFI)
800-347-3735 Phone
http://www.hud.gov/offices/oig/hotline
· Federal Bureau of Investigation (FBI)
202-324-3000 Phone
https://tips.fbi.gov "

While we may all feel the banks pain for making so many bad loans,we are all supposed to play by the rules and some of these are clearly breaking them. Many Americans do not like to accept responsibility for their actions, such as taking a loan they could not afford, to lenders who took risks, got high interest loans, and lost their gamble. Remember banks used to be conservative; seems they all drank the cool-aid.

If something like this is going on,talk with your agent on how best to proceed. One wants to get the home you are under contract on, but putting yourself and agent in a position of doing something illegal may not be in your best interest.

If I can help you buy a Santa Cruz foreclosures-REO or short sale, drop me a line. There can be some great opportunities, but one needs patience.

Santa Cruz is pretty, the homes interesting, the college, UCSC, beautiful.......

Recently our local institution of higher learning UCSC has named by Forbes as on of the 10 prettiest campuses in the world. Now that does not surprise me as I have been telling Santa Cruz real estate clients that for years it is one of the prettiest they will find.UCSC made the international list that includes another local university,Stanford, in Palo Alto, Princeton in New Jersey and the Scripps in Claremont, Ca. You can check out the slide show of the others in other parts of the world, but I didn't want all the commercials.


UCSC homes vary quite a bit as some are condos for students, while others are parts of a subdivision known as University Terrace, in west Santa Cruz that are larger for campus workers or faculty. The housing market here is quite varied with a whole range of styles and locations to choose from, just like these campuses.

The fact that the University of Santa Cruz is chosen was not a surprise. If you have ever been to the campus, the drive alone will make most recruits decide for the affirmative. With stunning panoramic ocean views of Santa Cruz to Monterey bay area below you as you head up or down from campus, one can't help but admire the natural beauty. While UCSC is a heavy weight in many academic areas, the combination of mind and spirit and the natural beauty is really a great treasure to have. With paths through the towering redwood trees to, the path to education here is crowded with beauty. While Santa Cruz real estate is most valued by those of us who live here, the University of Santa Cruz occupies some of the most valuable real estate in Santa Cruz. The golden rolling hills at times dotted with cattle or even mountain bikers on the way to rides is almost surreal in it's beauty.

If you have a child considering a college near or far from home, this is a beautiful place to get a grounded education in a wide variety of subjects. Definitely do check out UCSC and if you decide to go, call me for help in locating a home to buy in Santa Cruz. Renting can be a drag and you will find the place is a safe way to go as many parents have found.
You can reach Gregg Camp at 831-818-7524 for help with your UCSC housing needs.