For more information about resolving your mortgage problems you can contact us and we can discuss your particular situation.

Our experience with troubled loans and workouts can also help our clients avoid problems related to deficiency judgments, tax liability for debt forgiveness, and damaged credit.

For additional information about our ability to help our clients find useful solutions to difficult mortgage problems, contact a lawyer at the Heritage Law Group in San Jose or the Sacramento area.

Revised and New CAR Forms

CAR has issued New Forms and Revised many of it’s previous forms on April 15, 2011. This Article will discuss the new CAR forms and suggest how these forms should be used.

1. New CAR form DRA, entitled, “Denial of rental application” is designed to comply with the consumer credit reporting agencies ACT(“CCRA”) which is codified at California civil code sections 1785.1 through 1785.36. The purpose of the CCRA is to require consumer credit reporting agencies to adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel insurance, hiring of a dwelling unit, and other information in a manner which is fair and equitable to the consumer with regard to the confidentiality, accuracy, relevancy and proper utilization of such information in accordance with the requirements of CCRA. This new form should be used any time an application by a prospective tenant is denied because of credit history contained in a consumer credit agency report. The landlord or the landlord’s agent must notify the applicant of that fact and of the applicant’s right to obtain a copy of the credit report and dispute it’s accuracy. Additionally, if the credit information was received from a person other than a credit-reporting agency. The applicant must be notified of their right to request disclosure of the nature and substance of such information. Failure to supply this form is a violation of CCRA.

1. Two mortgage assistance relief services (“MARS”) forms have been introduced to deal with the new federal trade commission (“FTC”) rules which are codified at 16 CFR 322. The FTC recently enacted guidelines governing the activities of persons offering mortgage assistance relief services to homeowners. The MARS rules apply to any real estate agent who negotiates a short sale with a lender on a residential dwelling (1-4 Units). Agents who promote their services as a way to help consumers avoid foreclosure are also covered. Other mortgage assistance relief services that are within the scope of the new MARS rules include negotiation. Obtaining or arranging a loan modification, deed-in-lieu of foreclosure, loan forbearance, or postponing a trustee sale. The MARS rules took effect on January 31, 2001, but the FTC is still in the process of revising those rules. Revisions appear necessary because some of the required disclosures are misleading. For example, a seller who has signed a listing agreement is not free to “stop doing business with us at any time”, as provided in the form, without breaching the terms of the listing agreement and perhaps also breaching the contract with the buyer. Even though the disclosures and CAR forms that have been published to date with regard to MARS may be revised in the near future as the FTC modifies its rules, we recommend using these forms in a good faith effort to comply with the current state of the law.

The two new CAR forms are:

1. Short sale approval disclosure. When the listing agent provides the seller with a short sale approval letter from the lender, certain disclosures to the seller are required under the MARS rules. Those disclosures are set forth in the new CAR form MARSMRN.

2. Short sale listing notice. At the time of taking a short sale listing, or whenever the agent becomes aware the sale will be a short sale, certain disclosures to the seller are required under the FTC rules. Those disclosures are sent forth in the new CAR form MARSSN.

All the new CAR forms should be used immediately. Watch for future changes to the new short sale forms as the FTC issues new rules.

Useful information about these new CAR forms.

If you need more information about these new CAR forms, be sure to contact Heritage Law Group Real Estate Attorneys on our contact page.

Senate Bill Helps Short Sale Sellers

As your San Jose Real Estate Attorney, we’ve watched as Senate Bill 458 was passed into law in July of this year which expands upon previous legislation passed in California as Senate Bill 931.which took effect January 1, 2011.

Under Senate Bill 931 which took effect on January 1, 2011, Section 580e of the California Code of Civil Procedure was amended to provide that any first lien holder who accepts a short sale as full payment of the first lien obligation, is required to waive the right to pursue a deficiency judgment against the short sale seller.

Short Sale Sellers Law

Under the new law passed as Senate Bill 458, Section 580e of the California Code of Civil Procedure is amended to apply the same principal set forth in Senate Bill 932 to any secondary, or junior lien loans involved in the short sale transaction. In short, once the second or other junior lien holder accepts the terms of the short sale, those lien holders now agree, as a matter of law, to waive their right to pursue a deficiency, as well. Both of these laws only apply to dwellings of not more than 4 units.

This new legislation clears up what, until now, was a huge concern for short sale sellers since the second or other junior lien holder would usually reserve its rights to seek a deficiency judgment when agreeing to accept the terms of the short sale.

CAR Short Sale Sellers Law Statement

The California Association of Realtors issued this statement regarding the passage of Senate Bill 458:

Although a lender cannot require a borrower to pay an additional compensation in exchange for a short sale approval[under the new law], the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.

This could be good news for short sale sellers. The new legislation, as well as the previous bill which took effect in January 1, 2011, provides that if the seller (trustor or mortgagor) commits either fraud with respect to the sale of, or waste with respect to, the real property which secures the deed of trust or mortgage, the new law shall not limit the ability of the holder of the deed of trust or mortgage to seek damages and to seek remedies against the trustor or mortgagor or any third party for fraud or waste.

All in all, this new law is a good one for short sale sellers and should eliminate the previous concerns about a junior lienholder seeking a deficiency judgment once the short sale is concluded.