Foreclosure is not the end of your problems.

Forecloure must be your last resort: Here are some tips of how to:

GET A SETTLEMENT.

Think you are living free until the eviction order arrives? Think again.

SAVE EVERY CENT YOU CAN: YOU ARE GOING TO NEED IT TO GET A RENTAL WITH DINGED UP CREDIT. (There is an article coming soon on how to get a rental with poor credit).

Most property owners who are now in pre-foreclosure and eventually foreclosure, were blinded by the desire to live the American Dream. The tax codes and subsequently their tax preparers with promises of tax breaks, were part of a long line of influences nudging the blinded buyer and refinance victim down a road to disaster. Banks and lenders, who should know better, (in order to make a quick buck), regardless of ethics, are the major reason for the eventual failure of these loans.

I am convinced that a majority of the loans made were illegal. The public signed documents without a clue of what they were signing. Those same arrogant lenders are now the ones ignoring borrowers' requests for Loan Modifications and Short Sales. There has recently been a case, on the news in San Diego, of a family who applied to Wells Fargo for a loan modification and was strung along for 7 months believing that they were going to get help, and told not to make any payments. Next thing they are served an eviction order.

The people and institutions holding these notes are so confident that the victims are scared or lack the knowledge to challenge them, that they do whatever they want, regardless of the law. I feel that now is a good time to hopefully change their thinking. I have done a lot of research in this area and have come up with the following. Here are the reasons why they(Lienholders) need to be challenged:-

FEDERAL TRADE COMMISSION COMPLAINT REPORT, HUD COMPLAINT REPORT, DFI California Department of Financial Institutions complaint report, NATIONAL LOAN AUDITORS (Closed Forensic Loan Audit Compliance Analysis Report), Comptroller of the Currency Administrator of National Banks Customer Complaint Form.

The agencies listed above have been in existence long before the meltdown and have easily accessible websites, where complaints can be filed online.These agencies are there to protect the public and the lenders do not want to hear from them.

All it takes is a little guts and a letter (with attached copies of the forms), to the lienholder, stating that the appropriate paperwork has been filled out and will be submitted within 7 days if they do not respond. An audit of the lien holders, CLOSED FORENSIC LOAN File, will get their attention. They must be very confident that they could withstand an audit, not to respond immediately. They know that this could lead to a court case and that they should give this file special immediate attention or live with it for years.

The Government has been told, by their friends the lenders, that the reason that they can't approve modifications and short sales, is because they (the banks with billions in TARP money) don't have the manpower and the software and the Blah! Blah! Blah! I am not buying any of this. When making all these millions of loans (which took a huge amount of applications, underwriting, appraisals, verification, etc. etc.) there didn't appear to be problems.

FORECLOSURE:- What the average person does not fully understand about foreclosure is that when the "starry- eyed borrower" signed the loan documents, that there was a clause in the note that stipulates whether the note is Recourse or Non-Recourse. Every state is either Recourse or Non-Recourse (check your state)

However there are a number of twists to this story.. If you are in a Non-Recourse state like California and get a loan to purchase a property, it is probably a Non-Recourse Loan. The lien holder in a Foreclosure can only claim the property back and has no further recourse or claim against the borrower.

Recourse (even in a non-recourse state) is created most often in a refinance and particularly in a CASH OUT refinance. Here the lender can get a Deficiency Judgment and the court could authorize a Promissory Note for the amount of the Deficiency. (this could be devastating. I recently read an article of a case in Arizona where the Deficiency amount was $72000 and the monthly repayment was $700).Virtually all 2nd loans are Recourse.

2-4 Unit Investment loans are most likely Recourse.

IF YOU ARE IN FORECLOSURE YOU NEED TO CHECK THE NOTE YOU SIGNED AND SEE IF IT IS RECOURSE.

Short Sale or Deed-in-Lieu of Foreclosure:- AS set out by the Treasury Department.

This is standardized application that is designed to formalize a Short Sale Agreement. This has a lot of advantages over going to Foreclosure.(the whole document is 49 pages long) Below are some important clauses:-

Satisfaction and Release of Liability.

If all of the terms and conditions of this Agreement are met, upon sale and settlement of the property, servicer will prepare and send for recording a lien release in full satisfaction of the mortgage, foregoing all rights to personal Liability or Deficiency Judgment.

This, if agreed to by the note holder, will save having a Foreclosure on your credit report and will allow you to walk away with $1500 in your pocket which is part of the Treasury Department Agreement.

Credit Bureau Reporting.The servicer should continue to report a “full file” status to the major credit repositories for each loan under the HAFA program in accordance with the Fair Credit Reporting Act and the Consumer Data Industry Association’s (“CDIA’s”) Metro 2 Format

Credit bureau requirements. “Full file” reporting means that the servicer must describe the exact status of each mortgage it is servicing as of the last business day of each month. The Payment Rating Code should be the code that properly identifies whether the account is current or past due within the activity period being reported - prior to completion of the HAFA transaction.

Because CDIA’s Metro 2 format does not provide an Account Status Code allowable value for a short sale, a short sale should be identified with the reporting of Special Comment Code “AU”. The information below is consistent with “CDIA Mortgage and Home Equity Reporting Guidelines in Response to Current Financial Conditions” (May 2009).

Reporting should be as follows:

Short Sales

 Account Status Code = 13 (paid or closed/zero balance)

 Payment Rating = 0, 1, 2, 3, 4, 5, or 6

 Specal Comment Code = AU (account paid in full for less than the full balance)

 Current Balance = $0

 Amount Past Due = $0

 Date Closed = MMDDYYYY

 Date of Last Payment = MMDDYYYY

Deed-in-Lieu

 Account Status Code = 89 (deed-in-lieu of foreclosure on a defaulted loan)

 Payment Rating = 0, 1, 2, 3, 4, 5, or 6

 Current Balance = $0

 Amount Past Due = $0

 Date Closed = MMDDYYYY

 Date of Last Payment = MMDDYYYY

(The above Reporting is a good place for rebuilding your credit over a Foreclosure being Recorded).

Supplemental Directive 09-09 Page 14

Hopefully this will assist some distressed soul.

It is in your best interest to employ a Real Estate attorney or an experienced Realtor who you are going to need anyway to handle the short sale as stipulated in the Treasury Department Short Sale Agreement.

If you are going the Short Sale route ask your Realtor if your property would qualify for a FHA Loan, it makes a huge difference if buyers have this available. Conventional loans require a large down payment and that could be a problem. Always remember if you can't get a quick decision on a Loan Modification, chances are you won't get it; so, at least be ready for a Short Sale.

TAX IMPLICATIONS:- You will not believe what you are going to learn in my next article taken straight out of the TAX CODE.