Frontispiece

This publication is merely a report by the author on the various foreclosure remedies that are available. Several attorneys, foreclosure authorities and government agencies contributed to the data. The information in this book will go a long way toward helping homeowners in foreclosure, as well as many attorneys, to find and understand the most correct solution for their individual cases. While the book details most of the known foreclosure remedies, be advised that it may not be possible to include every detail or option that is best for your particular situation. In such cases, it is the author's sincerest wish that this material leads you to discover all the information you need to find your best solution. Also, any services and phone numbers mentioned are not product or service endorsements of any kind, are provided only for your convenience and must be used at your own discretion. In any case, since the author and publisher of How To Fight Foreclosure And Win With Honor are not attorneys and are not selling or offering legal advice in any form, do not use this book as a substitute for legal counsel. Foreclosure is a serious problem and, since laws and programs frequently change, an attorney or an other competent professional may be of valuable assistance toward finding or implementing the best remedy for each individual's foreclosure case. Thus, the data within this book is provided for informational purposes only. The author and publisher disclaim any liability and any responsibility for loss or damage caused, or alleged to be caused, directly or indirectly, by the information in this book. See the guarantee on page 20-3 for additional conditions. Published by Jensen Publications 200 Main Street, Suite 104-201 Huntington Beach, California 92648 (714) 843-0321

©
1994 by Jensen Publications All rights reserved. The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher, except by the purchaser who may reproduce certain specified forms to be used only to fight his or her particular foreclosure.

ISBN 0-9637960-0-3 Printed in the United States

This book is dedicated to all homeowners and to the preservation of the American Dream of home ownership. i

ii

Acknowledgements

Thanks to God for the idea, the inspiration and the perseverance. Special thanks to all who helped in making this book possible, including: Chris Rodriguez, my sweetheart, for her unconditional love and assistance; Beatrice Roden, my grandmother, for her love and understanding; Francis Jensen, my grandfather, for his example in real estate ethics; Elmer Roden, my grandfather, for his example of real estate investment; Bob and Mary Lou Jensen, my parents, for a lifetime of real estate, investment and accounting experience; Jim Jensen for all the computer and software advice; John Jensen for sharing his expertise in real estate and construction; Jerry Jensen for his guidance regarding accounting and computer software; Jeff Hoff for his prayers, treatments and advice; Graham Ledgerwood for his unconditional love and guidance; Dr. Pat Kubis for her years of writing lessons and advice; Margaret Chamberlain for the cover designs, the frontispiece, the chart and all her kind and helpful guidance along the way; Gordon Burgett, COSMEP and Publisher's Marketing Association for the publishing advice; John and Joyce Beck Seminars for their variety of in-depth real estate seminars; the Law Library of Santa Ana for all the reference material; How To Avoid Foreclosure, by Laurence Adams Malone, for the 5 model lawsuits and courtroom karate; First Tuesday for the state-of-the-art real estate forms; Stephen Stralka for his article on lease-options; Pat Morrel at the Department of Veterans' Affairs for the information; Vicki Cowell from Consumer Credit Counseling Service of Orange County for the budgeting information; Lorraine Donovan and Doug Fowler at Progressive Solutions Institute for the forms and information: "Bev" at the HUD office in Santa Ana for all the HUD information; Gabriele Williams at Cal-Vet for the information; California State University Real Estate and Land Use Institute for the study and report; California Department of Real Estate for the information; U.S. Armed Services for the information; Eileen Lawrence from Dearborn Publishing for all her help and information; The Homeowner's Guide To Foreclosure, by James I. Weidemer, Dearborn Publishing, for the in-depth understanding his book gave me regarding some foreclosure details; Kenneth Harney of The Washington Post Writers' Group for his article regarding errors in loans; The 7 Habits of Highly Effective People, copyright 1989 by Stephen R. Covey, excerpts on pages 13-5 through 13-7 reprinted with permission of Simon and Schuster Inc.; Seven Steps To Inner Power, copyright 1991 by Grandmaster Tae Yun Kim, excerpts on pages 15-3 through 15-4 reprinted with permission of New World Library, San Rafael, CA 94903; Writing The Natural Way, copyright 1983 by Gabriele Lusser Rico, excerpts on pages 15-5 through 15-6 reprinted with permission of The Putnam Publishing Group; What To Say When You Talk To Yourself, copyright 1982 by Shad Helmstetter, published by Pocket Books, for the information on page 15-2 quoted from his inspiring book; Wolcotts, Inc. for permission to reprint forms; Robin, Ken and Tracie Renner for all their help, and the real estate and loan information; Burr White Realty, Newport Beach; Tara Stoutenborough for marketing advice and support; Micheal Hsu and Robert Winterbotham for the interview regarding bankruptcy; Jerome Edelman for his bankruptcy advice; Ed Marsh for his hospitality and sage advice; Sylvia Vega for the loan information; Milt Stone and

Allen Passaquindici for all the real estate information over the years; Juris Solovjous for his accounting information: Rich Cook for his advice; Brenda Shelton from Lincoln Title for her help in finding some real estate forms; proofreaders Robin Quinn, Zee Rodriguez, Mary Lou Jensen, David Hochner, Don Viggiano, Bonnie Gordon, Cathy Lawson and Tom Baker; Cheryl Giacomini for all her help; and all the countless others who helped shape the information in this book.

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iv

TABLE OF CONTENTS
Introduction................................................................................1 The 5-Step Approach: How To Use This Book To Fit Your Needs Quickly.................................................................................................3 The 5-Step Approach At-A-Glance..............................................4

THE ACTION GUIDE SECTION
STEP 1: .......Become Familiar With The Action Guide Summary Of The 8 Options............................................................................................1-1 The 8 Options To Fight Foreclosure And The 3 Suggestions...1-2 The Action Guide Summary...............................................1-3 The Time Line Of Options--Non-Judicial Foreclosure.............1-13 What If Foreclosure Ran Its Course?.....................................1-15

THE 8 OPTIONS SECTION
STEP 2: STEP 3: STEP 4: 2-1 3-1 4-1 ................................Make Time To Work Through The 8 Options . First Read The Options That Seem Most Relevant To Your Case ...............Look For Other Ideas In The Book That May Be Helpful

Option 1: Option Option Option Option Option Option Option

................................How To Win By Reorganizing Your Finances 5-1 2: .................................................How To Win Through Bankruptcy 6-1 3: ..........................How To Win By Changing Your Mortgage Terms 7-1 4: ..................................How To Win By Refinancing Your Property 8-1 5: ......................................How To Win By Using The Legal System 9-1 6: ..........................................How To Win If You Are In The Military 10-1 7: ...........................................How To Win By Selling Your Property 11-1 8: .................................How To Win By Giving Away Your Property 12-1

THE ACTION PLAN SECTION
Suggestion 1:.................................................................................................. How To Act Quickly..................................................................................13-1 Suggestion 2:.................................................................................................. How To Maintain A Clear And Calm Mind................................................14-1 Suggestion 3:.................................................................................................. How To Explore New Possibilities............................................................15-1

STEP 5: .......Complete The Action Plan To Find A Solution That Fits Your Needs............................................................................................16-1 The Action Plan Workbook Table of Contents.......................16-5 The Action Plan Workbook.................................................16-7 Law: Law: Law: Power of Sale........................................................................17-1 Mortgage Foreclosure Consultant's Act................................18-1 Home Equity Sales Contracts Act.........................................19-1 Additional Reading and Services..........................................20-1 Guarantee.............................................................................20-3 Suggestion and Evaluation Response Sheet.........................20-5 Glossary................................................................................21-1 Index.....................................................................................22-1 v

The chapter that begins on page 1-15. out-of-court. An estimated 99% of California's residential real estate loans utilize a deed of trust which authorizes the trustee's power of sale in a non-judicial foreclosure. they also are agreeing. What If Foreclosure Ran Its Course.INTRODUCTION This book can arm you with most of the effective offensive and defensive weapons used to fight foreclosure in California today. Fight Foreclosure and Win With Honor is: stand up for your home and family by knowing and asserting your legal rights as well as the honorable methods that are available to resolve your foreclosure problem. Over the years. This system attempts to give the homeowner ample time to cure a default." The true meaning of this book's title. So. explains what would happen if a homeowner chooses not to "fight foreclosure and win with honor. the California state legislature has tried to create a system of non-judicial foreclosure which is fair to both the lender and the defaulting homeowner. 1 . in advance. non-judicial foreclosure. when homeowners sign for a loan on their property. to the contractual basis for a relatively quick. while at the same time. giving the lender a speedy remedy in the event the homeowner cannot cure the default.

the lawmakers' efforts toward fairness do not balance the advantage that the well-prepared and well-practiced lender has over the homeowner who is relatively inexperienced in foreclosure proceedings. Inadvertently. 1987) p. Feeling powerless and confused. non-judicial foreclosure actually can be insensitive to the uncontrollable factors that push homeowners into foreclosure.Unfortunately. many homeowners in foreclosure spend too much precious time denying their predicament until the last minute when only the most extreme of remedies remain available. 2 . Initially. Thus.000 Californians who lost their homes through foreclosure."1 How To Fight Foreclosure And Win With Honor was written to do that for you. this book was designed for the specific purpose of helping offset the homeowner's disadvantage.(in 1 year). Fortunately. the typical homeowner may feel defenseless. 1. And just as David slew Goliath. Research published by the California Department of Real Estate concluded that "many of the approximately 40. A Homeowner's Guide to Foreclosure in California (Sacramento. When the lender launches an attack with the powerful weapon of non-judicial foreclosure.could have avoided that loss had they been informed about the process and the actions available to them." Though legally correct and thus presumably fair. a homeowner may be able to turn the foreclosure process into a winning situation. Real Estate and Land Use Institute.. a battle line is drawn.. 1 . The California State University. it is the homeowner's unforeseen financial misfortune that results in a loan default. And the lender's intimidating battle cry to the homeowner so often seems to be "pay up or get out.. California State University.. California: School of Business. the reality of foreclosure is that "pay up" can take several forms that are actually advantageous to the homeowner. and "get out" is not usually as easy to enforce as it sounds.

For all homeowners facing foreclosure. this book tries to ease the shock. get started on The 5-Step Approach and your personal victory over foreclosure now. Good luck! 3 . the relief from foreclosure that is available to them. this book may prevent a NOD from ever being filed and eliminate the risk of it appearing on your credit record. fear and pain of foreclosure by presenting solutions that are helpful and ethical. and in particular. this book is dedicated to teaching an understanding of California's process of non-judicial foreclosure.For those now in the process of foreclosure. For those who are behind in their mortgage payments but who have not yet received a notice of default (NOD) on their loan. So. Discover the options that are available to you and use the system to your fullest advantage.

and begin to formulate possible solutions to your individual foreclosure situation. 2. Read as little or as much as you need in order to find the best solution for your individual foreclosure situation. Read it straight through while searching for new and expanded ideas. ideas that appeal to you. 3. The Action Plan Section is designed to help you systematically collect and assess the data necessary to discover the The 3 Sections Of This Book: 1. The 8 Options Section is designed to be a comprehensive source of foreclosure data that explains the details of each option. the Action Guide Summary and 2 charts give you a complete. Within minutes. Sift through this information for ideas. For these people. some homeowners in foreclosure are anxious for quick answers. or b. As a reference while working through The Action Guide or The Action Plan.THE 5-STEP APPROACH: How To Use This Book To Fit Your Needs Quickly Although the recommended procedure in How To Fight Foreclosure And Win With Honor is to follow The 5-Step Approach that is detailed on the next page. Use this section in either of 2 ways: a. mark the 4 . The Action Guide Section is designed to save you time by focusing your attention on a summary of the 8 options for fighting foreclosure. easy-to-understand overview of The 8 Options Section. this book was written in three sections which may be read independently of the 5 Steps.

It methodically will move you forward to a well-informed decision. Let it steer you through the various parts of this book that it references. For people who are in a hurry (or who like to construct things without first reading the instructions). to work through The 8 Options (if Step 3: First read the options that seem the most relevant to your situation. then start over at the beginning and follow the 5-Step Approach. Step 4: Look for other ideas in the book that may be helpful (if necessary). The Five Steps At-A-Glance Step 1: Become familiar with The Action Guide Summary of the 8 options. As a logical conclusion to The Action Plan Section and The 8 Options Section. THE 5-STEP APPROACH Homeowners who are facing foreclosure need quick and reliable answers to get their thoughts and emotions on track. In addition. read whatever other parts of the book you feel are necessary to find your solution. try starting with The Action Plan on page 16-7. or b. Step 2: Make time necessary). The 8 Options Section and The Action Plan Section. Use this section in either of two ways: a.best solution(s) for your individual foreclosure situation. 5 . if this approach proves to be too difficult. However. The 5-Step Approach is designed to focus your attention immediately toward finding the most appropriate remedy for your foreclosure situation. The 5-Step Approach is the road map that will lead you through The Action Guide Section. Step 5: Complete The Action Plan to find a solution that fits your needs. Consequently.

6 .

THE ACTION GUIDE SECTION .

8 .

3. These aids not only save you time by quickly directing you toward a favorable solution. they also give you a 1-1 basic understanding of the foreclosure remedies that are available. which summarizes the main points of The 8 Options Section and begins on page 1-3.The 8 Options To Halt Foreclosure and The 3 Suggestions chart on page 1-2. 2.The Action Guide.The Time Line of Options chart on page 1-13. .STEP 1: Become Familiar With The Action Guide Summary Of The 8 Options The following aids were designed to familiarize you with the 8 options in just a few minutes: 1.

1-2 . if you are the type of person who likes to learn by jumping right in. Refinance your property to convert equity into cash in order to make past and/or future mortgage payments. 5. And. Reorganize your finances to cut unnecessary spending and consolidate income for essentials like mortgage payments. the best solution(s) for your particular situation should become clearer. Refer to The Action Guide and the 2 charts as often as necessary while you read through the material in The 8 Options Section and complete the exercises in The Action Plan. 2. as previously mentioned. 6. 3. Reorganize your finances through bankruptcy to stop or avoid foreclosure. You soon will begin to form ideas about possible solutions. which begins on page 16-7. then after becoming familiar with the options. 4.Getting Started As you read and familiarize yourself with The Action Guide and the 2 charts. Negotiate a workout with the lender and/or loan servicer in which some or all of the terms of your loan are restructured to prevent foreclosure. The 8 Options To Fight Foreclosure 1. take notes and mark the material that seems interesting and/or applicable to your situation. As your process of decision- making progresses. you may want to skip ahead to the self-propelled exercises in The Action Plan. Seek formal protection and a "stay" of the foreclosure proceedings if you qualify as a member of the armed forces. Consider legal procedures or negotiations if there was fraud or an uncorrected error in the processing of your loan and/or foreclosure which might prevent or stop foreclosure and protect equity in your property.

or both ways simultaneously by using one of several buyer programs. an investor or other interested person if little or no equity exists in the property and no regular buyer can be found. 1-3 . 8.7. Sell your property through a real estate broker/agent. 2. by yourself. The 3 Suggestions 1. Develop and maintain as clear and calm a mental state as possible. especially if a notice of default has been filed and the foreclosure process has started. Give your property to the bank. Explore new possibilities with positive "self-talk" and other self-development techniques. Act quickly. 3. Repurchase or rent a home in a more affordable area.

• Formulate a plan reaching your goals. increase your income by renting rooms. debt and financial restructuring information. 2. • Use the budgeting tips on pages 5-4 . (See page 5-9 . intermediate and long term financial goals. then admit it now and make a vow to reorganize. a nonprofit organization that offers free credit. • Establish your short term.THE ACTION GUIDE SUMMARY (summarizes The 8 Options Section) Option 1: How To Win By Reorganizing Your Finances (Page 5-1) GOAL: Generate cash for your mortgage payments by: 1. • Read The 4 Steps to Financial Freedom on pages 5-2 through 5-4. and your • Accurately determine your financial situation. by taking a second or third job. persuading creditors to lower your monthly installment payments. • Contact the Consumer Credit Counseling Service (CCCS). increasing income. • Arrange with your creditors a program to lower your monthly payments. etc. • If your finances are in trouble.5-6 to set up a successful budget. for 3. by putting family members to work. garage space. slashing your unnecessary expenses. and/or a back lot. • Immediately stop all unnecessary spending so you can consolidate your income. • Whenever possible. • Know The Danger Signals (see page 5-2).

for a list of CCCS throughout California.liquidation. even at the last minute. • Ask CCCS to help you develop a budget and Debt Management Plan and to suggest ways to slash • Ask CCCS to help persuade creditors to waive interest payments. have it signed by a notary and record it at the county • Although filing bankruptcy will immediately stop foreclosure. Obtain relief from debts that exceed your income or assets and receive a "fresh start.reorganization. 3. Chapter 7 -. it may make obtaining credit difficult in the future. or Chapter 20 -a combination of chapters 7 and 13. Chapter 13 -. • If you can't find a CCCS office near you." • Decide if you bankruptcy. • To file a declared homestead. . Option 2: How To Win Through Bankruptcy (Page 6-1) GOAL: 1. check the Yellow Pages for other credit counselors and/or financial planners.) • Record a homestead exemption to protect some or all of the equity in your home from foreclosure and bankruptcy proceedings. finance charges and fees.) offices expenses and increase income. fill out the form on page 6-11 or 6-12. want to file • If you decide bankruptcy is the best solution to your financial situation. or if CCCS is unable to help. then determine which chapter of the bankruptcy law best fits your situation: either Chapter 11 -. Stop the trustee's foreclosure sale. • Determine whether you have enough protection under the automatic homestead or whether it is better for you to file a declared homestead. • Consult an attorney who specializes in bankruptcy (Contact your local bar association or Yellow Pages for a list of bankruptcy attorneys. Protect your property long enough to bring order to your financial problems.debt adjustment. 2.

a realistic "workout" repayment plan. . Try to determine the best type of workout for your particular situation. Be prepared to:  Visit or call your lender immediately and let them know  Collect all documents and receipts as proof of your statements. • Familiarize yourself with the 6 kinds of Special Workout Assistance on page 7-3. with your  Explore all possibilities for catching up on your missed payments and select. • Read How To Get Started On A Workout pages 7-5 through 7-7. which is called a workout.  Cooperate lender. • Familiarize yourself with the responsibilities of both the borrower and the lender/servicer on page 7-5. • Call the appropriate Hotline(s) listed in Option chapter 3 for help and/or advice:  Loan Workout Assistance: page 7-3 you are "workout" arrearage. with the lender. eager to your loan your lender and  Fully explain situation to the with honesty sincerity. • Familiarize yourself with The 9 Types of Workouts on pages 7-1  DataQuick Comparables:page 7-7  Cal-Vet:  HUD/FHA:  DVA: page 7-16 page 7-18 page 7-24 and 7-2. • Study and follow The 5 Keys To Successful Workouts on page 7-4. (check with your county recorders office) Option 3: How To Win By Changing Your Mortgage Terms (Page 7-1) GOAL: Stop your foreclosure by negotiating with your lender for a financially favorable change in the terms of your existing loan(s).recorder's office for a small fee. Determine the best kind of assistance for your particular situation.

third. Offer them a rate of interest higher than they . • Ask a friend or relative for a loan.  Develop a written version of your final workout agreement. page 16-37). • If your loan is insured by FHA/HUD. and. and your existing loan-to-value (item 1a. second. • If your credit is good and you have not yet received a notice of default. to get you over the hump. • Determine the current state of the local real estate market. Seek any necessary advice and assistance. or if your property was purchased through Cal-Vet. • Know the difference between the five types of loan categories: conventional refinance. etc. begin the refinancing process before you receive a notice of default. plan your strategy. then. Option 4: How To Win By Refinancing (Page 8-1) GOAL: Borrow on the equity in your house in order to stay current on your loan payments. page 16-17). explain your situation and ask for workout assistance. then. talk with lenders/mortgage brokers about an equity line of credit or conventional refinance. • If possible. first. first read the corresponding section in the chapter. plan your strategy. • Know your credit history and rating. read the section on conforming loans on page 7-11 . contact your lender/servicer or the appropriate agency. • If your loan is considered a conforming loan. as well as second/third mortgages and loans from friends. • Determine the equity in your property (item 21.. or by a private mortgage insurance company. • Be sure that all agreements with your lender are set in writing. the Department of Veterans' Affairs. and. • Seek other aid: welfare. second. if necessary. • Understand how lenders rate your credit (see pages 8-11 and 8-12). contact a representative from the appropriate agency and explain your situation. food stamps. equity line of credit and hard money loans. third.

• Consider using a mortgage broker to shop all the different kinds of loans. • If your lender does not cooperate with your workout attempts or if the lender will not stop the trustee sale to accommodate your escrow. • If you don't qualify for an equity line of credit or conventional refinance.) • If there is any evidence of fraud or errors. . or. • Call the CLA (Consumer Loan Advocates) hotline for help in determining if there are mistakes in your loan. Option 5: How To Win By Using The Legal System (Page 9-1) GOAL: File a lawsuit. you may be able to get a judge to issue an injunction or temporary restraining order. but carefully shop around for terms that are the most comfortable for you. • Look for key signs of errors in your loan such as:  Your loan was sold to another lender. (See pages 9-2 through 9-10 for specific techniques for finding errors.  Your loan note includes blank spaces. or negotiate. possibly.  Your loan was based on an unusual index. (See Prelawsuit Negotiations on page 9-2. who can meticulously review your loan and NOD paperwork and who can help you determine your rights. to stop or dismiss the foreclosure when the lender has committed fraud or refuses to correct an error in your loan or foreclosure documents. consider a hard money loan.can currently receive from bank certificates. • Review your regulation Z "truth in lending" loan document for possible errors in the paperwork. especially the "APR" calculations. then negotiate with the lender to withdraw the foreclosure. • Review your loan and foreclosure documents and process for errors or fraud.) • Talk to an aggressive lawyer who specializes in foreclosure. particularly if you have an adjustable rate loan. file a lawsuit to stop or block the foreclosure action.

• File a lis pendens prospective buyers litigation is pending. to let know Model #1: Use if you are suing a bank.  Your loan is complex. usury or mail fraud. • Use all or part of the language within The 5 Model Lawsuits as examples to help you or your attorney frame any • Create delays. consider a class action lawsuit. Your loan is older. Model #5: If you use a check to pay off an unlawful debt (created by the lender bank by mere bookkeeping entry). If it is. • File a preliminary injunction or temporary restraining order to delay the foreclosure sale. • If you have an adjustable rate loan or a home equity loan. • Contact an attorney if problems exist and you feel you can not properly deal with the problems. • Review The 5 Model Lawsuits on pages 9-15 through 9-42 for ideas in determining the best legal action for your case: . Model #3: Use if you are filing a lawsuit after a sheriff or Trustee sale. Model #4: Use if you are going to a sheriff or trustee sale to buy in your property with constitutional money. • Find out if yours is one of many loans in a lender's system which may have errors. Model #2: Use if you are suing a mortgage company or a financial institution other than a bank. Most errors occur in these loans. and file it in court before a sheriff or Trustee sale can take place. if possible. by requesting various documents and figures from the lender and trustee. consider suing the lender for breach of contract. check your documents carefully or call CLA for help. or created under other than current loan guidelines. • If your lender did not fund your loan with cash. or  Your lender is confused about your loan.

• This act may cover you if you are:  In the armed forces (including reservists on active duty). may continue for 30 to 90 days after you complete your military service.  A veteran who saw active duty during wartime.possible lawsuit of your own against lenders. Option 6: How To Win If You Are In The Military (Page 10-1) GOAL: Find relief from foreclosure if you.  In training or studying under the supervision of a service preliminary to induction. • SSCRA protection began the day you started active duty. • SSCRA does not terminate your legal or financial obligations--it only suspends them until after your period of active duty is completed or when your service no longer prevents you from meeting these obligations. Once . dependents are also covered. or a family member or partner who shares legal title to your house. contact the legal office of your branch of the service for advice on your rights under SSCRA (Soldiers' and Sailors' Civil Relief Act). • While SSCRA covers many written contracts or agreements you entered into before or during active duty.  In some cases.  A Public Health Service Officer on duty with any branch of the military. • Immediately notify your lender that you are in the service and are seeking relief under SSCRA. are in the United States armed forces. • As soon as you receive a threatening notice from your lender. • SSCRA does not terminate your legal or financial obligations--it only suspends them until after your period of active duty is completed or when your service no longer prevents you from meeting these obligations. it may not protect some deals made after beginning active duty. and depending on your situation.

Option 7: How To Win By Selling Your Property (Page 11-1) • Once you have made the decision to sell your house.  Sell it "for sale by owner (FISBO). consider selling before you lose your house. while you are away on military assignment." as well as with the aid of a broker.. sell your house while seeking the best possible deal. • Regardless of whether a broker sells your property or you sell it. or if keeping your property does not make good economic sense. • SSCRA mandates that interest rates on loans made before you went into the service must be reduced to 6% per annum during your service. and rent a place.informed of this.or your equity through an ill-planned refinance. • If it is impossible to pay your mortgage.  Sell it yourself. you must also appear in court. then you have within 90 days after your discharge to make an application to the court for dismissal of the judgment. GOAL: When your income cannot recover enough to afford your present loan payments. • If the lender does go to court. your lender cannot foreclose without a lengthy process through court.  A party to lease-option. Study and decide which of the following are best for your particular situation:  A regular retail buyer. the lender does not know you are away on military assignment and receives a judgment against you or your property." only. . you have at least three options:  Sell it through a real estate broker only. "for sale by owner (FISBO).. Repurchase in a more affordable area. • If. or have a military attorney represent you. or just pocket the proceeds. you have a range of potential home purchase contracts available to you.

• Discover how to find a good broker/agent (see page 11-7). as well as with an agent:  First list your house with a real estate agent under an exclusive agency listing.T. • Before listing your property for sale with a real estate agent. • Determine the fair market price for your property (Action Plan item 9dI. begin looking for a new place to live.  An all-inclusive (A. who typically do little or no selling of your house. A buyer financing: aided by seller  Seller carryback.  A lender short pay.D. • Determine whether you are trying to sell your house in a fast market or during a slump. as soon as you find a buyer. page 16-25). a partner.  Assumption/transfer liability. see pages 11-4 through 11-7 for the drawbacks and advantages of these 2 types of listings. and set your selling price accordingly: . • Assert your needs in the listing contract.  Second. • When selecting a real estate agent avoid lazy listers.  1% to 5% above recent comparables in slow or flat markets. know the difference between an exclusive right to sell and an exclusive agency.  An equity purchaser (foreclosure investor).  A mortgage insurance-assisted foreclosure presale.  Partner (equity sharing). open an escrow.I. an equity purchaser or leaseoption situation. of loan trust deed  Third.).  Finally. Check with your local Board of Realtors or ask various real estate brokerage firms for their top performing agent. • Since the foreclosure time-table for selling your home is tight. know The Foreclosure Sales Strategy which includes selling "for sale by owner" (FISBO). begin your own sales program designed to attract either a buyer.  A sale/lease-back.

(See the booklet titled The Home Equity Sales Contract Act which protects you from investors who may be trying to take advantage of your foreclosure situation. You may also consider living with a friend/family member for free or at a low cost or doing work in exchange for rent. begin looking for a new place to live. • Upon finding a buyer. • Once you find a buyer. give the property away while striving to save your credit rating as well as negotiating • Beware of equity investors who try to purchase your property for a large discount. You might buy a new property in one of the many affordable areas within California. See the disclosure form on pages 11-31 through 11-37. • Soon after opening an escrow. consider either a sale/leaseback or selling a share of your home to an equity partner. all parties to the deal need to go together to an escrow company and open an escrow. make sure you give the buyer a completed disclosure statement which is required by law and discloses the condition of the property. • Know your price. • As a way to keep your home. or outside the state (see area lists on page 11-29). especially if the total indebtedness against it is more than the property is worth. then consider a straight or traditional lease-option. • If you have private mortgage insurance. 5% to 15% above recent comparables in fast markets.) • When you have a potential buyer. consider a seller carryback or an AITD for a faster sale at a higher rate of interest. bottom-line sales as either an assumption. • A fast way to sell a property may be to have the buyer assume the existing loan(s) on the property in what is referred to . • If your potential buyer cannot complete a regular sale now. or a transfer of liability. then they may be able to help you sell your property. Option 8: How To Win By Giving Away Your Property (Page 12-1) GOAL: When no equity exists. or if your loan is guaranteed by the Department of Veterans' Affairs.

then consider quitclaiming (giving your property away). THE 3 SUGGESTIONS FOR SUCCESS: Suggestion 1: Quick action is crucial (Page 13-1) Goal: Get started immediately and use your time wisely. make sure your deed has acceptance. . • Upon reaching a deal with the lender or private party. then record it with the county. • If your loan is FHA or DVA backed. starting with the highest priority. do each item. • If no one can be found to quitclaim to. 1 by 1. • Procrastination has been cited as the number one reason homeowners facing foreclosure lose their homes. • Act fast if the foreclosure clock is already ticking. Don't let yourself get distracted. which must be recorded with the county recorder. sign it. Every morning. then consider a deed-in-lieu-of-foreclosure to the lender. • Negotiate with the person or company to whom you may quitclaim/deed-in-lieu for a few months free rent in exchange for the deed. then contact the appropriate agency and ask about their specific guidelines • Consider quitclaiming only when little or no equity exists in the property. • Place an ad in the newspaper to find someone to take over your loan(s) and property. mortgage payments and when no regular buyer can be found. • Some remedies need plenty of time to process.for the best interim deal for yourself. write up the appropriate deed. • Make a list of your priorities each night. • With a deed-in-lieu of foreclosure. according to a plan. until all items are complete. • Decide whether a straight quitclaim deed or deed-in-lieuof-foreclosure is best. • When none of the other remedies suggested in this book seem to work. when your interruption of income cannot recover enough to afford the monthly regarding a deed-in-lieu of foreclosure.

• Clarity.  The 10-10-10 (page 14-2). successful. • Face the truth about your credit report and make the changes you need to make. Covey. along with confidence. • Expedite things by sending documents Federal Express or picking them up rather than sending them through the mail. don't take no for an answer if you think or feel a positive solution is possible. • Read and practice The 7 Habits of Highly Effective People. • Self-destruction is another cause of homeowners losing their property.  During each day. and right after receiving bad news. keep your mind clear by doing one of the three onthe-hoof breath practices:  The triple inhale/exhale (page 14-1). will develop as you explore your choices in The 8 Options Section. by Stephen R. • Be persistent. • Do the calmness techniques:  Start each day with the deep belly breathing exercise (page 14-2).• Denying that you're in foreclosure can cause you to lose your home. brokers or anyone else regarding your foreclosure. it saves • When talking to lenders. breath • Write down your goal and list 10 priorities of things you need to do to achieve this goal. • Fear is a major stumbling block that keeps us from taking the appropriate action quickly.  The hush breath (page 14-2). and you'll be • Be organized -valuable time. use the counting-out breath (page 14-2) and the star (page 14-3) to increase your . • Many people discover that a clear and calm mind helps them make intelligent decisions.  Just before talking with your lender. Suggestion 2: Maintain A Clear And Calm Mind (Page 14-1) Goal: It is very important to maintain a clear and calm mind.

 Contemplation. and  Clustering. • Develop a positive visual picture of your life as you would like it to be.  Blue skying. .  Return to childhood. richer life.  Set aside 15-30 minutes to do deep relaxation (page 14-7). stress-reducing stretching exercises (pages 14-2) and the mind clearing contemplation/meditation (page 15-4) Suggestion 3: Explore New Possibilities (Page 15-1) Goal: Exploring new possibilities in your life may lead to a fuller. • Engage in positive self-talk:  How can you increase your income and decrease your expenses?  Should you keep your house or cash out the equity?  What changes might you make to gain financial independence? • Create a mental affirmation that reflects your new positive selftalk. • Let go of any old negative picture of yourself or your experiences. • Stay focused on your new goal.energy and calm your mind during this stressful ordeal. • Find a creative solution with one or more of the following techniques:  1001 uses for a brick.

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1-13 .

NOTES 1-19 .

let the process run its course? That question can be answered by introducing some foreclosure basics. The non-judicial foreclosure (see page 1-16). foreclosure is a legal process used to collect an overdue debt which is secured by real estate. The judicial foreclosure (see page 1-21). such as with loans. The process ends in a foreclosure sale where the real estate collateral is sold off to repay the delinquent debt.WHAT IF FORECLOSURE RAN ITS COURSE? What would happen. Liens can be voluntary. Real estate debts are known as a liens. such as with judgment liens. tax default liens and IRS tax liens. WHAT IS FORECLOSURE? First of all. The process of foreclosing on a forced lien is much different than the nonjudicial foreclosure procedure. 2. a judgment lien is created when the winner of a cash settlement in a lawsuit records an 1-20 . or forced. and instead. which accounts for 99% of the foreclosures and is the primary focus of this book. In a nutshell. and by explaining the step-by-step details of the 2 different legal processes lenders use to repossess real estate in California: 1. plus foreclosure costs. if a homeowner in foreclosure never fought back. etc. you might wonder.

the report stated: "For example. Economic variables such as income. sometimes giving homeowners additional months to catch up on the payments. Some commercial lenders have been known to wait until payments are behind 6 months to a year. depending on the county and agency handling the default. their unwillingness to manage repossessed properties. In a tax-defaulted sale. Lender reluctance is frequently higher during recessions. taxes. insurance.abstract of judgment against the loser's real estate. Reasons For Foreclosures Residential A study by the California State University Real Estate and Land Use Institute (CSU-RELUI) found that the common reasons for foreclosures can be organized into 3 categories: 1. including failure to pay loan payments. 3. since regulators often seize banks with too many bad loans. Lenders are reluctant to foreclose for the following reasons: the high cost. studies have shown that commercial lenders (as opposed to seller carryback lenders discussed on pages 11-13 through 11-16) are reluctant to launch an immediate foreclosure. defaulted tax liens and IRS liens. unemployment. did a divorce lead to . contact an attorney.8 years after the default. and the adverse effect that too many bad loans can have on the bank regulators. For more information on dealing with foreclosures on such forced liens as judgment liens. a lender may foreclose after the homeowner violates any term of their loan agreement. 1-21 The focus of this book is the nonjudicial foreclosure. An IRS seized property sale may result if you own a piece of property that has equity and fail to pay your income taxes. a law library and/or a legal services clinic. or to properly protect or maintain the property. 2 or more of the above reasons combine to create a sequence of events that leads the homeowner into foreclosure. and the fluctuations of mortgage interest rates. In the case of a lien that is created by a real estate loan. The study concluded that it was difficult to determine an individual's primary basis for foreclosure. Personal and Family reasons which include divorce. inflation and home prices. Lender Reluctance To Foreclose Few lenders choose to initiate a foreclosure when the homeowner is only a month or 2 behind in payments. separation. adjustable rate and graduated payment mortgages. A separate foreclosure action is filed for each loan in default on a property. Then the debt is collected by foreclosing on the lien in a process which ends in a sheriff's or marshall's sale. judgments or other liens. the negative public image. Also. Financial arrangements such as financial overextension caused by balloon loans. banks can play down bad loans in their portfolios by filing as few foreclosures as possible. then your property may be sold in 5 . 2. illness and individual personality characteristics. the actual root cause can be difficult to trace. On the last point. Generally. if you fail to pay your property taxes. Typically.

as a result of one spouse losing a job. The nonjudicial foreclosure.. Judicial Versus Foreclosure Non-judicial second year of waiting for the homeowner's redemption rights to expire. is actually a private process governed by the contractual agreement within most real estate loans known as a Deed of Trust. Judicial foreclosures are unpopular with California lenders because they are expensive and take too much time. This process of selling off the property is known as the non-judicial foreclosure. Under a deed of trust. the trustor (borrower) has the right to order the trustee (neutral third party) to reconvey the title in the property back to the trustor. require no court action. For example.the nonpayment of the mortgage debt. the trust deed. court proceedings typically last more than a year and also require a When a lender loans money on real estate that the borrower already owns or is about to purchase. THE FORECLOSURE NON-JUDICIAL Ninety-nine percent of the real estate purchased in California is financed by using the deed of trust with the power of sale (See Power of Sale. On the other hand. is paid off. which is a separate agreement called a promissory note. the judicial foreclosure is a lawsuit against the homeowner filed in Superior Court. which is used as both a promise to repay the loan as well as evidence of the debt (see page 1-29). although regulated by the civil code.) What exactly does this mean? Once the loan is repaid. In contrast.a. in fact. Liens may also be collected non-judicially. or did a reduced household income. your lender may have the right to begin a legal abandonment process. the lender acquires a legal interest in the collateral property. 1-22 . If the trustor fails to repay the loan. This third party holds the deed "in trust" until the loan. The official terminology used in a trust deed redefines the borrower as the trustor. including boarding up the windows and doors. By using a deed of trust. provide no redemption rights and deduct all costs from the homeowner's equity. a. the lender as the beneficiary and the neutral third party as the trustee. the vast majority of foreclosures are non-judicial. A Promissory Note. the reason may appear to be divorce or unemployment when. the most reasonable collateral to secure the debt is the property. then the beneficiary (lender) has the right to order the trustee to sell off the property to repay the loan. If your property appears to be abandoned. page 17-1. the borrower actually deeds the title in the property to a neutral third party.k. actually lead to the divorce?" In addition. in which they secure it from harm. the real cause is alcoholism or drug abuse. lenders prefer the non-judicial foreclosure because it can last as few as 111 days. Do Not Abandon Your Property Since judicial foreclosures are uncommon in California. A deed of trust consists of two legal documents: 1.

which lasts 3 calendar months. lenders developed trust deeds with contractual powers of sale to speed along the process of repossession by keeping foreclosures out of today's slow. So. after the 3 calendar months lapse. First. in signing the trust deed the borrower agreed in advance to the non-judicial process of foreclosure in the event the terms of the loan are not completed as originally agreed. The Non-Judicial Process And Time Line If a homeowner ignored the foreclosure to the end. On the face of it. such a fixed formula is impossible due to a few factors. some think the 3 month period always equals 90 days and when added to the 21 day period. 3 calendar months can equal 90. There are 2 main reasons for this gap. Basically. as The Time Line of Options shows on page 1-13. the advertising lead-in time for placement of the NOTS can take as long as 8 to 10 days. well above the minimum 111 days set forth by state law. expensive court system. seldom is the NOTS filed on the last day of the NOD period. However. Second. a nonjudicial foreclosure would take about 111 days.2. in part. there is an unspecific gap of time between the specific NOD and NOTS time periods. First. 91 or 92 days depending on the month when the NOD is first filed. A Deed of Trust. even the most efficient professional trustee service companies typically end up providing a pre-foreclosure period from 115 to 130 days. In effect. Untimely holidays and weekends can also prolong mailings and ad placement. and the Notice of Trustee's Sale (NOTS) phase. It is based. That can take several days of communications by mail. The Non-Judicial Time Periods In essence. Thus. on "Chapter II: 1-23 . the trustee must determine if the beneficiary wants to continue on to the trustee's sale. the nonjudicial foreclosure consists of 2 time periods: the Notice of Default (NOD) phase. the following outline explains the details of what might happen during the preforeclosure and foreclosure process. which is security for the debt (see pages 1-26 through 1-28). Second. which lasts 21 days.

This is not so much a legal obligation as it is a courtesy. since the trustee was named when you originally bought the property. or fair warning. there is a noteworthy procedure that almost all Also. in the meantime. a study by the California State University Real Estate and Land Use Institute (CSU-RELUI). The beneficiary orders the trustee to initiate the foreclosure proceedings if the trustor defaults on 1 or more of the following contractual obligations: 1-24 . As a practical matter. 17-1 for the California Civil Code Section on the power of sale. the trustee may have moved or changed jobs. and does not always occur in every case. see the chart on page ?: Sequence of Events for Non-judicial Foreclosure.The Legal Nature of the California Foreclosure Process" found in Reasons For Today's Foreclosures. Also.): 1. and it can buy you some extra time. the lender has the right to substitute a new trustee (see Substitution of Trustee page 1-30). The non-judicial process of foreclosure is as follows (See page lenders engage in prior to filing a NOD. usually by both the phone and mail. and issue to you a Notice of Intention to Foreclose. They contact you. and since.

not to commit waste on the property. 3. including assessments on appurtenant water stock. the trustor can cure the default without having to pay-off the entire balance on the loan.g. However. incurred in fulfilling this duty. deliberate/negligent damage to improvements. 4. many times the trustee publishes a Notice of Default in a newspaper of general circulation in the county where the property is located (see page 1-33). as described in the promissory note. if any. including attorney's fees. all claims for labor and material caused by work f. c. d. the collateral property can be scheduled for sale. Although not required by law. In order to proceed with the foreclosure sale. Also. e. e. After the three calendar months have expired without the trustor or a junior lienholder acting to reinstate the loan. g. all encumbrances. To pay. During this period. To provide and pay the premiums for a fire. which are: (1). b. To keep the property in good condition and repair. soil or plants. This notice must appear once a week for 4 consecutive weeks.To appear in court and otherwise defend any action or proceeding that may affect the security or the rights of the trustee or beneficiary. To comply with all ordinances. statutes. when due. the following requirements must be met: a.. and other laws as to physical condition and utilizations of the premises. and until 5 days before the sale. 1-25 being ordered done on the premises. Trustee must record a Notice of Default in the County Recorder's office (see page 1-31). The trustee must publish a Notice of Trustee's Sale of the collateral property in a . 2. To pay (at least 10 days before delinquency) all taxes and assessments affecting the property. To make payments to the beneficiary in accordance with the terms of the debt security contract (loan agreement). to pay all reasonable costs. windstorm and vandalism insurance policy from a financially responsible insurance carrier. The trustee also must mail notices to other parties as required by law. plus a trustee's fee and expenses.a. The trustee must mail to the trustor a Notice of Default within 10 days of recording the Notice of Default. such as junior lien holders. the trustor must pay all delinquent payments and late charges. charges and liens (with interest) on the property which appear to be prior or superior to the interests in this trust property. Trustee must complete the formal requirements for conducting the foreclosure sale of the collateral property. Recording the Notice of Default in the County Recorder's office commences the 3 month reinstatement period of the defaulted loan.

ending just 5 days before the trustee's sale. 6. Trustor filing for Federal Court bankruptcy protection (Option 2). Fourteen days prior to the sale. the Notice of Trustee's Sale must be recorded at the county recorder's office (see page 1-32). Trustor persuading the beneficiary to postpone the foreclosure sale (Option 3). Afterwards. Trustor requesting in writing that the trustee delay the sale and trustee agreeing (Option 3). This notice must appear once a week for 3 consecutive weeks over a 20 day period (3 publications not more than 7 days apart). during the last 5 days before the sale. posting is required. and at least 20 days before the date of sale. c. (3). including all payments in default. and f. Prior to commencement of the trustee's foreclosure auction sale. 7. trustee to halt the foreclosure sale (Options 5 & 6). the sale may be delayed or terminated by: a. if at all possible. At least 20 days before the sale. The reinstatement period continues through most of the Notice of Trustee's sale period. the amount of the original loan and all costs and fees. The Notice of Trustee's Sale must be posted for at least 20 days at the following locations (see example on page 1-32): 5. This requires a reasonable effort by the trustee to actually notify the trustor of the proceedings affecting the collateral property. (2).Beneficiary requesting foreclosure sale be postponed (Option 3). Within 10 days after the end of the original 3 month reinstatement period. and 2. b. on the door of the residence. Trustor obtaining a California Superior Court preliminary restraining order/injunction ordering 1-26 1. the following requirements must be fulfilled in . Trustee on its own volition/discretion postponing the sale (Option 3). b. judicial district. In a conspicuous place on the property.newspaper of general circulation in the county where the property is located (see page 1-34). the entire obligation is due. the trustee's sale notice must be mailed to the trustor at the last known address. or county of sale. If the property is a single family residence. d. e. the Notice of Trustee's Sale must be mailed via registered or certified mail to the trustor and any other persons requesting/receiving Notice of Default (similar to the example on page 1-32). In at least 1 public place in the city. When the trustee conducts the actual foreclosure sale of the collateral property. Only the amount in default must be paid during the reinstatement period.

The sale at the auction is made to the highest qualified bidder. Trustors can postpone the sale for 24 hours if they can prove they are working on a solution. which gives title to the property. b. if the auction sale price equals or exceeds the amount of defaulted debt plus costs and expenses of sale. if successful. the trustor. After conclusion of the auction sale to the highest bidder.order to complete a legally effective final sale: a. If the trustee's sale was conducted. Trustee may reject all bids if the trustee believes they are inadequate. They can do this by paying off the defaulted loan in its' full amount. receives a Trustee's Deed (see an example on page 1-36). the trustor may file a lawsuit to obtain a court order "setting aside. usually junior. Until the exact moment the auction-like bidding ends at the trustee's foreclosure sale. 9. delinquency charges and the trustee's fees and costs." which has been designated in the notice of sale as acceptable to the trustee. d." or void1-27 . Trustee retains any surplus funds from the foreclosure sale that remain after making payments for the cost of conducting the sale and paying off the first trust deed beneficiary. ing. c. However. the successful bidder. such as an investor or other private party bidder. This legal action. Foreclosure sale must be conducted at a public auction by the trustee's agent/auctioneer on any legal business day between 9 am and 5 pm in a public place in the county where the collateral property or some part of it is located. f. 8. or. including accrued interest.Trustee pays the first trust deed upon completion of the foreclosure. the foreclosure sale (see the legal chapter starting on page 9-1). any junior lienholder or any other party with a legal interest may still redeem the property. if the trustee has not complied with all of the legal requirements for an effective trustee's foreclosure sale. On advice of legal counsel. The trustor ceases to have any recognized legal or equitable interest in the property. e. would also impede the transfer of the property's title to the successful bidder at the trustee's foreclosure sale. the trustee executes and delivers a trustee's deed to the buyer and endorses the fact of the foreclosure sale on the trust deed promissory note. All bids must be paid in cash or cashier's check from a qualified financial institution as specified in the California Civil Code. g. the trustee will distribute any remaining proceeds of the foreclosure sale to other. lien claimants. a "cash equivalent.

it is important to detail the process of judicial foreclosure as well. If the lender does not voluntarily make and record such a document. deficiency judgments seldom are allowed on singlefamily. That means that if the foreclosed loan was a second mortgage. However. or to obtain a deficiency judgment. or had been 2. Some of the instances in which a deficiency judgment may be pursued by the beneficiary through judicial foreclosure include: 1. Also. A deficiency judgment is needed when the foreclosure sale does not raise enough money to pay off the debts owed. If a junior loan had been obtained and was not a part of the purchase. then the new owner may be required to pay off this loan. then the new owner must begin to make the loan payments on the first mortgage. which most loans have. this document officially gives the world notice that the default has been cured. then the homeowner should do it or ask the lender to do it. Due to California's "one action rule" a lender cannot obtain a deficiency judgment through judicial foreclose if they have . Formally known as a Notice of Rescission of Declaration of Default and Demand for Sale and of Notice of Breach and Election to Cause Sale. The deficiency judgment allows the beneficiary to collect the remaining balance by attaching wages or forcing the sale of other property. such as equity and home improvement loans. then the new owner must initiate a legal process to return or sell it.Voiding The Notices of Default or Trustee's Sale If and when the homeowner in foreclosure cures the default or otherwise redeems the property in foreclosure. If the first loan refinanced. which is referred to as senior because it is older than the foreclosed loan. if the previous tenant/owner left behind any abandoned 1-28 property. the lender. or renegotiate it. In absence of a bidder. which accounts for an estimated 99% of California foreclosures. must file a Notice of Rescission (see page 1-35). The successful bidder at the trustee's sale. the property reverts to the foreclosing lender. or 2. or beneficiary. The judicial method is mainly used to foreclose on land contracts or other mortgages that do not have a power of sale as does the deed of trust. or requalify for a new loan. then the new owner of the property becomes either: 1. owner-occupied residences where the foreclosure involves a loan that was used to purchase the residence. After The Trustee's Sale: Who Becomes The New Owner? If the homeowner does not cure the default nor redeems the property. THE JUDICIAL FORECLOSURE Even though the main focus of this book is the non-judicial foreclosure process. If the first mortgage has what is known as a due on sale clause. The new owner takes the property subject to all loans and liens that are senior to the foreclosed loan.

interest. 3. at this point. 2. For 1 year after the foreclosure sale. Notice of the property's description along with the time and place of the foreclosure sale must be given in a 1-29 . 6. trust deed is wiped out by a foreclosing senior loan. foreclosure and/or lawsuit (i. fees. When the homeowner/borrower defaults on 1 or more terms of the mortgage lien contract. If the lender proves the loan default. Once the 1 year redemption period expires without a party redeeming. The lawsuit alleges that the homeowner defaulted on terms of the mortgage contract and requests relief from the court. they have little or no collateral from which junior lenders can Judicial foreclosure occurs through litigation in the California Superior Court after a lawsuit is filed by the lender. then it may be worth seeking a deficiency judgment. a study by the California State University Real Estate and Land Use Institute (CSU-RELUI). after borrowers lose their property in a foreclosure. A certified letter containing the notice must be sent to the last known address of the mortgagor. etc.). However. In order to terminate other parties' recorded interests in the property. The following is also based in part on "Chapter II: The Legal Nature of the California Foreclosure Process". the successful bidder at the foreclosure sale receives 1. they should be included in the lawsuit as defendants. 5. the property may be redeemed by the homeowner or a junior lienholder. the property must be sold by the auctioneer to the most financially qualified bidder with the highest bid. the lender files a judicial foreclosure lawsuit. Yet. Many times. then the junior may sue for a deficiency judgment through judicial foreclosure. non-purchase. This same notice must be given in a newspaper of general circulation once a week for 20 days. is collections. public place for 20 days preceding the sale date. a if a junior.e. 7. if no other agreement exists to the contrary. legal expenses. At the foreclosure sale. 4.already foreclosed non-judiciously. The lender must prove both the validity of the mortgage as well as the obligation by the mortgagor. In chronological order. the major points of the judicial foreclosure are: collect the deficiency judgment. The main obstacle for the lender. found in Reasons For Today's Foreclosures. The redeemer must pay the entire unpaid delinquent mortgage debt plus all costs created by the default. Also. the court will usually decree a foreclosure sale be held by a courtappointed commissioner or the county sheriff. if a check of the public records reveals that the borrower owns more than one property.. the cost of the judicial foreclosure may be more than the value of the junior loan and thus cost prohibitive. and if the loan is large enough to warrant a judicial foreclosure. 8.

000. A 3-day Notice to Quit is used if the previous owner is still in possession of the property. and it is usually not paid until the previous owner moves out of the property. The new owner files an unlawful detainer with the court. or If the previous owner does not cooperate with the new owner. the previous owner has only 5 days to answer the Complaint. Getting Paid to Leave Rather than hassle an unlawful detainer. which grants possession of the premises to the new owner. which may cost $300 to $1. Getting Evicted: The Unlawful Detainer process server to be served upon the previous owner within 1-4 days. the previous owner decides not to leave the property. to the Municipal Court clerk. Customarily. First. if no other interest or extension has developed. Generally. it may grant the default judgment. At that time. A 30-day Notice to Quit is used to evict any tenant of the previous owner who is in possession of the property. as well as asks for court costs. this is either a cash payment equal to the cost of a new place to rent.title to the property. or the new owner may simply pay the first month's rent in a new location of the previous owner's choice.If the previous owner does not answer the Complaint. legal fees and delivery of possession of the property to the new owner. along with a request to evict the previous owner. After the court reviews the case. This is an inducement to leave. then the new owner may immediately file with the Clerk of the Municipal Court a Summons and Complaint against the previous owner. then the previous owner may be forced out through the eviction process. all legal and equitable interests of the mortgagor in the collateral property which was sold are terminated. The Summons and Complaint are given to a 1-30 2. after the trustee's sale is completed. At that time. will probably attempt to evict the previous owner from the property. and then to the marshall. the new owner will serve the previous owner with papers requesting the previous owner to vacate the property. The Complaint details the facts of the case. The foreclosure sale typically becomes final 1 year from the date of the foreclosure sale. then the new owner wins the trial by default. who is either the lender who ordered the foreclosure or is another person who came into ownership as a result of the foreclosure. The new owner submits a Request for Default Judgment to the Municipal Court clerk. If the previous owner does not leave the property by the expiration of the time within the Notice to Quit. Once it is served. the eviction is accomplished in either of 2 ways: 1. then the new owner of the property. WHAT IF YOU STAY AFTER THE SALE? If. the new owner submits a Writ of Execution for Possession. If the previous owner does not challenge the Eviction Complaint . the new owner may offer to pay the previous owner a sum of money to leave the premises. first. . 9. The new owner pays the previous owner to leave.

the previous owner still may be able to stop the eviction and. Judgment Against The Tenant/Previous Owner -If the court finds that the tenant/previous owner has no rights to be in the property. if the previous owner has not already vacated the property. Once the Complaint is Answered by the To the astonishment of many. Up until the 1-31 previous owner. maybe 20 to 60 days. the case becomes what is referred to as At Issue. eventually. If the previous owner challenges the Complaint (also see the legal chapter starting on page 9-1) . When previous owners refuse to remove any or all of their personal property. if any. then the judge renders a judgment granting possession of the premises to the new owner. At the end of those 5 days. then the previous owner may also be able to remain in the property for an extended period. regain ownership of the property. At the end of the trial. exact moment the marshal arrives to evict the previous owner. An Answer can be vague. depending on the time necessary to prepare for the trial. Finally. the court may take up to 20 calendar days to set the case for trial. the new owner may file with the Clerk of the Court a document known as a Memorandum To Set. The marshal posts a copy for the Writ on the property within 2-4 days giving the tenant/previous owner 5 additional days to get out. the marshal shows up on the sixth day to physically remove them from the property. and depending on the magnitude of the new owner's wrongdoing against the previous owner. At this point. the marshal shows up on the sixth day and physically removes the previous owner from the premises along with the previous owner's personal property. after which the previous owner has 5 more days to get out. such as contesting . Once the Writ of Possession is obtained. At the end of those 5 days. the new owner may file with the clerk of the court a Writ of Possession. As early as the same day as this judgment is granted. or other parties related to the new owner. then it may be lost through a legal process that deals with abandoned property. the marshal talks to the previous owner as well as posts the eviction notice on the property. or longer depending on the speed with which the new owner and/or the court processes the case. a judgment usually follows against either the new owner or the previous owner. even at this seemingly last moment when the marshal actually arrives to physically throw the previous owner out. or may spell out alleged wrongdoings performed against the previous owner by the new owner. and as early as the next day. the previous owner may stop the eviction by serving on the marshal either a Temporary Restraining Order (see page 9-12) resulting from a lawsuit. the new owner puts new locks on the doors and the previous owner is barred from returning to retrieve anything.Within 2-4 days.If the previous owner has cause to challenge the Complaint. usually by serving the answer on the new owner. Next. The court will let the new owner know that the previous owner has answered the complaint. The previous owner challenges the Complaint by filing what is commonly referred to as an Answer to the Complaint. such as a General Denial. the marshal is sent a copy.

a capital loss only may be deducted against a capital gain. the seller may have a deductible capital loss. After a sale.000 in capital improvements on a property. The net proceeds on the sale are $20. Then it has a $100. spas and room additions all may be capital improvements. maybe one who is an enrolled agent with the IRS. I am only reporting here some of the basics that I have been told. Depending on the borrower's I am not a tax expert nor an accountant. abandonments and deeds in lieu as a sale.000.000. or other competent tax professional. thus. then the basis increases to $120. This will allow you to consider the tax consequences that are particular to your case before you act.000 basis. always present the exact details of your situation to a tax preparer or tax account. (See more on capital gains on pages 6-6 and 6-9. if the house is sold for $200.000 basis is subtracted from the $180.000.000. then many remedies are possible. spas and room additions are not. The loss may be deductible if the property was a rental or other income producing property. which are deducted from the sales price. Before making any decision on which solution to implement regarding your current or potential mortgage default.000.If the court finds the new owner guilty of some wrongdoing against the tenant/previous owner.000 adjusted sales price. income producing and vacant land. Actually. Here are a few basics you may need to know.000. Assume a property was purchased for $100. let's set up a hypothetical model.000 adjusted sales price for a taxable capital gain of $60. Further distinctions are made between properties that are residential. but there are selling costs of $20.000. When the 1-32 . but repairs of patios. Now. If there are $20. The basis may be increased by capital improvements.000 owed against it. if a property had appreciated above its basis. The tax law treats such property transfers as foreclosures. or an Automatic Stay (see page 6-3) resulting from the filing of bankruptcy. TAX CONSEQUENCES FORECLOSURE OF property is later sold. The taxable gain or loss is called the capital gain or the capital loss. the basis is compared to the sales price in order to figure the taxable gain or loss.000. In such cases.000. Capital losses on personal residences are not deductible. Patios. then the basis is still $120. which is the amount remaining after the $160. from monetary damages to the loss of the property (see the legal chapter starting on page 9-1). and if it is refinanced for $160. the seller may have a taxable capital gain. then this leaves an adjusted sales price of $180.) To better understand these basics. rules against the new owner. Judgment Against The New Owner . The $120.000 owed is subtracted from the $180. If the property value appreciates to $200. If it depreciated below its basis.000. such as anything added to the property other than a repair.the foreclosure. The tax basis in a property is the price that was paid for it. but with $160. at any time before or after the trial the tenant/previous owner may file for bankruptcy. and.

page 11-25).000 reduced principal amount may be consid- instead.000 owed and the new $110.000. Let's look at the same property as if it went to a trustee's foreclosure sale Again.000 net proceeds may go toward paying taxes on the gain. 1-33 .000 to a regular buyer with the help of a principal reduction (see A Lender Short pay.000 difference between the $160. unless there is a separate capital loss to deduct from the gain. If the borrower decided not to sell and the lender agreed to reduce the principal to the $110.current income tax bracket.000 basis would be deducted from the $160. page 7-8). The $160.000 current market value in a note modification (see Note Modifications. looking at the same property.000. there is still a $40. then the $50. The $120. If the property did not go to a trustee's sale.000 taxable gain.000 that had been owed. but sold for $110.000 owed becomes the sales price in the trustee's sale. much of the $20. When the $120. assume that the property values have depreciated to a current market value of $110. the tax liability would still be for the same gain of $40.000 basis is subtracted from the trustee's foreclosure sales price.

So. before agreeing to a principal reduction. check with your tax preparer or a tax attorney first. An exception may be if the principal reduction is construed to be a gift from your parents. But. always ask your accountant or tax preparer if such a reduction is wise in your particular situation. If so. . The lender may even send a 1099 form to the borrower and the IRS. the $50.000 would be taxed at the borrower's current income tax bracket.ered by the IRS to be income in certain cases. some tax consultants feel that in certain situations it may be better to sell and take a capital loss than to keep the property and settle for a potentially taxable principal reduction. With income property.

Trust Deed Explanation S. Tax Service. 619752-1968.D. may be able to advise you .

Trust Deed Example .

Trust Deed Example 2 .

Promissory Note .

Substitution of Trustee .

Notice of Default .

Notice of Trustee's Sale .

may give public notice by running the following advertising for 4 consecutive weeks in a newspaper of general circulation in the county where the property is located: . the trustee. nonetheless.Immediately after filing a NOTICE OF DEFAULT. although not required by law.

Below are two examples of the advertising required by law to run for 3 consecutive weeks prior to a TRUSTEE'S SALE in a newspaper of general circulation in the county where the property is located. check out the differing formats: . Although both ads achieve the same effect.

Notice of Rescission .

Trustee's Deed .

THE 8 OPTIONS SECTION .

1-47 .

which is plenty of time to work on the options.STEP 2: Make Time To Work Through The 8 Options Your initial plan of action to stop the foreclosure will be affected by the number of days that remain before the trustee's foreclosure sale. and if some time has lapsed. a period of 130 days. then use the following formula to determine the minimum number of days that remain before the trustees' sale. A count of the remaining days is necessary in order to establish how much time you have left to work out a solution. When little time remains. Also. When a lot of time remains. the total number of days from the filing of the NOD to the day of the trustee's sale is a minimum of approximately 111 days. As outlined in the Time Line Of Options on page 1-13. or more. is possible (see page 1-13). 2-1 . if you have received a NOD. Ideally. especially negotiating a change in your mortgage terms with the lender. However. If you have not yet received a NOD. Certain options in this book may be used to prevent a NOD. then you have at least 111 days before the sale. the most advantageous time to get started is before a NOD is filed. you have the possibility of preventing a NOD from ever being filed. when it still can be prevented. However. a limited and severe strategy may be all that is available to you. usually there is enough time to process any of the options in this book (see page 1-2).

page 9-3) or by finding an error in the loan servicing (see Finding Errors In The Loan Servicing. If you must employ a temporary delay tactic. Talk your lender into postponing the sale. Create a delay by finding an error in the documents or procedures used in the foreclosure process (see Finding Errors In The Foreclosure Process. (See Option 3. or in to negotiations that may create a delay. The remainder is the approximate minimum number of days before the HOW TO CREATE MORE TIME Many of the more beneficial and permanent fore-closure solutions need plenty of process time. Obtain a postponement from your lender. 1. Do not damage your credit. (Uncorrected errors or intentional fraud may be grounds for more serious legal action. Errors in the foreclosure paperwork. Say you need more time since you are in the early stages of 1 or all of the following processes: reorganizing your finances.) 2. but you need to show continued forward progress. the foreclosure process may be vol-untarily suspended by the lender or may be forced to start over due to an error in the procedure or paperwork. The "early stages" can be just a preliminary telephone call. Some mortgage foreclosure consultants (see page 18-1) advocate that delays can be 2-2 . Subtract that total from 111 days. Add up the number of days that have passed between today and the date on the NOD. (Before using a delay tactic. then: 1.) Options That May Create More Time Read through the following section for a delay tactic which may be the best for your case: trustee's foreclosure sale (that is if nothing has been done to postpone the sale). consider how it may affect your possibilities for a permanent solution.) 3. if it has been 30 days since the filing date on the NOD.) 2. In other words. Do not jeopardize your permanent solution. page 9-11. For maximum delay. point out the error at the latest date possible. (Before using a delay tactic that might critically undermine your future financial opportunities. homeowners with only a little time remaining before their home goes to the auction block initially may need to choose an option that creates the additional time necessary to find a more permanent solution. More severe delay tactics exist as well. page 9-6). refinancing or selling. consider every possible consequence. then 81 days remain before the trustee's sale (111 . see Lawsuits. 3.30 = 81).How To Figure The Remaining Time 1. such as filing a lawsuit or for bankruptcy protection. page 7-1. So. For instance. 2. the foreclosure process or the loan servicing may be used to force the lender to start the foreclosure timeline over again.

2-3 . then you probably still have enough time to work out an option. then you may need to employ a temporary option to stall the foreclosure sale and create the additional time necessary to work out a more lasting solution. such as an itemization of payments and charges. Not only can this be used to force a postponement if you are refinancing or selling and need more time. but that is not recommended here. (See Option 6. such as when you believe that your loan or foreclosure papers have been illegally drawn and/or executed. Some people have filed a BK as a last minute desperate attempt to stop the sale.) 5. (See Other Laws. then you have plenty of time to work out an option and may prevent the NOD altogether. a BK can effect your credit for up to 10 years and only should be used if you truly need to file BK. However. (See Option 5. page 6-1. However.S. then cancelled it later. then the foreclosure may have to be stopped or even required to start all over again. Obtain a temporary restraining order against the sale. page 10-1. but also if you feel you have reason to file a lawsuit. Obtain a military exemption if either you or a family member is in the U. such a request may be time consuming for the lender or trustee. page 9-1. Many lenders and trustees who are used to routines may not be capable of responding to every request. if a day count reveals too much time has lapsed since the NOD was filed. Also. Obtain an automatic stay by filing bankruptcy (BK). If you only recently received a NOD. page 9-5) 4.created by requesting information from the lender or trustee.) Summary Of Step 2 If you have not yet received a NOD. If the information is not provided or is incorrect. (See Option 2. armed services.) 6.

And so on through all the Option chapters. then read that Option chapter first. If you feel you must sell your house but want top dollar. In other words. then read that Option chapter first. Read the details of those selections in the corresponding Option chapters. Make notes of all points pertinent to your case. If you feel you have the basis for a lawsuit. 4. then read that Option chapter first. This is best accomplished by the following process: 1.STEP 3: First Read The Options That Seem Most Relevant To Your Case Since every homeowner is involved in a unique situation. Or if you are in the military. 3-1 . Read the material in Step 1. However. Select ideas that seem to relate most urgently to your situation. 3. Reference these notes later when building your Action Plan. especially The Action Guide. then read the Option chapter on selling first. it is impossible to give guidelines that are specific to each case. 2. if when reading The Action Guide or charts in Step 1 you realize that you really need to reorganize your finances. Step 3 does provide a process to help you discover the best solution(s) for your particular case as you currently understand it. Step 3 asks you to select and read the Option chapters that relate most urgently to your situation.

Also. may need to reorganize your finances as well as negotiate a change in your mortgage terms in order to effect the best solution. you may possibly find the best solution during Step 3. read more about these ideas in the corresponding "Option" chapters in Section 2 and the material in Section 3. Summary Of Step 3 As you read the options within The Action Guide. 3-2 . skipping Step 4 is not advised). or even 5 of the options seem to relate to your needs. you In some cases. Then. If so. try to identify the ideas that seem most pertinent to your particular situation. be aware that 2 or more options may join together to create a unified solution for you. then read only those Option chapters first. For example. then.The point is that if only 1. or 2. Make notes of key points to reference later when building your Action Plan. due to time limitations you may need to skip Step 4 and advance straight to Step 5 (although a time saver.

after completing Step 3. Begin negotiations to change the terms of your mortgage terms with the lender(s).Look For Other Ideas In The Book That May Be Helpful If. Talk to real estate agents as well as foreclosure investors about the possibilities of selling your home. (Option 5) 5. you can set in motion the following options immediately: 4-1 1. in order to cover all your "option" bases. you still are not sure of the best option to pursue. One major reason for reading the entire book is to understand and implement every option that is available to you. Get the refinancing ball rolling. (Option 7) STEP 4: . (Option 1) 2. Make notes of the relevant points. The procedure is simple: 1. Read all the remaining unread chapters in The Action Guide Section and The 8 Options Section. Look for mistakes or signs of fraud on your loan or foreclosure papers. (Option 4) 4. 2. then Step 4 is designed to help you. For instance. Start reorganizing your finances with a debt counselor. (Option 3) 3. along with the notes from Step 3 to construct your Action Plan. or if you just want to fish for additional ideas. Use these notes later.

if your income base cannot recover quickly enough and if little or no equity exists in your property. the more options you can put into motion to find an appropriate solution. Summary Of Step 4 Think of all the options as individual components of an overall strategy designed to win. Discuss all the ramifications of a possible bankruptcy. The more informed you are. whether to refinance or change your existing mortgage terms. It may be helpful to consider all the options as individual components of an overall strategy to win. On the other hand. (Option 2) 8. each option does not necessarily have to stand alone. the very best course of action should become evident to you. (Option 6) The same holds true for deciding whether to sell your home or to keep it. For example. make notes of the relevant points. Only by reading all the material can you discover all the possible components. 4-2 . Interview a bankruptcy attorney. and whether to file a lawsuit or to quitclaim away the property. The correct answer for you requires reading both Option chapters. Read all the chapters in the book. The degree that the options can be combined to form joint remedies depends on each individual homeowner's unique blend of economic. And in the process of researching each option. If you or your family are in the military. sometimes finances may be so complicated that bankruptcy is the only option available in order to halt foreclosure and create a proper reorganizational plan. reading every option may make you aware of the inter-relationship between options. then you may want to consider giving the property away while negotiating some extra time to stay free until you find new housing (Option 8) 7. then use the notes to build your Action Plan. Also. then closely examining the facts of your particular situation. then consult an attorney from your base. some debt counselors can help you reorganize your finances without filing the credit blemish of bankruptcy. the more intelligent your decisions may be.6. Finally. The more information you have to consider. While each Option chapter is presented individually. financial and personal circumstances.

"You can get people out of foreclosure. "those options would just be a bandaid if the homeowner didn't reorganize. As the Option chapter on bankruptcy . but if you don't help them solve the real problem. Especially if you are behind on your mortgage payment. Financial reorganization can be accomplished with the help of a credit counselor.HOW TO WIN BY REORGANIZING YOUR FINANCES Reorganizing your finances to fight foreclosure means generating the money for your mortgage payment by slashing expenses. by increasing income opportunities and by persuading creditors to lower your monthly credit payments. when you reorganize your finances. you are taking control of your life. they'll go right back in again. and then make a vow to reorganize." More about CCCS on pages 5-6 through 5-9. you may be forced to reorganize through bankruptcy. That's why we teach people how to budget wisely and how to manage their money. Although any of the other options in this book may be used to fight foreclosure and win. or both. The key to financial reorganization is to develop and then abide by a livable budget and debt management plan. In a broad sense. you must begin financial reorganization immediately. too "says a counselor at Consumer Credit Counseling Service (CCCS). Getting Started You must start by admitting that your finances are in trouble. or individually with the assistance of a guidebook. Otherwise.

Her husband was an alcoholic and had trouble keeping regular work. 3. you will be required to itemize and assess your finances anyway.explains. And during the bankruptcy process. THE DANGER SIGNALS According to CCCS of Orange County. but also a sizable cash flow. home-cooked meals. it is time to reorganize your finances when: 1. washing. In return. bankruptcy can leave a nasty and unnecessary blemish on your credit record. She also successfully invested in various other real estate ventures. They lived in one of the poorest parts of town. How did she do it? Simply. she gave them a place to sleep. then parlayed the investment to her present home. 2. makes good sense to do it now in a voluntary financial reorganization while you may still be able to prevent bankruptcy. 6. cleaning. You have no cash reserve. You're using 25% or more of your take-home income to pay credit card bills and personal loans (excluding mortgage payments). The adults and children who did not yet have a paying job were required to do the cooking. etc. She cut costs everywhere conceivable. ironing. Now. Consequently. So. but continue to charge. Checks are bouncing. years later. 7. You can barely make the minimum required payment on bills. While managing this household. A side benefit of her good economics: most of her children learned to do the same as they married and set up their households. to make payments on other debts. When she was first married. she and her husband worked as migrant farm workers. such as food and utility bills. THE 4 STEPS FREEDOM TO FINANCIAL According to the Financial Counseling Guide from CCCS of Orange County. She did not stop there. she accumulated not only a large pool of funds. First of all. gardening. it I will never forget a woman I knew as a teenager. she had an excellent budget and financial plan. and she stuck to it. Looking back now I think she is a great example of the human spirit triumphing over poverty. 8. first in the barrio. everyone who lived in her house and who had a paying job was required to give her their paycheck every week. she is retired and living comfortably in an upper middle class community. she continued to work full-time. The 4 Steps to Financial Freedom are: . Also. She used the pool of funds to buy a house. 5. Despite these overwhelming economic difficulties. she bought food and household supplies in bulk and at a discount. a clean place to live and even some spending money. she was determined to excel. eventually as a garment worker. You're using 1 form of credit. You are so far behind on credit payments that collection agencies are after you. laundered clothes. 4. You are borrowing to meet regular expenses. such as a line of credit or a debt-consolidation loan. Your revolving credit cards are charged to the limit.

and 5. then you need to: 1. 3." which is a blemish on your credit record. if this happens. Get your creditors monthly payments. (Use the forms on pages 5-10 and 5-26 to begin reorganizing your finances. or use some other method. (See Repair Your Credit in the Additional Reading section on page 20-1). disa. etc. So. see How To Set Up A Successful Budget on pages 5-4 through 5-6) Determine how much you are worth today. Listing all your sources and amounts of income. when you ask for a lower repayment plan. 2.Step One: Determine where you are financially. Immediately cut back all your unnecessary and luxury expenses. 7. Increase your income by taking on a second job and/or putting other members of the household to work. to name a few. but also to waive any finance and interest charges." However. Keeping a record of expenses to determine where your money is going. Now you should have a clear picture of your finances. 6. Not only ask them to lower your monthly payments. 2. You can do this by: 1. and you may be able to repair your credit yourself. the main building block of your record keeping. Checking payroll exemptions to ensure you are withholding properly for the IRS. you'll find most creditors generally cooperative. contact your creditors and arrange a revised payment schedule. "Not paid as agreed. Be aware that some of them are expensive. Point out 2 things about a reduced repayment plan to your creditors: (1) it will . savings/retirement plans. More of your money will go through your checking account than any other financial tool. you may want to consult with a credit repair service. such as movies. a record keeping their 4. If your expenses are greater than your income. and allow you to start paying off some of your debt now. Also. Since you are making a responsible effort to pay your debts. Begin with good record keeping and by balancing your checking account. 3.. Evaluating company benefits--life.bility insurance. vacations and gifts. and (2) it is a good alternative to bankruptcy. Listing all assets approximate value. some creditors may indicate on your credit report. Identifying problem areas. health. and taking steps to resolve them. Developing system. costly clothing. Such organizations can show you how to turn bad credit around fairly quickly. restaurants. also ask them not to stamp your credit record with a "Not paid as agreed. Be aware that as you arrange for lower payments. to lower your On this last note.

2. Budgeting is not difficult nor does it have to be overwhelming. Intermediate goals that can be reached within 5 years. Remember. Develop a medium and long term savings plan to reach special goals. Set three kinds of goals: 1. 2. Evaluate insurance needs. however. Distinguish between wants and needs. physically start a budget. 3. 3. Be realistic in your expectations. Budgeting does. Rent or mortgage should not exceed 28% of gross income. Shop wisely. and family circumstances and income change. 2. Step Four: View financial planning as an ongoing process. 4. 2. Adjust as family circumstances change. One source: utilize employer-sponsored savings plans if available.Step Two: Decide where you want to go Many people struggle day-to-day without a plan on how to get ahead. It is a trial and error process. Become an informed consumer. 3. you attain financial freedom by learning to control the money you have rather than letting it control you. 7. To decide goals are: what your financial To reach your goals you must: 1. for 8. Set realistic financial goals--both short and long term. Consult an attorney to draw up a valid will. require that you set some goals and do some preplanning before you actually. 4. Long term goals that may take 10 to 20 years or longer. Developing a plan you can live with will take time and effort. especially if they offer tax advantages and/or matching contributions. Save for periodic expenses and emergencies to keep your plan running smoothly. Below are the basic steps that CCCS of Orange County has found 1. Revise spending as needed. Adjust your plan as goals are reached. To remain debt-free you should: 1. Develop a system for paying bills. Short term goals that can be met within the next year. Plan your use of credit wisely. Prioritize your goals. . 6. HOW TO SET UP A SUCCESSFUL BUDGET People from all walks of life encounter financial difficulties. Limit total debt (excluding mortgage) to 20% or less of net income. 5. and. 9. Credit is not an extension of your income. Review and revise them periodically. Step Three: Formulate a plan reaching your goals.

amounts to the b. a. a. a separate sheet for recreation. Use the Forecasting Expenses sheet on pages 5-14 through 5-17 to determine what you think your expenses will be for the next year (or maybe the next 6 months). For example. Keep a trial balance for 1 month. Change your spending habits to suit your individual needs.necessary to set up and operate a successful budget: Step 1: The Planning Stage 1. food. Jot down daily what you and your family spend your money on each day during the month. mortgage.: Family Finances Check-in or Family Money Planning Meeting). such as using candy machines. Refer to your past paycheck stubs as a guide and write down what you think your income will be for the coming year. eating out versus brown bagging. a separate sheet for car and gas expenses. Make up a separate Record of Expenditures sheet (see page 5-18) for each of the above budget and expense classifications necessary for your individual situation. Use the Fritter Finder sheet on pages 5-22 and 5-23 to become aware of your expenditure patterns.). Step 3: A Planning Meeting With Your Family 1. What you want to spend your money on. installment payments. Lump small daily amounts (i. (Watch the little things.e. Step 2: The Forecasting Stage 1. Use the Forecasting Income sheet on pages 5-12 and 5-13 to determine your average income for the coming year (or maybe just the next 6 months). During this meeting your family will decide: c. Determine your Flexible Expenses: utilities. and . Determine your Fixed Expenses: rent. etc. a. 4. you would make a separate sheet for food. etc. gas for your car. Refer to your checkbook register and past billing statements to help you determine what you think it will cost you to live for the next year. insurance. Round off the nearest dollar. a.: 75 cents for coffee each morning) together on a weekly basis and round off the total amount. Give this meeting a name (i. compulsively giving gifts. 3. What budget and expense classifications you want to have in your budget. b. c. 2. 2. b.e. entertainment. Use the Suggested Budget and Expense Classification sheet on page 5-11 as an example to help you determine the classifications under which your spending falls.

: spend more for the utilities and less on recreation and entertainment). 3. Discuss what you spent your money on last month. 7. 2. the food classification would include all food bought at the grocery store. To make arithmetic easy and quick. Step 6: Continuing On In The Future Months 1. Practice until you get the hang of it. c. then you need to start making compromises and priority decisions (i. Step 4: Now You Are Ready Actually Start Budgeting! To b. Group your expenses: This makes it is easier to plan expenditures and to budget. What goals to set for the future. 1. Meet as a family unit in order to influence your children and other members of the household. 4. meals eaten out. you may wish to use a bankbook entry system as seen on page 5-19. Now that you have been budgeting for a month. Use a loose-leaf notebook with dividers for your budget records. Ask: "Was our income enough to meet our expenses last month?" If the answer is no.c. and become comfortable with it. 2. round off recorded expenses to the nearest dollar. nor is permission needed on how to spend it. Make notations often--daily is best! 3. For a while. etc. Don't give in! Budgeting takes patience. Record your expenditures as they are made and as checks are written for bills during the month. For example. Use the Forecasting Short-term and Long-term Goals sheet on pages 5-20 and 5-21 to write down your goals in order of importance. Don't be critical of how money was spent this past month or chastise family members. Keep similar expenses in the same category and do not put too many expenses into the miscellaneous category. pet food. give the family a progress report of what has happened. 6. Step 5: First Report Month's Progress 1. Put a check mark in the last column for expenses that are tax deductible. . Remember to continue to record your expenditures often. Record credit card and charge card purchases as they are made and not at the end of the month when the statement arrives in the mail. 4.). Just inform! a.e. 5. 3. Discuss with the family if you are meeting your goals or not. lunches bought at work or school. Have a "Mad Money" category for each family member. Keep record keeping simple. Mad Money can be spent on whatever the person wishes and does not have to be accounted for.

At the end of each month. 3. Do not try to account for every dollar. There will always be a small amount of money that will go unaccounted. or the methods you are using to keep track of income and expenditures. 2. Spouses should rotate the bill paying duties on a monthly basis or do them together so that both know how the budget is going. At the end of the month. it is for everyone! Emotional Insights Budgeting Attitudes Don't blow a budget by: 1. Enter the total as a plus or minus figure. 3. look back over what you have done and ask yourself. However. Spending for status. do not let too many categories go into the red at the same time or remain in the red month after month. Determine if a category was overspent. Helpful Hints: 1. Spending too much money takes the fun out of life by creating needless worry. Into 1. Enter each total into the actual corresponding column. 4. Hold back purchases in the categories that have gone into the red as much as possible until you get your paycheck and can replenish that category again. "Am I getting full satisfaction out of spending my money?" 2. the amounts budgeted to certain areas. Budgeting does not have to be a straightjacket. Do you need to allocate more money to the overspent category and allocate less money to underspent categories? c. . b. Step 8: A Look Back 1. a. add all expenditures on your Record of Expenditures sheet on page 5-18 and enter the totals into the Budget Control Sheet on pages 5-24 and 5-25. After you have been budgeting for 3. It is OK to have 1 or 2 categories go "into the red" and have a minus balance. Remember--don't get upset if money spent that month bears no resemblance to the amount you budgeted. 4 or 6 months.Step 7: Controlling Operating Budget Spending And A Successful 2. or spending to look good. 5. Subtract your actual expenses in each category from the budgeted expenses. Budgeting is not just for people who are in financial trouble. You will then be able to see if you have overspent or underspent a certain budget category. you will be able to see how well your budget is working and what areas had problems. Determine if you need to make any changes in the budget categories. Some people feel that budgeting takes the fun out of spending money.

You can have as many appointments as you feel you need at little or no charge. For the do-it-yourselfer. Using money to control people. . Trying to outspend a friend or member of the family or household. things or events. These companies and organizations provide varying levels of service. but also serve as a good example of the credit counseling process. the counselor reviews and reclarifies all your debts. etc. A counselor's ultimate goal is to help you develop a budget you can live with and keep you out of bankruptcy court or foreclosure. CCCS wants to show you how to get out of debt and stay out. or 5. CCCS can get creditors to waive interest payments.One alternative to the commercial credit counselors is the Consumer Credit Counseling Service (CCCS). so you understand where your money is going. 2. You will bring this in to your appointment along with proof of income and verification of your existing charge accounts. CREDIT COUNSELORS A person or family can either reorganize their expenses on their own without assistance. accept lower minimum monthly payments and negotiate a workout with the lender. The typical appointment lasts 30 minutes to an hour. many books and programs are available at the bookstore. and/or 3. 3. This questionnaire asks you to describe in detail all your debts. finance charges and fees. you may need to use some expert "hands-on" help. CCCS is a non-profit community service organization that provides reliable help with budget and debt counseling at little or no cost. To institute needed. How CCCS Works . Whether you decide to reorganize on your own or use a counselor. Using money to retaliate or to get even with other people.2. To assist you in determining a course of financial action. or they can enlist the Consumer Credit Counseling Service . CCCS counselors work with you to get your financial life under control. debt services and financial planners listed in the yellow pages or newspapers who can assist you in restructuring your finances. making an outline of the monthly expenses that you consider to be the necessities of life. 4.When you call for an appointment. if necessary. This is a nitty-gritty list that In many cases. income. To develop a voluntary budget and debt management plan. However. you'll be sent a questionnaire. CCCS credit counselors help you or-ganize your income and expenses. There are many credit counselors. if help of a credit counselor. the methods used by CCCS are not only very sound. Spending to gain friends or social acceptance. and some of them are very expensive. At your first appointment. to quickly reorganize your finances and stop foreclosure. The goal of a CCCS counselor is: 1. a repayment plan.

which increases the amounts owed. Others can cover their monthly expenses. But. See the list of CCCS offices throughout the State of California on page 5-9. "What changes can we make that you can live with?" For example. counselors may suggest ways to increase your income such as pulling in a roommate or getting a second or part-time job. utilities or car payments.If CCCS counselors find that your income falls short of your total living expenses and your unpaid bills are piling up. CCCS will negotiate with creditors to drop interest and and coldly cut expenses. Now comes the expense slashing. finance charges. In a debt management plan. you must cooperate with the cuts. If you compulsively continue to charge expensive calls on the phone. In a similar fashion. In addition to reducing expenses. obviously. which can be as large as $200 a month. You have to destroy all your credit cards and live on a cash-and-carry basis . the counselor compares your total expenses to your total income and may help you develop a budget. This is an important step in creating a realistic budget. They try to figure out a plan where only a percentage of the regular monthly payments are paid without causing negative amortization. groceries. because your need for these miscellaneous items is often what got you into trouble in the first place. Then there are those who have a high percentage of income left over but not anywhere near what's needed to pay the minimum monthly payments on outstanding credit. the net income is simply not enough to cover the monthly expenses. Somehow these people have juggled their finances by using their credit cards to supplement their net income--a very common occurrence. Typically. Next. the counselors don't just sit back The CCCS Debt Management Plan . bus fair. etc. the plan will not succeed. but have only a small amount of income left over for spending money. pets. If there's anyone in the household over 18. the CCCS counselor looks at how much money is owed and the possibilities of rearranging or reducing the payments these creditors require. Often people don't have anything left over after they pay absolute necessities like their mortgage payments. then they usually suggest a debt management plan. A typical question is. This is similar to the revised payment schedule mentioned in Step 1 of The 4 Steps To Financial Freedom on page 5-2. prescriptions. The counselor tries to cut the phone bill down to the basic $15-20 a month. oil for your car. the counselor reviews your expenses item-by-item and cuts as much as possible. they might suggest putting him/her to work to bring in some income. Actually. phone bills are a major item the counselors will cut. You only can become eligible for the debt management plan if your debts can be reduced enough to be handled by your available income. In many cases. and to lower monthly payments. The counselor helps you think of everything you may use. Living with a debt management plan can be rough.includes things such as bottled water. It's more of an interview where they discuss your financial alternatives based on your critical needs.

The larger your payments. Only the original creditor can change a rating. Since each CCCS office is independently run. with the exception of a bonafide emergency. Typically you would bring or mail CCCS a money order or cashier's check for the amount predetermined by your individual plan. such as loss of job. your program is cancelled and all creditors are notified. New Debt: You must not incur any new debt while your program is in effect. Remember. Partial Deposit: If you send irregular deposits on a consistent basis. loss of a second income. Payments must be paid to CCCS. phone numbers. 4.Usually your full payments are due in the CCCS office on a prescribed schedule. The latter is usually due to bad timing. You must notify your CCCS Account Manager of any changes in your address. . If your deposit is received after the 20th. If you cannot make your deposit. 2. Likewise. For example. if you need $600 a month to pay creditors. 3. some of your creditors may still report your accounts as past due. Cancellation Of The Program CCCS will terminate your program if you fail to follow the basic rules of the plan including: 1. medical bills). Recounseling .e. False Disclosure: Supplying false or misleading information to CCCS regarding your income. you should increase the money going to the creditors. the extra money is applied to remaining creditors. No personal checks or cash can be accepted. CCCS cannot remove negative information from your credit report. on or before the 20th of each month. Some Of The Basic Rules . the sooner you will be out of debt. or a major raise in your basic living expenses (i. As some creditors are paid off. whenever possible. you deposit the money in their office by the 20th of every month and they will credit your account and disperse the money. and return all phone calls. only cashier's checks or money orders. your account can be reevaluated and restructured. Your Credit Rating . employment and/or financial situation. Deposits must be made on time each and every month. it may not go out until the following month.within the limits of your new budget that has been outlined with the counselor. not paid as agreed or even charged-off. Nonpayment: If they do not receive a deposit in a 60 day period. and completion of your Debt Management Plan will not remove negative information from your credit report. this plan is possible only because of the cooperation of your creditors.m. You are not allowed to make direct payments to the creditor.Even after being a CCCS client. CCCS actually takes your money and pays the bills for you. then arrangements can be made to catch up later. or due to reductions in the monthly payments that are necessary in order to allow all creditors a fair share of your limited funds.If there is a drastic change in your income. such as 5:00 p. check with the office nearest you for the exact rules of a typical CCCS debt management plan.

If you should decide to begin payments directly to the creditor on your own. CCCS recommends follow-up counseling to discuss your future finances and to help you avoid the pitfalls of falling into the same trap again. for immediate termination from the program. paying a 10% to 15% contribution to .. Direct Payment: Making deposits directly to your creditors and not through CCCS may jeopardize the entire program. Creditors are willing to pay the contribution because the alternative for the client would be filing bankruptcy. More About CCCS . etc. But. when full disbursement of principal and interest through CCCS has been verified. then the creditor may receive little or no money at all! So. may prove to be too complex. whether you go to CCCS. drop finance charges. If the CCCS client had to file bankruptcy. Typically. However.CCCS makes the bulk of its money from creditor contributions. although they ask for 15%. It is a win/win situation all around. developing a debt management program and convincing creditors to lower your monthly payments. CCCS has a lot of credibility within the credit community and their bargaining on your behalf to lower payments may be a big help. CCCS asks the creditor for a 15% contribution. CCCS only gets 10% from creditors. to another credit counselor or develop a budget and debt management plan on your own. CCCS will not issue a satisfactory program completion letter should you pay off your debts after being cancelled from the program. Each year CCCS returns millions of dollars to creditors. When CCCS sets a client up to make a smaller monthly payment to a creditor. If so. The guidelines described in this chapter can help you create a workable budget. CCCS will give you a letter attesting to the fact that you have successfully completed the program.living expenses or debts is grounds 5. After completion. Consequently. the monthly payment will return to normal amount and the creditor will resume interest and late charges. But the client usually receives credit for a full payment. then the drive to a CCCS office may be worth it. keep the doors open at CCCS is better for creditors in the long run than consistently losing 50% to 100% in the bankruptcy courts.

CCCS operates several offices throughout California. call The National Hotline at (800) 388- 5-14 . For a branch office near you.

NOTES FOR FINANCIAL REORGANIZATION 5-15 .

Budget Guidelines .

Forecasting Income 1 .

Forecasting Income 2 .

Forecasting Expenses 1 .

Forecasting Expenses 2 .

Forecasting Expenses 3 .

Forecasting Expenses 4 .

Record of Expenditures .

Sample Bankbook Entry .

Forecasting Short Term Goals 1

Forecasting Short Term Goals 2

The Fritter Finder 1

The Fritter Finder 2

Budget Control Sheet 1

Budget Control Sheet 2

HOW TO WIN THROUGH BANKRUPTCY
I gathered the following material from the law library and various bankruptcy attorneys. I report it here for informational purposes only. Since I am not an attorney, the information in this chapter is not offered a legal advice. It should not be taken as legal advice in any form. Please consult with an attorney before acting on any of this information. Filing bankruptcy will immediately stop your foreclosure. Nonetheless, never file bankruptcy just to halt a foreclosure, nor to avoid an honest debt. Use bankruptcy only as a serious step toward reorganizing your finances and rehabilitating your spending habits. However, if a creditor, such as a mortgage lender, is forcing a sale of property which you would like to keep, or if you seek relief from debts that far exceed your income or assets, then bankruptcy can be a valuable tool to stop the sale long enough to bring order to your finances. 6-1 Bankruptcy is a more severe form of financial reorganization than that which was outlined in the previous chapter since it both invokes government intervention into your financial affairs as well as publicly stamps your credit report with a nasty blemish for several years. (See Repair Your Credit in the Additional Reading section on page 20-1.) This chapter will focus primarily on those aspects of bankruptcy which apply to saving your home while presenting only a partial overview of bankruptcy principles. Getting Started In order to file for bankruptcy, a filing fee must be paid, plus any attorney costs, and an assortment of forms and schedules must be filed with the clerk of the Federal Bankruptcy Court. Both extreme

care and honesty must be exercised while filling out these forms and schedules. Mistakes can result in a dismissal of the To find out more about these forms and all the details of bankruptcy, consult with a bankruptcy attorney. Paralegals, found in the Yellow Pages, may also be of assistance in filing out bankruptcy documents. While many do-it-yourself bankruptcy books are available (see page 20-1), filing bankruptcy without professional help can lead to errors which might jeopardize your case. In many cases, legal assistance is necessary to accurately evaluate your case and determine the chapter of the bankruptcy law which is appropriate for your situation. If you decide to file bankruptcy, then there are some important points you will need to know in order to protect your home. THE PURPOSES OF BANKRUPTCY: 1. To stop creditors from acting against a financially troubled debtor, 2. To discharge certain debts, 3. To give the debtor a fresh financial start, and 4. To give all creditors an equal chance at any possible collections from debtor. 5. To allow debtors to reorganize their finances. TYPES OF BANKRUPTCY RELIEF The types of relief under the bankruptcy laws: 1. Reorganization (Chapter 11, 12 and 13), 2. Liquidation (Chapter 7), and

petition as well as non-discharge of certain debts. 3. "Chapter 20." Chapter 12 is debt adjustment for family farmers with incomes. Chapter 11 is financial reorganization generally used by businesses or individuals with over $100,000 in unsecured debt and $350,000 in secured debt. Bankruptcy relief for the typical individual homeowner is found in either the Chapter 7 Liquidation or the Chapter 13 Debt Adjustment Plan. In addition, "Chapter 20" is an unofficial term for the technique some attorneys use to obtain the benefits of both Chapter 7 and 13 by filing multiple or serial petitions. The upcoming sections on how to protect your home in chapter 7, 13 and 20 bankruptcies contains more detailed information on each of these different types of bankruptcy.

A "Cramdown" is a technique used to rewrite the loan on real estate to reflect current market value after it has decreased far below its original value. For example, let's say a property was purchased 5 years ago for $200,000, with a mortgage of $160,000, and it is now worth only $120,000. In a cramdown, the mortgage is "crammed down" or adjusted by the bankruptcy court to the current market value of $120,000. Unfortunately, a recent Supreme Court decision ruled against cramdowns in both Chapters 7 and 13 bankruptcy. However, cramdowns have not been ruled against in the more

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complex Chapter 11 bankruptcy. (See "Workouts" page 7-1 and 7-2.) Chapter 13: Debt Adjustment Chapter 13 bankruptcy is not much different than the non-bankruptcy financial reorganization discussed in the Option Chapter 1, except for 2 things: 1. The credit blemish, and 2. Bankruptcy's powerful automatic stay (see "Automatic Stay" below), which halts creditor actions such as foreclosure for the duration of the debtadjustment plan. Similar to the reorganization offered by CCCS (mentioned in the prior chapter), Chapter 13 allows financially overextended debtors with regular incomes to repay a reduced portion of their past-due debts over a prolonged time period, usually 3 to 5 years, in what is known as a "debt-adjustment plan." The percentage of discharged/dismissed debt is generally higher in Chapter 13 bankruptcy than with the voluntary reorganization (see page 5-1), but not as high as is found in Chapter 7 bankruptcy, in which, typically, most debts are wiped out. The Chapter 13 "plan" is supervised by the court and protects the debtor as well as helps the creditors recover part or all of what is owed to them. As a crucial part of the plan, the judge sets reduced payments which the debtor can afford. If a debtor fails to maintain his payment plan, except in hardship cases, then the case may be dismissed or converted

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to Chapter 7, both possibly jeopardizing the protection of the home or other property. In Chapter 13, the remaining debts or account balances are not discharged until after the successful completion of the debt adjustment plan, even though the amounts to be discharged are figured up front when the plan is approved. More on Chapter 13 can be found in both "Choosing Between Chapter 7 and 13 Bankruptcy" (page 6-5) and "How Chapter 13 Protects The Home" (page 6-4). Chapter 7: Liquidation - Chapter 7 is considered "straight bankruptcy" in which a court-appointed trustee sells the debtor's "nonexempt" property and distributes any proceeds to the creditors. (See AUTOMATIC STAY STOPS FORECLOSURE, in the next column, which explains how bankruptcy's "automatic stay" can temporarily stop forced sales such as foreclosures.) Since the typical Chapter 7 applicant has many more debts and liabilities than income or assets, the majority of debts are wiped away, or discharged. Only property owned by the debtor at the time of filing the bankruptcy petition will be sold to pay creditors, including such items as both tangible and intangible personal property, the debtor's property in another's possession, real estate and income earned from real estate. Nonetheless, some of this property is legally exempt. The debtor must choose from, and adhere to, 1 of 2 lists of California state exemptions. Since the 2 lists vary slightly, study both before filing to decide which best suits your case. For a complete list of the exempted items and the available choices, consult an attorney or a law library for a current exemption guide. Some of the items

exempted from the sale include alimony, certain bank deposits, certain home improvement building materials, burial plots, homesteads (see page 6-6), certain life insurance policies, some motor vehicles with equity, partnership property, pension funds, and certain wages, etc.

A partial list of the debts not exempted by the bankruptcy laws include most taxes; debts created by fraud, embezzlement or larceny; illegal credit card purchases; debts not listed properly on the petition; debts for alimony, maintenance or support; liability for willful and malicious injury; debts for fines and penalties; debts for educational loans; liability for driving while intoxicated; and debts denied or waived in a previous bankruptcy, etc. In Chapter 7, after the debtor's bankruptcy petition is filed, the debtor may keep just about any new property that is received. This is, in part, to encourage the debtor to begin a new financial life. Exempted from this "new property" is: 1. Property which has been inherited within 180 days after the petition has been filed. 2. Life insurance or death benefits when the bank-rupt dies. 3. Property obtained as the result of a divorce decree or property settlement agreement with the debtor's spouse within 180 days after the petition has been filed.

How Chapter 13 Protects The Home).More on Chapter 7 can be found in both "Choosing Between Chapter 7 and 13 Bankruptcy" (page 6-5) and "How Chapter 7 Protects The Home" (page 6-4). the automatic stay of Bankruptcy Code §362 stops most creditor actions. even on the last day before the foreclosure sale (see page 6-4. until the bankruptcy petition is either denied or discharged. AUTOMATIC FORECLOSURE STAY STOPS When any bankruptcy petition is filed. . With the automatic stay. including the progress of an existing foreclosure or the filing of new and additional foreclosures. no further creditor action against a debtor will be allowed. This includes halting a mortgage foreclosure dead in its tracks.

being the holder of a lien which was "created by an agreement" such as a mortgage lender. An automatic stay in Chapter 13 may stay in effect for the entire 3 to 5 years of the plan while in Chapter 7 the stay can range from a few weeks to several months. relief from an automatic stay can be provided only by the Bankruptcy Court. Some attorneys recommend waiting to file bankruptcy until the last day before the foreclosure sale. and/or 2. which is the average time span for Chapter 7 cases to be either denied. then all the back mortgage payments. Proceed with the following HOW CHAPTER 13 PROTECTS THE HOME . plus interest on the delinquent amount. The house remains protected by the automatic stay for the duration of the debt-adjustment plan (typically 3 to 5 years) just as long as the monthly payments of the "plan" are made in addition to the regular monthly mortgage payments. Creditors who ignore the stay may be held in contempt of court. That the creditor's interest in the property is not adequately protected. Saving your home in Chapter 13 is simple since it is designed to protect those kinds of assets. HOW CHAPTER 7 PROTECTS THE HOME Although Chapter 7 provides only limited protection for your home. By law. dismissed. Note that secured creditors not included in a Chapter 13 plan are allowed to foreclose. may immediately file with the court for relief from automatic stay and. both of which jeopardize the home or other protected property. in Chapter 13. discharged or for a creditor to receive from the court a "relief from automatic stay. if granted may continue with the foreclosure. can be put into the debtadjustment plan. which pays the arrearage at a reduced monthly rate. Inadequate protection would be. the exemption system within Chapter 7 provides the framework for a strategy which. like a foreclosure. for example. That the subject property lacks equity and is not necessary for financial reorganization.or until the stay is lifted. This would allow you to put a maximum amount of debt into the repayment plan and at the same time allow you to stockpile some of that money which otherwise would have gone to general unsecured debts and mortgage payments. fined and even ordered to pay damages to the debtor. If a debtor fails to maintain his Chapter 13 debtadjustment payment plan. if the plan payments are not made as promised or if the creditor could demonstrate that the debtor's income is not enough to simultaneously pay the back payments along with the regular principal and interest payments." In any bankruptcy poceeding. if used effectively. The duration of time in which the automatic stay remains in effect varies between Chapter 7 and 13. a secured creditor. To obtain relief from the automatic stay the secured creditor must show either: 1. can "shelter" the equity in your home and discourage a court trustee from selling it in order to pay your debts. After the automatic stay stops all creditor actions. then the automatic stay may be lifted and the case dismissed or even converted to Chapter 7.

This must be a bonafide loan and not phony paper designed to hide equity.only after the advice and approval of your attorney. including mortgages. 3. by deducting from the equity: 1. taxes. etc. 2.A newly created "junior" loan to protect the remaining equity not covered by the estimated sales costs or homestead exemption. In many bankruptcy cases. even high equity. you can reduce the equity in your home.The estimated sales costs that might result if the house were to be sold (even though it may not be sold). liens. Equity is the current appraised value of your house minus everything owed against the property. The Bankruptcy Court trustee usually will not sell your home if you demonstrate on your petition that there is not enough equity to warrant selling the house to pay creditors. back payments.Your homestead exemption. .

F) Chapter 13 is limited to an individual with regular income who owes less than $100. the stay remains in effect throughout the duration . Chapter 7 is open not only to individuals but also to corporations and partnerships without any limits on debt. discharged or until relief from the automatic stay is granted. dismissed. a little planning could save the home in Chapter 7. who have a promising future income and who just need some time to catch up on their bills should file under Chapter 13. who want to erase certain debts and who need a fresh financial start.000 in secured debts. In Chapter 13. dismissed or converted to another chapter (which may be as long as 3 to 5 years). such as some cars.000 in unsecured debts. this does not occur until the debtor successfully completes the terms of the plan. Chapter 13 includes property and earnings received until the case is closed. G) Chapter 13 debtors must voluntarily file. (However. release from debts occurs upon filing the petition. page 6-4). E) In most Chapter 7 cases. Property in Chapter 13 is retained by the debtor as long as the plan payments and other agreements are honored. Some Of The Differences Between Chapter 7 And Chapter 13: A)Chapter 13 provides a way to save a home. sometimes 3 to 5 years. D) Chapter 7 creditors. B)Chapter 7 debtors lose possession of most of their estate to a court-appointed trustee and all nonexempt property in Chapter 7 is subject to sale. Chapter 7 is for debtors who have considerately greater debts than assets or income.CHOOSING BETWEEN CHAPTER 7 AND 13 BANKRUPTCY Debtors who would like to keep a lot of their nonexempt property. Chapter 13 creditors usually receive a percentage of the debt through a court-approved plan over a considerable period of time. a courtappointed trustee might sell the house to pay creditors. often 3 to 5 years. 3 or more creditors with unsecured claims of $5. and owes less than $350. In Chapter 7. jewelry and real estate. However. C)Chapter 7 is limited to the debtor's assets at the time the petition is filed. such as charge accounts and credit cards. if paid anything at all. In Chapter 13. H) An automatic stay in Chapter 7 will last until the petition is either denied. see How Chapter 7 Protects The Home. receive payment almost immediately after the petition is filed.000 or more can force a debtor into Chapter 7.

and the $17. All 3 of the above deductions together generally average a total estimated deduction of at least 10% of the appraised value of your house. subtract the $40. then consult a tax preparer. This 10% average is generally accepted as a standard deduction by the Bankruptcy Courts. let's say you originally paid $100.500 (ask your tax preparer for the specific rules on fix-up costs). then your gross and net capital gain will be the same. Estimated escrow costs and fees. Estimated real commission(s).000 .000.000 gross capital gain to get the $91. For illustration purposes (referring to the chart on page 6-9 may be helpful).500 selling costs from the $150. certain fix-up costs and selling costs. certain fix-up costs and selling costs.500 for new paint and some flooring during the 90-day period prior to signing a contract to sell your house. B. Estimated capital gains tax.000. suppose you pay $1. The tax would be figured according to your current tax bracket. then the tax on $91. this standard deduction does not have to be used if you can prove your costs may be higher than 10%.000. The chart on page 6-9 contrasts equity and capital gains. you would have deductible selling costs of $17. You now have a $150. if you have paid a total of $17. If you do not know your tax bracket. and no selling costs to deduct. including: A. You would then have deductible fix-up costs of $1. minus all capital improvements.500 in fix-up costs. Next. NOTE: If you have no capital improvements. Capital improvements are the costs of certain additions made to the property while you have owned it.000 = $91. Selling costs include commissions. Your net capital gain is the difference between the price you originally paid for your home and its present value.500. Your capital gain is the difference between the price you originally paid for your home and its present value or sales price. your equity is the appraised value of your house minus everything owed against it.Deducting The Estimated Sales Costs The estimated sales costs that the Bankruptcy Court will allow to be deducted are those costs that might result if the house were to be sold. estate agent's improvements. a patio and a fence at a total cost of $40.000 net capital gain ($150. However.000 for a house which has gone up in value to $250. advertising. deduct any capital improvements.500 in selling costs.000 for capital improvements. Fix-up costs are the costs to fix-up the property during the 90-day period just prior to signing a contract to sell it. It is important to note that your equity is different that your capital gain.000 gross capital gain. The percentage of the deduction can be increased depending on the size of your net capital gain. Suppose you put on a room addition.000 C. the $1. If your bracket is 28%. escrow fees and any other direct costs incurred to sell your property.$59.000. fix-up and selling costs. Finally.000). To calculate your net capital gain. You would then have deductible capital improvements of $40. minus all the capital . no fix-up costs. As the chart on page 6-9 shows. Remember. Now figure the capital gains tax that would have to be paid on the net capital gain of $91.

Deduct this from your equity. the automatic homestead law protects equity in any kind of living space.000 for a single homeowner. $75. To greatly reduce or even avoid this problem. with a recorded homestead declaration. Although the dollar amount of the homestead protection is the same with both the automatic and the declared homesteads. finance company.000 the commission would be $15. you will have to prove to the court your right to automatic homestead protection. So it may be worth your while to calculate costs rather than blindly to accept the court's standard 10%.480. (Note: These are hypothetical costs for the Bankruptcy Court purposes. With the automatic homestead. The declared homestead protects only dwellings that are permanently attached to real estate. The standard exemptions are $50.980 is Your homestead exemption is granted automatically by bankruptcy law whether you have previously filed one or not.000.000 x 28% = 25. etc. doctor.980. if a creditor obtains a judgment against you in court and then forces the sale of your house.would be $25. Finally.500 escrow costs equals $42.000 x 6% = $15. protection than does a declared homestead: 1. A creditor cannot force the sale of a home to pay a judgment unless the sale would produce enough money to: . 2. condominiums and mobile homes. airline. over 17% of $250. The declared homestead does. which could be as high as 1%.000 estimated real estate commission plus the estimated $2.000 ($250. a homestead can protect a home from being foreclosed to pay a judgment lien that resulted from the failure to pay unsecured debts such as to a department store.480 ($91. or that was incurred as a result of an automobile accident. This inconvenience is a simple matter of red tape and may require help from an attorney. when added to the $15. Any actual sale of your home might put you into a higher tax bracket and that would be figured into the equation. or $2. not just real estate. Then. such as houses. The automatic homestead does not protect equity from creditors when a home is sold voluntarily and another is bought within 6 months. Deducting Exemption Your Homestead 3.480). file a declared homestead exemption just prior to filing bankruptcy. possibly inferior. On a house worth $250. However. deduct from your equity the estimated escrow costs. As you can see.500.000 for disabled persons or persons over the age of 65 (age 55 for low income persons). However. $42. also). much more than the 10% standard accepted by the Bankruptcy Court. the estimated capital gains tax of $25. the burden is on the creditor to prove your homestead is invalid. Homesteads: General Information--Although the homestead protection helps reduce the "appearance" of equity in the Chapter 7 bankruptcy court.000). a declaration of homestead in and of itself cannot stop a foreclosure on delinquent loans that are secured by real estate. beware: The automatic homestead offers different. Next.000 for a married couple and $100. deduct from your equity the average real estate commission of 6%.

if an unincorporated business is successfully sued. this may have to be a costly "hard money" loan. The homeowner has 6 months to reinvest the equity in another home and to record a new Declaration of Homestead on the new residence.000 with $150. such as wages. when there is a lot of equity. 2. to be fully protected. a home worth $200. drawn-out process for the creditor. Pay the costs of selling the home. As an illustration of homestead protection. up to the limits protected by the homestead exemption. Owners of businesses that operate as sole proprietorships or partnerships should record homestead declarations. Pay all existing liens (claims on the property).000 is protected because not enough equity exists to allow the holder of a judgment lien to force a sale of the house to pay the judgment. to satisfy judgments.000 amount protected by the homestead.000 owed on two mortgages has $50. unfortunately. who normally must hire a lawyer and pay a number of other unwanted upfront costs. or if a house is sold voluntarily. (And.) Filing a homestead is as easy as filling out a simple form (see pages 6-11 and 6-12) and recording it with the County Recorder's office for a small filing fee. Even if a creditor does foreclose on a court judgment. unmarried co-owners should each record a separate homestead declaration on their share of the property. this amount can be reduced by creating another home equity loan before sale of the house. Although a homestead protects only the equity in a home. Pay off mortgages and other loans secured by equity in your house. One declaration protects a married couple and family members. then the $50. However. to provide the homeowner with the $50. creditors can go after personal property. it is much harder for creditors to get individually owned . But if an unmarried homeowner has a declaration of homestead recorded. A judgment creditor-someone who has sued and won a court judgment--is unlikely to try to force the sale of a home except as a last resort. 4. such a foreclosure sale would be unlikely unless your property has a large amount of equity. enough to pay for all of the above. whether title to the property is held as joint tenants or as tenants in common. Who can record homestead declarations? Only individuals residing on the property being homesteaded qualify. If a business is a corporation. Most prefer to collect their judgments by taking other property. Forcing the sale of a home is a long.1. usually just $5 to $10.000 equity. Allow the homeowner to keep the remaining equity. to pay the sales costs and to pay the amount of the foreclosing judgment lien. This is true Obviously. A declared homestead tells creditors the homeowner knows his or her rights and will take advantage of them.000 mortgages. bank accounts or other real estate. a recorded homestead declaration continues to protect the homeowner's equity. Not enough equity exists to pay the $150. not just business assets. 3.

How To Win By Refinancing Your Home. Separate property always belongs to its owner. Deducting Equity The Remaining If. Corporations do not qualify for homestead protection. especially those made in a foreclosure situation. friendlier sources of funds (see option Chapter 4 . in and of itself. Otherwise. a $25. an equity line of bank credit or pursue other such inexpensive. all monies generated by the new mortgage should voluntarily go to pay creditors or be turned over to the bankruptcy trustee. Substantial equity might prompt the Bankruptcy Court to sell your property. affect the homestead rights of a formerly married couple who filed a homestead declaration together for property they own jointly. Instead of using a hardmoney lender. and the homestead does not give ownership interest to the spouse. How do homesteads work in divorce situations? A divorce does not.000 after such costs.assets. try to borrow money from a relative. Of course. Use this option only as a last ditch effort to stave off a liquidation sale. they still own the property together. a substantial equity still remains. some bankruptcy attorneys file the Declaration of Homestead just prior to filing bankruptcy. after deducting the estimated costs and the homestead exemption. It is this good faith gesture along with the now low available equity that might protect your home from a court-ordered bankruptcy sale. A word of caution: Most "junior" loans. as a token of good faith. you may create a new "junior" mortgage before filing for bankruptcy for as much of the remaining equity as possible. . Substantial equity would be more than 20% of the current appraised value. may be "hard-money" loans in which both high interest rates and high loan origination fees are routinely charged. your bankruptcy petition may be dismissed as fraudulent if it is construed that you are hiding monies. the declaration must be recorded before a creditor actually obtains a judgment from a court and records it with the County. When is the best time to record a homestead? Record a homestead declaration as soon as possible.000 to $20. only the automatic homestead will apply. However. Until 1 spouse legally transfers his or her half interest in the property to the other spouse. page 8-1). if the declaration is not recorded in time. In any case. For example. even though they are no longer married.000 dollar loan may net only $15. To take advantage of the protection of the declared homestead.

and then proceeds to cure the mortgage default under Chapter 13 is commonly known by the unofficial term "Chapter 20" bankruptcy. Some court precedents do not permit this while others do. .HOW CHAPTER 20 PROTECTS THE HOME The process by which a debtor obtains a discharge from general unsecured debt in Chapter 7. if done in good faith.

500.$ 1.00 $ $ $ How To Compute Gross and Net Capital Gains Your capital gain is usually computed to figure your actual or projected capital gain tax.000.000.$ 65.Remember.000. etc. take the appraised value of your property and then subtract everything owed against the property. Taxes in Arrears 14. $100.$ 7. Your capital gain is the difference between the price you originally paid for your home and its present value or sales price.00 Equals the gross capital gain of: $150.$ 80.00 . taxes. Current Estimated or Appraised Value $250.S. your equity is different than your capital gain.00 Subtract the purchase price from 12 years ago.000. liens. How To Compute Equity Your equity is the value you have in your property. To compute your equity.000.000.00 Trustee's Foreclosure Costs Lien: Property Taxes in Arrears Lien: I. including mortgages.500.00 . Current Appraised Value $250.00 .000.00 First Trust Deed Mortgage Second " " " Total of Mortgage Payments in Arrears 15.00 Lien: Unpaid Contractor 2.R.000.00 $ .000. minus all the capital improvements.00 - .000. back payments.00 Total Equity 65.

000. 1.500.). 40.00 Subtract the selling costs (commissions.00 Equals the net capital gain of: 91.00 $ - $ $ .Subtract the total capital improvements (major improvements).$ . etc. ads.000. 17.500. escrow/legal fees.00 Subtract the fixing up costs to sell home (see tax preparer).

000 capital gain) $250.000.000.00) $ .000.00 Subtract the estimated capital gains tax (based on 28% bracket).000. 25.000.500. (Note that no equity exists for the Bankruptcy Court trustee. 5.00 Subtract the estimated escrow costs (up to 1% of value). 30. 50.00 Equals the equity available to the Bankruptcy Court trustee.000.00 Subtract your homestead exemption (single person).000 equity and $375.000.00 . you can effectively reduce your equity to a low percentage that may save your property from a court-ordered bankruptcy sale. the homestead exemption and a new loan. The following illustrates this point.480.$ $ $ . 35.) 27. Moderate Equity Example Total equity (based on the example on page 6-9) 65.00 Subtract the estimated sales commission of 6% ($500.00 Subtract the estimated escrow costs.000 value).00 Subtract the estimated sales commission of 6%.00 Subtract the estimated capital gains tax (based on 28% bracket).000.$ . 2.$ ($ High Equity Example Total equity (based on $250. 15.A Test-Case Example Of The 3 Deductions By deducting the estimated sales costs.$ $ .$ . 75.980.00 Subtract your homestead exemption (married couple).000. $105.00 Equals the equity available to the Bankruptcy Court trustee.

Substantial equity would be an amount more than 20% of the current appraised value. 35.Subtract a newly created "junior" mortgage only if necessary*.000. no new mortgage would be necessary since the amounts available to the Bankruptcy Court trustee are far below 20% of current value.00 $ * Use this option only if a substantial amount of equity remains available to the Bankruptcy Court trustee to warrant a liquidation sale of your property. In the above examples. .

Single Person Declaration of Homestead .

Married Persons Declaration of Homestead .

delinquent homeowner's insurance. principal amounts. The lender records a NOD in search of a solution. but so may be interest rates. overdue association fees. and asking for the workout department. or combine key points to custom-build a workout for your situation. or servicer (which is a company that services the loan for the lender). liens. old-fashioned bargaining. Each lender may have a different procedure and may route your case through some sort of an evaluation department first. ask for the manager or president." Starting on a workout is as easy as calling your lender. back property taxes. If the receptionist does not know. These adjustments to your loan. Some lender/servicers may refer to their standard workouts by an entirely . which can be either temporary or permanent. or by hiring an attorney to write one.HOW TO WIN BY CHANGING YOUR MORTGAGE TERMS When circumstances force a strain on your ability to make your loan payments. Negotiating the details of a workout with a lender or servicer is as simple as plain. some lenders can be persuaded to adjust the terms of your loan agreement to stop the foreclosure and help you through the difficult financial times. or by using a lender/servicer's form. And the financial strength or weakness of the current real estate market will influence the lender/servicer's motivation. etc. Use the workout programs that are defined below individually. are commonly referred to as "workouts. Not only are the unpaid back payments open for renegotiation. Many times lenders prefer to negotiate a 7-1 solution instead of going to a trustee's sale. Writing up a workout is as easy as rewriting the models on pages 7-37 through 7-42 by using your own corresponding information.

in return. In a forbearance. Forbearance is used mostly where borrowers have temporary interruptions in their regular incomes. right or obligation) that is due. Repayment Plan: Sometimes used as a synonym for workouts. this is 3 to 6 months. Agree to this program only if you can afford it. usually in which the borrower has paid consistently on time. TYPES OF WORKOUTS 1.different name than described in this book. Although this is one of the quickest ways to catch up. the lender will only yield a month's time to the borrower to accomplish the more permanent solution. it works only if an appropriate sum of money is available. Usually. and "cramdown. 4. For more on cramdowns see How To Win Through Bankruptcy. 5. the lender/servicer may accept only a portion of the regular payment. Partial Payments: In special circumstances. Temporary Indulgence: As a temporary measure. the borrower and lender/servicer may create an agreement which combines the various parts of any workout listed in this chapter. most lender/servicers are familiar with the concepts behind the following workout programs. or the soonest that the loan can be brought current. Pay and Accrue: Pay and accrue means the borrower pays whatever he can afford 7-2 . However. In any event. This program requires higher than the usual payments since the arrearage are combined with the regular payments. The borrower must demonstrate to the lender/servicer an ability to handle the increased debt load due after the forbearance period. forbearance is a more prolonged version of the repayment plan." In practical terms. Typically." page 6-2. forbearance is when the lender/servicer allows the borrower in default extra time to come up with the missed monthly mortgage payments. the Bankruptcy Court may allow the loan to be written down to the current market value. 3. Cramdown: When the value of a property de-preciates below the loan against it. or the specifics of their workouts may vary in detail. after the agreed forbearance period. or when the property is in the process of a sale. Some lender/servicers may even allow a period of time when a reduced payment or even no mortgage payment is made. This might occur during the time a workout is being negotiated. the missed mortgage payments will be combined with the regular payments until arrearage are caught up. instead of foreclosing. Usually.) 6. all the past-due payments are repaid in a relatively short period of 2. page 6-1. time. provided the remainder is paid within the same month. forbearance is defined in Webster's dictionary as "a refraining from the enforcement of something (as a debt. the lender/servicer may allow the borrower a limited period of no payments in situations where permanent relief is pending but not yet finalized. Forbearance Agreement: Also commonly used interchangeably with the term workout. in a repayment plan.

in the event of a loan delinquency. yet temporarily lost. which is owned by either the borrower. a relative or even a friend. Cal-Vet Loan Assistance: By special agreement made at the time of the loan. However. 10 years from now or when the house is sold. Principal amounts. A sign that you may have a conforming loan is if. at the time you obtained your loan. also called a recast or reamortized loan. Conforming loans. primary loan agreement.) Items commonly modified are: a. you are notified that it was sold. Nonetheless. b. An immediate draw on the line of credit cures the delinquency and even provides a reserve account to help pay the mortgage until the mortgagor's income increases. c. a note modification.and the unpaid balance becomes an accruing debt that must be repaid at a later agreed upon date. Conforming Loan Assistance: If at the time your loan was made it conformed to certain government guidelines. actually goes in and permanently modifies the terms of the original. Interest rates. and payment e. Transfers of liability to another borrower upon resale. This may be beneficial to a borrower who is behind in payments. 7. then your loan is considered a conforming loan. whether next year. Extended Loan: After a period of reduced or suspended payments. Asset Collateralization: Asset Collateralization is when missed payments are repaid after the lender/servicer extends a home equity line of credit based on a separate piece of real estate than the property being foreclosed. See pages 7-11 through 7-12 for more on conforming loans. to an investor or investment group. and/or as a separate loan agreement. 2. To help stimulate the loan market. which are usually serviced by loan service companies. in either regular installments. Cal-Vet goes . usually. This program is ideal for 2 income households where 1 income is suddenly. Installment changes. must adhere to strict standards regarding delinquencies. SPECIAL WORKOUT ASSISTANCE You may be eligible for specialized help if. 8. forming loans. the federal government has become the largest investor in con7-3 9. an extension is when the back payments are repaid at the end of the original loan agreement. promissory note. you borrowed with the help of 1 or more of the following loan programs: 1. Note Modification: Most workouts are usually secondary agreements that temporarily suspend the foreclosure terms of the original. (See pages 7-8 through 7-11 for an overview of note modifications. Cal-Vet can repossess the property by cancelling the veteran/borrower's equity position. at anytime after you received your loan. or in a lump sum known as a balloon payment. d. Balloon payment payoff dates.

In order to prevent a foreclosure and the expense of a claim. then you may qualify to have your mortgage assigned to and serviced by HUD. See pages 7-12 through 7-16 for the details of Cal-Vet loan assistance. Private Mortgage Insurance (PMI): If a borrower was required to buy mortgage insurance when the loan was first obtained. 7-4 . 4. has a workout procedure for the veteran. formerly the Veterans' Administration (VA). FHA/HUD Mortgage Assignment: This is government mortgage insurance. In a case where the borrower suffers a temporary income loss. The odds are they offer one or more of the workouts mentioned in this chapter as well as some form of the special workout assistance referred to on this page. or other homeowner with a DVA loan. who is behind on payments for a loan that is insured by DVA or VA. Other Loan Programs: If you received all or part of your mortgage through any other local. state or federal loan program. 3. 5. and if there is a reasonable prospect that you will be able to resume full mortgage payments in 3 years or less. 6. then there is a strong possibility that they may have some sort of foreclosure assistance program available. See pages 7-16 through 7-17 for more on PMI. when circumstances beyond your control have caused you to miss 3 or more monthly mortgage payments. The Department of Veterans' Affairs (DVA). DVA Preforeclosure Avoidance Program: This is another type of government mortgage insurance. If the loan on your house is insured by the Federal Housing Authority (FHA). then the insurance company may be able to offer limited assistance in the case of a loan delinquency or default. the mortgage insurer may also pay part or all of the delinquent loan payments.through a thorough process of trying to work out the delinquency and keep the veteran/borrower in the property. Call the appropriate agency and ask for both written and verbal instructions regarding foreclosure assistance. See pages 7-21 through 7-24 for the DVA Preforeclosure Avoidance Program. The HUD assignment program is explained on pages 7-17 through 7-20. the mortgage insurance company may help the borrower to negotiate a workout with the lender/servicer.

and even do some or all the negotiating with your .HOTLINES:Free Loan Workout Assistance Counseling: open to HUD Housing (supposedly (800) 733everyone): 3238 Ask the HUD operator for the telephone number of the counseling office nearest you. Then call for help/advice in preparing your workout. Home Loan Counseling: (213) 7470807 They may be able to offer workout advice and assistance.

Climb the chain of command of the lender or mortgage company all the way to the top. Consider any different ideas. Reassure the lender/servicer that you are sincere about wanting to cure the default in any reasonable way. c. pages 5-2 through 5-4. Draft a few alternatives. Be ready. b. Be eagerly willing to cooperate: a. pages 5-4 through 5-6. if necessary. c. e. Keep a file or notebook containing every piece of paper sent to you. copies of what you sent out and anything else significant that was generated during the default period. As soon as you know there is a problem with making payments. Be prepared: a. b. 5. e. f. Be flexible: Accept workable alternatives to your ideal plan. c. Be bold. Read and understand the workouts in this book and those offered by the lender/servicer. Promptly mail (hand delivery is better whenever possible) copies of anything requested by the lender/servicer or other party involved in helping you. b. Maintain a friendly and positive attitude with all parties involved at all times. Be creative: Design several suitable scenario options that are realistic to your present and future financial situation and goals. d. Remain in as constant communication as necessary with the lender/servicer. Be ready to present a workout plan that is ideal for you. contact your lender/loan servicer. 3. 4.Be realistic: Don't accept a workout that would be difficult for you to honor. Be sincere. the more help that will be available. 2. or see a financial counselor. b. Act Fast: a. . Find solutions around obstacles. Document the entire process: a. yet reasonable. Know your financial status: past. and How to Set Up a Successful Budget. present and future.THE 5 KEYS TO SUCCESSFUL WORKOUTS 1. Complete The Four Steps to Financial Freedom. Be persistent: Don't take no for an answer. Answer the Common Questions on page 7-5. d. As a general rule: The sooner that you act. willing and able to negotiate: a. People who are friendly and sincerely seeking help may be harder for the lender/servicer to foreclose on than people who are belligerent and devious. Follow through on all agreements with the lender/servicer as quickly as possible.

again. or any other method that gives you proof of delivery. Lender/Servicer Responsibilities The lender and mortgage servicer must: 1. To foreclose on a property when problems can not be resolved.As a borrower. etc. Facilitate. coupons. you have the additional responsibility of resolving the problem. complete The Four Steps to Financial Freedom and How To Set Up A Successful Budget on pages 5-2 through 5-6). and. the lender/servicer has both the re-sponsibility to try to work out solutions for mortgage problems which appear temporary and the right to foreclose to recapture the money loaned to you. Put the final workout agreement in writing. including phone calls: Document every step of the workout process with your lender/servicer. on the phone or in person. on pages 16-22 and 16-23. Fulfill all other aspects of the loan agreement. 5. 2. Write letters whenever possible since they document the communication process as well as summarize and confirm on paper the Borrower Responsibilities . Why did you fall behind in your payments? 3. Use registered mail. Expect the lender/servicer to ask a lot of personal questions during their investigation. Repay the loan as per the loan agreement in regular monthly payments due on specific dates. your home is protected against a lender foreclosure.In order to determine the best remedy for each individual situation. Keep a written journal of all activities. such as paying all real estate taxes. the exact nature of the problem behind the late payments. see The Write-It-Out Exercises on pages 16-1 and 16-2. Also. If you maintain the above responsibilities. from the initial contact to the various drafts of your negotiations to the final agreement. d. 3. if you find yourself unable to make your payments on time. Keep the subject property in good repair. collect and record regular monthly payments on the loan. even if it was enacted orally. the lender/servicer wants to understand the details. 4. annual promises made during a phone call or visit. Remember. Borrowers should prepare themselves for the following questions from the lender/servicer (To help prepare. Conversely. etc. Follow-up each phone conversation with a written letter confirming the main points. insurance premiums (which may be included in certain mortgage payments).b. and send a copy to the lender/servicer. . Assist in the borrower's questions and problems. you have the responsibility to: 1. Provide payment statements. Common Questions From the Lender/Servicer . through the mail. 1. 2. c. Assist in developing a workout program in order to resume regular payments as soon as possible.

pay an attorney to force it from the servicer. fax. food stamps. but before a NOD is actually filed. federal benefits. Most loan servicing companies know about workouts and routinely grant them. You need to write. Step 1: Contact your lender/servicer once you are no longer making your loan payments. Ask a title company to locate a notice of assignment of your mortgage in the county records at the county recorder's office. then. 4. or any other sources of financial help. 5. Many loans . Your upfront sincerity will never harm your case and may bring you respect as well as quicker service in remedying the problem. telephone calls (3-90 days). inNote that many commercial lenders and investment groups hire a separate loan servicing company to collect payments from the borrower and to process foreclosures. 2. Since there are no laws against the giving or receiving of this information. Be prepared to discuss your problem in detail. However. First come the late notices/charges (3-20 days). address and/or telephone. by contacting the lender/servicer before the lender/servicer con tacts you may be an act of good faith that later plays to your advantage. Simply ask the loan servicer for the name. and. then fast action can still stop or delay the regular progress of preforeclosure. What documentation/proof do you have to support your statements? HOW TO WORKOUT GET STARTED ON A person interviews (30-90 days). letters (30-90 days). 1. 5. you may not know who the owner of your loan is. income from jobs. 3. finally. 4. In addition. If your loan is serviced by a loan servicer.2. Likewise. a notice of intention to foreclose (60-120 days). Fast action on the part of the borrower almost always can stop or delay a NOD from being filed. many times it pays to contact the lender directly. Lenders may be more likely to grant a workout after they get to know their borrower on a personal level. After a borrower has stopped making loan payments. visit. most lender/servicers will attempt to make a series of contacts with the borrower. Be open and honest. if a NOD has already been issued. other family members' contributions. public assistance. What are your current and potential resources to meet your expenses? (For example. or otherwise communicate with the lender/servicer. Hire a knowledgeable real estate or loan broker or consultant to obtain this information. When and how can you make up any missed mortgage payments? Be realistic. Not all loans are handled by commercial lenders or loan servicing companies. there are a few ways to obtain their name and number.) 3. If you would like to contact the loan owner directly. telephone. Check your original loan papers for the owner or clues as to who to call for this information. How do you plan to make future payments on time? Be realistic.

along with the suggestion of possible alternatives. In addition. get copies of bills and receipts from utility companies and all others to whom you owe money. You have the right to have your account handled properly and with the full cooperation of your lender/servicer. then keep asking until you receive satisfaction. Sometimes.are carried by relatively small-time private-party investors/lenders who either "carried back" the loan to help you buy your property (see page 11-13). Don't fall into the trap of thinking you don't deserve a workout. And do not agree to any workout program that you feel you cannot follow. Step 3: Cooperate with your lender/servicer. In the case of the small-time lender. If the lender/servicer's range of workout programs is too narrow or inadequate for you. er/servicers appreciate workout suggestions from the borrower. your payment problems are also the lender/servicer's concern since they also must meet obligations through your payments. and . or to go directly to the owner of the loan. page 7-3. to negotiate a compromise. statements from employers. Your continual persistence--combined with knowledge of the correct things to do and say--should persuade the lender/servicer to grant you a workout program. the Social Security Office. Be prepared. friends and relatives. or have to accept the first thing offered to you. Compare their programs to the details of those explained in this book under Types of Workouts. Special Workout Assistance. the welfare department. Strongly present your ideal plan. however. If your first request for a workout goes unanswered. many lendOne strategy might be to get a feel for the lender/servicer's knowledge or range of workout programs through a series of questions. then present an offer Step 2: Substantiate your claims by collecting for your lender/servicer documents which prove and support your statements. Choose a workout that best suits you and is also fair to the lender/servicer. or bought the loan later. doctors. then contact the next person up the chain of command. Also. For example. in order to get a lender/servicer going on a workout. or gives you no satisfaction and unfair treatment. You have nothing to lose and much to gain by listening to and cooperating with your lender/servicer. You may need to climb the chain of command all the way to the president of the loan servicing company. Step 4: Request a workout from your lender/servicer. Assert that you are eager to workout the arrearage on your loan account. page 7-1. although many will. Make your lender a photocopy of this section if it will help them understand or to convince them to grant you a workout. Recent check stubs may also be of help. If a loan servicer's representative seems uncooperative. you may have to explain to them the concept of workouts as taught in this book. Remember. compare them to your own realistic needs. especially if your financial problems appear temporary. Do not automatically expect the lender/servicer to offer a workout. be watchful of the occasional greedy private lender who may want to set you up in a faulty workout in order to foreclose on you later. you may need to persistently request one. And make the time to write down your workout ideas. Next. In fact.

in a weak or flat market.containing the details that are important to you. during good times. value.. or the mortgage servicer do it. each market does require a different negotiation approach. or cause a new one to be filed. At points in the cycle where real estate prices are going up a different strategy in the negotiation must be used than when real estate prices are going down. During different stages of real estate cycles. especially during strong real estate markets. Make sure the 5 elements of a contract are included: time. Appreciates. Either type the agreement as you understand it. Remember. qualifying for most workouts depends upon your current and future financial situation. going neither up nor down in value. parties. if the value of your property has decreased below the value of the . During bad times. going up in value. then you may qualify for a workout. The Market Affects The Lender's Attitude . While in all 3 of these basic markets you can still negotiate with your lender/servicer from a position of strength. a layoff. 2. if you are low on funds now due to such temporary things as an illness. not just FHA and DVA clients. Likewise. Step 5: Seek advice and assistance from your attorney or local housing counseling agency. remind lender/servicers that they may not want a foreclosure on their books. Even though workout programs may be put into effect with just an oral agreement. intent and consideration. especially when you may be able to resume payments soon. And make sure both you and the lender/servicer sign the agreement before implementing the program. the lender/servicer's overeagerness may be played to your advantage. a recession. Also. Call the HUD Housing Counseling Service at 1-800-733-3238 or see page 7-18 for a list of counseling locations. a sudden high expense. Be aware that the direction you take in the negotiations with your lender/servicer over late payments and foreclosure depends greatly on the current economic condition of the real estate market. (Contact an attorney or other appropriate counselor. Determining which of the workout programs would work best in your particular case depends on how soon or how long it will take before your financial situation improves. Many of these agencies are required to counsel anyone in default. or remaining stagnant. or have an attorney. etc. Step 6: Develop a written version of your final workout agreement.Sometimes you may feel resistance from the lender/servicer. Any failure to make every payment on time as agreed can jeopardize the agreement and reinstate the foreclosure. Basically. your property value either: 1. remind the lender/servicers that they are protected by the increasing equity due to market appreciation. place. Then be ready to negotiate and renegotiate until a realistic agreement can be met. For example. or going down in 3. Depreciates. Remains flat. if necessary). it is always better to document it in a letter of confirmation. Local HUD or DVA offices can provide a list of housing and counseling agencies in your area.

find more about real estate cycles on page 8-4 of Option chapter 4 and on page 11-2 of Option chapter 7. the holder of such a Find out the comparables in your neighborhood by calling DataQuick at 800-888-4492. the junior lienholder(s) may approve a heavily modified senior note. For a homeowner in foreclosure. then some lender/servicers may be persuaded to lower your principal amount in a note modification. They charge a fee and accept payment is by credit card. Also. such a maneuver is not very safe.) Also. the lender and any other involved parties. to be effective it should always be put into writing.loans on it. as the financial situation of the borrower may change. But modifications can also help postpone payoff dates and transfer liability. In time. (See pages 7-34 through 7-37 for an explanation and example of a standard note modification agreement form provided by First Tuesday. Since loss of priority equates to a loss of value. and must be of value to all parties (mutual consideration). in a lawsuit. As pointed out on page 1-17. Although the modification may be oral. However. a note modification permanently modifies the terms of the original promissory note. extension 152. then. If a problem were ever to develop in which the modification harmed a junior lienholder. the note modification is easy to hide since it is only required to be attached to the original promissory note and may not be required to be recorded at the county recorder's office. the modification must be agreed upon by the borrower. modifying too many aspects of a note may affect its priority. For example. so may be the necessity to change aspects of the note. Refer to page 7-10 regarding note modifications. if the note of a senior trust deed were modified to add $20. the main goal of a note modification is to reduce the monthly payments substantially enough to continue the mortgage payments and thus avoid foreclosure. heavily modified senior trust deed may be required to yield its senior priority to the subsequent junior lienholder(s). The document that is used to make the changes in the original promissory note is called a Note Modification Agreement. then that may so erode the equity cushion in the property as to threaten the security of any junior lienholders. especially if they are compensated. NOTE MODIFICATIONS Consequently. the lender may require the borrower to pay the cost of a revised title policy which insures the modified note's priority in the chain of title. The promissory note details the loan repayment duty of the borrower. Also. An important thing to remember about note modifications is to never modify the note so significantly that it loses its priority in the chain of title. the promissory note is used as both a promise to repay the loan as well as evidence of the debt itself. Also. take care to suggest a modification the lender will agree to--one that does not threaten priority. Granted. When asked. While most workouts are only secondary agreements that temporarily waive the lender's foreclosure option. the courts might rule in . Some holders of significantly modified notes have tried to avoid losing their senior position by not informing junior lienholders of the threat to their positions and by not ordering a reissuance of the title insurance.000 in back payments. or if the property has appreciated in value.

In any event. May include a lender's fee based on a percentage of the remaining loan balance and charge other current loan fee rates. 7. amounts and payments. Next. Must have valuable consideration for all involved parties as well as mutual consent. lar situation. where applicable (for example. Remember. For instance. 4. only strengthen the position of a junior lienholder. the total mortgage may be recast over a longer period of time and/or at a lower rate of inter- . just in case the lender wants to negotiate and/or explore various options. the parties involved. including punitive damages. be prepared to pay a loan fee based on a percentage of your loan balance and/or the current loan fee rates. a note modification can modify more than 1 provision at a time. while others may have departments already set up to do them. more than 1 6. decrease the possibility of a lawsuit. Nonetheless. Are contracts which are attached to. Note modifications consider): 1. be prepared to climb the chain of command all the way to the top until you find someone who is not only knowledgeable about note modifications. See pages 7-34 and 7-35 for help in filling out these forms. many of the modifications used to avoid foreclosure. calculate the revised figures. if 22 years remain on what was originally a 30-year loan. and become a part of the original promissory note.) Complete as many different contingency plans as possible. in order to lower the monthly payments and avoid foreclosure. 800-794-0494). see A Lender Short pay on page 11-25. be ready to explain the process to the lender/servicer. Identify the modified provision(s). Are not new loans. 3. but also willing to listen to you present your case for one. 2. Can modify provision. Can reamortize a new payment schedule according to the years left on the loan being modified. (For additional information similar to note modifications. nor the trust deed. and. and the Hardship Explanation and Remedy Proposal on page 11-57. lenders who are currently offering refinancing to the general public may be required to give the same benefits to the existing borrower in a note modification. Modify an existing promissory note only.the junior's favor. Do not have to be recorded at the county. In some cases. Be prepared to persistently push for a note modification. Also. if granted. Prepare your presentation to the lender by determining the best and most appropriate modification for your particu(points to 5. then the modified loan should be reamortized over the remaining 22 years). such as reductions of principal or interest rates. 8. and never rewrite the note. the trust deed and the property. thus. then fill out a copy of the forms on pages 7-36 and 7-37 (order copies from First Tuesday. the promissory note. and. Some lender/servicers may have little or no practical experience with note modifications. 9.

then pursuing a note modification may be worth your effort. 3.est. Since lenders call loans and increase rates whenever possible. the many costs of obtaining a loan add up to a lot of money. then approach your lender for a note modification. Installment and payment changes. But if you only want to lower your interest rate and/or principal amount. Interest Rate Modifications .The 2 options available are either to increase the principal amount. not only have you already been approved once before for the same loan on the same property. as well as your odds of avoiding foreclosure. More recently. over the months and years. declining interest spurred another boom in refinancing to the lower rates. they should understand your wishes to lower the rate when the market rates drop. Transferring liability upon resale. Many borrowers who felt stuck with the high mortgage rates switched to the lower market rates by using the note modification. If it is at least 2 percent less than the rate on your loan. Simply. If this new payment will help you avoid foreclosure. 20-year loan. a lower interest rate may be just the help you need to alleviate or even eliminate your present payment problems. The note modification actually becomes a viable alternative to refinancing. Principal amounts. 5. Yet. As detailed in the chapter on refinancing. Balloon payment payoff dates. A classic example is the high rates of the early 1980's when mortgages commonly had interest rates of between 15% to 21%. Modifying a higher interest rate to a lower rate may help you avoid or fight foreclosure. 2. higher mortgage rate for the newer. Principal Amount Modifications . if the current market rates are lower by 2 percent or more Look in your newspaper's financial section or call around to various lenders to determine the most current average interest rate. the note modification exchanges your older. The rule of thumb with interest rates is. A 13 percent fixed-rate. then why should you pay all these costs and hassle all the paperwork when no new money is being requested? Besides.You may want to change the interest rate on your note if the current market interest rates are lower than the rates you are paying. The following note provisions may be modified to help fight or avoid foreclosure: 1. may be recast as a more affordable 9% rate on a 1-year adjustable with a 30year term. and if a reduced interest rate would decrease your exposure to foreclosure. And although you may now be experiencing some temporary financial troubles. interest rates on mortgages rise and fall according to market pressures. by the mid 1980's. but also you have long since established a track record which demonstrates your ability to pay. . This usually reduces your loan payments. Interest rates. For example. 4. with some percentages even higher. then refigure your monthly payments using the new rate. than the rate on your present mortgage. rates had declined to below 9%. lower rate without the many costs or paperwork hassles of reapplying for a brand new loan.

or to decrease the principal amount of your original promissory note. too. it would be to foreclose. it makes sense for the lender to discount to you now and avoid the hassle of foreclosing and reselling. or more if a sales commission is involved. Increasing The Principal Amount: You may want to increase the principal amount of your note. The benefits of this type of modification are: first.500 on a note of $150. or. business colleagues and real estate experts. by $48. Check around for current sales comparables in your neighborhood by reading the real estate sections in your local papers. Decreasing The Principal Amount: You may want to decrease the principal amount in your note if the value of your property decreases below the loans secured against it.000.000. after a period of delinquent.000. It is the lender's easiest way to keep a paying customer in the property. You may want to ask the lender to decrease the principal amount of the loan similarly by 30%.000 loan for a house that was once worth $200. which. if you can prove values have decreased in your neighborhood. If. but now has a market value of only $140.000. or asking your neighbors.500 to original note of $150. Why shouldn't the lender also comply with such a request? Especially after you convince them that it will save them time and money. So. consequently. But. . then you will have a modified amount of $157. This may seem like a bold thing to ask a lender/servicer. making the new principal amount $112. Point out the fact that many lenders have reduced principal amounts in markets of decreased values. For example. you must plan out your case. then you owe $7. Many times the tax assessor complies with these requests. if you originally received a $160. watching real estate TV shows. However.000. in a note modification. to include the total amount of all the missed payments. or their senior agents who have been in the business for a few decades. and second.000 instead of $160. reduced or suspended payments. in this example. or the installment payment changes. family. How long has it been in this market? Where is it headed? Find out the comparables in your neighborhood by calling Dataquick at 800-888-4492. then that is a 30% decrease in its market value. such as through the records of recent comparable sales. unless the interest rate is simultaneously modified downward. What would be the lender/servicer's alternative? Typically.000. the borrower can start over without the pressure of back payments and foreclosure. it provides a method by which the lender is repaid the delinquent amounts. The drawback is that the borrower has to pay a higher monthly payment. then you may have a valid case. extension 152. substantiate it with facts and then keep pushing until the lender complies. Every time property values decrease. lowers your monthly payments. then sell the property at the 30% discount. Call up a few real estate brokers. present it objectively. A fee will be charged and payment may be by credit card. For example.000. and ask point blank what kind of market we are presently in. if you are behind 5 payments of $1. you add the delinquent $7. the property tax assessor is swamped with requests to equally devalue various property tax assessments.500 in delinquent payments.

seller and lender agree to the buyer's assumption and release the seller of any further liability on the loan. including. then your loan may be considered a conforming loan. such as a lump sum amount due on a pre-agreed upon date in the promissory note. the buyer. it provides an inexpensive method by which the lender can keep a paying borrower in a property that has decreased in value and may go to foreclosure. Second. for more on selling a property while in foreclosure. Important Note: Check with your tax preparer regarding taxes on reduced principal. may be accomplished with a note modification.) Balloon Payment Modification . to an investor or investment group). This is due to the fact that such modifications may be construed to be a separate new contract and subject to usury laws. But.This is used when a buyer of your property wants to assume the loan as the responsible party. Often a loan servicing company will service your loan for the investor/investment group. the borrower may be able to negotiate away any delinquent payments in the process of adjusting the depreciated market value. notice that the rates of payment become automatically modified downward when the interest rates and/or principal amounts are modified. especially if it is worth less than the total indebtedness against it. Negotiate for a date that will be realistic for you. This could be a hassle for some lenders. determine the percentage of value the property has lost since you The benefits of this type of modification are: first. at anytime after you received your loan. Many lenders. sell their loans to investors in order to raise the money to make another round of loans to another set of . payment modifications are more appropriately dealt with on a temporary basis through the regular workout procedures men- bought it. and second. savings and loans and mortgage companies. you are notified that it was sold (usually. often. First. the borrower can start over without the pressure of foreclosure and without paying too much for a property that has gone down in value. then contact the lender and ask that the note be modified to make the note due on a later date. See option chapter 7. tioned earlier in this chapter. page 11-25. Installment Payment Modification Modifications in the rates of payment. contact your lender and propose to modify the principal amount by the same percentage. A sign that you may have a conforming loan is if.If your threat of foreclosure is due to missing a balloon payment. Liability Transfer Modifications . This is due to the fact that such modifications may be construed to be a separate new contract and subject to usury laws. then take the following 2 steps. Also. Also. such as forbearance. but not limited to. such as monthly payments and annual lump sums. In this agreement. CONFORMING LOANS If your loan conformed to certain government guidelines at the time it was made. such as forbearance. However. mentioned earlier in this chapter. modifying the due date of a note may be better accomplished in a temporary workout. (See the Tax Consequences of Foreclosure on page 1-24.If your property is worth less now than when you purchased it. relieving the seller of all liability.

In order to prepare for this presentation. CAL-VET LOAN ASSISTANCE Cal-Vet offers a program of home ownership to veterans who live in California. as well as all the possibilities of resuming payments. or new owner of the loan. Determine the cause and severity of the delinquency.borrowers. affectionately referred to as Ginnie Mae). sometimes. and How To Get Started on a Workout on pages 7-5 through 7-7. then falls behind in the mortgage payments. 2. then the servicer will foreclose. If the borrower can present a reasonable case. Cal-Vet completely bypasses the judicial and non- . has become the largest investor in conforming loans through such federallychartered. The federal government. the lenders make their money by charging loan fees and points each time they make a loan. Communicate with the borrower through a progression of notices. 3. In fact. must adhere to strict standards regarding delinquencies. affectionately referred to as Fannie Mae). A qualified veteran who buys a property with the assistance of Cal-Vet. Although the lenders sell the loans at a discount. Initiate an appropriate workout (see pages 7-1 and 7-2 for a list of possibilities) if the borrower displays an ability to complete a workout. study the Types of Workouts on pages 7-1 and 7-2. Common Questions from the Lender/Servicer on page 7-5. They seem more interested in following the rules of foreclosure than being sympathetic to a borrower's particular situation. to help stimulate the loan market by insuring a steady stream of loan money for Americans. This may be beneficial to a borrower who is behind in payments. the lender/servicer may agree to any appropriate workout. if the borrower's loan has been sold to an investment group that uses the loan as collateral for a mortgage-backed security that provides a fixed income. The 5 Keys to Successful Workouts on page 7-4. to personally negotiate a special solution (see If your loan is serviced on page 7-6 for methods in finding lenders). Be aware that many times loan servicers may have an impersonal "I could care less" attitude about cooperating in a workout. but privately-owned corporations such as the Federal National Mortgage Association (FNMA. phone calls. If the borrower can not continue paying as promised and no workout can be agreed upon. Borrowers in default must be prepared to present their case to convince a lender to grant them a workout. which are usually serviced by loan service companies. In such cases. or the Government National Mortgage Association (GNMA. makes direct contact with the investor. affectionately referred to as Freddie Mac). workouts on conforming loans that have been sold to an investor may be best resolved when the borrower goes around the servicer and The servicer of a delinquent conforming loan usually will: 1. faces a foreclosure process that is very different than any discussed in this book. Conforming loans. letters and face-to-face interviews. However. then chances for such a workout may be slim. 4. the Federal Home Loan Mortgage Corporation (FHLMC.

Instead. either is bought out by another lien holder who is protecting a lien against the property. and is set up to. Cal-Vet and the California Code of Regulations In Title 12 of the California Code of Regulations. they can be much more flexible than conventional lender/servicers at working through a default. The primary reason for using a land contract. However. Those sections are as follows: cancellation. or who holds any other kind of lien or charge of . then. is that Cal-Vet does not loan money to buy the property. help the veteran cure the default and remain in the property. then Cal-Vet deeds full title over to the veteran. Cal-Vet sells bonds. they give the veteran many opportunities to catch up on the payments. Cal-Vet is a veterans' service organization and will do everything they can to help the veteran keep the property. When the veteran finishes paying all the payments and obligations as per the contract. which is contrary to ordinary mortgage transactions. To raise money for the purchases. if the veteran does not pay as agreed. In other words.judicial foreclosure processes mentioned on pages 1-16 through 1-22 by creating a land contract with the veteran. To better understand the Cal-Vet foreclosure process. then takes title as the owner with the veteran on title as the equitable interest. any equity that the veteran builds up in the property belongs to the veteran. or is sold on the open market. Before Cal-Vet forecloses on a veteran. the veteran still has all the usual freedoms associated with home ownership. since Cal-Vet owns the property. nor does Cal-Vet insure the mortgage. the veteran loses all interest and rights in the property. If a contract holder fails to comply with any of the terms of the Cal-Vet loan contract. the foreclosure proceeding becomes an in-house function of Cal-Vet. it may be important to look at why Cal-Vet uses the land contract. along with the right to encumber the property and to borrow against it. The § 344. who is referred to in these sections as the contract holder. which is never sold to an outside service company like so many conventional loans. or owner of any equity that eventually accrues. with other qualified veterans and first-time buyers given first priority to purchase. Cal-Vet can control the property in the event the veteran defaults on the payments of the land contract. By becoming the owner. Thus. and thereafter any occupants of the CalVet loan property under a mortgage or deed of trust. the conduct of CalVet is defined in the event of a default and foreclosure by the veteran/borrower. Cal-Vet actually purchases the property for the veteran. so no public money is used. then the land contract allows Cal-Vet to go through a relatively quick process of foreclosure by removing the veterans' equitable interest from the title. Afterwards. all payments theretofore made by or on behalf of the contract holder shall be deemed to be rental paid for occupancy. Since Cal-Vet services the contract. Cal-Vet wants to. and/or arranging a workout. the Department may cancel the contract and thereby terminate the interests of the contract holder and any and all junior lienholders. Upon property. In fact. etc. Default and Foreclosure. Even though Cal-Vet is protecting its interest in the property.

2. At the time of the issuance of a notice of intent to cancel a contract. The junior lienholder shall commence and complete such proceeding as quickly as permitted by law. only the De- . Upon such payment.3. The contract holder and all junior lienholders are responsible for keeping the Department informed by actual written notice to the Department of the proper address to which notices are to be sent. § 344. If the Department decides to cancel the contract. or by first-class mail. the Department may order from a title insurance company a litigation guarantee or similar title report showing the status of record title to the property which is the subject of the contract in default. or by first-class mail. § 344. or by personal service. the Department will issue its deed to the holder of the junior interest. bring the contract holder's account current by paying any arrearage (including all costs of the Department associated with the giving of the necessary notices) to the Department. or by personal service.record against the property. the Department will give 30 days' written notice of its intent to cancel the contract holder and to any junior lien holders for whom it has given its written consent to encumber. (b) The Department and the junior lienholder may agree to complete their respective foreclosure or similar proceedings and offer the property for a cash sale jointly. Notice to Other Lienholders. Before cancelling a contract. In such event. junior lienholders shall have 1 of 3 alternatives upon issuance of a notice of intent to cancel contract: (a) The junior lienholder may cure the default. whether with or without the consent of the Department. Any and all amounts so paid may be added to the contract holder's secured indebtedness to the junior lienholder. return-receipt requested. and shall be effective upon mailing. as deemed appropriate by the Department. The notice shall be given by certified or registered mail. § 344. or upon actual service if given by personal service.1. and keep the account current during the foreclosure or other proceeding necessary to protect the junior lienholder's interest. to or at the last known address of contract file. to or at the addressees shown in the report. The notice shall be given by certified or registered mail. as deemed appropriate by the Department. or upon actual service if given by personal service. The notice shall be effective upon mailing. Alternatives of Junior Lienholders. and upon the Department's verification that the proceeding was regular on its face. Notice of Intent to Cancel. the Department shall then give notice in writing to all junior lienholders shown in the report that it intends to cancel the contract and that they shall have 30 days in which to begin foreclosure or other action necessary to protect their junior lien or security interest in the property. return-receipt requested. At the sole option of the Department. and the default must be cured within 30 days thereafter to avoid cancellation. and the holder of the junior interest in the property upon completion of the proceeding shall have 30 days thereafter in which to pay the Department in full.

344.1. shall result in termination and forfeiture of their interest or interests in the property. and in no case less than 50% of the proceeds. but in no event shall the Department agree to receive nor actually receive less than its pro rata share based upon the respective interest of the parties.1. and the statement may be relied upon for the purpose of issuing a policy of title insurance free and clear of any claimed interests of the contract holder and non-responding junior lienholders. Failure of junior lienholders to respond or otherwise act within any of the periods prescribed by Sections 344. (3) the junior lienholder's demand.2. and the junior lienholder may not act on the Department's behalf nor bind the Department in any way to act in any particular manner. Upon a sale for all cash. and 344. (2) the Department's including costs. An Example of Foreclosure Procedure Cal-Vet As stated above. and the preferred alternative. including its costs. within 30 days after the Department's sale of the property or within six (6) months after the date of such notice. above. and 344. including principal. the Department will notify the junior lienholder of the permitted alternative. the junior lienholder shall deliver its deed of reconveyance or similar lien release to the Department forthwith. (c) The Department may give notice to the junior lienholder that it will complete its own foreclosure or other proceeding and sell the property unilaterally.2.5. The statement may be provided separately or may be included in a notice of cancellation of contract recorded in the county in which the property is located. stating its interest in the property.4.3.partment may accept an offer. and the failure of the contract holder and junior lienholders to respond or otherwise act within the times permitted. Consequences of Failure to Respond or Otherwise Act. whichever is earlier. Cal-Vet is a veterans' service organization and is committed to giving the delin- . above. Upon such payment. Any excess proceeds remaining after these disbursements may be divided between the Department and the junior lienholder pursuant to their agreement. § 344. Upon receipt of such response. the proceeds shall be applied in the following order of priority: (1) costs of sale. up to the extent of the remaining proceeds. Reliance by Insurance Companies.3. the amount thereof. or as otherwise instructed by the Department. 344. demand. and applicable advances and expenses. in which case the Department will pay the junior lienholder its interest in full. The Department shall include in its notice of intent a requirement that a junior lienholder respond in writing within 30 days. interest. the Department may provide a statement to one or more title insurance companies certifying that the notices were duly given as prescribed and that the contract holder and junior lienholders failed to respond. § 344. Title Upon the giving of the notices prescribed by Sections 344.

the veteran is required to purchase disability insurance. once the veteran gets behind in the payments. Cal-Vet will issue a Notice of Intent to Cancel. then a Cal-Vet representative from the district office goes out to the home of the veteran and attempts to make some sort of personal contact. district-by-district basis. A type of repayment plan which allows the vet-eran a six month period to repay the arrearage. 2. The foreclosure procedure for each veteran. In this case the payments in arrears are put onto the end of the contract. study the Types of Workouts on pages 7-1 and 7-2. If. When the veteran originally begins a contract with Cal-Vet. The 5 Keys to Successful Workouts on page 7-4. The purpose of this initial contact is to determine the nature of the veterans' financial problem in order to ascertain if the veteran qualifies for a workout or needs other assistance. If the veteran can present a reasonable case. This option is sometimes offered when the veteran is behind due to medical reasons or loss of job and needs just a little help. Cal-Vet works closely with the veteran. Common Questions from the Lender/Servicer on page 7-5. then by a follow-up letter. is actually decided on a case-by-case. Third Month of Delinquency: If the delinquency is not yet resolved by the third month of delinquency. Among other things. In order to prepare for this presentation. If a veterans' default is due to an injury which prohibits the veteran from working for more than 90 days.quent veteran many opportunities to catch up on the payments before completely foreclosing. the office in the district where the veteran lives is notified. Also. In a kind of extended loan. when the veteran is 1 month delinquent. First Month of Delinquency: Typically. In the early prevention program. A Cal-Vet representative from the district office then contacts the veteran (who is referred to as a contract holder). the main Sacramento office contacts the veteran by phone and with a letter. Second Month of Delinquency: When the veteran falls 2 months behind in payments. the notice invites the veteran to get in touch with CalVet to attempt to workout the default. 3. Cal-Vet can defer payments. At this point. the veteran still does not . property. 4. Some of the workouts Cal-Vet has routinely offered are: 1. This officially puts the veteran on notice that Cal-Vet has the right to cancel the contract as well as the veterans' equitable interest in the Veterans in default must be prepared to present their case to convince a lender to grant them a workout. Cal-Vet can also administratively adjust the account current. Cal-vet may agree to any appropriate workout. then the disability insurance may pay the veterans' mortgage payments directly to Cal-Vet. first by phone. throughout the districts. the Cal-Vet representative explains the options to the veteran. and How To Get Started on a Workout on pages 7-5 through 7-7. although based on the above Title 12 of California Code of Regulations. as well as tries to determine the persons in occupancy and the condition of the property. after the home visitation period.

then the veterans' contract could be subject to cancellation. called the Title 12. the veteran. The Title 12 Action begins when the Cal-Vet district office prepares an inhouse legal action transmittal. pay Cal-Vet. can be free and clear for remarketing by Cal-Vet. has lost all rights to the property and must vacate the premises. then the district office sends out the last and final letter. This letter states that if the veteran does not cure the default within 30 days. if Cal-Vet approves them to do so. of Title 12 of the California Code of Regulations on page 7-13 through 7-14).4. Cal-Vet also notifies any junior lienholders that are listed in the litigation guarantee/report from the title company. The litigation report provided by a If the lienholder(s) fail to respond. which also allows them to respond. whether Cal-Vet or a lienholder ends up with the property. then the lienholder may keep or remarket the property themselves. then Cal-Vet still proceeds with the Title 12 action. by the end of a fourth month period. Sacramento will issue the notice of cancellation of contract. by letter. On the other hand. Cal-Vet refers to this process as their Title 12 action. cure the delinquency. At that point the lienholder can step in. Then. which can take anywhere from 45-60 days. This report is sent to Sacramento along with a litigation report. such as the contacts with the veteran by phone. In any case. and after all workout attempts fail. if the veteran refuses cooperate with Cal-Vet's . The veteran still has 30 days from the date of the letter to redeem the property. which may actually include paying Cal-Vet off depending on the junior lienholder's position (see § 344. if a lienholder does exercise the right to redeem the property by paying Cal-Vet off. as well as the interest of any lienholder. which. the lienholder would have to record a lien of record against the veteran instead of the property. then CalVet begins its cancellation procedure. the title company can remove the veterans' interest in the property. Once the notice of cancellation has been recorded. they send the veteran a precancellation notice/letter advising the veteran that the contract is being cancelled. to Sometimes. The Title 12 process is primarily to eliminate any lienholder so the property title company shows who the junior lienholders are. and receive title to the property.2. Once the district office receives the notice of cancellation from Sacramento. etc. in person. at this point. through § 344. and cure the default by paying the veterans' account current. in order to collect.cure the default. The Title 12 Action and the Junior Lienholder Cal-Vet notifies any junior lienholder of their intention to terminate the veterans' equitable interest and allows the junior lienholder the opportunity to step in. at that point becomes an unsecured loan without the usual powers of foreclosure. This notification puts the Junior lienholder(s) on notice of Cal-Vet's action to cancel the contract. This includes the delinquent account worksheet and all the activities. Fourth Month of Delinquency: If. At the same time. after Cal-Vet has done everything within its means to resolve the delinquency. After receiving and processing this information.

Then. You will have the best chance of convincing the insurer to pay your delinquent payments if you can prove that it will cost them less money to help you than it will to pay off a claim to the lender. Then. A quiet title action is the legal device by which Cal-Vet removes the defaulted veterans' equitable interest from the title to the property. it runs between 12% to around 100% of the amount insured. To locate the Cal-Vet district office nearest you. do the calculations to determine if the insurer would have to pay more by paying the claim or by paying a few of your delinquent payments. regarding help from Cal-Vet when selling a home in foreclosure. Furthermore. and to find out more about the pre-foreclosure help that is available to you. Remember. then Cal-Vet has to enter into a Quiet Title Action. Also. after any liens are eliminated through the Title 12 process. call 800-952- income loss. But. the mortgage insurance company may help the borrower to negotiate a workout with the lender/servicer. In essence. ask what amount is insured. In most cases. PRIVATE MORTGAGE INSURANCE If you were required to buy mortgage insurance when the loan was first obtained. in order to prevent a foreclosure and the expense of a claim. then it makes good business sense for them to do so. CalVet. ask the insurer what percentage is insured. the veteran refuses to vacate the premises. see Cal-Vet Presale Assistance on page 11-25 listed under the heading Mortgage Insurance-Assisted Foreclosure Presales.foreclosure process. if the mortgage insurance company can avoid a claim due to a foreclosure. For example. In any event. Also. Cal-Vet only goes through the Title 12 process after exhausting all means of helping the veteran cure the default. then the insurance company may be able to offer very limited assistance in the case of a loan delinquency or default. or by paying a few delinquent payments. using your particular amounts. Also. If you have mortgage insurance as well as the potential to resume normal payments after a short period of time. as owner of the contract. if. it is the lender who gets the benefit of the insurance. in a case where the borrower suffers a temporary . the mortgage insurer may also pay part or all of the delinquent loan payments. after the veterans' equitable interest has been removed from title. To aid in preparing your calculations. just takes the property back simply by recording a cancellation document which cancels the veterans' equitable interest in the property. the delinquent borrower must show strong signs of being able to quickly recover from the financial set-back. then the veteran will be removed through the regular eviction process (see page 1-22 through 1-24 for more on the eviction process). then contact the mortgage insurer and ask them to pay a few delinquent payments to help you recover financially. by assisting certain borrowers in negotiating a workout. even though you must pay for the mortgage insurance in order to qualify for the loan in the first place.

in your negotiations point out that the insurer has little or nothing to lose by helping you out now with a few delinquent payments.S. by the HUD mortgage assignment program and by the HUD-approved counseling agencies. Basically. Department of Housing and Urban Development (HUD). but then you got into financial trouble again later and lost the property in foreclosure anyway. Common Questions from the Lender/Servicer on page 7-5.If an insurer were to pay some of your payments. ask the insurer for help in negotiating a workout. If the loan on your house is insured by the Federal Housing Authority (FHA). When a borrower gets behind in payments on an FHA-insured loan.) have caused you to miss 3 or more monthly mortgage payments. In addition to asking for help on the payments. If you are unsure about whether or not your loan is FHAinsured. page 11-23. Thus. See A Mortgage Insurance-Assisted Foreclosure Presale. The following section explains the foreclosure assistance provided by HUD. emergency home repairs. The 5 Keys to Successful Workouts on page 7-4. the lender/servicer or servicer must send you a letter of notification (see example page 7-25) before a notice of default is filed. The mortgage insurer has certain clout and can make certain guarantees which may influence the lender to grant you a workout. Typically. the mortgage insurer can help you with both paying a few delinquent payments as well as arranging a workout. you may qualify to have your mortgage assigned to HUD: a. FHA/HUD MORTGAGE ASSIGNMENT This is a type of mortgage insurance assistance. b. and How To Get Started on a Workout on pages 7-5 through 7-7. HUD may provide a more beneficial type of workout than would the private lender. HUD may be able to help you. study the Types of Workouts on pages 7-1 and 7-2. which is a division of the U. divorce. the insurer would simply deduct any prior delinquent payments they had made for you from the final claim settlement to the lender. etc. Be prepared to present your case to convince both the insurer and the lender to grant you a workout. even perhaps permanently changing your loan terms with a note modification. In order to prepare for this presentation. the lender may agree to a workout. (See example workout forms on pages 7-38 through 7-42. If circumstances beyond your control (such as: illness. Ideally. If you can present a reasonable case. strike. Choose the workout that best suits your needs. especially the complex note modification. see Mortgage Insurance-Assisted Foreclosure Presales on page 11-23 regarding help from the insurer when selling a home in foreclosure. death. separation. If you have an FHA-insured mortgage and you have fallen behind in your loan payments. such as lower payments and a longer period of time to pay. ask your mortgage servicer.) HUD could also . unemployment or under-employment. If there is a reasonable prospect that you will be able to resume full mortgage payments in 3 years or less. for more on how private mortgage insurance works. Also. and c.

CALIFORNIA HUD OFFICES Call the nearest regional office and ask for a branch or counseling center nearest to you. 2. study the Types of Workouts on pages 7-1 and 7-2. If you can present a reasonable case. you are fortunate. and The Federal Housing Administration (FHA) is the division of HUD which insures mortgage loans for both new and existing homes and for home improvements and repairs. CA 90015 (213) 251-7412 777 12th Street. You make all past due and . How To Get Started on a Workout on pages 7-5 through 7-7. Phillip Burton Federal Building 450 Golden Gate Ave POB 36003 San Francisco. In order to prepare for this presentation. fail to make monthly mortgage payments. One form of help from HUD is the Home Mortgage Assignment procedures through which HUD becomes your lender. CA 94102 (415) 556-4752 1630 East Shaw. Suite 138 Fresno. Community planning development. FHA insures the lender against loss if you. Common Questions from the Lender/Servicer on page 7-5.take over as the owner and servicer of your loan. In addition. as the borrower. your lender and/or HUD may agree to any appropriate workout. As an insurance company. If you are FHA-insured and meet certain conditions. CA 92707-5764 (714) 957-7362 What is HUD? The Department of Housing and Urban Development (HUD) is a federal agency responsible for a broad range of housing programs. CA 92108-2712 (619) 557-5310 3 Hutton Centre Drive. Be prepared to present your case to convince your lender to grant you a workout. FHA does not lend money. But. Suite 200 Sacramento. Suite 300 San Diego. HUD has special workout procedures to assist FHA-insured homeowners if they are temporarily having difficulties making their mortgage payments. Equal opportunity in housing. and 3. CA 95814 (916) 551-1351 2365 Northside Drive. HUD may help you avoid foreclosure. it would like to keep claims low. The 5 Keys to Successful Workouts on page 7-4. nor does it build homes. CA 93710 (209) 487-5033 1615 West Olympic Blvd Los Angeles. or to convince HUD to accept you into the HUD Assignment Program. Housing production and mortgage insurance. like any insurance company. Suite 500 Santa Ana. Among those responsibilities are: 1. If your mortgage is insured by the FHA. The lender who holds an FHA-insured mortgage must meet special requirements in handling the loan. and The HUD Mortgage Assignment Program on pages 7-18 through 7-20.

) HUD accepts an assignment of your troubled mortgage when circumstances Step 1: Contact your local HUD office within 15 calendar days after receiving a letter from your FHA-insured lender/servicer (see example on page 7-25) which states that you are in default and unless you do contact HUD. beyond your control temporarily prevent you from paying your monthly mortgage payments. However. although the term may be extended. Among other things. Step 4: After you contact HUD. be especially careful to follow all stated time requirements.future payments to HUD under a workout program which you and HUD put together. Throughout the entire process. Fill out the application and return it to . Be specific. you will be sent an application form HUD-92068F (see page 7-27). or a HUD-approved counseling agency. by up to 10 years. you have 15 days to contact HUD. you may lose your right to consideration. The basic steps you must follow are: Step 3: Carefully think through and write down why you believe you will be able to make full mortgage payments within 3 years. before foreclosing. The advantage is that as a government agency. pages 5-4 through 5-6. it will begin foreclosure. Acceptance of a mortgage assignment by HUD requires both quick and careful preparation. pages 5-2 through 5-4. Otherwise. What future events will enable you to resume mortgage payments? It is important to understand that HUD will emphasize your future ability to pay. not present income or credit history. You will be given a case number for your file. There must also be a reasonable prospect that the mortgage will be paid in full by the end of the original term. You must have a reasonable prospect of resuming full mortgage payments after no more than 3 years. Step 2: Carefully think through and write down all the events which led you to fall behind in your mortgage payments. HUD is not profit motivated and has greater flexibility than a private lender devising workout programs. The payments may be temporarily reduced or suspended in accordance with your ability to pay them. and How to Set Up a Successful Budget. Note what happened and when. the lender/servicer must send the borrower a letter notifying the borrower of the possibility of foreclosure and to mention HUD's services. However. Note even minor events which are in any way related to your financial difficulties. as necessary. For help see The Four Steps to Financial Freedom. workable budget. This will require a solid. (See list of HUD offices on this page. the letter states that before the lender/servicer or loan servicer can initiate a foreclosure. it too can and will foreclose if you refuse to meet your obligations once you are able. unless you have a good reason for sending documents to HUD late. A HUD-approved housing counselor agency can be very helpful in this process. Telephone and write HUD to request an acceptance of an assignment of your mortgage.The HUD Mortgage Assignment Program is designed to prevent FHAinsured borrowers (mortgagors) from losing their home even after the foreclosing lender/servicer has decided it is unable to provide further assistance. The HUD Mortgage Assignment Program .

You have 15 calendar days to appeal this decision. Prepared a detailed. Remember: a. Step 6: HUD will then do one of the following: 1. b. It is most helpful to work with a housing counselor or other legal representative in preparing for the conference or for written submissions. You may also want to keep a copy of the completed applications form. HUD will inform you of exactly which requirements you didn't meet and why. Within 15 calendar days. Letters from employers. If you are told by HUD that it does not believe you to be eligible. it is because there is not enough information to make a decision. Attach copies of any supporting documents which are readily available (for example. Step 5: Gather additional supporting documents. income tax returns.) For your safety. send only copies of documents. 3. HUD may refer your application back to your mortgage company for further servicing. A personal conference with someone from the local HUD office will then be arranged within 25 days after the initial decision letter. Prepare your plan to show your ability to resume full mortgage payments within 3 years. pay stubs. d. Try to obtain support for all the statements you have made on the application. debts and expenses. HUD may inform you that it needs more information to determine if you are eligible. Generally. HUD will also accept written submissions. 2. But try very hard to go in person. doctors. These include your lender/servicer's records. Be sure to answer fully those points HUD noted as the basis for not agreeing that you are eligible. The conference can be arranged at a mutually convenient place and time. Where a personal appearance is not possible. Keep your originals. friends and relatives may be used. showing how you will repay the . Copies of bills and receipts are useful to document expenses and debts. HUD will explain in the letter why the decision was made.HUD within 15 calendar days. of information which would change its mind. HUD may accept your applications for assignment. request HUD to review the applications. Be careful in itemizing present income. If you're not clear. don't be discouraged. HUD will arrange for a telephone conference at its expense. It should also inform you of the type c. with the housing counselor. you are entitled to review and/or obtain a copy of all materials in HUD's file on your case. return receipt requested. completed budget which shows your present circumstances. etc. Be realistic in listing potential sources of future income. This is the appeal period. even if you have already prepared one for the lender/servicer. ask them in detail and contact your counseling agency for help. Send the form to HUD by certified mail. Work out a realistic repayment plan. To prepare your appeal.

The HUD agencies can: 1. you can appeal their final agency decision in federal court.In situations where borrowers have no equity and little chance of curing their default. ask for additional time to provide the answers. You should also bring witnesses. Ask your HUD-approved housing counselor for advice. provide not only FHA counseling. Review all your documents and arguments immediately before the conference. Remember. professional organizations whose purpose is to provide advice and assistance to people with housing questions and problems. if you have the ability. These payment plans can change in accordance with your ability to pay. if necessary. by up to 10 years. Your HUD-approved housing counselor and/or a legal representative should come with you and speak on your behalf at the conference. You must make them according to the terms of the payment plans which you have worked out with HUD. Services are available to homeowners as well as to people preparing to buy or sell a home. Provide housing counseling to individuals in the community. e. 2. the term of the original mortgage can be extended. such as CCCS. 4. remember. More about the procedure for accepting a deed-in-lieu of foreclosure is found in Option chapter 8. If HUD accepts the assignment. Deed-In-Lieu of Foreclosure . To do this. Also. you will make all future mortgage payments directly to HUD. This savings can help you cure part of the delinquency. Step 7: Attend the conference. 3. Be sure to bring all supporting documents as well as your original assignment applications. and cannot sell their property nor improve their immediate financial condition. who can support your statements. Assist people in understanding all the rights and responsibilities of home ownership. put as much money as possible aside during the time you are being considered for assignment. Assist homeowners who are having problems making their . These usually are nonprofit. Act in behalf of individual clients. HUD-approved Counseling Agencies Housing Most HUD assignment programs are handled through HUD-approved housing counseling agencies. If HUD rejects your assignment for the second time but you still feel that you qualify and that HUD's decision was wrong. If unexpected questions are raised and you are unable to answer them. you will need a lawyer. HUD may consider letting them out of their loan obligation by accepting from them a voluntary deed to their property known as a deed-in-lieu of foreclosure. During the conference be polite.missed and/or reduced mortgage payments. Step 8: HUD will notify you in writing of its final decision (see example page 7-30): 1. page 12-1. 2. Many of these agencies. This money should be placed in a savings account. but also help the homeowners with both conventional and VA loans. firm and as clear as possible.

or the lender's servicing company (see . This section focuses on loan defaults by borrowers who live in the property (the DVA deals with investor defaults somewhat differently). Your lender/servicer and the local HUD office can provide you with a list of HUDapproved housing counseling agencies in your area. Initially. the DVA wants borrowers to first try working out the loan default with their lenders. while the resold foreclosures are typically bought by real estate investors who do not intend to live in the property. or guaranteed loan gets. including applications processes and eligibility requirements and assist people in applying for appropriate programs. Work with and refer clients to other community agencies and organizations which can offer other assistance and benefits. Generally. or 2. In addition. Creating loans for buyers of resold DVA foreclosure properties.000) obtained through a commercial lender/servicer. The Department of Veterans' Affairs' Loan Servicing Guide for the Los Angeles Region states that "distressed borrowers should not suffer from an inflexible. Call the HUD agency nearest you for an appointment (see list below). DVA PREFORECLOSURE AVOIDANCE The Department of Veterans' Affairs (DVA) Preforeclosure Avoidance Program is a special type of mortgage insurance assistance. being purchased by non-veteran buyers who plan to live in the property." In other words.mortgage payments in their contacts with the lender/servicer and/or HUD. However. When the borrower originated loan. many of the resold foreclosures today are 6. Explain available HUD programs. but if they discover an uncooperative borrower. A Lender Workout . DVA gets involved in the real estate loan business in 1 of 2 ways: 1. The DVA is committed to doing everything in its power to help borrowers in foreclosure keep their houses. 5.Initially. recommends that the seek help in the order: of a DVA a DVA behind in the DVA borrower following 1. Guaranteeing for veterans a portion of their home loan (currently up to $36. their loan payments. Likewise. HUD provides staff training and other support services on an ongoing basis. the DVA guaranteed loans require veterans to occupy the property as their primary residence. Or check your telephone directory under "US Government Agencies" for the HUD office nearest you. collection routines should not allow chronic delinquents to pay at will. the DVA "foreclosure avoidance" program is designed to do everything possible to help defaulting borrowers keep their houses. then the DVA will rule that it is in the best interest of the DVA to foreclose immediately. standardized system. Most of the HUD-approved housing counseling agencies receive some money from HUD as well as from community organizations in order to provide these professional services.

Mortgage A Lender Workout Once the borrower of a DVA guaranteed loan becomes 61-105 days delinquent. DVA Compromise Offer Program When the borrower can no longer continue paying. a computer file on the delinquent borrower is set up on the DVA's Loan Claims System (LCS)." Basically. . little chance of curing their default. But before the DVA gets involved. the DVA may help sell the property by loaning the borrower any shortage incurred by the sale. 3.The DVA may purchase the defaulted loan and take over the servicing when the foreclosing lender/servicer feels a workout is impossible. the DVA may consider letting them out of their loan obligation by accepting from them a voluntary deed to their property known as a deed-inlieu of foreclosure. for more on the DVA Compromise Offer Program. the lender/servicer and borrower are required to try to negotiate what is commonly referred to as a "workout. If the veteran can present a sound case. a workout is a process of renegotiating the terms of the loan to fit your current shift in finances. Immediately. and cannot sell their property nor improve their immediate financial condition. page 7-5. study the Types of Workouts on pages 7-1 and 7-2.If the borrower cannot workout the default problems with the lender. DVA Supplemental Servicing . The 5 Keys to Successful Workouts on page 7-4. Veterans in default must be prepared to present their case to convince a lender to grant them a workout. Supplemental Program Servicing Supplemental servicing does not actually begin until the lender/servicer notifies the DVA that its initial attempts to negotiate a workout with the borrower have been unsuccessful. and How To Get Started on a Workout on pages 7-5 through 7-7. DVA Refunding Program . 5. See page 11-23. then the borrower can ask the DVA for help known as supplemental servicing. or to convince DVA to accept them into the DVA assistance programs listed above. Common Questions from the Lender/Servicer on Insurance-Assisted Foreclosure Presale. as we mentioned earlier. 2. the lender/DVA may agree to a suitable workout. yet the DVA sees the potential for the borrower to eventually continue regular payments. the lender/servicer notifies the DVA before an actual NOD is filed.pages 7-1 and 7-3 for related material). In order to prepare for this presentation. The DVA procedure for accepting a deedin-lieu of foreclosure is found in option chapter 8. Deed-In-Lieu Of Foreclosure In situations where borrowers have no equity. The following sections will explain some of the details of each of these programs. The purpose of the DVA supplemental servicing is to analyze the veteran/borrower's situation and to help negotiate a lender workout in order to give the veteran every opportunity to cure the loan default during a period of temporary financial distress. page 12-1. 4.

telephone calls. and How to Set Up a Successful Budget. then the DVA may have to pay out on it and the borrower may be legally liable to reimburse the government. The LSR's contact with the borrower. workman's compensation. local housing authority. veterans' service organizations. phone calls can establish personal The DVA financial counseling requires the full cooperation of the borrower in a face-to-face meeting to discuss the borrower's financial condition in detail. Besides saving time and providing an immediate response. social security benefits. vocational and educational. labor unions. includes not only letters. Telephone Contact . book.The DVA will provide in-house financial counseling as well as direct the borrower to nonDVA counseling/relief offered through Federal. a field report should be made. The LSR is required to keep an open mind. Finally. but also to confirm agreements made between the borrower and the DVA. food service programs. Field Visits . if you want to avoid such a visit. The Four Steps to Financial Freedom." So. pages 5-2 through 5-4. the letter warns that if the borrower fails to repay the loan.The telephone is a primary tool for the DVA to communicate with the borrower. However. then the . local and private organizations such as welfare. state veterans' service office and FEMA/disaster assistance. churches and other charitable organizations. Counseling . unemployment. then the DVA invites the borrower to contact them. It urges the borrower to contact the lender/servicer. to explain the lack of payment and to detail when the regular payments will be resumed. pages 5-4 through 5-6.DVA Computer Letter #1 Supplemental servicing begins with a computer generated letter from the DVA (see example on page 7-32). marriage counseling. to be as friendly and understanding as possible and to not make predetermined decisions about the borrower. since nearly every option to fighting foreclosure and winning involves reorganizing your finances. DVA Loan Service Representative (LSR) . as recommended in The Servicing Guide. employment services. "when attempts to reach the borrower by phone and mail have been unsuccessful. a Letter Contact ." This means an LSR will come to the borrower's house "for a face-to-face interview" and "for an opportunity to determine the condition of the property. In addition. and field visits to the borrower at home.Letters are used by the DVA not only to request payment or personal contact with the borrower. the letter asks the borrower for extensive financial data and offers 3 kinds of counseling: financial. The basic points covered in the counseling are virtually identical to the elements of financial reorganization as characterized in Option Chapter 1 of this communication and permit discussion of possibilities.The DVA "guide" states. If satisfactory arrangements to reinstate the loan are not made with the lender/servicer.The goal of the LSR is to provide for the borrower as much help as possible and to gather facts about the borrower's present situation. sometimes a field visit may be necessary for other reasons. food stamps. State. This point can not be made enough. then respond cooperatively to the DVA letters and phone calls. but may also include counseling.

obviously. DVA Fact Finding . who has ability to pay. when the partial payment may be returned within 10 days of receiving it with a letter explaining 1 of the following reasons: 1.Housing expense. Reason for Nonpayment: It is necessary to determine what caused the borrower's payments to be in arrears. Obtain the borrower's work telephone number. Domestic Situation: Tactfully determine the domestic situation. child support. final divorce). real estate. when will payment be made. 1. it is interesting to note that the DVA will scrutinize the borrower's finances. 2. Financial Status: Adequate financial information is needed to realistically determine whether a payment proposal is based on ability. an accident which causes curtailment of income. Since most of the other options to fight foreclosure require some form of reorganization. length of employment and type of work. An experienced counselor can usually distinguish between an 'excuse' and a legitimate 'reason' for nonpayment. Rental income from the property has not been turned over to the lender/servicer to pay off the default. who occupies the property and the name of each other's attorney. jewelry. Partial Payments . they both should be contacted. Reason for Nonpayment. home appliances and furnishings. "the following information/facts should be obtained and documented: 1. divorce proceeding begun. ASSETS Cash. health and life insurance premiums. except under the following conditions. automobile(s). Determine who is to make the loan payments. alimony. If both parties are obligated in the loan. Employment: Determine employer's name and address. in much the same way as the borrower would have to do in the financial reorganization procedures recommended in Option chapter 1 of this book (see page 5-2). clothing purchases. 3. Domestic Situation. collections. find out the couple's status (mutual separation.Real estate loans. in effect. If there are marital problems. groceries and household items. 4. extended illness. The prospects of curing the default should also be determined. 4. Financial Status. education loan. securities. EXPENSES . death and natural disaster. 2." Again. boats and recreational vehicles. 3. entertainment. etc. 2. INCOME . automobile loans. stating. Some acceptable causes are: unemployment. installment contracts.Source of income and monthly amount received. legal separation.serious fighters must move straight to the Option Chapter 1 beginning on page 5-1 to start reorganizing their finances now. Employment.The DVA will accept payments of less than the full amount due. etc. it makes good sense to start reorganizing your finances as soon as possible.The Servicing Guide directs the activities of the LSR. LIABILITIES . The payment is less than 1 full monthly payment (unless . installment payments.

In such a case. A conclusion to foreclose must be substantiated by documentation of the servicing efforts.If a workout or repayment plan is not agreed upon between the borrower and lender. or. the DVA's LSC computer may generate a second letter (see page 7-33) notifying the borrower of the lender/servicer's intention to foreclose. no loan should go to foreclosure without personal contact having been made with the borrower or every reasonable effort to do so is expended. 3. 5. except maybe when the property has been abandoned or the whereabouts of the borrower is un- . The payment is a check and the situation requires cash only. After 6 delinquent months have gone by without a written repayment in effect. A Notice of Default has been filed. unless reinstatement of the loan would be illegal or would adversely affect the dignity of the lien on the property.The DVA is required to accept any payment in-full up to the moment of the foreclosure sale and must then reinstate the defaulted loan.Any DVA decision to allow a foreclosure to take place is not automatic. or the circumstances (abandonment. The payment is less than previously agreed to in a repayment plan. DVA will classify a default 'insoluble' only when all reasonable efforts to effect a cure of the delinquency through adequate servicing have failed." Preforeclosure Analysis . The payment jeopardizes the lender's lien position. The Servicing Guide states. "as a matter of policy. 7. then the lender/servicer may notify the DVA of its intention to foreclose. The payment is less than 50% of the total amount due (unless otherwise 4. 8. unless another plan had been previous agreed upon. waste or removal of security) do not warrant further indulgence.otherwise agreed to in a previous payment plan). 6. Payment In-Full . agreed to in a previous payment plan). Lender's Notice of Intention to Foreclose .

. and to determine what action might avoid foreclosure. detailed interview with the borrower... willingness to cooperate.. and motivation. A preforeclosure analysis must be conducted to officially retrace and document all of the steps made by the DVA to help the borrower avoid foreclosure. the prospects of curing the default............ the borrower proves to the DVA an ability to resume normal monthly payments. The preforeclosure analysis provides an opportunity to look at the borrower's attitude. The decision is based on the judgment of the DVA after weighing both the interests of the borrower as well as the DVA.........DVA refunding is when the DVA purchases the defaulted loan from the lender/servicer in order to help the borrower avoid foreclosure." DVA Refunding Program .. A preforeclosure interview should be carefully documented.............1-800-827-1000 .... both short-term and long-term..1-310-827-1000 San Diego. "before the foreclosure decision is made. But the decision to refund a loan comes only after careful analysis of the borrower's situation and attitude. Once the lender/servicer considers it bad business to grant further relief to the borrower. after a temporary set-back such as illness or unemployment.....known... According to The Servicing Guide...1-510-637-1325 Los Angeles. CALIFORNIA REGIONAL DVA OFFICES: Oakland.... Refunding occurs when the DVA is convinced the default may be cured through various other relief measures... Typically. The purpose of the analysis is to gain a thorough understanding of the nature and reasons for the default.. refunding can be a fresh start.1-619-297-8220 National. Once granted... it is imperative that there be a meaningful. the lender/servicer notifies the DVA of its intention to foreclose.

HUD Letter of Notification #1 .

HUD Letter of Notification # 2 .

HUD form 92068F 1 .

HUD form 92068F 2 .

HUD Letter of Notification #2t .

HUD Letter of Notification #3 .

HUD Letter of Notification #3a .

DVA Letter #1 .

DVA Letter #2 (NOTE: FIND EXHIBIT 7 IN DVA GUIDE) .

Note: Check and enter items in provisions with boxes and blanks if the provisions are intended to be included in the agreement.Preparing the Agreement to Modify A Promissory Note Before modifying a note. enter the new amount of the payment and enter the date the change is to take effect. 1. 5. First Tuesday's Form 426 (see page 7-37) sets forth all the necessary elements for a note modification including: • facts -. 5.3 Check the box if the note's due date is to be changed. 2.1 and 4. Existing financing: If the trust deed securing the note is junior to existing senior encumbrances.sets forth the changes in the note's terms and the consideration the lender is to receive on modification. 1. 5.4 Check the box if the Borrower is to begin making impound account payments. Enter the . Enter the new due date. Enter the new interest rate and the date the rate will go into effect.identifies the note being modified and all junior and senior liens encumbering the property. Identification: Enter the date and place the note modification agreement is prepared. 3. Note: Advances are made to cure underlying defaults which impair the lender's position. Enter the name of the Borrowand er/Trustor and Lender/Beneficiary under the trust deed. the lender and borrower must first agree to the terms of the modification. the recorder's instrument number. such as delinquent taxes. 2. The note: Enter the date on the note. Facts: 1. insurance premiums.1 Check the box if the interest rate is to be changed. enter the appropriate information in 4. enter the appropriate information in 3. and the county of record. 2. Enter the assessor's parcel number.1 Enter the legal or common description of the property. and assessments.3 Enter the balance in any impound account held by the Lender.2 Terms: 5. 1. Note modification: Enter and check the boxes applicable to the note modification. Trust deed description: Enter the date the trust deed was recorded.1 and 3. 2. and • provisions for title insurance subordination of junior liens. Junior encumbrances: If the trust deed securing the note is senior to any junior trust deeds.2 Check the box if the amount of the monthly payments is to be changed. 5.1 Enter the terms of the note -.the remaining balance on the note and the date through which the interest has been paid. • terms -. and the face amount of the note. the name of the Lender.2 Enter the amount of any late charges which have accrued and remain unpaid. senior loans. the name of the Borrower who signed the note.3 Enter the amount of any advances which have been made by the Lender.2 Enter the description of any additional property securing the note.2 4.

• the Borrower executing a Request for NODq on senior trust deeds. It does not apply to the principal and is characterized as prepaid interest. 9. Enter the legal description of the new security. 11. such as on subordination to a construction loan." etc.2 Check the box if the Borrower is to pay the Lender's costs incurred to modify the note. 7. 7. 6. such as "on presentation. Escrow opening: Enter the number of days anticipated to perform and close escrow. hazard insurance premiums. Enter the amount of principal reduction. A Lender's ability to require an impound account is restricted. Escrow closing agent: Enter the name of the es-crow company which will handle the note modification. and mortgage insurance premiums.6 Check the box if additional consideration is to be given to the Lender.5 Check the appropriate box if the Borrower is to deliver additional security or substitute security for the note. Acceptance period: Enter the number of days the Borrower or Lender has to accept the offer. 8. or releasing/substituting security.1 Check the box if a buyer is to assume the note with the Lender and a modification of the note can be demanded by the Lender for waiving any due-on-sale clause. Note: The Borrower is required to pay the escrow fees and charges. 7. Additional modifications: Check the box if modifications to the note or trust deed are to be made such as adding: 7. Note: The Lender might require a reduction in principal if the trust deed or note modification increases the Lender's risk of loss. 11. 11. Title insurance: Enter the name of the title insurance company insuring the trust deed. Note: The offer will automatically expire if it is not accepted (signed and delivered) within the specified time period. 10. Consideration: Check the boxes for the consideration the Lender is to receive on modification of the note. Note: The Lender often collects impounds to pay property taxes and assessments. • a buyer signing a release and waiver on dispute with a carryback seller. Enter the amount the Lender is to collect." "three days. 7. or • the Borrower authorizing the Lender to run a credit check.advance impound payment due on modification. Enter the terms of any senior encumbrance on the new security.1 Check the box identifying the type of title insurance policy desired. Requires escrow to be opened on acceptance. leasehold payments.4 Check the box if the Borrower is to make a principal reduction payment. 7. or and prepayment • a due-on-sale clause in the trust deed 7. such as: •a late charge penalty. Enter the amount of the Lender's costs. Note: The payment of a bonus or points is not part of the principal or costs.3 Check the box if the Borrower (or buyer) is to pay any bonuses or points to the Lender.2 Check the box if an existing policy will be endorsed to insure the Lender's title .

3 Conditions closing on the issuance of title insurance showing title subject to current property taxes. Costs: Requires the Borrower to pay all costs incurred to modify the note. confirming the terms and current status of the underlying loans. 11. 11. Thanks to Jacqueline Fontana and First Tuesday . Brokerage fee: Enter the name of the brokers. Enter the total fee due all brokers to be paid by the Borrower. Check the box selecting the type of policy. recorded CC&Rs and the existing trust deed(s) identified in 3. 12.5 Requires the Borrower to pay the title insurance policy premium. Note: Title insurance companies will require a specific subordination agreement from junior lienholders before insuring an existing trust deed on the modification of its note. 13. Broker's signature: Obtain the signature or initials of the broker or his authorized agent. 14. Obtain the lender's signature if he is making or accepting this offer.4 Requires any junior encumbrances listed in 4 to sign a specific subordination agreement. Signatures: Lender's signature: Enter the date the Lender signs and his name and address. Borrower's signatures: Enter the date the Borrower signs and his name and address. Obtain Borrower's signature if he is making or accepting this offer. and enter the date of approval.position. Beneficiary statement: Check the box if the Lender is to be provided a beneficiary statement from each of the underlying trust deed holders. 11.

NOTE MODIFICATION .1ST TUESDAY FORM 425 .

AGREEMENT TO MODIFY .1ST TUESDAY FORM 426 .

HUD FORBEARANCE FORM 1A .

HUD FORBEARANCE FORM 1B .

HUD FORBEARANCE FORM 2A .

HUD FORBEARANCE FORM 2B .

) .HUD FORBEARANCE FORM 3A (Duplicate and add to this plan paragraphs 3 through 8 from pages 7-40 and 7-41.

4. 5 different categories of loans may be available: 1. 2. a friend or REMEMBER a key factor about refinancing: almost always your total monthly mortgage payment WILL increase depending on interest rates. depending on their credit rating (see pages 8-11 and 8-12). A conventional first mortgage refinance. the two most 3.HOW TO WIN BY REFINANCING YOUR PROPERTY Refinancing as an option to stop foreclosure means borrowing on the equity in a property in order to have enough cash during tight financial times to remain current on the mortgage payments. A hard money loan. An equity line of credit. A second or third mortgage. Money from relative. 8-1 Although eligibility for all refinance loans is decided on a case-by-case basis. loan cost and an increased principal amount. For homeowners facing foreclosure. LOAN QUALIFICATION . This chapter discusses some of the basic refinance techniques using the equity in a property which may be helpful when foreclosure threatens. Fortunately. and 5. the marketplace offers a wide variety of loan programs.

some of the basics of how equity and credit interact: 1) in the case of a borrower who has both good credit and a lot of equity. What is the borrower's history? credit 8-2 . a variety of lenders probably will make the first 3 loans listed above available at a low cost and a low interest rate. Is there a large enough ratio of equity in the property to loan on? In a nutshell. if the borrower's credit record is blemished. 2) on the other hand. a 2. such as with many late payments.major questions that lender/servicers will ask are: 1.

if you have $50. And it would be pointless to do a complete refinance on zero equity. Sometimes. If you do not want to keep a house with zero equity. such as to a homeowner.) have a good chance of being renegotiated instead of refinanced. For example. the lender will loan $80. then you may find relief from foreclosure by selling the property (Option chapter 7). With .000 in loans/liens against a property valued at $100. the term loan-tovalue may be used to describe an existing loan on a property or the total of several existing loans and liens. For instance. etc. Depending on the lender.M. back taxes. The LTV may be defined as the percentage of a property's appraised or market value on which a lender may loan. The Equity In Your Property Equity may be defined as the value that an owner has in real estate after deducting all monies that are owed against the property. then 80% is the LTV. Please note that if there is very little or even zero equity in your property. In recessions or tight money markets some lenders may offer 100% LTV's under certain circumstances. "How To Win By Changing Your Mortgage Terms. Determine the actual equity in your property by deducting the total debts from its market value (see formula. then you may be eligible for 1 or more of the 3 loans mentioned above.000. They want to leave a percentage of the equity as a financial cushion to offset any potential unforeseen costs. unless you can figure out some way it will otherwise help ease the foreclosure threat beyond those techniques offered in Option chapter 3." Even such typical refinance targets as adjustable rate mortgages (A. But how much How To Win By Refinancing of the equity will lenders loan on? Refinance lenders virtually never loan on the full value of the property. no matter how large the equity.000 while maintaining a cushion of $20. or even back to the foreclosing lender/servicer (Option chapter 8). then you have an existing 50% loan-tovalue ratio in your property.R. then a hard money loan with high costs and interest rate may be the only loan available. or a bankruptcy. In other words. judgments. nor on the full amount of the equity. if you do have equity in your property. This cushion is determined by the loan-to-value ratio (LTV) which differs from lender to lender as well as month to month depending on the marketplace. Me-thods for determining the current market value of a property are explained in detail in Option chapter 7. liens. such as loans.3 NOD. LTV's run the gamut from as high as 95% for some government guaranteed loans to as low as 5% for some hard money loans.000. or quit claiming it over to an investor. often as a gimmick. such as with foreclosure or with depreciation in the property's value during a recession. then refinancing is not a realistic option since there is no equity for an equity line of credit or for a hard money loan.000 and the average lender wants a cushion of at least 20%. page 6-9). if a property is valued at $100. On the other hand.

then. But be prepared to demonstrate to the lender your future financial prospects. In other words. then the higher the amount of equity that is available. Before talking with the lenders. 50% of the property value tied up as security for a loan or loans. However.000 in this case. compare the existing loan-tovalue figure you come up with on your property to the lender's loan-to-value ratios in order to quickly determine the amount of available equity. but also into the category of a bad risk. Of course. Statistics prove that eventually you may lose your home anyway. then you may be eligible for all 3 of the above loans.000 property wanted a loan from a The chart on page 16-37 also shows how to tally the outstanding loan and liens against a property and then subtract it from the estimated property value to get the existing loan-to-value ratio against that property. if you have received a notice of default (NOD). assume that a homeowner with 50% equity in a $100. Of course. every loan is decided on a case-by-case basis. securing the loan ultimately depends on the homeowners's credit rating. Whether or not you have received a NOD. If your credit is good and you have not received a notice of default (NOD). the remaining 50% is all equity. or $30. the lender may be persuaded to loan if the financial circumstances which created the foreclosure situation are only temporary. Your Credit Rating Now that you have determined that you do have some equity available. Or save time by giving your existing loan-to-value ratio to a mortgage broker(s). then refinancing can become an effective tool. which is the portion of "available" equity in the property that remains after the 20% cushion is deducted. you may be disqualified for any loans except a hard money loan. It would be better to sell and pocket the equity now than to give it away to a lender later. So. generally. such as with an illness or job loss. However.4 How To Fight Foreclosure And Win With Honor lender who uses an 80% loan-tovalue ratio. Is your income earning power interrupted temporarily or permanently? Are you truly between jobs or are you suddenly disabled for life? Do not use refinancing as a bandaid treatment for a perpetual or an incurable problem. The difference between the borrower's 50% equity and the lender's 80% loan-to-value equals 30%. who may be very useful in interpreting your particular case and then finding an appropriate lender. lender's 30 day late payment limit. the lower your existing loan-to-value in a property. a NOD usually is issued after the mortgage payments are 3 or more months delinquent which places the homeowner not only far beyond most . determine which of your particular circumstances is leading you toward foreclosure. if you want to use part of the equity in your house as a one-time remedy to bridge an unexpected gap in your income. Nonetheless. for illustration purposes. the lender will want to know whether your credit rating is good or bad (see pages 8-11 and 8-12). When shopping the different lender loan programs.

Lenders Change With the Real Estate Cycles Have you noticed whether the current real estate market values in your neighborhood are appreciating.5 If your credit rating was blemished prior to receiving a notice of default. or not until you received the NOD. Depreciates. Land values are rising and your income promises to resume or increase soon. Chances would then be excellent that Determine the current market by asking neighbors and real estate agents whether houses in your neighborhood are going up in value. or after you filed bankruptcy. A fee will be charged and payment may be by credit card. During the 3 main real estate cycles your property's value either: 1. extension 152. neither gains nor loses equity. Generally. Read more on calculating market values later in Option chapter 7. have very little equity. How To Win By Refinancing you would qualify for a premium loan at a reasonable rate. then you may be able to clean up your record by using 1 or more of the methods suggested in the companion primer on credit repair. 3. Here's a best case scenario. Best and Worst Case Scenarios To illustrate how the above factors play off each other. when real estate values are going up the cushion in a property virtually grows. Thus. or. property values are declining in your neighborhood and a disability has left you permanately without income. or are remaining flat. And since . you would have received a notice of default. page 11-2. 2. but not impossible if you are willing to pay enough (except for the possibility of help from the Consumer Credit Counseling Service or a HUD counseling agency mentioned in Option chapters 1 and 3 respectively). In a worst case scenario. You have a high equity. Chances of obtaining a loan under these circumstances are very slim. so lenders make loans easier to obtain by cutting loan costs in an effort to compete for business. another key factor about refinancing: the more your particular situation leans toward the worst case scenario. the higher will be your costs to refinance and the lesser will be your selection of willing lenders. they usually offer some very low loan costs and interest rates in order to attract customers. generally speaking. gains equity. Remains flat. contrast a worst case scenario with a best case scenario. loses equity. When property values are going down. You are behind in payments. Find out the comparables in your neighborhood by calling Dataquick at 800-888-4492. even though many lenders get tighter. Appreciates. or have been flat over a period of months or for a year. but not yet in foreclosure. down in value. depreciating or stagnant? The current real estate trends will affect the lenders attitude toward loaning money.

The Equity Line of Credit Although the equity line of credit is probably the best overall refinance option of the 3 mentioned. but: (1) are short of funds to pay the mortgage payments. then quickly shop around for the best equity line of credit or a conventional refinance.000. hard money may be the only loan available to you. the interest can be written off on your tax return. if you have not yet received a NOD. especially during a slow market. The interest rate is variable.6 How To Fight Foreclosure And Win With Honor circumstances. So. And on lines of up to $100. ask the defaulted lender to holdoff filing at least a month while you look for refinancing. The fees and the interest rate will be higher for equity lines secured by a property other than the one you occupy. (2) have not been paying for a month or more. You pay interest only on the money you borrow. First. Even if you have received a NOD. many lenders may balk if you have received a Notice of Default. Unlike an adjustable rate mortgage. Generally. If you decide to go for a few years without a balance. The difference becomes the amount of your equity that is available to borrow on. which also features variable rates. Whether you have received a NOD or foresee the possibility of one soon. and the rate cannot exceed a rate cap of between 5% to 10% as the market rates cyclically rise. the equity line in today's mortgage market offers a seemingly streamlined ride to fast cash in 2 to 4 weeks at comparably low costs and low interest rates. In fact. lenders definitely do not want to repossess a house. under certain circumstances. you still might qualify for the conventional or equity loan. this may be an opportune time to take control and negotiate a refinance package which could include both extra money for general spending as well as money to cover the back mortgage payments. Yet. Prequalify yourself on all 5 loans with The Prequalification Worksheet on page 8-17. THE 5 TYPES OF LOANS A Notice Of Default will vastly diminish your borrowing power. Do not let this be discouraging. many of the new-breed bank equity lines remain open for 10 to 25 years. or (3) have actually received a letter or phone call from the lender threatening to foreclose if you do not pay--then this may be a last chance to look into a loan on your equity. once you have received a NOD. lenders can be persuaded to lend under certain . while some equity lines must be renewed annually. then you will only be charged a nominal annual maintenance fee of about $60. such as with a cosigner or collateralized by a second piece of real estate. There are no prepayment penalties with equity lines. the principal loan balance on the equity line can be paid off without canceling the right to reborrow on the line later. Most equity lines are offered by the major banks using a LTV of between 70% to 80% minus any existing loans against your property.

50% which is added to the lender's spread of 3. When the interest rates do begin to rapidly swell. convert the equity line into a regular year closed-end. The line is reevaluated depending on your repayment sched ule. Credit cards are openended. that benchmark rate averages 6. It goes upward as funds are needed (to a predetermined time and dollar limit) or downward to a zero balance as payments are made toward both the monthly interest charges and the principal loan balance. the borrower who has $10.50%.000 out at 10% pays $83 per month in interest only. In essence. or ends once it is paid off. For instance. if you still have a balance on the line at the end of the specified time period. during 1 month's time. Usually. the borrower becomes obligated to 2 types of payments: (1) to repay the money borrowed. That means you can no longer borrow against it.50% to some publicly advertised variable benchmark rate. While this "floating" interest rate may be a blessing to the borrower in low markets.50% = 10%). Although the lender's spread will not change.5% up to as high as 23%. if. The interest rate is usually calculated by adding a fixed "lender's spread" or gross profit margin of about 3. When rates suddenly swell to . they order and pay for all the necessary processes such as appraisal and title. employment and equity setup. How To Win By Refinancing then 10% equals the total interest charged on your loan for that month (6. each month the interest rate charged for the loan may be different. Some banks will. things can get ugly quickly for the equity line borrower who has a large loan balance and no fast means by which to pay it down. In other words. it can be dangerous in high markets such as during 1981-1982 when rates nearly doubled from 11. This instability of rates is actually 1 of the more beautiful aspects of an equity line since the borrower's principal loan balance is also allowed to float. amortized--principle and interest-mortgage. Your application can be taken over the phone in less than 15 minutes and is based on income. The long list of costs routinely charged for either the complete refinance or the hard money loan are not currently charged on the equity line by many banks in most cases. Some banks actually charge nothing or just a nominal fee of less than $100. A closed-end loan is a one-time loan that closes. It could be every year. Predictably.50% + 3. Thus. It could be once every 10 years.7 A line of credit in banking is called an open-ended loan. such as the interest rate that the bank pays out for a 6-month jumbo certificate of deposit. Start shopping for an equity line by calling around to the major banks listed in the Yellow Pages and asking for current rates and costs. like a regular mortgage or auto loan. and (2) to pay monthly interest on the borrowed money until it is all repaid. interest rates on equity lines dip in low markets and rise in high markets. you receive an answer within 24 to 48 hours. It could be every 5 years. the benchmark rates frequently drop or rise with the loan marketplace. If the bank decides to grant the loan.

an inheritance. for example. like most real estate loans. are protected by a trust deed. Conventional refinancing will pay off all of the existing loans against your property by creating a single new loan (also tapping into some of your equity). you may be able persuade the bank to issue an equity line in order to pay off the arrearage and get you back on track. then the banks may be more difficult to convince.000 from the $50. when the media or other source reports rising interest rates. then the loan may again become subject to foreclosure. prospects.640 ($6. this may be very similar to the loan you received when you originally purchased your property. However. While the average loan-to-value for refinancing in today's market is about 70% 15%. At a rate of 15%. If the payments are not paid as agreed. equity lines are routinely used to cover a loss of income or for debt consolidation such as in Option chapter 1. that borrower would have to pay down the principal loan balance to $6. the bank simultaneously records a trust deed to protect the entire $50. If you already have a first trust deed on your property. nor have any other income . they will be reluctant to lend.000 also swells to $125. However. never volunteer that information unless the lender specifically asks. a line of credit with a limit of $50. or other such new income. If the homeowner only borrows $10. an unrecorded personal loan from family or friend. since there is always the chance that the lender's search will not discover the NOD. Prequalify yourself on the equity line of credit loan with the Prequalification Worksheet on page 8-17. If you just received a new job. a gift.000. they want to be paid exactly the way you agreed to pay. The bank doesn't want to take your home in foreclosure. (Equity line loans that become a trust deed in a third position are usually only granted on properties with which the lender also holds the first and second trust deed. consider paying down the loan balance on the equity line in order to avoid skyrocketing costs. it may be difficult to get an equity line unless you have good reason and can persist in convincing the bank to make the loan. the monthly payment on the same $10. in order to remain with an $83 monthly interest payment. If the lender does find out. Conventional Refinancing Generally. If the prospective equity lender discovers your mortgage default. if you lost your job and don't anticipate getting it back soon.8 How To Fight Foreclosure And Win With Honor priority position.000 line of credit and later defaults on the payments. Even with a million dollars worth of equity in your home.000.) When the bank extends.000 amount borrowed and not the recorded amount of $50.640 times 15% divided by 12 months equals $83 monthly payment). then the bank could only initiate foreclosure proceedings on the $10. rationalize that it is to be included in the debt consolidation covered by the equity line.000. The reason for this is that most equity lines. So. when the banks see no way income to provide payment on the line. the equity line loan will then become a trust deed in a second If your house is in foreclosure when you apply for the equity line.

and both the "fixed rate" and the initially very low "variable interest rate" loans are available. paying twice for the same loan costs. particularly when the foreclosure is triggered by a split with a financial partner such as during a divorce. with the refinance. or 3. you end up with the simplicity of only 1 loan to service while the equity line or hard money loan methods create an additional loan on top of the already existing loan(s). You have not yet received a NOD. Unlike the equity line. 2. conventional refinancing has set amortized payments which pay off at a set rate for a set period of time such as 15 or 30 years. Then you are charged new loan costs for the total amount. plus whatever you borrow on your equity. in the A or B category. Thus. and even more for loans in third position than for loans in a second or first position. How To Win By Refinancing 1. including several different interest rates and several payments due on several different dates. and if your existing LTV in the property is low. Also. Study your own case to determine whether there are any secondary benefits to a refinance. The interest rates are among the lowest offered on the mortgage market. Refinancing drawbacks are that your credit must be good. some LTV's are as low as 95%. Or refinance to reduce your monthly payments by switching to a lower interest rate or a to new type of loan. but have a very good excuse to give to a loan officer. such as an Adjusted Rate Mortgage (ARM). even though you will pay a higher average interest rate by having multiple loans. With refinancing. Perhaps the most popular use of refinancing is to buy a partner out of the property and put the loan solely in your name. especially if the negotiation techniques mentioned in Option chapter 3 fail to any bring reduced payments. depending on your situation. and the costs to obtain the loan are high. refinancing might be worthwhile if a combination of any of the following apply: On the other hand. This is because lenders generally charge more for loans in a second position than for loans in a first position. if the interest rates on your existing loan are high. even when adjusted on the variable rate program. When you refinance. in general. Your credit is otherwise good. many secondary purposes may be just as appealing. When you originally obtained your first and/or second loans you paid certain loan costs. . you pay-off those existing loans. It works like this. While the primary purpose for refinancing is to pull some cash out of your equity. in effect. the interest charged on a complete refinance is generally less than the combined average interest rate charged on a multiple of loans.9 to 80%. you will actually end up. You have received a NOD. the complete refinance avoids the hassle of several different loan amounts to keep track of. Otherwise. yet your equity is high. but then reborrow the same amount.

As in conventional refinancing. the process is similar to conventional financing. You keep your existing first and\or second mortgage and only obtain a loan on a percentage of the remaining equity. by Thomas C. Inc.10 How To Fight Foreclosure And Win With Honor payments and/or have high equity. you pay the loan costs twice: once on the original loan and then again with the refinance. depending on the circumstance. then you may only qualify a of "hard money" loan depending on the degree of your financial difficulty. The Mortgage Kit may prove to be a valuable tool for understanding and obtaining not only a conventional loan. check page 20-1 for information about The Mortgage Kit. You may want to explore this option further if you qualify for such a loan. published by Dearborn Financial Publishing. The key is to do your math. Also. It can be the financial life rope that is thrown quickly to you when no other lender will loan. have not missed too many mortgage Hard money is the most controversial of all loans. your chances of receiving such a loan are better if you have not yet received a notice of default. The interest rate would likely be higher for a second or third mortgage than for a conventional mortgage. the fees and the interest rate for the loan on the nonowner occupied property will be higher. Exception to this would be in cases where the prevailing rates are much higher than the rates on your existing loan(s). Rather . Although the prequalification and application phases may take only a day or 2. sometimes paying off the old loans can slow things down two weeks or more. Hard Money Loans So in essence. 2. Thus. Steinmetz. for each conventional lender you approach for a loan. The cold fact of the matter is that if you have already received blemishes on your credit record. Assuming you were eligible to put a second or third mortgage on your property. Figure out if the combined monthly payments of your existing mortgage(s) and a new additional loan would be cheaper than just paying the new loan costs for a complete refinance. Fill out a Do-It-Yourself Refinance Worksheet. the lower the existing loan(s) to be refinanced. Refinancing can take 30 to 60 days to process if no snags exist. As with most loans. but also other loans as well. found on pages 8-13 through 8-16. yet that same rope can become the merciless noose of high payments that ultimately chokes your house away from you. the lesser the double costs and the better the refinance option. Second Or Third Mortgages Second or third mortgages are not very feasible in a foreclosure or preforeclosure situation. Some of the differences would be: 1." but is closed-ended (see The Equity Line of Credit page 8-4). This is like an "equity line of credit. Prequalify yourself for these types of loans with The Prequalification Worksheet on page 8-17. Other differences may exist. but not impossible.

the hard How To Win By Refinancing Remember a general rule regarding the overall costs of a hard money loan: the LOWER your existing loan-to-value. the HIGHER a risk you will be to a lender. Since a hardmoney loan is based entirely on the equity in the house. The borrower usually does not even need to provide tax returns or income verification. the key is to do your arithmetic to figure if you can afford the high costs of a hard money loan. yet still are in need of a loan.11 than being seduced by the fast money. do not apply to hard money. Generally. Prequalify yourself for a hard money loan with The Prequalification Worksheet on page 8-17. and all are designed to protect the lender. Other aspects are different. A large part of the hard money industry has evolved to fill a niche for consumers who have fallen on bad credit or poor economic times. Most of the funds used for hard money loans come from private investors who expect a high yield. such as good credit and income. the standard rules that apply to regular loans. and thus the HIGHER will be your loan costs and interest rate. too. .

200. Out of the $15. and a total cost of $14.000 and the "points" are 14%. (Some people call it "hardly any money!") And.000. Furthermore.000 in interest payments equals $14. Some borrowers had even been given a written guarantee that the promised rates would not change. which means none of the $20." This gives the lender room to legally change the rates which.000 times 14% equals $2. it can become very hard on your already over-burdened finances. as some lenders have demonstrated to be their intention from the beginning.. subtract from this $17. You suddenly may begin to understand why it is called hard money. However.000 loan. is much lower than is the case with conventional or equity line loans. The worst of these are about innocent borrowers who are anxiously awaiting a hard money loan when just days before their house is to be sold in a foreclosure auction the hard money lender says they cannot qualify for the loan after all.200 on a $20. the biggest difference is the costs.000 for a term of 3 years. then that amount is deducted from the $17. The interest rate is normally 5 percentage points or more higher than regular mortgage rates. That would be $9. However.800 "points" plus $2. Add to this some of the horror stories about the questionable lending practices of a few unethical hard money lenders.000. the term of the loan is shorter. but you still owe the full $20.000 in back payments and $2.200 costs plus the $9. and thus the amount loaned.000 for the use of $20. An LTV of 60% to 65% LTV is preferred by the hard money lender.000. usually only 1 to 7 years.200 all the regular costs involved with a conventional loan.money loan-to-value. You only receive $15. Also. instead of being amortized.000 in cash.000 for 3 years ($2. the borrower also signed a disclaimer form when the loan application was taken which stated the loan was "subject to lender's approval. If you owe $3. if the loan is for $20. However. When the borrower is offered an emergency loan with higher . As mentioned before. the entire $20. then the payment would be $250 per month ($3. some hard money lenders will pay all your back payments. For example. or possibly renegotiated. The interest. beware of some unscrupulous lenders who might string you out to the last minute to force you into unfavorable terms. or foreclosed upon.000 in 3 years. the term of time is much shorter and the interest rates are much higher with hard money than regular loans.000 in back taxes. before finally giving you any remaining money. And that's not the half of it. At the end of the term. We're talking about HARD money. If those costs equal $2. etc.000 per year). taxes.800 ($20.000). Some hard money loans can be processed in just a couple of days or weeks.000 minus $2.200). which leaves $15. If 15% is charged on $20.800). This is subtracted from the principal amount of the loan ($20.800 equals $17. And the cost of the loan can be as high as 16 percentage "points" of the principal loan amount.000. by far.000 principal payment is whittled down with the monthly payments. then you may only receive $10. interest only. although such a loan may be easy to get if you have the equity.000 must be paid back as agreed. then "the cost of the points" would be $2. is usually straight interest paid monthly over terms of 1 to beyond 7 years.

take all your information over the phone. you may quit making the mortgage payments in order to cover the child's doctor and hospital costs. and give quotes within 48 hours. you have a 3 day right of recision to cancel the loan. thus your credit becomes blemished. Although your personal doctor bills for your accident were paid by insurance. Figure out if you will be able to afford it." pick up a property with equity while surviving on the income generated by the loans. You use some of your savings." Next. the doctor says you'll have to stay out from work for an additional 2 months. do your math. including the amounts already owed against the property. Since many hard money lenders charge no application fee. Basically. simply apply for many loans at once." or "Quick Money. Consequently."points" and interest costs." Although few or none will call themselves hard money lenders. by law. you can distinguish them from the regular lenders by the language in their ads: "Easy to Borrow. including mortgages. A few hard money lenders hope that the borrower will default on the loan. Beware of house hunters in disguise. Both of you have a good steady income and so you buy a house. Why waste good equity now if you cannot afford the hard money loan and will lose the house later anyway? Instead you could sell the property quickly at a discount and keep some of that equity for yourself. they will not loan more than 60 to 65% loan-tovalue. In any case. As the quotes come in. even if you change your mind after you have signed the loan papers. you can easily develop several loan options within Try to contact 5 to 10 different hard money lenders within a few hours. . as stated above. if you do not know. they will want to know the property address and how much you want to borrow. allowing the lender to foreclose and take over the property along with its remaining equity. liens. usually a house hunter is an individual lender or small company whereas the straight lender is characteristically from a larger institution. But. Start by calling around to all the lenders found in the Yellow Pages or the newspaper under "Real Estate Loans. but you have an accident and cannot return to work for 6 months. many times the borrower goes for it in a panic or to avoid the frustration of shopping around at the last minute. In order to combat these lenders who make last minute increases in loan costs and interest rates. etc. They play a numbers game to see how many times they can a few hours. ask for a rate lock in writing and do not sign any disclaimer with the words like "subject to lender's approval." or "Credit and Income Problems OK.. Let's consider the typical scenario involving a hard money loan. you get behind in all your payments in order to make the mortgage. The disability payments are half of what you normally make and are slow coming in. You are married. Resist the temptation of letting the loan be a band-aid on a problem that will reappear later as another foreclosure. Although there is no way to be sure. Then a recession hits and not only does your spouses' commission income get cut in half. taxes. When your child has emergency medical treatment. They can find out how much is owed on the property.

condition of the property. record it at the county recorder's office. you don't shop around for other types of loans. but only at a few banks. you start looking around for loans. offering 50 to 60 foreclosure and are back to work. debt-to-income ratio. they promise to give you the money you need to pay-off and consolidate all your debts and still have some spending money. you might approach a friend or relative offering a rate of interest higher than they are currently receiving in their bank certificate of deposit. their loan-tovalue ratio. Even though the costs. Prequalify yourself on these types of loans with The Prequalification Worksheet on page 8-17. Even though you have a good excuse. Go to the stationary store and buy a standard form "Promissory Note Secured By A Deed Of Trust. Discouraged and unaware of the diversity of loans available. Since you have a lot of equity. Write it up. income. These payments will suck up a lot of your extra cash. They are very flexible. their job stability. Tragically. However. These "interest only" payments will continue for 1 to 5 years. MORTGAGE BROKERS A good mortgage broker can get just about any loan for just about anyone. etc. The exception would be in cases where the real estate market has appreciated during the course of the loan. the banks turn you down. the majority of hard money loans go into default and foreclosure before they are due. but now you have a large monthly payment on a hard money loan. mortgage payment history. Borrow From Relatives Friends Or different refinance programs depending on the borrower's credit. Soon you are back to work and your husband's income has actually increased beyond its previous limits. Then you see an ad in the newspaper or hear something on the radio about quick cash. Or your title company or a recording service might save you a trip to the county record's office. You decide to go for it. in such cases. interest rates and monthly payments are extremely high. there will no longer be enough equity nor much chance of getting another loan." Be sure it is for California legal use. Points and costs are figured on a . It should be self-explanatory.You receive a notice of default on your mortgage just as the only good news arrives: your husband's work and income has finally picked up. until the principal amount of the loan becomes due. Or maybe a friend or family member will take other collateral or simply trust you. After the loan is made. You have successfully saved yourself from Knowing now what you do about loans. The property can be the collateral even if you have little or no equity.

the worst your credit and income the worst your bargaining power. ---------------------------------------------------------------------------------------------------------------------------------THE ROUTE OF THE TYPICAL INSTITUTIONAL REAL ESTATE LOAN ." Give them the information they ask for and they can shop around to find the best loan for you. This method may be the only way you choose to You can find a mortgage broker in the shop loans or it may be one part of Yellow Pages and sometimes in the your loan shopping program.case-by-case basis after the applicant supplies all their facts. Many times they will return to you with several different options that might be best for your particular situation. newspaper classified ads under "Real Estate Loans. The basic rule: the better your credit and income the better your bargaining position. Some loan packages don't include appraisal fees and some don't include points.

a 30 day late) must be satisfactorily explained. etc. There can be (1) 30 day late payment on existing mortgage loans. 3. TYPE "A" Perfect credit. Any minor derogatory items (i.HOW LENDERS RATE HOMEOWNERS Whether you will qualify for an equity line of credit. Public records must be clear. Steady employment for 3 years. . No more than (2) 30 day "lates" within a 12 month period on all mortgage loans. Any minor derogatory items are explained with reasonable cause. 3. Income: 1. Similar to the letter grading system used in most school report cards. B is second best. The following are a typical set of guidelines that lenders may use to rate borrowers. in past 5 years. 4. Steady employment for 2 years. 2. Installment and/or revolving debt is paid as agreed for the most part. No blemishes. a complete refinance package or a hard money loan will depend on how you rate on the lender's "paper" scale. No major derogatory items.e. TYPE "A-" Credit History: 1. such as Bankruptcy or Notice of Default. TYPE "B+" Credit History: 1. in the past 3 years. "A . All installment and/or revolving debt must have been paid satisfactory as agreed. Income: 1. 2. No major derogatory items such as Bankruptcy or Notice of Default.paper" is the best rating.

No major derogatory items. 4. 2.30-60+ days). Traditionally slow paying installment and/or revolving debt (i. TYPE "C" Credit History: 1. Mortgage payments are usually slow. 3. .TYPE "B" Credit History: 1. Income: 1. in the past 12 months. Must be able to substantiate income over last 2 years. Steady employment for 2 years. No major derogatory items. Any minor derogatory items are explained with reasonable cause. There can be 4 30 day late payments within a 12 month period on all mortgage loans. Installment and/or revolving debt is paid as agreed for the most part. Income: 1.e. 3. such as Bankruptcy or Notice of Default. This is only a guideline--all loans are considered on a case-by-case basis. 2. Borrower has not established a satisfactory credit history. such as Bankruptcy or Notice of Default. in the past 2 years. 30-60 days.

by permission .Refinance Worksheet 1 .Appendix H. Dearborn.

Refinance Worksheet 2 . Dearborn. by permission .Appendix H.

Dearborn.Refinance Worksheet 3 .Appendix H. by permission .

Appendix H. Dearborn.Refinance Worksheet 4 . by permission .

1. 6. New Loan Amount: 3. Other Costs (List all other costs on separate sheets. . Interest Rate: 4. Total Loan Costs = $ . Points: $ . . Term Length of Loan: 5.The Prequalification Worksheet For All Loan Types (make as many copies as necessary to shop all loans) Lender: Loan Type: Representative: Phone: Lender's Loan-To-Value Ratio For This Loan: $ $ .) =$ . Loan Costs: a. c. Total of All Loan Fees (List all loan fees on separate sheets. Market Value of Property: 2. Notes: I.) = $ . multiplied by New Loan Amount $ . = b.

8-23 .

written by lawyer Laurence Adams Malone. law books. one who does not specialize in foreclosure. If this chapter helps someone.B. Although this may be true.HOW TO WIN BY USING THE LEGAL SYSTEM Let me preface this chapter by sharing a related story. this book would be incomplete without information on the legal system. but also when to use it. So. legal digests or consumer groups. If something seems to fit 9-1 . 5 model lawsuits . Ph. in fact. read this chapter with an open mind. Afterwards. LL. An earlier draft of this chapter had been read by an attorney. this chapter contains important help and research regarding lender fraud or errors from Consumer Loan Advocates (CLA). Most of the information in this chapter was obtained from attorneys.legal defenses against foreclosure . it is an uncommon way to fight foreclosure. all with focuses on foreclosure matters. then it will be a success. Certain homeowners in foreclosure not only may need to know what to expect from the legal system. I am only trying to save you time and money by reporting what I have discovered while researching foreclosure. Among other things. As mentioned earlier in the disclaimer. also. he cautioned me to not to build up too many hopes in the legal system when. and. the legal system may be the best route to a fair remedy. In certain circumstances. I am not an attorney and am not giving legal advice.D. or may be a good way to just open up negotiations with a lender.

Finding Errors In The Foreclosure Process. But first. doesn't the lender use a provision of the trust deed contract to foreclose? Likewise. The negotiations will depend largely on the severity of the error or fraud. they are really just governed by basic contract principles. The foreclosing loan(s). Finding Errors In The Loan Servicing.) 2. The original property purchase transaction. Lenders file a NOD in search of a solution. you may want to consider the following options before proceeding in negotiations with the lender. report that many lenders leave lots of room for errors. The foreclosure process. the procedural steps or the overall administration of: 1. the lender and the foreclosure trustee. as well as other relevant parties. then a lawsuit may be your only remedy in certain cases. the servicing. or if they have committed fraud. PRELAWSUIT NEGOTIATIONS A rule of thumb: Always negotiate for a solution and to avoid a lawsuit. The legal system may be used to fight foreclosure when errors or fraud are found in the Even though loans may seem complex. but possible). always try to negotiate with the lender first. (Generally. are required to act according to a prescribed set of rules and/or contractual agreements. (See page 9-6. (This is rare. Once you have found proof of an error or fraud. errors and fraud can be created by almost anyone connected with your loan. starting with the originator of your loan and ending with the bidders at the foreclosure sale. It may be possible to use any evidence of the errors or fraud mentioned above to delay or terminate the foreclosure action.) Progressive Solutions Institute.your situation. or becoming involved in a lawsuit. documentation. An accidental error is vastly different than intentional fraud. then the borrower may have the grounds for a lawsuit. and usually requires a different remedy. contact an appropriate legal service for a professional opinion. if the lender commits fraud or refuses to correct an error. (See page 9-3. 2. then why shouldn't you use the legal system to fight foreclosure? Some loan watchdog groups. or 3. When a homeowner stops making loan payments. Basically. such as a lawsuit. to obtain a money judgment. In either case of error or fraud. such as Consumer Loan Advocates (see pages 9-7 through 9-10). servicer or trustee: 9-2 . fraud or uncorrected errors may need strong legal action. errors may be used to negotiate a delay or stop in the foreclosure. has said the same about trustees and foreclosure documents. If they do not. and even fraud. or possibly. if negotiations fail to bring about a reasonable solution. which trains real estate agents to help homeowners in foreclosure (see pages 11-8 through 11-9). Many times lenders prefer to negotiate a solution in order to avoid going to a trustee's sale. However.) In fact. it is important to remember two points about errors and fraud: 1.

or maybe even bankruptcy. If a NOD has been filed and you are racing against the foreclosure clock. who scrutinizes every aspect of the loan and pre-foreclosure process. 2. some lawyers may write letters for a reasonable fee. "Have an expert realtor (real estate broker) study your loan documents for errors. as well as any other related paperwork. and (2) their fee 9-3 . File a lawsuit. you decide to go to court against your lender or trustee.) 4. typographical errors.) Some real estate brokers may have background as an attorney. anything on which you can challenge the documents. Look through all your loan and foreclosure documents. if you need to proceed with a lawsuit." or specializations under "Attorneys. then you may want to look for them anyway." or "Legal Services Plans. Malone in his lawsuit-strong pages under such categories as "Legal Aid. You might also call the local or state Bar Association or call the CLA number listed on page 9-10 for a recommendation (CLA specializes in interest errors in loans).) book." advises attorney Laurence A.) 5. If. then you may need an attorney familiar with foreclosure. See more on finding a real estate broker on page 11-7. an attorney may be helpful. call your local Bar Association for the telephone number of any free or low cost legal clinics. see page 9-11 for a very general overview of what to expect from a lawsuit. How To Avoid Foreclosure on Your Home. errors in spelling names. a real estate broker or other appropriate researcher(s) to look for errors or fraud in your documents. a real estate broker may be able to recommend an attorney with experience in foreclosure matters. or vice versa. Request that the foreclosure be delayed. 3. including the documentation. consult the local and regional yellow FINDING ERRORS AND FRAUD If you are not already aware of any errors or fraud in your documents. anyway. can be very effective at finding errors." such as foreclosure.1. at some point. An attorney who specializes in loans or foreclosures may be very helpful in ferreting out errors. may need to accelerate the reading process. To find such an attorney in your area. or Business. whether yourself or someone you hire. Also. Regardless of whether you choose a lawyer. suspended or restarted from the beginning. addresses. Request that the foreclosure be stopped and that no new action be taken. A filed lawsuit may persuade the lender into negotiations. if the grounds exist. (Although this may add an added expense. (Again. Farm. if the grounds exist. Or. Threaten to file a lawsuit. (Progressive Solutions Institute trains realtors to find errors in foreclosure documents and procedures. take extra care before you hire one to determine: (1) their knowledge of foreclosure legal work. an attorney may be helpful. This may give the negotiations additional power. Ask an attorney to negotiate your case. An aggressive researcher. (Again." "Legal Clinics.

into questions in order to determine whether they know about foreclosure principles. Two areas where errors commonly occur: 1.. Otherwise. document numbers. Many times. or from someone in a legal clinic. read every document and check every procedure generated during the foreclosure period for accuracy: 1. rephrase some of the key points in this chapter. not the originals. Finding Errors In The Foreclosure Process . The Foreclosure grounds to negotiate favorable changes in the loan terms. 2. may be sufficient 9-4 . or mail the NOD and/or the NOTs. and the book. Check the accuracy of your documents by using the following checklist as a general guide (see pages 1-27 through 1-29 for examples of the documents you most likely received at the time you first signed for your loan secured by a trust deed. and checked for errors. of all your loan documents and foreclosure papers. Also. certain events must occur at prescribed times during the foreclosure process. The procedure that the foreclosing trustee used must be compared. Errors In Process. then an attorney may take the case on contingency. In addition. Study the facts that appear on the NOD and the NOTS that you receive. give him/her copies. Upon finding and retaining the right person. These must be compared. but a large percentage of any future money settlement or judgment. According to California Civil Code Section 2924. must be spelled correctly on the foreclosure documents. if a case has the strong potential for money damages. the homeowner can force a delay or stop of the foreclosure. you may end up paying for their time to learn the subject! To screen the prospects. see pages 1-30 through 1-36 for examples of documents that are likely to be prepared during the foreclosure process.The lender or trustee often makes mistakes in some aspect of the foreclosure documents or process ranging from a misspelled name to neglecting to publish. Since the slightest error is common and helpful. to the facts which appear on the promissory note and deed of trust that you signed when you secured your loan. addresses. to the timelines that are specified by law. etc. Remind them that time is of the essence. By finding these errors and pointing out them out to the lender/servicer. Significant errors. The main point is to make a wise and informed decision when selecting someone to read your documents for errors. the names. that appears in the advertising and that is posted in a public place. meaning no up-front money now. some of which are sent to you): 2. pointing the error(s) out at the last minute in the foreclosure timeline can create a maximum delay. and checked for errors. post. or fraud. to launch a lawsuit or to receive a money settlement.for reading your documents for errors. Errors In The Loan Servicing. On this last point. Interview as many prospects as possible in order to find a reader who knows foreclosure well. you may get a free reading from a friend in the legal or real estate business.

and those listed in A through F on page 17-5. Look for errors or discrepancies.Legal Description. e.Recording the notice of default: The date that the notice of default (see page 1-31 for an example of a notice of default) is recorded begins the 3 calendar months of the default period. Venue. d.1. i. Compare the following timeline to the dates on every document that the trustee mails. advertises and posts during the foreclosure process (see page 1-26 for explanations of each detail): a. has been filed. Compare for exact accuracy the details on your promissory note and trust deed to the details on every document the trustee mails. check it too). (See page 1-32 for an example of an notice of trustee's sale. Trustor (borrower). the notice of default must be published once a week for at least 4 weeks in a newspaper of general circulation in the county in which the property is situated if certain circumstances exist.] Also. Document Number.) 9-5 . [See highlighted sections on page 17-4 within CC§2924b(b)(1) and on page 17-6 within CC§2924b(e). stating time and place. [See highlighted sections on pages 17-4 and 17-5 within CC§2924b(c)(1)(2) and page 17-6 within CC§2924b(e). b. g. Check the accuracy of the procedure used by the foreclosing trustee. h. Amount of Indebtedness. for the California Civil Code Section that governs foreclosure procedure): Day 1 . f.) [See the highlighted section on page 17-5 within CC§2924b(d). if so. 2.] Within the first month from recording the notice of default: The trustee must send by certified or registered mail a copy of the notice of default to the borrower. and containing certain specified information. [See highlighted sections on pages 17-1 and 17-2 within CC§2924. Beneficiary (lender). The notice of default must have certain specified information.] Within 10 days from recording the notice of default: The trustee must mail a copy of the notice of default to every trustor on record and to anyone who has filed a request for notice of default and request for notice (see more on requests for notice on pages 11-15 and 11-43). Trustee (unless a Substitution of Trustee. page 17-1. c. (See page 1-33 for an example of a published notice of default. page 1-30.] 3 months from recording the notice of default: The trustee must give notice of the trustee's sale. advertises and posts during the foreclosure process (see Power of Sale. Date of Execution.

[See highlighted section on pages 17-11 and 17-12 within CC§2924f(b). time and place of the trustee's sale.] 7 days prior to the date of the trustee's sale: The trustee sale must wait 7 days after the dismissal. a new date. expiration or termination of a court ordered injunction. [See highlighted section on page 17-8 within CC§2924c(e)] Sale day: Any reason for postponement must be made public at the time and place of the appointed sale. [See highlighted section on page 17-5 within CC§2924b(c)(3) and page 17-10 within 2924e. including any state tax agencies. [See highlighted sale must recorder of property is section on The trustee must publish a notice of trustee's sale once a week for 3 weeks in a newspaper of general circulation in the county in which the property is situated if certain circumstances exist.] pages 17-11 and 17-12 within CC§2924f(b). restraining order or stay. 9-6 . then the notice must list the name of the lender. (See page 1-34 for an example of a published notice of trustee's sale. 20 days before the trustee's sale date: The trustee must post a notice of trustee's sale in a public place and on the property in foreclosure. time and place must set forth. must provide written directions to the property upon request.) [See highlighted section on page 17-11 within CC§2924f(b).] The trustee must send by certified or registered mail a notice of trustee's sale to each person who was sent a notice of default. who. in turn. Within the 5 days before the sale. the loan may be reinstated at the lender's discretion. and concurrently.[See highlighted sections on page 17-2 within CC§2924 and on pages 17-11 and 17-12 within CC§2924f(b)] 25 days before the trustee's sale date: The trustee must send a notice of trustee's sale to the IRS whenever the IRS has a lien recorded against the property.] 14 days prior to the date of the trustee's sale: The notice of trustee's recorded with the county the county in which the located. notifying them of the date. [See highlighted section on page 17-14 within CC§2924g(d).] 5 business days prior to the date of the trustee's sale: A loan in default may be reinstated anytime from the filing of the notice of default until 5 business days prior to the trustee's sale.] Within 10 days from the first publication of the notice of trustee's sale: If the property in foreclosure has no common street address or designation. [See highlighted section on pages 17-11 and 17-12 within CC§2924f(b).

If it fails to comply. By these errors and pointing them out to the lender/servicer. the date(s) the taxes have been paid. the date(s) the loan is due. the Truth in Lending Law. then the borrower must receive the following notice by mail: The name and address of the person to which the transfer of the servicing of the loan is made. According to California Civil Code Section 2943. the amounts of periodic payments. amounts of liens paid by the lender and whether the loan can be transferred to a new borrower. any back payments.) The procedures these institutions must follow 9-7 . According to Section 941 of the Affordable Housing Act (see page 9-9). collect too much for the impounds/escrow account or make some other type of mathematical error. you may have the basis for negotiation or other action: 1. the homeowner can force a delay or stop of the foreclosure. Regulation Z may provide a powerful basis for negotiating with the lender regarding errors in the loan documents. Finding Errors In The Loan Servicing . pointing the error(s) out at the last minute in the foreclosure timeline can create a maximum delay. if the original trustee named in the trust deed is to be substituted. a new notice of trustee's sale must be recorded in the manner prescribed by Section 2924f. It provides for certain procedures that must be implemented by anyone who loaned money more than 25 times during the year or more than 5 times a year for transactions secured by dwellings (This includes almost every bank. 4. which includes the unpaid loan balance. then the borrower and all others requiring notice. 1969. was enacted by Congress on July 1. 3. within 2 months after a NOD.] Other Laws: Request the following from the lender. the date the transfer was or will be completed and a statement of the due date of the next payment. Additionally. 2. savings and loan or institutional lender. a lender must deliver a beneficiary statement. then a substitution of trustee must be recorded before the notice of default. amount of impound accounts. This starts the complete notice of trustee's sale period over again.[See highlighted section on 17-14 within CC§2924g(d). The more severe errors may even be used to negotiate favorable changes in the loan terms. [See highlighted section on pages 17-13 and 17-14 within CC§2924g(c)(1)(2). According to California Civil Code Section 2934a. and within 21 days of the receipt of a written demand from the borrower. if a notice of default has already been recorded. amount or insurance. to receive a money settlement or to launch a lawsuit. if a loan has been transferred to another lender. which are independent of any borrowerrequested or court-ordered postponements.] page After 3 different postponements by the lender/trustee. lenders/servicers have a duty to respond to borrower's inquiries. According to California Civil Code Section 2937. Many times. must be notified by mail of the substitution of trustee. Regulation Z.Lenders often charge more interest than their contract specifies.

The final disposition of the case was that the lender agreed that the borrower did not have to pay any interest at all. A while later. The Regulation Z document the borrower signed did not reflect this fee. If the lender refuses for any reason. If you can't find them. which occurred in southern California. The loan was arranged and all of the documents were ready to sign. This fee was clearly listed in the closing statement the borrower signed. examine the documents carefully to look for errors. your first step is to locate your Regulation Z documents. A few weeks later. This happened twice before the borrower finally went through with the deal. However. The bottom line to all of this is that calculating the APR accurately can be very difficult for the lender.000 of the original $500. Most real estate transactions governed by Regulation Z are termed closed-end credit transactions because they are offered for a specific time period. loan fees. service charges. Regulation Z can be a strong tool in stopping foreclosure. the costs and the schedule for repayment are all agreed to in advance. added an additional fee of a little over $100 for its extra work. premiums for property insurance (if required by the lender) and premiums for health or accident insurance (if required by the lender). you probably can force him to give you copies by contacting the appropriate agency that regulates your particular lender. the full amount of the loan. a borrower was negotiating a $500. the borrower's attorney claimed that the lender had violated the law by not including the extra $100 when calculating the APR.000 debt. and the annual percentage rate (APR). Even when the calculation is made by an experienced member of the lender's team.include full disclosure of items such as the interest rate charged. 9-8 . An example of this is the Campbell case. That is when the borrower had to back out of the deal. often there are mistakes. contact your lender and ask for copies. mortgage insurance. including loss of part or all of the interest due the lender. the borrower was required to repay only $400. The APR is so complicated to calculate that your lender. So. the borrower came back and said that he was now ready to proceed. what was the problem here? The escrow company. the full amount of the interest. even someone very experienced. The amount of the loan. fines up to 3 times the amount loaned and possible rescission of the transaction. Also. Regulation Z also provides penalties for lenders who make errors. Next. Obviously. it was never added into the APR. Even a tiny error in the documents may be sufficient grounds for halting a fore-closure. In this case. The lender is obligated to reveal to the borrower the exact amount of the finance charge under Regulation Z.000 mortgage for a residence he intended to occupy. transaction charges. This includes interest on the mortgage. There is even a specific method of calculating the APR that must be used. when the property went into foreclosure. faced with having to draw and redraw documents. If you choose to try to delay or stop foreclosure by suing your lender for not complying with the Truth in Lending Law.

With lines of credit approaching 25% of all consumer debt.000 adjustable rate mortgages and found a 47% error rate with an average overcharge of $1. new varieties are occurring weekly. 2. some lenders will abandon the foreclosure or reduce the mortgage amount when faced with a Regulation Z lawsuit. Sheer Number and Variety of Notes . Remember. Clearly. as notes evolve and change. For example. to decide whether to pay interest only for a period of time. Seventy-seven percent of the errors were overcharges by the lender.Lenders often "sell the note in the secondary market. That is. after the first year. now the most popular type of consumer borrowing (see page 8-4). 4. the personnel charged with managing thousands of notes on a daily basis are often the lowest ranked employees in the institution. because lenders/servicers view these positions with such little regard and expect "high turnover.588." they choose not to invest in training programs. Consumer Loan Advocates (CLA) CLA is the nation's foremost loan auditing firm. Even if you are unsure whether anything is wrong with the documents. For example. Inadequate Data Servicing Systems Many of the servicing systems still in operation today are outgrowths of the "fixed rate mortgage" environment. At this point. try to negotiate with the lender. Regulation Z is a good delaying tactic to slow down a foreclosure. The following is reprinted from the summer 1992 edition of the CLA newsletter Loan Watch Series: CLA has identified 5 major causes for errors in ARMs. Moreover. Even though the attorney may cost money up front.could easily make a mistake.In a highly competitive environment lenders are constantly redesigning notes. 3. If your lender will not be reasonable. Their primary objective is to operate with as small a support staff as possible. make sure you consult an attorney who has expertise in real estate loan and foreclosure matters. in 1991. the dynamics of this flexibility could cause nightmares for servicers. then it may be best to consult a lawyer. Sixty-seven percent of the errors were overcharges by the lender. 9-9 . then it may be worth it." and servicers tend to operate under thin margins. and if you want to save your house. Because of the liability involved.In surveys of servicing operations. When do you attempt a Regulation Z lawsuit? First. consulting an attorney is a good idea. It could be extremely hard for you to determine if there are errors in your Regulation Z form by yourself. CLA audited 9. or to accelerate principal reduction. In a more recent study. servicers are attempting to jam them into a system for which they were not designed. Inadequate Number of Personnel . close to a 75% rate of error was found in the monthly payment calculations on 110 home equity lines of credit. Inadequate Training of Personnel . a newly introduced ARM note now allows the borrower. if errors are found. commercial loans and lines of credit: 1.

computer systems and software were not a priority. Loans with six month terms and biweekly payments leave more room for error. Less common indexes force the lender to perform ongoing research to ensure the correct index is used and is taken from the correct source. Given the rapid pace of these transactions. The Loan Spaces. 5. "As interest rates tumbled during 1991 and 1992.During the 1980's lenders were in a 'production' mode. the RTC's (Resolution Trust Corporation) assumption of billions of variable rate notes into its makeshift servicing system has only served to worsen error problems.The following is reprinted from the summer 1992 edition of the CLA newsletter Loan Watch Series: Since home equity loans are ever changing. "The 1 year treasury bill is a common index. Additionally. Whenever loan data is being transferred from one lender to another. they are almost identical to ARMs.5. 9-10 . a high percentage Key Signs of Errors . thereby earning fees on 'upfront points' and servicing rights.The following is reprinted from the summer 1992 edition of the CLA newsletter Loan Watch Series: 1. The market place swelled with homeowners who were willing to pay 'points' up front in return for lower interest rates on their mortgage. It has been shown that ARMs issued prior to 1985 have a higher error rate due to the inadequate software/hardware utilized during that period. Moreover. The good news for consumers is that the statute of limitations laws allow them to collect any overcharges on paid off notes. utilize inadequate servicing software. The Loan is Based on an Unusual Index. The Loan has been Sold to Another Lender/Servicer. 3. it is well known that consumers are having difficulty communicating with this agency. 2. the profit Blank spaces left on a note allow room for typists to insert other terms and rates. The Loan is Complex. Market Dynamics . Finally. Their primary objective was to increase loan volume. Since income on servicing was secondary. there is a chance for incompatibility of data service systems. 4. Lender Confusion. Home Equity Loans are similar to ARMs . highly diverse. Data processing individuals are faced with having to mesh differing software programs. Note Includes Blank of 'pay off' balances were found to be in error. and need technical support. If a borrower cannot receive an adequate explanation from the lender regarding a perceived problem there is a good chance the lender does not understand it. The Loan is Older. 6. lenders entered into the refinancing frenzy.

depending upon the billing cycle.pressures on lenders during the recent recessionary period have led to limited investment in staff training and account servicing. of days in year (365) x actual days If the lender's servicing system is correct. The lender uses the wrong effective date for rate changes. 3. of days in year" instead of 365. The lender calculates the wrong number of days between two interest charge periods. The lender uses the wrong margin amount. Listed below is a sampling of errors being made by lenders on home equity loans and commercial lines of credit. 4. The lender changes the interest rate at the beginning of each accounting period. The lender charges the customer a margin of Prime plus 4. Example: Lender is using a $32. 2. The lender uses an incorrect loan balance when calculating the amount of interest due. the lender uses the 11th District Cost of Funds. causing customer service problems. 1. if the lender's servicing system is on a 30 day month. 5 extra days of interest are incorrectly charged to the borrower. However. Example: The note contract calls for a margin of Prime plus 3. The lender uses the wrong index type. 30 days of interest will be charged.000 balance when calculating interest amount due. However. If the lender uses 360 days for "no. 28 days of interest will be charged.000 instead of a $29.) 6. 1 is the interest charge period and the note calls for actual days. The lender uses an index value at the beginning of the month. 5. Lender is using an incorrect accrual basis for calculating the daily interest amount. 9-11 . balance x rate transpired no. Example: The note calls for the following daily interest rate formula. Example: Feb. The lender uses the wrong index value during the month. Example: The note calls for the interest rate to change on the fifteenth of each month. (This could be the first of the month. 7. 1 to Mar. Example: The note calls for the index value to be chosen at the end of the month. Example: The note calls for the Wall Street Prime as the index to be used.

CLA will analyze your loan with its sophisticated computer software. the servicer must make appropriate corrections to the account.) 9. or provide the borrower with a written explanation as to why the lender is correctly servicing the account. The following is reprinted from the summer 1992 edition of the CLA newsletter Loan Watch Series: "Now.000. If the servicer does not respond during this period. lenders and servicers have a duty to respond to borrower's inquiries.CLA is in the business of analyzing loans for errors in interest rates. it is the highest announced/published version: Wall Street Journal Prime High. The timing of the release can impact the interest rate charged significantly. But. If the lender does not meet this deadline.8. However. The lender uses the correct index type. which is issued weekly. Of the 3 types of loans. Not later than 60 business days after receipt of the borrower's inquiry. They must put in writing why they are servicing the loan correctly." How CLA May Help You find Errors . "According to Section 941 of the Affordable Housing Act. borrowers can make their lenders accountable. There are 2 key elements for the consumer: 1. CLA typically finds 9-12 .The CLA newsletter also reports on new legislation that helps consumers collect refunds. Example: The lender obtains the index from Telrate Systems. The servicer must provide a written response to any borrower inquiry and acknowledge receipt of the correspondence within 20 business days. but the incorrect version. and the borrower can collect all attorney's fees. For a fee which will vary according to your type of loan. with the servicer paying all attorney's fees. This must be done in a timely manner or they face punitive damages. Lenders Must Respond In A Timely Manner . The lender uses the incorrect source for the index and other errors. 2. Example: The Lender uses the Wall Street Journal Prime. rates can be different. the note calls for the lowest announced/published version: Wall Street Journal Low. These rates can be more volatile based upon the world events of the day. the borrower has the right to sue for $1. a firm which disseminates daily indexes direct from the financial markets. the note calls for the index to be sourced from the Federal Reserve Board Statistical Release. for the first time. (The different versions are arrived at through surveys of different lenders in various regions of the country. a home equity lines of credit and fixed-rate loan. Depending upon lender attitudes in each region. CLA audits adjustable rate mortgages (ARM).000. the borrower has the right to sue the servicer for up to $1. However. The lender cannot set its own time table in correspondence with a borrower.

CLA claims that some problems do exist with fixed-rate loans. Send legible copies of your documents to CLA. templates and procedures to follow. which depends on the number of years being audited. The reason CLA cannot calculate the exact dollar amount of any error is because CLA takes into account compounding. unless. If the lender disagrees with the audit.more errors in ARMs and equity loans than in fixed-rate mortgages. of course. The precise amount applied separately to interest and to principal. CLA will provide you with a completed audit analysis report. 9-13 . any such variations in the history of the specified loan payments will affect the CLA analysis by a few percentage points. or how to have the principal amount reduced (See Decreasing The Principal Amount under Note Modifications on page 7-10 for more on principal reduction. The CLA audit checks for errors in the interest rate adjustments over the life of the loan. When You Order a CLA Audit Analysis Report -When a borrower calls and orders a CLA audit they are sent a manual called ARM Aid. CLA's fee does not include payment application. 2. Since fixed-rate loans usually have the fewest errors. such an audit may not be the best value. when errors are brought to their attention they usually make restitution immediately. The documents usually include such things as a copy of the promissory note.) The book contains helpful form letters. The correct date that each payment was received by the lender. This will reflect what should be charged by the lender. when a borrower has difficulty collecting. However. but cannot reflect any overpayments or under payments made by the borrower. The audit actually does an estimated reamortization. Chapter 1 of ARM Aid outlines which documents are needed from the borrower for the audit and how to get them if you don't have them already. 3. but not the originals. small amounts may be misapplied. instead of a late charge being accrued. Payment application is defined by CLA as: 1. the audit indicates: 1. In 4-6 weeks. In fact. ARM Aid explains how CLA analyzes your loan with its software. CLA stands behind their audit 100%. Although most lenders are not aware of errors. For example. if any. CLA can have the audit report ready in about 2 weeks. an error is found. CLA will explain the audit to the lender. For an additional rush fee. primarily. and then interest will be charged to it. with the way payments are applied. if any. An approximate dollar value of any overcharge. Occasionally. if any. An audit of payment application is analysis intensive and costs an additional fee. The nature of the mistake. and 2. The book also shows how to go about collecting an overcharge from the lender. and a copy of any notice of interest rate change. and incudes estimates of overcharges. Basically. The correct dollar amount of each monthly payment. it may be added on to the principal balance. a rider.

but also. and possibly even turn it on the lender to recover a money settlement or judgment. then the borrower may be forced to consider a lawsuit against the lender. but the escrow will not close before the scheduled trustee's sale. and CLA HOTLINE -(800) 767-2768 (708) 615-0024 if this harms the borrower. what the problem is. whether non-FHA and non-VA lenders similarly are required to cooperate. an attorney. CLA might consider helping a homeowner on a contingency basis. and if the dollar amount is high enough to make it worthwhile. The substance of your particular legal action would depend greatly on your particular situation.CLA may help the borrower on contingency for a split of the recovery amount. a CLA audit may be an approach to consider. let's say a borrower is in the process of selling or refinancing his/her property. This may be especially true in cases where the borrower demonstrates the ability to cure the default at a date after the scheduled trustee's sale. If the lender or trustee will not stop the sale to accommodate the escrow. a real estate broker or other consultant to search for errors. the borrower would have to go into 9-14 . For homeowners looking for errors in hopes of stalling a foreclosure. there is some confusion as to money. When lender errors or fraud are found and the lender refuses to correct it. the lender's action may unnecessarily harm the borrower. The same may hold true when a lender will not cooperate in a workout with the borrower. In such cases. then the fees paid to CLA may be wasted LAWSUITS The purpose of this section is to give the borrower some idea of what to expect from a lawsuit. FHA and VA lender must attempt to cooperate with borrowers in a workout. However. then the borrower may have the basis for a lawsuit. it may be less than the hundreds of dollars that may be paid to a mortgage foreclosure consultant. On the other hand. A homeowner in foreclosure may want to sue not only to recover damages caused by the error. such as with an upcoming lump sum payment from an inheritance or business contract or other verifiable source of funds. That is why it is so important to scrutinize your paperwork and the actions of your lender and trustee. to stall. then the borrower may have the basis for a lawsuit. For example. However. But. stop or reverse the lender's foreclosure action. if no errors are found. As indicated in Option chapter 3. if a lender or trustee continues to foreclose without heeding a borrower's attempt to work out the situation. To prevent this. It is difficult to cover in the limited space of a book all the kinds of cases a worthwhile attorney could possibly build for you. An attorney knowledgeable in both California's foreclosure laws and the federal truth-inlending laws who is armed with the right error may be able to stall or stop the foreclosure process. or otherwise attempt to give borrowers some latitude in resolving their foreclosure problems. Their decision to take the case depends on who the lender is.

But when a borrower is four payments delinquent. in writing. why its position is in accordance with the original 9-15 . they may have dramatic results. there are a few legal tactics that homeowners or their attorneys have used to stop or stall foreclosure. Reprinted with permission): Even though loans may seem complex. if the lender makes a material breach of the loan agreement. the judge would give the borrower an extra month or so. "Finally. the borrower should confront the lender with the error in writing. the homeowner also should concurrently pursue any other applicable foreclosure remedy/option mentioned in this book. the borrower can sue for fraud or fraudulent concealment -opening the way to even stiffer monetary damages. Lawsuits can be filed on several levels. doesn't the lender claim that the intent of the note for non-payment calls for foreclosure? So. but would stipulate that if the borrower did not perform as promised. Since it is so important to act early in the foreclosure process and since these legal techniques may take time to process." 2. "The most basic is breach of contract under state law. the best legal defense is to take offensive action as soon as possible.court and ask the judge to issue a preliminary injunction (PI) or temporary restraining order (TRO) to stop the trustee's sale. The point is to get the lender to explain. However. or by an entire group of people in what is known as a class action suit. then shouldn't the lender be subject to legal action by the borrower? In cases where the lender refuses to correct an error. The following excerpts are from a Harney article regarding mortgages ( 1." 3. Typically. When faced with foreclosure. Washington Post Writer's Group. Lawsuits can be filed by an individual. "If the (borrower's) legal counsel can show that the lender's breach of contract was part of a larger pattern or practice. they are really just basic contract law. too." © 1992. Some lenders may scoff at the reasoning behind some claims of errors and say such claims are a twist of the intent of the original loan agreement. A letter form your attorney may have more impact. The following legal techniques may not apply to every foreclosure situation. Nevertheless. according to syndicated columnist Kenneth Harney. the borrower can sue for violations of the federal truth-in-lending statue. when they do apply. then the trustee's sale would to occur after all.

but if the lender actually charged interest according to a different method. if the suit is filed 9-16 . In addition. one of many loans in a lender's system of loans which all have the same error. the lender may be more willing than usual to negotiate a settlement with terms favorable to you. In such a legal action. then the borrower now has documentation of the lender's position. then there may be a basis for a lawsuit against the lender. However. if the loan agreement states that the lender is to charge interest according to a certain method. But if the lender still refuses to acknowledge or correct an error. In order to file a class action you must gather a group of borrowers with a similar problem. then you may become a lead plaintiff in a class action suit. the relief available to a borrower depends on whether the action is filed before or after the trustee's sale. see page 6-3. impractical. Due to the fact that it may be possible to delay the trustee's sale until such a case is resolved. If and when the lender does respond with a letter. perhaps your attorney will handle the case on contingency. If the suit is filed before the sale. lawsuits on a one-on-one basis are costly and. Lead plaintiffs usually pay nothing for participation in the lawsuit.contract. the borrower may attempt to enjoin or prohibit the sale with a Preliminary Injunction (PI) or Temporary Restraining Order (TRO) until the court can determine the underlying issues (To compare PIs and TROs with the automatic stay in bankruptcy proceedings. thus. then explain this in your letter. But. Or your case amy be so strong that you feel you will win. CLA may be able to help establish up a class (See Consumer Loan Advocates [CLA] on pages 9-7 through 9-10). if the lender does not respond to your letter in a timely manner.e. This documentation may be used to compare and analyze both the lender's error and the lender's excuse for the error. the courts usually get involved only if the borrower or another interested party files a legal action attacking the foreclosure sale. CLA may be able to analyze its thousands of audits to see if others match a borrower's particular lender with the borrower's particular error. Just the threat of a lawsuit may prompt a lender to attempt to negotiate a settlement out of court. For example.A class action lawsuit may be possible if your loan is one that has systemic errors. Some loan contract specifies attorneys fees to the prevailing party. If your loan is one of the first to be discovered. then a lawsuit may be inevitable. Class Action Lawsuits . If the lender's excuse does not reasonably resolve the dispute. then the lender also may be additionally sued for violation of section 941 of the Affordable Housing Act (see page 9-9). The borrower's letter to the lender might include copies of the loan agreement highlighting the specified interest method along with payment receipts highlighting the interest method that was actually used..) Preliminary injunctions are not available after the conclusion of a sale. Sometimes. Preliminary Temporary Orders Injunctions and Restraining Due to the out-of-court nature of the non-judicial foreclosure process. and also may be paid an extra bonus. i.

then the sale may be prohibited due to defective procedure. In situations where a bond is ordered. Basically. the court might allow some period of time after its decision to reinstate the defaulted loan. For instance. the courts may be persuaded to issue a PI or TRO to prohibit the trustee's sale until they can resolve the above issues. a PI or TRO may be granted when the foreclosure trustee fails to comply with the statutory regulations which regulate trustee's sales.after the sale. if a NOTS is not published. or the proposed conduct of the sale. the borrower may ask the court to set aside a completed sale (see below). In other words. the PI or TRO may delay the sale long enough to give the borrower some added advantage. A temporary restraining order halts the foreclosure process only long enough for a court to decide whether to grant a preliminary injunction. In such a situation. the NOTS. The California Code of Civil Procedure specifies the difference between a PI and a TRO. Fraud existed transaction. 2. If the property is sold with a notice of lis pendens recorded against it. if a trustee's sale is scheduled to take place within 15 days.") A notice of lis pendens should be recorded against the property immediately after the action is filed to prohibit the trustee's sale. such as time to cure the default by using 1 or more of the other options mentioned in this book. in the original In other words. b. a permanent injunction may be issued depending on the outcome of the trial. Bonding Requirements . Even if a borrower loses a lawsuit to prohibit the sale. No actual default exists under the loan agreement. File a Lis Pendens . The lien against the property is invalid. The trustee's right to foreclosure is contested because: a. The trustee's sale procedure is defective. depending on the case. Additionally. The borrower must decide when to seek a PI or TRO. if the borrower so requests.The court may or may not require a bond to be posted when issuing a PI. A preliminary injunction halts the foreclosure process until a final determination is made in the case. then a TRO should be sought at once since this time period is too short to obtain a PI.Another important tool in fighting foreclosure through the legal system is the lis pendens (which means "a lawsuit is pending. Nevertheless. the borrower's only remedy may be to correct the incorrect procedure before allowing the trustee to proceed with the sale. the purchaser buys it subject to the borrower's legal action. since the borrower's default is not always looked at by the courts as a breach of contract. or c. Grounds for prohibiting the trustee's foreclosure sale fall into 2 categories: 1. such as the NOD. the PI does not become effective until the bond is posted. A lis 9-17 . but a sale is scheduled.

" Thus. it may be impossible to set a sale aside under certain circumstances. attorney Lawrence Adams Malone..cannot lend its credit to another by becoming surety. Even though the lender's check appears to represent money because it can be deposited into your bank account.. In exchange. one of the most important questions you may answer is. In previous cases. mail fraud and racketeering or who challenged the accuracy of the documents they received upon loan approval. In your battle against foreclosure. Ph. "After obtaining a loan. it is unjustly enriching itself and. it is not "real" money.. usury. 2. such an act is ultra vires. Problems existed with the presale foreclosure process. However. did I actually receive 1. when a bank lends its credit. it is breaking the law.. When a corporation executes a contract beyond the scope of its powers. 9-18 . There was no breach of contract. In this case. And credit is not legal tender. the borrower repays the lender at regular intervals at an agreed upon interest rate. While this may seem harmless. cites examples of ultra vires bank contracts.. and 4.pendens may be sufficient to scare off a buyer as well as a title insurance company. endorser. or guarantor for him. What you received was credit. Farm or Business.If a trustee's foreclosure sale has already been completed. as a result. Improper conduct by the trustee/lender at the sale. How to Avoid Foreclosure on Your Home.. any real money--not just a slip of paper--from my lender? When applying for a loan from a bank or other lending institution. the borrower is negotiating an agreement by which the lender promises to provide a certain amount of money. The potential problem here is that the lender agrees to give "legal tender" to the borrower. Not only does the lender typically provide only a bookkeeping entry or check (a piece of paper symbolizing credit). grounds for setting aside a sale have included: Credit Is Not Money In his book. then the borrower may want to file a suit to have the sale set aside. The same grounds mentioned above to prohibit a sale also may be used to attempt to set the sale aside.D. Setting Aside the Sale . The lender's profit is the finance charge.B. LL. according to Malone. you may have grounds to sue your lender for breach of contract and fraud. Gross disparity between sale price and value when unfairness and irregularity are also present. but the lender usually does not have the money to back up the loan. if you did not receive cash from your lender. the courts consider the contract void or "ultra vires. A few foreclosures have been fought and won by homeowners who sued lenders for fraud. 3. the court decided." One example is the case of Merchant's Bank vs Baird (160 F 642). (see Additional Reading and Services on page 20-1). "A national bank.

section 10. MODEL LAWSUITS The following model lawsuits are included for 3 reasons.Here's the problem: Banks keep a minimum of 5% of their reserves in their vault. When it lends cash. see model lawsuit #5 for more on this type of legal action. or law impairing the obligations of contracts.000 can be used to create $100. The Federal law (18 USCS 1342 & 1962) states that anyone who uses the US mail 2 or more times within Personally. $5.000 in credit. (See Additional Reading and Services on page 20-1. The bank's money in its vault are its cash assets." Mallone's book gives very detailed instructions on how to proceed with this kind of lawsuit. are reprinted here from the book How to Avoid Foreclosure on Your 9-19 . There is no bank charter that gives a bank permission to lend its debts as money. First. After reviewing these 5 model lawsuits. 3 or more notices that your payments are late and that legal action will be taken against you. they may be handy to you or your attorney when preparing a lawsuit. your lender is breaking federal law. Actually. pass any bill of attainder. then consider consulting an attorney with experience in foreclosure matters.) Also. not cash or assets. emit bills of credit. it states that no state shall "coin money. including reasonable attorney's fees. Your lender. Constitution. I do not fully understand all the mechanics behind the "credit-is-notmoney" legal approach. in turn. can lend. the bank loans liabilities or debts. which the bank. If they have sent 2 or more of these letters within the past 10 years. paragraph 1 of the U. under 18 USCS 1964 section C. ex post facto law. Third. if you want to proceed with a lawsuit. In addition. make anything but gold and silver coin a tender in payment of debts. it is actually lending its liabilities and lending your liabilities simply is not legal for any person or institution. reading through the models may give you a better understanding of foreclosure lawsuits. Second. it lends assets. who may have created an unlawful debt by lending you credit undoubtedly will have sent you 2. they have been written as legal defenses against foreclosure by a licensed attorney." In addition to breach of contract and usury. I strongly suggest that if you are considering this type of legal action. a person injured in his business or property by a violation of section 1962 of that chapter may sue for "3-fold the damages he sustains and the cost of the suit. In article I. When the bank lends its credit.S. 10 years to collect an unlawful debt is engaged in mail fraud and is guilty of racketeering. The following 5 Model Lawsuits and the subsequent section. This means that if $5.000 is deposited in the bank. a homeowner may have grounds to sue a lender for mail fraud and racketeering. then please consult an attorney who is knowledgeable in this area of the law and who can further clarify this legal approach. A borrower exploring this type of legal action may want to get a copy of Mallone's book from the local library. I only include it here since it is a foreclosure defense recommended by an attorney. Legal Karate in the Courtroom.

use the information given in #4 with either #1. these models should be taken as they are labeled: as models only. Malone told me in a telephone conversation that the principles behind the model lawsuits reflect current legal proceedings. Model Lawsuits. with permission from the author. attorney Lawrence Adams Malone. Model #1: If you are suing a bank use Model lawsuit #l. then combine the information in Model #3 with either #1 or #2 and file it in court before a sheriff or trustee sale can take place.D. LL. Model #2: If you are suing a mortgage company or a financial institution other than a bank. you should act right away to commence suit against your lender. Farm or Business. When you use a model lawsuit. question marks [?] appear before certain paragraphs which may or may no need to be added to your particular lawsuit): MALONE'S FORECLOSURE DEFENSES Foreclosure Impending." Although Malone's book is currently out of print. Model #4: If you are going to a sheriff or trustee sale to buy in your property with constitutional money. They do an excellent job of conveying the differences in the types of lawsuits that can be filed as well. any one of which may be applicable to your particular situation. also. Despite the fact that Malone's book was last published in 1986. Since each state has specific laws which apply to foreclosure. especially in states where foreclosure can occur by a mere When Using Model Lawsuits. to make up Model Lawsuit #3. use part or all of the models to help create a lawsuit which is tailored to your specific needs. Malone's book was written to cater to the entire United States. Model #5: If you use a check to pay off an unlawful debt (created by the lender bank by mere bookkeeping entry). Mr. Model #3: If you are filing a lawsuit after a sheriff or Trustee sale. Ph. Malone's book is lawsuit-strong and is billed as having "courtroom karate with model lawsuits for the layman and his attorney.B. When foreclosure is impending.Home. not pertinent to your case and add 9-20 . In the following pages. plus his section on courtroom karate (Please note that throughout Malone's models blanks are provided for information specific to individual case. Since the particulars of each lawsuit may be different. omit any data advertisement or some other form of public notice and sale take place under third party Trustee Sale. you will find five model lawsuits. or #2. use Model Lawsuit #2. then use Model Lawsuit #4 and combine it with information given in Model Lawsuit #5. The remainder of this chapter includes the 5 model lawsuits reprinted verbatim from Chapter 8 of Malone's book. a great number are in circulation in many of the city and county library systems throughout the state of California.

Many debts are based on refinancing of existing debts. regardless of how many years were involved." any demands made on you regarding financial decisions that were detrimental to you. The Parties To The Action . you must plead with particularity and state the facts chronologically. Here. Sec. the court.S. then you must sue the original lender and name all the other parties to whom the note was assigned as defendants. you should add any other issues that are relevant to your case such as "breach of oral promises. You will have no claim for relief against the assigns (lenders who bought the note).This is a section where you will restate the allegations of your factual background section and then apply the law to the facts and state which laws they violated. but you can use your lawsuit to challenge jurisdiction of any action they bring against you based on #7 mentioned earlier that there is an existing action pending between the same parties on the same cause of action. Avoid any mention of law here. Usury is a 9-21 . The key parts of a lawsuit are: l.This is the section where you list the names and addresses of the defendants and the plaintiffs. Breach of Contract is a violation of the common law as well as Art. 5. FRAMING YOUR LAWSUIT The biggest challenge that anyone will have is to have his attorney frame a good lawsuit. but that he did deliberately issue a "bad" check and passed it on to you to circulate as "money" and that he did this deliberately to your detriment and damage. 10. Fraud is a violation of the common law and voids any contract.any material that is new or particularly applicable to your case. We want a lawsuit that will survive a Motion to Dismiss hearing or Demurrer and finally reach a jury trial. usually the top of which lists the plaintiffs and defendants. Constitution.. If you have a note that has been sold by the original lender to several other lenders. thus you must go all the way back to the original loan. You must then state the lender failed to lend you "legal tender" or "lawful money" as promised for all the loans involved.The first part of the body of the complaint or counterclaim that invokes part of the Constitution and state or federal laws applicable and states whether this is a Complaint at law or in equity. U. 3. 4. You must also state that you did not become aware of his fraudulent activity until after the date of your last loan. 2.This is the most important section of the lawsuit. In your factual background section. Jurisdiction .The first page. The caption . you must first list every loan of credit made. Factual Background . otherwise you are a party to fraud and have waived your claim for relief. The Counts . and any other things done to injure or violate your rights under the law. from the last one to the first one. In framing a lawsuit on the credit issue. avoid theory and conclusionary statements. 1. Case law is never cited in a complaint. Case # etc.

Racketeering is a violation of federal law and some state laws. You prepare this form yourself--a sample one is enclosed. a copy is sent to the 9-22 . Then you will need a Summons form. if you are filing a lawsuit there. along with a Certificate of Service usually signed by someone other than yourself who did the actual mailing of the Motion. answer and 3. All copies must be signed. you must have the party serving it fill out an Affidavit of Service. you cannot serve any Summons and you cannot serve any other pleadings either. or 4.Here is where you ask for any relief that was not mentioned in the Counts section. Request to clerk of courts to enter default judgment. Fraud can also involve a violation of state securities laws that is when the 6. a friend or lender obtains a note (a security) for a fraudulent or insufficient consideration. These forms are usually called: 1. Affidavit of no amount due. neighbor can serve the Summons and Complaint also. Affidavit of non military service. Another form you will need is a Notice of Lis Pendens. This is a notice of a lawsuit pending and must include the legal description of your property. Reread this section before writing your lawsuit. which in most areas can be served by mail. Check your State Statutes on Securities. After your lawsuit is written and filed. copies of a standard Summons form are available from the clerk of courts in your state or federal court or bankruptcy court. DEFAULT JUDGMENTS If a defendant does not Answer your Complaint or does not file a Motion to Dismiss within the time allowed in the Summons. You will need 4 separate forms which you can prepare yourself or you can get preprinted forms from the clerk of courts. then you will need someone to serve it. except for Motions. You demand your trial by jury and ask for empanelment of a grand jury so you can present criminal charges against the defendants or ask to be directed to an existing grand jury so you can present testimony concerning violations of various state or federal criminal laws. You can get the sheriff's department to do this or you can hire a process server. This is the basic structure of a well written lawsuit. you can then get the clerk of court to enter a Default Judgment for you. As a party to the action. Relief Requested . Default judgment. To locate a process server. While you can write up your own in many states. Once the default judgment is entered. 2. Once the defendants have been served. It is very important that you use all these forms to protect your interests. look up "Process Servers" in your Yellow Pages phone directory. you must make enough copies to serve one on each defendant. which you must file with the court. Also.violation of the contract based on the amount of lawful money or coins and currency actually risked in the loan. Once you have written your lawsuit. This is filed usually in the register of deeds and clouds title to the property while the lawsuit is in progress.

6. An automatic stay of execution goes into effect upon the filing of any bankruptcy plan.) Support your motion with an affidavit. Use Depositions for your most effective results to trap your adversary. Challenge the authority of the court when your Constitutional rights are violated. make a sketch or outline of the points you will raise.defendant. After their appeal time has run out. you have a judgment that can be collected by requesting the clerk of courts to issue a Writ of Execution to the sheriff. Any surprise arguments you raise will throw your opponent off track. you can then file a Motion to Consolidate Cases--that is. use Supreme Court cases primarily as these override all lower court decisions. To present your arguments. Use all Discovery aggressively. By What Authority? Always challenge the authority of the adversary to do what they do when you cannot find their authority for doing something. to combine their case against you with your case against them. 3. COURTROOM PROCEDURE In a court room. When using case law. In this motion. the party making a motion speaks first and the other party then responds. PRINCIPLES defense is a TO good 2. This will stop the clock on their execution of the judgment against you. As a plaintiff or defendant. Other options to stop them from seizing your property are to file a Petition for a Temporary Restraining Order (TRO) or to file a Chapter ll or 5. then you must file a new lawsuit against the lender. ("Newly discovered evidence" must be evidence which the defendant could not. your very first motion should be a "motion for a Court Ruling on Jury Trial Demand. you could ask the court for permission to answer the complaint and/or file a Counterclaim based on newly discovered evidence. Case law is always used in supporting briefs that are supported by affidavits. then ask the court to make him 9-23 . have discovered prior to judgment. If possible. The best set of books to find supporting case law are called "Supreme Court Digests" and these can be found in your local law library. After doing this. 7. If you were the defendant. go after your adversary criminally as well as civilly. Always use Affidavits to support your motions and always use Affidavits to oppose their motions that you are opposed to. The best offense." Support your motion by arguments based on the Constitution and case law. 4. If the opposing attorney baffles you with a lot of legal mumbo jumbo. It should be noted here that a default judgment can be removed by a judge based on good cause presented by the defendant such as newly discovered evidence or insufficiency of service and for other reasons. IMPORTANT REMEMBER 1. you could file a Motion to Set Aside Default Judgment. Chapter 13 bankruptcy plan. usually in the courthouse or at a college. Use arguments based on natural equity and combine them with arguments in law in your pleadings. in the exercise of diligence. If the judge does not grant it.

if the other attorney or the judge gets off track. but are part of the merits of the case which is not before the court today. If any paper is served on the other party directly such as interrogatories or a Notice of Deposition. If you plan on being in Federal Court. The fastest way to contact them regarding orders is at 612687-7000. Give them the name of your state that you want the court rules and procedures on. P. A Certificate or Affidavit of Service is then always filed with the court. return receipt requested. then tell the court that you are standing by your written pleadings as being a person not trained in law. MN 551641804. STICK TO THE ISSUES IN THE MOTION AND DO NOT GET INTO A DISCUSSION ON THE MERITS OF THE CASE. QUESTIONS AND ANSWERS ABOUT TRIAL PREPARATION Q: Where can I get a book on the rules of civil procedure for my state? A:Your State. you must point out that the new issues raised are not in the motion. If you are not confident of yourself. a Notice of Deposition or Subpoena must always be personally served on the party affected. usually the judge's secretary.O. Otherwise. Paul.. send for a copy of Federal Rules of Civil & Appellate Procedure. Memoranda and briefs are always presented at the pretrial hearing. Box 64526. the other party's attorney must always get a copy. While motions may be served by mail. Court Rules and Procedures can be obtained from West Publishing Co. you will get thrown off track. By getting them back on point and to the issues before the court in the motion hearing. SERVING MOTIONS While the complaint is always served directly on the party you are suing. St. ONE VERY IMPORTANT THING TO REMEMBER IS THAT AT A MOTION HEARING. To get back on track.explain in plain English just what each of his words means. Then go to the state 9-24 . you are not qualified to debate the opposing attorney. "motions" written afterwards are served on the attorney for the other party and this constitutes service on the other party. you will spare yourself a verbal debate on the merits of the case. usually certified. but may be used to oppose a Motion to Dismiss or a Motion for Summary Judgment.

Your next objective is to get a trial by jury. about half of them don't. Believe it or not. A tape recorder can provide evidence that will be invaluable to you in going after your adversaries both civilly and criminally. Q: When can a case be removed to federal court? Q: How do you gather evidence for a case? A:It is vitally important that you have a pocket tape recorder with you at all court proceedings.court or the federal court and ask for a copy of the local court rules. Getting him to answer the complaint virtually guarantees that a case will go to trial. and at all sheriff or trustee sales. These issues can be combined. You can also sue as an assigns to a land patent as this is the best and paramount title at law. when you call someone on the phone. A Polaroid camera may be helpful to photograph the high bidder's check or other monetary instrument. have a telephone pickup device which you can obtain from Sears or Radio Shack connected to a cassette recorder to record any advice that you receive from someone on any legal questions you may ask them. No one likes to see his fellow man put out of his home and you may enlist the sympathy of the jury immediately if you are being foreclosed for reasons not your fault and beyond your control. Getting A Trial . Use a tape recorder when going into a bank to find out if a cashiers or certified check from the lender at a sheriff or trustee sale is any good that is. and they definitely do not know on what authority "credit" money is created. Most lawyers and many lenders are not knowledgeable in the area of fractional reserve banking. Also. then amend Model #4 or #5 accordingly and charge the sheriff with failure to comply with the Constitution and state statutes by not requiring any money from the high bid that he accepted. FIRST. See Model Lawsuits #4 and #5. Only defendants can remove a civil case to federal court. If you are planning on being in bankruptcy court. if the bank has the cash to redeem it. A tape recording is A:Within 30 days after a federal issue is raised. better than most people's memories and can always be played back. A FEW MORE NOTES ABOUT DEFENSES AND COMMENTS WITH REGARD TO MODEL LAWSUIT #l 9-25 . Most important is a well pleaded complaint. especially one that is based on the money and credit money issue. all interviews with your lenders to record all verbal promises made. If no check is tendered.One of the most important actions goals you can achieve is getting a trial.You will probably want help in drafting such a complaint and it is of vital importance if you want to win your case and have the help of a "constitutional lawyer" who will know how to get the lender's attorney to answer the complaint. see the Legal Karate packet for the names of the books you will need there. Indeed. many who work for banks don't know exactly how banks create "credit" money.

. [ your name ]....... Who is a holder in due course? Let us say If you live in a state where Bank C is foreclosing on you and they have already filed a suit against you in court.. For those who prefer to file their lawsuits in a state court. Kerner........ ... name Bank A and Bank B as "Third Party Defendants" which will make you both Defendant and Third Party Plaintiff... MODEL LAWSUIT #l . under conditions of Fraud and Misrepresentation.. There may be other factors than those cited on the "Model" form to be considered in documenting your lawsuit...... Here is a list of those possible additional factors: Holder in Due Course. vs............ which was first obtained by Bank A........ in either a court of law or equity...... which may require the addition of extra parties and the adding of more facts to the "Factual Background" section of your Complaint... The question is: Whom do you sue? What you do is name Bank A. 519 and show their Complaint against the defendants as follows: JURISDICTION 1... omit the Federal Reserve Bank by dropping the last 2 paragraphs from the "Factual Background" section of the Complaint and by modifying the Counts and Relief Requested sections accordingly...This lawsuit is designed for suing banks in Federal Court and includes the option of suing the Federal Reserve Bank(s) and their Board of Examiners (name all of them in your Complaint)..... If you live in a non-judicial state such as Virginia. Now Bank C is foreclosing you.. the mortgage note........ then you must take the offensive prior to such action.. and relying on the decisions in Haines v. you took out a loan of credit from Bank A and Bank A sold it to Bank B. Com plaint at Law Bank of [ ].. there is little to do except plug in the names and dates of loans and dollar amounts on the model form given herein...S.................. which permits the lender merely to advertise and sell your property under foreclosure of a deed of trust and Trustee Sale.. in propria persona.. security agreement etc. or deed of trust.. FOR STATE COURTS/ (Jurisdiction in this action at law is based on the Constitution of the United States and in particular the 7th amendment as this is a suit at 9-26 ......... For those who want to sue the Federal Reserve Banks along with their local bank. However in the last section of the "Factual Background" section of your complaint add another paragraph and state: Bank B and Bank C are not HOLDERS IN DUE COURSE under the Uniform Commercial Code... then as Defendant.. Bank B in turn sold it to Bank C.. 404 U. and sue all of the Holders in Due Course.... Defendants.. Case #... and [Bank President or officer] and Federal Reserve Bank President [name] and John and Jane Does ( 1 to 25 )... The documents which Bank B and Bank C have obtained from Bank A do not provide them with any claim whatsoever for relief... naming all of them as Defendants and yourself as Plaintiff. Now Comes the plaintiffs. Bank B and Bank C as Defendants in your lawsuit.... Bank B and Bank C purchased the mortgage....... Plaintiff. ..Model Lawsuit #l ..

Sec. and did this deliberately to the detriment and damage of the plaintiffs. the bank did charge an interest rate that was 20 times greater than what was authorized in the contract... The defendants in this Complaint are the [name of bank] whose business address is as follows:.] on or about [month.") FACTUAL BACKGROUND 3.C. mortgage note. PARTIES TO THE ACTION 2. the plaintiffs have made payments of principal and interest totaling [total $ amount paid].. On or about [month. Relying on these false representations. use the following ..and who lives at. The bank in writing this check. Since the date of the loan..S.. 404 U.C. (For Federal Court. etc. Jurisdiction is further invoked under the Constitution of the state of [ ] and in particular by the. and 18 U. 8. 1332 and involves diversity of citizenship and more than $10.S. date. In carrying out their commitment to lend lawful money of the United States. year]. 1983 et seq.S. note. the plaintiffs were induced into signing a [mortgage. the [bank of] through its loan officer (or President) did verbally represent to the plaintiffs that it had approved a loan to them for the sum of [X amount of loan] in lawful money of the United States and at annual interest rate of ? %. date. dress is [use address of F. security agreement etc. deed of trust. the bank and its officer [name] did fail to lend the plaintiffs lawful money of the United States for the full value of the loan.C. The check (or checks) which the bank and its officers wrote were not backed by or redeemable in Federal Reserve Notes..and John and Jane Does (l through 25) whose names and addresses are unknown at this time.S. and whose ad6. did deliberately make a loan beyond its customers' deposits. Sec. The [Bank of] and its loan officer [insert name] knew or should have known that the verbal statement that they would lend the plaintiffs "lawful money of the United States" at an annual interest rate of ? % was a false representation that was made recklessly and with deliberate and intentional disregard for the rights of the plaintiffs. 1964 as well as the Constitution of the United States and in particular the 7th amendment as this is a "suit at common law. 5. 519). Bank here] and all members of the Board of Examiners whose names and addresses are unknown at this time. FOR FEDERAL COURTS.. For the actual lawful money which the bank risked for the loan. coins or 9-27 ..C. Sec..S.. year]..amendment which preserves the right to trial by jury in an action at law and jurisdiction is further invoked under 18 U. 964. R.common law. The plaintiffs' names and addresses are as follows:. add: "and other defendants include the President of the Federal Reserve bank of [your district] whose name is.and a bank employee [President or loan officer] whose name is. 7. 4.(Jurisdiction is invoked under 28 U. The plaintiffs in this action are citizens of the United States and residents of the state of [ ]. After the plaintiffs had signed the [mortgage. deed of trust.]. the bank did write a check for the sum of [$ amount of loan]..000 in controversy and jurisdiction is further invoked under 42 U." This Complaint is filed in propria persona pursuant to Haines vs. estimated to be no more than 5% of the loan's face value. note. Kerner.

S.C (wire fraud) and 18 U. particularly the 5th. Bank are a party to these false representations as they were a party to the transfer of book entries with the full knowledge that the bank did not have in its possession lawful money to redeem its check and they did all this to the detriment and damage of the plaintiffs. The bank and its officers did use the U. The Federal Reserve Bank President and the Board of Examiners for the F. FRAUD AND RACKETEERING.000 corporations to own all the farm lands in the nation. date. the Federal Reserve Bank President [name] and the Board of Examiners along with John and Jane Does. The only consideration which the bank provided for this loan was a book entry demand deposit which the bank itself created effortlessly and at virtually no cost to itself.C. whose name is. 9-28 . 1962 in establishing "pattern of racketeering activity." Plaintiffs ask for triple damages for actual and compensatory damage! sustained pursuant to 18 U.S. R. All of the illegal activity is being done in violation of Federal Racketeering laws. BREACH OF CONTRACT. The bank in stamping its own check "Paid. The averments of the previously numbered paragraphs are referred to by reference herein. add the following sections. 9. Mails more than twice since the date of loan to collect money on this debt. 1341 (mail fraud) and 18 U. 12. The Federal Revenue Bank President. whose names are unknown at this time.. year]. 10. All these parties are in collusion in using the U.lawful money of the United States for their full face value.S. The [name of bank and its officer. Federal Antitrust laws. Plaintiff did not become aware of the fraudulent activity of the defendants until on or around [month. and in violation of the plaintiffs Constitutional rights. are a party to a conspiracy to do all of the following: keep interest rates artificially high for contract credit to create unemployment and depreciating farm prices.C.. The [Bank of] and its officer [name]. COUNT ONE 1.S..C.S. 7th.and the Board of Examiners are all parties to the writing and processing of a check written by the [name of bank] on or about [date of loan]. whose name is. Mails and Wire Services to collect on this unlawful debt in violation of 18 U. failed to lend the plaintiffs lawful money of the United States and instead substituted a check with the intended purpose of circulating it as money. The averments of the previously numbered paragraphs are restated by reference herein. (Note: to sue the Federal Reserve Banks. The averments of the previously numbered paragraphs are restated by reference herein.S." did make a false representation as it merely transferred some book entries and never intended to redeem this check in lawful money of the United States. and to select and pressure the bank to foreclose on the plaintiff's property all as part of preplanned conspiracy to eliminate 2. Their collective activities in passing this check are part of a planned scheme. In addition to this.3 million American farmers and to set up 100. [name]. 9th and 14th amendments. and the Board of Examiners for this bank knew or should have known that the [name of bank] made a loan to the plaintiffs by writing a check on or around [date of loan] and that the bank was charging interest on nonexistent funds. COUNT TWO 1.. and the president of the Federal Reserve Bank of [your district].) 11.

.. 4... 1962 (pattern of racketeering activity) and 18 U. and its President as well as the Board of Examiners for violations of Federal Antitrust laws and the Federal Racketeering laws including 18 U....... Plaintiffs ask for a court order declaring the [mortgage........S.. 1.. etc...... Now Comes the Plaintiffs.... year].. ....C... CAPTION (See Model Lawsuit #l) Case #.. An injunction against the [name of bank] and the Federal Reserve Bank to divest themselves of any assets they have unlawfully gained and to return the COUNT THREE same to the plaintiffs and all other debtors or injured parties.. Court will want to know exact nature of the damage suffered..S. knew or should have known that 9-29 . MODEL LAWSUIT #2 (for financial institutions other than banks) . the [name of bank] has collected an annual interest rate estimated to be twenty times greater than the amount of interest the plaintiffs agreed to in the note they signed....C.. 4..S. The plaintiffs ask the court to empanel a Grand Jury to investigate the [name of bank]. Plaintiffs demand a trial by jury to be comprised of 12 members to determine all issues of facts in dispute and to determine and award all damages... [name]... Complaint at Law . note... .....1964 from each and every defendant on all counts. Sec. Date [Your Name] Plaintiff--in propria persona.. security agreement. (See Model Lawsuit #1) FACTUAL BACKGROUND 3.....S.. etc] to be null and void..... 404 U.... Kerner. 519 and show their complaint against the defendants as follows.... which is questionable. the Federal Reserve bank of [your district].....S.......... By virtue of the bank's activities in creating an unlawful debt by passing a bad check........ deed of trust. 2.. 3.... in propria persona.... USURY AND RACKETEERING.... Note: No statement claiming actual damage to the plaintiff except usury charge.. ( See Model Lawsuit # 1 ) PARTIES TO THE ACTION 2.C.. 1341 (mail fraud) and 18 U... mortgage note........ and relying on the decisions in Haines v. the [FLB/ PCA/Mortgage Co. 1343 (wire fraud) and 18 U. etc..... date... 241 for conspiracy to violate the plaintiffs and other citizens Constitutional rights.. The [FLB/PCA/Mortgage Co. The averments of the previously numbered paragraphs are restated by reference herein.C. JURISDICTION 1..... This violation of *contract law and usury laws is due to the fact that the actual amount of lawful money risked by the bank in making the loan was less than 5% of the loan's face value.] did verbally represent to the plaintiffs that they had approved a loan to them for the sum of [$ amount of loan] in lawful money of the United States at an annual interest rate of ? %... Plaintiffs ask for actual damages for the sum of [?$ paid on loan] and compensatory damages to be determined as well as three times this amount in punitive damages against each defendant convicted on any count.. 5.] and its loan officer... On or about [month.. RELIEF REQUESTED 1..

Subsequently. The defendants. [PCA/FLB/Mortgage Co. The plaintiffs did not become aware of the fraudulent activity alleged in this complaint until on or around [month.] and their loan officer. date. deed of trust. or lawful money of the United States. date..] did write a check for the sum of [$ amount of loan] on or about [date of loan]. the plaintiffs were induced into signing a [mortgage.] did fail to lend the plaintiffs lawful money of the United States for the full value of the loan. deed of trust. 10.] and its loan officer.S. [PCA/FLB/Mortgage Co. etc. 12. 5. security agreement. the plaintiffs have made payments of principal and interest totaling [total amount paid]. ]. The bank merely laundered the bad check by transferring some book entries. the bank. ) 9-30 . The [PCA/FLB/Mortgage Co. The defendants.] knew or should have known that the checks they deposited in the bank account to cover the check they wrote for this loan was a bad check.] wrote for the sum of [$ amount of loan] was/were not backed by or redeemable for their full face value in Federal Reserve Notes. lending checks which they had received either directly or indirectly from a commercial bank. Mails more than twice since the date of the loan to collect money on this debt. ll. 7. After the plaintiffs had signed the [mortgage.] and their loan officer. etc. the [PCA/FLB/ check. note. The interest rate charged should have been applied only to the lawful money risked in making this loan and instead was applied against the entire check even though this check is estimated to have been backed by only 5% of its face value in lawful money. The [PCA/FLB/Mortgage Co. The [PCA/FLB/Mortgage Co.the verbal statement that they would lend the plaintiffs "lawful money of the United States" at an annual interest rate of ? % was a false representation that was made recklessly and with deliberate and intentional disregard for the rights of the plaintiffs. etc . The interest rate charged for the actual lawful money risked for this loan is estimated to be twenty times greater than that agreed to in the note signed by the plaintiffs. etc. etc. nor did the bank have in its possession the cash to redeem that loan. The bank against whom this check was drawn was a party to this check kiting scheme. They knew or should have known that the bank upon which the check for this loan was drawn had insufficient funds to redeem this check in lawful money of the United States.] on or about [month. [name] knew or should have known that they were a party to a check kiting scheme by laundering bad checks which they had received either directly or indirectly from one or more commercial banks that originated the scheme. 6. etc . The check(s) which [PCA/FLB/Mortgage Co. mortgage note. [name]. year]. etc. against whom [PCA/FLB/Mortgage Co. In carrying out their commitment to lend lawful money of the United States. (Note: Paragraph 11 and 12 of Model Lawsuit #l can be substituted for paragraph ll and 12 of Model Lawsuit #2. Since the date of the etc.] wrote the check never did redeem this check in lawful money of the United States.] and its loan officer knew or should have known that they were accepting. did use the U. 9. mortgage note. the [PCA/FLB/Mortgage Co. note. coins. year]. 8. Relying on these false representations. [name] knew or should have known that they were violating usury laws by charging interest on non-existent funds.

1964 from each and every defendant.C.S. and one or more unknown banks are parties to the writing and laundering of a bad check(s) written by [PCA/FLB etc.S.C...] on or around [date of loan]. then you should use Count Two from Model Lawsuit #l as well.." Plaintiffs ask for triple damages for actual and compensatory damages sustained pursuant to 18 U.. and by virtue of the fact these checks were only backed by 5% or less of their face value in cash.COUNT ONE 1.. deed of trust. etc.S...S. [PCA/FLB etc ..S. mortgage note.. PCA/FLB (strike 9-31 .. BREACH OF CONTRACT. 1343 (wire fraud) and 18 U. then use the 5 point Relief Requested material from Model Lawsuit #l as a substitute for the Relief Requested section of Model Lawsuit #2. The [PCA/FLB etc.C. 3. security agreement. Date. (Note: if you have previously named the Federal Reserve Bank President and RELIEF REQUESTED 1...C. Mails and Wire Services to collect on this unlawful debt in violation of 18 U.. All these parties are in collusion in using the U. The averments of the previously numbered paragraphs are restated by reference herein. ) COUNT THREE 1.... By virtue of John and Jane Does who were the banks that were writing and passing bad checks to [PCA/FLB etc. FRAUD AND RACKETEERING. Plaintiffs--in propria persona. Plaintiffs ask for a court order declaring the [mortgage. The averments of the previously numbered paragraphs are restated by reference herein. COUNT TWO 1. (Note: if you sued the Federal Reserve Bank President and the Board of Examiners. note. the Board of Examiners as defendants and have used paragraph ll and 12 from the Factual Background of Model Lawsuit #l.. 1341 (mail fraud) and 18 U.] and its officer.S. restates the allegations of Counts 1 through 5.] did knowingly charge an interest rate on lawful money actually risked that was about 20 times greater than the interest rate agreed to in the note signed by the plaintiffs.] and its officer [name] failed to lend the plaintiffs lawful money of the United States and instead substituted a bad check with the intended purpose of circulating it as money.. 1962 in establishing a "pattern of racketeering activity.] to be null and void.C.] depositing these bad checks and passing them on to borrowers by writing checks against non existent funds. Plaintiffs demand a trial by jury to be comprised of 12 members to determine all issues of facts in dispute and to determine and award all damages.] and by virtue of [PCA/FLB etc.) (To be added to Count 2 of Model Lawsuit #2) FRAUD AND RACKETEERING The plaintiff/defendant (strike one). [Your Name].... 1341 (mail fraud) and 18 U..S. 1962 by engaging in this pattern of racketeering activity. 2 . USURY AND RACKETEERING... They did this in violation of 18 U.C. Plaintiffs ask for actual damages for the sum of [total $ amount paid on loan] and compensatory damages to be determined as well as three times this amount in punitive damages against each defendant on any count. etc.. The [PCA/FLB/Mortgage Co. The averments of the previously numbered paragraphs are restated by reference herein.

there is a failure of consideration. Angry non-prime borrowers... stock certificates starting showing up for the first time in February of 1985 in the state of Washington. However. THE PRIME RATE CASES and HOW TO ADD RACKETEERING CHARGES TO SUITS AGAINST BANKS AND OTHER LENDERS.. The central figure in the punitive damages in the sum of [3 times the damages just quoted] for a total of [add actual and punitive]. . Furthermore. and b. rate.S. all in violation of 18 USCS 1341. settled with a West German and two U. old lawyer and business professor who started the Atlanta case in 1980. other banks took notice. Currently. knew or should have known that the stock sold to me. Mr. PCA/FLB has. the in this case does not exist. Milwaukee Cheese Co. Our actual damages in the payment of principal and interest on this non existent stock has been the total sum of $ which is the total amount we estimated we paid for this non existent stock since the first loan was taken out which was on [date of first loan]. a breach of contract and fraud. The plaintiff/defendant in this action has never voted at any stockholders meeting and has never been invited to one. Kleiner says a client. and 18 USCS 1961 and 1962.... he says. The issue of fraud for requiring borrowers to buy nonexistent stock can still be in any area where stock certificates have not been issued as other allegations added to Model Lawsuit #2.. Pursuant to 18 USCS 1964. That the damages awarded us be applied against all existing delinquent payments and future payments until paid in full and that the foreclosure action against us be dismissed.. we therefore are for treble damages or the sum of [insert triple damages here] plus "When First National Bank of Atlanta agreed recently to settle a 3 1/2 year old lawsuit for as much as 12.. PCA/FLB and its loan officer.5 9-32 .. through these fraudulent actions created an unlawful debt and has more than twice used the U. In one case. The Wall Street Journal reports the following: burgeoning litigation is Jackie Kleiner.one) created an "unlawful debt" by requiring the Plaintiff/Defendant to purchase "stock" from them in the sum of [dollar value of stock purchased] on [date of loan or stock purchase]. say banks have been overcharging them. banks for about 10. That the entire debt be declared null and void. 1985: Update insert-Because of a number of lawsuits filed against PCAs and FLBs on this issue. Because the stock does not exist. Feb. a 51 yr. however. he has been involved at one time or another in 38 of the estimated 50 prime rate suits. APRIL 4. because the prime rate their loans were tied to. In addition we ask the court for the following relief: a. which for years has been described as the rate banks charge their best corporate customers. or best. we allege that this stock does not exist and never did exist and the amount required for the stock purchase is nothing more that concealed interest rate charge. wasn't the real prime. often for years. there is a failure of consideration as there is no stock and no actual ownership in PCA/FLB by me or other farmers as they claim.. he says.S. At issue is a hallowed banking tradition: the prime rate.5 million.. suing banks is 'my main occupation'. Since then. for example. 1984.. Mails to collect on this debt.

" The above statements are excerpts from the article which appeared in The Wall Street Journal on April 4. so you as a reader can see for yourself how it was placed together. Meanwhile. THAT'S POWERFUL STUFF! You can sue to collect triple damages against anyone who creates an unlawful debt and uses the U. one of which occurred after the effective date of this chapter [Oct 15. this is a prohibited activity. the controversy has prompted many banks to redefine the prime rate in lending documents. which is incorporated in 18 USCS 1961 which defines a "pattern of racketeering. The farmer usually borrows from 5 to 10% more in order to buy the stock.. Even the new definitions don't bother Mr. for creating and lending "credit" which is not lawful money.5 million in loans. Mails to collect it.S. and the banks forgave about $13. section c. He says Milwaukee Cheese paid the banks about $3 million. Mail to collect on this debt. if any bank or other lender creates an unlawful debt in whole or in part and they send you statement to collect on this bill two or more times within any 10 year period. Kleiner. The article was titled: CHALLENGES TO PRIME RATE AS BASE FOR LOANS STIR FEARS AMONG BANKS.5 million to the Milwaukee Cheese Co. Now. 1984.S. He says the banks' new language is 'more deceptive' than before. Mails to collect on an unlawful debt. My interest in learning about the racketeering charges is because suits against banks on the "credit" issue involve the same fundamental issues which are breach of contract and fraud. When the above article came to my attention. including reasonable attorney's fees. but Milwaukee Cheese officials won't discuss the terms. it is fraud and 9-33 . a violation of 18 USCS 1341. every farmer who has subpoenaed the stock from either the PCA of the FLB have never received any. they are engaging in mail fraud.. however. Under 18 USCS 1964..S. it says: "Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit. I went to the Federal Courthouse and looked the case up." and under 18 USCS 1962.." and because they use the U. having been sent to me by a resident here in Milwaukee. The issues in the prime rate cases are essentially this: breach of contract for charging an interest above the Prime Rate." In other words. fraud for doing it deliberately. I called the Milwaukee Cheese Co. A banking source confirms that the settlement was for "several million" dollars. they have established a "pattern of racketeering. What about loans from the Production Credit Association and the Federal Land Bank? Both PCA and the Federal Land Banks (FLBs) require farmers to buy "stock" when they take out an agricultural loan as a condition for the loan... 1970] and the last of which occurred within ten years after the commission of a prior act of racketeering activity. Why? The answer is obvious--the stock doesn't exist! This is a Breach of Contract and because they are doing it deliberately. A copy of this case that was apparently worth $10. is part of this packet.million." 18 USCS 1961 defines a "pattern of racketeering" as "two acts of racketeering activity. and third racketeering for using U. Since the banks create an unlawful debt because of their failure to provide a "lawful consideration. He wants to challenge it in court. and they provided me with the Case number.

Check your new loans or notes and you may find this amount already included in the loan that is refinanced. Here is how you would calculate the amount of actual damages: 9-34 .because they are using the U. 1. It is possible that much of your mortgage loan or deed of trust could be wiped out or repudiated. Now.S. Look up the original figures. you can sue to recover triple damages on this 5 to 10 % of the loans value from the very first loan you took out. I am told that several years ago. Get copies of all your original loan papers. the PCAs and the FLBs paid some interest to the farmers on this stock and then discontinued the practice. If you cannot Consider that a farmer may have taken out several loans from either PCA or FLB for the last several years. they are engaged in a "pattern of racketeering" and are potentially liable to the borrowers (the farmers) for triple damages. one farmer received a check which amounted to 3 % interest on the stock. Also. Mails to collect on an unlawful debt. that this year. Is this the same rate of return the other stockholders of PCA and FLBs receiving? I doubt it.

Lot 2 desc. thence N 9 rods. 1. S l/2 SE l/4.00 in lawful money of the United States at the foreclosure sale on January 17. Trunk . Lot 2 for 1497. Section 10 of the United States Constitution which states: "NO STATE SHALL MAKE ANY THING BUT GOLD AND SILVER COIN A TENDER IN PAYMENT OF DEBTS. as follows: Beginning at the NE corner thereof." This foreclosure sale was for property described as follows: S 1/2 NE 1/4. thence E at right angles 300 ft. 2.00 feet to the point of beginning. Lot 2 desc. distant 33. White made the high bid of $21. line of said Govt. to the point of beginning of the land to be described.57 ft. T 126 N. thence W parallel to the S line thereof 67 l/3 rods. and each dollar of silver contained 371. along the North . Box 286 Avon. the E. except parcels: Parcel A: That part of Govt. containing 2. more or less to the point of beginning.M. thence northerly along said west line a distance of 150. 35. thence northwesterly a distance of 486. Lot 1 and Govt. line thereof 53 rods 3. thence W. MN 56310 THIS INSTRUMENT WAS DRAFTED BY David G. except: commencing at the N 1/4 corner of said Sec.30 acres. of County Highway #11. as follows: Beginning at a point in the S. 1. distant 33. parallel with the north line of said S 1/2 NE 1/4 a distance of 470. MN 56310 Subscribed & sworn to me this 18th day of January.19 feet. thence N 1 rod. R 32 W. 1. thence along said centerline N 3° 21' 27" W for 1160 ft. Lots 1 & 2.. 35. at right angles 145. T 125 N. 1: thence S. said point being the center of the road.. thence N 89° 57' W (assumed bearing) along the S. at the south door of the Stearns County Courthouse in the City of St. thence S. thence continuing along said centerline N 3° 21' 27" W for 260 ft. David G. thence S 86° 38' 33" W for 152 ft. as follows: Beginning at the SE corner thereof. 3 rods to the place of beginning. to the centerline of a public road. thence W 41 rods. all in Sec.South 1/4 line of said Sec. as now constructed and travelled. as follows: Commencing at the S 1/4 corner of said Sec.25 grains of pure silver and was minted by the United States government prior to 1965. thence E to place of beginning. all in Sec. thence E. along said road 3 rods.00 feet southerly of the northwest corner of said S l/2 NE l/4 of Sec.00 feet southerly of the northwest corner of said S l/2 NE l/4.20 ft. described as follows: Beginning at a point on the west line of said S l/2 NE l/4 of Sec. thence S.. 1. 1.22 ft. The NE I/4 SW l/4.16 feet.. 1.20 ft.AN EXAMPLE OF AN AFFIDAVIT AND NOTICE OF HIGH BID IN LAWFUL MONEY THIS IS TO CERTIFY THAT David G. except tract desc. thence N. W of the SE corner thereof. line thereof. more or less to the shore of Freeport Lake. 1985 [signed] Jean A. Parcel B: That part of Govt. also a part of the NW I/4 SE l/4 desc. AND EXCEPT that part of the S l/2 NE l/4 of Sec. for point of beginning.05 ft. Cloud. Each dollar is as lawfully defined by the Coinage Act of 1792. thence W 53 rods to the center of the road. Box 286 Avon. [signed] David G. thence SW'ly along said lake shore to its intersection with a line draw S 86° 38" E for 462 ft. White Rt. a distance of 2017.00 feet southerly of the point of begin ning. thence E 41 rods to the center of said road. parallel with the west line of said S 1/2 NE 1/4 a distance of 276. thence S 9 rods to the place of beginning and also except that part of said Lot 2 lying W. thence N. distant 150. 2.. The silver coins were bid in compliance with Article I. thence NW'ly to a point on the W line thereof which is 66 l/3 rods S of the NW corner. R 32 W. thence southerly. at right angles 300 ft. thence S along said W line to the SW corner.74 feet to a point on the west line of said S 1/2 NE 1/4. White Rt.. all in Sec. 1985 at 10:15 o'clock A. along said line 145. to the E. thence easterly. White did bid twenty one (21) dollars in silver coins. to the point of beginning and there terminating. Also Govt. 6 acres of SW 1/4 NW 1/4 and SE 1/4 NW 1/4.

available from PIN. it is easy to calculate actual damages.000 equals $15. This equals $5. There are no stock certificates!) TO PCA or FLB: You are required to bring to the deposition a copy of all stocks sold to [your name] which were a condition for the loan or loans executed on [date of loan].locate the papers. Now. So three times $5. I prefer the latter method myself." and let's say that in 5 years on this loan you paid $50. as you can grill them and ask them several questions. you were required to buy 10% of the loan's value as "stock. Let's take an example: Let's say that on all your loans from PCA or FLB.000. 18 USCS 1964. What percent of all loans that I took out constituted money which was used to purchase the stocks referred to in the above question? c. To calculate the actual damages is simple. read the instructions in the book Discovery Made Simple.000 in payments for both principal and interest. then send PCA or FLB a "Notice of Written Interrogatories" and a "Notice to Produce Documents" OR send then a Notice of Deposition and a Subpoena Duces Tecum and ask them to appear before a Court Reporter and to bring the "stocks" with them and all figures of records showing the amount of "stocks" you were required to purchase in dollar values. NOTICE TO PRODUCE DOCUMENTS: TO PCA or FLB: Along with the answers to the interrogatories above.10 = $5. $15. you are further required pursuant to Discovery statutes to send a copy of all "stocks" sold to [your name] which were a condition for the loan or loans executed on [date of loan]. What was the dollar value of all stock I was required to buy from PCA/FLB for all loans I took out since [date of first loan]? b. some of which you will only think of at the time of the deposition. As you can see from the above. On top of this. you . All you do is multiply the percent of the loans that went for the stock purchase against the total payments you made to PCA or FLB.) HOW TO DAMAGES CALCULATE ACTUAL Once you know what percent of each loan you were required to purchase for the stock and you know the total dollar value of all payment you made to PCA or FLB. you have two methods of obtaining the information and document you need through Discovery procedures. (To set up a deposition.000). you are entitled to triple damages. Take 10% (amount of stock purchase) times $50.000 (total amount of payments). What is the dollar amount of all payment (principal and interest) that I made to PCA/ FLB since [date of first loan]? (NOTE: An official of PCA whom I recently talked to indicated that PCA charges 8% of the loan value to stock and that Federal Land Bank charges 5%. under the RICO (Racketeering) laws.000 is the amount federal law requires the court to grant to you in damages.000 x . The following is a list of questions for the interrogatories or for the deposition: a.000 ($50. You can use the interrogatories with the notice to produce documents or you can use a deposition along with a subpoena duces tecum.

then file a Petition for Removal to Federal Court of the existing case in the State court.. After doing this. so the State Courts have jurisdiction to hear the RICO cases? According to Attorney Carla Struble of Columbus. and involves more than $10. P. and you must sue them on this issue in Federal court. MN 551641804.O.000 in controversy.000 ($15. 28 U. Jurisdiction is also based on 18 U. Paul. Refinance the loans you have with them at 6% interest. Sec. after which you file a Motion to Consolidate Cases in Federal Court.S. in part on 28 U. 1332 and that the amount in controversy exceeded $10. Box 64526. under Jurisdiction. c. 1332. If you decide to settle out of court.C. then you should file a Petition for Removal to Federal Court. Either way.000 plus $45. then they may call you and want to settle out of court. b. However. This is good news.C.can ask for punitive damages of 3 times $15. MODEL LAWSUIT #3 Note: (This model lawsuit contains information that should be added to Model Lawsuit #1 or #2 and should be filed before a sheriff or trustee sale. and not escalator clauses." You can obtain one from West Publishing Co.000 or $45. Send for this book as soon as possible. That they drop the foreclosure action against you. (Instructions on how to remove a case from state court to federal court are available from PIN for $3. Be sure your Counterclaim mentioned. If the time to file an a. then write up a whole new lawsuit and file it in Federal Court. they have used RICO in the state courts and jurisdiction has not been challenged. St. if the plaintiff challenge the court's jurisdiction to hear the RICO part of your Counterclaim.S. you will need a book called "Federal Rules of Civil Procedure. If you live in a state where they foreclose against you without going to court. You will dismiss your suit against them.00) WRITING A SUIT OR AMENDING ONE Be sure the following information gets in under: (add the following to Model Lawsuit #2) JURISDICTION Jurisdiction in this action is based. JURISDICTIONAL CONSIDERATIONS Amended Complaint or Counterclaim has expired under State statutes.000. The fastest way to contact them regarding orders is at 612-687-7000. Q: What do I do if I have already filed a Complaint or a Counterclaim in State Court? A:File an Amended Complaint or an Amended Counterclaim and add the charges. 1964. Now we are talking about a sum to potentially wipe out the entire loan. Now when you hit PCA or FLB in Federal Court with one of these suits. Sec. write up your suit on the credit issue and any and all other issues you can think of that apply to your case and add the racketeering charges and file it in the Federal District Court nearest you. The purpose of this lawsuit is to stop a sheriff or trustee .S.000 or a total of $60.000). Ohio. I suggest that you ask for these three things: Since State Courts have jurisdiction to hear all foreclosure actions and because the racketeering laws (RICO) are Federal.C.

In all these lawsuits.. The plaintiffs have discharged the debt/judgment by returning full payment in like kind of money........... Case #." The plaintiff's right not to be denied property without due process under the 5th and 14th amendments will be violated if the sheriff sale goes through as planned and the title to the plaintiff's property will be clouded by said sale.... then go directly to Model #4 and file this after the sheriff/trustee sale as soon as possible..." the plaintiff sent a check to "bank...sale after an FRC was used to pay off a debt or judgment. On or about "month-dayyear... FLB.... The plaintiff did pay off the debt/judgment dollar for dollar by returning to [name of lender] the same amount of credit they had loaned us. See Model Lawsuit #1 or #2 and add the following paragraph: 13.. PCA etc..." for the sum of $..... Yet.... See Model Lawsuit #2.. I have recently been informed by the sheriff's department that they plan to sell my property on "planned date of sale... that the debt/judgment had been paid in full and requested that the sheriff sale be cancelled.. Now comes the plaintiffs.... and Federal Reserve Bank President [name] and Sheriff [name] and John and Jane Does (1 to 25).. and show their complaint against the defendants as follows: JURISDICTION 1.. PARTIES TO THE ACTION 2... and add: (Sheriff [name]....) MODEL LAWSUIT #3 ..... [your name]...... omit what is not applicable to your situation and add whatever else is applicable... Model lawsuit #5 is designed to be used if you go to a sheriff sale and bid 21 or more dollars in silver and gold coins on another person's property. in propria persona......... Complaint at Law Bank of [?/PCA/FLB etc..... FACTUAL BACKGROUND 3 through 12... it is assumed that you have already sent an affidavit to the sheriff/trustee that the debt/judgment has been paid in full and that you have returned to the lender the full amount of credit you owed him.. If you lacked the time to use the information in Model #3 before the sheriff/trustee sale. . Defendants." the plaintiff sent an affidavit to the sheriff attesting to the fact Plaintiff..... the plaintiff is not aware of any counter affidavit signed by the [lender] which says that "the debt has not been discharged in a like kind of . Furthermore. and relying upon the decisions in Haines v.... .. For purposes of this suit......... who is the sheriff of ? county and whose address is [address of sheriff's department or his home]........ ]....... Kerner. 404 US 519.............. (On "day-month-year. See Model Lawsuit #1... The sheriff knows or should have known that the contents of the affidavit are true. These lawsuits may be filed in either state or federal court..........

.. Kerner.. you should have plenty of exhibits to attach to Model lawsuit #4............... Under the defendants. then omit them or modify the complaint accordingly.. Now comes the plaintiffs........ 404 US 519... the sheriff is bound by all the principles of our legal system to honor the plaintiff's affidavit and cancel said sheriff sale.." In the absence of such an affidavit... Counts 1 and 2 and 3 (See Model Lawsuits #1 or #2) Relief Requested (See Models #1 or #2) and add the following: #? Plaintiffs restate by reference all the averments of this complaint......... . If you have previously filed Model Lawsuit #3 and if for some reason....... IN THE UNITED STATES DISTRICT COURT FOR THE.. MODEL LAWSUIT #4 Note: (Model Lawsuit #4 is filed shortly after a sheriff or trustee sale... then #4 provides material to be added to Model Lawsuit #1 or #2 that can be found in the instructions that go with the Memorandum of Law on Bank Credit and Voidable Contracts. .. X ........ add: [name of bank against whose account the high bid in credit money was drawn at the sheriff sale] .... Caption--See Model Lawsuits #1.......... If you did your homework....... Date... it did not stop the sheriff or trustee sale.. Exhibits: A copy of the Affidavit sent to the sheriff is attached hereto..... then you simply file an "Amended Complaint" and add the new material from Model Lawsuit #4..... If these later conditions are not applicable...) ...... See Model Lawsuits 1. Plaintiff also ask the court to order the sheriff to show cause why the plaintiff's affidavit is not being honored in the absence of a counter affidavit from the lender.. Although Model #4 can be used in state court.....DISTRICT OF........................... #2 or #3.. This request is made pursuant to their right to trial by jury under the 7th amendment to the Bill of Rights as well as their right not to be denied property without due process of law under the 5th and 14th amendments.. and relying upon the decisions in Haines v...... in propria persona.. 2 or 3.. Plaintiffs ask the court for a Temporary Restraining Order to stop pending sheriff sale and to suspend it for a minimum of 6 months until the merits of their case has been adjudicated before a jury.. and shows their complaint against the defendants as follows: JURISDICTION 1... The plaintiff believes that the sheriff sale will place the sheriff in violation of 42 USC 1983 and with an unknown party may also be in violation of 18 USC 241......... Model #4 is designed on the assumption that you placed a bid of 21 or more dollars in silver coin at the sheriff or trustee sale and that you also challenged the lender bid in credit money as described in the complaint.... If you did not file Model Lawsuit #3..money......... there are several reasons to believe that it will be more effective to file it in federal court..........

The sheriff did cloud and slander the title of the plaintiff's property and did deny him property without due court process which is the plaintiff's inalienable right under the 7th and 14th amendments to the U.S.the sheriff is bound by Art." The sheriff knew or should have known that the contents of my affidavit were true as there was no counter affidavit provided by the [lender]. in order to protect his interest in said property. [your name].. 10. [your name] did place the high bid in lawful money of the United States by offering the sum of $.. Constitution which says: "No State shall make anything but gold and silver coin a tender in payment of debts. the plaintiff. See Model Lawsuits 1.S. #? At the sheriff sale which occurred on [month/day/year]. 2 or 3 and add the following: #? Prior to the sheriff/trustee sale and on or about [month/day/year]. This check was drawn on the bank of... 1. [your name] did place a high bid in lawful money as required by Article 1..and paid the debt/judgment in full by returning payment in like kind of money. the plaintiff sent a check to the [lender] for the sum of $. The plaintiff. The meaning of Art. the plaintiff did send to the sheriff whose name is... with a tape recorder and with witnesses. no counter affidavit was filed by the [lender] that stated that "the debt had not been discharged in a like kind of money." Since the sheriff's department and his position is created under the jurisdiction of the state of.The plaintiff..) . In the absence of a counter affidavit. asked the sheriff for a photocopy of the check submitted. 2 or 3 and add the sheriff's name and the name of the bank against whom the check was drawn that the sheriff accepted for the high bid. FACTUAL BACKGROUND 3 through 12. Sec.. went to the bank against whose funds this check was drawn and placed a tape recorder on the counter at the bank and proceeded to show the clerk behind the counter a photocopy of the check.PARTIES TO THE ACTION 2.... Article 1. See Model Lawsuits 1. Sec. The sheriff did refuse to accept the high bid in silver coins and instead awarded the sale to [name] for a [Cashiers/Certified Check] which was offered by [name] for the sum of $.. felt compelled to place a high bid in lawful money of the United States. He is further bound by his oath of office to uphold and defend the Constitution of the United States. Constitution. (Note: if the sheriff won't give you a copy of the check. 10 of the U.dollars in silver coins.. After this. Section 10 of the U. This bid was witnessed by the following persons: [insert names of witnesses present].an affidavit that attested to the fact that the debt/judgment had been paid and discharged. 10 is very clear on its face and the sheriff was aware of this prohibition and the sheriff [his name] is aware of its clear and unambiguous meaning.... Sec. the sheriff violated all the principles of our legal system by selling the plaintiff's property on [month/day/year] to [name of highest bidder in credit money] . ask him the bank it is drawn against and the name on the corporation listed on the check. Constitution. The property the sheriff sold is located at. Also. The plaintiff.S.. #? The plaintiff having knowledge that many "bad" checks are being submitted by financial institutions at sheriff sales and suspecting that this had happened here. The sheriff sold the plaintiff's property deliberately to the detriment and damage of the plaintiff. 1.

in spite of what evidence we showed him.(or is unknown at this time). Count 5 The averments of the previously numbered paragraphs are restated by reference herein..S. The sheriff knew from the affidavit that the plaintiff. Sec. . For not having cash to redeem the Cashiers check/Certified check. 1.The plaintiff then asked the clerk at the bank after showing the clerk a photocopy of the check (or verbally telling her the today. but instead accepted a bad check from [high bidder]. The sheriff violated his oath of office by not accepting the high bid in silver coins as he is required to do by his oath of office and then even violated the legal tender laws of Congress by not requiring actual coins or currency issued by the U. we returned to the sheriff's department and played the tape recording to him. Plaintiff asks for a jury verdict to determine the fraud charge against the bank and for the costs of this action and for reasonable compensatory damages for the plaintiff as determined by the jury. (Note: in writing this part of the complaint. We also pointed out that the state statutes under [statute] requires bids at sheriff's sales to be placed in "cash and lawful money of the United States. The sheriff did this deliberately to the detriment and damage of the plaintiff(s).. let alone gold and silver coin.When asked what her name was she said it was [name of clerk]. Counts 1. The sheriff did accept a bad check written by [name of bidder] and drawn against the bank of..The sheriff also committed perjury by failing to grant the sheriff's deed to the plaintiff. Yet.S. in like amount of the check) if they have sufficient cash in their vault to cash this check kind of money.. Plaintiff asks as damages the costs of this action and a verdict from a jury trial voiding the deed issued at the sheriff sale and awarding the sheriff's deed to the plaintiff as well as reasonable compensatory damages to the plaintiff as determined by the jury. the sheriff did deliberately sell the plaintiff(s) property to the detriment and damage of the plaintiff. the plaintiff charges the bank and the person who signed or certified the check with Fraud. Constitution and reminded him of his oath of office. The clerk told us that the bank did not have enough cash to cash this check for the sum of $. The sheriff violated the plaintiff's Constitutional rights under the 5th and 14th amendments and thus violated 42 USC 1983.. describe exactly what happened as it occurred at the bank.. [your name] had paid the debt in full. 10 of the U. 2 and 3 (See Model Lawsuits 1 or 2) and add the following: Count 4 The averments of the previously numbered paragraphs are restated by reference herein. We also informed the sheriff that the bank had committed a fraud and that this was illegal. The sheriff accepted a bad check from [name of bidder] as lawful money and knew that this was not lawful money and the sheriff [name] did this deliberately to the detriment and damage of the plaintiff. The person who certified the check/wrote and signed the cashiers check is. Yet. the sheriff still insisted he would accept the cashier's/certified check. and instead gave the sheriff a bad check which was not redeemable in Federal Reserve Notes or coins.) #? Upon learning that the bank has written/certified a bad check. Government.." We also showed the sheriff sale Art.. [your name].

.. and shows their complaint against the defendants as follows: JURISDICTION 1. John and Jane Does..... it will be a violation of the plaintiff's 7th amendment rights as well as his 5th and 14th amendment rights... (See Model Lawsuits 1 or 2) and add this: 4...." Date.. Motions to Dismiss... Plaintiff ask the court for an Order for the Arrest of the bank official who certified the check/wrote the cashiers check and that he be charged with fraud... Constitution which prohibits states from making any thing but gold and silver coin a tender in payment of debts.... ........ through 3.. Article 1..... plaintiff. Demurs and Motions for Summary Judgment are not allowed as these are equity proceedings and are tried to a judge rather than a jury. This suit is filed in a court of record and in an action at common law in contrast to a suit in equity or chancery jurisdiction..... Defendants... If the defendants invoke the court's equity jurisdiction... .. Jurisdiction is further based on Article 1.. 2.. Jurisdiction is further based on the common law tort of fraud... [your name] and relying upon the decisions found in Haines v....S. Section 10 of the U................... Jurisdiction in this action is based on the 7th amendment to the Bill of Rights as this is a "Suit at Common Law" and the value in controversy exceeds twenty dollars...... where the value in controversy shall exceed twenty dollars... [Name of high bidder in unlawful money] and. Constitution says in part: "No State shall.. PARTIES TO THE ACTION 4.... Now comes the plaintiff...... The plaintiff has the right to have the issues tried to a jury where the issues of law as well as fact can be determined...... Plaintiffs further ask the court to empanel a Grand Jury or to direct the plaintiff to an existing Grand Jury so as to allow the plaintiffs to present written and oral testimony to the Grand Jury concerning violations of Federal and State criminal law by one or more defendants named herein........ 404 U. In contrast... ... Plaintiffs ask the court to issue a Writ of Quo Warranto to execute the same..... The plaintiff(s) request that the court act as an impartial referee so as both plaintiff(s) and defendants are afforded "due process" and a fair trial........ Section 10 of the U..Relief Requested 1.. a jury trial only allows issues of facts in dispute to be determined.... The plaintiff(s) in this suit at common law are citizens of the ..S....... Complaint at Law Sheriff[name] and...... the right of trial by jury shall be preserved... X........ [your name]. Case#. In a suit at common law...............make any Thing but gold and silver coin a Tender in Payment of Debts" and the 7th amendment to the Bill of Rights says: "In suits at common law..... 3. Kerner.......S............. 519...... MODEL LAWSUIT #5 .

United States and residents of the State of. Sheriff [name] has damaged the plaintiff.. give address] for the purpose of placing a bid in lawful money of the United States for the property described in the preceding paragraph. [your name]. At or about [time]. FACTUAL BACKGROUND 5. [your name]...... The averments of the previously numbered paragraphs are restated by reference herein.and. The sheriff is an elected/appointed official who has taken an oath to uphold and defend the Constitution of the United States... This person [insert name or declare it to be a John or Jane Doe if you don't know the name] is being sued in their individual and not in their official capacity under the common law. The other defendant in this action is an employee or agent for [bank or other financial institution]... Then I approached the sheriff and told him I had good cause to believe that the check may not be good and I asked him for a photocopy of it. the check..] The sheriff gave me a photocopy of the check. 7. Count Two 10. In this paragraph. Have your tape recorder running so you can recall events as they occur.county. On the morning of [date of sheriff or trustee sale]. their Cashiers/Certified check was a fraudulent representation... deliberately and knowingly by refusing to accept our/my high . Count One 9. Plaintiffs also ask for the cost of this action plus reasonable compensatory and punitive damages against [name of person signing or certifying cashiers/certified check].. defendant Sheriff [name] came to this location for the purpose of conducting a sheriff sale on the above referenced property. [If the sheriff won't give you the photocopy. The 8. Since the bank did not have the coins and currency to cash property located at the above address is legally described as follows: [Insert legal description here] 6. Sheriff [name] is being sued in his capacity as an individual and not in his official capacity. His address is [either insert home address or the address of the sheriff's department].The defendants in this action are Sheriff [name] who is the sheriff for. Plaintiffs ask for a jury determination of this fraud charge. did appear at [describe location of sheriff/trustee sale. then ask for the name of the bank it is drawn against and the account number and the name of the organization or person issuing it. On or about [month/day/year]. The averments of the previously numbered paragraphs are restated by reference herein. describe what happened exactly as it happened.would be held by the sheriff's department on [date of sale]. Persons known to the plaintiff who were present to witness the sale were [names of witnesses]. the plaintiff(s) in this action learned that a sheriff sale for the property located at. Plaintiffs charge the [person who signed and certified the check] with fraud and misrepresentation.. The address of the second defendant is. the plaintiff(s)..The Plaintiff(s) names and addresses are as follows:.

Detail the facts in the statement of "Factual Background" in your Complaint. you should indicate the approximate amount. date. Relief Requested 11. The plaintiff asks for a jury determination on which of the bidders placed the high bid in lawful money of the United States as required by our Constitution and for a verdict awarding the Sheriff's Deed to the plaintiff. Constitution to be gold or silver coins. Sec. it is important to note that Complaints are not written under oath or penalties for perjury.000 were made to the bank from 197? to 199?. then you must proceed to attack the original loan that was made to the person you cosigned the note with or assumed the note from.S. same as that of someone who has co-signed on a bad note. The averments of the previously numbered paragraphs are restated by reference herein. Further. However. If you have not kept track of the exact dates then state "On or around [month. Usually.bid in lawful money of the United States. Discovery takes care of resolving such questions. and 18 USC 1621 and other violations of law against the defendants named herein as well as any other parties that may have conspired with them to violate the above named laws.If you have had occasion to refinance your debt or loan. 10 of the U. Your position is much the 12. If he doesn't . Plaintiff asks for the costs of this action to be assessed against the sheriff in his capacity as an individual. The Plaintiff(s) ask the court for an Order for Arrest of the bank official who signed/certified the cashiers/certified check and that he/she be charged with fraud for misrepresentation of the check. Append this bookkeeping detail to your statement of factual background. Plaintiff(s) demand all their rights at all times and waive none of their rights at any time including their right to time. Plaintiff(s) demand a trial by jury under the 7th amendment on all issues including the issue of what constitutes "lawful money" for a sheriff department under state jurisdiction. then add language to your complaint like "Payments totaling approximately $???. [your name] as the one bid which was the high bid in lawful money. you must list each and every loan amount from the first one you took out with the lender bank and if possible list the first loan as the original loan. If you assumed a mortgage by cosigning for it. Refinancing debts or loans . so you are not going to suffer for a minor error. Cosigning and Mortgage Deed of Trust Assumption. as a co-plaintiff. Plaintiffs further ask the court to empanel a Grand Jury or to direct the plaintiff to an existing Grand Jury so as to allow the plaintiff(s) to present written and verbal testimony to the Grand Jury concerning violations of Federal and State law including and not limited to 18 USC 241. 18 USC 1001. and if you do not know the exact amount you borrowed. Try to get the person you assumed the note from to join with you in the suit. The sheriff has also violated his own oath of office to uphold and defend the Constitution of the United States. which is required by Article 1. year]. if you don't know the exact amount you paid the lender. LEGAL KARATE: Additional Notes and Comments. Plaintiffs ask the court to issue a Writ of Quo Warranto to execute the same.

"recision forms executed when the loan was taken out". "verbal or written promises that were made to you about refinancing the loan which the lender reneged on unexpectedly or for some hidden reason. If you send them a Notice to Produce Documents. To block sheriff or trustee sale. file an Answer and a Counterclaim to any Complaint that is filed against you. use silver dollars with an Affidavit and a Constructive Notice. (See sample instructions in the Models given. "failure to obtain a Certificate of Authority to do business in the state. If as a Defendant you file an Answer and Counterclaim to a corporation foreclosure." This is a particularly useful issue to raise in foreclosure. 3. depositions and interrogatories. You find out by writing to your Attorney General's office or to the State Corporation Commission for the foreign corporations status regarding a "Certificate of Authority. 4. and condoned it even at the time you assumed the note. "Backdating the Truth and Lending Forms". then list him as a Defendant in your suit.. Other issues.) COUNTERCLAIMS." 6. you will find that their stock is nothing more than a book entry and a concealed interest charge.e." You can and must learn of their existence through Discovery procedures." 5.cooperate. But among these issues. charge him with knowledge that he was aware of the bank's fraud. you are the Defen- . serve him with a Subpoena. i. you reverse positions with the lender. things the lender should not have done would be: 1. In states where judicial foreclosures are used. 2. "your signature appearing on documents you never signed (such signature made by a duplicating machine). add stock fraud charges for requiring you to buy nonexistent stock in their associations. In using Model Lawsuits #1 and #2. Stock Fraud Charges." Do not overlook any jurisdictional challenge. "failure of a corporation to register with the Secretary of State or the State Corporation Commission. There are other issues that can be added to individual lawsuits and they vary from case to case.

Most court cases today are decided with Motion hearings.dant counterclaiming against the lender who is the plaintiff. because each and every judge and attorney at law has taken such an oath. This is because people do not avail themselves of the Defenses provided by the courts." That is a Legal Karate hold. Defenses. you can sue them by filing a "Third Party Complaint. yet most of them fail to carefully read the document they are sworn to uphold." However. The most frequently used Motions are a "Motion to Dismiss" and a "Motion for Summary Judgment. act and proceed on the premise that it is and remains the Supreme Law of the Land. While the rights to a trial by jury is always granted in a criminal proceeding." the information in these instructions will undoubtedly be of interest to the licensed attorney as well. if you are a Defendant suing another defendant you file a Cross Complaint and you are the Cross Plaintiff. If you bring in a bank or other lender that was not originally mentioned in your lawsuit. You call your pleading a "Counterclaim at Law" instead of a "Complaint at Law. " In this. lawyers. U." and you have a right to have this It is now recommended that an attorney use all the Constitutional and legal arguments contained in the pleadings which are made a part hereof. sheriffs. judges. you will be called the Defendant and Third Party Plaintiff and the bank called the Defendant. it is frequently denied in civil proceedings. many Constitutional rights have since been abridged and denied through legislative and judicial fiat. Today. which says: "In suits at common law. Legislators." If the judge grants either Motion.S. there is another kind of lawsuit called a "Complaint at Law or Suit at Common Law. under the 7th Amendment to the Bill of Rights. Although these instructions are written mainly for the benefit of the "pro se" or person who proceeds in the proper person or "in propria persona. there are today many laws and practices in conflict with one another. The purpose of this work is to teach you how to use courtroom karate techniques (a) to banish your fear and to show you how to use your Constitutional rights. Use it. Constitution. TRIAL BY MOTION versus TRIAL BY JURY. While the Constitution is the foundation of law in the United States. They permit Foreclosure by Default and the courts have no alternative." Also. Insist on it. the right of trial by jury shall be preserved. especially to keep possession of your property until your case is decided before an impartial jury. There is nothing wrong with lawsuits being decided in this manner so long as both sides agree to this format. These types of suits are called "suits in equity or chancery jurisdiction. have all taken an oath to uphold the Constitution of the United States.Chancery or Equity . our courts often become collection agencies for the nation's banks and mortgage companies. As a result. where the value in controversy shall exceed twenty dollars. Chancery or Equity Jurisdiction . where the only issue in controversy is an amount of money. kind of case tried before a jury. your case will never come to trial. However. The main difference between a "suit in equity" and a "Suit at law" is that the former is tried before a judge while the latter is tried before a Jury.

You need evidence for exhibits. refinance it or whatever. Parties . the defendant who is being sued counter sues the Plaintiff for "Counterclaims. INSIST UPON IT. to settle your debt. it is the right of either party to the lawsuit to have such motions tried before a jury. or offers to lend you money. The event should be recorded in an Affidavit. Your Complaint is when you as a Plaintiff sue the defendant. signed by your witness. It is practical and possible to file a "COMPLAINT AT LAW" and then file a Motion before the court for some reason as long as your Motion does not deny the other parties" right to a trial by jury or deny them "equal protection of the laws" under the 14th Amendment. etc. a Motion to Dismiss for any reason given. Every word of what your lender counter proposes should be noted as well as any threats he may make to foreclose. A Motion for a Continuance or a Motion for Certification of the Question are all proper Motions to present to the court. There are also Cross complaints. The Facts . If you are very smart and shrewd you will take a witness with you and go to your lender and make an offer. 3. The same jury will probably preside in both trials. The first will be to determine if the court has proper jurisdiction or if you have a claim upon which relief can be granted. Jurisdiction Establish what authority under the Constitution or laws you are invoking. where one defendant sues another defendant. places and names of persons involved. While the right to a trial by jury is a Constitutional right under the 7th Amendment. or third party plaintiff for third party defendant must be spelled out. ANOTHER DEFENSE. See to it that you bring MATERIAL FACTS INTO DISPUTE." The basic elements of a lawsuit are: 1. 4. so that the court has the authority to act. By using these motions you obtain two jury trials. One facing a Foreclosure must frame a COMPLAINT or COUNTERCLAIM in a lawsuit. within your stated means. When an attorney files any of these Motions or if you do.Jurisdiction occurs every time you present any Motion before a judge. practical experience has shown us the courts don't grant jury trials in civil proceedings unless there are MATERIAL FACTS IN DISPUTE. or verbally. in writing. You must name dates. 2. Any laws violated must be cited. shortly before the lender reneges and calls in his note.The names and addresses of each party to the lawsuit. In a Complaint at Law or Suit at Common Law. then you proceed to the second jury trial which deals with the merits of the case. such as letter promising to renew your loan. You will need the help of an attorney in this area. In a Counterclaim. Laws Violated. If the jury decides in your favor. notarized. .Be specific and show that the intent of the person you are suing was to defraud you or breach contract or injure you in some way. whether plaintiff or defendant. and presented as an exhibit in evidence. must be tried before a jury. such as lack of jurisdiction or failure to state a claim upon which relief can be granted.

" When filing your Counterclaim. The more issues of facts in dispute that you can set forth the more you will increase your chances of getting a trial by jury. At a deposition." It is the model lawsuit you will use to sue the lender bank or institutional lender. (Many banks and lending institutions have your signature copied by machine and by this means place your signature on documents you never signed. MODEL LAWSUIT #1. ask the lender to explain in detail how he arrived at his figures for the Annual Percentage Rate used in the loan further. Charge the lender with Usury and violating title 15 of the U. Note: This is strictly legal karate.The relief you are requesting in money damages must be stated in your "COMPLAINT. Code by not accurately figuring the Annual Percentage Rate based on Regulation Z." You will need an attorney to help you in this area. If the lender presents documents to the court that you do not remember signing. Then in a written interrogatory or at a Deposition. BE SURE TO DENY YOU SIGNED SUCH DOCUMENTS. then ask them for what purpose they own such a machine and why was your signature duplicated as if you had signed documents you had never seen? The answer should be most interesting to the court and especially to a jury. Breach of Contract or Agreement (Such as when the lender in writing or verbally promises to renew your loan and reverses himself. Money Damages Relief .5. deny signing any and all documents that you do not remember signing. EVEN IF THE SIGNATURE APPEARS TO BE YOURS. Why? It so happens that Regulation Z is so complicated that almost no one can figure out how to use it. even in today's "equity courts. Charge that the Annual Percentage Rate the lender has used is higher than the figure he reported in the Truth in Lending Statement. disclaim them. Have your attorney send the lender an Interrogatory or have him take a Deposition in which they are asked if they own a "signature machine. 1. You are strongly advised to get the help of an attorney to add more to it than what is given in the skeleton framework presented. 3. accomplished by "signature machines. 4.S." Examples of issues of facts in dispute to present in your Complaint. if they admit to owning such a machine. Add any other issues of facts you can think of including any and all defects in the lenders Complaint.) 2. like errors in .) Note: In practice this usage of your signature amounts to forgery. and most lender banks and institutions have just such a machine. demand that he show just how this complies with Regulation Z." a machine that duplicates a handwritten signature. Model Lawsuit number one is a basic lawsuit on the "Money and Credit Issue. including lenders and attorneys.

Bring up every issue of money and credit that you and your lawyer can think of. • Such documentation when gathered over the months. • If the Judge refuses your request have your attorney enter a Motion for Trial by Jury. • Hold a series of pretrial conference. Author's note. etc. OF • Use of an impartial Constitutional lawyer who will present your case in front of an impartial Constitutional judge (one who conscientiously observes his oath to uphold the Constitution of the United States). • Get all the documents you can applicable to your case into production. have your attorney politely request that he disqualify himself for prejudice. • Enter Motion for Discovery. And .) Answering a Complaint. possibly years. Use at your own risk! Better to come into court with clean hands." Does he agree? If not. (At this point. which has to be entered as a countersuit (as you have made him the Defendant!). loan • Get your complaint filed before your opponent brings his action to the court. • Diplomatically challenge the Judge as to where he stands with regard to the Constitution being the "Supreme Law of the Land. the Judge upon your Motion to Dismiss may do that very thing. (See sample given on DISCOVERY in the Appendix. • If denied. your lender may drop his suit and no longer respond to your Motions.names. figures. If you use the Fractional Reserve check (which the author does not WEAPONS IN YOUR ARSENAL DEFENSE (Especially as a PLAINTIFF) • Use of Court Rules. and file a Request for Admission of Documents. dates. enter counterclaims and cross claims against your opponent. Attack the Trustee's Complaint.) • The Judge may have a mortgage of record with your lender bank! • Enter as many Motions for Discovery of facts and evidence in preparation for Trial as you can. • Enter a Motion to obtain written Interrogatories (Depositions) from every individual connected with the lender in his lending institution who might have performed some act in processing your loan. (The example has been given as well as the instructions for use as use of these FRCs is becoming better known and more and more successful. • Find flaws in every document your opponent presents to the Court. will serve you well at trial. • Enter a Motion to Terminate Litigation without Trial. Invoke Court Rules. addresses. Courtroom Karate. Attack his complaint.) • Your best weapons of defense (as a Plaintiff) are Motions for Discovery of Facts and a demand for written Interrogatories.

recommend using) you may follow model answers in the instructions that go with its use. If you do not use an FRC, an effective way to answer a Complaint that was used by Bob Bennett from Wisconsin is as follows: He denied everything except his name and address. In other words, an Answer to Complaint is a separate paper with that heading. He worded it: "Now comes the defendant, in his own person, and answers the complaint as follows: "1. Defendant admits his is...and that he lives at.... name

have immediately filed a Motion for Summary Judgment, which would have wiped out all chance of the case going to trial. Mr. Bennett's admission of having signed the note would also have wiped out any chance of getting a jury trial. When you answer - When you answer a complaint, file a Counterclaim against the lender, using every issue you can find that is reasonably available. Use every strategy to get a judge to grant you a trial by jury that he would otherwise deny, especially in an equity proceeding. Your Counterclaim moves the case from the "equity" side of the court to the "at law" side under the protection of the 7th Amendment to the Bill of Rights.

"2. Defendant denies each and every allegation of paragraph Two of the Complaint and leaves the burden to prove such allegations to the plaintiff. Note: Paragraph two of the bank's complaint said that Mr. Bennett had signed a mortgage not on April 1st, 1979. By denying he signed the paper (even though he did so), Bennett forced the case to trial and caused a delay in the case. Had he admitted he signed the note, the bank's attorney would LEGAL KARATE IN THE COURTROOM USE OF LEGAL KARATE - WHAT TO DO If you are not experienced in court procedure, you will need all the help you can get. When you find a local attorney, bring this entire section to him and ask him to assist you. Keep a copy for yourself for the inevitable conferences that will take place. I suggest you may want to avoid any attorney who wants a large amount of money down and who will not agree to represent you in court on the Lawful Money and Credit Money Issue.

Of course, time is of the essence and the question of where one starts depends on whether or not your creditors have taken action in court to get a judgment against you or to foreclose on your property. Legal Karate: Your Options Before Judgment. You have two legal karate courses of action. One is to file an original COMPLAINT at LAW, or wait until the lender files a Complaint and Summons against you, at which time you respond with either a MOTION TO DISMISS or an "ANSWER" and "COUNTERCLAIM AND THIRD PARTY COMPLAINT AT LAW."

If you sue first, with a Complaint at Law, suspend payments and save your money in an account at another bank or in a shoebox at home to cover future payments in the event you lose or decide to abandon the lawsuit down the road. If you are the Plaintiff, demand a Trial by jury, and at once proceed to use interrogatories and admissions as are described in DISCOVERY MADE SIMPLE (see Appendices). If you find that the lender(s) refuse to answer your interrogatories, then serve them with a NOTICE OF DEPOSITION, and with a Subpoena and ask them questions in court. (An attorney with good cross examination would come in very handy.) However, you can prepare your list from the admissions and interrogatories that they have refused to answer. Procedure for taking Depositions is explained in the Discovery Book, Appendices. Further, should your lender bank refuse to answer a Request for Admissions, you should then file a MOTION for Summary Judgment, as the law says that any Admissions not answered are deemed "admitted." At this point, however, you have moved from a proceeding "at law" to one in "equity," and the judge should grant your Motion for Summary Judgment as a matter of right under the law. Because of the questionable behavior of some of our judges, you may not be granted your Motion for Summary Judgment. Your next step would be to file a Motion for Leave of Court to Appeal the judge's refusal to grant judgment. If the judge refuses this Motion, immediately You may wait until the lender sends you a Summons and Complaint, which are usually filed in Superior or State Court. You have two options here, in reacting to that action they have taken. One is to file a MOTION TO DISMISS for lack of jurisdiction of the court over the subject matter. The other is to file an ANSWER and COUNTERCLAIM and Third

file a Petition for Writ of Error in Appellate Court. You are the Petitioner and the Judge then becomes the Respondent. You then ask the Appellate Court for an Order reversing the lower court decision of not granting you your Summary Judgment and cite the Discovery rules under Admissions to support your petition. Another option which can be carried out at the same time is to file a Third Party Complaint for violation of your 14th amendment rights of not giving you equal protection under the laws. The debtor is entitled to the same protection as the creditor under the law. Court Room Karate: To support your Complaint, ask your attorney to subpoena to a Deposition adversary and ask him a number of questions which will clarify what the statute says. Then follow this interrogation up with more questions about the particulars of the case. Use your equitable discovery rights, without waiving your trial by jury rights. Since the other party to your suit will not be idle, you must demand your trial by jury rights, especially when he files a Motion for Judgment against you. YOUR OTHER LEGAL KARATE OPTION. Party Complaint at Law. If you are only dealing with a bank lender, you need only to file an ANSWER and COUNTERCLAIM as you can file a THIRD PARTY COMPLAINT against third party holders in due course, if necessary, or if your Constitutional rights are violated. The Answer and Counterclaim and Third Party

Complaint is used as your response against financial institutions other than banks (may be holders in due course). In any case, it is used against Mortgage companies and other like institutions. Name a number of John and Jane Doe respondents as Third Party Defendants. These John and Jane Does are banks or lender officers of such institutions who loaned, or bought your note from the original lender mortgage company, with "checkbook money or check credit money." It is quite safe to assume that they did as it is common practice for these same banks to create money on their books with checkbook or credit money. FAILURE TO TENDER A LAWFUL CONSIDERATION. In this second type lawsuit, charge the lender(s) with "failure to tender a lawful consideration," "illegality," and "Breach of Implied Contract." Even though they state they have acted in good faith, their contract with you is voidable because what they did was illegal. There is no legal authority under the sun that gives them the right to create "credit money" and demand lawful money in return. Congress has declared only coins and currency to be legal tender in payment of debts, not "credit" or "checkbook money," created by a private corporation. Furthermore, you may then charge your lender(s) with "material representation of facts and "fraud." An additional karate option - An additional courtroom karate option is your MOTION TO DISMISS . This Motion should be used as your first option and if your Motion is denied, you must immediately file your Answer and Counterclaim.In any state court, when anyone is foreclosing you your property and has filed a Summons and Complaint, you have the right to challenge the court's jurisdiction to hear the case. A simple defense here is to use Article 1, Section 10 U.S. Constitution which says:

"No state shall coin money, emit bills of credit (credit money, checkbook money, Ed.) or make anything but gold and silver coin a tender in payment of debts." Filing Fees - Every court case requires the payment of filing fees to initiate a case, unless the lender (bank or mortgage company) pleaded they had no lawful money (and many of them have very little), and proceeded "in forma pauperis." The filing fees must be paid in either gold or silver coin (have a roll of Roosevelt silver dimes handy) in order to comply with Art. 1 para. 10. In almost every instance, filing fees will be paid by check, which is not even legal tender by act of Congress. Neither checks nor currency nor copper nickel coins comply with the prohibition in Art. 1 Sec. 10 on the states to make nothing but gold and silver coin a tender in payment of debts. Thus, all filing fees paid to file the lawsuits are in violation of Art. 1 Sec. 10 when they are paid in something other than gold and silver coin! Indeed, this is your basis for challenging jurisdiction. In your Complaint and Motion to Dismiss you must allege that the Defendant/Plaintiff has already violated the law, the U.S. Constitution, which is the Supreme Law of the Land. And immediately thereafter, use a Discovery procedure called a NOTICE OF REQUEST FOR ADMISSIONS. The five questions you must ask the lender to admit are listed in Discovery Made Simple (see Appendices, Discovery Made Simple). When you file your Motion to Dismiss, ask the judge's clerk for a

date AFTER the date the Admissions are due for a Hearing. Get your date set for the Motion to Dismiss hearing. Ask for a date two or three weeks away. If you send in the Request for Admissions the day after you have received a Summons, your Admissions request response will be due BEFORE the date of the hearing. In that way you will put the Plaintiff/Defendant lender in a "Catch 22" situation. By doing so you will have proved he not only is violating the Constitution; he himself is proving to the • Motion (have witnesses present) of Demand for Trial by Jury. (Don't let the Judge deny your Right.) • If Judge denies your right to trial by jury seek publicity. Serve a Complaint on him. Call in the media. • Otherwise, prepare for Trial before a Jury. • Voir Dire. • Opening Statements to the Court, as to the Constitutional Money Issues and as to the invalidity of your debt contract. • Direct Examination of the Plaintiff. • Presentation of Exhibits: Copy of the Constitution. Copy of The Bill of Rights. Copy of Sec. 31 U.S.C.A. 392. Copy of The Coinage Act of 1792: Money of Account • Exhibits of all laws passed by our United States Congress on The Money Issue in contravention of the Constitution of the United States, federal and state statutes (see example, Memoranda, Appendices). • Point out that Congress has enacted no legislation on the Coinage of Money and the regulation of the value thereof

court that you are right under Discovery laws. The law says: Any admissions not answered are "admitted." And in this situation, the lender cannot answer the Admissions without admitting that he violated the Constitution under Article 1 para. 10. USE THE FOLLOWING MOTIONS: • Notice of Jurisdictional Defect. • Advance Trial Order of The Judge. that isn't in contravention of the Constitution. • ENTER: • Objections to Plaintiff's Exhibitions (Defendant). • Objections to validity of any contract existing between yourself and Plaintiff. • Point out need for lawful coins to provide base for lawful consideration to make a contract valid. • Cross examination techniques should be skillfully applied by your attorney. • Additional Motions for Discovery and Interrogatories. • Motion for Direct Judgment of the Court. • Motion for Verdict. • Closing Arguments. • Instructions to the Jury (the Judge should stick to the Constitution). • Verdict. If you win, you can go home. If not:

• Post Trial Motions. • Appeal Procedures explained, again, will be MOTIONS, MOTIONS, i.e., • Motion for Judgment notwithstanding the Verdict(non obstento veredicto). • Motion for New Trial. • Motion to Vacate or Amend Judgment. • Motion for Relief from Judgment or Order. • Independent Judgment. • Appeal. COURT ROOM KARATE WEAPONS SUMMARIZED. 6. Submit Affidavits in Opposition to the lender's Motions for Summary or Default Judgment, by raising issues of fact and law in your Affidavits. State them or have your Attorney state them for you to the Judge. Your case will then have to go to trial. 7. Actual Notice - Use these often and attach each one you use to your lawsuit. 8. Use Affidavits in support of all your Motions. 9. Use Cross Complaints and Third Party Complaints. 10. Use Motions for a New Trial or a Motion for Leave of Court to File Counterclaim, if a judgment has been entered against you. 11. File a Chapter 13, to block entry of Judgment or to stop the Sheriff or Trustee Sale; also file Adversary Suit to Set Aside

1. A well written Complaint or Counterclaim. 2. Request for Substitution of Judge or Motion for Disqualification of the Judge supported by an Affidavit of Prejudice or Conflict of Interest. 3. Affidavits in opposition MOTIONS TO DISMISS. to

4. Raise all kinds of Issues of Facts and law In your MOTION to DISMISS. 5. DEMAND TRIAL BY JURY based on the 7th Amendment to the Bill of Rights, U. S. Constitution. Proceedings in Bankruptcy Court. (See Appendix for forms.) Present a Complaint before a Grand Jury against any adversaries who get together in a way that violates your Constitutional rights, as their actions are in violation of Title 8, Sec. 241, which could subject them to a $10,000 fine and up to ten years in prison. 12. Use Depositions to win your case throughout all of this. THIS IS THE ESSENCE OF LEGAL COURT ROOM KARATE. There is value in using the jurisdictional challenge. First, it is placed in the record and you can always bring it up on appeal. If the issue is not first brought up in trial court it cannot be raised in the future when you appeal. An important strategy in any court pro-

ceeding is to use all the defenses, which are valid, and waive none. This strengthens your overall case. In a recent case, it took a judge six months before he decided he had jurisdiction (in a case brought by Dan Palmer of Olmsted Twp., Ohio). Palmer filed an Answer and Counterclaim on the "credit" issue--that of banks lending their credit as money, when in fact they did NOT have the actual amount of cash involved in their safe deposit vaults to back it up. Another winner on this issue is Walter Moore of Dover, North Carolina. Mr. Moore successfully fought a foreclosure. He had to educate the sheriff, but his position was legally correct and the sheriff refused to carry out the court's order to evict Moore. The Answer and Counterclaim, Third Party Complaint Definitions An Answer to a Complaint is exactly that. You answer the lender's complaint by admitting parts of it and denying other parts. You may admit your name and address and deny all the rest. A Counterclaim, a Complaint at Law, and a Third Party Complaint are all basically the same Motions in the same basic lawsuit used in different situations. In a Complaint, you are the Plaintiff and the original moving party bringing the action. And it is always best if you are. You start the Action. You file the The action on paper would look like this: National Bank, Plaintiff, vs. [your name], Defendant and Third Party Plaintiff, vs. [Name of the Judge who broke his oath not upholding the Constitution], Third Party Defendant.

Summons. After all, you are the injured party, as you have given the lender a mortgage note or a Deed of Trust and note on your property for a mere credit entry on his books, which he created out of thin air. And he has misrepresented to you that he is lending you lawful money of the United States. Pay the filing fees in currency or silver coin, and get a receipt showing you have paid cash. In Counterclaim and Third Party Complaint Actions, you are the Defendant who is countersuing the Plaintiff lender or some other party connected with him in the existing case that was started against you. In the Counterclaim you must write up a Complaint against the Plaintiff. Basic court procedure is that both the Complaint against you and your Counterclaim against the Plaintiff must be tried at the same time. The Third Party Complaint which either the plaintiff or defendant can file literally brings a third party into the case as a Third Party Defendant. The Plaintiff would call himself both Plaintiff and Third Party Plaintiff, whereas if the defendant filed a Third Party Complaint he would call himself "Defendant and Third Party Plaintiff." Even if a judge should dismiss your Complaint or Counterclaim, your Third Party Complaint will effectively drive him off the case, even if you file your action after the judge's dismissal. Also, in support of your MOTION TO DISMISS, you should submit to the court a MEMORANDUM OF LAW ON CONSTITUTIONAL MONEY.

Motion for Summary Judgment. If the lender submits a Motion for Summary Judgment, you submit a Motion to the county called an Answer and Counterclaim. However, determine first if the judge has ruled on whether or not he has jurisdiction to hear the subject matter in your case. During oral arguments, when the judge says he has jurisdiction, then you say: Your honor I anticipated that the court might overrule me on this Motion for equity consideration, and I have brought with me an Answer and Complaint, with a fifty page brief in support, and I would like now to file a copy with the court and with the Plaintiff/Defendant (lender). The important point to remember in all this is that when you file a Motion to Dismiss for lack of Jurisdiction or for any other reason, you must not answer the Complaint until the judge rules he has jurisdiction. Actually, you always have the right to challenge jurisdiction at any point in a trial proceeding, even if you asked for a new trial, or again, at the confirmation of the sheriff or trustee sale. Summary Judgment. of Options Before

plaint and sue adversary party.

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4. If you cannot do any of these things, immediately file under Chapter 13 in Federal Bankruptcy Court or a Chapter 11. This will effectively block all action in your case, even a Trustee Sale. If your secured debts are under $300,000 and your unsecured debts are under $100,000 file a Chapter 13 action. 5. If your debts are over the $300,000, mark file a Chapter 11 Action. 6. File your Demand for Jury Trial under Rule 9015. 7. Challenge the alleged debts you owe as loans having been made as "credit" loans. And file your Memorandum of Law on what is Constitutional money. 8. Complete the Chapter 13 statement carefully, with the help of a specialist attorney familiar with all aspects of current bankruptcy law. 9. File a Complaint at Law with a Summons just like any other lawsuit modeled after Bankruptcy Form 34. It is called an ADVERSARY PROCEEDING NUMBER (Abbr.: ADV. PRO. NO.)

1. File a Motion to Dismiss and challenge jurisdiction of the court based on Article 1 Sec. 10. 2. If denied: File an Answer and Counterclaim and Demand Trial by Jury. 3. Against lender's Motion for Judgment, file a Third Party Complaint. The judge may violate your Constitutional Rights such as total denial of Discovery rights through a "protective order" or if he says you will not get a trial by jury, or if he dismisses your Counterclaim, file your Third Party Com-

10. Proceed with Discovery against the lender (and all other parties connected with your case just as you would in any court. Pay for your Demand for Trial by Jury

papers at the Federal Bankruptcy Clerk of Courts Office. Use cash. Get a receipt for payment showing CASH.

HOW TO WIN IF YOU ARE IN THE MILITARY
The Soldiers' and Sailors' Civil Relief Act If you're in the armed forces and are now in default, don't panic. You can get immediate help and relief under the Soldiers' and Sailors' Civil Relief Act (SSCRA). The main purpose of this act is to ensure that service members are not disadvantaged either legally or financially due to their military service. SSCRA affects leases, loans, mortgages, credit and other financial matters, as well as civil suits, income taxes and life insurance policies. The Act protects members of the U.S. Armed Forces, including reservists, who are on active duty or who are in training prior to induction. SSCRA also protects officers of the Public Health Service who are detailed for duty with any branch of 10-1 the military, any person who is training or studying under the supervision of a service preliminary to induction, veterans who saw active duty during wartime and, in some cases, dependents. Service members who are not on active duty, or who are on unauthorized absence or serving a sentence of confinement, may not be protected. Protection under SSCRA begins the day you begin active duty and, depending on the situation, may continue for 30 to 90 days after termination of military service. SSCRA does not cover written agreements entered into after coming on active duty. As a result, this act has only a limited effect on the obligations of a career military person.

SSCRA does not terminate your legal or financial obligations - it only suspends them until after your period of active duty is completed or when your service no longer prevents you from meeting these obligations. SSCRA says that when a service member's military service "materially impairs" his/her ability to meet legal or financial obligations, those obligations may (under some circumstances) be put on hold until being called to active duty. This is considered material impairment. The most recent example was Operation Desert Storm, when many military reservists and National Guard in the United States were called back into active duty. Many of these people had to serve 6 months to 1 full year. During their duty, they were paid military wages. In many cases, these military wages were less than they had been receiving in their regular civilian jobs. If their finances were barely making ends meet before being called back into active duty, then imagine the strain of trying to stretch a reduced income for several months. Obviously, it is only a matter of time before the rent or mortgage is not paid. Next, the landlord or lender begins eviction or foreclosure proceedings. This is the situation the SSCRA was designed to help. This is when the SSCRA may be put to work. The Act is which relates trust deeds. what SSCRA divided into 7 parts, 1 of entirely to mortgages and This section makes clear may be used to:

the "material impairment" no longer exists. For example, when a soldier has a good income as a civilian and has accumulated debts, he believes that income will be available to pay the bills. Then, as in the case of a reservist, the member may be called to active duty and his or her pay reduced, making it difficult or impossible to meet the financial obligations undertaken before 3. Reduce payments on a loan and reduce interest payments to a maximum of 6% during the affected period. To qualify for this protection, you must have purchased your home and entered into a security agreement, such as a promissory note and trust deed, before beginning active duty, and your military service must have materially affected your ability to pay as originally promised. How To Rights Ensure Your SSCRA

1. Stop foreclosure proceedings, 2. Set aside completed foreclosure proceedings, and

Just knowing SSCRA exists is not enough. If you have received a letter threatening foreclosure, you need to contact counsel. You can find the appropriate attorney by going to the nearest legal services office for your branch of the military. Your commanding officer should be able to direct you to the appropriate counsel. A military attorney will be very knowledgeable about SSCRA and can help you protect your property against foreclosure. Once you've talked with your attorney, contact your lender and tell him you have contacted counsel.

10-2

Your lender cannot foreclose out of court on any kind of mortgage once you inform him you are away from home in the service on assignment and intend to seek relief under SSCRA. See page 10-4 for a suggested letter to a mortgage holder, and page 10-5 for a suggested letter to the holder of an installment note. Since this act suspends all but judicial foreclosure (see page 1-21 for more on the judicial foreclosure process), your lender would have to bring the matter into court. And, most lenders will back off because it is unlikely that any judge who understands that you are on assignment for the Armed Services would allow foreclosure. Unless there are some extenuating circumstances, you will very likely be protected for as long as you are on duty in the service. If the lender does go to court, try to appear yourself or have an attorney represent you. If you can't be in court due to your military service, again, your SSCRA rights will protect you. For example, when an individual does not defend an action in court, the opposing side can obtain a Judgment against an See page 10-6 for an example of an affidavit you can send to the court for protection when a lender is attempting to obtain a default judgment against you. Should your lender say he doesn't know or has not been able to find out whether you are in the military service, he'll need to prove his statement. He'll be required to post a security deposit, which will protect you in the event the judgment is set aside. The security deposit can be used for damages you may have suffered as a result of a judgment incorrectly entered against you. If the lender has falsely sworn that you are not in the military service, knowing that you are, he can be sent to prison or fined, or both. If, while you're away, the lender swears he does not know whether or not you are 10-3

individual by "default." SSCRA provides service members some protection against these type of "default" judgments if their service prevented them from appearing in court. Should a default judgment be entered against you while in the service, you can reopen the judgment if: 1. The judgment was entered while you were in the service. 2. You apply to reopen the case in the court where the judgment was entered while you are in the service or within 90 days. 3. You can show that your service materially affected your ability to defend yourself (such as being deployed, out of the country, not able to get leave, etc.). 4. You can show that you have a defense to all or part of the suit made against you. in military service and receives a judgment, then ask the court to reopen your case. They will comply provided: 1. You make application to the court within 90 days from date of your discharge. 2. You have suffered damages, were harmed, a blemish was put on your credit, or your case is prejudiced because you were away on military duty and could not properly present your side of the case to the court. 3. You have a valid, legal defense you wish to present to the court.

this interest rate must be reduced to 6% per annum during service unless the creditor can show that your ability to pay was not materially effected by being on active duty. If you are about to lose your home and go down to a recruiting station and sign up in the hope of avoiding foreclosure. While we don't recommend this method. your interest rate must drop to 6%. in situations where even a portion of the property is owned by a military person. you will be facing an entirely different situation in court. If you can show that you make substantially less money while on active duty than you did in your civilian employment. This protects their property rights in case something happens resulting in their friend's death. However. The person to whom such a transfer is made must send a registered letter to the lender notifying him/her that he/she now owns a portion of the property and is in the armed services and protected under SSCRA. Negotiate new terms.SSCRA Reduces Mortgage Payment Interest In addition to delaying foreclosure. 2. or 10-4 . most lenders will either: 1. Then they have this person execute a reconveying deed which they don't record. the interest rate on a loan made before you went on active duty might be 12%. which takes 3 to 4 times longer than out-of-court foreclosure on a trust deed. For example. Because the penalties for foreclosure when SSCRA has been invoked are so strict. However. some borrowers have successfully avoided foreclosure by transferring a portion of their property into the name of a friend or family member who is going into the service. it may be possible for you to convince your lender not to foreclose on the basis that you are going into the Army or Navy and to negotiate a schedule of payment commensurate with your military pay. SSCRA also provides a limitation of interest rates for members of the service. Remember: This act was created to protect soldiers and sailors who were called to active duty after making certain financial obligations. Begin judicial foreclosure.

well aware of the severe penalties for pursuing a foreclosure if SSCRA applies. If the lender does begin foreclosure. The foreclosure case will then probably be dismissed on your Motion to Dismiss. Agree to the 6% interest rate and a delay while the owner is in the service.3. or should be. 10-5 . you will have time to get down to the Clerk of the Court and file a complaint. as both the judge and lender are.

SUGGESTED LETTER TO A MORTGAGE HOLDER HOLDING A SECURITY AGREEMENT .

SUGGESTED LETTER TO A CREDITOR ON INSTALLMENT NOTE .

AFFIDAVIT TO COURT .

HOW TO WIN BY SELLING YOUR PROPERTY The purpose of this chapter is to familiarize you with some general considerations about selling your property. the range of typical home purchase contracts to consider include: 1. or if keeping your property does not make good economic sense. or 3. Although the decision to sell your home may involve a gut-wrenching process. then consider selling before you lose your house. 2. 11-1 . Market it "for sale by owner (FISBO). or your equity." as well as with the aid of a broker. A regular retail buyer. selling may be your wisest and most practical solution under certain financial circumstances. you have at least three options available: 3. "for sale by owner. through an ill-planned refinance. Selling now may be the best way to retain most of your equity for future investment and to minimize the damage to your credit. Market it through a real estate broker only. SALES OPTIONS 2. A party to lease-option. A buyer aided financing: by seller 1. Once you have made the decision to sell your house." only. If it is impossible to pay on your mortgage. Market it yourself. especially points which may be important to a homeowner in foreclosure. TYPICAL HOME PURCHASE CONTRACTS Regardless of whether a broker markets your property or you market it. or other rescue attempt gone sour.

such as subsequent loans. back taxes. 7. a cycle starts with flat prices which eventually begin to creep upward until a frenzy of buying quickly drives prices ever higher and ultimately beyond the reach of most buyers. judgments. If a real estate agent sells your house. the current state of the real estate market will greatly influence the sale of your 11-2 trust deed 6. this chapter will help explain some of the benefits of these options and programs. a tract house.a. and never dip back to the previous lows. A mortgage insurance assisted foreclosure presale.T. SOME BASICS OF HOME SELLING Whether you list with a broker. These costs include the mortgage balance. The escrow company may generate a list of your closing costs and pay them out of your proceeds. During the frenzied part of the cycle. Generally. For example. A sale/lease-back. or sell FISBO. in California.000). Since many books on selling your home are written by real estate brokers. prices go higher with each cycle. On the other hand. Partner (equity sharing). sometimes with several offers which bid up the asking price. assessments. foreclosure costs. The frenzy suddenly recedes into a market where prices stagnate or gradually decline for a while before the next cycle takes off again. by 1994.D. Obviously. this section tries to present an objective overview of the home selling process. A lender short pay. any back payments. you owe a commission. 4. and other debts for which the property was used as collateral. one that may increase your profit during financially trying times when you need the money the most. or of 9. built in Costa Mesa. and pursue 1 or all of the recommended home pur-chase contracts.) Economic Cycles Affect Real Estate Prices As mentioned in other chapters. each cycle has lasted a little longer than the previous one. house. Remember. Item 1.). etc. Net Proceeds Estimate. houses have sat for over a year without an acceptable offer. in the flat part of the cycle.I. 5. they are biased toward using brokers exclusively. the houses have been known to sell within hours of being listed for sale. the same house is worth as low as $160. Seller carryback. b. All real estate prices are subject to cycles. Since World War II. and page 16-57. Even though its value flattened out or dipped with each economic cycle along the way. Basically. liens. An equity purchaser (foreclosure investor).000 (down from a 1990 peak of $220. California in 1954. you must pay everything owed against the property. An assumption/transfer loan liability. 8. these very different markets call for very different selling strategies. (See more on calculating net proceeds on page 11-60. before you receive any money from your sale. in Determine the market you are by reading the real estate . An all-inclusive (A.500 and subsequently appreciated in value. While there are excellent reasons for selling through a broker only. originally sold for $7.

and may need to participate in opening the escrow (see page 11-27). They charge a fee and accept payment by credit card. each may work in any cycle with a suitable marketing plan. You may need to reduce the price to insure a sale before the foreclosure. Depending on the current economic cycle. or their senior agents who have been in the business for a few decades. you will be entertaining all offers. you may need that broker's help in conjunction with developing your own prospects. there is an increase of buyers shopping for homes between March and June. again at the end of summer. set your "asking price" at about 1 to 10% higher than the property's fair market value and/or your bottom-line sales price. in its 11-3 . sometimes. studies show the least amount of buyers shop for homes between November and February. while an equity purchaser may prefer to buy it "as is. Yet. Let them know that this would be a starting point in your negotiations. A house may need to be fixed up to attract a regular retail buyer. you may sell to an investor. Find out the comparables in your neighborhood by calling DataQuick at 800-888-4492. counteract this by standing firm to your price. watching real estate TV shows. But until a deal is reached and a deposit received. and. Tell all potential buyers to make a written offer somewhere near your asking price. and ask point blank what kind of market we are presently in. Or. However. one strategy may be wiser than the other. You can save on the commission by not using a broker and doing all the work yourself. with this strategy you run the risk of underpricing your house and thus losing potential equity. The cycle within the average year also influences your strategies to sell. However. An Asking Price Above The Market . you may be offered more than your asking price and receive several offers. One drawback is buyers tend to offer less than the asking price. Conversely. It helps position your house at the head of the pack. in slow markets. This strategy is common in markets where prices are flat or falling. How long have these market conditions existed? Where is it headed? In a fast market. or talking with your neighbors. This strategy is common in markets where prices are appreciating. 1) above the current market prices or. if you use this strategy you run the risk of overpricing your house and thus losing potential buyers. It helps you avoid selling your house for too little.With this strategy. Pricing Strategy Two basic types of pricing strategies are using an asking price that is. Typically.sections in your local papers. extension 152. Call up a few real estate brokers. you may counteract this problem by making it very clear in all your marketing that you will entertain any offer. In a market with appreciating prices. On the other hand. set your "asking price" at or below the property's fair market value. such as delivering the purchase agreement (see page 11-54) to the escrow company. family. If the market allows. business colleagues and real estate experts. Another factor in setting your price is the cost to fix-up or repair to make the property more saleable. An Asking Price Above The Market With this strategy. 2) below the current market prices. without a broker's help. in a slow market.

Disclosure must be made in "good faith. inaccuracies or omissions of information that they did not personally know of. Offer/Counter-offer Strategies Learn to be comfortable with working offers like a ping-pong game: the buyer always starts with a written offer. See page 11-56 for an example of a counteroffer form. the seller of any real property must deliver to the prospective buyer a written disclosure statement detailing the condition of the property. See pages 11-31 through 11-37 for a copy of the form which state law requires the seller to use to make the disclosure. And you either compromise if you do not have another offer or hold out for a better one. which may give prospective buyers another 3 to 5 days to back out of their offer to purchase. You Must Disclose Property's Condition Your As required by California state law. the buyer's purchase offer form has a section for making counter-offers. Escrow agents (see page 11-27) are not required to deliver the completed disclosure for the seller. to give the seller a written cancellation of their offer to buy. Then the buyer may bounce back with a compromise. many times. If more than one real estate broker is involved in the 11-4 . This gives you the leeway to discount your price for the purchaser. Sellers are not liable for errors. It is wise to determine your projected fixup costs (see page 16-65). prospective buyers are allowed 3 days after receiving the disclosure in person. See page 11-56 for a form to use to counter a counter-offer.current condition" and then fix it up later. Or. and you return with a counter offer which demands the terms and conditions you need to close the sale." The seller may amend the initial disclosure in writing at any time. Make photocopies to use in your transaction. or 5 days if received by mail. then figure them into your beginning asking price even before the work is started. unless otherwise instructed to do so." which the law defines as "honesty in fact in the conduct of the transaction. or to have the proper budget in the event you do the work yourself after all. If they so wish.

While your agent markets your property through the MLS.transaction. then the broker who has obtained the offer from the prospective buyer is required to deliver the disclosure. always write: The subject property is being sold in its present "current" condition. or to rent. as well as all of the above home purchase contracts. While exclusives list the property for sale with only one agent. take any backup offers. Decide whether to stay with a friend or family. If the seller does not provide the disclosure to the broker. page 11-7. is completed. Of the different types of listing arrangements. then the broker must notify prospective buyers in writing of their right to such a disclosure. then the sale is still considered valid. The basic procedure is very simple: 1. one exciting direction for the very ambitious seller is to pursue both of the selling options. Upon finding or deciding on a buyer. In addition the broker must maintain a record of the action made to obtain and deliver the disclosure. chose an agent who is sympathetic to your foreclosure situation and willing to work 11-5 . Many of the most important details of both selling FISBO and selling with a broker are explained in the corresponding sections below. or to buy in a more affordable area. net and exclusive listings. A listing agent as defined by the Civil Code Section 2373(1) is "a person who has obtained a listing of real property to act as an agent for compensation. and thus. open an escrow. yet the seller is liable for the amount of damages the buyer suffers. A commission is paid when the agent's listing or selling efforts sell the property. On both the sales contract and the disclosure statement. 2 kinds of exclusives are. Begin looking for a new place to live. which gives you an equal right to sell as well as exposes your property to all agents who subscribe to the local Realtor Multiple Listing Service (MLS). USING A REAL ESTATE BROKER A well-chosen real estate agent may be the best way to sell your property. 3. more important. motivated and proven to be effective. 2) Exclusive Agency The primary goal in selecting an agent to list your house is not only to choose an agent who is knowledgeable. The benefit of this plan is you may net the best possible deal at the best possible price and in the shortest period of time. Also. 4. 1) Exclusive Right To Sell and. becomes known as the listing agent. (See How To Find A Good Agent. begin your own sales program designed to attract buyers. but. exclusive listings are the most commonly used for residential. at the same time. including open. List your house with a real estate agent under an Exclusive Agency Listing. a listing is both an employment contract between the homeowner and a real estate agent as well as evidence of inventory for sale.) The agent you select will want to enter into an agreement to list your property. 2. If the disclosure is never made even though the sales transaction THE FORECLOSURE SALES STRATEGY Since the time-table is tight for the homeowner facing foreclosure." Thus.

Under this type of listing. (See How To Sell "For Sale By Owner" on page 11-9. They are content to split the commission with the selling agent. fear. is a . 2) The Commission Drawback and. The Commission Drawback . especially if a dual 11-6 the aid of a real estate agent. the importance of the Exclusive Agency to the homeowner who is racing against the foreclosure clock becomes clear when you compare the features and legal ramifications of both types of listings. some agents are merely "listers" who sign up as many listings as possible. page 11-7. For my situation. a commission can amount to a lot of money. which are. lack of confidence and other limitations may prohibit you from do so. you would still owe a commission.) Although the listing agent may protest. (See How To Find A Good Agent. listing in an Exclusive Right To Sell may be your best option. In many cases. before you sign an Exclusive Right To Sell listing. Thoroughly think following questions: through the 1. To many homeowners in foreclosure. (See sample provisions. Two alternatives to using an agent are. be aware of a few drawbacks for a homeowner in foreclosure. For my situation. or 2) market. sell and process the sales transaction yourself. Such an agent must be willing to list your house under an Exclusive Agency Listing rather than the popular Exclusive Right To Sell Listing. or to add provisions to the listing which allow you to cancel it under certain appropriate conditions. 3) The Equity Purchaser Drawback.Whether you realize it or not. 1) ask the agent to sell at a reduced commission. but leave most of the selling to other agents.An equity purchaser. if a buyer shows up at your doorstep with cash in hand and buys your house from you without A homeowner in foreclosure needs an aggressive real estate agent with a sound marketing plan who wants to focus on finding prospective buyers for his/her specific property. But. would it be better to have a broker/agent market my property? The Equity Purchaser Drawback . If you got stuck with a lazy lister. page 11-6. time. every dollar saved may be significant to rebuilding their future. using a hypothetical situation. is marketing my property in the FISBO process appealing to me? 2. commonly called a foreclosure investor.) However. Their hopes rely on other agents doing the selling.) Listing with anything less would be cheating yourself. Exclusive Right To Sell The reason why most real estate brokers usually prefer the Exclusive Right To Sell (see example page 11-38) as the residential standard of the industry is that it guarantees them a commission whether they work to sell your property or not.with you on it. A commission can erode some of your equity. Their focus is on how to obtain as many listings as possible without putting much effort into selling those listings themselves. 1) The Lazy Lister Drawback. The problem with lazy listers is that they can stall or delay your efforts to find a buyer immediately. agent (see "dual agents" below). The Lazy Lister Drawback Indeed. read your contract to find out how to cancel it or how to amend it to make the agent perform properly for your foreclosure situation.

equity purchasers want to cut out all unnecessary costs. unwittingly places certain limits on the equity purchaser in an Exclusive Right To Sell Listing. A dual agent. the Home Equity Sales Contract Act. the dual agent will still receive 1 percent more than the 3% received in a regular 50/50 commission split. The listing agent who also brings in the buyer does not have to make the usual commission split with another selling agent. but also such a bond is currently not offered by any bonding company (except possibly for a few real estate agents in a unique arrangement). is an agent who acts as an agent for both the seller and the buyer. Limitations of the Home Equity Sales Contract Act on the Exclusive Right To Sell listing seem to apply only to the equity purchasers who are represented by the listing agent . or any buyer who offers substantially less than market value. An agent's commission might be just the additional cost factor that turns an equity purchaser away from buying your property. The 2 reason for this are the Home Equity Sales Contract Act and the cost of the broker/agent's commission." Not only would such a bond add up to 10% on to the agent's commission and thus to Even with this commission reduction. Normally. Unfortunately. as defined by the state Civil Code Section 2373. Unintentionally. the dual agent can still represent regular buyers who want to pay market value and do not realize the house is in foreclosure. the alert seller can ask the agent to reduce the commission. So. passed hastily to protect homeowners in foreclosure. a dual agency is considered advantageous to both the listing agent and the seller. So." Since the bond is virtually unobtainable.) Although not the most preferred kind of buyer in most cases. then any such "equity purchase contract" would be rendered by law to be "void and the equity purchaser (foreclosure investor) shall be liable for all damages proximately caused by the failure to comply.special kind of buyer. The problem is that any serious equity purchaser will not or cannot contact you through a broker/agent. the mandatory commission is another problem the Exclusive Right To Sell 11-7 your costs. whether the agency will be dual or will exclusively represent the seller. any dual agent who represents both buyer and seller in such a transaction must be bonded for "an amount equal to twice the fair market value of the real property. Nonetheless. before taking the listing. The code mandates that the agent specify on a written form. As per Civil Code Section 1695. in effect. Even if the agent reduced the 6% commission to 4%. the Home Equity Sales Contract Act makes it prohibitive for the dual agent to present offers to the seller from equity purchasers. the resulting liability exposure to the investor will probably prevent most preforeclosure equity purchases handled by a dual agent. (See pages 11-20 through 11-23 for more on Equity Purchasers. An additional catch-22: the Statute says that if this bond is not obtained. in nonequity purchase transactions. some equity purchasers may make an offer at the last minute in the foreclosure process when certain sellers may need it the most.17 of the Home Equity Sales Contract Act. you must first understand the role of the dual agent. To fully understand the impact of this limitation. listing agreement presents for the equity purchaser.

3. then quote Civil Code Section 1695. And the need for that freedom becomes clear when given the limitations imposed on agents by the Home Equity Sales Contract Act. well-chosen agent. In fact. If the agent protests. the Exclusive Right To Sell may be the best option for homeowners who do not want to participate in the selling. including the local Multiple Listing Service. while attracting the largest number of potential buyers in the shortest period of time. Since many agents . Other agents may promise to lower their commission to help you retain equity. you gain the freedom and flexibility to advertise for. or even any other buyer you find without the agent's help. which calls for the agent to be bonded for twice the amount of your property. for which the seller agrees to pay the agent a finder's fee of $200 only if the seller closes a deal with that equity purchaser.17 from the Home Equity Sales Contract Act (see page 19-1 for a copy of the law). Some real estate agents may claim that the seller has the right to cancel the Exclusive Right To Sell listing at any time. partners and equity purchasers. or any other of your needs. The agent still markets your house through all the regular brokerage channels. Yet. The seller reserves the right to solicit and sell to any buyer who is procured solely by the seller and not through any agent. for the homeowner facing foreclosure. Most likely the investor will end up paying this finder's fee. or who feel 11-8 more secure with an aggressive. And equity purchasers may represent themselves to the homeowners. you may avoid all the limitations of the Exclusive Right to Sell.) Assert Your Needs In The Listing Contract In essence.to buy at a sales price substantially below the regular market values. agents other than the listing agent may be able to present offers from equity purchasers. The seller reserves the right to cancel this listing at anytime. Equity purchasers actually prefer to deal straight with the homeowner in order to freely discuss the fine details of the deal whenever necessary. all these limitations notwithstanding. Exclusive Agency Listing An Exclusive Agency Listing is when you list your property with a real estate brokerage firm while retaining the right to sell your property yourself without owing a commission to the listing agent. In many cases. deal with and sell to your own buyers. 2. Examples of the provisions which might be put in the listing contract: 1. Still other agents may allow you sell to an equity purchaser. The seller reserves the right to pay a 4% commission in the event of a dual agency. the promises. The best place to do that is in the original Exclusive Right To Sell listing contract. the Exclusive Right To Sell listing creates definite drawbacks in the cases of lazy listers. In any case. specify in the original listing agreement: the listing agent agrees to refer any equity purchaser directly to the seller. (See pages 11-20 through 11-23 for more on Equity Purchasers. By listing under an Exclusive Agency. equity reduction and limits on the equity purchaser. must be put into writing at the time of the listing. On the other hand.

may not be familiar with the Home Equity Sales Contract Act. it comes down to this: despite competition from you. A One Party Showing basically protects the agent from the person who is named in the form and who is shown your FISBO (see page 11-9) house from going behind the agent's back to deal with you separately. Ultimately. Mentioning your knowledge of these procedures to the agent at the time of listing will make that agent feel better about you and the Exclusive listing. with the agent's sign in your yard and with a listing agreement which legally binds you to separate your buyers from the agent's. But there are 3 simple. or an agent's. 2. the mature agent should feel wellprotected. will not be inclined to work as hard to find a buyer since they have to compete with the seller. See an example of a One Party Showing on page 11-40. The seller must routinely ask the potential buyers who happen to stop by. many Realtors may not be carrying this around. do not be surprised if you will need to educate them about it. Some agents might say that under an Exclusive Agency they. the agent can further protect himself by having you sign a One Party Showing naming a specific person each time the agent wants to show the house. then you may give them the agent's fact sheet on your house. or briefly show them around. If they did not find the house through an agent. such as the agent's ad or sign in your yard. but ultimately must refer them back to the agent. if they found your house through your efforts. even though less than usual. which also builds trust. While there is a special form entitled Exclusive Agency Listing. which. ask the agent not to publish your address in any of the brokerage advertising. This just is not true of good. To further eliminate confusion. The listing agent who is sympathetic to your foreclosure situation will not mind using an Exclusive Agency Listing. or amend a standard listing form to limit the agent/broker to one showing with one buyer. especially when that agent senses your cooperation and your determination to participate in the selling and 11-9 hired. If they found it through an agent. with your house in the local Multiple Listing Service. accepted methods to protect the agent's buyers: fully understands the Home Equity Sales Contract Act's limitation on the Exclusive Right To Sell Listing. And it is not needed. hardworking agents. Still other agents fear that the prospective buyers whom they bring to the seller's house will go behind the agent's back to deal with the seller. 3. Just remember to include the following language under "Other Provisions" in the regular Exclusive Right To Sell listing agreement (see page 11-38): . Both the seller and the agent must keep lists of who they have talked to and then compare it from time to time. they acknowledge as a fair trade for including your house in the Multiple Listing Service and agent networking. In any case. then you may proceed with your own sales presentation. Any agent who feels this way should not be 1. most agents appreciate the opportunity for a potential commission. Besides. or their colleagues.

motivated and effective. then call those sellers for a reference on the agent. Sometimes this may involve bringing other agents to the house for opinions. Aforesaid agent agrees to conduct at least one open house per month for four months. including addresses and phone numbers. 3. you will want to find a good agent. And at the time of the listing. 2. I am reserving the right to sell the property "For Sale By Owner (FISBO).1. stay away from friends or family agents who are not the best or do not usually work your neighborhood. and in which case. In fact. for which a finder's fee shall be paid. make the four open houses a contingency of the contract. 3. The main idea is to avoid listing your property with a "lazy lister. Ultimately." and instead find a "go getter" agent who. Go look at the . This should include a list of properties sold and a list of properties for sale printed in a few minutes from the Multiple Listing Service (MLS) computer in the agent's office. Use the following guidelines to gauge their performance: 1. 4. reasonable selling price. mark a list of questions to ask. I will not be bound to pay a commission. a property profile from the title company should be included in the agent's presentation. client satisfaction. Ask to see the data of recently closed sales used in the agent's analysis. or ask various real estate brokerage firms for their top performers in sales." without another agent. Recommendations from family. average amount of open houses. while in this foreclosure predicament. Anonymously attend their next open house to see them in action. is sensitive to your foreclosure situation and has a track record of being knowledgeable. This listing to last how long? 5. Ask the agent for a market analysis of your neighborhood. try to find three to five prospective agents to interview. also. The agent should appear to enjoy working with buyers. How To Find A Good Agent Regardless of whichever listing you decide to go with. This is an Exclusive Agency Listing which authorizes the agent/broker mentioned within this contract to sell the property. but the seller reserves the right to personally sell the property in which case no commission is owed the aforesaid agent/broker. specify in the listing agreement that agent must refer any equity purCall the local Board of Realtors for suggestions. Ask for a list of the agent's recent sales records. etc. including a brief personal history. Also. as well as a suggested asking price and a 11-10 chaser directly to you. 2. As a principal. most likely by the investor and only if you close the deal. But. There may be another set of "comparables" straight from the county records which show many "by owner" sales not in the MLS. While looking for prospective agents. with such things as a neighborhood map including your property and other recent sales as well as general information regarding your property. friends and business associates sometimes help locate a real estate agent with a record of success.

Get recommendations for a termite inspection. mail marketing to neighbors. PSI explains their options and makes appropriate suggestions regarding how to deal with the lender. Understanding the tax ramifications of foreclosure. information flyers. 5. for the agent's real estate office and for the real estate trade in general. but also refers homeowners to local brokers/agents who have received PSI training. open houses. . Being sensitive to the emotional state of a homeowner in foreclosure. Knowing the foreclosure process. tours of area agents. market changes. Ask for a marketing plan. When a homeowner in foreclosure calls PSI. newspaper advertising. PSI believes no one should have to go through the trauma of foreclosure by themselves and takes pride in being consumer oriented. the homeowner decides to sell their property. 2. showings and results. and processing a sale.houses which the agent thinks are comparable. PSI can refer them to a Foreclosure Counselor Realtor for guidance and help in selling their property. 4. Understanding bankruptcy other legal aspects. including: interested lookers/callers. Progressive Solutions Institute (PSI) not only trains brokers/agents to process foreclosure listings and sales. Ask for a prioritized list of suggestions for improving the property's curb appeal as well as functionality. The training is approved for California Department of Real Estate continuing education credit. A 90 day listing is fair. 3. 6. along with a clause that allows you to cancel at any time. A PSI trainee receives the title of Foreclosure Counselor Realtor. 4. Negotiating with the lender. The agent should verbally present the listing at the Board of Realtors meeting. If. distribute flyers to other brokerage firms and provide special preview tours for top producing agents. A good agent should give the seller a weekly update by phone or in person. 5. 11-11 6. and a disclosure statement of the property's defects. Agents Trained To Help Homeowners In Foreclosure PSI trains Foreclosure Counselor Realtors in the following areas: If a homeowner in foreclosure decides to list his/her home with an agent. 7. A marketing plan should include steps identifiable to the seller. PSI hopes to eventually have a certified Foreclosure Counselor Realtors in every area of the state. which includes a For Sale sign. The agents/brokers receive a certificate to include in their career book. Ask the agent to specify and explain the terms for sale. after dealing with the lender. MLS. Listing and marketing a property in foreclosure. then it makes sense to consider an agent who has training in foreclosure matters. and 1. The agent should conduct all three kinds of open houses: for the public.

for: you. you may begin your own sales program designed to attract a buyer. FISBO shall refer to those homeowners who sell their homes themselves whether or not they also list with a real estate agent. Call Progressive Solutions PSI trained 1. 3. Advertise your property in the newspaper or other periodical. financing and pest control. In order to learn more about the general principles and techniques of selling FISBO. Advertise your property in one of the FISBO publications. Aren't you potentially the most motivated seller of your property? So. who may be dividing his/her energies over several other properties. homeowners in foreclosure may gain a potential advantage by simultaneously selling FISBO along with the service of a real estate agent under the Exclusive Agency listing. It is important to note that the term "FISBO" usually refers to a homeowner who is selling a house without the benefit of a real estate agent or brokerage firm. as mentioned earlier. But. (PSI). many community colleges. from the necessary repairs and cosmetic improvements to how to figure the appropriate price. either individually. this section will focus on quick ways to find these buyers and how to sell to them "for sale by owner. Processing a lender short pay sale (see page 11-25). Such books detail the customary steps in the FISBO process. HOW TO SELL "FOR SALE BY OWNER" Now that you have secured your right to sell. at Counselor Realtor near and 2. Thus. for the purposes of this book. too. For example. from how to show your house and negotiate the best deal to how to close an escrow and move out. If handled properly. selling FISBO can give you maximum market saturation. a real estate broker/agent working for you may also bring in a buyer through 1 the same programs). you can: 1." commonly known as FISBO (pronounced fizz-bow). you may want to read one or more of the excellent books on the topic available through a bookstore or library. One good reason to find a buyer as soon as possible is that many lenders will postpone the foreclosure sale (called the trustee sale) to allow you extra time to close your sale's escrow. in addition to the efforts of the agent.7. A free referral to a Institute Foreclosure 1-800-633-9075. you can focus on working all aspects of the entire market. Also. Distribute your own sales flyer (see page 11-41 for an example of a sales flyer you can design yourself with a typewriter and a photo of your house. Hold your own open whenever the agent conducting one. . Since the foreclosure timetable is tight. such as taxes. Some free general counseling regarding your foreclosure or the foreclosure process. 2. houses is not 4. or contractually with a broker/agent. And all the details in between are included. page 11-42 for a form you can fill-in and photocopy for immediate use). univer11-12 sity extensions and local clubs offer courses in home selling by owner. Each of the home purchase contracts listed on page 11-1 have unique characteristics (remember.

and 2. it is the high sales appeal of the rent and deposit credit toward the purchase price that usually locates a buyer in a relatively short period of time. a buyer can get into a house with some of the best of . The traditional lease-option sets the purchase price and credit all or part of the deposit and monthly lease payments toward a down payment at the end of the lease. Real estate agents are best set-up to locate this kind of buyer with their Multiple Listing Services. A PARTY TO LEASE-OPTION A lease-option is used to lease your house to a tenant while giving an option to buy at a later date. the more of this option money deposit the seller may be willing to credit toward the down payment as an enticement to buy. On the other hand. especially during recessions and other such slow real estate markets. Second. Generally. agent-to-agent networking. Nonetheless. do not be surprised if the broker/agent comes up with a more nonconventional buyer. marketing to regular retail buyers may generate more competition than your listing agent will want from you. Since the rent payments in a lease-option are higher than the regular market rents. The terms of both are similar. The more motivated the seller is to sell the home. However. Newspaper advertisements that promise the buyer can "rent-to-buy" usually bring in many potential home shoppers. The traditional lease-option. if and when the buyer exercises the option to buy. the higher portion of the rent is what actually accumulates toward the purchase.THE REGULAR RETAIL BUYER The Traditional Lease-option The regular retail buyer is who you expect your real estate broker/agent to find: a conventional buyer who will pay fair market value and buy according to the standard purchase procedures. if before signing the Exclusive Agency listing agreement you make mention to the broker/agent of your desire to run an ad or conduct an open house. The straight lease-option. as well. Yet. This method is a popular home selling tool. the straight option accrues no money toward the down payment and sells only an option to buy at the end of the lease or other date. open houses and real estate brokerage sign in your front yard. But. with a traditional lease-option. then that should be sufficient warning to thwart any conflicts. One of the most powerful aspects that a traditional leaseoption has over a straight lease-option is in its marketing capabilities. except for 2 very big differences. 11-13 The basic terms of the traditional lease-option (see the form on page 11-46) are simple. Most traditional lease-options credit a major portion of the option deposit toward the purchase price. be aware that of all your potential buyer categories. First. But." usually a deposit as low as 1 to 10% of the purchase price. a portion of the rent or lease payment is set aside to accrue toward the down payment or purchase price. The two most common lease-options are: 1. advertising. the buyer pays the seller a deposit called the "option money. as a FISBO. you may also shop around for a regular retail buyer.

the upfront option money only purchases the option to buy later at the prevailing fair market price. at his discretion. it becomes an enforceable bilateral purchase agreement. and the roles of the parties are narrowly defined in terms of a landlord/tenant relationship. Ads in the "Homes For Sale" section of the local newspaper that 11-14 want to set a slightly higher than market price in order to make up for any future price inflation. the subsequent lease payment may be comparatively high. For example. and a separate agreement to sell an option to buy (see page 11-49). The lease payments pay only the lease. They have ruled that the contract is either a lease-option. Nonetheless. a seller may The straight lease-option uses one agreement (see page 11-46) to lease a property. Until then. taxes and insurance. The Straight Lease-option read "$5. or a sale. However. makes the final loan payment. plus the amount above market rents which accrue toward the purchase. the agreement between the parties is a lease for all purposes. if and when the lessee exercises the option to buy. Also. when used commercially and not residentially.5% of the house and is much better than the 20 to 30% deposits required by most banks and mortgage companies." (First Tuesday also publishes real estate forms that specialize in California law) It is worth while to note that the straight lease-option also has some market appeal. When a tenant with a genuine option to buy exercises the option. "the (straight lease-)option is the landlord's irrevocable offer to sell the real estate to the tenant within a certain period of time--should the tenant decide to buy. especially those who have little down payment money. Instead of being regarded as a deposit.000 dollars on a $200. some courts have looked beyond such a designation to the actual components of the commercial lease-option contract itself. Legal Notes Regarding Leaseoptions . the rate of closing such deals may be less than with the traditional lease-option since the straight lease-option does not have the appeal of offering a credit of the deposit or rent toward the purchase. A deposit of $5.financial terms available. Since the lease payments will have to cover the seller's mortgage. and no money is ever credited toward the purchase. A land sales contract is an agreement in which a seller does not transfer real estate until the buyer. as some commercial lease-options have tried to be.000 moves you in" will also bring in many home shoppers. which leverages 97.Many conservative sellers have decided to use the straight lease-option due to a few court decisions that reclassified traditional lease-options. The tenant is given the absolute right to buy or not to buy the property. According to Stephen Stralka in his article published in First Tuesday magazine. in leases lasting more than a year. in a contract labeled a lease-option. after making installment payments for a year or more.5%.000 house is only 2. the traditional leaseoption makes a house easier to sell since it is affordable to more buyers. as a land sales contract. but cannot be the same at once. It never sets a price nor credits any money toward the purchase. yet have more than one income in the household. wherein the price had been set and . Irregardless of whether a contract says Lease-option at the top of it.

Sometimes the seller/landlord may end up in a lawsuit and possibly paying a settlement to the lessee. And since the usual deed of trust. is not routinely drawn-up as part of a traditional lease-option. it is worth noting that the above legal problems seldom occur. Since a seller cannot evict a buyer with an equity position. But always remember. according to the prevailing real estate market and whatever best suits the buyer's and seller's needs. So in order to lessen your exposure to a lawsuit. and/or makes repairs with the good faith belief of being an owner and/or pays substantially higher monthly payments which could be construed to be mortgage expenses rather than rent. a seller may want to draft a straight lease-option and stay away from the terms which make it appear too much like a land sales contract. Important Facts To Know About Lease-options 1. Other items within the contract that the courts will look for in order to reclassify a traditional leaseoption as a land sales contract are if the tenant assumes the property's risk of loss and the responsibility of maintenance. Although the above court cases involved commercial leaseoptions. Since some courts have ruled that such a leaseoption is really a land sales contract. As stated earlier. traditional lease-option agreements that mention a sales price or accumulate credit toward the purchase begin to develop problems when the lessee quits making payments and the seller attempts an eviction. the problems with traditional lease-options may only arise after the buyer defaults on the payments and the seller starts an eviction process. many feel the precedent could just as easily be applied to residential lease-options if a disgruntled buyer ever forced the issue in the courts. To date. . the court reclassified it as a land sales contract and not a lease-option. the lessee usually either buys the house and stays. no one has challenged residential traditional lease-options. The possibility exists that the traditional lease-option may be reclassified in the courts as a land sales contract. which can mean a long. the seller can only foreclose. pay a settlement for wrongful eviction. For this reason it is very important for the seller to include the deed of trust in the contract along with its powers of non-judicial foreclosure. Note: The lease-option form on page 11-46 was designed by First Tuesday to provide the protection of the non-judicial foreclosure power of sale in either a traditional or a straight lease-option. difficult court procedure (see an Even though some feel the straight lease-option may be safer. the so-called lessee is really a buyer with an equity position in the property.payment credit had been allowed to accrue toward the purchase. A traditional lease-option ends up in court only infrequently and is rarely reclassified as a land sales contract. the foreclosure must be judicial. Lease-options are usually made for periods of time between a few months to a few years. never underestimate the power of a disgruntled buyer who is pushed into the arms of a knowledgeable attorney. with its usual powers of non-judicial foreclosure. Furthermore. or does not buy and peacefully leaves. At the end of either the straight or traditional lease term. and the seller may even have to 11-15 explanation of judicial foreclosure on page 1-21).

Immediately record the option at the county recorder's office in order to protect their claim in the property and protect it from being sold to someone else. A home inspection should be made along with a decision as to who will be responsible for any repairs. 2. or more. hopefully. 5. insurance and property tax payments. insurance and property tax payments you may use the surplus to rebound financially. 4. Benefits of Straight Traditional Lease-options and The main benefits of either leaseoption for the homeowner in foreclosure are: 1. Receiving a deposit which could help offset your costs to move. 5. 11-16 . as well as any maintenance. 4. enough to pay your combined mortgage. especially when the option is not exercised. Tax deductions until the option is exercised. or through a title company. In cases where the lease payments you receive are higher than your combined mortgage. for any outstanding liens against the property. 3. Receiving lease payments which could be 10 to 20%. 3. higher than current market rents. Tenants who care about the property since it someday may be theirs. Check with the county recorder. or. Be aware that prudent buyers might: 1. The improvements that will be permitted during the lease must be specified. Language should be included in contracts which provides for restitution in the cases where lessees causes (or allow others to be caused) serious damage to the property. Check that both the mortgage and the taxes are being paid. A possible income. 3. Credit and employment checks should be run on the prospective lessee. Assignments or subletting of the lease should not be allowed. Arrearage on your mortgage could be reworked into your mortgage payments through a forbearance (see chapter 3-How To Win By Changing Your Mortgage Terms).2. This higher rent is the price the lessee pays for the option to buy later. 6. 2.

" can be for all the equity. or creates. Receiving a fair market price when the option is exercised. Rent-to-buy means a pre-set portion of the monthly rent or lease payments accumulates toward a preset purchase price. 2.T. Clearer. Several good books are available on the subject. Benefit Of The Traditional Leaseoption The main benefit unique to a traditional lease-option for the homeowner in foreclosure is: 1. Affords an excellent selling technique commonly used in a slow real estate market.000 (the option money) moves you in" should bring many prospective buyers. if the tenant does not exercise the option to buy. it is even used to finance a down payment. trust deed The main benefits that are unique to a straight lease-option for the homeowner in foreclosure are: 1.D. or only for part of it. An all-inclusive (A. The possibility for a reprieve. Additionally. "Real Estate Digest #104.T. When the option on the lease is exercised. A seller carryback. Advertising the property as "rent-tobuy. The seller carryback may become the first and only mortgage on the property. Many times a sale will go through only if the seller helps out by creating some or all of the financing." which is a powerful marketing tool that attracts many potential buyers. the traditional leaseoptions can be considered a form of seller financing. Sometimes. Although this section touches on some of the basics. The seller carryback is so versatile that it can be used in a variety ways to best suit your particular transaction. or a chance to get the house back. 1. is concise.6.D.I. For the homeowner facing foreclosure. 2. This would be good only if you have rebounded financially and want the house back. A BUYER FINANCING AIDED BY SELLER 3. The carryback loan. Benefits option Of The Straight Lease- 7. a loan for the buyer from the equity in the property that is being sold. following are 2 of the most useful methods of seller financing: 11-17 . also called a "note" or "paper. 3.). you are well advised to do further research and/or consult an attorney before attempting seller financing. thus. or may be used in conjunction with new or existing loans. The Seller Carryback A seller carryback is when the seller carries back." published by First Tuesday. or both. comprehensive and 1 of the best books on the subject. Marketing with newspaper ads like "$5. it may involve a seller carryback or an A.I. possibly a safer legal contract.

The promissory note can be either a straight note or an installment note depending on the agreed upon mode of payment. including the amount of the note. the legal power behind a seller carryback is the promissory note (see page 1-29) and deed of trust. the payment schedule and the due date. depending on how much cash the seller does or does not want after the sale. In addition. the buyer must sign an unconditional written promise to pay not only the person named as holder of the note. The Promissory Note and Deed of Trust . Many installment notes are either fully or partially amortized. then the seller may want to loan the remaining $35. Necessary for a note to be enforceable. While the straight note pays off in 1 lump sum at some predetermined future date (balloon payment). An incremental note pays partial balloon payments at designated times during the life of the note.000. or $160. such as in this case $15. the interest rate. or trust deed (see pages 1-26 through 1-28). or buy a brand new first mortgage.000 property. the amount of the regular monthly interest payments would be adjusted to reflect the decreased principal. The deed of trust becomes both a recorded lien on the real estate in question as well as security for the . The buyer can either get a second loan from a mortgage lender.000 note and pockets a $5.000.000 down payment. identify the lender and specify the debt.000 = $200. The buyer assumes the existing $120. If the buyer assumes (takes over) the existing loan. If the buyer does not have the $40.000 + $160. both of which the California civil code considers 1 contract to be read together. The buyer can then close the deal by putting up the final $40.000 in the form of a seller carryback. Most preprinted forms include all this contract language.000 on a $200. 11-18 b. the note must mention consideration.000). the result would be an 80% loan-to-value. or debt.000 while the seller creates an "incremental" $75. being the exact amount of principal and interest. to be legally sound. In order for the note to be negotiable. the installment note is paid in periodic payments.000 down payment ($40. The seller then has $80. After every partial balloon payment.000 in equity. a.000 every year for 5 years. then the seller can create a loan for the buyer out of all or part of the $80. Some variations are possible from this point: 1.As is the case with most mortgages in California. or pay interest installments only with a single balloon payment at the end of the term.000 equity. but also the agreed upon payment schedule and the debt. If the buyer only has $5. and promise to pay the loan. consideration can be simply an agreement to convey a property in trade for the carryback note and deed of trust. contain a promise to pay.000 and an existing loan of $120. 2. then the seller can take whatever down payment the buyer does have and carryback the remaining balance.Assume a seller has a property with a current market value of $200. The promissory note documents the terms for repayment of the loan. In either case. while assuming the first mortgage. The promissory note is the written evidence of.000 to put down.

In other words. And once a seller carryback does fail to give a delinquency notice. the buyer must have the payment in the seller's possession within the 10-day grace period. or on the eleventh day. In order to collect on the late charge. A 10-day grace period. which is an extra charge to the buyer for paying off a loan before its due date. Late Charges and Grace Periods Within certain guidelines. or whatever is considered a reasonable loss which the seller determines at the time of the loan. such as 40%. If a payment is due on the first of the month. or must deliver a written statement of delinquency on or after the first day following the 10-day grace period. The law says if a broker assists or participates in a loan. directly to the seller's resulting tax consequences which have been triggered by the buyer's early repayment of all or part of the loan. The exact late charge. with the amount being no more than 6% (10% if a broker set up the loan) of the delinquent installment payment. it is not considered delinquent until after the 10-day grace period. The amount of the charge depends on whether the buyer lives in the subject property or not. the seller's rights in the property under the deed of trust are terminated. then you can charge the higher interest rates allowed by brokerassisted loans. The promissory note must contain provisions for: 1. Prepayment Penalties A carryback seller may charge a prepayment penalty. the more the rate of interest. While most loans from an institutional lender are 15 to 30 years in length. the lender either must have had mentioned the late charge in the prior month's billing statement. or they may need to adhere to the usury laws and loan at only 10%. the term of time for a seller carryback loan is usually has a much shorter term. ranging from 1 to 7 years. then the charge can be a simple rate. the seller carryback loses the right to collect on those particular installments. a second might get 12 to 14% and a third 14 to 15%. First Tuesday's "Real Estate Digest #104" shows step-bystep how to fill out a promissory note and deed of trust. Once the seller carryback note is paid off. Interest Rate and Length of Term Typically. The statements must have the precise total of the late charge. However. or the equation used to figure the charge. However. since the carryback seller may have to pay up to 40% . If a first mortgage currently gets 10%. a lender may charge a late fee for delinquent installments on any loan which helped finance the purchase of a single-family residence. then the higher interest rates may be charged. The seller's "reasonable loss" is tied 11-19 2. the higher the position of the loan. if you pay a real estate broker a nominal fee of $50 to $200 to look over your promissory note before executing it. and If the buyer does not live in the residence. For every missed installment that the seller carryback fails to give a delinquency notice.payment of the debt. Sellers may need to keep the rate low on their carryback loans as a buyer incentive. the seller carryback must give the buyer advance notice in writing in order to collect any future late charges.

In essence. To determine the tax advantages in your situation.worth of income tax on the unexpected early repay of the loan. the buyer's net income. without penalty. which. Credit Check .Before making the loan.) This is accomplished with 2 documents from the buyer: a financial statement and a credit report. ask for an interpretation of the buyer's credit-worthiness. Also. However. No prepayment penalty can be charged on a buyeroccupied residence after 5 years on the loan. and/or read up on the most current tax advantages in a book from the store or library. The financial statement will give you. many different tax advantages pertain to each particular financial situation.000.000 divided by 6 months equals $6. which the buyer or the buyer's accountant prepares. First Tuesday has an excellent section in the Real Estate Digest 104. A Request For Notice of Default and Notice of Delinquency . the buyer can prepay. the carryback seller may charge up to 40% for the reasonable loss. the prepayment penalty is limited to 6 months of advanced interest figured on only 80% of the remaining loan balance (a monthly mortgage interest payment of $1. for up to 5 consecutive years. if the carryback seller sells the carryback note on the market. Basically. or 12 month period. consult with your accountant or financial planner. provided the exact charge was part of the original negotiations and was specified in the promissory note. divided by .8. the seller must obtain reliable credit information about the buyer in order to determine the risk of making a loan. in addition to the tax reasons for charging a prepayment penalty. Give the social security number to a local credit reporting company (look in the Yellow Pages) and. when a buyer asks a seller to carryback a loan.800).If. which is either 1-to-4 residential units. the seller wants to determine if the buyer has both a good credit history as well as the income to make the payments on all the existing loans. proper reading of the buyer's financial statement and credit report should give the seller adequate information for analysis. Also. plus the seller carryback loan. among other things. not including the mortgage payment. make a surprise visit to inspect the maintenance of their current residence. and a social security number. Since the seller's acceptance of the buyer's offer depends on the buyer's creditworthiness. or 80%. the main tax benefit is deferring the tax on the profit in a real estate sale by turning it into an income-producing note. Request that the buyer supply you with both a financial statement. (Most institutional lenders use the 26/38 rule: 26% of their income pays 38% of their bills. Also. up to 20% of the original loan amount per year. Beyond that. and/or other properties the buyer may own. Tax Aspects . then a prepayment penalty can make that note more valuable in many trust deed markets. To further check up on a buyer. if the seller has less than 3 different carryback loans on three different properties. contact the buyer's landlord and/or various creditors for a payment history and personal reference. along with buying a credit report. 11-20 . then the seller can bar the buyer's prepayment during the calendar year of the sale. equals $4. If the buyer lives in the subject house.

Generally. This will cause the carryback seller to be notified within 10 days of the filing of a Notice of Default by a senior loan/lien holder. but at least it is some sort of notice. but not the junior. be sure to include the approval for the Notice of Delinquency in the note itself: The buyer hereby approves the issuance of a Notice of Delinquency.after making a seller carryback loan. Between the 2 requests. Be advised that the face value of a note is not worth the same in cash. These are actually 2 different requests handled two different ways. The only sure way to know would be to call the senior lender(s) every month or 2 and ask. In any case. the junior still has a right to foreclose on the senior loan's default. carryback sellers can stay informed enough to protect their financial interests as soon as a buyer gets behind in payments. A Request for Notice of Delinquency insures that the senior loan/lien holder(s) will notify the junior after the buyer has been delinquent in payments for 4 months and 15 days. the seller may want to convert it to cash. So. If the buyer is behind on a senior. The most usual remedy is reinstating the senior loan with personal funds and then exercising the legal right to initiate and control a new foreclosure of your own. Notes are always discounted in order to be converted to cash. Since some lenders do wait that long or longer to file a NOD. The sooner the junior loan/lien holder finds out. A Request for Notice of Default form can be completed and recorded at the county recorder's office both at the time of the carryback and whenever the seller changes address.000 note with a 15% interest rate might only take a hit of 20%. including the carryback seller would be wiped out. the Notice for Delinquency seems to be sent very late. Unlike the Request for Notice of Default. The percentage of discount usually depends on the interest on the note. quency must be approved by the buyer. the Request for Notice of Delin11-21 due payments accrue. the less expense that junior will have in preparing a remedy. the higher the interest rate the lower the discount. So. A $30. Unfortunately. a buyer could be several months behind before some senior lenders file a Notice of Default. after holding a carryback note for awhile.000 note with a 10% interest rate might have to be discounted 30% while another $30. in the event one is necessary. as well as infrequent calls to the senior lenders. be aware of the discount . then the seller carryback wants to know as soon as possible. a junior loan/lien holder needs to find out about any delinquency on any senior loan as soon as possible before too many past The quickest way for the junior/carryback seller to know about the foreclosure is to file both a Requests for Notice of Default and Notice of Delinquency (see page 11-43). then all junior loans. the junior would automatically receive a notice within 30 days. If a senior lender were to proceed through to foreclosure. The requests should be filed in the recorder's office in the county where the property is located. the request buys the seller 20 extra days. Without filing the request. a buyer defaults on the payments to a senior or underlying mortgage. Converting A Note To Cash Sometimes. So. and visa versa. The best time for the seller to get the buyer's approval is during the original negotiations for the carryback loan.

" Shop around for the lowest discount since all buyers have different criteria.T. can generate an income for the seller as well as facilitate a quick sale. with the $30. Commonly used when financing is tight or unavailable. also known as a wrap around loan. sales price and the seller's net yield. then consider charging a loan fee of several percentage points. Since a note yields a much greater return than cash in the bank. the remaining $180. In other words. the A. especially when your foreclosure arrearage have been paid through a lender workout.I. Creates a wealth-rebuilding income stream for the seller rather than losing part or all of the equity to an equity purchaser. What are the benefits of seller carryback to the homeowner in foreclosure? An All-Inclusive Deed of Trust An all inclusive trust deed. buyers can be found in most newspaper classified sections under "Trust Deeds. at 9% interest.000 to put down on a property that is worth $200. All three loans are "wrapped" together into one $180. do not cash out a note unless you desperately need the cash. or A. As is evident. when you first create the note.T.000 note is not equal to $30.. or worse.000 and has 2 existing underlying mortgages. 4. into a single trust deed instrument.000 is financed by combining the existing $100.000 second mortgage. along with any new seller carryback financing. pay the higher price. if you think you might cash out later.T. the buyer gets into a . 3. the seller gets to keep the difference between the lower existing interest rates of 9% and 11% and the higher "all-inclusive" rate of 13% (see example on page 11-18). eliminating your need for cash from the buyer.I.T. If you must cash out. not only does the seller charge 13% for the new. For example. but increases buyer demand.000 all-inclusive-trustdeed. is a flexible purchase-money transaction that not only creates financing for the buyer. Consider the fact that the rate of interest on a note is usually double or more than on a savings account in a bank. However.I. thus. Look into borrowing on the note first. If the buyer balks. the A.I. Finally. and with the new seller carryback $50. at 11% interest.000 third mortgage.. When the seller creates an A. then negotiate for a higher sales price in order to offset the discount. a buyer has only $20.. especially one who cannot get conventional financing.D. a $30.requirement on the open market before agreeing to take a note so as not to be let down when you attempt to cash out the note before its pay-off date. but also 13% on the existing loans as well. A way to finance the down payment for a buyer.D. seller-created mortgage. 11-22 1. in an A. A quick sale.000 cash. to foreclosure.D.D.D.T. Easy and inexpensive financing for the buyer. gets its name from the fact that it includes any existing mortgages on a property. at 13% interest. In return.000 first mortgage. 5. 2.I. A higher sales price since seller financing creates a greater incentive to buy and. For creating the buyer's financing.

The buyer receives a deed of title as well as a policy of title insurance as in a regular sales transaction. the seller can initiate a non-judicial foreclosure as under any trust deed.'s.T.In addition to all the benefits listed for the seller carryback on page 11-16. consult your attorney.D. such as for payoff of the seller's equity only or for the payoff of all the loans.I.T.I. or time and credit hassles of going through an institutional mortgage lender.T. pays on the existing loans.I.D. or in any manner.I.T.T.T.D..T. In the event the buyer defaults on an A. And if the property decreases in value.property without the fees. who.D.D.I.'s is recommended before implementation. the amount under the foreclosure can only be for the seller's equity and not for the underlying mortgages.D. the A. 2. to conceal the sale from the underlying lenders. Since A.I. Pays the seller a higher rate of interest than is on the face of the underlying mortgages. Many sellers have tried to use the A. the buyer cannot be held liable for the deficiency because of the purchase-money character of the A. The buyer does not pay directly on the existing loans. How The A. Also. in turn. Benefits The Homeowner Who Is In Foreclosure .I. further study of A. The purchase contract must have a provision that the seller promises to pay off the underlying loans as well as provides adequate protection to the buyer in case the seller defaults on the existing loans.T.D. especially when due-on-sale or other such clauses exist. Before using an A. form on page 11-44).D.D. However. also: 1. but pays 1 lump payment to the seller.T.I.I.D. See an example of an A.T. there are several informative books in libraries and bookstores with sections discussing the uses of A. in such a manner. Provides instant delinquency notice since the carryback seller 11-23 .I.'s can be used for varying durations of time.

Gives the seller tighter control over the payments to the underlying senior loans. 11-24 . on the 3.collects the payments underlying loans. Provides the possibility of an income stream when the interest charged is more than the rates on the existing loans. 4.

00 at 13% annual = $ 542.000.D.608.000.T. of $30.00 at 11% annual = $ 275.00 per month TOTAL: $180. With The Existing Interest Rates Readjusted: Existing 1st T.T.I.00 per month Existing 2nd T.567. an A.000.D.00 per month -------------------------------------------------------------------------------------------------------------- With An A. of $ 50.00 per month TOTAL: $180.567.D.000. when its higher interest rate is adjusted upwards across all the existing loans.000.00 at 11% (average) = $ 1.00 at 9% annual = $ 750. Under The Existing Interest Rates: Existing 1st T.D. of $30.$ 1.000.D.00 per month Seller's Yield With The A.T.000.00 at 13% annual = $ 1.T.the total new/existing loan payments listed in the upper equation: .000.00 per month Brand New 3rd T.00 per month x 12 months = $ 4.. of $100. as demonstrated in this example.00 per month Brand New 3rd T.I. of $50.T.00 annually Thus. Increases Income Without An A.951.D.00 at 13% annual = $ 1. will earn an additional $4.D.084.00 per month SUBTRACT .Example Of How An A.I. = $ 384.D.D.00 per month Existing 2nd T.I.I.D.00 at 13% annual = $ 542.608 annual income over and beyond the income already being generated by the . of $100.00 at 13% annual = $ 325.D.

T.D. on page 11-17.I.new third trust deed (See explanation of A.) .

Practically any variation of a sale can occur as a sale-leaseback. To find an investor who is currently involved in a 1031 tax trade situation and scouting for properties. association or board may help. Use the purchase contract on page 11-54. would be slightly different than traditional equity sharing. A saleleaseback is when you sell your house to an investor. For the homeowner facing foreclosure. a variation of the sale-leaseback would provide an option to repurchase later. for a homeowner in foreclosure who still wants to try to keep the property. Rent in exchange for the down payments. Selling some of the equity may bring in just the infusion of new cash necessary to save your property from foreclosure. The investor would buy your house. or the home equity purchase contract on page 11-50 if discounted equity is purchased. This will give the investor a higher return on the investment when the property is sold at a market price. A local real estate company. the investorpartner may even contribute toward the monthly payments and expenses. 3. within a predetermined period of time. then lease it back to you for a period. GET A PARTNER (EQUITY SHARING) For many homeowners facing foreclosure. In any case. such as in a 1031 tax exchange. check in the Yellow Pages under "Real Estate Exchanges" or ask an escrow company which specializes in real estate exchanges. Use the lease forms on pages 11-46 through 11-49 for the leaseback of your property.T. insurance and property taxes. you may want to discount your equity when you sell. then lease it back for a period of time. the obligation to pay on a home has become a temporary financial burden. or they both sell the property to a third party and split the profit according to percentages they contributed or agreed on. 4. depending on your situation. In some instances.I. Traditional equity sharing arrangements begin when an investor buys a property and then takes on a partner who lives in the house and pays the mortgage payments. A seller carryback.A SALE-LEASEBACK For some homeowners facing foreclosure. An ideal investor may be 1 who needs to trade into a short-term (1 to 3 years) rental property.. equity sharing can be as simple as selling a share in your property to an investor. But sharing that financial obligation for a period might suddenly make it less burdensome. along with the maintenance. the live-in partner can either buy out the investor-partner. As a special incentive to get the investor to buy. For a homeowner in foreclosure who still wants to try to keep the property. This type of equity sharing. you can advertise in the real estate section of your local newspaper. or 5. simply mention it in your sales brochure (see a sample brochure on page 11-41). 2. and/or is trading a large amount of cash from another sale. An A. This can delay the trauma of moving for 1 to 3 years. based on the current market values. such as: 1. a type of a sale-leaseback may be a desirable remedy. A cash down payment. A brand new loan. Generally. the more equity you have to work with the greater your possibilities. such as a 50-50 split. by the end of which you would have to decide whether to repurchase or to decline the option. Or. which greatly . Also.D.

This. the investor can then determine the value of a property and the amount of equity. selling to an equity purchaser is not recommended.000. The essence of an equity purchase is that the homeowner sells the property to an investor-buyer and then moves out before receiving any money. unless the homeowner cannot obtain a buyer. suddenly panic at the last minute and sell off their wealth just before the trustee (foreclosure) sale. Lender approval may be necessary. For a relatively low down payment and little or no contribution toward the monthly payments (depending on the individual deal) the investor buys into the possibility of future appreciation for a specified period of time. But if the homeowner must sell to an equity purchaser. the investor will use 1 or both of the 2 most common methods: 1.000 worth of equity is sold to an investor for only $5. nor any of the other solutions suggested in this book or by an attorney. In order to confirm this information. Through a variety of real estate information systems. What the equity purchaser offers in exchange for your equity is some lastchance cash and a quick sale. an investor discovers a Notice of Default has been filed on a property from the public records or a company which specializes in reporting NOD's. Unfortunately. or even on the last day before the trustee sale. 2. At the end of that period. Equity Purchase: The Players And Process . allows enough time to enact 1.000 to $10. as well as initiate a relationship with the homeowner.depends on the amount of cash the homeowner needs and the amount of equity available. Often $50. Fortunately. the homeowner in foreclosure may sell the equity position in the property at a discount. a homeowner can show up at the actual trustee sale just seconds before their property is to be sold and legally force a 24 hour postponement during which bankruptcy can be filed. in turn. the homeowner has a few options: In situations where little equity exists or little chance of early appreciation is evident.An entire investor-driven industry has been founded on purchasing the equity of a homeowner in foreclosure. But the process is much more complex. . Make a new or revised agreement to extend the original agreement. Marketing through the mail. Buy out the investor by paying back both the original investment plus a corresponding percentage of any appreciation in value that has occurred during the specified period. many homeowners who ignore the NOD and the foreclosure process. a lender workout. commonly within a week or 2. month after month. First. usually a very high discount. or 2. Door knocking. 3. as an additional inducement to an investor. Sell the property and split the profits. a more beneficial solution than selling to an equity purchaser. then the information in this chapter may help the homeowner act intelligently and be in control of the negotiation and sale process. Thus. even at these seemingly desperate last moments. Consult an attorney or a real estate broker for help in locating an investor to share equity and to draw up the appropriate contracts. The tragic thing is that many of these homeowners sell so cheap because they never learned about the help that is available to them. GET AN EQUITY PURCHASER An equity purchaser is a foreclosure investor who wants to buy the equity in your property at a discount.

but not limited to. business address and telephone number of the equity purchaser. the doorknocker's and mail-marketeer's strategies are similar. From this point on. purchaser represents he will perform for the equity seller before or after the sale. "every contract shall contain the entire agreement of the parties and shall include the following terms: a. d. h. The name. Next they will drive to as many as 30 houses per day. f. the investor wants in to inspect the property and then tie it up in a sales contract. A notice of cancellation as provided in subdivision (b) of Section 1695. immediately above the statement required by section 1695. and their contracts must adhere to the Home Equity Sales Contract Act (HESCA). knock on the door and try to sell themselves as the best solution to the homeowner's problem. and completed with the name of the equity purchaser. the mail-market investor does not leave the office at first. The following notice in at least 14point boldface type. or defined geographical region. then the investor will drive immediately to the residence for a physical inspection and to tie up the property with a sales contract. The terms of any rental agreement.5. c. b. any services of any nature which the equity enough equity and desire to sell exists in the homeowner's situation. The investor begins by mailing out a series of letters during the NOD and NOTS periods.An entire body of preforeclosure law has evolved through the California state legislature to guide the conduct of the equity purchaser as well as to protect against investors taking unconscionable advantage of homeowners in foreclosure. The total consideration to be given by the equity purchaser in connection with or incident to the sale. g. according to the statute. the California Civil code states that an equity purchaser must adhere to the HESCA (see page 19-1 for the actual details required by HESCA). The address of the residence in foreclosure. e. A complete description of the terms of payment or other consideration including. The doorknockers start by making a list of properties with high equity which are located within the investor's turf. The time at which possession is to be transferred to the equity purchaser. In brief. if the contract is typed. if the contract is a printed or in capital letters. Ideally.5(a): --------------------------------------------------------------------------------------------------NOTICE REQUIRED BY CALIFORNIA LAW . During such a phone call. In contrast. The Home Equity Sales Contract Act .These are 2 vastly different approaches. if the investor determines that The required legal terms to be incorporated in the equity purchase contract are. door-knockers first contact the homeowner in person while mail-marketers try to lure the homeowner through the mail. When buying 1 to 4 residential units of real estate in foreclosure. waiting for an interested homeowner to phone in response.

2. or use to your cancel later." To weasel out of a contract which has such clauses. A tip-off to the existence of a weasel clause is phrases such as "this contract is contingent upon . If the form is preprinted but not entitled "Equity Purchase Agreement.. then the seller may have reasonable cause to 1.Until your right to cancel this contract has ended." followed by wording like "obtaining appropriate financing. Either resist. If a second buyer makes an offer. the equity purchaser's tendency toward utilizing weasel clauses. or seller's remorse comes along. the seller can require a 72 hour first-right-of-refusal which allows the seller to continue soliciting and entertaining offers from other prospective buyers. a disguised "weasel clause. The preprinted form follows a selfexplanatory. The contract required by this section shall survive delivery of any instrument of conveyance of the residence in foreclosure. --------------------------------------------------------------------------------------------------The Equity Purchase Contract . fill-in-the-blanks process. if necessary. such as if a better deal. Have a legal exit from the contract if the analysis reveals the property is not a wise investment." The weasel clause will allow the equity purchaser to: advantage.Many equity purchasers will have preprinted forms with all of the above legal language included (see page 11-50). then the first buyer has 72 hours to fulfill the contract or lose the deal to the second buyer. the seller can turn the tide on the weasel clause by having included in the original contract either an option fee or a nonrefundable deposit ranging from a minimum of a few hundred dollars to however many thousands of dollars the investor will pay. In the event the equity purchaser wants to back out of the deal." or "approval of the preliminary title report. . and shall have no effect on persons other than the parties to the contract. (Name) or anyone working for (Name) CANNOT ask you to sign or have you sign any deed or any other document. the equity purchaser need only disapprove the preliminary title report or deem the financing inappropriate for any lame reason when the actual truth is the equity purchaser's analysis foresees more trouble than profit. Keep your property off the market long enough to do a more thorough analysis. The equity purchaser's goal is to tie up the property by talking the seller into signing a contract which has. among other terms.. Also. If 1 or more of these points are omitted. and." then check the HESCA on page 19-1 to verify all the above points have been covered.

as per the HESC Act. but also considering other foreclosure remedies. you are not only negotiating with other investors for better terms. just by knowing this. If the seller does not cancel the agreement within the 5 days. any or all of the different sale techniques previously mentioned can be used to help facilitate the best deal for your particular situation. you are the homeowner in foreclosure with the equity the purchaser wants. Never let on that you are in a vulnerable situation. many are recent graduates of a preforeclosure seminar. Always let them know that while you may be willing to sell at a discounted price. In other words. After all. And realize that while many equity purchasers are sophisticated professional investors. As part of the sale agreement. and could even cause the equity purchaser to altogether lose a stake in the property. Not unlike intoxicated freshman on spring break. purchase money or property can be exchanged. then the sale must be completed according to the terms of the equity purchase contract. The following wording must appear in or accompany the contract: --------------------------------------------------------------------------------------------------- . The investor usually specifies that any money is paid out by the escrow company. they usually have not acquired all the experience and social graces neces-sary to properly court a homeowner in distress. Hopefully.) The requirement to move out is fair since some sellers have suddenly changed their mind about the sale after receiving some money.Do not hesitate to negotiate the terms of the deal to your advantage. Once the contract is signed. have remained in the house and then filed bankruptcy. you may be less offended and/or intimidated by any foot-in-mouth assessments made of your property or life. who is the impartial third party hired to process the transaction. court the investors just as they court you. Play them off each another to bid up the price and terms to your advantage. a 5 day waiting period must occur before any deeds. Make them aware that you are merely researching the possible benefits of an equity sale and only want the best deal and protections. pages 11-27 through 11-28. Bankruptcy effectively stops both a foreclosure and an eviction. (See Opening An Escrow.

at any time before ________________________________________ at 12:00 midnight to 8:00 a. Typically.m. (Enter date and time of day) To cancel this transaction.m. NOTICE OF CANCELLATION ______________________________________________ (Enter date contract signed) You may cancel this contract for the sale of your house.m. personally deliver a signed and dated copy of this cancellation notice. They will do this only if it allows them to avoid paying out on a full claim later. or send a telegram to_________________________________ (Name of purchaser) at__________________________________________________________________ (Street address of purchaser's place of business) NOT LATER THAN________________________at 12:00 midnight to 8:00 a. (Enter date and time of day) I hereby cancel this transaction_________________________________________ (Date) ________________________________________ (Seller's signature) --------------------------------------------------------------------------------------------------A MORTGAGE INSURANCE ASSISTED FORECLOSURE PRESALE If you have some form of mortgage insurance. then you may be able to find help in a mortgage insurance assisted foreclosure presale. in such a presale the mortgage insurance pays off some of the total indebtedness in order to help you sell your property before it goes to foreclosure.NOTICE REQUIRED BY CALIFORNIA LAW Until your right to cancel this contract has ended. but cannot because the total indebtedness against it is more than the property is worth. if you must sell your property. at midnight to 8:00 a. See attached notice of cancellation form for an explanation of this right. 199__. . _________________________________________________________________ ___ (Name of Buyer) or anyone working for_______________________________________________ (Name of Buyer) CANNOT ask you to sign or have you sign any deed or any other document. You may cancel this contract for the sale of your house without any penalty or obligation at any time before_____________. without any penalty or obligation. and. Presales are not required of mortgage insurance companies.

not a percentage of the market value of the property. the lienholder loses the $25. The Department Affairs (DVA). These additional costs usually include any property taxes owed prior to the default date. In this case. if the total indebtedness against a property is $200. yet you would still be legally liable to pay it. in the event of a foreclosure.334 claim later. The problem that arises when you try to sell a property with negative equity is that the buyer is only willing to pay $175.000. Even though your credit record would be blemished. including any extra costs to foreclose and resell the property. 2.000 negative equity thanks to California's antideficiency laws. the presale becomes the middle ground between the no-sale stalemate and an out-and-out foreclosure that has no collection recourse due to the California's anti-deficiency laws. if the insurer only has to pay $25. or more.000. The private mortgage insurance company guarantees the loan against default. but the property has subsequently depreciated to a current market value of only $175. any attorney's fees and court costs that have accumulated and any cost to preserve/restore the property up to a specified amount based upon what the property actually needs. You may not have the extra $25. All these costs.000 and $200. can add up to a total indebtedness of $233.000.such as if the property were to go to foreclosure afterall. For example. then the property has a $25. then the mortgage insurance company would have to pay the lender $58.334 after the lender sold the foreclosed property for $175. if you were to let the same property go during the final trustee's foreclosure sale. which guarantees that you will make your loan payments. when you get behind in payments or go into foreclosure. or else they must pay for you up to a certain percentage of the loan amount.000 to bridge the gap. any hazard insurance premiums. On the other hand.334. The percentage of coverage may range from 12% to 100%. Private mortgage insurance companies (PMI).000 is paid. Thus. but the lenders/lienholders will not release the property for the sale unless their portion of the $200. when added to the original $200. that is substantially better for the insurer than paying a $58. Obviously. depending on the specifications of the original insurance contract.000. Under these laws. you would not be legally liable for the $25. then a lienholder would be stuck with a property worth only $175. If the percentage is 25% on a total indebtedness of $233. the private mortgage insurance . and including the back interest due.000.334.000. or more. So.000 to recover the total indebtedness of $233. Private Mortgage insurance is usually required to help borrowers qualify for a loan when they may not have been able to qualify otherwise.000 now in a presale to bridge the negative equity gap between $175.000. The 2 main players in mortgage insurance-assisted foreclosure presales are: 1.334. Thus.000 negative equity. the lender cannot force you to pay the negative equity after a foreclosure sale. Private Mortgage Company Presales of Veterans' Insurance Mortgage insurance insures a percentage of the total indebtedness against a property.

In convincing the insurer. For the address/telephone number of your private mortgage insurance company either check your escrow or property purchase papers. The alternative for the private mortgage insurer would be to pay out on a full. If they can avoid paying a full claim by helping you sell your house before foreclosure. In a compromise sale. Department of (DVA) Presales Veterans' Affairs' turn. The borrower must sign a promissory note for that $10. Typical terms may be below market. in which the negative equity. but rather is a method the insurer offers to help you avoid foreclosure. cannot cure the default and/or has no equity. and if the current market value of your property is worth less than the loan(s) against it. you could argue that it makes good economic sense for both the private mortgage insurer to cooperate with you in a foreclosure presale and for the lender to put pressure on the insurer to do so. In making your case. the DVA may ask borrowers to sell their home when the borrower can no longer continue making the loan payments. . then you may be able to persuade the insurer to pay all or part of the negative equity in order to help secure the sale. known within the department as the Compromise Sale Program. any shortage of funds needed to close the sale may be loaned to the borrower by the DVA. will be lost. in Tell the lender that due to California's anti-deficiency laws on purchase money loans. point out that the alternative is a trustee's foreclosure sale. but the fair market value of your property has depreciated below the total amount due against the property. For example. The way it works is if you currently have a mortgage insurance policy and have found a buyer for your property. such as 5 years to pay the loan off at a 4% annual rate of interest. The borrower will be required to pay back the loan at a future date. Most of these loans are not secured by another piece of real estate. which. In a DVA presale. For the address/telephone number of the DVA office nearest you see the listings in the following box. The lender's logic is that the insurer would pay down the loan or total indebtedness now to help make the sale in order to avoid a full claim by the lender after a foreclosure. point out the obvious: the insurer might avoid a full claim by paying the negative equity now to insure a sale. as well as other costs. later after a foreclosure anyway.000. or ask your lender/servicer.company must pay up to a limit. if the borrower sells the property but cannot close the deal because the escrow is $10.000 short. A presale is not required of the private mortgage insurer. helps the insurer avoid paying a full claim to the lender. How To Contact the Insurer If you have been paying for private mortgage insurance. usually 15% to 100% of the loan. then contact either of these agencies and ask for information regarding mortgage insurance-assisted foreclosure presales. or have a loan through the Department of Veterans' Affairs. but must be paid off before the DVA will make a future loan to the veteran/borrower. larger claim. the best chance of recovering the negative equity is to put pressure on the private mortgage insurance company to cooperate in a presale. if you must sell your property. then they may assist you in what is known as a presale. then the VA will loan the money to close the deal. as part of your persuasion tactics. Thus.

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(See Tax Consequences of Foreclosure. may be a loss the lender absorbs and the borrower may not have to pay.. The $50.. A short pay provides a way to make an overpriced property easier to sell during down cycles in the real estate market. Sometimes a buyer and seller try to hide this transfer from the lender.. In such cases. in turn.... which usually causes the buyer to have to get a new loan after all. the lender avoids the cost and hassle of foreclosing..) Why would a lender do this? The alternative would be to complete a foreclosure and then to resell the property at the reduced market price anyway... if the veteran so wishes...T. (See page 11-2.I.. So. before Cal-Vet will cancel the veterans' equitable interest.....1-800-827-1000 makes payments to the buyer who. The homeowner decided to sell the property to avoid foreclosure... page 1-21.1-310-827-1000 San Diego. Suddenly... For example. a helpful way to sell a property is to transfer the current loan(s) on your property to the new buyer.) CALIFORNIA REGIONAL DVA OFFICES: Oakland. This process can be expensive.. the lender allowed the buyer to assume.. the buyer.. especially Decreasing The Principal Amount on Page 7-10).000. maybe about 3 to 6 months. An additional benefit to the lender is that the homeowner usually helps find the buyer and maintains the property until the buyer moves in.1-510-637-1325 Los Angeles. the seller Short pays are prevalent when market prices dip below the loan(s) on a property...000 against it.. imagine a property with a loan of $250. (See Note Modifications on pages 7-8 through 7-11. A LENDER SHORT PAY A lender short pay is when the lender agrees to reduce the loan amount on a property to its current depreciated market value in order to help it sell.D. See Liability Transfer Modifications on page 7-11 for more on liability transfers.. if the lender ever finds out.. Notice the similarity between a short pay and a note modification. By helping the homeowner make the sale with a short pay. who has no chance of resuming payments.. in which to sell the property.. forwards the payment to the lender. To a certain extent..... and Deficiency Judgments.. ASSUMPTION/TRANSFER OF LOAN Sometimes.1-619-297-8220 National.. Often an A.000 principal reduction.. regarding the possible financial drawbacks of a principal reduction in your particular situation.. the loan at the reduced current market value of $200.. the market value of the property depreciated to $200. However. or take over. Economic Cycles Affect Real Estate Prices.... See page 7-12 for more on Cal-Vet. In a short pay a new borrower takes over . in many instances.000. they do cooperate with veterans who are behind in payments while actively trying to sell their property. However..... In this agreement.. page 1-24... The main difference is with the borrowers.. Cal-Vet will give the delinquent veteran. seller and lender agree to the buyer's assumption and release the seller of any further liability on the loan... a period of time. Usually the buyer simply assumes the current loan(s) rather than take out a new one. maintaining and reselling the property. check with your tax preparer about income taxes and your attorney about deficiency judgments. the lender may call the loan.Cal-Vet Presale Assistance Although Cal-Vet does not provide the type of mortgage insurance assistance mentioned above... is used to do this...

the reduced loan. If the receptionist does not understand what a short pay is. call back and ask for a supervisor or manager. short sale. On the otherhand. The evaluation process may take from 14-45 days.) . to find someone who can give you a short pay. use some of the synonymous terms mentioned in the previous paragraph. workout or asset management and recovery. Some lenders may send you a package of forms to fill out. You may have to explain the short pay concept to most private party lenders. loan adjustment. Different lenders use different names. Climb the chain of command all the way to the top. (See example. If the receptionist still does not comprehend a short pay. if necessary to convince your private party lender to participate in a short pay. When you decide to sell and need the lender to reduce the principal to a depreciated current market price. If you want to keep the property and can make the new reduced principal payments. Some of the things you may be expected to pro-vide before your lender will consider a short pay include: 1. if necessary. In a note modification. the existing borrower keeps the property but makes reduced payments on a reduced principal amount (or interest rate. then consider a note modification before losing the property in a short pay. compromise sale. call your lender and ask for a short pay. loss mitigation. it is in a separate department than is the foreclosure or bankruptcy departments. most commercial lenders not only are aware of short pays. such as the seller carrybacks mentioned on page 11-13. for additional help see the Write-It-Out Exercises on pages 16-1. but may even have a specific department for handling them. Photocopy this section. generally. such as loss management. and others may prefer to speak to you in a telephone conversation only. 16-22 and 16-23. Not every lender refers to this principal reduction as a short pay. Hardship Explanation and Remedy Proposal A written explanation of the specific circumstances leading to your financial hardship and the exact terms you seek. or other adjustment). page 11-57. Whatever your lender calls a short pay.

escrow companies only have the authority to do what you instruct them to do. 8. the safest way to process it is through an escrow company. While opening an escrow can be as easy as phoning in the significant terms of the purchase contract to the escrow officer. Seller's Authorization .If a real estate broker. 3.) Bank 10. a fee may be charged to process the short pay. so instruct them correctly. from the buyer. Item 1. or other financial information. Buyer's Proof of Ability to Purchase .) 6. Financial Disclosure . Ask the lender to waive this fee. work out the details of the deal and then write up the terms of the deal in a purchase contract. In effect. but the other must be from a broker not associated with the purchase contract.2. it is highly recommended that both the buyer and seller.In order to properly analyze your current financial situation.This calculates the money left over after deducting the costs of the sale from the sales price.) 9.One may come from the listing agent. then they must have a signed letter of authorization from the seller. Processing Fee . 4.). this must show no proceeds being paid to the seller or the seller's costs.This usually means a completed loan application. (See example. Usually. Two Estimates of the Property's Fair Market Value . most escrow companies will ask for the important facts they need to know in order to be properly instructed. for additional help see pages 5-1 through 5-26. nor do they appreciate the buyer and seller negotiating the major details of their deal while opening the escrow. mortgage foreclosure consultant (see page 18-1) or other party negotiates for the seller. you will be asked to provide information similar to that requested in the forms in option chapter 1. Estimate of the Net Proceeds from the Sale . an escrow officer restates the terms of the purchase agreement in a set of escrow instructions which the escrow company must fulfill before the escrow can close and the property title can change hands. Past 2 Years Tax Returns. OPENING AN ESCROW Upon making a deal with a buyer. Purchase Contract . So before meeting with the escrow company. page 11-58. Remember. page 11-61. (See more on calculating net proceeds on page 11-60. 5. It may include any of the home purchase contracts mentioned in this chapter and listed on page 11-1. along with any involved real estate agents.) 7. Past 2 Months Statements/Pay Stubs. and page 16-57. Net Proceeds Estimate. (See an example of a purchase offer on page 11-54.This is the offer from the buyer to purchase your property. However the escrow company cannot give legal advice. (See the Broker Appraisal example on page 11-59. Fortunately. The escrow company is licensed by the state of California and acts as an impartial third party who processes the legal ramifications of a real estate transaction.Depending on the lender. be present when escrow is opened in order to correct any mistakes or . (See example.

in a foreclosure situation. Since the constant processing of numbers and paperwork can be wearing on your escrow officer. especially the numbers. but also may be returned to you in terms of good and speedy work. let your attorney and/or accountant recheck the escrow papers. make the deal contingent on the buyer signing the escrow instructions within 3 to 5 days. However. If real estate agents are involved with the sale. Don't hesitate to question every vague area or incorrect data. If the closing of your escrow is contingent on the closing of 1 of more other escrows (such as in cases where the buyer needs to sell a property for the funds to buy yours. even if all of the instructions have been completed. If they discover the property is not profitable enough. While escrows can be trusted. Real estate and escrow people may say that an average escrow takes 60 days to complete. some regular real estate investors do not consider a deal binding until all parties have signed the escrow instructions. And Once an escrow is opened. Do not sign the set of escrow instructions until you are satisfied that it represents the agreement as you understand it. While checking for errors. understanding and appreciation will not only be highly regarded. then the possibilities for a delay increases. seller and escrow officer endeavor to cooperate and if no irregularities exist. Although the need for amendments may naturally occur throughout the duration of any escrow. So. signed instructions usually cannot close. Escrows with signed instructions are difficult to stop. once escrow instructions are drawn up. including the instructions. do a teleconference in order to participate in opening the escrow. Nearly all mistakes in the escrow instructions can only be corrected through an amendment. If you have any doubts. the escrow officer begins completing the instructions whether or not the instructions have been signed. taking the time to begin an escrow with correct instructions can make the difference between a bearable escrow and a nightmarish escrow. then they cancel the escrow and the deal. they may want to open the escrow themselves. or you have the "option" to cancel the deal. In fact. In addition. However. the buyer and seller usually can rest assured that the transaction will be processed properly and accurately. Generally. They refrain from signing escrow instructions as a ploy to tie up a property long enough to finish their research on it. and/or you need to buy a new house with the proceeds of your sale). but insist on participating in the opening as well as in all phases of the escrow. many times the escrow may need to close much quicker. If necessary. keep in mind that an escrow requires teamwork in order to progress smoothly. preliminary title report and trial settlement sheet. it helps to tell the escrow officer that you plan to become a return customer as well as recommend the company to your friends and associates. escrows without amendments are hassles which may involve further negotiations or disagreements and/or rushing around at the last minute for additional sets of signatures from both the buyer and seller. . Escrows can take only 10 to 14 days if the buyer. in order to protect against losing precious time to a fickle buyer. your pleasantness. take time to double-check the paperwork. Always offer the escrow officer your complete cooperation and availability to help.misunderstandings before they become part of the original escrow instructions.

settlement sheet. Ask for a copy and review it for errors. set it at a month. all parties meet with the escrow officer to draw up escrow instructions. 2. the escrow officer should do everything possible to speed up the closing date. A preliminary title report should be distributed to the buyer and seller within 5 days of opening escrow for approval. friendly calls for an update may help keep your escrow moving steadily along as the squeaky wheel often gets the oil in escrows. If a new loan is involved. The seller might need to sign many of the items signed by the buyer. homeowner's insurance. vesting. let the escrow officer know from the onset that you want to keep up on the progress of the escrow. Review the various components as necessary: Addendums. as well as the terms under which the title company will issue title insurance. etc. The closing escrow documents are signed by the buyer and seller. and so on. Buy a less expensive house with any proceeds. to close in 45 days. The settlement statement is the final accounting of the charges owed by both the buyer and the seller. Make immediate signing of escrow instructions a contingency of the deal. you will need to begin making arrangements for a new place to live as soon as escrow looks like it is going to close. preliminary title report. Escrow instructions are sent to the buyers and sellers for signatures (this step may take place later in some 6. addendums. Move in with a friend or family member. 3. . plus a grant deed and a IRS tax form. (Research areas with affordable housing and list them on pages 11-29 and 11-30. payoff demands. Rent a room or an apartment. FINDING A NEW PLACE TO LIVE Unless you have arranged to remain living in the house after the close of escrow. 5. regions of California). 4. 7. The deposit money is held by the escrow company and can be placed in an interest bearing account if the buyer so requests and the seller does not object. 3. The recommended escrow process for the seller in foreclosure is: 1. After writing up a purchase contract. If you need it to close in 1 month. And as your original closing date approaches or passes. the lender's note and deed of trust. beneficiary statements. etc.) 2. Review the loan documents. Some of the possibilities are: 1. set it at 2 weeks. termite report.Always bargain for a shorter escrow period than you anticipate since escrows usually take longer than expected. The seller will need to instruct the escrow officer where to send the proceeds. 8. Then. This report outlines the condition of title. termite report. See page 11-62 for an example of an escrow settlement statement. including any encumbrances. Receipts and copies of checks should be issued to both buyer and seller. then the escrow officer must order the loan documents to coincide with the closing of escrow. etc. Buyer's might need to sign: escrow instructions (if not yet signed). Frequent. saleleaseback agreement.

" . Renting a room or trading rent for work is another possibility. Living with a friend or family member may help you consolidate and rebuild your finances. "Handyman seeks room. will work in exchange for rent.Consult with a local real estate agent to determine more affordable areas in which to buy a less expensive home. Finding a work-for-rent trade can be as easy as placing an ad in the newspaper classifieds such as.

LIST OF AFFORDABLE AREAS INSIDE CALIFORNIA .

LIST OF AFFORDABLE AREAS OUTSIDE CALIFORNIA .

I COORDINATION WITH OTHER DISCLOSURE FORMS This Real Estate Transfer Disclosure Statement is made pursuant to Section 1102 of the Civil Code. and. where the subject matter is the same: (list all substituted disclosure forms to be used in connection with this transaction) II SELLERS INFORMATION The Seller discloses the following information with the knowledge that even though this is not a warranty. IF ANY. the following disclosure form.Disclosure Statement Form The following disclosures are required by law when transferring residential real estate. and are intended to satisfy the disclosure obligations on this form. prospective Buyers may rely on this information in deciding whether and on what terms to purchase the subject property. THIS INFORMATION IS A DISCLOSURE AND IS NOT INTENDED TO BE PART OF ANY CONTRACT BETWEEN THE BUYER AND SELLER. STATE OF CALIFORNIA. Other statutes require disclosures. THIS STATEMENT IS A DISCLOSURE OF THE CONDITION OF THE ABOVE DESCRIBED PROPERTY IN COMPLIANCE WITH SECTION 1102 OF THE CIVIL CODE AS OF . Seller hereby authorizes any agent(s) representing any principal(s) in this transaction to provide a copy of this statement to any person or entity in connection with any actual or anticipated sale of the property. IT IS NOT A WARRANTY OF ANY KIND BY THE SELLER(S) OR ANY AGENT(S) REPRESENTING ANY PRINCIPAL(S) IN THIS TRANSACTION. depending upon the details of the particular real estate transaction (for example: special study zone and purchase-money liens on residential property). THE FOLLOWING ARE REPRESENTATIONS MADE BY THE SELLER(S) AND ARE NOT THE REPRESENTATIONS OF THE AGENT(S). DESCRIBED AS . . 19 . AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PRINCIPAL(S) MAY WISH TO OBTAIN. shall be made a part of the transaction (exempted transfers include deeds-in-lieu-offoreclosure and other court/government ordered foreclosure sales): REAL ESTATE TRANSFER DISCLOSURE STATEMENT THIS DISCLOSURE STATEMENT CONCERNS THE REAL PROPERTY SITUATED IN THE CITY OF . COUNTY OF . Substituted Disclosures: The following disclosures have or will be made in connection with this real estate transfer.

(Attach additional sheets if necessary. _ Septic Tank Softener _ Patio/Decking _ Sauna Hot Tub _ Security Gate(s) Number Remote Garage: _ Attached Pool/Spa Heater: _ Gas Water Heater: _ Gas Utility or Water Supply: _ City Gas Supply: _ Utility Exhaust Fan(s) in Gas Starter Age: (approx. If yes. _ _ _ _ Interior Walls _ Ceilings Insulation _ Roof(s) Slab(s) _ Driveways Electrical Systems _ Floors _ Exterior Walls _ Windows _ Doors _ Foundation _ Sidewalks _ Walls/Fences _ Plumbing/Sewers/Septics _ Other Structural Components (Describe: . Are you (Seller) aware of any significant defects/malfunctions in any of the following? _ Yes _ No. The subject property has the items checked below (read across): _ Range _ Dishwasher Disposal _ Washer/Dryer Hookups _ Burglar Alarms Fire Alarm _ T.V. check appropriate space(s) below. Antenna _ Central Heating Evaporator Cooler(s) _ Wall/Window System Air Cndtng. then describe.Seller _ is _ is not occupying the property.): . any of the above that are not in operating condition? _ Yes _ No.) Other: _ Oven _ Trash Compactor _ Window Screens _ Smoke Detector(s) _ Satellite Dish _ Central Air Cndtng. B. _ Sprinklers _ Sump Pump _ Built-in Barbecue _ Pool _ Garage Door Opener(s) _ Not Attached _ Solar _ Microwave _ Garbage _ Rain Gutters _ _ Intercom _ _ Public Sewer _ Water _ Gazebo _ Spa_ _ Controls _ Carport _ Electric _ Private Other _ Well _ Bottled 220 Volt Wiring in Roof(s): Type: Fireplace(s) in Are there. to the best of your (Seller's) knowledge. A. If yes.

or other soil problems ...... materials... asbestos.. or landslides . (Attach additional sheets if necessary): C....... whose use or responsibility for maintenance may have an effect on the subject property _ Yes _ No 3.......If any of the above is checked. _ Yes _ No 8..... formaldehyde......... Neighborhood noise problems or other nuisances No _ .... _ Yes _ No 7........ or slippage. structural modifications......... drainage or grading problems .... _ Yes _ No 4...... _ Yes _ No 2. Any zoning violations.... Any settling from any cause...... 9...... radon gas. or other alterations or repairs made without necessary permits .. but not limited to................ nonconforming uses............. or other alterations or repairs not in compliance with building codes ........ floods........ _ Yes _ No _ Yes _ No _ Yes _ No _ Yes 10..... fences...... Are you (Seller) aware of any of the following: 1.. Major damage to the property or any of the structures from fire...... 11... Any encroachments............... or products which may be an environmental hazard such as........... Room additions...... sliding.... Substances..... _ Yes _ No 6............... Features of the property shared in common with adjoining landowners........ _ Yes _ No 5... fuel or chemical storage tanks.... explain... Flooding............ easements or similar matters that may affect your interest in the subject property.. and contaminated soil or water on the subject property ... and driveways......... Landfill (compacted or otherwise) on the property or any portion thereof ....... structural modifications... lead-based paint......... earthquake...... violattion of "setback" requirements ... such as walls... Room additions...

. or other areas co-owned in undivided interest with others) ..) THE UNDERSIGNED. _ Yes _ No If the answer to any of these is yes explain. BASED ON THE ABOVE INQUIRY OF THE SELLER(S) AS TO THE CONDITION OF THE PROPERTY AND BASED ON A REASONABLY COMPETENT AND DILIGENT VISUAL INSPECTION OF THE ACCESSIBLE AREAS OF THE PROPERTY IN CONJUNCTION WITH THAT INQUIRY....): Seller certifies that the information herein is true and correct to the best of the Seller's knowledge as of the date signed by the Seller.... (Attach additional sheets if necessary......................... Seller Seller Date Date III AGENTS INSPECTION DISCLOSURE (To be completed only if the seller is represented by an agent in this transaction.......... STATES THE FOLLOWING: Agent (Broker Representing Seller) (Please Print) or Broker-Signature) By (Associate Licensee Date IV AGENTS INSPECTION DISCLOSURE (To be completed only if the agent who has obtained the offer is other than the agent above..12........ tennis courts......) . _ Yes _ No 16. _ Yes _ _ Yes _ No _ Yes _ No 15....... 14. Any notices of abatement or citations against the property . CC&R's or other deed restrictions or obligations No 13........... Any lawsuits against the seller threatening to or affecting this real property .......................... Homeowners' Association which has any authority over the subject property ....... Any "common area" (facilities such as pools. walkways...

BASED ON A REASONABLY COMPETENT AND DILIGENT VISUAL INSPECTION OF THE ACCESSIBLE AREAS OF THE PROPERTY. STATE OF CALIFORNIA.THE UNDERSIGNED. STATES THE FOLLOWING: Agent (Broker obtaining the Offer) (Please Print) or Broker-Signature) By (Associate Licensee Date V BUYER(S) AND SELLER(S) MAY WISH TO OBTAIN PROFESSIONAL ADVICE AND/OR INSPECTIONS OF THE PROPERTY AND TO PROVIDE FOR APPROPRIATE PROVISIONS IN A CONTRACT BETWEEN BUYER AND SELLER(S) WITH RESPECT TO ANY ADVICE/INSPECTIONS/DEFECTS. Seller Seller Agent (Broker Representing Seller) Agent (Broker obtaining the Offer) (Associate Licensee or Broker-Signature) Date Date Buyer Buyer By Date Date Date (Associate Licensee or Broker-Signature) By Date A REAL ESTATE BROKER IS QUALIFIED TO ADVISE ON REAL ESTATE IF YOU DESIRE LEGAL ADVICE. I/WE ACKNOWLEDGE RECEIPT OF A COPY OF THIS STATEMENT. LOCAL OPTION REAL ESTATE TRANSFER DISCLOSURE STATEMENT THIS DISCLOSURE STATEMENT CONCERNS THE REAL PROPERTY SITUATED IN THE CITY OF . CONSULT YOUR ATTORNEY. DESCRIBED AS . COUNTY OF .

(Example: Adjacent land is zoned for timber production which may be subject to harvest. Seller hereby authorizes any agent(s) representing any principal(s) in this transaction to provide a copy of this statement to any person or entity in connection with any actual or anticipated sale of the property. THE FOLLOWING ARE REPRESENTATIONS MADE BY THE SELLER(S) AS REQUIRED BY THE CITY OR COUNTY OF . IT IS NOT A WARRANTY OF ANY KIND BY THE SELLER(S) OR ANY AGENT(S) REPRESENTING ANY PRINCIPAL(S) IN THIS TRANSACTION. 2. Seller Seller Date Date II BUYER(S) AND SELLER(S) MAY WISH TO OBTAIN PROFESSIONAL ADVICE AND/OR INSPECTIONS OF THE PROPERTY AND TO PROVIDE FOR APPROPRIATE PROVISIONS IN A CONTRACT BETWEEN BUYER AND SELLER(S) WITH RESPECT TO ANY ADVICE/INSPECTIONS/DEFECTS. AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PRINCIPAL(S) MAY WISH TO OBTAIN. prospective Buyers may rely on this information in deciding whether and on what terms to purchase the subject property. OF THE CITY OR COUNTY CODE AS OF . THIS INFORMATION IS A DISCLOSURE AND IS NOT INTENDED TO BE PART OF ANY CONTRACT BETWEEN THE BUYER AND SELLER. AND ARE NOT THE REPRESENTATIONS OF THE AGENT(S). IF ANY. 19 .) Seller certifies that the information herein is true and correct to the best of the Seller's knowledge as of the date signed by the Seller. THIS STATEMENT IS A DISCLOSURE OF THE CONDITION OF THE ABOVE DESCRIBED PROPERTY INCOMPLIANCE WITH ORDINANCE NO. I SELLERS INFORMATION The Seller discloses the following information with the knowledge that even though this is not a warranty. Seller Date Buyer Date . I/WE ACKNOWLEDGE RECEIPT OF A COPY OF THIS STATEMENT.. 1.

CONSULT YOUR ATTORNEY.Seller Agent (Broker Representing Seller) Agent (Broker Obtaining the Offer) Date Buyer By Date Date (Associate Licensee or Broker-Signature) By (Associate Licensee or Broker-Signature) Date A REAL ESTATE BROKER IS QUALIFIED TO ADVISE ON REAL ESTATE IF YOU DESIRE LEGAL ADVICE. . (c) This section does not preclude the use of addenda to the form specified in subdivision (b) to facilitate the required disclosures. This section does not preclude a city or county from using the disclosure form specified in subdivision (b) for a purpose other than that specified in this section.

EXCLUSIVE RIGHT TO SELL LISTING .T. form 102 .F.

form 550 .RESIDENTIAL LEASE AGREEMENT .T.F.

California. in the county of enters into an agreement located at: .One Party Showing On this I/we. as a result of the agent/broker's efforts in showing this property. or efforts to sell the property by the owner or other authorized agents. The sole purpose of this agreement is to acknowledge. in no way shall supersede. interrupt. This agreement is limited only to the prospective buyer(s) and agent/broker mentioned above. in the city of in the state . with day of . the above prospective buyer makes a bona fide offer to the owner to purchase 11-54 . hereby real property . encourage and protect the efforts of the agent/brokers mentioned above when showing the property solely to the prospective buyer(s) mentioned above. hereafter referred to who is a California licensed real estate agent/broker doing business under the following name/address: . . or otherwise interfere with any other prospective buyer(s). and. of California. as the owner of . in the year of . If. to show the above mentioned property to the prospective buyer(s) by the name(s) of: . in the city of in the state of . in the county of .

and if the owner accepts the offer. only then shall the owner compensate the agent/broker for services rendered with a sales commission of: % ( transferred. payable after title to the property is AGREED Owner 11-55 .the property. AGREED Agent/Broker AGREED Agent/Broker DATE: DATE: AGREED Owner percent). and if the agent/broker actively participates in the successful completion of a lawful sale transaction and legal transfer of title to the buyer mentioned above.

design a flyer similar to this one on a typewriter or computer at home or at a full-service copy/print shop.5 Bathrooms New interior paint 11-56 . California • • • 3 Bedrooms 1.(Using your own facts and details. Make photocopies to give to prospective buyers. Priced For A Quick Sale! 1234 Any Street. Anytown. AFFIX A FRONT VIEW PHOTO OF YOUR HOUSE.) OVER THIS BOX.

• • • • • • Covered Patio Quiet street New roof New plumbing Priced under market! Seller motivated/will consider every offer!! ONLY: $214.000 CALL ANYTIME AT: 714-000-1234 At this price it won't last long Submit Your Offer Now! 11-57 .

Make photocopies to give to prospective buyers. Priced For A Quick Sale! Address: • • • Bedrooms Bathrooms 11-58 . either type or write in your own facts and details in the blanks below. AFFIX A FRONT VIEW PHOTO OF YOUR HOUSE.(For immediate use.) OVER THIS BOX.

• • • • • • Priced under market! Seller motivated/will consider every offer!! ONLY: $ CALL ANYTIME AT: At this price it won't last long Submit Your Offer Now! 11-59 .

DELINQUENCY .F.60 How To Fight Foreclosure And Win With Honor REQUEST FOR N.D AND N. form 412 .O.O.T.

F. form 421 61 .D.I.T.T. .How To Win By Selling Your Property A.

I.T.Full Payoff .F.T.62 How To Fight Foreclosure And Win With Honor A. form 443 .D Addendum .

F.How To Win By Selling Your Property TRADITIONAL LEASE-OPTION (contract for Deed).T. form 163 63 .

64 How To Fight Foreclosure And Win With Honor TRADITIONAL LEASE-OPTION (contract for Deed). page 2 . F. form 163.T.

F.How To Win By Selling Your Property 65 LEASE-OPTION FINANCIAL DISCLOSURE STATEMENT.T. form 309 .

66 How To Fight Foreclosure And Win With Honor STANDARD OPTION TO PURCHASE .T. form 161 .F.

page 1 . form 156 67 .How To Win By Selling Your Property EQUITY PURCHASE AGREEMENT.F.T.

page 2 .68 How To Fight Foreclosure And Win With Honor EQUITY PURCHASE AGREEMENT.F. form 156 .T.

How To Win By Selling Your Property EQUITY SHARING ADDENDUM .T. form 265 69 .F.

T. form 300 .F.70 How To Fight Foreclosure And Win With Honor SELLER CARRYBACK DISCLOSURE .

form 150 71 .How To Win By Selling Your Property PURCHASE OFFER .F.T.

72 How To Fight Foreclosure And Win With Honor PURCHASE OFFER. Page 2 .F. form 150 .T.

F.How To Win By Selling Your Property COUNTER OFFER . form 180 73 .T.

/Mrs./Mrs. Homeowner . The remedy I/we seek is as follows (ASK FOR A SHORT PAY. A reduction of principal from to A reduction of the interest rate from to . STATE./Mrs. The nature of my/our hardship is as follows (EXPLAIN THE DETAILS OF THE EVENTS WHICH LED TO YOUR DEFAULT). (WHOEVER YOU SPOKE TO ON THE TELEPHONE) (ADDRESS AND NAME OF LENDING INSTITUTION) Regarding Loan # Dear Mr. Other modifications include: This solution may be the best for you as well. The purpose of this letter is to explain the nature of our hardship and the remedy I/we seek. It seems that your alternative would be to complete the foreclosure only to end up with the costly burden of reselling the property. My/our proposal eliminates that cost of time and money for you. With your help and understanding.74 How To Fight Foreclosure And Win With Honor HARDSHIP EXPLANATION AND REMEDY PROPOSAL DATE Foreclosure/Workout Department Attention: Mr. : This is in regards to the property located at (ADDRESS. ZIP AND LOAN NUMBER) on which I/we have received a notice of default. Mr. Sincerely. TOWN. A NOTE MODIFICATION OR OTHER REMEDY). My/our interest and commitment to the property had been demonstrated prior to our hardship. Thank you very much for your time and consideration. I/we hope to keep the property as My/our home.

FINANCIAL DISCLOSURE The information you provide below will remain confidential. You must give us complete information to evaluate your request. Cash Value: Total Other Assets: TOTAL ASSETS: TOTAL EXPENSES: LISTING AGENT: LISTING PRICE: Borrower Signature Signature Date Date Lender Representative . Loan # Property Address Employer Name Employer Address Number of Children and Ages NET MONTHLY INCOME Base Income: Overtime: Bonuses: Commissions: Rental: Other: TOTAL INCOME: MONTHLY EXPENSES First Mortgage: Second Mortgage: Mortgagee Name: Third Mortgage: Mortgagee Name: Homeowners Dues: Food: Utilities: ASSETS Checking Accts: Saving Accts: Real Estate: Automobiles: Personal Property: Automobiles: Homeowner's Insurance: Automobile Insurance: Credit Cards: Bank Loans: Total Other Expenses: PAYMENT BALANCE Name Telephone # Life Ins.

BROKER APPRAISAL (Broker Price Opinion) .

Deduction: Escrow Fee: Documentary Transfer Tax: Recording Fee: Prorations: Other Costs: TOTAL COSTS (Subtracted from the Sales Price): NET PROCEEDS TO THE LENDER: Agent Signature Real Estate Broker/Agent Company $ $ $ $ Date Address -$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Property Address: $ .ESTIMATE OF THE NET PROCEEDS (To be completed by the seller or the listing agent) Borrower/Seller: Sales Price (see Purchase Agreement): 1st Loan Balance: 2nd Loan Balance: 3rd Loan Balance: Real Estate Commission: Foreclosure Fees and Costs: Property Taxes: Homeowner's Association Dues: Termites/Repairs/Improvements (see itemized list): Home Protection Plan: Appraisal Fee: Document Preparation Fee: Demand and Reconveyance Fees Title Policy: IRS 1099 Preparation: Cal-F.T.P.I.R.A.

: Pursuant to my conversation with (LENDER REPRESENTATIVE) . Thank you very much for your time and consideration./Mrs. Homebuyer .Seller's Authorization To Negotiate DATE Foreclosure/Workout Department Attention: Mr. I/we (BOR ROWER'S NAME[S]) . Please call me at if you have any questions. hereby authorize (BORROWER'S REPRESENTATIVE) . (WHOEVER YOU SPOKE TO ON THE TELEPHONE) (ADDRESS AND NAME OF LENDING INSTITUTION) Regarding Loan # Dear Mr./Mrs./Mrs. to discuss the status of my loan and to negotiate on my behalf. Sincerely. Mr.

ESCROW CLOSING STATEMENT .

with the words "deedin-lieu of foreclosure" or "quitclaim deed" written across it will also do the job. or a deed-in-lieu of foreclosure. you may still be able to keep the foreclosure off your record by giving your property away. interest or any claim in a property. For that matter. or any other valid deed that transfers a fee title.HOW TO WIN BY GIVING AWAY YOUR PROPERTY When your property has no equity. Two possible recipients may be your lender. However. or a private party who is willing to take over the loan and back expenses. a deed-in-lieu of foreclosure can be a quitclaim deed with the words "deed-in-lieu of foreclosure" written across it. the deed does have to be officially accepted by the party who is receiving it. as well as a deed-in-lieu of foreclosure. or by giving the lender either a quitclaim deed. conveys the homeowner's title. The giveaway is usually accomplished by giving the private party a quitclaim deed. and when you no longer want it but can't find a buyer. Any 1 of the 3 will work. 12-1 A quitclaim deed. Actually. a grant deed. And the new . The deed does not have to guarantee or warranty that the title is valid.

(If a NOD or NOTS has been filed. The homeowner's interruption of income cannot recover enough to afford the monthly mortgage payments. you may be asked on a future credit application whether you have been in foreclosure. unless otherwise arranged. then. If so. Make just a small down payment and take over payments. advertise or look around for someone who would take over the existing mortgage payments (see Assumption/Transfer of Loan on page 11-25. including to a lender instead of using the deed-in-lieu-of-foreclosure form. This approach could bring out the whole gambit. If none of the other remedies suggested in this book seem to work. Typically. a straight quitclaim deed could go to any qualified individual. A Straight Quitclaim Deed In a straight quitclaim deed situation you would try to choose someone who will work with you for the best overall effect on your financial and credit situation. First come. especially in cases where: 1. and 3. packs up and moves out on some preagreed-upon schedule. then try explaining that you resolved the default before the property went to the foreclosure sale). the foreclosure pressure can come to an end in 1 quick move. A sample ad in the real estate section might include: Must sell ASAP. even though you may not have a lot of equity bargaining power. you might want to use any down payment you may receive to pay your back payments and your moving expenses. For example. Or you may try to negotiate a workout with . For example. Little or no equity exists in the property. So with a quitclaim deed. then giving away the property may make the most sense. Avoid further foreclosure hassles. or deedin-lieu of foreclosure. 2. the owner simply hands over the house keys and title (in the form of a quitclaim deed or deed-in-lieu of foreclosure). from savvy investors to novice buyers. Your main concern must be to negotiate to get the most benefits for you and your family. 2. Minimize damage to your credit by keeping the foreclosure off your record. Eliminate further foreclosure costs for both the lender and borrower. The Advantages of the Quitclaim or Deed-in-lieu: 1. first served. QUITCLAIM/DEED-IN-LIEU ADVANTAGES While a deed-in-lieu-of-foreclosure only deeds the property back to the foreclosing lender. and Liability Transfer Modifications on page 7-11 for more on taking over existing mortgages) and other obligations on the property. No regular buyer can be found.owner must take over all the existing obligations that have been recorded against the property. 12-2 3. even though these may not show up on your credit report.

However. Promise to keep the property in good condition. offer a deed-in-lieu of foreclosure as a compromise between the lender's foreclosure and your lawsuit. Some prefer the non-judicial foreclosure since it clears away all junior liens. the lender has the right to reject it. the lender may retaliate with a negative report to your credit records. the lender 12-3 goes directly to the foreclosing lender. Not always do the lenders want a quitclaim deed. your property may not have enough equity to warrant any down payment. no buyer to be found. Then pass this onto the new owner. A forced deed may cloud the official title until acceptance or rejection occurs. you should be relieved of all financial responsibility under the mortgage. Nonetheless. A Deed-In-Lieu of Foreclosure A Deed-In-Lieu of Foreclosure is a variation on a quitclaim deed. you still can try recording the deed over to the lender at the County Recorder's Office anyway. Do this on the premise that since you can no longer make the payments as promised. And both you and the lender will avoid the costs and legal hassles of a full-blown foreclosure. like toxic waste. the new owner pays off the foreclosure costs and the down payment can pay your moving costs. Other reasons for not accepting such a deed would be if the property has substantial problems. and/or the county recorder. if that suits your needs.the lender (as suggested in Option chapter 3) in which all your back payments and foreclosure costs are woven back into your monthly payments. plus be a reserve to pay some living expenses. Also. extreme hillside. However. In exchange. or a deed-in-lieu of foreclosure. The deed One benefit is that the deed-in-lieu of foreclosure arrangements leaves the borrowers' credit ratings intact. On the other hand. Nonetheless. Typically the lender will accept it unless the property has enormous problems. But. a negotiation for acceptance is clearly your safest procedure. So. Deeds Must Have Acceptance Since investors and other buyers who approach you or who answer your ad are interested in your property. when there is no equity in your property. Use this option only as a last resort when no other alternatives are available. may not be. to leave as promised and to cooperate with any new owners to whom the property may be sold. in effect. Dismiss the lawsuit if the lender agrees to let you remain in the property for a time equal to your equity divided by the fair market rent. in cases where you have no equity and have contested the foreclosure with a lawsuit against the lender (see Option chapter 5). and no other candidate for the quitclaim deed. including the back payments and foreclosure costs. but instead deeds the property back to the lender. in cases of lender unacceptance. The less the number of problems or juniors liens . begin negotiating for additional benefits such as the right to stay in the property for a while after the transaction. erosion/flood problems. etc. It will not save your house. then you are officially forfeiting the collateral as agreed in the purchase and trust deed contracts. they may be automatically open to accepting a quitclaim deed situation. So.

he gave his lender a deed-in-lieu of foreclosure. your lender may be able to writeup or supply you with the appropriate form with some preferred language. In addition. with the deepening of the recession. Also. especially if you either print or type. The lender preferred to let him stay in the house to guard against vandalism. After filling out the form. Consult a real estate attorney before executing a deed in lieu. First. With no job in sight. the prices of condos in his area slipped off the former peak prices by as much as 10%. I suggested he save his credit while negotiating for the free rent by using either the quitclaim deed or deed-in-lieu. he decided to let the house go. Second.000 per month. At the point of foreclosure. Although it is entirely okay . an occupied house sells easier than an empty one. a standard quitclaim deed can be used as a deed-in-lieu-of-foreclosure. He went to work on a solution. he would be forced to move and his credit would be scarred. which lasted nearly six months. should record the deed at the recorder's office in the county where the property is located.000 and got a loan for $90. 1) report anything negative to your credit record and. before giving a deed in lieu always get from the lender in writing a promise not to. After 4 months of making no payments. make a copy for your records and deliver the original to the lender or new owner. a deed-in-lieu of foreclosure may not be readily available. His story is a classic example of a preforeclosure situation that leads homeowners to quitclaim away their property. Whenever possible. A standard quitclaim deed form may be purchased from most stationary stores. The lender let him stay until they had a chance to resell the property. however. in the second year his financial troubles began. the more the likelihood of acceptance. Thus. he was just willing to ignore the entire problem until the property was foreclosed out from underneath him. a friend called. Nonetheless. He put $10. Originally. and with no job. or a service you hire. HOW TO FILE the information on page 12-5 and 12-6 as guidelines. But. you may want to type up your own form by using 12-4 threatened foreclosure.000 down on a sales price of $100. he was faced After negotiating the terms of the deed with either the lender or the potential new owner.000 down-payment he originally paid in the form of several months of free rent. Next. "Deed-in-Lieu-of-Foreclosure" across the top of the quitclaim deed. He had no job prospects and used his unemployment income to eat and survive. type up the appropriate deed with the correct information and sign it. he lost his job and could not find another. his property was not worth the loan on it.on the property. That is when he called me. and no visible chance for the prices to appreciate within the next several years. Or. Everything went well for about the first year. either you. He rationalized that by that time he would have regained the $10. He bought a condo in a Los Angeles suburb in 1990 when condo prices in the area were at a peak. 2) try to collect any deficiency from you.000 with payments of about $1. Eventually. An Example Of A Deed-In-Lieu Recently.

Additionally. no lender wants to accept a property that has other outstanding debts owed against it. the acceptance of a voluntary deed-inlieu of foreclosure must have the prior approval of the DVA. Title is acceptable . page 8. HUD and DVA may also be open to accepting a deed-in-lieu of foreclosure under certain circumstances. The borrower's financial condition has deteriorated to a point where he/she is no longer able to make the loan payments and there is little likelihood that the borrower's financial condition will improve. in its Loan Servicing Guide.2 REV-1). As part of its foreclosure processing. (see page 7-3). the foreclosure agent determines whether any other outstanding liens exist. the DVA may 12-5 . and debt collection appears doubtful.no intervening secondary liens. They usually give their approval when there is a saving in time and money. In any event. The HUD handbook (#4330. instructs the HUD foreclosure agent who intends to accept a deed-in-lieu to wait "the required 20 days before preparing and recording the deed. gives specific guidelines for accepting a deed-in-lieu of foreclosure: "The DVA will consider a deed-in-lieu of foreclosure under the following circumstances: 1. 2. The borrower has been unable to sell the property after reasonable exposure to the market." If the above conditions exist. 3.to just deliver the deed without recording it. HUD and DVA Deed-In-Lieu Programs Workout programs provided by HUD and DVA are expanded in Option Chapter 3. Chapter 7." As with all deeds in-lieu. The DVA. then the DVA may even suggest a deedin-lieu of foreclosure to the borrower. recordation will make the transfer of title official and give constructive notice to the world that you have given up all rights as well as responsibilities to the property.

12-6 . The DVA should notify the borrower in writing that the deed is not considered accepted until the borrower surrenders the property.require from the borrower a signed financial statement and a letter requesting acceptance of a deed-in-lieu. releases the DVA from further liability and the deed-in-lieu is recorded.

A STRAIGHT QUITCLAIM DEED .

A DEED-IN-LIEU OF FORECLOSURE .

THE ACTION PLAN SECTION .

.

if you want to save your home--You must act quickly! Who wants to admit they are in foreclosure? But avoiding action and delaying that phone call to the lender will only make your situation worse.000 Californians who lost their homes through foreclosure. according to a plan. knowing your options may not be enough. I completely agree. But.. unfortunately.(in 1 year). You must act quickly. If your foreclosure clock is ticking.could have avoided that loss had they been informed about the process and the actions available to them. This chapter will show some of the main reasons people do not act quickly enough and/or do not act quickly at all and 13-1 .." according to research commissioned by the California Department of Real Estate and prepared by The Real Estate and Land Use Institute of The California State University. do it right now. you have no time to delay. You can not wait until the last minute. Knowing your options is critical to saving your home... If you have not checked the foreclosure timeline (see page 18) and found out where you are. You can not afford to wait.SUGGESTION 1: HOW TO ACT QUICKLY Goal: Get started immediately and use your time wisely. That is why I wrote this book. There is 1 other thing that is crucial. "Many of the approximately 40.

will give you some examples of how you can move more quickly. . you are putting momentum into saving your home. only perceived. or somehow think badly of you. you may have decided on option 3. by leaning into the situation rather than denying that it exists. One of the spouses pretended they were paying the mortgage. but they were actually not paying at all. Perhaps you choose the bankruptcy option. one of the mechanisms many of us learn as children to cope with painful situations is to simply pretend these things are not happening to us. and most don't want anyone to know they're having financing trouble. Fear is another major stumbling block that keeps us from taking the appropriate action quickly. But there is no better way to fail than to do nothing. All of a sudden the other spouse discovered they were in foreclosure. Now ask yourself. The problem could be you are afraid of failing. denying the facts can cause happen to me as a result. but you do not call the bankruptcy lawyer. "What is the worse thing that could happen to me as a result of this action?" Write down your answers. So you become paralyzed and do nothing. try asking yourself. your fears are not real. REASONS PEOPLE DO NOT ACT QUICKLY Denial. What stops you from calling? Possibly you are afraid of rejection. Problems such as divorce or alcoholism can put people into selfdestructive modes. Or maybe you feel the lender will think you are a fool. You just keep thinking about it. there was 1 couple that was in the process of getting a divorce. And then ask yourself. "Is this real? Will this really happen. what will 13-2 Unfortunately. For example. afraid the lender will say no. When fear is crippling you. you to lose your home. But when it comes to foreclosure. For example. Just like when you are riding a motorcycle and lean into the curve. Maybe you have heard that lenders are more willing to do workouts right now because they do not want to have to manage the property. Self-destruction is unfortunately another cause of people losing their homes. but you put off calling." Most likely. Sometimes this works for us without any serious consequences. Procrastination is a sign of being in a state of denial. Try just picking up the phone and dialing instead of rationalizing and making good reasons for putting off that phone call. working out a deal with your lender. Few people want to be in foreclosure. "What is the truth here? What good could really happen?" This kind of logical approach to an emotional situation can take the punch out of the fear and get you moving forward toward saving your home. And if it does.

do not despair. it is also very common. 3. When dealing with others and/or agencies. or somewhere that will help you remember them all day long: This will help you develop a sense of urgency. you can expedite things by using Federal Express or picking up papers yourself. He was angry and irrational. While each option below explains a different tip for acting quickly. especially during emotionally trying times such as a divorce. If the foreclosure clock is ticking for you. Make sure that your priorities are all leading to the same goal. Unfortunately. "Do It Now" "Be Persistent" This will help you keep going and not give up. Next. then write these 2 lines down and put them up on your bathroom mirror or in your wallet. you will find typical possibilities for moving quickly for each of the 8 options. This may seem far-fetched. or on your desk. Do not wait for regular mail if your foreclosure clock is ticking. Option 1:How to Win By Reorganizing Your Finances 13-3 .The first spouse just did not care. and. Keep telling yourself you are worthy of owning a home and make a goal of putting constructive energy into saving your home. TIPS FOR MOVING QUICKLY Being in foreclosure is difficult for anyone. Do not sit around and beat yourself up for what you did or did not do to get into this situation. Take some action right now. Do each item in the order of greatest priority until all the items are completed. Each night make a list of everything you need to do. Many people aren't very organized. Then. eliminate them. So be sure to read all the information in the following examples. If any are distracting or will waste time. keep in mind that every tip may or may not be relevant to every option (depending on your situation). You can set up a simple organizational system simply by having a labeled folder into which you put all important papers and phone numbers relating to the foreclosure fighting option you have chosen. make a list of the things you need to do to achieve this goal. Write down your goal. Since being organized saves so much time. set up a folder for your important papers now. Do not let yourself get distracted. General Tips for Through the Options Working 1. as soon as you get up in the morning start doing each item on your list. and there are some simple solutions. If you see some of these blockages to acting quickly in yourself. These blockages are very common. Be kind to yourself. 4. 2. But organization can save you time. It was his way of getting back at his wife.

pick up the phone and either call the CCCS office nearest your home or call a local bookstore and find out if they have a guidebook that will help you prepare a budget and debt management plan. If you do not get anywhere with the first person you talk to ask for someone else--preferably someone higher up in the chain of command. then right now as you are reading this.If you have decided this is the best option for you. But remember. angry and frustrated. depending upon where you are on the foreclosure timeline. Talk with them long enough to determine which 1 you will be most comfortable with and/or which one seems most knowledgeable in areas particular to your situation. Then no matter how hard it is. Do not spend days thinking about which attorney to call. your self-esteem gets a knock and it is harder to call. Right now. She explained all the appeals options and also told me that acceptance depends upon the individual evaluator. The best way to overcome this fear is to pick up the phone and call right now. Once you get the momentum going. It takes a lot of guts to declare bankruptcy because it is so hard on our sense of self-esteem. Pick up the phone and call 1 or 2 or 3. You are not sure what to say. turn to page 9-3 of this book for help finding an attorney. I was told by the person who answered that she did not qualify. And 2 weeks later. you may have no more Here's an example. make a note and call first thing Monday morning. the action you take now may save your home. At this point. it is possible they may not know anything about how to negotiate a workout with you. Every time you procrastinate or run away from making this phone call. ask for another counselor or ask for the supervisor. you probably need a bankruptcy attorney. who told us a different story. you may have a tendency to procrastinate. If it is a weekend and CCCS is not open today. When you get hold of the CCCS counselor. If this counselor is really busy. So I called another counselor 13-4 . pick up the phone and make an appointment with that attorney. If you have decided bankruptcy is the best choice for your situation. Just the fact that you are being so persistent may get you an earlier appointment. Now 1 problem you may run into with this option is that the first person you talk to may not be helpful and. it gets easier and easier to overcome procrastination. So you have to be persistent. tell them you are in foreclosure and need to see them immediately. Once you have talked to 2 or 3 attorneys. Maybe you have been taught to believe that lenders do not make deals or that they will not consider changing the terms of your mortgage. My daughter was distraught. Option 2:How to Bankruptcy Win With than a day to make a choice. we called the registration office to determine her eligibility. maintained a good attitude and never mentioned the first counselor's opinion. Most of us are intimidated by official documents such as loan agreements. Option 3:How to Win By Changing Your Mortgage Terms This is the option that is often most easy to put off. When my daughter was applying to a state college which had certain entrance requirements. I talked with this counselor at length.

your major stumbling block or reason to procrastinate is probably intimidation by legal documents. Call 1 of them. call a credit bureau such as TRW. Option 4:How to Win By Refinancing Your Property If you have chosen option 4. CLA claims 1 of the biggest problems they have in helping people discover these mistakes is convincing them that their bank documents are incorrect. during down cycles many people facing foreclosure would like to sell their house for what it might have been worth during up cycles. but 1 made by your lender. This is where denial may creep in and cause you to procrastinate. If your foreclosure clock is ticking. although these documents could have been prepared by experienced people. By facing the truth about your credit report. If this real estate office can not help you. Consumers Loan Association reviews loan documents every day and has found that 47% of the Adjustable Rate Mortgage loans had errors. call CLA. You must overcome any intimidation you have of these loan documents. Call right now. If you have chosen this option.my daughter received an acceptance from this college. If your credit is not good. You can get a quick reading on the market value by calling a local real estate office and asking for "comps" of homes in your neighborhood that have recently been sold. The tricky thing here is to be realistic about the current market value. then sit down right now and determine how much equity you have in your home by deducting the total amount of debt from the market value. remember this analogy. You have little to lose. they know your area. Unfortunately. an aggressive broker or an attorney who specializes in finding errors. When you call the real estate office. But it is best to check the comps for yourself. you can move forward much quicker. make that call now and do not take no for an answer--BE PERSISTENT. they can probably give you a good idea of what your house is worth. Keep in mind that statistics show that about 47% of the adjustable rate mortgage loans having mistakes. That gives you nearly a 50/50 chance that you have a case. Next. call another. make the changes you need to make and 13-5 determine what kind of loan for which you are really qualified. even before you read any further. So. do not pretend it is and try to get the wrong kind of loan. CBI or TU to get your credit report. particularly if you have an adjustable rate mortgage. Option 6:How to Win If You Are in the Military . Remember. they can still contain mistakes. And know rules can be bent depending on your attitude and the person with whom you talk. Option 5:How to Win By Using the Legal System This option is the least likely to conjure up fear and denial because it does not involve a mistake that you have made. You have probably found several flyers from real estate agents on your door. In addition. Do not take no for an answer. Again. you must stress to the agent that you need this information quickly and will come down and pick it up this afternoon or tomorrow morning.

But if you do . call a real estate broker and make an appointment for tomorrow. No one wants to admit they have to give their home away to save their credit rating. Do not wait for them to call you back.If you are in the military. Then as soon as you get up in the morning. you need to do some planning. Even if you are not through with your planning by the time of the appointment. Do not get so caught up in the planning and research you waste time. then you will be coming face-to-face with denial and fear. there are probably 3 reasons why you have not called your branch of the military's legal service office: 1) you didn't know about SSCRA. at least you have got the ball rolling. It is important. So. "I deserve to own a home. For example. 2) you do not want others to know you are having financial problems. and I am going to keep my home. Option 7:How to Win By Selling Your Property If you have chosen this option. really want to do. "you do not deserve to own a home. it may take time to sell your home without losing your equity. Expedite things by sending documents Federal Express. And keep repeating the above affirmation. Meanwhile. Resist the impulse to drop the ball. starting doing them. Set a deadline for your planning and stick to it." The best way to Military service is known for having a lot of red tape which sometimes makes it difficult to find the office or information you need. Option 8:How to Win By Giving Away Your Property This option is a tough choice to make. It will help you overcome the tendency to stop or procrastinate. I know a manager who uses planning as a way to delay doing jobs he does not 13-6 shift gears is to create a simple mental affirmation (see page 15-2 through 15-3) that says. If they can not steer you in the right direction immediately or make an appointment for the next day or 2. particularly if you have decided to sell your home." Keep repeating this as you pick up the phone and find out where the nearest legal services office is. But do not use planning as an excuse for inaction. or 3) you may have a self-destructive impulse that is saying. go through the action plan and the action guide and do your planning. If there is a down real estate cycle. But this manager spent months planning and analyzing data rather than confronting the person. Let them know you mean it. Do not let yourself get distracted. tell them you will call them back at noon today or by 4 pm today. pick up the phone. If you have decided to give your property away to minimize damage to your credit. I am not saying you should not plan.) Tell the person who answers the phone that you want to stay on the line while they get the right number or until they can make an appointment for you. there was an employee who had some serious problems that needed to be dealt with. Make a list of all the things you need to do in the evening. (This is a self-destructive urge or just plain fear. but it may be your best choice if none of the other options work for you.

Then go pick up either a quitclaim deed or a deed-in-lieu of foreclosure. Have the paperwork sent to you Federal Express or go pick it up. of where you are now and so that the what really matters most to you. They are value driven. it affects their attitude and their performance. next month's behavior--can be going so that you better understand examined in the context of the whole. they feel good. Covey. on the other hand. Each means to start with a clear part of your life--today's behavior. For example. studied people who've made an impact. picture or life as a whole. _____________ 1 7 Habits of Highly Effective People. Habit 2:Begin with the End in Mind important. Whether it rains or shines makes no difference to them. By steps you take are always in the keeping that end clearly in mind. not our conditions. author of The 7 Habits of Highly Effective People. tomorrow's behavior. way to the vision you have of your "Begin today with the image. Reprinted by permission of Simon & Schuster. they simply respond.not face this reality. Our behavior is a function of our decisions. "When people are 'reactive' rather than proactive." Successful people do not always start out that way. next week's It means to know where you are behavior. What's important is that you do this now. and that each day of your life contributes in a meaningful Covey explains habit #2 this way. Stephen Covey. Covey says." As Eleanor Roosevelt observed. "No one can hurt you without your consent. understanding of your destination. you may lose both your home and your credit rating. Overcome this by calling the person or institution that you are giving your home to and make an appointment for today or tomorrow. Get that deed signed and recorded tomorrow. 7 HABITS PEOPLE1 OF HIGHLY SUCCESSFUL Habit 1:Be proactive Being proactive does not mean merely taking initiative. Once you get the paperwork. If it is not. It means that as human beings. COPYRIGHT 1989 © by Stephen R. make certain that whatever you do on any particular day does not violate the Covey recommends visualizing criteria you have defined as supremely your own funeral. can carry their own weather with them." paradigm of the end of your life as your frame of reference or the criterion by To begin with the end in mind which everything else is examined. We can subordinate feelings to values. we are responsible for our own lives. if the weather is good. Covey describes the habits he observed. you can right direction. Proactive people. Sometimes they have experienced difficulties and even tragedies. Start out right now by making a list of people to whom you might give your home.. as well as people who have been personally successful. Inc. Standing there 13-7 . We have to take the initiative and the responsibility to make things happen. you will again be facing the desire to procrastinate and to not face reality.

"You are the creator. It is the ability to make decisions and choices and to act in accordance with them. you will find your definition of success. Then to Be Understood Most people." Habit 6:Synergize Covey says that synergy is the highest activity in all life--the true test and manifestation of all of the other habits put together. Covey says. Win/Win means that agreements or solutions are mutually beneficial. Habit 3 makes it possible to carry out the program we created with the other habits. "If I were to summarize in 1 sentence the single most important principle I have learned in the field of interpersonal relations. being proactive. achievement. says. It is the ability to act rather than be to be acted upon. Covey writes. Perhaps fame. "In addition to selfawareness. money or some of the other things we strive for are not even part of the right wall. putting first things first. is the physical creation. It may be very different from the definition you thought you had in mind. mutually satisfying." Habit 5:Seek First to Understand. 13-8 . then to be understood. a co-worker says about you. With a Win/Win solution. is the mental creation. a higher way." Habit 4:Think Win/Win Covey explains win/win this way: "Win/Win is a frame of mind and heart that constantly seeks mutual benefit in all human interactions. all too often we fail to take the time to really understand or to diagnose the problem first. it is a better way. it is the fourth human endowment-independent will--that really makes effective self-management possible. This principle is the key to effective interpersonal communications.. Win/Win is a belief in the Third Alternative. It is based on the ability to envision. unfortunately. It is not your way or my way. The second habit. have a tendency to rush in." Habit 3:Put First Things First Habit 3. "If you carefully consider what you wanted to be said of you in the funeral experience. not a competitive arena.. a friend. According to Covey. "It is the fulfillment." It empowers you to make changes. keeping your real goals in mind. imagination and conscience. all parties feel good about the decision and feel committed to the action plan. to see the potential. You are in charge. the actualization. He says.watching and listening to what loved ones. the natural emergence of Habits 1 and 2. to proactively carry out the program we have developed through the other 3 endowments. when dealing with someone else's problems. Win/Win sees life as a cooperative. But. it would be this: Seek first to understand. The first habit. Win/Win is based on the paradigm that there is plenty for everybody.. that one person's success is not achieved at the expense or exclusion of the success of others. to fix things up with good advice. to create with your mind what you cannot see with your eyes.

regularly and consistently in wise and balanced ways. getting sufficient rest and relaxation and exercising regularly. mental and social/emotional. to compensate for weaknesses.. it is important we be committed to having a deep understanding of the other person's point of view and to searching for a solution that will make both people feel good. we are providing leadership in our lives. For many people.. It is renewing the four dimensions of your nature-. "This may involve working together to produce third alternative solutions to our differences that we both recognize are better than the ones originally proposed by either person. And. spiritual. new alternatives and new options. This means eating the right kinds of foods. This could involve a classroom or systematic study program. others through reading scriptures. we must first be proactive. "As soon as we leave the external discipline of school. Sharpen the saw basically means expressing all four motivations. but it may not. most of their mental development and study comes through their formal education. According to Covey."What is synergy? Simply defined. "is preserving and enhancing the greatest asset you have--you. unfortunately. your commitment to your value systems.. We must also be able to clearly communicate our own thoughts and feelings." Covey says that when communication is synergistic. but it does take practice. On a physical level. The essence of synergy is to value differences--to respect them. Can you think of a few now? Renewing our social/emotional dimension may not take extra time as does exercise. to be continually honing and expanding our minds." If we are to sharpen our saws.physical. Covey recommends that we take care of our physical body. some through meditation. . Habit 7:Sharpen the Saw This habit makes all other 6 possible. By renewing our spiritual dimension. According to Covey. Reading good literature expands our minds. It means exercising all 4 dimensions of our nature." It is important to continue our education. it means that the whole is greater than the sum of its parts. He says. It draws upon the sources that inspire and uplift and tie you to the timeless truths of all humanity. sharpening the saw. to hear what they are trying to say. "The spiritual dimension is your core. Covey says. "The very way that a man and a woman bring a child into the world is synergistic. many of us let our minds atrophy.Family life provides many opportunities to observe synergy." 13-9 . according to Covey. We must learn to listen empathetically to others. Covey says proactive people find many ways to expand their minds. It is a very private area of life and a supremely important 1. And people do it very.. very differently. your center. to build on strengths. you are opening your mind and heart and expressions to new possibilities." Some do it through prayer. Writing in a journal is another.

13-10 .Relating in this way takes work and practice. but it is worth it.

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If panic or stress is about to dominate you. This chapter outlines several easy-to-do techniques that can help you stay calm and clear when you need to the most.SUGGESTION 2: HOW TO MAINTAIN A CLEAR AND CALM MIND GOAL: It is very important to maintain a clear and calm mind. As many people have discovered. Deep breathing does calm the mind. BREATHING EXERCISES You have probably heard the old adage that advises: "When you are upset. take a deep breath. The "breath" practices included here take just a few minutes and can be done any time during the day. try 1 or more of these yoga breathing practices." There is a lot of truth to this statement. it is hard to stay calm and think clearly. Yet one of your best assets during this process is a calm. A decision about your home deserves clear thinking. taking a few minutes to do a breath practice can make the difference between anxiety and peace of mind--between a good decision and a bad one. The following group of techniques can be very effective as you walk into the lender's office to negotiate or just as you receive a difficult letter or phone call. clear mind. . Breathing exercises can change 14-1 your life. When threatened with the possible loss of your home.

twice or 3 times. before trying any of the breathing exercisInhale 3 short breaths through the nose and then exhale 3 short breaths through the nose.When you do these practices. However. and clear? Belly Breathing The following yoga breathing practices were recommended in Prevention. Because most of us are taught to hold in our chest and suck in our stomachs when we inhale. These breathing techniques could be a major factor in helping you stay calm and healthy during foreclosure. with each triple inhale and exhale taking approximately 1 to 2 seconds. opening your mouth wide and making a "hahhhh" sound. As you slowly and gently inhale. it is important you do not strain. When you exhale. close your eyes and check out what's going on in your mind for a minute or so. Finally. if you are comfortable. Any breath practice done to excess will exhaust you rather than calm you down. this may feel awkward at first. It does not take much repetition for this practice to work. If you are having trouble making the exhalation twice as long. (Doing this practice more than 3 14-2 es. Is your mind more peaceful. then hold your breath for the same count. The book will raise up. Then. you do 3 to 5 repetitions. (If your inhalation count was 5. The 10-10-10 Breath Inhale for a count of 10 (or any number from 5 to 10 that is comfortable). show your doctor the book and get the doctor's permission first (particularly if you have health problems). Be careful to not overdo breathing exercises. so the ratio comes out right. Do this at a rhythm that is comfortable for you.) Sit quietly with your eyes closed for a moment after doing the exercise. It actually adds more tension. try sitting quietly. Then do the 10-10-10 breath 3 times. exhale for the same count. after a week. it will become much more comfortable and natural with a little practice. calm. You can do this triple inhale/exhale 1 to 3 times. in the evening to settle down after a hard day. The Triple Inhale/Exhale times can be a strain. They will help you to be generally more calm and clear thinking all day long. gentle and twice as long as your inhalation. Straining does not relieve stress. However. then shorten your inhalation. relax your chest. Do not do more than 5 repetitions. a leading health magazine. or before you have to go out to an anxiety-filled appointment. if you are doing it right. (Do this practice 3 to 5 times. Your exhale should be slow. Learn to breathe from your diaphragm by lying on the floor with a book on your stomach. then your exhalation count would be 10. Then. Begin by doing this breath 2 or 3 times. allowing the breath to fill the lowest portion of the lungs. the book will be lower. This practice can be done once. sit quietly for another minute and see what's going on in your mind now. Then exhale through your mouth. Hush Breath Inhale gently and slowly through your nose for a comfortable count (anywhere from 4 to 15 counts).) To get a good idea of how effective this technique is. They can be done at home in the morning to start your day off more calmly.) .

slip off into another room (even if it is the rest room) and take a minute to stretch away that tension. Then you just relax and hang there.) As you practice.) Whenever you do a posture. Hold the pose only as long as you are comfortable (30 to 60 seconds. To do the star. shopping and during those especially stressful situations during the day. mentally say "one" before the breath. stand in a spot where there is 3 to 4 feet of clear space around you in all directions. Try 1 now. again saying "relax" as you breathe out.Once you have mastered this "belly breathing. If we can get our energy level up. Count "2" with your next breath. These exercises can either be done at home when you have 10 or so minutes to yourself. if you are feeling stressed during the day. twice a day for a week. or. being able to relax and--most important to someone facing foreclosure-. and see if you feel any different! (Caution: Before trying any of the yoga postures or breathing exercises mentioned in this book. calmer and are more able to think clearly under pressure. you will probably feel tension release from your body. while calming your mind down.Counting Out . and mentally say "relax" as you exhale. 14-3 second phase of this breathing exercise. most of us feel "down" and are low on energy. Just as you did not strain with the breath practices. After a week or more of practicing phase 2. show your doctor the book and get permission first." sit upright in a chair and count your breaths. allowing yourself to let go of tension rather than hold onto it.) GENTLY STRETCH TENSION AWAY YOUR Revitalizing Star Pose When life's stresses are intense. healthier. start practicing at work.to think clearly. The star pose is an excellent way to bring your energy up. (Be careful not to do breath or relaxation practices while driving a car or working power equipment. Then extend your arms out at each side and slowly raise . After practicing this exercise for at least a week and/or until you are completely comfortable with it. we feel happier. Some simple yoga stretching techniques can help you to quickly and easily release tension and shift into a more calm state of mind. and "relax" before the exhalation. you are releasing tension. in the When we get stressed. we store tension in our bodies. you never strain doing postures because straining puts more tension into the body. as we did with the previously mentioned breath practices. And this tension prevents us from having peace of mind. Stand with your legs apart 2 to 3 feet apart. You move slowly and consciously into the position until you feel a tense area. You can do this practice 10 minutes a day. etc. Mentally count "1" as you inhale. then return back to 1 and begin again. Continue this way up to a count of 10.

Make only 1 movement at a time. lower them briefly and then raise them again. slowly bring your feet together. 14-4 . as with the upright star. But again. Finally.them to shoulder level. called the "lying down star" that is also helpful in both calming the mind and energizing the body. raise your arms to shoulder height. first lower your arms slowly and gently. To do the lying down star. Your hands are on the floor with the palms facing up. After that. If you feel any discomfort during or after this pose. slowly and carefully lower your arms. start out lying on the floor with feet together and arms at your sides. remember to extend the time only if you are comfortable. Then. Within the next week or 2. Then slowly spread your legs until they are 2 to 3 feet apart. bring your feet back to a comfortable distance apart (6 to 18 inches) and rest with your eyes closed for a moment. stop immediately. The first time you do the "star." it is best to start with holding the position 1 to 3 minutes. try to work your way up to 5 minutes. Stand there with arms at your sides and feet together with your eyes closed for a moment and enjoy the peace. (If your arms are uncomfortable. There is an alternate pose. Lie there for 1 to 3 minutes in this position.) Next. with your palms facing up (as shown below). After your arms are lowered. Relax and breath normally (but slowly) for 1 to 5 minutes.

carefully stretch your spine. Then move your feet a few inches apart. Close your eyes. relaxing and letting go of tension. tilting from the waist only as far as comfortable (Figure 2). Now slowly raise your arms from the side. keeping your legs and hips straight. Come back to an upright position. Pause in this position for about 30 to 45 seconds. (The glands that get overworked when you are under pressure. Raise up on your Figure 1 toes. stand as still as you can and pause briefly. Release your hands and slowly lower your arms back to your sides. bringing them up above your head until your palms meet. this time bending to the right (Figure 2).Half Moon Posture This posture is affectionately called the "anti stress" pose by many who practice it regularly because it quickly releases tension in your body and helps to revitalize your adrenal glands. Figure 2 . Repeat this posture. and then return your heels to the floor (Figure 1). Next.) To do the half moon: Begin by standing with arms at your sides and feet together. gently lean to your left. You do not need to do this posture (or any of the postures described in this chapter) more than once a day.

Again gently arch backward and come forward. Move your legs apart so they are approximately 2 to 4 feet apart. At this point you may want to look down and see if your head is midway between your feet. Now. above Figure 3 your head with your palm facing forward (Figure 4). Repeat the posture. Next. Close your eyes and pause. adjust yourself so you are centered. Then bring your arms straight up at your sides similar to the star pose on page 14-3 except with your palms facing forward. Remember. Then turn your head so you are gazing at the fingertips of the hand that is up in the air. Pause in this position for 30 to 60 seconds. Next.) The opposite arm is stretched upward straight. this time twisting to the right. slowly untwist. arms at your sides. allowing your left hand to touch your left foot without bending your knees. If it is not. and if you feel any discomfort.Triangle Posture Begin with feet together. bend forward from the hips gently twisting your body. Bring your feet back together first and then consciously and slowly lower your arms to your sides. breathing as needed. come out of the position. do not strain. Figure 4 . slowly and carefully arch back just a little and only for a moment (Figure 3). coming back to the upright position shown in Figure 3 below. (If you can not reach your foot--and most people can not until they have been doing postures for a while and have released considerable amounts of tension--touch your knee or calf.

Then. just rest your hands at any point along your leg. Then slowly slide your hands down your legs until you can easily grasp your foot (Figure 6).Head to the Knee Posture Begin this posture by sitting on the floor in a comfortable cross-legged position. sit quietly for a few minutes after doing the postures and check out your mind. bringing your abdomen towards your thigh. Pause briefly with your leg extended. slowly slide your hands back up your leg coming back to an upright position. Next. slowly drop your head towards your knee. Place your hands on your thighs with your back straight. Next. The head to the knee is an excellent way to release all the tension that gets stored in our legs and spine when our "fight or flight" syndrome gets triggered. If you are doing these postures at home and you have the time. Very likely its more calm and clear than it has been for a long time. If you are not able to reach your foot. Pause in this position for 30 to 60 seconds. bring your left leg in so the heel of your foot is near the groin area while your right leg is extended (Figure 5). Then bring your legs back into a crosslegged position and pause with eyes closed. Figure 5 Figure 6 . Repeat the posture on the other side. Begin to move forward.

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giving yourself enough time to imagine or sense the mist moving through that body part. It moves into the jaw. When you are ready to do the practice. knee. the mist enters the brain at the base. This beautiful mist now moves into the fingers of your left hand. or tape record them for playback later. calf. Slowly this soothing mist fills the hand. Very slowly it surrounds and supports your body. Keep your eyes closed throughout the practice.). heel. Very gently. Finally. forearm. one by one (Pause briefly as the mist fills each toe). Ask a friend to read the following deep relaxation sequence to you. shoulder and neck. elbow. filling and relaxing each and every brain cell. the teeth. This peaceful mist moves around to fill the left ear and the right ear. Then place your hands over your eyes for approximately 30 to 45 seconds. lungs and chest. This beautiful soft mist now begins to fill the toes of your left foot.THE DEEP RELAXATION TECHNIQUE Have a friend read the following paragraphs slowly.) This soothing mist now moves around to enter the back at the hips. You feel light and free as if floating on a cloud (Pause for about 5 seconds). Both legs are completely relaxed. And now this beautiful mist moves out to touch every hair on your head. or read it into a tape recorder yourself. 1 by 1. knee. elbow. Very gently. tongue and lips. the mist fills the hand. calf. (Pause for a second or 2 as the mist fills all these organs) The mist gently brings peace and calmness to the heart. This practice should take 10 minutes. (Pause for about 5 seconds. the middle back and the upper back. the right eye --filling all parts of the eye. sweetly and softly. You are now ready to begin deep relaxation. the left eye--filling all parts of the eye. 1 by 1. let your arms rest comfortably at your sides with palms facing up. seeing or imagining a beautiful white light. allowing enough time to sense or imagine the mist filling that body part. (Remember to go slowly through each body part. loving mist now moves into the toes of your right foot. the forehead. Your left leg is now completely relaxed. upper arm. Very gently the mist fills the left cheek. bed or couch with your spine and head straight.) Gently the mist fills your arch.) The mist now fills the fingers of the right hand. This loving mist now gently moves into the abdomen. This soothing mist fills and relaxes your every thought and every feeling. heel. The comments in parentheses are timing directions and should not be read aloud. This soft. Figure 7 . forearm. one by one. the right cheek. filling the lower back. This loving mist begins to fill your face. This light is soft like a mist. shoulder and neck. (Remember to go slowly through each body part. thigh and hip. turn the lights down or off and lie on your back on the floor. Your legs should be a comfortable distance apart. then play it back: Let's begin by feeling. upper arm. filling all the internal organs. Rub the palms of your hands together briskly until they get warm. thigh and hip. but no wider than 12 to 18 inches (Figure 7). The mist moves into the arch (Mention each body part slowly.

deep peace. chest. This leaves your consciousness free to expand. touching everyone and everything with your deep. neck and throat are now filled with renewed consciousness. roll over and go to sleep. Gently wiggle your fingers and toes for a minute. (Speak gently as you begin. (Pause now for about 1 to 2 minutes).. (Pause briefly. and then gently roll over to one side and get up or. the right leg into the toes. It expands first to fill the room. It expands beyond the mountains and the trees and encircles the globe. It moves into the heart.beyond galaxies.. lungs.Your entire body is now completely relaxed. ----------------------------------------------------------------------------------------------------------------------NOTES . Since yoga techniques can be helpful in learning to reduce stress.. renewed vitality.. (Begin speaking in a slightly more upbeat tone. It moves down the left leg into the toes. Stretch once or twice.) This consciousness moves down your left arm to the fingertips.beyond. throughout the country. relax and think more clearly. Allow it to return first behind the eyes. Enjoy this expansion. It expands beyond galaxies.until the entire universe is but a speck of light in 1 tiny corner of your deep. It moves across the state. It expands across the continent.. you may want to visit a local yoga center to develop a complete stress reduction practice. It expands to the galaxies.. Your entire face.) It now expands out to the community. deep peace.) Time now to return your consciousness. and abdomen. down the right arm and down the back to the hips. if you are in bed. to all the continents. (pause for a second or 2).

This chapter shows you how to change your financial condition by changing your picture of life as well as your attitude about life. Rephrasing Your Self Talk: The Essential Attitude . Permanately fighting foreclosure and rebuilding wealth involves looking for new possibilities. 2. Visualizations. Affirmations. contemplation and clustering. fulfillment and a generally happier life: 1. success. helping them to enjoy greater prosperity. Rephrasing your self talk. a practice that has transformed millions worldwide. Later in this chapter. finding more effective ways of handling your finances and rethinking your patterns of behavior. richer life. attunement with the Creator. 1.SUGGESTION 3: HOW TO EXPLORE NEW POSSIBILITIES GOAL: Exploring new possibilities in your life may lead to a fuller. Finally. and discover a new career that suits your heart. called here. The following 3 techniques have been used successfully by thousands of people. 5 methods are outlined that help you think more creatively. find a new means of increasing your cash flow. a return to childhood dreams. blue skying. These practices include: 1001 uses for a brick. and 3.

your success or failure in anything." The chatter that is going on inside your head all the time. By knowing what to expect.) By deciding to let go of this old habit. One way is to take a look at your "self talk. you will be ready to meet that old self talk head on.or I do not need a house. It is a great day to be alive. some people believe that money is evil." To change your financial condition. In Shad Helmstetter. And what you tell it about you.. but most do have an inner tape that keeps playing similar negative statements: "I do not want a house. you spend most of your time thinking about your immediate cash flow problems. to the ideal you'd rather have.. consciously acknowledge that your old habit does not work and is not what you want.D. (If that is true. you have to substitute something new--You need to substitute a habit of thought that you would rather have.. There are a few ways to make this shift to the positive. that your old self-talk is a habit. But to change old habits.. Remember. For example.'s book on selftalk (What To Say When You Talk To Your Self). It feels natural and it feels comfortable even if it is negative. Instead of waking up in the morning and telling yourself you are broke without prospects of success or change. Here's an analogy: While riding a bicycle down a dirt path. tends to make the situation worse. "You will become what you think about most. "When you begin rephrasing your self-talk from the old to the new. too.or I can not afford a house. When you get started. and begin building a new habit. start first with the decision to not listen to the earlier negative program which tries to tell you that it will not work." Helmstetter cautions that. Ph. It has no choice. and what you say when you talk to yourself. Once you recognize the problem. you are well on your way to change. "Today I have the opportunity to make a lot of money. a child is terrified he's going to hit a rock and fall down..The brain simply believes what you tell it most. If you are like most people who are facing foreclosure. large or small. start some new self talk that says.Adjustment Why do people end up in foreclosure? Usually it has something to do with old habits and an old view of themselves and life. will depend on your programming--what you accept from others.. override it. your old programming will try to talk you out of it." An essential first step toward changing your old habits is to recognize them.. they unfortunately build up habits that keep prosperity at bay. this continual focus on your problems. Unfortunately. he says. Try to identify how you really feel about money and owning a home." A good way to start creating new habits is to recreate your self talk. Because of this belief. it will create. which you have probably had for many years. you need a new attitude about life as well as a new picture of life.. This .or I do not deserve a house. I am successful in all I do.. Not everyone in foreclosure has this same problem.

I am safe and secure.." 3. "I might lose my house. You phrase this statement in a way that "affirms" that your new picture has already happened. all the time focused on rocks in his path. "I will be fine soon. we all have a picture of life and of ourselves. green field.child gets onto his bike.." and do not use future tense words like will. You do not want your life to continue moving in the same direc- Notice that the affirmation puts the weight on the other foot. Visualizations: Visualizing a new way to live. affirmations do not contain negative words like "not. we all have a picture of life and ourselves. it focuses on a positive solution." Repeat your affirmation many times during the day--especially any time you catch yourself doing negative self talk. Instead of focusing on a negative situation. It is a practice done by many people throughout the world to improve their prosperity and have a better life.) . So we must see ourselves in positive and/or constantly improving situations. We all visualize. I think it is fair to assume you want a change. they get out of the cycle of debt. he never sees the turnoff into a smooth. Affirmations: Affirming Prosperity Your A "Mental affirmation" is a kind of self talk. This picture you are projecting is setting up certain expectations. Saying to yourself." or. And eventually. he does hit a rock and falls down. For example. because of your financial problems. you may be picturing yourself as someone in debt. We're so busy picturing ourselves as a person in foreclosure. It is the same with us. You see. Instead." Instead. try creating a positive affirmation such as.and they stay out. (You may want to repeat your affirmation as you do the visualization practice described below. Just as we talk to ourselves all the time. Also. I have more money than I need. He's so worried about the rocks. The problem is that most people do it unconsciously. you should affirm. 2. I am in debt. Affirmations always use present tense words like "I am. it is very helpful to spend 15 minutes a day repeating your affirmation. "I am not in foreclosure. Visualizations are based on the proven fact that our picture of life creates our life's experiences." regardless of how ridiculous you may think it is.for a more positive cash flow and greater peace of mind. At this moment. And. without much hope of getting ahead. many people have found by using a few simple techniques that help them change their attitude and refocus their mind. right now the mental phrase you are repeating to yourself is probably. we do not make room for an easier path -. "My house payments are made on time every month. you choose a phrase that best states your new picture of yourself. However. To create an affirmation. "I am making more than enough money to pay my bills." simply will not work.

You see your friends and family congratulating you on your successful money management and prosperity. Try picturing the following: Your checkbook balance is high. try to see everything in as much detail as possible. I want to use all my spare time building up my speed and endurance by practicing every day. To be successful at creating a new picture of life. Maybe in your new picture your bills are all paid on time every month. your attitude about life changes.tion. take a good look at your daily activities. you are delighted at the balance in your checkbook. if you insist on partying often to late hours. Once you decide on what your new picture of yourself and your life is.' Nevertheless. you have already paid next month's bills. Once your new picture is clearly created and your new attitude starts to come through. skipping workouts 'just this one time'. And. think about a picture you'd rather have. It is probably best to do this practice for 15 minutes a day. In fact. it is like digging a hole and filling it up at the same time. Which ones lead toward your new goal and which ones are based on old habits that are taking you in the wrong direction? Tae Yun Kim gives an excellent example. accepting frivolous invitations . and enjoy your career and your life. you must be patient and clear. it will take much focus. As Tae Yun Kim says in her book. you have been holding that old picture for a long time. Your mind says. you need to keep your new goal in mind. As you stand in the bank. eating improperly. Sense your good feelings and allow yourself to feel these emotions deeply. You are happy to pay them. Just as changing old habits takes much intensity and repetition. determination and concentration on your part to keep your new picture in mind. why picture? not create a new Here's how you practice creative visualization. To create this new picture. creating a new picture of life may take much repetition of the new visualization and/or affirmation. 'This is an important priority. (See page 20-1 for additional reading. "You may set a goal of winning a marathon race. There are some excellent books on creative visualization that describe how to create visualizations and that document hundreds of success stories. you must be clear and specific. you have thousands of dollars in the bank. You appreciate the fact that people trusted you enough to extend credit to you. Remember. you are relaxed and happy.) Stay Focused on Your Goal When you begin the adventure of changing your attitude and your life. And it also means letting go of the old picture. First. if you keep your old ideas and actions going while trying to create new visualizations and affirmations. as you do the visualization. Once you have clearly and deeply changed your picture of life. Your mortgage payments and other bills are all paid. So. Seven Steps To Inner Power. I want to win.

" This practice will help you stretch beyond the everyday borders of your mind and tap into your inner creativity to find new solutions. your new picture of your life. As you practice visualizing and affirming. There are usually some important clues in the childhood goals that were uninhibited by the picture stamped on us by our parents. Include conventional answers such as "building a house" and unusual ideas such as a "cuff link for a giant. Try thinking about what you liked doing when you were a small child. Make a commitment to yourself to stop the old habits that are taking you away from what you want. if necessary. 3. the work is easy. 4. One of the biggest blocks to solving problems is not allowing yourself to expand your thinking. Then take a few minutes to list all the activities you are currently doing that will lead toward that goal and the ones that are taking you in a different direction. 1001 uses for a brick.. When you really love what you are doing. Clustering. But. society or just random circumstances. Contemplation. as a warm-up. Return to childhood. Have you ever seen a creativity test where people are asked to connect dots without removing the pencil from the paper? A lot of people go around and around in the same pattern thinking there is no solution. Blue skying. find out what your dreams were and . Or just skip the first 3 altogether if no warm-up is necessary. Return To Childhood Another technique for getting out of financial binds is to find a profession or career that you really love. and 5. the creative person takes the pencil and extends the lines way out past what seem to be borders and succeeds in connecting all the lines without moving the pencil from the paper. FINDING A CREATIVE SOLUTION The following techniques are designed to help you think more creatively so you can find new ways to increase your prosperity and enjoy your life more. and you tend to be more successful and make more money. more new activities will take the place of the old ones. The techniques described below give you that kind of creative expansion.. 1001 uses for a brick. return to childhood and blue skying.A practice that helps develop creative thinking that you may want to do as preparation for the "blue sky" is to list as many uses for a brick as you can..instead of turning them down. Look back. Use the first 3 techniques.How like are you to succeed under these circumstances?" So write down your new goal. Mind stretchers that can help you think more creatively and find a new way of living: 1. It allows you to tap into your own inner creative potential. 2. 1001 Uses For A Brick . to the last 2 techniques of contemplation and clustering.

You can start by putting energy into your new career part-time. Our minds tend to drift around from 1 random thought to another and take us to thoughts or feelings that are completely unrelated to what we started out thinking or talking about. when practiced with patience. Do not get involved in the drift. Do not force your mind back. Write down all the ideas." and again watch your mind. "Blue skying" is a fun and simple way to stretch your mind and discover creative new solutions to life's problems. take a break. you realize a few minutes have gone by and you haven't heard a word your friend has said. "increasing my finances. Note where it ends up. The idea behind contemplation is simple--you focus your attention as best you can on a particular idea or object and let your mind drift to only thoughts about that idea or object. All of a sudden. "increasing my finances. let's say you are listening to a friend talk. when a new thought comes up that is unrelated to increasing your finances--a thought such as. Just let your mind stretch and flow. do not editorialize or judge and do not get angry that your mind is drifting. For example. preferably This process helps break down limiting barriers to thinking creatively. especially at first. Then.This technique. begin again with your key idea. Have you ever noticed this? It happens to outside and start thinking of any possible financial solutions: new careers."--bring your attention back to the key idea." Just sit there for 3 or 4 minutes. "I would really like an ice cream cone now. Very likely you already have got some good. Do not judge your ideas as impossible or too far out. Unfortunately. or maybe you need to take a class at school.make some changes. but bring it back gently. Then come back to your list a little later and note the ideas that work best for you. but tend to wander all over the place. Let your mind go to outrageous and outlandish ideas. is that our minds are not used to being focused on 1 idea or object. If a . Contemplation . Once you have "blue skyed" as many ideas as you can think of and written these ideas down. Just watch your mind as if you were watching a movie. Eventually most people come up with a unique solution that works. Lay down in some comfortable place. To shift from this normal wandering mind mode to the practice of contemplation. Let your mind free associate and watch where it goes. winning the lottery. everyone. can provide you with new and unique ideas for changing your financial situation. etc. making a movie. forming a partnership. workable solutions to your financial problems. the thing that may make contemplation difficult to practice. A good way to understand how your mind wanders is to simply sit down and try to think about 1 idea such as. Spending a few minutes a day finding your dreams could change your whole life. inheriting money.

Then your creative. Clustering is a powerful tool that can locate and unlock helpful ideas from within your mind. Write it in the middle of a blank page. you begin with a nucleus word. Begin by writing down an issue you want to explore.related idea comes up such as. and. or how to rebuild wealth. Your mind has been wondering wherever it has wanted for a long time. Gabriele Lusser Rico describes clustering this way. Now you simply let go and begin to flow with any current of connections that come into your head.To create a cluster. try to be as relaxed as possible and sit in a comfortable position. there will be a moment or 2 of quiet. then we need to look at things differently and let go of the limitations we've set for ourselves. Write these down rapidly. The phrase you choose becomes your nucleus. If we are going to be successful.. intuitive faculties will very likely be triggered and you will receive some new insights. And. on a fresh page. Here's how clustering works. Connect all the outside circles to the central circle with lines. or it can be a dominant impression. After you run out of information about your key idea or object. Clustering is the crucial first step for bypassing our logical. But the time and effort you put into practicing contemplation is well worth it. It has been used by many writers to break through writer's block. . Eventually you will run out of thoughts. All around the outside of the circle jot down any related idea or word that comes into your mind and put a circle around it. then draw a circle around the phrase (drawing circles stimulates the right side of the brain. contemplation is a skill you can use for the rest of your life to solve problems and/or find new ideas or opportunities. such as: How to fight foreclosure. circled. When you contemplate. the area believed to be the seat of creativity).Too often people believe the creative process is only for artists and writers. remember to be patient with yourself. Now. it may be even more turbulent.." How you can get started on a new business or income opportunity. "have a garage sale. each in its own circle. in times of stress. And. In Writing the Natural Way. this is the exciting part. "Clustering always unfolds from a center. Whenever the thoughts shift away from your key idea." allow your mind to continue its drift. again gently bring your mind back to the thoughts you were having just before your mind drifted to the unrelated thought. Clustering . That center can be a nucleus word or phrase. You can have some life-changing breakthroughs. You may get an insight about a new career. It may help you discover the best solution for your foreclosure situation. or how to increase income. orderly mind and tapping into our creative intelligence. like ripples generated by a rock thrown into a pond.

Here is an example: If your center circle says "how to fight foreclosure. Rico says. "File a lawsuit. If you momentarily run out of associations. As you cluster. In its place will be a certain playfulness. "Continue to cluster. That will only stop the flow of new ideas. This kind of practice often leads to a host of new ideas that can help you. which is the point of the practice." you might have a line going out to a circle that says. do not "nix" any words or ideas." Another line going out from the center might say. no matter how ridiculous your ideas may seem. But trust your natural process.radiating outward from the center in any direction they want to go. And. at some point during the clustering. doodle a bit by filling in arrows or making lines darker." Since you are not responsible for putting the ideas in a logical order or sequence." (see the example diagram below. This relaxed receptivity to ideas usually generates another spurt of associations until at some point you experience a sudden sense of what you are going to do. Let each association find its own place." Rico explains. a dramatic shift occurs and a detailed answer to your question becomes very apparent. In other words." Another line might go from the center circle to a circle that says. you may feel foolish.) Keep going." When something new and different strikes you. "We all cluster mentally throughout our lives without knowing it. any natural anxiety you feel at first will soon disappear. let this new word or idea become the nucleus of a new cluster. as if this process is not leading anywhere. but do not dwell on what goes where. . Connect each new word or phrase with a line to the preceding circle. we have simply never made these clusterings visible on paper. "negotiate with the lender. "Contact CLA. drawing lines and even arrows to associations that you see to go together.

Use extra paper. if necessary. for increasing your income and for improving your mental/emotional well being. _______________________________________________________________________________________ CLUSTERING EXAMPLE . Use the next 4 pages for your different clusters.Why not try your own cluster now? Very likely it will help you discover new ideas for fighting foreclosure. to cluster other thoughts.

CLUSTERING WORKSHEET Possible Focus: How To Fight Foreclosure .

CLUSTERING WORKSHEET Possible Focus: How to Increase Income .

CLUSTERING WORKSHEET Possible Focus: How to Improve Mental/Emotional Well-Being .

CLUSTERING WORKSHEET Focus: Miscellaneous .

Find your best solution. Since each foreclosure is unique. first study and collect data regarding your foreclosure situation. for your specific foreclosure situation. friend(s). As you read The Action Plan. or combination of options. and The Talk-It-Out Exercise 2. be flexible and use the following exercises as a structure over which you can fit the fabric of your foreclosure situation. In other words. or anyone who can help you in order to weave together your own individual action plan. counselor. The easy question and answer format allows you to pick and choose from the various options and ideas in this book 16-1 While completing The Action Plan. However. the exercises in The Action Plan should help you: 1. The Action Plan can only give general exercises and not exact procedures for every case. family member(s). Try discussing them with a spouse. notice how the exercises help you reach your own conclusion(s). So relax. then construct and implement a well-planned solution. therapist. Make a clear evaluation of your situation.STEP 5: Complete The Action Plan To Find A Solution That Fits Your Needs The Action Plan was designed to help you to discover the best option. try to get a clear picture of your options and solutions. .

Play devil's advocate by listing the pros and cons of each the ideas. it is very useful to sit down and write out the chain of events you feel led you into your current financial difficulties. As you write. allow them to read through these materials. but also any mental or emotional barrier that blocks discovering your best solution. then The Write-It-Out Exercises First. In fact. too. do not there will likely be such and such a reaction. Play the game of "if I were to do such and such an action. This kind of freedom of thought may help unlock not only the best solution for you. Brainstorm ideas. Encourage and expect this from all participants.understand and digest these ideas (or just talk it out into a tape recorder). 16-2 . alternatives and dreams.

if your lender has defrauded you. then you may need to work through The Action Plan exercises until the best solution is found for your particular case. first. you have read and become familiarized with The Action Guide summary. Now is the time to apply that information in The Action Plan Workbook. or use your own private journal. 3 approach is immediately obvious to you. ----------------------------------------------------------------------------------------------------------------------------- 4 Important Basic Questions At this point. On the other hand. page 15-3). item 2b to jot down your Second. you are sure of a solution. then contact an appropriate attorney. if you are not so sure of the best solution. or use your own you think you can get out of this private journal. then explain the solution in as much detail as possible on the following page (attach additional pages. Backtrack. use the space on page 16-23. If no realistic these lists. and. if necessary. Do everything necessary to get the whole story out (see "clustering" on page 15-5). ask yourself: 1. after reading the option chapters. alternatives and dreams. At this time. as you progress through The Action Plan exercises. or a desirable solution (see visualization. Again. Or. 3. continue to pursue it. item 2a to jot down your thoughts. solutions.The Action Plan Workbook worry about creating a perfect document. are you sure (or pretty sure) of a solution and are in the process of applying it? Yes No If your answer is yes. if necessary): 2. Draw from financial pinch. these pools of ideas. Make a list of ideas. list all the possible ways thoughts. For example. Use the space on page 16-22. The important thing is to just let the story unfold as it naturally wants to unfold. all or part of the 8 option chapters. are you unsure of a solution now and need to systematically work through option chapters until the best remedy emerges? Yes No If. Does your financial trouble seem (circle 1): b) permanent? a) temporary? . Describe the job you would like to have as well as the income and savings. Go into detail. possibly. But. then dream up a probable.

As long as you are well-informed and make intelligent decisions regarding the sale. The benefits include curing your default. minimizing credit damage and purchasing another house in a more affordable neighborhood. If you have not decided to sell your house. protecting equity. Do you want to keep this property or not? No Yes If you decide you cannot keep or do not want to keep your house. Fill out. then do the following exercises in The Action Plan while thinking through each option. As the chapter on selling points out. selling your house when it is in foreclosure can be a very good move. then analyze the forms on pages 5-11 through 25. . do the following exercises in The Action Plan while looking for alternatives. then go directly to page 16-57 for exercises on selling your house. 4.4 How To Fight Foreclosure And Win With Honor Your current financial standing and your future financial prospects will influence and may indicate your direction of action. Even so. but do not know yet the best solution. before you resort to selling your house.

The Action Plan Workbook 5 On this page (attach additional pages. Also. explain any important details of the solution in as much detail as possible. if necessary) list the solution(s) you think may be the best for your particular situation. .

Through The Action Plan 1. do only those sections you think will benefit your case and speed up a solution. 5. then try beginning with The Action Plan and let it lead you through the references to the book until you find a solution. Refer to these notes and to The Action Guide as much as required while doing the Action Plan exercises. 2. For example. you find a solution. in the course of doing The Action Plan exercises. such as. you were asked to make notes of ideas which interested you and/or seemed to offer help to your particular situation. then feel free to stop at that point. if you do a workout with your lender which solves your problem. You may want to skip sections of The Action Plan that do not apply to you. 3. If you need or Quickly then systematically pursue every step in The Action Plan one step at a time. if you are not serving in the military. When you read The Action Guide and the option chapters. In other words. then there is no reason to continue with this book (unless you just want the informaNOTES .6 How To Fight Foreclosure And Win With Honor How To Move want maximum exposure to all the solutions. If. 4. If you like to construct things without reading the instructions.

.16-11 How To Win By Changing Your Mortgage Terms16-21 How To Win By Refinancing...............................16-55 How To Win By Selling Your Property......................16-57 How To Win By Giving Away Your Property..16-41 How To Win If You Are In The Military......16-7 How To Win With Bankruptcy............ THE ACTION PLAN WORKBOOK Table Of Contents How To Win By Reorganizing Your Finances.....16-37 How To Win By Using The Legal System...........16-71 16-7 ..................(systematically moves you toward a well-informed decision).

NOTES

16-8

The Action Plan Workbook

9

OPTION 1: HOW TO WIN BY REORGANIZING YOUR FINANCES THE GOAL OF THIS OPTION: Generate cash for your mortgage payments by: expenses, A. B. C. GETTING STARTED 1. With special possible: focus on slashing your expenses wherever Slashing your unnecessary

Increasing your income, and Persuading creditors to lower your monthly installment payments.

a. Complete The 4 Steps To Financial Freedom on pages 5-2 through 5-4. List these notes on separate sheets of paper as well as in the income and budget forms on page 5-11 through 25, where applicable. b. Start a budget immediately. A credit counselor may be of assistance, (look in the Yellow Pages) or consult with Consumer Credit Counselor Services (see page 5-9 for their telephone numbers for their California offices). I. Fill out the income and budget forms on pages 5-11 through 5-25, where applicable. See How To Set Up A Successful Budget on page 5-4 through 5-6. 2. Using the above data, answer the following questions: a. What is your current average monthly income? $ . b. Divide the annual amount paid on all your loans against the property by 12 months, and then list and subtract the results here. $ . c. This is your monthly income that remains after paying your mortgage(s).$ .

10

How To Fight Foreclosure And Win With Honor

d. Divide your annual property tax and insurance by 12 months and then list and subtract the result here (if tax and insurance are not included in 1 of your loan payments). $ . e. Divide all your other annual living expenses by 12 months and then list and subtract the result here. $ . f. This is your remaining monthly income. (Is this enough to live on?) $ . Enter the total from item "f" above. $ .

3. List the possibilities of increasing future monthly income. a. Rent from roommate(s). b. Rent from the garage/backyard as storage. c. Income from other family/household members. d. Extra income from sidejobs/bonuses/raises. e. Other. f. Other. g. Other. . I. Add the total future income. $ $ $ $ $ $ $ $ . . . . > +$ . . . .

4. The total possible monthly income. $ . 5. List the possibilities of decreasing your mortgage payment. a. A workout (see page 7-1) or refinance (see page 8-1). Determine your newer, lower mortgage payment from these sources, or from the exercises on pages 8-13

The Action Plan Workbook through 8-16. List the lowest possible revised payment. $ . b. Sell a partnership (see page 11-19). Usually this can cut your mortgage payment exactly in half. List your deal. $ . . . . c. Other. d. Other. e. Other. I. Equals your total possible deductions of: $ . . II. Your current mortgage payment. $

11

$ $ $

1. Subtract your total possible deductions (from 5dI). $ . 2. Equals your possible new lower monthly payment of: . $

6. Begin to contact credit counselors for help in persuading creditors to lower your monthly payments, as well as all other financial planning matters such as slashing your unnecessary expenses and increasing your income. (Or you can try negotiating with your creditors by yourself, even though this is not nearly as successful as with a third party professional credit counselor. Nonetheless, if you do attempt your own negotiations, keep track of your work on page 16-6 or in your private journal.) a. Contact at least 3 credit counselors, if possible. Look in your local Yellow Pages or newspapers. Interview as many credit counselors, debt services or financial planners as possible until you find someone you feel comfortable with. List the agencies you contacted below.

12 I. number Response: II. number Response: III. number Response:

How To Fight Foreclosure And Win With Honor

agency

representative

phone

agency

representative

phone

agency

representative

phone

b. List the name and phone number of the agency you decided to work with and the name of the counselor you contacted. agency counselor phone

number Comments:

c. Contact the Consumer Credit Counseling Service (CCCS) in your area for reliable help with budget and debt counseling at little or no cost (see page 5-9). List the name and phone number of the agency you decided to work with and the name of the counselor you contacted. number Comments: agency counselor phone

d. If your income falls short of your total living expenses and your bills are piling up, then get started on a Debt Management Plan, which usually includes persuading your creditors to lower your monthly installment payments. If you do begin a Debt Management Plan with CCCS, or elsewhere, then fill in the following blanks. start date phone number I. projected end date counselor

The Action Plan Workbook 7. Judging from the preceding information: a. Have you slashed your unnecessary expenses? No Yes b. Have you increased your income? No Yes

13

c. Have you persuaded your creditors to lower your monthly payments?No Yes d. Can you afford to keep your house? Yes No

I. If no, then you may want to proceed to page 16-57 of the Action Plan which begins Option 7: How To Win By Selling Your Property. II. If yes, then continue on in the order of the guideline exercises. Your ultimate goal is to weave together a solution by sorting through the ideas in the Exercises.

OPTION 2: HOW TO WIN THROUGH BANKRUPTCY THE GOAL OF THIS OPTION: 1. To protect your property long enough to bring order to your financial chaos, and To bring relief from debts that far exceed your income or assets.

2.

GETTING STARTED 1. Based on the numbers you provided in the forms found in Option chapter 1 Forecasting Income (pages 5-12 and 5-13), the Fritter Finder (pages 5-22 and 5-23) and the Record of Expenditures (page 5-18), do you have more debts than income? No Yes If no, then probably bankruptcy is not an option for you, and you may want to proceed to Option 3 of these exercises. 2. If your answer to the above question is yes, then contact an attorney who specializes in bankruptcy. In order to help determine which chapter of the bankruptcy code to file under, be prepared to answer the following questions: a. Do you need to permanately erase some debts in order to get a fresh financial start? No Yes If yes, then perhaps your attorney would advise you to file Chapter 7 bankruptcy as the best solution for you. However, be advised that Chapter 7 stamps your credit file with the worst blemish of the 2 bankruptcies since some future creditors may look unfavorably on the fact that you did not pay some debts. b. Do you only need some temporary relief from your debts, a little extra time to catch up on your bills? No Yes If yes, then perhaps your attorney would advise you to file Chapter 13 bankruptcy as the best solution for you. Some future creditors may overlook a Chapter 13 bankruptcy if you

eventually paid off your debts in a bankruptcy court-approved debt adjustment plan. c. Do you need both, to permanately erase some debts, as well as, to get temporary relief from other debts? Yes No

If yes, then ask your attorney whether he or she would advise you to liquidate some debts under Chapter 7 before reorganizing other debts under Chapter 13.

3. If you decide to file Chapter 7 bankruptcy, then you may want to demonstrate on your petition that there is not enough equity in your house to cause the court trustee to sell it to pay off creditors. To minimize the appearance of equity, you may legally deduct: a. The estimated sales costs (that might result if the house were to be sold), b. A homestead exemption, and c. A new junior loan. Note: Pages 16- 12 through 16- 18 study the figures that are needed to process the above deductions, including formulas that determine your capital gains and equity, which are important factors for analyzing your situation, as well as for other sections of The Action Plan. 4. The estimated cost of sales includes: a. The estimated capital gains tax, b. The estimated sales commission(s), and c. The estimated escrow costs. I. The bankruptcy court routinely accepts 10% of your property's fair market value as the estimated cost of sales. To figure this, list the fair market value (see page 16-25, item 9dI, and page 11-2). $ . A. Multiply 4cI by the bankruptcy court's standard of 10%. x 10% $ B. Equals the bankruptcy court's standard deduction of: .

5. However, you may increase the estimated cost of sales deduction beyond the standard 10% if your estimated net capital gains are above average. To figure your net capital gains:

a. Again, enter your property's fair market value (see item 4cI, above). $ . b. Subtract the price you paid for your house. $ . c. This equals your gross capital gain. $ . d. Subtract all the capital improvements made to your property since you purchased it. (Consult with your tax preparer, and see pages 6-6 through 6-9 for more information.). $ . . e. This equals your net capital gain of: $

6. First, in order to figure your own estimated cost of sales: a. Enter your net capital gain (item 5e above). . I. Multiply 6a by your income tax bracket. (Consult your tax preparer.) x % $ . $

II. Equals your estimated capital gains tax of: > -$ . b. List the estimated fair market price for your house (see item 4cI, above). I. Multiply by a sales commission of 6%.

$ x $ 6%

.

II. Equals your estimated sales commission of: > -$ . c. List the estimated fair market price for your house (see item 4cI, above). I.

.

$ x

. 1% .

Multiply 6c by the average escrow of up to 1%. $

II. Equals your estimated escrow costs. > -$ . d. This equals your own estimated cost of sales of: $ .

Is this amount larger than the standard deduction figure you listed in item 4cIB above? Yes No II. Enter the larger of the 2 amounts in the blank in item 16aII, page 16-17. 7. Second, using the following guideline, figure your homestead exemption according to your present status. Enter the appropriate amount in the blank in item 22c, page 16-18. a. The single homeowner standard deduction (When more than 1 single homeowner appears on the property's title, each individual may file a separate $50,000 exemption.) 50,000

I.

$

000 c. over age 65.b. or over 55 (if low income) $100.000 $ . The married couple standard deduction 75. The standard deduction for homeowners who are disabled.

8. . . . . Total foreclosure costs (check with trustee) Total owed on 5th trust deed >$ . Holder of 2nd: name address phone c. . . . . 5th trust deed amount $ Total amount of delinquent payments/late charges $ $ $ . . $ . . Holder of 4th: name address phone e. . 4th trust deed amount $ Total amount of delinquent payments/late charges $ $ $ . Total foreclosure costs (check with trustee) Total owed on 2nd trust deed >$ . List the trust deeds you have against your property and person/company holding it: a. Total foreclosure costs (check with trustee) Total owed on 3rd trust deed >$ . . . Holder of 1st: name address phone b. Total foreclosure costs (check with trustee) Total owed on 1st trust deed >$ . Total foreclosure costs (check with trustee) Total owed on 4th trust deed >$ . 3rd trust deed amount $ Total amount of delinquent payments/late charges $ $ $ . 2nd trust deed amount $ Total amount of delinquent payments/late charges $ $ $ . 1st trust deed amount $ Total amount of delinquent payments/late charges $ $ . . . Holder of 3rd: name address phone d.

Page total: $ .Holder of 5th: name 9. 10. including past. address phone Property tax due. fines and penalties. $ . . current.

. . Holder: e. Holder: f. . Holder: c. . a. . . Holder: d. Holder: . List all liens and judgments against your property and the person/company holding it.11. $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone Holder: b.

12. Page total . $ .

Holder: e. Holder: 14. List the totals of all the encumbrances charged against your property. . . a. a. Holder: d. Total this page $ . . . $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone $ (description of lien/judgment) name address phone Holder: b.13. Holder: c. List all other expenses/encumbrances charged against your property. . .

The total encumbrances against your property $ . item 10 c. b. Total page 16-15. Total page 16-14. .. item 12 $ $ 15. .

19. Subtract the total charges (from item 18). Equals your total selling costs of: >$ . a. or II. previous page). $ $ . List the total costs of selling your house. 18. . page 16-25). $ 20. page 16-69). 17. 21.16. . . page 16-12. b. Add all the estimated or actual costs necessary to fix-up your property (see item 20d. Equals the total charges owed against your property's equity. The selling costs in item 6d. $ . List only 1 of the following (either I or II): I. $ c. . $ $ $ . Add the total amount of liens (from item 15. page 16-13. . $ . The selling costs in item 4cIB. Your property's appraised/fair market value (see item 9dI. The equity in your house . .

Enter your total equity (from item 21. . the proceeds from the loan should be turned over to the court to pay expenses. page 16-17 (Note that this figure contains the costs to fix up your property for sale. c.000 or 10% of your property's fair market value. b. . Subtract your homestead exemption according to your status (see item 7. I. III. on page 16-17. If this remaining amount is greater than $10. I. ask your tax preparer or bankruptcy attorney for advice on including it due to the fact that it will be a real cost of sales). -$ . on page 16-17. However. then you may want to get an additional loan on your property. the less chance the Chapter 7 bankruptcy court will sell your property. The new loan will further reduce the equity available to the court. Equals the reduced equity that is available to the chapter 7 bankruptcy court trustee. Before using it.$ d. (See Option Chapter 4 of The Action Plan beginning . item 16aI. The lower the reportable equity. page 16-13). item 16aII. Enter the amount of any new junior loan designed to reduce equity for the Chapter 7 bankruptcy court. Subtract the estimated cost of sales which ever is greater of the following 3: -$ . which may not be part of the formula allowed by the bankruptcy court. .$ II. item 16c. e. $ . .22. To make the legal deductions from your equity in order to minimize the appearance of equity in your property in Chapter 7 bankruptcy: a. previous page. $ .

$ . and page 6-8.on page 16-37.) -$ . . Deducting The Remaining Equity. Equals the final total of equity to report to the Chapter 7 bankruptcy court trustee. f.

23. With each attorney you interview. Use the following space to record those ideas. and especially with the attorney you hire. List the attorneys you contacted below. Interview at least 3 attorneys who specialize in bankruptcy. attorney phone a. attorney number Results Promised: Attorney's Fee(s) Quoted: Additional Costs Quoted: b. Interview as many attorneys as possible until you find someone you feel comfortable with. Be open and honest with the details of your affairs. if possible. Circle the letter of the attorney you decide to hire. or according to your credit counselor or financial planner. Look in your local Yellow Pages or newspapers. brainstorm ideas with which you may avoid filing bankruptcy. list any results from those actions. attorney phone number Results Promised: Attorney's Fee(s) Quoted: Additional Costs Quoted: 24. Then. IDEAS RESULTS . Give them your financial data as per the forms you filled out in Option chapter 1. if any exist. phone number Results Promised: Attorney's Fee(s) Quoted: Additional Costs Quoted: c.

.

as I. as I. GETTING STARTED 1.OPTION 3: HOW TO WIN BY CHANGING YOUR MORTGAGE TERMS THE GOAL OF THIS OPTION: Stop your foreclosure by negotiating a financially favorable change in the terms of your existing loan(s). 1st loan: lender phone loan # address $ . 5th loan: lender phone loan # address . as I. a. List the loan(s) on your property with which you are delinquent on the payments. 2nd loan: lender phone loan # address $ . 3rd loan: lender phone loan # address $ . Total in arrears including late charges of: b. Total in arrears including late charges of: d. Total in arrears including late charges of: c. 4th loan: lender phone loan # address $ . Total in arrears including late charges of: e. as I.

see The Write-It-Out Exercises on pages 16-1 and 16-2. and. Total in arrears including late charges of: A.. Go into detail. . Total in arrears including late charges of: f. To help prepare. that involves every income producing member of your household. 6th loan: lender phone loan # $ . Backtrack. etc. as address $ . write out the chain of events you feel led you into your current financial difficulties. Honestly and sincerely explain the events and circumstances which led you to fall behind in your loan payments. Do everything necessary to get the whole story out (see "clustering" on page 15-5). do not worry about creating a perfect document.I. complete The Four Steps to Financial Freedom and How To Set Up A Successful Budget on pages 5-2 through 5-6. as I. Total of all loan payments in arrears of: 2. The Write-It-Out Exercises: $ . such as sudden illness or job lay-off. In the following space (attach as many additional pages as necessary). as a. As you write. The important thing is to just let the story unfold as it naturally wants to unfold.

list all the possible ways you can think of to get out of this financial pinch.The Action Plan Workbook 33 b. or a desirable solution (see visualization. In the following space (attach as many additional pages as necessary). To help prepare. including your prospects for new. and. Make a list of ideas. Describe the job you would like to have as well as the income and savings. then dream up a probable. increased income. complete The Four Steps to Financial Freedom and How To Set Up A Successful Budget on pages 5-2 through 5-6. . If no realistic approach is immediately obvious to you. see The Write-It-Out Exercises on pages 16-1 and 16-2. page 15-3). solutions. alternatives and dreams.

Neighbors? YesNo . Describe why: 5. Label it page 16-25a. Workout #3: .34 How To Fight Foreclosure And Win With Honor 3. if necessary). b. and describe why (attach additional pages. then list the item in the following space: I. If yes. To find the current cycle of the real estate market (which will help clarify the position to take in your negotiations with your lender). Describe why: . 4. List the 3 most appealing/appropriate workouts for your situation from the Types of Workouts on pages 7-1 and 7-2. Does any loan against your property that is in foreclosure qualify you for any of the special workout assistance listed on page 7-3? Yes No a. Have you read and completed the 6 steps on How To Get Started On A Workout on pages 7-5 through 7-7? Yes No 8. a. Describe why you think it qualifies. Long-time/local neighborhood? real estate Yes No agents who sell in your I. What facts did you discover? Attach your research to this page. Workout #1: b. Have you read and followed The 5 Keys To Successful Workouts on page 7-4? YesNo 6. Describe why: . Workout #2: c. have you consulted with: a. Are you aware of the responsibilities of both the borrower and the lender/servicer as outlined on page 7-5? Yes No 7.

9. Label it page 16-25b.The Action Plan Workbook 35 I. Does your loan conform with government guidelines such as those required by FNMA. d. What facts did you discover? Attach your research to this page. $ . Services that provide real estate comparables (see box on page 7-7)? Yes No I. c. What facts did you discover? Attach your research to this page. e. Remaining flat? d. Label it page 16-25d. What facts did you discover? Attach your research to this page. GNMA AND FHLMC? (If unsure. is the property value trend in your neighborhood currently (circle 1): a. list the estimated current fair market value of your property. Going up? b. Professional real estate appraisers? Yes No I. Yes No . Label it page 16-25e. also. Label it page 16-25c. What facts did you discover? Attach your research to this page. Upon concluding your market survey. 10. then ask your lender/servicer.) I. Going down? c. County records analysis? Yes No I. Based on the above inquiry. see 7-11 and 7-12 for more on conforming loans). Other/additional: (NOTE: Please read page 8-3 for information on negotiating with lenders during the different real estate cycles.

If yes. Is your first loan from Cal-Vet? (If unsure. Have you received a phone representative? Yes No call from a Cal-Vet A. then call the loan servicer and ask for workout assistance. If yes. address and phone number. I. are you behind on the Cal-Vet loan payments? YesNo b. (1) List the name. address and phone number. If yes. see pages 7-12 through 7-16 for more on Cal-Vet loans. Write and call the lender directly to explain your situation and to ask for workout assistance. If yes. Also. describe the workout programs that the loan servicer offered to you.36 How To Fight Foreclosure And Win With Honor a. then ask your lender/servicer. 11. lender's name address phone number A. Have you received a phone call from a representative of Cal-Vet's main Sacramento office? YesNo III.) Yes No a. Have you received a letter from the Cal-Vet office in Sacramento? Yes No A. then describe the nature of the phone call and\or the details of any possible workout that was discussed. then ask for the lender's name. describe the workout programs that the lender offered to you. attach a copy of the letter to this page. In the following space. In the following space. list the lender's name. b. If you are 1 month behind on your payments: I. If the loan servicer is of little to no help. II. In the following space. address and telephone number of the CalVet agent you spoke with: .

If you have not been contacted by letter or phone. Have you received a Notice of Intent to Cancel from Cal-Vet? YesNo A. If you are 3 months. then contact Cal-Vet yourself by calling 800-952-5626. then attach a copy to this page. (1) List the name.The Action Plan Workbook (a) phone 37 agent address IV. or more. then attach a copy to this page. In both the phone call and the letter formally request workout assistance. behind in payments: I. II. ask for the address and follow up the phone call with a letter. If yes. Have you received a phone call and follow-up letter regarding the Notice of Intent to Cancel from a representative of Cal-Vet's local district office? YesNo A. address and telephone number of the CalVet agent you spoke with: (a) phone agent address d. Have you made the above phone call and sent the letter? Yes No (1) If yes. A. c. Has a representative from Cal-Vet's local district visited your home? YesNo A. then did the representative explain your options? Yes No . then describe the nature of the phone call and\or the details of any possible workout that was discussed. Also. or more. behind in your payments: I. If yes. If you are 2 months. If yes.

A. If yes. 12. See pages 7-16 and 7-17 for more on PMI. then do your finances show strong signs of recovery? Yes No I. (1) phone agent address . then have you received a final cancellation notice from Cal-Vet? Yes No I.38 How To Fight Foreclosure And Win With Honor (1) If yes. If yes. then describe those options in the following space. and if Cal-Vet has made all the above efforts. Was your loan covered by any form of private mortgage insurance (PMI)? (If unsure. behind in your payments. address and telephone number of the CalVet agent you spoke with: (a) phone agent address e. (2) List the name. or check your itemized payment records from the lender. then contact the private mortgage insurer and ask them to participate in a workout with your lender and to consider paying some or all of your delinquent payments. Below describe below who you spoke with and explain your agreement.)Yes No a. address and telephone number of the private mortgage insurance agent to whom you spoke. ask your lender/servicer. then describe below any final workout agreement with Cal-Vet that allowed you to save your property from foreclosure. or more. List the name. If yes. If you are 4 months. yet were unsuccessful in helping you workout your delinquency.

if any? (Get all agreements in writing. then notify HUD and ask your lender to send you the above letter and form.) 13. have you received HUD letter #1 along with form HUD92068F.) e. Also. Have you received HUD letter #2 requesting loan assignment to HUD? YesNo I. Is your first loan FHA insured? (If unsure. If yes. A. then attach a copy to this page and list below who contacted you from HUD.The Action Plan Workbook 39 (a) What are the terms of the workout. then ask your lender/servicer. Local HUD phone number: II. Call HUD for help in filling out the forms (see page 7-3 for the HUD phone numbers). Have you received HUD letter #3 against loan assignment to HUD? Yes No . If yes. Request for Financial Information as seen on pages 7-25 and 7-27? Yes No I. If yes. c. If no. Will the lender grant you a workout without HUD assistance? Yes No d. see pages 7-17 through 7-21 for more on FHA insured loans. What are the terms of the workout. if any? (Get all agreements in writing. phone agent date II. If yes.) Yes No a. are you behind on the FHA-insured loan payments? Yes No b. then fill out the forms (attaching a copy to this page) and return them to the appropriate return address.

then who were you in contact with from the DVA? A. If there have been no attempts toward a workout. lender/servicer name date phone A. phone name date B.) Yes No a.) II. If yes. Is your first loan DVA insured? (If unsure. then contact the lender/servicer by phone and by letter. Who did you contact at HUD? datephone III. What are the terms of the workout. have you or your lender/servicer attempted to negotiate a workout? YesNo I. If yes. if any? (Get all agreements in writing. if any. and request to begin negotiations on a workout immediately. Also. What are the terms of the workout. name II. then attach a copy to this page and apply directly to HUD for the assignment. see pages 7-21 through 7-24 for more on DVA-insured loans.) . (Get all agreements in writing. How To Fight Foreclosure And Win With Honor If yes. If yes. list which representative of your lender/servicer you were in contact with regarding a workout.) 14. What are the terms of the workout. if any? (Get all agreements in writing. agent B. Below. are you more than 2 months behind on the DVA insured loan payments? YesNo b. then ask your lender/servicer.40 I.

vocational and/or educational counseling? YesNo A. If no.) II. (Attach any letters from the DVA and copies of your letter to this page. then have you contacted the DVA in a letter or through 1 of the above telephone numbers and requested any counseling you feel is necessary for your situation? YesNo (1) If yes. c. List below who you were in contact with at the DVA. Have you received a standard. Has a DVA letter or representative offered you financial.The Action Plan Workbook 41 III. then have you contacted the DVA to request DVA's supplemental servicing? YesNo I. then have you contacted the DVA immediately by phone and by letter? (Either ask the lender/servicer for the address and telephone of the DVA. If no. or call the DVA directly at any of the telephone numbers listed on page 1125. If you and your lender/servicer were unable to arrive at a workable workout. then list below who you were in contact with at the DVA: .)Yes No A. then attach a copy to this page. If yes. computer-generated letter from the DVA urging you to negotiate a workout with your lender? Yes No A. (1) phone agent address date (a) Briefly describe the details of the phone call and\or the meeting with the DVA representative.

The reason for your non-payment? Yes No II.42 How To Fight Foreclosure And Win With Honor (a) phone representative address date (I) Briefly describe the details of the phone call and\or the meeting with the DVA representative.) e. (Attach any copies of your letters or letters from the DVA to this page. Your overall financial status? Yes No . d. The details of your employment situation? Yes No IV. A.) (II) If the DVA did offer you counseling. and did you provide: I. If yes. phone representative address date (1) Briefly describe the details of the phone call and\or the meeting with the DVA representative. (Attach any letters from the DVA and copies of your letter to this page. did you accept it? Yes No (A) If yes. Did the DVA representative ask you for. then attach a copy of the DVA offer to this page. then list below who you were in contact with at the DVA. The pertinent details of your domestic situation? YesNo III. Has a DVA loan service representative conducted a face-toface interview with you at the property in foreclosure? Yes No I.

then has DVA explained their refunding program to you? Yes No I.) B. If the DVA did accept you into the refunding program. II. Have you received a letter from the DVA notifying you of the lender's intention to foreclose on you? YesNo I. (1) phone representative address date . then list the representative who gave you the acceptance. then describe below their reason for denial (or attach their letter of denial). and thus must foreclose on you. Did the DVA accept you for their refunding program? YesNo A. (Attach any pertinent letters to this page. If no. If no. then ask the DVA for details on the refunding. list the representative who you spoke to: (1) phone representative address date (2) Please describe the reasons the DVA gave for refusing you into their refunding program. then attach a copy to this page. If the lender/servicer decides that they cannot. If no. then have you asked the DVA to consider you for their refunding program? YesNo A. h. grant you a workout.The Action Plan Workbook 43 f. Did the DVA representative accept a partial payment from you? YesNo I. If no. under any circumstance. g. If yes.

List the terms of the agreements in writing?) 1st loan: .44 How To Fight Foreclosure And Win With Honor (2) Please describe the details of the particular program the DVA gave in accepting you into their refunding program. and if you do not have private mortgage insurance. (Attach any pertinent letters to this page. List the name and address of the person who granted you a workout. and if the loan was not obtained through Cal-Vet.) 1st loan: number Yes 2nd loan: number Yes 3rd loan: number Yes 4th loan: number Yes 5th loan: number Yes No No No No No name name name name name workout you phone phone phone phone phone received.) 15. yet you want to get started on a workout. (Caution: you may need to explain workouts to most private party lenders as well as some lower level employees at many lending institutions. such as from clerk to manager to president. FHA or DVA. or who said it was not possible. With lending institutions. until you find someone willing to grant you a satisfactory workout program.) a. (See page 16-14 for delinquencies amounts. then contact the lender(s) with whom you are behind in the payments and ask them to grant you a workout. (Get all b. If your loan does not conform to government guidelines. use letters and\or phone calls to climb the chain of command.

__________________________________________________________________________ NOTES . List the total monthly payment of your current loans before any workout. $ . then: I. I. Equals your new total principal amount of: $ . Equals the new monthly payment of: $ b. $ . and $ . $ . II.The Action Plan Workbook 2nd loan: 45 3rd loan: 4th loan: 5th loan: 16. Add the new additional principal amount (to be paid off by ). a. . List the original principal amount here (to be paid off by ). III. Add the additional monthly payment created by the workout. If the workout increased the principal amount you owe.

NOTES 16-46 .

item 15) by the appraised/estimated fair market value (see page 16-25. A conventional first mortgage refinance No III. divide the total owed against your property (see page 16-16. If your LTV is less than 90%.The Action Plan Workbook 47 OPTION 4: HOW TO WIN BY REFINANCING THE GOAL OF THIS OPTION: Borrow on the equity in your house in order to stay current on your loan payments. An equity line of credit No Yes Yes Yes Yes Yes No II. Total owed $ . a. item 9dI). . GETTING STARTED 1. A second or third mortgage No IV. According to the results of this worksheet can you qualify for: I. I. then multiply the answer by 100 to determine your loan-to-value %. A loan from a friend or relative No . equals % loan-to value (LTV). a. A hard money loan V. 2. To determine if you may be able to qualify for refinancing. complete the worksheet on pages 16-38 through 16-39 for each of the different loan types. then chances do exist of receiving some sort of loan. divided by property value $ multiplied by 100. To determine if you can borrow against your property.

Have you received a NOD? No c.48 How To Fight Foreclosure And Win With Honor 3. Have you ever filed bankruptcy? No Rating Yes Yes . C or D)? Consult your credit report and page 8-11: Credit Date b. Determine your credit rating from your credit report by contacting a credit bureau. B. What is your credit rating? a. I. What is your credit rating (either A.

Make notes of the differences in each lender's requirements. Price and terms: I. if necessary. lender representative Qualify? number II. lender representative Qualify? number II.) a. Conventional first mortgage refinance: YesNo I. and list whether you can qualify. honest and sincere. Equity line of credit: Yes No lender number II. List the terms and prices of the best of each 3. (Attach additional pages.4. Price and terms: phone . Most lenders will ask you the questions necessary to prequalify you over the phone. representative Qualify? phone b. Contact up to 3 lenders in each of the following loan categories. Be open. A second or third mortgage: YesNo I. Price and terms: phone c.

broker I. lender representative Qualify? number II.d. A loan from a friend or relative: YesNo I. Prices and terms: phone . Price and terms: phone e. lender representative Qualify? number II. Price and terms: phone 5. A hard money loan: YesNo I. List below the brokers you contacted: a. Contact up to 3 mortgage brokers who will use your basic information to shop all categories of loans for the best loan for you.

Prices and terms: broker I. phone 6. I.b. List the total of the original principal amount. Prices and terms: broker I. . $ (A) Equals the new total principal amount of: . I. a. Add the new additional principal amount created by any new loan(s). Prices and terms: phone c. phone d. $ . $ $ . List the total monthly payment of your current loan(s). Equals the new monthly payment of: b. . broker I. $ . $ . Add any new loan monthly payment(s).

then describe below. The original loan documents: I. fraud or other irregularity? Yes No II. stop or dismiss the foreclosure when the lender has committed fraud or refuses to correct an error in your loan or foreclosure documents or procedures. Full principal amount of the loan No C. The original contract to purchase the property: I. Interest rate B. Were the amounts of the following items fully disclosed to you on your loan documents? Yes Yes Yes No A. b. Error Checklist. then describe below.OPTION 5: HOW TO WIN BY USING THE LEGAL SYSTEM THE GOAL OF THIS OPTION: File a lawsuit. as well as the servicing of those documents. fraud or other irregularity? Yes No II. to delay. The escrow papers and procedures to purchase the property: I. c. Are there any signs of error. or negotiate. If yes. for errors or fraud. Are there any signs of error. If yes. a. Total interest to be paid No . Review the following key documents. GETTING STARTED 1.

Did the lender use the correct accrual basis for calculating the daily interest amount? Yes No b. No J. Was the APR calculated properly (pages 9-8 and 9-9)? Yes No a. Did the lender use the correct margin amount? Yes No Yes No d. Did the lender use the correct loan balance when calculating the amount of interest due? No Yes Yes No .D. Did the lender use the correct effective date for any rate changes? f.Finance charges No E. No Health or accident insurance The annual percentage rate (APR) Yes Yes Yes Yes Yes No No Yes Yes 1. Did the lender calculate the correct number of days between two interest charge periods? Yes No c.Property insurance I. Service charges No F.Mortgage insurance H. Did the lender use the correct index value during the month? e. Loan fees No G.

Look for other errors or discrepancies Yes No Yes Yes Yes Yes No No No Yes Yes Yes No No No e.g.): A. Did the lender use the correct source for the index? Yes No d. If so. did the lender use the correct version? Yes No j. Document Number B. Did you compare for exact accuracy the details on your promissory note and trust deed to the details on every document the trustee mailed. Trustor (borrower) D. if so. Legal Description G. and item 2 on page 1-19): I. has been filed. Did the lender use the correct index type? Yes No h. Did the trustee record the Notice of Default in the . Your Notice of Default (see an example on page 1-31.Amount of Indebtedness H.Trustee (unless a Substitution of Trustee. check it too) Yes No E. page 1-30.Venue I. Your Promissory Note and Deed of Trust (see examples on pages 1-26 through 1-29): I. Beneficiary (lender) No F. Date of Execution C. advertised and posted during the foreclosure process? (See page 1-26 for explanations of each detail.

I. item 7): . then describe the incorrect procedures which caused you harm. if necessary. If no. did the agency follow the correct foreclosure procedures as outlined in the corresponding sections in the option chapter 3? Yes No I. In at least 1 public place in the city. A. Did the trustee post the Notice of Trustee's Sale for at least 20 days: II. II. If your foreclosing loan is through Cal-Vet. FHA or DVA.) h.office of the county recorder? Yes No Did the trustee mail a Notice of Default within 10 days of recordation to the homeowner/borrower? Yes No f. On the door or other conspicuous place on the property in foreclosure? No Yes g. and item 3 on page 1-19): Did the trustee wait until after 3 calendar months expired before proceeding with the trustee's sale? Yes No Did the trustee publish a Notice of Trustee's Sale once a week for 3 consecutive weeks over the 20 day period prior to the sale in a publication of general circulation in the county where the property is located? Yes No III. judicial district or county of sale? Yes No B. The conduct of the trustee at the sale (see page 1-20. Your Notice of Trustee's Sale (see an example on page 1-32. Did the trustee mail a registered/certified Notice of Trustee's Sale to the homeowner/borrower at least 20 days before the sale? Yes No IV.(Attach additional pages.

or any other party with a legal interest may still redeem the property? Yes No II. or postponed 1 time only for 24 hours. III. IV. After the sale.If so. did the trustee distribute any remaining proceeds to other lien claimants? Yes No VIII. did the trustee execute and deliver a Trustee's Deed to the buyer and endorse the fact of the foreclosure sale on the trust deed promissory note? Yes No Until the exact moment that the sale ends. VI. After the sale.I. did the trustee allow the property to be redeemed. any junior lienholder. did the trustee pay off the first trust deed upon completion of the foreclosure (if the sale price equals or exceeds the amount of defaulted debt plus costs and expenses of sale)? Yes No A. Did you review the time sequences within item 2 on VII. by the trustor. . Did the trustee conduct a public auction on a legal business day between 9 am and 5 pm at a public place in the county where the property is located? Yes No Was the property sold to the highest qualified bidder? Yes No Was the high bid paid in cash or cashier's check from a qualified lender as specified in the California Civil Code." which has been designated in the notice of sale as acceptable to the trustee? Yes No Did the trustee reject all inadequate bids? Yes No After conclusion of the sale. a "cash equivalent. did the trustee give the successful bidder a Trustee's Deed? Yes No i. or. V.

if necessary. address b. Are there signs of error. Consumer Loan Advocates (see page 9-9 for more on CLA)? Yes No attorney phone number Response: d. Yourself? Yes No attorney phone number Response: I. address c. fraud or irregularity with any other aspect of the property? Yes No I. A real estate broker (see page 9-2 for more on finding a broker)? Yes No attorney phone number Response: I. then describe below. List the names of who read and reviewed the documents and procedures listed above for your case? a. address I. address .) 2. An attorney (see page 9-3 for more on finding an attorney)? Yes No attorney phone number Response: I.pages 9-4 and 9-5 for additional error possibilities? Yes No j. If yes. (Attach additional pages.

address I. then summarize the main points of the conversation below. c. Did you make contact in person? No Yes I. then attach a copy to this page. address Yes Yes No Yes No 3. A friend? No attorney phone number Response: f. If yes. Did you present any errors/fraud to the parties responsible for the errors/fraud? No a. Did you make contact in a telephone conversation? Yes No Yes I. did you write a letter? Yes No I. Other? attorney phone number Response: g. If yes. then summarize the main points of the visit below. Other? attorney phone number Response: I. d. address I. b.e. If yes. If yes. Did the parties responsible for the errors/fraud .

No

respond with a letter?

Yes

I. If yes, attach a copy to this page. e. Did they respond in a telephone call? No Yes

I. If yes, then summarize the main points of the conversation below. f. Did they respond during a visit you made to them? I. If yes, then summarize the main points of the conversation below. 4. At any point, were the parties responsible for the errors/fraud willing to negotiate with you in order to avoid a lawsuit? Yes No a. If yes, were they willing to officially stop the foreclosure while negotiations took place? Yes No I. If yes, then list below the actions they took. 5. Were the parties responsible for the errors willing to cooperate in negotiating with you to stop the foreclosure? Yes No a. If no, then you may be able to obtain a preliminary injunction or temporary restraining order to stop the sale or to set aside an already completed sale. List below the main points concerning their lack of cooperation. b. Were there any extraordinary violations of your rights? Yes No I. If yes, then you may be able to obtain a preliminary injunction or temporary restraining order to stop the sale or

to set aside an already completed sale. Explain the details of the violation(s) below. c. If you are trying to sell your property and have a strong prospective buyer, or a buyer in an escrow that is scheduled to close after the date of the trustee's sale, then did your lender, upon notification of the buyer, agree to postpone the trustee's sale in order to allow the escrow to close? Yes No I. If no, then you may be able to obtain a preliminary injunction or temporary restraining order to stop the sale. If the sale has already occurred, then you may be able to have it set aside in order to complete the sale. If the trustee's sale caused a bonafide buyer to buy elsewhere and thus caused you harm, then you may be able to sue for damages. d. Has your lender been cooperative in your attempts to workout the default? Yes No I. If no, then you may be able to obtain a preliminary injunction or temporary restraining order to stop the sale, especially if your loan is FHA or DVA guaranteed. Describe the details of your lender's lack of cooperation. 6. Did you attempt to avoid a lawsuit and negotiate an alternative with the lender? Yes No a. Did you request that the foreclosure be stopped and that no new action be taken? Yes No b. Did you request that the foreclosure be delayed, suspended or restarted from the beginning? Yes No c. Did you ask an attorney to negotiate your case? Yes No I. If yes, list the attorney's name and telephone number below.

Telephone

Name

d. Did you threaten to file a lawsuit? Yes No e. Did you actually file a lawsuit? No 7. Do you have the basis for a lawsuit, preliminary injunction or temporary restraining order? Yes No a. If yes, then do you plan to proceed with the lawsuit by yourself? Yes No I. Do you plan to hire an attorney? Yes No b. Do you have the basis for starting or joining a class action lawsuit? No Yes Yes

c. Which model lawsuit(s) seems most applicable to your case (see page 9-15)? 1 3 4 5 d. Did you file a motion for a preliminary injunction? Yes No I. If yes, then attach a copy of the motion to this page. II. Did you have to post a bond? No A. If yes, then attach a copy to this page. e. Did you file a motion for a temporary restraining order? Yes No I. If yes, then attach a copy of the motion to this page. II. Did you have to post a bond? No A. If yes, then attach a copy to this page. Yes Yes

2

f. Did you file a lis pendens to give the world and any prospective buyer notice that legal action is pending on your property? Yes No I. If yes, then attach a copy of the motion to this page.

g. If your property has already been sold in a trustee's sale, do you have the basis to have the sale voided, or set aside by the courts? No I.

Yes

If yes, then did you file a motion to set aside the sale? Yes No

II. If yes, then attach a copy of the motion to this page. III. Did you have to post a bond? No A. If yes, then attach a copy to this page. 8. Contact at least 3 attorneys, if possible. Look in your local Yellow Pages or newspapers (see page 9-3 for more on finding an attorney). Interview as many attorneys as possible until you find someone you feel comfortable with. List the attorneys you contacted below and what they promised you. (Circle the one you decided to hire.) a. attorney phone number Response: b. attorney phone number Response: c. attorney phone number Response: address Yes

address

address

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NOTES

OPTION 6: HOW TO WIN IF YOU ARE IN THE MILITARY THE GOAL OF THIS OPTION: Find relief from foreclosure if you, or a family member who has a legal share in your house, are in the United States armed forces. GETTING STARTED 1. Were you, or a co-owner of a property in foreclosure, in the American military service when you received a Notice of Default? Yes No a. Did you, or a co-owner of a property in foreclosure, fall behind on your loan payments as a result of serving in the American military service? Yes No I. Did you or a co-owner of a property in foreclosure, fall behind on your loan payments as a result of being called to active duty? Yes No b. Was your property sold at a foreclosure trustee's sale while you were away on active duty? YesNo 2. If you answered yes to any of the questions above, then immediately report to the appropriate attorney or legal counsel for your base or post and ask about your rights under SSCRA. Ask your commanding officer about the base's legal services, if necessary. a. Who was the base legal counsel or attorney you spoke to regarding your case? attorney/legal counsel phone number I. address

A. What was the suggested legal action? B. What was the legal action taken?

3. If you had to use an attorney outside the base legal services, then list the attorney(s) you consulted, the advice given and the action taken? a. attorney/legal counsel phone number address

I. What was the legal action suggested? II. What was the legal action taken? 4. Have you sent the letters and affidavit on pages 10-4 through 10-6? YesNo a. If no, then send them out immediately, but only if they are important to your case as determined by legal counsel.

OPTION 7: HOW TO WIN BY SELLING YOUR PROPERTY THE GOAL OF THIS OPTION: When your income cannot recover enough to afford your present loan payments, sell your house while seeking the best possible deal. Repurchase in a more affordable area, or just pocket the proceeds and rent. GETTING STARTED 1. How much equity do you have to work with (see page 16-17, item 21)? (Note: The actual sales commission figure can be substantially reduced from the projected commissions in 4cIB, page 16-12, by negotiating a lower broker's sales commission, and brought even lower by selling your property yourself.) $ . a. Subtract any additional sales costs, including any costs to fix-up the property listed on page 16-69. -$ .

I. Equals your maximum equity potential of: $ . II. Compare this to your minimum equity potential, item 3aIA, page 16-58. -$ . $ A. Equals your margin of equity potential of: .

b. Does this leave enough equity to purchase another property? Yes No I. If no, is there enough money remaining to make selling worthwhile? Yes No A. If no, then consider another option, such as Option 3, How To Win By Changing Your Mortgage Terms, if your financial problem is temporary, or Option 8, How To Win By Giving Away Your Property, if no other option is feasible. II. If yes to question b, then what are the new locations you would consider possible? A. Locally, in a down-sized and\or more affordable property? Yes No B. In a more affordable area inside California (see list, page 11-29)? Yes No C. In a more affordable area outside California (see list, page 11-30)? YesNo (1). If yes to any of the preceding 3 questions, then contact real estate agents in each area of interest. (Check your local library for Yellow Pages elsewhere; look under "real estate.") List the properties of interest and compare the benefits on page 16-68. 2. To determine your property's potential "asking price," list your property's appraised/fair market value (see item 9dI, page 16-25). $ . a. In a flat or depreciating market, multiply the amount above in item 2 by 95% to 99%. List the answer below in item 2aII. x %

I. In an active or appreciating market, multiply the amount above in item 2 by 101% to 110%. List the answer below in item 2aII. x % II. Answer to item 2a or 2aI which equals your suggested "asking price" and base for beginning negotiations: $ . 3. Establish the lowest price and the least desirable terms you would be willing to accept from a buyer before you would consider selling not worth while. (This information is for your use only. Do not give these figures to anyone else, except possibly your real estate broker/agent, at your own discretion.) a. List the lowest price you would be willing to accept from a buyer. $ . I. Subtract the total charges against your equity from page 16-17, item 18. A. Equals your minimum equity potential of: (Compare this to item 1aI, page 16-57). - $

.

.

$

b. List the least desirable terms you would be willing to accept from a buyer (includes down payment size, terms of any seller carrybacks or AITDs, or any concessions.) Add additional pages, if necessary.

4. Once you have made the decision to sell your house, you have at least 3 options available. (Check the item by which you feel most comfortable selling now; circle the item you ended up using to sell your property.) a. List your house with a real estate broker/agent under an Exclusive Right To Sell Listing, only (which guarantees a broker/agent commission under most circumstances). b. Sell it yourself "for sale by owner (FISBO)," only.

c. List your house with a real estate broker/agent under an Exclusive Agency Listing (which allows you to sell FISBO, as well as with the aid of a broker/agent). 5. Did you write any special provisions into the listing contract? Yes No 6. Whether you sell your property or a broker does, the following list is your basic range of potential home purchase contracts. (Check the item[s] you tried in negotiations with various potential buyers. Circle the item which ended up selling your property). Are you familiar with the details and benefits of the following home purchase contracts (see pages 11-10 through 11-23)? a. A regular retail buyer. No b. A party to lease-option. No I. Traditional lease-option. No II. Straight lease-option. No c. A buyer aided by seller financing. Yes No I. Seller carryback. No II. An all-inclusive trust deed (A.I.T.D.). No d. A sale/lease-back. No e. Partner (equity sharing) No f. An equity purchaser (foreclosure investor). Yes No g. A mortgage insurance-assisted foreclosure presale. Yes No Yes Yes Yes Yes Yes Yes Yes Yes

h. An assumption/transfer of liability. Yes No i. A lender short pay. No Yes

6. If you decide to sell FISBO, then make your own sales flyer (see pages 11-9 and 11-41). 7. If you have been approached by any equity purchasers, did they comply with the appropriate HESCA contractual and/or other requirements (see pages 11-20 through 11-23, and the HESCA section on page 19-1)? Yes No 8. Do you have mortgage insurance through: a. A private mortgage insurance company? Yes No b. The DVA? Yes No I. If yes, then have you contacted them by phone and by letter to request presale assistance (see Mortgage Insurance Assisted Foreclosure Presale, pages 11-23 through 11-25)? YesNo II. If yes, then list the agent you contacted. A. phone agent date

(1) Attach a copy of your letter to this page as well as their response letter, and describe below any additional information that was discussed on the phone or elsewhere: 9. Did you fill out a copy of the disclosure forms on pages 11-31 through 11-37? YesNo

Circle the item letter of the agent you decided to work with. (See How To Find A Good Agent. then fill them out now. Once you begin to receive offers to buy your house. phone Response: agent address address 11. (Terms include down payment size. along with the potential buyer's name and address.) Compare each offer on an apples for apples basis. Make photocopies if more pages are necessary. Look for real estate signs around your neighborhood. or who made a written offer to purchase your property? YesNo I.a. 10. then be sure to give a copy to anyone who asks for the disclosure. or to anyone who makes a formal written offer to purchase your property. terms of any seller carrybacks or AITDs. agent address phone Response: b. compare each offer to your bottom line figures in item 3a and 3b. Look in your local Yellow Pages or newspapers. b. if you want. List the agencies you contacted. Also. If no.) a. agent phone Response: c. page 16-59) with each offer. then contact at least 3 broker/agents who specialize in your neighborhood. interview as many agent/brokers as necessary to find someone you feel comfortable with. Designate the type of home purchase contract (see item 5. In fact. If you decide to use a real estate broker/agent. keep track of each offer by listing the price and terms. . If no. Did you give a copy of the disclosure forms to every prospective buyer who either asked for them. page 16-58. page 11-7. and any concessions. List the prospective buyers to whom you gave a copy of the disclosure.

if any: Price: $ . Terms: I. Price: $ . if any: Price: $ . Terms: d.a. Your counter-offer. Price: $ . Your counter-offer. Terms: c. Terms: I. Your counter-offer. Terms: I. Terms: b. if any: Price: $ . Price: $ . Terms: I. Your counter-offer. if any: Price: $ . Price: $ . Terms: .

if any: Price: $ . Your counter-offer. Price: $ . Terms: 12. then did the buyer qualify with the existing lender? YesNo 13. Price: $ . a.e. Terms: Comments: . Price: $ . Terms: 14. List the price and terms of the offer you accepted and put into escrow. a. If yes. Price: $ . then (make sure they are worded as back-up offers) list them below. Does your buyer want to assume your existing loan in such a way as to release you from all liability on the loan? YesNo a. Terms: Comments: b. If other offers are presented to you after you have accepted an offer and opened an escrow on a previous offer. Terms: I.

E. What are the payments. (1) The payments are interest only.c. What is the term of the loan (months/years)? D. A. Yes No (4) The payment is a single lump sum at the end of the term. Did you draw up and define the agreement in a promissory note and deed of trust? YesNo I. YesNo (2) The payments are principal only. YesNo . Price: $ . Terms: Comments: 15. if any (per month/year/one-time)? $ .How much is due at the end of the term? $ $ . What is the total principal amount? B. a. YesNo (3) The payments are both principal and interest. If you are asked to carry back financing (see pages 11-13 through 11-16) to help make the sale. If yes: . What is the interest rate? % C. then the following checklist should help remind you of the important points to consider.

a Request for Notice of Default? YesNo II. If yes. Upon finding a buyer. List the name and phone number of the escrow company you decided to work Poor Average . all parties to the deal should meet at the escrow office.II. Have you run a credit check on the applicant borrower's social security number? YesNo I. Have you filed with the county recorder: I. what are the terms? 3. what are the terms? b. If yes. Have you thought through the tax aspects of carrying a note? Yes No I. Ideally.If yes. Provisions for a grace period? YesNo A. if any? d. is the credit (circle 1): Good (1) What are the considerations.If yes. Prepayment penalties? Yes No A.If yes. what are the terms? 2. Did you include: 1. a Request for Notice of Delinquency? Yes No e. Notes: 16. Provisions for late charges? Yes No A. what are the considerations? c. open an escrow.

Did all parties to the deal meet together to open the escrow? Yes No address d. Notes: 17. How many days did you set for the escrow to close? days b.) escrow company phone Comments: a.with. Vesting? YesNo III. Did you review for errors the various components of the deal? I. Addendums? Yes No II. Did the escrow officer distribute a preliminary title report within 5 days? Yes No f. a. Beneficiary statements? YesNo V. The preliminary settlement statement? YesNo g. Begin looking for a new place to live. (Attach a copy of the original escrow instructions and final settlement statement. Did you buy a property in a more affordable area . How many days did it actually take for the escrow to close? days c. Loan payoff demands? YesNo IV. Did you make immediate signing of the escrow instructions a contingency of the deal? YesNo e.

list your total monthly rent? $ . What is the address of the property you bought in a more affordable area? address town state II. item 1bII. Can you live with a friend or family member for a while rent free? Yes No A. C. III. Total new monthly payment. If yes. then list the price and total new monthly payment. A. and page 16-68)? YesNo I. B.(see page 16-57. $ . what is the address of the house/apartment/room you rented? address town state (1) Can you work off the rent instead of paying cash? Yes No (2) If no. If no. then do you want to rent for a while? YesNo A. If yes. Price. $ . what is the friend/family member's name and address? (1) relationship (2) state name address town (a) Do you have to do any work in-lieu-of the rent? YesNo . If yes.

Notes: b. Notes: g. Notes: .) Or ask the real estate broker/agent in each area to send. Notes: d. Use this page to evaluate each property by comparing the price to the lot size and the square footage of living space (attach additional photocopies. Notes: f. mail or fax to you any Fact Sheets or Property Profiles detailing each of the properties that interest you. if necessary.Notes: 19. Notes: e. Notes: i. Notes: c. Notes: h. LOT SIZE LIVING SPACE PRICE AREA/ADDRESS AGENT/PHONE a.

Curb appeal I. Paint III. . $ $ $ $ . . Driveway cleaning B. . stained or aged window coverings which do not make a room look good. B. Remaining landscape A. $ . Paint where necessary B. . Miscellaneous II. . . . . Street side landscape A. Flooring (1) Shampoo carpets (2) Mop and polish floors (3) Miscellaneous C. . Paint where necessary . List all the estimated or actual costs necessary to fix-up the property for sale. Miscellaneous III. $ $ $ $ $ $ .20. Major repairs $ $ $ $ $ $ $ . Miscellaneous b. Window covering (1) Remove any shabby. . $ . Cosmetic repairs I. $ . Miscellaneous IV. Remaining exterior face of house A. Accents F. . Flowers D.Miscellaneous II. (2) Miscellaneous D. . Interior of house A. Street side face of house A. Miscellaneous c. Shrubs C. a. . $ . . Lawn B.Trees E.

Roof Plumbing Electrical Flooring replacement $ $ $ $ $ . . Total of all the estimated or actual fix-up costs . . Fumigation/termite damage repair $ $ .. $ VII. IV. V. Driveway replacement VI. . II.Miscellaneous d. . III. I. .

NOTES 16-80 .

To determine if there is no equity. If your answer is "no" to item 1b and 1bI on page 16-57. Attach a copy of your letter to this page. in your property.The Action Plan Workbook 81 OPTION 8: HOW TO WIN BY GIVING AWAY YOUR PROPERTY THE GOAL OF THIS OPTION: When no equity exists. then contact the corresponding agency with both a letter and phone call(s) and express your interest in negotiating a deed-in-lieu of foreclosure. Date letter was sent: B. 2. GETTING STARTED 1. Contact your lender and negotiate as many free months rent as possible in trade for a deed-in-lieu of foreclosure: I. phone lender . Yes No c. then: a. Address letter was sent to: C. If yes to either (a) or (b) above. as well as the agency's response letter. List the phone call(s) and representative(s) to whom you spoke. and the date. complete item 1a and 1b on page 16-57. give the property away while striving to save your credit rating and negotiating for the best interim deal for yourself. A. or not enough equity. Is your loan insured or guaranteed by DVA? Yes No I. Is your loan insured or guaranteed by FHA? b.

Terms of the offer: c. date newspaper II. Place an ad in your local newspaper looking for someone to take over the existing loans and obligations on your property. list the terms you accepted. a. If you found someone willing to take over the existing loans and obligations on your property. including all back payments and foreclosure costs. b & c above. a. Write or paste your ad below. phone I. After analyzing and comparing the lender's terms in item 2cII page 16-72 alongside the various buyer's terms in items 3a. 3.82 How To Fight Foreclosure And Win With Honor II. phone name Terms of the offer: name II. including all back payments and foreclosure costs. name Terms of the offer: 4. then list (or attach copies of) the terms of the 3 best offers you received. . List the newspaper and date your ad ran: I. See page 12-2 for an example of such an ad. Terms being negotiated: d. phone I. b.

any legal aid service used and the filing date.The Action Plan Workbook name 83 phone I. File this Deed-in-Lieu with the recorder's office in the county where the property is located. If no favorable terms are available from the lender. and if no one is found to take over the existing loans and obligations on your property. (Look in the Yellow Pages under "legal aid services.") If you file a Deedin-Lieu. File it yourself or hire a service to file for you. list the lender's name on the deed. then forfeit the property (the lender's collateral for the loan) by filing a Deed-in-Lieu of Foreclosure in the lender's name (consult your attorney first). the county recorder's office where filed. including all back payments and foreclosure costs. Terms of the agreement: 5. lender county service date .

Deposit in court 2924k Priority of order of distribution of proceeds. less than two. Exercise of power of sale 2924. Transfer as security deemed mortgage or pledge. a lender who exercises non-judicial foreclosures power of sale is subject to the following Civil Code Section. Postponement. Where. made only as a security for the performance of another act. Limitation on costs and expenses. is to be deemed a mortgage. Declaration of unresolved claims. of a like estate to secure the performance of an obligation.7 Enforcement of acceleration of maturity date of principal and interest or disbursement of proceeds of property insurance by beneficiary. 1917. Prohibition against kickbacks 2924e Junior mortgagee's request to senior lienor for notice of delinquencies. Attorney fees 2924d Right to reimbursement for costs and expenses of enforcement. except when in the case of personal property it is accompanied by actual change of possession. Notice of default. Trustee's costs and expenses 29241/2 [Section repealed] § 2924.5 Recitation of acceleration clause in instruments encumbering small residential properties 2924. publication.3 Notice by agent collecting payments from obligor 2924. Liability for failure to give notice 2924f Notice of sale. Contents. Bids prior to sale 2924g Time and place of sale. by a mortgage created after July 27. Exercise of power of sale Every transfer of an interest in property. of any estate in real property.POWER OF SALE The following California law is fairly self-explanatory. Basically. 1917.6 Limitations on acceleration 2924. and recording. Place of sale. or in any transfer in trust made after July 27. 17-1 . Trustee's or attorney's fees. Posting. other than in trust. in which case it is to be deemed a pledge. trustee. or agent 2924a Conduct of sale by attorney for trustee 2924b Request for notice of default and sale 2924cCuring default. Penalties 2924i Notice regarding final payment on balloon payment loan 2924j Trustee's notice of conflicting claims to proceeds of sale under power of sale. other than an estate at will or for years. mortgagee. Conduct of sale 2924h Bidding. Section § 2924 § § § § § § § § § § § § § § § § Transfer as security deemed mortgage or pledge.

a notice of default. and where the default is curable pursuant to Section 2924c. the failure to include an actually known default shall not invalidate the notice of sale and the beneficiary shall not be precluded from asserting a claim to this omitted default or defaults in a separate notice of default. identifying the mortgage or deed of trust by stating the name or names of the trustor or trustors and giving the book and page where the same is recorded or a description of the mortgaged or trust property and containing a statement that a breach of the obligation for which the mortgage or transfer in trust is security has occurred. beneficiary. in the manner and for a time not less than that set forth in Section 2924f. Notice by agent collecting payments from obligor (a) Except as provided in subdivisions (b) and (c). to be exercised after a breach of the obligation for which that mortgage or transfer is a security. trustee or other person authorized to take the sale shall give notice of sale. or to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations. A recital in the deed executed pursuant to the power of sale of compliance with all requirements of law regarding the mailing of copies of notices or the publication of a copy of the notice of default or the personal delivery of the copy of the notice of default or the posting of copies of the notice of sale or the publication of a copy thereof shall constitute prima facie evidence of compliance with these requirements and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value and without notice. to make collections of payments from an obligor under the note. judgment. § 2924. shall first file for record. until (a) the trustee. and (c) after the lapse of the three months the mortgagee. a person who has undertaken as an agent of a mortgagee. or any other person. postage prepaid. or owner of a promissory note secured directly or collaterally by a mortgage or deed of trust on real property or an estate for years therein. or decree of a court of record. or is made by a public utility subject to the provisions of the Public Utilities Act. (b) not less than three months shall thereafter elapse. However. the power shall not be exercised except where the mortgage or transfer is made pursuant to an order. trustee. containing the statement specified in paragraph (1) of subdivision (b) of Section 2924c. stating the time and place thereof.a power of sale is conferred upon the mortgagee. shall mail the following notices. (2) Notice that a notice of default has been recorded pursuant to Section 2924 on account of a breach of an obligation secured by a mortgage or deed of trust against the same property or estate for years therein having priority 17-2 . within 15 days after recordation. and setting forth the nature of each breach actually known to the beneficiary and of his or her election to sell or cause to be sold the property to satisfy that obligation and any other obligation secured by the deed of trust or mortgage which is in default. in the office of the recorder of each county wherein the mortgaged or trust property or some part or parcel thereof is situated. beneficiary or owner for whom the agent has agreed to make collections from the obligor under the note: (1) A copy of the notice of default filed in the office of the county recorder pursuant to Section 2924 on account of a breach of obligation under the promissory note on which the agent has agreed to make collections of payments. mortgagee.3. to each mortgagee. There is a rebuttable presumption that the beneficiary actually knew of all unpaid loan payments on the obligation owed to the beneficiary and secured by the deed of trust or mortgage subject to the notice of default. or beneficiary.

whichever is later. or owner described in Section 2924b is the current business or residence address of that person. assignment or other transfer of the property subject to the deed of trust or mortgage shall be valid unless the clause is set forth. (b) An agent who has undertaken to make collections on behalf of mortgagees. beneficiary or owner who is entitled to receive notice pursuant to subdivision (3) of Section 2924b or for whom a request for notice has been recorded pursuant to subdivision (2) of Section 2924b if the agent reasonably believes that the address of the mortgagee. mortgages. alienation. lease. conveyance. whichever is later.6. Recitation of acceleration clause in instruments encumbering small residential properties No clause in any deed of trust or mortgage on property containing four or fewer residential units or on which four or fewer residential units are to be constructed or in any obligation secured by any deed of trust or mortgage on property containing four or fewer residential units or on which four or fewer residential units are to be constructed that provides for the acceleration of the due date of the obligation upon the sale. in its entirety in both the body of the deed of trust or mortgage and the promissory note or other document evidencing the secured obligation. beneficiaries or owners of promissory notes secured by mortgages or deeds of trust on real property or an estate for years therein shall not be required to comply with the provisions of subdivision (a) with respect to a mortgagee. succession. (3) Notice of the time and place scheduled for the sale of the real property or estate for years therein pursuant to Section 2924f under a power of sale in a mortgage or deed of trust securing an obligation described in paragraphs (1) or (2). 1972. (d) Any failure to comply with the provisions of this section shall not affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value and without notice. beneficiary. beneficiaries or owners of promissory notes secured by mortgages or deeds of trust on real property or an estate for years therein shall not be required to comply with the provisions of paragraph (1) or (2) of subdivision (a) if the agent knows or reasonably believes that the default has already been cured by or on behalf of the obligor. within 15 days after recordation or within three business days after the agent receives the information. not less than 15 days before the scheduled date of the sale or not later than the next business day after the agent receives the information. (c) An agent who has undertaken to make collections on behalf of mortgagees. § 2924.over the mortgage or deed of trust securing the obligation described in paragraph (1). This section shall apply to all such deeds of trust. and obligations secured thereby executed on or after July 1.5. § 2924. Limitations on acceleration (a) An obligee may not accelerate the maturity date of the principal and accrued interest on any loan secured by a mortgage or deed of trust on residential real property solely by reason of any one or more of the following transfers in the title to the real property: 17-3 .

insurance premiums.7. (b) The provisions of any deed of trust or mortgage on real property which authorize any beneficiary. mortgagee. or his or her agent or successor in interest. (d) This act applies only to loans executed or refinanced on or after January 1. to receive and control the disbursement of the proceeds of any policy of fire. or his or her agent or successor in interest shall be enforceable whether or not impairment of the security interest in the property has resulted from the failure of the trustor or mortgagor to pay the taxes. "residential real property" means any real property which contains at least one but not more than four housing units. any taxes. assessments. rents. § 2924. § 2924a. mortgagee. or his or her agent or successor in interest. (5) Such real property or any portion thereof is made subject to a junior encumbrance or lien. (2) A transfer by an obligor where the spouse becomes a coowner of the property. 1976. trustee. Enforcement of acceleration of maturity date of principal and interest or disbursement of proceeds of property insurance by beneficiary. (3) A transfer resulting from a decree of dissolution of the marriage or legal separation or from a property settlement agreement incidental to such a decree which requires the obligor to continue to make the loan payments by which a spouse who is an obligor becomes the sole owner of the property. flood. to accelerate the maturity date of the principal and interest on any loan secured thereby or to exercise any power of sale or other remedy contained therein upon the failure of the trustor or mortgagor to pay. assessments.(1) A transfer resulting from the death of an obligor where the transfer is to the spouse who is also an obligor. or agent (a) The provisions of any deed of trust or mortgage on real property which authorize any beneficiary. at the times provided for under the terms of the deed of trust or mortgage. mortgagee. rents. Conduct of sale by attorney for trustee 17-4 . or any advances made by the beneficiary. or advances. mortgagee. trustee. or insurance premiums with respect to the property or the loan. or other hazard insurance respecting the property shall be enforceable whether or not impairment of the security interest in the property has resulted from the event that caused the proceeds of the insurance policy to become payable. (c) For the purposes of this section. (4) A transfer by an obligor or obligors into an inter vivos trust in which the obligor or obligors are beneficiaries. trustee. (b) Any waiver of the provisions of this section by an obligor is void and unenforceable and is contrary to public policy.

(b) The mortgagee. and the book and page where the deed of trust or mortgage is recorded or the recorder's number . Signature " Upon the filing for record of the request. a duly acknowledged request for a copy of the notice of default and of sale. 17-5 . the attorney for such trustee may conduct the sale act in such sale as the auctioneer for the trustee. cause to be filed for record in the office of the recorder of any county in which any part or parcel of the real property is situated. as to which deed of trust or mortgage the power of sale cannot be exercised until these notices are given for the time and in the manner provided in Section 2924 may. is named as beneficiary (or mortgagee) and as trustee be mailed to at Name Address NOTICE: A copy of any notice of default and of any notice of sale will be sent only to the address contained in this recorded request. specifying the name and address of the person to whom the notice is to be mailed. the date of recordation thereof . addressed to each person whose name and address are set forth in a duly recorded request therefor. deposit or cause to be deposited in the United States mail an envelope. § 2924b. shall identify the deed of trust or mortgage by stating the names of the parties thereto. executed by as trustor (or mortgagor) in which . 19 .Where by the terms of any trust or deed of trust a power of sale is conferred upon the trustee. the recorder shall index in the general index of grantors the names of the trustors (or mortgagor) recited therein and the names of persons requesting copies. sent by registered or certified mail with postage prepaid. Civil Code. County) California. directed to the address designated in the request and to each trustor or mortgagor at his or her last known address if different than the address specified in the deed of trust or mortgage with power of sale. This request shall be signed and acknowledged by the person making the request. containing a copy of the notice with the recording date shown thereon. If you address changes. or other person authorized to record the notice of default shall do each of the following: (1) Within 10 business days following recordation of the notice of default. a new request must be recorded. and shall be in substantially the following form: In accordance with Section 2924b. Request for notice of default and sale (a) Any person desiring a copy of any notice of default and of any notice of sale under any deed of trust or mortgage with power of sale upon real property or an estate for years therein. request is hereby made that a copy of any notice of default and a copy of any notice of sale under the deed of trust (or mortgage) recorded . trustee. (or filed for record with recorder's serial number . in Book page records of County. at any time subsequent to recordation of the deed of trust or mortgage and prior to recordation of notice of default thereunder.

(C) The assignee of any interest of the beneficiary or mortgagee described in subparagraph (B). of the estate or interest or any portion thereof of the trustor or mortgagor of the deed of trust or mortgage being foreclosed. of the estate or interest being foreclosed which is recorded subsequent to the deed of trust or mortgage being foreclosed. addressed to each person whose name and address are set forth in a duly recorded request therefor. and provided the instrument is recorded in the office of the county recorder so as to impart that constructive notice prior to the recording date of the notice of default and provided the instrument as so recorded sets forth a mailing address which the county recorder shall use. containing a copy of the notice with the recording date shown thereon. provided that the estate or interest of any person entitled to receive notice under this subdivision is acquired by an instrument sufficient to impart constructive notice of the estate or interest in the land or portion thereof which is subject to the deed of trust or mortgage being foreclosed. as of the recording date of the notice of default. beneficiary. trustee. containing a copy of the notice of the time and place of sale. (D) The vendee of any contract of sale. (3) As used in paragraphs (1) and (2). The beneficiary shall inform the trustee of the trustor's last address actually known by the beneficiary.(2) At least 20 days before the date of sale. (B) The beneficiary or mortgagee of any deed of trust or mortgage recorded subsequent to the deed of trust or mortgage being foreclosed. as of the recording date of the notice of default. addressed to each person set forth in paragraph (2). or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject 17-6 . as instructed within the instrument. the trustee shall incur no liability for failing to send any notice to the last address unless the trustee has actual knowledge of it. and which address shall be the address used for the purposes of mailing notices herein. trustee. deposit or cause to be deposited in the United States mail an envelope. or other person authorized to record the notice of default shall do the following: (1) Within one month following recordation of the notice of default. the "last known address" of each trustor or mortgagor means the last business or residence address actually known by the mortgagee. or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or a recorded statement of subordination to the deed of trust or mortgage being foreclosed. (2) The persons to whom notice shall be mailed under this subdivision are: (A) The successor in interest. sent by registered or certified mail with postage prepaid. or the lessee of any lease. for the return of the instrument after recording. (c) The mortgagee. However. deposit or cause to be deposited in the United States mail an envelope. sent by registered or certified mail with postage prepaid. directed to the address designated in the request and to each trustor or mortgagor at his or her last known address if different than the address specified in the deed of trust or mortgage with power of sale. or other person authorized to record the notice of default.

California. (d) Any deed of trust or mortgage with power of sale hereafter executed upon real property or an estate for years therein may contain a request that a copy of any notice of default and a copy of any notice of sale thereunder shall be mailed to any person or party thereto at the address of the person given therein. California. an envelope. as of the recording date of the notice of default. containing a copy of the notice of the time and place of sale addressed to each person to whom a copy of the notice of default is to be mailed as provided in paragraphs (1) and (2). sent by registered or certified mail with postage prepaid. where. or employee. a copy of the notice of default may be delivered personally to the trustor or mortgagor within the 10 business days or at any time before publication is completed. or by posting the notice of default in a conspicuous place on the property and mailing to the last known address of the trustor. If any deed of trust or mortgage with power of sale executed after September 19. (4) The mailing of notices in the manner set forth in paragraph (1) shall not impose upon any licensed attorney. as of the recording date of the notice of default.to a recorded agreement or statement of subordination to the deed of trust or mortgage being foreclosed. 1939. Sacramento. (3) At least 20 days before the date of sale. (F) The Office of the Controller. a "Notice of Lien for Postponed Property Taxes" has been recorded against the real property to which the notice of default applies. agent. and a copy of any notice of default and of any notice of sale shall be mailed to each of these at the same time and in the same manner required as though a separate request therefor had been filed by each of these persons as herein authorized. (E) The successor in interest to the vendee or lessee described in subparagraph (D). (e) Any person required to mail a copy of a notice of default or notice of sale to each trustor or mortgagor pursuant to subdivision (b) or (c) by registered or certified mail shall simultaneously cause to be deposited in the United States mail. or employee of any person entitled to receive notices as herein set forth any duty to communicate the notice to the entitled person from the fact that the mailing address used by the county recorder is the address of the attorney. agent. which has recorded a notice of tax lien prior to the recording date of the notice of default against the real property to which the notice of default applies. In lieu of publication. Sacramento. a copy of the notice of default shall be published once a week for at least four weeks in a newspaper of general circulation in the county in which the property is situated. except a deed of trust or mortgage of any of the classes excepted from the provisions of Section 2924 does not contain a request of the trustor or mortgagor for special notice at the address of the person given therein or does contain such a request but no address of the person is given therein and if no request for special notice by the trustor or mortgagor in substantially the form set forth in this section has subsequently been recorded. an envelope containing an additional copy of the required notice addressed to each trustor or mortgagor at the same address to which the notice is sent by 17-7 . with postage prepaid and mailed by first-class mail. the publication to commence within 10 business days after the filing of the notice of default. and addressed to the office of any state taxing agency. deposit or cause to be deposited in the United States mail.

(f) No request for a copy of any notice filed for record pursuant to this section. interest. the affidavit required by this subdivision shall establish a conclusive presumption of mailing. or by reason of failure of trustor or mortgagor to pay. the name and address of the trustor or mortgagor to whom sent. In the absence of fraud.registered or certified mail pursuant to subdivision (b) or (c). Attorney fees (a) (1) Whenever all or a portion of the principal sum of any obligation secured by deed of trust or mortgage on real property or an estate for years therein hereafter executed has. or mortgage. the date of deposit in the mail. or advances actually known by the beneficiary to be. assessments. This section does not apply to bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations or made by a public utility subject to the Public Utilities Code. if the power of sale therein is to be exercised. at any time within the period specified in subdivision (e). may pay to the beneficiary or the mortgagee or their successors in interest. otherwise at any time prior to entry of the decree of foreclosure. (B) all amounts in default on recurring obligations not shown in the notice of default. which are actually incurred in enforcing the terms of the obligation. Curing default. or lien or charge upon the property described in the deed of trust or mortgage referred to therein. subject to subdivision (c). title. Limitation on costs and expenses. or. the term 17-8 . insurance premiums." as used in this section. in default and shown in the notice of default. other than the portion of principal as would not then be due had no default occurred. under the terms of the deed of trust or mortgage and the obligation secured thereby. showing the name and residence or business address of that person. and thereupon. or advances made by beneficiary or mortgagee in accordance with the terms of that obligation or of the deed of trust or mortgage. Notice of default. the entire amount due . taxes. respectively. at the time payment is tendered. in accordance with the terms of that obligation or of the deed of trust or mortgage. with respect to (A) all amounts of principal. the trustor or mortgagor or his or her successor in interest in the mortgaged or trust property or any part thereof. taxes. become due or been declared due by reason of default in payment of interest or of any installment of principal. or any beneficiary under a subordinate deed of trust or any other person having a subordinate lien or encumbrance of record thereon. and thereby cure the default theretofore existing. no statement or allegation in the request. all proceedings theretofore had or instituted shall be dismissed or discontinued and the obligation and deed of trust or mortgage shall be reinstated and shall be and remain in force and effect. deed of trust . The person shall execute and retain an affidavit identifying the notice mailed. that he or she is over the age of 18 years. and that the envelope was sealed and deposited in the mail with postage fully prepaid. (g) "Business day. and no record thereof shall affect the title to real property or be deemed notice to any person that any person requesting copies of notice has or claims any right. has the meaning specified in Section 9. the same as if the acceleration had not occurred. For the purposes of this subdivision. § 2924c. or interest in. and trustee's or attorney's fees. assessments. prior to the maturity date fixed in that obligation. subject to subdivision (d). and that are. premiums for insurance . and (C) all reasonable costs and expenses.

and will increase until While your property is in foreclosure. property taxes. and hazard insurance premiums. and payments of taxes. the beneficiary or mortgagee may require the trustor or mortgagor to provide reliable written evidence that the amounts have been paid prior to reinstatement. [14-point boldface type if printed or in capital letters if typed] and you may have the legal right to bring your account in good standing by paying all of your past due payments plus permitted costs and expenses within the time permitted by law for reinstatement of your account. No charge. IT MAY BE SOLD WITHOUT ANY COURT ACTION. all amounts of principal and interest or rents advanced on senior liens or leaseholds which are advanced after the recordation of the notice of default. You may not have to 17-9 . the beneficiary or mortgagee may require as a condition to reinstatement that you provide reliable written evidence that you paid all senior liens. which is normally five business days prior to the date set for the sale of your property. and hazard insurance advanced after recordation of the notice of default. No sale date may be set until three months from the date this notice of default may be recorded (which date of recordation appears on this notice). pay taxes on the property. or pay other obligations as required in the note and deed of trust or mortgage. execute and deliver to the trustee a notice of rescission which rescinds the declaration of default and demand for sale and advises the trustee of the date of reinstatement. assessments. the beneficiary or mortgagee or agent for the beneficiary or mortgagee shall. the beneficiary or mortgagee will give you a written itemization of the entire amount you must pay. or rents. (2) If the trustor. provide insurance on the property. printed or typed thereon: "IMPORTANT NOTICE [14-point boldface type if printed or in capital letters if typed] IF YOUR PROPERTY IS IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR PAYMENTS. Where the beneficiary or mortgagee has made no advances on defaults which would constitute recurring obligations. (b) (1) The notice. subject to the deed of trust or mortgage in default due after the notice of default is recorded. shall begin with the following statement. within 21 days following the reinstatement. recorded pursuant to Section 2924. the beneficiary or mortgagee may insist that you do so in order to reinstate your account in good standing. This amount is as of your account becomes current. except for the recording fee. and mailed to any person pursuant to Section 2924b. Upon your written request. shall be made against the trustor or mortgagor for the execution and recordation of the notice which rescinds the declaration of default and demand for sale. you still must pay other obligations (such as insurance and taxes) required by your note and deed of trust or mortgage. or other person authorized to cure the default pursuant to this subdivision does cure the default. In addition. . of any default described in this section. If you fail to make future payments on the loan. mortgagor."recurring obligation" means all amounts of principal and interest on the loan. The trustee shall cause the notice of rescission to be recorded within 30 days of receipt of the notice of rescission and of all allowable fees and costs .

provided the sale is concluded prior to the conclusion of the foreclosure. shall appear in at least 12-point boldface type. If the obligation secured by the deed of trust or mortgage is a contract or agreement described in paragraph (1) or (4) of subdivision (a) of Section 1632. you have only the legal right to stop the sale of your property by paying the entire amount demanded by your creditor. as defined in Sections 7151. you may offer your property for sale. or both (1) and (2). Notwithstanding the fact that your property is in foreclosure. or to arrange for payment to stop the foreclosure. among other things. the notice required herein shall be in Spanish. [14-point boldface type if printed or in capital letters if typed]" Unless otherwise specified. unless the obligation being foreclosed upon or a separate written agreement between you and your creditor permits a longer period. you and your beneficiary or mortgagee may mutually agree in writing prior to the time the notice of sale is posted (which may not be earlier than the end of the three-month period stated above) to.2 and 7159 of the Business and Professions Code.pay the entire unpaid portion of your account. but you must pay all amounts in default at the time payment is made. (1) provide additional time in which to cure the default by transfer of the property or otherwise. However. a copy of the notice required by subdivision (c) of Section 2924b shall be in English. If the obligation secured by the deed of trust or mortgage is contained in a home improvement contract. Following the expiration of the time period referred to in the first paragraph of this notice. No assignee of the contract or person authorized to record the notice of default shall incur any obligation or liability for failing to mail a notice in Spanish unless Spanish is specified in the contract or the assignee or person has actual knowledge that the secured obligation was principally negotiated in Spanish. the notice. 17-10 . even though full payment was demanded. Unless specified in writing to the contrary. you should contact a lawyer or the governmental agency which may have insured your loan. To find out the amount you must pay. the seller shall specify on the contract whether or not the contract was principally negotiated in Spanish and if the contract was principally negotiated in Spanish. YOU MAY LOSE LEGAL RIGHTS IF YOU DO NOT TAKE PROMPT ACTION. or if your property is in foreclosure for any other reason. contact: (Name of beneficiary or mortgagee) (Mailing address) (Telephone) If you have any questions. Remember. if printed. which is subject to Title 2 (commencing with Section 1801). or (2) establish a schedule of payments in order to cure your default. the notice required herein shall be in Spanish if the trustor requested a Spanish language translation of the contract or agreement pursuant to Section 1632.

17-11 . the postponement is for a period which exceeds five business days from the date set forth in the notice of sale. and posting notices required by Sections 2924 to 2924i.000) up to and including one hundred fifty thousand dollars ($150. plus one-half of 1 percent of the unpaid principal sum secured exceeding fifty thousand dollars ($50. plus one-quarter of 1 percent of any portion of the unpaid principal sum secured exceeding one hundred fifty thousand dollars ($150. (e) Reinstatement of a monetary default under the terms of an obligation secured by a deed of trust. in the event of judicial foreclosure. and. are hereby authorized to be in an amount which does not exceed two hundred forty dollars ($240) with respect to any portion of the unpaid principal sum secured which is fifty thousand dollars ($50.(2) Any failure to comply with the provisions of this subdivision shall not affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value and without notice. mailing. Any charge for trustee's or attorney's fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where the charge does not exceed the amounts authorized herein. or until the notice of sale is deposited in the mail to the trustor as provided in Section 2924b.000) up to and including five hundred thousand dollars ($500. or.000). or mortgage may be made at any time within the period commencing with the date of recordation of the notice of default until five business days prior to the date of sale set forth in the initial recorded notice of sale. Nothing contained herein shall give rise to a right of reinstatement during the period of five business days prior to the date of sale. or is postponed on the date declared for sale at an immediately preceding postponement of sale.000). and shall continue from that date until five business days prior to the date of sale set forth in the subsequently recorded notice of sale. postponement upon the written request of the trustor pursuant to Section 2924g made to either the beneficiary or trustee not to exceed fifty dollars ($50) per postponement and a fee for a trustee's sale guarantee or. shall be limited to the costs incurred for recording. then the right of reinstatement is revived as of the date of postponement and shall continue from that date until five business days prior to the date of sale declared at the time of the postponement. inclusive. if the sale is by power of sale contained in the deed of trust or mortgage. In the event the sale does not take place on the date set forth in the initial recorded notice of sale or a subsequent recorded notice of sale is required to be given.000).000) or less. a litigation guarantee. the right of reinstatement shall be revived as of the date of recordation of the subsequent notice of sale. otherwise at any time prior to the decree of foreclosure. whether the date of sale is noticed in a notice of sale or declared at a postponement of sale. In the event the date of sale is postponed on the date of sale set forth in either an initial or any subsequent notice of sale. (d) Trustee's or attorney's fees which may be charged pursuant to subdivision (a). inclusive. (c) Costs and expenses which may be charged pursuant to Sections 2924 to 2924i. publishing. or declared at the time of postponement. plus one-eighth of 1 percent of any portion of the unpaid principal sum secured exceeding five hundred thousand dollars ($500.

000) or less. which are actually incurred in enforcing the terms of the obligation and trustee's or attorney's fees which are hereby authorized to be in an amount which does not exceed three hundred fifty dollars ($350) or one percent of the unpaid principal sum secured. Right to reimbursement for costs and expenses of enforcement. may demand and receive from a trustor. or any other person having a subordinate lien or encumbrance of record those reasonable costs and expenses. plus 1 percent of any portion of the unpaid principal sum secured exceeding fifty thousand dollars ($50. plus one-half of 1 percent of any portion of the unpaid principal sum secured exceeding one hundred fifty thousand dollars ($150. Prohibition against kickbacks (a) Commencing with the date that the notice of sale is deposited in the mail. no beneficiary. to the extent allowed by subdivision (c) of Section 2924c. may demand and receive from a beneficiary. which are actually incurred in enforcing the terms of the obligation and trustee's or attorney's fees which are hereby authorized to be in an amount which does not exceed three hundred fifty dollars ($350) with respect to any portion of the unpaid principal sum secured which is fifty thousand dollars ($50. or his or her agent or successor in interest. or his or her agent or successor in interest. Trustee's or attorney's fees. Any charge for trustee's or attorney's fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where that charge does not exceed the amount authorized herein.000). trustee. Any right of reinstatement created by this section is terminated five business days prior to the date of sale set forth in the initial date of sale. trustee. plus one-quarter of 1 percent of any portion of the unpaid principal sum secured exceeding five hundred thousand dollars ($500. Any charge for trustee's or attorney's fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where that charge does not exceed the amounts authorized herein. and no such right of reinstatement during this period is created by this section. or any beneficiary under a subordinate deed of trust. § 2924d. Any charges for trustee's or attorney's fees made pursuant to the provisions 17-12 . As used in this subdivision.000). or may deduct from the proceeds of the sale. and until the property is sold pursuant to the power of sale contained in the mortgage or deed of trust. a trustee.000) up to and including five hundred thousand dollars ($500.000). whichever is greater. to the extent allowed by subdivision (c) of Section 2924c. and is revived only as prescribed herein and only as of the date set forth herein. or their agents or successors shall be liable in any manner to a trustor. or his or her agent or successor in interest. mortgagor.Pursuant to the terms of this subdivision. mortgagee. their agents or successors for the failure to allow a reinstatement of the obligation secured by a deed of trust or mortgage during the period of five business days prior to the sale of the security property. Any charge for trustee's or attorney's fees made pursuant to the provisions of this subdivision shall be in lieu of and not in addition to those charges authorized by subdivision (d) of Section 2924c. mortgagor. a beneficiary.000) up to and including one hundred fifty thousand dollars ($150. mortgagee. those reasonable costs and expenses. or his or her agent or successor in interest. (b) Upon the sale of property pursuant to a power of sale. as provided in Section 2924b. the term "business day" has the same meaning as specified in Section 9.

(b) The request for notice shall identify the ownership or security interest of the requester. deed of trust. at the address specified for the receipt of these payments. Liability for failure to give notice lienor for notice of (a) The beneficiary or mortgagee of any deed of trust or mortgage on real property either containing one to four residential units or given to secure an original obligation not to exceed three hundred thousand dollars ($300.000) may. (c)(1) No person shall pay or offer to pay or collect any rebate or kickback for the referral of business involving the performance of any act required by this article. if not known. does not exceed in the aggregate the trustee's fee authorized by subdivision (d) of Section 2924c or subdivision (a) or (b) of this section. or. (d) It shall not be unlawful for a trustee to pay or offer to pay a fee to an agent or subagent of the trustee for work performed by the agent or subagent in discharging the trustee's obligations under the terms of the deed of trust. submit a written request by certified mail to the beneficiary or mortgagee of any lien which is senior to the lien of the requester. the date on which the interest of the requester will terminate 17-13 . if provided for in the note. when combined with other fees of the trustee. in addition to any other remedies provided by law. The request shall be sent to the beneficiary or mortgagee. pursuant to Section 580c of the Code of Civil Procedure. (e) When a court issues a decree of foreclosure. with the written consent of the trustor or mortgagor that is either effected through a signed and dated agreement which shall be separate from other loan and security documents or disclosed to the trustor or mortgagor in at least 10-point type. costs.of this subdivision shall be in lieu of and not in addition to those charges authorized by subdivision (a) of this section and subdivision (d) of Section 2924c. it shall have discretion to award attorney's fees. in payments of principal or interest on any obligation secured by that senior lien notwithstanding that the loan secured by the lien of the requester is not then in default as to payments of principal or interest. and expenses as are reasonable. Junior mortgagee's request to senior delinquencies. if known. Any payment of a fee by a trustee to an agent or subagent of the trustee for work performed by the agent or subagent in discharging the trustee's obligations under the terms of the deed of trust shall be conclusively presumed to be lawful and valid if the fee. § 2924e. for written notice of any or all delinquencies of four months or more. or mortgage. or agent which it might designate for the purpose of receiving loan payments. (3) No violation of this subdivision shall affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value without notice. at the address shown on the recorded deed of trust or mortgage. plus reasonable attorney's fees and costs. (2) Any person who violates this subdivision shall be liable to the trustor for three times the amount of any rebate or kickback.

Any successor in interest of a party entitled to notice under this section shall file a request for that notice with any beneficiary or mortgagee of the senior lien and shall pay a processing fee of fifteen dollars ($15). first-class postage paid. The beneficiary or mortgagee of obligations secured by nonresidential properties that have sent five or more notices prior to the expiration of the effective period of the request may charge a fee up to fifteen dollars ($15) for each subsequent notice. Upon timely submittal of a renewal request for notice. whichever occurs later. the beneficiary or mortgagee shall give written notice to the requester of the fact of any delinquency and the amount thereof. which occur prior to the date on which the interest of the requester will terminate as specified in the request or the expiration date.as evidenced by the maturity date of the note of the trustor or mortgagor in favor of the requester. and a subsequent foreclosure or trustee's sale of the security property occurs. For obligations secured by residential properties. The request for notice and renewals thereof shall be recorded in the office of the county recorder of the county in which the security real property is situated. The rights and obligations specified in this section shall inure to the benefit of. The notice shall be given by personal service. as the case may be. the name of the trustor or mortgagor and the name of the current owner of the security property if different from the trustor or mortgagor. as the case may be. no notice or further notice shall be required pursuant to this section. the request shall remain valid until withdrawn in writing and shall be applicable to all delinquencies as provided in this section. the beneficiary 17-14 . Succeeding renewal requests may be submitted in the same manner. at the address to which original requests for notice are to be sent. as appropriate. For obligations secured by nonresidential properties. A request for notice shall be effective for five years from the mailing of the request or the recording of that request. within 15 days following the end of four months from any delinquency in payments of principal or interest on any obligation secured by the senior lien which delinquency exists or occurs on or after 10 days from the mailing of the request for notice or the recording of that request. Following the recording of any notice of default pursuant to Section 2924 with respect to the same delinquency. the request shall remain valid until withdrawn in writing and shall be applicable to all delinquencies as provided in this section. as appropriate. (c) Unless the delinquency has been cured. and a fee of forty dollars ($40). successors in interest of parties specified in this section. or by deposit in the mail. or agent. No new written consent shall be required from the trustor or mortgagor. whichever occurs later. (d) If the beneficiary or mortgagee of any such senior lien fails to give notice to the requester as required in subdivision (c). the loan number (if available to the requester) of the loan secured by the senior lien. a copy of the earlier request for notice together with a signed statement that the request is renewed and a renewal fee of fifteen dollars ($15). the effectiveness of the original request is continued for five years from the time when it would otherwise have lapsed. which occur prior to the date on which the interest of the requester will terminate as specified in the request or the expiration date. and may be renewed within six months prior to its expiration date by sending the beneficiary or mortgagee. and shall include or be accompanied by the signed written consent of the trustor or mortgagor. the street address or other description of the security property. or pass to. the name and address to which notice is to be sent.

any request for notice received pursuant to this section shall be transmitted promptly to that person. and describing the property to be sold. if not. (e) If any beneficiary or mortgagee. as the case may be. or agent which it had designated for the purpose of receiving loan payments. then in one public place in the judicial district in which the property is to be sold. then in a newspaper of general circulation published in the judicial district in which the property or some part thereof is situated. if not. and publishing a copy * * * once a week for the same period. or any resale resulting from a rescission for a failure of consideration pursuant to subdivision (c) of Section 2924h. in a newspaper of general circulation published in the county in which the property or some part thereof is situated. in a newspaper of general circulation published in the city in which the property or some part thereof is situated. A showing by the beneficiary or mortgagee by a preponderance of the evidence that the failure to provide timely notice as required by subdivision (c) resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error shall be a defense to any liability for that failure. notice of the sale thereof shall be given by posting a written notice of the time of sale and of the street address and the specific place at the street address where the sale will be held. if any part thereof is situated in a city. Posting. (b) (1) Except as provided in subdivision (c). (f) Any failure to comply with the provisions of this section shall not affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value and without notice. or in case no newspaper of general circulation is published in the city or judicial district or county. the beneficiary or mortgagee that made the request shall communicate that fact in writing to the senior lienholder to whom the request was made. Notice of sale. has been succeeded in interest by any other person. in a newspaper of general circulation published in the county in this state that (A) is contiguous to the county in which the property or some part thereof is situated and (B) has. or in case no newspaper of general circulation is published in the city or judicial district. and recording.or mortgagee shall be liable to the requester for any monetary damage due to the failure to provide notice within the time period specified in subdivision (c) which the requester has sustained from the date on which notice should have been given to the earlier of the date on which the notice is given or the date of the recording of the notice of default under Section 2924. before any sale of property can be made under the power of sale contained in any deed of trust or mortgage. Contents. and shall also forfeit to the requester the sum of three hundred dollars ($300). by comparison with 17-15 . Place of sale. at least 20 days before the date of sale in one public place in the city where the property is to be sold. as the case may be. or. publication. if the property is to be sold in a city. Bids prior to sale (a) As used in this section and Sections 2924g and 2924h "property" means real property or a leasehold estate therein. The communication shall specify that provision of notice pursuant to the prior request under this section is no longer required. § 2924f. (g) Upon satisfaction of an obligation secured by a junior lien with respect to which a notice request was made pursuant to this section.

The term newspaper of general circulation as used in this section has the same meaning as defined in Article 1 (commencing with Section 6000) of Chapter 1 of Division 7 of Title 1 of the Government Code. nor shall the failure to post the notice of sale on a door as provided by this subdivision affect the validity of any sale to a bona fide purchaser for value. or access road. advances at the time of the initial publication of the notice of sale. the notice of sale shall also contain a description of the 17-16 . the highest population based upon total county population as determined by the most recent federal decennial census published by the Bureau of the Census. the validity of the notice and the validity of the sale shall not be affected by the fact that the street address. then the notice shall be posted in a conspicuous place on the property. other common designation. The notice of sale shall contain the name. (2) If the sale of the property is to be a unified sale as provided in subparagraph (ii) of paragraph (a) of subdivision (4) of Section 9501 of the Commercial Code. or the directions obtained therefrom are erroneous or that the street address. Directions shall be deemed reasonably sufficient to locate the property if information as to the location of the property is given by reference to the direction and approximate distance from the nearest crossroads. name and address of the beneficiary. that the trustee shall incur no liability for any good faith error in stating the proper amount. a reference of that fact. The notice of sale shall contain a statement of the total amount of the unpaid balance of the obligation secured by the property to be sold and reasonably estimated costs. if any. where possible and where not restricted for any reason. and a county assessor's parcel number. if republished pursuant to a cancellation of a cash equivalent pursuant to subdivision (d) of Section 2924h. if not possible or restricted. if access is denied because a common entrance to the property is restricted by a guard gate or similar impediment. but.all similarly contiguous counties. other common designation. the property may be posted at that guard gate or similar impediment to any development community. If a legal description or a county assessor's parcel number and either a street address or another common designation of the property is given. frontage road. and telephone number of the trustee or other person conducting the sale. name and address of the beneficiary. In addition to any other description of the property. street address. If the property is a single-family residence the posting shall be on a door of the residence. Additionally. the name and address of the beneficiary at whose request the sale is to be conducted and a statement that directions may be obtained pursuant to a written request submitted to the beneficiary within 10 days from the first publication of the notice. An inaccurate statement of this amount shall not affect the validity of any sale to a bona fide purchaser for value. and the name of the original trustor. A copy of the notice of sale shall also be posted in a conspicuous place on the property to be sold at least 20 days before the date of sale. but if the property has no street address or other common designation. if any. and. expenses. the notice shall contain a legal description of the property. or directions obtained therefrom are omitted. provided. the notice shall describe the property by giving its street address. or other common designation. however. and also shall contain the statement required by paragraph (3) of subdivision (c). the notice of sale shall conform to the minimum requirements of Section 6043 of the Government Code and be recorded with the county recorder of the county in which the property or some part thereof is situated at least 14 days prior to the date of sale.

In the case where it is contemplated that all of the personal property or fixtures are to be sold. owner-occupied residence. the description in the notice shall be sufficient if it would be a sufficient description of the personal property or fixtures under Section 9110 of the Commercial Code. UNLESS YOU TAKE ACTION TO PROTECT YOUR PROPERTY. IF YOU NEED AN EXPLANATION OF THE NATURE OF THE PROCEEDING AGAINST YOU. IT MAY BE SOLD AT A PUBLIC SALE. YOU SHOULD CONTACT A LAWYER. (3) If any default of the obligation secured by a deed of trust or mortgage described in paragraph (1) has not been cured within 30 days after the recordation of the notice of default. the description in the notice of the personal property or fixtures shall be sufficient if it is the same as the description of the personal property or fixtures contained in the agreement creating the security interest in or encumbrance on the personal property or fixtures or the filed financing statement relating to the personal property or fixtures. at his or her last known address. In all other cases. (2) Except as otherwise expressly set forth in this subdivision. the trustee or mortgagee shall mail to the trustor or mortgagor. (4) All sales of real property pursuant to a power of sale contained in any deed of trust or mortgage described in paragraph (1) shall be held in the county where the residence is located and shall be made to the person making the highest offer.personal property or fixtures to be sold. a copy of the following statement: YOU ARE IN DEFAULT UNDER A (Deed of trust or mortgage) DATED . (c)(1) This subdivision applies only to deeds of trust or mortgages which contain a power of sale and which are secured by real property containing a single-family. where the obligation secured by the deed of trust or mortgage is contained in a contract for goods or services subject to the provisions of the Unruh Act (Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of Division 3). prior to which the property may be conveyed by the trustor to the 17-17 . and in no way shall render defective Or noncomplying either that notice or a sale pursuant to that notice by reason of the fact that the sale includes none or less than all of the personal property or fixtures referred to or described in the notice. The trustee may receive offers during the 10-day period immediately prior to the date of sale and if any offer is accepted in writing by both the trustor or mortgagor and the beneficiary or mortgagee prior to the time set for sale. the sale shall be postponed to a date certain and. This paragraph shall not otherwise affect the obligations or duties of a secured party under the Commercial Code. Inclusion of a reference to or a description of personal property or fixtures in a notice of sale hereunder shall not constitute an election by the secured party to conduct a unified sale pursuant to subparagraph (ii) of paragraph (a) of subdivision (4) of Section 9501 of the Commercial Code. shall not obligate the secured party to conduct a unified sale pursuant to subparagraph (ii) of paragraph (a) of subdivision (4) of Section 9501 of the Commercial Code. all other provisions of law relating to the exercise of a power of sale shall govern the exercise of a power of sale contained in a deed of trust or mortgage described in paragraph (1).

The trustor. the trustee or mortgagee pursuant to a deed of trust or mortgage subject to this subdivision shall be entitled to charge an additional fee of fifty dollars ($50). § 2924g. When a portion of the property is claimed by a third person. In the event that the sale proceedings are 17-18 . Monday through Friday. After sufficient property has been sold to satisfy the indebtedness no more can be sold. The performance of the offer following acceptance. unless the deed of trust or mortgage otherwise provides. (6) This subdivision applies only to property on which notices of default were filed on or after the effective date of this subdivision. and shall be made at auction. the portion subject to the claim may be thus sold. (1) any postponement of any of the sales shall be announced at the time published in the notice of sale. (2) the first sale shall commence at the time published in the notice of sale or immediately after the announcement of any postponement. or upon instruction by the beneficiary to the trustee that the sale proceedings be postponed. If the sale of more than one parcel of real property has been scheduled for the same time and location by the same trustee. (c) (1) There may be a postponement of the sale proceedings at any time prior to the completion of the sale at the discretion of the trustee. according to its terms by a conveyance of the property to the offeror shall operate to terminate any further proceeding under the notice of sale and it shall be deemed revoked. and (3) each subsequent sale shall take place as soon as possible after the preceding sale has been completed. and the trustee shall follow that direction. and 5 p. Postponement. The offer is revocable until accepted.m. to the highest bidder. If the property under power of sale is in two or more counties the public auction sale of all of the property under the power of sale may take place in any one of the counties where the property or a portion thereof is located. who requires it to be sold separately. when the property consists of several known lots or parcels which may be sold to advantage separately. Time and place of sale. (b) When the property consists of several known lots or parcels they shall be sold separately unless the deed of trust or mortgage provides otherwise. may also.m. direct the order in which property shall be sold. The sale shall commence at the time and location specified in the notice of sale. Conduct of sale (a) All sales of property under the power of sale contained in any deed of trust or mortgage shall be held in the county where the property or some part thereof is situated. between the hours of 9 a. on any business day.person making the offer according to its terms. There may be a maximum of three postponements of the sale proceedings pursuant to this subdivision. (5) In addition to the trustee fee pursuant to Section 2924c. if present at the sale. Any postponement shall be announced at the time and location specified in the notice of sale for commencement of the sale or pursuant to paragraph (1) of subdivision (c).

but this subdivision precludes its conduct during that seven-day period. No other notice of postponement need be given. However. or by the mutual agreement. or stay as provided in subdivision (d) be deemed a postponement for purposes of this subdivision.postponed three times. or a check drawn by a state or federal savings and loan association. If the sale had been scheduled to occur. restraining order. operation of law. Penalties (a) Each and every bid made by a bidder at a trustee's sale under a power of sale contained in a deed of trust or mortgage shall be deemed to be an irrevocable offer by that bidder to purchase the property being sold by the trustee under the power of sale for the amount of the bid. savings association. whether oral or in writing. and (2) to require the last and highest bidder to deposit. and to conditionally accept and hold these amounts for the duration of the sale. the sale shall be conducted no sooner than seven days after the earlier of (1) dismissal of the action or (2) expiration or termination of the injunction. or where stayed by operation of law. and place of sale and the place of sale shall be the same place as originally fixed by the trustee for the sale. or stay (which required postponement of the sale). In addition. Bidding. Any postponement pursuant to this paragraph shall not be a postponement for purposes of determining the maximum number of postponements permitted pursuant to this subdivision nor shall a postponement resulting from the prohibition upon a sale within seven days from the expiration of an injunction. whether by entry of an order by a court of competent jurisdiction. restraining order. a cashier's check drawn on a state or national bank. the scheduling of any further sale proceedings shall be preceded by the giving of a new notice of sale in the manner prescribed by Section 2924f. or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee prior to and as a condition to the recognizing of the bid. or subsequent order expressly directs the conduct of the sale within that seven-day period. Any second or subsequent bid by the same bidder or any other bidder for a higher amount shall be a cancellation of the prior bid. of any trustor and any beneficiary or any mortgagor and any mortgagee. A public declaration of postponement shall also set forth the new date. a new notice of postponement shall be given if the sale had been scheduled to occur during that seven-day period. the full 17-19 . The trustee shall maintain records of each postponement and the reason therefor. or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state. (b) At the trustee's sale the trustee shall have the right (1) to require every bidder to show evidence of the bidder's ability to deposit with the trustee the full amount of his or her final bid in cash. time. * * * (2) The trustee shall postpone the sale upon the order of any court of competent jurisdiction. restraining order. § 2924h. if not deposited previously. a check drawn by a state or federal credit union. one postponement by the trustee based upon a reasonable belief that a petition for bankruptcy has been filed shall not be a postponement for purposes of determining the maximum number of postponements permitted pursuant to this subdivision. unless the injunction. or otherwise. (d) The notice of each postponement and the reason therefor shall be given by public declaration by the trustee at the time and place last appointed for sale.

m. and shall be deemed perfected as of 8a.1 of the Insurance Code. a check drawn by a state or federal credit union. or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee. the trustee may withhold the issuance of the trustee's deed to the successful bidder submitting the check drawn by a state or federal credit union or savings and loan association or the cash equivalent until funds become available to the payee or endorsee as a matter of right. or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state. a cashier's check drawn on a state or national bank. a cashier's check drawn on a state or national bank. or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state. including any court costs and reasonable attorneys' fees. a cashier's check drawn on a state or national bank. the trustee's sale shall be deemed final upon the acceptance of the last and highest bid. (d) If the trustee has not required the last and highest bidder to deposit the cash. However. 17-20 . (c) In the event the trustee accepts a check drawn by a credit union or a savings and loan association pursuant to this subdivision or a cash equivalent designated in the notice of sale. For the purposes of this subdivision. or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state. the sale is subject to an automatic rescission for a failure of consideration in the event the funds are not available for withdrawal as defined in Section 12413. if the address of the last and highest bidder is known to the trustee. the interest of any lienholder shall be reinstated in the same priority as if the previous sale had not occurred.amount of the bidder's final bid in cash. or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee. the completion of the sale being so announced by the fall of the hammer or in other customary manner. The trustee shall send a notice of rescission for a failure of consideration to the last and highest bidder submitting the check or alternative instrument. a check drawn by a state or federal credit union. The present beneficiary of the deed of trust under foreclosure shall have the right to offset his or her bid(s) only to the extent of the total amount due the beneficiary including the trustee's fees and expenses. or a check drawn by a state or federal savings and loan association. savings association. immediately prior to the completion of the sale. a check drawn by a state or federal credit union. or a check drawn by a state or federal savings and loan association. that bidder shall be liable to the trustee for all damages which the trustee may sustain by the refusal to deliver to the trustee the amount of the final bid. the amount of his or her final bid in cash. or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee in the manner set forth in paragraph (2) of subdivision (b). savings association. If a sale results in an automatic right of rescission for failure of consideration pursuant to this subdivision. the trustee shall complete the sale. savings association. when demanded. on the actual date of sale if the trustee's deed is recorded within 15 calendar days of the sale. or a check drawn by a state or federal savings and loan association. If the last and highest bidder then fails to deliver to the trustee.

then this section shall prevail. (g) It shall be unlawful for any person. any consideration of any type not to bid. be fined not more than ten thousand dollars ($10. However. or (2) to fix or restrain bidding in any manner. or (3) loans made for the principal purpose of financing the construction of one or more residential units. or if the last and highest bidder cancels an instrument submitted to the trustee as a cash equivalent. or a check drawn by a state or federal savings and loan association. 17-21 . or a cash equivalent which has been designated in the notice of sale as acceptable to the trustee. the trustee shall provide a new notice of sale in the manner set forth in Section 2924f and shall be entitled to recover the costs of the new notice of sale as provided in Section 2924c. (b) This section shall not apply to (1) open end credit as defined in Regulation Z. (e) Any postponement or discontinuance of the sale proceedings shall be a cancellation of the last bid. savings association. In addition to any other remedies. any person committing any act declared unlawful by this subdivision or any act which would operate as a fraud or deceit upon any beneficiary.If the last and highest bidder willfully fails to deliver to the trustee the amount of his or her final bid in cash.500).000) or imprisoned in the county jail for not more than one year. (2) transactions subject to Section 2956. or be punished by both that fine and imprisonment. In the event the last and highest bidder cancels an instrument submitted to the trustee as a cash equivalent. that bidder shall be guilty of a misdemeanor punishable by a fine of not more than two thousand five hundred dollars ($2. trustor. § 2924i. upon conviction. to state that a property subject to a recorded notice of default or subject to a sale conducted pursuant to this chapter is being sold in an "as-is" condition. at a sale of property conducted pursuant to a power of sale in a deed of trust or mortgage. (f) In the event that this section conflicts with any other statute. (1) to offer to accept or accept from another. a cashier's check drawn on a state or national bank. it shall not be unlawful for any person. a check drawn by a state or federal credit union. acting alone or in concert with others. Notice regarding final payment on balloon payment loan (a) This section applies to loans secured by a deed of trust or mortgage on real property containing one to four residential units at least one of which at the time the loan is made is or is to be occupied by the borrower if the loan is for a period in excess of one year and is a balloon payment loan. whether or not the transaction is otherwise subject to Regulation Z. or junior lienor shall. including a trustee. or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state.

If the operation of this section acts to extend the term of any note. however. a statement to that effect. including unpaid principal.C. or interpretation promulgated by the Board of Governors of the Federal Reserve System under the Federal Truth in Lending Act. or 90 days from the date of delivery or mailing of the notice required by subdivision (a).).(c) At least 90 days but not more than 150 days prior to the due date of the final payment on a loan that is subject to this section. a written notice which shall include all of the following: (1) A statement of the name and address of the person to whom the final payment is required to be paid. to the trustor. or his or her successor in interest. such amount to be determined assuming timely payment in full of all scheduled installments coming due between the date the notice is prepared and the date when the final payment is due. (d) For purposes of this section: (1) A "balloon payment loan" is a loan which provides for a final payment as originally scheduled which is more than twice the amount of any of the immediately preceding six regularly scheduled payments or which contains a call provision. regulation. that if the call provision is not exercised by the holder of the loan. Default 17-22 . to issue such interpretations or approvals. this notice requirement shall apply only to the due date as extended (or as subsequently extended). as amended (15 U. except that the due date for any balloon payment shall be the date specified in the balloon payment note. and any interpretation or approval thereof issued by an official or employee of the Federal Reserve System duly authorized by the board under the Truth in Lending Act. (2) The date on or before which the final payment is required to be paid. (e) Failure to provide notice as required by subdivision (a) does not extinguish any obligation of payment by the borrower. or the due date specified in the notice required by subdivision (a). a good faith estimate of the amount thereof. interest shall continue to accrue for the extended term at the contract rate and payments shall continue to be due at any periodic interval and on any payment schedule specified in the note and shall be credited to principal or interest under the terms of the note. whichever date is later. (3) "Regulation Z" means any rule. or if the exact amount is unknown. (3) The amount of the final payment. the holder of the loan shall deliver or mail by first-class mail. 1601 et seq. the existence of the unexercised call provision shall not cause the loan to be deemed to be a balloon payment loan. with a certificate of mailing obtained from the United States Postal Service. interest and any other charges. (4) If the borrower has a contractual right to refinance the final payment. If the due date of the final payment of a loan subject to this section is extended prior to the time notice is otherwise required under this subdivision. Sec. provided.S. (2) "Call provision" means a loan contract term that provides the holder of the loan with the right to call the loan due and payable either after a specified period has elapsed following closing or after a specified date. at the last known address of that person. as amended.

Declaration of unresolved claims. stating the following: (A) The amount of the claim to the date of trustee's sale. § 2924j. (4) That before the trustee can act. within 30 days of the execution of the trustee's deed resulting from a sale in which there are proceeds remaining after payment of the amounts required by paragraphs (1) and (2) of subdivision (a) of Section 2924k. 17-23 . Trustee's notice of conflicting claims to proceeds of sale under power of sale. (B) An itemized statement of the principal. and other charges. the noticed person shall submit a written claim to the trustee. executed under penalty of perjury. (f)(1) The validity of any credit document or of any security document subject to the provisions of this section shall not be invalidated solely because of the failure of any person to comply with this section. (3) The noticed person may contact the trustee at the address provided in the notice to pursue any potential claim. Deposit in court (a) Unless an interpleader action has been filed. (2) That the noticed person may have a claim to all or a portion of the sale proceeds remaining after payment of the amounts required by paragraphs (1) and (2) of subdivision (a) of Section 2924k. interest. 1984. However. (g) The provisions of this section shall apply to any note executed on or after January 1. (2) No person may be held liable in any action under this section if it is shown by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid any such error. the trustee shall send written notice to all persons with recorded interests in the real property as of the date immediately prior to the trustee's sale who would be entitled to notice pursuant to subdivisions (b) and (c) of Section 2924b. any person who willfully violates any provision of this section shall be liable in the amount of actual damages suffered by the debtor as the proximate result of the violation. (C) That claims must be received by the trustee at the address stated in the notice no later than 30 days after the date the trustee sends notice to the potential claimant. and.in any extended periodic payment shall be considered a default under terms of the note or security instrument. for reasonable attorney's fees. The notice shall be sent by first-class mail in the manner provided in paragraph (1) of subdivision (c) of Section 2924b and inform each entitled person of each of the following: (1) That there has been a trustee's sale of the described real property. if the debtor prevails in any suit to recover that amount.

as applicable. The clerk shall deposit the amount with the county treasurer subject to order of the superior or municipal court upon the application of any interested party. the names and addresses of all persons sent notice pursuant to subdivision (a). a statement that the trustee exercised due diligence pursuant to subdivision (b). if a conflict or conflicts exist with respect to the total proceeds. (c) If. as applicable. of the county in which the sale occurred. to all persons described in subdivision (a) informing them that the trustee intends to deposit the funds with the clerk of the superior or municipal court. the trustee shall be discharged of further responsibility for the disbursement of sale proceeds. the trustee shall send written notice by first-class mail. The court shall distribute the deposited funds to any and all claimants entitled thereto. the trustee shall submit a copy of the trustee's sales guarantee and any information relevant to the identity. that portion of the sales proceeds that cannot be distributed . providing the address of the court in which the funds were deposited. Within 90 days after deposit with the clerk.(b) The trustee shall exercise due diligence to determine the priority of the written claims received by the trustee to the trustee's sale surplus proceeds from those persons to whom notice was sent pursuant to subdivision (a). The clerk may charge a reasonable fee for the performance of activities pursuant to this subdivision equal to the fee for filing an interpleader action pursuant to Article 2 (commencing with Section 26820) of Division 2 of Title 3 of the Government Code. A deposit with the clerk of the superior or municipal court pursuant to this subdivision may be either for the total proceeds of the trustee's sale. that the trustee provided written notice as required by subdivisions (a) and (d) and the amount of the sales proceeds deposited by the trustee with the superior or municipal court. (d) Before the trustee deposits the funds with the clerk of the court pursuant to subdivision (c). the court shall consider all claims filed at least 15 days before the date on which the hearing is scheduled by the court. Upon deposit of that portion of the sale proceeds that cannot be distributed by due diligence. less any fees charged by the clerk pursuant to this subdivision . and that a claim for the funds must be filed with the court within 30 days from the date of the notice. (e) Nothing in this section restricts the ability of a trustee to file an interpleader action in order to resolve a dispute about the proceeds of a 17-24 . after due diligence. and priority of the potential claimants with the superior or municipal court and shall file proof of service of the notice required by subdivision (d) on all persons described in subdivision (a). the trustee is unable to determine the priority of the written claims received by the trustee to the trustee's sale surplus of multiple persons or if the trustee determines there is a conflict between potential claimants. a description of the property. The declaration shall specify the date of the trustee's sale. less any fees charged by the clerk. the trustee may file a declaration of the unresolved claims and deposit with the clerk of the superior or municipal court. or that portion that cannot be distributed after due diligence . postage prepaid. and a phone number for obtaining further information. location. Further. less any fees charged by the clerk. the clerk shall serve written notice of the hearing by first-class mail on all claimants identified in the trustees' declaration at the addresses specified therein.

thereafter the provisions of this section shall not apply. the investigation of priority and validity of claims and the disbursement of funds. as the case may be.trustee's sale. or the clerk of the court upon order to the clerk pursuant to subdivision (d) of Section 2924j. (f) "Due diligence. or a portion of the proceeds. 17-25 . including. shall distribute the proceeds. In the event the property is sold or transferred to another. including the payment of the trustee's fees and attorney's fees permitted pursuant to subdivision (b) of Section 2924d and subdivision (b) of this section." for the purposes of this section means that the trustee researched the written claims submitted or other evidence of conflicts and determined that a conflict of priorities exists between two or more claimants which the trustee is unable to resolve. Trustee's costs and expenses (a) The trustee. (2) To the payment of the obligations secured by the deed of trust or mortgage which is the subject of the trustee's sale. (4) To the trustor or the trustor's successor in interest. § 2924k. (b) A trustee may charge costs and expenses incurred for such items as mailing and a reasonable fee for services rendered in connection with the distribution of the proceeds from a trustee's sale. (3) To satisfy the outstanding balance of obligations secured by any junior liens or encumbrances in the order of their priority. Once an interpleader action has been filed. the fee is conclusively presumed to be reasonable. If the fee charged for services rendered pursuant to this subdivision does not exceed one hundred dollars ($100). but not limited to. of the trustee's sale conducted pursuant to Section 2924h in the following order of priority: (1) To the costs and expenses of exercising the power of sale and of sale. to the vested owner of record at the time of the trustee's sale. Priority of order of distribution of proceeds.

Foreclosure consultants represent that they can assist homeowners who have defaulted on obligations secured by their residence. judgment. however. cumulative remedies. (b) The Legislature further finds and declares that foreclosure consultants have a significant impact on the economy of this state and on the welfare of its citizens. harassment. notice of cancellation. time and manner of cancellation 2945.11 Representative of consultant.9 Liability of consultant for statements or acts committed by representative (New) 2945.1 Definitions.9. often charge high fees. punishment.3. date. deception. 2945. then that person is subject to the Mortgage Foreclosure Consultant's Act. voiding provision or contract. Legislative finds and declarations (a) The Legislature finds and declares that homeowners whose residences are in foreclosure are subject to fraud. (c) The intent an purposes of this article are the following: 18-1 . statements to be provided to owner. 2945. take no other action. contents. Basically. are diverted from lawful businesses which could render beneficial services.2 Owner's right to cancel contract with consultant. arbitration. (New) 2945. sometimes to the foreclosure consultants who purchase homes at a fraction of their value before the sale. Written contract. remedies (New) § 2945.7 Violations. language. and perform promises of help.5 Waiver.MORTGAGE CONSULTANT'S ACT FORECLOSURE The following California law is fairly self-explanatory.8 Severability. and unfair dealing by foreclosure consultants from the time a Notice of Default is recorded pursuant to Section 2924 until the time of the foreclosure sale. and signature. Action against consultant. if anyone tries to help you save your house from foreclosure. 2945.6. cumulative remedies. These foreclosure consultants. 2945. and often lost their homes. 2945. Prohibited practices 2945.4. Legislative findings and declarations 2945.10 Limitation of liability under section 2945. the payment of which is often secured by a deed of trust on the residence to be saved. form 2945. Section 2945. limitation of actions.

(a) "Foreclosure consultant" means any person who makes any solicitation.(1) To require that foreclosure consultant service agreements be expressed in writing. representation. (B) is entitled to compensation for the acts performed in connection with the sale of a residence in foreclosure or with the arranging of a loan secured by a lien on a residence in foreclosure. (8) Save the owner's residence from foreclosure. performs any service which the person in any manner represents will in any manner do any of the following: (1) Stop or postpone the foreclosure sale. § 2945. to permit recision of foreclosure consultation contracts. or offer to any owner to perform for compensation or who. or receive any compensation until the acts have been performed or cannot be performed because of an owner's failure to 18-2 . charge. (4) Obtain any extension of the period within which the owner may reinstate his or her obligation.1. to prohibit representations that tend to mislead. for compensation. (3) A person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code when the person makes a direct loan or when the person (A) engages in acts whose performance requires licensure under that part. and to encourage fair dealing in the rendition of foreclosure services. (2) A person licensed under Division 3 (commencing with Section 12000) of the Financial Code when the person is acting as a prorater as defined therein. the safeguard the public against deceit and financial hardship. (b) A foreclosure consultant does not include any of the following: (1) A person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney at law. (C) does not claim. (6) Assist the owner to obtain a loan or advance of fund's (7) Avoid or ameliorate the impairment of the owner's credit resulting from the recording of a notice of default or the conduct of a foreclosure sale. (3) Assist the owner to exercise the right of reinstatement provided in Section 2914c. demand. (2) Obtain any forbearance from any beneficiary or mortgagee. collect. (5) Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained in any such deed of trust or mortgage. (2) The provision of this article shall be liberally construed to effectuate this intent and to achieve these purposes. Definitions The following definitions apply to this chapter.

(d) "Service" means and includes. credit unions. willing. budget. the lending broker does not acquire any interest in the residence in foreclosure directly from the owner other than as a beneficiary under the deed of trust. and able to purchase a residence in foreclosure or make a loan secured by a lien on a residence in foreclosure on the terms prescribed in a listing or a loan agreement. provided that. and any agent or employee of the above wile engaged in the business of these persons or entities. (c) "Person" means any individual. if a foreclosure interest in the residence in foreclosure or in the outcome of the sale is not owned. any of the following: (1) Debt. and the loan is not made for the purpose of effect of avoiding or evading the provisions of this article. (8) Any person or entity doing business under any law of this state. or a mortgagee which is a United States Department of Housing and Urban Development approved mortgagee and any subsidiary or affiliate of the above. (7) Any person licensed to make loans pursuant to Division 9 (commencing with Section 22000). which loan and deed of trust the broker in good faith attempts to assign to a lender. 18-3 . 10 (commencing with Section 24000). or of the United States relating to banks. (6) A person who holds or is owed an obligation secured by a lien on any residence in foreclosure when the person performs services in connection with this obligation or lien. trust companies. For the purposes of this paragraph. and (D) does not acquire any interest in a residence in foreclosure directly form an owner for whom the person agreed to perform the acts other than as a trustee or beneficiary under a deed of trust given to secure the payment of a loan of that compensation. or any person or entity authorized under the laws of this state to conduct a title or escrow business.make the disclosures et forth in Section 10243 of the Business and Professions Code or failure to accept an offer from a purchaser or lender ready. insurance companies. for an amount of at least sufficient to cure all of the defaults on obligations which are then subject to a recorded notice of default. subject to the authority of the Commissioner of Corporations to terminate this exclusion. pension trusts. after notice and hearing for any person licensed pursuant to any of those division upon a finding that the licensee is found to have engaged in practices described in subdivision (a) of Section 2945. corporation. (5) A person or his or her authorized agent acting under the express authority or written approval of the Department of Housing and Urban Development or other department or agency of the United States or this state to provide services. however organized. or financial counseling of any type. controlled. (4) A person licensed under Chapter 1 (commencing with Section 5000) of Division 3 of the Business and Professions Code when the person is acting in any capacity for which the person is licensed under those provisions. industrial loan companies. but is not limited to. or managed by the lending broker. savings and loan associations. a "direct loan" means a loan of a real estate broker's own funds secured by a deed of trust on the residence in foreclosure. association or other group. partnership. or 11 (commencing with Section 26000) of the Financial Code.

is effective if it indicates the intention of the owner not to be bound by the contract. (d) Notice of cancellation given by the owner need not take the particular form as provided with the contact and. (b) Cancellation occurs when the owner gives written notice of cancellation to the foreclosure consultant at the address specified in the contract. (4) Arranging or attempting to arrange for an extension of the period within which the owner of a residence in foreclosure may cure his default and reinstate his obligation pursuant to Section 2914c. form (a) Every contract shall be in writing and shall fully disclose the exact nature of the foreclosure consultant's services and the total amount and terms of compensation. (6) Advising the filing of any document or assisting in any manner in the preparation of any document for filing with any bankruptcy court. is effective when deposited in the mail properly addressed with postage prepaid. (7) Giving any advice. if given by mail. notice of cancellation. (5) Arranging or attempting to arrange for any delay or postponement of the time of sale of the residence in foreclosure.1. or any term thereof. the full satisfaction of that obligation. 18-4 . an owner has the right to cancel such a contract until midnight of the third "business day" as defined in subdivision (e) of Section 1689. Owner's right to cancel contract with consultant' time and manner of cancellation (a) In addition to any other right under law to rescind a contract. between a foreclosure consultant and an owner for the rendition of any service as defined in subdivision (d). explanation or instruction to an owner of a residence in foreclosure which in any manner relates to the cure of a default in or the reinstatement of an obligation secured by a lien on the residence in foreclosure.2. language. § 2945. (g) "Contract" means any agreement. and signature. § 2945.(2) Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a lien on a residence in foreclosure. (c) Notice of cancellation. however expressed. (e) "Residence in foreclosure" means a residence in foreclosure as defined in Section 1695. or the postponement or avoidance of a sale of a residence in foreclosure pursuant to a power of sale contained in any deed of trust.8. date. contents. (f) "Owner" means a property owner as defined in Section 16956.3.5a after the day on which the owner signs a contract which complies with Section 2945. Written contract. (3) Contracting creditors on behalf of an owner of a residence in foreclosure.1.

(b) the following notice. To cancel this transaction. or send a telegram to (Name of foreclosure consultant) at (Address of foreclosure consultant's place of business) NOT LATER THAN MIDNIGHT OF (Date) I hereby cancel this transaction: (Date) " (Owner's signature) 18-5 . which shall be attached to the contract. the owner. shall be (easily detachable. deed of trust. See the attached notice of cancellation form for an explanation of this right. shall be printed immediately above the statement required by subdivision (c): "NOTICE REQUIRED BY CALIFORNIA LAW or anyone working for him or her CANNOT: (Name) (1) Take any money from you or ask you for money until has completely finished doing everything he or she said he or she should do. may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. shall be dated and signed by the owner. mail or deliver a signed and dated copy of this cancellation notice. as follows: "You. (2) The date the owner signed the contract." (d) The contract shall contain on the first page. or deed. and shall contain in immediate proximity to the space reserved for the owner's signature a conspicuous statement in a size equal to at least 10-point bold type. captioned "notice of cancellation". within three business days from the above date. and (Name) (2) Ask you to sign or have you sign any lien. or any other written notice. and shall contain in type of at least 10-point the following statement written in the same language as used in the contract: "NOTICE OF CANCELLATION (Enter date of transaction) (Date) You may cancel this transaction without any penalty or obligation. printed in at least 14-point boldface type and completed with the name of the foreclosure consultant. each of the following: (1) The name and address of the foreclosure consultant to which the notice or cancellation is to be mailed." (c) The contract shall be written in the same language as principally used by the foreclosure consultant to describe his services or to negotiate the contract. (e) The contract shall be accompanied by a completed form in duplicate. in type size no smaller than that generally used in the body of the document.

any lien of any type on real or personal property. limitation of actions (a) An owner may bring an action against a foreclosure consultant for any violation of this chapter. Any such security shall be void and unenforceable. This subdivision shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of residential real property in foreclosure. Judgment shall be entered for actual damages.4." shall not constitute notice of a violation of this article. or receive any compensation until after the foreclosure consultant has fully performed each and every service the foreclosure consultant contracted to perform or represented he would perform. (c) Take any wage assignment. reasonable attorneys' fees and costs. Any interest acquired in violation of this subdivision shall be voidable provided that nothing herein shall affect or defeat the title of a bona fide purchaser or encumbrancer for value an without notice of a violation of this article. Prohibited practices It shall be a violation for a foreclosure consultant to: (a) Claim. or (d) 18-6 . § 2945.2 and 2945.(f) The foreclosure consultant shall provide the owner with a copy of the contract and the attached notice of cancellation. charge. or other security to secure the payment of compensation. (d) Receive any consideration from any third party in connection with services rendered to an owner unless such consideration is fully disclosed to the owner. demand.6 Action against consultant. collect or receive any fee. Waiver Any waiver by an owner of the provisions of this article shall be deemed void and unenforceable as contrary to public policy. cumulative remedies. (b) Claim.5. in its discretion. (b). (e) Acquire any interest in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted. award exemplary damages and shall award exemplary damages equivalent to at least three times the compensation received by the foreclosure consultant in violation of subdivision (a).3. judgment. § 2945. and appropriate equitable relief. demand. Knowledge that the property was "residential real property in foreclosure. except to inspect documents a provided by law. (f) Take any power of attorney from an owner for any purpose. collect. § 2945. Any attempt by a foreclosure consultant to induce an owner to waive his rights shall be deemed a violation of this article. The court also may. (g) Induce or attempt to induce an owner to enter a contract which does not comply in all respects with Sections 2945. or any other compensation for any reason which exceeds 10 percent per annum of the amount of any loan which the foreclosure consultant may make to the owner. interest. charge.

4. punishment. (b) "Representative" for the purposes of this section means a person who in any manner solicits. or (3) any transfer title to the residence in foreclosure to the foreclosure consultant.000). the remainder of the article and the application of such provision to other persons. Representative of consultant. (b) The rights and remedies provided in subdivision (a) are cumulative to.11. The foreclosure consultant shall be liable to the owner for all damages proximately caused by that provision. § 2945. in addition to any other award of actual or exemplary damages. 1992.10.9 shall be void and shall at the option of the owner render the contract void. (2) any owner to pay any consideration or transfer title to the residence in foreclosure to the foreclosure consultant. remedies 18-7 . § 2945.8 Severability If any provision of this article or the application thereof to any person or circumstance is held to be unconstitutional. § 2945. or contract to perform any of the services described in subdivision (a) of Section 2945. Limitation of liability under section 2945. Any provision in a contract which attempts or purports to require arbitration of any dispute arising under this chapter shall be void at the option of the owner only upon grounds as exist for the revocation of any contract. (2) receipt of any consideration or property from or on behalf or an owner. voiding provision or contract. cumulative remedies Any person who commits any violation described in Section 2945.9 Liability representative of consultant for statements or acts committed by A foreclosure consultant is liable for all damages resulting from any statement made or act committed by the foreclosure consultant's representative in any manner connected with the foreclosure consultant's (1) performance. Any action brought pursuant to this section shall be commenced within four years from the date of the alleged violation. or (3) performance of any act prohibited by this article. § 2945. or in the state prison. arbitration (a) Any provision in a contract which attempts or purports to limit the liability of the foreclosure consultant under Section 2945. any other rights and remedies provided by law. § 2945.7 Violations.9. These penalties are cumulative to any other remedies or penalties provided by law. offer to perform. by imprisonment in the county jail for not more than one year.1. or causes (1) any owner to contract with a foreclosure consultant. statements to be provided to owner.of Section 2945. or both that fine and imprisonment for each violation. induces. and not a limitation of. (b) this section shall apply to any contract entered into on or after January 1.4 shall be punished by a fine of not more than ten thousand dollars ($10.

(2) A statement in writing. 18-8 .09. (b) The failure to comply with subdivision (a) shall at the option of the owner render the contract void and the foreclosure consultant shall be liable to the owner for all damages proximately caused by the failure to comply. that the representative has a valid current California Real Estate Sales License. deemed to be the agent or employee or both the agent and the employee of the foreclosure consultant shall be required to provide both of the following: (1) Written proof to the owner that the representative has a valid current California Real Estate Sales License and that the representative is bonded by an admitted surety insurer in an amount equal to at least twice the fair market value of the real property which is the subject of the contract.(a) Any representative. under penalty of perjury. as defined in subdivision (b) of Section 2945. that the representative is bonded by an admitted surety insurer and has complied with paragraph (1). The written statement required by this paragraph shall be provided to all parties to the contract prior to the transfer of any interest in the real property which is the subject of the contract.

7 Seller's right to bring action 1695.10 Waiver 1695. particularly in the urban areas. b) The Legislature declares that it is the express policy of the state to preserve and guard the precious asset of home equity. if anyone tries to buy your house which is in foreclosure.12 Presumption of loan transaction 1695. intimidation.8 Violation: Punishment 1695. and the social as well as the economic value of home ownership. The recent rapid escalation of home values. then that person is subject to the Home Equity Sales Contracts Act. Basically.17 Statements required of representatives § 1695. and other unreasonable commercial practices. are vulnerable to the importunities of equity purchasers who induce homeowners to sell their homes for a small fraction of their fair market values through the use of schemes which often involve oral and written misrepresentations. elderly.16 Voidness of contract provisions attempting to limit liability 1695.1 Definitions 1695. c) The Legislature further finds that equity purchasers have a significant impact upon the economy and well-being of this state and its local communities.HOME EQUITY SALES CONTRACTS ACT The following California law is fairly self-explanatory. and therefore the provisions of this chapter are necessary to promote the public welfare. Section 1695.6 Equity purchaser to provide contract: Acts prohibited 1695. especially the poor. has resulted in a significant increase in home equities which are usually the greatest financial asset held by the homeowners of this state.14 Rescission 1695.13 Unconscionability 1695. homeowners in financial distress. Legislative findings and declarations: Intent and purposes of chapter a) The Legislature finds and declares that homeowners whose residences are in foreclosure have been subjected to fraud.15 Liability of equity purchaser for damages resulting from statements of representative 1695. 19-1 .2 Form of contract 1695. deceit.9 Provisions not exclusive 1695. and financially unsophisticated.5 Notice of right to cancel 1695.4 Right of cancellation 1695.11 Effect of unconstitutional provision 1695.3 Terms of contract 1695. During the time period between the commencement of foreclosure proceedings and the scheduled foreclosure sale date. and unfair dealing by home equity purchasers. deception.

4) At any sale of property authorized by statute. blood relative. Labor Day. Definitions The following definitions apply to this chapter: a) "Equity purchaser" means any person who acquires title to any residence in foreclosure. and Christmas Day. d) "Business day" means any calendar day except Sunday. 5) By order or judgment of any court. foster. Memorial Day. c) "Equity Seller" means any seller of a residence in foreclosure.2 Form of contract Every contract shall be written letters of a size equal to 10-point bold type. f) "Property owner" means the record title owner of the residential real property in foreclosure at the time the notice of default was recorded.to four-family dwelling units.d) The intent and purposes of this chapter are the following: 1) To provide each homeowner with information necessary to make an informed and intelligent decision regarding the sale of his or her home to an equity purchaser. and to preserve and protect home equities for the homeowners of this state. to prohibit or restrict unfair contract terms. Thanksgiving day. one of which the owner occupies as his or her principal place of residence. to require that the sales agreement be expressed in writing. between an equity purchaser and equity seller incident to the sale of a residence in foreclosure. b) "Residence in foreclosure" and "residential real property in foreclosure" means residential real property consisting of one. § 1695. to afford homeowners a reasonable and meaningful opportunity to rescind sales to equity purchasers. Veterans' Day. to insure. § 1695. or arrangement. Columbus Day. and against which there is an outstanding notice of default. to safeguard the public against deceit and financial hardship. § 1695. Washington's Birthday. 2) By a deed in lieu of foreclosure of any voluntary lien or encumbrance of record. recorded pursuant to Article 1 of Chapter 2 of Title 14 of Part 4 of Division 3. to prohibit representations that end to mislead. 6) From a spouse. Independence Day. or blood relative of a spouse.1. agreement. and encourage fair dealing in the sale and purchase of homes in foreclosure. 2) This chapter shall be liberally construed to effectuate this intent and to achieve these purposes. in the same language principally used by the equity purchaser and equity seller to negotiate the sale of the residence in foreclosure and shall be fully completed and signed and dated by the equity seller and equity purchaser prior to the execution of any instrument of conveyance of the residence in foreclosure. or the following business holidays: New Year's Day. 3) By a deed from a trustee acting under the power of sale contained in a deed of trust or mortgage at a foreclosure sale conducted pursuant to Article 1 of Chapter 2 of the Title 14 of Part 4 of Division 3. or any term thereof.3 Terms of contract Every contract shall contain the entire agreement of the parties and shall include all the following terms: 19-2 . e) "Contract" means any offer or any contract. except a person who acquires such title as follows: 1) For the purpose of using such property as a personal residence.

m. § 1695. (name) or anyone working for (name) CANNOT ask you to sign or have you sign any deed or any other document. d) A complete description of the terms of payment or other consideration including. e) The time at which possession is to be transferred to the equity purchaser. § 1695. immediately above the statement required by Section 1695.a) The name. effective if it indicates the intention of the equity seller not to be bound to the contract. the equity seller has right to cancel any contract with an equity purchaser until midnight of the fifth business day following the day on which the equity signs a contract or until 8 a. business address.5 Notice of right to cancel a) The contract shall contain in immediate proximity to the space reserved for the equity seller's signature a conspicuous statement in a size equal to at least 12-point bold type. as follows: "You may cancel this contract for the sale 19-3 . c) The total consideration to be given by the equity purchaser in connection with or incident to the sale.5. and completed with the name of the equity purchaser. if the contract is printed or in capital letters if the contract is typed. of the contract is printed or in all capital letters if the contract is typed. g) A notice of cancellation as provided in subdivision (b) of Section 1695. c) A notice of cancellation given by the equity seller need not take the particular form as provided with the contract and. h) The following notice in at least 14-point boldface type. and shall have no effect on persons other then the parties to the contract. and the telephone number of the equity purchaser.5 (a): "NOTICE REQUIRED BY CALIFORNIA LAW Until your right to cancel this contract has ended. whichever occurs first." The contract required by this section shall survive delivery of any instrument of conveyance of the residence in foreclosure. however expressed. on the day scheduled for the sale of the proper pursuant to a power of sale conferred in a deed of trust.4 Right of cancellation a) In addition to any other right of recision. b) Cancellation occurs when the equity seller personally delivers written notice of cancellation to the address specified in the contract or sends telegram indicating cancellation to that address. but not limited to. any services of any nature which the equity purchaser represents he will perform for the equity seller before or after the sale. f) The terms of any rental agreement. b) The address of the residence in foreclosure.

2) Record with the county recorder any document. signed by the equity seller. 3) Transfer or encumber or purport to transfer or encumber any interest in the residence in foreclosure to any third party. the following statement written in the same language as used in the contract: "NOTICE OF CANCELLATION (Enter date contract signed) You may cancel this contract for the sale of your house. or send a telegram to (name of purchaser) at (street address of purchaser's business) NOT LATER THAN (enter date and time of day) I hereby cancel this transaction (date) " (seller's signature) c) The equity purchaser shall provide the equity seller with a copy of the contract and the attached notice of cancellation. This form shall be attached to the contract.6 Equity purchaser to provide contract: Acts prohibited a) The contract as required by Sections 1695.3. if the contract is printed or in capital letters if the contract is typed. any instrument of conveyance of any interest in the residence in foreclosure. This section shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of the residential real property in foreclosure. if the contract is printed or in capital letters if the contract is typed. personally deliver a signed and dated copy of this cancellation notice.2. and shall contain in type of at least 10-point. or induce any equity seller to execute. without any penalty or obligation. 4) Pay the equity seller any consideration.4 shall be provided and completed in conformity with those sections by the equity purchaser. and 1695.of your house without any penalty or obligation at any time before (Date and time of day) See attached notice of cancellation form for an explanation of this right. including. but not limited to." b) The contract shall be accompanied by a completed form in duplicate. § 1695. the equity purchaser shall not do any of the following: 1) Accept from any equity seller an execution of. 1695. captioned "notice of cancellation" in a size equal to 12-point bold type. b) Until the time within which the equity seller may cancel the transaction has fully elapsed. any instrument of conveyance. shall be easily detachable. and knowledge on the part of any such person or entity that the property was "residential real property in foreclosure" shall not constitute notice of a violation of this chapter. at any time before (enter date and time) To cancel this transaction. 19-4 . followed by a space in which the equity purchaser shall enter the date on which the equity seller executes any contract. provided no grant of any interest or encumbrance shall be defeated or affected as against a bona fide purchaser or encumbrancer for value and without notice of a violation of this chapter.

6 or Section 1695.9 Provisions not exclusive The provisions of this chapter are not exclusive and are in addition to any other requirements. § 1695. be punished by a fine of not more than ten thousand dollars ($10. the equity purchaser shall not cause any encumbrance or encumbrances to be placed on such property or grant any interest in such property to any other person without the written consent of the equity seller. § 1695. rights. or in the state prison.000) by imprisonment in the county jail for not more than one year.6 or who engages in any practice which would operate as a fraud or deceit upon an equity seller shall. or by both that fine and imprisonment for each violation. any contract term. the nature of any document which the equity purchaser induces the equity seller to sign.8 Violation: Punishment Any equity purchaser who violates any subdivision of Section 1695. The equity seller shall recover actual damages plus reasonable attorney's fees and costs.c) Within ten days following receipt of a notice of cancellation given in accordance with Sections 1695. but in any event shall award exemplary damages in an amount not less than three times the equity seller's actual damages for any violation of paragraph (3) of subdivision (b) of Section 1695. the equity purchaser shall return without condition any original contract and any other documents signed by the equity seller.10 Waiver Any waiver of the provisions of this chapter shall be void and unenforceable as contrary to the public policy. the equity seller's rights or obligations incident to or arising out of the sale transaction. or both. Any action brought pursuant to this section shall be commenced within four years after the date of the alleged violation. and penalties provided by law.7 Seller's right to bring action An equity seller may bring an action for the recovery of damages or other equitable relief against an equity purchaser for a violation of any subdivision of Section 1695. § 1695. the court shall award exemplary damages or equitable relief. d) An equity purchaser shall make no untrue or misleading statements regarding the value of the residence in foreclosure.5. In addition.4 and 1695. or any other untrue or misleading statement concerning the sale of the residence in foreclosure to the equity purchaser.13.13. e) Whenever any equity purchaser purports to hold title as a result of any transaction in which the equity seller grants the residence in foreclosure by any instrument which purports to be an absolute conveyance and reserves or is given by the equity purchaser an option to repurchase such residence.11 Effect of unconstitutional provision 19-5 . § 1695. § 1695. the amount of proceeds the equity seller will receive after a foreclosure sale. upon conviction. remedies.6 or Section 1695. if the court deems such award proper.

however. § 1695. by the terms of such transaction. the remainder of this chapter and the application of its provisions to other persons and circumstances shall not be affected thereby. as defined in Section 1695. as defined in Section 1695. negotiate.14 Recision (a)In any transaction involving residential real property in foreclosure. Knowledge that the property was residential real property in 19-6 . takes unconscionable advantage of the property owner in foreclosure.13 Unconscionability It is unlawful for any person to initiate. (c) The provisions of this section shall not affect the interest of a bona fide purchaser or encumbrancer for value if such purchase or encumbrance occurred prior to the recordation of the notice of recision pursuant to subdivision (b). shall have 20 days after the delivery of the notice in which to reconvey title to the property free and clear of encumbrances created subsequent to the rescinded transaction. which may be overcome by clear and convincing evidence to the contrary that the transaction is a loan transaction. and by recording such notice with the county recorder of the county in which the property is located. This section shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of the residential real property in foreclosure.If any provision of this chapter. the rescinding party may bring an action to enforce the recision and for cancellation of the deed. such presumption shall not apply to a bona fide purchaser or encumbrancer for value without notice of a violation of this chapter. § 1695.13 is voidable and the transaction may be rescinded by the property owner within two years of the date of the recordation of the conveyance of the residential real property in foreclosure. if the successor is not a bona fide purchaser or encumbrancer for value as set forth in subdivision (c). if such person.1. and knowledge on the part of any such person of entity that property was "residential real property in foreclosure" shall not constitute notice of a violation of this chapter. enter into. Upon failure to reconvey title within such time. (b)Such recision shall be effected by giving written notice as provided in Section 1691 to the equity purchaser and his successor in interest. such transaction shall create a presumption of affecting the burden of proof. or if any application thereof to any person or circumstance is held unconstitutional. The equity purchaser and his successor in interest if the successor is not a bona fide purchaser or encumbrancer for value as set forth in subdivision (c). and the purported absolute conveyance is a mortgage. or consummate any transaction involving residential real property in foreclosure.1. The notice of recision shall contain the names of the property owner and the name of the equity purchaser in addition to any successor in interest holding record title to the real property and shall particularly describe such real property. § 1695. within two years of the date of the recordation of the conveyance to the equity purchaser.12 Presumption of loan transaction In any transaction in which an equity seller purports to grant a residence in foreclosure to an equity purchaser by any instrument which appears to be an absolute conveyance and reserves to himself or herself or is given by the equity purchaser an option to repurchase. which is in violation of Section 1695.

induces. Any provision in a contract. (b) "Representative" for the purposes of this section means a person who in any manner solicits. § 1695. under penalty of perjury. § 1695. 1992. Liability of equity purchaser for damages resulting from statements of representative (a) An equity purchaser is liable for all damages resulting from any statement made or act committed by the equity purchaser's representative in any manner connected with the equity purchaser's acquisition of a residence in foreclosure. or causes any property owner to transfer title or solicits any member of the property owner's family or household to induce or cause any property owner to transfer title to the residence in foreclosure to the equity purchaser. (d) In any action brought to enforce a recision pursuant to this section.15 shall be void and shall at the option of the equity seller render the equity purchase contract void. receipt of any consideration or property from or on behalf of the equity seller. (b) This section shall apply to any contract entered into on or after January 1. The written statement required by this paragraph shall be provided to all parties to the contract prior to the transfer of any interest in the real property which is the subject of the contract. deemed to be the agent or employee. (b) The failure to comply with subdivision (a) shall at the option of the equity seller render the equity purchase contract void and the equity purchaser shall 19-7 . the prevailing party shall be entitle to costs and reasonable attorneys fees. The equity purchaser shall be liable to the equity seller for all damages proximately caused by that provision. is bonded by an admitted surety insurer in an amount equal to an least twice the value of the real property which is the subject of the contract and has complied with paragraph (1). or the performance of any act prohibited by this chapter. (e) The remedies provided by this section shall be in addition to any other remedies provided by law. as defined in subdivision (b) of Section 1695. which attempts or purports to require arbitration of any dispute arising under this chapter shall be void at the option of the equity seller only upon grounds as exist for the revocation of any contract. § 1695.15. that the representative ha a valid current California Real Estate Sales License.foreclosure shall not impair the status of such persons or entities as bona fide purchasers or encumbrances for value. This subdivision shall not be deemed to abrogate any date of inquiry which exists as to rights or interests of persons in possession of the residential real property in foreclosure.15.17. (2) A statement in writing.16 Voidness of contract provisions attempting to limit liability (a) Any provision of a contract which attempts or purports to limit the liability of the equity purchaser under Section 1695. Statements required of representatives (a)Any representative. or both the agent and the employee of the equity purchaser shall be required to provide both of the following: (1) Written proof to the equity seller that the representative has a valid current California Real Estate Sales License and that the representative is bonded by an admitted surety insurer in an amount equal to twice the fair market value of the real property which is the subject of the contract.

19-8 .be liable to the equity seller for all damages proximately caused by the failure to comply.

1986. 1991. VA. Financial Reorganization Bailard. The Homeowner's Guide To Foreclosure. Personal Money Management. John. Fresh Start. White Hall.: Betterway Publications. Dearborn Financial Publishing. Thomas E. Jensen Publications. Dearborn Financial Publishing. Fresh Start. Chicago: Science Research Associates. 1991. Repair Your Credit. Weidemer. 1991. Jensen. Jensen. Ventura.. Rebuild Wealth.ADDITIONAL READING AND SERVICES For more information on the various topics discussed in How To Fight Foreclosure and Win with Honor check your local libraries or book stores for the following books. The Bankruptcy Kit. Laurence Adams. 1986. James I. 1994. 1992. The Homeowner's Guide To Foreclosure. Dearborn Financial Publishing. 1992. Bankruptcy Ventura.. The Homeowner's Guide To Foreclosure. James I. 1992. or call the phone number listed. Jeff. Changing Your Mortgage Terms (Workouts) Malone. White Hall. Dearborn Financial Publishing. John. Ventura. James I. 1986. How To Avoid Foreclosure. VA. Jensen Publications. Dearborn Financial Publishing. General Reading Malone. Weidemer. 5th ed. Jeff. and others. Laurence Adams. Dearborn Financial Publishing. John. How To Avoid Foreclosure. Weidemer.: Betterway Publications. 1994. Inc. 20-1 .

1992. Stephen R. Reginald R. Maintaining a Calm and Clear Mind Ledgerwood. Dearborn Financial Publishing. Acting Quickly Covey. Dearborn Financial Publishing. Dearborn Financial Publishing. Publishing. The Complete 20-2 . The Publishing. Thomas C. The Mortgage Kit. What To Say When You Talk To Yourself. Edith. The Home Renovation Kit. Keys To Higher Consciousness. Costa Mesa. New York: Pocket Books. 2nd ed. White Hall. Robert.: Betterway Publications. New York: Simon & Schuster. Howard K. The Homeowner's Guide To Foreclosure. Exploring New Possibilities Helmstetter. VA. James I. Homeseller's Kit.. and Battles. 2nd ed. Laurence Adams.Refinancing Steinmetz. Dearborn Financial Irwin. 445 East 17th Street. How To Avoid Foreclosure. Graham. Shad. Dearborn Financial Legal System Malone. The 7 Habits of Highly Effective People. 1992. CA 92627: Everest Publishing Company. Weidemer. 1986. Honychurch. 1992. 1992. 1989. 1991. Relocation Kit. Selling Your Property Lank. 1989. 1982.

Homestead Forms. P. 1983. 1991.. Writing the Natural Way. Telephone (714) 781-7300 Real Estate Comparables. Tarcher. Riverside. Seven Steps To Inner Power. San Raphael: New World Library. California 92516.Kim. 1992. Telephone 800-888-4492. Tae Yun. Box 20068. Los Angeles: J. Inc. Real Estate Forms and Data Real Estate Forms from First Tuesday. see the Yellow Pages) 20-3 . Inc. Rico. Wolcott. Gabriele Lusser. P. DataQuick Information Network.O. (Available at your local stationary store.

the sales receipt. This guarantee does not apply to any other purchases. along with your completed Action Plan. The reasons the Action Plan must be filled out: 1. For Refunds: 1. 2. to: Jensen Publications 20-4 . It demonstrates that you actually did the exercises (studies have proven that a percentage of people who buy self-help books do not actually read them).GUARANTEE My guarantee is simple: This guarantee applies only to homeowners who have received a notice of default. by doing the Action Plan exercises you will have the highest probability of finding the most appropriate solution to your particular situation. you have not found an appropriate solution to your foreclosure situation. then return the book. How to Fight Foreclosure and Win With Honor. Return the entire book. then. Since the Action Plan was designed to guide a homeowner in foreclosure to the most appropriate solution. and since the Action Plan keeps track of your key foreclosure-fighting activities. a copy of your notice of default and the completed Action Plan for a complete refund. after completing the Action Plan. If.

20-5 . Suite 104-201 Huntington Beach.4 weeks to analyze the information in your completed Action Plan and to process your request for a refund. Please allow 2 . California 92648 2.200 Main Street. Send a letter stating your reason(s) for returning the book and why you feel the book did not help you. 3.

NOTES 20-6 .

too. Please complete the next page. The Action Guide Was very helpful Did not read Not enough information Too much information Your interest level: high average low Option 1: How To Reorganizing Your Finances Win By Was very helpful Did not read Not enough information Too much information Your interest level: high average low Option 2: How To Bankruptcy Win With Was very helpful Did not read Not enough information Too much information Your interest level: high average low Option 3: How To Win By Changing Your Mortgage Terms Was very helpful Did not read Not enough information Too much information Your interest level: high average low 20-7 .Suggestion and Evaluation Response Sheet To assist in updating How To Fight Foreclosure and Win With Honor and to make it an even more useful tool for others who are facing foreclosure. please circle the comment that shows how useful the book was for you.

Option 4: How To Win By Refinancing Was very helpful Your interest level: low Did not read Not enough information Too much information Option 5: How To Win By Using The Legal System Was very helpful Did not read Not enough information Too much information Your interest level: high average low Option 6: How To Win If You Are In The Military Was very helpful Did not read Not enough information Too much information Your interest level: high average low Option 7: How To Win By Selling Your Property Was very helpful Did not read Not enough information Too much information Your interest level: high average low Option 8: How To Win By Giving Away Your Property Was very helpful Did not read Not enough information Too much information Your interest level: high average low The Action Plan Was very helpful Did not read Not enough information Too much information high average 20-8 .

Your interest level: low high average 20-9 .

if necessary. address.What improvements or suggestions can you make to help the book be more beneficial and useful to future homeowners in foreclosure? Did you discover any new and/or better ways to fight foreclosure? Attach additional pages. Please write your comments below. write them down in the spaces provide below. . or interesting stories with future homeowners in foreclosure by allowing it to be reprinted in our next edition of How To Fight Foreclosure and Win With Honor? Yes No If yes. then please fill in you name.If you would like to share any interesting stories about how you fought foreclosure. and telephone number below: Testimonial . suggestions. Attach additional pages. then please. Attach additional pages. if necessary: _________________________________________________________________________________________ _______ _________________________________________________________________________________________ _______ _________________________________________________________________________________________ _______ Would you please share your improvements.10 Suggestion And Evaluation Sheet (continued) How To Explore New Possibilities Was very helpful Did not read Not enough information Too much information Your interest level: high average low The 5 Step Approach Was very helpful Did not read Not enough information Too much information Your interest level: high average low How To Act Quickly Was very helpful Did not read Not enough information Too much information Your interest level: high low average How To Maintain a Clear and Calm Mind Was very helpful Did not read Not enough information Too much information Your interest level: high low average Improvements/Suggestions .I would like to hear about the help you received from How To Fight Foreclosure and Win With Honor. if necessary: _________________________________________________________________________________________ _______ _________________________________________________________________________________________ _______ _________________________________________________________________________________________ _______ Interesting Stories .

California 92648 .Home Equity Sales Contracts Act 11 _________________________________________________________________________________________ _______ _________________________________________________________________________________________ _______ _________________________________________________________________________________________ _______ Would you please share your testimonials with future homeowners in foreclosure by allowing us to reprint it in our advertising or future editions of the book? Yes No If yes. 200 Main Street. then please fill in the information below: Name:____________________________________________Address:____________________________ ________ City______________________________________________Phone:_______________________________ ________ Please copy/remove pages 20-5 & 20-6 and mail to: Jensen Publications. Huntington Beach. Suite 104-201.

in a trust lenders to the entire not make Acre: A unit of measurement used in real estate. Accession: The increase of land either by man or natural cause. When recorded in a county. and closing costs. Said contract term or provision may not be specifically enforceable if unconscionable.560 square feet. Adjusted Sales Price: The sales price of a property less commissions. Abstract of Title: A historical summary taken from public records of all documents affecting the title of a property. Adjusted Market Price: The value of a comparable property after adjustments have been made for differences between it and property that has been appraised. Accounting: A detailed statement of the mutual demands of debt and credit between the parties arising out of contract or fiduciary relationship. ACRS: Accelerated cost recovery system. fix-up. which replaced depreciation. to its detriment. Acceptance: Consent to an offer to enter into a contract. Adhesion Contract: A one-sided contract without equality of bargaining position where a standard contract term is forced upon the second party. Acceleration Clause: A clause deed or mortgage which allows demand immediate payment of loan balance if borrower does payments when due. Adjustable Rate Mortgage: A mortgage in which the interest rate rises or falls with changes in prevailing rate.Glossary Abstract of Judgment: Summary of a court's judgment. it creates a general lien upon all real and personal property owned by the judgment debtor. Accrued Interest: Interest which has been deferred beyond the period earned. such as a river changing its course. Action to Quiet Title: A court action to clarify ownership of a property and to remove any interest in the title. one acre equals 43. Acknowledgment: A declaration by someone that they signed a particular document. Ad Valorem Taxes: Taxes based according to the value of the property. 21-1 . Accelerated Depreciation: Any method of depreciation that achieves a faster rate of depreciation then the straight-line method. This is a method used to recover investment cost under the 1981 Tax Reform Act. Removes clouds on the title. Abstracter (conveyancer): A specialist in title search and abstract preparation.

Amortization Table: A schedule for a complete payoff of a certain sum and interest in a given period by scheduled payments over the term. All Inclusive Deed of Trust: AITD. Also known as a wrap-around mortgage deed of trust that includes within the terms of the note the obligations owing under a prior deed of trust. and other items needed to protect the beneficiary's interest under the deed of trust. you qualify for an assignment of mortgage to HUD. AIREA: The American Institute of Real Estate Appraisers. Appraiser: A qualified person who is hired to make estimates on the market value of property. Assignment: If the loan on house is insured by FHA. Alienation of Title: Any kind of change in ownership. both as to principal and interest. set by the tax assessor. includes 21-2 . Appreciation: An property value. Appraisal Letter: A valuation report in the form of a business letter. Assign: To transfer your rights to another under a contract. hazard insurance premiums. by a series of regular payments that are equal or nearly equal. such as sewer or street maintenance. Amortization: Payment of a loan requiring periodic installments that include both interest and partial repayment of principal. sworn statement before witnesses.Advances: Money advanced by the beneficiary under a deed of trust to pay real property taxes. Alienate: To transfer the title to real property from one person to another. Agent: A person who has been given authority from another to act in his behalf. Amount Realized: selling expenses. discount points. Air Lot: The air space over a parcel of land. Adverse Possession: Acquisition of real estate through prolonged and unauthorized occupation. Asset: All forms of property owned by a person that has value. Appraisal: An estimate of property's market value. Assessment Roll: A list that shows assessed values for all lands and buildings in a taxing district. This means your may your HUD Annual Percentage Rate (APR): Finance charge over a full year. Assessment: A tax for a specific purpose. Alienation Clause: A provision in a loan contract that the loan must be paid in full if ownership is transferred. (Same as Purchase Contract) interest. increase in Assessed Value: A value placed on a property for tax purposes. Agreement For Sale: A document whereby the purchaser agrees to buy a specific piece of real estate and the seller agrees to sell. Selling price less Affidavit: A written. and loan fees. Amortized Loan: Loan that is completely paid off. Assignee: One to whom a right or property is transferred.

Balloon Mortgage: A mortgage in which the final payment is larger than any of the preceding payments. etc. Because of the expenses of this action. or which allows the debtor time to reorganize his/her financial affairs so he/she can fully pay his debts. Beneficial Interest: A unit ownership in a real estate vestment trust. It may increase or decrease based on certain factors. You must show that there is a reasonable prospect that you will be able to resume full mortgage payments after three years.) must have forced you to miss three or more monthly payments. Prospect is dependent upon employment potential. Basis: Bookkeeping starting point for tax purposes. unemployment or underemployment. it is the purchase price. recovery from illness. Assignment always involves a repayment plan. death. of in- Beneficiary: The lender in a deed of trust transaction. For property. property in the event of a default. 21-3 .will become your lender. separation. etc. To be accepted for assignment. training. Assignment of Mortgage: A contract that transfers mortgage ownership from one party to another. It requires a court order. it is usually only done for large. divorce. income producing properties. Bank: A financial institution that loans money from others for a fee. education. Balloon Payment: The final payment on a balloon mortgage. Assumption of Loan: The buyer takes upon himself the obligation to repay the existing loan as a condition of the sale. Bench Mark: A permanently fixed market in the ground used as a reference point of known location and elevation. Attachment: Seizure of property by court order. Assignment of Rents: A clause in a trust deed which gives the beneficiary the right to collect rents of the secured Attorney In Fact: One who is authorized to act in the place of another. Assignment can also involve a mortgage extension or recasting. and a receiver is assigned to collect the rents. Association: A nonprofit organization that can own property and transact business in its own name. Bad Faith: Actual or constructive fraud by secretly misleading another. Beneficiary's Demand: Instructions by a beneficiary (usually in writing) under a deed of trust stating and demanding the amount necessary for issuance of a reconveyance. circumstances beyond your control (such as: illness. A bankruptcy does not discharge obligations secured by a deed of trust. Base Line: The east and wet line that fixes the center of a township and range system. Assumption Fee: A fee charged by the lender for changing the records of a piece of property to a new owner who is assuming an existing loan. but unlike those worked out with a private lender. HUD's plan can provide for a longer term with lower payments.intentionally refusing to fulfill an obligation. Bankruptcy: A legal proceeding which allows a debtor to discharge certain debts of obligations without paying the full amount.

It is usually obtained in escrow when the landowner wishes to sell or refinance. Beni: Short for beneficiary. Certificate of Reduction: A document prepared by a lender showing how much of an existing loan needs to be repaid. As individual lots are sold. Buyer's Market: A market with few buyers but many sellers. Bill of Sale: A written agreement by which one person transfers his personal property to another. Caveat Emptor: Let the buyer beware. CAP: The maximum interest percentage changes under a VIR (Variable Interest Rate) loan. often covers an entire subdivision. conditions. paid by the seller. Bilateral Contract: A situation in which a promise is exchanged for a promise. Mortgage or deed of trust that covers more than one lot or parcel of real property. Brokerage Fee: Broker's commission. property received Breach of Contract: Failure to perform as required by a contract. Blockbusting: An illegal practice which causes panic selling so that property can be obtained for deflated prices. Capital Loss: The loss from the sale of property. Capital Gains Tax: An investment incentive which currently imposes federal taxes only forty per cent of the profits of a qualified investment held for more than six months. Capital Gains: Profit from the sale of property after accounting for the inflationary decline in value of money during the time the property was owned. 21-4 . usually a percentage of the sales price. Certificate of Title: A written opinion by an attorney as to who owns a parcel of land. Broker: A person licensed by the state to represent either the seller or buyers of property. Buy-Down: A cash payment given to a lender to reduce the interest rate a borrower must pay. Binder: A contract or restraint. loosely referred to as a real estate agent. and restrictions by which a property owner agrees to abide. Cash-On-Cash: The cash flow produced by a property divided by the amount of cash necessary to purchase it. The buyer must examine the goods or property and buy at his own risk. Blanket Mortgage: Also blanket Deed of Trust. Blind Pool: An investment pool where property is purchased after investors have already invested their money. CC&R's: Covenants. Chain of Title: Shows the chain of ownership from the present property owner back to the original source of title. Bequest: Personal under a will. a partial reconveyance from the blanket mortgage is ordinarily obtained.Beneficiary's Statement: Statement of a lender giving the remaining principal balance due on a note and other information concerning the loan. Cash Flow: The money left over each year after collecting rents and paying operating expenses and mortgage payments.

Co-broker: A person who finds prospects for the broker and receives a finder's fee for this referral. a security for payment of a debt. Closing Costs: The miscellaneous expenses involved in closing a real estate transaction. conditional and firm. FHA commitments are of two types. Clause: A section in a legal document addressing a specific provision. The former is a commitment of a definite loan amount on a parcel of property subject to approval of a presently unknown borrower who will be required to have a satisfactory credit rating. usually paid by the buyer on the closing date. defeats the deed and places the title back in the hands of the original grantor. Cloud on Title: A claim or encumbrance which appears to impair the title but which can be shown by proof to be unfounded. IT also may mean a requirement to be met or a contract which is to be completed or is in effect. Competitive Market Analysis: A method of valuing homes that looks at recent home sales. Common Elements: Those parts of a condominium in which each unit owner holds an undivided interest. Comparative Analysis: A method of appraisal in real estate in which selling prices of similar properties are used as the basis for arriving at the value estimate. Condition Precedent: A condition that must be fulfilled before title can be transferred. Collateral: The property pledged by a borrower to assure loan repayment. Closing: The finalization of the sale and purchase of property also referred to as a settlement. Color of Title: A fact which appears to support the claim to title but which can be shown by proof to be unfounded. stress. It is also known as the Market Data Approach. homes currently on the market and homes that were listed but have not yet sold.). Community Property: Property jointly owned by both husband and wife in which each has one-half interest. The latter type is an agreement by FHA to insure a loan on a specified property with a specified borrower. etc. COE: Close of escrow. Commitment: Pledge. repair shops.Chattel Mortgage: A pledge of personal property. Commercial Loans: Loans made to commercial businesses (restaurants. over and above the price of the property. Compound Interest: Interest paid on original principal and on the accrued and unpaid interest which has accumulated. Condition: A stipulation or qualification in a deed. Complaint: The first pleading in a civil action by a Plaintiff starting the lawsuit. Comparables: Estimating the value of properties similar to another properties of known value. promise or firm agreement. which if violated or not performed. Closing Statement: Balance sheet at COE itemizing accounting disbursements. Condition Subsequent: A condition which provides that if the owner 21-5 .

Conversion Loan: Short term financing for converting residential or commercial properties to condominiums. Declaration of Homestead: Document recorded to establish a homestead to protect the owner against judgment liens. This is done usually to reduce the amount of payments made each month or to get a lower interest rate. because of dealer status. Crier: The conducting auction. Conventional Loans: Real estate loans that are not insured or guaranteed by the government. Debtor: The person owing money. Condominium: Individual ownership of separate portions of a building plus joint ownership of the common elements. Corporation: A business owned by stock-holders. It does not protect against voluntary liens such as deeds of trust. Contract: A legally enforceable agreement made between two or more parties. Consideration: Anything of value given to induce another to enter into a contract. Cost Approach: Property valuation based on land value plus current construction costs minus depreciation. 21-6 . Contingency: A condition which must be fulfilled before a valid contract is in effect. Cooperative: An arrangement involving a multi-unit apartment building owner by a corporation which leases space to its share holders. Conditional Sale Contract: Contract of sale under which title remains in the seller until the conditions off the contract have been performed. Co-signer: A person who signs a note along with the borrower and becomes liable for repayment of the loan along with the borrower. Contract For Deed: A method of selling and financing property whereby the buyer obtains possession but the seller retains the title.fails to do something. Credit Lease Loan: Financing dependent on credit borrower instead of the value of his property. (Where one is attempting to serve two masters). Constructive Trust: Establishing those holding title or possession to property as trustee(s) for claimant/Plaintiff. Conveyance: The transfer of ownership of real property from one person to another. his title may be defeated and he may lose his title. Covenant: A written agreement or promise. Consolidation Loan: Combining several small loans into a single larger loan. Construction Loan: A loan where money is advanced as construction takes place. Creditor: A person or firm to whom money is owed. Conflict of Interest: Two competing interests which are irreconcilable. are ordinary income rather than capital gains. person the "crying" or foreclosure Dealer: One whose occupation is the sale of real property from inventory and whose profits on such sales.

Discount: To sell a promissory note for less than its face value. This is usually combined with the terms of the sale in the form of a deposit receipt and purchase contract. Forfeiture. settlement Deed of Reconveyance: The document which transfers legal title back to the trustor (borrower) from the trustee after a debt is secured by a trust deed has been paid.10 per $1. You will not Default: Failure to perform a duty or to discharge an obligation. The rate is $1. Deed: A document that conveys legal title of property to a neutral third party if borrower defaults on loan. Demurrer: A legal pleading which disputes the sufficiency of a Complaint or Cross-Complaint. Discounting by a lender means lending money on a note and deducting the interest in advance. Deterioration: Loss of value of physical structures de to wear and tear. Discount Points: A fee made by the lender to adjust the interest rate on a loan. Deed of Trust: A document that conveys legal title of property to a neutral third party if borrower defaults on loan. Documentary Transfer Tax: A method for counties and cities to tax real property transfers. Deed Restrictions: Provisions placed in deeds to control future use of land by homeowners. Deficiency Judgment: A judgment against a borrower if the sale of repossessed property at foreclosure does not bring in enough to pay the balanced owed on the mortgaged. You. Omission or failure to perform any act. Deed in Lieu of Foreclosure: A deed given by a trustor to the trustee for the benefit of the beneficiary to prevent foreclosure of the property. Document: Written instruments which record information which might be used in evidence in court. Discounting Interest: Taking of interest in advance. Depreciation: A gradual decrease in the value of a house (but not the land) due to wear the tear. Deposit Receipt: A form used to accept "earnest money" to bind an offer r the purchase of real property. Delinquent Loan: A loan payments are past due. or a question of law.Declaratory Relief: Court opinion determining the rights of the parties. The tax is usually Demand: People wanting to buy or rent a property. in which receive any financial from this process. 21-7 . Discount Broker: A broker who charges less than the prevailing commission rates in his locality. Avoids the trouble and expense to the lender and credit problems for you of foreclosure. give the lender full title to the property in exchange for being relieved of all financial responsibility under the mortgage. High demand usually results in high prices. the borrower. Department of Housing and Urban Development (HUD): A federal agency that sponsors programs to assist homeowners and community development.000 of equity. Most California counties require that a tax be paid prior to recording the deed. Low demand leads to low prices. without ordering anything to be done. Usually in foreclosures this means not paying the loan payments or principal.

Encumbrance: Any legal claim by a third party that limits title to property. stress. aggravation by conduct. Escrow: Money or documents held by a third party until the conditions of a contract are fulfilled. Equitable Relief: Result sought on basis of justice and fairness. 21-8 . Earnest Money: A deposit that accompanies an offer to purchase property.written on the deed and thus is useful in computing sale price. such as the use of a road. Escrow Account: A non-interest bearing account held by the lender which is sued to pay the borrower's property taxes. such as a lien. Escalator Clause: Contract clause that provides for upward or downward adjustment of certain items of cost or expense top cover specified contingencies. DOE: Fictitious party defendant of a lawsuit. Emotional Distress (the infliction of): The act of intentionally or negligently causing worry. lease or easement. Economic Duress: Forced business choice where there is no freedom of decision. Easement: The right for one party to use land belonging to another for a special purpose. Dragnet Clause: Broad clause in many deeds of trust in favor of a lending institution to secure already exiting loans. It is money used to purchase the equity in real estate. conduct or silence. Estate: The interest or right which a person has in real estate. to impose a benefit for Plaintiff. no reasonable alternative. Equity Mortgage: A loan made against the appreciated value of the borrower's property. Duress: The use of coercion to force a person to act against his or her will. Equitable Estoppel: Judicially stopping one whose acts. Equity Capital: The difference between total capitalization (in money and property) and debt capital (loans). Encroachment: The unauthorized intrusion of a building or other improvement onto another person's land. The clause extends the deed of trust to cover every past and present obligation between debtor and creditor. Due-On-Sale: A clause in a note or mortgage that gives the lender the right to collect the entire unpaid balance of the loan if the property is sold. denies claimed rights to be asserted. Dower: The right of a widow to a portion of her deceased husband's property. Eminent Domain: The government's right to take private property. with just compensation for public use. insurance and other periodic expenses connected with the property. by imposing conditions of action or inaction upon others. Equity Purchase: Buying the equity -the amount obtained by subtracting liens from value. Equity: The market value of property above the debt against it.

Federal Tax Lien: An obligation to the United States government as a result of non-payment of taxes. sealing and delivering. a signed instrument. printing press money. First Mortgage: The first recorded mortgage on a property. to make. to execute a contract is to perform the contract. Housing FHLBB: Federal home loan bank board. Exclusive Listing: A contract in which a seller gives a real estate agent the sole right to sell his property. First Position: The most senior lien or encumbrance on real estate title records. part private corporation which buys and sells mortgages. Federal Home Loan Bank Board: A federal agency that regulates federally chartered savings and loan associations. National Federal Housing Administration (FHA): A government agency which insures residential mortgages against loss due to default. Finance Charge: A fee imposed on the borrower in order to make a loan. to do. Federal National Mortgage Association: Originally organized by the federal government but later converted to a part public. An unrealized or "paper" profit. to complete. They impose certain structural and qualifying standards which have been used as a standard throughout the real estate industry. to make a deed. Has senior priority and is the first to be paid in the event of foreclosure. Excess Equity: The amount of equity above the amount paid for it. for information useful to a broker. Exclusive Right to Sell: A listing that gives the broker the right to collect a commission no matter who sells the property during the listing period. including especially signing. Fiat Money: Money created by the government. Executed: A contract that has been fully performed. Fixed Rate Mortgage: A mortgage where the interest rate remains constant throughout the term of the loan. Fee simple: The largest collection of rights that a person can hold in a piece of real estate. Finder's Fee: A fee paid to a person not requiring a license. to follow out. Evict: The forced physical moving of a person in real property. Fair Market Value: The highest prices that a seller can expect to obtain from the sale of property or assets at current market conditions. to follow out to the end. Fiduciary: A person placed in a position of trust and confidence such as between a broker and client. FHA: See Federal Administration. to perform. Execute: To complete. Extension: An agreement by the lender which allows a borrower to make smaller payments on existing debt over a longer period of time.Estoppel: Forbidden by law to speak against one's own act or deed. to execute a deed. 21-9 . Fannie Mae: See Federal Mortgage Association.

Fraud involves cunning. General Damages: Damages implied. F. The F. Floating Rate Mortgage: A mortgage that has an interest rate which fluctuates with the lending institutions prime rate.one of indefinite duration. Government National Mortgage Association: Also known as Ginnie Mae. by payment of loan funds.Flat-fee Broker: A broker who will list a property and help the owner sell it for a fixed fee. Forty Thieves: A colorful name for the professional foreclosure buyers in one area. Free and Clear: "Free" means a freehold estate -.: Abbreviation for the Federal National Mortgage Association. It is an agency which buys big blocks of loans from banks. The securities are guaranteed by the loans behind them. Usually the sale will occur within a short period of time. Usually there are appreciably fewer than forty of them. rights. General Index: County recorder's record of documents filed. or presumed.N. deception. a sheriff. GI Loans: A guaranteed loan available to veterans under a federal government program administered by the Department of Veterans Administration. a judge. thus enabling the banks to loan more money. gets its money by selling securities in the market to investors. or artifice to cheat or deceive another person. or another official.A. Ginnie Mae: See Government National Mortgage Association. Freddie Mac: Federal Home Loan Mortgage Corporation. Garnishment: A procedure by which a portion of a debtor's wages are held back to repay creditors. collusion. Forbearance agreement: A type of repayment plan (usually written but may be oral) made between the mortgagor and the mortgagee. Under a forbearance agreement the lender allows you a time during which you make lower mortgage payments until the loan is up-to-date again. "Clear" indicates that there are no money encumbrances against the title.M. This false action causes a loss of property or of legal 21-10 . Funding: The financing. The owner is forced. as a direct result from another's breach or wrong.A. Often the actual sale is carried out by someone other than the owner: a trustee. near the close of escrow. Future Advance Clause: Clause in a deed of trust permitting the lender to make additional advances in the future that will also be secured by the deed of trust. usually by law.M. Forfeiture: Loss of anything of value due to failure to perform. Fraud: An intentional false representation or concealment of a material fact which is used to induce another person to act. organized alphabetically by names of parties involved. Gift Deed: A deed that states "love and affection" as the consideration rather than cash or other assets. to sell a property for whatever it will bring.N. is a part of HUD and sponsors a mortgage backed securities Foreclosure: The procedure by which a person's property is taken and sold to satisfy an unpaid debt. Forced Sale: An involuntary sale of real property.

rather than compensatory. Grantor: The owner of the thing being granted. Homestead Protection: State laws which protect the homeowner against forced sale of his property. subsidies for Grace Period: A period of time after the due date of a loan that is not subject to late penalties. Hypothecate: To give property to secure a debt without having to give up possession of it. Establishes the value based upon multiple of the gross annual income. Incorporate by Reference: include without repeating. Gross Multiplier: Method of appraising income property. Grant: The ownership. It is backed only the assets or reserves of the guarantor. The person who makes a grant. Injunction: A prohibitive writ. Impound Account: An account set up by a lender for receiving payments from the borrower of real property taxes. which has no adequate remedy in money damages. deal honestly. Guardian's deed: A deed used to convey the property of a minor. Gross Annual Income: Total yearly income of a property before deduction of expenses or of vacancy factors. fairly and in good faith with the other parties. In the case of a deed. Highest and Best Use: That use which is most likely to produce the greatest net return to the land and/or building over a given period of time. 21-11 . Insider: One of the professional foreclosure investors who are known by other professionals. Income Approach: A method of estimating the value of property based on the monetary returns that the property can be expected to produce. To Indicated Value: Estimating the worth of property based on the recent sales of comparable properties. Implied Covenant of Good Faith and Fair Dealing: An unwritten part of every California contractual relationship to Grant Deed: The customary document used in California to transfer title to real property. allowing or stopping an act which is unjust and inequitable. HUD: Department of Housing and Urban Development. Inadequate Remedy at Law: When the relief sought is preventive. the seller.) Improvement District: An area that receives the benefits of a special public improvement which is paid for by its residents. (For restrictions on use see CC law #2954-2955. after. insurance premiums or other payments relating to the property in monthly installments. Guarantee of Title: A guarantee by an abstract company or title company that the title is vested as shown on the guarantee.program and provides residential loans. act of conveying Graduated Payment Mortgage: A fixed interest rate mortgage where the monthly payment starts low and then increases. Grantee: The person named in a deed who buys real estate. INFRA: Below.

Lease: A contract that gives the right to use property for a period of time. savings and loan association. Lien: A claim on a debtor's property as security for payment of a debt. Judgment: The final determination of a court on a matter presented to it. Joint Tenancy: A type of ownership of property by two or more people with equal interest in the property and in the right of survivorship. IRS: Internal Revenue Service. pension fund. Legal Description: A proper and formal method of describing a parcel of real estate that is recognized by law. Into It For: A phrase which indicates how much money the person paid for the property plus all liens and loans against the property for which the owner is obligated. such as a tax lien. Instrument: A written legal document. Lessor: The landlord. Institutional Lender: An entity such as a bank. Junior Mortgage: Any mortgage that has a lower priority than the first mortgage. Should one die. the others inherit all rights of the deceased person. or real estate investment trust that invests depositor's or client's fund in secured real property loans or other loans. Joint Venture: The association of two or more parties in a single business dealing. Insurance Premium: The amount of money that must be paid to the insurance company for the coverage. Interest-Only Loan: A loan for which only interest is paid until the end of the term when the entire principal becomes due. Involuntary Lien: A lien imposed against property by operation of law without consent of the owner. the taxcollecting arm of the U. Landlord: Owner or lessor of real property. Liability: A debt. 21-12 Leverage: The process of making money in real estate by using someone else's money. Interest: The fee for the use of money. Interference with Interim Loan: A short term construction loan which is usually replaced by a longer term loan. There are several methods used. Into the Property for. government. judgment lien or mechanic's lien. Intermediate position that until default passes to the Theory: The legal a mortgage is a lien at which time title lender. life insurance company. . An order of a court.S. Irreparable Damages: Damages for which no certain monetary standard exists for measurement. Late Charges: A charge imposed by a lender for late payment of the amount due on a promissory installment note. Judgment Lien: A claim against property in favor of the holder of a court-ordered judgment. Lessee: The tenant.Installment Contract: The selling and financing of property where the seller retrains title but the buyer takes possession while making payments.

Limited Partnership: A partnership having one or more limited partners and one or more general partners. Lock-in Clause: A condition in a mortgage that prevents the borrower from paying off the loan before a specified time. Much like a share holder in a corporation. Loose Money: Funds lenders have immediately available to loan. 21-13 . Loan Servicing: The task of collecting monthly payments and handling insurance and tax impounds. the limited partner does not make decisions in running the partnership. Lis Pendens: A notice lawsuit delivered to recorder's office at lawsuit to foreclose is of a pending the county the time a filed. Loan-to-Value ratio: The amount of money a lender will loan on a property divided by its appraised value. Limited Partnership: A partnership in a business venture composed of limited partners who supply financial backing and general partners who operate the partnership. the broker is entitled to receive an agreed commission payment from the owner. Loan Commitment: An oral or written promise to process a loan in a limited period of time. Limited partners have limited liability. Maker: Their person who signs a promissory note. at specified interest rate. prepayments and mortgage releases. Limited Partner: The passive investor in a limited partnership. Loan Broker: A person who negotiates loans between borrower and lender. Littoral right: The right for a land owner to use the water of a lake or sea bordering his land. Limited Partners: A partner who provides capital but is not involved in the management and has limited liability. If the broker brings a buyer who offers the purchase terms specified in the listing contract. usually 30-60 days. Line of Credit: Money that a lender makes available to a borrower. Life Estate: The conveyance of fee title for the duration of the beneficiary's life. Listing: An employment contract between an owner and a broker empowering the broker to attempt to find a buyer for the property of the owner. general partners have full liability and are responsible for management and control of the business. terms and charges/fees. Loan Fee: A fee charged by the lender over and above the annual interest in order to make the loan. Loan Escrow: An escrow account opened for the purpose of repaying a loan. Liquidate: To convert assets to cash. delinquencies.monthly payment. Loan to Facilitate: A loan made by a lender to facilitate the sale of real property which the lender owns. Liquid Assets: Assets that can be converted to cash in a short amount of time.Lien Theory: The legal position that a mortgage creates a charge against property rather than conveying it to the lender upon default by the debtor.

to cause damages. Merchant Builder: One who builds for sale. Mortgage Extension: May be used after a period of reduced or suspended payments. Method of Money Damages: Compensation paid in lieu of fulfilling contract obligations. Monthly payments are adjusted so that missed amounts are gradually paid back. Market Value: The highest price a seller can reasonably expect to obtain from the current sale of property. that the property owner is not entitled to any rights under the Soldier's and Sailor's Civil Relief Act of 1940. Modus Operandi: operation. Mortgage Recasting: May also be used after a period of reduced or suspended 21-14 . in writing. Mortgage Guarantee Insurance Corporation (MGIC): The oldest and largest private mortgage insurance company in the United States.Malicious: Intentional doing of a wrongful act. terms of a promissory note or the phraseology of a deed of trust. payments. Mortgage Banker: A company that makes mortgage loans and then sells them to other financial institutions and investors. The lender allows payments to be made after the original term of the mortgage in order to make up for earlier missed or reduced payments. Mortgage Broker: A person who brings together borrowers and lenders. scheme. To keep monthly payments low. Mortgage Company: A firm that specializes in making real estate loans and selling them to investors. Market Price: The price actually paid for property. Market Approach: A method of valuing a property based on the prices of recent sales of similar properties. setting forth all the boundary lines together with their terminal points and the angles between the lines. Mortgagee: A lender who receives a mortgage as security for his loan. Military Affidavit: A sworn statement. Mortgage Pool: A fund of mortgage loans that is used as an investment. Meridian Line: The north and south line that fixes the center of a township and range system. Metes and Bounds: A method of describing the boundaries of land. Mortgage: A lien on a property which a borrower gives the lender as security for repayment of the borrowed money. Mechanic's Lien: A claim placed against property by workmen or material suppliers for unpaid services or supplies. Modification Agreement: An agreement between the beneficiary (lender) and trustor (property owner) to change the Mortgagor: A borrower who pledges his property in order to gain a loan. without cause. Middleman: A person who brings two or more parties together but does not conduct negotiations. the recasting agreement may also Maturity: The end of the life of a loan when all payments have been made.

g. Narrative Appraisal: An unusually thorough appraisal report that can run in length up to 100 pages. National Association of Realtors (NAR): The largest association for realtors in the United States. secured by a Deed of Trust. Non-Assumption Clause: A condition stated in a note or mortgage that gives the lender the right to call the entire loan balance due if the property is sold. something which TARM (The Average Reasonable Man) would not do. It guarantees that the person signing is the person with the same name as that of the signature. Recasting is a change in the mortgage terms. so that the principal increases and the borrower owes more than when the loan was originated. Note: A signed document in which one party promises to pay on a debt to another party. Negative Amortization: A situation where the interest rate is higher than what is being paid. A living person legal person (a New Income or Net Spendable: The cash remaining from the gross income after deducting operating expenses. Note Modification: A contract which modifies an existing note.provide for extending the period of the mortgage.. Municipal Bond Programs: A source of home loans that receives financing from municipal bonds. Net Spendable: The amount of money remaining at the end of the year after collecting rents and paying operating expenses and mortgage payments. failing to meet the standard care required by duty to others. a promissory note or check meeting certain legal requirement) that allows it to circulate freely in commerce. principal and interest payments and income taxes. Notarize: To witness a signature on a document and to place a notary public's seal on that document. Notary: A state witness before whom certain acts are performed and statements sworn to as being true. Given a longer period monthly payments can be lower. assignable or transferable in the ordinary course of business. Natural Person: contrasted to a corporation). on real property. but you will pay more interest. Net Listing: A listing where the brokers commission is determined by the difference between the selling price and a minimum price set by the seller. Negative Cash Flow: A condition where the amount of cash paid out exceeds the cash brought in. Negotiable Instrument: Instrument (e. IT is recorded in the county recorder. Multiple Listing Service: An organization that provides a means for brokers to exchange information on listings. Mutual Consent: Both parties freely approve of or assent to the terms of a contract.'s office and shows that the borrower is behind on payments. Negligence: Doing. Negotiable: Capable of being transferred by indorsement. Notice of Default: The first step in the foreclosure process. 21-15 . Net Lease: A lease where the renter is responsible for paying operating expenses and taxes as well as the rent. or failing to do.

Operating Expenses: The minimum expenses necessary to maintain the production of income. security deposits." Origination Fee: A fee charged by the lender in order to make the loan. gutters. Outsider: Someone who bids at a foreclosure auction and who is not a 21-16 Offset Statement: Statement customarily furnished to an escrow holder from a tenant regarding rent. Offsite Improvements: Grading. (See also beneficiary's statement. paving and other improvements to the land excluding buildings. Participation Loan: A mortgage loan in which the lender receives . Recorded in the county recorder's office. P&L Statement: statement. Such a person is sometimes known as an "outside bidder". Package Mortgage: A mortgage secured by a combination of real estate and personal property. For example: "The borrower will pay $100 a month or more. Partially Amortized Loan: A loan that begins with amortized payments but ends with a single balloon payment. Someone who is not recognized as a professional foreclosure buyer by the other professionals. Optionee: The person who receives an option on property. curbs." Partial Release Clause: Allows a portion of the property to be released from a mortgage when part of the loan is paid off. (see Fin C Law 500072. feelings or rights of another. statement furnished by an owner of land subject to an encumbrance as to the amount due. the document is advertised and posted. Profit and of to loss PAC: Political Action Committee. Option: The right to purchase or lease property at a predetermined price within a specified time. It is sometimes called a "deed of partial reconveyance. Optionor: The owner of the title who gives an option. Outrageous Conduct: A serious insulting or abusive wrong committed to the person. "Or More": The clause in a trust deed or note which permits an early pay-off of the loan. and other rights of possession in the sale of income property.) Open-end Mortgage: A mortgage which contains a clause which allows the mortgagor to borrow additional money on the mortgage without paying ordinary financing charges.) regular foreclosure professional. drains. sidewalks and public utilities. Also. fences or landscaping. IT also contains the legal description of the property to be sold. installing sewers. Partial Reconveyance Deed: A deed used to reconvey a portion of land encumbered by a blanket trust deed or mortgage. Open Listing: A listing that gives brokers a nonexclusive right to find a buyer. Ownership and Legal Right Possession: Lawful title something. It gives the time and location of the trustee's sale.Notice of Trustee's Sale: The last step before the foreclosure auction. Overencumbered Property: Property which has a market value less than the loans against it.

Postponement: A verbal announcement made at the time and place of the scheduled trustee's sale. morals or general welfare of the public. interest. Passive Investor: An investor who does not want to be involved with management control of the investment venture." Points: A percentage of the loan amount paid to the lender for the privilege of borrowing money. Party: A term that refers to a person involved in a business or legal proceeding. automobile and personal furnishings) less total liabilities. Prepayment Clause: A provision in a loan agreement permitting the debtor. He's in the foreclosure "game. they share the profits in certain portions as agreed. Preliminary Injunction: An injunction ordering or restraining conduct until the time of trial. IT is usually a written agreement. Preliminary Title Report: A report from a title company of the present condition of a title. to pay part or all of the balance of the debt before its due date. taxes. requiring a penalty for early payoff.interest profits. Prayer: Request for relief in a lawsuit (Complaint or Cross-complaint. Portfolio: A collection of mortgages and other investments held by an individual or company.) 21-17 . PITI: A loan payment that combines principal. This is an illegal activity. One point equals one percent of the loan amount. Partnership Agreement: The agreement between the partners setting forth their rights and duties. for consideration. The announcement establishes the nw time for the trustee's sale. preferring to rely on the expert judgment of a professional. Payday: The paying of a potential buyer at a foreclosure auction so that he will not bid. Plat: A map showing the location of individual properties Player: A popular term for the equity purchaser. plus a percentage of the Perjury: A deliberate while under oath. or foreclosure investor. Primary Financing: The trust deed and note that has first priority. thus saving interest. Police Power: The right of the state to regulate the use of private property for the protection of the health. The report is made prior to the issuance of a policy of title insurance. of the principal balance--usually 6 months' interest. safety. Personal Net Worth: Generally refers to total assets (exclusive of home. Power of Attorney: Written authorization given to one person to act in behalf of another. Power of Sale: A clause in a mortgage to conduct a foreclosure sale without having to go to court. in part or full. lie made Partnership: Two or more person joined together for the operation of a business. and insurance. Prepayment Penalty: A clause in a Note and/or Deed of Trust.

Punitive Damages: damages. Quitclaim Deed: A simple document that conveys any claims the grantor has to the grantee. contains no covenants. producing damage. operating expenses and net operating income. The highest priority obligations are paid first. Proximate Cause: The direct cause. He will do this before allowing them to bid at the sale. It is used in surveying and describing the location of property. IT is a way for a seller to extend credit to a buyer when he does not have all the purchase money. without which the result would not have occurred. Range: A column of townships that parallels the Meridian Line. if injustice can be avoided only by enforcement of promise. Quite Title: Establishing Plaintiff's title to real property by compelling an adverse claimant to establish his claim or be forever barred from asserting it. Punishment Probate: A minimum four-month period during which the Superior Court has jurisdiction over the administration of the estate of a deceased person. Real Estate: Land and anything that is made a part of is such as a 21-18 . Probate Court: Superior Court which has authority over property of deceased persons. Publication Period: The interval beginning after the reinstatement period and ending with the trustee's sale. warranties nor implications of the grantor's ownership. Publication Letter: The authorization from the beneficiary to the trustee to begin publication of the notice of trustee's sale. Prospectus: A disclosure statement that describes an investment opportunity. Promissory Note: A written promise to repay a loan. (Same as Agreement For Sale. Purchase Money Mortgage: A loan used to purchase real property. Purchase Contract: A document whereby the purchaser agrees to buy a specific piece of real estate and the seller agrees to sell. Principal: The actual amount of money borrowed before finance and other charges are added. Qualifying: The person conducting a foreclosure auction asks potential bidders to prove that they have enough money to purchase the property.Prime Rate: The interest rate banks charge their top borrowers at any particular time. Promissory Estoppel: A promise which is reasonably expected to. and does. During the publication period. posted and recorded. Pro Form Statement: A statement that predicts income. the notice of sale is advertised. Priority: Determines which loan or lien is to be paid off first with moneys realized from a foreclosure sale or a tax sale of a property. induce action or forbearance and is binding.) Purchase Money Encumbrance: Any money or trust deed that is given by a buyer to a seller for all or part of the purchase price. then any remaining money goes to the lower priority ones. minors and insane persons.

E. or understanding of the parties. realty. Repayment Plan: A written or oral agreement made between you. During this period. Often the term is restrictively used to mean real property owned by a lender as a result of the lender's foreclosure proceedings. Refinance: To pay off an existing debt to obtain another. Reformation: Equitable remedy to reform or rewrite contracts which fail. Reinstatement Period: An interval of three calendar months following the recording of a notice of default. the borrower (mortgagor). Recision of a Notice of Default: The document removing the effect of a previously recorded notice of default. R. to by reclaim paying Release Clause: Mortgage or Deed of trust clause providing for release of specified portions of the property on payment of a specific sum of money. Rehabilitation: The restoration of a property to a satisfactory condition without drastically changing the plan. mutual mistake. Realty: See real estate.: The abbreviation for "Real Estate Owned". Same as real property and Regression: An appraising principal stating that a high-valued property placed in a neighborhood of lower valued property seeks the level of the lower valued properties. Rent: Consideration paid for the use and possession of a property. and that which is immovable. through fraud. to express the parties' true intention. Generally these agreements Redlining: Refusing to make loans for property in certain neighborhoods. The term is used to describe properties owned by institutional lenders after foreclosing on loans secured by the properties. Regulation Z: A federal law requiring lenders to show borrowers exactly how much they are paying for credit. that which grows on or in the land. that which is attached to the land. Reinstatement: Curing of a default by a borrower and restoration of the loan to current status through payment of past-due amounts. (mortgagee) to help the borrower to make up missed payments. Redemption: The right ownership in property previous indebtedness. form or style or architecture.O.house. Real Property: Land. Release: Giving potential claim. up a claim or Real Estate Owned: Real property owned by a lender. a default may be cured when the owner pays whatever is owed to the lender. Record: To file for record in the office of the County Recorder. It must be signed by the beneficiary and recorded by the trustee. This gives constructive notice to the world of the contents of the document. and the lender 21-19 . or because a lender took a deed in lieu of foreclosure. Reconveyance: An instrument which is recorded on real estate chain of title when a loan secured by Trust Deed. Realtor: A real estate broker who is a member of the National Association of Realtors. is paid off in full.

Reserves: The setting aside of a specific amount of money to be used for future expenses. Repo: Short for "repossession". Your lender or the mortgage servicer is usually willing to make these arrangements with you. 21-20 Security: Collateral. You must not agree to a payment plan you cannot live up to. Second Mortgage: A mortgage that is obtained on a piece of property when one is already in existence. property pledged or hypothecated to secure payment of a debt or performance of an obligation. Recision: The mutual agreement of the parties to a contract to release each other. Reproduction Cost: The cost of reproducing a new replica building on the basis of current prices with the same or closely similar materials. Seasoned Loan: A loan that has been in existence long enough to demonstrate the borrowers diligence in payment. Such an agreement is illegal. Restraint of Bidding: An agreement by two or more people to not raise the bidding on a property being sold at a foreclosure auction. Request for Notice of Default: Notice recorded by the holder of a junior lien requesting that he be notified if a notice of default is recorded under a prior deed of trust. Security Agreement: Agreement between lender and borrower creating a security interest in property pledged or hypothecated. Reverse Mortgage: A mortgage contract where the lender makes monthly payments to the homeowner who later repays in a lump sum. A property which a lender owns after a foreclosure sale. contact the mortgage servicer in person and explain what caused the delinquency. Risk Factors: Those elements of a given investment which serve to create a risk of loss of the invested capital. Section: One of the 36 squares in a township. The lender has "repossessed" the property much as a bank would repossess an automobile upon which they loaned money. Security Device: The document used when property is used as a . Restrictive Covenants: Clauses in deed which restricts what the landowner can do with the property. To establish a repayment plan. It contains 640 acres and is one square mile. Secondary Mortgage Market: The buying and selling of existing mortgages. Satisfaction of Mortgage: A certificate from the mortgagee that the loan has been repaid.require higher payments than the regular monthly mortgage amount for a short period of time (3 to 6 months). but you must be willing to pay what you realistically can afford. Rescind: To cancel a contract from the beginning. Sale by Advertisement: This allows a lender to see a property under foreclosure without going to court first. until the loan can be brought up-todate. Be open and honest. to restore the parties to their original positions. Secondary Financing: Junior trust deeds or mortgages.

Simple Interest: The amount paid for the money lent at a certain rate agreed upon by the parties or fixed by law.: Standard Operating Procedure. Step-Up Rental: A lease includes agreed upon increases. It offers some protection against their being foreclosed upon. Similar to a super bargain. Soldier's and Sailor's Relief Act: An act passed by Congress in 1940 for the financial protection of those people entering the military service. 21-21 Seller's Market: A market condition where there are much more buyers than there are sellers. Statutory Redemption: The right of the borrower to reclaim property after a foreclosure sale has taken place by paying his debt. Sheriff's Deed: Conveys title of property to buyer as a result of a court-ordered foreclosure sale.P. A type of straight note. Shared Appreciation Mortgage: A mortgage in which the borrower gives the lender a share of the property's appreciation in return for a lower interest rate. chattel trust. rather than in installments. Settlement: A meeting in which property is conveyed to the buyer. that rent Straight Line: A method of calculating depreciation whereby an equal sum is set aside annually from income to pay the cost of replacing improvements which are presumably deteriorating or losing value.security for a loan. a land contract. Senior Mortgage: A mortgage that holds first priority over any others in the event of a foreclosure. Statue of Frauds: A law requiring that certain types of contracts be written in order to be legally binding. Subdivision: A division of land into 5 or more parcels with the intent . equipment trust. Steal: A popular term for a very good purchase. It thus encompasses such terms as the following: chattel mortgage. Separate Property: Property owned by a husband or wife which is not community property. Single Person: A person who has never been married. Square-Foot Method: A method used for appraising a property based on the square foot construction costs of similar buildings. Terms on the loan are usually only five years or less. Not all steals are truly super bargains. Special Warranty Deed: A deed that contains a parties that the grantor has not encumbered the property. Sleeper's Note: Promissory note on which no payments are made until the note is due and payable. Security Interest: A term designating the interest of the creditor in the property of the debtor in all types of credit transactions. Statue of Limitations: The time limit allowed by law in which a wronged party can seek justice in court. pledge. S. At that time all principal and interest must be paid. A mortgage loan with no amortization payable at interest only payments. less clearly defined. Straight Note: Note in which the entire principal is repaid on one sum. trust receipt. conditional sale and inventory lien.O. a mortgage. however. A trust deed.

Super Bargain: Buying a property for two-thirds or less of its market value. before. Substitution of Trustee: A written document by which one trustee is appointed in place of another. Tax Deed: Conveys title to property that has been sold by the government because of the non-payment of taxes. Tenancy in Partnership: Ownership by two or more people who unite their property in a lawful business venture. Syndicator: The sponsor forms the syndicate. 21-22 . joint venture. Tax Lien: A lien placed on property to insure the payment of taxes. Tight Money: Refers to a condition in which loan money is in short supply and loans are hard to get. mortgage or other lien. to an Summons: A notice to defendant or cross-defendant that an action has been started and that a judgment will be entered against him if he fails to answer. Subordination Clause: A clause in a trust deed or mortgage by which the lender relinquishes his priority to a subsequent trust deed. Tax Shelter: A savings in income tax that an investment can produce for its owner. Subject to the Existing Loan: The homeowner sells his property without paying off his mortgage. The buyer then makes payments to the seller but does not take personal responsibility for the loan. Surface Rights: The right to use the surface of a piece of real estate. Subordination Agreement: Agreement under which a prior or superior lien is Take-Out Loan: A long term arranged to replace a short construction loan. who Tenants in Common: Ownership in a single piece of property by two or more persons. Syndicate: Pooling arrangement or association of persons who invest in real property by buying shares in some type of organization such as a partnership. Term: The length of time it takes for the loan to be paid in full. Surplus Money Action: A claim file by a junior mortgage holder for payment as a result of a foreclosure sale. Tax Loss: A paper loss which the individual may show in his or her tax return. It benefits the borrower. Subordinate: To make inferior or junior to another interest or lien. Sublease: A lease that is given by a renter. SUPRA: Above. corporation.to sell. lease or finance now or at any time in the future. or other entity. Subsurface Right: The rights to the use of land below the surface. loan term made inferior or subject otherwise junior line. Tax Free Exchange or Tax-Deferred Exchange: A method of deferring capital gains by exchanging real property for other like property. Term Loan: A loan in which only interest payments are made until the end of the term when the entire principal becomes due.

21-23 . Unimproved Real Property: Land without a building or other man-made improvement. TRO: Temporary Restraining Order. Unlawful Detainer Auction: A lawsuit to evict a tenant or former owner who unlawfully remains in possession of real property. Unilateral Contract: A contract where a promise is exchanged for a specific performance. and to compensate the insured against loss on account of title defeats. Mortgage title insurance insures only the lender against faulty real estate titles. also known as adverse possession. Undivided Interest: Ownership by two or more individuals. The guarantee is obtained by the trustee before initiating a trustee's sale. Title by Prescription: Acquiring ownership to property through prolonged and unauthorized occupation. Tort: A civil wrong or injury violating a duty imposed by statutory or case law. It is used to locate property. Unsecured Note: A loan which is not secured with collateral and is given on the basis of a borrowers credit worthiness and signature. Also called raw land. Trustee: A person who holds property in trust for another to secure the payment of debt. Townhouse: A multiple dwelling with shared walls but individually owned. Transfer Fee: The lender's fee to substitute a new debtor (trustor) on a Deed of Trust. Title: A document showing evidence of ownership.Time-Sharing: Shared ownership of property in which owners are given specified numbers of days that they can use the property each year. Township and Range System: The crossing of a base line and meridian line that fixes the point from which a system of townships and ranges are identified. Usury: Usually refers to charging an interest rate higher than that permitted by law. Trustor: The borrower in a deed of trust. Trustee's Sale: An auction sale of the property described in a deed of trust that is the subject of the trustee's sale proceeding. Township: A unit of land containing 36 square miles. it is 6 miles long on each side. Trust Deed: See Deed of Trust. Trustee's Sale Guarantee: A policy of title insurance that accompanies a title report on a property. each having the right to use the entire property. Title Insurance: Insurance policy with a title insurance company by which the company undertakes to defend a title if another party makes claims to it. It insures the trustee as to the completeness and correctness of the information about the title situation of a property contained in that report. Title Search: An examination of publically available records and documents to determine current legal ownership of a parcel of land. Owner's title insurance insures only the owner's interest. Trustee's Deed: Deed given by the trustee under a deed of trust when the property is sold under the power of sale.

VA: See Veterans Administration. Veterans Administration (VA): Government agency which guarantees loans given to qualified veterans. Voidable Contract: A contract that obligates one party to fulfill his part but allows the other the right to cancel the agreement. Void Contract: A contract that is no longer legally binding. in turn. Vender: A seller. Zoning: Governmental relating to the use of land. Wraparound Mortgage: A second mortgage in which the lender assumes the first mortgage. or as a result of. Wait of Execution: A process of the court under which property is seized and sold. Warranty: A guarantee statement is true. Variable Formula: The conditions which determine the size and frequency of interest rate changes. Voluntary Lien: Any lien placed on property with consent of. Variable Rate Mortgage: A mortgage loan in which the interest rate rises or falls with prevailing rates. the voluntary act of the owner. Vendee: A buyer. The borrower makes one payment to the second mortgagee who. sends the proper payment to the first mortgagee. that a Warranty Deed:A deed which contains a covenant whereby the grantor agrees to protect the guarantee against any claimant of title. 21-24 .

...9-31 Other defenses.............16-2 4 Steps to Financial Freedom.....................................................8-9 Conventional Refinancing.....................................................9-35 5 Types of Loans............................................................14-1 Suggestion 3: How To Explore New Possibilities 15-1 4 Important Basic Questions.....................................................................3 Step 1: Become Familiar with the Action Guide Summary......1-1 Step 2: Make Time To Work Through The 8 Options .........................................9-29 Model 5: Suing against an unlawful debt....8-4 5-Step Approach: How To Use This Book To Fit Your Needs Quick.........9-15 Model 1: Suing a bank..................................................................................... 9-36 Model 2: Suing a mortgage company or a financial institution.......................................................5-3 Step 4: View financial planning as an ongoing process.........9-22 Model 3: Suing before a sheriff's or trustee's sale ....................15-4 3 Suggestions Suggestion 1: How To Act Quickly...........5-3 Step 3: Formulate a plan for reaching your goals .........................................9-20......................................8-7 The Equity Line of Credit.....................................................................................................................................8-6 Hard Money Loans..........13-1 Suggestion 2: How To Maintain A Clear And Calm Mind............5-2 Step 2: Decide where you want to go............................2-1 ......................................................................5-2 Step 1: Determine where you are financially.................................................................................9-28 Model 4: Suing after a sheriff's or trustee's sale ......................................................................................8-4 Borrow From Friends Or Relatives..7-4 5 Model Lawsuits............................5-4 5 Keys to Successful Workouts.................................INDEX 1001 Uses For A Brick..................................8-7 Second Or Third Mortgages............

............2-1 Win by Changing Your Mortgage Terms.............13-5 Habit 2: Begin with the End in Mind....... 5-4 Step 4: Now You Are Ready To Actually Start Budgeting!...5-4 Step 2: The Forecasting stage..........................5-6 Acknowledgements..........5 Act Quickly.4-1 Make Time To Work Through The 8 Options.........3-1 How to Win by Giving Away Your Property...............................................7-1 Win by Reorganizing Your Finances..................5 ...16-1 7 Habits of Highly Effective People Habit 1: Be proactive..............................................9-1 How to Win if You are in the Military...5-4 Step 3: The Planning Meeting With Your Family.......12-1 How to Win by Refinancing Your Property.....................................5-5 Step 7: Controlling Spending And Operating A Successful Budget...................Step 3: First Read The Options That Seem Most Relevant To You............13-6 Habit 7: Sharpen the Saw.............................................................................5-5 Step 5: First Month's Progress Report..10-1 How to Win Through Bankruptcy..................13-6 Habit 4: Think Win/Win...............................13-6 Habit 6: Synergize.................................................................5-6 Step 1: The planning stage...................4-1 Step 5: Complete The Action Plan To Find A Solution..............13-7 8 Options Section................5-6 Helpful Hints...6-1 Look For Other Ideas In The Book That May Be Helpful.........................1-2 8 Steps to a Successful Budget Emotional Insights Into Budgeting Attitudes.....................................11-1 How to Win by Using the Legal System.......13-6 Habit 5: Seek First to Understand.................................................. Then to Be Understood.............................................5-1 8 Options To Fight Foreclosure.........................13-1 Action Guide....3-1 Step 4: Look For Other Ideas In The Book That May Be Helpful..1-38 First Read The Options That Seem Most Relevant To Your Case...............................................................................3 Action Guide Section.......5-5 Step 6: Continuing on in the Future Months.............................................. How To.........................................................................................8-1 How to Win by Selling Your Property.........................................................................................................................................................13-6 Habit 3: Put First Things First....................................5-5 Step 8: A Look Back...................................................................................................

..............16-1 Suggestion 1: How To Act Quickly..................................................................16-5 Adjusted Rate Mortgage (ARM)..................16-7 Option 2: How to Win with Bankruptcy....................................................16-55 Option 7: How to Win by Selling Your Property ..........................................................1-4 Maintain A Clear And Calm Mind..1-7 How To Win With Bankruptcy.... 1-9 Contents............................15-1 Affirming your prosperity ...........8 Options to Fight Foreclosure and 3 Suggestions ...............15-2 Affordable Housing Act..............1-4 How To Win By Giving Away Your Property.......................................1-10 How To Win By Refinancing.16-71 Action Plan Section..................1-15 Action Guide Summary Explore new possibilities......1-2 Get Familiar with the Action Guide Summary of the 8 Options........................................................................8-6 Advantages of quitclaiming.............1-12 How To Win By Changing Your Mortgage Terms..............................................................16-5 Option 1: How to Win by Reorganizing Your Finances...................................................................................1-6 How To Win If You Are In The Military.......................................................................................................................16-37 Option 5: How to Win by Using the Legal System ................................................................................1-3 Time Line of Options.......1-13 What if Foreclosure Ran its Course?.........................12-7 Complete The Action Plan To find A Solution That Fits Your Need.............................................................................................................. ........16-57 Option 8: How to Win by Giving Away Your Property.................1-12 Quick action is crucial.........................................1-11 Action Plan.......................................................................14-1 Suggestion 3: How To Explore New Possibilities 15-1 The Action Plan......................1-3 How To Win By Selling Your Property..1-5 How To Win By Reorganizing Your Finances..................................16-41 Option 6: How to Win if You are in the Military .......................1-8 How To Win By Using The Legal System...9-9 .....16-21 Option 4: How to Win by Refinancing............................3.................................................................13-1 Suggestion 2: How To Maintain A Clear And Calm Mind..........12-2 Affirmations............................................................16-11 Option 3: How to Win by Changing Your Mortgage Terms.............1-1 The Action Guide Summary...............

...D..............1-17 Blue skying.........................................................................Agent...........7-13 Notice to Other Lienholders......6-3 Bankruptcy see How to Win Through Bankruptcy...6-2 Automatic stay stops foreclosure....1-6 Asset Collateralization........................15-4 Breathing Exercises...................................................................................................................................................................................................T........................................... Increases Income....................6-1 Bankruptcy relief.......................................9-6 California Civil Code Section Home Equity Sales Contracts Act............18-1 Power of Sale...................................................11-18 How The A....I.14-1 Budget control sheet..19-1 Mortgage Foreclosure Consultant's Act.....14-1 Belly Breathing...................................................................................................................7-14 Cal-Vet and the California Code of Regulations...........................................................7-2 Attorney.7-15 The Title 12 Action and the Junior Lienholder.........................................I......................D......................... 7-12 Consequences of Failure to Respond or Otherwise Act...11-7 All-Inclusive Trust Deed How A.....................................9-6 APR calculations............7-13 First Month of Delinquency..................11-17 Appraised Value............................................................................................13-3 Beneficiary............................................6-9 APR.......T.......................14-2 The 10-10-10 Breath......................7-15 Third Month of Delinquency........................................7-14 Second Month of Delinquency............7-15 Cal-Vet Loan Assistance...............14-2 The Triple Inhale/Exhale.........14-2 Counting Out..........................................................6-2 Be organized................7-14 Default and Foreclosure.............................................................................................5-4 Budgeting tips................... Benefits The Homeowner Who Is In Foreclosure..................................7-3 Calculating the APR........................................................7-13 Reliance by Title Insurance Companies.............................................................5-6 Budgeting............................................7-14 Fourth Month of Delinquency..........1-3 CAL-VET Alternatives of Junior Lien holders...7-15 Notice of Intent to Cancel.................7-13 An Example of Cal-Vet Foreclosure Procedure.........14-2 Hush Breath.................................................................17-1 .......................................9-3 Automatic stay..................

................ 5-7 Debt-consolidation loan......9-36 Creating delays......................................6-6 CCCS....................................................................... 8-4 Counting out breath........................................ ............9-5 Civil Code Section 2937......1-4 Chapter 13 -....1-4 Chapter 7 Bankruptcy: Liquidation...........1-3 Contacting the mortgage servicer...............................................9-11 Contact Consumer Credit Counseling.............................. ...5-1.........1-6...........................................1-4 Chapter 7 -..........................15-4 Conventional refinance................................................9-40 Courtroom Karate.1-4 Chapter 13 Bankruptcy: Debt Adjustment......9-5 Class Action Lawsuits..........9-5 Civil Code Section 2943...18-1 Power of Sale..............................5-2 .............................19-1 Mortgage Foreclosure Consultant's Act..............................................8-3 Danger Signals...................................................2-2 Creating more time..........................................................6-2 Debt Management Plan...............6-6 Conforming Loan Assistance..................reorganization.............................................17-1 Civil Code Section 2924................................9-7 Consumer Loan Advocates (CLA) hotline..6-6 Capital Gains How To Compute Gross and Net Capital Gains.................................Calm (How to stay calm).....7-5 Contemplation....................6-4 Chapter 20 -......................... 5-6 Consumer Loan Advocates (CLA) ...............9-12 Clustering.......a combination of chapters 7 and 13... 5-1.....1-12 Court Room Karate Weapons Summarized....................6-2 Chapter 13 protects your home...........................................................................................1-7 Creating Foreclosure Delays.....................liquidation............................................8-11 Credit Ratings......6-9 Capital gains tax..................................................14-1 Capital gain.........5-6 Credit history................................1-4 Chapter 11 -.....................15-2 Credit Counselors........15-5 Commission(s)....debt adjustment..........9-3 Civil Code Section 2934a..............................1-3...................................2-2 Creating new habits with self talk.........1-3........................................................................................................................................................................................................... 5-2 Debt adjustment.6-6 Capital improvements..................................................................................................................................7-3 Consumer Credit Counseling Service (CCCS)................................................................................6-3 Civil code Home Equity Sales Contracts Act.................8-3 Credit repair..........................

..........................................................................................................................................................................................6-4..................6-9 Equity investors.7-23 Payment In-Full....................................................9-17 Deficiency judgment..........1-10 Equity Purchase Contract................................................1-17 Deed-in-Lieu of Foreclosure see How to Win by Giving Away Your Property.........................................................................9-3 Escrow Opening An Escrow............................11-23 Notice required by California law......................6-6 ...................................................................7-22 DVA Fact Finding.6-6 Deed of Trust.............................. 8-4 Equity partner.......................7-3 Economic Cycles Affect Real Estate Prices.....................1-12 Deducting the estimated sales costs........7-24 Supplemental Servicing Program..............................................................................11-2 Equity......................1-21 Denial....................1-12 Default judgments................................................................................................................................................9-2 Errors In The Foreclosure Process.............................................1-11 Deep belly breathing exercise........2 DVA Preforeclosure Avoidance A Lender Workout...................9-2 Errors and Fraud Finding errors and fraud....................7-10 Decreasing your expenses.............................................................11-27 The recommended escrow process for the seller in foreclosure...........................1-6....................................................11-21 The Home Equity Sales Contract Act..11-20 Notice of cancellation...................................................9-3 Two important points.......11-20 Errors Two areas where errors commonly occur.........4-1 Developing a new attitude about life.1-10 Equity line of credit.........7-22 DVA Preforeclosure Avoidance Program.....11-21.......................................................12-1 Deed-in-Lieu-of-Foreclosure.....................................7-24 Lender's Notice of Intention to Foreclose....... 11-22 The Equity Purchase Contract....13-1 Dept counselor..............................15-2 Disclaimer........................9-3 Errors In The Loan Servicing.................Decreasing The Principal Amount.11-21 Equity Purchaser Equity Purchase: The Players And Process............. ..........7-24 Partial Payments..........7-23 DVA Refunding Program.........11-28 Escrow costs and fees............ 6-8 How To Compute Equity.....................

.......11-6 Extended Loan.. 1-16 one action rule....1-21 Foreclosure Defenses By Laurence Adams Malone ....................1-9 Finding a New Place to Live.........9-2 Finding Errors In The Foreclosure Process..........7-3 HUD-approved Housing Counseling Agencies..........................................................................................1-9 Forbearance Agreement..........................5-4 Forecasting income..........1-15...........1-17 ..............................7-17 What is HUD?............................................................................ 7-17 FHA/HUD Mortgage Assignment...............................................................................................................13-2 Federal housing authority (FHA)...................................................7-3............................................................................................11-7 Finding a good broker/agent............................................................................. 1-21 Non-Judicial.............................................. Who Becomes The New Owner?.........................................1-15.....5-1 Finding a creative solution ...............................................................................................................................1-22 After The Trustee's Sale: Getting Paid To Leave 1-22 Judicial Foreclosure................15-4 Finding A Good Agent...................12-3 Exclusive Agency Listing.................................9-15 Foreclosure Process After The Trustee's Sale..............1-21 After The Trustee's Sale: Getting Evicted ... ......7-17 File bankruptcy (BK)..................... 1-21 Judicial Versus Non-judicial Foreclosure................................................7-2 False disclosure.....9-3 Finding Errors In The Loan Servicing.................15-6 Flexible Expenses..11-28 Finding Errors and Fraud ........Example Of A Quitclaim Circumstance..........9-6 Finding new ideas for fighting foreclosure.........................................................................................................................7-20 Qualifications................5-8 Fear..............5-4 Foreclosure Judicial...........7-2 Forecasting Expenses...5-4 Financial Reorganization see How to Win by Reorganizing Your Finances.....................................................1-15 Non-Judicial Foreclosure Explained..............................................7-2 Extended mortgage.................5-4 For sale by owner.....................1-15.5-3 Financial planning...........5-4 Forecasting stage...........................................2-2 Financial goals.................1-16 Lender Reluctance To Foreclose............................1-16 Non-Judicial Foreclosure....................................1-16 Non-Judicial Process And Time Line.....1-9 For sale by owner with a broker.....................................................

.1-16 Tax Consequences of Foreclosure..................11-58 Flyer example...............................1-17 Voiding The Notices of Default or Trustee's Sale ......11-44 Broker Appraisal (Broker Price Opinion)...........................................................................................5-20 Hardship Explanation and Remedy Proposal...11-34 Agreement to Modify............5-11 Clustering worksheet ...............................10-6 Agents Inspection Disclosure........possible focus: how to increase income..................11-62 Estimate of the net proceeds....................................11-60 Exclusive Right to Sell Listing.15-8 Counter Offer...11-38 Financial disclosure...6-11 HUD Forbearance Form 1a.................)...D Addendum .........full payoff..................................5-14 Forecasting income......7-33 Equity Purchase Agreement...............................11-41 Flyer form......D..............................12-6 A Straight Quitclaim Deed...15-9 Clustering worksheet .......................................11-52 Escrow closing statement.....1-15 Foreclosure sales strategy.................................................... .........................................1-21 What Is Foreclosure?...possible focus: how to fight foreclosure..........................focus: miscellaneous.......................................................Non-Judicial Sequence of Events................................................I..........................12-5 A....................................................................11-57 Homestead declaration................................. ..................................T.............................................................1-24 Trust Deeds Explained...................11-3 Forms A Deed-In-Lieu of Foreclosure.........15-10 Clustering worksheet .................................5-12 Forecasting short term goals.................11-31 DVA Letter #1........................7-38 ....................6-12 Homestead declaration.....................1-17 Reasons For Residential Foreclosures........................11-59 Broker Price Opinion.........................1-18 Non-Judicial Time Periods........................5-24 Budget guidelines.I..................................7-37 All-Inclusive Trust Deed (a............................................11-56 Disclosure Statement Form......possible focus: how to improve well-being..................................T..........7-32 DVA Letter #2...........11-59 Budget control sheet.......15-7 Clustering worksheet ...........11-50 Equity Sharing Addendum............................. single person..................................................... ....11-45 Affidavit to court. married persons...........11-42 Forecasting expenses........

.........................9-2 Fritter finder....................................................................................D and N.1-33 Notice of Rescission.................8-15 Refinance Worksheet 4...............5-22 Traditional lease-option (contract for Deed)....................1-30 Suggested letter to creditor on installment note ..................................................................................................................11-61 Standard Option to Purchase........................10-4 The fritter finder...........................................11-40 Preparing the Agreement to Modify A promissory Note................O.................................7-27 HUD Letter of Notification #1....9-2 Two important points...........................5-18 Refinance Worksheet 1........11-49 Substitution of Trustee......7-36 Notice of Default..................................10-5 Suggested letter to mortgage holder on a security agreement..................................7-34 Prequalification Worksheet For All Loan Types....................................1-31 Notice of Default Advertising..................................7-40 HUD Forbearance Form 2b.......................1-32 Notice of Trustee's Sale Advertising...11-48 List of affordable areas inside california...................................HUD Forbearance Form 1b................................O.7-41 HUD Forbearance Form 3.........7-30....1-3 .......5-19 Seller Carryback Disclosure..............................7-29 HUD Letter of Notification #3.................................11-35 Record of Expenditures.......................Delinquency.....................................................................................11-43 Residential Lease Agreement.........1-34 One Party Showing.............................11-30 Note Modification..............5-4 Generate cash.....8-13 Refinance Worksheet 2.......................11-46 Trust deed example...................................................................................................................11-39 Sample Bankbook Entry....8-14 Refinance Worksheet 3..........................................................................................................................................................11-29 List of affordable areas outside california...............................7-25 HUD Letter of Notification #2...11-54 Real Estate Transfer Disclosure Statement..1-35 Notice of Trustee's Sale.........................8-17 Promissory Note....1-29 Purchase Offer............... 7-31 Lease-Option Financial Disclosure Statement......11-53 Seller's Authorization To Negotiate..................1-26 Fraud.....................1-27 Trust deed explanation..............7-39 HUD Forbearance Form 2a..8-16 Request for N......................................................................................................................................7-42 HUD form 92068f.........

...............................Get Familiar With The 8 Options.13-2 General tips for working through the options...........................................11-3 You Must Disclose Your Property's Condition................................11-25 Get a partner (equity sharing)................19-1 Home Pricing Strategy.............................................................11-2 How To Sell "For Sale by Owner".....................20-3 Hard money ................................................................13-2 Do It Now.....................................................................6-6 Married Couple.........................................11-3 Pricing Strategy...................................6-9 Guarantee.....9-8 Home Equity Sales Contracts Act.....6-6 Single Persons..................................................11-23 A party to lease-option......13-1 7 Habits of Highly Successful People...................................................... Farm.............6-6 How Chapter 20 Protects Your Home................................. or Senior Citizens........15-1 Affirmations: affirming your prosperity.......6-8 How maintain a clear and calm mind Gently stretch your tension away...............................................................................11-10 Homestead exemption........... ........................6-6 How to Deduct.................................................................................. or Business...............15-6 Finding a creative solution........15-2 Clustering example..........................8-4 Hard money loans....................6-4 Disabled Persons................................21-1 Grace Periods..............................................................................................................1-1 Glossary.............11-13 A mortgage insurance-assisted foreclosure presale ....11-2 The Foreclosure Sales Strategy...........................................................................................................................11-9 Offer/Counter-offer Strategies..............................................................11-2 Home Selling Basics....................................13-2 How to Avoid Foreclosure on Your Home...................................13-1 Tips for moving quickly.....11-2 Economic Cycles Affect Real Estate Prices............11-19 Assumption/transfer of loan........................15-4 ......11-3 Home Selling Programs A buyer aided by seller financing.....................9-3 How to explore new possibilities......................14-2 How to act quickly...............................11-10 A sale-leaseback...........11-19 Get an equity purchaser........13-2 Reasons people do not act quickly..............11-14 Gross capital gain..............1-6 Home Equity Loans are similar to ARMS...................................13-5 Be Persistent.............................11-20 The regular retail buyer.................................

...............12-1 A Deed-In-Lieu-of-Foreclosure........12-2 An Example Of A Deed-in-Lieu...............................................12-2 A Straight Quitclaim Deed........................7-1 Workout hotlines........................8-9 Conventional Refinancing................. 7-8 Principal amount modifications.......7-4 Balloon payment modification...15-3 Visualizations: Visualizing a new way to live................14-1 The deep relaxation technique...................8-3 Borrow From Friends Or Relatives...................14-7 How to win by changing your mortgage terms.................................7-11 Borrower responsibilities..8-6 Five different categories of loans........................7-11 Interest Rate Modifications............................7-5 Cal-Vet loan assistance......................................7-1 5 keys to successful workouts...................................................................7-11 Negotiating the details of a workout................................................12-3 How to maintain a clear and calm mind................8-7 ...................................................................................15-3 How To Figure The Remaining Time .................7-5 Liability Transfer Modifications..............................................7-3 The market affects the lender's attitude............................7-16 Special workout assistance.................................................................7-12 Common questions from the lender/servicer.............................7-17 How to get started on a workout.7-21 FHA/HUD Mortgage Assignment...................7-5 Installment Payment Modification....12-2 How To Win By Refinancing Best and Worst Case Scenarios...................7-5 Conforming loans....15-1 Stay Focused on Your Goal...12-3 HUD and DVA Deed-In-Lieu Programs..................7-7 Types of workouts.....................................7-9 Lender/Servicer Responsibilities.................12-3 Deeds Must Have Acceptance..............................7-1 How To Win By Giving Away Your Property..12-4 The advantages of the Quitclaim or Deed-in-lieu ...7-7.......................................................7-3 Writing up a workout..........................7-11 DVA Preforeclosure Avoidance..8-1 Hard Money Loans........................................................................................14-1 Breathing exercises..........7-1 Note modifications.......Rephrasing Your Self Talk: The Essential Attitude Adjustment.......................................................................................2-1 How to file a quitclaim deed ..................12-2 How to file....................................................7-10 Private mortgage insurance..............................................

.......................................8-11 Lenders Change With the Real Estate Cycles.....................I...8-17 Refinance Worksheet 1................................................................8-4 The route of the typical institutional real estate loan.................How Lenders Rate Homeowners....................11-10 A sale-leaseback....................................................................11-29 List of affordable areas outside california..............5-7 How To Win By Selling Your Property.........8-13 Refinance Worksheet 2....................................T...D.5-6 Danger Signals.11-18 Finding a new place to live..............................11-18 ........................11-9 Lender short-pay...........11-1 Using a real estate broker......8-1 Mortgage brokers...................5-1 CCCS telephone numbers.....5-9 Credit counselors..........................................11-19 Get an equity purchaser.......5-1 How to set up a successful budget..................8-4 The 5 Types of Loans...................................................8-7 The Equity In Your Property..............................................................................8-3 How To Win By Reorganizing Your Finances.11-3 The regular retail buyer............................................5-4 The CCCS debt management plan.11-23 A party to lease-option.....................8-3 Loan qualification.....8-10 Prequalification Worksheet For All Loan Types.....................................................................11-2 The foreclosure sales strategy...............11-20 How to find a good agent......................5-2 Getting started.........................11-25 Example of how a...........11-27 Some basics of home selling.11-28 Get a partner (equity sharing)..................8-10 Your credit rating............... With The Existing Interest Rates Readjusted...............8-15 Refinance Worksheet 4..T................11-25 List of affordable areas inside california..................................................................D..........5-2 4 Steps to Financial Freedom.......................................I........................................11-1 A buyer aided by seller financing.........11-30 Opening an escrow....................11-10 Typical home purchase contracts.....................11-7 How to sell "for sale by owner".................................8-16 Second Or Third Mortgages.........................................................................................11-19 Assumption/transfer of loan.............8-2 The Equity Line of Credit..........8-14 Refinance Worksheet 3................................................................................11-4 With an A.........11-13 A mortgage insurance-assisted foreclosure presale ............................................................................................................. Increases income..........

............................................6-6 How Chapter 13 Protects the Home...................How To Win By Using The Legal System.........................................9-8 Lawsuits...............6-1 A Test-Case Example Of The 3 Deductions..................................................9-7 How CLA May Help You find Errors........9-6 Two important points about errors and fraud........9-11 Lenders Must Respond In A Timely Manner................10-1 How To Ensure Your SSCRA Rights.............................................6-5 Getting Started..............................................9-2 Finding Errors In The Foreclosure Process.............................6-4 How To Compute Equity. 1-21 Junior lienholder..........6-2 Types of Bankruptcy Relief....................10-3 The Soldier's and Sailor's Civil Relief Act.............9-2 When You Order a CLA Audit Analysis Report................................................................6-3 Choosing Between Chapter 7 and 13......1-15...........6-3 Chapter 13: Debt Adjustment...........................12-4 Hush breath......................................1-15 Increasing The Principal Amount........................7-10 Increasing your income........................................................9-1 Consumer Loan Advocates (CLA)...................6-2 Chapter 7: Liquidation...1-12 What If Foreclosure Ran Its Course? .........................6-9 The Purposes of Bankruptcy........................................9-6 5 major causes for errors.....1 Judicial foreclosure.....................10-1 How To Win Through Bankruptcy.....................................................9-14 Errors In The Foreclosure Process...................................6-8 How Chapter 7 Protects the Home......6-4 How Chapter 20 Protects the Home..................................1-19 ...............1-12 Injunction....................................................................................9-8 Finding errors and fraud.9-3 Finding Errors In The Loan Servicing.........................................................................6-2 HUD and DVA Deed-In-Lieu Programs ......9-3 Errors In The Loan Servicing...................9-7 Credit Is Not Money................6-1 Homestead Exemption.....................................................9-10 How to Win If Your Are In The Military................9-9 Key signs of errors......................................6-10 Automatic Stay Stops Foreclosure..................10-2 SSCRA Reduces Mortgage Payment Interest..................................9-2 Regulation Z: Truth In Lending.....................9-3 Errors on home equity loans and commercial lines of credit...................1-6 Introduction....................9-9 Prelawsuit Negotiations...........................................6-9 How To Compute Gross and Net Capital Gains.

traditional.....11-25 Liens.................5-1 Malone's Foreclosure Defenses...............8-3 The Equity In Your Property..................................................................9-1 Legal system provides ways to halt foreclosure. 5 Models..................................................9-12 Setting Aside the Sale................9-13 Lawsuits..11-12 Legal defenses against foreclosure.15-1 ..........................................................................................8-3 Loan-to-value ratio (LTV)........................10-1 Military exemption............................................................ Straight.......................... Important Facts.. Benefit of the Traditional Lease-option .......9-11 3 Types of Lawsuits......................11-10 Lease-options ......15-2 Military See How To Win If You Are In The Military...................9-15 Mental affirmations.............................................8-2 Lowering your monthly credit payments........11-11 Lease-options...................... Benefits of the Straight Lease-option ...17-1 Lawsuit see How To Win By Using The Legal System.....................................................................................................................................1-16 Lender Short Pay...........................................18-1 Power of Sale........................................................................1-15 Liquidation................................................................9-5 Home Equity Sales Contracts Act......................................9-11 Bonding Requirements.....................................................9-15 Lease option..............................................................................................9-13 Class Action Lawsuits................................1-10 Lease-option......2-2 Mind stretching.......................................................6-2 Lis Pendens..............9-1 See How To Win By Using The Legal System...9-1 Lawsuits..............................Laws.....................................Legal Notes.....9-12 Lis Pendens.........................................11-30 Loan qualification Best and Worst Case Scenarios....................................................................1-2 Lender Reluctance To Foreclose..........9-13 List of affordable areas inside california.....................9-13 Preliminary Injunctions and Temporary Restraining Orders.............19-1 Mortgage Foreclosure Consultant's Act...........................11-13 Lease-option.....11-13 Lease-option.11-10 Lease-option.......................................................8-2 Your Credit Rating...........................................................8-3 Lenders Change With the Real Estate Cycles.......11-29 List of affordable areas outside california........................................9-14 Legal system........................................

......9-41 Trial by motion versus trial by jury..................7-36 Preparing the Agreement to Modify A promissory Note....1-2 Negotiations..................................................................................................................................................................9-35 Mortgage brokers...........7-11 Interest Rate Modifications............11-24 Mortgage workouts......................................7-34 Principal Amount Modifications...........18-1 Mortgage Insurance Assisted Foreclosure Presale Department of Veteran's Affairs......11-24 How To Contact the Insurer...11-25 Private mortgage insurance companies......................................................6-9 Non-judicial foreclosure.....................Model Lawsuits............9-36 Failure to tender a lawful consideration...................9-40 Courtroom karate: weapons in your arsenal of defense........................................................ 1-16 Power of Sale............9-37 Co-signing and Mortgage Deed of Trust Assumption .......................9-38 Courtroom karate weapons summarized... Third Party Complaint Definitions.........................................................................................7-37 Balloon Payment Modification........................................7-1 Negotiate a workout.........................9-38 Motions..............................................................7-10 Some points to consider........................9-39 In counterclaim and third party complaint actions ..............9-41 Legal karate......................................................................................7-11 Installment Payment Modification.........8-10 Mortgage Foreclosure Consultant's Act.................................................................1-17 Note Modification........................................................1-15................................................................9-33 Legal karate: what to do....................9-33 Counterclaims....................................7-8 Notice of Default............7-11 Note Modification Form...........................9-39 Refinancing debts or loans.........................................................................................................................................................7-8 Agreement to modify form................................1-19 .................................9-2 Net capital gain......................................7-2 Note Modifications..................7-9 Liability Transfer Modifications......................................................................17-1 Non-Judicial Time Periods .........................................9-42 The Answer and Counterclaim.....................................9-34 Court room karate....9-33 Summary of Options Before Judgment...........9-15 Answering a Complaint.......................................7-5 See How To Win By Changing Your Mortgage Terms .....................

.8-9 Home Purchase Contracts............................................1-16 Record of expenditures......................................................................................11-4...........................1-6.................. 8-3 Reasons For Residential Foreclosures...12-2 Real Estate Broker..............................................1-17 Promissory note secured by a deed of trust..11-19 Assumption/transfer of loan.......12-2 Quitclaiming deed-in-lieu-of-foreclosure.............................................................14-4 Head to the Knee........................12-2 Quitclaiming See How To Win By Giving Away Your Property.....................................11-25 Get a partner (equity sharing)...............7-2 Pay and Accrue....................................9-2 Preliminary Injunctions.......11-10 A sale-leaseback..........................................11-19 Get an equity purchaser.......................................8-1 Regulation Z....2-2 Partial Payments...............................................11-14 Private Mortgage Insurance (PMI).........11-3 One action rule................. 9-36 ............ 11-6 Exclusive Right To Sell..................11-4 Exclusive Agency..........................................1-2 Refinancing See How To Win By Refinancing Your Property.............................................................................................................1-21 Options that may create more time.........................................5-4 Postures..................11-7 Real estate cycles................................................................................14-6 Revitalizing Star Pose.............................. 12-1 Straight quitclaim deed.9-12 Prepayment Penalties.............11-4 How To Find A Good Agent........................................12-2 Straight Quitclaim Deed.................................11-20 The regular retail buyer......................................................................11-23 A party to lease-option................11-10 Purposes Of Bankruptcy....................................7-2 Planning meetings..............................14-5 Power of Sale. 9-6.....................................................................................................................................................7-3 Promissory Note.......6-2 Quitclaim Deed Deed-In-Lieu-of-Foreclosure...14-2 Half Moon........11-1 A buyer aided by seller financing................................................................. 5-6 Refinance your property....................11-13 A mortgage insurance-assisted foreclosure presale ................Offer/Counter-offer Strategies.17-1 Prelawsuit Negotiations..................................5-4..7-7..................................................................................14-3 Triangle..................................................

.....................................................................................................................6-6 Second mortgages Third Mortgages.....................................................11-14 Tax Aspects.................11-31 Sell through a real estate broker.................................3-1.....................................11-1 The disclosure statement.11-14 Selling Your Property...............................................................................1-2 Reorganize your finances through bankruptcy.......................................................15-4 Revised payment schedule.................................6-4 Selecting a real estate agent..14-2 Triple inhale/exhale..............11-15 The Promissory Note and Deed of Trust..................1-9 Self-destruction..15-1 Return To Childhood..............14-3 10-10-10 breath...........................................................................................11-13 An All-Inclusive Deed of Trust.........................11-16 Converting A Note To Cash...........................10-1 Reduce loan and interest payments.....................................11-1 Required disclosure forms.............11-13 Seller Carryback A Request For Notice of Default and Notice of Delinquency.....................15-3 Short Pay......................5-3 Sales Costs...........11-25 Slashing expenses.............................10-2 Stop foreclosure proceedings.........................11-3 Seven Steps To Inner Power........................1-2 Seller carryback.. .........................................................................14-2 Belly breathing.............. 5-1 Repayment Plan..................1-10 Seller Financing................................................................................ ........10-2 Set aside completed foreclosure proceedings...........................Reorganize your finances.....................................................................11-17 The Seller-carryback..............................1-9 Sell your property..................................................5-1 Soldiers' and Sailors' Civil Relief Act................................11-1 Selling it yourself with a broker........................................................11-14 Late Charges and Grace Periods...............................................11-16 Credit Check......14-1 ........7-1 Rephrasing your self talk.................................................11-15 Benefits to the homeowner in foreclosure..............13-2 Sell through a real estate broker.........8-7 Secured creditor........................................................11-1 For sale by owner....................11-14 Prepayment Penalties.........................10-2 Staying calm......................................14-2 Hush breath................................................1-2 Reorganizing your finances......................................................11-15 Interest Rate and Length of Term..

.7-2 Temporary restraining order.........................7-3 Temporary Indulgence...................................................................................7-24 HUD offices..............1-6 Trustee's Sale...............................................................................5-9 Comparables hotline.......................................1-18 Trustee sale....................................................................................3-1 Step 4: Look For Other Ideas In The Book That May Be Helpful.1-6.......................................20-5 Suing the lender......................16-1 The Write-It-Out Exercises...................................7-7 Consumer loan advocates..............1-7 Suit at common law...................................................................................................................Staying Focused on Your Goal .......7-16 CCCS .................................................1-1.............1-6 Unlawful Detainer: Eviction .......1-2 Time Line of Options.......................................................................................................................................................................................... 1-13...California.....................................6-9 Triple inhale/exhale.....16-2 The Three Suggestions..15-3 Step 1: Become Familiar with the Action Guide Summary....................................16-1 Steps To Financial Freedom......................................1-17 Truth in lending...............................9-12 The 5-Step Approach The 5 Steps At-A-Glance...............................................................2-1 Options That May Create More Time................9-10 DVA California offices....................4-1 Step 5: Complete The Action Plan To find A Solution That Fits How To Move Through The Action Plan Quickly.........................1-1 Step 2: Make Time To Work Through The 8 Options How To Create More Time................16-1 The Talk-It-Out Exercise..............................................................14-3 Suggestion and Evaluation Response Sheet....1-19 Trustor..............................9-20 Telephone numbers Cal-Vet loan assistance.2-1 Step 3: First Read The Options That Seem Most Relevant To Your...............2-1 How To Figure The Remaining Time...4 The Action Plan 4 Important Basic Questions...............................................1-12 Trustee..................................................... 1-17 Total capital improvements.. 2-2 Temporary Restraining Orders............................1-17 Substitution of..5-7 Stretch Your Tension Away.................................................................................................................7-18 Loan workout hotlines............. 16-1 Important Questions..........

15-1 Visualizing a new way to live..................................................................15-3 Voiding the foreclosure sale.......1-24 Judgement Against The Tenant/Previous Owner 1-23 Using The Legal System ..........1-8 Visualizations....................7-1 Workouts Contact your lender/servicer........7-6 Put the final workout agreement in writing............................................7-7 Request a workout..............................................7-5 Cooperate......9-1 Veterans.......................................7-7 Substantiate your claims.................................................. .................1-20 What To Say When You Talk To Your Self......................If the previous owner challenges the eviction.......................7-6 Seek advice and assistance......................7-6 .............................15-2 Win By Changing Your Mortgage Terms.1-23 Judgement Against The New Owner....... .................................................................1-23 If the previous owner does not challenge the eviction........................................................

NOTES .

NOTES 22-45 .

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