Monday, July 27, 2015

Read your traffic ticket before pleading guilty

Early last summer, my #1 Navy son told me he was shipping out on his first overseas deployment.  As you can probably imagine, I was not that thrilled.  My opinion changed when I learned he was going to Okinawa.  As overseas deployments go, Okinawa is about as stress-free on moms as it can get.  So I was happy.

A few days prior to the date he was shipping out, he sent me a text telling me he would call me that night right before he shut off his phone for a few months.  After that, we'd have to communicate by email, since neither of us had overseas cell service.  [I learned later that he was able to call me at the liberty center with some type of specialized WiFi that routes phone calls stateside.  Most of his calls came from a Florida number.]

Anyway, he sent me that text.  I was stopped at a red light in a heap of traffic, so I replied back, letting him know I'd be home at 6:30pm.

The light changed and I pulled forward along with a LOT of other cars.  Saw pretty red and blue lights in my rear view mirror.  Rats.

So I pulled off on a side street and received a ticket for texting while driving.  I didn't say anything to the cop, just dutifully handed over my license and registration.  Yes, I was not moving at the time, but the engine was running so technically I was "driving" even tho stopped.

The vehicle code section he cited me for, was using a cell phone while driving.  In CA, you can only use a cell phone while driving if you are hands-free, meaning you need a bluetooth or similar device.  I wasn't.

I called an acquaintance of mine who defends traffic tickets.  He told me to look up a case People v Spriggs which states that this particular code section applies ONLY to speaking and listening on the phone.  The code section for texting is entirely different than the code section I was cited for.

An internet search gave me the case my friend referenced, plus the relevant code sections.  As it turns out, I was certainly guilty of texting while driving, but I was NOT guilty of violating the code section written on the ticket.

Bottom line - always read your ticket.  Never assume the officer is right, or that you'll lose.

On the date written at the bottom of the ticket, I appeared in court and pled not-guilty.  The court set a trial date.

Next week - my trial.

Monday, July 20, 2015

If you are facing foreclosure

This is NOT an all-inclusive list, but something to give you ideas on your options.  This is also NOT legal advice.  Please consult an attorney licensed in your state [or your country], to discuss your options.

First, contact your lender immediately upon realizing you won't be able to stay current on your loan. The earlier you act, the more options you have.

If you want to try to keep your home:

The most important thing to remember is that keeping your home means you must have some way to pay for it.

Reinstatement – you pay off your arrearage, generally by borrowing money from relatives, selling off other assets, etc.

Forbearance – You skip several payments, usually 3-6 months, and then you pay an increased amount after that, to make up the missed payments. This is generally good for a short-term problem, like a brief period of unemployment or illness, or a short military deployment, but you are back to work within a short period of time. Generally negotiated in advance of the missed payments.

Repayment plan – Similar to a forbearance, but you are already behind in your payments when you approach your lender.

Refinance – You can obtain a new loan with a new lender, paying off the current loan, with more favorable terms such as a lower interest rate and/or lower monthly payment because of interest-only, adjustable rate, or other options. This option is generally available if you have good credit, are employed, and you have equity in your home.

Loan modification – Your current lender restructures your loan. This is similar to a refinance, but you are working with your current lender, not finding a new lender. Your lender will have requirements you need to meet, to qualify for a modification.

Bankruptcy – There are differences between chapter 7 and chapter 13, the two most-common consumer bankruptcy actions. Best to speak with an attorney to decide which chapter might be the most helpful for you to meet your goals. You can strip [remove] a second trust-deed, pay off your loan arrearages over 3-5 years, reduce or eliminate other debt so you have more available funds to pay your mortgage, and take other actions to restructure your debt.

File a lawsuit – For non-judicial foreclosure states. This generally works ONLY if you file the lawsuit BEFORE the property is sold, record a lis pendens, and then request and obtain a Temporary Restraining Order, prohibiting the sale while you work out options to get yourself current. It does NOT work if you are wanting to reduce the amount you owe. Nor does it generally work if you file the lawsuit AFTER the property is sold, especially if it is purchased by someone who is NOT the lender.

Rent your home – If you payment is lower than the rental value, you can rent your home to tenants and use the rent to pay your mortgage. Or, you can rent rooms. To successfully take advantage of his option, you must research the requirements in your state and city for landlords, and make sure you meet the requirements and can maintain the home in habitable condition [or can afford to hire a property management firm]. I put this option last, because being a landlord is difficult and not something to consider lightly.

If you want to walk away from your home:

If you are significantly underwater [owe much more than the home is currently worth] or if you are unemployed or underemployed without much hope of obtaining employment at a level which will allow you to keep your home, you may decide to walk away from it.

Sell –If you have at least as much equity in your home as the amount outstanding on your loan, you can simply sell the property.

Foreclosure – Some states have judicial foreclosures, which means the lender sues you in court to obtain a judgment allowing it to foreclose [sell] your home. Other states have non-judicial foreclosures [including my state of California]. The lender can foreclose [sell] your home without going to court, so long as it follows the rules.

Short-sale – Your lender works with you to allow you to sell your home to a buyer at the current market price, which is less than the amount you owe on your loan. For example, if you owe $300,000 on your loan, but the home is only worth $250,000, you can sell it for $250,000, leaving a $50,000 deficiency. If you qualify, the lender may then “forgive” the deficiency, meaning you won't owe that amount to the lender. Check with your tax adviser to determine whether you must claim the forgiven amount as income on your tax return.

Deed-in-Lieu – You sign a deed giving your home to the lender, thus avoiding foreclosure. You must have your lender's permission to do this, if you want your loan forgiven. Otherwise, you still owe the money but you no longer own the home.

Websites with more information [US residents]

Monday, July 13, 2015

More on foreclosure scams

The fraudulently recorded deeds mentioned in last week's post are the most common foreclosure scams I see in my daily practice.  There are others though.

1.  Scammers ask you to sign documents without reading them.  Last week we discussed fraudulent deeds, where the borrower signs a deed [sometimes believing he is only signing loan modification documents] giving away part or all of the property to a third party in bankruptcy.  Often the third party has no idea he has been deeded the property.  Never sign documents until you read and understand them.

2.  Scammers offer sale-and-leaseback.  Another deed scam is the borrower signing away all of the property to the "foreclosure rescuer", who then promises to pay off the mortgage and rent the property back to the borrower "until he can get back on his feet".  Often, the borrower is then surprised by monthly rent payments higher than the mortgage he couldn't afford, PLUS the mortgage is not paid off.  He then defaults on his rent payments and is evicted, sometimes before the foreclosure sale even happens.  Read all documents in advance, especially your "lease", to make sure you can afford the lease payments. Be sure the promise to pay off the mortgage is in writing, so you can enforce it later.

3.  Scammers want money up-front.  Paying a "foreclosure rescue" firm up-front to help you with your loan modification application.  Even some attorneys are doing this.  If you live in California, STOP!  Because of the number of consumer complaints, California has enacted laws to protect consumers facing foreclosure, including laws that prohibit foreclosure consultants from collecting money before services are performed.  Don't pay money up-front.

4.  Scammers tell you to cancel your trust deed.  This has been used on and off over the past few years.  A consumer has the right to rescind a credit transaction, sometimes as long as three years after the contract was signed.  Many borrowers are sending their lenders a "cancellation of trust deed" notice, thinking they are then no longer obligated to pay the money.  While this may be true, depending on several factors, they forget that to rescind the trust deed means they have to RETURN THE PROPERTY.  Pretty much 100% of people who do this, claim they can keep their home without paying for it.  Hint -- this isn't how it works.  Cancelling / rescinding your trust deed, even if you are within the time frame to do it, won't allow you to keep your home.

If you are in this situation, here's more information about popular scams --

How to recognize a foreclosure rescue SCAM

What to do to avoid becoming a victim

Next week, information on what you CAN do, if you're facing foreclosure.

Monday, July 6, 2015

Fraudulently recorded deeds

One of the foreclosure scams alive since at least 2008 is, just before a scheduled foreclosure sale, a scammer convinces the borrowers to deed all or part of the property to a third party who is in bankruptcy. This requires the lender to go to bankruptcy court and request permission to conduct the foreclosure sale.

All this accomplishes is the borrowers buy themselves another 30 days before the property is sold. Bankruptcy judges are not stupid. They see this all the time, and in fact there is a 100% chance the bankruptcy court will allow the sale to proceed.

This result happens even if the borrowers back-dated the deed to the third party and the bankruptcy case was filed BEFORE the sale but the lender isn't notified until AFTER the sale. The property was then technically sold while the bankruptcy “automatic stay” was in effect. Borrowers think this makes the sale invalid, but bankruptcy judges will 100% of the time validate the sale.

Apparently these borrowers never stop to think about what might happen if they are actually successful in obtaining a loan modification. Whether they deeded away 100% of the property or only a small percentage [even as low as 1%], they will have to (1) track down this third party and beg that person to assign the property back to the borrowers, hopefully at no charge, or (2) file a quiet title action to get the property back, or (3) admit to the fraudulent deed, opening themselves up to a criminal prosecution and/or also filing a quiet title action, and/or annoying the lender so much that the loan modification offer is retracted.

This is also a LOT of fun during the eviction trial, especially if the scammer had the prior owner deed away 100% of his interest to the third party. I bring a certified copy of the grant deed, and when it's my turn to cross-examine the Defendant [prior owner] –

Defendant: Direct testimony.  [LOTS of allegations about how the foreclosure sale was invalid / unfair / illegal / etc, how my client (an investor who bought the property with cash at the sale and who is NOT the lender) defrauded him / stole the property / etc]

Me: I'm showing you a grant deed that states you gave your house to John Smith. Do you remember signing this?

Defendant [looking at document]: Um... yeah... well... this guy who's helping me save my home from these foreclosure scams, told me to sign a bunch of papers.

Me: Did you pay him money?

Defendant: Yes.

Me: He told you this would save your home?

Defendant: Yes.

Me: Did you read the papers before you signed them?

Defendant: Um... well... not really.

Me: Sorry to point this out, but on [whatever date the deed says it was signed], you actually GAVE AWAY your home to John Smith.  Isn't that true?

Defendant: That's not what I meant to do.

Me: So as of [date], you were a squatter in John Smith's house. And right now, you're a squatter in Plaintiff's house.  Isn't that true?

Defendant: I'm not a squatter.  I want my house back.

Me: Isn't it true that it hasn't been your house since [date].

Spoiler alert -- I always win.

For anyone facing foreclosure, please remember that valid options to SAVE your property do NOT include deeding away a portion or all of the property, despite what some scammer may tell you.