Information About Credit Scores, Foreclosures, Etc...

Good Evening Everyone!

I have been getting a lot of emails and call from people on how a foreclosure, short sale or bankruptcy effects one's credit score.  I came across a great Q/A from the California Association of Realtor article that breaks it all down.  The article discusses how underwriters will view things regarding your credit.  After you read this, you will know more than most people.  This is one of those blogs that is a must read.

Credit After Foreclosure, Bankruptcy, or Short Sale

Copyright© 2009, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) Permission is granted to C.A.R. members only to reprint and use this material for non-commercial

purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited withoutthe express written permission of the C.A.R. Legal

Department. All rights reserved.

One of the concerns a consumer has after experiencing a bankruptcy, foreclosure, or short sale

(referred to as a "preforeclosure sale" by Fannie Mae) is the ability to obtain credit to purchase

another home. Fannie Mae has updated its credit guidelines. This legal article summarizes those

guidelines in Part I. In addition, since lenders use FICO scores in order to determine the

creditworthiness of a borrower, this article covers the impact of a bankruptcy, foreclosure or short

sale on FICO scores in Part II..

I. Fannie Mae Credit Guidelines

Q 1. How long is the time period after a foreclosure before a consumer can be eligible to

obtain credit to purchase a home?

A Five years from the date the foreclosure sale was completed.

Additional requirements that apply after 5 years and up to 7 years following the completion date are

as follows:

. The purchase of a principal residence is permitted with a minimum 10 percent down payment

and minimum representataive credit score of 680.

. Purchase of a second home or investment property is not permitted.

. Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility

requirements in effect at that time.

. Cash-out refinances are not permitted for any occupancy type.

(Source: FNMA Announcement 08-16, 6-25-08 )

Q 2. Why do the additional requirements for foreclosures in Question 1 only apply from 5 to 7 years following the foreclosure completion date?

A According to Fannie Mae policy in Part X, Section 103 of the Selling Guide, Fannie Mae requires

only a 7-year history to be reviewed for all credit and public record information. The 7-year

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timeframe also aligns with the information provided by the borrower on the loan application relative to

disclosure of a past foreclosure action. (Source: FNMA Selling Guide, 4-1-09. )

Q 3. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the foreclosure?

A Yes. Three years from the date the foreclosure sale was completed. The same additional

requirements apply as listed in Question 1 except the minimum credit score of 680 is not required.

(Source: FNMA Announcement 08-16, 6-25-08. )

Q 4. What are"extenuating circumstances" ?

A Fannie Mae describes "extenuating circumstances" as follows:

Extenuating circumstances are nonrecurring events that are beyond the borrower's control that

result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in

financial obligations.

If a borrower claims that derogatory information is the result of extenuating circumstances, the

lender must substantiate the borrower's claim. Examples of documentation that can be used to

support extenuating circumstances include documents that confirm the event (such as a copy of

a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents

that illustrate factors that contributed to the borrower's inability to resolve the problems that

resulted from the event (such as a copy of insurance papers or claim settlements, listing

agreements, lease agreements, tax returns (covering the periods prior to, during, and after a

loss of employment), etc.).

The lender must obtain a letter from the borrower explaining the relevance of the

documentation. The letter must support the claims of extenuating circumstances, confirm the

nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the

borrower had no reasonable options other than to default on their financial obligations.

(Source: FNMA Selling Guide, 4-1-09 at 391. )

Q 5. How long is the time period after a deed-in-lieu of foreclosure before a consumer can be eligible to obtain credit to purchase a property?

A Four years from the date the deed-in-lieu was executed.

Additional requirements that apply after 4 years and up to 7 years following the completion date are

as follows:

. Borrower may purchase a property secured by a principal residence, second home, or

investment property with the greater of 10 percent minimum down payment ro the minimum

down payment required for the transaction.

. Limited-cash-out and cash-out refinance transactions secured by a principal residence,

second home, or investment property are permitted pursuant to the eligibility requirements in

effect at that time.

(Source: FNMA Announcement 08-16, 6-25-08. )

Q 6. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the deed-in-lieu of foreclosure?

A Yes. Two years from the date the deed-in-lieu was executed. The same additional requirements

apply as listed in Question 4 after 2 years up to 7 years. (Source: FNMA Announcement 08-16, 6-25-08. )

See Question 4 for the definition of "extenuating circumstances."

Q 7. How long is the time period after a "preforeclosure sale" before a consumer can be

eligible to obtain credit to purchase a property?

A Two years from the completion date. No exceptions are permitted to the 2-year period due to

extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )

Q 8. What is a "preforeclosure sale" mentioned in Question 6 and is that the same as a short sale?

A "A preforeclosure sale involves the sale of the property by the borrower to a third party for less

than the amount owed to satify the delinquent mortgage, as agreed to by the lender, investor, and

mortgage insurer" (Source: FNMA Announcement 08-16, 6-25-08 ).

Although the terms preforeclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a preforeclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclousre action. A short-sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to faciiate the sale of teh property to a third party. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 9. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the preforeclosure (short) sale?

A No. There are no exceptions to the 2-year time period. (Source: FNMA Announcement 08-16, 6-25-08. )

Q 10. If a borrower sold his or her property as a short sale but was never delinquent on that mortgage and is now attempting to purchase a new primary residence, will Fannie Mae purchase the loan?

A The loan will be eligible for delivery to Fannie Mae provided that the borrower's previous

mortgage history complies with Fannie Mae's excessive prior mortgage delinquency policy--that is the borrower does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date--and the borrower has not entered into any agreement with the short sale lender to repay any amounts assoicated with the short sale, including a deficiency judgment. (Source: FNMA Announcement 08-16 Q&A, 8-13-08 ; FNMA Selling Guide, Part X, Chapter 3, Section 302.09. .)

Q 11. Are preforeclosure (short) sales and deed-in-lieu of foreclosure actions identified on a credit report?

A Preforeclosure sales may be reported as "paid in full" with a "settled for less than owed" remarks code, and the mortgage tradeline would indicate any recent delinquency. A deed-in-lieu may be reported by a remarks code indicating a deed-in-lieu. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 12. How long is the time period after a bankruptcy (all except Chapter 13) before a

consumer can be eligible to obtain credit to purchase a property?

A Four years from the discharge or dismissal date of the bankruptcy action (Source: FNMA

Announcement 08-16, 6-25-08 ).

Q 13. How long is the time period after a Chapter 13 bankruptcy before a consumer can be

eligible to obtain credit to purchase a property?

A Two years from the discharge date and four years from the dismissal date (Source: FNMA

Announcement 08-16, 6-25-08 ).

Q 14. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the bankruptcy (all actions)?

A Yes. Two years from the discharge or dismissal; however, no exceptions are permitted to the 2- year time period after a Chapter 13 discharge (Source: FNMA Announcement 08-16, 6-25-0).

See Question 4 for the definition of "extenuating circumstances."

Q 15. How long is the time period after multiple bankruptcy filings before a consumer can be eligible to obtain credit to purchase a property?

A Five years from the most recent dismissal or discharge date for borrowers with more than one

bankrutcy filing within the past 7 years (Source: FNMA Announcement 08-16, 6-25-08 ).

Q 16. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the multiple bankruptcies?

A Yes. Three years from the most recent discharge or dismissal date. The most recent

bankruptcy filing must have been the result of extenuating circumstances. (Source: FNMA

Announcement 08-16, 6-25-08. )

See Question 4 for the definition of "extenuating circumstances."

Q 17. What is the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy?

A Chapter 13 permits a borrower with a regular income to propose a plan to repay some or all of his or her obligations over a period of up to five years. A borrower who files a Chapter 7 is permitted to retain exempt assets and receive a discharge of the borrower's debts. Chapter 7 is a relatively quick liquidation process that is generally completed within 120 days. Chapter 7 cases are rarely dismissed. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 18. What is the difference between a Chapter 13 dismissal and a Chapter 13 discharge?

A A borrower who files a Chapter 13 can dismiss the case at any time (voluntary dismissal) or the case may be dismissed by the court based on the borrower's failure to comply with the requirements of the Bankruptcy Code or to make the required payments. If the borrower who files a Chapter 13 case makes all of the payments required by the plan, the borrower receives a discharge at the end of the plan. A borrower who doesn't make all the payment required by the plan may still receive a discharge if the court finds, among other things, that the borrower made a certain amount of the payments and the borrower's failure to make all of the payments was due to circumstances beyond the borrower's control. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 19. What are the requirements to re-establish a credit history?

A After a bankruptcy or foreclosure-related action, a credit history must meet the following

rquirements to be considered re-established:

. It must meet the requirements for elapsed time (as discussed in this article.

. It must reflect that all accounts are current as of the date of the mortgage application.

. it must include a minimum of four credit references. At least one of the references must be a

traditional credit reference, and one of the references must be housing-related.

A housing-related reference must cover the period following the bankruptcy discharge or

dismissal, foreclosure, or deed-in-lieu, and can be in the form of mortgage payments or

rental payments.

If rental payments wre not reported to the crdit repositories, the lender must obtain copies

of bank statements, money orders, or cnacled checks for the most recent 12-mnth period

as a supplement to the rent verification.

. It must reflect three of the four credit references, including rental housing references, as

active in the 24 months preceding the date of the mortgage application.

. It must include no more than two installment or revolving debt payments 30 days past due in

the last 24 months.

. It must include no installment or revolving debt payments 60 or more days past due since the

discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.

. It must include no housing debt payments past due since the discharge or dismissal of the

bankruptcy or the completion of the foreclosure-related action.

. It must include no new public records since the discharge or dismissal of the bankruptcy or

the completion of the foreclousre-related action. Public records include bankruptcies,

foreclousres, deeds-in-lieu, preforeclosure sales, unpaid jdugments or collections,

garnishments, liens, etc.

(Source: FNMA Selling Guide, 4-1-09 at 392. )

II. Bankruptcy, Foreclosure, and Short Sale and the Impact on a FICO® Score

Q 20. What is a FICO® Score?

A A FICO® score is a number representing the creditworthiness of a person or the likelihood that

person will pay his or her debts. The three credit reporting agencies, Equifax, Experian, and

TransUnion, collect data about consumers in order to compile credit reports. The credit agencies use FICO® software to generate FICO® scores, which are then sold to lenders. Actually FICO® is just one of the several credit scoring systems available. The Fair Isaac Corporation (known as FICO®) created the first credit scoring system in 1958. Others are NextGen, VantageScore, and the CE Score. They all evaluate the creditworthiness of a borrower. However, FICO appears to be the most -used credit scoring system. A FICO® score is between 300 and 850. The higher the better the credit. Each consumer has three credit scores at any given time for any given scoring model because the three credit agencies have their own databases, gather reports from different creditors, and receive information from creditors at different times.

Q 21. What factors go into determining a FICO® score?

A Credit scores are designed to measure the risk of default by taking into account various factors in a person's financial history. Although the exact formulas for calculating credit scores are closely guarded secrets, FICO® has disclosed the following components and the approximate weighted contribution of each:

35% — Payment History – Late payments on bills, such as a mortgage, credit card or

automobile loan, can cause a consumer’s FICO® score to drop. Paying bills as agreed over

time will improve a consumer’s FICO® score.

30% — Credit Utilization - The ratio of current revolving debt (such as credit card balances) to

the total available revolving credit (credit limits). Consumers can improve their FICO® scores by

paying off debt and lowering their utilization ratio. The closing of existing revolving accounts will

typically adversely affect this ratio and therefore have a negative impact on their FICO® score.

15% — Length of Credit History – As consumer’s credit history ages, assuming they pay their

bills, it can have a positive impact on their FICO® score.

10% — Types of Credit Used (installment, revolving, consumer finance) – Consumers can

benefit by having a history of managing different types of credit.

10% — Recent search for credit and/or amount of credit obtained recently - Multiple credit

inquiries for a consumer seeking to open new credit, such as credit cards, retail store accounts,

and personal loans, can hurt an individual’s score. Applying for lots of new credit in a short

period of time is also viewed as risky and can cause a drop in an individual’s score. However,

individuals shopping for a mortgage or auto loan over a short period will likely not experience a

decrease in their scores as a result of these types of inquiries.

(Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Q 22. How does a mortgage modification affect my FICO® score?

A FICO® credit scores are calculated from the information in consumer credit reports. Whether a

loan modification affects the borrower's FICO® score depends on whether and how the lender

chooses to report the event to the credit bureau, as well as on the person's overall credit profile. If a lender indicates to a credit bureau that the consumer has not made payments on a mortgage as originally agreed, that information on the consumer's credit report could cause the consumer's

FICO® score to decrease or it could have little to no impact on the score.

(Source: http://www.myfico.com/crediteducation/questions/Mortgage_Modification.aspx)

Q 23. How does a bankruptcy affect my FICO® score?

A A bankruptcy is considered a very negative event regardless of the type. A bankruptcy is factored into your FICO® score until it is removed from your credit report. As long as the bankruptcy is listed on your credit report, it will be factored into your score. If you are considering bankruptcy as an alternative to foreclosure, keep in mind that it may have a greater impact on your FICO® score. Typically, you can expect bankruptcies to remain on your credit report, from the date filed, as follows:

(1) Chapter 11 and Chapter 7 bankruptcies up to 10 years.

(2) Completed Chapter 13 bankruptcies up to 7 years.

These time periods refer to the public record item associated with filing for bankruptcy. All of the

individual accounts included in the bankruptcy should be removed from your credit report after 7

years. (Source: http://www.myfico.com/crediteducation/Questions/Bankruptcy-Types.aspx)

If you plan to file a bankruptcy, here are some things you should do to make sure your creditors are accurately reporting the bankruptcy filing:

(1) Check your credit report to ensure that accounts that were not part of the bankruptcy filing

are not being reported with a bankruptcy status.

(2) Make sure your bankruptcy is removed as soon as it is eligible to be "purged" from

your credit report.

After a bankruptcy has been filed, the sooner you begin re-establishing credit in good standing, the sooner you can expect your FICO® score to rebound. A good practice is to obtain a secured credit card and continually make all of your payments on time. As time passes and the impact of the bankruptcy lessens, you might apply for a traditional credit card and also continually make all of your payments on time.

(Source: http://www.myfico.com/crediteducation/questions/Bankruptcy-Reach.aspx)

Q 24. How does a short sale, deed-in-lieu-of foreclosure. or a foreclosure affect my FICO®

score?

A The alternatives to foreclosure, such as a deed-in-lieu of foreclosure or a short sale, aren’t any

better as far as a FICO® score is concerned. The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all "not paid as agreed" accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial or tax perspective, just that they will be considered no better or worse for your FICO® score. If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact on your FICO® score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO® score.

(Source: http://www.myfico.com/CreditEducation/Questions/foreclosure-alternatives-fico-score.aspx)

Q 25. What won't affect my FICO® score?

A The following information is not considered by the FICO® scoring formula:

. Your race, color, religion, national origin, sex, or marital status

. Your age

. Your salary, occupation, title, employer, date employed, or employment history

. Where you live

. Any interest rate being charged on a particular credit card or other account

. Certain types of inquiries (such as promotional, account review, insurance or employmentrelated

inquiries)

. Credit counseling

. Any information not found in your credit report

. Any information that is not proven to be predictive of future credit performance

(Source: http://myfico.custhelp.com/cgi-bin/myfico.cfg/php/enduser/std_adp.php?p_faqid=55)

Q 26. Where can I get more information?

A This article is just one of the many legal publications and services offered by C.A.R. to its

members. For a complete listing of C.A.R.'s legal products and services, please visit C.A.R. Online at www.car.org.

Readers who require specific advice should consult an attorney. C.A.R. members requiring legal

assistance may contact C.A.R.'s Member Legal Hotline at 213.739.8282, Monday through Friday, 9:00 A.M. to 6:00 P.M., and Saturday, 10:00 A.M. to 2:00 P.M. C.A.R. members who are brokerowners, office managers or Designated REALTORS® may contact the Member Legal Hotline at 213.739.8350 to receive expedited service. Members may also fax or e-mail inquiries to the Member Legal Hotline at 213.480.7724 or legal_hotline@car.org. Written correspondence should be addressed to:

CALIFORNIA ASSOCIATION OF REALTORS®

Member Legal Services

525 South VirgilAvenue

Los Angeles, California 90020

The information contained herein is believed accurate as of October 13, 2009. It is intended to provide general answers to general questions and is not intended as a substitute for

individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an

attorney.

Terms and Conditions Privacy Policy Permission to Reprint Site Map Copyright © 2009 CALIFORNIA ASSOCIATION OF REALTORS®

It is November 2, 2009 and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Halloween Safety Tips

Halloween Safety Tips - Be Safe

Anytime a child has an accident, it's tragic. The last thing that you want to happen is for your child to be hurt on a holiday, it would forever live in the minds of the child and the family. There are many ways to keep your child safe at Halloween, when they are more prone to accidents and injuries. The excitement of children and adults at this time of year sometimes makes them forget to be careful. Simple common sense can do a lot to stop any tragedies from happening. Help your child pick out or make a costume that will be safe. Make it fire proof, the eye holes should be large enough for good peripheral vision. If you set jack-o-lanterns on your porch with candles in them, make sure that they are far enough out of the way so that kids costumes won't accidentally be set on fire. Make sure that if your child is carrying a prop, such as a scythe, butcher knife or a pitchfork, that the tips are smooth and flexible enough to not cause injury if fallen on. Kids always want to help with the pumpkin carving. Small children shouldn't be allowed to use a sharp knife to cut the top or the face. There are many kits available that come with tiny saws that work better then knives and are safer, although you can be cut by them as well. It's best to let the kids clean out the pumpkin and draw a face on it, which you can carve for them. Treating your kids to a spooky Halloween dinner will make them less likely to eat the candy they collect before you have a chance to check it for them. Teaching your kids basic everyday safety such as not getting into cars or talking to strangers, watching both ways before crossing streets and crossing when the lights tell you to, will help make them safer when they are out Trick or Treating. Make Halloween a fun, safe and happy time for your kids and they'll carry on the tradition that you taught them to their own families some day! Thank you to the Halloween Safety Guide for providing us this pertinent information! It's October 31, 2009 and I am very Bullish on Sacramento!   David Ohara @dwo34 dwo34@aol.com

An Inside Look into a "Pot House" After the DEA Goes Through It Part II Photos

Good Evening! 

This is the second set of photos regarding my blog on "Pot Houses."  On another note, it was reported recently that the DEA had made more arrests.  One person who was arrested was a bay area real estate agent.  

Once again, It's October 27, 2009 and I am Very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

An Inside Look into a "Pot House" After the DEA Goes Through It

Good Evening Friends

One of the big topics that has been featured in many of the media outlets in the Sacramento/Northern California area, are the infamous "pot houses."  A "pot house" is a residential property aka home, that has been turned into a marijuana farm.  The people who turn nice four bedroom homes in nice neighborhoods, have to make some serious alterations to the home in order to plant and cultivate it.  This is one a type of blog that will be better done in photos.  I don't know how many I can post per blog, so if I need to, I will create another post and add more photos.  You will be amazed! I could not believe my eyes when I walked through this home.  Holes in the walls and ceilings.  Extension cords all over the place. A thermal foil paper located on all the windows, the kitchen stripped of its cabinets and appliances.

Look at the photos and be amazed! I took a lot of photos so I can send you more if you would like.  

It's October 27, 2009 and I am Very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Resolution of the "Missing Fifty Thousand Dollars"

Good Evening

As a follow up to my last post "A First for Me!" where I talked about the case of the missing $50,000 cashier's check, I wanted to bring this saga to an end and let you all know what transpired today.

During our short negotiations and escrow period, I had built up a good rapport with the Seller.  I handled the negotiations in a non-adversarial manner.  I wanted to know if she had received her funds so I decided to give her a call and ask her.  I called this morning and this is how our conversation went:

dwo34: Good Morning, how are you?

Seller: I am fine, but I have an issue with the title company.

dwo34: Really? What is your issue?

Seller: Well, as you know we went on record on Wednesday of last week.  I received a phone call from the title company last week notifying me.  I gave her instructions to wire the funds to my account and she said she would.  She told me that the wire would be sent out on Thursday morning because we recorded in the afternoon.  Well, I called my bank around lunch on Thursday and my money was not there.  I called the escrow officer and she said she was so busy she did not have time to wire the money.

dwo34: The escrow officer can instruct anyone in the office to contact their bank to wire the money. She does not do this herself.

Seller: I know.  She lied to me.  She told me that she wired the money on Friday. But the fact is, she never did.  When I spoke to her this morning she told me that they misplaced $50,000 and the amount she had for me was short.  I told her that's not my problem and wire me the money.  They are still holding the other portion of my money too.  They won't release any of my money and they told me they would try to get the property back for me.  I don't want the property back, it closed and I want my money.  I am so furious that she lied to me and was so negligent with the Buyer's money.

dwo34: I knew about this on Thursday and I am sorry that you have to go through this.  I wished you would have allowed me to open the escrow at the company I always deal with (Stewart Title).  Where did you leave it with the title company?

Seller: I told her to send me my money or I will sue them.  They screwed up.  She told me that she had all the money to close on Tuesday.  So I place the blame on them.  How long should I give them before I call my attorney?

dwo34: I will go and meet with them today and see if I can get it ratified.  I will call you later and let you know the outcome.

Seller: Thank you and I appreciate you stepping in and helping.

I did have a meeting with the title company and I basically said:  

Look, the Buyer brought in all the funds to close.  You confirmed it in writing to me.  Some where between receiving the funds and getting ready to deposit the funds, you lost it.  That is your problem.  We don't have an issue with the Seller.  You do.  As a matter of fact, I spoke to the Seller this morning and she tells me that you have not been totally honest with her and it appears you are trying to "cover up" something.  The Buyer will not be signing the property back over to the Seller.  The Seller is not willing to wait 90 days for her funds.  Unless you file a claim with your insurance company for $50,000, we will be contacting the insurance commissioner and letting them know what transpired and all of your mixed signals.  We will also show all of our documentation that we have that clearly shows you are not being honest and broke your fiduciary responsibility.

After some phone calls to upper brass, we got what I had come for.  The title company will end up sending the Seller the $50,000 that they "lost."  The Buyer will be reimbursed for the added expenses he incurred while trying to get another "cashier's check."  And I have the satisfaction of having a happy client and perhaps picking up a new one (Seller).

I also told the manager that I spoke to, that I did not appreciate any of the tactics that her mid level manager tried to use on me in an attempt for me to have the Buyer sign back the property.  He tried to use intimidation and his "enormous legal team" as his weapon of choice. When he said that I replied "Go ahead Brian,  some of my best friends are lawyers and I actually enjoy chatting with lawyers, so I am sure I will have a nice time with your team. How long shall we drag this process?"  I told the manager today, with mid level managers like that,  I can see why you have to maintain such a large team of attorneys.  She ultimately apologized for the debacle and their bungling the escrow.   I did call the Seller and informed her of the good news, as well as the Buyer.

Once again, when you are dealing with people, there are choices.  It's prudent to chose your service providers wisely.  Call me, I have built a solid team of professionals that I can refer you to in most industries.  Even the simplest of tasks can cause large problems.  Memo to this title company: Handle those cashier's checks a little more diligently and not so carelessly!

It's October 26, 2009, and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

A First for Me!

Good Evening:

Ever hear of the saying "There is a first time for everything?"  Well, I truly had thought I had seen it all in my real estate career.  I have seen homes burn, I have seen couples separate during escrow, I have seen people have their relocation plans change during escrow, but something happened on Thursday that I had never seen nor experienced before!

To set the story up, one of my clients had successfully made an offer on a property and was going to pay cash for the home.  We signed our papers and sent in our funds to close the escrow.  We were notified by the escrow company that they had received the buyer's funds and all closing documents needed to consummate the sale.  The escrow called me the next day (Wednesday) to let me know that the property would be closing that afternoon.  I received an email late Wednesday that the property did close and the please relay the good information to the Buyer, which I did.  

A nice easy escrow.  A seven day close. No hassles with appraisers, pest companies, home inspections, and lenders. At least that is what we all thought.  I get a call from the escrow officer and she sounded frantic.  I was in a meeting so I missed her call.  The Buyer also called me and said "get a hold of the escrow lady, because she just called and makes no sense...."

When I called her back this is how our conversation went.

dwo34:  I got a message you called. What can I do for you?

Escrow Officer: Your buyer needs to bring in additional funds. He was short. 

dwo34: What do you mean? You confirmed you had the funds and we are on record. As a matter of fact we brought in more than what was needed to close. You owe him money.

EO:  I cannot find the other check. Are you sure you gave it to me?  Maybe you only gave me one check.

dwo34:  You confirmed receipt of the funds. If you did not have enough, you would not have let it record.  Did you lose one of the checks?

EO:  I don't know.  Can you see if it is at your office, or in the buyer's car, or maybe you still have it.

dwo34:  We gave it to you. You confirmed it.  I would have more respect for you if you just admitted you lost it or misplaced it.

EO:  I don't know where it is.  I take full responsibility for the check.  I cannot find it. Can you have the buyer cancel the check and get me a new one?

dwo34: I will call him, I know he cannot do it today, he is out of town. I will see what he can do.

EO: Thank you

Amazing!! Misplacing a check for $50,000!  I know she received it, because you will not close an escrow when there are not enough funds.  The thing is with banks, they will not give you access to your funds for 90 days! Even though we stopped pay on the check, we cannot get another check for 90 days!  The head brass at the title company did not act the way I thought they should.  They wanted me to have the buyer sign back the deed to the seller.  I said "Give him his money back, including access to his $50,000 and we would.  The story is not over.  My client has a home and the seller who sold it to him is probably short $50,000.  Not a good way to start your weekend if you were the escrow officer!

I'll finish this blog this upcoming week.  We need to get this ratified.  One of the reasons I wanted to blog on this is simple:  Use qualified service people!! Use people who will pay attention to details.  Even the simplest tasks can be botched.  In this case, a simple depositing of a check would have made all the difference in the world!  

It's Saturday, October 24, 2009, and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com