David Fisher Law - Blog

Red Flags In Real Estate Fraud

9/27/2018

Here are examples of red flags during a real estate transaction. Be wary if you:
• Are asked to pay cash.
• Are asked to pay for something “on the side,” “outside of escrow,” or “after closing.”
• Are asked to pay a real estate agent directly or are asked to pay upfront fees.
• Are dealing with unlicensed agents or unlicensed brokerage companies.
• Are offered a “forensic loan audit.”
• Are dealing with “attorney-backed” businesses or law offices that refuse to provide an attorney’s name or State Bar number.
• Come across programs and companies that claim to represent Federal or State agencies or programs.
• Are given a sales pitch with logical holes, lack of details, or assumptions.
• Meet with salespeople who fail to discuss possible risks along with possible rewards. All investments carry a risk.
• Are asked to lend personal funds to an investment plan secured only by a personal note, or otherwise unsecured.
• Encounter lack of an actual business office, unwillingness to meet in an actual office, or refusal to meet in person.
• Are not provided with required State and Federal disclosures early in the real estate transaction.
• Are asked to transfer title.
• Are encouraged to make payments to someone other than your servicer.

Tips for Borrowers When Applying for a Home Loan

9/26/2018

• Ask for a Mortgage Loan Disclosure Statement and/or a loan estimate. These documents will tell you the cost and proposed terms of the loan.
• If using the services of a mortgage broker, contact the California Department of Business Oversight at www.dbo.ca.gov or (866) 275-2677, and/or the Department of Real Estate at www.dre.ca.gov or (877) 373-4542 to make sure the mortgage broker is properly licensed.
• Consider asking the mortgage broker for references.
• Check for special programs you may qualify for with Federal, State or local government.
• Do not sign blank forms or forms you do not understand.
• Ask for copies of the forms you complete or sign.
Questions to Ask When Applying for a Home Loan
• Who is the lender?
• What is the interest rate and term of the loan?
• What is the monthly payment for principal and interest?
• How much are the property taxes and insurance?
• What is the annual percentage rate?
• What are points?
• Is a rebate being paid by the lender to the broker?
• When will I receive an estimate of my costs for the loan?
• Is there a prepayment penalty?
• Is there a balloon payment? When is it due and how much is the payment?
• Are there any up-front fees to pay?
• If I have to pay up-front fees, are they refundable?
• How long does loan approval take?
• When will the loan close and how much money must I have at closing?
• If I have a rate locked in, is it in writing?
• What happens if interest rates change during the loan process?
• If the loan does not go through, is there a cancellation charge?
• Is the loan assumable by someone later? Is there a fee?

Beware of Fraudulent Loan Modification Schemes

9/20/2018

Protect yourself from loan modification or foreclosure rescue scams. Beware of loan modification and foreclosure rescue scams run by con artists who demand the payment of upfront fees.

Loan modifications are situations in which you and your lender agree to modify one or more of the terms of your home loan. The terms could be a lower interest rate, an extension of the length of the loan (like converting a 30-year loan into a 40-year loan), changing an adjustable-rate loan (called an ARM) to a fixed rate, a rate freeze, the deferring of some of your payments, or any other modification or restructuring of loan terms.

The goal of a successful loan modification is to help you keep your home and to give you a real, meaningful, sustainable, and long-term adjustment to your current home loan that works for your financial situation. Not everyone will meet the qualification requirements for a loan modification. If you have been turned down by your lender, seek counseling services for advice on other options available to you.

The U.S. Department of Housing and Urban Development (HUD) offers foreclosure avoidance counseling through nonprofit agencies in California. Go to HUD’s website at www.hud.gov or call (800) 569-4287 to find counselors. HUD also offers information to homeowners facing the loss of their home.
The HOPE NOW alliance is a cooperative effort of home loan counselors and lenders, and it consists of HUD intermediaries. Go to the Hope Now website at www.hopenow.com or call its hotline at (888) 995-HOPE.

If you are considering obtaining assistance from a person or company that is not a HUD-approved nonprofit housing counselor, always check them out at www.dre.ca.gov to ensure the company or person is properly licensed. And remember, never pay an upfront fee for loan modification or forebearance services.
If you have already been the victim of a scam by a disreputable company, or have become aware of a loan modification scam, you can report fraud to DRE at (877) 373-4542.
For more information, advice, and safeguards, visit DRE’s Consumer Alerts section: http://www.dre.ca.gov/Consumers/ConsumerAlerts.html.

Key Points To Consider In Hiring a Property Manager

9/17/2018

Get the full name and contact information of the person or company you employ.

Check the property manager’s Bureau of Real Estate license, which must be valid and active to collect rent and manage your property. (Note: Resident property managers don’t need a real estate license.)

Ask the property manager for professional affiliations or certifications with property management organizations, and then verify those on the organization’s website.

Find out how long the company has been in business.

Ask how many properties are being managed and by how many employees. Make sure the answer is reasonable.

Get information on how tenants are screened, to include employment verification, prior rental and eviction history, etc.

See how many tenants have been evicted in the last year. This can also help you find out if tenants are being properly screened.

Ask how long it takes to fill a vacancy. Make sure the answer is reasonable.

Find out what insurance or bond the company may have.

Make sure the property manager has a trust account for security deposits and rents if they’re not held in an escrow account or given directly to you.

Call the Bureau of Real Estate at (877) 373-4542 or go to www.calbre.ca.gov to check the license. Make sure the license status is “Licensed” and that an agent with a salesperson license works for a broker. Look into any prior disciplinary action or restrictions on the license.

Check the Better Business Bureau, Chamber of Commerce, and other sources for reviews and complaints.

Review your insurance policy to see if you’re covered against fraud by a property manager.

What is Crowdfunding?

9/11/2018

Crowdfunding harnesses the power of social networks and the internet to give people the means to raise funds, help others overcome hardship, and meet aspirational goals. With crowdfunding, you can do everything from helping a friend pay for surgery to fulfilling a student’s dream of attending college, supporting a cause you believe in to helping an entire community recover from disaster.

In recent years, crowdfunding has transformed the traditional fundraising landscape, breaking down barriers between those in need and those available to help them—and making it possible for people to offer direct support to those who need it most. This is part of a larger trend toward individual giving. In 2016, charitable giving by individuals grew by 3.9% for a total of $281.86 billion, outpacing giving by both corporations and foundations.

Unlicensed Contractors Arrested

9/3/2018

A sting operation conducted by the Contractors State License Board on July 25-26, 2018, resulted in 15 individuals being cited for alleged illegal contracting.

CSLB’s Statewide Investigative Fraud Team (SWIFT) compiled a list of suspected unlicensed contractors and invited them to place bids on home improvement projects for a
single-family home near the Corona Municipal Airport. Individuals gave bids for concrete services, fencing, painting, tile services, and more, which ranged from $2,500 for exterior painting to $21,000 for paving concrete; high costs to risk on someone who is potentially inexperienced and uninsured.

Fifteen suspects received a citation for contracting without a license (Business and Professions Code section 7028) after providing bids over the legal limit. It is illegal for anyone to submit a home improvement bid of over $500 in combined labor and material costs unless that person holds an active CSLB-issued license. First-conviction penalties for contracting without a license include up to six months in jail and/or up to $5,000 in fines. A second conviction can carry a mandatory sentence of up to 90 days in jail. Penalties are more severe with each successive violation.

California’s housing market down for third straight month

8/27/2018

Existing, single-family home sales totaled 406,920 in July, down 0.9 percent from June and down 3.4 percent from July 2017.

July’s statewide median home price was $591,460, down 1.9 percent from June and up 7.6 percent from July 2017.

“While home sales continued to decline in recent months, the softening of the market is more indicative of a market shift rather than a major market correction,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Despite the slowdown, there were some silver linings in the market in July. For example, homes priced between $500,000 and $1 million posted modest gains of about 5 percent in July thanks to growing inventory. Additionally, every price segment above $1 million continued to enjoy double-digit sales gains.”

The Southern California Region housing market was essentially flat compared to last year with sales ticking up 0.1 percent. Ventura County led the region with a 9.4 percent sales increase, followed by a modest uptick of 1.3 percent in Riverside. The core employment centers of the region continued to struggle as Orange and Los Angeles counties saw sales declines of 0.9 percent and 1.4 percent, respectively. Sales in San Diego inched up 0.7 percent in July.

Home prices in Southern California continued to rise as well, despite posting lackluster sales. Price increases in every county were in the single-digits, though San Bernardino County saw prices rise by 9.7 percent. With the exception of Madera County, which suffered from recent major wildfires, every part of the Central Valley saw prices rise as well.

The median number of days it took to sell a California single-family home remained low at 18 days in July, up from 16 days in July 2017.

The average statewide price per square foot for an existing, single-family home statewide was $289 in July, up from $270 in July 2017.

The 30-year, fixed-mortgage interest rates averaged 4.53 percent in July, down from 4.57 percent in June and up from 3.97 percent in July 2017, according to Freddie Mac. The
five-year, adjustable mortgage interest rate, however, edged higher in July to an average of 3.84 percent from 3.82 percent in June and from 3.22 percent in July 2017.

FHFA Increases Conforming Loan Limits

8/12/2018

Federal Housing Finance Agency (FHFA) announced that it will increase the 2018 conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac to $453,100 on one-unit properties and a cap of $679,650 in high-cost areas. The previous loan limits were $424,100 and $635,150, respectively. The conforming loan limit determines the maximum size of a mortgage that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically have tighter underwriting standards and carry higher mortgage interest rates than conforming loans.

The Director of the Consumer Financial Protection Bureau Requests Zero Funding

8/12/2018

In his first quarterly funding request as acting director of the Consumer Financial Protection Bureau (CFPB), Mick Mulvaney asked for nothing. "This letter is to inform you that for the Second Quarter of Fiscal Year 2018, the Bureau is requesting $0," he wrote to the Federal Reserve, which provides the agency's funding. Mr. Mulvaney stated his reason for this request: The CFPB already has sufficient funds to carry out its mandates, and he saw no practical reason for the CFPB to maintain a large "reserve fund."

This is yet another indication of the hands off regulatory approach that Mr. Mulvaney intends for the CFPB. The CFPB is the primary enforcer of RESPA, a federal law that prohibits referral fees and kickbacks

Marijuana Policy Rescinded by the Department of Justice

8/12/2018

The Department of Justice formally rescinded the Obama era policy that had discouraged federal prosecutors from bringing charges of cannabis-related crimes in states that have legalized sales of the drug. (See the DOJ memorandum of January 4, 2018). While the rescission of this policy does not necessarily mean that the DOJ will immediately begin enforcement of federal cannabis law, it does free up federal prosecutors to use their discretion to enforce the Controlled Substances Act (CSA) as they would any other federal law.

However, the Rohrabacher-Farr amendment regarding medical cannabis is presently still in effect, and precludes the federal government from using its resources to enforce the CSA regarding medical marijuana use if permitted under state law. In order for it to remain in effect, this budget amendment must be included in every subsequent appropriations bill providing funds to the DOJ. This includes current bills proposing to extend federal government funding on a short-term basis.

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