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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Pre-sale clarifications Posted by Ward-CA- on June 23, 2002 at 7:03 AM In Reply to: Preforeclosure process clarification posted by Jason on June 20, 2002 at 0:00 AM : I have an opportunity to take over a home in California that is in the preforeclosure process that has equity. I am trying to determine the different options I have of taking over the property. Can someone clarify if the following will work and the potential problems to look out for. Pls also answer the questions below. : - Perform necessary title search. : - The owner signs the grant deed over to me. : - The note stays in the current owners name. : - After recording the deed, I pay the lender the amt owed including penalties. : - The lender stops the foreclosure process and I either refinance the note in my name or sell the property. : 1. Do I need to open escrow? : 2. Do I need to notify the owners current lender? : 3. Is it correct that the current owner has 5 days to cancel the transaction? When does the five days start? Once the 5 days is over, does the owner have any rights to the property. : 4. I have also heard if the lender notices that a different person is paying for the loan they may call the loan due in 5 days? What happens at that point? Does the lender take the property after 5 days or do they just restart another 90 day foreclosure period? : 5. If someone does this as a business, should they form a corporation and make all transactions in the corporations name? : Any help would be greatly appreciated. : Thanks =•=•=•=•=•=•=•=•=•=•= Jason, When you say the “note” stays in the current owner’s name I think you mean to say the current financing (both note and deed of trust) stays in the current owner’s name. And most people would characterize a refinance as a refinancing of the “loan” rather than the note. Technically Jason, you’re right in your description, but it’s rarely described in the terms you use so it might confuse some other newbie. #1. There’s no requirement in CA that a buyer or seller use the services of an escrow. #2. There’s no requirement in CA that a buyer or seller needs to inform an existing lender that an ownership change is taking place. 3. The 5 day Notice of Cancellation is required only in the instance where the seller/occupant’s home is in foreclosure and the new buyer has no intention of occupying the premises. If such a condition exists, then yes, the seller has 5 business days to cancel. Said cancellation right begins the day following the signing of the Equity Purchase Contract, unless that day would be Sunday or a state-observed holiday. In that case it would start a day later. The expiration of the right to cancel cuts off the seller’s further right to cancel unless the buyer was remiss in complying with all the requirements of Section 1695. 4. An aggrieved lender can call a loan due the moment a violation of the due-on-sale clause is discovered. There’s no 5 day rule in this area. Most lenders are accommodating enough to give the violator ample time to either qualify and execute a formal assumption agreement in taking over the loan or refinancing the property and paying off the existing loan. No lender has the naked power to summarily “take” the property. Their only remedy to a new owner’s non-response to their due-on-sale demand is to initiate a foreclosure. And as you know, that’s at least a 15 week process in California. 5. Doing business under a registered, fictitious business name is simpler, far cheaper and just as effective (public relations wise) as forming a formal corporation. If you also used no-cost title holding trusts to hold title to your foreclosure buys you’d be in great shape. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : I have an opportunity to take over a home in California that is in the preforeclosure process that has equity. I am trying to determine the different options I have of taking over the property. Can someone clarify if the following will work and the potential problems to look out for. Pls also answer the questions below. : : - Perform necessary title search. : : - The owner signs the grant deed over to me. : : - The note stays in the current owners name. : : - After recording the deed, I pay the lender the amt owed including penalties. : : - The lender stops the foreclosure process and I either refinance the note in my name or sell the property. : : 1. Do I need to open escrow? : : 2. Do I need to notify the owners current lender? : : 3. Is it correct that the current owner has 5 days to cancel the transaction? When does the five days start? Once the 5 days is over, does the owner have any rights to the property. : : 4. I have also heard if the lender notices that a different person is paying for the loan they may call the loan due in 5 days? What happens at that point? Does the lender take the property after 5 days or do they just restart another 90 day foreclosure period? : : 5. If someone does this as a business, should they form a corporation and make all transactions in the corporations name? : : Any help would be greatly appreciated. : : Thanks : =•=•=•=•=•=•=•=•=•=•= : Jason, : When you say the “note” stays in the current owner’s name I think you mean to say the current financing (both note and deed of trust) stays in the current owner’s name. And most people would characterize a refinance as a refinancing of the “loan” rather than the note. : Technically Jason, you’re right in your description, but it’s rarely described in the terms you use so it might confuse some other newbie. : #1. There’s no requirement in CA that a buyer or seller use the services of an escrow. : #2. There’s no requirement in CA that a buyer or seller needs to inform an existing lender that an ownership change is taking place. : 3. The 5 day Notice of Cancellation is required only in the instance where the seller/occupant’s home is in foreclosure and the new buyer has no intention of occupying the premises. If such a condition exists, then yes, the seller has 5 business days to cancel. Said cancellation right begins the day following the signing of the Equity Purchase Contract, unless that day would be Sunday or a state-observed holiday. In that case it would start a day later. The expiration of the right to cancel cuts off the seller’s further right to cancel unless the buyer was remiss in complying with all the requirements of Section 1695. : 4. An aggrieved lender can call a loan due the moment a violation of the due-on-sale clause is discovered. There’s no 5 day rule in this area. Most lenders are accommodating enough to give the violator ample time to either qualify and execute a formal assumption agreement in taking over the loan or refinancing the property and paying off the existing loan. No lender has the naked power to summarily “take” the property. Their only remedy to a new owner’s non-response to their due-on-sale demand is to initiate a foreclosure. And as you know, that’s at least a 15 week process in California. : 5. Doing business under a registered, fictitious business name is simpler, far cheaper and just as effective (public relations wise) as forming a formal corporation. If you also used no-cost title holding trusts to hold title to your foreclosure buys you’d be in great shape. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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