Senate Bill 94 - California

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Senate Bill 94 - California

Will BarnardPro Member
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Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes

Are any of you short sale investors aware of Senate Bill 94 which was placed into action October 12, 2009? If not, you need to read up on it right now. While it only affect us in CA, other states are soon to follow, although other states may do it better as usual.

Basically, the bill was designed to reduce/eliminate all the loan mod fraudsters out there. The problem has been taht a large majority of loan mod companies (95%+ in my book) are frauds and scams, looking only to take money from unsuspecting homeowners. In fact, many of the loan mod crooks are the very same mortgage broker crooks who sold ridiculous loans to people and now that they are out of the loan biz, they got into another biz to take maoney from people.
Unfortunatley, the infinite wisdom of our state officials made the bill so broad, that it encoumpasses not only loan mod people, but EVERYONE, including us investors.
It is my hope that the wording is edited or ammended so that it is more specific, but until that time, and according to the bill, anybody performing a short sale in CA without having a RE sales license, DRE # or being an attorney, you could be committing a crime, and not a small one, but a felony that carries with it 10 years jail time!

Read up and post your comments here.

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Edward Alvarez
Involved In Real Estate · Los Angeles, CA · Member since 2008 · 89 posts · 15 votes
16y

Hey Will, great topic... not to many short sale investors in CA, apperantly. I personally think it took long enough to implement Bill 94. It really boils down to taking up-front fee's. I'm a strong believer of producing results before anyone gets paid anything. I personally have a couple short sales in my pipeline and I don't see how it would affect me. 1st off I use an option agreement and second I actually pay the seller an option fee, so I'm not in anyway taking any up-front fees whatsoever. Another piece of advice, use complete transperancy between all parties involved... Your thoughts?

By the way if your doing short sale investing in CA. Read up on CA laws 1695, 2945 and Bill 94... Theirs also a great bulletin post by Freddie Mac on flipping distress property including REO and short sales. Flipping is legit as long as you do it the right way! Get Educated folks...

p.s. one last thing to be on the safe side of things keep your profit margins below 15% if not 10% is best...

Ed

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  • Matt Mathews
    Real Estate Consultant · yucaipa, CA · Member since 2008 · 233 posts · 109 votes
    16y

    Another law went into effect by the Attorney General. This law and the bill you are speaking of, came about when Investors/Scammers or not started calling themselves Loan Modification Experts. The law requires a 1million dollar bond plus you must be registered with the Attorney Generals office. Also to note!! Many other states now have similar laws on the books. Personally, I can't figure out why so many Investors want to waste their time doing short sale deals, when in fact less than 20% ever get closed. Investors/lenders make more $$ writing off the loss from the foreclosure. The few short sales that do get closed, are priced close to market value give or take 5%. Otherwise, they go back to the bank. I realize that in some states when your dealing with a local community bank etc, you may have a better chance with short sales. But here in Ca. that's not the case, at least from my experience as a Retired Banker and Licensed RE Consultant. The Rules and laws change daily here! Time to find another niche'

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  • Aaron Norris
    Lender · California and Florida · Member since 2008 · 319 posts · 194 votes
    16y

    Great thread everyone. We're being overly cautious right now and advising our investors and hard money clients to make sure they close all transactions with their own funds before moving forward with a new buyer. While transparency in the transaction is great, we’d rather be on the conservative side right now as our local, state, and national government dream up the next “fix†to the real estate problem.

    For those that think California is rough, I can’t imagine other states not following California’s lead. The FBI and the Obama Administration will continue their efforts to go after "perpetrators" and we should probably expect even further restrictions in 2010. You’ve probably already seen the article on the FBI website but I thought I’d repost for some who may not have:

    http://www.fbi.gov/publications/fraud/mortgage_fraud08.htm

    See also “Obama's Task Force to Fight Mortgage Fraud and White-Collar Crimes†from DNS News.

    http://www.dsnews.com/articles/obamas-task-force-to-fight-mortgage-fraud-and-white-collar-crimes-2009-11-17

    I only post this as it’s obviously on their radar. Since many of these banks are TARP funded and hence tax payer supported, I fear this task force will be taking on several of the FBI’s list in their activities.

    Nothing to do but stay informed, be transparent, and talk to your trusted legal advisors IN YOUR STATE!

    Has anyone else heard of another bill being presented that extends the seasoning rule and the amount an investor can make? There’s a few rumors going around but I haven’t found anything substantial on the subject.

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  • Scott Hubbard
    Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
    16y
    Originally posted by Matt Mathews:
    Personally, I can't figure out why so many Investors want to waste their time doing short sale deals, when in fact less than 20% ever get closed. Investors/lenders make more $$ writing off the loss from the foreclosure. The few short sales that do get closed, are priced close to market value give or take 5%.


    Matt-

    I agree, from your perspective Short sales are not productive. That is because your lack of experience, patience and inability to think like an investor is why your opinion means little to us. I have read many posts where you state something like that above. I know you do not UNDERSTAND.... I get it! Your a REALTOR.... Big surprise!

    Take off your REALTOR hat, open your eyes and realize that REOs are killing out markets! Stop being a bottom feeder and be part of the solution. IMHO!

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  • Scott Hubbard
    Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
    16y
    Originally posted by Matt Mathews:
    Personally, I can't figure out why so many Investors want to waste their time doing short sale deals, when in fact less than 20% ever get closed. Investors/lenders make more $$ writing off the loss from the foreclosure. The few short sales that do get closed, are priced close to market value give or take 5%.


    Matt-

    I agree, from your perspective Short sales are not productive. That is because your lack of experience, patience and inability to think like an investor is why your opinion means little to us. I have read many posts where you state something like that above. I know you do not UNDERSTAND.... I get it! Your a REALTOR.... Big surprise!

    Take off your REALTOR hat, open your eyes and realize that REOs are killing out markets! Stop being a bottom feeder and be part of the solution. IMHO!

    My apologies for Hijacking the thread.

    I do some work in the CA market and I, too am concerned about the vague laws. I try to make sure that I work with a professional whenever possible and that disclosure is made. Great thread btw.

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  • Will BarnardPro Member
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    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    16y

    Matt, I don't have enough fingers to count the amount of times you cme into a thread and post your thoughts in an exact contrast and then spill off how lease options are the best way to go.
    I believe Scott said it best, take off your agent hat and start thinking like an investor! You entire post is not just opinionated, but completely lacks foundation. Please show us all you evidence to support your claims. Even if a low % of short pays go through, I can bet that the majority of the ones that fail are due to an inexperienced agent involved!

    We are doing short sales and I know a ton of others who are too. In fact, I provide transactional funding for short sale investors so I probably see more deals acros my desk then most and the ones crossing my desk are ALL closing and investors are cashing $20k $40k and one is getting almost $100k in profits! If that is a waste of time in your book, find a new book!

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  • Will BarnardPro Member
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    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    16y

    Now that my thread was completely hijacked and went so far off topic, I will bring it back again, so please stay on point. We are discussing the senate bill and not if short sale investors should move on to other strategies.

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  • Marcus Mccray
    Real Estate Consultant · Monrovia, CA · Member since 2009 · 73 posts · 20 votes
    16y

    As a Realtor and investor here is how I see it...
    Stay educated and know the law period. It can only help you. On another note our affiliate title rep came in talking about a new law that will eliminate Authorizations To Convey with banks. I don't have the exact info but she is normally on top of her game and I felt it was worth mentioning. If anyone else has more knowledge of this please post but this will put a huge change in the short sale game!

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  • Will BarnardPro Member
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    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    16y

    Is there an attorney in the BP House!?
    Chime in here please.

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