Investing in Pre-Foreclosures Sacramento

8 Replies

Hello, I have started marketing pre-Foreclosures in the Sacramento, Ca area. Is there any experienced investors in Sacramento or Northern Ca that are investing in this area?  Thank you!

Hey Jessie!

Thanks for writing this note. I'm an active investor in the Sacramento Area and always looking to explore new options. Would love to connect and share my experience with you.

Thank you.  I will get in touch.

I'm sure you are being careful not to make your service look or smell like foreclosure avoidance/rescue services, as you would be required to be licensed by the state of California to do so.

@Jessie Ramsey you will probably notice a low return rate on mailing to pre foreclosures unless you invented the best letter in the world. There are fewer preforeclosures compared to five years ago. I dont care what I buy as long as it is priced right so I mail to many different homeowner types. They all have a low response rate but it only takes one at a time.good luck

Gordon Cuffe, Lender in CA (#1037464)
916-261-2381

@Ron S. what do you mean by that? I am myself looking into the pre-foreclosure realm and still learning. I would prefer to avoid an issue like you suggest.

Thanks.

Originally posted by @Joe W. :

@Ron S. what do you mean by that? I am myself looking into the pre-foreclosure realm and still learning. I would prefer to avoid an issue like you suggest.

Thanks.

I'm not saying anyone on this post is subject to registration. Not saying anyone falls under this situation or category but as a lender that has performed foreclosures for greater than 25 years, in California, I can say with conviction I've seen my fair share of good Samaritan's that have run afoul from the law in California unintentionally because of the rule. It's not on the front page of the news and it's not likely that anyone is going to get into trouble however, it's important that your intent and the understanding by the borrower of your intent, are in sync so that down the road if something goes wrong, they don't come back after you with something like, "you said you could stop my foreclosure and save my home/get me money/get me relocation assistance/buy my home/fix my credit", etc..

If you are marketing to borrowers that are in "pre foreclosure" (Which means different things to different people) by offering to either buy their home or find a buyer for their home, or take their home "subject to" or basically, anyone that "helps" them out, you may be considered a foreclosure consultant. If you get that designation by design (Nothing wrong with actually being a foreclosure consultant) or by default, they would be required to be registered by the state as a foreclosure consultant. Failing to do so would be considered illegal. Here is the definition of a mortgage consultant under the California Civil Code:

If you are not exempt, I would pay special attention to 2945.1 (8) and 2945 (9)(c)(1),(2),(3),(4),(5),(6),(7), and (8)

ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

2945.1.

The following definitions apply to this chapter:

(a) “Foreclosure consultant” means any person who makes any solicitation, representation, or offer to any owner to perform for compensation or who, for compensation, performs any service which the person in any manner represents will in any manner do any of the following:

(1) Stop or postpone the foreclosure sale.

(2) Obtain any forbearance from any beneficiary or mortgagee.

(3) Assist the owner to exercise the right of reinstatement provided in Section 2924c.

(4) Obtain any extension of the period within which the owner may reinstate his or her obligation.

(5) Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained that deed of trust or mortgage.

(6) Assist the owner to obtain a loan or advance of funds.

(7) Avoid or ameliorate the impairment of the owner’s credit resulting from the recording of a notice of default or the conduct of a foreclosure sale.

(8) Save the owner’s residence from foreclosure.

(9) Assist the owner in obtaining from the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, the remaining proceeds from the foreclosure sale of the owner’s residence.

(b) A foreclosure consultant does not include any of the following:

(1) A person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney at law.

(2) A person licensed under Division 3 (commencing with Section 12000) of the Financial Code when the person is acting as a prorater as defined therein.

(3) A person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code when the person is acting under the authority of that license, as described in Section 10131 or 10131.1 of the Business and Professions Code.

(4) A person licensed under Chapter 1 (commencing with Section 5000) of Division 3 of the Business and Professions Code when the person is acting in any capacity for which the person is licensed under those provisions.

(5) A person or his or her authorized agent acting under the express authority or written approval of the Department of Housing and Urban Development or other department or agency of the United States or this state to provide services.

(6) A person who holds or is owed an obligation secured by a lien on any residence in foreclosure when the person performs services in connection with this obligation or lien.

(7) Any person licensed to make loans pursuant to Division 9 (commencing with Section 22000) of the Financial Code when the person is acting under the authority of that license.

(8) Any person or entity doing business under any law of this state, or of the United States relating to banks, trust companies, savings and loan associations, industrial loan companies, pension trusts, credit unions, insurance companies, or any person or entity authorized under the laws of this state to conduct a title or escrow business, or a mortgagee which is a United States Department of Housing and Urban Development approved mortgagee and any subsidiary or affiliate of the above, and any agent or employee of the above while engaged in the business of these persons or entities.

(9) A person licensed as a residential mortgage lender or servicer pursuant to Division 20 (commencing with Section 50000) of the Financial Code, when acting under the authority of that license.

(c) Notwithstanding subdivision (b), any person who provides services pursuant to paragraph (9) of subdivision (a) is a foreclosure consultant unless he or she is the owner’s attorney.

(d) “Person” means any individual, partnership, corporation, limited liability company, association or other group, however organized.

(e) “Service” means and includes, but is not limited to, any of the following:

(1) Debt, budget, or financial counseling of any type.

(2) Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a lien on a residence in foreclosure.

(3) Contacting creditors on behalf of an owner of a residence in foreclosure.

(4) Arranging or attempting to arrange for an extension of the period within which the owner of a residence in foreclosure may cure his or her default and reinstate his or her obligation pursuant to Section 2924c.

(5) Arranging or attempting to arrange for any delay or postponement of the time of sale of the residence in foreclosure.

(6) Advising the filing of any document or assisting in any manner in the preparation of any document for filing with any bankruptcy court.

(7) Giving any advice, explanation, or instruction to an owner of a residence in foreclosure which in any manner relates to the cure of a default in or the reinstatement of an obligation secured by a lien on the residence in foreclosure, the full satisfaction of that obligation, or the postponement or avoidance of a sale of a residence in foreclosure pursuant to a power of sale contained in any deed of trust.

(8) Arranging or attempting to arrange for the payment by the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, of the remaining proceeds to which the owner is entitled from a foreclosure sale of the owner’s residence in foreclosure. Arranging or attempting to arrange for the payment shall include any arrangement where the owner transfers or assigns the right to the remaining proceeds of a foreclosure sale to the foreclosure consultant or any person designated by the foreclosure consultant, whether that transfer is effected by agreement, assignment, deed, power of attorney, or assignment of claim.

(9) Arranging or attempting to arrange an audit of any obligation secured by a lien on a residence in foreclosure.

(f) “Residence in foreclosure” means a residence in foreclosure as defined in Section 1695.1.

(g) “Owner” means a property owner as defined in Section 1695.1.

(h) “Contract” means any agreement, or any term thereof, between a foreclosure consultant and an owner for the rendition of any service as defined in subdivision (e).

(Amended by Stats. 2010, Ch. 596, Sec. 1. Effective January 1, 2011.)

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