26 Sawgrass
At the tail end of this November, we opined that we were ignorant as to whether or not 26 Sawgrass is currently listed for lease. We can now say, it is. And we can now say we are no longer ignorant. At least about that if nothing else.
26 Sawgrass is now listed for lease at $4,000 per month, down from a previous listing last year for $4,600. This brings up a weak spot in our knowledge base, (yes, yes, I know, of which there are many). What rights does a tenant have if the property they are leasing is foreclosed on? Are their rights dependent upon when they sign the lease? And what obligation does the owner/landlord/lessor have to inform the potential tenant of the foreclosure and delinquency status of the mortgage? If the owner is a realtor, does the NAR have or enforce any sort of ethics standards upon its members regarding disclosure to tenants? Ok, that last question was ridiculous. If you look up oxymoron in the dictionary, the example is the NAR and ethics.
Are there any realtors out there who want the public to know the truth about this subject? There seems to be lots of opinion, but little knowledge based on fact. If you are one who claims to work in the best interest of your clients, please inform us. Word is we at the CHB are talkin’ smak about Coto and we aren’t telling the truth. Well, this is your opportunity to tell the truth. Show us that realtors want to convey the truth and want their clients to have access to all available and relevant information.
blinker
January 25th, 2010
The silence is deafening, isn’t it?
IrvineRealtor
January 25th, 2010
Someone asked this question previously on the Irvine housing blog in May of last year. To my knowledge, the info is still accurate:
“The Helping Families Save Their Homes Act of 2009 contains various new laws to address the national foreclosure crisis.
HOPE FOR HOMEOWNERS (H4H) REVAMPED: The new law loosens the H4H program requirements to help homeowners refinance out of their troubled mortgages and into more affordable, fixed-rate FHA-insured loans. Originally launched in October 2008, the H4H program intended to help 400,000 distressed homeowners, but in the program’s first seven months, it only helped one family stay in its home. The maximum loan-to-value ratio for an FHA refinance is 96.5% of the appraised value. If refinance proceeds are insufficient to pay off existing liens, the existing lienholders must voluntarily agree to a short payoff, but a new inducement is an opportunity for them to share in the homeowner’s equity. Other changes to the H4H program include monetary incentives for both the participating servicers of the existing loans and originators of the FHA refinance. Millionaire borrowers (with net worth over $1 million) are now excluded from the program. HUD will establish the requirements and standards to implement the H4H program as revised.
LONGER STAY FOR TENANTS OF FORECLOSED HOMES: Effective immediately, an REO lender or buyer who acquires title through a foreclosure sale must give at least a 90-day notice to terminate a bona fide tenant as defined. A 90-day notice to terminate is sufficient for a month-to-month tenant or if a new owner will occupy the property as a primary residence at the end of the 90 days. Otherwise, a tenant with a one year or other fixed-term lease with a remaining lease term exceeding 90 days can stay in the premises until the remaining lease term ends. This new 90-day notice requirement applies to foreclosures of a federally-related mortgage loan or residential real property, except for properties under rent control, rent-subsidized programs (such as Section 8), or other state laws that provide additional protections for tenants. This law expires on December 31, 2012.”
While there are some RE people that are ethically-challenged, there are many that you will find that act within the commonly-accepted boundaries of morality. Just sayin’.
-IrvineRealtor
cdcrez
January 25th, 2010
@IrvineRealtor
Thanks. I had looked up the tenants rights portion this morning. Do you know what the law says regarding disclosure to potential tenants of default and foreclosure?
Someone, not you, has publicly challenged the honesty and truthfullness of the CHB and we are giving them a chance to show their stuff.
zaander
January 25th, 2010
Talking smack, meaning you are not allowed to say anything that could be considered the truth about why prices in Coto may fall further?
Back in 2005-2006, the Real Estate Indutrial Complex didnt want to hear how toxic loans had the ability to cause people to lose their homes if prices stayed flat or dropped. We know how things worked out.
Sounds to me like they want to kill the messenger of bad news and not address reality.
C Delroy Spuckler
January 25th, 2010
For the renter, I assume they have to pay a fair rent to the new homeowner, right? (AKA what if rent was paid upfront? Or they agreed to a deal where the rent was below market value?) I assume the new homeowner isn’t up for the refund on security deposit right?
Are there any rules that an existing landlord needs to tell the tenant that their home is under foreclosure?
blinker
January 25th, 2010
@C Delroy Spuckler-
i experienced these shenanigans of being leased a home that was on the road to delinquency. four months into the 12 mos. lease we were advised that payments were not being made and that a listing and short sale were on the horizon.
i contacted (and paid for) 2 attorneys. here is what i got from that: you are legally obligated to continue to pay rent until the house forecloses OR the lease is completed. also, the owner has no obligation to you to pay the mortgage (with the rent money) OR disclose any financial information. basically, you, as a renter have to use public records to investigate and secure your own fate as best as possible in this market.
also, the realtors involved in my transaction had no moral conscience as it pertains to displacing residents. it’s just another day in their business. this is why i will never use another realtor to buy or sell my homes in the future. i sold my own home without incident and without a realtor, not that it’s some magnificent feat- i am merely pointing out that anyone with any level of business saavy can take this on themselves unless there are unusual entanglements. in that case, we have real estate attorneys (who charge far less than 5% or 6%).
my (unsolicited) advice for anyone who is leasing in this desperate climate is to first check grantor/grantee information on the landlord. 2.) check the date and purchase price of the home- to guesstimate if they are equity owners or if they are just desperate to get any type of income on the home. ideally, if you have a friend in real estate- you can find out if they are a serial refinancer.
3.) meet the owner if you can, to “get a vibe” ask them direct questions. as long as you have good credit- any lessor on the “up and up” should not have a problem addressing your concerns in this market.
just another example of how the losers and cheaters in this country are protected and taken care of. we should be used to it by now
Special K
January 25th, 2010
@blinker
Thanks this is very helpful. Apparentely it is not illegal to rent out a home with an NOD already filed either, because my neighbor just did it. They disclosed that the owner was seeking a loan mod, but please, who is going to loan-mod a 1.2mm loan, investor property, when the comps are 900k. There are plenty of non-savvy people out there who get taken advantage of by some realtors which is very sad.
This being said, the realtor I used was top notch, but it is unfortuneate that so many can ruin the light an industry is viewed in.
C Delroy Spuckler
January 25th, 2010
@blinker
Honestly, my gut feel is these laws were not made to protect the landlord. I think when the laws were made people just didn’t think of these situations. What’s important is do they ammend the laws now that its obvious what is going on (and hopefully not over correct)
Seriously, 5 years ago if someone said people would try to rent out a property in default, who would have even thought? It wouldn’t surprise me if this was just not something commonly checked for. We can look back in hind site and say “what were they thinking” or “they were lazy”… but honestly, who would have thought? Commissions on rent are pretty low from what I understand and you don’t have an escrow or title company involved I assume.
South County
January 25th, 2010
I just looked on Realist and there is no NOD on the property.
My MLS access to Realist was updated on 1/14/10. He must have paid or got a loan mod?
cdcrez
January 25th, 2010
@South County
Sorry, we are not familiar with Realist. Foreclosure Radar shows the NTS, (TS Number CA-09-261500-ED), as current and my experience is that FR shows cancellations within 48 hours. The NTS was postponed from 1/4/10 to 3/3/10. The NOD recorded on 10/29/09. Priority is not showing a cancellation and LPS is not showing a cancellation. Both Priority and LPS usually list cancellations on the day of cancellation, within hours. If the NTS on 26 Sawgrass shows up as canceled, we will post an update. The owner’s primary residence in Calabasas also shows an NTS recorded in October and postponed numerous times until 2/4/10. The published bid on the Calabasas residence is $2,608,099.
For clarification, we rarely feature a property which has an NOD, but no NTS yet, and so far our occasions to do so were prompted only by the celebrity of the persons involved. We usually feature a property on the day of its scheduled trustee sale. This amounts to our idea of showing restraint.
cdcrez
January 26th, 2010
@South County
Just curious; do realtors have access to change info on Realist?
IrvineRealtor
January 26th, 2010
No. Realist pulls information from County Records.
cdcrez
January 26th, 2010
Thanks. Does Realist have a record of cancellations?
cdcrez
January 26th, 2010
So basically, there are no laws regarding disclosure to potential tenants. As somebody mentioned, why would there be? Who woulda thought that there would be so many foreclosures and disclosure would be an issue. But, a question remains. If the NAR is supposed to be a professional organization, shouldn’t the NAR enforce a code of ethics upon its members and wouldn’t disclosure of default to a prospective tenant by a member of the NAR be a given? It seems to me a realtor would be morally and ethically obligated to disclose such info and a realtor who is also a prospective landlord of a property in default would be even more obligated.
IrvineRealtor
January 26th, 2010
NAR’s ethics code can be found here: http://www.realtor.org/mempolweb.nsf/7c7e04a0f916f203862568940053aa55/862877740df4733b86257234007985c9?OpenDocument#Duties%20to%20the%20Public
Articles 1-9 pertain to duties to clients, articles 10-14 are responsibilities to the public, and articles 15-17 cover obligations to other realtors.
Violations can be reported and fees/sanctions/revocation of license can be levied by the board. It seems to me that the association runs into the same issues that most/all professional associations (legal, banking, accounting, transportation, health-care, etc.) run into. The fox inevitably ends up guarding the henhouse.
In theory, practice and theory play out the same. In practice, the two end up quite differently.
IrvineRealtor
January 26th, 2010
Cancellations of what? MLS listings? No, those are separate systems. Realist is strictly reporting of info from public records.
cdcrez
January 26th, 2010
@IrvineRealtor
Sorry, I should have been clearer. Cancellations of NODs and NTSes. South County says he/she can not find an NOD for 26 Sawgrass on Realist. I assume then that Realist shows NODs and maybe NTSes. If so, does Realist also show the cancellations of NODs and NTSes? Foreclosure Radar does show cancellations of NODs and NTSes. FR shows a current NTS on 26 Sawgrass and does not show a cancellation.
cdcrez
January 26th, 2010
@IrvineRealtor
I read it and it seems to me that theory and practice are aligned perfectly. The ethics iterated are hazy and minimal and the results are obvious. Of course there are ethical and moral real estate agents. I know one.
IrvineRealtor
January 26th, 2010
Realist’s reporting has recently been updated to include active NOD and NTS info. To my knowledge, cancelled notices are not shown. Nothing is shown currently on the property you’ve referenced on Sawgrass.
Here’s Realist.com’s contact info for more direct answers to your questions:
Customer Support: realist@socalmls.com (714) 517-2600 or (800) 995-2600
Maybe you can give them suggestions to further improve their reporting.
cdcrez
January 26th, 2010
@IrvineRealtor
Thank you. I am not so concerned with Realist’s accuracy as I am with getting my post correct. If the NTS was canceled, I want to know.
IrvineRealtor
January 26th, 2010
The horse’s mouth is the better end of the animal to get information from.
cdcrez
January 26th, 2010
@IrvineRealtor
Ok, but go down to the county recorders office? gross
Scarlette
January 26th, 2010
My earlier comment did not get posted, however, as a tenant, I agree with everything “blinker” posted above.
I would just add a couple of things that we do to further protect ourselves and that do no involve going through County records:
1. Read the rental ad carefully. Many times “accidental landlords” use terminology that gives away their situation. Avoid these landlords.
2. Rent only from a long-time, professional landlord. Ask the prospective LL how long they have been landlording. We have a policy that we do not rent from anyone who has been a landlord for less than ten years. You have to look at this like an interview for the position of LL. If you are a tenant with excellent credit scores, some bank, and an excellent rental history of at least two years, the amount of power you have in this current economy is immense.
3. Real estate agents make good landlords, believe it or not. They understand the market, understand when they have good tenants, and are less likely to let a property go to h*ll. Architects and design people also have been good landlords for us.
4. Try to rent from someone who has a professional license. Many times, they have to carry on their personal and business affairs more judiciously than the average person in order to protect their professional license.
Finally, if you rent through a real estate agent or broker, understand that in our experience, should the rental property get a NOD, the agent will take your side and FOR FREE, find another property for you to rent.