Eisrael Gomez Realtor - Monterey County Blog

What is a mechanics lien? (from State of California website) A mechanic's lien is a "hold" against your property that, if unpaid, allows a foreclosure action, forcing the sale of your home. It is recorded with the County Recorder's office by the unpaid contractor, subcontractor or supplier. It means that any of these unpaid entities can claim a lien against the property until they are paid.

The prime contractor has a direct contractual agreement with the homeowner. If the contractor isn't paid, he can sue on the contract and record a mechanic's lien. But subcontractors, workers and suppliers don't have a contract with the homeowner. A problem occurs when the homeowner pays the prime contractor for all or some of the work, but the prime contractor fails to pay the laborers, subcontractors and materials suppliers that were hired to do portions of the job. If they are not paid, often their only recourse is to file a mechanic's lien on the home.

The lien is filed with the Monterey County recorder's office.

http://www.co.monterey.ca.us/recorder/contact.htm

Monterey County Government Center Administration Building
168 West Alisal Street, 1st Floor, Salinas, CA 93901
Phone: (831) 755-5041

The county is not able to provide any advice or counsel on these matters.  Since this is a legal matter you should consult with your attorney.  Usually you can pick up a Mechanic's Lein form from your attorney or a stationary store. 

County fees are as follows:

$8.00 for first page

$5.00 for each debtor

http://www.co.monterey.ca.us/recorder/recorderfee.htm

If you have any further questions regarding mechanics liens, consult your attorney.  As alway, please feel free to post your comment or call me at 831-809-8266. 

Artilce on California Investigates Subprime Mortgage Industry from Bloomberg.com

 http://www.bloomberg.com/apps/news?pid=email_en&refer=&sid=aJp84dFMpeps

Here in Monterey County we have seen some buyer's loans not fund even after signing loan documents and after bank approval!  It will be interesting to see how this plays out in our local market.  Stay tuned.

Here is another question we've been faced with more and more.  One of my clients suggested I blog it, so I thought I would discuss it today.  I've excluded names and changed amounts to protect the innocent!

We have a buyer on a property and my seller needs to sell!!  My seller has listed the property at $500,000.  The buyer's offer is for $600,000.  The buyer will be getting a loan for $600,000.  He is requesting for the seller to give the extra $100,000 back to him in cash at close of escrow.  What to do you think?  Deal or no deal?

No deal buddy!  According the legal department at the California Association of Realtors the amount of cash being returned to the buyer at close is many times a RED FLAG that mortgage fraud may be involved.  There's already lot's of talk in the news about this (see some of my previous blogs or emails).  The reason it's fraud is because under federal law, mortgage fraud includes anyone who willfully overvalues a property or with knowledge makes a false statement for the purpose of influencing a federaly insured mortgage lender or other lenders.  In order to receive the $100,000 cash, the buyer would have to show the lender that the purchase price of the home listed is really $600,000, when in fact it's only $500,000.  Most likely, the cash to the buyer is "under the table" & is never disclosed to lender.  The legal department says:  "This price inflation scheme is very likely to be illegal." 

For more information, check with your local FBI agent or visit http://legal.car.org  :-)

Please let me know if you think this info was useful to you?  Or do you have a future topic you would like me to discuss.  I would love to hear about.

Question:  "If a home is sold in preforeclosure how long can original owner come back and redeem the property?  I've heard they can come back after one year." 

Pre-Foreclosure would mean after a bank provides a "Notice of Default"  and before the auction.  From what I have seen, this is when you can get the best deals on the home. 

However, to answer your question.  If you are an investor:

1)  The homeowner foreclosed upon has 1 year to redeem the property. 

2)  A buyer of the foreclosure usually can't be represented by the agent. 

Here's the bottom line:  The above are true, unless the buyer/new owner is a bonafide buyer i.e., someone who is going to live in the property.  So, if the home is going to be owner occupied, an agent can represent you and the owner could not come back to redeem the property. 

Otherwise, if you want your realtor to represent you, they would have to use the California Association of Realtor's form that requires a bond.  The bond is usually so cost prohibitive and usually not available to realtors.  It becomes too much of a risk that the buyer will come back to claim the property if you bought it as an investment and not to live in.

The above applies to pre-foreclosures (after a "Notice of Defualt") or homes prior to being auctioned.  If you have any comments or questions please feel free to post it here, email or call me at 831-809-8266

Eisrael Gomez

According to an artilce published in today's Wall Street Journal federal bank regulators have begun cracking down on loose lending standards on subprime mortgages.   This comes as a result of the increase in defaults by borrowers on such loans.  Some are beginning to face federal criminal inquiries.  New Century Financial out of Irvine  learned of the federal probe in a letter from the U.S. attorney for the central district of California.

The article also states "During the surge in subprime lending in the past several years, many lenders have pushed home loans that carry a fixed rate for the first two years, then "reset" to a much higher rate that floats with the general level of interest rates. These loans -- known as 2/28 mortgages -- can lead to jumps of 50% or more in monthly payments after the initial period ends. Many of the borrowers refinance to avoid these "payment shocks," generating more fees for lenders and mortgage brokers. "  Percentages of defaults on subprime loans have doubled from 2005 levels. 

The result will be fewer loans written this coming year without verification of income and those that don't require down payments. 

How to protect yourself?

The best way to protect yourself is to confirm that you can make the payments on your new purchase after the introductory period ends and your payments go up.  Most reputable lenders will make it very clear what your maximum payments will be after the period of fixed lower payments. 

In the past the higher payment was not an issue becuase you were easily able to refinance the loan before the introductory period ended.  This usually was not an issue as home values were rising to keep pace.  Many Monterey County homeowners are finding they now owe more to the bank than what the home is worth.  This puts the brakes on any refinancing plans.  Many Salinas Valley and Monterey Bay locals are being surprised by higher payments they can't afford and banks that are not willing to help refinance.

Seek the advice of a professional if you find yourself in this situation.  Everyone's circumstances are different so talk to your CPA, Realtor and or Attorney.  Many predators & scam artists are preying on locals who are in this situation.  There are ways to resolve the stress involved in these situations.  If you or anyone you know find themselves in this situation or have any questions, please feel free to post a comment here or contact me. 

According to Dow Jones Business News U.S. home prices fell 0.7 percent in the fourth quarter, according to Standard & Poor’s inaugural release of the national Case-Shiller price index.

This is the fastest rate home prices have fallen since 1992. Overall home prices rose only 0.4 percent last year.

On an inflation-adjusted basis, national home prices are down 1.6 percent in the past year. Prices in the top 10 metro areas are down 2 percent.

Among the 20 cities included in the index, the biggest gains in the past year were in Seattle (up 12.1 percent), Portland (up 9.9 percent) and Charlotte (up 6.7 percent). The biggest losses in the past year were recorded in Detroit (down 5.9 percent), Boston (down 5.1 percent) and San Diego (down 4.2 percent).

You can view historical index data at:

Standard & Poor's Web site,

www.indices.standardandpoors.com

Home Price Indices Factsheet.pdf

How Case-Shiller works

The Case-Shiller indexes attempt to overcome flaws in other measures of home prices by comparing actual arms-length transactions on the same single-family home. New homes and condos are excluded.

Median prices for new and existing homes can be affected by the mix of homes sold. For instance, if relatively more homes are sold in high-priced markets, the median sales price would show an increase even though actual value of any particular home would not have changed.

The quarterly price index reported by the Office of Federal Housing Enterprise Oversight also compares price changes for the same homes, but only covers homes with mortgages that conform to Fannie Mae and Freddie Mac limits, currently $417,000 or less. In addition, the OFHEO index includes mortgage refinancings that are valued by an appraiser, not the market.

The latest OFHEO index showed prices had risen 7.7% year-on-year through the third quarter. For purchases only, the OFHEO index was up 6% year-on-year, the lowest in seven years. Fourth-quarter data will be released Thursday.

Other price indexes are based on the homes sold in a particular period. The median price of a new home was down 1.5% year-on-year through December. The median price of an existing single-family home was down 3.1% in the 12 months ending in January.