s o u t h e r n c a l i f o r n i a’s n o.1 s h o r t s a l e e x p e r t

are you inforeclosure?

know your options

Dear Reader,

The purpose of this book is to provide much needed educational support to homeowners facing foreclosure. Because of the continuing mortgage crisis, millions of our friends, families, and neighbors are facing the loss of their homes.

take heart. While things may look bleak, there are proven, workable solutions.

Within this book you will find detailed explanations of your options as a distressed homeowner. Whether you chose a loan modification, short sale, foreclosure, bankruptcy, deed-in-lieu, etc, you will be better prepared to make that decision once you’ve read this book.

The opinions and observations written here are based on our years of experience consulting on loan modifications, short sales and bankruptcies, and the shared experiences of hundreds of our clients and industry colleagues.

The material is brief, current, and will provide many insights into foreclosure practices that less scrupulous professionals might not want you to be aware of. My intention is to arm you with vital information and help you choose the right path, not to sell you any particular product or service.

From our family to yours,

William S. Lee

Principal/Broker WSL & Associates info@wsl-associates.com

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Table of Contents

Know Your Options

loan modification

short sale

bankruptcy

principal reduction

Mortgage Litigation

APPENDIX A. How to Maximize Your Stay during Foreclosure and Avoid Foreclosure?

APPENDIX B. Beware of Foreclosure Rescue Scams: Do’s and Don’ts

APPENDIX C. Bank Contact Information ( Loss Mitigation DepARTMENTS )APPENDIX D. ABOUT WSL & ASSOCIATES

APPENDIX C. Bank Contact Information (Loss Mitigation Dept)

| About WSL & Associates

APPENDIX C. Bank Contact Information ( Loss Mitigation DepARTMENTS )APPENDIX D. ABOUT WSL & ASSOCIATES| ALERT: Important New (2012) Update for Homeowners

While you may have done hours of research and consulted with various distressed prop-erty experts, chances are that you are still unsure which Foreclosure-Workout Option is best for you.

Allow me to make this point before we proceed.

There is no perfect solution. There are, however, many beneficial or some potentially harmful methods of preventing Foreclosure/Trustee Sale for your property. The choice should be based entirely on your unique financial situation and goals.

Since each family’s case is unique, each one will have different priorities. The workout option most beneficial to your family will depend on a comprehensive review of your specific financial status and your own personal objectives.

There are more options than you may think. The sooner you take action, the more likely it is you will maintain the widest variety of options to choose from.

Unfortunately, choosing the best Foreclosure-Workout solution is not an easy decision to make. Even with the best case scenario, it requires facing tough realities and doing some rigorous home study.

To begin, we always ask the following 5 Questions to our clients:

5 most important questions 1. Do you have eQuitY in your home? If so, how much?

2. Do you have verifiable incoMe? If so, how much?

3. Do you expect your current financial hardship to be short or lonG-terM?

4. Do you have DeBts other than the mortgage? If so, how much?

5. What are your Goals for your home, personal finance, and personal credit?

2. KNOW YOUR OPTONS

OPTIONS TO STAYREFINANCE

LOAN MODIFICATION

BANKRUPTCY (ch. 13)

REPAYMENT

1. KNOW YOUR OPTIONS

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Below is a current list of the most common workout options available to distressed home-owners. We have divided the options into two groups. First are options to stay in your home permanently, and the second are options to walk away.

Keep in mind that some options will require certain qualifications be met for approval.

While there appear to be lots of options, more than 90% of distressed homeowners choose one of the following: Loan Modification, Short Sale, Bankruptcy, or Foreclosure.

We strongly advise all of our clients to aVoiD foreclosure if at all possible.

Sadly, many misguided homeowners do allow their homes to be foreclosed upon, simply due to a lack of knowledge of alternative, viable options to prevent foreclosure.

Our position is that Loan Modification, Short Sale, and Bankruptcy are the most practical and least damaging workout options that should be seriously considered prior to foreclosure.

OPTIONS TO STAYREFINANCE

LOAN MODIFICATION

BANKRUPTCY (ch. 13)

REPAYMENT

OPTIONS TO walk away DEED-IN-LIEU

sHORT sALE

BANKRUPTCY (ch. 7)

FORECLOSURE

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A Loan Modification is the most practical option if you want to stay in your home perma-nently. With this option, you reach an agreement with your mortgage company to modify the original terms of your loan. The goal here is to reduce the monthly payment to a more affordable amount, This can include changing the monthly payment amount, adjusting the repayment term/length of the loan and/or lowering the interest rate.

Qualifying for President Obama’s HAMP Loan Modification Program: The borrower must live in the home as the primary residence.

The loan must have been originated BEFORE January 1st, 2009.

The loan amount must be LESS than $729,750 for a single family residence.

The current mortgage payment must be more than 31% of monthly gross income.

There must be an affirmation of an eligible financial hardship.

The borrower must be delinquent on the mortgage or face imminent risk of default.

According to the checklist above, almost all borrowers should qualify for the HAMP loan mod program, right?

Unfortunately, the reality of qualifying is quite different. Statistics released by the U.S. Treasury in October, 2010 report that less than 8% of all applicants successfully and permanently modi-fied their home loans.

The success of a loan modification is determined primarily by the following factors: 1) your monthly income, 2) completeness of the required documentation, 3) your diligent follow-up with the lender, 4) the date that you applied for the program, and 5) your luck in getting a skilled and well-experienced negotiator assigned by the bank to review and process your application.

We have seen scores of policy changes by both the banks and the government over the last 2 years. We offer our observations in hopes they will assist you in your planning and decision-making.

2. LOAN MODIFICATIONS

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loan MoDificationcase stuDY #1:

The client owned a prop-erty valued at $600,000 with a single mortgage balance of $550,000. Due to the fact there was $50,000 in equity, he elected not to do a Short Sale or file for Bankruptcy. After choosing to apply for a HAMP loan modification, the client stopped making his mortgage payment in January of 2010. Then, in April of 2010, he ap-plied for a loan modification and submitted the documents requested by his lender.

This is where the plan fell apart. First, the file got lost in the mid-dle of the loan-mod process. Then, the negotiator was changed abruptly. Next, the lender “accidently” cancelled the file. Sadly, these are all too common occurrences.

Eventually, his loan was modi-fied to a lower interest rate (for 36 months) while he got his finances in order. Here’s the rub - after all the penalties, delinquent taxes, attorney fees, and other incidental charges had been added, the total loan balance had ballooned to $620,000, thus wiping out his remaining equity entirely.

The sad fact is, that it is rare that lenders process loan mods quickly enough to prevent significant charges from being added to the loan balances. This reality often negates any benefits that may have been realized.

As the foreclosure crisis strug-gles to correct itself, this issue has become a major problem for thousands of homeownersseeking relief through loan modifications.

Why is Survival Difficult Even After a Successful Loan Modification?Unfortunately, even with a successful loan modification, most homeowners don’t end up keeping their homes. The reason is that most lenders have a rule stating that homeowners can only be eligible for a loan modification if they missed their mortgage payments for an extended period, usually a mini-mum of 3-4 months.

Since the loan modification process takes 3~6 months or lon-ger, the past due amounts just stack up and very often the banks “Dual-Track” the Foreclosure process.

By the time a decision on a loan mod application has been of-ficially received, the homeowners have little time to avoid the foreclosure.

Additionally, while the whole point of applying for the loan modification is to reduce the monthly payment, most people actually experience an INCREASE in their monthly payment. This wipes out any equity the homeowner may have had and completely negates any benefit of the loan modification.

That’s due to several factors. While the monthly payment may be reduced somewhat by a loan mod, the total principal bal-ance of the mortgage increases due to the inclusion of past due property taxes, late fees and penalties tacked on, even during the course of the loan modification process.

“1-888-995 HOPE” & Free HUD-Approved Counseling Agencies: Help or Hindrance?As a homeowner in distress, you may have received a letter from your lender suggesting that you contact the HUD ap-proved counseling agency, 1-888-995-HOPE. In theory, 1-888-995-HOPE is a non-profit group providing free mortgage con-sultations to homeowners facing foreclosure.

Statistics and our own experience show that very few people have had satisfactory experience with HOPE or any other non-profit or for-profit Loan Modification counseling agencies.

The most important truth is that very few people can fur-nish the exact required income statements and additional required documentation to be approved for a loan modi-fication.

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is THERE Hope for “HOPE”?In summary, after having reviewed more than 600 cases for distressed homeowners through-out California, we believe that while the free consultation call to 1-888-995-HOPE is probably worth a phone call, it is upto the homeowners themselves to pursue all options diligently for loan modification success.

The counselors from HOPE, at the very least, can help guide you in the right direction in the preparation process and could possibly help avoid any key mistakes on important paperwork. With that said, don’t expect much else from this organization or any other counseling agen-cies.

Keep in mind, while HUD-Approved counseling offices are non-profit, that doesn’t mean they don’t generate revenue. The fact is, they get paid by lenders and/or the government based on the number of homeowners signing up for their counseling services.

We think this is the root of the problem fueling the poor service; they are simply more con-cerned with the volume of clients they bring in than the quality of service they deliver. For “non-profit” agencies, it’s all about the “head-count”.

better today than tomorrow, better yesterday than todayWithin the past few years, we have all learned that getting approved for a “permanent” loan modification is extremely difficult, even if all the paperwork is submitted correctly.

However, not all is lost in the dizzying game of Loan Modifications.

While the modification itself may not be successful, the time spent applying for and process-ing a loan modification request could provide you with the time to save some cash and strate-gically prepare for your next best move.

Another benefit is that by having your file being processed for a HAMP loan modification pro-gram, the foreclosure proceedings are delayed temporarily. But keep in mind, that many find that the Foreclosure Monster is waiting anxiously to set an official Foreclosure/Trustee Sale Date as soon as a Yes-or-No decision is made by the lender/servicer, or more accurately, the original investor of your loan.

We strongly suggest not waiting until the last minute to initiate discussions with your lender.Delaying will limit your options and devastate your negotiating position.

Whatever you do, you should act now.

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# of Active Trial ModIFICATIONS: 697,026# of Permanent MoDIFICATIONs: 31,382

Do NOT Hire an Attorney for your Loan ModificationYou DO NOT need an attorney for a loan modification. It is a completely unnecessary expense. Unfortunately, many distressed homeowners are falsely led to believe that a freshly-licensed “scammy” attorneys or so-called “law firms” are actually qualified professionals to help them in real estate and finance matters.

With regard to loan modifications and real estate, nothing could be further from the truth.

The actual loan modification process is fairly simple and straightforward. Most attorneys will have inexperienced call center “processors” to simply gather your financial documents, fax them, and make casual calls to non-decision makers periodically to see what came up.

TruE Success Rate of Loan ModificationHave you ever wondered - how many homeowners actually have found a long-term perma-nent solution to their mortgage affordability problem through a HAMP loan modification?

Data suggests that only 4.5% of applicants have been able to do so. Some inflated data sug-gests that 13% of all homeowners who have applied for a Loan Mod since the beginning of the program have been approved for a permanent loan-mod and were able to keep their homes.

At best, that’s roughly 1 in 10 homeowners who applied. Unfortunately, the statistics reveal that HAMP is an unmitigated failure.

We’ve been tracking the two most important metrics in the Obama Administration’s monthly HAMP Progress Reports which are the total number of “trial” loan modifications initiated and the total number of those trials that have converted to “permanent” loan modifications.

According to the HAMP Progress Report through November 2011, the numbers are:

So, the reality for this year is that only 4.5% of loan modification starts have actually gone on to become a permanent solution for homeowners. We’re hoping this percentage will increase.

The reality is, either Foreclosure or Short Sale remains the ultimate the path of resolution for most homeowners looking for a way out of their mortgage dilemma.

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Should I Attempt a Loan Modification or a Short Sale?Homeowners in distress usually consider Bankruptcy as the final alternative to resolve a debt crisis. Consequently, that leaves two viable options to resolve a mortgage crisis: Short Sale or Loan Modification. If you have a loan with any of the major lenders such as Bank of America, JPMorgan Chase, Wells Fargo, CitiMortgage, and IndyMac OneWest Bank, and you’ve missed a few mortgage payments, you may have received an offer to short sell your home or apply for a Loan Modification.

Whether you choose a loan Modification or short sale should depend on the following:

1. Your financial status (can you really afford the new Loan Mod payments & taxes?)

2. current property Value vs. total loans & Debts Balance (are you upside-down?)

3. foreclosure auction Date (did you receive a Notice of Trustee Sale already?)

4. Desire to Keep Your home (for emotional and family reasons, do you must stay even it would be more cost-effective to relocate or find a rental property?)

Still unsure? Simply compare these scenarios to see which one of the following categories you may fit into:

case 1: Negative Equity - you owe more than what the house is worthtotal loan Balance: $750,000 vs. current property Value: $500,000 Foreclosure Status: The Notice of Default (NOD) filed, no Foreclosure Sale Date (NTS) set yet.

Let’s assume that you’ve successfully been approved for a Loan Mod and have a new interest rate of 2.5%. The past due payments are added back into the original loan principal balance, and you have a newly “reset” 30-year mortgage. In this case, that leaves you with a new bal-ance of roughly $780,000.

While your monthly payment is now reduced to $3,100, you still have to add Property Taxes, Insurance, and possibly the HOA dues. So, even with a new miracle low interest rate of 2.5%, your total monthly payment will still be roughly $4,000+. Was it worth it? Wouldn’t you be able to rent a similar home for less in your neighborhood?

In Case 1, a Short Sale is the wisest solution.

3. SHORT SALE

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CASE 2: No Equitytotal loan Balance: $500,000 vs. current property Value: $500,000 Foreclosure Status: The Notice of Default (NOD) filed, no Foreclosure Sale Date (NTS) set yet.

Let’s assume that your bank has reduced your interest rate to 2.5% resulting in an increased total loan balance of roughly $520,000 after adding past due payments, fees and penalties. Your new loan payment would be $2,100; and after adding property taxes, insurance, etc…, the monthly cost to keep your home is roughly $2,800.

You should wisely consider the 1) hassle and cost of finding a new place to live 2) gradual increase of cost of living 3) the future market value of your property in the next 3~5 years, 4) emotional stress, 5) your family’s circumstances, 6) your expected salary increase/decrease, and so on.

While you haven’t received the Auction/Notice of Trustee’s Sale yet, it is not premature to explore pursuing other options. For example, a Short Sale with Seller Cash Incentive would be a better financial proposition than barely surviving in a property that is no longer an asset, but a liability. That is, unless you expect the property value to skyrocket in near future or you expect your financial situation to improve significantly very soon.

CASE 3: Have Equitytotal loan Balance: $500,000 vs. current property Value: $700,000 Foreclosure Status: The Notice of Default (NOD) filed, no Foreclosure Sale Date (NTS) set yet.

In this case, you should consider cashing out now (while there are some buyers left in the hous-ing Market) by selling your home as quickly as possible through a Traditional Sale and pocket-ing the equity.

We’ve seen many homeowners who had equity when their financial difficulties began, but ended up with no equity at all, after wasting months attempting loan modifications while not paying their mortgages.

CASE 4: Negative Equity + 2nd Mortgage Higher than 1st Mortgage Total Loan Balance: $300,000 (1st Mortgage: $100,000 + 2nd Mortgage: $200,000) Current Property Value: $250,000

In this case, the 1st mortgage lender will be eager to foreclose on your home and grab their share of entire $100,000 balance through Foreclosure. In this case, the strategy is to negotiate with your 2nd mortgage company.

Since it is not an easy task negotiating the settlement of delinquent 2nd mortgages, you should have the absolute best Short Sale negotiators in the industry behind you. With their well-established relationships and know-hows to successfully negotiate a settlement at a price that the Buyers would be willing to pay through a Short Sale, so you can walk away debt-free and pay no cost.

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Also, since the 2nd mortgage lender has high chance of not getting anything, they will aggres-sively try to foreclose on you even before the 1st Mortgage Lender does. They will aggressively attempt to minimize their losses unless a Short Sale agreement is reached.

We empathize with the homeowners but it is crucial that you work diligently with the 2nd mortgage lender to have your loan modified early on. If you fail to secure a viable loan modifi-cation from the 2nd mortgage lender in due time, then Short Sale is your only and best option.

CASE 5: No Income, No EquityWithout verifiable, documented income and cashflow, you won’t qualify for any loan modifi-cation, and the bank will aggressively pursue a Trustee Sale/Foreclosure relentlessly.

In this case, a quick and efficient Short Sale is your best and only option. Always make sure that your real estate agent applies for the h.a.f.a. short sale (home affordable foreclosure alternative).

The federally sponsored HAFA program confers some additional benefits to the homeowner, such as a possible Cash Relocation Incentive.

CASE 6: Notice of Trustee Sale is fILEDOnce the lender has filed the Notice of Trustee Sale (NTS) / Foreclosure Auction Date, it’s most likely far too late to apply for a loan modification, or to reapply. Moreover, your property will automatically be scheduled for auction 21 days later, to be auctioned off to the highest bidder or purchased back by the bank so that they can do a REO(Bank-Owned) sale.

there are 2 legitimate, proven ways to stop or postpone the sale date:

1. immediately submit a short sale package to your lender, which must include a qualified actual buyer who intends to purchase your house. Typically, all required documents must be prepared and delivered at least 10 days prior to the sale date. With so little time, it is crucial that an experienced short sale specialist prepare this packet perfectly, so that it is not rejected outright by your bank.

2. filing for bankruptcy is the other option, but it can be costly and lethal to your credit, so most homeowners should avoid this route and leave the Bankruptcy option as an absolute last resort for temporary postponement.

New short sale Incentive Programs for homeowners!As early as April 2011, several major lenders including Bank of America, JPMorgan Chase, Wells Fargo, and Citi Mortgage began offering huge cash incentives to homeowners com-mitting to Short Sale programs.

Bank of America, the nation’s largest mortgage servicer, has been offering some homeown-ers up to $20,000 in incentives to Short Sale their homes rather than letting them languish in costly and bad-for-publicity foreclosure proceedings.

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We feel this is a very positive sign that banks are actively trying to help homeowners and get the stalled real estate market moving again.

Most major lenders have officially announced to agents nationwide that their highest prior-ity is to encourage and promote the Short Sale solution for most homeowners rather than Foreclose.

It is the only true Win-Win Solution for all parties involved and the Housing Market as a whole. For banks, the alternative is to spend tremendous amounts of money processing or “pretend-ing to” process loan modifications, battling attorneys for foreclosure judgments.

Once it is determined that you are eligible for a Short Sale, you have a limited time to complete the Short Sale through your agent. The good news is that lenders are allowing reasonable time to complete the process.

It is astounding how little known these Seller Cash Incentive Programs are to most home-owners. Even long-time real estate profes-sionals, if not extensively experienced in Short Sales, are unaware of the intricacies of these programs, as lenders are not advertising ac-tively them and are moving very quietly.

MAXIMUM CASH SELLER INCENTIVEs

JPMORGAN CHASE: $35,000

BANK OF AMERICA: $20,000

WELLS FARGO: $20,000

CITIMORTGAGE: $12,000

*as of October 31, 2011

It is our opinion that the secrecy surrounding the seller incentive program is due to 2 reasons:

1. They’re still in the testing stage determining if it will truly reduce their expenses and inven-tory.

2. They’re afraid homeowners with little equity, still current on their mortgages, might stop making payments and elect to short sell their homes to receive the incentives.

Regardless of the banks motivations for secrecy, we see this as a tremen-dous opportunity for insolvent homeowners to get a much needed injection of cash in a desperate time.

While we are not sure how long these incentives would last, it may be in the best interest of many homeowners to fully explore these cash incentive options.

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REQUIRED DOCUMENTS FOR A SHORT SALEFor a successful Short Sale that Maximizes stay & seller’s cash incentive, perfect prepara-tion is the key to success. It can be daunting for even an-experienced real estate agent to make sure all the necessary documents are Approval-Ready, absolutely flawless, and drafted advantageously for the best financial interest of the homeowner.

A short sale packet that includes all documents listed above would contain roughly 100 pages. To increase the likelihood of lender approval, it is vital that your agent has the packet organized in the format the lender wants.

Also, as the approval process progresses, you should continue providing recent paystubs and bank state-ments to your lender to prevent any delays or denials.

Documents Description/explanation

1 Letter of Authorization Allows your lender to communicate with your agent.

2Financial Statements (Borrower & Co-Borrower)

An experienced short sale realtor should be able to generate adequate financial statements from your credit report. Make sure that you provide your credit report to your agent.

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A Hardship Letter Not all Hardship Letters are created equal. A seasoned veteran Short Sale agent should be able to prepare the winning Hardship Letter that masterfully depicts the hard-ship that will satisfy the loan servicer and investor internal guidelines.

4 Tax Returns & Form 4506-T (most recent 2 years)

All Borrowers’ financial documents must not be simply furnished and thrown in the pile, but carefully preparedwith a full and persuasive explanation of each and every item that supports the application for Short Sale.

The RMA Form (also commonly used a standard required application/financial worksheet for Loan Modification) isalso crucial to successful Short Sale negotiations and must be prepared by an experienced master negotiator.

5 RMA (Request for Modifica-tion and Affidavit)

6Paystubs from employers (most recent 2 months) or Profit & Loss Statements

7 Bank Statements (most recent 2 months)

8 Broker Price Opinion (BPO) The BPO is the report of estimated market value of yourproperty as determined by a real estate agent/appraiser.

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Listing Agreement & Offer from a Buyer(s)

A short sale expert with a deep pool of buyers and a keen knowledge of the market has a better chance of obtain-ing the offer that your bank is looking for, and therefore, is also able to avoid the hassle of showing your property to potential buyers for a lengthy period.

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HUD-1 Statement The HUD-1 is the settlement statement which shows the amount the bank will receive after the short sale. This docu-ment may be single most important contractual tool of the negotiations and must be strategically itemized.

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Short Sale Timeline As you can see from the timeline below, short selling is a long process requiring diligence, excellence in negotiations, utmost professionalism, and most importantly, patience.

The often long-delayed short sale process may serve to benefit homeowners as they are able to stay in their homes without paying the mortgages. Depending upon the bank, the investor of your loan, and the negotiator from the bank, the entire short sale process can take any-where from 3~6 months. However, an experienced short sale expert can slightly adjust the timeframe of a short sale to be shorter or longer.

approx. timeline Description

1~60 days

1Do sufficient research to find the most experienced Short Sale Realtor. This process is too complex to leave to an amateur. Even if you haven’t received the Notice of Trustee Sale yet, you should have an expert by your side.

2 Collect and deliver all required documents indicated above to your agent. A good short sale agent will coach you on this step.

3Have detailed discussions with your short sale agent. Be honest and don’tconceal anything; you never know what can be helpful. This will help youragent build a hardship presentation for the lender.

10~45 days 4

About this time, your short sale agent will list your property for sale. Be cooperative; teamwork is important. You’re going to need a valid offer from a prospective buyer to really begin a short sale. Once a buyer is located and anoffer made, your job is pretty much done.

7~15 days

5At this point, your agent will prepare the “short sale packet” for submission to your lender. The packet will contain the documents listed above and should be tailored to your specific lenders requirements.

6The complete short sale packet is now sent to the bank. If you’ve already been notified of a Trustee Sale date, this packet must be submitted without delay.

7~15 days 7 The bank will now review all documents and assign an in-house negotiator for your short sale. The negotiator will postpone your sale date, if necessary.

10~30 days 8The bank negotiator will now request an appraisal of your property todetermine current values and how the bank will respond to your request fora short sale; accept, reject or counter offer.

10~30 days 9

Your agent will now begin negotiations with the bank on your behalf. Terms will include sales price, closing costs, realtor commissions, closing date, etc... At this point, the skills of your agent are vital to your future financial health & well-being.

7~15 days 10Once the negotiation is done and an agreement is reached, the negotiator sends the documents to the investor for approval. (The bank is the servicer, not the investor of your loan, which is why each loan is treated differently).

30~45 days

11The investor denies or approves the short sale request. If denied, the process goes back to Step 4 if there is enough time until your Sale Date. If approved, the process moves forward to Step 12.

12 Buyer and seller open escrow. Seller plans for relocation.

13 Close of Escrow; all mortgage debts are settled in full with no deficiency.

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In 2011, we saw major banks greatly speed up their Short Sale processing over previous years.Now, when you start a short sale, you can estimate roughly 3~6 months or so until the Close of Escrow.

As you read this, new short sale legislation is working its way through Congress. If it becomes law, it could have a truly positive impact on the real estate market. However,at the same time, it could result in shorter stays for homeowners who wish to remain in their homes longer.

The bill, officially known as the “Prompt Decision for Qualification of Short Sale Act of 2011”, would shorten the amount of time mortgage lenders have to approve or deny a short sale request.

Short Sale after bankruptcyYes, you can still successfully complete a Short Sale even if you plan on filing bankruptcy. Most experienced Realtors would attest to the fact that distressed homeowners can benefit from a short sale even after bankruptcy. One of the primary reasons is because the waiting period for the homeowner to buy another home is a lot shorter (2 years vs. 7-10 years).

As Principal Director of California’s #1 Short Sale Team, having completed over 500 successful Loan Modifications & short sales, it is my opinion that the homeowner will benefit from a Short Sale even after filing Bankruptcy because the borrower gets to stay longer in his/her house simply by entering into the Short Sale process and the possibility of receiving generous Short Sale Seller Cash Incentives from their lender (up to $35,000).

Short Sale after bankruptcy is not always easy and will require strategic planning and prepara-tion by an experienced Short Sale specialist. It may require the agent to know exactly how to escalate the request through proper bank channels to successfully win the Short Sale resolu-tion after the bankruptcy case is dismissed or discharged. Typically, judges and lenders will decide on resolution methods where short selling after bankruptcy is concerned.

With that said, we believe attempting a short sale after a bankruptcy can only be financially beneficial to the distressed homeowner and worth every shot –and it costs the Seller nothing.

SB 458: No More Deficiency Judgments - walk away debt-free for Short Selling Homeowners <effective July 15th, 2011>July 15th, 2011 – Governor Jerry Brown signed into law, Senate Bill 458, prohibiting a defi-ciency judgment after a short sale for 1-4 residential units; regardless of whether the lender is a senior or junior lien holder.

“Effective immediately for transactions closing escrow from this day forward, both senior and junior lien holders cannot require a borrower to owe or pay short sale deficiencies.” <SB 458>

This law also prohibits any deficiency judgment to be requested or rendered for senior or ju-nior liens after a short sale of 1-4 residential units. Any purported waiver of this rule shall be a monetary contribution to a lender in hopes of obtaining a Short Sale. A lender is also permit-

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monetary contribution to a lender in hopes of obtaining a Short Sale. A lender is also permit-ted under the new law to negotiate for a contribution from someone other than the bor-rower, such as other lenders, agents, relatives, and the like.

We have recently set a national record for one of the most successful Short Sale cases ever documented; where an Orange County homeowner was “forgiven” more than TWO MILLION DOLLARS of debts for cooperating with the Short Sale. The Seller also received a handsome cash incentive to relocate after the sale was completed.

wsl summaryDo not Wait until the VerY last Minute to prepare anD plan for short sale. For most homeowners who cannot qualify for, and cannot afford Loan Modifications, and for homeowners who received a Notice of Default (NOD), Short Sale is the only and best option for real complete property debt-relief.

For those who have exhausted all other options, seize the opportunity to exit gracefully and acquire the Seller Cash Incentives while maximizing your stay during the process.

Please, do not wait without a clear plan of action until the Notice of Trustee Sale is posted on your front door - it may be too late.

Moreover, we strongly recommend taking full advantage of the lengthy loan modification process. Once your application is in the system, the Trustee Sale date will be postponed until your lender makes a final decision on your loan. At that point, even if the loan modification is denied, most major banks will still allow you to do a Short Sale.

call me today for a free confidentialno-obligation phone consultation.

i will personally advise you on the beststrategies to protect your family andsecure your best financial interests.

William s. lee principal, Wsl & associates

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While most homeowners want to avoid this option if possible, sometimes bankruptcy is in-evitable and beneficial. According to our distinguished legal counsel and leading California Bankruptcy expert attorney, Raymond J. Seo, the following four questions are most common-ly asked by distressed-property owners:

1. Will Bankruptcy stop my Foreclosure?

2. How long will the Foreclosure process be stopped for?

3. Can I stay in the house during bankruptcy proceedings?

4. Can I still keep my house after the bankruptcy?

With few exceptions, a Bankruptcy filing will stop a Foreclosure proceeding. When a Bankrupt-cy case is filed, a Restraining Order is entered under “11 USC 362” called the “Automatic Stay”, which prevents any further debt collection against the debtors or their property. However, the automatic stay is limited and will not last forever.

Types of bankruptcychapter 7 is the most frequently selected type of bankruptcy for individuals. It is generally the simplest and quickest form of bankruptcy, and provides the debtor with the greatest relief. Note that Chapter 7 does not excuse homeowners from paying their mortgages. In fact, the debtor filing chapter 7 who wants to keep their home must continue to pay the mortgage. Also, be aware that filing a Chapter 7 petition will not prevent a bank from foreclosing on the home if payments are delinquent.

With chapter 13, the foreclosure process will be permanently stopped if the debtor propos-es a feasible repayment plan which is then confirmed by the Bankruptcy Court. Such a plan must prove the ability to maintain the proposed mortgage payments.Itmust also provide for an additional “catch up” payment to cure the arrears over the next 3 to 5 years.

Also, thanks to the process of “Lien Stripping” where 2nd mortgages are eliminated because of reduced property values, Chapter 13 restructuring often provides a much more affordable payment structure than you might think. Keep in mind, to be eligible for Chapter 13, you must have regular, stable income, and debts below predetermined levels.

chapter 11 cases are similar to Chapter 13’s but are much more flexible. A Chapter 11 pro-ceeding is a very expanded version of Chapter 13 designed primarily for large businesses, partnerships, and corporations.

Chapter 11 cases are so varied in difficulty and complexity, that no range or meaningful cost can be stated. The absolute minimum attorney cost is between $20k-$30k and fees for large business cases have been in the millions.

4. BANKRUPTCY

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Who Should file bankruptcy?1. Borrowers denied a short sale from their bank.

2. Borrowers with a lot of other debt that can’t be cleared through a short sale (consumer credit, vehicles, etc...).

3. Borrowers with stable income that want to keep their home (Chapter 13 only).

4. Borrowers who need to immediately stop foreclosure proceedings and postpone the sale date (auction) of their home.

Stripping 2nd Mortgages with Chapter 13 Bankruptcy“Lien Stripping” is an option for Chapter 13 debtors whose liens are unsecured by an asset. An unsecured lien is usually in the form of a 2nd or 3rd mortgage with the balance owed on the 1st mortgage exceeding the value of the home.

For example, if you have a 2nd mortgage on your home, and the current value of your home is less than the amount you owe on the 1st (senior lien holder), the junior lien is treated as an unsecured claim and may be “stripped off” as part of a Chapter 13 proceeding.

The net effect of “stripping” a junior lien is to convert what was once a secured debt into an unsecured debt, which will then be treated in a Chapter 13 case the same as a credit card or an unsecured creditor.

Disclaimer

No advice: This literature contains general information about legal matters. The information is not advice, and should not be treated as such. Limitation of warranties: The legal information on this literature is provided “as is” without any representations or warranties, express or implied. WSL & Associates, William S. Lee, and its affiliates make no representations or warranties in relation to the legal information on this material. Without prejudice to the generality of the foregoing paragraph, WSL & Associates does not warrant that: the legal information on this literature will be constantly available, or available at all; or the legal information on this literature is complete, true, accurate, up-to-date, or non-misleading. Professional assistance: You must not rely on the information on this literature as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this material. Liability:Nothing in this legal disclaimer will limit any of our liabilities in any way that is not permitted under applicable law, or exclude any of our liabilities that may not be excluded under applicable law.

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Types of Liens Eligible to be Stripped during BankruptcyIn Chapter 13 bankruptcy, liens such as mortgages and security liens may be voided if they are junior liens and the balance owed to the senior lien holder exceeds the current value of the property to which they are attached.

Chapter 13 bankruptcy is commonly used to strip property liens such as lines of credit and second/third mortgages due to the fact they are generally unsecured (no collateral). As a re-sult of declining property values, it’s common for the value of the property to be less than the balance owed to the 1st Lien Holder (1st Mortgage Lender).

In some circumstances, non-purchase money liens on other property may also be stripped during the Chapter 13 reorganization process.

To understand whether your liens are eligible to be stripped when you file for Chapter 13 bankruptcy, we encourage you to meet with our attorneys. Every financial situation is unique and requires an individual assessment to determine how your bankruptcy action will proceed.

About Chapter 13Chapter 13 is often used by people who have fallen behind on home or car payments. It allows you to pay creditors over an extended period of time according to a plan created for you by the court. In theory, after making monthly installments over a 3-5 year period, all remaining debts are wiped away, or “discharged.”

Chapter 13 bankruptcy might also be used to discharge debts that a Chapter 7 bankruptcy cannot. Debtors who have too much disposable income to qualify for a Chapter 7 or have assets they would lose under Chapter 7, may choose instead to proceed under Chapter 13.

not everyone can file Chapter 13Only individuals with an approved level of stable income may use Chapter 13. There is also a limit on the amount of debt that may be eligible for Chapter 13 bankruptcy. The debtor must have less than $360,525 in unsecured debt and $1,081,500 in secured debt.

Unfortunately, due to the inflated real estate values in Southern California, many people exceed the prescribed debt limits on the value of their houses alone. While this is an out-dated rule, it still applies.

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HOA Judgments & Bankruptcy Nowadays, it’s common for homeowners to neglect paying HOA (Home Owner Association) dues while in foreclosure hoping they’ll be wiped out by the foreclosure process or bank-ruptcy.

While it’s true that unpaid HOA dues can generally be included for discharge in a bankruptcy petition, the successful inclusion of these fees depends upon: the circumstances of the filer; the amount of money owed to the HOA; and the debtor’s intent for the property.

However, if the HOA dues have been converted to a “judgment” or “lien” against the home/condo, the Association itself may then be considered a “secured creditor” due to the judg-ment or lien.

If this is the case and the debtor wishes to retain the property, the debtor must pay/satisfy the judgment or lien outside of bankruptcy first to clear the title of the property.

In California, HOA liens/judgment are very powerful and can lead to the garnishment of wages, levy’s against bank accounts, and even the forced sale of real property (your home) to satisfy the debt.

If you have an HOA judgment or lien against your home and you still retain ownership, the simplest way to resolve the debt is to short sell the home and have the buyer pay the HOA judgment balance prior to closing escrow.

Of course, in order for a buyer to agree to pay the judgment balance, your short sale agent must negotiate with your lender and get the best possible price on your home.

If you have a judgment from an HOA and your home has already foreclosed, you should im-mediately consult with a skilled bankruptcy attorney. Please contact our attorney Raymond Seo, if you are in the local area.

Disclaimer

No advice: This literature contains general information about legal matters. The information is not advice, and should not be treated as such. Limitation of warranties: The legal information on this literature is provided “as is” without any representations or warranties, express or implied. WSL & Associates, William S. Lee, and its affiliates make no representations or warranties in relation to the legal information on this material. Without prejudice to the generality of the foregoing paragraph, WSL & Associates does not warrant that: the legal information on this literature will be constantly available, or available at all; or the legal information on this literature is complete, true, accurate, up-to-date, or non-misleading. Professional assistance: You must not rely on the information on this literature as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this material. Liability:Nothing in this legal disclaimer will limit any of our liabilities in any way that is not permitted under applicable law, or exclude any of our liabilities that may not be excluded under applicable law.

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The Truth about Principal ReductionKeep in mind, principal reduction is a possible component of a loan modification strategy and should not be seen as a separate outcome. The truth is; banks may or may not consider principle reduction for a specific customer. It is at their discretion.

Nevertheless, according to a new report from the Federal Governments “Office of the Comp-troller of the Currency” which regulates national banks, lenders are, with “increasing frequen-cy”, lowering the principal due on home mortgages for struggling borrowers. Unfortunately, the numbers are deceiving as lenders remain reluctant to reduce principal balances.

why won’t the bank reduce my principal?First, this policy may create a “moral hazard” — If lenders reward homeowners who default, it would probably encourage more homeowners to default on their mortgages.

Secondly, banks have a legal duty to protect the loan’s investors/owners. Loan modification strategies like principal reductions are only allowable if the investors would lose less by reduc-ing the loan balance than they would with other types of modifications or even foreclosure.

To make this determination, lenders apply the “Net Present Value” (NPV) test which is applied to every loan modification application.

Further, the federal “Making Home Affordable” program only allocates funds to help lenders in defraying losses resulting from mortgage rate decreases, not principal reduction.

How Many Actually get a principal reduction?The actual numbers on principal reduction are very disappointing. Of 142,362 loan modifica-tions completed last quarter (Q2, 2011), only 10% involved a principal reduction.

Think about that: out of perhaps18 million homeowners in financial distress, less than 15,000 principal reductions were offered last quarter.

Here’s another twist: from an anecdotal standpoint, having processed roughly 400 loan modi-fications in the past two years by WSL & Associates and our partner McFarlin & Schmidt, we have seen only one solitary principal reduction offered on a first mortgage.

In contrast, we have seen about 20 principal reductions offered on second mortgages. This sampling supports our belief that the vast majority of principle reductions, perhaps 95%, were on second mortgages.

5. principal reduction

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Who is Likely to be Offered a Principal Reduction?As discussed, don’t expect principal reduction to be approved for your first mortgage; rather, work with your 2nd mortgage holder instead. To provide a clearer picture of who is more likely to be offered principal reduction, let me offer some examples:

case scenario 1 Value of your property: $500,000 1st Mortgage: $400,000 (Bank of america) 2nd Mortgage: $250,000 (Jp Morgan chase heloc)

In this case, you must target JP Morgan for the reduction, not BofA. As the first mortgagor, Bank of America will never offer you a principal reduction; especially when they can seize the entire balance through foreclosure.

Now, it is likely that JP Morgan sold your loan ($250,000) to another investor, perhaps for 10% ($25,000) or, to a collection agency. In California, many bad 2nd mortgages originated by Washington Mutual were later sold to JP Morgan. Now JPM is trying to dump these bad loans as quickly as they can. We have found JPM to be open to offers on 2nd mortgage principle reduction and suggest homeowners start the negotiation at no more than 10% of the out-standing loan balance.

important fact you should knowLet’s say you owe $500,000 on your mortgage and your lender has agreed to reduce your principal balance to $350,000. The catch? After 5 or 10 years when you decide to sell your house for $450,000, the bank takes the difference of $100,000, and you walk away with nothing. This is a very basic concept of the principal reduction, but unfortunately, not many homeowners are aware of this important fact.

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case scenario 2 Value of your property: $500,000 1st Mortgage: $600,000 (Bank of america) 2nd Mortgage: $250,000 (Jp Morgan chase heloc)

In this case, one glance says it’s not worth keeping the house. However if you are determined to keep your home, target the 2nd mortgage for principle reduction. The strategy will be the same as scenario 1. Keep in mind, even after a successful principal reduction on the 2nd mortgage down to 10% of the original loan balance, you still owe $625,000 on $500,000 property.

You really have two options: 1) Short Sale - minimize credit damage, take advantage of the cash seller incentives, and wipe out your mortgage debts. 2) File Chapter 13 Bankruptcy - keep the property, eliminate/strip the 2nd mortgage and, most importantly, have the financial ability to make the payment on the 1st mortgage.

case scenario 3 Value of your property: $500,000 1st Mortgage: $300,000 (Bank of america) 2nd Mortgage: $250,000 (Jp Morgan chase heloc)

In this case, the house is worth keeping and attempting a principal reduction. Again, don’t ex-pect the 1st mortgagor to reduce your principal; work with the 2nd mortgage. In this scenario if you offer JPM $100,000, they will probably accept. However, rather than reduce your balance to $100,000, JPM will ask you to find a new lender who will refinance your 1st and 2nd loan. It would be likely that JPM would want to sell your loan and get it off their books.

Nevertheless, according to a new report from the Federal Governments “Office of the Comp-troller of the Currency” which regulates national banks, lenders are, with “increasing frequen-cy”, lowering the principal due on home mortgages for struggling borrowers. Unfortunately, the numbers are deceiving as lenders remain reluctant to reduce principal balances.

To accomplish this, you would have to find a new mortgage company to finance $400,000 (on a home valued at $500,000). This is a refi-principal reduction.

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Important tips you should Know• If the 2nd mortgage is purchase money from the same mortgage company as your 1st

mortgage, it’s going to be a lot more difficult to negotiate a principal reduction on your 2nd mortgage.

• Unfortunately, a bankruptcy loan modification provision, which would have given judges the power to reduce mortgage principal, died in the U.S. Senate a few months ago. Currently, bankruptcy judges can reduce principal loan balances on all encum-bered assets EXCEPT primary residences (thanks to an amendment pushed through by the mortgage industry back in 1977).

• We are talking about a very small percentage of homeowners that will apply for princi-pal reduction (less than 1% of all homeowners who apply for a loan mod).

• If your lender does not clearly see the financial benefits for approving principal reduc-tion, they will not reduce your principal balance.

• If you want to attempt a principal reduction negotiation with your lender, do it early! The best time would be after missing a few monthly payments but before you receive the Notice of Default. Also, the bank will not consider negotiating once the Notice of Trustee’s Sale is filed.

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Should I Sue My Lender?Do you believe your home was unlawfully foreclosed upon? Have you been approved for a loan modification but were sent a foreclosure notice anyway? Do you struggle day in and day out to communicate with your mortgage lender/servicer?

Perhaps you’ve thought about suing your lender/servicer to get the attention you deserve. While suing banks over foreclosures and rejected loan modifications is nothing new, it is never easy or cheap, but it can work in your favor.

However, before you decide to sue… we strongly advise you persevere with your lender before pulling the trigger on a lawsuit. I repeat - you MUST be persistent with your bank if you want to keep your home. Litigation should always be your very last option.

Common Reasons Attorneys take Mortgage Litigation CasesA recent settlement between federal regulators and several of the country’s largest mort-gage servicers has resulted in an agreement in which servicers will be required to hire inde-pendent firms to review loans looking for improprieties (i.e.; robo-signing). Loan document errors or misrepresentations are the leading cause of loan litigation.

As a result of the settlement, servicers have established a process of review for borrowers who believe they’ve been financially harmed by unethical lending practices. This has also expedited and streamlined the grievance/lawsuit process for attorneys representing those clients.

Lender/servicers have been forced into the position where they must readily submit a plan to compensate borrowers for errors, misrepresentations, or other deficiencies identified in these independent findings.

ALERT! BEWARE OF LOAN LITIGATION SCAMSUnfortunately, the sad fact is, more than 90% of the attorneys advertising loan litigation ser-vices to distressed homeowners are bait and switch charlatans. Many of our clients have rec-deived mailers from attorneys making audacious claims like – “We’ll fight against the bank for you and get your principal reduced!” or “We’ll get your house back!” or “We’ll stop foreclosure immediately!” and many other false promises of immediate action and fantastic results. It’s also very common for them to claim that you can stay in your home for an absurdly long time without making any mortgage payment at all during the pending lawsuit. DON’T FALL FOR THIS! More related readings can be found at “Beware of Attorneys Providing Litigation Services” section on page 28.

6. mortgage litigation

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Overpromising & Under Delivering: What You’ll Probably Hear…They’ll file a lawsuit against your bank which they’ll assure you will be tied up in court for 2-3 years. They’ll claim that there’s a high probability the principal will be reduced as a result of the lawsuit. They may ask you to sign a “grant deed” and transfer ownership of your home to someone else. They’ll probably ask you to pay MONTHLY for their efforts to delay the foreclo-sure. They may word the offer a little differently, but the goal is to collect a retainer from you for as long as possible.

WHAT SERVICES ARE THEY REALLY PROVIDING?To delay foreclosure, attorneys simply exploit our slow moving legal system; in this case they file a lawsuit against your lender, then use a motion called a “Lis-Pendens” (meaning, “lawsuit pending”).

Once a Lis-Pendens is attached to your property to stop foreclosure (known as an “action to enjoin the trustee’s sale”), there is automatically a lawsuit against the property. For the bank to proceed with foreclosure, the bank must remove the Lis-Pendens. What attorneys know is that it takes months for banks to remove Lis-Pendens due to a huge number of foreclosures they are processing.

In reality, unethical attorneys are simply taking advantage of delays caused by current economic conditions and are cashing-in on unsuspecting homeowners in distress. What attorneys don’t want you to know is that anyone can file a Lis-Pendens with the local county recorder. It’s easy and it costs less than $400 to file.

WHERE DOES THIS LEAVE YOU?You may think your attorney’s doing a great job fighting your lender and prolonging your stay in your home. The truth is, they’ll do very little for the money you’ll pay them every month. Most often, all they do is file a paper-lawsuit and create the Lis-Pendens, which you can easily do yourself. If you follow this path, the bank will eventually remove the Lis-Pendens and foreclose on your home. In fact, following this path, many homeowners don’t even know their homes were sold at auction until they get the eviction notice.

At the conclusion of this attorney-managed process, you will be out of money you’ve paid to the attorney and will probably be facing a counter lawsuit by your lender. In addition, many homeowners end up with judgments from the IRS, HOA (homeowners association) and other creditors, and many are left un-cleared even after a bankruptcy filing.

Don’t forget, there are types of judgments that cannot be wiped out with bankruptcy and they will follow your social security numbers and are enforceable for up to 20 years. This means your assets can be seized at any time over the next 20 years until the judgment is paid and cleared.

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How to Maximize Your Stay during Foreclosure & Avoid Foreclosure

iMportant upDate – JanuarY 2012. Bank of America and Chase are now rejecting many short sale requests by homeowners who have been behind on their mortgage payment for more than 18 months. If your goal is to stay for the maximum period and then do a short sale, it is important that you initiate your short sale before 18 months of delinquency.

With the U.S. economy in shambles, thousands of local homeowners are falling further and further behind on their mortgage payments. Many have stopped making their payments al-together.

Without a dramatic turnaround, most will end up in foreclosure. With this in mind, it’s critical for homeowners to be clear-headed during these difficult times, stay engaged and, put to-gether a plan that takes advantage of all available opportunities.

If you’re having financial difficulties and have stopped making your mortgage payment or are considering stopping, it is truly in your best interest to exploit the options that are available to you.

When foreclosure looks unavoidable, we instruct our clients on strategies to maximize the time they can remain in their homes. Each strategy involves the use of accepted bank proce-dures with the ultimate goal of substantially prolonging the time a homeowner can remain in the home.

While your bank won’t be thrilled to learn you’re using their rules to benefit you instead of them, our concern is for your financial well-being. It is our goal to help each and every home-owner get the most out of each of their options. Further, we do not promote practices that are unethical, illegal or cause financial harm to the homeowner.

there are three proven tactics: 1) loan Mod application short sale

2) loan Mod application Bankruptcy filing short sale

3) loan Mod application loan litigation short sale

APPENDIX A

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Regardless of the strategy you choose, the first tactic you must prepare for is the simple act of waiting. Be patient. When you do fall behind on your mortgage payment, wait. This is very im-portant! DO NOT TAKE ANY ACTION UNTIL YOU GET THE NOTICE OF DEFAULT.

In California, the Notice of Default (NOD) is the first step in the foreclosure process. Don’t let the NOD worry you too much, because you will still have plenty of time to act. The filing of the NOD simply means the bank has begun the legal process. In reality, a minimum of 110 days has to pass before an actual auction/sale date of your home can be scheduled.

Continue living in your home and wait for the bank to make a move you can respond to. Re-member, you can’t be evicted without due process. My personal suggestion is that you don’t begin these “delaying tactics” until you receive the NOD.

Although banks are processing foreclosures more efficiently and faster than in the past, they’re still not adhering to permitted foreclosure timelines. In California, lenders can file a Notice of Default as soon as 90 days after you are delinquent on your mortgage.

In fact, over the last year, we’ve communicated with many homeowners who didn’t receive their Notice of Default until a year or more had passed since making their last mortgage payment.

please note that these strategies should not be used if your goal is to keep your property permanently.

option 1 option 2 option 3

strategy loan Mod→short sale loan Mod → Bankruptcy → short sale

loan Mod → litigation → short sale

possible period of stay

6~8 months (up to 12~18 months if a loan mod trial period is approved)

6~18 months (6~8 months if Bankruptcy is dismissed quickly and up to 18 months with the successful filing of a Ch.7 or Ch.13 BK)

6~24 months

pros Minimizes negative credit impact; Prevents long term credit dam-age; No record of BK or foreclosure history on credit report.

Could provide the longest stay in your home (of all the options) without the risks of litigation.

Could provide up to 3 years in the property if the lender can’t reach an agreement with you.

cons Provides shortest time extension of all options

If BK is dismissed, lender may forbid a short sale and pro-ceed directly with foreclosure; Bankruptcy attaches to per-sonal credit for 7 to10 years.

Costly. You may end up with non-dischargeable IRS and HOA judgments or possible countersuit from lender. Lender may appeal for dis-missal resulting in expedited foreclosure.

* The observations above are based purely on our extensive experience. Please note that changes in the law, court rulings, bank policies and government intervention may change the viability of these strategies.

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bankruptcy filings create an “automatic stay”Filing for bankruptcy prior to the Trustee Sale automatically creates a “Stay” postponing the auction. The stay prevents the bank from taking further action until the bankruptcy filing has been reviewed and acted upon.

The bank will respond to the filing with a “Motion for Relief from Stay” to get the stay lifted and proceed with the sale of your home. While the bank has the option to file this motion right away, it generally takes them weeks (up to 10) just to file this document. It then takes roughly 4 weeks (sometimes less) to get it granted. At this point, the bank will get another sale date and attempt to auction your home on the new date.

It is important to have a competent bankruptcy attorney review your case before proceed-ing. Many recent bankruptcy filings are being dismissed (not to be confused with discharged) which leaves the individual vulnerable and open to action by creditors.

Beware of attorneys providing option #3: litigation servicesUnfortunately, there are MANY local attorneys espousing the merits of suing your lender. Most claim that filing suit against your lender will extend your stay in your home for several years.

This is not true. Then, they’ll ask you to pay a monthly service fee equal to an amount they believe you can afford; usually $1,000~$1,500, while they continue to postpone your sale date during the lawsuit.

The truth is that these unethical attorneys will NOT fight for you against your lender. What they will do is collect money from you while your lender prepares a formal action against you and the pending lawsuit. More related readings are on Chapter 6: Mortgage Litigation.

stay in the loopWhile most big lenders like Bank of America, Chase, and Wells Fargo have increased their pro-cessing speed for loan modifications, it still takes a minimum of 3 months to receive their final decisions.

During this time, it is critically important that you call frequently and make sure your file hasn’t been lost or sidelined, and provide any supplementary documents they request. Why is this so important? Banks are very bureaucratic. They will automatically deny a loan-mod packet if anything is amiss or if documents are missing. They will not call you and ask for missing docu-ments. You and/or your agent are solely responsible.

The final decision will be sent to you by mail. If you’re one of the lucky few and do get ap-proved for a trial loan modification, DO NOT hesitate! Sign it and return it to your lender as quickly as possible. Even if you can’t afford the proposed payment, sign it and return it anyway.

By simply agreeing to the terms, you’ve just engineered yourself another 2-3 months stay in your home.

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wsl summaryIf foreclosure is inevitable, there are a number of proven strategies to prolong your remaining time in your home. Several are free to you. Ultimately, the goal is to stay as long as you can, preserve your credit as much as possible and, maximize your cash-in-pocket when you leave.

Keep in mind, many lenders are now offering substantial cash incentives to homeowners who short sell ($10,000-$35,000). Of course, not all will qualify for these large incentives. There is al-ways the federally sponsored $3,000 HAFA short sale incentive that you can still get, and at WSL & Associates, we always provide 1% of sales price as a short sale seller incentive.

While this is an unfortunate situation, it doesn’t have to end badly. The key is to minimize the hazards. Try to avoid costly, non-beneficial solutions. Whatever you do, don’t transfer the title of your home to another promising to “help” you out of this predicament. This can leave you with huge financial liabilities, even after a foreclosure or bankruptcy.

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foreclosure rescue scamsYou may have already received mailers from several different organizations, law firms, realtors, etc.., promising quick, easy solutions to your mortgages woes. The short answer is, if it sound-stoo good to be true, it is! Unfortunately, it’s probably worse than untrue, it’s probably a scam!

This is one of the most important topics we’d like to discuss with distressed homeowners. The fact is, we often lose clients to unscrupulous scam artists (and local attorneys) who promote the virtues of “loan litigation” as discussed in previous pages, under the heading “ALERT! Loan Litigation Scam”.

These scams have left many homeowners with mountains of unexpected debt and, in several cases, counter lawsuits by aggravated banks. Sure, the client may have lived in their home a few months longer without paying the mortgage. Ultimately, however, they had to face long-term ruined credit and tremendous financial liability after foreclosure that can’t even be elimi-nated with bankruptcy.

APPENDIX b

Don’tsDo not bury your head in the sand. Pending foreclosure will not go away on its ownand will only get worse if you ignore it.

Do not sign a contract under duress. Always insist on time to review any docu-ments on your own and at your own pace.

Do not sign a Grant DeeD. Scam artists will say it’s the way to delay an auction saleand will ask you to notarize it. THIS IS FALSE! By signing a deed, you are agreeing totransfer ownership.

Do not work with internet-BaseD companies with no physical address. They usually use a P.O. Box address or are based out of state. No legitimate companies hide the location of their businesses.

Do not accept verbal representations. Get all offers in writing and tell whoever ismaking the offer that you and/or your representative will review it thoroughly.

Do not make payments to any party other than your lender.

Do not sign a quit claim deed without being specifically instructed to do so by yourattorney or representative. Do not agree to any deal that proposes you rent the prop-erty and then buy it back at a later date.

Do not accept an offer from somebody who wants to take the house off your hands and bring your payments current in exchange for assigning them the surplus from the foreclosure sale. For example; if you hypothetically owed $200,000 on your mortgage plus arrears of $10,000, and your house is worth $250,000, you would stand to make money on the sale. (This applies to homeowners with equity).

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Do’s

Confirm you’re in foreclosure. If you’re behind in payments, you’ll receive a deficiency notice or, Notice of Default. The NOD will notify you of your delinquency and give you a chance to resolve the debt. If you receive a Notice of Trustee’s Sale, you are in foreclosure.

Speak with your lender. Try to restructure the payments or refinance the loan. Ask about renego-tiating or refinancing your loan or, working out a payment plan. Be honest about your financial situation. The sooner you contact your lender, the more options you’ll retain and the sooner you might remedy the problem.

Understand the laws regarding foreclosure for your state. It’s important to know how much time you have to resolve the issue. Do a lot of internet research or read the articles provided in our library (which might be more than enough).

Choose an experienced, credible counselor. Interview several experts before making your choice. Be careful when choosing and pay attention to the certification requirement recommended above. It’s easy to tell a scam artist from a legitimate counselor: You should not have to pay for legitimate foreclosure counseling.

Once you’ve selected a foreclosure professional call your lender periodically to ensure that person/company is engaged and actually doing what they promised. Lender customer service representatives will tell if there’s been contact and what is currently going on.

Sell your home if there are no other options. If you have no equity, contact a real estate agent who specializes in the short sale process and has extensive lender contacts/relationships.

Do your research. Most realtors sub-contract their short sales to 3rd party short sale negotiators and split the commission. Try to find a hands-on short sale expert and ask for their list of success-ful cases. Also, we recommend visiting their office to confirm the scope of their operation.

Do’s

confirm you’re in foreclosure. If you’re behind in payments, you’ll receive a defi-ciency notice (Notice of Default or NOD). The NOD will notify you of your delinquen-cy and give you a chance to resolve the debt. If you receive a Notice of Trustee’s Sale, you are in foreclosure.

speak with your lender. Try to restructure the payments or refinance the loan. Ask about renegotiating or refinancing your loan, or try working out a payment plan. Be honest about your financial situation. The sooner you contact your lender, the more options you’ll retain and the sooner you might remedy the problem.

understand the laws regarding foreclosure for your state. It’s important to know how much time you have to resolve the issue. Do a lot of internet research or read the articles provided in our website.

When you choose to do a short sale, you should consult with more than two re-altors who only specialize in short sale, not a local realtor. Visit their offices, ask for the list of successful short sales, ask for references, and ask for the most recent closings of short sales. If he/she is a real short sale expert, they should be super-confident and proud of sharing the information with you.

Do it yourself on loan modification. This can be a daunting task, but you must do this on your own. The government has restricted collecting fees from distressed homeowners for the loan mod services, and it’s illegal to charge any upfront fees. So, it is obvious that no one would do better and take care of it better than yourself.

if your loan is under a pending loan modification review, follow up with your bank “consistently” (at least twice a week). Banks frequently lose the docu-ments you sent, and they indicate “missing documents” in their system. We know it’s not your fault, but you have no time to blame your bank and argue. Just fax the documents again. If the loan mod is stopped due to missing documents, your loan mod application will be automatically cancelled and your lender will proceed with foreclosure.

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bank contact information: loss mitigation departments

APPENDIX c

nation’s top 5 Mortgage companies

Bank Of America www.bankofamerica.com/mha/ 800-669-6607

Chase www.chase.com 866-550-5705

CitiMortgage www.mortgagehelp.citi.com 866-915-9417

One West Bank www.OWB.com 877-908-4357

Wells Fargo www.wellsfargo.com/homeassist 800-678-7986

Major Mortgage companies nationwideAmerican Home Mortgage Servicing www.ahmsi3.com 877-304-3100

AmTrust Bank www.amtrust.com 866-476-0022

Arvest Mortgage Company www.arvest.com 800-232-5524

Aurora Loan Services www.myauroraloan.com 866-521-3828

Banco Santander www.santandernet.com 787-625-6545

Bank Of America www.bankofamerica.com/mha/ 800-669-6607

BB&T www.bbt.com 800-295-5744

Capital One, NA / Chevy Chase Bank www.chevychasebank.com 800-933-9100

CCO Mortgage www.ccomortgage.com 877-745-7366

Central Mortgage Company www.centralmortgageonline.com 800-366-2132

Chase www.chase.com 866-550-5705

CitiMortgage www.mortgagehelp.citi.com 866-915-9417

Colonial Savings, F.A. www.colonialsavings.com/assist/ 800-937-6303

Doral Financial Corporation www.doralbank.com 787-300-4515

EverHome Mortgage www.everhomemortgage.com 800-669-9721

First Horizon www.firsthorizon.com 800-364-7662

Flagstar Bank www.flagstar.com 800-393-4887

Freedom Mortgage Corporation www.freedommortgage.com 800-220-3333

GMAC Inc. www.gmacmortgage.com 800-766-4622

Green Tree www.gtservicing.com 800-643-0202

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Do’s

Confirm you’re in foreclosure. If you’re behind in payments, you’ll receive a deficiency notice or, Notice of Default. The NOD will notify you of your delinquency and give you a chance to resolve the debt. If you receive a Notice of Trustee’s Sale, you are in foreclosure.

Speak with your lender. Try to restructure the payments or refinance the loan. Ask about renego-tiating or refinancing your loan or, working out a payment plan. Be honest about your financial situation. The sooner you contact your lender, the more options you’ll retain and the sooner you might remedy the problem.

Understand the laws regarding foreclosure for your state. It’s important to know how much time you have to resolve the issue. Do a lot of internet research or read the articles provided in our library (which might be more than enough).

Choose an experienced, credible counselor. Interview several experts before making your choice. Be careful when choosing and pay attention to the certification requirement recommended above. It’s easy to tell a scam artist from a legitimate counselor: You should not have to pay for legitimate foreclosure counseling.

Once you’ve selected a foreclosure professional call your lender periodically to ensure that person/company is engaged and actually doing what they promised. Lender customer service representatives will tell if there’s been contact and what is currently going on.

Sell your home if there are no other options. If you have no equity, contact a real estate agent who specializes in the short sale process and has extensive lender contacts/relationships.

Do your research. Most realtors sub-contract their short sales to 3rd party short sale negotiators and split the commission. Try to find a hands-on short sale expert and ask for their list of success-ful cases. Also, we recommend visiting their office to confirm the scope of their operation.

Major Mortgage companies nationwideHSBC Mortgage Services www.hsbcmortgageservices.com 800-395-3489

Huntington Bank www.Huntington.com 800-323-9865

IndyMac www.indymacmortgageservices.com 877-908-4357

LBPS www.lbps.com 866.570.5277

Litton Loan Servicing www.littonloan.com 800-247-9727

M&T Bank www.mandtbank.com 800-724-1633

Metlife www.metlifehomeloans.com 888-638-6964

Midwest Loan Services, Inc. www.midwestloanservices.com 800-262-6574

Mortgage Service Center www.mortgagequestions.com 800-936-8303

Nationstar Mortgage www.nationstarmtg.com 888-850-9398

Navy Federal Credit Union www.navyfederal.org 888-842-6328

One West Bank www.OWB.com 877-908-4357

PNC Mortgage www.pncmortgage.com 800-822-5626

Popular www.bppr.com 787-281-4742

Prime West Corp. www.primewestcorp.com 800-288-7252

Quicken Loans www.quickenloans.com 866-390-3652

Regions www.regions.com 800-748-9498

Residential Credit Solutions www.residentialcredit.com 800-737-1192

Saxon www.saxononline.com 800-594-8422

Sovereign Bank www.sovereignbank.com 800-232-5200

Trustmark National Bank www.trustmark.com 800-844-2400

US Bank www.usbankhomemortgage.com 800-365-7900

Wells Fargo www.wellsfargo.com/homeassist 800-678-7986

Weststar Mortgage Corporation www.westloan.com 800-640-0635

For up-to-date bank contact information, visit www.wsl-associates.com

33

William s. lee & associates was originally founded in 2008 by William Lee. True to our original charter, the WSL Team is and will remain a full service organization committed to providing Orange and Los Angeles County homeowners’ consultation and representation covering all facets of residential real property transactions. Operating under the Coldwell Banker® brand, the WSL Team is staffed by top per-forming REALTORS®, Marketers, Short Sale Negotia-tors, Financial Consultants and Attorneys.

The WSL & Associates specializes in local distressed real estate markets and helping home-owners and buyers navigate the complexities of foreclosure, short sale, loan modification, and bankruptcy. With over 400 distressed property transactions to our credit, we remain as the No.1 distressed property expert and short sale specialist in Orange County.

William s. lee is a principal and director of all WSL & As-sociates activities. As a Realtor and Broker, Mr. Lee has special-ized in the distressed real estate markets of Los Angeles and Orange counties since his first day as a Realtor. Operating un-der the Coldwell Banker franchise since 2007, Mr. Lee has gar-nered awards from peers and much praise from clients.

Shortly after joining Coldwell Banker Best Realty in 2007, Mr. Lee was recognized for exceptional performance with a “Top 10 Producer” award in 2008. Lee increased his commitment to serving his clients and was awarded the “No.1 Top Producer” award for two consecutive years in 2009 & 2010, making him the youngest Top Producer in company history.

Mr. Lee is a graduate of the University of California, Irvine with a B. A. in International Studies and Economics. He is a Real Es-tate Broker, Certified HAFA Specialist, and Certified Distressed Property Expert.

By providing the exceptional solution and saving clients from

foreclosures, we know they are going to come back to us when they need to buy or sell their homes in the future.

I am confident on that. – William S. Lee

abouT WSL & ASSOCIATES

“”

34

It’s sometimes difficult to face the realization you may need help with your mortgage loan. The quality of help you choose will make a big difference as to your outcome. Make sure you work with the BEST.

”

William s. leePrincipal

edgar cotzalManaging Director

innie hahnSenior Escrow Officer

nate chappellTitle Officer, First American

Min chungSenior Advisor

Kelly padillaDirector, Transaction Mgmt

robert nohTitle Officer, Advantage365

Victor casillasMarketing Director

35

36

fullerton office (Main)4130 W. Commonwealth Ave.

Fullerton, CA 92833___________________________________

los angeles office355 S. Grand Ave, Suite 2450,

Los Angeles, CA 90071____________________________________

tustin office13751 Red Hill Ave.

Tustin, CA 92780

william@coldwellbanker.comwww.wsl-associates.com

DRE: 01800148

(714) 465-4060 phone(213) 260-2644 phone(714) 442-2659 fax

DisclaimerNo part of this book may be transmitted or reproduced in any way including, but not limited to, digital copying and printing. Anyone found to be copying or reproduc-ing this book without written permission of the author will be prosecuted to the fullest extent of the law. The authors, William S. Lee & Associates have done their best to produce a high quality, helpful and informative book. However, they make no representations or warranties of any kind with regard to the completeness or accuracy of the content of this book. They accept no liability of any kind for any losses or damages caused or alleged to be caused, either directly, or indirectly, from using or acting on any of the information contained in this book. All links are listed for information purposes only, and are not warranted for content, accuracy, or other implied or explicit purposes. If you choose to follow the advice contained in this book, you acknowledge that you are entirely responsible for your own actions and results and that you are using these ideas, tips and suggestions at your own risk. The authors do not claim the sufficiency of this book as the sole resource for anyone attempting to perform a loan modification, real estate short sale or any other real estate transaction. As always, you should seek professional tax advice for any matter related to real estate related tax issues from a certified public accountant or tax attorney. IMPORTANT NOTICE: William S. Lee & Associates are not associated with the government in any way and our services are not approved by the government or your lender. Using our services does not guarantee that your lender will agree to change your loan or allow you to short sale your home. If you stop paying your mortgage, you could lose your home and damage your credit rating.

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www.Wsl-associates.comColdwell Banker Best Realty

oc (714) 465.4060 | la (213) 260.2644

s o u t h e r n c a l i f o r n i a’s n o.1 s h o r t s a l e e x p e r t