What Is A Dual Escrow And Why Use It?
Why do one escrow when you can do two? With prices continuing to climb, people find creative ways to structure escrows and in some instances that means doing a double escrow. What is a double escrow and why do it?
A double escrow is having two escrows at the same time. Why would someone do a double escrow? Dual escrows typically occur during a hot market when someone can profit by buying and selling a property at the same time.
Many escrow officers will advise or even refuse to conduct the transaction if all of the sales information has not been disclosed to all parties. Experienced and ethical escrow officers tell stories of one party not fully disclosing info to one of the other parties.
Oftentimes the lack of info involves elder abuse (e.g. someone buying a senior’s home for below market value then reselling it for above market value) or other predatory tactics. A good escrow officer will insist to talk with a seller before conducting the double escrow. Oftentimes buyers will hide some fact from the sellers which can cause serious issues down the line.
Predatory Dual Escrows?
For a double escrow to occur there needs to be something that signifies a rise in sales price (e.g. upgrades, repairs, or a lease option/right of first refusal). It can’t be just one party taking advantage of another party. There needs to be some reason for the change in value. For this reason, doing a double escrow for an REO or short sale would not be allowed or would be considered fraudulent. During short sales and REO sales, the selling bank considers the selling price to be at or near fair market value so conducting a dual escrow and reselling at a significantly higher price would be tantamount to fraud.
Like any other real estate transaction, unusual structuring of a deal can benefit all parties. The rare instances for the proper use of a dual escrow can be a useful tool but those who use the tactic can end up getting themselves and other parties in something more painful than hot water.
Homeowners May Face Adjusting Loan Mod Rates Beginning In 2014
With distressed Bay Area properties going the way of affordable rent, and prices in most areas still on the rise (or at least steady) most homeowners and others interested in real estate think that we have seen the last wave of distressed properties in our collective rear view mirrors.
Like the mirrors in a funhouse, the real estate view may be slightly distorted or even downright scary. Despite the fact that the economy in the hilly city and as well as Silicon Valley, Marin, etc continues to display robust numbers, many people overlook the scary loan mod adjustment monster that looms on the horizon.
Those with short memories will need a refresher to remember that not only did the real estate crisis start about 2009 but so did the loan modification craze. While many homeowners received 30 or 40 year fixed loan mods, many homeowners received five year loan mods, meaning that they adjust after five years. These adjustments will mean that many homeowners will not be able to afford the adjusted monthly payment.
We have spoken with many homeowners who have these loan mods that will begin adjusting in 2014. Many of these homeowners can see the writing on the wall. Most will not be able to pay the adjusting amount which will put them in awkward positions. Either underwater or with equity, these homeowners may not be able to pay their new adjusted mortgage.
Re-modifying Adjusting Loans
Can homeowners return to the bank for another loan mod? Banks have not been in the habit of re-modifying loans so that may not be an option. Unfortunately, these homes may be future examples of distressed equity sales.
Some prognosticators think that we may be in store for 11 more years of short sales, foreclosures, loan mods and the distressed properties. That may be a bit of a stretch however it may likely continue for at least five years.
Homeowners with soon to be adjusting loan modifications (2014, 2015) take note. Be proactive. Create a game plan for your home or investment property instead of waiting until the loan modification adjusts. Doing so will allow you to look yourself in the mirror and know that you did the right thing.
Anyone with question about how to approach their adjusting loan mod can feel free to contact me at firstname.lastname@example.org.
Tom Vacar, KTVU/Fox 2’s Consumer Editor, interviewed Keith Rockmael one one of the Bay Area Resource coalition members.
See link for video which aired yesterday on the 5 o’clock news here in the San Francisco Bay Area.
Homeowner Take On Banks In Court For Dual Tracking And Foreclosing
When the California Homeowner Bill of Rights came into effect in January of this year, many advocates cheered, and of course the banks were not so pleased. Even though the law took effect few people saw any immediate effects. We heard from several non-profit counselors and homeowners that banks continued to dual track homeowners, offer multiple points of contact and break the terms of the law.
The California Homeowner Bill of Rights offers protection for the homeowners but what options do homeowners have if the banks don’t comply? Take it to the courts. In the past, homeowners didn’t have many options if banks dual tracked then foreclosed. Even if you could find an attorney to take the case, many judges would throw the case out. One of our attorney colleagues mentioned recently that in the past Contra Costa judges had been particularly reticent to halt foreclosures or entertain dual tracking cases but with the new law things have changed.
One story (see link) tells the story of a San Luis Obispo County couple who came out victorious in a million-dollar-plus settlement against OneWest Bank, IndyMac Mortgage Services, U.S. Bank and GSR Loan Mortgage Trust after the servicer foreclosed on their home and a rental property while the couple negotiated a loan settlement with the servicer. People often refer to this practice as “dual tracking”.
Attorney Specializing in CA Homeowner Bill of Rights Will Speak at the San Francisco Housing Expo
This case and a few others will now doubt offer homeowners a better opportunity to take on the banks for wrongdoings as part of the Homeowner Bill of Rights.
One attorney specializing in the California Homeowner Bill of Rights will be speaking at the San Francisco Housing Expo October 26.
SF Housing EXPO Offers Resources For Current And Future Homeowners
After a one year hiatus, HomeownershipSF presents the upcoming HomeownershipSF Housing Expo. The free expo will present information opportunities for future and current homeowners. HomeowershipSF partners with the Mayor’s Office of Housing the five member agencies, Asian Inc., Consumer Credit Counseling Service of SF, Mission Economic Development Agency, SF Housing Development Corp. and SF LGBT Center to promote affordable housing in the city.
For those who don’t work at Google, Facebook or Twitter and may be thinking that affordable homeownership in San Francisco represents an oxymoron of epic proportions consider that possibilities do exist for low to medium income San Franciscans. Come to the expo to discover about city, state, and federal down payment assistance programs, as well as special loans for veterans, emergency first responders, and teachers. Keep in mind that Below Market Rate (BMR) properties have become available again.
Expo Also Offers Info For Current and Distressed Homeonwers
In addition to workshops about buying a home, the expo will offer workshops for current owners. Although the San Francisco real estate market continues to rise at a steady pace, some current owners still face distressed situations. The expo will offer sessions to educate homeowners about many topics including the important California Homeowners Bill of Rights as well as updates from Keep Your Home California.
Although the expo is free, it is a good idea to register in advance due to the limited capacity of some workshops.
To register click on the link here
October 26, 2013
10:30 am to 5:30 pm
At St. Mary’s Cathedral
1111 Gough St., San Francisco 94109
A: It’s impossible to buy a home in San Francisco unless you work at Google or Facebook or
B: That foreclosures and foreclosure prevention does not exist anymore in San Francisco,
might consider attending the HomeownershipSF FREE RESOURCE FAIR FOR CURRENT AND FUTURE HOME BUYERS
For those wishing to purchase a home in San Francisco we have listed a number of items that will be included in the free event
Find out about down-payment assistance programs
Tour available Below Market Rate (BMR) properties
Learn about special products and services for Veterans, persons with disabilities, and Union members
For CURRENT HOMEOWNERS who may be having difficulty dealing with their servicer, making mortgage payments, trying to save their home or finding out of the box solutions may wish to attend as well.
The expo will include:
Negotiate directly with servicers to modify your home loan
Meet with a certified Keep Your Home CA counselor
Find out about grants and low interest loans for needed home repairs
Connect with resources to support your financial well being
Those wishing info before the event can feel free to contact us for assistance and information.