Please Click on a Section below to read our Policies & General Information on our services. THE PROCESS OF FORECLOSURE - WHAT WE DO FOR YOU THE
PROCESS OF FORECLOSURE - WHAT WE DON'T OR CAN'T DO FOR YOU HELPFUL HINTS, COMMENT AND ANSWERS TO FREQUENTLY ASKED QUESTIONS
I. THE PROCESS OF FORECLOSURE - WHAT WE DO FOR
YOU
Transmit the "Request to Prepare Notice of Default and Declaration of Default" and the "Substitution of Trustee" to our office by regular or certified mail, along with a copy of the deed of trust, your original promissory note and your initial deposit, in the amount set forth on the fee schedule. You may want to insure this, as the original promissory note is valuable.(We suggest that you insure the note for at least 1 1/2 percent of its value, as that would be the cost of obtaining a lost instrument bond should it become lost.)
Once we have received the "Request to Prepare Notice of Default and Declaration of Default", the original promissory note, the Substitution of Trustee, and your deposit, we will prepare a Notice of Default. We will send you a copy of the Notice of Default. (If, after receiving the Notice of Default, you notice anything which merits our attention please don't hesitate to call us.)
This Declaration of Default, together with the Substitution of Trustee are then sent to our title company for processing. It is reviewed by the title company. The title company then records the Substitution of Trustee, and the Declaration of Default. The title company also issues a Trustee Sale Guarantee, which provides a form of title insurance for the foreclosure process, and also provides the trustee with valuable information concerning other liens against the property, and information concerning other persons or entities who may need to receive notice of your foreclosure proceeding. We will provide you with a copy of the Trustee's Sale Guarantee.
It generally takes the title company one to two weeks to process the paperwork and record the necessary documents with the county recorder. It generally takes another two weeks or so before they issue the Trustee's Sale Guarantee. When the documents are returned from the title company, FTD sends notice by certified mail to the debtor (trustor) advising of the filing of the Notice of Default. It is therefore very important that you provide us with all of the addresses which you may have for the debtors, so that they may receive appropriate notice of the default. Your failure to do so will invalidate the Notice of Default.
The debtor has 90 days within which to cure the default. It is very important that you do not accept any payments upon the obligation during this period of time. If you are contacted by the debtor, please refer them to FTD in order to make certain that they are paying the correct amount, including the arrearages due to you, and the fees and costs incurred through FTD. If you collect any money, you will invalidate the notice of default, and if you do not collect enough money to satisfy both the sums due to you, and the sums due to FTD, you will make yourself responsible for any unpaid charges of FTD.
If the default is not cured within 90 days, FTD will notify the title company. The title company does a "date down" of the Trustee's Sale Guarantee to discover any new liens, or matters of record which must be addressed within the foreclosure proceeding. FTD then prepares a "Notice of Trustee's Sale", and sends this notice by certified mail to the debtors and others required to receive notice. We also physically post the notice upon the real property, and we make arrangements to publish the Notice of Trustee's Sale in a newspaper of General Circulation in the county in which the real property is located. (This notice must be published once per week for four weeks.) FTD also makes arrangements with an auctioneer to be present at the time and place set for the trustee's sale.
If the default is cured before the trustee's sale, FTD prepares a notice of rescission and records it with the county recorder, and serves it upon the debtor.
If the default is not cured on or before the date and time set for the trustee sale, the auctioneer will "cry the sale" at the time and place set for the sale. It is therefore very important that FTD receive prior instructions from you as to the amount of money you wish to "bid" at the sale. You may bid all or only part of the total amount owed to you. You should consult an attorney and your tax advisor as to the amount to bid. UNLESS FTD RECEIVES INSTRUCTIONS TO THE CONTRARY, OUR AUCTIONEER WILL BID THE FULL AMOUNT OF THE OBLIGATIONS DUE AND OWING.
If there are no bids at the sale other than yours, you will become the owner of the property, subject to whatever liens and encumbrances that are senior (prior) to yours. If there are bidders, and they bid more than the amount owed to you, they will receive title to the property. You will receive payment for the sums owed to you from them, and to the extent that there are any surplus funds, those funds are distributed to pay liens which are junior to your deed of trust.
At the conclusion of the trustee's sale, FTD prepares a Trustee's Deed, conveying the property either to you, if you were the successful bidder, or to another, if they have bid enough money to pay your obligations in full. This deed is then sent in for recording by the title company.
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II. THE FORECLOSURE PROCESS - WHAT WE DON'T OR CAN'T DO FOR YOU.
If this is your first experience with a foreclosure, following are acts which you should be aware Federated Trust Deed Services cannot perform, and you must assume responsibility to ensure information is available when requested.
Lenders will not, as a matter of policy, release information to a non-principal over the telephone. However, most will respond to a written inquiry. You should contact all lenders whose loans are senior to yours to ascertain whether or not these senior loans are current.
If these senior liens are not current, it may become necessary during the course of your foreclosure to advance sums to these lenders to protect your own lien. This is crucial if a prior lender has already filed a notice of default. If you have received a copy of a notice of default from a prior (senior) lender, please provide us with a copy of that notice, and advise us of the date and amount of any advance made to cure such a default so that we may properly request reimbursement for any advances you have made.
If you have no proof of fire insurance coverage (NAMING YOU AS LENDER AND AS AN ADDITIONAL INSURED), you should inquire of the borrower (beneficiary) and/or the senior (prior) lender, and determine the name of the fire insurance agent and their phone number. You should then call the insurance agent, and request documentation confirming that you are named as an additional insured. If you discover that you are not insured, you should contact your insurance agent to obtain such insurance. Most deeds of trust provide that you are entitled to recover the cost of such insurance. If you have advanced funds to obtain insurance, please advise us of the amount you spent to purchase that insurance on the "Request to Prepare Notice of Default" and we will add that amount to the notice of default.
If you are unaware of the status of property taxes, the current status of taxes may be obtained by calling the Tax Collector in the county which the property is located. If you have advanced funds to pay property taxes, please be sure to advise us of the amount on the "Request to Prepare Notice of Default" and we will add those sums to the amount due on the notice of default. If you have not advanced funds to pay past due taxes, but wish to claim the failure to pay taxes as an item of default, please check the appropriate box on the "Request to Prepare Notice of Default" and enter the amount of past due taxes. We will then add that as an additional item of default within the Notice of Default, and will require evidence of payment of the taxes in order to cure the default.
D. REQUEST FOR DEMAND FOR PAYMENT IN FULL
If the property is in the process of being sold, or is sold during the foreclosure process, Federated Trust Deed Services will not assume responsibility for submitting a demand for payment in full of your lien WITHOUT YOUR WRITTEN CONFIRMATION AND DIRECTIONS TO DO SO ON YOUR BEHALF. If the escrow company indicates imminent date for close of escrow, you should submit your demand directly to the escrow company and Federated Trust Deed Services will forward its statement for fees and costs.
You must be available to furnish up-to-date figures at all times during the course of foreclosure proceedings: * for reinstatement or payoff * at end of pre-publication (3 calendar months following recordation of Notice of Default). * day prior to auction
FEDERATED TRUST DEED SERVICES WILL NOT ASSUME LIABILITY FOR COLLECTION OF THE PROPER REINSTATEMENT OR PAYOFF AMOUNTS, OR BID AMOUNTS WITHOUT YOUR CONFIRMATION. IF YOU ARE UNAVAILABLE TO CONFIRM THESE FIGURES, WE CANNOT ACCEPT REINSTATEMENT, PAYOFF, NOR BID AN AMOUNT AT THE SALE.
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III. HELPFUL HINTS, COMMENTS, AND ANSWERS TO FREQUENTLY ASKED QUESTIONS.
A. COMPUTING THE INTEREST ON YOUR NOTE.
To aid you in computing interest, the following formula may be helpful: Interest is computed by multiplying principal by the interest rate and dividing by month and day, i.e.: Principal is $12,000.00. Interest is 13% per annum. $12,000.00 x .13 = $ 1,560.00 per year. $ 1,560.00 divided by 12 = $130.00 per month. $130.00 divided by 30 = $ 4.34 per day.
B. COMPUTING INTEREST ON ALL-INCLUSIVE NOTES AND DEEDS OF
TRUST (sometimes called "wrap-around" deeds of trust):
Foreclosure fees are computed ont he principal balance due on the all-inclusive note, less the amount(s) owed on the underlying note(s) and deed(s) of trust (your equity), i.e.: Amount due on all-inclusive note $ 156,000.00 Less amt. due on first deed of trust - 70,000.00 Less amt. due on second deed of trust - 20,000.00 EQUITY on which fees are based $ 60,000.00 It is necessary that you furnish the EXACT amounts due on any underlying notes, and the date(s) to which interest is paid.
Late charges are only legal if they are provided for by the promissory note which is secured by the deed of trust, and do not exceed the limitations established by law. Please check your promissory note to determine the amount of late charges which you are entitled to receive.
D. HOMEOWNERS ASSOCIATIONS ASSESSMENT FEES
HOMEOWNERS ASSOCIATIONS assessment dues are not an item which can be recovered by the foreclosure process if the Notice of Delinquent Assessment was not recorded prior to your Notice of Default. It is advised that you contact your attorney before advancing funds to cure such delinquency. Please be aware that many Homeowners Associations will try to make you believe that you must pay for all past due homeowners or condominium association fees, even if their notice of Delinquent Assesment was not filed prior to your Notice of Default. This is not generally correct.
Although Federated Trust Deed collects a deposit from you prior to instituting non-judicial foreclosure proceedings, please remember that the debtor (the trustor under the deed of trust) is ultimately responsible for paying these fees and costs. As the beneficiary, you are normally only responsible for payment of these fees and costs if the debtor does not cure the default, and you take the property back. However, it is very important that once you commence the foreclosure process, that all payments, or arrangements to pay, should be made through our offices. If you should attempt to collect money from the debtor, after the foreclosure process has commenced, and if you do not collect enough to pay our fees and costs, then you will be directly responsible to FTD for payment of those fees and costs.
Federated Trust Deed Services collects a deposit based upon estimated trustees fees and costs. These costs include photocopying, certified mail, postage, telephone, fax, recording fees, and the cost of a trustee's sale guarantee from a title insurance company. Our fees are regulated by the State of California. We have attempted to estimate these fees realistically, however every foreclosure is different. Some deeds of trust are lengthy and hence require larger amounts for recording fees (the recorders office charges by the page to record documents.) Some deeds of trust have multiple trustors, and/or multiple requests for notice of default, which requires us to send out more certified letters. Some property descriptions are larger than others, and some newspapers charge more for publication expenses than others. Therefore, although we attempt to collect an adequate deposit, (and do so in over 95% of our matters) there are occasions when we must ask for an additional sum of money. If we request an additional sum from you please don't hesitate to ask us for an explanation.
If you have paid money to an attorney in an attempt to get the trustor to cure the default, you will generally not be able to recover those fees and costs through a nonjudicial foreclosure proceeding such as this. Although attorneys fees and costs that you have incurred are recoverable, they must be added to the balance of the principal due, and collected at the time of the final payment upon the note. Therefore, we cannot recover attorneys fees and costs you may have previously incurred in an effort to collect the sums due to you, unless we are recovering upon the final payment, or final balance due.
The owner of Federated Trust Deed Services, is an attorney at law. However, in processing a nonjudicial foreclosure, Federated Deed Services is not performing legal services, and the fees charged are trustees fees only.
If you need the assistance of an attorney, we can do so at very competitive rates. If we provide legal services, it will be necessary to enter into a separate retainer agreement.
In order to commence a non-judicial foreclosure proceeding, we must be in possession of the original promissory note. If you have lost your original promissory note, you may proceed in one of two ways:
a. You may procure a "lost instrument bond". Typically the premium charges for such a bond are one to two percent of the face value of the note, or
b. You may qualify for our "lost instrument indemnity program". In this program, you fill in a credit application, if it is acceptable, FTD will cause an indemnity agreement to be prepared for you. In signing this agreement, you agree to indemnify (pay) FTD if FTD suffers any loss, damage or claim resulting from the lost promissory note. The fee charged for the preparation of the indemnity agreement, and for undertaking the risks associated with lost promissory notes are not a part of the trustees fees.
Whether you pay for a lost instrument bond, or pay for the "lost instrument indemnity program", you may not charge or collect reimbursement of that expense from the trustor. You must bear any expense associated with the loss of the original promissory note.
H. WHAT HAPPENS IF THE DEBTOR FILES BANKRUPTCY
If the debtor (or any one of several debtors) files for bankruptcy, the foreclosure process must immediately cease until a bankruptcy court order is obtained allowing us to proceed. This order is generally referred to as a "relief from stay" order. You will need to retain the services of an attorney to acquire this order. We strongly suggest that you allow us to refer you to counsel familiar with this process, as it is a constantly changing and highly specialized area of the law. In some cases the foreclosure process must be started all over once you have obtained an order for relief from stay. In other cases you may proceed with foreclosure within 10 days after obtaining the order for relief from stay.
I. WHY CAN'T I PROCEED WITHOUT THE EXPENSE OF A TRUSTEE'S
SALE GUARANTEE?
The single largest expense for costs, is usually the Trustee's Sale Guarantee. If you do not have this insurance, and a problem later develops with title to the property as a result of the foreclosure, you will not be insured. Furthermore, if you do not have a title insurance policy on the foreclosure proceedings, many title companies will make the foreclosure an "exception" to all future title insurance policies on the property, which will often cause it to be more difficult to market or sell the property.
J. ARE THERE OTHER COMPANIES THAT CHARGE LESS?
No. We guarantee that we will meet any fees charged by a competitor for like services. You should be aware that trustee's fees are regulated by statute, and the fees provided are not overly generous. For example, on a $50,000 deed of trust, the statutory fee (as of 8/10), if default is cured within 90 days, is only $680. While some companies may charge a lower deposit, we are not aware of any companies charging lower fees. Those companies that charge a lower deposit will usually pick up the difference at some later point in the foreclosure process. Some companies charge lower rates based upon the volume or total value of business.
In any event, we guarantee the lowest price available for trustee services. If you find a company charging a lower price, before you hire us, we will match that price. Unfortunately, the law prohibits a trustee from giving a "kickback", and we cannot therefore rebate any fees after we have been substituted in as trustee.
K. WHAT IF THE DEBTOR (TRUSTOR) OFFERS ME A DEED IN LIEU OF
FORECLOSURE
It sounds easy enough. Instead of foreclosing, you simply take a deed back from the debtor, and the property is yours, without the time and inconvenience of a foreclosure proceeding. Unfortunately, nothing could be further from the truth.
When the debtor gives you a deed, you take your interest through him. That is to say, that you acquire not only his interest in the property, but you acquire any debts, taxes or judgments that he may have incurred which have become liens upon the property. These liens then become yours.
Only by foreclosing can you protect yourself, and acquire the property free of most debts, liens, or judgments.
L. I SUSPECT THERE MAY BE DAMAGE TO THE PROPERTY.
You should immediately contact the insurance agent representing the insurance company naming you as an additional insured upon the property. It will be important for you to convince the agent when and how the damage was done. Ordinarily you will have difficulty collecting from the insurance company if you cannot prove the condition of the property at the time the policy was issued, or if you cannot prove that the damage was not the result of an accumulation of damages, each of which was below the deductible amount of the policy. We recommend that you consult with competent insurance coverage counsel prior to submitting your claim.
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