Sonoma County’s Real Estate Foreclosure Epidemic

Right now we are experiencing a melt-down in County real estate values.  This is being fueled mainly by the epidemic of foreclosures that are occurring daily.  The foreclosures are pushing prices to lows that nobody expected.  Hundred of Sonoma County residents purchased property with sub-prime loans and are now subject to foreclosure.  As much as 20% of all recent sales in Sonoma County were a result of foreclosures. As much as 10% of all property today is worth less than the money borrowed against it.

Many of loans being foreclosed on are being called "predatory" because they were made to people that could not afford them. Mortgage brokers have a duty not to loan money to borrowers that have no apparent present ability to pay for the loan. It is a breach of a duty to the borrower to make a loan to a person that has not established an ability to pay. However, on the other hand the broker is entitled to rely on financial statements of the borrower as to stream of income.

In some cases predatory loans can be rescinded. For example, if the lender charged brokerage fees and costs that exceed the legal limit the borrower will have limited rights to rescind the loan. Each case depends on its specific facts and requires a study of the finance documents. If the loan cannot be canceled or rescinded then the borrower must consider other options. In some cases borrowers may be worried whether the bank can collect the debt from properties other than the one mortgaged. These answers require individual consultations.

Real estate finance issues arise both out of state laws such as the Finance Code and the Business and Professions Code as well as federal laws such as the Truth In Lending Act (TILA), Regulation Z, and Real Estate Settlement Procedures Act, (RESPA) to name a few. However, some of the real estate law that attorneys deal with on a daily basis are rules that come from court decisions. The language in the real estate laws are further defined as disputes arise and are handled in the courts. Each dispute raises specific issues that have to be interepreted with respect to how the laws are to be applied. These laws evolve over time because one judge may overrule a former decision.

From Sebastopol, the Law Offices of Graden Tapley represents clients throughout Sonoma County, including Santa Rosa, Cotati, Healdsburg, Petaluma, Rohnert Park, Santa Rosa, and Windsor.