Posted by Calnotary on 5/8/12 10:34am
Msg #420251

Declaration of abandonment of declared homestead

I had a signing a few months ago that the borrowers refused to sign. I did a search here and there is not much to read and I still don't understand it.

Can some one here explain why the lender wants this signed so I can tell the borrowers in my next appt. I see many borrowers that they just sign it without a question but there are some that have so many questions and I don't really have an answer. LO have been called and they don't know the answer either.

Please help. Thank you.

Reply by Linda_H/FL on 5/8/12 10:41am
Msg #420252

It's not up to you to explain to borrowers why their

lender wants a particular document signed - next time it happens, call title/ss/hiring party from the table and let them explain -

I could hazard a guess as to why this is needed but I won't. Your best reference in this is your hiring party.

JMO

Reply by Calnotary on 5/8/12 10:47am
Msg #420253

Re: It's not up to you to explain to borrowers why their

I know that Linda, but sometimes lender is not available and a brief explanation without going in to legal ground or UPL will be great.

Reply by Linda_H/FL on 5/8/12 11:00am
Msg #420254

Let title do it - that's why they get the big bucks n/m

Reply by HisHughness on 5/8/12 11:11am
Msg #420255

I don't know if your question was just ineptly phrased, or if you really were asking what to tell a borrower about a given situation.

Linda is correct: It isn't your job, and in fact you're crossing the line into practicing law, when you attempt to tell a borrower what impact a document will have on the individual borrower's circumstances. You can explain the function of a document.

I don't ever recall having encountered a Declaration of Abandonment of Declared Homestead. If you think you might encounter one again, call the loan officer on the last one, or the title company, and ask for an explanation. My best guess: Once you have formally declared a property your homestead, certain important rights and safeguards attach to your ownership. Obviously, the lender does not want any of the rights that accrued with the earlier declaration of homestead to impair future transactions pertaining to the property.

There probably is someone else on the forum who can give you better insight that I, though.

Reply by Linda Juenger on 5/8/12 11:40am
Msg #420257

This could one of those docs that are in EVERY pkg, whether or not it applies to these particular borrowers. When I encounter a doc like this, I hand it to them, have them read it and if they choose to sign it great, if not, I call title (lender won't know). If I can't reach title, and they refuse to sign it, I put a stickie note on that doc saying "borrower refused to sign, please call them and explain". Done. Move on. Title will take it from there. If its something they "need" to sign, it can be done during the 3 day rtc period.

Reply by OR on 5/8/12 11:57am
Msg #420262

This is what I say. As I understand it Homestead is a historical home. It is a home and all its out buiildings that can not be leaned upon and that the property tax's maybe deferred. It is set up to shelter the spouse.

Here is an explanation from Wikipedia::
"Homestead exemption laws typically have four primary features:

They prevent the forced sale of a home to meet the demands of creditors (however, in most cases homestead exemptions do not apply to forced sales to satisfy mortgages, mechanics liens, or sales to pay property taxes);
They provide the surviving spouse with shelter;
They provide an exemption from property taxes which can be applied to a home.
Allows a tax-exempt homeowner to vote on property tax increases to homeowners over the threshold via bond or millage requests.
For purposes of these statutes, a homestead is the one primary residence of a person, and no other exemption can be claimed on any other property anywhere, even outside the boundaries of the jurisdiction where the exemption is claimed.

In some states, homestead protection is automatic. In many states, however, the homeowner must file a claim for homestead exemption with the state, and will not receive the protections of the law until this has been done. Furthermore, the protection can be lost if the homeowner abandons the protected property by taking up primary residence elsewhere"

If they wont sign it I would X out the form write NO and send it back.

Reply by Linda Juenger on 5/8/12 12:24pm
Msg #420265

<If they wont sign it I would X out the form write NO and send it back. <

I never, ever write on the doc itself. I always use a post it note. That doc may need to be signed at some point. What does everyone else do??

Still not our job to "explain" it to the borrowers. Let them read it and decide for themselves. The rest of the docs in the pkg, I give a brief explanation using the title of the doc.

Reply by NJDiva on 5/8/12 1:08pm
Msg #420270

Actually I had one of these after one of the major floods in

our area last year. A bo actually explained to me that her atty said that because of the damage done to her home from getting flooded out about four times last year, she walked away from the home as it was uninhabitable.

She told me that she was declaring that she was abandoning her homestead. I don't know if that is right, that's just what she said her atty told her.

Reply by Les_CO on 5/8/12 3:15pm
Msg #420292

Re: Actually I had one of these after one of the major floods in

Homestead laws differ from State to State. Best check your State’s law. Homestead laws are more about bankruptcy protection than anything else. JMO

Reply by MikeC/TX on 5/8/12 4:12pm
Msg #420302

I found this...

http://www.1stoplegalforms.com/formls/LFL_0101.asp

I am not a lawyer amd this is not a legal opinion - just my understanding of the situation based on what I've read.

There are references to the appropriate sections of the CA Code of Civil Procedure, but my take on this is that in CA, a declaration of homestead, among other things, protects all or some of the equity in the primary residence from judgments from most creditors.

The declaration of abandonment eliminates those protections, but is usually only done when there is a new primary residence. Why would a lender want the BO to sign that on a re-fi? It looks to me like they're saying "We'll lend you the money, but we want to be able to go after all of your equity if you default."

This is not something I would attempt to describe to a BO, because unless you choose your words very carefully it will come across as legal advice. Let the lender or the TC explain it.

As far as I can tell, there's nothing to stop the BO from abandoning it and then declaring it again at a future date - the declaration of homestead just has to be recorded prior to a judgment being attached to the property. Again, not something I would attempt to describe to the BO...

Reply by HisHughness on 5/8/12 5:02pm
Msg #420306

Re: I found this...

***Why would a lender want the BO to sign that on a re-fi?***

One scenario:

Homestead declaration filed on residential property, which later flips to commercial. Borrower moves out to rented housing (or into an RV, or into a nursing home, bunks with his kids, shacks up with his girlfriend, etc.), takes refi cash-out loan to finance new business in former home. With homstead declaration on books, and owner not owning any other real property, lender wants it clear borrower is no longer asserting any homestead rights in the property.

As an aside, do people actually shack up nowadays? That term used to have such derogatory connotations. "Living together" doesn't seem to carry the same taint.

Reply by Linda_H/FL on 5/8/12 5:17pm
Msg #420311

'Nother perspective

Two people, single, each owns their primary residence, both homesteaded...they marry each other, now have two residences but only one is primary so can only homestead one...one has to be "abandoned"...then it becomes investment property or second home.

Reply by MikeC/TX on 5/8/12 5:33pm
Msg #420314

Re: I found this...

I agree that's a possible scenario, but I also think that Occam's Razor makes mine the more probable... I really have no idea - I'm just going by my understanding of what I read about CA's homestead law, so your guess is as good as mine.

"As an aside, do people actually shack up nowadays? That term used to have such derogatory connotations. "Living together" doesn't seem to carry the same taint."

That's just the result of the political correctness assault on the English language... If you make a phrase as generic as possible, you remove all emotion from it. But that discussion doesn't belong here...