HARP changes put refinancing in reach of more homeowners – Appeal-Democrat: Real Estate

HARP changes put refinancing in reach of more homeowners

When the federal Home Affordable Refinance Program HARP launched in 2009, millions took advantage, but many other homeowners found they couldn’t qualify to refinance their underwater mortgages. Today, significant enhancements have made the program more accessible for homeowners and a great opportunity to lower payments or build equity faster.If you owe as much or more on your home than its current value, you’re considered “underwater” or “upside-down” on your mortgage. For some homeowners, the situation has led to foreclosure. Others, however, have stayed current on their mortgage payments, and those are the people HARP is intended to help.You may be eligible for HARP if: You are current on your mortgage. Fannie Mae or Freddie Mac backs or owns your mortgage, and they acquired your mortgage on or before May 31, 2009. Use Fannie Mae’s and Freddie Mac’s online tools to find out. The mortgage is for your primary home, a single-family second home or a one- to four-unit investment property.

via HARP changes put refinancing in reach of more homeowners – Appeal-Democrat: Real Estate.

Federal Government Looks to Spread Awareness of Refinancing Options – Press Release – Digital Journal

Federal Government Looks to Spread Awareness of Refinancing Options>PRWEB.COM NewswireChicago, IL PRWEB October 03, 2013The Federal Savings Bank is continuously informing current lien holders of various refinance opportunities. With refinance activity on the decline, the Federal Housing Finance Agency is doing all it can to spread awareness about the Home Affordable Refinance Program.However, theres more to the FHFAs awareness campaign than just spurring on mortgage activity. The government agency has said that too many Americans who are eligible to benefit from the program have not done so due to a lack of knowledge regarding HARP.”Theres a perception among some that youve got to be delinquent in order to have some government-sponsored program that can help you,” FHFA Acting Director Edward J. DeMarco told Bloomberg on September 23rd. “What we want to do is correct that misperception.”

via Federal Government Looks to Spread Awareness of Refinancing Options – Press Release – Digital Journal.

How the Does the Mortgage Debt Relief Act Affect You?

When you escape a debt the IRS normally counts the amount of the debt you were forgiven as income, and taxes you accordingly.  In terms of a taxable event, this could be significant to you financially if you short sale your home.

Example:  Mr. & Mrs. Jones owe $550,000 on their mortgage, but the current market value for the house is $350,000.  Faced with a transfer, they have to sell their home. Their lender allows them to Short Sale their home for the current market value even though it will net less than the balance owed on the mortgage. In agreeing to sale short, the lender also agrees to forgive the debt on the outstanding balance; in this case, $200,000. Enter the IRS, who view the $200,000 as taxable income!

The Mortgage Forgiveness Debt Relief Act addresses this very scenario, and has been in effect for the last since 2007 when the market began its collapse, throwing many homeowners into financial distress by owing more on their mortgage than what their house was actually worth in the changed market. (It has recently been extended to the end of 2013.)

This act allows a home owner a tax exclusion for the forgiven mortgage debt. Without this Act, in the scenario above, the Jones would get a tax bill on the $200,000 as though it were regular, earned income. That means a bill of somewhere around 30%, or $60,000. Quite a deep hole to fall into!

The Mortgage Forgiveness Debt Relief Act is about making it possible to get out from under financial hardship so you can get back on your feet again.

Note:  While this is fantastic news, there are some qualifiers to this tax act.  Be sure to consult a qualified tax preparer before moving ahead.  Also, another thing to consider; the state of California is expected to follow suit with their own forgiveness of debt relief. However, as of this writing, they have not yet extended this tax break on the state level. Plain English: You may get off the hook at the Federal level, but the state is not there….yet.

Principal “Curtailment” for Underwater Home Owners

If you fit this description:

  • Have low to moderate income
  • Owe more than your house is worth
  • Live in your home
  • Are delinquent, or have a hardship that puts you at risk of default
  • Have a mortgage balance of less than $729,750

Read this article….

Principal relief for stressed homeowners

A limited number of underwater homeowners in California will soon be able to get principal reductions of up to $100,000 apiece on Fannie Mae and Freddie Mac loans through the federally funded Keep Your Home California program.

The federal agency that oversees Fannie and Freddie has steadfastly refused to allow permanent principal reduction on loans they own or guarantee on the grounds it would cost taxpayers money. But in mid-September, Fannie and Freddie told servicers they could immediately begin accepting money for principal reductions from programs financed by the U.S. Treasury’s Hardest Hit Fund, including Keep Your Home California.

Fannie’s and Freddie’s willingness to accept money from Hardest Hit Funds does not signal a change of heart on the part of their regulator, the Federal Housing Finance Agency. Lest anyone get the wrong idea, Freddie says it will allow funds to be used for “principal curtailment.”

Read the rest here…

via Principal relief for stressed homeowners – SFGate.

So You Missed the Deadline for Debt Relief Exemption?

When you escape a debt the IRS normally counts the amount of the debt you were forgiven as income, and taxes you accordingly.  In terms of a taxable event, this could be significant to you financially.

Example:  You owe $550,000 on your mortgage, but the current market value is $350,000.  Under an a Short Sale agreement with your lender, you sell your home for the $350,000 and the remaining $200,000 is forgiven. Enter the IRS, who view the $200,000 as taxable income!

The Mortgage Forgiveness Debt Relief Act addresses this very scenario, and has been in effect for the last 5 years for distressed home owners who short sell  their homes between 2007 and 2012. This act allows a home owner a tax exclusion for the forgiven mortgage debt. However, the measure is due to expire at the end of 2012 with a very good chance it will NOT be extended before the end of this year.

We are still 2.5 months from the end of this year–the deadline to close so that you can benefit from the current Mortgage Debt Relief Act.  Getting from listing to close in that time is a challenge  but may be doable depending on your lender.

One advantage you have right now is that the inventory of available homes for sale in Sonoma County is drastically low.  Buyers are competing aggressively for homes and that is pushing the prices up.  Depending on your lender, it may be possible still to accomplish a short sale in time so that you don’t have to hope that the bill is extended next spring.

But if you missed it, and there is a chance you may at this stage…have some hope.

It is believed that the law may be retroactively extended in spring of 2013. So, if you talk to your accountant, you may find that by going ahead with your short sale and doing an extension next year, you would be able to claim the benefit after all.  There is still a chance that it won’t be renewed, but if a Short Sale is definitely in your path, then this gives you an added chance to avoid penalty.

By extending your tax return to October 15th, 2013, if the law is extended retroactively in the first half of 2013, you may then be able to exclude the forgiven amount. Remember: consult with a tax professional before deciding.

Awesome New Site for Fannie Mae Mortgage Holders!

Fannie Mae site helps you find your way through…

Confused about what options might be available to you and if you even qualify for them?  Fannie Mae’s Know Your Options site will get you rolling in no time!

First, to be sure your mortgage is owned by Fannie Mae, start with the Loan Look Up on the very top menu line.  Once you’ve confirmed this, you have a literal plethora of assistance in sorting out what options may be open to you.

Their Option Finder makes this all easy!  You answer simple, focused questions and come out the other end with your options!  If there is something you are not sure about, you can contact them for assistance from a real person!  

Included are…

  • How to refinance with little to zero equity
  • How to modify your loan
  • Options to stay in your home
  • Options to leave your home
  • What to do if you are already in foreclosure
  • A Resource list for Mortgage Assistance & Government Programs that may apply

Another great feature are the calculators made available on the site so that you can get an estimate of your monthly payments would be on a modification or refinance.

Check it out now at www.knowyouroptoins.com!

What is Your Stress Style?

Like the difference between an introvert and an extrovert, we all react differently to stress.  Some of us get energized and spring into action, some adopt the head in the sand, hope it goes away position.  Don’t judge yourself, it is just the first impulse.  You can still decide to do something different.

You know that stack of unopened letters from the bank?  One of them may contain a way to get back on track and avoid a foreclosure.  Ever since the government put the banks on notice with the Robo Signing $24 billion judgement, banks have been active in offering alternatives to foreclosure.  They include interest reduction, lowering payments, short sale cash incentives and, in rare instances, principal reductions.

What you don’t know CAN hurt you.

I know it is hard, but there may be hope yet.  Wouldn’t you feel awful if your found out later that you did have a way out?  So, pull your head out of the sand and grab your letter opener and find out what options may be waiting.

Here are some examples of things that have gone out in the mail and unfortunately have been ignored by stressed out homeowners….

  • B of A selected 200,000 delinquent homeowners for a principal reduction of up to $150,000 a piece.  They sent the letters registered mail.
  • Chase is offering cash incentives of anywhere from $2,500 to $45,000 to do a short sale.  They selected 57,000 homeowners and sent the notice out in the mail.
  • In the last 6 months banks have been on the move and coming up with loan modification and short sale programs and they are mostly notifying their customers through the mail.

So go ahead…open them up.

If there is nothing in the mail, call your lender and ask what other solutions they have. New ones may have been added since the last time you spoke to them.  Good luck and call me if I can be of help.

Tip:  Ask a close friend(s) over, hand them a letter opener and make a party of it.  Whoever finds an incentive offer first, gets the door prize!

Where Do You Begin?

Like a lot of difficult things in life, the first step is the hardest.

When you’ve come to the inescapable conclusion that there is just no way to keep up with your mortgage payments and that the longer you put off finding out what your options are, the worst things will be and the fewer avenues you will have open, you’re ready to do something, but what?

As a CDPE (Certified Distressed Property Expert), I know where to start and how to proceed and that is one of the biggest advantages I bring to the table on your behalf.   Everyone’s time frame is different and my approach will be different depending on how much time you have.

 CDPEs enjoy a 80% rate of success in Short Sales.

I’d like to see everyone exploring their options the day after they miss the first payment. Sadly, this hardly ever happens because we go into denial over our circumstances.  It’s a common human reaction, but don’t let it stop you from taking a step forward. Really, there should be no foreclosures hitting the market before a loan modification, and if that did not work, a Short Sale was attempted.

Unfortunately we see foreclosures hit the market every day where the home owner gave up because they just didn’t know there was any other way.

Picture a large flow chart with your house at the beginning.  On this chart there are connecting “routes” to the best outcome for you.  What route is taken depends on the amount of time you have, the number of lenders to negotiate with, and even the condition of the property.

The foremost goal is to save your home.  If that can’t be done, then to save your credit by Short Selling  your home.  So, where do you start?  By getting in touch with me by email or phone.  Let’s talk about what you are facing and what options are open to you.

Yes, I do short sales, but what I am after first is the best solution for YOU. I layout the options you may have after the facts of you particular situation are evaluated: loan modification, re-finance, non-profit services, federal programs,…  A short sale is one solution, but you may find a better one.

Foreclosures last approximately 7 years on  credit ratings.  For most families that is almost half the number of years their children live at home with them.

 

Why Would a Bank Accept a Short Sale?

Why Would a Bank Accept a Short Sale?

The easiest way to demonstrate why a bank will negotiate a short sale is to break down the costs of a foreclosure on a hypothetical property, one a short sale and the other a foreclosure.

The average cost of processing a foreclosure is between $40,000 & $50,000 for the bank before they ever bring the house to the market and pay the additional costs listed here.  That is why banks are moving increasingly towards Short Sales.

Say the property has a current value of $200K and the owner owes the bank $225K. But, the best offer to come in is for $190K.  The bank would be foolish to accept it, won’t they?  Maybe not.  Let’s go through the numbers.

Short Sale:

Market Value $200,000
Loan amount $225,000
Sale Price $190,000
Closing Costs @ 2.25%    -$4,275
Commissions @ 6%  -$11,400
Proceeds from sale $175,325
Loan Amount  $225,000
Less Proceeds -$175,325
Short Sale Lender Loss    $49,675
Loss Percentage      22.07%

Foreclosure on the Same Property:  

Market Value $200,000
Loan Amount $225,000
Sale Price $175,000
Legal Fees    -$7,000
Taxes       -$500
Insurance    -$1,000
6 Months Utilities       -$400
6 Months Maintenance       -$800
6 Months Interest Loss    -$6,650
Association Dues    -$1,200
Staffing Costs (Servicing Dept.)    -$2,000
Closing Costs @ 2.25%    -$4,275
Commissions @ 6%  -$11,400
Proceeds from sale $139,775
Loan Amount  $225,000
Less Proceeds -$139,775
Foreclosure Lender Loss   $85,225
Loss Percentage     37.87%

HARP 2.0: What it is; What it isn’t

HARP 2.0: What it is; What it isn’t

October 26th, 2011 in CDPE by Alex Charfen

When the Obama Administration announced a series of changes to the Home Affordable Refinance Program (HARP) early this week, our phones started ringing with inquiries from the media for our input concerning the impact. And we had even more questions about HARP during our CDPE Advanced Broadcast yesterday afternoon.

The new HARP is by no means a game changer.

Here’s essentially what we’ve had to say about the revamped government mortgage refinancing program:

HARP 2.0, as the media has started to refer to it, has some merit, but it’s scope is very limited and it will have little or no impact on foreclosures or the estimated 6.4 million homeowners nationwide who are behind on their mortgage payments. The new HARP just expands the net of those who were eligible for help under the original version.

HARP was created in April of 2009 to help borrowers whose loans were backed by Fannie Mae or Freddie Mac, but did not have enough equity or negative equity to refinance. Under the original version of HARP, borrowers who were current on their payments and owed up to 125 percent of the current value of their homes could refinance their mortgage.

The original HARP fell short of expectations. Over the past two and a half years, only 838,000 homeowners have benefited from the program. The new HARP has broadened the base with looser eligibility requirements.

Borrowers with FHA, Fannie Mae or Freddie Mac mortgages that were sold to Fannie or Freddie before May 31, 2009,  will be able to refinance, no matter how far underwater they are. Banks will only have to verify that borrowers have made their last six payments, that they’ve haven’t missed more than one payment over the past year, and that they have a job or another source of regular income.

Other key changes:

  • Appraisals are no longer required if there is a reliable automated valuation model (AVM)–a significant hurdle in the previous plan.
  • Risk-based fees have been eliminated for borrowers who refinance to 15-year mortgages.
  • Existing mortgage insurance coverage can be transferred much easier than under the original HARP.

While the new HARP won’t help homeowners who are behind on their payments and at risk for foreclosure, it is a welcome relief for homeowners who have been caught in the Catch-22 of not being able to refinance because they owe more on their mortgage than their home is worth, and at the same time, don’t qualify for a short sale or a loan mod because they are current on their payments and still have income and assets sufficient to cover their costs.

More money into the pockets of this segment will mean more dollars back into the economy, potentially heading off strategic defaults and keeping and stemming the tide of homes entering the foreclosure pipeline.

via HARP 2.0: What it is; What it isn’t | CDPE Blog.