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.

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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.

Why 2012 is the Best Time to Do a Short Sale

2012 may just be the perfect storm:  Sonoma County’s available inventory of homes for sale is the lowest in years. Banks and Government programs are getting more and more favorable for the Distressed Homeowner who needs to sell.  Banks have too many foreclosures on their books.   Short Sales are getting, well, shorter because of improved operating standards by the banks and programs by the government.   And the Number One Reason:  The Forgiveness of Debt Tax Relief Act expires at the end of this year.  Taking advantage of that may save you thousands in taxes you would otherwise have to pay.

Sound interesting?  Pick up the phone and call me!

Sheila Lawrence

707.829.7493

HAMP Update: Investment Property Eligible & Other Good News

Hamp Update: Investment Property Eligible & Other Good News

HAMP (Home Affordable Mortgage Program) has made some very exciting changes lately.

  • Incentives to Lenders to do write-downs (reduce the principal on a loan) have been increased up to 3 times the previous amount.  That mean lenders can receive anywhere from 18 to 63 cents on the dollar for each dollar reduced on the mortgage.
  • The program is now open to Fannie Mae & Freddie Mac.
  • It’s been expanded to include investment property as long as it is tenant occupied.

These changes are all focused on making mortgages more affordable and spreading out the loss and getting inflated debt off the backs of Homeowners.

12 Ways to Avoid Foreclosure

12 Ways to Avoid Foreclosure

  1. REINSTATEMENT: Bring the loan current
  2. FOREBEARANCE: Temporary repayment plan
  3. REFINANCE: New loan with reduction in monthly payments
  4. LOAN MODIFICATION: Modify original loan terms or reduce principal                 (Visit: www.hmpadmin.com and contact your bank.)
  5. SHORT REFI: (New) Qualify for this process by showing a hardship as well as the ability to pay the new mortgage
  6. SELL THE PROPERTY: Use equity to pay off or pay difference
  7. RENT THE PROPERTY: Must make loan current
  8. SERVICE MEMBERS CIVIL RELIEF (SCRA): Protection for military personnel in foreclosure in specific situations
  9. HAP: Department of Defense for eligible service members and federal civilians
  10. SHORT SALE: Negotiate with bank to accept a sale less than the loan amount due
  11. DEED IN LIEU OF FORECLOSURE: “Friendly Foreclosure”
  12. BANKRUPTCY: Will stall foreclosure, but not prevent it