Foreclosure Help – Page 2

New Bill Could Relieve California Homeowners of Paying Forgiven Debt Tax

Yesterday the California Senate voted 21-15 to approve legislation that would relieve the tax liability of California homeowners from who have had forgiven debt from a foreclosure or short sale. The bill will make changes to the state’s law to make it more consistent with the federal tax law.

The bill is now in front of the governor and if signed it will become immediately effective. It is retroactive to include the 2009 tax year and the exemption on state taxation of forgiven mortgage debt would remain in force through 2012.

For more information about Forgiven Debt Tax download our FAQ
https://www.parsonsrealty.com/parsons_realty/taxes/car_faq.pdf

or for more information on the Mortgage Debt Forgivness Act and Federal Tax Law visit the IRS website.
https://www.irs.gov/individuals/article/0,,id=179414,00.html

How Banks Can Profit When You Lose Your Home

As a veteran of processing over 100 short sales in Redding and Shasta County I can tell you; sometimes things just don’t add up. Many times I’ve seen banks turn down offers and later sell the property after foreclosure for less than our original offer. How can this be? It just doesn’t make sense, or does it?

I think you too may be shocked at what you are about to see…
I’d love to hear your comments on this video!

https://www.thinkbigworksmall.com/mypage/archive/1/32275

F.Y. I you will hear the term “HELOC” in the video. HELOC stands for Home Equity Line Of Credit. In our area, many residents of Redding have used heloc funds to improve their homes or purchase cars ect. One of the reason construction is down in Redding or all of Shasta County is due to funds drying up as heloc loans are almost impossible to obtain throughtout Shasta County and most other parts of California.

Will Fannie Mae Become Your Landlord? The New Deed For Lease Program

Fannie Mae announced Thursday that it is implementing a program under which qualifying homeowners facing foreclosure will be able to remain in their homes as renters if they voluntary transfer the property deed back to the lender.

The GSE’s new Deed for Lease Program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under the program, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at market rate.

“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Fannie Mae’s VP. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Investor properties with tenants are also eligible for the program.

Prospective renters must show that they can afford to pay the new market rental rate and must be able to document that the rental payment is no more than 31 percent of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period.

A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

What’s In a Short Sale Package?

If you are considering a short sale your lender will require a list of documents that will need to be faxed with your offer. This is known as a short sale package.

Here is the typical list of documents required by most lenders.

Hardship letter (explanation of why you need a short sale)
Financial Statement
Last two months bank statements
Last two tax returns
Two most recent pay stubs
Buyer pre approval letter or proof of funds
HUD1 or Net Sheet
Purchase Contract
Listing agreement and authorization letter if listed by a real estate agent

The actual documents that are required vary from lender to lender. It is worth contacting them to find out exactly what they need and where to send it. Keep in mind if you send them an incomplete package it could delay your short sale approval.

Fannie & Freddie To Help Renters Of Foreclosed Homes

Freddie Mac & Fannie Mae are preparing a plan that will allow renters who live in bank repossessed properties to stay in their homes. They expect to have the plan completed before their self imposed moratorium on foreclosures expires on January 31^st.

The plans were revealed in the letter Federal Finance Housing Agency (FHFA) Director James Lockhart sent to Senator Christopher Dodd, chairman of the Committee on Banking, Housing, and Urban Affairs, accompanying the FHFA’s Foreclosure Prevention Report.

In addition to Freddie Mac’s proposed policy, the letter said Fannie Mae will offer monetary support for tenants that do not want to sign a new lease with the Government Sponsored Entity.

The report, which covers both Fannie Mae and Freddie Mac’s combined 30.6 million residential mortgages it secures, was filed last week, but covers last year through the month of October. It said:

– Loans 60+ days delinquent as a percent of all loans increased from 1.46 percent as of March 31 to 1.73 percent as of June 30 to 2.21 percent as of September 30 and to 2.39 percent as of October 31.

– Loans for which foreclosure was started as a percent of loans 60+ days delinquent declined from 8.29 for the first quarter, 7.81 percent for the second quarter and 7.12 percent for the third quarter to 6.44 percent for October

– Loan modifications completed increased to 5,639 for October from a monthly average of 4,475 for the third quarter – an increase of 26 percent.

– For modifications completed in October, 57.8 percent were modified with an interest rate reduction, and 43.2 percent were completed with a change to another term.

– The loss mitigation ratio for October was 52.6 percent versus a year-to-date monthly average of 54.4 percent. The ration is calculated at the total mitigation activities (payment plans, HomeSaver Advances, loan modifications, short sales, deeds in lieu, assumptions, and charge-offs) divided by the total of loss mitigation activities plus foreclosures completed and third-party sales.

Under the Economic Stabilization Act of 2008, Federal Property Managers, like the FHFA as GSE conservator, are required to report to Congress about the number and type of loan modifications and the number of foreclosures during the reporting period.

Recourse Loan or Nonrecourse Loan?

Knowing whether or not a loan is recourse or nonrecourse debt is critical when borrowers are facing foreclosure. Depending on the type of debt there could be tax consequences for a foreclosure or a short sale.

The main difference in a recourse loan and a nonrecourse loan is the liability. With a nonrecourse loan the lenders only way of recovering their loan is the security, in this case the property. With a recourse loan the lender is able to go after the borrowers assets if they do not receive enough from the secured asset to pay the loan off in full.

Whether or not a loan is a nonrecourse or recourse depends on the type of loan.

Notes secured by real estate are nonrecourse when the note is:

· The original purchase money loan on an owner occupied one-to-four unit residential property;

· A seller carry back note secured by the real estate sold; or

· A note containing an exculpatory clause, relieving the borrower of liability.

Examples of recourse loans are refinances of existing mortgages, home improvement loans, equity lines of credit, and loans, other than seller financing, securing a debt for purchase of property that is not an owner-occupied one-to-four unit property.

With recourse debt the lender is not limited to taking the property back and the borrower may be personally liable on the debt.

Here is a handout from the California Association of REALTOR’s that explains more about recourse and nonrecourse debt.

https://www.parsonsrealty.com/parsons_realty/taxes/car_faq.pdf