Home Affordable Foreclosure Alternatives (HAFA) Short Sale Update

HAFA Supplemental Directive 12-02, effective June 1, 2012, impacts short sales with loans from non-government-sponsored enterprises in which the homeowner is eligible for the HAFA program.

Key enhancements include:

• Time frame extended: The program has been extended to Dec. 31, 2013. The HAFA short sale or deed in lieu of foreclosure can be initiated up to Dec. 31, 2013; however, the transaction must have a closing date on or before Sept. 30, 2014.
• Eligibility updated: Occupancy requirements for HAFA eligibility have been removed; however, the property can’t be owned or secured by a business entity.
• The second lien maximum has been increased from $6,000 to $8,500. 
• HAFA relocation assistance of $3,000 will be paid only to the primary resident (borrower or occupant) of the property at time the agreement is executed. The resident must vacate upon closing. Vacant properties are not eligible for HAFA relocation assistance.
  • Nonborrowers (tenant, legal dependent, parent or grandparent) can now qualify if occupying the property and must vacate upon closing.

Additional information: 

•  This policy is effective June 1, 2012, for new HAFA-eligible short sales initiated. It also applies to current HAFA short sales prior to closing.
• Tenants will be eligible only for the $3,000. Any money available from additional incentive payout opportunities must be paid to the borrower. The HUD-1 must reflect the breakdown.
• The borrower will be responsible for requesting and managing the tenant relocation assistance, including submitting required proof of occupancy and other documentation.

Additional recommendations:

• Help your financially distressed clients understand the benefits a HAFA short sale, including the relocation incentive. Review the agent HAFA education guide to learn more.
• Provide the Bank of America non-GSE HAFA Eligibility FAQ to interested homeowners.
• Direct homeowners to contact Customer Care at1.866.880.1232 if they have questions.

If you Lost your home to Foreclosure in 2009-2010, you may be owed MONEY.

If your primary residence was involved in a foreclosure process between January 1, 2009 and December 31, 2010, you may qualify for a free Independent Foreclosure Review.

The Independent Foreclosure Review will determine whether individual borrowers suffered financial injury and should receive compensation or other remedy because of errors or other problems during their home foreclosure process.

If you believe you are eligible to participate in the program, you may complete and submit a Request for Review Form. It is important that you complete the form to the best of your ability; all information you provide can be useful.

All Requests for Review Forms must be submitted online or postmarked no later than July 31, 2012.

Request to have your foreclosure reviewed before its too late:

independentforeclosurereview.com/

 Now this is some welcoming news. The Federal Housing Finance Agency announced a new policy designed to speed up the process that banks use to handle short sales for mortgages that are backed by Fannie Mae and Freddie Mac.

The new policy will require banks to respond to a request for a short sale offer within 30 days. Banks also will be required to make a final decision on the short sale offer within 60 days. If the decision is not made within 30 days banks will be required to provide weekly status updates to borrowers regarding the pending short sale offer.

The new policy is set to roll out in stages with the first phase starting in June. With these new standards in place it should "prevent foreclosures, keep homes occupied, and help maintain stable communities,” says Edward DeMarco, the FHFA’s acting director. “These timeline and borrower communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

Source: Federal Housing Finance Agency 

Struggling to make your mortgage payments? Or do you know someone who is? 

Help may be only a click away..

A Short Sale is a complex transaction in itself, but there is always one thing that is constant in a qualified Short Sale transaction.

The house must be valued at less than the homeowner owes on their mortgage debt. In other words, the home must be “underwater”.

In most cases there should be a "Hardship". The simple fact that you owe more than your house is worth may not constitute a hardship. A Short Selling bank will entertain a short sale when and only when there is a hardship that will, now or in the future, affect the borrower’s ability to pay their mortgage.

Below is a list of some acceptable "Hardships":

• Mortgage Rate Adjustments
• Loss of Employment or Reduction in Wages
• Business Failure
• Medical Hardship
• Death in the Family
• Divorce/Separation
• Military Service
• Overwhelming Debt Obligations
• Job Relocation

As always, If you have questions as to the acceptability of a hardship scenario, you should seek advice from an expert that has been trained in the short sale field.

Bank of America Mortgage to Lease program

Bank of America has announced a new pilot program that is suppose to help default home owners stay in their homes. This program has not been launched in Columbia SC yet. Bank of America's innovative idea is designed to help foreclosed property by turning a homeowner into a renter and eventually sell the property to an investor as an appealing profit producing package. This is a highly innovative idea. They offer  home owners a chance to sign a "deed-in-lieu" in foreclosure, and stay in their homes at a reduced rental rate for one year with a possibility of renewing the lease at the rate the bank determines. Giving the bank a tenant to maintain the property and time to hope that the market rebounds and they can get more equity for the property.

To read the full article click below. 

www.cnbc.com/id/46829774/Bank_of_America_Getting_Into_the_Landlord_Business

Mortgage Debt Relief Act of 2007 is set to expire at the end of 2012. If your are struggling you may want to act now.

Tax Tips from irs.gov

Canceled debt is normally taxable to you, but there are exceptions. One of those exceptions is available to homeowners whose mortgage debt is partly or entirely forgiven during tax years 2007 through 2012.

The IRS would like you to know these 10 facts about Mortgage Debt Forgiveness:

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.

2. The limit is $1 million for a married person filing a separate return.

3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.

6. Proceeds of refinanced debt used for other purposes — for example, to pay off credit card debt — do not qualify for the exclusion.

7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.

8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions — such as insolvency — may be applicable. IRS Form 982 provides more details about these provisions.

9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed

10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit www.irs.gov. IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments, is also an excellent resource.

Buying a short sale can be a great opportunity whether you are an investor, first time home buyer or just looking to move up to a bigger home. Knowing something about the Short Sale process may help you take advantage of that opportunity and help to relief some of the potential stress. The key difference in a short sale vs a traditional transaction is:

• Short Sales traditional have a lower sales price
  
• Short Sale transactions traditional take longer to close
  
• Short Sales have Multiple parties involved in the contract approval

The most important thing to remember is that Short Sales require patience;but the pay offs may be big.

Click to watch this short video illustrating a short sale timeline.

youtu.be/NvjG8LsgpHc

Foreclosure in Columbia South Carolina is on the rise. As with many people facing such a tragedy. Knowing what their options are and what decisions would be best; is not only hard but very stressful.

Foreclosure involves a lawsuit in which the bank, a mortgage company, or other lien holder seeks to take ownership of the property to satisfy a debt. The owner loses whatever rights he or she had in the property. Once the owner has missed a couple of payments the bank will send several notices stating that foreclosure is impending; which of course is the mortgage companies way of trying to get the loan paid up to date. An official foreclosure or notice of default will be filed if all attempts have failed to bring the loan current.

Deed-in-lieu is another form of foreclosure but it allows you to bypass all the paperwork. The owner can sign the deed and/or mail keys back to the lender foregoing all the filing.

Both foreclosure and Deed-in-lieu will effect your credit the same.

A short sale is when the proceeds from selling the property fall short of the balance of debts  and the owner cannot afford to repay the full amount, the bank would agree to accept less than the amount owed on the debt.

The advantages to a Short Sale when facing foreclosure

-Your lender may offer financial incentives lenders are known to offer $3,000 for relocation assistance at closing.

-A tremendous burden can be lifted
facing foreclosure alone can be traumatic and stressful. you can successfully short sale your home with the help of a qualified and experience real estate agent. At no cost to you. Having an agent work for you reliefs stress and can speed up the process.

-Once a short sale is approved you credit begins to repair itself.

-The owner maintains rights to the property until closing.

Rozalyn Franklin

This article was recently posted in a national real estate publication.

RISMEDIA, January 27, 2009-The national foreclosure moratorium imposed by Fannie Mae and Freddie Mac, major banks such as Citibank and Bank of America, and a host of state governments has created a "breather" for homeowners in default. By working with loan servicers, some homeowners will be able to modify their loan terms and stay in their homes. But many won't.

Not all borrowers will qualify for modified loans. Lenders are keenly aware of this, as well as the fact that foreclosing on a home is an expensive proposition: It can cost a bank $30,000 to $50,000 to foreclose on a home, plus carrying costs that equate to 1.0% to 1.25% of the value of each home per month. There is little enthusiasm for increasing bank-owned (REO) inventory in markets already saturated with foreclosed homes and falling prices.

As an alternative, lenders have new enthusiasm to ramp up the volume of short sales.

Short sales, as most know, are when the lender allows a distressed property to be sold at a price lower than the homeowner's mortgage indebtedness, with the difference forgiven. This relieves the homeowner of their ownership and debt burden without marring their credit report the way a foreclosure would. It also typically allows the new purchaser to buy into the neighborhood at a substantial discount . much more in line with the property's true, current market value. In other words, short sales facilitate efficient clearing of the market.

Historically, short sales have not been very appealing to lenders. The short sale is a complex process that requires an agreement by all the lien holders to accept the lesser amount owed by the original borrower. The paperwork and number of players involved in short-sale transactions can easily overburden a servicer who is already dealing with hundreds of thousands of loan modifications, REO dispositions, etc.

But now with over four million new loans in default in this cycle and six million more expected in early 2009 due to coming interest-rate resets, lenders such as Citibank, Bank of America and Wells Fargo are fired up for short sales.

As they see it, if just 25% of current loans in default could be sold through short sales it would stave off one million foreclosures (good for homeowners) and replace one million nonperforming borrowers with one million performing borrowers (good for lenders).

The industry's challenge to accomplish this is two-fold: Evaluating their portfolios to determine which homes are well suited for short sales, and processing the high volume of bulk sales.

So lenders are now assessing a distressed borrower's situation early in the loan modification process, calculating the sensibility of modifying the loan versus offering the property in a short sale or letting it likely roll into foreclosure. In cases where short sales are the best route, lenders are proactively assigning loans in bulk to be put through the short-sale process. (This phenomenon is strangely new to homeowners; in the past it was incumbent on them and their agents to initiate the short-sale process, not the other way around).

The second part of the challenge is how to process the actual sales, considering legacy technology solutions weren't built to handle either the volume or the complexity of today's short-sale transactions.

DepotPoint's TrackPoint, with a new short-sale module, is up to the task. TrackPoint is an online workflow platform that operates in a SaaS environment. The short-sale module can scale an outsourcer's or an asset manager's operation quickly to handle massive amounts of short-sale volume, reducing costs and elapsed time to complete transactions.

Already using TrackPoint featuring the new short-sale module is MMREM, Matt Martin Real Estate Management, which has facilitated more than 10,000 short sales as the nation's largest facilitator of short sales.

"Short sales are often complex, time-consuming transactions," said Matt Martin, President and CEO of MMREM. "In today's high-volume environment, managing them can be even more cumbersome than usual. REO TrackPoint featuring the new short-sale module simplifies and streamlines the process. It's the most comprehensive, efficient national online platform we've seen for managing and processing default properties."

MMREM has increased its short salle through-put by more than 300% by using TrackPoint with the short-sale module.

Tom Gordon is Executive Vice President of Business Solutions for DepotPoint, Inc., which brings greater efficiencies and cost savings to mortgage lenders, loan servicers, foreclosure attorneys and REO asset management firms that use the company's Web-based application suite, TrackPoint, to vertically process properties through foreclosure straight into REO management.

By Tom Gordon