The Short Sale

One of the many questions I get is as follows: What if the lender says no to any kind of loan modification?Well, if you have exhausted all other options, Then you should really consider a short sale. Though most of might know what a short sale is, this blog is for the people that need to have these things broken down simply. A short sale is where the lender agrees to allow the sale of the property to be less than what is owed on it. You still have to be able to prove hardship for them to allow such a sale, but it is better than a foreclosure. Alright, admittedly, I don't know as much about a short sale as I do about loan modifications. what I do know is that a short sale should be your last resort. If by chance you are declined or you are reaching a breaking point, this is a better option than just walking away. Yes, you will take a hit on your credit, and no it will not be as bad as the foreclosure. What your main concern is, or should be, is the deficiency. If you already have an agent to list your home, you will need to make sure that you stay on top of them about what is going to happen with that deficiency. If you owe $250,000 on the house but it sells for $150,000, you may still have to pay that $100,000 that makes up the difference. There is paperwork and negotiating that needs to be done so that you may walk out of this with as little owed (if any) as possible.

Short sales are on the rise. In fact, according to www.realtytrac.com, short sales in the first quarter are the highest that tey have been since 2009. What this tells you is that while you may not get approved for a loan modification, that doesn't mean that you have to walk away. With the new guidelines that have been set recently, lenders and homeowners alike are having to take an action, so there is less of a chance for the foreclosure to take the house out from under you. These guidelines are in place for that reason. Again I don't know as much about this process but here is what I do know:

1. The lender MUST review and respond to any requests for short sale within 30 days form the time that they receive it, and send out the borrower response package.
2. If it is still under review after that 30 days, that have to keep you updated every week.
3. They only have 60 total days to make a decision and send you out the response package.

With that, when you receive that borrower response package, you need to hurry because you only have about 30 days yourself to fill it out and return it. So make sure that your agent or whoever you have helping is on top of that. We homeowners have to do our part as well. If we don't, we look at the lender as being unfair and we want to push the blame on them.

In any short sale situation you will receive a 1099 from your lender. If you work on a 1099, you know that you usually set aside 30% of your gross for taxes. What you don't want is to have to pay anywhere up to 30% of that $100,000 that we were speaking of before. You need to make sure that your agent or whoever is helping you is filing for a 1099-C, which is a cancellation of debt. This way, you don't owe the IRS another $30,000.

If you have an FHA loan you may even get relocation assistance. Ask your Realtor about this.

All of these things are the small intricacies that are going to help you get a positive response from your situation. Take control of it the best you can. Let me know if you have any questions or concerns.

Have fun kids!

HAMP Program: Let me get this straight...

I have noticed here lately that when I am speaking to potential clients for loan modifications, that they have been having difficulties with their eligibility for the HAMP Program. In these particular situations, I don’t know if the client is misunderstanding or in their lender is just being facetious. They are being told that do not qualify to receive a mortgage rate reduction because they are paying more than 31% of their monthly income towards their mortgage. Or that they don't qualify because they are behind If your lender is telling you this, you need to straighten them out.

 According to http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx, you are eligible for the HAMP Program if you are paying more that 31%. This being from the actual site, I tend to believe that a little more than someone representing the lender that just happened to get a job in customer service.

There are several different facets that Making Homes Affordable has in place. There is not only the reduced interest, but there is Principal Reduction Alternative.

 

 Your mortgage cannot  be owned or guaranteed by Fannie Mae or Freddie Mac.You must owe more than your home is worth.You  have to occupy the house as your primary residence. If you obtained your mortgage on or before January 1, 2009, and your mortgage payment is more than 31 % of your gross monthly income. You must owe up to $729,750 on your 1st mortgage, and have a financial hardship that has lead you to be either delinquent or in danger of falling behind.You have to have sufficient, documented income to support the modified payment, you must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.--- http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/pra.aspx



There is also Home Affordable Unemployment Program. You may be eligible if:

You are unemployed and eligible for unemployment benefits.You have to occupy the house as your primary residence.You have not previously received a HAMP  modification, and you obtained your mortgage on or before January 1, 2009.You have to owe up to $729,750 on your home.-- http://www.makinghomeaffordable.gov/programs/unemployed-

Keep in mind however that you may be required to make a partial payment not exceeding 31%.  I don’t know if those partial payments will actually be going to the mortgage or not, you may want to check your statements to see if it reflects that. Find out if it is going into an escrow account; just make sure that you know where your money is going. This program is NOT available if your mortgage is held by Fannie Mae or Freddie Mac, so if yours Is, you will need to contact them about the forbearance programs they have available.

Furthermore, if you are behind, that means that you have hit a hardship and were unable or are unable to afford your payments. That is the reason why you need a modification. No need to go too deep on that one. You should just talk to them like they are idiots if they tell you that you don't qualify because you are behind.

At the end of the day you just have to know what and who you are dealing with. You CAN do this by yourself but your lender may be telling you that it is unable to be done. If you are having problems, you may need to get in contact with someone that has the know how to deal with the lender. If you fall under these criteria listed above, you shouldn’t have a problem obtain a HAMP modification. Remember, modifications are about numbers and ratios. If you can prove hardship you are eligible.

Let me know if you have any questions or concerns or if you just want to talk about it. 

Big 5 to Modify Mortgage Rates in Settlement

Hey guys. So I have heard the rumors, honestly I dismissed them as being untrue, but I heard from a client today about the Dept. of Justice and the Secretary of State in 49 states sending out letters about refinancing your loan, loan modifications, and foreclosure. This apparently is a pretty big thing, and I honestly think that a little auditing is needed in situations like these. When you have banks that are being sued, or are in court for fraudulent underwriting, answers need to be had. So I did a little reading up on the issue and there is a joint state-federal settlement. This settlement is involving the big 5: Ally/GMAC, Bank of America, Citi Mortgage, Chase, and Wells Fargo. This is the absolute largest consumer protection settlement that the United States has ever seen. In laymen terms, all of the robo signing, the underwriting fraud, and not really running a checks and balances, has now back fired. We are looking at a $25 billion settlement here.  You can get more info at http://www.justice.gov/opa/pr/2012/February/12-ag-186.html.

Loan Modifications:

If you are behind on either the first or second lien, you may be receiving a letter from The Department of Justice. It is going to explain to you that you are going to be able to get a loan modification. Here is what it is not going to explain. The time line that you are used to seeing still remains. You are still going to pull your hair out and send in the same paperwork over and over again, every 30 days. That is not going to change. If you feel like it will, I want to burst your bubble. For these banks to refinance, modify, or even write checks for foreclosure reimbursement a total of $25 billion. How fast would you come off of that kind of money? The fact does remain, that it WILL be easier. Your chances do increase. It still is going to take some time, and it still is going to go against your credit. So make sure that you are taking names, taking notes, and speaking with the proper departments.

Refinance:

If you are current on your payments, but your mortgage exceeds your home’s value, you will be able to refinance through this settlement. Refinancing is always going to be a hassle.  The credit checks and closing costs are always going to be the same.  These banks are being forced to provide $3 billion in refinancing relief across the nation. So if your mortgage is upside down, I would suggest you try to take care of this as soon as possible. There is probably a long line.

Foreclosure:

If you lost your home after defaulting under any of these faulty loans, or if you were a victim of robo signing, you can receive a check immediately. There will be about 750,000 borrowers  receiving these checks and it will add up to about $1.5 billion nationwide.

According to http://www.nationalmortgagesettlement.com, the banks “are still accountable for other claims not covered by this settlement”.  You can go to their website to get more information on that.  This settlement deals with the basic immoral principles that have hurt people the most. Foreclosure, servicing, and the underwriting will all be covered. Anything else you will need to seek an attorney.

Well that’s it guys. I hope you enjoy. I just read a few things about it and wanted to relay it to you on terms that we understand. So let me know if you have any questions or if I can help in any way.