New Rules for Fannie Mae
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Trying to minimize foreclosures, new Fannie Mae rules will go into effect as of July 2010 for homeowners who do a “deed in lieu of foreclosure” or short sale allowing them to apply for another Fannie Mae backed loan in two years. Currently, Freddie Mac still requires a four year wait. Previously the wait period was reduced from five years to four and now to two. However a minimum 20% down payment will be required unless there are “extenuating circumstances” such as job loss, according to Fannie Mae wants to help some troubled borrowers get back into home market. |
Foreclosures Down For San Joaquin or Is It Too Soon To Tell?
Foreclosure notices in San Joaquin County dropped dramatically in the first quarter of this year from the same period a year sending mixed messages to industry experts regarding the mortgage meltdown. The drop in foreclosures could be linked to more short-sale approvals or the increase in first time buyers due to the impending expiration of the first time homebuyer credit. What does this mean for the "next wave" of foreclosures? Foreclosures could easily go back up again if the government pushed loan modifications or short sales don’t work out. For S.J., it’s a mixed money bag; Good news: Fewer lose homes | Recordnet.com
Servicers Taking Steps to Prevent Short Sale Fraud
As short sales are significant in foreclosure prevention, fraud concerns abound. Appraisal fraud to flipping, the short-sale process poses several possible areas of fraud where the servicer must take preventative action. Included but not limited to the following:
- Focus on making sure it’s an arm’s-length transaction- Search deeds on a regular basis
- Pull titles six months after closing
- Work with capable and/or short sale certified Realtors
- Sell for market value
Real Estate Prices May Not Boom Again For 15 Years
The return to the bubble home prices could take a long time to bounce back for many U.S. markets, according to Fiserv, Inc. The company believes the areas of biggest price bubbles, in California, Florida, Arizona, and Nevada, may not see real estate prices back at those levels again for another 15 years or more. Boom-Era Prices Won’t Return Until 2025 for Some Markets: Study
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Sent from my BlackBerry - please excuse typos.
First Quarter Foreclosure Jump
California had more than 216,000 foreclosure filings with the most of any state at 23% of the nation’s foreclosures one for every 62 homes this past quarter. First quarter 2010 foreclosure filings rose 7%, to more than 930,000, over last quarter a 16% increase over last year. Just when you thought it was safe: Foreclosures spike
Senate Bill 401 = No More Debt Tax
Senate Bill 401 has been enacted into law. The new California state income tax on debt forgiven in a short sale, foreclosure, or loan modification will be treated much like the federal law up through 2012. The existing federal exemption allows $2 million, and the new California exemption allows for $800,000 and forgiven debt up to $500,000.
For more information go to Mortgage Forgiveness Debt Relief Extended, Mortgage Forgiveness Debt Relief Act and Debt Cancellation, www.leginfo.ca.gov.
DRE Issues Short Sale Alert
The Central Valley Business Times reported yesterday that the California State DRE issued an alert regarding short sales. Read the article here. The DRE cautioned against the following:
• In some instances, the homeowner may be sued by the lender/bank for the money that was “forgiven”
• The amount not paid back, which is a form of “debt forgiveness,” may be taxed by tax agencies for the “forgiven” amount
• If there are other lenders or lien holders (such as a second or third loans), the holders of the second or subordinate liens, may file a deficiency judgment in civil court against the homeowner to get their money back, even though the first lien holder allowed debt forgiveness.
Although all of these scenarios are potential risks, they are not always the case. In order to avoid these risks anyone considering a short sale must use a real estate agent experienced in short sales and be sure to review each lender’s short sale approval conditions with a CPA and attorney prior to close.
Struggling Homeowners Can Take Steps to Save Credit
If you’re a struggling homeowner, remember the safest option is always to keep making your mortgage payment. However, if you can’t pay, try to work with the government’s foreclosure prevention program. If that doesn’t work, consider all of your potential options and the affect each one will have on your credit scores before making a final decision.
Defaulting on a loan should always be the last resort. The worst credit mistake a homeowner can make is to wait until they are in default before planning a loan modification or sale of their home. These processes can take time and each late or missing payment will further harm credit scores. For more detailed information read the Struggling Homeowner’s Guide to Credit Score Consequences and contact your accountant or tax lawyer.
