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Foreclosure rates surge, biggest jump in 5 years

Fri, 16 Apr 2010 10:54:26 GMT

Foreclosure rates surge, biggest jump in 5 years

(Source:http://news.yahoo.com/s/ap/20100415/ap_on_bi_ge/us_foreclosure_rates)

By ALEX VEIGA, AP Real Estate Writer Alex Veiga, Ap Real Estate Writer – Thu Apr 15, 7:32 am ET

LOS ANGELES – A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

"We're right now on pace to see more than 1 million bank repossessions this year," said Rick Sharga, a RealtyTrac senior vice president.

Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.

These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.

"We're finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing," Sharga said. "We expect the pace to accelerate as the year goes on."

In all, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice, RealtyTrac said. The firm based in Irvine, Calif., tracks notices for defaults, scheduled home auctions and home repossessions.

Homeowners continue to fall behind on payments because they've lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.

The Obama administration's $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.

About 231,000 homeowners have completed loan modifications as part of the Obama administration's flagship foreclosure prevention program through March. That's about 21 percent of the 1.2 million borrowers who began the program over the past year.

But another 158,000 homeowners who signed up have dropped out — either because they didn't make payments or failed to return the necessary documents. That's up from about 90,000 just a month earlier.

Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.

The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said.

Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.

Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.

All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said.

Foreclosure filings rose on an annual and quarterly basis in Arizona, however.

One in every 49 homes there received a foreclosure-related notice during the quarter.

Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing.

California accounted for the biggest slice overall of homes facing foreclosure — roughly 23 percent of the nation's total. One in every 62 properties received a foreclosure filing in the first quarter.

(Source:http://news.yahoo.com/s/ap/20100415/ap_on_bi_ge/us_foreclosure_rates)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

NO MORE STATE TAX ON FORGIVEN DEBT

Tue, 13 Apr 2010 15:58:14 GMT

NO MORE STATE TAX ON FORGIVEN DEBT

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

Realegal® is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide.

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Mortgage Delinquencies Rise to Nearly 14 Percent

Mon, 29 Mar 2010 11:19:55 GMT

Mortgage-Delinquencies-Rise-to-Nearly-14-Percent

By Julie Haviv

NEW YORK (Reuters) - Delinquencies on mortgages rose to nearly 14 percent in late 2009, led by a sharp increase in seriously overdue home loans held by the most credit-worthy borrowers, U.S. banking regulators said on Thursday.

The percentage of current and performing mortgages fell to 86.4 percent at the end of the fourth quarter of 2009, down 0.9 percent from the previous three months, marking a decline for the seventh consecutive quarter, the report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision said.

It was also down 3.9 percent from a year earlier.

The decline was attributable to a 21.1 percent jump in mortgages 90 or more days past due, to 4.7 percent of all mortgages in the portfolio at the end of 2009.

The increase in seriously delinquent mortgages was most pronounced among prime borrowers, with an increase of 16.5 percent in seriously delinquent mortgages during the fourth quarter.

The jump in seriously delinquent mortgages is likely to lead to a rise in foreclosure actions, the report said.

So-called prime mortgages are granted to the most credit-worthy borrowers, a sector that initially raised few worries when the housing bubble burst.

The continued decline in performance of prime mortgages is a significant trend, given those mortgages accounted for 68 percent of all home loans within the portfolio.

The report by the U.S. Treasury Department units covers nearly 34 million loans totaling almost $6 trillion in principal balances and provides information on their performance through the end of the fourth quarter of 2009.

The report defines "serious delinquencies" as those loans 60 days or more past due and loans delinquent to bankrupt borrowers.

The OCC and OTS Mortgage Metrics Report provides performance data on first-lien residential mortgages serviced by national banks and federally regulated thrifts. The report covers all types of first-lien mortgages serviced by most of the industry's largest mortgage servicers.

The mortgages in this portfolio comprise more than 64 percent of all mortgages outstanding in the United States.

Without the help of government, state and private loan modification programs, many of the homes backed by these delinquent loans could go into foreclosure. Foreclosures are by far one of the biggest threats to the U.S. housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention.

"While servicers reported that HAMP (Home Affordable Modification Program) and proprietary foreclosure prevention programs will help a significant number of distressed homeowners, they indicated these programs are not expected to help all delinquent borrowers," the report said.

"In this regard, servicers reported that they expect new foreclosure actions to increase in the upcoming quarters as many of the mortgages that are seriously delinquent may eventually result in foreclosure as alternatives that prevent foreclosure are exhausted," the report said.

Home forfeiture actions -- foreclosure sales, short sales, and deed-in-lieu-of-foreclosure actions -- increased by 8.6 percent from the previous quarter to 163,224. That is up 44.5 percent from a year earlier.

The number of newly initiated foreclosures, however, dropped by 15.4 percent from the previous quarter to 312,529 after remaining steady the three prior quarters.

But that is up 19.0 percent from a year earlier. The number was curtailed as more loans are held in a delinquent status for an extended period as borrowers and servicers pursue alternate workout solutions, the report said.

(Source: http://www.bnet.com/2407-13071_23-407891.html?tag=content;col1)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Wall Street used Stockton as housing punch line

Mon, 22 Feb 2010 14:36:17 GMT

Home Front: Wall Street used Stockton as housing punch line

from SacBee -- Home Front by jwasserman@sacbee.com (Jim Wasserman)

On Wall Street it was spring 2005 "when we began to hear the first jokes about the housing market," writes Lawrence McDonald, vice president at Lehman Brothers before its historic September 2008 collapse.

McDonald, author of a riveting new inside history of Lehman, "A Colossal Failure of Common Sense," says, "One name in particular kept popping up on the joke menu: Stockton."

Wall Street traders jokingly called the port city a "subprime nirvana" that helped pioneer the NINJA mortgage: "No income, no job, no assets."

But it was more than Stockton that rang the first alarm bells at the massive New York investment bank. It was California's entire Central Valley: thousands of people with small salaries who had gorged themselves on cheap teaser loans and big two-story new houses.

McDonald worked in Lehman's distressed debt division, where traders made large sums guessing which company and industry was headed for the skids, then shorting their stocks.

"The housing boom was so widespread it was difficult to know where to start," he wrote. "But we kept coming back to California, and that invariably led to the central part of the state, especially along Route 99, the original two-lane highway that starts just south of Bakersfield and runs to Sacramento."

Refugees were pouring in from expensive coastal zones "into rows and rows of brand new houses. They were digging up the asparagus fields to build more."

Through 2005 and 2006, even early 2007, McDonald wrote, doubts were not officially entertained at Lehman meetings, especially "when the mortgage guys swaggered in with their balance-sheet-busting results for the month. Because they had the perfect retort: We're making this much money because we know precisely what we're doing, and because the U.S. housing market always goes up. That's always, not sometimes, not usually."

But then, wrote McDonald, people began spilling out of the houses they couldn't afford in Bakersfield, Modesto, Sacramento.

"This was nothing like a few guys in over their heads; now there was a whole scattered army on the march, getting out of their new homes and going back to the poorest areas of the cities where they could afford to live," he said.

Big subprime lenders collapsed and then, "fear, that most terrible of Wall Street predators, was suddenly lurking in our conference room," he wrote.

Recalling early 2005 when the doubts began, McDonald wrote, "There was not one shred of evidence that the mortgage bonanza would ever go wrong or that house prices would fall. But by golly, if they ever did, Stockton would surely be ground zero for financial crisis."

Five years have passed. Stockton is a wreck. A shocked Sacramento still reels. Merced is on its knees.

McDonald's story of Lehman Brothers tells how a band of skeptics once watched this Central Valley landscape from afar, joked about it, saw this coming.

In hindsight, it's easy to see how Lehman's collapse is much the same as Highway 99's.

And both await likely harsh judgments in American financial history.

(Source: http://www.sacbee.com/2010/02/19/2548438/home-front-wall-street-used-stockton.html#mi_rss=Home%20Front)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Foreclosures' collateral damage widespread

Mon, 22 Feb 2010 14:33:46 GMT

Home Front: Foreclosures' collateral damage widespread

from SacBee -- Home Front by jwasserman@sacbee.com (Jim Wasserman)

If you're among the thousands of Sacramento-area homeowners who played it conservative during the housing boom, who didn't refinance or flip to a bigger house, everyone else's foreclosures reached out and smacked you anyway.

Sales prices are lower. There's less home equity to tap into. Local services have been shredded by falling property tax revenue.

Such repo collateral damage is why so many owners who pay their mortgages on time are so grouchy.

Rob Wassmer hasn't been affected so much. Fourteen years ago he bought an east Sacramento house in the Fab 40s cheaply at the very bottom of the last housing bust. His older neighborhood has largely escaped the brunt of 52,000 foreclosures across the Sacramento region since 2007.

But Wassmer knows the financial whipping people have taken in Lincoln, Elk Grove, North Highlands and Yuba City. Being an academic, he knew there had to be a number for the carnage.

"I knew this kind of research had been done. I wanted to do a study of Sacramento," said Wassmer, chairman of California State University, Sacramento's department of public policy and administration.

Wassmer analyzed $9 billion in sales prices from 36,822 home sales in Sacramento, Yolo, Yuba, Sutter, Placer and El Dorado counties between January 2008 and June 2009. Almost half were homes sold by banks. The other half were sold by regular folks.

He concluded that the foreclosed homes cost this one region of America $2.7 billion in price cuts and lost equity over just 18 months.

The repos sold for $659 million less simply because they were bank-owned and differed from normal sales. They took $1 billion more in price cuts because they were near other repos.

Both reductions then stripped $1 billion from sale prices of nearby homes never in foreclosure danger.

Collectively, these foreclosures cost local governments $27.1 million in property taxes. Reassessments will likely take more.

Said Wassmer, "This is a call for regulation." He suggests a federal law to make lenders and borrowers meet in "structured mediation" at least once before foreclosure.

Few ideas have proved so far to be the solution. See the research directly at: >www.csus.edu/indiv/w/wassmerr/ResForeclosure.pdf

State tax credit confusion

Tax preparation season is already disappointing some 2009 California home buyers who aren't getting a full three-year, $10,000 tax credit for buying a new home.

A Lincoln buyer called Home Front saying his 2009 credit will be about $300 well short of the $3,333 he'd expected to get for each of the next three years.

Spokeswoman Brenda Voet of the California Franchise Tax Board told Home Front that the size of the credit depends on the buyer's specific tax situation. "It's a dollar for dollar credit for taxes owed," she said.

That means if you owe $300 in state taxes you get a credit for the $300 and don't owe it. If you owe $4,000 in state taxes you get a credit for $3,333 and pay $667.

No one gets money from the state above what they owe, Voet said.

(Source: http://www.sacbee.com/2010/02/12/2531697/homefront-foreclosures-collateral.html#mi_rss=Home%20Front)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Expected Jump in Foreclosures in 2010

Mon, 22 Feb 2010 14:30:09 GMT

Home Front: Foreclosures in Sacramento region expected to jump in 2010

from SacBee -- Home Front by jwasserman@sacbee.com (Jim Wasserman)

Sacramento may see more foreclosures in 2010 than this year.

"Clearly, foreclosures will be up next year versus 2009," a top Bank of America staffer said in a call with reporters this week.

"I think 2009 was somewhat of an artificially low number because of (foreclosure) moratoriums," said Jack Schakett, head of credit loss prevention.

That's significant locally. Bank of America and its Countrywide affiliates were the region's top mortgage lender during the most dangerous period of the market 2005 to 2007.

With 15 percent market share, it's easy to guess what this means.

Pick your poison

You might think it's wonderful that banks appear to be at least temporarily canceling more foreclosures as they try to modify more home loans.

But it only shows what lousy options exist to deal with California's housing crisis, says Sean O'Toole, who tracks foreclosure statistics with the Contra Costa County firm ForeclosureRadar.com.

His contention: A modified loan in which your monthly payments fall, but you still owe more than your house is worth, is just the lending industry's newest form of exotic mortgage.

"The loan modification is great for politicians," O'Toole says. "It pushes the problem to another day."

That day is five years out, when payments will rise again.

Home Front called O'Toole about his argument, asking: "So, what should the industry be doing?"

"Pick your poison," he said.

In a state where 30 percent of borrowers owe more than their homes are worth, the options are these:

Banks can reduce principal balance. That is, cut the amount borrowers owe to reflect today's home values; or, give bankruptcy judges the power to do it. Banks understandably dislike this.

Ramp up more short sales, in which lenders accept sales prices below what they're owed. A new buyer moves in, the negative equity is wiped out.

These, indeed, are very much on the rise in the capital area, now about one in five sales.

Foreclose. It moves out people who can't afford the house and moves in someone who can. It's harsh, but it does get the job done.

Anything less than the above, O'Toole said, simply keeps pushing the problem down the road.

"At the end of the day, it has to be a mix," he said. "There are different solutions for different homeowners."

Brown studies pay option loans

Letters from 10 of the nation's leading issuers of pay option loans and how they plan to prevent borrowers from falling into foreclosure have returned to the offices of Attorney General Jerry Brown.

Brown made the request about six weeks ago. But the letters aren't being made public yet, said Evan Westrup, a spokesman for the attorney general's office.

Westrup said only, "We are reviewing and responding to them."

They might be released publicly when and if legal action is taken, the spokesman said.

Lenders heavily seeded California and the capital region with those dangerous loans. They provided borrowers four monthly payment options.

Most picked the least amount, which makes a loan actually grow larger as it's paid off.

Stay tuned for whether more get fixed in 2010 or "explode" with sharply higher payments.

Easy with those credit cards

Be careful with your credit cards this holiday season if you plan to buy a house or refinance next year.

Credit scoring agency FICO says carrying a balance on three to five cards can hurt your score, jeopardizing your ability to gain other credit.

It also warns against getting new cards from stores that offer instant savings.

Opening new lines can hurt your credit score and boost chances of a late payment that makes it worse.

Think about a new house instead.

(Source: http://www.sacbee.com/2009/12/18/2405284/home-front-foreclosures-in-sacramento.html#mi_rss=Home%20Front)

Posted by:

Isom Coleman

(916)504-9178

(Source: http://www.homesforsale-sanjoseca.com/say-goodbye-to-spot-approvals-for-fha-loans-in-condotownhome-communities/)

California Brokers License #01736830

Say Goodbye to Spot Approvals for FHA loans in Condo/Townhome Communities

Fri, 19 Feb 2010 14:46:06 GMT

Say Goodbye to Spot Approvals for FHA loans in Condo/Townhome Communities

February 9th, 2010 · 1 Comment · FHA approved, FHA loan, condo homeowner, condo/townhome, first time buyer, real estate

Why FHA decided to end spot approvals is a complete unknown to me and is definitely not good news for FHA buyers and condo/townhome communities that are not FHA approved. As of February 1, 2010, FHA no longer allows spot approvals in said communities. A spot approval is one in which FHA looks at an individual unit, the HOA documents, and some other factors to determine if the community is stable and the unit is in good condition and may allow a FHA loan to go through when a condo/townhome community is not FHA approved. And, being that the real estate and mortgage industry had not been using FHA loans prior to 2008ish since the early 90’s, most communities are not FHA approved.

From now on, for a FHA buyer to buy in a condo/townhome community, the community itself will have to be FHA approved. Unfortunately, most communities are not FHA approved since FHA was not used for so long and just reignited about 2008ish. So, FHA buyers will not be able to buy in the majority of condo/townhome communities, which is both bad for the buyer who won’t be able to buy in many of the communities they wish to live in and also for the communities and homeowners in that they will be losing a segment of the buyers that are getting loans through FHA.

I thought it would be a good idea to get this blog out and encourage homeowners and HOA communities that read this blog and live in communities that are not FHA approved to go to the HOA and advise them to get FHA approved. It can be a long process, but in order to keep that buyer market segment that are getting FHA loans, which in this market, there are a lot, it would be advisable to get as many buyers as possible to buy in the community you live in and not lose out on an important niche market.

It is actually not that hard to get FHA approved as long as the community is financially stable and in good condition overall. But, it takes getting information together and going through the process and many HOA communities are just too lazy to do it, even though, it’s not all that hard. If a community is in financial hardship, has low owner occupancy, has high HOA delinquencies, and/or overall bad condition, then FHA won’t approve the community, so no need to bother.

However, for the communities that are stable and in good shape, it is truly a good idea to go through the process to get FHA approved to make sure to entice any potential buyer, which will keep the community more stable in the future and keep values up by not eliminating all the FHA buyers that want to live in a community. So, if you live in a condo/townhome community and your community in not FHA approved, I highly encourage you to go to your HOA and request they get FHA approved to protect your investment, keep values in your community as high as possible, and get as many potential buyers as possible.

A lot of the brand new communities in downtown San Jose (for example) were not FHA approved and seemed to squawk at FHA buyers, they didn’t seem to think they needed their business. Well, guess what? Now, if you go to those same communities, who still haven’t sold out, you will see them advertise being FHA approved all over the place. I saw one the other day that has a huge sign near the top of the building that they are FHA approved. Back about a year ago, when I asked that same community if they were going to be FHA approved, the sales rep looked at me like I was on drugs and said they did not feel it necessary to do so. As usual, I was one step ahead and knew all those new communities should get FHA approved. And finally, even those new communities got a clue that it was important to be FHA approved and not miss that niche market and even use it in their advertising.

I usually don’t ask for feedback on my blogs, but I would love to hear from anyone who is going to take the initiative and go to their HOA to demand the HOA go through the FHA approval process, or go to the next HOA meeting to bring up this subject, or even get on a board to take the initiative to get it done. The more communities that are FHA approved, the more choices FHA buyers have to buy in communities they actually want to live in. And, of course, this will make my job easier. Yes, I am not 100% selfless.

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Avoid Bank of America Foreclosure

Fri, 19 Feb 2010 14:31:18 GMT

How to Avoid a Bank of America Foreclosure

Posted in Foreclosures, February 9th, 2010 | No Comments »

If you are about to go through a Bank of America foreclosure you can get caught up and avoid the process. There are many ways to avoid a foreclosure. The most common include working with the bank to save your property. Bank of America will work with you if you truly want to save your home.

One very popular way to avoid a foreclosure from affecting your credit is by selling the property prior to the auction. If you can sell the property yourself then you can pay off the loan in its entirety and avoid a foreclosure from appearing on your credit score. Many homeowners are able to be successful at selling their property prior to the auction. Bank of America may also offer you an option to sell the property as a short sale. This is beneficial because it will allow you to drop the price of the property below the market value. The term short sale tells potential buyers the bank is willing to negotiate even lower bids on the home as well.

Another way to avoid a foreclosure with Bank of America is to talk to the lender about a deed in lieu. A deed in lieu is offered to homeowners that work with the bank and do everything they can prior to the auction to sell the property. If you show the bank you have tried by putting the home up for sale, offering a short sale, and other options that don’t work, the bank will allow a deed in lieu. This allows you to sign the title over to the lender and you can walk away.

The best way to avoid a foreclosure with the Bank of America is to pay the monthly mortgage payments or get caught up on the arrearages in full. If you are in a position to get a personal loan to catch up, this is the best option. If the missed payments on your mortgage are not appearing on your credit report yet, you might qualify for a small loan that will help you pay on your home loan. You also might be able to refinance your home mortgage through the Bank of America.

Bank of America doesn’t want to own your home or take it from you. If you have missed mortgage payments or you foresee you are going to be in a bad financial situation soon then it is important to talk to your lender. They will work with you in many ways to avoid a foreclosure.

(Source: http://www.foreclosurelistings.com/content/foreclosures/how-to-avoid-bank-of-america-foreclosure.htm)

Isom Coleman

(916)504-9178

California Brokers License #01736830

Year of the First-Time Buyer?

Fri, 19 Feb 2010 12:25:02 GMT

Daily Real Estate News | February 19, 2010 | Share

2010: The Year of the First-Time Buyer?
According to the Chinese calendar, 2010 is the Year of the Tiger. But in real estate, 2010 may come to be known as the “Year of the First-Time Home Buyer.”

Mark Zandi, chief economist at Moody's Economy.com, says there will be 1.84 million homes sold to first-time home buyers in 2010, compared with 1.73 million in 2009.

These buyers will invariably make some mistakes that they will come to regret a few years down the road, some experts say, including failing to use a real estate professional to help them manage the transaction.

Real estate professionals have the time and the knowledge to sift through thousands of listings, creating market analyses to judge pricing and other key features, points out Ray Boss Jr., a practitioner with RE/MAX Realty Group in Maryland.

"I would want someone who is going to look out for my interests first and foremost," says Boss. "Someone who knows the contracts, who has experience negotiating, and who can walk me through the entire process smoothly — step by step — and make sure I get the house that's right for me."

Source: U.S. News & World Report, Kimberly Castro (02/18/2010)

(Source: http://www.realtor.org/rmodaily.nsf/pages/News2010021901?OpenDocument)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

116,000 Aided By Foreclosure Prevention

Fri, 19 Feb 2010 12:16:52 GMT

Foreclosure Prevention Has Aided 116,000

The federal foreclosure prevention program has helped about 12 percent of borrowers who applied for help since the plans were announced a year ago, the Treasury Department says.

About 1 million borrowers initiated the application process, and as of January, about 116,000 home owners--12 percent--had their loans modified. But administration officials say another 76,000 applications have been approved and are awaiting signatures.

Another 830,500 home owners are currently in a trial modification review period during which banks make sure payments are feasible for the borrower and ensure the qualifications of the assistance program are met.

For those who qualify, the Home Affordable Modification Program brings monthly loan payments down to 31 percent of home owners' pre-tax income.

Nearly 60,500 people have been denied permanent modifications.

Source: CNNMoney, Tami Luhby (02/17/2010) and USA TODAY, Stephanie Armour (02/17/2010)

(Source: http://www.realtor.org/rmodaily.nsf/pages/News2010021802?OpenDocument)

Isom Coleman

(916)504-9178

California Brokers License #01736830

Nonrefundable Deposit are Deemed Invalid

Tue, 16 Feb 2010 10:43:15 GMT

Nonrefundable Deposit Deemed Invalid

Stella Ling Friday, February 12th, 2010

An agreement for a “nonrefundable” escrow deposit is invalid and unenforceable, according to the recent California case of Kuish v. Smith (2010 WL 373225). This case serves as a good reminder for REALTORS® that inserting a “nonrefundable deposit” provision into a real property purchase contract may be legally ineffective.

The Kuish case involved a $620,000 escrow deposit for the purchase of a $14 million oceanfront home in Laguna Beach. Instead of using a liquidated damages provision, the buyer and sellers merely agreed in the purchase contract that the deposit would be “nonrefundable.” According to the trial court, both parties were “big boys,” meaning that they were “sophisticated business people [who] understood all the ramifications of their actions in freely negotiating to make the [deposit] non-refundable.”

The buyer eventually cancelled the agreement. The sellers refused to return the deposit to the buyer, even though they sold the property to someone else for $1 million more.

The buyer sued to recover the $620,000 deposit, and won on appeal. The court stated that “any provision by which money or property would be forfeited without regard to actual damage suffered would be an unenforceable penalty. To construe the term ‘nonrefundable’ to establish [the sellers'] entitlement to the full deposit without regard to actual damages would essentially create a liquidated damages provision.” Yet, the parties in this case did not separately sign or initial a liquidated damages provision.

Under C.A.R.’s Residential Purchase Agreement, the sellers would have been entitled to the escrow deposit (not to exceed three percent of the purchase price), if the parties initialed the liquidated damages provision, and the buyer had no contingencies or had removed all his contingencies. For more information about liquidated damages, C.A.R. has a legal article entitled Liquidated Damages and Deposit Forfeitures, which is available in English, Chinese, Korean, Spanish, and Vietnamese.

(Source: http://www.sacrealtor.org/blog/2010/02/12/nonrefundable-deposit-deemed-invalid/)

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Posted by:

Isom Coleman

(916)504-9178

If You're in Deep Debt Trouble ...

California Brokers License #01736830

Citigroup's Foreclosure Alternatives Can Still Hurt Your Credit

Fri, 12 Feb 2010 14:11:45 GMT

Citigroup's Foreclosure Alternatives Can Still Hurt Your Credit: Don't Believe the Hype!

By Lynnette Khalfani-Cox on Feb 11th 2010 3:55PM

"Foreclosure Alternatives," the new foreclosure alternative program announced today by Citigroup, may help cash-strapped homeowners in some regards, but it is also erroneously being touted as a way to do "less" damage to person's credit rating. Moreover, in many ways, the new initiative will benefit Citigroup itself far more than it will their borrowers.

Under its foreclosure alternative program, Citigroup would allow a homeowner at risk of foreclosure to stay in his or her home for six months -- as long as the homeowner turns over the deed to the property. During the six-month period, the homeowner must keep the property in good condition. After that, the homeowner must move. Citigroup will provide relocation counseling and pay $1,000 or more in relocation expenses. Citi will also consider covering other costs too, such as taxes, insurance or homeowner association fees incurred while the homeowner remains in the house.

While these are all clearly benefits that would aid financially-troubled homeowners, Citi's new foreclosure alternative program is also being hailed as a way to help individuals and couples minimize the impact of foreclosure on their credit scores.

Credit Misconceptions

An Associated Press story states: "In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi's program, like other 'deed in lieu of foreclosure' efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower's credit score."

Unfortunately, the misconception that a deed in lieu of foreclosure does less damage to your credit scores than a regular foreclosure is simply not true.

According to officials from Fair Isaac, the company that created FICO credit scores, "The common alternatives to foreclosure, such as short sales and deeds-in-lieu of foreclosure are all noted as 'not paid as agreed' accounts and considered the same by your FICO score."

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Try to Negotiate ...

If making even the minimum payments on your loans is getting to be too much for you, it's time to go directly to your creditors and try and negotiate. You can negotiate for a lower minimum, lower interest rate or different payment terms. Trust us: Your creditors want to get paid -- they may not like having to reduce your payments (and they may even put a nasty mark on your credit report), but you stand a good chance of getting at least one or two of your creditors to make a reduction. Just remember to be polite and non-confrontational when you call ... and tell them what you CAN pay every month. If the rep you're talking to isn't a help, ask to speak to her supervisor.

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If You're in Deep Debt Trouble ...

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If Youre in Deep Debt Trouble ...

It's a sure sign of the times: millions of Americans are having a hard time keeping their heads above water. Credit card delinquencies are up 18% in the last three months. People are walking away from their homes because they can't make the mortgage payment. What about you? Is your stomach in knots when the mail arrives or the phone rings? Find out the steps you can take today to begin digging yourself out of this debt trouble. Personal finance experts Ken and Daria Dolan of Dolans.com walk through your options.

Mouse over the photo at left, and use the arrows to click through our gallery and see the Dolans' expert suggestions for dealing with debt trouble.

Make at Least the Minimum Payments

While you are working on debt relief, do everything you can to keep making the minimum payments on your credit cards. Of course, we'd love for you to pay MORE than the minimums each month so you can pay your credit cards down faster. But at least make your minimum payment so you don't get hit with huge penalties and interest. Perhaps most importantly, it will keep your credit debt in the hands of your credit card company rather than having it turned over to a collections agency.

Consider Credit Counseling

If you're getting nowhere with your creditors directly, then it's time to contact a credit counseling service. A good credit counseling service will help you create a personal spending budget. Most also offer debt management services in which they'll contact and negotiate lower payments and interest rates with all of your creditors. (Plus another benefit is you only need to write one check to the service and they'll distribute the payments for you.) There are both private and non-profit organizations in this arena, but beware -- there are some shady characters in this field. We suggest starting with the National Foundation for Credit Counseling (NFCC.org), a non-profit that includes the longstanding and reputable Consumer Credit Counseling Service.

Consolidate Your Debt

If you're constantly robbing Peter to pay Paul every month -- juggling payments on car loans and credit cards -- then debt consolidation might be the best answer for you. With it, you can roll all of your balances into one big loan. It'll reduce your monthly debt, plus it should reduce the amount of time it takes to pay it all off. There's one catch: Your credit needs to be decent in order to get a debt consolidation loan, so if you have a lot of credit dings and dents due to spotty payments, this may not be an option for you.

Settle if You Can

If you're way past due on a credit account, you may be able to make an offer your creditor can't refuse. This is especially true if the account is so delinquent that it's already been turned over to a collection agency. In this case, call your credit card company and offer to settle your debt by making a reduced one-time payment that will clear up the debt for good. This is only in the event you can't pay the account off in full and have no hope of doing so in the near future. Settling your debt can prevent a lawsuit and even the resale of your debt to another creditor. Offer 50 to 70 cents for every dollar you owed -- so offer to pay $500-$700 on a $1,000 debt. Debt settlement will show up on your credit report, so your score may suffer, but you'll do far more damage by having an open delinquent account on your record.

Bankruptcy as a Last Resort

When you've exhausted all other options we discussed and you don't see any other way out, bankruptcy may be your last resort. Bankruptcy certainly isn't something to jump into lightly. It will ruin your credit for several years, and will even affect your ability to rent a home and secure a new job! If, after doing some numbers-crunching, you determine it'll take you longer than FIVE years to pay off everything you own, then you may want to go the bankruptcy route. But before you do...

Bankruptcy Options

If bankruptcy is your only answer, keep in mind you have two options. Chapter 7 allows you to wipe out most, if not all, of your debts while Chapter 13 works out a realistic repayment plan under court protection. As appealing as Chapter 7 might sound, keep in mind that your income might be too high for you to qualify for it. With Chapter 7, not all debts are excused. You don't get to skip out on Uncle Sam, nor will you be free and clear of any outstanding child support or alimony payments. Also, a Chapter 7 bankruptcy will stay on your credit report for 10 years, as opposed to Chapter 13, which will be removed after 7 years.

Communication Is Key

As you try to get out from under your debt, the single most important thing you need to do is keep the lines of communication open with your creditors. Evading phone calls from creditors and collection agencies and tossing out reminder notices will only get you in deeper trouble. Instead, address these phone calls and letters directly and promptly. Be open and tell them your situation -- e.g. you lost your job, you're going through a divorce, etc. -- and make sure they know your main goal is to work on repaying them in some form. Remember: The more upfront you are with your creditors, the less likely you'll be harassed. You'll also stand a greater chance of working out a reasonable repayment plan directly with them.

Know Your Rights!

Speaking of harassing creditors, we want you to be fully aware that you DO have rights when it comes to how your creditors "work" with you. No matter how much hot water you're in, you're protected by the Fair Debt Collection Practices Act. Your creditors can't contact you before 8am or after 9pm. They also can not call you at your place of employment unless you give them permission. Debt collectors are also barred from falsifying who they are, or making false threats (like telling you that you will be arrested or will lose your home if you don't pay up). To find out more about your rights, check out the FTC Web site.

Information on the company's website, myfico.com, goes on to explain: "This is not to say that these may not be better options for you from a financial perspective, just that they will be considered no better or worse for your FICO score."

Citigroup is launching its Foreclosure Alternatives initiative in six states, including Florida, Illinois, Michigan, New Jersey, Ohio and Texas. The company says roughly 1,000 homeowners are expected to participate, though up to 20,000 borrowers may be eligible. Depending on the success of the program, it may be rolled out nationwide.

In my view, Citigroup is to be applauded for at least offering people who are on the verge of foreclosure an easier way to transition out of a home -- along with some financial help and counseling in the process.

But let's be clear. Programs like Foreclosure Alternatives by Citigroup are implemented primarily because they benefit the lender -- not the borrower. As I explained in my book Your First Home, The Smart Way to Get It and Keep It, banks loathe having loan defaults and foreclosures mainly for two reasons. The first is financial; the second is regulatory.

Banks Are In the Lending Business -- Not the Business of Owning Property

Banks obviously sell mortgages and earn a profit (i.e. interest) on those loans. More important, foreclosures and people walking away from their mortgages are extremely costly for lenders. ACORN, the Association of Community Organizations for Reform Now, estimates that banks suffer an average loss of $58,000 for every foreclosed property. This is due to the lost interest, legal fees, eviction expense and other costs a bank incurs during foreclosure – such as repairing a home, marketing it for resale and paying an agent's sales commission. Therefore, responsible lenders know that it is definitely not financially prudent to return a home to its inventory.

Citigroup's senior mortgage executive, Sanjiv Das, acknowledged as much, asking AP: "Why should we all go through the foreclosure process and evict people?" Avoiding foreclosure, Das said, is "less painful for our borrowers as well as for us."

What's more, lenders know that federal regulators frown on financial institutions with too many bad loans on their books. So they always want to keep foreclosures at a minimum.

These two reasons explain why banks are interested in preventing outright foreclosures. They also explain Citi's motivations in launching Foreclosure Alternatives, which is directed at people at least 90 days behind on their mortgages who don't qualify for a modification or a short sale.

I'm not saying that Citigroup isn't also acting responsibly toward their customers, because Citi's aid will definitely offer homeowners some peace and security during a period of economic and personal upheaval. What I am suggesting, however, is that there is a growing awareness among lenders that they need to cut their financial losses and get more creative about tacking the nation's growing foreclosure problem. Foreclosure Alternatives and programs like it will help lenders reach these goals.

And with an estimated three million foreclosure filings expected in 2010, according to Realtytrac, I predict that more large lenders will emulate Citigroup's Foreclosure Alternatives program. When they do, it's important for those facing tough economic times to consider all their options, seek out ways to more quickly bounce back from financial setbacks such as foreclosure and to recognize what these programs can and can't offer from a financial and credit-rating standpoint.

(Source: http://www.bvonmoney.com/2010/02/11/foreclosure-alternatives-citigroup/)

Posted by:

Isom Coleman

(916)504-9178

The Coming Foreclosure and Commercial Real Estate Storms

California Brokers License #01736830

The Coming Foreclosure and Commercial Real Estate Storms

Fri, 12 Feb 2010 13:50:08 GMT

When you read that foreclosure filings fell 10% in January from December, don't get too excited. According to Realty Trac, foreclosures are 15% higher than they were a year ago and there's likely to be an increase in foreclosure activity in the next few months, as the government's crappy mortgage modification program continues to fail.

(AP Photo/David J. Phillip)

James J. Saccacio, CEO of RealtyTrac noted that "if history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works." In other words, another storm is a-brewing in the housing market.

The continued reluctance of banks to tackle the foreclosure problem is astounding. There's near-universal agreement that principal reduction is the key, but we are left with lame programs, like this one announced yesterday by CitiMortgage. The so-called "strategic non-foreclosure" continues the "extend and pretend" policy that bank lenders have pursued over the past year.

From the banks' point of view, the longer they keep you on the hook, the better it is for them. Avoiding the mess of foreclosure allows them to keep the fictitious valuations on their books and in this new Citi program, ensures that some of the costs of carrying the dud loan get transferred to the borrower, who in all likelihood, will end up defaulting. Some experts believe that a new round of foreclosures could trigger a double-dip in housing prices.

As if the foreclosure mess weren't enough to keep you up at night, today we're also digesting a new report from the Congressional Oversight Panel (that's Elizabeth Warren & Co, the TARP watchdogs) about the looming storm in the commercial real estate market. The report predicts a wave of losses, totaling $200-$300 billion, from commercial real estate loans could "trigger economic damage that could touch the lives of nearly every American."

Here's how the dire analysis plays out: "when commercial properties fail, it creates a downward spiral of economic contraction: job losses; deteriorating store fronts, office buildings and apartments; and the failure of the banks serving those communities." The report reminds us that the failure of community banks would further restrict small business access to capital, just the economic recovery is occurring.

Don't put away those shovels just yet - two potential storms could be coming.

(CBS)Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

(Source: http://www.cbsnews.com/blogs/2010/02/11/business/econwatch/entry6198016.shtml)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Forclosures hurt animals too!

Wed, 10 Feb 2010 02:22:07 GMT

Homeowners are not the only ones displaced by the foreclosure crisis!

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Outrageous Foreclosure Stories

Wed, 10 Feb 2010 01:44:34 GMT

10 Outrageous Foreclosure Stories

BillShrink Guy

September 15, 2009

File under Tags: foreclosure, mortgage, outrageous, suicide

Foreclosures have skyrocketed virtually every month since the collapse of the housing market. Across the country, people who bought homes at inflated prices and took adjustable rate mortgages are losing the properties to foreclosure in record numbers as home values decline. (To put the sheer quantity into context, consider this: foreclosures are reported to have “fallen slightly” during August, according to the Washington Post, because there were “only” 358,471 foreclosure filings nationwide during that month. That’s an 18% increase from August 2008!) However, not every story follows the typical “homeowner borrowed too much, homeowner loses home” formula. The stories below run the gamut from weird to tragic to outrageous, capturing some of the less common events on today’s foreclosure scene.

Executive Foreclosure Squatting

The typical foreclosure story is rather common: homeowner can no longer make payments, homeowner goes into foreclosure and loses the home, home goes on the market. But every once in a while a foreclosed home or two falls off the back of the proverbial truck, as DS News reported on September 11, 2009. According to the story, Wells Fargo executive Cheronda Guyton was found to have:

“…moved into a $12 million mansion in Malibu, California, and turned it into an exclusive party pad just after the owners – a couple whose savings were wiped out in Bernie Madoff’s ponzi scheme – surrendered the house to Wells Fargo to settle their debts.”

The bank also reportedly “refused to show the home to would-be buyers” while the disgraced exec was living it up, infuriating local real estate agents. What’s worse is that Guyton is not just an executive in some extraneous department, but a senior vice president responsible for foreclosed properties. In other words, precisely the type of person who should know better. Speculation has surfaced that the bank may have been complicit in the entire scam in efforts to keep the mansion in its inventory of “available housing that’s not brought to market, out of fears doing so would drive down its sales value.”

Evicting the Elderly

While Orange County deputy Dan Mendoza is quick to point out that evictions are nothing more than “business disagreements”, stories like these remind us of the human element. On September 10, 2009, Reuters tells the heartbreaking story of Mendoza’s assignment to evict a “70-year-old woman named Aida, who only speaks Spanish and cries with worry over her grandchildren’s belongings.” After discussing how Mendoza had to summon paramedics to calm the elderly woman’s stress-induced stomach pains, the article highlights some of the other things eviction offers are encountering on today’s foreclosure eviction scene:

“Mendoza talks about finding senior citizens, small kids and pitbulls left behind in the homes. Figueroa says many homes are in appalling state, with mold eating through the roof, meat rotting in the refrigerator and animal feces and urine soiling the carpet. One older man was growing marijuana upstairs, another took his life when deputies arrived.”

Foreclosure Suicide

It’s one thing to hold parties in a foreclosed mansion or lose your home, but to be so terrified of foreclosure that you take your own life is truly something else. Fox News broke the heart-wrenching story in July 2009 of Carlene Balderrama, a 53 year old Massachusetts mother who apparently committed suicide by gunshot when it became clear that she was to lose her home. Complicating matters is the fact that Balderrama’s husband, John, claims to have had no knowledge of the impending foreclosure until now.

“I had no clue,” he told The Associated Press. He said that unbeknownst to him, his wife had been fielding letters from the mortgage company, PHH Mortgage Corp., and shredding them.

Chillingly, Fox reports that Carlene had faxed a letter to her mortgage company on Tuesday July 22 to warn that “by the time you foreclose on my house I’ll be dead.” She is also said to have left a suicide note advising her family to “take the insurance money and pay for the house.” Even more confusing is John’s income as a plumber: $95,000 per year, or roughly $6,932 a month after taxes. Why was paying the mortgage on a $230,000 home so difficult that his wife saw suicide as the only way out?

House Set Ablaze, Kids Poisoned

In the same tragic vein as the last story comes the woman who apparently set fire to her house and attempted to poison her kids in anticipation of foreclosure. Thirty-three year old Tanya Friedly of Detroit was “accused of taking her children out of school early Nov. 18, slipping a sedative in their hot chocolate and setting her own bed on fire in a suicide attempt.” Luckily, the children got away and summoned emergency services, while neighbors pulled Friedly from the inferno. Friedly’s mother, quoted for the story, suggested that her daughter’s bizarre and reprehensible actions may have stemmed from circumstances like “taking new medications for depression and anxiety, her boyfriend lost his job and she was faced with losing her home to foreclosure.” Early reports from psychiatrists indicated that Friedly “does not understand the charges” – assault with intent to murder and arson – brought against her, but she has since “regained competency” by taking anti-anxiety medication and will soon stand trial.

Arizona Couple Forced to Relocate

A somewhat similar case involves an elderly couple in Tucson, Arizona being forced out of their dream home by foreclosure. In a state where one out of every 135 housing units is in foreclosure (the nation’s third highest foreclosure rate, according to AZ StarNet), the story remains gripping.

“The couple’s saga is painful to their daughter, Marybel Ramírez, who bought the house for her parents in 2004 after they all moved here from Douglas. But she lost her job, then depleted her savings and couldn’t refinance. Then, her husband lost his job and the young couple had to survive on what was left of their savings, as well as unemployment benefits and food stamps.”

Once the mortgage payments stopped, there was nothing, not even an attempt at a payment plan, standing between Jesús and Irma Terán and foreclosure of the home they had put so much into – “about $6,000 in this house in upgrades — a tile floor, wrought-iron bars over the windows and screen doors, ceiling fans, shelving in the garage and new paint”, according to AZ StarNet. Aside from noting that Irma was “ghost-white, too weak and ill to see her prized possessions” being packed up, the story simply concludes with Marybel’s somber acknowledgment that she “cannot change reality.”

Foreclosure Protesters Kicked and Pepper Sprayed

The wave of foreclosures has engulfed many homeowners who are beloved by their neighbors and communities, leading to protests and rallies aimed at getting their foreclosures called off. This was the case in Clinton, Minnesota in September, when a planned eviction was obstructed by a squad of activist protesters. The scene got ugly in a hurry, as IndyBay.org reports:

“After rallying the crowd, a handful of activists crossed the yellow tape roping off Clinton Avenue on either side of the house and were promptly assaulted by the police with kicks and pepper spray. Other supporters crossed the now-removed yellow tape from the opposite direction to ensure the activists’ safety. Officers responded aggressively; one shoved someone to the ground with a two-handed shove to the chest. A TC Indymedia volunteer was sprayed directly in the face while on the “public” side of the police tape.”

Others who simply sat down in front of the house in civil disobedience were nevertheless arrested for “obstruction of legal process”, though these people were never officially charged with anything and have since been released. Why the protesters were violently apprehended instead of simply arrested remains unexplained.

The Accidental Eviction (or was it?)

With hundreds of thousands of new foreclosure filings piling up each month, mistakes are inevitable. When a mistake winds up wrongly putting someone’s house into foreclosure auction, however, it’s worth a second look. The Wall Street Journal tells us about Anna Ramirez, a Homestead, Florida woman who “discovered her belongings in the front yard, and a man demanding she vacate the home he won at auction for $87,000.” Already bewildered by what was going on, NBC Miami reports that Ramirez and her family were even given a “leave in 3 hours or else” ultimatum by local police! Ramirez complained that the bank “took the house from right under my feet” and indeed, it was only several days later when the whole mess was linked to an error in the Miami-Dade clerk’s office. Ramirez is now back in her home, but claims that her belongings have been damaged and that she is “exploring legal options.”

But it gets better. An update to the original WSJ story claims that the foreclosure was not in error because the mortgage on Ms. Ramirez’ Florida home had not been paid “in some time.” In a case where no one seems to know the full truth and surprises keep coming out of the woodwork, a commenter on the article spoke for many of us when he wondered “who are the people who run these banks and why do they still have jobs?”

State Rep Foreclosure

It appears that government officials are not exempt from the foreclosure crisis either. In an August 23 story, the Miami Herald reveals that Florida State Rep. Erik Fresen is in foreclosure after failing to make mortgage payments on his home for over a year. The 2014 Florida House Speaker hopeful apparently “owes nearly $615,000 in principal, interest and late fees”, and claims to be “the victim of the banking crisis meltdown and sloppy record keeping by the bank.” Fresen and his attorney also claim to have spent hours on the phone with Chase loan officials to no avail. Unfortunately for Fresen, Chase does not appear to be in any mood for posturing. Spokeswoman Nancy Norris had stern remarks for the State Rep, bluntly stating that “refusing to pay your mortgage isn’t going to bring us to the table any faster. We will eventually foreclose. It’s bad for us, and it’s bad for you.”

The Near Save

A common theme of today’s foreclosure surge is homeowners and banks attempting to find other alternatives. Unfortunately (as we have already seen) these attempts are not always made. But even when they are, that is apparently no guarantee of keeping one’s home. A New Hampshire Public Radio story describes the plight of Sharon Gagnon, who thought she had negotiated a payment extension under the federal Making Home Affordable Program but instead expressed shock and indignation when “a real estate agent came by and told her she [and her husband] didn’t own her house anymore.” Gagnon did her best to patiently explain the agreement she and Chase had reached to the agent, noting that she now had a three month window to come up with some payment money before any kind of foreclosure proceedings began. But according to Gagnon:

“And she’s like, well, I hope Chase didn’t screw you was her response.”

What happened next only added more confusion to the situation. The bank, which had previously accepted the mortgage modification and Gagnon’s check that accompanied it, mysteriously sent the check back without explanation. As Gagnon then explains:

“And the next thing I know is there’s an eviction notice on the door, from the sheriff, telling us we need to be out by September 15th. This was on august 10th. So, naturally that was a whole other level of panic. Now not only are they telling me they own my house. They’re kicking me out of it.”

Chase wont comment on the matter other than to say that it is “under investigation” at present. NHPR claims that Sharon Gagnon’s situation was “unusual in New Hampshire” and blamed both the bureaucratic behavior of banks as well as the aggressiveness zeal with which they pursue foreclosure cases today.

Send in The Catfish

Distressed homeowners aren’t the only ones with mounting costs in the foreclosure surge. Municipal governments are finding themselves swamped with huge bills for common foreclosure tasks, such as cleanup and maintenance. A code enforcement officer in Florida, for example, reported that the town of Wellington was spending $7,000 per month on chemicals just to keep foreclosed swimming pools in sanitary condition! But let not your heart be troubled. While reports of government waste and inefficiency are on the rise, the town of Wellington has discovered a truly cost-effective alternative to chemicals – catfish. NBC Los Angeles breaks it down for us:

“At a typical home, the town drops 15 algae-eating fish in the pool to keep the water clean. In addition to being a potential health hazard, Mitchell believes that cleaner more sanitary pools will make the houses more attractive to buyers, as will the lower fees for upkeep.”

Asked to explain the emergence of her idea, Debra Mitchell offered “Some of us got clever and decided to try the fish-eating…er algae eating fish.”

(Source: http://www.billshrink.com/blog/outrageous-foreclosure-stories/)

Posted by:

Isom Coleman

(916)504-9178

(Source: http://www.fanniemae.com/newsreleases/2010/4923.jhtml;jsessionid=1P3KS4QTTZTLJJ2FECHSFGI?p=Media&s=News+Releases)

California Brokers License #01736830

3.5 Percent Seller Assistance to Purchase Homes

Mon, 08 Feb 2010 22:31:45 GMT

Fannie Mae News Release

Fannie Mae announced today that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010.

"Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover. Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help," said Terry Edwards, Executive Vice President of Credit Portfolio Management. "Homebuyers have the option to choose between financial assistance toward closing costs or new appliances for their home."

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers homebuyers an opportunity to purchase with as little as 3 percent down.

Buyers purchasing properties listed on HomePath.com that close escrow within this period may receive up to 3.5% of the final sales price for:

^. Closing costs;

^. The purchase of new Whirlpool® appliances by Fannie Mae; or

^. A mix of closing costs and appliances, at the buyer's discretion, up to the maximum 3.5%.

To be eligible for this incentive:

^. Offers must be accepted on or after January 28, 2010;

^. Property sales must close before May 1, 2010, and;

^. Buyers must be owner-occupants (investors are excluded).

(Source: http://www.car.org/legal/2010-archive-news/reg-news-fnma-seller-assist/ )

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Flipping homes is back in style!

Mon, 08 Feb 2010 22:27:19 GMT

Home Front: Flippers back in vogue in Sacramento housing market

from SacBee -- Home Front by jwasserman@sacbee.com (Jim Wasserman)

This house in Sacramento County is going for roughly the county's median sale price. This is a home that a moderate-income can afford. We're going to show how much income would be necessary, or how much the payment would be, depending on which of three California Housing Finance Agency loans the buyer chooses. The story will highlight the agency's soon-to-be-released fixed-rate 40-year mortgage, which allows buyers to borrow more money, or qualify on a lower income, compared with a traditional 30-year mortgage. CalHFA also offers fixed-rate 30-year loans and fixed-rate 35-year loans with five years of interest-only payments. House was photographed on Wednesday, February 15, 2006. ( The Sacramento Bee Hector Amezcua )

House flipping, the timeless buy-low, sell-high strategy, is back.

Thousands engaged in it during the real estate boom. Hundreds are trying it in the bust.

Property researcher MDA DataQuick tells Home Front it is seeing more houses sold within three weeks to six months of being purchased. Almost 5 percent of Sacramento County's December home sales fell into the "flipping" category.

Today's numbers rank right up there with the flipping rates of early 2005, just before the housing price bubble burst. At that time, 5.3 percent of Sacramento County sales were considered flips, says DataQuick analyst Andrew LePage. Often-amateur buyers simply bought houses and re-sold them as values rose 25 percent per year. Flipping is one of the factors that eventually spoiled the party and ruined those last arrivals.

By December 2007, with the market collapsing, only 1.7 percent of Sacramento County sales were flips.

But now at the bottom, investors have picked up the game with cheap bank repos. They add carpet, paint and countertops and resell for more, said LePage.

DataQuick statistics say investors accounted for 25 percent of Sacramento County sales in December.

"You've been in the 22 to 25.5 percent range for the past year," LePage said.

It's one of the reasons first-time buyers say they're still losing out in bidding wars.

More bank repos coming

Capital-area buyers can expect the repo market share to rise 15 percent in 2010 as banks bring more to market, says Mike Lyon, head of Sacramento's Lyon Real Estate.

Lyon says the number of repo listings began to swell in December after a year of "numerous government moratoriums."

Lyon's research division, TrendGraphix, says strong demand by investors and first-time buyers seeking federal $8,000 tax credits has driven average sale prices for foreclosed homes from $198,000 to $206,000. Lyon says he believes prices for homes under $300,000 will rise until midyear, when interest rates are expected to go up. By then the federal tax credit scheduled to expire April 30 will also likely be gone.

Extra spending money

Here's a welcome flip side to endless reports about people with mortgages they can't afford: A record percentage of Americans refinanced into smaller, cheaper home loans in the last three months of 2009.

It's a trend thanks to lower interest rates that is freeing up billions of dollars in extra household income.

Federal home loan giant Freddie Mac reported Thursday that 33 percent of borrowers who refinanced in the fourth quarter actually lowered their principal balances. In other words, they got smaller mortgages after having paid off part of their original loans.

Freddie Mac said it's the greatest quarterly percentage of loan downsizing since it started analyzing refinance activity in 1985.

The fourth-quarter refinancers also knocked about 1 percent off their collective interest rate. That translates into $2 billion in total savings the first year, said Freddie Mac. Alongside savings from smaller mortgages, this is new income to pay down bills, spend in restaurants, buy new cars or otherwise fuel the larger economy.

On the other side of the ledger, a record low 27 percent of those who refinanced in the fourth quarter cashed out some home equity. During the boom era from late 2003 to late 2005 as house prices rose it was routine for more than 80 percent of borrowers who refinanced to cash out home equity, Freddie Mac statistics indicate.

In 2009, American homeowners cashed out just $70 billion from their houses, the lowest amount since 2000, according to Freddie Mac. (In 2005: $301 billion). It's not hard to guess why. Falling home values have eliminated all the equity people otherwise might have extracted.

(Source: http://www.sacbee.com/736/story/2498388.html#mi_rss=Home%20Front )

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

Homebuyer Tax Credit UPDATE

Mon, 08 Feb 2010 22:11:50 GMT

Introduction

There were major changes on November 6, 2009 to the homebuyer tax credit after passage of the federal Worker, Homeownership, and Business Assistance Act of 2009. This new law extended the homebuyer tax credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit. In particular, the first-time home buyer tax credit for $8,000 (or $4,000 if married and filing separately) maximum was extended to April 30, 2010. In addition, the law provides a homebuyer tax credit of $6,500 ($3,250 if married and filing separately) maximum for current homeowners who had used the home sold or being sold as a principal residence consecutively for five of the previous eight years. For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.

A new version of IRS Form 5405 , First-Time Homebuyer Credit, is available (revised December 2009). A taxpayer who purchases a home after Nov. 6, 2009 must use this new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return. A taxpayer who purchased a home on or before Nov. 6, 2009 and chooses to claim the credit on an original or amended 2008 return may use the old version of Form 5405.

The new law also provides a "binding contract" provision which, in essence, states that so long as a written binding contract to purchase is in effect on April 30, 2010, the buyer has until July 1, 2010 to close escrow.

In addition, the law increased the income limits in order for the buyer to be eligible for the tax credit. The increased modified adjusted gross income (MAGI) limits are effective as of November 7, 2009: $125,000 for a single person, $225,000 for a married couple. For homes purchased prior to Nov. 7, 2009, existing MAGI limits remain in place. The full credit is available to taxpayers with MAGI up to $75,000 ($150,000 for joint filers). Those with MAGI between $75,000 and $95,000 (or $150,000 and $170,000 for joint filers) are eligible for a reduced credit. Those with higher incomes do not qualify.

The law includes anti-fraud provisions that require the purchaser to attach certain documentation to the tax return. The new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns.

Finally, several new restrictions on purchases that occur after Nov. 6, 2009 go into effect with the new law:

^. Dependents are not eligible to claim the credit.

^. No credit is available if the purchase price of a home is more than $800,000.

^. A purchaser must be at least 18 years of age on the date of purchase.

FIRST-TIME HOMEBUYER FOR HOMES PURCHASED IN 2009 OR 2010

Q 1. Who is considered a first-time homebuyer?

A A homebuyer is considered a first-time buyer if all of the following requirements are satisfied:

1. The main home is purchased in the United States, and

It is purchased after Dec. 31, 2008 and before May 1, 2010, or

It is purchased after April 30, 2010 and before July 1, 2010 and the buyer entered into a binding purchase contract before May 1, 2010 with the close of escrow before July 1, 2010.

2. The buyer (and spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.

3. The buyer does not satisfy any of the conditions listed in Question 3.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 2. What is a "main home" as mentioned in this legal article?

A A main home is "the one you live in most of the time. It can be a house, houseboat, mobile home, cooperative apartment, or condominium."

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 3. When is a first-time homebuyer not eligible for the tax credit?

A A first-time homebuyer cannot claim the tax credit if any of the following apply:

1. The purchase price of the home is more than $800,000. (This rule applies to homes purchased after November 6, 2009.)

2. The buyer's modified adjusted gross income (MAGI) is

a. $95,000 or more ($170,000 or more if married filing jointly) and the home was purchased before November 7, 2009, or

b. $145,000 or more ($245,000 or more if married filing jointly) and the home was purchased after November 6, 2009.

3. The buyer was claimed as a dependent on another person's tax return. (This rule applies to homes purchased after November 6, 2009.)

4. The buyer (and spouse if married) is under age 18 on the date of purchase. (This rule applies to homes purchased after November 6, 2009.)

5. The buyer is a non-resident alien.

6. The main home is located outside the United States.

7. The main home is sold, or it ceases to be the main home, before the end of the year in which it was purchased. (Note: this rule doesn't apply if the buyer is a member of the uniformed services or Foreign Service, or an employee of the intelligence community on qualified official extended duty as defined in the Instructions to Form 5405 (2009) and the main home is sold, or it ceases to be the main home, after 2008. The tax credit can be claimed on the return for the year of purchase or on the return for the year before the year of purchase.)

8. The main home was acquired by gift or inheritance.

9. The main home was acquired from a related person. (A related person is a spouse, parent, grandparent, or other ancestor; or a corporation in which you directly or indirectly own more than 50% of the capital interest or profits interest; or a partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest.)

10. The buyer acquired the main home after November 6, 2009, from a person related to the buyer's spouse. This includes the spouse's ancestors or lineal descendants. Examples are the buyer's parents-in-law or stepchildren.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 4. What is the amount of the tax credit for a first-time homebuyer?

A The tax credit is 10% of the purchase price of the home not to exceed $8,000 (or $4,000 for a married person filing separately). The tax credit may entitle the homeowner to a refund even if no tax is owed.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 5. What documentation must be attached to the tax return (Form 1040) for a first-time homebuyer?

A The following documentation must be attached to the buyer's tax return for 2009 or 2010:

^. Settlement statement showing all parties' names and signatures, the property address, the contract sales price, and the date of purchase. In most cases, the settlement statement is the properly executed Form HUD-1.

^. For a mobile home, the buyer may attach a copy of the executed retail sales contract showing all parties' names and signatures, the property address, the purchase price, and the date of purchase.

^. For a newly-constructed home and there is no executed settlement statement, attach a copy of the certificate of occupancy showing buyer's name, the property address, and the date of the certificate.

^. If the date of purchase is after April 30, 2010 and before July 1, 2010, attach a copy of the pages from the signed purchase contract showing all parties' names and signatures, the property address, the purchase price, and the date of the contract.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

FIRST-TIME HOMEBUYER FOR HOMES PURCHASED IN 2008

Q 6. What were the differences in the tax credit for a first-time homebuyer who closed escrow in 2008?

A The Housing and Economic Recovery Act of 2008 established a tax credit of 10% for first-time homebuyers with a maximum of $7,500 ($3,750 for a married person filing a separate return); however, this tax credit is equivalent to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year. This credit applies to home purchases after April 8, 2008 and before Jan. 1, 2009. This credit reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar. In other words, the tax credit is fully refundable--the credit is paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

For example, if a buyer claimed the maximum available credit of $7,500 , then the buyer would begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 income tax return.

The tax credit is reduced or eliminated for higher-income taxpayers. The tax credit is phased out based on the MAGI. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. That means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

See the Internal Revenue Service News Release IR-2008-106, Sept. 16, 2008 (http://www.irs.gov/newsroom/article/0,,id=186831,00.html) for more details.

LONG-TIME RESIDENT HOMEBUYER FOR HOMES PURCHASED IN 2009 OR 2010

Q 7. Can an existing homeowner get the tax credit for a new home purchase?

A Yes, under certain circumstances after passage of the federal Worker, Homeownership, and Business Assistance Act of 2009 existing homeowners are eligible for a tax credit for a new home purchase. Existing homeowners were not eligible for the tax credit under the prior law.

In order to be eligible to claim the tax credit, the buyer must meet all of the following requirements:

1. The buyer (and his or her spouse, if married) must have owned and used the same main home for any 5-consecutive-year period during the 8-year period ending on the date the new main home is purchased (typically the escrow close date).

2. The new main home is located in the United States and it was purchased

a. After November 6, 2009 and before May 1, 2010, or

b. After April 30, 2010 and before July 1, 2010 and the buyer entered into a binding purchase contract before May 1, 2010 with the close of escrow before July 1, 2010.

3. The buyer does not satisfy any of the conditions listed in Question 3.

Note: The definition of main home can be found in Question 2.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 8. What is the amount of the tax credit for a long-time resident homebuyer?

A The tax credit is 10% of the purchase price not to exceed $6,500 ($3,250 if married filing separately). The tax credit may entitle the homeowner to a refund even if no tax is owed.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 9. What documentation must be attached to the tax return (Form 1040) for a long-time resident homebuyer?

A The following documentation must be attached to the buyer's tax return for 2009 or 2010:

^. Settlement statement showing all parties' names and signatures, the property address, the contract sales price, and the date of purchase. In most cases, the settlement statement is the properly executed Form HUD-1.

^. For a mobile home, the buyer may attach a copy of the executed retail sales contract showing all parties' names and signatures, the property address, the purchase price, and the date of purchase.

^. For a newly-constructed home and there is no executed settlement statement, attach a copy of the certificate of occupancy showiwng buyer's name, the property address, and the date of the certificate.

^. If the date of purchase is after April 30, 2010 and before July 1, 2010, attach a copy of the pages from the signed purchase contract showing all parties' names and signatures, the property address, the purchase price, and the date of the contract.

^. Form 1098, Mortgage Interest Statement (or substitute statement), property tax records, or homeowner's insurance records. (These records should be for 5 consecutive years of the 8-year period ending on the purchase date of the new main home.)

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 10. Must the tax credit be repaid for a first-time homebuyer or a long-time resident homebuyer for purchases in 2009 or 2010?

A No, if the homebuyer owns the main home and uses it as a main home for at least 36 months beginning on the purchase date (close of escrow) then the tax credit need not be repaid.

However, if the home was purchased after 2008, the tax credit must be repaid if the home is disposed of or ceases to be the main home during the 36-month period beginning on the purchase date (close of escrow). This includes situations such as selling the home, converting the entire home to a business or rental property, the home is destroyed, condemned, or is disposed of under threat of condemnation, or the lender forecloses on the mortgage.

If applicable, the tax credit is to be repaid by being included as additional tax on the tax return for the year it is disposed or ceases to be the main home. If the home is destroyed, condemned, or disposed of under threat of condemnation, and a new home is not acquired within 2 years of the event, then the entire repayment amount must be repaid with the tax return for the year in which the 2-year period ends.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 11. What are the exceptions to the repayment rule in Question 10?

A The following are exceptions to the repayment rule:

^. If the home is sold to someone who is not related to the homebuyer during the 36-month period, the repayment in the year of sale is limited to the amount of gain on the sale. The amount of the credit in excess of the gain doesn't have to be repaid.

^. If the home is destroyed, condemned, or disposed of under threat of condemnation, the tax credit need not be repaid if a new home is purchased within 2 years of the event and you own and use it as your new main home during the remainder of the 36-month period.

^. If, as part of a divorce settlement, the home is transferred to a spouse or former spouse, the spouse who receives the home is responsible for repaying the credit if, during the 36-month period beginning on the purchase date, the spouse disposes of the home or it ceases to be his or her main home and none of the other exceptions apply.

^. Members of the uniformed services or Foreign Service and employees of the intelligence community (as defined in the Form 5405 Instructions) do not have to repay the credit if, after 2008, they sell the home or the home ceases to be their main home because they received Government orders to serve on qualified official extended duty.
^. If the homebuyer dies, repayment of the tax credit is not required. However, if the credit was claimed on a joint return, the surviving spouse would be required to repay his or her half of the credit if, during the 36-month period beginning on the purchase date, he or she disposes of the home or it ceases to be his or her main home and none of the other exceptions apply.

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 12. Must the tax credit be repaid for a first-time homebuyer for purchases in 2008?

A Yes. For a main home purchased in 2008 and owned and used as the main home during all of 2009 and 2010, repayment of the credit over a 15-year period begins with the 2010 tax return. Form 5405 is not to be filed in 2009. These homebuyers must file the 2010 revision of Form 5405 with the 2010 Form 1040.

However, if the home was purchased in 2008 and it ceased to be the main home in 2008 or 2009, then the tax credit must be repaid with the 2009 tax return. An exception applies if the home was destroyed, condemned, or disposed of under threat of condemnation, and a new main home was not acquired within 2 years of the event. In that case, the tax credit is to be repaid with the tax return for the year in which the 2-year period ends.

Another exception applies for certain members of the uniformed services or Foreign Service or employees of the intelligence community (see instructions for line 12 on Form 5405).

(Source: Instructions for Form 5405 (rev. Dec. 2009).)

Q 13. Where can I get more information?

A For any other tax credit questions not convered in this Legal Q&A, please refer to the Instructions for Form 5405 (rev. Dec. 2009). In addition, see the IRS, First-Time Homebuyer Credit Questions and Answers: Claiming the Credit on Your Tax Return. This chart is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.'s legal products and services, please visit car.org.

Readers who require specific advice should consult an attorney. C.A.R. members requiring legal assistance may contact C.A.R.'s Member Legal Hotline at (213) 739-8282, Monday through Friday, 9 a.m. to 6 p.m. and Saturday, 10 a.m. to 2 p.m. C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at (213) 739-8350 to receive expedited service. Members may also fax or e-mail inquiries to the Member Legal Hotline at (213) 480-7724 or legal_hotline@car.org. Written correspondence should be addressed to:

CALIFORNIA ASSOCIATION OF REALTORS®
Member Legal Services
525 S. Virgil Ave.
Los Angeles, CA 90020

(Source: http://www.car.org/legal/legal-questions-answers/2010-qa/homebuyer-tax-credit-update/ )

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

5 IRS Tax Tips

Mon, 08 Feb 2010 22:06:16 GMT

Internal Revenue Service Tax Tip 2010-23

As you get ready to prepare your 2009 tax return, the Internal Revenue Service wants to make sure you have all the details about tax law changes that may impact your tax return.

Here are the top five changes that may show up on your 2009 return.

1. The American Recovery and Reinvestment Act

ARRA provides several tax provisions that affect tax year 2009 individual tax returns due April 15, 2010. The recovery law provides tax incentives for first-time homebuyers, people who purchased new cars, those that made their homes more energy efficient, parents and students paying for college, and people who received unemployment compensation.

2. IRA Deduction Expanded

You may be able to take an IRA deduction if you were covered by a retirement plan and your 2009 modified adjusted gross income is less than $65,000 or $109,000 if you are married filing a joint return.

3. Standard Deduction Increased for Most Taxpayers

The 2009 basic standard deductions all increased. They are:

. $11,400 for married couples filing a joint return and qualifying widows and widowers

. $5,700 for singles and married individuals filing separate returns

. $8,350 for heads of household

Taxpayers can now claim an additional standard deduction based on the state or local sales or excise taxes paid on the purchase of most new motor vehicles purchased after February 16, 2009. You can also increase your standard deduction by the state or local real estate taxes paid during the year or net disaster losses suffered from a federally declared disaster.

4. 2009 Standard Mileage Rates

The standard mileage rates changed for 2009. The standard mileage rates for business use of a vehicle:

. 55 cents per mile

The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move:

. 24 cents per mile

The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents per mile.

5. Kiddie Tax Change

The amount of taxable investment income a child can have without it being subject to tax at the parent's rate has increased to $1,900 for 2009.

For more information about these and other changes for tax year 2009, visit IRS.gov.

Links:

. FS-2010-4, 2009 Tax Law Changes Provide Saving Opportunities for Nearly Everyone

. The American Recovery and Reinvestment Act of 2009: Information center

. 1040 Central

. Form 1040 instructions (PDF 941K)

IRS YouTube Videos: (See source link below for links to all the videos.)

(Source: http://www.irs.gov/newsroom/article/0,,id=120227,00.html)

(Source: http://www.car.org/legal/2010-archive-news/reg-news-irs-5-tax-changes-2009/ )

California Brokers License #01736830

Posted by:

Isom Coleman

(916)504-9178

More people seeing benefits of walking away from mortgage.

Mon, 08 Feb 2010 21:59:57 GMT

Home Front: Gain trumping pain of walking away from mortgage

from SacBee -- Home Front by jwasserman@sacbee.com (Jim Wasserman)

Marysville real estate agent Ruben Ramos caught a torrent of abuse in December 2008 when he said at a Bee real estate roundtable that he counsels people to "walk away" from their mortgages.

Housing industry reps and readers current on their mortgages called Ramos irresponsible, a menace who lacked morals and encouraged fraud. Yet his view that people have the right to walk away if lenders won't work with them has since become mainstream in the Sacramento region, where 221,674 households owe more than their homes are worth, according to First American CoreLogic.

"What I see again is that lenders aren't willing to step up to the plate," Ramos said this week. "They have their right. We have the same right. Let's exercise it."

This line of thinking is especially prevalent in wealthier circles, where people with financial smarts refer to "walking" with a less morally weighted term, "strategic default."

"Strictly a business decision," said Dianne Slutsky, a Coldwell Banker real estate agent. She sees strategic defaults discussed and acted upon repeatedly in her neighborhood, Lincoln's upscale Catta Verdera. People there are questioning $5,500 monthly mortgage payments on houses they bought for $800,000 and $900,000 four or five years back and which are now worth half that.

"People can make payments. But it's just not a prudent decision," said Slutsky. "You feel terrible about it, but it's like you bought a stock for $50 and it went to $100 and now it's $20. How long are you going to hold onto it?"

Slutsky said, "It becomes an easier decision for people 40 and under. They have the most time to wait out a return to a more basic market. My generation, the baby boom generation, is looking at it like 'it's five years now we've been in this market. We're five years older.' I'm 60. It may be that our income now can support it. But what if I get sick? What if? What if? That's the conversation I have with people who are 45 or 55."

Scott Thompson, principal with Carmichael's Mortgage Resolution Services, listens daily to people wondering aloud whether to stay or go.

"I'm having more and more initial conversation with homeowners saying, 'Man, I ran the numbers and this doesn't make sense.' For those people it takes awhile to get over the social stigma hurdle. But they're going to get there," Thompson said.

People are getting there because "their hope meter is running so low," he said. The economy is stuck and unemployment is still rising. Values keep falling at the higher end. There's no move-up market to stop it.

"If you're 45 years old and 10 years from back to even on your home you start looking at the numbers," Thompson said.

Slutsky still recalls a remark she heard from one Lincoln retiree who bought her house high, pays high for it monthly and has to live with its lowered value. The woman's remark suggested a profound indifference to banking's moral and social hold on borrowers.

"When I go to my grave I don't need an 800 FICO score," went her wisecrack. "I want to have my last 10 years be fun."

(Source: http://www.sacbee.com/736/story/2514938.html#mi_rss=Home%20Front )

Isom Coleman

(916)504-9178

California Brokers License #01736830

New Walk-In Borrower Help Center

Mon, 08 Feb 2010 21:50:56 GMT

Freddie Mac News Release

Freddie Mac and Neighborhood Partnership Housing Services (NPHS) on Jan. 28, 2010 announced the opening of a new walk-in Borrower Help Center where delinquent borrowers with Freddie Mac-owned mortgages can get free, confidential 'holistic' financial counseling and one-on-one help to obtain a mortgage modification from their lenders.

The new Borrower Help Center in Ontario, CA is part of a new national pilot program to provide holistic, financial counseling to borrowers with Freddie Mac-owned mortgages who are in financial distress and may be eligible for a loan modification but never called their mortgage servicers or have stopped trying.

"These centers are designed to help delinquent borrowers who are suffering during these trying times and want to save their homes from foreclosure but need a strong and reliable guide to navigate the workout process," said Dwight Robinson, Senior Vice President for Corporate Relations and Housing Outreach at Freddie Mac. "We are working with NPHS because they have the expertise and the community's trust to be the difference that puts a borrower back on their financial feet and keeps a family in their home."

Holistic financial counseling includes an assessment of borrower debt and credit issues that could affect their ability to make their mortgage payments after a modification. A recent NeighborWorks America study found borrowers who received such counseling from reputable non-profit groups are 1.6 times more likely to avoid foreclosure than other borrowers.

"As an organization which is dedicated to making a difference in our community, NPHS is witnessing a rise of foreclosures throughout the Inland Empire", stated Jed Davis, NPHS Executive Director. "The collaboration of efforts between NPHS and Freddie Mac is not only innovative, it is effective. This partnership is allowing NPHS to reach out to our community and provide foreclosure prevention counseling to more families than ever."

How the borrower Help Center Works

Potential eligible borrowers identified by Freddie Mac will be contacted by NPHS and scheduled for one-on-one appointments. Delinquent borrowers with Freddie Mac owned mortgages can also schedule free appointments by walking in to the Borrower Help Centers.

Counselors at each Borrower Help Center are trained to review Freddie Mac and Making Home Affordable workout requirements with their clients. Counselors will also provide one-on-one guidance to help borrowers apply for modifications, supply missing information or documents needed to move an application forward, and work with Home Retention Services, a wholly owned subsidiary of Stewart Lender Services, Inc., to help borrowers effectively connect with their servicers.

Counselors will also work with borrowers on other outstanding debt and credit issues, such as credit card debts or auto loans that may also be causing financial distress.

The NPHS Borrower Help Center is located at 320 W. G Street, Suite 103 in Ontario, CA 91762. For more information, contact the center at (800) 761-6747.

Freddie Mac is opening up similar Borrower Help Centers in Chicago, Phoenix, and Washington, DC plus a separate Borrower Help Network where participating non-profit organizations will provide similar free holistic financial counseling by phone to targeted Freddie Mac borrowers across the nation. (For more information, visit freddiemac.com/avoidforeclosure.)

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

In 2009 Freddie Mac helped more than 250,000 borrowers avoid foreclosure through loan modifications, forbearances, repayment plans, modifications under Making Home Affordable and other alternatives. Freddie Mac accounts for nine percent of all seriously delinquent mortgages, but finances nearly 23 percent of the country’s home loans.

(Source: http://www.freddiemac.com/news/archives/corporate/2010/20100128_neighborhood.html)

(Source: http://www.car.org/legal/2010-archive-news/reg-news-fred-mac-loans-help/?redirectFrom=login)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

New homebuyer tax credit form released

Tue, 02 Feb 2010 01:46:02 GMT

Internal Revenue Service News Release IR-2010-6

The Internal Revenue Service today released the new form that eligible homebuyers need to claim the first-time homebuyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time homebuyer credit.

The new form and instructions follow major changes in November to the homebuyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions, eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the homebuyer credit.

Some of these early taxpayers claiming the homebuyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

In addition, the new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
Property tax records or
Homeowner’s insurance records.

The IRS also reminded homebuyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit will be issued toward the end of March.

The IRS encourages taxpayers to use direct deposit to speed their refund. In addition, taxpayers can use Where's My Refund? on IRS.gov to track the status of their refund.

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

(Source: http://www.irs.gov/newsroom/article/0,,id=218336,00.html)

Posted by:

Isom Coleman

(916)504-9178

California Brokers License #01736830

FHA to provide early relief to struggling homeowners

Tue, 02 Feb 2010 01:41:38 GMT

U.S. Department of Housing and Urban Development News Release

Homeowners with FHA-insured mortgage loans who are experiencing financial hardship are now eligible for loss mitigation assistance before they fall behind on their mortgage payments. Previously, these homeowners were not eligible for such assistance until after they had missed payments.

The Helping Families Save Their Home Act of 2009 signed into law by President Obama expanded FHA’s authority to use its loss mitigation tools to assist FHA borrowers avoid foreclosure to include those facing ”imminent default” as defined by the Secretary. FHA today issued guidance to FHA-approved loan servicers on how to assist these FHA borrowers.

“Loss mitigation assistance is beneficial to both borrowers and FHA because it helps borrowers retain their homes while protecting the FHA insurance fund from unnecessary losses,” said FHA Commissioner David Stevens. “FHA has always required lenders to establish early contact with delinquent borrowers to discuss the reason for missing a payment and to evaluate reinstatement options. Now servicers will have additional options for those borrowers who seek help before they go delinquent, which increases the likelihood that the borrower will be able to retain their home.”

Effective immediately, the loss mitigation options of forbearance and FHA’s Home Affordable Modification Program (FHA-HAMP) may be used to assist borrowers facing imminent default.

^. FHA defines an “FHA borrower facing imminent default” to be an FHA borrower who is current or less than 30 days past due on the mortgage obligation and is experiencing a significant reduction in income or some other hardship that will prevent him or her from making the next required payment on the mortgage during the month that it is due.

^. A forbearance agreement is an agreement by the loan servicer to postpone, reduce or suspend payments due on a loan for a limited and specific time period.

^. FHA-HAMP allows qualified FHA-insured borrowers to reduce their monthly mortgage payment to an affordable level by permanently reducing the payment through the use of a partial claim combined with a loan modification. The partial claim defers the repayment of a portion of the mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off. The remaining balance is then modified through re-amortization and in some cases, an interest rate reduction.

The borrower must be able to document the cause of the imminent default which may include, but is not limited to, one or more of the following types of hardship:

1. A reduction in or loss of income that was supporting the mortgage loan, e.g., unemployment, reduced job hours, reduced pay, or a decline in self-employed business earnings. A scheduled temporary shutdown of the employer, (such as for a scheduled vacation), would not in and by itself be adequate to support an imminent default.

2. A change in household financial circumstances, e.g., death in family, serious or chronic illness, permanent or short-term disability.

Loan servicers must document the basis for its determination that a payment default is imminent and retain all documentation used to reach its conclusion. The servicer’s documentation must also include information on the borrower’s financial condition.

Additional information and guidance can be found on HUD’s website.

(Source: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-017)

Isom Coleman

(916)504-9178

California Brokers License #01736830

FHA Toughens Down Payment Rules

Tue, 02 Feb 2010 01:38:50 GMT

FHA Toughens Down Payment Rules

Caylyn Brown Friday, January 22nd, 2010

The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, the agency announced Tuesday.

The change is among a number of major changes the FHA is making to ensure its long-term financial soundness.

Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency’s finances.

The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet to be announced.

Taken from REALTOR® Magazine, more information is available here.

Isom Coleman

(916)504-9178