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I will be providing & citing content from various sources for accuracy

New HAFA RULES

There is a concerted push to make the short sale process more streamlined. If you don’t know what a short sale is, it when you sell your property for less than the mortgage owed. For example if you owe $650,000 and sell the property for $550,000, then this is a short sale.

The problem with short sales is there is not a streamlined process. For a short sale the bank holding the mortgage needs to be notified and they are involved in either accepting or not accepting the terms of a short sale.

The frustrating part? Every bank does it differently. And it can be a LONG process. Some banks are better (Wachovia) and some are notoriously difficult (BofA, Chase).

Why are short sales a good idea? Well they help to stop the hemorrhaging when it comes to declining prices. Think about it, if you’re a homeowner and the property is going to foreclosure, you may considering the selling the new kitchen cabinets and granite countertops and hell why not sell the appliances as well? In addition if there is small leak in the roof, why fix it? Once this property goes to foreclosure, it is a distressed property because there deferred maintenance on top of a missing kitchen. Of course because of the condition the property, despite the location, will not be able to sell for the same price of a home in good condition. This property sells for less money and helps to bring down the prices in the neighborhood.

What else is good about short sales? The homeowners credit could probably recover and when your credit score is not completely trashed things like qualifying for a car loan, or a credit card becomes much easier. This is not only good for the homeowners who needed to sell but is good for the economic recovery. If you can get credit and make purchases, this will help the broader economic engine and move us more toward recovery.

The third and what seems like the most obvious to me, is the banks will more than likely recoup more of their money. Think about it. If you are selling a home with cooperative homeowners who are going to help out in the sale of the property (the kitchen will remain for example), then the final sale of the property will more than likely be more than if the property has been stripped via the typical foreclosure route. What else does this do? It helps to stabilize prices in the neighborhood. With less highly distressed home sales, the prices do not plummet. This in turn will probably keep more homeowners in their home, because if prices stabilize and homeowners are able to refinance and stay, then there are less short sales and less foreclosures. Seems so completely obvious, you have to wonder what the banking community is thinking.

There are some changes coming down the pike. Short sales are becoming more common and in some instances easier than in times past. HAFA is a program that is to set the guidelines to assist with short sales.

Will these laws make real inroads? I am cautiously optimistic. I don’t think these laws really go far enough in fact. What the banks should really look at is principal reductions for those who want to stay in their home but find home values much less than when they bought the property. The one challenge I see these new laws is there is not a lot of teeth to it. Only those banks who utilized TARP funding are required to comply. The reality is for this to be effective is staving off foreclosures and helping the communities in which homeowners are underwater, there will be some success with the changes, but some significant challenges ahead for homeowners who find themselves underwater.

How to Get the Extended Home Buyer Tax Credit

You’ve decided to purchase a home and take advantage of the Extended Home Buyer Tax Credit. Here's what you have to do to get your benefit:

Close on your home purchase between November 7, 2009 and April 30, 2010, or have a binding written contract by April 30, 2010 and close by July 1, 2010.
Decide whether to:
- apply the credit to your 2009 tax return, filed on or before April 15, 2010;
- file an amended 2009 return; or,
- apply the credit on your 2010 return, filed on or before April 15, 2011.
Attach documentation of purchase to your return.

Documentation of Purchase

Details concerning the precise documents required to confirm your purchase have not yet been released. When this information becomes available, we will include instructions and links to the appropriate forms.

When to Apply the Credit

Buyers purchasing homes on or before December 31, 2009 may claim the credit on their 2009 tax returns.

Buyers purchasing in 2010 will have the option to:

Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009;
File an amended return for 2009 if their purchase is completed after April 15, 2010; or,
Claim the credit on their 2010 tax returns.

If you, or your client, purchased a home between January 1, 2009 and November 6, 2009, please see:

Applying the Credit to Your 2009 Taxes

You will need to do three things to claim the credit on your 2009 tax return:

Fill out Form 5405 to determine the amount of your available credit;
Apply the credit when you file your 2009 tax return or file an amended return;
Attach documentation of purchase to your return or amended return.

Applying the Home Buyer Tax Credit to Your 2009 Tax Return

To claim the credit as part of your 2009 return, you will need: The standard Form 1040 and Form 5405 for the home buyer tax credit.

First begin Form 1040.

Be sure to take note of your adjusted gross income, which you enter on lines 37 of the form. Form 5405 actually requires you to note your modified adjusted gross income, but that affects few people, so most will just use their adjusted gross income.

When you come to Line 69 you'll be asked to enter your tax credit amount. To do that, you'll need to first complete Form 5405.

Once you complete Form 5405, enter the amount on Line 69, then complete your return.

Attach Form 5405 to your return.

Collecting Your Refund

Any refund for which you qualify will be sent to you.

CITIMORTGAGE LOAN HOLDERS THIS IS FOR YOU!!!!

Date Provided 2/22/2010

Boy did I ever run acoss a great post I'd like to share which could change the loan modification process if given a chance. CitiMortgage is piloting a program to rent back for 6 months and cash for keys. There is the HAMP program but OK...these programs sounds great,,but I am all for if people are out to go make landlords wealthy by having to pay for shelter somewhere if they still lose their home, what was accomplished except a prolonged hardship that had a temporary bandaid fix! I know I speak to these families or single people whom this is a reality for them.

Home goes into foreclosure for a price the folks living there could actually pay in most instances, but are denied, a loan modification and sometimes any other option. I know I am a home retention specialist and this happens,,due to a job loss, health condition,,, to not offer more to these people, there lies something backwards in this conveyor belt outcome. All situations are not equal, and cannot be treated as such. We need a loan modification or foreclosure court. Just like landlord/tenant. This is personal, lives at stake. Not cut and dry!

Banks put families out and now these families have to live with family if they have any or a one-two bedroom apartment, and someone or an investor purchases this very home that with the scaled down payments the folks kicked out could pay or rent back? Logic,,,none for me, perhaps I am a dreamer. I have families ask me can they rent back their home if an investor plans to rent it out.

The time may be longer to get results and the rate of loan mods that wind up still going into foreclosure status is still high! However I read this brilliant blog, I love this site and this Richard Warren just redeemed my faith in folks who care in what we can do through nagging our hired public officials,,,and I guess (ahem) perhaps GMTA! I know capitalism is often made best from those who suffer, but I have a problem with the ones who caused it, Banks and the fat cats and still can't figure this boatload of mess out and we are suffering again! Banks have got to get this together in a more humane way, it hits the middlemen there as well. And if I were a neighbor living in a area of homes going into foreclosure that didn't sell via short sale, it's a matter of public record. I would want to know why,,,if is depreciates my neighborhood, you should know. This blogger states my exact sentiment in a quote! Read his blog below! If my spelling is off,,it's 3 AM and this subject just came to me immediately. Have a good week!

The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks. – Lord Acton (British Historian)

Click here: A Loan Modification Plan That Might Actually Work for Homeowners AND Lenders?

Date Provided 2/13/10

LUXURY HOMES & SHORT SALES

Yes people with means are affected by this market too!

Citi to let distressed homeowners stay for 6 months

What do you think?

Date Provided 2/2/10

NSP PROGRAM

If you don't know about it yet there is a NSP program (neighborhood stabilization program) in different cities available! You may qualify for a grant to purchase a home based on income. This is to help fight the foreclosure inventory and prevent cities and neighborhoods from becoming blighted! NCST NAR Press Release 20100126_web.pdf or just check your preferred city link http://www.cityofsouthfield.com/.

Take a gander and read about it, there is criteria and a class involved and qualifying factors! It never hurts to see if you or someone you know can take advantage of this fantastic program. Homes at this date 2/2/2010 must be bank owned and vacant to qualify.

EXTENSION ON TAX CREDIT

The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify. Read on...
http://www.federalhousingtaxcredit.com/

HAFA Home Affordable Foreclosure Alternatives

Basically a new plan to keep people from selling their homes via short sales but rather get a loan modification to keep them in their homes as an alternative. Home Affordable Foreclosure Alternatives Program (HAFA). Below is a very good link to see if you qualify!

http://makinghomeaffordable.gov/

BE AWARE:

Beware of Foreclosure Rescue Scams - Help Is Free!

Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
Assistance from a HUD-approved housing counselor is FREE.
Beware of people who pressure you to sign papers immediately, or who try to convince you that they can “save” your home if you sign or transfer over the deed to your house.
Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
Never make a mortgage payment to anyone other than your mortgage company without their approval.

VA and the HAMP PROGRAM

Very timely information for Veterans and the public. I have ambivalent feelings on the HAMP program, we need to keep fighting this in congress.

http://www.housingwire.com/2010/01/12/va-launches-hamp-program-for-distressed-borrowers/

FHA CHANGES

In other woids, higher credit scores and now 3% will be max for seller back closing costs. Yi yi yi! which translates fewer buyers. We can start with Medical bills and Student loans plaguing those with otherwise good credit....go figure! Wish we could rate credit scores to the bank..voila community banks?

Potential New FHA Rules and Guidelines

The Federal Housing Administration (FHA) is already the largest mortgage insurer in the country, and they are being asked to insure more and more loans each day. To accommodate the influx of mortgage loan applications, the U.S. House of Representatives passed the conference report for H.R. 3288, the Consolidated Appropriations Act, allocating over $100 million for FHA to upgrade its technology and fraud detection programs.

Fraud perpetrated against lenders costs billions of dollars each year which, unfortunately, gets passed on to borrowers in the form of higher loan fees. The hope with the passage of HR 3288 is that lenders can detect fraud earlier, reduce fraud related losses, and make loans more affordable for its borrowers.

At the same time, the FHA is proposing new rules to strengthen risk management, boost lender oversight, and tighten controls for lender approval. Among them are a proposed change that would require FHA approved lenders to have higher net worth and reserve requirements and that they be liable for the loans they originate. According to HUD Secretary Shaun Donovan, the changes will expand enforcement for new loans, including “requiring lenders to indemnify the FHA fund for their own failures to meet FHA requirements, and holding lenders accountable nationally for any improper activities.”

Not all the changes are aimed at lenders, though. The FHA is also proposing changes that could affect borrowers and their eligibility to obtain an FHA insured loan from its approved lenders. The proposed changes include:

higher insurance requirements
larger down payments
lower seller concessions
minimum credit score requirements

Currently, the FHA insured loan program does not have a minimum credit rule, and the down payment requirement is only 3.5 percent. Should the FHA choose to raise the down payment requirement to 5%, it could potentially require borrowers to put an additional $1,500 down on each $100,000 borrowed. That amount could increase if lenders use FICO scores to categorize borrowers in different risk levels that would require additional down payments based on FICO. This method is similar to underwriting procedures banks employ in conventional conforming loans.

At face value, these changes would appear to make FHA loans less available or restrict the amount of homeowners that can benefit from the program. However, the new rules will likely create a more secure pool of mortgages, help to stabilize an ailing real estate market, and reduce further loan related losses. All of this could potentially allow lenders to pass on lower cost mortgages to the borrower.

Tags:fha, FHA changes, FHA guidelines, fha insured, fha loan, government loan Buying a Home, Financing, Government Programs, LendingTree

More to come! Don't forget to keep up with my Walls of Blog!

FHA POLICY CHANGES

As of February 1, the FHA took the following steps:

1. Increase the mortgage insurance premium (MIP);

2. Reduce seller concessions to three percent, from six percent;

3. Waive the 90 day property flipping rule;

4. Update the combination of FICO scores and down payments for new borrowers; and implement a series of significant measures aimed at increasing lender enforcement.

Announced FHA Policy Changes:

Mortgage insurance premium (MIP) will be increased.

The first step will be to raise the up-front MIP by 50 bps from 1.75% to 2.25% of the loan amount. If the loan amount is $100k the up-front MIP will increase from $1750.00 to $2250.00. The up-front MIP is usually financed into the loan amount and in this example will only increase the payment ≈$3/mo. This new rate will go into effect April 5^th, 2010 and be applicable to all purchase and refinance transactions.

Reduce allowable seller concessions from 6% to 3%

The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions. This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

Waiver of the 90 day Property Flipping Rule for Private Sellers:

All transactions must be arms length, if the sales price is ≥ 20% more than the acquisition cost the seller must justify the price to the lender with documentation and provide a property inspection report to the buyer. The waiver will go into effect February 1^st, 2010.

Increase enforcement on FHA lenders accountability with the risk of losing their ability to offer FHA loans.

Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1. Implement Credit Watch termination through lender underwriting ID in addition to originating ID. This change was included in one of the two Mortgagee Letters issued on January 21st, and is effective immediately.

Update the combination of FICO scores and down payments for new borrowers.

New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer. This change will not affect most lenders, since most lenders currently do not do FHA loans with a score below 600.

Supplied by:

North Oakland County Board of REALTORS®
4400 W. Walton Blvd.
Waterford, MI 48329