Interest Rates at Historic Lows

This week’s  July 5-July 9 Freddie Mac survey showed the 30 year fixed  mortgage interest rate average at 4.57%, down again from last week’s low of  4.58%, according to the California Association of REALTORS.  Borrowers will need to put 20% down and pay 0.7% of the loan amount in fees to obtain that rate. This is the lowest interest rate average in 39 years. Consider too the California Homebuyer’s Tax Credit of $10,000 is still in effect, although reports suggest the funds for the credit are about 80% depleted and time is running out.  With home prices still at exceptional values, but indications that the market–at least in Orange County–has bottomed, one has to wonder: what are buyers waiting for?

Foreclosed Homeowners Who Refinanced Shielded From Lenders on Deficiencies

Homeowners and Realtors won a huge victory June 3rd when the California Senate overwhelming passed a new foreclosure protection bill despite heavy resistance from lenders. Until now, distressed owners who refinanced their original mortgage but lost their home to foreclosure anyway were liable for the difference between what they owed and what the home was sold for at auction. Such protection has been in place for homeowners who defaulted on their original  “purchase money” mortgage but, unknown to many, this was not the case for refi’s. Senate bill 1178 was originally defeated when it first came up for a vote, but due to the extensive efforts of the California Association of Realtors and over 5000 agents who voiced their support to congress, the bill was reintroduced and passed yesterday by a vote of 30 to 4. The National Association of Realtors is the largest trade organization in the world, and I for one am proud to be an active member. The next time someone criticizes congressional “lobbyists”, you might want to think twice about jumping on the band wagon and painting everyone with a broad tar brush! Hurray for the NAR and the California Senate. Chalk one up for the people!

No More Tax Liability On Short Sale Debt

Great news: California homeowners who are forced to sell their homes for less than their mortgage amount are no longer subject to taxation on the forgiven debt at either the Federal or state levels, the California Association of Realtors has announced today. Senate Bill 401 was enacted into law yesterday and covers indebtedness of up to $800,000 and forgiveness of debt up to $500,000 on a California homeowner’s principal residence. It covers both first and second trust deeds as well as refinances that were used to pay off previous loans. It also applies to sellers of second homes and rental properties who have been granted bankruptcy protection, or whose current liabilites exceed their income and are considered insolvent. The new law is retroactive and covers distressed sellers from 2009 until 2012 . Those who qualify and have already filed their 2009 state taxes may file Form 540X to receive the exemption. As always I highly recommend speaking with a tax adviser about the new law. If you or anyone you know is in financial distress, having difficulty meeting  payments or is upside down in their mortgage, I urge you to call me today at 949-374-9091 for a free consultation. I can help.

Administration Announces New Loan Modification Requirements

There’ s more good news for homeowners who are having difficulty making their mortgage payments. The Treasury Department and the Department of Housing and Urban Development (HUD) have announced new requirements designed to increase the number of permanent loan modifications granted, the LA Times reports. Unsatisfied with the success of the Home Affordabe Modification Program(HAMP),  so far, the administration is scheduled to begin the new guidelines June 1.

Previously, many borrowers who have applied to the program waited for months to hear back from the banks, only to learn their application had been denied. The banks have claimed this is because they temporarily approved many homeowners who didn’t actually qualify, and who failed to make their payments for the 3 month trial period. Also, the lenders claimed that many applicants failed to provide sufficient documentation.

Under the new system, homeowners must submit three documents. They are: A formal application for modification, along with a Letter of Hardship; Proof of Income, including 2 pay stubs or the most recent Profit/Loss statement for the self employed; and A form authorizing the IRS to release tax information to the banks.

For their part, lenders and servicers must respond to applicants within 10 days, and have 30 days from receipt of all documents to approve or deny the application. They must also calculate whether it is in the best interest of the owner of the loan (mortgage) to modify the loan and if so, they are required to grant the modification, the Times reports. If the homeowner successfully pays the modified loan on time for three months, the lender must make the modification permanent.

If you or anyone you know is having difficulty making their mortgage payments during these difficult times, I want you to know two things:

You are not alone, and you do have options. Millions of people are going through the same thing, most through no fault of their own. It can be frustrating, embarrassing and confusing. Many people are simply throwing in the towel and walking away from their home. Please don’t just give up.   I urge you to contact me today, before it’s too late.   I and my team of attorneys and tax accountants can provide valuable information on steps you can take that may help you.

Successful Loan Modification Numbers Improving

The number of homeowners benefiting from the Obama Administration’s Home Affordable Modification Program was up 17% in January over the previous month, the Wall Street Journal reported recently. HAMP, as it is called, was launched a year ago  and is designed to help homeowners having difficulty making their monthly mortgage payments modify the terms of their loan to prevent possible foreclosure. It offers homeowners who qualify for the program a possible reduction of their interest rate–in some cases as low as 2%–and a possible extension of the terms of the loan up to 40 years. Borrowers who successfully pay their modified loan for three months are eligible for permanent modification. The US Treasury said the program has temporarily cut mortgage payments for about 947,000 households. 116,000 loan modifications have been made permanent, up 75% from the previous month.