The Nuts and Bolts of the $25 Billion Robo Signing Settlement

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The latest buzz in Real Estate now is about the $25 Billion Robo Signing Settlement.  In typical fashion, the program was announced first, before the details were released.  Fortunately, CDPE’s parent organization was able to read through the settlement and extract the details.

 

So what are the specifics about this settlement?

 

WHO

 

Bank ofAmerica

Ally

Chase

Citi

WellsFargo

 

HOW WILL THE MONEY BE SPENT?

 

$5 Billion  -  $2,000 payments to borrowers who were foreclosed on between Jan. 1, 2008 through December 31, 2011 and who were subjected to the fraudulent practices.

 

$20 BILLION WILL BE USED TOWARDS FORECLOSURE ALTERNATIVES

 

$10 Billion –  Going to borrowers who are currently delinquent on their mortgages in the forms of loan modifications and principal reductions.

 

$ 7 Billion –   Going to assisting homeowners through short sales, forbearance, relocation assistance or other alternatives.

 

$3 Billion  -  Going to help borrowers who are current on their mortgages but owe more than the value of their home into different refinance efforts.

 

TIMELINE

 

30-60 days  -  Negotiators will select an administrator to handle logistics of the settlement and monitor compliance.

 

6  –  9  Months  -   The settlement administrator and attorney general will identify homeowners eligible for immediate cash payments and notify them by mail.

 

3 Years  -  The time it will take for the settlement to  be completed by the banks.

 

 ADDITIONAL NOTES

 

* Robo-signing practices are forbidden.

 

* Dual-track Foreclosures (working with the homeowner on modification of the loan while simultaneously pursuing foreclosure) is forbidden.

* Fannie Mae and Freddie Mac insured loans are not impacted by this settlement.

 

* Special recourse is in place for Servicemembers who were charged over 6% interest
rates after a valid request to lower their rates under the Servicemembers Civil Relief Act
(SRCA) or who were wrongly foreclosed on.

 

* Money will be distributed differently for different states.

-  California will receive the largest portion of the settlement:  $12 Billion

 

Major Lenders offering cash incentives to distressed homeowners to complete short sales

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As I had written before, lenders offering cash incentives to distressed homeowners has apparently now grown also to include Bank of America and Wells Fargo.  These actions simply go to reinforce the fact that lenders will make more money doing Short Sales than Foreclosures and get the underperforming assets off their balance sheets much quicker.

 

If they made more money foreclosing, we would not see these tremendous efforts to drive distressed homeowners to complete Short Sales.

 

From the distressed homeowner’s point of view, there are other things happening which are ancillary benefits that make completing short sales extremely appealing to them.

 

The key to this huge payoff is that the lenders contact those who they believe to be at greatest risk and send them those wonderful letters.  If you are fortunate enough to receive one of these letters, you need to contact a seasoned professional like the San Jose Short Sale Agent immediately and set things into motion.

 

If you are not the recipient of one of these letters, then you can help others by passing along this information, so that these distressed homeowners  who may receive then, do not end up throwing them away thinking they are some sort of ploy or junk letters.

 

 

Banks Paying Homeowners to Avoid Foreclosures

A Happy Day for the San Jose Short Sale Agent

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It was a pleasant, beautiful sunny day today as the San Jose Short Sale Agent drove around previewing some homes while listening to some oldies on the radio.   It turned into a much nicer day when my client who was closing on his short sale today, invited me to lunch after he picked up his check for the $3000 relocation assistance check from his HAFA short sale.  He was so excited that the nightmare was ending, that he wanted to celebrate with me.

 

It a little over two months ago when he contacted me, feeling he was at the end of his ropes.  Chase had just informed him they were denying his request for a loan modification after dragging it out for months and the prospect of staying in his home was now up in the air.  But he had made up his mind.  He realized, despite his emotional attachment, he could no longer afford to keep the home.  He had to give it up and move on with his life and make a new life for him and his family.

 

In a little over two months, that same lender – Chase – was willing to allow him to sell his home for a loss, forgive him the deficiency, but on top of that gave him a check for $3,000 to help with the relocation to his new rental.   As we were discussing over  dim sum lunch, he was so happy and grateful that he is able to move forward without the burden of his mortgage, he seemed like a different man.  He was saying he could not sleep even last night, because he was concerned that something could go wrong and we would not be able record the deed and close escrow today.  He was going to sleep well tonight!   My client is now a friend and an evangelist on my behalf.

 

We were discussing why more people who are in similar situation as himself would not choose his route if they were unable to get loan modifications or otherwise afford to keep their homes.  We came to the conclusion it is probably due to lack of information.  If distressed homeowners knew that their income tax exemptions and the benefits of financial incentives from HAFA were ending soon, they would probably take decisive action as to prevent missing out on those valuable benefits.  He would tell his friends whom he knows are having difficulty paying their mortgages to take action.

 

Dear reader, if you or someone you know, are in a similar situation where you have come to the conclusion that you cannot afford to keep your home, but you cannot sell your home either because of the debt you owe to the banks, please take action soon and before this year is up.  Naturally, if you reside in the greaterSilicon Valley, I would love to help you so you can move forward with a new chapter in your life.

 

However, I am not saying you have to come to me necessarily; I respectfully and sincerely urge you to talk to someone who is an expert in the field of Short Sale  and get help soon before the two programs expire.   I think I would not be doing my job and my personal quest to help as many people fight foreclosures if I were not educating people about programs that are available; yet many people are not taking advantage due to lack of information.

 

Please talk to someone.  Indecision means you are making a decision to allow foreclosure to happen to you.

Villa Cortina Condo Homeowners (801 S. Winchester Blvd., San Jose, CA 95128), we want to talk to you.

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Villa Cortina Homeowners, we have buyers who are looking to purchase 2 bedroom 2 baths units in this complex.

 

We would like to hear from you if you can do a regular sale.

 

Even if you are underwater and would like help getting out from under the  property so you can move forwards, we can help you, so please contact us.

 

Steve Mun Group
www.stevemungroup.com
650-605-3188

Freddie Mac permits up to 12 months of forbearance to unemployed homeowners

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Excellent news for unemployed homeowners who may be carrying Freddie Mac mortgages.   Starting February 1, 2012, if you make prior arrangements with Freddie Mac through their servicers, there may be up to 12 months of forbearance.

 

Details below

 

 

Freddie Mac Now Permits Up to 12 Months Forbearance to Unemployed Borrowers – Jan 6, 2012

Top 10 Red Flags of a Mortgage Scam

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It seem inevitable.  During economically challenging times, all types of  fraud increase.  People who are at the brink of losing their homes grasp at straws and want to hear that people out there have miracle means of saving their homes from foreclosure.  The fraudsters claim they have knowledge of  ”secret laws” or legal loop holes which will invalidate their mortgages or otherwise prevent the lenders from being able to foreclose, etc……

 

The FBI tracked mortgage fraud for the past decade and revealed that 91% of all Mortgage Fraud in the past decade took place between 2007 – 2010.  

 
FBI Stats

 

 

If someone asks you to engage in any of these activities, you want to run the opposite way.   Protect yourself by arming yourself with knowledge.

 

 

Mortgage Scams

In 2013 short sales or foreclosures means paying income taxes

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With the start of the New Year, inevitably people start thinking about paying taxes and the IRS.

 

Here is something to ponder if you are one of the millions of American Homeowners who is behind in their mortgage payments.  Starting in 2013, whether a homeowner gets foreclosed on or completes a short sale, they will be required to pay both Federal and State Income Taxes.  Yes, even after they lose their home, they will be left with a tax bill for the value of the debt which was forgiven or charged off.   And as calculated in the article below, this could mean possibly tens of thousands of dollars for the homeowner.

 

According to the Mortgage Debt Relief Act of 2007, up until December 31, 2012, the IRS and Franchise Tax Board (for California Homeowners) will “generally allow taxpayers to exclude income from the discharge of debt on their principal residence.”  The Franchise Tax Board has agreed to mirror the IRS on this matter.   And given the status of the Federal Debt Ceiling and current political climate, I would bet against the law being extended.

 

 

http://www.sacbee.com/2012/01/09/4172841/you-may-owe-federal-income-taxes.html
You May Owe Federal Income Taxes in 2013 if You Have a Short Sale, Foreclosure
 

Besides the expiration of the Income Tax exemption, there is another financial incentive which will expire at the end of calendar year 2012.    The HAFA (Home Affordable Foreclosure Alternative) Program, which may assist qualified Homeowners receive moving expenses and additional funds to pay off a second mortgage will expire on the same date.

 

Given that the foreclosure and short sale procedures are prone to extended time to completion, homeowners in distress contemplating short sales must do some serious thinking this year.

The list of celebrity short sales is increasing

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They say celebrities are just like us, except richer, better looking and skinnier.  Perhaps.

 

What is indisputable, however, is that they are not spared from suffering through falling property values and other economic hardships so many Middle Americans are suffering through today.  Many of these athletes or celebrities bought when they received their big paychecks, then fell behind on their payments when times became more difficult.  The amount of money involved may be greater, but the situations of underlying economic hardships are similar.

 

The list of celebrities who are utilizing short sales to avoid facing foreclosure is increasing; it includes such names as:  Terrell Owens, R.Kelly, Jamarcus Russell, Chris Tucker,  Carnie Wilson, and several Reality TV stars.  The list continues to grow.

 

Most of these highly paid athletes or celebrities have business managers, lawyers and accountants advising them and otherwise looking out for their financial interests.  If celebrities are doing short sales on their multi-million dollar homes because that is a better outcome than foreclosure, why wouldn’t it be good for the average homeowner?  What’s good for the goose must be good for the gander, right?

 

The chasm between the lifestyles of celebrities and those of Middle Americans seem to be shrinking.   Just as not every homeowner is facing foreclosure, not every celebrity is in the same situation.  However, just like Middle Americans, now celebrities who have fallen on hard times are choosing short sales over foreclosures.  A reversal in trend, where celebrities are now doing things Middle Americans  first made popular.      

 

Knowledge can avoid tragic foreclosure outcomes – so share that knowledge

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The San Jose Short Sale Agent  shouted with glee today to celebrate the victorious outcome of a family which was able to successfully fight its battle against foreclosure today, as I was feeling proud and victorious.  The family which had endured the humiliation of being turned down for a loan modification by their bank, feeling they were without recourse, had come to me only two months ago to try a short sale as their last hope.   They felt they were at their wit’s end.   They came beaten and  humiliated.  It was bad enough they had to live through the indignity of unemployment which triggered their horror story, but their bank had refused to modify their loan or otherwise assist them.

 

But today they were victorious because the same bank which refused their loan modification request, had approved their Home Affordable Foreclosure Alternatives Program (HAFA) short sale and were willing to pay them $3,000 to help with their relocation costs and also had going to pay nearly $4,000 to pay off their HOA delinquencies and additional funds to pay off their delinquent property taxes.   Unlike two months ago, now the family felt they were getting vindicated.

 

That joyous feeling lasted a few hours as I read this  article today describing a different outcome for a person with a similar hardship which is headed towards a different outcome.   I obviously do not know the full details of Darlene’s situation besides what was described in the article below.   However, what I do know is that she was unemployed, suffers from cancer and fell behind in her payments which led to her foreclosure.

 

Typically three things have to be present to qualify for a short sale approval:  1) hardship (typically economic hardships) ,  2) monthly income short fall (meaning more goes out than coming in)  and 3) insolvency (meaning no assets).   In Darlene’s case, she certainly would have met the hardship (cancer plus unemployment);  the article mentions she is living on pension, social security and unemployment so I would assume she had a monthly short fall and probably did not have much assets set aside.   She certainly sounds like she would have been a good candidate for a short sale.

 

Additionally, if  this were her only home (primary residence), and as she was obviously delinquent on her mortgage payments and her unemployment and other income sources would probably have resulted in her paying more than 31% of her monthly income, there is a good chance she would have qualified for a HAFA short sale as well as Wells Fargo participates in that program.   If she qualified for a HAFA short sale, then she would have received $3,000 relocation assistance and up to $6,000 to pay off her second loan, if she had one.   Rather than being evicted with nothing to  her name or perhaps a small stipend – otherwise known as cash for keys – to get her out, Darlene could have saved herself the humiliation of being evicted from her home of 41 years and walked away knowing that she would have settled her debts with Wells Fargo and other lien holders.   She could have walked away selling her home with the bank’s blessing plus money in her pocket, rather than having the bank evict her and her neighbors of 41 years watching this happen.

 

The unfortunate aspect of this tragic story is that Darlene probably did not know that the HAFA option was available to her.   People in Darlene’s demographics do not often have the benefit of being able to research alternative options to foreclosures on the internet and take advantage of those solutions and the accompanying benefits like my clients did when they reached out to me two months ago.  Both of these people had similar hardships – unemployment (but Darlene’s case was worse because she also has cancer which was probably rapidly draining her bank account) – yet the outcomes will be dramatically different and each of these families will be celebrating the Holiday Season this year  in different states of minds.   It did not have to end this way for Darlene except that she was unaware and regretfully no one around her had given her the requisite  information.

 

If you are reading this blog entry, please share what you have read, so that people like Darlene do not have to suffer through foreclosures due to lack of knowledge regarding alternative options.   Please tell your grandparents, parents, neighbors or others who may be unable to surf the net for answers that there are alternative options to foreclosures; they don’t have to endure the humiliation of an eviction.  Please share with them that there is a Federal Government designed program to help out people facing foreclosures by offering them different alternatives.

 
San Jose Foreclosure Case is Both Tragic and Complicated

Bank of America streamlines HAFA short sale process in Equator.

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Starting today, December 1, 2011, Bank of America (BofA) makes the HAFA short sale process run easier and smoother by permitting them to be processed through the Equator system. The use of the Equator system made the entire short sale process at BofA go much smoother. It was only a couple of years ago, that BofA was often deemed to be the worst lender to deal with in the short sale arena. As the San Jose Short Sale Agent who has handled countless number of short sales with BoA prior to their transition to Equator, the changes in their service after converting to Equator were almost immediate. BofA went from the worst to best in a matter of months by a BBB (Better Business Bureau) survey. Unfortunately, the benefits and the efficiency of Equator were unavailable for those who were seeking HAFA short sales with BofA.

 

Until this announcement was made, all HAFA short sales had to be taken out of Equator and handled through their third party vendor call centers and fax machines. This meant things took longer and the inefficiencies of faxing documents to various fax numbers and non-employees came back into play. (But to be fair, even Wells Fargo which also uses Equator, takes the same approach with HAFA short sales and removes them from Equator). But with the announcement today that HAFA short sales can be processed through Equator, all is right with the universe. Now only if Wells Fargo will follow suit.

 

Bofa Announcement