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
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 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
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.
If you have been following my blog, you know that I am personally offended by these scam artists out there who are preying on homeowners going through difficult times right now. I try to warn people about scams and point them in the right direction.
If you are one of the 10 Million Homeowners who is behind in mortgage payments and have come to the difficult conclusion that you can no longer afford to keep your home but also cannot sell it either and are looking for a way out, there are dignified solutions available to you. Foreclosure is not the only course. You may not be aware, but there are alternative solutions which may not only allow you to sell your current unsellable home, but may also provide you with thousands of dollars to make it happen, if you qualify.
The HAFA (Home Affordable Foreclosure Alternatives) program is a Federal Government sponsored program to help homeowners in distress. IT COSTS NOTHING TO THE HOMEOWNERS. Real Estate agents can help you with the process, but the homeowners do not pay the Realtors; their commissions are paid from the proceeds of the HAFA sale.
Unfortunately, many homeowners are not aware and are being duped by swindlers who claim to be able to help. Below are 10 signs of Mortgage Modification Scams.
Mortgage Payments Weighing You Down Report
I am mad as hell as I write this entry. Once again, dual track foreclosure has proven to be alive and well and being practiced by one of the large banks in Silicon Valley.
What is dual track foreclosure? Simply put, it is when the lender agrees to work with homeowners on a loan modification request, but also continues its foreclosure effort simultaneously. If the homeowners are being given the chance to work on a loan modification, why not stop the foreclosure effort until the resolution of the modification request? The problem is that by permitting the homeowners to work on a loan modification, it gives them the false impression that the foreclosure action has halted during the loan modification process. Those homeowners whose loan modifications are rejected are discovering that their homes are being foreclosed soon thereafter, often not giving them enough time to prepare to deal with the loan modification, let alone the foreclosure. In even worse scenarios, the homeowners are being foreclosed on while they are anxiously awaiting answers to the loan modifications. Homeowners are given false hopes of saving their homes through a loan modification, but while they are working through the process, their homes get unceremoniously snatched away without warning.
Legislative efforts were made earlier in the year in California to try to stop this deceptive practice by the lenders, but it never passed. The lobbying efforts of the lending institution were sufficient to get the bill killed in the California Senate. The despicable practice is still not illegal and being widely practiced.
Being the San Jose Short Sale Agent, I received a call from a prospect today who was referred to me by a recent client for whom I completed a successful short sale. He wanted me to help him because he spoke with someone at Wells Fargo who kindly informed him that they denied his loan modification and by the way, they are going to foreclose and sell his home (court house auction) next week. Here is an example of a dual track foreclosure at work.
This homeowner had trouble making his mortgage payments because his wife had lost her job. They went from a two income family for which they qualified their loan to a single income family. They had been working with Wells Fargo since April of this year to get qualified for a loan modification. After months of providing documentation, they were told a few days ago that their loan modification was being rejected. And also, by the way, the foreclosure auction (Notice of Trustee Sale) had been scheduled for next week. When the homeowner asked if he could get a 30 days extension to hire a Realtor to do a short sale, they rejected that request as well.
I would love to help this homeowner, but the problem is, with less than a week to go before the auction date, I cannot stop this trustee sale from taking place. Even if I had a viable offer in hand, most lenders and Wells Fargo, specifically, will not stop the sale if the sale is scheduled to take place in less than 7 days. Had the homeowner called me a week or two ago, I could have worked some magic, but now with less than a week to go before the sale date, he is out of options. Had he not relied solely on the bank to and taken other steps, we could have prepared him for a HAFA short sale and probably gotten him $6,000 to pay off the second lien and another $3,000 in relocation expenses. Instead, he will get nothing for months and months of waiting.
Some of you skeptical readers out there may be wondering if I may be exaggerating how often dual track foreclosures may be occurring in the real world? More often than you would like to believe and sometimes with confusing results.
Family Fights to Keep Home After Accidental Sale – Local News – Sacra Men To, CA – Msnbc
For homeowners out there who are working on loan modifications, do not put all of your hopes into that one basket. The chances of homeowners getting successful permanent loan modifications are small to begin with, most receive a temporary modification or are summarily rejected like the person who called me today. So protect yourself and consider multiple options, do not make the mistake of believing that the lender will have your best interest at heart.
This is the dilemma that over 6.3 million homeowners must face today: they can’t afford to keep their home, but they cannot afford to sell it either. Truly a situation where these homeowners are stuck between a rock and a hard-place.
These are both financially and emotionally difficult times for these homeowners and also ideal climate for swindlers to come swooping in. However, there is a solution available for these homeowners without falling victim to fraud. I invite you to do your due diligence and find an agent who can help you out of this dilemma who has the experience, the skill set and references to protect your financial future.
A prospective client came asking for help. She had a short sale specialist working on her case for over a year. The thing was, this agent was not even local (from San Diego) and would only tell her that things were going well for well over a year; not much communication, just that things were OK every few months. The distance probably had something to do with the lack of continual communication.
Only recently, did she receive a call from him saying the lender would not be approving the short sale and would now be foreclosing. This came as a complete shock to her. This was obviously a case of dual track foreclosure or simple negligence on the part of the agent. She said the agent was basically backing out and telling her that he could no longer help her. She wanted to know if I could help by replacing him.
It’s easy to wonder why someone would simply trust an agent for over a year and not ask questions or demand that she be kept apprised of the status of the short sale more frequently than a few times a year. I pulled up the county record to see how much time was remaining on a Notice of Trustee Sale (NOT) and to see if we could save the short sale. My search found that the NOT was filed over 3 months ago. I needed to get more information.
I asked her to get a copy of her file since the agent was essentially firing himself and I needed to know what type of communication had been initiated and what the lenders had agreed to in writing. I also asked her to get me a copy of the NOT to find out the attorney service handling the sale.
After a week or so, I followed up and not surprisingly, she got nothing from this agent. Nothing in writing. Not a copy of the NOT; not a rejection of the short sale letter from the lender; not a copy of the short sale package that was submitted on her behalf; not even a cancellation of the listing agreement; nothing. Only words.
I wanted to help her, but with no documentation and only verbal statements, I could not commit myself to help her out of her predicament. Given her particular situation, I seriously doubt anyone could help her with no documentation of what had happened before and being asked to step in only with the verbal understanding that foreclosure is imminent.
How could this individual have avoided this type of crisis? I’m not going to go into allegations here without seeing any documentation, but it seems like the agent who professed to be a specialist perhaps was not so experienced.
I believe she did not have to be in this situation. The best way to have avoided this crisis, in my opinion, was for her to have done her due diligence when hiring someone to help her out initially. You really do not get a second chance when you are dealing with foreclosures.
First, she should have hired someone locally rather than someone who is 500 miles away to market and sell her home. From what was described to me, he really didn’t know the local market and did not price it correctly nor put in a lot of effort to get it marketed correctly. If she were not getting answers, she could have dropped in on a local agent to demand answers in a more timely manner.
Secondly, she is a young computer literate woman; she should have done some research into who she was hiring. After all, she found me online. She should have Googled the person’s name and see what was said about the individual. She may not have gotten everything she needed, but she would have discovered if someone were alleging bad service or worse. People may not write nice things about you, but if they felt mistreated, they will let the world know, from my experience.
Please distressed homeowners, do your due diligence before hiring someone to help you.
You are at the end of your ropes and came to the conclusion that you can no longer afford to keep your home. If there were a way to help sell your home and protect your financial future, would you seek help?
If the government had a program which would help pay for a portion of your loan obligation and also help pay for your moving expenses, would you seek help?
If the government had a program which would insure that the lenders would not come after you for deficiency that results from what you borrowed versus what you ultimately re-pay them, would you seek help?
If the government said until 2012, the IRS will not collect taxes on the gains that result from the lenders forgiving you for portions of your loan, would you seek help?
Many homeowners are continuing to suffer because unemployment rate is still 10% in Silicon Valley and loan modifications are still very difficult to obtain or may be secretly a victim of dual track foreclosure. If you saw no other way out except to sell your unaffordable home through a short sale using the HAFA program to obtain all of the above-mentioned benefits, would you seek help?
If the answer to the above questions were yes, then you may be a candidate for the HAFA short sale program. Most major lenders are participants of this program which was designed to help distressed homeowners avoid foreclosure. It is one of the few government programs designed to help struggling homeowners that actually works.
However, time is running out and you may not be able to take advantage of all of these wonderful benefits after the end of calendar year 2012. So please contact us to find out more and see if you can qualify for all of these free benefits, including money to help settle your other liens and help you move. Help is available to you, not taking advantage of this program is wasteful and can be disastrous to your financial future. You have an obligation to help yourself by finding out more.
You may be fortunate and not be in a situation to take advantage of these benefits offered by this program. However, if you know someone who may be able to benefit, then please forward this link and help them take advantage of these benefits and free money. You will be helping someone out a very difficult situation. It may be the right thing to do.
I try in this blog to reach out to and deliver to the public , who may be looking for information, material that may prove useful to them. However, sometimes it is a challenge to try to verbalize the information in a manner that is easy to read and to comprehend. Writing proves to be a difficult challenge for your truly.
Sometimes, rather than reading about something, it is much easier to absorb the information by watching a video. Fortunately, the CDPE organization has published some videos which are short and to the point. Since they have made the effort to produce these little gems, I feel it is only right that I share them with my readers. Enjoy.
This first one answers the question: what is a short sale?
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