Huntington Beach Realty

2011-07-06T20:16:00.000-07:00

Orange County Housing Market Summer 2011

Everybody is taking for granted that these current historically low level interest rates will last forever… they absolutely will NOT.

Interest Rates: we will not see interest rates like these every again during our lifetimes.
Remember the days when gas prices were below $1.50 per gallon? That was just nine years ago. At this point we would settle for paying $3.00 per gallon. Longing for those days will not make them come back. In fact, I don’t think we will ever see gas prices below $2.00 ever again, and most likely have seen the last of prices below $3.00 as well. Many buyers are going to be kicking themselves for not taking advantage of today’s incredible interest rate atmosphere. As a society, we unfortunately shop for homes strictly by price. Sure, buyers and homeowners want to take advantage of today’s interest rates, but I will bet good money that everybody has forgotten the day when we rejoiced at interest rates that dropped below 8% a decade ago. Very few people believe interest rates could increase dramatically. Yet, interest rates are poised to increase, they HAVE to. The United States government has dumped tons of money into the economy over the past several years in hopes to jump start activity. When the economy is flooded with money, inflation eventually rears its unwelcome head. When that happens, and it will, interest rates will jump. So, why am I making such a big deal about interest rates? I am making a big deal because as interest rates rise, affordability drops just as swiftly. This chart helps illustrate the impact of an increase in interest rates. For a $500,000 loan, as interest rates bump up from 4.5% to 6.5%, an inevitable reality down the road, affordability drops by $100,000. If rates increased to 8%, year 2000 levels, the monthly payment for a $400,000 loan increases to $2,935. For a $1 million loan, affordability drops by $200,000 with a 2% increase in interest rates. Since these payments are not going to hold at these historically low levels, for buyers that are waiting for prices to fall further, they risk being able to afford and qualify for a much smaller purchase price. It is time to shop for homes based upon today’s incredible low payments. We all shop for cars based upon the monthly payment, often negotiating to drop the monthly payment by $20. As mortgage rates increase, monthly payments go up by hundreds of dollars. We are worried about saving $20 per month for a car with, it’s time that we start worrying about saving hundreds of dollars and cashing in on today’s “once in a lifetime” historically low mortgage rates. If a buyer plans on holding onto a home for many years, a wise way to approach real estate today, the total savings over time with a lower monthly payment will be staggering.

Housing Demand: Demand dropped slightly over the past couple of weeks.
Demand, the number of new pending sales over the past month, decreased by 40homes in the past two weeks and now totals 3,060 pending sales. Last year at this time demand was almost at the same level with 3,107pending sales. The discrepancy in year over year demand has vanished because last year at this time the first time home buyer credit had expired.

The Active Listing Inventory: There listing inventory grew slightly.
The inventory slightly increased by an additional 51 homes, almost unchanged, and now totals 11,388. Last year, the listing inventory was continuing to grow at an alarming pace. This time last year during the same two week period, the inventory grew by over 3% and totaled 10,462, just 962 fewer homes than today. The year over year gap has dramatically diminished, starting the year with 2,694 home spread and now totals less than a 1,000.

The Distressed Market: the active distressed inventory changed very little this year.
The distressed inventory now totals 3,810 and represents 33.5% of the active inventory. The expected market time for foreclosures is remains incredibly HOT at 1.57 months. There are currently only 670 foreclosures within the active listing inventory, an increase of only two homes in the past month. There are currently 3,140 short sales on the active market, increasing by one home in the past month. The expected market time is 2.83 months for short sales, also a seller’s market.

Information generously provided by Steven Thomas

2011-05-26T09:43:00.001-07:00

2011-04-15T20:48:00.000-07:00

Search for Homes!

2011-03-28T13:29:00.000-07:00

How to Write a Short Sale Hardship Letter

A Hardship Letter for a Short Sale is a letter that you write to your bank or financial institution requesting that the bank consider a short sale to stop the foreclosure of your home.

In the letter you must:

State the legitimate, special circumstances which have caused you to fall behind on your house payments.
Explain your current situation and what you are doing to try and get back on your feet.
Don’t make your situation worse, by complaining to them.
Be honest and represent the facts clearly.
It is important that you put some effort into writing the hardship letter. A lender will agree to a short sale only when they are convinced that a loss on the property is inevitable. The lender then weighs the cost/benefit of a short sale versus a foreclosure.

To qualify for a short sale, the borrower must demonstrate evidence that the mortgage cannot be paid and that the property cannot be sold for what is owed on the property. Although short sale applications are assessed on a case by case basis, short sale approval is easier to obtain from a lender if the following conditions exist:

The market value of the property has decreased.
The borrower has experienced a financial hardship.
The mortgage is in default.
What Does The Bank Consider a Short Sale Hardship?
Banks will read the hardship letter to assess why a borrower is having financial difficulties. What situation triggered the problem? When did the problem arise? How has the borrower attempted to cope with the resulting financial difficulties?

The underlying reason behind most delinquent mortgage payments is what the mortgage industry defines as a "hardship condition." A hardship is an unexpected financial crisis of some sort. Although it is the lender who ultimately determines whether a situation will be deemed a "hardship," HUD guidelines may help determine status. HUD recognizes the following situations as valid hardships and justification for default:

Death of principal mortgagor
Death of mortgagor's family member
Illness of principal mortgagor
Illness of mortgagor's family member
Marital difficulties
Curtailment of income
Unemployment
Excessive obligations
Inability to sell property (this is true for all of Las Vegas)
Job Relocation
Property problem (roof leaks, construction litigation, etc.)
Incarceration
Inability to rent property
Military Service
Casualty loss (such as a Hurricane, etc.)
Energy-Environmental costs
Servicing problems
Payment adjustment (ARM Adjusting)
Payment dispute
Transfer of ownership pending
Fraud
Abandonment of property (due to condition of property, for instance)
It is important to keep in mind that some scenarios may meet these criteria and yet not be viewed favorably by a lender. Additionally, the more proof of the hardship which a borrower is able to produce, the better.

What Does NOT Constitute a Short Sale Hardship
QUESTION: Why are some homeowners asked to pay substantial promissory notes in exchange for a short sale approval, while other homeowners are not asked to pay a promissory note at all? The answer can almost always be found by looking at the experience (or lack of experience) of the Real Estate Agent. There are certain factors which minimize hardship in the eyes of Banks and Bank Investors, and are essentially "Short Sale Deal Killers." A Realtor experienced with short sales will be able to explain the banks perception of hardship and how it applies to your particular situation.

Here are a few scenarios which are guaranteed to raise red flags in the eyes of your bank. Bank negotiators are trained to look for these items, and once a bank has determined that your short sale falls into one these "minimized hardship" categories, the chances of you being required to pay a promissory note increase exponentially.

1. Your Mortgage Payment is Current

Banks may not take you seriously if you have the ability to pay your monthly mortgage. This does not constitute a hardship in the eyes of the bank. Remember, a bank will only consider a short sale if they think the chances of foreclosure are eminent. As long as you continue to make your monthly payment, the bank will likely "sit back and wait" to see if you will make another payment next month too. It is possible to obtain a short sale approval while continuing to make your mortgage payment, however, this places you in a position where the bank will likely request a very large promissory note or cash contribution at closing. The less your hardship in the eyes of the bank, the greater your chances of paying a promissory note.

2. Collecting Rents and Failing to Pay Your Mortgage

Banks will cooperate with investors who are experiencing hardship, however, if you are collecting rent from a tenant and failing to make the monthly mortgage payment on your tenant occupied property, then this is the #1 Short Sale Deal Killer. Banks do NOT look favorably upon investors who are getting paid by a tenant, yet failing to honor their mortgage obligation. In fact, these type of investors are far more likely to be sued by their bank in a deficiency judgement lawsuit than anyone else. Non-owner occupied properties are eligible for short sale approval, however, it is important that investors understand the banks perspective of hardship. It makes no sense to continue collecting rent from a tenant, only to wind up being sued by your bank once the home forecloses. These type of investors will have a hard time convincing a judge that they acted in good faith.

3. Recent Purchases on Your Bank Statements or Inquiries on Your Credit Report

When you apply for a short sale, the first thing the bank will do is pull your credit. (Yes, they have the right) They will use your credit report and your bank statements to determine the extent of your hardship. If your bank statements show recent electronics purchases at Best Buy, or show purchases made on a recent vacation to Maui, or if your credit report shows recent credit inquries at car dealerships, etc., then you are going to have a much harder time convincing your bank that a hardship exists. Banks are very smart. They intentionally make the short sale process complicated, to sort out the people with actual hardship from the people who may still have the ability to make their mortgage payment.

A Real Estate agent who is experienced with short sales can help you prepare a workout package which conforms with the banks definition of legitimate hardship. You do NOT need to be poor or broke to qualify for a short sale. Actor, Nicolas Cage is a multi-millionaire, yet last year, he successfully did a short sale on his Las Vegas home. Hardship is not solely determined by how much money a person earns...it also factors in a person's expenses, especially if expenses have increased and income has decreased.

Basically, the two questions a lender asks itself when reviewing a short sale packet are:

1) Is this property going to go into foreclosure?

2) If this property goes into foreclosure, will we lose less money with a short sale?

Even if the hardship does not completely meet the criteria of a true hardship, the lender may approve the short sale because they believe that the property is going to go into foreclosure regardless.

NOTE: As you write the hardship letter, you need to accomplish two goals. You MUST:

1) Provide as much written explanation of your hardship as possible. Be specific.

2) Convince the bank that you are unable to make any more payments

The borrower should write the letter in their own words, but they need to make sure that there is a clear picture of their financial condition, and back up their claims to hardship with documentation, such as pay stubs, medical bills, job layoff letters and more. The numbers should clearly illustrate that the borrower is headed for foreclosure or bankruptcy. This will motivate the lender to cooperate.

Lenders are all about numbers, so the letter isn't a sob story about the borrower's difficulties. It should be a factual description of a financial situation that is leading up to a bankruptcy or a foreclosure on their home, or both. The lender must be convinced that their only other option is foreclosure, and then they can analyze the numbers to see if a short sale is a preferable alternative.

The short sale hardship letter can be typed or handwritten, but we have found that handwritten is most effective. It should contain some standard elements at the top of the letter including the name of the borrower(s), the date, the lender and the loan number. The end of the document should have the borrower’s signature with the date, as well as the signature of any co-borrower. The length is not important so make it as long as needed to have the desired impact.

After assembling hundreds of short sale packages I have found that more than any other document, the hardship letter can make or break a short sale. While banks care most about dollars and cents, it is important to remember that the package will be reviewed by an individual loss mitigator. Like the rest of us, this loss mitigator is a real person with real emotions who cannot help but be influenced by a sincere story of hardship.

2011-03-21T21:20:00.001-07:00

2011-03-02T13:00:00.001-08:00

7322 Yellowtail Dr. #202

HUNTINGTON BEACH, CA

Newly updated kitchen, floors and windows!

2BR/1+1BA Single Family House

$375,000

Year Built	1984
Sq Footage	900
Bedrooms	2
Bathrooms	1 full, 1 partial
Floors	2
Parking	1 Car garage
Lot Size	Unspecified
HOA/Maint	$319 per month

Description

Highly desireable Pacific Ranch guard gated end unit villa with 2 bedrooms, attached garage and lots of wonderful amenities. Enjoy the home's excellent location next to pool, spa and recreation room. Light and bright end unit with no one above or below affords vaulted ceilings, remodeled baths, hardwood floors, interior laundry and fireplace in the living room for more added value. Walk or ride your bike within minutes to the beach, pier and Huntington Beach's downtown strip. Close to Seacliff shopping center, schools and city civic center. Call now for a private showing.

Property Features

Central heat	Fireplace	High/Vaulted ceiling
Hardwood floor	Living room	Dining room
Dishwasher	Refrigerator	Stove/Oven
Microwave	Washer	Dryer
Laundry area - inside

Community Features

Garage parking	Guest parking	Clubhouse
Swimming pool(s)	Sauna/Spa	Gated property
Secured entry

Additional Photos

Photo 1	Photo 1
Photo 2	Photo 1
Photo 2	Photo 1

Contact Info

Ron Pascual

RJP & Associates

(714) 423-9500

For sale by agent/broker

Equal Opportunity Housing

2011-03-02T11:29:00.001-08:00

2011-02-28T10:46:00.001-08:00

U.S. consumer confidence hits three-year high
The Consumer Confidence Index rose to 70.4 this month, up from 64.8 in January, as Americans expressed more optimism about their income prospects and the direction the economy is headed, a private research group reported Tuesday

2010-11-01T22:16:00.001-07:00

Ron Pascual | RJP & Associates | (714) 423-9500

21422 Fleet Lane, Huntington Beach, CA

4BR/3BA Single Family House

offered at $730,000

Year Built	1967
Sq Footage	2,508
Bedrooms	4
Bathrooms	3 full, 0 partial
Floors	2
Parking	2 Car garage
Lot Size	6,098 sqft
HOA/Maint	$0 per month

DESCRIPTION

GREAT SOUTHPORT NEIGHBORHOOD!! 1/2 mile to beach. Walk to Edison, Sowers, and Eader. Wonderful 2 story home w/ huge upstairs bonus-family room, spacious open floorplan with vaulted ceilings all on a quiet interior lot location. Large backyard w/ modern pool and covered patio is perfect for entertaining. Gated side yard for RV parking too!

Must see for the active beach family lifestyle.

see additional photos below

PROPERTY FEATURES

- Central heat	- Fireplace	- High/Vaulted ceiling
- Hardwood floor	- Tile floor	- Family room
- Living room	- Bonus/Rec room	- Dining room
- Dishwasher	- Stove/Oven	- Laundry area - inside
- Balcony, Deck, or Patio	- Yard	- Swimming pool

OTHER SPECIAL FEATURES

- 400 sqft bonus room!

ADDITIONAL PHOTOS

Wonderful Curb Appeal	Entertainer's Backyard
Vaulted Ceiling	Upstairs Bonus Room
Cozy Front Porch	Surf City!

Contact info:

Ron Pascual

RJP & Associates

(714) 423-9500

For sale by agent/broker

Equal Opportunity Housing

Posted: Nov 1, 2010, 8:54pm PDT

2010-11-01T14:02:00.000-07:00

Looking for a home in a certain area? Map search here!

2010-09-08T23:39:00.000-07:00

Credit after Foreclosure, Deed in Lieu, Short Sale or BK...
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One of the concerns a consumer has after experiencing a bankruptcy, foreclosure, or short sale (referred to as a "preforeclosure sale" by Fannie Mae when the owner is in default) is the ability to obtain credit to purchase another home. Fannie Mae has updated its credit guidelines in the FNMA Selling Guide, June 30, 2010. [ Note: This is a 1,234 page PDF document that takes a long time to download.] This legal article summarizes those guidelines in Part I. In addition, since lenders use FICO scores in order to determine the creditworthiness of a borrower, this article covers the impact of a bankruptcy, foreclosure or short sale on FICO scores in Part II.

I. Fannie Mae Credit Guidelines

A. Credit after Foreclosure

Q 1. How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?

A Seven years from the date the foreclosure sale was completed as reported on the credit report or other foreclosure documents provided by the borrower. See Question 2 below for exceptions.

(Source: FNMA Selling Guide, 6-30-10 at 426 )

Q 2. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the foreclosure?

A Yes. The borrower may again be eligible for a loan three years from the date the foreclosure sale was completed if the borrower has "extenutating circumstances" as defined in Question 3.

Additional requirements that apply after 3 years and up to 7 years following the completion date are as follows:

The purchase must be of a principal residence. Purchase of a second home or investment property is not permitted until the seven-year waiting period has elapsed.

The consumer is limited to a maximum loan to value ratio of 90 percent. If the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf ) sets forth a lower maximum loan-to-value ratio for the transaction at hand, then the consumer is limited to the lower maximum loan-to-value ratio.

Limited cash-out refinances are permitted for all occupancy types. (Cash-out refinances are not permitted until a seven-year waiting period has elapsed.)
(Source: FNMA Selling Guide, 6-30-10 at 426-7 .)

Q 3. What are"extenuating circumstances"?

A Fannie Mae describes "extenuating circumstances" as follows:

Extenuating circumstances are nonrecurring events that are beyond the borrower's control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.

If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower's claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower's inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, listing agreements, lease agreements, tax returns (e.g., covering the periods prior to, during, and after a loss of employment).

The lender must obtain a letter from the borrower explaining the relevance of the documentation. The letter must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no reasonable options other than to default on his or her financial obligations.

(Source: FNMA Selling Guide, 6-30-10, 6-30-10 at 429 .)

Q 4. What are the requirements to re-establish a credit history after a foreclosure?

A After a foreclosure, a credit history must meet the following requirements to be considered re-established:

• The elapsed time and the related requirements are met (as discussed in this article).

• The loan receives a recommendation from Desktop Underwriter (an automated underwriting system) that is acceptable for delivery to Fannie Mae. If manually underwritten, then the loan must meet the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.

• The borrower has traditional credit as outlined in the Selling Guide, B3-5.3, Traditional Credit History (https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sel043010.pdf). Nontraditional credit or “thin files” are not acceptable. A “thin file” exists where the borrower does not have a sufficient number of credit references to develop a traditional credit report.

(Source: FNMA Selling Guide, 6-30-10, 6-30-10 at 428).

B. Credit after Deed-in-Lieu (DIL) of Foreclosure

Q 5. How long is the time period after a deed-in-lieu of foreclosure before a consumer can be eligible to obtain credit to purchase a property?

A After two years from the date the deed in lieu was executed, but the consumer is limited to a maximum loan-to-value ratio of 80 percent. If the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf) sets forth a lower maximum loan-to-value ratio for the transaction at hand, then the consumer is limited to the lower maximum loan-to-value ratio.

After four years, the consumer is limited to a maximum loan to value ratio of 90 percent. If the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf) sets forth a lower maximum loan-to-value ratio for the transaction at hand, then the consumer is limited to the lower maximum loan-to-value ratio.

After seven years, the consumer is limited to the loan-to-value ratios set forth in the Eligibility Matrix. (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf)

(Source: FNMA Selling Guide, 6-30-10, 6-30-10 at 427.)

Q 6. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the deed-in-lieu of foreclosure?

A Yes. Two years from the date the deed-in-lieu was executed, but the consumer is limited to a maximum loan-to-value ratio of 90 percent. If the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf) sets forth a lower maximum loan-to-value ratio for the transaction at hand, then the consumer is limited to the lower maximum loan-to-value ratio.

(Source: FNMA Selling Guide, 6-30-10, 6-30-10 at 427.)

See Question 3 for the definition of "extenuating circumstances."

Q 7. Are deed-in-lieu of foreclosure actions identified on a credit report?

A A deed-in-lieu of foreclosure may be reported by a remarks code indicating a deed-in-lieu.

(Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 8. What are the requirements to re-establish a credit history after a deed-in-lieu of foreclosure?

A After a deed-in-lieu of foreclosure, a credit history must meet the following requirements to be considered re-established:

• The elapsed time and the related requirements are met (as discussed in this article).

• The loan receives a recommendation from Desktop Underwriter (an automated underwriting system) that is acceptable for delivery to Fannie Mae. If manually underwritten, then the loan must meet the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.

• The borrower has traditional credit as outlined in the Selling Guide, B3-5.3, Traditional Credit History (https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sel043010.pdf). Nontraditional credit or “thin files” are not acceptable. A “thin file” exists where the borrower does not have a sufficient number of credit references to develop a traditional credit report.

(Source: FNMA Selling Guide, 6-30-10 at 428).

C. Credit after a Short Sale (Preforeclosure Sale)

Q 9. How long is the time period after a " preforeclosure sale" before a consumer can be eligible to obtain credit to purchase a property?

A After two years from the date the preforeclosure sale was completed, but the consumer is limited to a maximum loan-to-value ratio of 80 percent. If the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf) sets forth a lower maximum loan-to-value ratio for the transaction at hand, then the consumer is limited to the lower maximum loan-to-value ratio.

After four years, the consumer is limited to a maximum loan to value ratio of 90 percent. If the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf) sets forth a lower maximum loan-to-value ratio for the transaction at hand, then the consumer is limited to the lower maximum loan-to-value ratio.

After seven years, the consumer is limited to the loan-to-value ratios set forth in the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf).

(Source: FNMA Selling Guide, 6-30-10, 6-30-10 at 427.)

Q 10. What is a "preforeclosure sale" mentioned in Question 9 and is that the same as a short sale?

A "A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satify the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer"

Although the terms preforeclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a preforeclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclousre action. A short-sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to facilitate the sale of the property to a third party.

(Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 11. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the preforeclosure (short) sale?

A Yes. Two years from the date the preforeclosure sale was completed, but the consumer is limited to a maximum loan-to-value ratio of 90 percent. If the Eligibility Matrix (https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf) sets forth a lower maximum loan-to-value ratio for the transaction at hand, then the consumer is limited to the lower maximum loan-to-value ratio.

(Source: FNMA Selling Guide, 6-30-10 at 427 .)

Q 12. If a borrower sold his or her property as a short sale but was never delinquent on that mortgage and is now attempting to purchase a new primary residence, will Fannie Mae purchase the loan?

A The loan will be eligible for delivery to Fannie Mae provided that the borrower's previous mortgage history complies with Fannie Mae's excessive prior mortgage delinquency policy--that is the borrower does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date--and the borrower has not entered into any agreement with the short sale lender to repay any amounts associated with the short sale, including a deficiency judgment.

(Source: FNMA Announcement 08-16 Q&A, 8-13-08 ; FNMA Selling Guide, Part X, Chapter 3, Section 302.09. .)

Q 13. Are preforeclosure sales (short sales) identified on a credit report?

A Preforeclosure sales may be reported as "paid in full" with a "settled for less than owed" remarks code, and the mortgage tradeline would indicate any recent delinquency.

(Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

D. Credit after a Bankruptcy

Q 14. How long is the time period after a Chapter 7 or Chapter 11 bankruptcy before a consumer can be eligible to obtain credit to purchase a property?

A Four years from the discharge or dismissal date of the bankruptcy action.

(Source: FNMA Selling Guide, 6-30-10 at 425 .)

Q 15. How long is the time period after a Chapter 13 bankruptcy before a consumer can be eligible to obtain credit to purchase a property?

A Two years from the discharge date and four years from the dismissal date. The shorter waiting period based on the discharge date recognizes that borrowers have already met a portion of the waiting period within the time needed for the successful completion of a Chapter 13 plan and subsequent discharge.

(Source: FNMA Selling Guide, 6-30-10 at 425 .)

Q 16. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the bankruptcy (all actions)?

A Yes. Two years from the discharge or dismissal; however, no exceptions are permitted to the 2-year time period after a Chapter 13 discharge.

(Source: FNMA Selling Guide, 6-30-10 at 425-6 .)

See Question 3 for the definition of "extenuating circumstances."

Q 17. How long is the time period after multiple bankruptcy filings before a consumer can be eligible to obtain credit to purchase a property?

A Five years from the most recent dismissal or discharge date for borrowers with more than one bankruptcy filing within the past 7 years.

(Source: FNMA Selling Guide, 6-30-10 at 426 .)

Q 18. What are “multiple bankruptcy filings”?

A This means an individual borrower has filed for bankruptcy more than one time. Two or more borrowers with individual bankruptcies are not cumulative, and do not constitute multiple bankruptcies. For example, if the borrower has one bankruptcy and the co-borrower has one bankruptcy, this is not considered a multiple bankruptcy.

(Source: FNMA Selling Guide, 6-30-10 at 426 .)

Q 19. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the multiple bankruptcies?

A Yes. Three years from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances.

(Source: FNMA Selling Guide, 6-30-10 at 426 .)

See Question 3 for the definition of "extenuating circumstances."

Q 20. What is the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy?

A Chapter 13 permits a borrower with a regular income to propose a plan to repay some or all of his or her obligations over a period of up to five years. A borrower who files a Chapter 7 is permitted to retain exempt assets and receive a discharge of the borrower's debts. Chapter 7 is a relatively quick liquidation process that is generally completed within 120 days. Chapter 7 cases are rarely dismissed.

(Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 21. What is the difference between a Chapter 13 dismissal and a Chapter 13 discharge?

A A borrower who files a Chapter 13 can dismiss the case at any time (voluntary dismissal) or the case may be dismissed by the court based on the borrower's failure to comply with the requirements of the Bankruptcy Code or to make the required payments. If the borrower who files a Chapter 13 case makes all of the payments required by the plan, the borrower receives a discharge at the end of the plan. A borrower who doesn't make all the payment required by the plan may still receive a discharge if the court finds, among other things, that the borrower made a certain amount of the payments and the borrower's failure to make all of the payments was due to circumstances beyond the borrower's control.

(Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 22. What are the requirements to re-establish a credit history?

A After a bankruptcy, a credit history must meet the following requirements to be considered re-established:

• The elapsed time and the related requirements are met (as discussed in this article).

• The loan receives a recommendation from Desktop Underwriter (an automated underwriting system) that is acceptable for delivery to Fannie Mae. If manually underwritten, then the loan must meet the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.

• The borrower has traditional credit as outlined in the Selling Guide, B3-5.3, Traditional Credit History (https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sel043010.pdf). Nontraditional credit or “thin files” are not acceptable. A “thin file” exists where the borrower does not have a sufficient number of credit references to develop a traditional credit report.

(Source: FNMA Selling Guide, 6-30-10 at 428).

II. Bankruptcy, Foreclosure, and Short Sale and the Impact on a FICO ®Score

Q 23. What is a FICO® Score?

A A FICO® score is a number representing the creditworthiness of a person or the likelihood that person will pay his or her debts. The three credit reporting agencies, Equifax, Experian, and TransUnion, collect data about consumers in order to compile credit reports. The credit agencies use FICO® software to generate FICO® scores, which are then sold to lenders. Actually FICO® is just one of the several credit scoring systems available. The Fair Isaac Corporation (known as FICO®) created the first credit scoring system in 1958. Others are NextGen, VantageScore, and the CE Score. They all evaluate the creditworthiness of a borrower. However, FICO appears to be the most-used credit scoring system. A FICO® score is between 300 and 850. The higher the better the credit.

Each consumer has three credit scores at any given time for any given scoring model because the three credit agencies have their own databases, gather reports from different creditors, and receive information from creditors at different times.

Q 24. What factors go into determining a FICO® score?

A Credit scores are designed to measure the risk of default by taking into account various factors in a person's financial history. Although the exact formulas for calculating credit scores are closely-guarded secrets, FICO® has disclosed the following components and the approximate weighted contribution of each:

35% — Payment History – Late payments on bills, such as a mortgage, credit card or automobile loan, can cause a consumer’s FICO® score to drop. Paying bills as agreed over time will improve a consumer’s FICO® score.

30% — Credit Utilization - The ratio of current revolving debt (such as credit card balances) to the total available revolving credit (credit limits). Consumers can improve their FICO® scores by paying off debt and lowering their utilization ratio. The closing of existing revolving accounts will typically adversely affect this ratio and therefore have a negative impact on the FICO® score.

15% — Length of Credit History – As a consumer's credit history ages, assuming the consumer pays his or her bills, it can have a positive impact on the FICO® score.

10% — Types of Credit Used (installment, revolving, consumer finance) – Consumers can benefit by having a history of managing different types of credit.

10% — Recent search for credit and/or amount of credit obtained recently - Multiple credit inquiries for a consumer seeking to open new credit, such as credit cards, retail store accounts, and personal loans, can hurt an individual’s score. Applying for lots of new credit in a short period of time is also viewed as risky and can cause a drop in an individual’s score. However, individuals shopping for a mortgage or auto loan over a short period will likely not experience a decrease in their scores as a result of these types of inquiries.

(Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Q 25. How does a mortgage modification affect my FICO® score?

A FICO® credit scores are calculated from the information in consumer credit reports. Whether a loan modification affects the borrower's FICO® score depends on whether and how the lender chooses to report the event to the credit bureau, as well as on the person's overall credit profile. If a lender indicates to a credit bureau that the consumer has not made payments on a mortgage as originally agreed, that information on the consumer's credit report could cause the consumer's FICO® score to decrease or it could have little to no impact on the score.

(Source: http://www.myfico.com/crediteducation/questions/Mortgage_Modification.aspx)

Q 26. How does a bankruptcy affect my FICO® score?

A A bankruptcy is considered a very negative event regardless of the type. A bankruptcy is factored into your FICO® score until it is removed from your credit report. As long as the bankruptcy is listed on your credit report, it will be factored into your score. If you are considering bankruptcy as an alternative to foreclosure, keep in mind that it may have a greater impact on your FICO® score.

Typically, you can expect bankruptcies to impact your FICO® score, from the date filed, as follows:

(1) Chapter 11 and Chapter 7 bankruptcies up to 10 years.

(2) Completed Chapter 13 bankruptcies up to 7 years.

These time periods refer to the public record item associated with filing for bankruptcy. All of the individual accounts included in the bankruptcy should be removed from your credit report after 7 years.

(Source: http://www.myfico.com/crediteducation/Questions/Bankruptcy-Types.aspx)

If you plan to file a bankruptcy, here are some things you should do to make sure your creditors are accurately reporting the bankruptcy filing:

(1) Check your credit report to ensure that accounts that were not part of the bankruptcy filing are not being reported with a bankruptcy status.

(2) Make sure your bankruptcy is removed as soon as it is eligible to be "purged" from your credit report.

After a bankruptcy has been filed, the sooner you begin re-establishing credit in good standing, the sooner you can expect your FICO® score to rebound. A good practice is to obtain a secured credit card and continually make all of your payments on time. As time passes and the impact of the bankruptcy lessens, you might apply for a traditional credit card and also continually make all of your payments on time.

(Source: http://www.myfico.com/crediteducation/questions/Bankruptcy-Reach.aspx)

Q 27. How does a short sale, deed-in-lieu-of foreclosure. or a foreclosure affect my FICO® score?

A The alternatives to foreclosure, such as a deed-in-lieu of foreclosure or a short sale, aren’t any better as far as a FICO® score is concerned.

The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all "not paid as agreed" accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial or tax perspective, just that they will be considered no better or worse for your FICO® score.

If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact on your FICO® score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO® score.

(Source: http://www.myfico.com/CreditEducation/Questions/foreclosure-alternatives-fico-score.aspx)

Q 28. What won't affect my FICO® score?

A The following information is not considered by the FICO® scoring formula:

. Your race, color, religion, national origin, sex, or marital status

. Your age

. Your salary, occupation, title, employer, date employed, or employment history

. Where you live

. Any interest rate being charged on a particular credit card or other account

. Certain types of inquiries (such as promotional, account review, insurance or employment-related inquiries)

. Credit counseling

. Any information not found in your credit report

. Any information that is not proven to be predictive of future credit performance

(Source: http://myfico.custhelp.com/cgi-bin/myfico.cfg/php/enduser/std_adp.php?p_faqid=55)

Q 29. Where can I get more information?

A For a credit missteps comparison (i.e., affect on credit scores after certain events), go to http://www.myfico.com/crediteducation/questions/Credit_Problem_Comparison.aspx.

This legal article 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 submit online requests to speak with an attorney on the Member Legal Hotline by going to http://www.car.org/legal/legal-hotline-access/. Written correspondence should be addressed to:

CALIFORNIA ASSOCIATION OF REALTORS®
Member Legal Services
525 South Virgil Avenue
Los Angeles, CA 90020

2010-07-28T21:06:00.001-07:00

Ron's new Huntington Beach listing!

2010-07-28T13:58:00.000-07:00

8 Tips to Getting Your Loan Modification Application Reviewed

RISMEDIA, July 28, 2010--Many homeowners seeking a loan modification to lower their monthly mortgage payments and avoid foreclosure continue to find the application process a complex web, often causing them to give up before their application is ever reviewed by their mortgage company.

Certified housing counselors for CredAbility, a national nonprofit credit counseling and education agency, speak daily with hundreds of homeowners seeking a loan modification or other solutions to keep their homes. The organization has several tips for people that will help them increase the chances that their application is reviewed as quickly as possible.

"A homeowner needs to collect and send several documents that tell the mortgage company why you need a modification, and it needs to be done in a timely, organized manner," said Michelle Jones, senior vice president of counseling for CredAbility. "Once a homeowner has submitted these documents, they need to stay in regular contact with the company. With hundreds of thousands of applications under consideration, homeowners must take matters into their own hands to make sure their application gets to the right person at the company."

Here are CredAbility's recommendations for homeowners seeking a loan modification:

Speak With a Nonprofit Housing Counselor to Understand Investor Rules for Your Loan. Every homeowner's mortgage loan is different, so don't rely on information you may have heard from your neighbor or your sister-in-law, even if they received a loan modification. For example, if your 30-year, fixed interest rate loan is owned by one investor, and your neighbor's is owned by another investor, the rules governing a loan modification may be quite different. A certified counselor at a nonprofit credit counseling agency can help you find the investor who owns your mortgage and determine your options.

Submit All Documents That Prove Your Current Income. Income verification is critical, but homeowners sometimes don't provide their mortgage company with recent documents. If you lost a job in June, don't provide pay stubs from March. In addition to recent pay stubs and other traditional income sources, homeowners should also provide a document called a "contribution letter." This letter explains the source of any household income that is not easily verified. For example, a servicer will want to know the total household income of a married couple, even if only one person's name is on the loan. The letter could also include income verifying that you have a roommate that pays rent.

Submit Current Bank Statements. Recent bank statements allow your mortgage company to verify your income and expenses. This information enables the mortgage company to see your monthly expenses for food, utilities and other expenses and determine whether you will have enough money to make your mortgage payment.

Mail Your Documents to the Mortgage Company. Many people prefer to send all of their documents by fax or scan their documents and send them via email. However, postal mail is usually more reliable, especially if it's addressed to the person you spoke with at the mortgage company. Faxes often get lost.

Label Each Page With Your Name and Loan Number. One of the most common complaints among homeowners is that the mortgage company loses their documents. You can help your own cause by writing your name and loan number on each page of every document.

Fully Explain Any Recent or Unique Income Changes. For example, a bank deposit may show various one-time transactions, such as an asset sale, cash gifts from family members or a bonus. Unless you explain this one-time increase in income, the servicer may not understand it and use this information to deny your loan modification.

Include a Timeline in Your Hardship Letter. Every application for a loan modification must include a "hardship letter" that explains the reasons for your request. But the letter must have specific dates explaining when an income loss has occurred. If your spouse lost her job on July 15 and your family income will decrease by $3,000 beginning in August, your letter needs to provide these details.

Call Your Mortgage Company Every Week. Many homeowners work extremely hard to submit all of their paperwork to the servicer - and then wait for weeks before picking up the telephone to call them about the status of their application. This is a mistake for several reasons: the person handling your application may quit; the application may be transferred to another person; the company may need more information. You get the picture.

2010-07-22T13:28:00.000-07:00

Fannie Mae to prohibit lenders from changing home appraisals
To comply with the stricter lending guidelines of Fannie Mae and Freddie Mac, and to avoid accusations that the loans sold to Fannie and Freddie are based on inflated appraisals, some real estate professionals have reported lenders lowering home values on appraisals submitted to them. However, effective Sept. 1, Fannie Mae is prohibiting the purchase of loans from lenders who change appraisers’ numbers.

MAKING SENSE OF THE STORY FOR CONSUMERS

Generally, lenders order a low-cost electronic valuation—based on publicly available statistical data—to review the accuracy of the information submitted by the appraiser. If there is a discrepancy between the electronic valuation and the appraiser’s report, the lender’s underwriters may reduce the appraisal figure.

In some instances, real estate agents and consumers have reported that reduced appraisals have led to the derailment of home sales transactions, as some buyers refuse to pay more for a house than the appraisal says it is worth.

This industry practice may soon change. In guidelines issued June 30, Fannie Mae said lenders must contact appraisers to resolve discrepancies between the valuations, rather than simply reducing the appraisal. If it is not possible to contact the appraiser, the lender should order a second appraisal.

Borrowers and/or sellers who believe a home valuation is too low may appeal the valuation or request a second option. It’s important to note that the second valuation must be more than five percent higher than the first—anything less is considered an acceptable difference.

2010-01-22T11:10:00.001-08:00

FHA 90-day anti-flipping rule waived!

The Dept. of Housing and Urban Development (HUD) announced Friday it will eliminate for one year the Federal Housing Administration (FHA) 90-day anti-flipping rule.

FHA’s anti-flipping rule generally prohibits insuring a mortgage on a home owned by the seller for less than 90 days. That rule already has been waived for certain transactions, including REOs. Beginning Feb. 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors. This one-year waiver will give FHA buyers access to a broader array of recently foreclosed properties.

Under the temporary waiver, all transactions must be made at arm’s-length and may require additional documentation of improvements and justification of certain price increases. Additional documentation may include a second appraisal and a property inspection ordered by the lender.

C.A.R. recently submitted a letter to FHA Commissioner David Stevens detailing the challenges facing many FHA home buyers, such as the lack of housing inventory available to them, and the need to revise this rule to reflect current market conditions. The reexamination of the 90-day anti-flipping rule was passed as an action item during C.A.R.'s board of directors meetings in October.

PS Call me if you'd like to take a look at more homes!

2009-05-13T17:14:00.000-07:00

Foreclosures up less than 1 percent in April, increase 32 percent from year ago. Foreclosure filings, which include default notices, auction sale notices, and bank repossessions, were reported on 342,038 U.S. properties in April, an increase of less than 1 percent from the previous month and an increase of 32 percent from the same period a year ago, according to a report released today by RealtyTrac®. The report also shows that one in every 374 housing units nationwide received a foreclosure filing in April.

“Much of this activity is at the initial stages of foreclosure, while bank repossessions, or REOs, were down on a monthly and annual basis to their lowest level since March 2008,” said James J. Saccacio, chief executive officer of RealtyTrac®. “This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria. It’s likely that we’ll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months.”

Foreclosure activity in California decreased 10 percent in April compared with March, although the state still posted the nation’s third highest state foreclosure rate in April, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity in California was up 42 percent last month compared with the same period a year ago, according to the report.

2009-05-11T13:23:00.001-07:00

Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

2009-02-23T12:53:00.000-08:00

Help for homeowners

The President's strategy for economic recovery is a stool with several legs,
as he's said, and one of them is solving the foreclosure crisis.

"We must stem the spread of foreclosures and falling home values for all
Americans, and do everything we can to help responsible homeowners stay in
their homes," he said yesterday as he signed the American Recovery and
Reinvestment Act into law.

Though communities across the country have been affected by the crisis,
Arizona has been hit particularly hard -- in 2008, only two states had more
foreclosures.

And President Obama is there today, in Phoenix, to unveil his "Homeowner
Affordability and Stability Plan," which will help bring relief to
homeowners and bring some order to the housing market.

The President will talk more about his plan a little later today. In the
meantime, we're sure you have a lot of questions, like, Am I eligible for
assistance? Might I be able to modify my loan? When do I apply? We've put
together an example sheet that will show you
ht=220&width=370&inlineId=tb_external> what options might be available to
you, depending on the circumstances of your mortgage, as well as answers to
some common questions (below).

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

* What help is available for borrowers who stay current on their
mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who
stay current on their mortgages but have been unable to refinance to lower
their interest rates because their homes have decreased in value, may now
have the opportunity to refinance into a 30 or 15 year, fixed rate loan.
Through the program, Fannie Mae and Freddie Mac will allow the refinancing
of mortgage loans that they hold in their portfolios or that they placed in
mortgage backed securities.

* I owe more than my property is worth, do I still qualify to
refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage
(including any refinancing costs) will not exceed 105% of the current market
value of the property. For example, if your property is worth $200,000 but
you owe $210,000 or less you may qualify. The current value of your
property will be determined after you apply to refinance.

* How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program
starts. The criteria for eligibility will include having sufficient income
to make the new payment and an acceptable mortgage payment history. The
program is limited to loans held or securitized by Fannie Mae or Freddie
Mac.

* I have both a first and a second mortgage. Do I still qualify to
refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the
value of the property, borrowers with more than one mortgage may be eligible
to refinance under the Homeowner Affordability and Stability Plan. Your
eligibility will depend, in part, on agreement by the lender that has your
second mortgage to remain in a second position, and on your ability to meet
the new payment terms on the first mortgage.

* Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to
provide creditworthy borrowers who have shown a commitment to paying their
mortgage with affordable payments that are sustainable for the life of the
loan. Borrowers whose mortgage interest rates are much higher than the
current market rate should see an immediate reduction in their payments.
Borrowers who are paying interest only, or who have a low introductory rate
that will increase in the future, may not see their current payment go down
if they refinance to a fixed rate. These borrowers, however, could save a
great deal over the life of the loan. When you submit a loan application,
your lender will give you a "Good Faith Estimate" that includes your new
interest rate, mortgage payment and the amount that you will pay over the
life of the loan. Compare this to your current loan terms. If it is not an
improvement, a refinancing may not be right for you.

* What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to
provide borrowers with a safe loan program with a fixed, affordable payment.
All loans refinanced under the plan will have a 30 or 15 year term with a
fixed interest rate. The rate will be based on market rates in effect at
the time of the refinance and any associated points and fees quoted by the
lender. Interest rates may vary across lenders and over time as market
rates adjust. The refinanced loans will have no prepayment penalties or
balloon notes.

* Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to
help borrowers refinance into safer, more affordable fixed rate loans.
Refinancing will not reduce the amount you owe to the first mortgage holder
or any other debt you owe. However, by reducing the interest rate,
refinancing should save you money by reducing the amount of interest that
you repay over the life of the loan.

* How do I know if my loan is owned or has been securitized by Fannie
Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or
Freddie Mac and is eligible to be refinanced, you should contact your
mortgage lender after March 4, 2009.

* When can I apply?

Mortgage lenders will begin accepting applications after the details of the
program are announced on March 4, 2009.

* What should I do in the meantime?

You should gather the information that you will need to provide to your
lender after March 4, when the refinance program becomes available. This
includes:

* information about the gross monthly income of all borrowers,
including your most recent pay stubs if you receive them or documentation of
income you receive from other sources
* your most recent income tax return
* information about any second mortgage on the house
* payments on each of your credit cards if you are carrying balances
from month to month, and
* payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

* What help is available for borrowers who are at risk of foreclosure
either because they are behind on their mortgage or are struggling to make
the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who
are already behind on their mortgage payments or who are struggling to keep
their loans current. By providing mortgage lenders with financial
incentives to modify existing first mortgages, the Treasury hopes to help as
many as 3 to 4 million homeowners avoid foreclosure regardless of who owns
or services the mortgage.

* Do I need to be behind on my mortgage payments to be eligible for a
modification?

No. Borrowers who are struggling to stay current on their mortgage payments
may be eligible if their income is not sufficient to continue to make their
mortgage payments and they are at risk of imminent default. This may be due
to several factors, such as a loss of income, a significant increase in
expenses, or an interest rate that will reset to an unaffordable level.

* How do I know if I qualify for a payment reduction under the
Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy
your house as your primary residence; (b) your monthly mortgage payment is
greater than 31% of your monthly gross income; and (c) your loan is not
large enough to exceed current Fannie Mae and Freddie Mac loan limits.
Final eligibility will be determined by your mortgage lender based on your
financial situation and detailed guidelines that will be available on March
4, 2009.

* I do not live in the house that secures the mortgage I'd like to
modify. Is this mortgage eligible for the Homeowner Affordability and
Stability Plan?

No. For example, if you own a house that you use as a vacation home or that
you rent out to tenants, the mortgage on that house is not eligible. If you
used to live in the home but you moved out, the mortgage is not eligible.
Only the mortgage on your primary residence is eligible. The mortgage
lender will check to see if the dwelling is your primary residence.

* I have a mortgage on a duplex. I live in one unit and rent the
other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you
live in one unit as your primary residence.

* I have two mortgages. Will the Homeowner Affordability and
Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

* I owe more than my house is worth. Will the Homeowner Affordability
and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is
to help borrowers avoid foreclosure by modifying troubled loans to achieve a
payment the borrower can afford. Lenders are likely to lower payments
mainly by reducing loan interest rates. However, the program offers
incentives for principal reductions and at your lender's discretion
modifications may include upfront reductions of loan principal.

* I heard the government was providing a financial incentive to
borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the
Homeowner Affordability and Stability Plan provides incentive payments as a
borrower makes timely payments on the modified loan. The incentive will
accrue on a monthly basis and will be applied directly to reduce your
mortgage debt. Borrowers who pay on time for five years can have up to
$5,000 applied to reduce their debt by the end of that period.

* How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner
Affordability and Stability Plan. If you wish to get assistance from a
HUD-approved housing counseling agency or are referred to a counselor as a
condition of the modification, you will not be charged a fee. Borrowers
should beware of any organization that attempts to charge a fee for housing
counseling or modification of a delinquent loan, especially if they require
a fee in advance.

* Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and
loans are evaluated for modification on a case-by-case basis. But the
government is offering substantial incentives and it is expected that most
major lenders will participate.

* I'm already working with my lender / housing counselor on a loan
workout. Can I still be considered for the Homeowner Affordability and
Stability Plan?

Ask your lender or counselor to be considered under the Homeowner
Affordability and Stability Plan.

* How do I apply for a modification under the Homeowner Affordability
and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will
evaluate loans in their portfolio to identify borrowers who may meet the
eligibility criteria. After March 4 they will send letters to potentially
eligible homeowners, a process that may take several weeks. If you think
you qualify for a modification and do not receive a letter within several
weeks, contact your mortgage servicer or a HUD-approved housing counselor.
Please be aware that servicers and counseling agencies are expected to
receive an extraordinary number of calls about this program.

* What should I do in the meantime?

You should gather the information that you will need to provide to your
lender on or after March 4, when the modification program becomes available.
This includes

* information about the monthly gross income of your household
including recent pay stubs if you receive them or documentation of income
you receive from other sources
* your most recent income tax return
* information about any second mortgage on the house
* payments on each of your credit cards if you are carrying balances
from month to month, and
* payments on other loans such as student loans and car loans.

* My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders
have expressed their intention to postpone foreclosure sales on all
mortgages that may qualify for the modification in order to allow sufficient
time to evaluate the borrower's eligibility. We support this effort.

2009-02-17T15:45:00.000-08:00

FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
Major Modifications Italicized
February 2009
FEATURE CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit
Lesser of 10 percent of cost of home or $7500 Maximum credit amount increased to $8000
Eligible Property
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
No change
All principal residences eligible.
Refundable
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.
No change
Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).
No change
Same income limits continue to apply.
First-time Homebuyer Only
Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
No change
Still available for first-time purchasers only. Three-year rule continues to apply.
Revenue Bond Financing
No credit allowed if home financed with state/local bond funding. Purchasers who utilize revenue bond financing can use credit.
Repayment
Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. No repayment for purchases on or after January 1, 2009 and before December 1, 2009
Recapture
If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.
Termination
July 1, 2009
(But note program changes for 2009) December 1, 2009
Effective Date
Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. All revisions are effective as of January 1, 2009