Millions of homeowners will have difficulty making their mortgage payments this year. If several months of missed payments go by then the mortgage lender will have the ability to take title to the home throughout the process of foreclosure. But, for those homeowners who recognise that they have a financial hardship early on (any time up to the trustee sale) there are several "better alternatives" to foreclosure. Remember to consult your tax and legal advisor to decide what the best course is.
Here is a list of options to AVOID FORECLOSURE AND KEEP YOUR HOUSE:
Refinance
A new loan—with new terms, interest rates and monthly payments—that completely replaces your current mortgage. Even if your home value has decreased or you owe more than your home is worth, you may be able to refinance your loan as part of the government’s Home Affordable Refinance Program (HARP).
■Make your payment more affordable by lowering your interest rate or adjusting the terms of your loan
■Creates no negative activity or event on your credit history
■Stay in your home and avoid foreclosure
Repayment Plan
An agreement between you and your mortgage company that lets you pay the past due amount—added on to your current mortgage payments—over a specified time period to bring your mortgage current.
■Resolve your delinquency
■Catch up on your past due payments over an extended period of time
■Less damaging to your credit score than a foreclosure
■Stay in your home and avoid foreclosure
Forbearance
An offer by your mortgage company to temporarily suspend or reduce your monthly mortgage payments for a specified period of time.
■Have time to improve your financial situation and get back on your feet
■Less damaging to your credit score than a foreclosure
■Stay in your home and avoid foreclosure
Modification
An agreement between you and your mortgage company to change the original terms of your mortgage—such as payment amount, length of loan, interest rate, etc. You may also be eligible for the government’s Home Affordable Modification Program (HAMP) created to help struggling homeowners.
■May reduce your monthly mortgage payments to a more affordable amount
■Less damaging to your credit score than a foreclosure
■Stay in your home and avoid foreclosure
Deed for Lease
A program that allows you to temporarily lease your home. You first transfer the ownership of your home to the mortgage company (called a Deed-in-Lieu of Foreclosure) in exchange for a release from your mortgage loan and payments. You can then rent the property back—at an affordable rate—and remain in the home as a tenant.
■Resolve your delinquency and avoid foreclosure
■Stay in your home and neighborhood—no need to move or relocate
■Lease at current market rate rent for up to 12 months with a possible option to extend the term
■Pay no security deposit
■Assistance for relocation may be available at the end of your lease
■Start repairing your credit sooner than if you went through a foreclosure
■Get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)
If you want to pursue any of the above options, call your mortgage lender and ask about them. The lender should be contacted as early as possible, and frequently thereafter, in order to successfully negotiate a foreclosure alternative.
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
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FREE Information on Foreclosure Alternatives
Thursday, January 13, 2011
Monday, January 3, 2011
What are the tax consequenses of a short sale?
Federal and State laws have recently been enacted
that eliminate the tax consequences for most individuals who must
sell their house short of the full amount that they owe. As licensed
real estate professionals, we can help guide you to the appropriate
information and resources.
For more information about Tax Relief from debt cancellation in
your particular situation you should consult a tax professional
and refer to these government links:
IRS Mortgage Forgiveness Debt Relief Act
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows
taxpayers to exclude income from the discharge of debt on their
principal residence. Debt reduced through mortgage restructuring,
as well as mortgage debt forgiven in connection with a foreclosure,
qualify for this relief. (from irs.gov
California Franchise Tax Board
On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted.
It allows taxpayers who had all or part of the loan balance on their
principal residence forgiven by their lender to exclude the forgiven
debt from California gross income. The new law applies to discharges
of qualified principal residence indebtedness on or after January
1, 2009, and before January 1, 2013. (from ftb.ca.gov)
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
that eliminate the tax consequences for most individuals who must
sell their house short of the full amount that they owe. As licensed
real estate professionals, we can help guide you to the appropriate
information and resources.
For more information about Tax Relief from debt cancellation in
your particular situation you should consult a tax professional
and refer to these government links:
IRS Mortgage Forgiveness Debt Relief Act
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows
taxpayers to exclude income from the discharge of debt on their
principal residence. Debt reduced through mortgage restructuring,
as well as mortgage debt forgiven in connection with a foreclosure,
qualify for this relief. (from irs.gov
California Franchise Tax Board
On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted.
It allows taxpayers who had all or part of the loan balance on their
principal residence forgiven by their lender to exclude the forgiven
debt from California gross income. The new law applies to discharges
of qualified principal residence indebtedness on or after January
1, 2009, and before January 1, 2013. (from ftb.ca.gov)
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
Thursday, December 30, 2010
Can the bank come after me for a defeciency judgement? (California)
Below is a summary of recent changes to California State Law by the California Association of Realtors that affects banks ability to come after borrowers for deficiency judgements.
SB 931
(eff. Jan. 1, 2011)
Discharge of balance of loan indebtedness after a short sale for residential 1-4 real property by holder of a first deed of trust
This new law prohibits a lender holding a first deed of trust (purchase money or refinance) for a dwelling of 1-4 units to demand a deficiency judgment (unpaid balance due on the loan) from the trustor or mortgagor (owner) who sells the dwelling for less than the remaining amount of the indebtedness due at the time of the short sale to which the lender has consented in writing.
However, if the owner commits either fraud with respect to the short sale, or waste with respect to the secured real property, then the lender may seek damages and use existing rights and remedies against the owner or any third party for fraud or waste.
Note that this law doesn't apply if the trustor or mortgagor is a corporation or political sudivision of the state.
Adds Section 580e to the Code of Civil Procedure.
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
Associated Real Estate
Serving Tehachapi, Bakersfield, Lancaster, Palmdale, Rosamond, California City, Mojave for over 25 years.
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
SB 931
(eff. Jan. 1, 2011)
Discharge of balance of loan indebtedness after a short sale for residential 1-4 real property by holder of a first deed of trust
This new law prohibits a lender holding a first deed of trust (purchase money or refinance) for a dwelling of 1-4 units to demand a deficiency judgment (unpaid balance due on the loan) from the trustor or mortgagor (owner) who sells the dwelling for less than the remaining amount of the indebtedness due at the time of the short sale to which the lender has consented in writing.
However, if the owner commits either fraud with respect to the short sale, or waste with respect to the secured real property, then the lender may seek damages and use existing rights and remedies against the owner or any third party for fraud or waste.
Note that this law doesn't apply if the trustor or mortgagor is a corporation or political sudivision of the state.
Adds Section 580e to the Code of Civil Procedure.
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
Associated Real Estate
Serving Tehachapi, Bakersfield, Lancaster, Palmdale, Rosamond, California City, Mojave for over 25 years.
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
Wednesday, December 29, 2010
Options to Avoid Foreclosure
Avoid Foreclosure
Homeowners who are struggling with their mortgage payments are facing tough choices—do you stay in a home you may no longer be able to afford or should you try to leave? While it may be difficult to think about leaving your home and making this decision, it may be the best option if other solutions to keep you in your home are no longer viable.
Don’t just walk away from your home. There are better options. The most important thing is to avoid foreclosure—and options may be available to assist you if you are ready to leave your home. Some options may even offer cash incentives to help you move and transition into different housing. Now’s the time to take action before it’s too late.
A short sale is the sale of a home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds.
Short Sale
■Eliminate or reduce your remaining mortgage debt
■Assistance for relocation may be available
■Start repairing your credit sooner than if you went through a foreclosure
■May be able to get another Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)
Deed in Lieu
With a Deed-in-Lieu of Foreclosure (DIL), you transfer the ownership of your property to the owner of your mortgage in exchange for a release from your loan and payments.
■Eliminate or reduce your mortgage debt
■May be eligible for relocation assistance
■Start repairing your credit sooner than if you went through a foreclosure
■May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)
Associated Real Estate
Serving Tehachapi, Bakersfield, Lancaster, Palmdale, Rosamond, California City, Mojave for over 25 years.
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
Homeowners who are struggling with their mortgage payments are facing tough choices—do you stay in a home you may no longer be able to afford or should you try to leave? While it may be difficult to think about leaving your home and making this decision, it may be the best option if other solutions to keep you in your home are no longer viable.
Don’t just walk away from your home. There are better options. The most important thing is to avoid foreclosure—and options may be available to assist you if you are ready to leave your home. Some options may even offer cash incentives to help you move and transition into different housing. Now’s the time to take action before it’s too late.
A short sale is the sale of a home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds.
Short Sale
■Eliminate or reduce your remaining mortgage debt
■Assistance for relocation may be available
■Start repairing your credit sooner than if you went through a foreclosure
■May be able to get another Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)
Deed in Lieu
With a Deed-in-Lieu of Foreclosure (DIL), you transfer the ownership of your property to the owner of your mortgage in exchange for a release from your loan and payments.
■Eliminate or reduce your mortgage debt
■May be eligible for relocation assistance
■Start repairing your credit sooner than if you went through a foreclosure
■May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)
Associated Real Estate
Serving Tehachapi, Bakersfield, Lancaster, Palmdale, Rosamond, California City, Mojave for over 25 years.
Our FREE INFORMATION PACKET
can get you started and show you what information we need to effectively
negotiate with your bank. We are licensed Real Estate Agents and
charge NO UPFRONT FEES.
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