HAFA Short Sale Program Information

Starting on April 5, 2010, the new government Short Sale guideline HAFA officially begins.  HAFA stands for Home Affordable Foreclosure Alternative, which is the government's remedy for the current real estate downturn.  HAFA aims to help homeowners with upside down mortgages to wipe out their debt and move on with their lives.  Under the HAFA program, homeowners can avoid foreclosure, sell their homes at the current market price, which is likely much lower than their mortgage amount, without ever paying back the lenders for the deficiency, without paying for real estate commission, and the best part is, the government will pay the homeowner $3,000 for a completed Short Sale!

Upside Down Home? Facing Foreclosure?
Don't Let Your House Go Through Foreclosure!
The consequence of a Foreclosure is Worse than What You May Think!
You Have Options! We can help at NO COST to you!
Government PAYS YOU $3,000 TO COMPLETE A SHORT SALE!

Here is Our Proven Track Record of Recently Closed Transactions:

Street Name, City	Home Specs	Loan Owed*	Sold Price	Debt Forgiven
Whitaker St, Buena Park	3-Bed Townhome, 1281 Sqr Ft	$504,375	$280,000	$224,375
Fries Ave, Carson	3-Bed Home, 1314 Sqr Ft	$535,148	$280,000	$255,148
145th St, Gardena	2-Bed Condo, 1002 Sqr Ft	$352,216	$150,000	$202,216
Yale St, Ontario	3-Bed Condo, 1253 Sqr Ft	$316,152	$158,000	$158,152
Ruhland Ave, Redondo Beach	4-Bed Townhome, 2069 Sqr Ft	$643,600	$600,000	$43,600
211th St, Lakewood	4-Bed Home, 1440 Sqr Ft	$587,183	$375,000	$212,183
210th St, Torrance	3-Bed Home, 992 Sqr Ft	$456,800	$315,000	$141,800
1st St, San Pedro	3-Bed Home, 972 Sqr Ft	$416,186	$300,000	$116,186

*Loan owed include the first and second loan balance, the delinquent payments and penalties

So, how do you qualify for the HAFA Program?

• The property is the borrower's principal residence.
• The mortgage loan is a first lien mortgage originated on or before January 1, 2009.
• The mortgage is delinquent or default is reasonably foreseeable.
• The current unpaid principal balance is equal to or less than $729,750.
• The borrower's total monthly mortgage payment exceeds 31 percent of the borrower's gross income.

Q: Can Investment Homes or Second Homes qualify for HAFA? 

A: No, but Short Sale may still be your best option, as this is the only way you can wipe out your debt without going through a foreclosure or bankruptcy and now is the best time to do it when the government is encouraging it. It is not worth holding onto this liability, as the property is no longer an asset. Experts predict it may take more than a decade to recover the loss of the current crisis (see case study). Some may worry about the tax liabilities for non-owner occupied homes, but please check with your tax consultant. You may realize the Cancellation of Debt Income can be deducted by the Capital Loss in the sale of the home, so in the end you still come out better! 

If you want a way out of your “upside-down” home and FREE Yourself from the huge debt, the collection calls, and dealing with your lender, please call us today for a FREE Consultation. You need to seek help from trained experts with years of experience. We are NOT your average Realtors who can only sell your home when there is equity. We can answer your questions regarding any offers that you might have received from your bank regarding any loan modification.

CALL US NOW for a No Obligation/FREE Consultation!
Call Joe at 310-562-0310 or by e-mail

 

---

To download the FREE and instantly downloadable eBook Should I Short Sale My Home?, please click here or scroll down to the bottom of the page and fill in the form to lead you to the FREE eBook.

If you are facing financial difficulties and are behind on mortgage payments, or if your lender has contacted you in regards to foreclosing on your home, you are definitely not alone. California has one of the highest foreclosure rates in the nation. Many homeowners are experiencing the same situation that you are in, such as purchasing or refinancing your home during the bubble housing market. Unfortunately, with the burst of the housing bubble, your home equity also vanished. Economists predict between this year and the next, 50% of the California homes will have negative or no equity.

We at The REO and Short Sale Team at RE/MAX Execs South Bay are dedicated to providing you the specialized foreclosure prevention service, including loan modification to short sale of your home. Many homeowners are having a hard time to continue to make their mortgage payments, either due to adjustable interest rate hike, or even if the interest rate stays low, they simply feel very frustrated about carrying the mortgage on an upside down home (negative equity, or when the loan owed on the property is more than the current market value). We see many homeowners sitting on a home with $100,000 or more negative equity and the home value in the neighborhood still continues to drop. In some cases, it makes business sense to simply let go of the property. However, if you decide to do nothing about it and let the property forclose, you will ruin your credit dramatically and have a foreclosure mark, which will prevent you from borrowing money for all uses and to buy another home for as long as 5 to 7 years!  Many other options exist for you to consider, to help yourself out of this tough financial situation.  There are steps to take to minimize the impact on your credit so you can get back on your feet again much sooner than 7 years, if you can avoid having a foreclosure!

There are several options to help you get out of this tough situation and AVOID FORCLOSURE. Each individual's case is different, so we advise you to contact us as soon as possible to discuss your options. The call and your information will be kept strictly confidential. 

Avoid Foreclosure with the New Short Sale Plan:
HAFA Seller's Relocation Assistance is $3,000!

RE/MAX Agent Helping Homeowner Avoid Foreclosure:

In the following, we compare the different options to help you get a better understanding about the possibilities. In early 2009, the Obama administration has finalized on the following Homeowners Workout Programs:

OBAMA HOMEOWNERS WORKOUT PROGRAMS

Just how bad is this bubble market and when experts think the market bottom is and the time of recovery will be?

To most people, this may be a shocker. Simply put, now in the middle of 2009, there are many indications that we are NOT at the market bottom yet. The sales activities may have increased due to the lower pricing, lower interest rate, and government tax incentives, and most importantly, the lenders' temporary holdback on Bank Owned REO inventory. However, record shows the Notice of Default (NOD) filing is steadily increasing and the lenders will have no choice but to release them in the later half of this year and next year. Short Sale listings will continue to overwhelm the market. Together, these foreclosure listings will continue to drive the price down from the current market value, which is already 30%-40% below the peak market value in 2005-2006.

In the following two graphs, we illustrate California's Notice of Default (NOD) filings in the recent 5 years and the mortgage interest rate resets in the future years. From late 2008 to early 2009, there has been reduced NODs, mainly caused by lenders' own action of delayed filing due to the anticipation of the government bailout programs. Soon after the programs were released, the NOD filing activity resumed and the NODs reached the highest ever level and is expected to continue to rise even higher. A strong indication to project the future NOD filing levels is the interest rate resets. So far we have gone by the first wave of subprime resets. However, the next wave of Alt-A and Option ARM resets are yet to come and they will certainly result in more mortgage defaults.

Notice of Default Filings in the Past 5 years.  Source: dqnews.com		Number of Mortgage Rate Resets over the Next 10 Years.  Source:  Credit Suisse

Most economists predict the bottom of the housing market in Southern California to be between 2010-2012. However, the home value will NOT bounce back to the 2006 peak value any time soon. Due to the sharp decline of the bubble market and economic recession (or depression), there will be a long period of flat market, much longer than what people expected, and then an eventual lower paced appreciation. Some predict it may be until 2020 or later for homes in Southern California to reach back to the 2006 peak market value. The famous Yale economist Dr. Robert Shiller, who also precisely predicted the tech stock bubble market bust in 2000, predicted that the US housing bubble would take a much longer time to recover. For homeowners carrying a large mortgage in a seriously depreciating market, this is very important information, as their hope for a quick recovery of their equity is unfortunately NOT likely to happen. In fact, even with a modified lower interest rate, many modified loans will again go into default, resulting in more foreclosure homes in the next few years. In the following chart, we show the history of US home values since 1890. Obviously there had been many boom and doom cycles, but the current bubble market has a much larger scale than the previous cycles. An analyst took the liberty to add future projection to the Shiller chart, shown below. The projection, shown in "red dots", predicts the market bottom will be far from being reached in 2010. From the historical average appreciation rate and cycle patterns, it is very difficult to see another sharp fast appreciation cycle back to the 2006 peak level any time before 2020. Obviously, there are many factors that will impact exactly how the future will play out, but the historical home value chart really puts everything in perspective and brings us an objective view of the current bubble market.

Source: "Irration Exuberance", 2nd Edition, 2006 by Dr. Robert Shiller, taken from Bill Marsh/The New York Times, projection added by Andy Somers

For some homeowners who can actually afford their payments, many realize it makes business sense for them to short sale their home due to the loss of their equity.

Case Study Example (Starting May of 2009):

• Homeowner paid $500,000 at the market peak in late 2006. Homeowner put down 5% and did a 7-year interest only mortgage. Monthly payment including principle, interest, taxes and insurance is $4,200 per month.
• Assuming the property has depreciated 30% and is now worth only $350,000, the owner has negative equity or is 'upside down' by $150,000.
• The market is continuing to depreciate and is projected to level off by late 2010 or later. In other words, months and months of more losses for the homeowner.

Option 1
Homeowner can 'stick it out' and keep the home. They will continue to make their monthly interest only payment/ house upkeep of $4,200 per month. They will pay $50,400 per year to keep the home. They are deeply 'upside down' in the home with massive negative equity. By late 2010, the home's value has stopped depreciating. The market stays flat for at least a year thereafter. The inventory levels have to sell off. In late 2011 or early 2012 the market then starts to slowly appreciate again. Best case the home starts to appreciate at 5% per year. Based on this rough example it will take at least 7 years for that home to be worth what that owner paid in 2006. During that time the homeowner will have paid $50,400 per year. Do the math. That's $352,800 spent to stay in the home and ‘stick it out'.

Option 2
Homeowner lists the home with an agent trained in doing short sales. The home sells and the bank agrees to accept the loss in equity as the short sale. Bank loses $150,000. Homeowner moves to a rental home in the same neighborhood and pays rent of $2,000 per month. Half of his previous house payment. Homeowner saves the difference between what he had been paying for the owned home and his new rent payment, which is $26,400 per year. Yes, the homeowner does have significant negative credit ramifications as a result of his short sale. This negative credit will prevent him from buying a home for the next 18-24 months. With this option he can sit out the real estate recession and jump back in when the market has hit bottom. If the time is right he can buy at the market bottom, when his credit is recovered. This time he will have a more significant down payment and a better quality mortgage. Then, with the average appreciation of 5% per year, the homeowner actually accumulates $82,000 of equity growth over a 5-year period for a $300,000 home. Comparing to the homeowner who 'stuck it out', this homeowner will actually be more than $200,000 ahead from having the BANK to take the equity loss, paying less monthly for a rental, and finally actually accumulating equity gain by buying at the bottom of the market!

Here are some relevant government, National Association of REALTORS®, and other publications:

•  Home Affordable Foreclosure Alternative (HAFA)'s Latest Revision— March 26, 2010
•  Fannie Mae's Avoiding Foreclosure
•  Are You Having Problems Paying Your Mortgage? (1760kb, 2 pages)
•  Homeowner Affordability and Stability Plan— February 18, 2009
•  Home Affordable Modification Program (HAMP) Guidelines— March 4, 2009 
•  Detailed Homeowner Workout Options
•  Should I Short Sale My Home? (540kb, 34 pages)   

Loan Refinance:

In some homeowners' cases, the simplest way to combat the high monthly mortgage payment is to do a refinance. This usually works for homeowners with a smaller degree of equity problems and are still current on their mortgage payments. 

The advantages of a refinance under the Homeowner Affordability and Stability Plan are:

• It removes your previous unfavorable loan terms. You may benefit from a lower interest rate and may remove the adjustable rate, balloon payment, or interest only payments.
• It is possible to refinance even if you have a negative equity, as long as the first loan balance is below 125% of the current market value
• It has no negative impact on your credit

The disadvantages of a refinance are:

• There is normally a fee to do the refinance which could be a few thousand dollars 
• Credit score and proof of income are still very important to obtain the new loan, so you may not qualify even under the stimulus plan. If you already missed some mortgage payments, most likely you will not qualify for a refinance.
• The interest rate may not be as low as you thought it could be and the monthly payment reduction may not be as significant as you wished
• Your loan principle still remains the same, so it doesn't solve your negative equity problem
• If you have a second loan, refinancing the first loan has no impact on the second loan

To find out more about the new refinance possibilities and see if it may work for you, please contact our preferred lenders or simply contact us to go over your scenario.  You may also fill out the simple 4 questions on the government Making Home Affordable website to determine your eligibility.  For a quick market value assessment of your home, you may try our Instant Home Valuation system.

Loan Modification:

In some homeowners' cases, perhaps loan modification may be a viable solution. When the negative equity is more serious and when you have already missed a few mortgage payments, you may want to see if you qualify for loan modification. After all, this may be the best way for you to keep your home.

A loan modification, unlike a refinance, changes the terms of the existing loan without writing a new one. Modifications are designed to make mortgages more affordable. The modification plan is open to homeowners with loan balances under Fannie Mae and Freddie Mac limits, which is now as high as $729,750 in some high-cost areas.

Here are the advantages of a loan modification over refinance:

• Lower interest rate, may be as low as 2 percent for a period up to 5 years to reach the target affordability level of 31 percent mortgage payment of your household income.
• Principal reduction up to $5,000 over a period of 5 years of "success payments"
• Possible additional principal reduction (subject to your lender's qualification criteria)
• Interest rate adjustment after the 5-year period up to the Interest Rate Cap which is the lesser of the original contractual rate or the current market rate (still at historical low)
• Able to obtain extremely low interest rate given the lower credit and income qualification and keep your home, where it would not be possible with refinance or purchasing another home immediately

Here are the disadvantages of a loan modification:

• Preparation of the application takes a lot of time and effort, with NO guidance from your lender (they will not tell you what to look out for and what makes your application successful)
• It takes typically 30 to 90 days to get the loan modification application started and there is a long waiting period of no sign of progress which may make homeowners a little antsy or annoyed
• It is possible to get denied by your lender for loan modification, even if you think you should qualify. Most importantly, the principal reduction may not be as much as you like to achieve, so you may not be satisfied with the offered modification terms.
• It does not stop your home from continuing to drop value. Experts anticipate another wave of price drop starting from the second half of 2009 when the lenders start releasing their bank owned properties once again. Economists predict 2010-2012 might be the bottom of the market but home values may not come back to the last peak value until 2020 or later.
• Some homeowners decide it does not make business sense to keep the home even with a modified loan, when they can simply short sell their home and have the lender take the equity loss, clean up their credit in about 2 years, purchase another home at the bottom of the market and experience true appreciation of the next upward real estate market. See the sample case study for more details. 

Here are the basic eligibility criteria:

• The home must be your primary residence
• The first mortgage balance must be equal to or less than $729,750
• Hardship on making payment on your mortgage (you may still qualify if you are current on the loan, but you have to show financial hardship)
• Payment on your first mortgage more than 31% of your current gross income
• Check the government Making Home Affordable website to determine eligibility.

Why do you need a REALTOR® to represent you on the loan modification?

We at The REO and Short Sale Team at RE/MAX Execs South Bay have the expertise to ensure your success in loan modification or the backup options including a stress-free short sale. Please contact us at your earliest convenience for a free consultation. Our fee is paid only when you complete a successful loan modification. There is NO UPFRONT FEE for this service and our service fee is as small as your monthly payment of your loan or less! For a personalized market value assessment of your home, please provide your home information in the form below and we will deliver your Comparative Market Analysis within 24 hours. Besides loan modification, if you like to learn more about short sale, you may download the FREE ebook Should I Short Sale My Home?

Important Loan Modification Web Links and Useful Articles:

• Department of Real Estate Consumer aware of Loan Modification Scam!
• Making Home Affordable Government Website
• Find out if Your Loan is a Fannie Mae Loan to qualify for government program! 
• How Long Does a Loan Modification Take?
• Teaming Up with Your Lender for a Loan Modification
• The Loan Modification Debacle
• Teaching Homeowners the Importance of DTI Ratios

Please see the Q & A section of Loan Modification for additional information.

*Please note we are real estate professionals and we do not make any legal advise or get involved in any legal aspect of the foreclosure or bankruptcy. You should consult your attorney should you need any legal advise on foreclosure and/or bankruptcy. REALTORS® are allowed to assist you in your loan modification application, as clearly indicated on the Department of Real Estate webpage, before or after the Notice of Default (NOD) is filed by your lender, as long as the fee is paid at the completion of the work instead of upfront.

Short Sale (Short Payoff):

A short sale, also known as a short payoff, is when a lender or lenders accept a discounted payoff on your mortgage and agree to allow the homeowner to avoid the cost of a foreclosure. In other words, when a homeowner owes more than can be collected through a real estate sale, a short sale allows them to sell their property to avoid a foreclosure and also reduce or eliminate the remaining mortgage debt.

A short sale may be the best way to keep your credit intact (or from getting worse) for future purchases and can usually help you exit from a property without having to pay anything. It will also save you money by not having to pay attorney's fees, go through an eviction process, make repairs to the home so it is marketable; and the lender will cover all real estate fees. The typical process takes 30 to 60 days after a complete short sale package is submitted.

How Do You Qualify?

Qualifying for a short sale is based on financial need. All lenders require proof of financial hardship. FHA, VA and conventional loans, along with each mortgage service company, have their own criteria. If you are behind or about to fall behind on your payments we can get you qualified. The earlier in the foreclosure process you start, the higher our likelihood of success.

Here are the advantages of a short sale:

• In most cases, short sale is FREE to the homeowner. The deficient loan payoff amount is written off as loss for the lender or their investor. The short sale lender pays for the real estate commissions, as the fees are part of their loss in short payoff.
• You can wipe out the first loan and all junior loans (second, third, etc.) all at once with the short sale, as long as all lenders approve the short sale
• You can even receive up to $3,000 in relocation cost to complete a short sale, paid by the government!
• You would remove the negative equity on the property and be relieved from holding on to a home that continues to drop in price
• Congress Bill H.R. 3648: Mortgage Forgiveness Debt Relief Act of 2007 eliminates the deficiency tax liability, so that you will NOT receive a 1099 form that requires you to report the deficient payoff amount as taxable income, given the property is owner-occupied. The original 2009 deadline of the bill is extended to Dec. 31, 2012 by Bill H.R. 1424. The similar Debt Relief Income Exempt from California State income-tax is summarized in S.B. 1055.
• You have a much better shot at repairing your credit for another home purchase at the bottom of the market, and experience another home appreciation upward cycle, as opposed to homeowners who would hold on to the property and may only recover the lost equity after waiting for perhaps 10 years. See the sample case study for more details. 

Here are the disadvantages or negative impact of a short sale:

• There will be some hit on your credit score, although it is not as dramatic as a foreclosure. The hit may come from the combination of late payments and a settled but not full payoff of the loan.
• You obviously will need to relocate to another home before the closing of the sale
• It takes about 2 years for credit repair to complete before you may be able to buy another home. Consult a credit repair company on how they can help you recover your credit score faster.

We at The REO and Short Sale Team at RE/MAX Execs South Bay have the expertise to ensure your success in short sale, as we specialize in marketing short sale properties and negotiating with the lenders. We can help you explore other options including loan modification and refinancing so you can decide on which option works best for you. Your hope for a brighter future is just a call away. We offer FREE short sale service to you and also FREE service on finding a home to lease upon your request. Then, after things settle we can refer you to credit repair consultants so you can better prepare for another home purchase at the bottom of the market, which we will be glad to help when you are ready. Please contact us at your earliest convenience for a free consultation. The call and your information will be kept strictly confidential. For a personalized market value assessment of your home, please provide your home information in the form below and we will deliver your Comparative Market Analysis within 24 hours. To learn more information, you may download the FREE ebook Should I Short Sale My Home?

Please see the Q & A section of Short Sale for additional information.

Deed-in-Lieu:

A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

It is considered to be the last resort before you exhaust all other options, such as refinance, loan modification, and short sale.  Basically, the lender will simply take the property back and sell it as a bank owned property afterwards.  We recommend giving a fair shot at the other options before considering this last option, as we were told by the lenders that the credit impact of having a deed-in-lieu is more serious than that of late payment, settlement, or a short sale.  Obviously it is still better than having a foreclosure mark on the credit report, so some homeowners would still consider this option.

Please note you will need to work with your lender on a deed-in-lieu or have a third party representative to work on the deed-in-lieu application.  The process is similar to that of the short sale and loan modification, as there will need to be a full application that involves the presentation of your financial data, hardship, and proof that you cannot keep the property any longer.  The timeline may also be as long as a short sale or loan modification application, so we like to clear up the common misunderstanding that you can simply mail the keys back to your lender and complete a deed-in-lieu right away.  Unless your lender approaches you first to propose a deed-in-lieu, it is definitely not as easy and quick as you may think.  Because of this, we (and your lender as well) recommend considering other options as they would take just as much time and effort but will achieve much better results.  Many people who went through a short sale could get back on their feet and repair their credit in 2 years.  With a deed-in-lieu it would take longer to get the credit repaired.

If you feel your home simply cannot be sold, even with a short sale, you may want to first consult a real estate professional, as specialized short sale agents will know how to market your home and get it sold for you, without you making any repair.  Your home WILL be sold, given the right price, marketing, and negotiation with the lender.  Contact us now to discuss your situation so we can see how we can help you! For a personalized market value assessment of your home, please provide your home information in the form below and we will deliver your Comparative Market Analysis within 24 hours. 

Questions and Answers Section:

Q and A for Borrowers about the Homeowner Affordability and Stability Plan

-The following is a reformatted version of questions and answers on the Obama administration's housing plan released by the U.S. Treasury in Washington, taken from Bloomberg on Feb. 18, 2009.

Borrowers Who Are Current on Their Mortgage Are Asking:

1. 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.

2. 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 125% of the current market value of the property. For example, if your property is worth $200,000 but you owe $250,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

3. 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.

4. 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 125% 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. When can I apply?

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

10. 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 monthly
· payments on other loans such as student loans and car loans.


Borrowers Who Are at Risk of Foreclosure Are Asking:

1. 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.

2. 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.

3. 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;
(c) your loan is not large enough to exceed current FNMA and FHLMC 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. 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.

13. 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 monthly
· payments on other loans such as student loans and car loans

14. 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.

The above Q&A section regarding the Obama administration's housing plan was taken from Bloomberg on February 18, 2009.  Please contact us to go over your scenario so we can help determine the best solution in your situation.

Q and A on Short Sale 

1. Will my lender really accept a lower payoff?

Lenders these days understand about the real estate market and they are motivated to get at least a portion of their investment back, rather than holding on to the non-performing assets which may result in additional losses in the months to come. The government has given lenders a lot of incentives to work out short sale deals, so your chance of success will be very good now as opposed to the next couple of years. There are a lot of extra legal fees and other costs for lenders to go through foreclosure and sell the homes themselves, so the best way to minimize their losses is to accept short sales. Keep in mind your home value WILL NOT go back to the peak bubble value any time soon and the lenders know that more than you do.

2. What is the impact of the short sale on my credit score?

The possible impact on credit score from short sale comes from late payments and also the mark of the payoff of the loan not in full. The impact varies but generally it may range from 200-300 points after short sale completion and they may not qualify for a government-backed mortgage (lowest interest rate possible) for up to 24 months. However, please note credit score is repairable and within 24 months there is a high chance of getting it back to the level to re-purchase another home at the bottom of the market. Many people treat credit score as sacred; however, in the context of losing $100,000-$200,000 or more in home equity, many doubt the repairable credit score would be worth the hundreds of thousands of dollars to maintain it.

3. I have received the Notice of Default (NOD) from my lender and my foreclosure date is coming in a few weeks (or days). What can I do?

If you have received the Notice of Default and you are running out of time, we recommend you to contact us immediately and put your home on the market to bring in an offer as soon as possible. There are ways to draw offers immediately. The key to postpone the foreclosure date is to get an offer in right away. The only way to do this is to work with a knowledgeable REALTOR® who specializes in short sale deals. You may also consult an attorney to handle your case and work with your lender to postpone the foreclosure Trustee Sale, but ultimately, it is the OFFER obtained by a REALTOR® that can really get things going in a short sale.

4. Can I still stay at my home even if I stopped making the mortgage payments? Do I have to move right away when I decide to do a short sale?

You can stay at your home, even when you stopped making payments already. Keep in mind the property is still yours, until the lender gets it back from the foreclosure proceeding. Lenders are motivated to work out a short sale deal with you to prevent foreclosure. Once they accept a short sale it is a settlement on the short payoff and they will forgive all of the deficiencies including the months of missed payments when you still occupy the home. Many homeowners stay in their homes when doing a short sale, especially since it takes a while to complete. The hassle of the sale and property showings can be minimized when working with an experienced and short sale specialized REALTOR®.

5. I want to do a short sale and have a 2nd mortgage, does this make me ineligible?

No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holder.

6. Do I have to miss a payment to do a Short Sale?

No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment. However, in most cases, lenders do take priority on loans that are already in default over those that are not yet in default.

7. How do you, my listing agent get paid? Who pays your commission?

The bank will pay the commission along with all the other usual closing costs.

8. Do I have to pay income taxes? I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me... the seller... is this true?!

It WAS true, now it's not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no taxes due.

9. I owe more than my home is worth and I can't make the payment, do I have to somehow qualify for a short sale?

The simple answer is NO. If someone can't make their payment and they are otherwise insolvent they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.

10. Will I still have to pay property taxes if I do a short sale?

Property taxes will always have to be paid as part of any accepted short sale. Whether it's you or the lender depends on their policies and the specific agreement you reach while negotiating the short sale.

11. I just missed a payment and I know I will miss more.... how long does the foreclosure process take and is there time to do a short sale?

The foreclosure process takes differing times depending on your state. In the Midwest a foreclosure can take over a year. In California it's taking 6+ months. Generally speaking a well-priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.

12. Do I have to have my home ‘Approved' by my lender prior to offering it for sale as a short sale?

No. Technically speaking, there is no such thing as being ‘Short Sale Approved'. The actual approval only happens with an accepted offer.

13. If I pay mortgage insurance and default on my loan, wouldn't that cover the deficiency amount?

The mortgage insurance is not there for your protection, it protects the mortgage lender.

14. I can't make my house payments but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score... is a short sale right for me?

Probably not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder) it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.

15. I have filed personal bankruptcy. What is the impact of the bankruptcy on the short sale of my home? Will my creditors take my home?

Torrance Short Sale | Redondo Beach Short Sale | Palos Verdes Short Sale | Rolling Hills Short Sale | Manhattan Beach Short Sale | Hermosa Beach Short Sale | El Segundo Short Sale | Hawthorne Short Sale | Lawndale Short Sale | Los Angeles Short Sale | Marina Del Rey Playa Del Rey Playa Vista Short Sale | Mar Vista Short Sale | Culver City Short Sale | West Los Angeles Short Sale | Gardena Short Sale | Harbor City Short Sale | Lomita Short Sale | San Pedro Short Sale | Carson Short Sale | Long Beach Short Sale | Wilmington Short Sale | Rancho Palos Verdes Short Sale | Palos Verdes Estates Short Sale | Rolling Hills Estates Short Sale | Beverly Hills Short Sale | Santa Monica Short Sale | Venice Short Sale | Westwood Short Sale | Artesia Short Sale | Bellflower Short Sale | Buena Park Short Sale |  Cerritos Short Sale | Cypress Short Sale, Hawaiian Gardens Short Sale, La Palma Short Sale, Lakewood Short Sale, La Mirada Short Sale, Norwalk Short Sale, Anaheim Short Sale, Brea Short Sale, Fountain Valley Short Sale, Fullerton Short Sale, Garden Grove Short Sale, Huntington Beach Short Sale, La Habra Short Sale, Orange Short Sale, Placentia Short Sale, Santa Ana Short Sale, Seal Beach Short Sale, Tustin Short Sale, Westminster Short Sale, Alhambra Short Sale, Baldwin Park Short Sale, Covina Short Sale, Diamond Bar Short Sale, Downey Short Sale, El Monte Short Sale, Hacienda Heights Short Sale, La Puente Short Sale, Long Beach Short Sale, Montebello Short Sale, Monterey Park Short Sale, Pico Rivera Short Sale, Rosemead Short Sale, Rowland Heights Short Sale, San Gabriel Short Sale, Santa Fe Springs Short Sale, Signal Hill Short Sale, Temple City Short Sale, Walnut Short Sale, West Covina Short Sale, Whittier Short Sale, Pomona Short Sale

Please fill in the following form to instantly download the Should I Short Sale My Home?  eBook:

We will also provide you a personalized market value assessment of your home within 24 hours, when you complete your home information and address.

• Privacy Policy
• Agent Login

Site by Z57 Inc.
Copyright © 2010 Joe Chen. All rights reserved.