Deb Espinoza's Real Estate BLOG: April 2010

Just an add on for my previous post this morning..

Save yourself the $299 fee to get HAFA certified. All the information you need is located at www.hafahelp.info

All the details of the program and forms etc. Take note to the fact that your commission can be compromised if "the servicer retains a vendor to assist the listing broker, the vendor must be paid a specified amount from the commission." One could wonder who the 'vendors' might be and what is the 'specified amount' going to be?

Okay- so now we Realtors have SFR Certification (Short Sale and Foreclosure Resource), massive amounts of "Gurus" toting their specialty programs to be 'certified' in distress property sales, and now CAR is promoting a HAFA training and Certification from some company called "Asset Plan USA" for $299 !!! What the heck?

So I decided to do some research to see just how difficult this HAFA program could be to learn and implement. The HOPE for homeowners web site had this information:

Home Affordable Foreclosure Alternatives Program (HAFA)
57. What other alternatives to foreclosure exist within the Making Home Affordable Program?
The Making Home Affordable Program will include additional foreclosure avoidance options through the Home Affordable Foreclosure Alternatives (HAFA) Program. While the HAFA Program becomes effective April 2010, servicers may participate immediately, or as soon as is practical. The primary options available through HAFA include Short Sale and Deed-in-Lieu of Foreclosure.

58. How does the HAFA Short Sale work?
In a Short Sale, the homeowner sells the property for less than the full amount due on the mortgage. When a homeowner qualifies for the HAFA Short Sale, the servicer approves the Short Sale terms prior to listing the home and then accepts the payoff in full satisfaction of the mortgage.

59. How does the HAFA Deed-in-Lieu of Foreclosure work?
With the Deed-in-Lieu of Foreclosure, the homeowner voluntarily transfers ownership of the property to the servicer in full satisfaction of the total amount due. The servicer may require that the homeowner list and market the property before they agree to a deed-in-lieu arrangement. In order for the Deed-in-Lieu of Foreclosure to work, the homeowner must provide a marketable title, free and clear of other mortgages, liens, or other encumbrances.

60. How can I be considered for HAFA?
A participating servicer must consider a homeowner for HAFA if the borrower requests a short sale or deed-in-lieu under HAFA, and a servicer will also consider a homeowner for HAFA within 30 days of the date the homeowner:

• does not qualify for HAMP; or
  
• does not successfully complete a HAMP trial period; or
• misses at least two consecutive payments on a HAMP modification.

However, before evaluating a homeowner for HAFA, a participating servicer must first consider that homeowner for other loan modification or retention programs that they offer. In addition, pursuant to the servicer's policies, every eligible homeowner must be considered for HAFA by a participating servicer before the homeowner’s loan is referred to foreclosure and before the servicer may allow a pending foreclosure sale to continue.

Beware of Foreclosure Rescue Scams - Help Is Free!

61. What are some of the warning signs of scams or fraud?

• There should never be a fee for assistance with or information about the Making Home Affordable Program.
  
• Beware of any person or organization that asks you to pay an upfront fee in exchange for a counseling service or modification of a delinquent loan. Do not pay – walk away!
  
• Beware of anyone who says they can "save" your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
  
• Never make your mortgage payments to anyone other than your mortgage company without their approval.
  
• The Obama Administration has launched a coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams that threaten to hurt American homeowners and prevent them from getting the help they need during these challenging times.

62. What should I do if I’ve been scammed?

• First, get the help you need to avoid foreclosure. Contact your servicer immediately.
  
• Contact a HUD-approved housing counselor through the Homeowner’s HOPE^TM Hotline at 888-995-HOPE (4673).
  
• To learn about foreclosure rescue scams, go to www.MakingHomeAffordable.gov/beware. To file a complaint or to get free information on fraud and other consumer issues, contact the Federal Trade Commission at www.ftc.gov/consumerprotection or 877-FTC-HELP (4357).

So, there's no fee for the homeowner to get HAFA info, but the agent should pay for it?? I don't understand. Who is controlling the situation in these HAFA short sales? Govt. employees on a hot line or experienced, knowledgable Realtors??

In deciphering this information above I have come to the conclusion that in most cases this HAFA short sale program won't be used on most SoCal homes. Most properties here have 2nd mortgages and most seconds either want more than the $3K token payoff; and plan to go after deficiency when the unsuspecting borrower gets back on their feet, or they will sell to a bull dog collection agency for a few dollars more so they can go after the borrower at a later date. So I am thinking in 3-5 years we have a pretty good amount of poor unsuspecting families getting their wages garnished to pay for houses long gone and overpaid for.. As well as the fact that you cannot do a deed-in-lieu if you have 2nd or more lien holders and most home buyers have those 2nd mortgages.

I am thinking we have just another inadequate government program that the lenders will never quite figure out how to implement, and will further mess up the progress we've been making with getting some systems in place for some lenders; in a effort to make the public think that the government is actively working to find solutions for the homeowner's best interests. (NOT) AND to top it off some company I've never heard of (probably owned by an ex- Goldman Sachs exec. haha, no really, I would not in the least be surprised :-) gets $299 for each unsuspecting real estate agent that signs up for their program to become HAFA certified.. are we SUCKERS!??? I even went on the site and listened to the video by Ray something or another to describe the program... are you kidding me??? HOPE, HAMP, HAFA.. maybe we need a program called HEMP because I think someone's smoking it..

Enough about my thougts, what do you think? Have you heard about our Realtor "need" to be certified for this?? I'd love your input!

A record number of homes were lost to foreclosure in the US in the first quarter of 2010. According to RealtyTrac Inc. the number of U.S homes taken over by banks is up 9% the first quarter compared to a year ago. Additionally, households facing foreclosure grew 16 percent in the same period and 7 percent from the fourth quarter 2009. More homes were taken over by banks and scheduled for foreclosure sales than any other quarter going back to at least 2005, when RealtyTrac first began reporting data.

California accounts for the largest amount of homes facing foreclosure... roughly 23 percent of the nation's total.

In my opinion this is just the tip of the iceberg. We have a backlog of properties that the banks have been holding off the foreclosure sale for various reasons, drawn out and postponed foreclosures waiting for short sale approvals or loan modifications, and the avalanche of Pick-A-Pay or Option ARM loans coming to the end of their five year teaser period. The flood of homes will break the dam at some point. Modifications are seeing a failure rate of over 50%, jobs are still being lost, and the 'teaser loans' are unsustainable at their actual amortization payment rate, nevermind the tens of thousands of dollars that most homeowners added to the loans principal amount over the past five years when the payment required didn't even cover interest only on the loan. These loans will give 'upside down' a new meaning. MANY of these 'creative' loans were originated on California properties since our values reached a point of impossibility for most mere mortals to purchase. I can only imagine (and have nightmares about) what the government bimbos will come up with this time in order to attempt to stem this flood. I say, let it rain!! Flush it out and get it over with... enough bailing out; let's flush it out.

What's your view?

Great News from California Association of Realtors

NO MORE STATE TAX ON FORGIVEN DEBT

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification.  Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law.  For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012.  Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
 
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions.  Most notably, taxpayers who are bankrupt are exempt from debt relief income tax.  Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage.  The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

Please remember to verify information with your CPA or attorney to see how this will pertain to your individual situation...