Saw this covered over the weekend…change to IL Mortgage Foreclosure Act where lenders now can’t begin foreclosure proceedings until mortgagor is at least 30 days delinquent on mortgage and further requires lenders to tell homeowners they have another 30 days to work with a credit counselor—and give them yet another 30 days if they see a credit counselor approved by the U.S. Department of Housing and Urban Development.
Question, is anyone actually seeing lenders filing foreclosure suits prior to 90 days delinquincy anyways? (In other words, does the new law help anyone??)…I don’t want to overstate my foreclosure experienc…it’s just a smattering and the occasional counseling of clients, but I have not seen suits filed prior to mortgagor being at least 90 days delinquient (without the new law).
Rates on 30-year mortgages fell this week to the lowest level on record after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.85 percent this week, from 4.98 percent last week. It was the lowest in the history of Freddie Mac’s survey, which dates to 1971, and was down a full point from a year earlier.
The previous record low of 4.96 percent was set in the week of Jan. 15. Rates fell after the Fed said last week that it will pump $1.2 trillion into the economy to lower rates on mortgages and loosen credit.
I saw this piece today and it’s a real help actually. It would be nice if the House of Representatives could do a little Ex Post Facto law (like with those AIG bonuses) to give people who bought homes in 2008 the revised credit that was passed as part of Obama’s stimulus package. Likely you all know the basic differences…
If you bought a first home between April 9, 2008, and December 31, 2008, you are eligible for a tax credit of 10% of the home’s purchase price, up to $7,500. But you must repay that credit over 15 years, starting two years after the year you claim the credit…
But if you buy a house between January 1, 2009, and December 1, 2009, you could receive a credit for 10% of the home’s purchase price, up to $8,000. This credit does not have to be repaid as long as you remain in the new home for at least three years.
Personally what I learned the most from was sort of how to use the “new” ’09 credit as part of your 2008 tax filing at the end of the article:
Taxpayers who buy a first home in 2009 don’t need to wait unt
That was the title of a piece I saw over the weekend. It analyzes 3 critical issues regarding potential mortgage foreclosure:
Getting sued;
Tax consequences; and,
Credit score impact.
I. Threat of lawsuit
This has a real human psychological impact…who likes getting sued? I suppose the main concern is the potential for a deficency judgment for the difference between the amount owed and the amount received when lender sells the property post-foreclosure. Keep in mind the Stipulated or Consent Foreclosure Options in Illinois where essentially borrower makes the foreclosure case easier in exchange for waiver of the deficiency judgment.
The lender may not follow through, though. “What our membership is telling us is that it can be cost-prohibitive to chase down a borrower who is already in financial distress,” said John Mechem, a spokesman for the Mortgage Bankers Association. “You can’t squeeze blood from a stone.” They may, however, still come after people with high incomes who walk away from jumbo loans that are way under water or loans on investment properties.
II. Tax Consequences
You also need to consider the taxman. Often, forgiven debts are taxable as income. Recent legislative changes, however, eliminate the federal tax burden through 2012 on most primary residence debt that a lender has reduced through loan restructuring or forgiven during foreclosure.
I think the statute was the Mortgage Forgiveness Debt Relief Act of 2007.
III. Your Credit
A short sale, deed in lieu or foreclosure itself will almost certainly damage your credit report and score, and the black mark will last for up to seven years. But the amount of damage it does will depend on how much other credit trouble you’ve gotten yourself into with other lenders. If you’re giving up the home you own, you’ll probably need to rent soon afterward. Will landlords turn you away once they check your credit and discover your troubled mortgage? “If it’s the only thing marring their credit, it’s probably not a big issue,” said Clay Powell, the director of the Rental Property Owners Association of Michigan, who added that good tenants could be scarce in economic environments like this one.
Saw this little nugget become law effective 1/09. A new “Notice” that must be included with the copy of a summons served to a homeowner in a foreclosure action. The changes to the foreclosure act add new sections 1504.5 & 1505.5.
The Code of Civ. Pro. was amended by adding Sections 15-1504.5 and 15-1505-5, which require plaintiffs in a residential foreclosure action to attach a Homeowner Notice (“Notice”) to the copy of the summons served to the homeowner. 735 ILCS 5/15-1504.5.
I don’t mean to single out Countrywide…many lenders were doing this and more importantly many individuals were signing these mortgage notes. My primary problem with Countrywide has just been their horrible customer service when dealing with them in different capacities. Here’s a true story:
I was working with Countrywide trying to help someone get a rather simple loan modification. This person had a temporary family medical situation which caused her to get a couple months behind on her mortgage but then for like a year had resumed full, timely monthly payments. Simply, it was difficult to get the 2 past due months caught up. So as Countrywide requested I wrote a “hardship letter” on client’s behalf spelling out the problem with supporting documentation. Next, ostensibly client is assigned a “loan negotiator” with Countrywide. This person calls a time or two. But you couldn’t call the negotiator back…meaning negotiator would never answer the phone and didn’t have individual voicemail. You’d just get routed back to the collection people who wouldn’t help you. So after 4-6 weeks of this charade I get a letter from Countrywide saying “thanks for contacting us about your financial hardship situation. However at this time we must deny your request for the following reason:
Mortgagor failed to contact.”
Yep, I had to read that one a couple times and then chuckle.
Saw this piece today regarding 8 of the largest mortgage lenders proclaiming a temporary foreclosure moratorium pending Obama’s bank/housing overall expected shortly. From the piece:
Citigroup will halt foreclosures through March 12, or until a plan is completed, the company said Friday. Wells Fargo said its moratorium is in place until a plan is announced. The other lenders said foreclosures will be stopped on owner-occupied homes until March 6.
Not necessarily my view but some interesting thoughts put forth here. Some bits from the article:
“If you’re still linked through the house, than you’re not really divorced,” says Kelly Lise Murray, a Harvard-trained lawyer and Nashville real estate agent…
But Murray, who describes herself as a “divorce real estate advocate,” says people tend to underestimate the “ghosts” that go along with keeping the house. The place is often so filled with memories, both good and bad, she says, that “it’s not the family home anymore. It’s a huge lodestone…”
Then there’s the even bigger issue of hidden debt. Ideally there will have been no secrets between the husband and wife. But money is a major cause of divorce, and in many cases, one spouse has no clue that the other one has rung up big bills that have become undisclosed liens against the property…
I think the premise above contains two particular advantages.
First, the divorce case is quickened and potentially “cleaner.” I can’t tell ya how many cases I have now that are just sort of lagging because of an inability to sell real estate…nothing too much happening but no final closure either.Of course no one can control market conditions.
Second, there’s way too much guesswork in setting some value on a marital residence at some time fairly arbitrarily plus there’s a lot of unknown and moving factors that have to happen for the typical refinance with buyout or sell in the future and distribute proceeds in some pre-set manner…now that’s messy!
An earnest payment (sometimes called earnest money or simply earnest, or alternatively a good-faith deposit) is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the purchase. When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations.
I’ve been working with a long term client regarding sale of real estate over the last months. And won’t go in to many details here but there was a shocker regarding a recent offer and contract (where eventually the buyer’s backed-out of the deal) where the listing real estate agent didn’t require nor take any earnest money from these buyers when they made their offer and subsequently backed-out.
UNBELIEVABLE!
And in the end the result may have been the same but it sure would have been nice if the potential buyer’s had a little skin the game…ya know, I think it’s called leverage.
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Apr 06 2009
