Sunday, November 11, 2012

Relief from Short Sale/Foreclosure and other woes ...

Having a hard time making ends meet? Well, there's a new avenue for you to explore. If you are a California homeowner and personally occupy your property, have financing that does not exceed $729,750 and that loan was in place before January 1, 2010... Help may be just a few clicks away ... ... They offer programs for Principal Reduction, Mortage Reinstatement, Unemployment Assistance, Transition Assistance and more. If I can assist you in any way, please contact me. You've had the setback and I am all about the comeback ... I strive to make a positive impact on someone's life every day. Best of Luck to you and as always - Keep the Faith!!! Short Sale Sully 760-610-3245

Thursday, September 13, 2012

Tax relief on forgiven debt set to expire Dec. 31, 2012

I've been talking about this and if you need to Sell Short - Get a move on ... Just in case. There are no guarantees that there will be an extension from either the Fed or State, if there is - I promise to report it right away ... Read on for the latest ... Unless Congress and the California State legislature take action, a break for mortgage principal forgiven in loan modifications or short sales will expire at year’s end. The mortgage debt forgiveness issue is only one of approximately 60 expiring tax provisions that Congress appears unable to extend prior to its recess for the November elections. Congress is pushing the extension of any expiring tax provision to the lame duck session, along with any increase in the debt ceiling, and any serious attempts to prevent the mandatory budget cuts agreed to during last year’s debt ceiling deal. California's tax treatment of mortgage debt relief income generally aligns with federal law, and both the California and federal laws are set to expire at the end of 2012. For debt forgiven on a loan secured by a "qualified principal residence," borrowers are exempt from both federal and state income tax consequences, but only until Dec. 31, 2012. 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 pay off a previous loan that would have qualified. However, these tax breaks apply only to debts discharged from 2009 through 2012. It may be that Congress will take action to extend the federal exemption before year-end, but we will have to wait and see. If the federal law is extended, it is likely that California would follow in due course, as in the past, but it is not guaranteed. The last time the federal tax exemption was extended, California did not conform its tax law until well into the next year. Sellers who have transactions closing after Dec. 31, 2012, need to speak to their own legal counsel or tax advisors about the impact of the expiration of these laws and their potential tax liabilities, including the applicability of other exemptions from debt relief income tax. Keep the faith!!!

Tuesday, September 11, 2012

Why Short Sales, Foreclosures Damage Credit Similarly

Here is an interesting story which relates the reasoning and includes Blog postings from the FICO Web site about why these events hit the credit scoring so hard and there being no real difference between Short Sale, Deeds-in-Lieu and Foreclosures. In my opinion, the fact of the matter is that when you experience financial difficulties to get into a situation to be considered for these alternatives or a Modification, as well, you have usually missed from one to many mortgage payments. This is where the real damage is done in your credit scoring, especially if it takes quite a while to close whichever alternative you end up with. Your late charges go from 30 days to 60 days to 90 days to 90+ then 180 then 180+ and on and on. This is happpening while your credit scoring is spinning downward monthly. The label the final action is given at the end is really immaterial and while there is a difference (certainly future lenders look at the difference in reviewing any application for future credit from 1-7 years down the line, depending on the Agency and loan program) the damage has already been done and nobody told you about that. Read on for the story ... Daily Real Estate News | Friday, September 07, 2012 With short sales, home owners work with a bank on a solution to get out of a house they may no longer be able to afford or have to sell urgently for some reason. That’s why some argue short sales shouldn’t damage a person’s credit score in the same way as foreclosures, which can be much more costly for banks. So should the penalty for a foreclosure more severely damage a borrower’s credit score than a short sale? No, maintains a new FICO study. FICO conducted a study to determine the credit risk associated with “mortgage stress events,” such as foreclosures and short sales, by analyzing data from October 2009 to October 2011. “While it is true that short sales represent slightly better risk than foreclosures, they do not perform well enough to merit a more positive treatment in the FICO Score,” according to a recent blog post on the FICO Web site. The blog post goes on to explain that one out of every two borrowers who undergo a short sale go on to default on another account within two years. Also, according to researchers, an overwhelming majority of borrowers who went through a short sale also had some other mortgage delinquency in their credit history. “From a weighting perspective, all these mortgage events – short sale, foreclosure, deed in lieu – fall into the same heavyweight class, because they correlate with exceptional riskiness,” the FICO blog post notes. “They aren’t alone in that class either. Based on the data, consumers with short sales perform no better than consumers who have a severe delinquency (90-plus days past due), a collection, or a derogatory public record (e.g., bankruptcy, tax lien, etc.) on file.” Keep the faith ...

Monday, September 10, 2012

Modification processs reportedly improving

Mortgage settlement with banks starts to ease foreclosure crisis Nearly 140,000 homeowners have received a total of $10.6 billion in mortgage debt relief from March through June, a federal report on the banks' progress says. Overall, 137,846 struggling homeowners nationwide received some type of monetary relief from the banks during the four-month period starting in March for an average of about $76,615 each. Above, a foreclosed home is on the market last year in Miami. (Joe Raedle, Getty Images / August 30, 2012) August 30, 2012 WASHINGTON — The nation's five largest banks are off to a good start on their promise to help ease the foreclosure crisis, providing nearly 140,000 struggling homeowners with a total of $10.6 billion in mortgage debt relief, according to a government report. But the banks have much more work to do to fulfill their requirements under a $25-billion agreement reached in February to settle federal and state foreclosure abuse investigations, key officials said. And to keep the pressure on, the government released the preliminary report Wednesday — the first look at how Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. were carrying out their commitments. "We will continue holding the banks' feet to the fire in the months ahead, and we will be watching like hawks to make sure they live up to the requirements under this settlement," Housing and Urban Development Secretary Shaun Donovan said. The report from the Office of Mortgage Settlement Oversight showed that Bank of America had faltered in one key area. It did not complete a single modification of a first mortgage from the settlement's start date of March 1 through June 30. The other four banks had completed a total of 7,093 modifications of first mortgages worth $749 million during that same period. JPMorgan Chase completed the most, 2,920, with the highest value, $367 million. Bank of America quickly responded to the report with updated numbers, saying that from July 1 to Aug. 21 it had completed 3,823 first-mortgage modifications, worth $596 million. Bank spokesman Dan Frahm said the modifications were difficult to complete by June 30 because each homeowner must first go through a three-month trial period. Overall, 137,846 borrowers nationwide received some type of monetary relief from the banks during the four-month period for an average of about $76,615 each. Californians received about $4.6 billion in relief, by far the most of any state. "We are happy with California's share of the pie, but the pie needs to get bigger," said Shum Preston, spokesman for California Atty. Gen. Kamala D. Harris, who was a key player in the settlement. "There's a lot of hurt out there." The banks voluntarily provided the preliminary data before the first required report, due in November, and the data were not audited, said Joseph A. Smith Jr., the government-appointed monitor of the settlement. He released the information so the public could track the progress of the banks and the oversight of his office. "Now that the information is out, it is going to facilitate a conversation, so to say, about how they're doing that will have an impact on the banks' motivation," Smith said. "I'm encouraged by where we are. But we're not going to declare victory." The five largest mortgage servicers agreed to provide the relief to struggling homeowners as part of a settlement with federal officials and 49 states to end lengthy investigations into alleged "robo-signing" and other foreclosure abuses. The banks have set aside about $20 billion to lower loan rates and principals and provide other relief directly to consumers, and $5 billion to the states, primarily for foreclosure relief and prevention programs. The banks get credits for various types of homeowner relief. Each dollar forgiven in a short sale, for example, results in a credit of 45 cents if the bank owns the loan and 20 cents if it is held by investors. The report did not say how much the $10.6 billion provided as of June 30 would reduce the $20-billion obligation. The largest amount of relief came in debt forgiveness as part of short sales, in which the bank allows a homeowner to sell a home for less than what is owed on the mortgage. The banks forgave about $8.7 billion in first- or second-mortgage debt as part of short sales. In addition to the $749 million in principal reductions on first mortgages, the banks provided $231 million in principal reductions or outright forgiveness for second mortgages. The banks also are adopting 304 servicing standards required by the settlement, with four of the banks saying that they implemented more than half the standard as of July 5. The report did not identify those banks. Overall, Bank of America had provided the most relief to homeowners for the report period — $4.9 billion, nearly all in the form of short sales. Kevin Stein, associate director of the California Reinvestment Coalition, a housing advocacy group, said he was concerned that most of the relief from the banks was in the form of short sales instead of principal reductions, which allows people to keep their homes. "It's still early, and we want to be hopeful that will turn itself around," Stein said. Donovan said short sales were easier to complete in the first few months of the settlement than principal reductions. But he said short sales are capped and are not as attractive to banks because they result in less credit toward fulfilling the settlement terms. Katie Porter, a UC Irvine law professor who is monitoring the settlement compliance for the state attorney general, said the report showed that the banks had moved quickly to start providing relief, though their performance was uneven. "We need to see more, but the trend is in the right direction," she said.

Saturday, September 8, 2012

HAFA Ending 12/31/12 but FHFA puts brakes on early

FEDERAL HOUSING FINANCE AGENCY STATEMENT For Immediate Release STATEMENT BY EDWARD J. DEMARCO, ACTING DIRECTOR, FEDERAL HOUSING FINANCE AGENCY, ON THE USE OF PRINCIPAL FORGIVENESS BY FANNIE MAE AND FREDDIE MAC I provided a response to numerous congressional inquiries as to whether the Federal Housing Finance Agency (FHFA) would direct Fannie Mae and Freddie Mac to implement the Home Affordable Modification Program Principal Reduction Alternative (HAMP PRA). After extensive analysis of the revised HAMP PRA, including the determination by the Treasury Department to begin using Troubled Asset Relief Program (TARP) monies to make incentive payments to Fannie Mae and Freddie Mac, FHFA has concluded that the anticipated benefits do not outweigh the costs and risks. Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP PRA did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today. I have also previewed for Congress several housing-related initiatives to strengthen the loss mitigation and borrower assistance efforts of Fannie Mae and Freddie Mac as well as improve the operation of the housing finance market. These initiatives include new and consistent policies for lender representations and warranties, alignment and simplification of the Enterprise short sales programs, and further enhancements for borrowers looking to refinance their mortgages. The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions. Note: The Federal Housing Finance Agency is releasing extensive documentation of its analysis and the basis for our policy conclusions. The documents being released include FHFA’s correspondence to numerous members of Congress, which includes a paper that describes the economic analyses undertaken, including the modeling results and the assessment of related operational costs and costs associated with the effect principal forgiveness may have on future defaults. A technical appendix to the paper describes the modeling work done to assess principal forgiveness and the sensitivity of the modeling results to various assumptions about borrower characteristics and borrower response. Also being released today are separate analyses of HAMP PRA undertaken by Fannie Mae and Freddie Mac and reported to FHFA by each company. AS always ... keep the faith; and if you need any couseling on your California "Coachella Valley" property or loan situation, call upon "Short Sale Sully" 760-610-3245 La Quinta Real Estate

Tuesday, August 21, 2012

FHFA issues new guidelines for Fannie/Freddie Short Sales

Back in June, the Federal Housing Finance Agency 'FHFA' announced that strict timelines for servicers to respond to short sales within 30 days of receipt of a short sale offer, provide weekly status updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer. They have followed that up with new guidelines that will take effet November 1, 2012: •Eliminates current Fannie Mae and Freddie Mac short sale programs and creates a single standard short sale process for both entities (Fannie and Freddie HAFA programs will expire at the end of the year). •Enables servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales without waiting for an approval from Fannie Mae or Freddie Mac •Offers special treatment for military personnel with Permanent Change of Station (PCS) orders. •Standardizes and clarifies foreclosure suspensions on a property with an approved short sale. •May pay borrowers up to $3,000 in relocation assistance. •Fannie Mae and Freddie Mac will offer up to $6,000 to subordinate lien holders to expedite a short sale. In addition, FHFA clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a Fannie Mae or Freddie Mac loan. We haven't experienced the complete implementation and follow through of the items from June and hope that will improve. It will be interesting to see how these guidelines are implemented from November 1st forward and what the transition will involve for HAFA qualified applications that don't close by year end. Stay tuned and Keep the faith! La Quinta Real Estate

Thursday, May 31, 2012

Fannie & Freddie speeding up the Short Sale process

Federal regulators have hopes of greatly streamlining the short-sale process starting mid-June. Bank of America started an expedited process of their own April 15th and now starting June 15, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, will require both agencies to give short-sale buyers a final decision within 60 days. (In a short sale, a lender agrees to accept less than the balance on a mortgage.) Fannie and Freddie must also respond to initial requests for a short sale within 30 days of receiving the buyer’s submission. “Short sales are huge right now,” said Peter Spino, the foreclosure services manager for Community Housing Innovators in White Plains, N.Y., a housing counselor certified by the Department of Housing and Urban Development. Distressed homeowners often prefer them to a foreclosure, he noted. Expedited sales as a result of the new directive will benefit the entire housing market, said Michael McHugh, the president and chief executive of Continental Home Loans and the president of the Empire State Mortgage Bankers Association, a trade group. They could also remove some risks for buyers — many of whom previously had to wait months for a decision and then ended up not getting the house they wanted. In March, the most recent month for which data were available, short sales represented more than 14 percent of existing home sales, according to CoreLogic, a data analytics company, compared with 12 percent for all of 2011 and about 10 percent in 2010. And as the number of short sales has risen, foreclosures have fallen. Completed foreclosures represented 25.3 percent of home sales in March, versus 34.9 percent in all of 2011 and 42.7 percent in all of 2010. Lenders favor short sales because they are less costly and more efficient than foreclosures. Yet the homeowners, trying to exit as gracefully as possible, never know how long the process will take or how badly their credit will be hurt. Although short sales have a reputation for being easier on credit scores than foreclosures, “that’s a fairly common misperception,” said Rod Griffin, the director of consumer and public education at Experian, one of the major credit bureaus. If there is a difference in impact, he said, it is slight. Both short sales and foreclosures remain on the credit report for seven years — but foreclosures don’t appear until the legal paperwork is filed, and that could take months, Mr. Griffin said. The effect was measured in an analysis by VantageScore, a provider of credit scores used by lenders. The higher the credit rating a consumer has, the more points he or she would lose in a short sale. If consumers started with, say, an 830 score, they would most likely lose 100 to 110 points from a short sale, 120 to 130 points from a foreclosure. But a homeowner with a 625 score, who is behind on his mortgage and some credit card payments, would lose 15 to 25 points from a short sale and 10 to 20 points from a foreclosure, the VantageScore analysis shows. One major downside to a short sale has always been the length of time it takes to process the transaction. The application goes from Borrower(s) to Real Estatae Agent(s) to Negotiator to Bank to Investor (and maybe to Private Mortgage Company) and then back down the line; and if there are hiccups along the way, there can be lenghty delays in the process between the various links (i.e. valuation problems, counter offers, etc...) Short Sales have been done in record times (1-2 months) with 3-6 begin the norm and I’ve also had them take a year. I am actually working on one property that is approaching 1,000 days. Locally, the inventory level is so low that Buyers who would not have previously looked at Short Sales are now jumping at the chance to submit an offer, certainly evidence that the buyer's market is gone. As always, keep the faith!

Saturday, May 19, 2012

Short Selling? BofA might pay up to $30,000

Bank of America is offering some struggling homeowners payments of up to $30,000 if they sell their homes in a short sale and avoid ending up in foreclosure. Under the plan, Bank of America will offer homeowners so-called relocation payments of between $2,500 and $30,000 if they sell their home in a short sale. In short sale deals, the sale price of the home is less than what the seller owes the bank. The bank first tested the payments in a pilot program in Florida last fall. Under that initiative, Bank of America paid up to $20,000 to borrowers who sold their homes in short sales."This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," said Bob Hora, an executive for the bank. Chase started a similar initiative in late 2010 that pays as much as $35,000 to short sellers. Wells Fargo has also paid five-figure incentives to short sellers or to owners who turned over their deeds to the bank. BofA said it has completed 200,000 short sales over the past two years. These sales are generally more cost effective for banks than foreclosures. By avoiding foreclosure, the lenders get distressed properties back from delinquent borrowers more quickly, which helps them to avoid property tax payments, maintenance expenses and legal fees that can build up for months, even years, as foreclosures work through the system. In addition, the incentives help guarantee the homes will return to the lenders in better condition. Foreclosed properties are often poorly maintained, even sometimes sabotaged, by angry former owners, making them worth far less to the banks. During the last three months of 2011, foreclosures sold for an average of about $150,000, according to RealtyTrac. Meanwhile, short sales sold for an average of about $185,000. To qualify for Bank of America's relocation payments, borrowers must obtain pre-approval on sale prices for their homes. The sale must begin by the end of 2012 and close by September 26, 2013. The exact compensation is determined case-by-case based on a calculation that involves the home's value, mortgage balance and other factors. I am here to assit you with this inquiry so please call upon Short Sale Sully for assistance (760) 610-3245 .. and as always... Keep the faith!

Monday, April 23, 2012

Congress considers extension to mortgage-debt relief deadline

Congress considers extension to mortgage-debt relief deadline
Action not expected until post-election
By Ken Harney Inman News®

For anyone hoping that a fractious, election-bound Congress can manage to extend a law that is crucial to the housing recovery -- the Mortgage Forgiveness Debt Relief Act -- here's a little good news: Before heading home for the Easter holiday recess, key members of the House and Senate tax-writing committees introduced bills that would keep the law alive through 2014.

Without action by Congress, the law -- which allows homeowners whose mortgage debts have been written off by lenders in short sales, foreclosures, principal reductions and deeds-in-lieu of foreclosure to escape heavy federal taxation on the amounts forgiven -- would expire Dec. 31, 2012.

Real estate and mortgage trade groups believe that any expiration would be disastrous for large numbers of underwater owners trying to rid themselves of smothering debt loads.

It could also sharply reduce the appeal of short sales and other resolutions needed to clear out distressed inventories.

If homeowners thought they'd be penalized for agreeing to principal reductions and debt cancellations, they'd be far less likely to participate.

That, in turn, could hamper efforts like the $25 billion nationwide robo-signing mortgage settlement, which features more than $10 billion in debt forgiveness, as well as the Obama administration's efforts to spur short sales and principal reductions at Fannie Mae and Freddie Mac.

Until the tax code was amended in 2007, the Internal Revenue Service treated owners whose unpaid principal balances were canceled as having received actual income from the transaction and hit them with tax bills.

For example, in a short sale where the lender wrote off $100,000 of unpaid mortgage debt prior to 2007, the federal tax code treated the $100,000 as ordinary income to the seller and the IRS imposed tax levies at regular rates.

Though the prospects for quick action on the issue are virtually nonexistent, the sudden introduction of multiple bills on both sides of Capitol Hill can only be a positive sign.

In the Senate, Finance committee member Debbie Stabenow (D-Mich.) joined with fellow Democrats Robert Menendez (New Jersey), Sherrod Brown (Ohio) and Jeff Merkley (Oregon); and two Republicans: Dean Heller (Nevada) and Johnny Isakson (Georgia), on a proposed extension (S 2250) through Dec. 31, 2014.

In the House, 14 of the 15 Democrats on the Ways and Means Committee -- the point of origination for most tax legislation in Congress -- are co-sponsoring a bill (HR 4202) with the same provisions as Stabenow's.

One Republican on the Ways and Means Committee, U.S. Rep. Tom Reed of New York, also is introducing an extension bill, but the text and bill number were not immediately available.

President Obama's fiscal 2013 federal budget proposal calls for an extension through 2014, which congressional analysts estimate would cost the government $2.7 billion in tax revenues over the coming two years.

In a statement, Stabenow said, "It is bad enough that so many families are faced with mortgages that now exceed the value of their home.

"But to add insult to injury, without this bill the IRS would once again require these families to pay hundreds or thousands of dollars in additional income tax when they sell or refinance their home. That's just wrong."

The lack of more Republican co-sponsors on Reed's bill may point to difficulties for the debt relief extension that could materialize as early as the end of this month.

The Republican-controlled Ways and Means Committee says it plans to look at all "extenders" -- expired or soon-to-lapse special benefit programs ranging from corporate research and development tax credits to individual homeowner write-offs for residential energy improvements -- within the next two weeks.

If the Republican majority decides that mortgage debt relief is just another contributor to the federal deficit, the House version of bills could be derailed indefinitely.

(Remember that last December, House and Senate conferees deferred action on a long list of extenders -- including deductions for private mortgage insurance premiums -- and they all remain in legislative limbo.)

But tax analysts and lobbyists on Capitol Hill say the most likely scenario shapes up something like this: Though the National Association of REALTORS® and other groups will push for early consideration of the debt relief extender, it's unlikely that Congress will be able to focus on a major revenue package until after the November elections.

Then, the victors and lame ducks from both houses will have to do the year's tough lifting: They'll take up the entire range of budget, deficit and debt-ceiling issues during several frenetic weeks, and finally hammer out an omnibus bill that includes either a one- or two-year new lifeline for mortgage debt relief.

Though there's a chance the entire process will break down again as it did last year, Jim Tobin, chief lobbyist for the National Association of Home Builders, told me last week, "We remain optimistic that once we get past the election and into a robust lame duck session, Congress will do the right thing" on mortgage forgiveness.

"But any way you look at it," he added, "taxing (financially distressed) homeowners on phantom income is just inequitable."

Plus, it makes absolutely no economic or political sense for either party -- whether we have a President Romney and Republican majorities in both houses, or President Obama and the Democrats come away big winners -- to kick homeowners when they're already down.

Stay tuned to ShortSaleSully for more great information ... and as always

Keep the faith!

Thursday, February 23, 2012

How to bounce back from a Short Sale and/or Foreclosure

Greetings from Short Sale Sully ( The following is a reproduction of an article from today's Desert Sun. In my opinion, it's very informative and provides some good tips. After reading through this, please note my closing comments. If you have suffered through one of these situations, you've already had the setback ... make note and avail your self of all the little things necessary to make your 'comeback" simpler and succcessful. Here's the story from Alex Veiga

Next to filing for bankruptcy protection, nothing wrecks your chances of qualifying for a home loan like a foreclosure.

And if you got out from under an oppressive mortgage through a short sale — when the bank agrees to accept less than what the homeowner owes — lenders can look upon you just as unfavorably.

It's a reality that the former owners of the more than 4 million homes lost to foreclosure in the six years since the housing bubble burst will have to confront if they want to own again. But the passage of time makes all the difference.

That's because mortgage-lending guidelines that most banks follow prohibit them from making loans to people with foreclosure or a short sale in their credit history, often for years. Never mind the hit that one's credit score takes.

Still, some of the homeowners who were foreclosed upon when the market first started to skid are now looking to buy and getting loans.

“They're probably going to pay a little higher interest rate, but with rates so low, a higher interest rate of 4 percent is not a big deal,” said Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev.

So how likely are banks to approve your mortgage application if you have a real estate-related blemish on your record? And can you do anything to spring yourself from the mortgage penalty box?

It depends on several factors, but largely on whether you had a foreclosure or a short sale.


Generally, borrowers who have a foreclosure in their credit history can expect to wait two to seven years before a lender will even accept their loan application.

The waiting periods stem from guidelines most banks must follow in order to be able to sell their home loans. That's because potential purchasers, such as Fannie Mae and Freddie Mac, each have a different set of guidelines for the loans they will buy and criteria for whom they deem a qualified borrower.

The fact is, a person's credit score, employment history and other factors that make up one's creditworthiness will take a back seat to these resale guidelines.

If a buyer with a past foreclosure is seeking a government-backed mortgage, the waiting period can vary before they can qualify.

Take the Federal Housing Administration, which insures roughly 30 percent of new loans. Under its guidelines, former homeowners must wait three years from the date of their foreclosure before they can qualify for backing by the agency.

Compare the U.S. Department of Agriculture's housing program, which requires three years, while the time penalty for a VA loan is two years. Fannie Mae and Freddie Mac, which own or guarantee about half of all mortgages, require the longest stretch: seven years after a foreclosure.

In some cases, the waiting periods for a foreclosure can be reduced.

Fannie Mae, for example, allows a three-year waiting period in the event the foreclosure was due to an extenuating circumstance. The company defines this as an event that was beyond the homeowner's control and resulted in a sudden reduction in income or catastrophic increase in financial obligations. Think job layoff, medical bills or divorce.

FHA may grant an exception to its waiting period in the event a wage-earner becomes seriously ill or dies. A divorce may qualify for an exception, but only in certain cases.

Short Sales

The roadblocks for having a short sale in your credit history can be less severe, and in some cases, waived altogether.

FHA requires borrowers who weren't paying their mortgage when they sold their house to wait three years before they can qualify for a home loan. That time penalty may be waived in certain cases, including long-term job loss.

There is no FHA time penalty for homeowners who made their house payments in the 12 months before their short sale.

The size of a down payment can also shorten the waiting period.

A down payment of 20 percent or more will cut Fannie Mae's time penalty on a borrower with a short sale down to two years from seven. Buyers who put down 10 percent can qualify after four years.

Credit scores

It's no longer just a waiting game for homeowners caught up in the earliest stages of the foreclosure crisis in 2007 and 2008.

There's still the impact a foreclosure or short sale has on one's credit score - still very much a factor in qualifying for a loan.

Like most blemishes, foreclosures and short sales will remain in your credit history for seven years.

As a general rule, the higher your credit score, the more it will drop as a result of a bad debt, said Barry Paperno, consumer affairs manager for, the consumer website for FICO.

FICO credit scores range from 300 to 850. In simulations, a foreclosure sent a FICO score of about 720 down to as low as 570 and took about seven years to recover fully, assuming everything else being equal.

Still, there are steps one can take to burnish one's tarnished credit rating.

While in the foreclosure penalty box, make sure to pay all your bills on time.

Get more credit. This may sound counterintuitive after a foreclosure, but beefing up your track record of good credit accounts can help boost one's credit score. A car loan or a credit card will do. But if you get a credit card, pay it off every month.

Be patient. A foreclosure's drag on your credit score will decline over time.

Dispute any mistakes on your credit report, which can lower your score.

Don't close your oldest credit accounts. Your score gets a boost from older credit lines.

Scale back your lifestyle, and pocket the savings toward a future down payment.

So I hope you took notes and here's a few tips to add to the list:

1) Keep copies of the checks for any/all payments made in the last 2 years of time you had made payments on the loan (even if they were partial payments) and keep these in a safe spot;

2) If you bank online, print out and keep the monthly statements;

3) Make it a habit to keep all pages of your bank statements (even if it's a blank). When a statement given to a Lender says it's one of 8 pages, they want to see all 8 pages. Just keep these with your tax data after filing yearly and recycle when your purge your tax files.

4) Start the same habit with your paystubs. Down the line this will be crucial;

5) Introduce yourself to This is a free service to order copies of your credit report (you must pay if you want scores but why bother for a few years). You can order one from each of the three companies but if you get in the habit of ordering one every 4 months, you have a rotating means of checking your credit and making sure there are no unexpected reports; and if so, you'll have time to deal with it.

So SHORT SALE SULLY says "GOOD LUCK" and I am here if you need me and like always ... Keep the faith!!!

Remedy for borrowers who suffered foreclosure in 2009 & 2010?

Do you believe you suffered through a foreclsoure procedure in error? If so and this occurred in 2009 or 2010, you may have another opportunity for remeption. You can request an independent foreclsoure review ...

The Federal Reserve and the OCC announced that the deadline for submitting requests for review under the Independent Foreclosure Review has been extended. The new deadline, July 31, 2012, provides an additional three months for borrowers to request a review if they believe they suffered financial injury as a result of errors in foreclosure actions on their homes in 2009 or 2010 by one of the servicers covered by enforcement actions issued in April 2011.

The deadline extension provides more time to increase awareness of how eligible people may request a review through the Independent Foreclosure Review process and to encourage the broadest participation possible.

As part of enforcement actions issued in April 2011, the OCC, Federal Reserve, and the Office of Thrift Supervision required 14 large mortgage servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity in 2009 and 2010 to identify borrowers who may have been financially injured due to errors, misrepresentations, or other deficiencies in the foreclosure process. If the review finds that financial injury occurred, the borrower may receive compensation or other remedy.

Borrowers are eligible for an Independent Foreclosure Review if they meet the following basic criteria:

The mortgage loan was serviced by one of the participating mortgage servicers; The mortgage loan was active in the foreclosure process between January 1, 2009 and December 31, 2010; and The property securing the mortgage loan was the borrower's primary residence.

Participating mortgage servicers include: America's Servicing Company, Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome Mortgage Company, Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, U.S. Bank, Wachovia Mortgage; Washington Mutual, Wells Fargo; and Wilshire Credit Corporation.

There is no cost associated with being included in the review. For more information, borrowers can call 888-952-9105, Monday through Friday, 8 a.m.-10 p.m. ET or Saturday, 8 a.m.-5 p.m. ET or visit one of the following websites or

As always ... Keep the faith

Thursday, January 19, 2012

Expansion of California anti-deficiency legislation explained

In a recent issue of California Real Estate, Linda A. Kirios, Esq (Counsel to the California Association of Realtors, presents commercial educational programs throughout California and practices commercial Real Estate)answered the question: I have heard that the anti-deficiency legislation in California has been expanded. Can you shed soe light on that?

Cut and paste for her answer: