Homeowner Resources

President Obama’s Making Home Affordable Program: Do you qualify?

You may qualify for a LOAN MODIFICATION if:

• You own and occupy your home as your primary residence.
• You are either current, at risk of imminent default, or behind in your mortgage payments, or are in foreclosure or bankruptcy.
• The unpaid principal balance of the first mortgage on your primary residence is $729,750 or less (loan limits are higher on owner-occupied multi-unit properties).
• You have verifiable source(s) of income to put towards a mortgage payment each month, even if that income has recently been reduced.
• You can provide copies of your most recent tax returns and will sign an affidavit of financial hardship.
• You have not previously modified your mortgage under the MHA program.

Note: Mortgages on second homes, vacant homes and investment properties are not eligible for modification under this program.

Short Sale Frequently Asked Questions:

Why do lenders or banks take discounts or Short Sales?
A Lender or bank takes a discount or does short sales because it saves them money. It gets bad debt off their books so they can reinvest that money by giving out another loan to a customer. On average a Lender loses between $30,000 to $80,000 on each property that they take back as a bank owned property.

What is an Authorization to Release Information?
An Authorization to Release Information is an instrument that allows you to speak to a foreclosing lender or another entity on the behalf of a homeowner.

What is required on an Authorization to Release Information form?
The required information for an Authorization to Release Information form is as follows:
Lenders name, loan number, property address, homeowner or homeowners name printed and their signatures and finally the date they signed the Authorization.

Why are there so many foreclosures?
There are many answers to this question, however, one of the biggest reasons why there are so many foreclosures is because of the relaxed lending guidelines starting back in 2004. Many homeowners only had to “state” their income and did not need to verify any of it.

Can we do a short sale with every bank or lender?
The answer is no. The majority of the lenders do short sales however, there are a select few that do not do short sales.

How long does a typical short sale take?
Depending on what state you are from, this answer will vary. Call the Foreclosing Lender and ask them that question. For example in the State of Connecticut a short sale typically takes between 2 to 4 months

Can I discount a 2nd (second) mortgage or a junior lien holder?
Yes absolutely.

Can a homeowner receive money when a bank or lender accepts a discount?
A homeowner cannot accept money from the sale of their home if a Lender accepts a short payoff or a short sale. However, there are exceptions to this statement; for example an FHA (Federal Housing Authority) insured loan will allow a homeowner to receive $1,000.

Does a homeowner receive a 1099 if the bank or lender takes a discount? Is a reduction of debt a taxable event?
Yes it is an IRS code. The IRS code states that “a reduction of debt is a taxable event.” However, the Government has passed a bill stating that for a certain period of time, some homeowners may be exempt from receiving a 1099. Please consult a local tax attorney in your area for any changes or updates in reference to this bill.

When do I list a house that is in default and needs a discount?
That depends on two things; #1 It depends on your exit strategy. If your exit strategy is to wholesale the property then you would not want to list the property.
#2 It also depends on whether the Foreclosing Lender requires the property to be listed. Please note: Some Lenders require a property to be listed when they take a short sale or short payoff.

Do I have to list a house when it is in default?
Yes and no. Some Lenders require a property to be listed when they take a short sale or short payoff. Ask the Foreclosing Lender, at the beginning of your short sale, whether you need the property listed.

Do Lenders or Banks do short sales if the homeowner is current on there mortgage?
Some Lenders will entertain taking a discount when a homeowner is current on their mortgage.

If a property is an REO or bank owned property can I do a short sale?
No. If a property is an REO, the loan has already been paid off. You can offer the same amount that you would have in the pre-foreclosure stage (pre REO), but it would not be a short sale at this point, just a standard transaction.

Can Owner (of property in default) also be listing agent of property being short saled?
Good Question!
There is absolutely nothing wrong with that set up. The agent wife is not a financial beneficiary of the short sale by virtue of her commissions, therefore there is no conflict.
BEWARE however. There is a small chance that your Lender could take issue with it and reduce her side of the commissions accordingly.

Helpful Links:

Realtor.org Mortgage Debt Forgiveness Act 

IRS.gov Home foreclosure and Debt cancellation

US Foreclosure Laws by State