After a year of attempting a settlement with five of the nation's major banks, an agreement was made on Thursday with 49 states (Oklahoma being the exception) to resolve "abusive and negligent foreclosure practices" that were charged against the banks back in 2008. With $26 billion, the big lenders will aim to benefit both those that were wrongly foreclosed on in the past, and many home owners who are currently under water.
An approximate $17 billion will go towards reducing principals for distressed home owners who are either under water or behind on payments. $3 billion will go towards helping those who are current on their payments but wish to refinance in able to take advantage of the record low interest rates. Another $5 billion will go to states and the federal government, and will then be dispersed to those who have already lost their homes to foreclosure in settlement amounts of $1,500 to $2,000 per household.
According to the agreement, it will also be the end of robo-signing (the source of the sloppy foreclosure practices) and harassment to delinquent borrowers. The banks have also agreed to reduce the principal interest more frequently during loan modifications.
Wondering how the new agreement may benefit you?
*If you borrowed from Bank of America, Wells Fargo, JPMorgan Chase, Citigroup or Ally Financial, you may be in luck! Unfortunately loans backed by Freddie Mac and Fannie Mae were not included in the agreement.
*If you were foreclosed on between 2008 and 2011 you may qualify for a settlement of up to $2,000. Contact your lender to have your case reviewed. The payment amount will depend on how many households apply for the program."The U.S. Department of Housing and Urban Development expects about 750,000 former homeowners to take part".
*If you're struggling financially with house payments, now is the time to look into refinancing (to lock in amazing rates) or loan modification. Unlike many debt forgiveness programs, principal reductions on home loans will not be considered taxable income in 2012 thanks to the Mortgage Debt Relief Act of 2007!
Courtesy of CNN Money
According to a recent report from RealtyTrac (a foreclosure listing firm), foreclosure rates are at their lowest since 2007. "Total filings, including default notices and bank repossessions were down 33% for the year to 2.7 million". In 2011, 1.9 million homes were filed for foreclosure last year which is a good improvement from 2010 (down 20%), and even better in comparison to the amount of filings in 2007. While this may come as good news, RealtyTrac also points out the fact that the banks have not caught up with the amount of foreclosure paperwork. They've taken more precaution due to the "robo-signing" scandal of 2010, and therefore the entire process has been delayed. The listing firm predicts that when the banks do catch up, the result will be a higher foreclosure rate for 2012. However, rates aren't expected to be as drastic as they were in 2010.
Low prices in the housing market will also continue to be a challenge for homeowners, as many of them will lack the home equity that might otherwise be available as emergency money. On the flip side, low mortgage rates are making it possible for many people to refinance their homes, in the hopes of avoiding any future financial troubles.
The areas hit hardest by foreclosure remain California (with 7 cities in the top 10), Arizona, and Nevada.
With over 6 years of experience in the short sale process and an instinctive ability to understand the needs of her clients, Angel Lynn is your trusted real estate expert. Whether you’re a buyer, a seller, or one of the millions currently in danger of foreclosure, contact us today! We’re here to help!
If you've been thinking about doing a short sale on your home, you now have more motivation to get the ball rolling. On December 31st, 2012 the Mortgage Forgiveness and Debt Relief Act is scheduled to expire.
Congress passed the act in 2007 for the purpose of helping distressed home owners. Before the act was passed, any forgiven debt on a primary residence was considered taxable income. The act states that if you borrow up to $2 million and the lender forgives the debt, such as in the case of a short sale, you are not responsible for the taxes owed on the forgiven amount. When a short sale is processed, the lender is responsible for providing a Form 1099-C to the IRS, which indicates the amount of debt that is being forgiven.
If the act is not extended, the tax liabilities on borrowers could cause even more of a financial burden for those that are already struggling. Hopefully there will be an extension but there's no guarantee, so don't delay!
With over 6 years of experience in the short sale process and an instinctive ability to understand the needs of her clients, Angel Lynn is your trusted real estate expert. Whether you’re a buyer, a seller, or one of the millions currently in danger of foreclosure, contact us today! We're here to help!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
;)
;)
;)
