Our 3rd Party Advocate's Guide to Modifying Loans blows away every other "how to" manual available.
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MHA stats..... There are currently 487,081 active trial modifications for the Making Homes Affordable Program. Chase (including WAMU, EMC) leading with 117,196 of them. In all stats show that 3,100,305 loans are eligible for the plan - where do you think mortgages are going with this plan being the leader of all modifications.
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Why should real estate professionals work with short sales? First and foremost, agents should put working with short sales in their repertoire because it allows them to really help people out of an emotionally stressed situation. They are providing a much needed service, while at the same time, helping their own econmy and the economy at large. The more properties sell, the more people work, it's that simple. Revenue and business is generated. The real estate agent works, the mortgage lender, the title rep, the processing agent, the administrators, home improvement and inspection professionals etc. Second, it is a good way to pick up a few extra salable listings., build an investor pipeline maybe and avoid REO baby sitting hassles. Truly, though, there is nothing quite like helping a client who feels overwhelmed and distraught find their way out of a bad position. After all - isn't helping people what we are all here to do? Though short sales are tedious, time consuming and a sure pain in the ?BEEP? it is our duty as professionals of real estate to step up and help homeowners through this epidemic.
At the end of the month, Fannie Mae will adopt higher minimum down payments and credit scores for borrowers with a past foreclosure.
The government-sponsored enterprise already has boosted the time period for these borrowers to re-establish their credit to five years from four years.
While exceptions could be made for borrowers in hardship situations, Marianne Sullivan, senior vice president of single-family credit policy and risk management at Fannie Mae, says those who had the ability to pay but walked away from their homes should be treated differently than those who met their payment obligations.
Additionally, Sullivan says Fannie Mae will make it more difficult for borrowers to transform their current residences into rentals and purchase new homes to discourage them from walking away from the existing home after the transaction closes.
Fannie Mae is making these changes as Congress considers passing legislation that would allow struggling borrowers to refinance into FHA loans after their lenders write down a portion of their mortgages, and the mortgage industry is pushing for speculators to be barred from the program.
Former Mortgage Bankers Association chair Regina Lowrie asks, "Why should a servicer take a haircut or have a cram-down for any borrower that truly has the ability to pay?"
Here's an article from the Associated Press I thought some may be interested in reading if they haven't already. WOW
The Associated Press May. 6, 2008 08:10 AM
WASHINGTON - Fannie Mae reported losses of $2.2 billion in the first quarter and the nation's largest buyer of home loans said Tuesday it would cut its dividend and raise $6 billion in new capital, with expectations that the housing slump will persist into next year.
Home prices fell faster in the first quarter than Fannie Mae had expected, the government-sponsored company said, and it will open a $4 billion share offering immediately, with the remainder being offered in the "very near future."
Fannie Mae's federal regulator, the Office of Federal Housing Enterprise Oversight, announced Tuesday that following the stock sale, it will cut the capital surplus cushion the company has to maintain by 5 percentage points to 15 percent. Another five-point cut will come in September, provided there is "no material adverse change" in the company's regulatory compliance.<!-- BOXAD TABLE -->
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The agency's director, James B. Lockhart, said capital requirements were eased because Fannie Mae has improved internal financial controls following a multibillion-dollar accounting scandal in 2004.
The company's estimated fair value of net assets as of March 31 was $12.2 billion, down 66 percent from $35.8 billion at the end of December. The huge decline was attributed to falling home prices and changes made to reflect new accounting methods. The assets are not counted toward the overall loss.
Fannie Mae's first-quarter loss contrasts with a profit of $961 million in the January-March period last year. The company reported Tuesday that the early 2008 loss was equivalent to $2.57 a share. It earned 85 cents a share a year earlier.
Wall Street analysts polled by Thomson Financial had expected the company to lose 81 cents a share in the latest period.
Following Fannie's earnings release, Moody's Investors Service downgraded Fannie's financial strength rating because of the potential for credit losses over the next two years.
Reflecting the ravages of the housing crisis, Washington-based Fannie Mae was forced to set aside $3.2 billion to account for bad loans. The losses were greatest in the hardest-hit states: California, Florida, Michigan and Ohio.
And the company said it only expects credit losses to worsen next year.
"Going forward, we expect our financial results to continue to be affected by the difficult (housing) market," Fannie's chief financial officer, Stephen Swad, said in a statement.
Revenue rose 38 percent in the first quarter, to $3.8 billion, bolstered by increases in fees that Fannie Mae charges lenders to guarantee mortgages and in interest income.
After falling 6 percent, Fannie Mae shares rose 81 cents to $28.52.
Amid the deepening housing downturn and the financial turmoil it sparked, the government has increasingly looked to Fannie Mae and its smaller government-sponsored sibling, Freddie Mac, to step up their role and help restore stability to the market by buying up more mortgages and bundling and selling them as securities. Three-quarters of mortgage-backed securities are issued by the two companies.
In March the regulators reduced by a third the mandatory cash cushion that must be held by Fannie and Freddie, in order to free up an additional $200 billion to finance new mortgages and help existing homeowners battered by the roiling market to refinance into more affordable mortgages.
But analysts worry that the opening for Fannie and Freddie could put too much financial risk on the backs of the companies, which have taken multibillion-dollar hits from the foreclosure wave and have been hungry for capital. Critics have said that allowing the companies to take on more debt could threaten the global financial system.
On Tuesday, Fannie Mae said it would cut its dividend, starting in the third quarter, from 35 cents to 25 cents a share, freeing up around $390 million a year.
The company already had slashed the dividend 30 percent in December, when it also raised $7 billion in capital in a special stock sale.
Fannie Mae said it expects "severe weakness" in the housing market in 2008, bringing increased mortgage defaults and foreclosures.
An interesting article I found at www.slate.com . I'm dealing with tons of Countrywide short sales. They are receiving around 300 short sale packets PER DAY. 80% of my files are short sales with Countrywide. Crazy stuff.
The foreclosure boom means they're the seller, the lender, and maybe even the appraiser. Would you buy a home that way?
So, you've heard about the foreclosure crisis, and to you foreclosure sounds a lot like opportunity. Maybe you've scanned the lists of foreclosed houses on the market and fallen in love with the house with "great bones" and faux Tudor facade in Sacramento that's had its price cut from $314,900 to just $214,900. Or maybe you've reached the point in life where you can consider something closer to the seven-figure range, like the $860,000 six-bedroom colonial in Maryland. But with all you've heard about the credit crunch, how are you going to get a loan to buy your new house?
Well, you're in luck. Because there's one lender certain to finance your purchase: Countrywide, the biggest mortgage lender in the country. And, yes, the very same company that foreclosed on these houses in the first place.
As the real estate market tanks and foreclosures surpass 2 million a year, financing the purchase of foreclosed houses is one bright spot in the mortgage market. As you might imagine, it's not something that lenders are rushing to advertise. But within the real estate world, the importance of this business is not a secret.
In December, according to notes made and posted online by one attendee at a Countrywide conference at the La Costa resort in Carlsbad, Calif., Brian Hale, a Countrywide exec responsible for the company's branch network, told real estate agents that this year financing REOs ("real estate owned," bank-speak for foreclosed properties) would make up 15 percent to 20 percent of his division's business in 2008. At the rate Countrywide's going right now, even the low end of that range would mean $22 billion in loans.
Right now Countrywide's Web site lists more than 14,000 houses that it has foreclosed on and is trying to resell. (The Countrywide Foreclosures Blog keeps a nice running tally for those keeping score.) That's a small fraction of the total that Countrywide has foreclosed on (a number that Countrywide's never released, but of the 9 million mortgages Countrywide manages, more than 101,000 have foreclosure pending). It doesn't include houses that Countrywide has already sold, or many thousands of others it has in inventory and hasn't listed with realtors yet.
So how eager is Countrywide to finance these houses a second time? The contract real estate agents give to potential buyers requires that unless they're paying all cash, they have to get "prequalified" by the local Countrywide office before they can even submit an offer.
You don't have to take Countrywide's offer (with all those houses on its books, Countrywide would probably rather sell the house even if they don't provide the mortgage). But of course making you get that prequalification is a chance for them to sell you on their loans.
And if you do get your loan from them, Countrywide will even throw in an appraisal for free by their appraisal unit. That'll save a few hundred bucks.
Take that offer and that means you'll be buying a house from Countrywide, financed by Countrywide, on the basis of an appraisal from Countrywide. You can file that under Department of Foxes and Henhouses.
Of course, Countrywide is a mortgage lender, so it's natural that they'd offer mortgages to buyers already on their doorstep. But playing the role of seller, lender, and perhaps appraiser creates some peculiar incentives. And remember, this is a company whose appetite for giving zero-down low-doc (go ahead and fudge!)and no-doc (guess-timate what you'd like to earn!) loans give it a special place in real estate history. Indeed, on Tuesday, a federal judge authorized a sweeping Justice Department investigation into allegations of widespread abuse in the firm's lending practices. Countrywide declined to comment for this story.
Surprisingly, exactly what kinds of loans Countrywide is pushing and how much its underwriting practices have changed is still a murky question. A year ago, a "leaked" Countrywide memo to brokers said that the company would no longer give out loans for 100 percent of a house's value. Then, just a few days later, Angelo Mozilo, Countrywide's ever sanguine CEO reassured potential customers that no, they could still get a house with no money down.
When it comes to its own foreclosed properties, that's most assuredly the case. Take this two-bedroom starter house in San Diego's Linda Vista subdivision: a Countrywide foreclosure that sold for $330,000 in August and was financed again with a 100 percent mortgage from the folks at Countrywide. Or the house in Palm Springs, Calif., that sold not long afterward, in September, for $275,000. Who knew you could get a house in Palm Springs for less than $300,000? Even better, according to mortgage records, the new mortgage from Countrywide was for the full $275,000.
The rub, of course, is that in the heady days of mortgage free love, all those zero-down mortgages tended to come with unpleasant side effects, such as high interest rates and prepayment penalties. And they often went to people who, not being able to afford to put any money down, were very optimistic about how much they could pay each month.
We won't know for a while whether the loans in this go-round are any less toxic than the ones that came before. But if the experience of other booms and crashes is any indication, there's every reason to think that however low standards went on the way up, they can go even lower in the last ill-fated efforts to keep the game going on the way down.
The Mortgage Forgiveness Debt Relief Act of 2007 allows individuals to exclude from gross income any discharges of qualified principal residence indebtedness. This exclusion applies to discharges made after 2006 and before 2010 and is entered on line 1e. Additionally, the basis of the principal residence must be reduced (but not below zero) by the amount excluded from gross income. For more information go directly to the form by this link.
Remember this Act does not apply to Investment properties.
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.
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