SHORT SALES: an Alternative to FORECLOSURES
CLARK COUNTY, WA. REAL ESTATE MARKET & TRENDS
FORECLOSURES, PRE-FORECLOSURES
DISTRESSED PROPERTIES
SHORT SALES UPDATE: Credit Concerns
Fannie Mae has issued new underwriting guidelines regarding "pre-foreclosure sales"
6/25/2008 "Establishing a new policy for pre-foreclosure sales. A pre-foreclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer. Due to the increased incidence of preforeclosure sales, Fannie Mae is establishing a 2-year elapsed time period for reestablishing credit following completion of the action."
READ FULL ARTICLE: Fannie Mae
According to Fannie Mae, they will consider a new home loan after two years have lapsed from the completion of a Short Sale. A foreclosure is 5 to 7 years.
The credit bureaus, however, now lump all Short Sales, Notice of Default, Deed in Lieu of Foreclosure, and Foreclosures into the same category. This will effect your consumer credit badly. (It is unknown at this point if the credit bureaus will make an adjustment in two years for a short sale). So even if you can apply for a new home loan within two years, you may not be able to apply for a new car loan in two years! It is also unknown how it will effect your credit cards.
(This information is provided as reference only and is not intended as legal or tax advice.)
SHORT SALES UPDATE: Washington’s New Distressed Homeowner Legislation, June 2008
"In this time of rising foreclosures, desperate homeowners are being lured by offers of assistance – only to be cheated out of equity they’ve built up and tricked into transferring ownership of their home. The attorney general requested legislation targeted at cons who promise to save homes but either strip the equity from the property or charge exorbitant fees for unnecessary or non-existent services. Victims of such scams are often given the opportunity to rent back their property – but at prices higher than the original mortgage payments. In some cases, homeowners are unaware that they’ve lost their property until they receive an eviction notice.
READ FULL ARTICLE: Washington gov, facts
(This information is provided as reference only and is not intended as legal or tax advice.)
SHORT SALES UPDATE: "Mortgage Forgiveness Debt Relief Act of 2007"
The Debt Relief Act "revises a section of the Internal Revenue Code which classifies forgiven debt as income. As a result of the Act, sellers will not be taxed on up to $2,000,000 of debt ($1,000,000 if filing individually) that is forgiven upon sale of the sellers' principal residences. The Act is retroactive, in that it applies to debt forgiven on or after January 1, 2007, and will be in effect until January 1, 2010."
READ MORE: IRS, Mortgage Forgiveness Debt Relief
Important note: this is designed to forgive debt on your "principal" residence, not investment properties.
(This information is provided as reference only and is not intended as legal or tax advice.)
LOAN WORK OUT SOLUTIONS:
Update: The Feds are encouraging lenders to be pro-active in negotiations, and to be more timely in the loan workout solutions.
If you have recently received a pre-foreclosure notice from your bank, or, if you are just starting to get behind, you need to start looking at options. "Work Out Solutions" and "Loan Modifications" are being offered by most lenders.
They may be able to modify your loan terms, offer a temporary payment plan, reduce your interest rate, move missed payments to the end of the loan, or extend the term of your loan to lower the payment amount. It is so important for you to make that phone call and communicate with your lender. Remember that you are one of thousands facing the same problem. The banks are willing to find the best available alternative to resolve your delinquency! Going through a foreclosure is going to hurt your credit history for 5 to 7 years!
Call your lender as soon as you have a late payment. Even if you are 3 months late, call your lender! Ask about loan modifications or work-out solutions. Be willing and ready to present to them with the reasons why you are having financial problems. High interest rates on adjustable rate mortgages is a huge problem right now. If the interest payment is killing the deal - tell them! It will be cheaper for them to negotiate than foreclose!
(This information is provided as reference only and is not intended as legal or tax advice.)
