Home Ownership Preservation Loans
The FDIC is proposing that Congress authorize the Treasury Department to make loans to borrowers with unaffordable mortgages to pay down up to 20 percent of their principal. The repayment and financing costs for these Home Ownership Preservation (HOP) loans would be borne by mortgage investors and borrowers. This approach is scaleable, administratively simple, and will avoid unnecessary foreclosures to help stabilize mortgage and housing prices.
This proposal is designed to result in no cost to the government:
- Borrowers must repay their restructured mortgage and the HOP loan.
- To enter the program, mortgage investors pay Treasury’s financing costs and agree to concessions on the underlying mortgage to achieve an affordable payment.
- Treasury would have a super-priority interest — superior to mortgage investors’ interest — to guarantee repayment. If the borrower defaulted, refinanced or sold the property,
- Treasury would have a priority recovery for the amount of its loan from any proceeds.
- The government has no continued obligation and the loans are repaid in full.
Mortgage Restructuring:
- Eligible, unaffordable mortgages would be paid down by up to 20 percent and restructured into fully-amortized, fixed rate loans for the balance of the original loan term at the lower balance. New interest rate capped at Freddie Mac 30-year fixed rate.
- Restructured mortgages cannot exceed a debt-to-income ratio for all housing-related expenses greater than 35 percent of the borrower’s verified current gross income (‘front-end DTI’). Prepayment penalties, deferred interest, or negative amortization are barred.
- Mortgage investors would pay the first five years of interest due to Treasury on the HOP loans when they enter the program. After 5 years, borrowers would begin repaying the HOP loan at fixed Treasury rates.
- Servicers would agree to periodic special audits by a federal banking agency.
Process:
- Mortgage investors would apply to Treasury for funds and would be responsible for complying with the terms for the HOP loans, restructuring mortgages, and subordinating their interest to Treasury.
- Administratively simple. Eligibility is determined by origination documentation and restructuring is based on verified current income and restructured mortgage payments.
Funding:
- A Treasury public debt offering of $50 billion would be sufficient to fund modifications of approximately 1 million loans that were “unsustainable at origination.” Principal and interest costs are fully repaid.
Eligible Mortgages:
Applies only to mortgages for owner-occupied residences that are:
- Unaffordable – defined by front-end DTIs exceeding 40 percent at origination.
- Below the FHA conforming loan limit.
- Originated between January 1, 2003 and June 30, 2007.
- Home Ownership Preservation Loans: Questions and Answers
- Home Ownership Preservation Loans: Examples
- Related Link: Financial Times, April 29, 2008 – Op Ed: How the State can Stabilise Housing Market
- FDIC Chairman Sheila Bair at the Brookings Institution Forum, The Great Credit Squeeze: How it Happened, How to Prevent Another; Washington, DC – May 16, 2008
- FDIC Chairman Sheila Bair at the Brookings Institution Forum, The Great Credit Squeeze: How it Happened, How to Prevent Another; Washington, DC – May 16, 2008 – Video (Courtesy of C-SPAN – www.c-span.org)
FORECLOSURE RELIEF BILL BECOMES LAW
Friday, July 11, 2008
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®
This week, the State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. It also requires owners acquiring property through foreclosure to maintain the exterior of vacant residential properties. The new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. These requirements will remain in effect until January 1, 2013. The full text of Senate Bill 1137 (Perata) is available at www.leginfo.ca.gov.
Highlights of the new law are as follows:
Contact Between Lender and Borrower
Effective on or about September 8, 2008, a lender, trustee, or authorized agent may not file a notice of default until 30 days after contacting a borrower to assess the borrower’s financial situation and explore options for avoiding foreclosure. A lender must generally contact the borrower in person or by telephone, or satisfy due diligence requirements for contacting a borrower. During the initial contact, the lender must inform the borrower of the right to request a meeting with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency. A subsequent notice of default must include the lender’s declaration that it has contacted the borrower, tried with due diligence to contact the borrower, or the borrower has surrendered the property. A lender who had already filed a notice of default before the enactment of this law must include a similar declaration in the notice of sale. This requirement to contact borrowers applies to loans secured by owner-occupied residences made from 2003 to 2007. Certain exemptions apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations.
Maintenance of Vacant Properties
Effective July 8, 2008, anyone who acquires property through foreclosure must maintain the exterior of vacant residential property. Violations of this law include permitting excessive foliage growth that diminishes the value of surrounding properties, failing to take action against trespassers or squatters, failing to take action to prevent mosquitoes from breeding in standing water, or other public nuisances. This law authorizes a governmental entity to impose a civil fine up to $1,000 per day for any violation, as long as the owner has been given notice and an opportunity to remedy the violation. A violator must be given at least 14 days to begin, and 30 days to complete, such remediation before a fine can be assessed.
60-Day Notice to Terminate Tenants
Effective July 8, 2008, a tenant or subtenant in possession of a rental housing unit that has been sold through foreclosure is generally entitled to a 60-day written notice to quit, not just 30 days. However, a borrower who remains on the property after foreclosure may be served a three-day notice to terminate. This law does not affect, among other things, rent-controlled properties with just-cause evictions. Effective on or about September 8, 2008, the lender, trustee, or authorized agent posting a notice of sale must also post and mail a specified notice of a tenant’s right to a 60-day eviction notice from the new owner, unless other laws apply. This requirement to notify tenants of their rights applies to loans secured by residential real property where the borrower has a different billing address than the property address.
Short sale & consequences
Investors in second or multiple homes stand to be among the biggest losers from the housing downturn. That’s because proposed mortgage bailout programs don’t address second homes and investment properties. Many owners of multiple properties don’t realize that investments they thought would help them build long-term wealth may in fact leave them in bankruptcy and facing a sizeable tax debt.
MAKING SENSE OF THE STORY FOR CONSUMERS
- Homeowners who borrowed against the value of their second home, or who financed the purchase of their second home and subsequent homes by pledging their primary home or other properties as security, may be liable for taxes on the difference in value should they sell any of their properties for a price less than the value owed on the mortgage.
- Under the Mortgage Forgiveness Debt Relief Act, a homeowner doesn’t have to pay taxes on forgiven debt if the collateral behind the mortgage is owner-occupied. That provision doesn’t apply to a growing number of homeowners renting out their second home or investment property. Of some 7.5 million vacation homes, only about 10 percent are considered owner-occupied, according to the NATIONAL ASSOCIATION of REALTORS® (NAR). Many of these homeowners borrowed against the ever-increasing (or so it seemed) value of these properties to finance improvements or to buy other properties.
- There may be a way out for some, one bankruptcy lawyer counsels: Get a lender to agree that foreclosure “fully satisfies all obligations under the loan.” That might protect the seller from having to pay taxes on the forgiven debt – although one attorney said, “I sure don’t want to be the one litigating it” in court.
To read the full story, please click here:http://www.nytimes.com/2008/05/30/business/30tax.html?th&emc=th
To get your short sale handled by professional team of real estate consultants and foreclosure therapists call Best Hollywood Homes Team at 310-499-1305. We provide free & no obligation consultation based on your specific situation.
SHORT SALE Article & Audio
Weekly Geni.us, audio, Posted by joshfowler – View profile
Philip Tesoriero started out in the real estate business in 1989. His main source of business came from rehabbing REO and distressed properties as an investor and contractor. In 2002 Philip decided it was time to open his own Real Estate Brokerage after years of working as an agent specializing in the sale of HUD and REO properties. The company grew quickly and Philip was the owner/manager of 40 plus agents servicing the Long Island New York market. In late 2006 Philip decided to sell his company and open a new firm that specializes in Default Real estate sales.
Listen in as we discuss:
1. What is a short sale
2. What is the benefit of a home owner doing a Short sale
3. What is The Mortgage Forgiveness Debt Relief Act of 2007 and what does it have to do with short sales?
4. What is the key factor to a successful short sale?
5. How does a bankruptcy affect the short sale process?
6. What is the sellers motivation to complete a short sale?
To contact Phil email him gelip@optonline.net See article »
Updated list of foreclosures in Los Angeles for the week of Jan 28
For detailed information on NOD, NOS and REO properties please call Best Hollywood Homes Team (assoc. with Promenade Realtors) at 310-499-1305 to schedule a meeting with one of our Foreclosure Therapists/Real Estate Consultants. We will be glad to go over all the options on how to buy foreclosures and what you need to be careful of.
Please note that foreclosed properties are not always a great deal. There is a lot of details that you need to pay a special attention to. Therefore it might be much smarter to find a real estate agent who can protect you from issues that can arise when buying foreclosures.
Los Angeles
We also have information for Orange County, Ventura, San Bernardino, Riverside, Kern, San Diego and Santa Barbara Counties. Please call for more info.
Note: If in any of the above reports you see a property that you are interested in please make sure that you provide the whole property address & APN number to our Foreclosure Therapists. That will help us to get additional info on the property faster.Best Hollywood Homes Team can be reached by phone 310-499-1305 (i.e. direct office number for Foreclosure Therapist/Real Estate Consultant Igor Korosec) or by Email BestHollywoodHomes@gmail.com
List of Los Angeles Foreclosures
For detailed information on NOD, NOS and REO properties please call Best Hollywood Homes Team (assoc. with Promenade Realtors) at 310-499-1305 to schedule a meeting with one of our Foreclosure Therapists/Real Estate Consultants. We will be glad to go over all the options on how to buy foreclosures and what you need to be careful of.
Please note that foreclosed properties are not always a great deal. There is a lot of details that you need to pay a special attention to. Therefore it might be much smarter to find a real estate agent who can protect you from issues that can arise when buying foreclosures.
Los Angeles
LA NOD Report.pdf
LA TS Report
LA REO Report.pdf
We also have information for Orange County, Ventura, San Bernardino, Riverside, Kern, San Diego and Santa Barbara Counties. Please call for more info.
Note: If in any of the above reports you see a property that you are interested in please make sure that you provide the whole property address & APN number to our Foreclosure Therapists. That will help us to get additional info on the property faster.
Best Hollywood Homes Team can be reached by phone 310-499-1305 (i.e. direct office number for Foreclosure Therapist/Real Estate Consultant Igor Korosec) or by Email BestHollywoodHomes@gmail.com
Latest Housing Forecast for 2008
The recent report released by the U.S. Congress’ Joint Economic Committee (JEC) estimates that two million homes will be closed by the end of 2008. Forecasters believe the market will start rebounding in 2009.
According to Mortgage Bankers Association new home construction this year is projected to drop to its lowest level since 1991. Total home sales are expected to hit a low point this year before improving in 2009. Total mortgage originations are expected to continue declining for the foreseeable future.
This is definitely a great time for all investors as well as first time buyers to find some terrific deals on home/property purchase. I definitely recommend to start looking for deals now. It doesn’t matter if you are not ready yet. To find a great deal I’d suggest you to start looking at current home listings, homes in pre-foreclosure stages as well as foreclosures. My Best Hollywood Homes team and I are ready to meet with people who are looking to buy real estate in 2008. We have it all: pre-foreclosures, foreclosures, real estate auctions, current home listings… Please call us at 310-499-1305 for a consultation.
More and more foreclosures
Lately I am reading a lot about foreclosures. I mean, pretty much everywhere in US they are up 51% (compared to about a year ago). What does that mean? It means an erosion of equity and therefore greater opportunities for investors. For owners facing foreclosure it means that since their equity is very small (if any), it is harder to get out of trouble. What owners don’t know, that there is a lot of steps that they can take before they loose the possesion of their home.
If you got a Notice of Default it will definitely be helpful if you know some laws about foreclosures in California. I am a strong believer of “what goes around, comes around” and therefore I want to share some of my search results with you. For more laws you might want to contact
Attorney General’s Office
1515 K Street, Suite 511
P.O. Box 944255
Sacramento, CA 94244-2550
Ph: (916) 445-9555
Fax: (916) 324-5205
Civil law division: (916) 324-5431
Summary:
Judicial Foreclosure – Sometimes
Non-Judicial Foreclosure – Yes, most common
Security Instruments – Deed of Trust, Mortgage
Right of Redemption – Yes, judicial foreclosure only
Deficiency Judgments – Yes, judicial foreclosure only
Time Frame – 111 days or more
1515 K Street, Suite 511
P.O. Box 944255
Sacramento, CA 94244-2550
Ph: (916) 445-9555
Fax: (916) 324-5205
Civil law division: (916) 324-5431
Judicial Foreclosure – Sometimes
Non-Judicial Foreclosure – Yes, most common
Security Instruments – Deed of Trust, Mortgage
Right of Redemption – Yes, judicial foreclosure only
Deficiency Judgments – Yes, judicial foreclosure only
Time Frame – 111 days or more
Judicial foreclosure in California is rarely used, and only in the absence of a power of sale clause in the loan document or when the lender is seeking a court order for a deficiency judgment. The lender must sue the borrower to obtain a decree of foreclosure and order of sale. The court may also order that the borrower has up to one year to redeem the property.
Non-judicial foreclosure is the most common form of foreclosure in California. This process is used when there is a power of sale clause authorizing the lender, in the event of default, to sell the property to satisfy the loan balance. If the power of sale clause includes the time, place and terms of sale, then that procedure must be followed. If not, the process is as follows:
A Notice of Default is recorded with the county in which the property is located when a borrower fails to make a loan payment. A copy of this Notice is sent by certified mail to the borrower within 10 business days of recording. The borrower has 90 days from the date of recordation to cure the default.
If the borrower fails to cure the default, a Notice of Sale is recorded. This Notice states that the lender or trustee will sell the property at auction in 21 days. This Notice is also sent certified mail to the borrower. It is also published weekly in a newspaper of general circulation in the county for three consecutive weeks prior to the sale date. The notice is also posted on the property, as well as in a public place, usually at the county courthouse.
The Trustee Sale Auction is held as a public auction at the time and place designated in the Notice of Sale, and conducted by the lender’s representative. The successful bidder must pay immediately with cash or cashier’s checks in the full amount of the bid. The successful bidder receives a trustee’s deed on completion of the sale. The lender usually bids in the amount of the balance due plus costs. If no one else bids, the property reverts to the lender.
The borrower has no right of redemption, and deficiency judgments are not allowed in non-judicial foreclosure.
Links:
- Civil Code Section 890 et seq. – Rent Skimming
- Civil Code Section 1695 et seq. – Home Equity Purchasing
- Code Section 2924 – Trustee’s Sale Procedure
- Civil Code Section 2945 et seq. – Foreclosure Consultant
- California Code of Civil Procedures
