The HAFA (Home Affordable Foreclosure Alternatives) program became official on April 5, 2010. The HAFA program stream lines the short sale process by preapproving the short sale prior to the homeowner putting their home on the market. There are other great benefits – see our short intro video on HAFA.

But the guidelines didn’t include Fannie Mae or Freddie Mac mortgages. Finally, those guidelines were just released… Read the rest of this article »

The Treasury Department released data this week on the Home Affordable Modification Program that shows 3.2 million homeowners are eligible for the HAMP program but that only 295,000 have actually gotten a permanent modification.

The Wall Street Journal yesterday also reported that some homeowners, trying to get a loan mod but often having to wait 6-12 months for their bank to determine eligibility, continue making payments but deplete their savings, putting them into worse financial straits.

For many homeowners who can’t get a loan mod through the HAMP program and want to avoid foreclosure, the Administration has begun the Home Affordable Foreclosure Alternatives (HAFA) program – basically, a “pre-packaged” short sale that provides a $3,000 relocation allowance for the homeowner plus financial incentives for the lenders to do a short sale.

Senate bill 401 passed yesterday, bringing California in line with Federal policy which waives taxation on forgiveness of debt for a personal residence. Governor Schwarzenegger said he would sign the bill. For example, for homeowners considering a short sale, this means that the amount of the “haircut” (loss) their lender(s) would take on that short sale will not be counted as income for them – which it would have been had this law not been enacted. It is a technical bill, and so as always, consult your financial adviser.

As expected, President Obama signed into law the bill that extends the first time homebuyer credit of $8,000; it also raises the income limits for qualification. But this bill also includes a $6,500 tax credit for existing homeowners who want to move up (or down) provided they’ve lived in their home for 5 of the last 8 years.

Details:

• Must be in escrow no later than April 30 and close escrow no later than June 30.
• For first time buyers, max. income limits have been raised to $125k for singles and $225k for a married couple.
• If you close escrow in 2010, you can claim the credit on your 2009 taxes (verify this with your tax counsel…!).

Comments – when the first $7,500 tax credit was enacted (not a true credit, but a loan that needed to get paid back to the Feds), then the “real” $8,000 credit, policy makers hoped it would not only spur the first time buyer buying that first home, but that a ripple effect would occur. The seller of that first home would move up, that seller would move up, and so forth.

It didn’t happen. Most first time buyers have been buying distressed homes (ie, short sales and bank foreclosures).

With the new $6,500 credit, policy makers now hope to kick into gear that move up crowd.

The Senate has reached general consensus to extend the first time homebuyer credit of $8,000 to April 30, 2010. However, this extension must be inserted into a formal Senate bill and then be reconciled with a House version, then signed by the President. Trying to read tea leaves, it would appear at this point enough Democrats and Republicans support this extension for it to pass. Some potential items that may also be included is increased income limits and a $6,500 tax credit for home owners who’ve lived in their home for 5 years or longer and purchase a new property.

Yesterday the Fed made 2 decisions that fundamentally affect the real estate industry. First, they kept the federal funds rate (what banks charge each other for overnight loans) unchanged. Secondly, and more directly, they decided to extend their purchase of mortgage backed securities, which has kept interest rates low. How do these decisions made so far away affect Joe and Mary Mainstreet thinking about buying a home? Read the rest of this article »

HUD yesterday announced that homes can now be “underwater” up to 125% (compared to the previous 105% limit) of value and still qualify for the Home Affordable Refinance program established earlier this year by the Obama administration. This applies to borrowers current on their payments who have loans currently owned or guaranteed by Fannie Mae or Freddie Mac. Read HUD’s press release for more details.

Most potential first time buyers know they can receive an $8,000 credit if they close escrow on their home by December 1st when they file their income tax return for 2009 (or file an amended return for 2008). But HUD just announced that the credit can be used immediately for closing costs, or towards the down payment in excess of the required 3.5% down currently required for an FHA loan. Read the rest of this article »

The Senate today rejected a provision allowing bankruptcy judges the authority to modify (“cram down”) mortgages of troubled homeowners. The provision garned only 45 votes, with all Republican Senators voting against it plus 12 Democrats. The banking industry has much greater clout in the Senate compared to the House where a simiar provision passed. It would appear this Obama supported measure is now dead.

The Treasury provided a fact sheet yesterday about the Administration’s plan for dealing with homeowners with second mortgages struggling to make their payments. These payments could be lines of credit or second loans used to limit or eliminate down payment requirements.  It’s part of the Administration’s Making Home Affordable program.

The Second Lien announcement provides a fact sheet of how the program will work, and the Making Home Affordable site provides info on refinancing or modifications to home loans.