October 15, 2014
WASHINGTON – Oct. 15, 2014 – In a short sale, an owner sells his home for less than the amount stated on his mortgage, with the balance forgiven by the lender.
Last year, homeowners could move on after the sale. Any money forgiven by the bank could be forgotten.
This year, however, Congress has failed to extend the Mortgage Debt Forgiveness Relief Act. If passed as it was in previous years, lawmakers would have made the law retroactive to Jan. 1, assuring all 2014 short sellers that they would not be taxed on mortgage money they never actually received.
This year, however, the story is different – so far. In January 2014, the National Association of Realtors® (NAR) and other practitioners expected a retroactive passage of the mortgage debt act because it generally had bipartisan support in Congress. In May, NAR and others felt the same way, but with a bit less assurance.
The law has still not passed Congress, however, and fewer observers are now sure that it will.
However, the November election may be a deciding factor. While little Congressional action is expected before Americans go to the polls, there is still a small window of time afterward when Congress could act.
For more information on the Mortgage Debt Relief Act, visit NAR’s “Mortgage Debt Cancellation Relief” page.
October 15, 2014
WASHINGTON – Oct. 15, 2014 – Thousands of Americans who lost their homes to foreclosure years ago have moved on and rebuilt their finances, only to find that their past problem isn’t staying in the past.
In more and more cases, mortgage lenders are contacting these homeowners and attempting to collect the debt forgiven as part of a short sale or foreclosure.
“Using a legal tool known as a ‘deficiency judgment,’ lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come,” Reuters reports. (Effective July 1, 2013, the lender has one year on residential properties to initiate the process.)
“Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way. But the housing crisis saddled lenders with more than $1 trillion of foreclosed loans, leading to unprecedented losses. Now, at least some large lenders want their money back, and they figure it’s the perfect time to pursue borrowers: many of those who went through foreclosure have gotten new jobs, paid off old debts and, in some cases, bought new homes.”
Mortgage giant Fannie Mae is one of the most aggressive in pursuing deficiency judgments. Of the 595,128 foreclosures the government-sponsored enterprise was involved in through owning or guaranteeing the loan, it has referred 293,134 to debt collectors for possible deficiency judgment, according to a report by the Inspector General, reflecting the time period from January 2010 through January 2012.
Some of the largest mortgage lenders – JPMorgan Chase, Bank of America, Wells Fargo & Co., and Citigroup – say they don’t usually pursue a deficiency judgment, but they do reserve the right to do so.
“We may pursue them on a case-by-case basis, looking at a variety of factors, including investor and mortgage insurer requirements, the financial status of the borrower, and the type of hardship,” says Wells Fargo spokesman Tom Goyda.
Many borrowers may be surprised to learn that their years-old foreclosure isn’t really behind them. For example, former homeowner Danell Huthsing thought she was in the clear after a foreclosure in 2008 on a home she shared with her boyfriend. But this summer, she was served with a lawsuit demanding $91,000 for the amount of mortgage still unpaid after the home was foreclosed and sold.
Huthsing plans to appeal, but if she loses, the debt collector who filed the lawsuit will be able to freeze her bank account, garnish up to 25 percent of her wages, and seize her paid-off car, Reuters reports.
“For seven years, you think you’re good to go, that you’ve put this behind you,” said Huthsing. “Then wham, you get slapped to the floor again.”
May 16, 2014
FORT LAUDERDALE, Fla. – May 15, 2014 – Question: We found a house and entered into a contract to buy it. We did our inspections, got our mortgage loan set up and are ready for the closing about three weeks from now. Last night, the seller called and told us that she had an unexpected issue and will not be able to sell us the house. But don’t we have rights here? And do we have to wait until the closing date comes and goes before we start taking action to enforce the contract?
Answer: Most contracts contain contingencies allowing a party to cancel the deal if certain things happen, such as a bad inspection or the financing falls through. You need to carefully review your contract to make sure that the seller does not have a contractual way to cancel. If not, she is bound by what she agreed to, meaning that she must sell you the house.
Because she told you clearly that she is not moving forward, you don’t have to wait until the closing date to start enforcing the agreement. You or your lawyer should send her a letter now asking her to confirm in writing whether she is moving forward to closing. Once she confirms that she isn’t, most contracts give you the right to sue her for “specific performance,” meaning that you can ask the court to force her to sell you the property.
The practical problem with this is that it can take some time for the case to wind its way through the courts. So if you have concerns with where to live while this happens, or you are worried that you will lose your mortgage loan, this might not be the best option for you. It might be better to get your money back and move on to a similar house without all the trouble. But if this truly is the house you want, you appear to have the law on your side.
About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.
The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.
Copyright © 2014 Sun Sentinel, Gary M. Singer. Distributed by MCT Information Services.
September 9, 2013
NEW YORK – Sept. 9, 2013 – Business forecasters maintained their rosy view of the U.S. economy in 2014, predicting 3 percent growth by the second quarter of next year, low inflation and improving employment.
The top economists surveyed by the National Association of Business Economics (NABE) between Aug. 8 and Aug. 20 also said there’s an 80 percent likelihood that the pickup in growth will prompt the Federal Reserve to trim its monthly $85 billion purchases of mortgage bonds and Treasury bills next year.
The NABE’s 43 respondents said in a report released Monday that there’s a 45 percent chance the Fed will begin its so-called “tapering” as early as this year.
But economists trimmed their expectations for the second half of 2013 since the last survey, in May.
The economists predicted that real gross domestic product would grow at a 2.3 percent annualized rate in the third quarter through September, down from 2.5 percent seen earlier; and 2.6 percent in the fourth quarter, down from 2.8 percent seen earlier. They were less optimistic about consumer spending, industrial production and private investment in nonresidential structures, equipment and software.
August 14, 2013
NEW YORK – Aug. 14, 2013 – Though home prices have risen nearly 12 percent from a year ago, a slowdown is expected soon. But many analysts say it’s no cause for concern.
“Prices are still going to rise – just not as at brisk a pace as we’ve seen over the past year,” The Wall Street Journal reports. “This should calm down those pundits who have fretted over a new crop of housing bubbles.”
According to a report by Goldman Sachs economists, home prices will likely moderate because they have returned to “fair value” and are no longer being viewed as “undervalued,” as they were for the past two years. Also, a rise in mortgage rates may cause some buyers to re-evaluate their options.
For the first time this year, buyer traffic dropped below agents’ expectations, and “the next few months will be crucial to determining whether this is just a pause or something more,” the Goldman Sachs report notes.
The report also notes that investors will likely slow their purchases as the number of foreclosures starts to dry up. What’s more, the inventory of homes for sale is starting to loosen as more sellers look to put their homes on the market. Those sellers, in turn, will then be looking to purchase another home, so prices will still likely continue to rise until new-home construction catches up.
“With the improving underlying housing demand driven by household formation and economic recovery, we think housing activity will remain on an upward trajectory, despite occasional ups and downs along the way,” says the Goldman report.
Source: “Why Home-Price Growth Will Slow,” The Wall Street Journal (Aug. 12, 2013)
June 6, 2013
Daily Real Estate News | Thursday, June 06, 2013
The recent rise in home prices has more investors concerned that it will be increasingly difficult to turn a profit from their rental investments. Nearly half of U.S. real estate investors say they expect to purchase fewer rental homes in the next year, according to a recent survey conducted by polling firm ORC International.
Just 10 months ago, the percentage of investors who said they intend to buy fewer homes stood at 30 percent—compared to 48 percent today. Only about 20 percent of the investors surveyed say they plan to buy more homes in the next year—a drop from the 39 percent who reported they intend to buy more homes last August.
More than half of the investors surveyed who own rental properties say they plan to hold them for at least five years or more, and 33 percent plan to hold them for 10 years or more.
“Higher prices are reducing returns on investment and investors are responding by cutting back on their purchasing plans until conditions sort out,” says Chris Clothier, a partner in MemphisInvest.com and Premier Property Management Group. “Fewer foreclosures, rising property values, and competition from hedge funds are making it tough to find good ideals on distressed sales. On the other hand, investors are planning to hold onto their rental properties for at least eight to 10 years and realize the benefits of rising rents and low vacancy rates. Cash flow is much more important than appreciation.”
April 3, 2013
By Sarah Parr
The real estate industry and the consumer economy have some recent, positive news. CoreLogic published a report last week indicating that the shadow inventory of homes is down 28 percent from when it peaked in 2010. CoreLogic determined the shadow inventory figure by calculating the number of very delinquent homes, properties in foreclosure and homes held as REOs (real estate-owned) by mortgage servicers, but are not yet listed on multiple listing services (MLS).
As of January 2013, the shadow inventory includes 2.2 million housing units, or in real estate terms, nine months of supply. Florida currently has 16 percent of the total shadow inventory in the United States.
Defining the shadow inventory
In real estate, the shadow inventory refers to all of the homes held by banks, but not offered for sale, and homes that people are waiting to put on the market when prices increase even more. Vacant houses in some stage of foreclosure, known as “zombie foreclosures,” also comprise about half or more of the shadow inventory. Many homeowners anticipate foreclosure and move out of the house, leaving it vacant for a period of time.
What creates the shadow inventory?
The finalization of the National Mortgage Settlement in April 2012 caused the shadow industry to grow because of a 59 percent spike in properties in some stage of foreclosure, according to RealtyTRAC. Because of the settlement, banks have been required to work with homeowners on loan modifications, and their homes are kept off the market. The states in which the shadow inventory grew are mostly judicial process states since these states are more prone to having court backlogs of foreclosure cases. Foreclosure cases in these states typically take much longer to process.
The effects on real estate
Real estate professionals> initially feared properties in the shadow inventory would be listed all at once and depress surrounding property values. Reuters reported that properties in the shadow inventory have been listed in miniature spurts, though, and the small inventory has actually caused an increase in prices in some areas. Investors have also helped mitigate potential flooding of the market by buying up some of the shadow inventory, according to a TIME article. These investors are a part of firms that buy out distressed real estate when it first hits the market. They often beat individual buyers with cash offers, sometimes before properties are listed.
All the same, a shadow inventory can create ambiguity for homeowners looking to sell their homes and for predicting when a local market can expect full recovery in the housing market. The shadow inventory can also affect overall housing inventory data.
Sarah Parr is a Central Florida-based writer who blogs about foreclosure issues for Altamonte Springs foreclosure lawyers.
March 8, 2013
Today I had to explain to a new seller of mine that you cannot toss a case or two of wine into a sinkhole and call it a wine seller.
March 6, 2013
NEW YORK – March 6, 2013 – A very tight mortgage lending environment “promises improvements this year as the drivers of tough credit standards reverse,” according to Moody’s Analytics ResiLandscape Report. Still, lending will remain tight by historical standards, the report notes.
Tight underwriting conditions have been one of the main obstacles to a housing market recovery. But the credit agency says that those conditions began to ease somewhat this year and likely will continue to do so.
“Rising house prices give lenders more breathing room to extend credit,” the analysts at Moody’s noted.
Over the past year and a half, large lenders have loosened up or, at least, held standards stable on prime loans for mortgage originations, according to the Survey of Senior Lending Officers.
Aiding lenders’ confidence is that mortgage delinquencies have fallen to pre-recession rates.
“Being right-side up on the mortgage improves a borrower’s credit profile. It also lowers the risk of default and increases the likelihood of trade-up buying,” according to Moody’s report.
Mortgage supply will remain constrained, but “improved consumer credit quality combined with steady growth in jobs, low mortgage interest rates and modestly rising house prices makes it clear that more households will be able to qualify for a mortgage,” Moody’s said. “Greater credit availability will, in turn, help drive stronger home sales and stronger price appreciation.”
Source: “Slight opening of credit spigot aids housing outlook,” HousingWire (March 4, 2013)
March 5, 2013
BRADENTON, Fla. – March 5, 2013 – As first time buyers begin coming back into the real estate market, we take a look at what is going on in the mortgage industry since last year’s $25 billion settlement with the country’s five largest mortgage lenders.
Under the settlement, mortgage lenders agreed to make unprecedented changes in how they service mortgage loans and handle foreclosures. With the backing of a federal court order and the oversight of an independent monitor, the agreement created dozens of new consumer protections, making the servicing process substantially more transparent.
The protections range from requiring a single point of contact for borrowers, establishing case review and paperwork processing requirements and deadlines, and restricting practices such as “dual tracking” in which banks pursue a loan modification while simultaneously pursuing a foreclosure.
The $25 billion settlement was with the country’s five largest mortgage lenders including Bank of America, Citi, JPMorgan Chase, Wells Fargo, and Ally/GMAC. The settlement raised hopes for a real estate recovery. It’s especially urgent in Florida, the state that leads the nation in foreclosures yet which also posted strong across-the-board improvements in 2012.
If you have or want a home loan or refi from Bank of America in Florida, the person ultimately responsible is 54-year-old Tampa-based senior vice president Sandy Robertson. The Bradenton Herald’s Stephen Frater caught up with Robertson on Friday for an exclusive interview with the banking giant’s go-to-guy for mortgages in the Sunshine State, “the nation’s most troubled real estate market.”
Q: What is Bank of America’s portion of the housing debt market?
A: The bank is the fourth largest bank in the country and has the largest share of the market in Florida.
Q: Currently in Florida, 11 percent of the housing stock is distressed by some definitions, and 40 percent of the market is underwater. Some underwater owners take a calculated decision to walk away and take the credit hit. Does that concern you?
A: Much of the distressed housing stock is due to a backlog in the foreclosure process. The bank is working more on proactive short sales and CACs are located in Tampa Bay to help people make the transition easier. People should contact their lender and talk with them when they are underwater. I have a more bullish outlook on the topic. The bank has been able to do more proactive short sales and I’m excited to see the appreciation in home prices. The numbers are trending in a new direction.
Q: Recent “bank-owned” data shows that 45 percent of homeowners believe owning is more affordable than renting. What is the buy-versus-rent calculus in the Florida market following the great recession?
A: The rise in rents relative to home prices may encourage buyers to enter the housing market. Interest rates are also at historic lows, and affordability is high due to lower home prices and low interest rates. Rental prices are dramatically increasing in the Florida market which is another reason why purchasing a home is a more affordable option in many cases.
Q: Please describe Bank of America’s program for low-to-moderate income buyers.
A: The bank offers quarterly programs and seminars in the market, which educates buyers on the home-buying process. The goal is to provide a realistic view of a buyer’s true budget versus what they think they can afford. A buyer should focus on paying themselves first and save for a down payment. Customer Assistance Centers (CAC) are also available in the market to help find resolutions.
Q: With the recession and many people taking hits to their credit score, what is the “new” normal?
A: The standard has not changed much except what we are seeing now is more documentation being needed in terms of income earnings and bank statements. The loan process has changed over the last few years – it takes longer now. Borrowers must be prepared to fully document income and expenses.
Q: Fifty-percent of deals in the Miami market were cash-only in 2012. Is this a new trend? Will it continue?
A: This is not necessarily an increase or something new. We’ve been seeing this in the market over the past two years. In 2012, there was a range of 30-70 percent of cash buyers in any market depending on where in the state they were located.
Q: How is the prominence of cash buyers affecting first-time homebuyers?
A: We believe over time we will see less cash buyers as inventory continues to shrink and new development emerges. The best thing for a potential home buyer to do is to work with a lender upfront. It is important to note that more construction will go into the first-time homebuyer market going forward.
Q: What can a potential buyer with a credit score of 600 and a regular job expect? Can this person buy a home?
A: The best thing for someone in this situation to do would be to come in and talk with a lender. We may have some work to do, but they should come in and have a talk with us.
Q: President Obama touched on difficulties people are having with refinancing and mortgage availability during his State of the Union address. How will this be fixed?
A: The relation of loan to value is the biggest issue right now, along with unemployment. The unemployment rate is even higher in Florida. Job growth will be critical in fixing the current state of housing and refinancing options. The state of Florida had a rate of about 50% of the market being underwater homeowners; this has now dropped to approximately 38%. Through the HARP Program (a federal program for homeowners not behind on mortgage payments but unable to get traditional refinancing because the value of the home has declined, they may be eligible to refinance through the U.S. HUD Home Affordable Refinance Program with a new, more affordable, more stable mortgage.) Bank of America has been able to provide help to many underwater homeowners with HARP.
Q: What are some of the bank’s Web-based tools used to educate homeowners or would-be buyers?
A; I would refer your readers to our online Home Loan Guide. It is a comprehensive tool for potential home buyers and current homeowners on mortgages, refinancing, and home equity. It is located at, https://www.bankofamerica.com/home-loans/home-loan-guide.go.
Much of the information used in our local market seminars is also included in this guide.
Copyright © 2013 The Bradenton Herald (Bradenton, Fla.), Stephen Frater. Distributed by MCT Information Services.