Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
BRE # 01051535
www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com
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Na#onwide Distressed Homeowners Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Lost 3.8 millions homes to Foreclosures
5,641,601
• Currently, there are
homeowners that are 30 days or more delinquent in their mortgages
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Distressed Homeowners
Na$onwide Figure: Currently, there are 5,641, 601 homeowners that are 30 days or more delinquent in their mortgages Riverside County
San Diego County
Tolal Loans: 471,298
Tolal Loans: 582,219
Foreclosed upon: 92,695
Foreclosed upon: 51,937
Delinquent/Imminent Default: 142,475
Delinquent/Imminent Default: 119,850
Underwater: 185,331
Underwater: 156,428
Orange County
Los Angeles
Total Loans; 565,760
Total Loans; 1,505,109
Foreclosed upon: 33,528
Foreclosed upon: 111,719
Delinquent/Imminent Default: 109,547
Delinquent/Imminent Default: 345,287
Underwater: 143,466
Underwater: 450,639
Delinquent/Imminent Default for Orange, LA, Riverside, & San Diego County www.certifiedhomeowneradvocates.com totals 717,159!!!
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Real Estate Agents vs. Servicers Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Front Line: First to contact homeowners. Real estate professional "fiduciary" relaPonship to homeowners • Banks and services don't owe fiduciary duty homeowners; but really represent interest of shareholders • Important: Outrowth in government created and funded programs since crisis started -‐ but few real estate agents or HOMEOWNERS understand all the opPons and programs available. Plus all the new laws.
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Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
Government Programs
NaPonal Mortgage Se_lement
www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com
CA Homeowner Bill of Rights
CA Foreclosure & Short Sale Laws
IRS Short Sale Laws
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Na#onal Contractual Programs Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Making Home Affordable Programs:
― Modifica>ons: • Home Affordable ModificaPon Program (HAMP) • Principle ReducPon AlternaPon (PRA)-‐ see using more and more • Second Lien ModificaPon Program (2MP) • FHA Home Affordable ModificaPon Program (FHA-‐HAMP) • Second Lien ModificaPon Program for Federal Housing AdministraPon Loans (FHA-‐2LP) • Veteran's Affairs Home Affordable ModificaPon (VA-‐HAMP-‐Similar)
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Na#onal Cuntractual Programs Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Other Foreclosure Preven>on Programs: ― Home Affordable Unemployment Program (UP) ― Neighborhood StabilizaPon Program (HUD) ― Housing Finance Agency InnovaPon Fund for the Hardest Hit Fund (HHF) -‐ $7.6 Billion >> $2 Billions ot CA -‐-‐ Keep Your Home California • Refinances: (30-‐50 Years low rate) ― Home Affordable Refinance Program (HARP) most Fannie/Freddie should take advantage of the low interest rate ― FHA Short Refinance ― VA Interest Rate ReducPon Refinancing Loan (IRRRL) • Foreclosure Alterna>ves: ― Home Affordable Foreclosure AlternaPve Program (HAFA) – Short Sales -‐-‐ Must Know -‐ NaPonal Standard
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LOAN MODIFICATIONS: CORE CONCEPTS • Loan ModificaPon is the same with be_er terms • The goal is to lower homeowner monthly payments to make them more affordable and sustainable (HAMP reduces to 31 percent of their verified gross (pre-‐tax) income to make their payments more affordable) • Borrowers have a JOB or have a conPnuing source of income to support the mortgage (excepPon UP for 12 months) • Common ways used by loan Servicers to reduce monthly payments (one or more of the 4 things done) ― ReducPon in interest rate (most common -‐ 2%, 3% and may be stay at 4%) ― Extend life of the loan (may from 30 years to 40 years -‐ analyze now or try a different programs) ― Principal forbearance ― Principal ReducPon (not offer in most cases but it does happen -‐ not all loan mod is a good one)
• Borrower must provide financial and hardship documentaPon to complete applicaPon (lack of documentaPon is key issue in loan modificaPon -‐ but now might be cure with SPOC)-‐ Filling out the Loan ModificaP0n Packge
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LOAN MODIFICATIONS: CORE CONCEPTS Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Trial offer: Generally homeowners get a 90 day trial period oren involved before loan modificaPon becomes payment • The best way for borrowers to move forward with loan modificaPon applicaPon is to contact and work directly with loan Servicer • Real Estate Agents can help homeowners with the process of gathering the loan modificaPon package for the Services -‐ good deed. ― When loan modificaPon is not an opPon or fails -‐ high percentage, short sale is a consideraPon so conPnuing communicaPon is important
• Note: Loan modificaPon support is always available for FREE the servicers. There are a lot of scams in this arena so warm your clients/families about those charging up front fees.
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HAMP ELIGIBILITY .
Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Mortgage Loan originated on or before January 1, 2009 • First Mortgage Loan balance less than or equal to $729,750 on primary residence or single unit rental property -‐ This is all across the board -‐ these numbers are same ― When loan modificaPon is not an opPon or fails -‐ high percentage, short sale is a consideraPon so conPnuing communicaPon is important
• Property not condemned • Financial hardship present and either delinquent or in danger of falling behind on mortgage payments -‐ losing job soon (Rental ProperPes only eligible if delinquent) • Financials documentaPon: Pay-‐stubs, W-‐2, tax returns, servicers package • 10 Years rule: Not convicted in past 10 years of felony larceny, ther, fraud or forgery, money laundering or tax evasion, in connecPon with mortgage or real estate transacPon • Next step if qualify then is to check to see if that mortgage servicer parPcipates in program (servicer signed into the program and must offer it) and apply. If not eligible, check other alternaPves available • List of over 100 parPcipaPng MHA servicers at: (90%) www.cerPfiedhomeowneradvocates.com
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PRINCIPAL REDUCTION ALTERNATIVE (PRA) Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• PRA is Offered by the same 100+ HAMP Servicers but subject to investors' guideline: The largest servicers include Bank of America, CiPMortgage, JP Morgan Chase, and Wells Fargo • Eligibility: ― Not owned or guaranteed by Fannie Mae or Freddie Mac ― Underwater value house -‐-‐Borrower owes more than property worth ― Primary residence (HAMP is for primary and rental) ― Mortgage payment must be more than 31% of gross monthly income (pretax) ― You owe up to $729,750 (max) on your 1st mortgage ― Financial hardship and delinquent or imminent default documented ― Same 10 year felony larceny etc. ban (as HAMP)
• As of mid-‐2012, there is about over 1 million permanent HAMP modificaPons and slightly under 100,000 PRA's with principal reducPon
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SECOND LIEN MODIFICATION PROGRAM (2MP) Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• HAMP only modificaPon the 1st mortgage only • The 2MP is Offered to borrowers receiving permanent HAMP modificaPon on their 1st lien, who have a 2nd lien on same property (includes home equity loans) -‐ only 17 servicers for the 2MP • 2MP works in tandem with HAMP to improve home affordability • Eligibility: ― First mortgage permanently modified under HAMP and second on same property ― You must not have been convicted within the last 10 years of felony larceny, ther, fraud or forgery, money laundering or tax evasion, in connecPon with a mortgage or real estate transacPon. ― Borrow have not missed there consecuPve payments on HAMP modificaPon
• 2MP may have a trial period -‐ a forbearance agreement • 17 par>cipa>ng servicers: Bank of America, CiP Mortgage, JP Morgan Chase, Wells Fargo Bank, NaPonstar Mortgage, OneWest Bank, PNC Bank, PNC Mortgage, PennyMac Loan Services, ResidenPal Credit SoluPons, Bayview Loan Servicing, Community Credit Union Of Florida, GMAC Mortgage, Green Tree Servicing, iServe ResidenPal Lending, iServe Servicing, ServisOne Inc., dba BSI Financial Services
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HOME AFFORDABLE UNEMPLOYMENT PROGRAM (UP) Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Unemployed??? UP program. This is a big DEAL!! • The "UP" provides Servicers with the flexibility to provide assistance to borrows whose hardship is related to unemployment. • Unemployed borrowers, depending on their specific situaPon, may be eligible to get their mortgage payment suspended for 12 months or more • Eligibility: ― Unemployed and eligible for unemployment benefits (involuntary) ― Property is primary residence ― Borrower has not previously received a HAMP modificaPon (Borrowers who were previously deemed ineligible for a HAMP modificaPon are eligible to apply for the UP program.) ― Obtained mortgage on or before January 1, 2009 ― Mortgage does not exceed $729,750
• More than 100+ same HAMP parPcipaPng servicers offer UP to eligible borrowers • Borrowers may be required to make a parPal payment not to exceed 31% of their pre-‐tax income including unemployment benefits • at end of UP forbearance period -‐-‐ Borrowers evaluated for HAMP • But remember this program not available with mortgages held by Fannie Mae or Freddie Mac -‐ both have their own forbearance arrangements
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HOME AFFORDABLE REFINANCE PROGRAM (HARP) Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Current and Underwater house >> HARP >> Great interest rate • Most Ninja loan interest rate: 6.25% >> First thing: find out if Mortgage is owned or guaranteed by Freddie Mac or Fannie Mae ― Goal is to enable current borrowers with Fannie or Freddie loans to take advantage of low interest rates even if their home has fallen in value to get a more affordable, more stable mortgage. ― About 10% of Fannie and Freddie are delinquent so this is for the other 90% Fannie Mae/ Freddie Mac
• Shop around with various different banks -‐ if you get a le_er from your service with trying to lock you into a lower rate... be_er to shop around. • Eligibility: ― Mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009 ― Mortgage cannot have been refinanced under HARP previously -‐ Refinanced under HARP once only ― Current LTV raPo greater than 80% (must banks won't refinance if you go above 80%) ― Borrower must be current at Pme of refinance (no late payments in last 6 months, and only 1 late payment in past 12 months)
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FHA SHORT REFINANCE Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• This is for underwater value and current on mortgage -‐ like HARP but a smaller program Borrower is not behind on mortgage payments but owes more than property is worth • Current lender will agree to reduce the amount owed on first mortgage to no more than 97.75% of property's current value • Eligibility: ― Mortgage is not owned or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or USDA ― Borrower owes more than property is worth -‐ Underwater Mortgage ― Current on mortgage payments ― Occupy home as primary residence ― Eligible for new loan under standard FHA requirements ― Borrower's total debt does not exceed 55% of monthly gross income ― You must not have been convicted within the last 10 years of felony larceny, ther, fraud, forgery, money laundering or tax evasion in connecPon with a mortgage or real estate transacPon.
• ParPcipaPon of mortgage servicers is voluntary • Contact your mortgage servicer and ask whether they parPcipate in FHA Short Refinance
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VA Refinance Program: INTEREST RATE REDUCTION REFINANCING LOAN (IRRRL) Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• If you have a VA loan... this is for you. ― Must have an exciPng VA guaranteed loan to be eligible
• It must be a VA to VA refinance, and it will reuse the enPtlement you originally used • HUGU IDES: No appraisal or credit underwriPng package is required when applying for an IRRRL • May be done with "no money out of pocket" (by including all costs in new loan or making new loan at rate enabling lender to pay costs) • Borrower may not receive any cash out from refinance • It is a Voluntary program -‐ lenders not required to offer -‐ but any lender of borrower's choice may process the IRRRL applicaPon -‐ should be able to find a lender even if their servicer does not do it. • Veterans are strongly urged to contact several lenders because terms may vary
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HAFA -‐-‐ HOME AFFORDABLE FORECLOSURE ALTERNATIVES Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• If you can't afford your mortgage payment and it's Pme for you to transiPon to more affordable housing, the Home Affordable Foreclosure AlternaPvesSM(HAFA) program is designed for you -‐ very pro-‐consumer. • Sister program of HAMP with similar eligibility guidelines: sets federal standards for (pro-‐consumer) short sales-‐ no deficiency in all states • This is the only NaPonal short sale program that mandates debt forgiveness. • Designed to help those who don't qualify for or fail HAMP, or who don't want to keep their home, leave home but sPll avoid foreclosure by pursuing a short sale or deed in lieu of foreclosure-‐ Lenders prefer short sales. • Key point is that the government provides financial incenPves to borrowers, servicers, and investors for complePng the HAFA short sale • General eligibility: ― Primary residence, one-‐to-‐four units -‐ making short sales more accessible ― Delinquent or imminent default ― Mortgage originate on or befare January 1, 2009 ― Loan amount less than $279,750 (higher amounts apply for 2-‐4 unit properPes/same as HAMP) ― HAFA is available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac or serviced by over 100 HAMP parPcipaPng mortgage servicers.
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HAFA: HOME AFFORDABLE FORECLOSURE ALTERNATIVES • Program was significantly expanded mid-‐2012: many more borrowers eligible than before (e.g., investor owned properPes) -‐-‐Pre-‐approved. • Why HAFA vs. a tradiPonal short sale? ― Mandatory debt forgiveness -‐ Starts that does not have anP-‐ deficiency. Big deal outside of California. Releases borrower from remaining mortgage debt on first and subordinate lines ― Borrower or tenant receives at least $3,000 relocaPon assistance at closing ― Up to $8,500 available to pay subordinate mortgage holder(s) to release lines and borrower liability ― Sets standards for payments to non-‐mortgage lien holders • no cash contribuPons or promissory notes allowed! • Mechanic lien, child support issue, -‐-‐ close more in HAFA in theory
― Lenders Must consider HAFA first before offering non-‐HAFA short sale programs considered or pursued
• Investors: Buyers cannot flip the property within 90 days purchase per HAFA short sale.
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NEIGHBORHOOD STABILIZATION PROGRAM (HUD) The neighborhood StabilizaPon Program (NSP) was established for the purpose of stabilizing communiPes that have suffered from foreclosures and abandonment. This fund accomplishes this through the purchase and redevelopment of foreclosed and abandoned homes and residenPal properPes -‐ land banks • Total funding of almost $7 billion in 3 rounds of funding • Funding focused on census tracts with highest rate of foreclosures • 123 CA NSP funding recipients (HUD grantees) received over $1.3 billion of the $7 billion -‐ this is the down payment assistance and silence 2nd mortgage. ― Get to know them and find the government funding for your clients.
• NSP grantees should be contacted for special homebuyer programs offered and available in each locaPon: programs offered vary by grantee
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TREASURY: HOUSING FINANCE AGENCY INNOVATION FUND FOR HARDEST HIT STATES Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• In early February 2010, the Treasury announced funding that the Hardest Hit Fund of $7.6 billion to aid homeowners in states hardest hit by the housing crisis • Funding managed by state housing finance agencies (18 states -‐ AZ, CA, FL, NV) • In California, this program is call: Keep Your Home California -‐ run by CALHFA • CA received almost $2 Billion (a lot of money); less than $500 million spent as of mid -‐2012 -‐ fund are sPll available • Hardest Hit programs complement Making Home Affordable; so if you don't qualify for HAMP you can do keep Your Home California
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KEEP YOUR HOME CALIFORNIA HARDEST HIT FUND (HHF) PROGRAMS:
Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Keep Your Home California is a free service for homeowners who have suffered a financial hardship, to help them stay in their home, maintain an affordable mortgage payment and avoid foreclosure. • This is a $2 Billion program run by California Housing Finance Agency • 4 major programs; available Pll December 31, 2017 or unPl funds run out • Here are the 4 programs: ― Unemployment Mortgage Assistance Program (UMA): Up to 9 months of mortgage payment subsidy if unemployed ― Mortgage Reinstatement Assistance Program (MRAP): Funds to help reinstate mortgage if fallen behind on payments ― Principle Reduc>on Program (PRP): Assistance in paying down principle in case of negaPve equity -‐ for people underwater. ― Transi>on Assistance Program (TAP): RelocaPon or moving support for those pursuing a short sale or deed-‐in-‐lieu of foreclosure
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CA HARDEST HIT FUND (HHF) ROGRAMS: KEEP YOUR HOME CALIFORNIA Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• These programs are Only offered by par>cipa>ng servicers: list of parPcipaPng servicers-‐ • Which of the 4 programs • www.cerPfiedhomeowneradvocates.com • Eligibility criteria and county-‐by-‐county income limits apply. ($76,800 Organe $101,050) ― Eligibility criteria include but are not limited to:
• Ownership and occupancy of property as primary residence • LocaPon in California • First mortgage loan balance less than or equal to $729,750 -‐ same as HAMP • Mortgage originated on or before January 1, 2010 (so here if you don't qualify for HAMP, you qualify here if mortgage in 2009) ― There are Income limits by County for eligibility
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CA HHF: UNEMPLOYMENT MORTGAGE ASSISTANCE PROGRAM -‐ UMA -‐ DETAIL Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• The Program provides mortgage payment assistance to eligible homeowners who have experienced an involuntary job loss and are receiving California EDD unemployment benefits (people are terminated not people who quite) • UMA's goal is to help homeowners remain in their homes and prevent avoidable foreclosures despite loss of income due to unemployment. • Benefit assistance through UMA can be up to $3,000 per month and can last up to nine months. >. MAX is $27,000 • Designed to help low to moderate income homeowners ― LA >> $76.8k ― OC >> $101k
• hardship Affidavit is required to get this • So call the servicer to find out
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CA HHF: MORTGAGE REINSTATEMENT ASSISTANCE PROGRAM -‐ (MRAP) Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
• Make the mortgage current is the goal • This Program provides assistance to eligible homeowners who, because of a financial hardship, have fallen behind on their payments and need help to reinstate their past due first mortgage loan. • Benefit assistance through MRAP can be a one -‐ Pme payment of up to$25,000 to cover principle, interest, taxes and insurance, any HOA dues • Designed to help low to moderate income homeowners ― Riverside -‐ 75k ― San Diego -‐89k
• Hardship Affidavit is required • Contact servicer to move forward and see if they parPcipate
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CA HHF: PRINCIPLE REDUCTION PROGRAM -‐ (PRP) • Goal here is to provide capital and make property more affordable • The Principle ReducPon Program Provides assistance hardship coupled with a severe decline in the home's value. • Homeowners who qualify for the PRP could be eligible for up to $100,000 in assistance from Keep Your Home California. • Provides monies to reduce principal balance of 1st loan • Designed to help low to moderate income homeowners with mortgages that are delinquent or at risk of imminent default • This program requires Hardship Affidavit required • Borrower to contact servicer
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CA HHF: TRANSITION ASSISTANCE PROGRAM -‐(TAP) • Goal her is to help with moving expense and relocaPon • The TransiPon Assistance Program provides one-‐Pme funds to help eligible homeowners relocate into a new housing situaPon arer execuPng a short sale or deed-‐in-‐lieu of foreclosure program. • TAP to be used in conjuncPon with short sale and DIL programs. Homeowners required to occupy and maintain properPes unPl conveyed. • Designed to help low to moderate income homeowners • One Pme funding of up to $5000 per household; can be used or layered with other HHF programs • Funding intended to help homeowner secure new housing (e.g., rent, moving expenses, security deposits) • Hardship affidavit is required • Borrower to contact servicer
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CALHFA: DOWN PAYMENT ASSISTANCE CaIHFA home buyer programs: Down Payment Assistance:
• Down payment typically largest hurdle for many first Pme home buyers Assistance typically offered through a second or subordinate loan "silent second" with payments deferred unPl home sale, refinance, or full loan repayment • California Homebuyer's Down payment Assistance Program (CHDAP) offers deferred payment subordinate loan in amount of 3% of purchase price or appraised value (whichever is less) to be used for down payment and/or closing costs • CHDAP may be combined with a CaIHFA or non-‐CaIHFA first mortgage loan • Borrower requirements: ― First Pme home buyer: That means if you've never owned a home, you're a first-‐Pme homebuyer. It also means that if you owned your home three or more years ago, but sold it, you are right back to being a first-‐Pme homebuyer again, and you can take advantage of all of the benefits of CaIHFA's first-‐Pme homebuyer programs. ― Occupy property as primary residence
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CALHFA: INDIVIDUAL DEVELOPMENT ACCOUNTS (IDA'S) • IDA's are special savings accounts designed to assist low income borrowers on their path to ownership of a long term asset such as a home, through matched contribuPons by non-‐profit organizaPons and eligible banks • ParPcipaPng organizaPons may offer up to a 3:1 savings match
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NaPonal Mortgage Se_lement
CA Homeowner Bill of Rights
CA Foreclosure & Short Sale Laws
IRS Short Sale Laws
Landmark Se`lement Landmark Relief www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com
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$25 Billion Na>onal Mortgage Se`lement Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
The NaPonal Mortgage Se_lement is the product of sixteen months of intensive negoPaPons between the five largest banks and an unprecedented condiPon of state a_orneys general and federal agencies, including the Departments of JusPce, Treasury, and HUD, that spanned parPsan lines.
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Background: The 2010 Robo Signing Scandal • The states and federal agencies established that the servicers have done wrong: ― improper lending pracPces, ― improper foreclosures, etc. – and ― in response the banks have agreed to a $25 Billion se_lement that helps homeowners who have been hurt by misconduct in the marketplace.
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$25 Billion Dollars Mortgage Se`lement Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
How will know whether this se_lement affects my situaPon?
Borrower from Oklahoma will not be eligible for any of the relief.
Lets start by telling you which homeowners do not qualify and the rest you or homeowners can contact the servicers.
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$25 Billion Na>onal Mortgage Se`lement • February 2012 and 10/3/2012 date to get act together • Largest Mortgage Se_lement Ever in History • What does it means: ― Underwater houses and on those on the brink of foreclosure might be able to keep house • Money for banks to encourage short sales
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Which Banks/Servicers?? • So banks were sued and they lost and these 5 servicer has to pay $25 Billion Dollar to homeowners. • Bank of American • JPMorgan Chase • Ally/GMAC • CiPbank • Wells Fargo • These 5 servicers account for about 50% of mortgages out there
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Government-‐sponsored enterprises-‐-‐ GSE loans are not eligible • For Fannie Mae & Freddie: ― If serviced by one of the five, must abide by the new servicing guidelines ― BUT Fannie & Freddie mortgages, even if serviced by one of the five, are not subject to se_lement provisions pertaining to principal reducPon
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Fannie Mae or Freddie Mac Loan Look UP: • Fannie: ― www.fanniemae.com/loanlookup • Freddie: ― www.freddiemac.com/mymortgage
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Principal ReducPon • $10 Billion Principal reduc>on: At least $10 billion will be dedicated to reducing principal for borrowers who, as of the date of the se_lement: ― owe more on their mortgages than their homes are worth and ― are either delinquent or at imminent risk of default.
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Principal ReducPon Eligibility Criteria • 1. In default -‐ Delinquent by at least 60 days as of 1/31/2012 • 2. Underwater • 3. Have not defaulted on payment under a HAMP • 4. Ownership of loan: No Fannie/Freddie or FHA Hud/VA • 5. Servicer: ― Wells Fargo, CiP, & GMAC • Servicer • Own loans
― Bank of American and Chase • Servicer-‐owned loans • Investor-‐owned loans with delegated Authority www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com https://www.facebook.com/julie.boyd.9083
1st Lien Principal Reduc>ons • Bank of America ― Mandatory solicitaPon of certain group of borrowers (60 days default as of 1/31/2012 and other criteria)
• Wells Fargo, Chase, CiP & Ally/GMAC ― Not subject to the same solicitaPon requirement as BOA
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BOA Principal Reduc>on • Your current mortgage payment is 25% or more of your gross monthly income. • You owe more on your first mortgage than your home is worth. • You were delinquent by at least 60 days as of HAMP or HAMP-‐style loan modificaPon. • Your mortgage is owned by Bank of America or part of a Countrywide securiPzaPon that Bank of American has authority to modify principal. www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com
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2nd lien principal reduc>ons • Bank of America ― Sending solicitaPon to eligible borrowers
• Wells Fargo, Chase, CiP, and Ally/GMAC ― Second line modificaPon programs vary but primary occur when 1st lien is modified under the Se_lement by them or another se_lement bank
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Breakdown of the $25 Billion • $3 Billion will be dedicated to a refinancing program for borrower who are current on their mortgage but who owe more on their mortgage than their homes are worth.
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To be eligible for refinancing you must meet the following requirements: • Loan Serviced and Owned by the Same Bank • Underwater • Current • Minimum Interest Rate-‐-‐ Your current interest rate must be greater than or equal to 5.25%. • Maximum Unpaid Mortgage Balance ―
One unit -‐ $729,750 Two units -‐ $934,200 Three units -‐ $1,129,250 Four Units -‐ $1,403,400
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Breakdown of the $25 Billion • $7 billion to other forms of relief, including forbearance of principal for unemployed borrowers, anP-‐blight programs, short sale and transiPonal assistance.
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Breakdown of the $25 Billion • $7 billion to State and Federal government. • Wrongful foreclosure from 1/1/2008 to 12/31/2012. • Legal aid, fund housing counselors, etc
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The process • These big 5 are going through their loans and figuring out which loans are which and which qualify. • These bank do get credit for principal reducPon • So reach out to your servicer • Happening within the next 3 years.10/3/2012 was the date for the big 5 to get in order.
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CA Homeowner Bill of Rights
Homeowner Bill of Rights
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CA HOMEOWNER BILL OF RIGHTS • Signed into law July 2012; goes into effect January 1, 2013 • 62% Foreclosure dropped in January 2013 • CAR was not supporPve of the bill because CAR's posiPon was that it might slow down the real estate market.
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California's Homeowner Bill of Rights-‐-‐2018 $25 Billion Na#onal Mortgage SeSlement-‐-‐2015 • Is a package of bill not just the secPon that we are going to focus on today, where homeowners will use to try to save their home. For example it has a secPon to protect tenants on foreclosed tenant is 90 day noPces on foreclosed property, give grand jury power to a_orney general to go across county to chase arer foreclosure scammer. • It does not over throw anything substanPve contract right between investor and the Loan Servicer. BUT it does include very strict procedures and rights for homeowners before foreclosure. • This was model arer the $25 Billion NaPonal A_orney General Se_lement -‐ which is effecPve another 3 years or so BUT the CHBOR will remain unPl 2018 and some porPon will be an indefinite future.
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California's Homeowner Bill of Rights Purpose: Civil Code § 2923.4: "..to ensure that, as part of the non-‐judicial foreclosure process, borrowers are considered for, and have a meaningful opportunity to obtain, available loss mi#ga#on op#ons (include short sale), if any, offered by or though the borrower's servicers, such as loan modifica$ons or other alterna$ves to foreclosure..." (emphases added)
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High Light of CHBOR • Modeled on AG Se_lement Agreement servicing standards, but not idenPcal • Heightened pre-‐foreclosure outreach and communicaPons requirements • AnP-‐dual tracking requirements • Heightened documentaPon requirements • Private right of acPon
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Defini>ons and Exclusions Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
Ø Key Exclusions/LimitaPons ▪ Only applies to first liens on owner-‐occupied, 1-‐4 unit properPes Borrower is going to mean: Only applies to first liens on owner-‐occupied, 1-‐4 unit properPes. In the CHBOR you will find the phrase: “Foreclosure prevenPon alternaPve” — applying to means the 1st lien holder; which includes short sales or any other available loss miPgaPon. SO VERY BROAD!!!
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SPOC ― Key Component Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
one of the key component is a single point of contact of this Bills. The experiences of homeowners been ge•ng bounced around from staff person to staff person and really there were no consistency.
Ø Single Point of Contact (SPOC)(§2923.7) ▪ Allows for a team vs. a specific person ▪ Specifies responsibiliPes: SPOC is responsible for the communicaPon the process to the homeowners, the process which the homeowners can apply for a loan mod or foreclosure alternaPve or the deadline for any of the opPon. ▪ Communicate to borrower the Process/Deadline ▪ No more different answers! ▪ Does not expire -‐ remained assigned unPl all opPons exhaust ▪ Small servicers exempt (≤175 foreclosures in prior annual reporPng period per $2923.18(b)) ▪ Enforceable by PRA
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An>-‐Dual Tracking Provisions • An>-‐Dual tracking provision is a good thing, it provides: good protec>on for homeowners— • Basic an>-‐dual tracking rule — If borrower submits a first loan modifica>on offered, servicer may not record NOD, record NTS or conduct a scheduled foreclosure sale ( as applicable) while applica>on is pending and un>l servicer provides a wri`en determina>on. — Need a wri`en explana>on — Enforceable by PRA
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Dual Tracking -‐ 30 Days Wait if Denied Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
Ø Large servicers -‐ no NOD/NOS/ sale un>l: ▪ 30 days arer date of wri_en denial noPce (appeal period); or ▪ If borrower appeals a denial, 15 days arer denial of appeal; or ▪ If offered a first lien loan modificaPon, at least 14 days arer offer if borrower doesn't accept ▪ If there is a appeal of the deny; then absolutely bank has to wait another 15 days before foreclosure or take the next step toward foreclosure. So let says homeowner is deny and you dispute and say the income is higher and the servicer come back say well even with that higher income you don't qualify...so now form this date...bank has to wait 15 days before the next foreclosure step because deny can be incorrect for borrower to address the incorrectness. ▪ Does not expire -‐ remained assigned unPl all opPons exhaust ▪ Small servicers exempt (≤175 foreclosures in prior annual reporPng period per $2923.18(b)) ▪ Enforceable by PRA
Ø Small servicers ▪ No required appeal period or specific Pmelines Ø Aker 1/1/18 But arer 1/1/2018 -‐-‐ no regulaPon -‐-‐ no nod protecPon... no waiPng period...No brakes put upon foreclosure.
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An>-‐Dual Tracking ― If borrower is approved in wriPng for a foreclosure prevenPon alternaPve... • Pre-‐NOD: Short Sale Approval Servicer cannot record NOD while borrower complying with terms of the offer or all parPes have approved in wriPng
― Post-‐NOD: Short Sales Approval • Servicer cannot record NOS or conduct sale while borrower complying with terms of the offer or all parPes have approved in wriPng
― Transfer of servicing: Carry-‐over • Transferee servicer must honor the agreement between transferor servicer and borrower [sunsets 1/1/18] -‐ chase to naPonstar -‐ agreement is good to naPonalstar
Must provide copy of fully executed agreement [small servicers exempt; sunsets 1/1/18] Apply to Short Sale www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com
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Trustee sales Postponement Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
Amendments to Non-‐Judicial Foreclosure Procedures ($2924) servicer must provide wri_en noPce to borrower within 5 business days when a scheduled sale is postponed by more than 10 days [sunsets 1/1/18]
No enforceable by PRA
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Enforcement and Remedies TRO Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
Ø Injunc>ve relief -‐> So before sale you can sue to raise the viola>ons you want to allege before the final act of trustee sale. But be aware that all other state law are s>ll valid but under CHBOR it draws a line in the sand that says before the trustee sale.
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CA Foreclosure & Short Sale Laws
California Foreclosure/Short Sale Law
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California = Judicial vs. Non-‐Judicial Judicial
Non-‐Judicial
How IniPated
File a Complaint
Record and serve a NoPce of Default
Time
Requires court proceeding (approximately 6-‐12 Months) could be longer if counter claims/affirmaPve defenses are raised and other TILA/RESPA issues
4-‐5 months (minimum 135 days)
Expense
Typical costs of a lawsuit
Trustee fees
RedempPon
Yes (1 year if def 3month if no deficiency -‐ CCP 729.030(b)
No (5 days before)
Deficiency against
Yes, determine by court as to value
No!!!
Pursuit of Guarantor
Yes
Yes
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Non-‐Judicial Foreclosure • In California, lenders who intend to foreclose on a
property when the loan is delinquent typically use the non-‐judicial foreclosure process also known NOD follow by a trustee's sale. ― This process is less expensive for the lender than the judicial foreclosure process. ― A non-‐judicial foreclosure doesn't require a count proceeding and , thus, is a more expediPous process. ― Get a hold of the NOD or Trustee Sale NoPce
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Purchased Money Loan (Non-‐Recourse) • A non-‐recourse loan is a loan that the creditor can
only look to their secured interest. • To qualify as a purchase money mortgage in California, the loan must be obtained at the Pme of purchase of the borrowers primary residence.
Owner-‐Occupied Residence – Defini>on:
• To be a non-‐recourse loan, the loan in quesPon must be secured by an
owner-‐occupied dwelling of no more than 4 units.
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Recourse loan • Recourse
A recourse loan is one where the lender has the
legal means to collect the deficiency balance from the borrower.
• Recourse type of loan? • vacaPon homes,
• home-‐equity lines of credit (HELOC), • investment properPes where the borrower does not reside there, apartment buildings more than 4 units. • Refinanced the property • A refinanced 2nd mortgage
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California's An>-‐Deficiency Statute • CCP Sec. 580d: Homeowner has no post-‐ foreclosure liability to a lender who uses the (NOD -‐ Trustee Sale)-‐non-‐judicial process to foreclosed.
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CCP 726 -‐ One Form Ac>on Rule • Non-‐Judicial JurisdicPon >>> NOD >> Trustee Sale >> Too bad so sad for lender • This means the creditor must bring judicial or non-‐judicial foreclosure acPon first against the real property collateral.
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California's An>-‐Deficiency Statutes • CCP Sec. 580b: Homeowner has no post foreclosure liability on purchase money loans for a primary residence of 1-‐4 units-‐ ― Note re: refinancing and home improvements
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California's Post-‐Short Sale An>-‐Deficiency Statute -‐ CCP 580E • CCP Sec. 580e-‐ Homeowner has no post-‐ foreclosure liability to a lender who consents in wriPng to a short sale of a 1-‐4 unit dwelling. ― 7/15/11 through 12/31/2012 (all liens)
― Not retroacPve
Note: SB30, it’s replacement Bill is currently stalled out on the Senate Finance Commi_ee Floor with the introducPon of “poison pill” legislaPon in the form of a major, hidden tax. LegislaPve Liaison’s like myself, and major Lobbies like the California AssociaPon of Realtors are doing all that we can to push this legislaPon through without the added tax burden.
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2nd Mortgage Liability — Analysis • In certain cases, a home is foreclosed upon but the homeowners sPll liable for the 2nd. Determining Liability:
• 1. Is this your primary residence? • 2. How did you get your second mortgage? • 3. If 2nd mortgage is refinanced, a heloc loan, or if the property is a rental property or vacaPon home...then problemaPc www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com
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5 Types of Bankruptcy • Chapter 7 Discharge Debt – BK Law places income & Asset Caps on qualifying for a bankruptcy • Chapter 9 municipaliPes -‐ government • Chapter 11 -‐-‐1.1149 million sec. 383k unsce • Chapter 12 -‐farmer –fisherman • Chapter 13 A “Repayment plan”
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IRS Short Sale Laws
The last thing a person involved in a foreclosure or short sale needs is a crushing tax bill, so it is important to understand and be aware of poten>al tax consequences. The materials provided in this presenta$on do not cons$tute legal or tax advice. We can arrange for a FREE Consulta$on with a CPA and A_orney – Just call Julie at 1-‐888-‐668-‐9680 extension 201 to arrange this excep$onal service.
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Taxable Event: Cancella>on of Debt (COD) • The tax triggers: ― Foreclosure (Generally about 31% Higher than short sale) ― Short Sale ― Loan ModificaPon Principal ― Deed-‐in-‐lieu of foreclosure
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No Tax IF: • 1. Non-‐Recourse Mortgage -‐ (Purchase Money Loan) • 2. MORTGAGE FORGIVENESS DEBT RELIEF ACT • 3. Insolvency • 4. Bankruptcy
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Non-‐Recourse Loan • State law • Non-‐Recourse -‐ Purchase Money -‐ Ninja Loan ― Lender's only remedy is the property used as collateral. ― No COD
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MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 Qualified Principal Residence Indebtedness: The debt must have been used to buy, build or substanPally improve the taxpayer's principal residence. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-‐relief provision. EffecPve through December 31, 2013 Obama administraPon proposing extension unPl January 1, 2015 Note: IRS consumer brochure with details above and more at: h`p://www.irs.gov/pub/irs-‐pdf/p4705.pdf
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Primary Residence -‐-‐ Defini>on • Primary Residence ― A principal residence for tax purposes is a home that a taxpayer has owned and lived in for at least two of the past five years. Those two years do not need to be consecuPve.
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Qualified Principal Residence Indebtedness Exclusion • Qualified Debt ― Used to buy, build, or improve principal residence
• Maximum Debt Allowed ― Federal-‐ $2,000,000 ($1,000,,000 if MFS) ― California -‐ $800,000 ($400,,000 if MFS) (as not pass 2013 -‐ check for extension)
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Insolvency • COD excluded to the extent insolvent • Debts exceed value of assets ― The forgiven debt may qualify under the "insolvency" exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent. A taxpayer is insolvent when his or her total liabiliPes exceed his or her total assets.
• RePrement plans create problems!
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Cash for Key in Short Sale • As much as $30,000 • Taxable to homeowner? 1) Receipt of 1099 does not mean it's taxable 2) "Cash due homeowner" is return of equity
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Tenant (Investors)
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KEY FEDERAL LEGISALTION: PROTECTING TENANTS AT FORECLOSURE ACT OF 2009 • Federal Law • EffecPve May 2009 through December 31, 2014 • Protects tenants from immediate evicPon by persons or enPPes that become owners of residenPal property through the foreclosure process • Fundamental purpose is to ensure tenants facing evicPon from a foreclosed property have adequate Pme to find alternaPve housing • Establishes a minimum Pme period that a tenant can remain in a foreclosed property before evicPon (but does not affect any state or local law that provides longer Pme periods or addiPonal tenant protecPons) • A lease or tenancy is bona fide if:
not
― The tenant is the mortgagor or the parent, spouse, or child of mortgagor ― It is the result of an arms length transacPon ― Rent is not substanPally lower than fair market rent or is reduced or subsidized due to a federal, state, or local subsidy
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KEY FEDERAL LEGISLATION: PROTECTING TENANTS AT FORECLOSURE ACT OF 2009 (CONTD.) • Requires that immediate successor in interest at foreclosure must: ― Provide bona fide tenants with 90 days to terminate tenants in a month to month tenancy ― Allow bona fide tenants with leases to occupy property unPl the end of the lease term, except the lease can be terminated on 90 days noPce if the unit is sold to a purchaser who will occupy the property
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Tenant En>tled to a 90-‐Day No>ce to Terminate Aker Foreclosure • EffecPve January 1, 2013, a month-‐to-‐month tenant in possession of a rental housing unit at the Pme the property is foreclosed must be give a 90-‐day wri_en noPce to terminate under California law. For a fixed-‐term residenPal lease, the tenant can generally remain unPl the end of the lease term, and all rights and obligaPons under the lease shall survive foreclosure, including the tenant's obligaPon to pay rent. However, the landlord can give a 90-‐day wri_en noPce to terminate a fixed-‐term lease arer foreclosure under any of the following four circumstances: (1) the purchaser or successor-‐in-‐interest will occupy the property as a primary residence; (2) the tenant is the borrower or the borrower's child, spouse, or parent; (3) the lease was not the result of an arms' length transacPon; or (4) the lease requires rent that is substanPally below fair market rent (except if under rent control or government subsidy). The purchaser or successor-‐in-‐interest bears the burden of proving that one of the four excepPons has been met. This law does not apply if a borrower stays in the property as a tenant, subtenant, or occupant, or if the property is subject to just cause rent control. This law will expire on December 31, 2019. www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com
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Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201
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BRE # 01051535 https://www.facebook.com/julie.boyd.9083
Credits: • Julie Boyd, SFR, CDPE, CerPfied Homeowner Advocate, CerPfied Expert Advisor, LegislaPve Liaison & Frequent Keynote Speaker for AAREA, NAHREB, CDPE, Wells Fargo and Chase. Founder of RETHINK Short Sale SoluPons. • Paul Horn, CPA and A_orney • Copyright, TM 9/22/2013