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Pre-Foreclosure Specialist
Tiffany Mehrmann is a
Pre-Foreclosure and Investment
Property Specialist
Don't
Panic, there is no reason to be embarrassed.
This is more common than you may
imagine.
Many individuals discover themselves in a situation in
which the home that they purchased as an investment has
turned into a financial burden or even a liability.
Sometimes this is due to changes in interest rates, loan
terms, relocation, employment or marital status.
Regardless of the circumstances, it is nothing to be
ashamed of, but it is extremely important to
deal with.
As a pre-closure and investment property specialist,
it is my responsibility to treat you with dignity and
compassion as we address this important issue together.
There may not be much time, so you need to know
and understand your options.
Fortunately, the seller, buyer and
the bank or finance institution have very similar goals,
to reach a mutually agreeable arrangement -
quickly!
Goal of the Seller:
As a seller, you want to maximize the amount of the
sale in a very short time. As the seller, this may help
to avoid foreclosure, protect your credit and move
quickly into another home that fits your current budget.
We may be able to create a bidding environment to find
the best offer within your time constraints.
Goal of the Buyer:
As a buyer or an investor, there are opportunities to
purchase homes below the local market value, enabling a
quick turn on investment for a profit. In many cases,
property value can be increased by minor renovations or
modifications.
Goal of the Bank / Financial
Institution:
The bank or financial institution would rather
receive a return on the loan through a sale than take
possession of the property. Banks would rather handle
funds than homes, and are typically supportive of the
seller and the buyer in these instances.
Goal as Your Realtor:
As a pre-foreclosure specialist, I am also committed
to helping all parties achieve maximum value and
satisfaction in the transaction. I have earned a
reputation for passionate commitment to my clients and
apply my years of professional business experience for
your benefit.
How to Avoid Foreclosure for FHA
Insured Loans
The guidance below is applicable to homeowners with
FHA Insured loans. While a good deal of this information
may apply to all homeowners in danger of losing their
homes, not all of the foreclosure avoidance tools
mentioned may be available to you if you have a VA or
conventional loan. Additionally, HUD/FHA does not have
any Loss Mitigation oversight over VA or conventional
loans. Please contact your lender or a housing
counseling agency.
Q: What Happens When I Miss My
Mortgage Payments?
Foreclosure may occur. This is the legal means that
your lender can use to repossess (take over) your home.
When this happens, you must move out of your house. If
your property is worth less than the total amount you
owe on your mortgage loan, a deficiency judgment could
be pursued. If that happens, you not only lose your
home, you also would owe HUD an additional amount.
Both foreclosures and deficiency judgments could
seriously affect your ability to qualify for credit in
the future. So you should avoid foreclosure if possible.
Q: What Should I Do?
- DO NOT IGNORE THE LETTERS FROM YOUR LENDER. If
you are having problems making your payments, call
or write to your lender's Loss Mitigation Department
without delay. Explain your situation. Be prepared
to provide them with financial information, such as
your monthly income and expenses. Without this
information, they may not be able to help.
- Stay in your home for now. You may not qualify
for assistance if you abandon your property.
- Contact a HUD-approved
housing counseling agency. Call (800)
569-4287 or TDD (800) 877-8339 for the
housing counseling agency nearest you. These
agencies are valuable resources. They frequently
have information on services and programs offered by
Government agencies as well as private and community
organizations that could help you. The housing
counseling agency may also offer credit counseling.
These services are usually free of charge.
Q: What Are My Alternatives?
You may be considered for the following:
Special Forbearance. Your lender may be able
to arrange a repayment plan based on your financial
situation and may even provide for a temporary
reduction or suspension of your payments. You may
qualify for this if you have recently experienced a
reduction in income or an increase in living
expenses. You must furnish information to your
lender to show that you would be able to meet the
requirements of the new payment plan.
Mortgage Modification. You may be able to
refinance the debt and/or extend the term of your
mortgage loan. This may help you catch up by
reducing the monthly payments to a more affordable
level. You may qualify if you have recovered from a
financial problem and can afford the new payment
amount.
Partial Claim. Your lender may be able to
work with you to obtain a one-time payment from the
FHA-Insurance fund to bring your mortgage current.
You may qualify if:
- your loan is at least 4 months delinquent
but no more than 12 months delinquent;
- you are able to begin making full mortgage
payments.
When your lender files a Partial Claim, the U.S.
Department of Housing and Urban Development will pay
your lender the amount necessary to bring your
mortgage current. You must execute a Promissory
Note, and a Lien will be placed on your property
until the Promissory Note is paid in full.
The Promissory Note is interest-free and is due
when you pay off the first mortgage or when you sell
the property.
Pre-foreclosure sale. This will allow you to
avoid foreclosure by selling your property for an
amount less than the amount necessary to pay off
your mortgage loan.
You may qualify if:
- the loan is at least 2 months delinquent;
- you are able to sell your house within 3 to
5 months; and
- a new appraisal (that your lender will
obtain) shows that the value of your home meets
HUD program guidelines.
Deed-in-lieu of foreclosure. As a last
resort, you may be able to voluntarily "give back"
your property to the lender. This won't save your
house, but it is not as damaging to your credit
rating as a foreclosure.
You may qualify if:
- you are in default and don't qualify for any
of the other options;
- your attempts at selling the house before
foreclosure were unsuccessful; and
- you don't have another FHA mortgage in
default.
Q: How Do I Know if I Qualify for Any of These
Alternatives?
Your lender will determine if you qualify for any of
the alternatives. A housing counseling agency can also
help you determine which, if any, of these options may
meet your needs and also assist you in interacting with
your lender. Call (800) 569-4287 or TDD (800)
877-8339.
Q: Should I Be Aware of Anything Else?
Yes. Beware of scams! Solutions that sound too simple
or too good to be true usually are. If you're selling
your home without professional guidance, beware of
buyers who try to rush you through the process.
Unfortunately, there are people who may try to take
advantage of your financial difficulty. Be especially
alert to the following:
Equity skimming. In this type of scam, a
"buyer" approaches you, offering to get you out of
financial trouble by promising to pay off your
mortgage or give you a sum of money when the
property is sold. The "buyer" may suggest that you
move out quickly and deed the property to him or
her. The "buyer" then collects rent for a time, does
not make any mortgage payments, and allows the
lender to foreclose. Remember, signing over your
deed to someone else does not necessarily relieve
you of your obligation on your loan.
Phony counseling agencies. Some groups
calling themselves "counseling agencies" may
approach you and offer to perform certain services
for a fee. These could well be services you could do
for yourself for free, such as negotiating a new
payment plan with your lender, or pursuing a
pre-foreclosure sale. If you have any doubt about
paying for such services, call a HUD-approved
housing counseling agency at (800) 569-4287
or TDD (800) 877-8339. Do this before you pay
anyone or sign anything.
Q: Are There Any Precautions I Can Take?
Here are several precautions that should help you
avoid being "taken" by a scam artist:
- Don't sign any papers you don't fully
understand.
- Make sure you get all "promises" in writing.
- Beware of any contract of sale of loan
assumption where you are not formally released from
liability for your mortgage debt.
- Check with a lawyer or your mortgage company
before entering into any deal involving your home.
- If you're selling the house yourself to avoid
foreclosure, check to see if there are any
complaints against the prospective buyer. You can
contact your state's Attorney General, the State
Real Estate Commission, or the local District
Attorney's Consumer Fraud Unit for this type of
information.
Q: What Are the Main Points I Should Remember?
- Don't lose your home and damage your credit
history.
- Call or write your mortgage lender immediately
and be honest about your financial situation.
- Stay in your home to make sure you qualify for
assistance.
- Explore every alternative.
- Beware of scams.
- Do not sign anything you don't understand. And
remember that signing over the deed to someone else
does not necessarily relieve you of your loan
obligation.
Act now. Delaying can't help. If you do nothing, YOU
WILL LOSE YOUR HOME and your good credit rating.
If you need help, don't
wait - call today!
American Recovery
and Reinvestment Act of 2009
H.R. 1,
the "American Recovery and Reinvestment Act of 2009" (AARA), passed the
House on February 13, 2009, by a vote of 246 - 184. On the same day, the
Senate passed the bill by a vote of 60 - 39. The President signed the
bill on Tuesday, February 17, 2009. The bill is a $780 billion package,
with roughly 35% of the package devoted to tax cuts (mostly for 2009)
and the rest to spending intended to occur in 2009 and 2010.
The bill includes the following provisions:
-
Homebuyer Tax Credit
—
The bill provides for a $8,000 tax credit that would be available to
first-time home buyers for the purchase of a principal residence on
or after January 1, 2009 and before December 1, 2009. The credit
does not require repayment. Most of the mechanics of the credit will
be the same as under the 2008 rules: the credit will be claimed on a
tax return to reduce the purchaser's income tax liability. If any
credit amount remains unused, then the unused amount will be
refunded as a check to the purchaser.
-
FHA,
Fannie Mae and Freddie Mac Loan Limits
— The bill reinstates last year's 2008 loan limits for FHA, Freddie
Mac, and Fannie Mae loans. These limits were equal to the greater of
125% of the 2008 local area median home price or $271,050 for FHA
and $417,000 for Fannie and Freddie, with an overall maximum cap of
$729,750. For the few areas where the 2009 limits were higher, the
higher limits will apply. In addition, the bill includes language
providing the HUD Secretary with the discretion, if warranted, to
increase the loan limit for any "sub-area", i.e.an area smaller than
a county. The Secretary's discretion is again limited by the
$729,750 cap. These 2009 limits will expire December 31, 2009.
The inclusion of these loan limit provisions in the final bill is a
victory for homeowners, buyers and REALTORS®. While these new limits
were included in version of the original stimulus bill approved by
the House, the bill first approved by the Senate did not. NAR's Call
for Action to both the House and the Senate prior to the final vote
advocated strongly for the provisions which were then included in
the final bill approved by both Chambers. NAR has estimated the new
2009 Loan Limits by county.
-
Neighborhood Stabilization
— Division A, Title XII of the bill provides $2,000,000,000 in
additional funding for the Neighborhood Stabilization Program (NSP).
The NSP was created by the Housing and Economic Recovery Act of 2008
(Public Law 110-289) to provide grants through the Community
Development Block Grant program (CDBG) to states and localities to
address the problems that can be created when whole neighborhoods
are decimated by foreclosures. The funds can be used to purchase,
manage, repair and resell foreclosed and abandoned properties. In
addition, the funds can also be used by states and localities to
establish financing methods for the purchase and redevelopment of
foreclosed properties. After purchase the homes must be used to
assist individuals and families with incomes at or below 120% of
area median income. Twenty-five percent of funds must be used for
households with incomes at or below 50% of area median income. By
leveraging their expertise in partnership with others from both the
public and private sector, REALTORS® in many communities have been
making important contributions to their local communities'
neighborhood stabilization programs.
-
Commercial Real Estate
— Commercial real estate is impacted primarily through those
provisions of the bill focused on green building and energy
efficiency as well as business tax incentives. H.R. 1 provides
significant funds for state energy programs, which could be used to
support commercial property owners' investment in energy efficiency
upgrades while commercial property owners seeking to invest in
alternative energy systems for onsite power generation would benefit
from the Department of Energy Renewable Energy Loan Guarantees
Program. Of particular benefit to small businesses would be certain
provisions of the bill that provide tax relief in the area of bonus
depreciation and capital expenditures, as well as the 5-Year
carryback of net operating losses for small businesses.
-
Rural Housing Service
— The bill provides an additional $500 million to existing USDA
Rural Housing programs. The RHS provides both a guaranteed loan
program and a direct housing loan program for those meeting the
program's eligibility criteria. The direct loan program will receive
$270 million while $230 million will be allocated for unsubsidized
guaranteed loans. It has been reported that this level of funding
would provide for an additional 192,000 homeowners.
-
Low
Income Housing Grants
— Allow states to trade in a portion of their 2009 low-income
housing tax credits for Treasury grants to finance the construction
or acquisition and rehabilitation of low-income housing, including
those with or without tax credit allocations.
-
Tax
Exempt Housing Bonds
— Tax-exempt interest earned on specified state and local bonds
issued during 2009 and 2010 will not be subject to the Alternative
Minimum Tax (AMT). In addition, financial institutions will have
greater capacity to purchase tax-exempt state and local bonds.
-
Energy Efficient Housing Tax Credits & Grants
— To promote green jobs and energy independence, ARRA invests
significantly in efforts to make homes and buildings more energy
efficient. The bill provides state and local governments with $6
billion in energy efficiency and conservation grants for energy
audits, retrofits and financial incentives. Through 2010, homeowners
will be able to claim a 30% tax credit (up from 10%) for purchases
of new furnaces, windows and insulation. Another $5 billion will be
available to modernize the nation's electricity grid and install
smart meters on homes that help to save consumers money. There is
also $5 billion for weatherization assistance for low income
households and $2 billion for federally assisted housing (section 8)
efficiency efforts.
-
Transportation Investments
— The bill provides $46.7 billion to states and localities for
capital investment for surface transportation projects including
highways, bridges, transit, and rail projects. NAR policy supports
increased spending on the types of transportation infrastructure
addressed in the bill with the exception of Amtrak and high-speed
inter-city rail where NAR has no policy. These investments will tend
to moderate traffic congestion and support a variety of
transportation alternatives which will improve the quality of life
of American communities and bolster the value of real estate.
-
Broadband Deployment
— The bill creates $7.2 billion in grants to promote broadband
deployment in unserved and underserved areas and for mapping the
availability of broadband service in the U.S. Any entity is eligible
to apply for a grant including municipalities, public/private
partnerships and private companies as long as they comply with the
grant conditions. The grants are subject to "network neutrality"
requirements to ensure that broadband networks be free of
restrictions on content, sites, or platforms, on the kinds of
equipment that may be attached, and on the modes of communication
allowed. The bill also charges the FCC is with developing a national
broadband plan that shall seek to ensure that all Americans have
access to broadband capability and shall establish benchmarks for
meeting that goal.
These
provisions are important victories for REALTORS® because increased
broadband access promotes economic growth and expands opportunities for
home sales. A 2006 Commerce Department report determined that property
values are 6% higher in communities where broadband is available
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