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The U.S. Treasury plan to help homeowners avoid foreclosure potentially applies to 75 percent of the mortgages in the U.S., including those backed by Freddie Mac or Fannie Mae (those two organizations are currently devising guidelines). The plan, which provides incentives for lenders and homeowners for completing Short Sales, is many-faceted: It provides incentives to lenders and borrowers for completing Short Sales It streamlines and standardizes the documentation necessary for Short Sales It limits the ability of subordinate lien-holders to obstruct the Short Sales process It sets limits on the time it takes lenders to approve or reject Short Sales requests It steps up pressure on lenders to make permanent the 650,000 trial loan modifications they started earlier in 2009 Incentives to Borrowers Under the plan, borrowers who complete a Short Sale are released from all mortgage debt. Additionally, they receive $1,500 for moving expenses. Incentives for Lenders The plan provides for pay

Homeowners across the United States who are undergoing financial hardship could avoid foreclosure under a plan announced on Nov. 30 by the U.S. Treasury Department. Under the plan, millions of at-risk homeowners could be free of mortgage debt without going through foreclosure, and given $1,500 for relocation. The Treasury plan, which potentially applies to 75 percent of the mortgages in the U.S., including those backed by Freddie Mac or Fannie Mae (those two organizations are currently devising guidelines), provides incentives for lenders and homeowners for completing Short Sales – transactions in which the lender agrees to a sale price that's less than the borrower owes on the mortgage. Short Sales are preferred to foreclosure because homeowners take less of a hit on their credit and lenders realize a smaller loss. However, Short Sales often get bogged down because of the complicated nature of the transaction. Deals can fall through because they take too long. Buyers are discourag

Don’t forget the cost of FHA mortgage insurance is going up. But there is a window of opportunity to get an FHA loan before the this happens. As long as the the laon in obtained before April 5, you can get an FHA loan with 1.75% upfront mortgage insurance (versus 2.25% AFTER April 5). Why This Is Happening: · FHA’s capital reserve requirement mandated by Congress has fallen below the minimum requirement. · FHA makes up 1/3 of all financing in today’s market What Will Change: · Increase in the up front MIP Fee to 2.25% from 1.75% · FHA is also asking Congress to increase its monthly premium which is one of the major advantages compared to a Conventional Loan’s PMI rate. (This has not been finalized yet). · Seller concessions will be lowered to 3% from 6% - currently viewed as a reason to inflate appraisals. · Minimum Credit Score of 580 – lower scores require 10% down · Most likely will not increase the amount the buyer needs to bring to the table, but by increasing the PMI it will incr

Knowing the Guidelines Solves the Mystery The appraisal process often baffles consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn't always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules. In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace su

Recently I had a client call me to complain about how upset she was regarding the fact that she was only getting half of the $8000 tax credit. She had purchased a duplex a couple of months ago and was expecting to receive 10% of half of the sales price (since she was renting out the other half of the duplex and receiving rental income). She was, therefore, expecting to get $7500 (10% of $75K instead of 10% of the full purchase price of $150K) She was very upset because she had recently been to H&R Block to have her taxes done and they insisted on the fact that she was only entitled to half of the tax credit ($4000) rather than 10% of half of the purchase price ($7500). Now, I am not a tax accountant and don’t even pretend to be. But, I called the IRS and they confirmed that this is indeed wrong . She was indeed entitled to 10% of half of the purchase price ($7500), NOT half of the tax credit ($4000). So, don’t assume that H&R Block knows what they are talking about. If you