The following article is from the most recent Fannie Mae’s News Release:
WASHINGTON, DC — Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.
“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Vice President of Fannie Mae. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”
The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.
Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.
For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on www.efanniemae.com.
Tags: Deed for Lease, Fannie Mae
The following info is from California Association of Realtor:
One of the concerns a consumer has after experiencing a bankruptcy, foreclosure, or short sale (referred to as a “preforeclosure sale” by Fannie Mae) is the ability to obtain credit to purchase another home. Fannie Mae has updated its credit guidelines. This legal article summarizes those guidelines.
Fannie Mae Credit Guidelines
Q 1. How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?
A Five years from the date the foreclosure sale was completed.
Additional requirements that apply after 5 years and up to 7 years following the completion date are as follows:
. The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representative credit score of 680.
. Purchase of a second home or investment property is not permitted.
. Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
. Cash-out refinances are not permitted for any occupancy type.
(Source: FNMA Announcement 08-16, 6-25-08 
)
Q 2. Why do the additional requirements for foreclosures in Question 1 only apply from 5 to 7 years following the foreclosure completion date?
A According to Fannie Mae policy in Part X, Section 103 of the Selling Guide, Fannie Mae requires only a 7-year history to be reviewed for all credit and public record information. The 7-year timeframe also aligns with the information provided by the borrower on the loan application relative to disclosure of a past foreclosure action. (Source: FNMA Selling Guide, 4-1-09. )
Q 3. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the foreclosure?
A Yes. Three years from the date the foreclosure sale was completed. The same additional requirements apply as listed in Question 1 except the minimum credit score of 680 is not required. (Source: FNMA Announcement 08-16, 6-25-08. )
Q 4. What are”extenuating circumstances” ?
A Fannie Mae describes “extenuating circumstances” as follows:
Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.
If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower’s claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower’s inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, listing agreements, lease agreements, tax returns (e.g., covering the periods prior to, during, and after a loss of employment).
The lender must obtain a letter from the borrower explaining the relevance of the documentation. The letter must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no reasonable options other than to default on his or her financial obligations.
(Source: FNMA Selling Guide, 4-1-09 at 391.
Q 5. How long is the time period after a deed-in-lieu of foreclosure before a consumer can be eligible to obtain credit to purchase a property?
A Four years from the date the deed-in-lieu was executed.
Additional requirements that apply after 4 years and up to 7 years following the completion date are as follows:
. Borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction.
. Limited-cash-out and cash-out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time.
(Source: FNMA Announcement 08-16, 6-25-08. )
Q 6. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the deed-in-lieu of foreclosure?
A Yes. Two years from the date the deed-in-lieu was executed. The same additional requirements apply as listed in Question 4 after 2 years up to 7 years. (Source: FNMA Announcement 08-16, 6-25-08. )
See Question 4 for the definition of “extenuating circumstances.”
Q 7. How long is the time period after a ”preforeclosure sale” before a consumer can be eligible to obtain credit to purchase a property?
A Two years from the completion date. No exceptions are permitted to the 2-year period due to extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )
Q 8. What is a “preforeclosure sale” mentioned in Question 6 and is that the same as a short sale?
A “A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satify the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer” (Source: FNMA Announcement 08-16, 6-25-08 ).
Although the terms preforeclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a preforeclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclousre action. A short-sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to facilitate the sale of the property to a third party. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 9. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the preforeclosure (short) sale?
A No. There are no exceptions to the 2-year time period. (Source: FNMA Announcement 08-16, 6-25-08. )
Q 10. If a borrower sold his or her property as a short sale but was never delinquent on that mortgage and is now attempting to purchase a new primary residence, will Fannie Mae purchase the loan?
A The loan will be eligible for delivery to Fannie Mae provided that the borrower’s previous mortgage history complies with Fannie Mae’s excessive prior mortgage delinquency policy–that is the borrower does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date–and the borrower has not entered into any agreement with the short sale lender to repay any amounts associated with the short sale, including a deficiency judgment. (Source: FNMA Announcement 08-16 Q&A, 8-13-08 ; FNMA Selling Guide, Part X, Chapter 3, Section 302.09. .)
Q 11. Are preforeclosure (short) sales and deed-in-lieu of foreclosure actions identified on a credit report?
A Preforeclosure sales may be reported as “paid in full” with a “settled for less than owed” remarks code, and the mortgage tradeline would indicate any recent delinquency. A deed-in-lieu may be reported by a remarks code indicating a deed-in-lieu. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 12. How long is the time period after a bankruptcy (all except Chapter 13) before a consumer can be eligible to obtain credit to purchase a property?
A Four years from the discharge or dismissal date of the bankruptcy action (Source: FNMA Announcement 08-16, 6-25-08 ).
Q 13. How long is the time period after a Chapter 13 bankruptcy before a consumer can be eligible to obtain credit to purchase a property?
A Two years from the discharge date and four years from the dismissal date (Source: FNMA Announcement 08-16, 6-25-08 ).
Q 14. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the bankruptcy (all actions)?
A Yes. Two years from the discharge or dismissal; however, no exceptions are permitted to the 2-year time period after a Chapter 13 discharge (Source: FNMA Announcement 08-16, 6-25-08 ).
See Question 4 for the definition of “extenuating circumstances.”
Q 15. How long is the time period after multiple bankruptcy filings before a consumer can be eligible to obtain credit to purchase a property?
A Five years from the most recent dismissal or discharge date for borrowers with more than one bankruptcy filing within the past 7 years (Source: FNMA Announcement 08-16, 6-25-08 ).
Q 16. Does a shorter time period apply if the borrower has “extenuating circumstances” that led to the multiple bankruptcies?
A Yes. Three years from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )
See Question 4 for the definition of “extenuating circumstances.”
Q 17. What is the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy?
A Chapter 13 permits a borrower with a regular income to propose a plan to repay some or all of his or her obligations over a period of up to five years. A borrower who files a Chapter 7 is permitted to retain exempt assets and receive a discharge of the borrower’s debts. Chapter 7 is a relatively quick liquidation process that is generally completed within 120 days. Chapter 7 cases are rarely dismissed. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 18. What is the difference between a Chapter 13 dismissal and a Chapter 13 discharge?
A A borrower who files a Chapter 13 can dismiss the case at any time (voluntary dismissal) or the case may be dismissed by the court based on the borrower’s failure to comply with the requirements of the Bankruptcy Code or to make the required payments. If the borrower who files a Chapter 13 case makes all of the payments required by the plan, the borrower receives a discharge at the end of the plan. A borrower who doesn’t make all the payment required by the plan may still receive a discharge if the court finds, among other things, that the borrower made a certain amount of the payments and the borrower’s failure to make all of the payments was due to circumstances beyond the borrower’s control. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )
Q 19. What are the requirements to re-establish a credit history?
A After a bankruptcy or foreclosure-related action, a credit history must meet the following rquirements to be considered re-established:
. It must meet the requirements for elapsed time (as discussed in this article).
. It must reflect that all accounts are current as of the date of the mortgage application.
. it must include a minimum of four credit references. At least one of the references must be a traditional credit reference, and one of the references must be housing-related.
(1) A housing-related reference must cover the period following the bankruptcy discharge or dismissal, foreclosure, or deed-in-lieu, and can be in the form of mortgage payments or rental payments.
(2) If rental payments wre not reported to the credit repositories, the lender must obtain copies of bank statements, money orders, or canceled checks for the most recent 12-month period as a supplement to the rent verification.
. It must reflect three of the four credit references, including rental housing references, as active in the 24 months preceding the date of the mortgage application.
. It must include no more than two installment or revolving debt payments 30 days past due in the last 24 months.
. It must include no installment or revolving debt payments 60 or more days past due since the discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.
. It must include no housing debt payments past due since the discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.
. It must include no new public records since the discharge or dismissal of the bankruptcy or the completion of the foreclousre-related action. Public records include bankruptcies, foreclosures, deeds-in-lieu, preforeclosure sales, unpaid judgments or collections, garnishments, liens, etc.
(Source: FNMA Selling Guide, 4-1-09 at 392.
Tags: Bankruptcy, Chapter 13, Chapter 7, Deed-in-lieu of Foreclosure, Foreclosure, Preforeclosure, Short Sale
The following news release was from The Office of the Attorney General.
Los Angeles – Concerned about a “new wave” of foreclosures, Attorney General Edmund G. Brown Jr. today called on ten major banks and loan servicers to detail their plans to assist homeowners facing dramatic monthly payment increases on Pay Option Adjustable Rate Mortgages.
“Homeowners with Pay Option ARMs are sitting on ticking time bombs that the lending industry has the power to defuse,” Brown said. “Unless these banks and loan servicers act quickly, hundreds of thousands of mortgages will reset across the state, creating a new wave of foreclosures.”
In the third quarter of 2009, California accounted for more than 25 percent of the nation’s foreclosure activity, with 250,000 homes receiving foreclosure filings statewide. This is an annual increase of almost 20 percent in foreclosure activity and more foreclosures loom.
California homeowners hold almost 60 percent of the nation’s exotic Pay Option ARMs originated between 2004 and 2008. Approximately one million of these mortgages will reset nationwide in the next four years, resulting in higher payments and a dramatic increase in foreclosures.
Brown believes that the lending industry must be responsive to homeowners and loan modification programs must be expanded.
Brown has made it a top priority to protect homeowners and combat loan modification fraud in California. In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans, once the largest lender in the county, after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers’ ability to afford loans.
In total, Brown has sought court orders to shut down more than 30 fraudulent foreclosure assistance companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan modification consultants.
Homeowners who have been scammed can contact the Attorney General’s office at 
1-800-952-5225
, or file a complaint online at: www.ag.ca.gov/consumers/general.php
For more information on the Brown’s action against loan modification fraud visit: http://ag.ca.gov/loanmod.
Brown’s request was made in a letter sent to: Bank of America Home Loans & Insurance; Wells Fargo & Company; JP Morgan Chase & Co.; Litton Loan Servicing; ResCap, LLC; Ocwen Financial Corporation; OneWest Bank; American Home Mortgage Servicing; Saxon Mortgage Services, Inc.; and Select Portfolio Servicing. Banks and loan servicers are asked to respond by November 23, 2009.
If you are facing foreclosure, there may still be a chance to save your house. In the past 7 years, mortgages have been sold over and over, resulting in misplaced or lost contracts and docs. Your note could have changed hands several times over the course of the loan. But exactly where is the original note? In some warehouse in the Midwest somewhere or at the dumpster in an abandoned office building?
When your lender says you owe a debt, you always ask them to prove that you owe the debt and make them prove they actually own the debt they say you owe. You don’t help build a case against you. Instead, you go to court and ask the lender to produce the original note you signed.
Based on my understanding, 65% of the time the lender can’t find the original notes after being sold to different parties for so many times and the judge has to stop the foreclosure. This gives you the leverage to renegotiate terms with your lender. It may not always work, but it’s worth a try, if you still want to keep the house. It makes sense, the way institutions were reselling loan packages these past years and chopping them up, paperwork could easily be mishandled. This doesn’t mean you are off the hook. It means the lender has to stop foreclosure for the moment. In the mean time, you have their attention and they might think you know what you are doing, you have the chance to negotiate the term with them. Please do not be afraid of being in the negotiation process to ask for debt forgiveness, the worse they can say is NO. They might say YES.
If a foreclosure sale doesn’t cover your loan, the bank will charge-off this amount, but it is collectible in the future. If you are not pursuing some legal court protection, be aware this can hang over your head later on. For legal advice on this matter, please consult with your attorney.
Tags: Foreclosure, Produce the Note
- No Advance Fee Loan Modifications: Starting October 11, 2009, a new law prohibits anyone from claiming any compensation for negotiating or arranging a loan modification until after that person fully performs each and every service as promised. Aimed at combating loan modification scams, this ban applies to upfront fees collected by real estate agents and attorneys. The ban expires on January 1, 2013. Also effective immediately, anyone who negotiates or arranges a loan modification must give the borrower a specified notice that paying a third-party for loan modification services is unnecessary. These new requirements apply to mortgage loans secured by residential property up to four units, with certain exceptions for lenders and loan servicers acting on their own behalf. Violations can be penalized by, among other things, a $10,000 fine plus one-year imprisonment for individuals, or a $50,000 fine for businesses. Real estate brokers with existing Advance Fee Loan Modification Agreements reviewed by the Department of Real Estate (DRE) can no longer, as of October 11, 2009, enter into these agreements or collect advance fees. Agreements entered into and advance fees collected before October 11, 2009 are not affected. For the DRE announcement, go to http://www.dre.ca.gov/pdf_docs/SB94WebAnnouncement(brokers).pdf. Senate Bill 94.
- Advance Fee Redefined: Aside from loan modifications discussed above, Senate Bill 94 also broadens the definition of an advance fee which must be specially handled by real estate agents, such as by submitting an advance fee agreement for DRE review and placing funds received into a broker’s trust account. Under the new definition that took effect on October 11, 2009, agents cannot separate advance fees or services into components to avoid the advance fee requirements. More specifically, an advance fee is now defined as “a fee, regardless of the form, claimed, demanded, charged, received, or collected by a licensee from a principal before fully completing each and every service the licensee contracted to perform, or represented would be performed.” Exceptions include advertisements in newspapers of general circulation, tenant prescreening fees, and tenant security deposits. Senate Bill 94.
Tags: Loan Modification
- The real estate market is almost at the bottom. We are in buyer’s market. With all the foreclosures and short sales on the market, many people are struggling to sell their houses giving you the power to purchase the properties. If you can buy and hold the property till the market climbs back to seller’s market, you will gain considerable equity.
- Landlords that bought the rental properties in the past few years and over-leveraged their properties are having a hard time getting their loans refinanced or selling the properties. You may be able to pick up some good deals from these distressed property landlords.
- Many people are losing their homes while they are going through tough times with the unemployment rate at about 10%. If you are able to purchase the house in pre-foreclosure stage, you can help the homeowner to get out of his or her tough situation. This opens an opportunity for creative financing, such as using Land Trust. For more info about Land Trust, please contact Hope Lin.
- Many foreclosures and Bank Owned properties (REO) can be purchased for pennies on the dollar.
- The next big wave of foreclosures is just right around the corner. There was a pause in foreclosures from October 2008 to March of 2009. The six month waiting period is already over and foreclosures are starting to rise again, which means it is a great investment opportunity for everyone.
For more info on selling and buying foreclosures, REO and short sale properties, please send us a message.
Tags: Buy Foreclosures, Distressed Property, Pennies on the Dollar, REO, Short Sale
A Land Trust is a living, revocable, beneficiary-directed title-holding trust that holds real estate and /or real estate related assets. When “real property” (real estate) is held in a land trust, ownership is converted to “personalty” (personal property), and is therefore subject to laws pertinent to both real and personal property.
Upon a property being placed into a Title-Holding Land Trust, all or a portion of its beneficial interest can be assigned to a second party( tenants and/or future buyers). When the second party occupies the property as a co-beneficiary and handles all costs….all the benefits of ownership follow….It’s a Win Win situation for both Resident( tenants and/or future buyers) and Non-Resident (the landlord and/or seller):
Benefits for Resident:
- Just like 100% financing with minimal cash down
- Appreciation potential
- Active income tax write-off (loan interest, property tax)
- Equity increase from mortgage principal reduction
- Use/Occupancy/Possession/Pride of ownership
Benefits for Non-Resident:
- Retains all existing equity in the property and is freed from a burden while someone else pays the bills
- Potential for creditor judgments against the property is virtually eliminated
- Passive tax loss (depreciation) still available
- No violation of the lender’s Due-On-Sale admonitions.
The IRS View:
(Re: IRC 163 (h)(4)(d) – The IRS Code for Estates and Trusts gives full tax deduction benefits to the Resident Beneficiary in a Land Trust. The trust property qualifies as income property for the “passive” deduction in favor of the Non-Resident Beneficiary (See: IRC 167).
For more info on Land Trust program, please contact Hope Lin.
Tags: $8000 Tax Credit, Move-up Home, sell today
Welcome to my blog! My name is Hope Lin. I’m a long time Irvine resident. Before I settled down in Irvine, I had lived in Taiwan for 20 years, Hawaii for 3 years, New Hampshire for 7 years and visited 45 states in the US in the past 15 years. As you can see, I used to move a lot and travel a lot, too. Among these cities that I used to live or visit, there’s no city like Irvine that makes me want to call home. My family has called Irvine home for many years and still have many years to come.
When I first visited Auntie’s house in West Park back in the late 80’s, I thought Auntie lived in a rural area. She would take me to Lucky supermarket, which is today’s Albertsons, by driving thru a huge vacant lot, which was later on developed into West Park II.
Several years later, Auntie moved to new development, called Northwood Pointe. At that time, the real estate market was not doing well at all, it was not easy to see new neighbors moving in to the new community. I remember Auntie had to go to the sales office to ask them to try to sell more houses, just so she would be able to meet more new neighbors and feel safe to live in this brand new community. It was kind of scary to live in a very “empty” community.
Now West Park and Northwood Pointe have well-developed into a very mature communities, so does University Town Center, Woodbridge, Quail Hill, Oak Creek, Northpark, Northwood, West Irvine, Turtle Ridge and the other communities in Irvine. With a population over 200,000, today many have called Irvine their homes.
Tags: Irvine, Irvine Home, Northpark, Northwood, Northwood Pointe, Oak Creek, Quail Hill, Turtle Ridge, University Town Center, West Irvine, West Park, Woodbridge
