A homeowner who has $100,000 in mortgage debt forgiven through a short sale, for example, would have to pay income tax on the $100,000.
A new law that will be implemented on November 15, 2011 is yet another slap in the face to the American Homeowner regarding modifications.
- Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. To check whether a borrower has a Fannie Mae or Freddie Mac loan, go to MakingHomeAffordable.gov’s page on “Look up your loan“.
- Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
- Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
- Current loan-to-value (LTV) ratio must be more than 80%.
- Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.
More information is available from the Federal Housing Finance Agency (FHFA) on the agency’s website: www.fhfa.gov.
The reason why HARP is not good, is the same basic reason that HAMP (Home Affordable Modification Program) and the traditional modification is as follows:
It is strictly voluntary with all lenders; even though they say they participate. Of course, there are factors with the seller or borrower that have an affect on being put in a modification plan that eliminate many from it. This problem could be avoided if the banks would just lower the loan amount to the fair market value and a greater percent of people would have been able to keep their homes. Even a future shared equity with the lender would have been acceptable if the property was sold for a profit in the future. Few banks are offering this program as well.
In conclusion, it is obviously important that we talk ASAP to go over your situation. I have several associates waiting to help: accountants, attorneys, and credit repair company. If you’re moving on, getting back on track with your credit, staying in your home with an extended time without payments due in order to recoup finances, and most importantly receiving thousands from your bank at closing are all opportunities within your grasp! I am just a phone call away!
John | (619) 890-3648
The following is an excerpt of recent negotiations ongoing with ING bank for a short sale transaction. Here is an example of what certain banks are still doing to literally steal money from innocent people, let alone in this case, an active duty military stationed locally and getting ready to retire, who does not have large income. The new short sale law SB 458 has a controversial statement that was covered in a prior blog post (viewable here: “Short Sale Memoirs & New Laws“) regarding a contribution by a seller towards closing costs as being allowed. This fact has been confirmed by attorneys as being interpreted as a direct violation of the law due to the fact any contribution for closing costs, taxes or otherwise is directly increasing the balance of the net sale for the lender and lowering the loss for their loan, thus breaking the law.
In addition, this lender as you can see wants to also steal money from the agents, leading me to believe that the negotiating person will get a cut of whatever he brings in. This needs to completely stop as these lenders are making it hard for most agents to earn a living themselves for their families.
While this one is not over, it shows you what is partly going on in a short sale transaction, not including negotiation with buyers and other lien holders, that make the work even more cumbersome only to have your income reduced due to the greedy tendencies of lenders that are still out there.
I anticipate a successful result as long as this lender comes to their senses.
I welcome comments…..
ING’s letter to me:
I received the 2nd lien approval, and ran the numbers. Rather than going back and forth on negotiations, here is what I need to get this deal approved:
- $3,700 cash at closing from the seller to cover the property taxes and closing costs
o Yes, we are allowed to ask for this money, as it is not going to the mortgage or missed payments
- 4.5% commissions to help with part of the 2nd lien.
o As I said before, your listing agreement is not with ING DIRECT, and our max commissions are 5%. This is only a .5% reduction to help the deal get approved.
I will pay the 5% commissions if the $1,300 is added to the purchase price. I have been doing this job for a while, and knows what my credit review committee needs to get a deal approved. This terms are it. Assuming all parties agree, I can finish the file and have a decision for you in a few business days.
And my reply:
The seller will not be bringing any contribution to the table. I have already stated that. Any difference in costs, including commission contribution that ING refuses to pay or absorb will have to be covered by the buyer and if the buyer refuses, then I will have to find another buyer to pay that or the property will go to foreclosure.
Any contribution by the seller can be interpreted as a contribution to the loan and this has been confirmed by numerous attorneys. You are directly taking advantage of military personnel that has sacrificed his life for 20 years for our country, besides if the property goes to foreclosure, there is no recourse on this loan by ING, only more losses. No other lien holder in a short sale has ever done this to a United States military personnel borrower. You and ING are now crossing the forbidden line of respect for our military. I hope you cause ING to reverse their stance in this case. You have a borrower trying to do a good thing by selling the property early to avoid further losses to the bank only to get penalized for it.