Using the Bankruptcy Cram Down to Save Investment Property

Bankruptcy Attorney Mortgage Real Estate Cram Down Ch. 13

Ch. 13 Bankruptcy can provide the principal reduction and debt restructuring that can help save investment properties.

Many clients come in to my office seeking assistance with modifying their investment property mortgages. The first question I am usually asked is “will the bank reduce my principal down to what the property is worth?” The answer is that meaningful principal forgiveness is very rarely offered in conventional “HAMP” or “Proprietary” modifications. Unfortunately, this results in investment properties becoming unaffordable and impossible to maintain. However, these clients are often amazed when I advise them that they can cram the mortgage loan amount down to the fair market value of the property in Ch. 13 Bankruptcy.

A “cramdown” in a Chapter 13 bankruptcy enables the borrower to reduce the principal balance of a mortgage loan down to the actual market value of that property. While this Chapter 13 cram down may be utilized to save a car, boat, or other property, the benefits are best realized in saving investment real property. The catch is that most courts require that the balance be paid off in the 5-year Ch. 13 payment plan. However, there may be exceptions and an attorney should be consulted to determine and explain your options.

For those borrowers in South Florida who may benefit from and are considering the cram down, the time is now for doing so because property values in Broward & Palm Beach counties have been rebounding substantially in recent months. As the values go up, so does your potential balance under the Ch. 13 cram down. Also, the bankruptcy case can be filed and initiated at any point; whether you are current on the mortgage or in foreclosure.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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FHA Mortgage Applicants with Recent Foreclosures Offered a Pass

Bankruptcy, Loan Modification, Short Sale, Foreclosure Attorney

FHA offers a new program to help otherwise eligible borrowers with recent foreclosure troubles qualify for FHA loans

The Federal Housing Administration has instituted a new program called “Back-To-Work-Extenuating Circumstances” to assist potential borrowers who faced financial hardship during the recession. This program, which began August 15th, 2013 provides a second chance for mortgage applicants who have experienced financial hardship such as unemployment or a severe reduction in income beyond the borrower’s control. This program is designed to assist borrowers with a recent history of foreclosure, judgment, short sale, bankruptcy, loan modification, or deed-in-lieu by acknowledging that their credit history may not fully reflect their ability or propensity to repay a mortgage. Prospective borrowers that have experienced an economic event and can document that the event was out of their control, that they have recovered, and that they have completed housing counseling can apply for an FHA-insured mortgage that will allow up to 96.50% financing.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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New Foreclosure Cases Down from May 2012

Florida Foreclosure Attorney

New Foreclosure Filings in Palm Beach County are down from this time last year

According to the Clerk & Comptroller’s office, new foreclosure filings in Palm Beach County have dropped when compared with June 2012 and May 2013.  Last June Palm Beach County had 1,249 new cases while this June saw only 1,001 new filings, a 19.9 percent decrease.  New filings also decreased 6.2 percent in June compared with May of this year.  According to Clerk Bock, “In June we saw the highest number of deeds recorded with us since June 2006, and most mortgages recorded with us since November 2007.”

June 2013 showed 7,550 deeds recorded, up 30 percent from the 3,654 recorded in June 2012.

There were 5,294 mortgages recorded in June 2013, up 45.2 percent from June 2012.  All these numbers reflect the stabilization of the local real estate market.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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Florida Remains a Leader in Nationwide Foreclosure Statistics

Foreclosure Attorney Foreclosure Defense Lawyer

Florida is still leading the nation in most foreclosure statistics

Florida remains tops in the nation for the highest percentage of distressed homes and the number of completed foreclosures, a new report has found. The state’s foreclosure inventory (properties in some stage of foreclosure) stood at 8.6% of all mortgaged homes in June, real estate data provider CoreLogic said Tuesday.

While that rate is down from a revised 8.8% in May and from 11.5% in June of last year, it is still more than three times the national average. A total of 107,000 homes in Florida underwent foreclosures in the 12-month period ended in June, CoreLogic said. That was 35,000 more than in the No. 2 state, California.

Within Florida, the Tampa-St. Petersburg-Clearwater region posted the highest foreclosure inventory, at 9.3%, which also ranked it among the nation’s top 25 metro areas. Still, the figure was down from 12.3% in the same period last year.

Orlando-Kissimmee-Sanford was second-highest in Florida, at 8.6% of all mortgaged homes. Nationwide, 2.5% of all mortgaged homes were in some stage of foreclosure in June, compared with 3.4% one year earlier. A total of 701,959 foreclosures were completed in the U.S. in the past year, with 15.3% of that total in Florida.

But while the numbers carried an ominous tone (an estimated 1 million U.S. homes were in foreclosure in June) CoreLogic also noted that the total level of distressed homes was down 28% from 1.4 million homes a year ago.

Moreover, completed foreclosures totaled 55,000 in June, 13,000 fewer, or 19%, than the year-ago period.

“Completed foreclosures continued to drop for the 19th straight month,” said CoreLogic president Anand Nallathambi. “The improvement is broad-based, with 49 states posting a year-over-year decline in foreclosure rates in June. But CoreLogic stopped short of declaring the housing industry completely recovered. “The housing market is clearly on the mend, but we expect the ultimate conclusion of the present housing down cycle to be another several years away,” Nallathambi said.

After Florida, the highest foreclosure inventories were found in New Jersey at 6%, New York at 4.8%, Connecticut at 4.2% and Maine at 4.1%. Wyoming was lowest at 0.5%, with Alaska at 0.6%, North Dakota and Nebraska at 0.7 % and Colorado at 0.8%.

If you have questions about foreclosure, loan modification, bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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Former Miami Dolphins QB Daunte Culpepper Surrenders Florida House in Foreclosure

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Florida native Daunte Culpepper has surrendered his house to SunTrust bank in lieu of Foreclosure

Daunte Culpepper’s 2006 signing with the Miami Dolphins was so disastrous that the repercussions are still being felt. In a foreclosure case, the former NFL quarterback has lost a home he bought for about $3.6 million back when he was traded to the Dolphins. He surrendered the nearly 10,000-square-foot home to SunTrust Bank back in April in lieu of foreclosure, Broward County court records show, and the bank dropped its lawsuit against the three-time Pro Bowler earlier this month. The bank cited $3 million in debt in court papers, which list a home in Weston, Fla., as Culpepper’s current residence.

After growing up in Ocala, Fla., and playing for the University of Central Florida, Culpepper became a star with the Minnesota Vikings, leading the team to the NFC championship game in 2000, his first as a starter. But a serious knee injury derailed his Vikings career in 2005, and he was traded to the Dolphins in 2006.

Though his return to his home state was celebrated, Culpepper failed to live up to the eight-year deal worth nearly $60 million, struggling in his comeback from the knee injury and adding a shoulder ailment as well. Things got ugly off the field between Culpepper and the Dolphins, with the team trading for quarterback Trent Green the next off-season and Culpepper asking for and eventually receiving his release. He spent three more years in the NFL, with the Oakland Raiders and Detroit Lions, and last played for the United Football League’s Sacramento Mountain Lions in 2010.

If you have questions about foreclosure, loan modification, bankruptcy, or short sale, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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Tips for Foreclosure & Short Sale Buyers

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Tips for Buyers of Short Sale or Foreclosure Properties

After experiencing years of depression, Florida’s housing market is returning and contains many homes that are being marketed as either short-sales or foreclosures.  For anyone interested in potentially purchasing one of these homes, the following information is critically important.

First is the condition and price of the home.  Since a foreclosure occurs because the home owner stopped paying their mortgage, they were likely unable to afford to maintain the home as well.  This could mean the property needs major repairs, such as a new roof, which can be quite costly to repair.  Foreclosures are normally sold “as-is” with no guarantees from the seller, usually the bank that foreclosed on the mortgage.  A home being sold as a short sale will likely be in better condition than a foreclosed property since the owner is still living in and maintaining the property whereas a foreclosure may have been sitting vacant for a year or more.

Other factors that differ between foreclosures and short sales are the price and time needed to close.  Foreclosures generally happen faster than short sales and are priced lower because the home may need major repairs.  Short sales are often priced higher than foreclosures, but unless the mortgage holder has already agreed to the selling price it will still need to be approved before the title can be transferred.  It can take up to 6 months to be approved and then there is a large amount of paperwork the seller must complete to prove to their mortgage holder that they are even eligible for a short sale.  You could wait for a year to purchase a short sale and then still lose the property due to the current owner’s financial situation.  Foreclosures may close quicker because the property is already vacant and the bank is losing money every day they are in possession of the property.

Finally, the closing costs and financing options available for short sales and foreclosures vary widely.   Some lenders may require foreclosed properties to be repaired before they will offer a mortgage, but since you do not yet have the mortgage you would essentially be repairing someone else’s home.  Short sales can be very time consuming and loan documents may even expire and need to be updated before being submitted.  Every seller is different, but it is important to remember when purchasing a distressed home that the seller neither has nor wants to spend money on the property or the closing costs so you must be prepared to do so for the sale to occur.

If you have questions about foreclosure, loan modification, short sale, bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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New Foreclosure Cases in Palm Beach County Up 10% from April, Down 21% from May 2012

Palm Beach County FOreclosure Defense Attorney, Boca Raton Foreclosure Attorney, Delray Beach Foreclosure Attorney, Lake Worth Foreclosure Attorney, Boynton Beach Foreclosure Attorney

Palm Beach County Foreclosure Statistics

The latest statistics for Palm Beach County’s foreclosure filings are in.  There were 1,067 new cases filed during May 2013, down 21 percent from May 2012 which had 1,356 new filings.  The amount of new cases for May was only 45 less than those filed in February of this year.  There were 962 new cases filed in April, 10 percent less than May of this year and 21.3 percent less than May 2012.  According to Palm Beach Clerk Sharon Bock, this is the fourth straight month that we’ve seen fewer foreclosures filed compared with the previous year.  She also indicated that case numbers, at least for now, are stabilizing.

Newly recorded mortgages and deeds are another condition indicator for the Palm Beach real estate market.  This past May the Clerk’s office reported 6,124 deeds, a 12.3 percent decrease from the 6,985 recorded in April.  This is only a 0.33 percent increase from the 6,104 deeds that were recorded in May 2012.  Mortgage numbers also decreased from April to May, from 4,548 to 3,522 or 22.6 percent.  In May 2012 there were 3,206 new mortgages recorded representing a 9.9 percent increase to May 2013.

The results of foreclosure sales for May were 886 properties sold according to the Grant Street Group, with 667 sold back to the plaintiff.  The remaining 219 were sold to a 3rd party purchaser, or someone other than the bank or mortgage company who owned the mortgage.   Out of 1,353 properties listed for sale, 466 sales were canceled.  The rate for May was 34.4 percent, down from 40 percent in April.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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Florida Foreclosure Bill Passes Legislature

Florida Foreclosure Speedy Foreclosure Rocket Docket Foreclosure Attorney Foreclosure Lawyer

The Florida House & Senate have voted in favor of passing the Speedy Foreclosure Bill which will streamline and fast-track many Florida foreclosure cases.

Despite being defeated multiple times in past legislative sessions, the bill designed to speed up the foreclosure process passed the Senate on Friday, May 3rd with a 26-13 vote, largely along party lines. The bill has already passed the House and will go to Governor Rick Scott next for final approval. Concerns about the number of foreclosure cases clogging up the court system have been an ongoing issue for years. Currently, there are an estimated 352,890 cases statewide that this new bill will help push along. In addition to reducing the time a bank has to recover the mortgage balance on the foreclosed property from the past owner, this bill allows homeowners’ associations to help push the cases through the court system.

Critics still point to examples of lender fraud as well as obstruction of due process by forcing a defense before the defendant has enough time to build their defense as reasons to not fast-track foreclosure cases, but concerns about maintaining Florida’s real estate recovery won out. It has been more than three years since the official end of the Great Recession and both home prices and new construction are on the rise. Additionally, sympathy for delinquent mortgagees may be declining. Despite the “robo-signing” scandal where banks and law firms produced falsified documents used to foreclose on properties, the new legislation prevents a homeowner who loses a foreclosure case from regaining the property even if there was fraud present in the case. Representatives claim more harm than good would come from not including this provision because otherwise timely payers could be forced out of their homes for the benefit of the non-paying ex-owner. According to Republican Senator Jack Latvala, the sponsor of the bill, Florida’s real estate market will not get back to normal until the backlog of cases has been handled.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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Lucky Few Floridians Get $125,000 from Foreclosure Settlement, Most to Get $300

Independent Foreclosure Review Rust Settlement - Speak with a Florida FOreclosure Attorney

Many Florida Homeowners are receiving checks from Rust Consultants relating to the Independent Foreclosure Review

The first wave of checks from the $3.6 billion dollar federal settlement will be mailed this Friday according to the Office of the Comptroller of the Currency and Board of Governors of the Federal Reserve System, with hundreds of thousands of them going to Florida residents.  Out of the 4.2 million borrowers who will be receiving settlement checks, a lucky 1,100 residents nationwide will receive the maximum payout of $125,000 and about 2.3 million borrowers will receive the $300 minimum.  The 1,135 borrowers receiving the maximum were primarily those protected by the 2003 Servicemembers Civil Relief Act.  Another 50 or so borrowers are receiving the maximum because their home loans were never in default to begin with.

The announcement made Tuesday, April 9th was the first with information about how the funds would be disbursed and critics are calling it both nonsensical and capricious.  Borrowers who did apply for the Independent Foreclosure Review often received double the amount of those who didn’t to “acknowledge the efforts they made to request a review” according to Bryan Hubbard, the spokesman for the Office of the Comptroller of the Currency.

As of the January 1st deadline, just 500,000 borrowers of the 4.2 million who are eligible had applied for a review.  According to Nova Southeastern University law professor Robert Jarvis, the Independent Foreclosure Review and the current settlement are the worst possible processes to compensate borrowers.

Those eligible for payment include borrowers who were in foreclosure during 2009 or 2010 with loans serviced by the 13 lenders included in the settlement.  The following companies and their affiliated mortgage companies are included in this settlement: America’s Servicing Co, Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC Mortgage Corporation, Goldman Sachs, HFC, HSBC, Litton Loan Servicing LP, Metlife Bank, Morgan Stanley, National City, PNC, Saxon Mortgage, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual, Wells Fargo, and Wilshire Credit Corporation.  The following servicers are not participating in the Independent Foreclosure Review Payment Agreement: Everbank/EverHome Mortgage Company, GMAC Mortgage, Financial Freedom, and OneWest Bank/IndyMac Mortgage Services.  The Independent Foreclosure Review process is continuing with these companies.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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Loss Mitigation Programs Overview

Loan Modification Programs, Loss Mitigation Programs, Short Sale Programs

The “Alphabet Soup” of Loss Mitigation Programs currently available can be confusing and overwhelming. This article makes an attempt at outlining and simplifying the list of programs.

            In the wake of the housing crisis, lawsuits against lenders, and settlements between government entities and some of the world’s biggest banks, an alphabet soup of loss mitigation programs has emerged and re-emerged. To help make sense of all of the available programs and how they relate to your situation, I have prepared the below outline which describes substantially all of the major programs being offered on residential loans today. All but one of these programs are designed for the borrower that wants to keep their property but needs assistance to do so. The last program on the list is designed for borrowers who either prefer not to keep their property or have accepted that there is no way for them to do so and are simply interested in avoiding losing the property in a foreclosure sale. I hope this outline makes the options more digestible and easier to understand.

 Programs Designed for Borrowers Wanting to Keep their Home

I. Home Affordable Modification Program (HAMP)

  1. Overview
    1. If you are not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP®). HAMP may lower your monthly mortgage payments in order to make them more affordable and sustainable for the long-term.
    2. If you currently occupy your home as your primary residence, we encourage you to contact your mortgage servicer as soon as possible to begin the HAMP evaluation process.
    3. In an effort to continue to provide meaningful solutions to the housing crisis, effective June 1, 2012, the Obama Administration expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include:
      1. Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it.
      2. Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
      3. Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
      4. Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.
    4. If you are a homeowner who falls into any of these criteria, you may be eligible for a modification under the expanded criteria.
  2. You may be eligible for HAMP if you meet all of the following criteria:
    1. You obtained your mortgage on or before January 1, 2009.
    2. You owe up to $729,750 on your primary residence or single unit rental property
    3. You owe up to $934,200 on a 2-unit rental property; $1,129,250 on a 3-unit rental property; or $1,403,400 on a 4-unit rental property
    4. The property has not been condemned
    5. You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify).
    6. You have sufficient, documented income to support a modified payment.
    7. You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

 

II. Principal Reduction Alternative (PRA)

  1. If your home is currently worth significantly less than you owe on it, MHA’s Principal Reduction Alternative (PRA) was designed to help you by encouraging mortgage servicers and investors to reduce the amount you owe on your home.
  2. You may be eligible for PRA if:
    1. Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
    2. You owe more than your home is worth.
    3. You occupy the house as your primary residence.
    4. You obtained your mortgage on or before January 1, 2009.
    5. Your mortgage payment is more than 31 percent of your gross (pre-tax) monthly income.
    6. You owe up to $729,750 on your 1st mortgage.
    7. You have a financial hardship and are either delinquent or in danger of falling behind.
    8. You have sufficient, documented income to support the modified payment.
    9. You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
  3. Participating servicers are required to develop written standards for PRA application. The largest servicers include Bank of America, CitiMortgage, JP Morgan Chase, and Wells Fargo.

 

III. Second Lien Modification Program (2MP)

  1. If your first mortgage was permanently modified under HAMP and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage as well, through MHA’s Second Lien Modification Program (2MP). 2MP works in tandem with HAMP to provide comprehensive solutions for homeowners with second mortgages to increase long-term affordability and sustainability. If the servicer of your second mortgage is participating, they can evaluate you for a second lien modification.
  2. You may be eligible for 2MP if you meet all of the following criteria:
    1. Your first mortgage was modified under HAMP.
    2. You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
    3. You have not missed three consecutive monthly payments on your HAMP modification.
  3. Servicers participating in 2MP are:
    1. Bank of America, NA
    2. BayviewLoan Servicing, LLC
    3. CitiMortgage, Inc.
    4. Community Credit Union of Florida
    5. GMAC Mortgage, LLC
    6. Green Tree Servicing LLC
    7. iServeResidential Lending, LLC
    8. iServeServicing, Inc.
    9. J.P.MorganChase Bank, NA
    10. NationstarMortgage LLC
    11. OneWestBank
    12. PennyMacLoan Services, LLC
    13. PNC Bank, National Association
    14. PNC Mortgage
    15. Residential Credit Solutions
    16. ServisOne Inc., dbaBSI Financial Services, Inc.
    17. Wells Fargo Bank, NA

 

IV. FHA Home Affordable Modification Program (FHA-HAMP)

  1. FHA, VA and USDA all offer mortgage modification programs for struggling homeowners designed to lower monthly mortgage payment to no more than 31 percent of the homeowner’s verified monthly gross (pre-tax) income — making monthly mortgage payments much more affordable. If you have a loan that is insured or guaranteed by the Federal Housing Administration (FHA), you may be eligible for a program offered through that government agency.
  2. For information on FHA and participating servicers, call FHA’s National Servicing Center at (877) 622-8525.

 

V. USDA & Veteran’s Affairs Home Affordable Modification (VA-HAMP)

  1. FHA, VA and USDA all offer programs for struggling homeowners that strive to lower your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income — making monthly mortgage payments much more affordable.
  2. If you have a loan that is insured or guaranteed by the Department of Veterans Affairs (VA), you may be eligible for a program through that government agency.

 

VI. Second Lien Modification Program for Federal Housing Administration Loans (FHA-2LP)

  1. If you have a second mortgage and your first mortgage servicer agrees to participate in FHA Short Refinance, you may be eligible to have your second mortgage on the same home reduced or eliminated through the FHA Second Lien Program (FHA2LP). If your second mortgage servicer agrees to participate, the total amount of your mortgage debt after the refinance cannot exceed 115 percent of your home’s current value.
  2. You may be eligible for FHA2LP if you meet the following criteria:
    1. You are eligible for FHA Short Refinance.
    2. You obtained your mortgage on or before January 1, 2009.
    3. You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.
  3. Program Availability:
    1. If the servicer of your first mortgage agrees to an FHA Short Refinance and you have a second mortgage on the same home, the first mortgage servicer will work with the second mortgage servicer to reduce or eliminate the second mortgage.
    2. More than a dozen mortgage servicers have agreed to review homeowners for FHA2LP when the first mortgage servicer has agreed to a refinance under FHA Short Refinance.

 

VII. Home Affordable Refinance Program (HARP)

  1. If you’re not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through the Home Affordable Refinance Program (HARP). HARP is designed to help you get a new, more affordable, more stable mortgage. HARP refinance loans require a loan application and underwriting process, and refinance fees will apply.
  2. You may be eligible for HARP if you meet all of the following criteria:
    1. The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
    2. The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
    3. The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
    4. The current loan-to-value (LTV) ratio must be greater than 80%.
    5. The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
  3. If your loan is owned by Freddie Mac, you may check your potential eligibility for HARP here.
  4. If your loan is owned by Fannie Mae, you may check your potential eligibility for HARP here.

 

VIII. FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)

  1. If you’re not behind on your mortgage payments but owe more than your home is worth, FHA Short Refinance may be an option that your mortgage servicer will consider. FHA Short Refinance is designed to help homeowners refinance into more affordable, more stable FHA-insured mortgage. If your current lender agrees to participate in this refinance, they will be required to reduce the amount you owe on your first mortgage to no more than 97.75 percent of your home’s current value.
  2. You may be eligible for FHA Short Refinance if you meet the following criteria:
    1. Your mortgage is not owned or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or USDA.
    2. You owe more than your home is worth.
    3. You are current on your mortgage payments.
    4. You occupy the house as your primary residence.
    5. You are eligible for the new loan under standard FHA underwriting requirements.
    6. Your total debt does not exceed 55 percent of your monthly gross income.
    7. You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

 

IX. Home Affordable Unemployment Program (UP)

  1. If you are unemployed and depending on your situation, MHA’s Home Affordable Unemployment Program (UP) may reduce your mortgage payments to 31 percent of your income or suspend them altogether for 12 months or more.
  2. You may be eligible for UP if you meet all of the following criteria:
    1. You are unemployed and eligible for unemployment benefits.
    2. You occupy the house as your primary residence.
    3. You have not previously received a HAMP modification.
    4. You obtained your mortgage on or before January 1, 2009.
    5. You owe up to $729,750 on your home.
  3. More than 100 HAMP-participating servicers can offer UP to eligible unemployed homeowners.
  4. You may be required to make a partial payment, not to exceed 31 percent of your verified monthly gross (pre-tax) income including unemployment benefits.
  5. You will be evaluated for a HAMP mortgage modification at the end of your UP forbearance period if it is available at that time.
  6. UP is not currently available for homeowners with mortgages held by Fannie Mae and Freddie Mac; however, both have their own forbearance arrangements for unemployed homeowners. Please contact your mortgage servicer to see if you are eligible.

 

X. Hardest Hit Fund (HHF)

  1. Early in 2010, Treasury announced that the Hardest Hit Fund® would provide more than $7.6 billion in aid for homeowners in states hit hardest by the economic crisis. Since then, state housing finance agencies have used the fund to develop programs that stabilize local housing markets and help families avoid foreclosure. Hardest Hit Fund programs complement the Making Home Affordable Program but are not limited to homeowners eligible for Making Home Affordable.
  2. Hardest Hit Fund programs vary state to state, but may include:
    1. Mortgage payment assistance for unemployed or underemployed homeowners
    2. Principal reduction to help homeowners get into more affordable mortgages
    3. Funding to eliminate homeowners’ second lien loans
    4. Help for homeowners who are transitioning out of their homes and into more affordable places of residence.
  3. For more information, visit Florida’s Hardest Hit Fund page or contact your state housing finance agency.

 

XI. FHFA Streamlined Modification Initiative (SMI)

  1. The SMI has been designed to curb losses to the government-owned Fannie & Freddie by letting borrowers that are behind 3 months or more bypass the notorious red tape and associated with typical loan modifications. However, applicants may still provide documents relating to their financial hardship to save even more money.
  2. According to the FHFA, the Streamlined Modification Initiative (SMI) will begin July 1, 2013 and expire on August 1, 2015.
  3. In order to qualify, applicants must be at least 90 days late on their mortgage; have a loan that was first made on or before July 1, 2012; and have less than 20% equity in their home.
  4. The program is offering fixed interest rates and payment terms of up to 40 years. Some “underwater” borrowers who owe more than their homes are worth will not be required to pay interest on at least some portion of the principal balance.

 

Program for Borrowers Not Interested or Not Able to Keep their Home

Home Affordable Foreclosure Alternatives Program (HAFA)

  1. If you can’t afford your mortgage payment and it’s time for you to transition to more affordable housing, the Home Affordable Foreclosure Alternatives (HAFA) program is designed for you. HAFA provides two options for transitioning out of your mortgage: a short sale or a Deed-in-Lieu (DIL) of foreclosure. In a short sale, the mortgage company lets you sell your house for an amount that falls “short” of the amount you still owe. In a DIL, the mortgage company lets you give the title back, transferring ownership back to them.
  2. In either case, HAFA offers benefits that make the transition as favorable as possible:
    1. Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls “short” of the amount you still owe. The deficiency is guaranteed to be waived by the servicer.
    2. In a HAFA short sale, your mortgage company works with you to determine an acceptable sale price.
    3. HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
    4. When you close, HAFA may provide $3,000 in relocation assistance.
  3. You may be eligible for HAFA if you meet all of the following criteria:
    1. You have a documented financial hardship.
    2. You have not purchased a new house within the last 12 months.
    3. Your first mortgage is less than $729,750.
    4. You obtained your mortgage on or before January 1, 2009.
    5. You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.
  4. HAFA is available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac or serviced by over 100 HAMP participating mortgage servicers.

 

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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