Borrowers in distress who seek to work with their servicers and submit information to their servicer can be evaluated for foreclosure alternatives such as a loan modification, a short sale or a deed-in-lieu of foreclosure.  If one of the foreclosure alternatives is able to be worked out, the borrower may be eligible for a new mortgage loan in as little as three years depending on the circumstances.

For more information or to read the full press release visit Fannie Mae’s website at http://fanniemae.com/newsreleases/2010/5071.jhtml.

With community awareness and public education as their main focus, the Network hopes to bring forward increased reports of those who have fallen victim to these scams.  They have devised an online national database on their site www.preventloanscams.org to help collect and compile vital information pertaining to these scams.  Homeowners can easily report complaints directly online and all collected information is shared with federal, state and local authorities to help uncover patterns of fraud and support law enforcement efforts against these con artists.  Each registering homeowner will also have access to invaluable information via email newsletters and online updates on latest trends and tips to identify and avoid these fraudulent programs. 

For additional information on the Loan Modification Scam Prevention Network, any of its participating organizations, or for detailed descriptions of programs and services they provide, please visit their site at www.preventloanscams.org.

Previously, California homeowners were subject to tax implications for the deficit acquired while processing a foreclosure, short sale or loan modification. The amount of debt a lender cancelled or forgave was reported on a 1099-C and required to be reported as taxable income for the troubled homeowners.

The new state law allows taxpayer’s of qualified residences to exclude the cancelled mortgage debt from their income through 2012. The limits are up to $500,000 or $250,000 for married/registered domestic partners filing separately. Unfortunately, the act does not cover debt forgiven on a second home or business property.

If you are a qualified homeowner and have already filed your taxes, you may file a Form 540X – Amended Individual Income Tax Return, to take advantage of the new Act. For more information on how to amend your current taxes or for more details on the guidelines and qualification of the Mortgage Forgiveness Debt Relief Act, please visit the Franchise Tax Board’s website at www.ftb.ca.gov.

The new program will extend a credit to qualified home buyers equal to the lesser of 5% of the purchase price or $10,000; payable in equal amounts over a 3 year period.  Of the $200 million allotted to this program, $100 million will be allocated to first time home buyers and the other $100 million to any buyer purchasing a new or unoccupied home.   There is a requirement that the buyer be at least 18, in no way related to the seller, and must live in the home for at least 2 years or forfeit the credit.

Supporters anticipate this new program to be as successful as the first homebuyer tax credit that began in March 2009.  Because of popular demand the former program’s funding was exhausted by June; months before the expected program expiration date. 

For a state struggling with a budget crisis, the governor was optimistic about this new bill commenting that it will stimulate “the housing industry, creating jobs for thousands of Californians.”

For more information and additional details on the new home buyer tax credit visit http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml.

The program, with plans to start this May, will allow a homeowner to reduce their mortgage balance back down to equal 100% of the value.  BofA will first set aside a portion of the mortgage principal balance as an interest-free principal forbearance.  They will then allow for that balance to be forgiven principal after five years, provided that they do not default on any payments; allowing up to 30% in mortgage principal forgiveness.

Although borrowers interested in taking advantage of the program must also qualify for Obama’s mortgage loan modification program, Bank of America estimates that about 45,000 customers will qualify and will start sending notification to those who meet preliminary qualification guidelines. 

For more information on the new program please visit their website at http://homeloans.bankofamerica.com/en/service-and-support.html.

Unfortunately, with the rising amount of loan defaults, collection agencies are on the move to purchase these unpaid home equity lines and second mortgages at drastically discounted rates in hopes of catching up with these borrowers down the line.  With some states allowing years to file their claims, defaulted homeowners are receiving judgments, wage garnishments and sometimes levies from these collection agencies years after losing their homes; causing financial destruction and forcing many to resort to filing bankruptcy.

Luckily, in many states such as California, troubled homeowners are exempt from collections on defaulted “first-lien” loans associated with a foreclosure or short sale.  Many states are adopting laws to protect homeowners who refinanced to improve or help keep their homes.  The federal government is also creating new short sale programs to help prevent collections from second mortgage lenders once the short sale is final.

However, those homeowners with second mortgages, home equity lines, and/or cash-out refinances are at risk.  Be aware of the repercussions BEFORE they hit.  Consult with a local nonprofit housing counselor to assess your situation and all options available to you.

To read the full article, visit RISMedia at http://rismedia.com/2010-03-22/years-after-loan-default-homeowners-may-still-owe/.

 Consumers can now rest assured that there is help on their side.  In a joint effort to educate consumers and put an end to these rescue scams, organizations including Fannie Mae, Freddie Mac, the Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee) and NeighborWorks America, among others, have formed the Loan Modification Scam Prevention Network.  In conjunction with key governmental agencies such as U.S. Department of Housing and Urban Development (HUD), Federal Trade Commission, the U.S. Department of Justice, the FBI, U.S. Treasury Department and state Attorneys General offices nationwide, the Loan Modification Scam Prevention Network has launched a new website, www.preventloanscams.org, as a one stop informational site regarding all loan modification and foreclosure rescue scams.  Consumers can directly report a scam online and have the information immediately relayed to the appropriate authorities for investigation.  They also provide “real life” stories of individuals, up-to-date information and current events, and local resources all relative to the consumer’s specific needs.  The Network estimates reaching 50,000+ consumers affected by these scams.

 For more information please visit their site at www.preventloanscams.org.

The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury’s website.

Guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders.

The incentives, first announced in May, expand on the government’s Home Affordable Modification Program, known as HAMP, that has seen limited success in lowering payments for distressed homeowners. The Treasury earlier on Monday stepped up pressure on mortgage companies to make permanent the 650,000 trial modifications they have started.

“While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve” or offer a modification, the Treasury said in its announcement.

Financial incentives for completing short sales or similar deed-in-lieu transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses.

Short sales are favored by real estate agents and community groups over foreclosure because they can preserve the borrower’s credit rating and leave the property in better condition than when a homeowner is evicted. While primary lenders typically realize steep losses, their recovery is typically far better than under foreclosure.

But short sales have been frustrating for borrowers and real estate agents, often hung up by negotiations with multiple lien holders and mortgage insurance companies. Real estate agents have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.

Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.

It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.

In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

Second lien holders in recent months have begun demanding more money from the first lender, seller, buyer or agent in exchange for releasing their claim, agents have said. Because primary lenders would face larger losses in a foreclosure, some subordinate lenders have felt empowered, the agents said.

The largest second-lien holders are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc.

Second lien holders may proceed with a short sale outside of the Treasury program, if they felt the cap was too low, a Treasury official said in October.

“If there was a short sale program that didn’t recognize the second lien holder position, it could have pretty damaging consequences for the industry,” Sanjiv Das, chief executive officer of CitiMortgage, said in an interview last week.

“Please Note: The borrower must have a current or eminent financial hardship and the loan must be delinquent.”

For more information on their requirements or to view the entire message in its entirety, visit their site at https://homeloanbusiness.bankofamerica.com/ShortSaleInformation.aspx.

For more information and additional guidelines and qualifications, follow the link to the IRS website:

http://www.irs.gov/newsroom/article/0,,id=206291,00.html