Newly Proposed Foreclosure Law

Under a bill recently proposed to Congress, people who are far behind on their mortgage can withdraw from their 401(k) to save their home without paying any penalties.

According to the language in the “HOME ACT,” the proposed bill allows homeowners to withdraw money from a retirement plan penalty-free (but not tax free) to make mortgage payments toward his primary residence up to $50,000 or one-half of the present value of one’s 401(k) account (whichever is smaller). This will be allowable as long as the funds are used for that purpose within 120 days of withdrawal. This sounds like a great idea that could potentially help millions of homeowners who are behind on their payments or struggling with a recent job loss.

However, you can look at the bill another way.

The option to withdraw from a retirement plan may just be a postponement of the inevitable. It may do little or no help at all to the millions who are hopelessly underwater, and who may eventually lose their home. Is this bill really about helping the millions of American’s facing impending foreclosure? Or is this another attempt to a bailout that we, as taxpayers, will end up paying for when folks who opt into this plan will eventually need help because their retirement funds have been depleted?

What do you think? Would you ever do this, or would you prefer a Short Sale as a solution?

Ihor Pochay
BROKER/SHORT SALE & REO SPECIALIST
Team Pochay Realty
C (562) 334-7393
ihorpochay@hotmail.com
TeamPochayRealty.com
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MARS Mortgage Assistance Relief Services Disclosure

Homeowners who are facing foreclosures are willing to do and listen to any company that will say we can help you stop foreclosure, modify your home and/or conduct the Short Sale. There are many schemes out there, where some individuals and companies are taking advantage of distressed homeowners and are not performing the acts that they promised.

Recently, the Federal Trade Commission (FTC) issued a Rule to fix the unfair and deceptive practices associated with mortgage assistance relief services - Mortgage Assistance Relief Services (MARS) Rule. Here some points from this rule:

1. It's illegal to charge upfront fees. The service must be performed first and the homeowner must agree to the offer from the bank.

2. Clear and prominent disclosure of information before signing people up for services is mandatory (i.e., total cost, stopping of services at any time, that the company is associated with the government, etc.).

3. Cannot advise either to pay or not to pay the mortgage. The homeowners must be told that failure to make mortgage payments may result in losing the house and damage to their credit.

4. It is illegal to advise homeowners to stop communicating with their lenders and services.

5. No misrepresentation of services is allowed. Under this Rule, it is prohibited to make claims that are false or misleading.

6. Must disclose to customers if they receive an offer of mortgage relief from a lender or service. The companies or individuals are required to provide written notice to customers from the lender or service describing all the facts. It’s important to note that the customer must be advised that if they do not like the offer from the service or lender, they can reject it and will not have to pay for the services.

This rule applies to any company and or individuals who offer mortgage assistance relief services (Short Sales, Loan Modification, etc). If you have any questions in regards to this Rule or need to Short Sale your house, please call me at 562-334-7393.

Ihor Pochay
BROKER / Short Sale & REO Specialist
Team Pochay Realty
Cell: (562)334-7393
ihorpochay@hotmail.com
www.TeamPochayRealty.com
www.shortsaleyourhome.blogspot.com
DRE# 01772584

Short Sales and Debt Forgiveness Act

It's the end of 2010 and all the homeowners who completed a Short Sale, Foreclosure or Loan Modification are wondering what to expect in regards to the tax returns. Well, first of all the difference between the loan amount and the sale price will be considered as the income to the homeowners that were involved in Short Sale, Foreclosure or Loan Modification Process. Example:

You borrowed $400,000 and your property is sold for $320,000. There will be a cancellation debt of $80,000. The lender, at the end of the year, will have to send the Form 1099-C (Cancellation of Debt) to the borrower, showing the amount of debt canceled if the forgiven amount $600 or more. The good news is that you may be able to exclude part or all of this income if:

1. The debt was qualified principal residence indebtedness;
2. You were insolvent immediately before the discharge;
3. The debt was canceled in a Title 11 bankruptcy case;
4. You have non-recourse loans.

This exclusion of debt became available after the Mortgage Forgiveness Act was signed in 2007 and extended until 2013. The Act allows you to exclude the income realized as a result of Loan Modification, Short Sale or Foreclosure. However there is a limit on the forgiven debt up to $2 million ($1 million if married, filed separately).

The homeowners will have to file Form 982 with they taxes in order for them to cancel some or all of the forgiven debt. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as result of foreclosure on your principle residence, you only need to complete lines 1e and 2 on the form 982. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2 and 10b. You can get the form by downloading from http://www.irs.gov/pub/irs-pdf/f982.pdf or calling at 1-800-829-3676 and requesting the form to be sent to you by mail (will take 7-10 days).

One more time, please, consult your tax professional or CPA while doing your taxes this year. If you need to Short Sale you property, please, give me a call at 562-334-7393.

Sincerely,

Ihor Pochay
Real Estate Broker/REO & Short Sale Specialist

Team Pochay Realty
Cell: (562)334-7393
ihorpochay@hotmail.com
www.MyRealtorIhor.com
http://shortsaleyourhome.blogspot.com/
DRE# 01772584

Home Owner Affordability and Stability Plan and Short Sales

President Obama signed a plan designed to help homeowners stay in their homes and avoid foreclosure. The three main points of the plan are as follows:

1). It will help homeowners refinance to lower their interest rate. The Loan to Value on the loan should be no more that 105%. So let’s assume the house was bought for $500,000 with the 1st Trust Deed as $400,000 and the 2nd Trust Deed is $100,000. If the value of the home dropped to $420,000 – the homeowner still can refinance as it is 105% of the first Trust Deed. If the Value dropped more than $420,000 – the homeowner will not be eligible to refinance. This section of the plan will help about 7-9 million borrowers refinance their homes.

2). The plan will help homeowners modify their loans. All the loans which were bought by FNMA and FDMAC can be modified (in today’s market it is 60% of all the loans). This section of the plan is designed to help approximately 4-5 million borrowers. The bank will modify the loan in the way that the new PITI (Principle+Interest+Taxes+Insurance) will be 38% and the bank and FNMA will split additional 7% of the costs and bring the PITI to 31%. If the loan is not held by any of the mentioned above investors, the borrower should contact their bank directly and try to work out some options. Borrowers should be aware of the many scammers working in the loan modification field. Make sure you hire someone with a license and do not pay any upfront fees for these services. At the end you can do it yourself.

3). This part of the plan is designed to make more than $200 billion available for people who are buying homes for the first time (first-time home buyers). This provides first-time home buyers with new mortgages that are very affordable, have low interest rates and tax credits that will be available to them at the end of the year – $8000 if they purchase a home between 2009-June 2010, and up to $18,000 – if they buy from a developer.

The borrowers who will not be able to qualify for these programs will still be able and encouraged by the banks to do a Short Sale or a Short Pay Off to avoid foreclosure.

This is just short break down of the plan. If you have any questions or need to see if you qualify to any of these programs or for a Short Sale program, you are more than welcome to contact me.

Ihor Pochay
Real Estate Broker/ Short Sale & REO Specialist
Team Pochay Realty
Cell: (562) 334-7393
ihorpochay@hotmail.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com

New Guidance for Short Sales

Beginning April 5, 2010 the lenders (who participate in Home Affordable Modification Program "HAMP") will have new guidance for conducting Short Sales and Deed-In-Lieu. The new guidance is part of the Home Affordable Foreclosure Alternatives Program (HAFA). Under this program the lenders:

1) Will not be able to require a cash contribution or promissory note from borrower;
2) Will no be able to pursue a deficiency judgment against the borrower;
3) Will use the borrower's financial and hardship information, collected in conjunction with HAMP program (the borrower will not have to resubmit these items);
4) Will send to the borrowers the pre-approval of short sale terms before the property is listed;
5) Will not be able to cut the REALTORS commission;
6) Will use standard processes, documents and timeframes;
7) Will provide financial incentives to borrowers, investors and services.

In order for the loan to qualify to the HAFA program, it needs to meet the following criteria:
- The property must be the borrower's principal residence;
- The loan must be the first lien mortgage, and must be originated on or before 01/01/2009;
- The current unpaid principle balance should be no more than $729,750;
- The total monthly mortgage payment should exceed 31% of the borrower's gross income;
- Mortgage is delinquent or it can be foreseeable.

As always, if you have any questions regarding this posting or other Short Sale/Real Estate topics, please feel free to call me or write me a quick e-mail.

Ihor Pochay
Realtor / Short Sale & REO Specialist
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 364-9005 Ext. 471
Fax: (909) 364-9262
ihorpochay@tarbell.com
http://www.myrealtorihor.com/
www.shortsaleyourhome.blogspot.com/
Twitter: @ihorpochay

Ten Reasons to Purchase a Short Sale Property

I’ve put together a list of 10 reasons why Buyers should consider purchasing a Short Sale home in today's market:

1). Great Value: Short Sale properties offer Buyers great prices. On average, these properties are 5%-15% below the market price!
2). Wider Selection: Most of the properties on the market today are Short Sales (65%-80%). In some areas, the percentage is even up to 90%. If Buyers consider Short Sale properties in the current market, they'll actually increase the chance to find the property that will match their needs.
3). Good Condition: The properties sold in Short Sale transactions will be in much better condition than the ones that are sold as REO (real estate sold by banks).
4). Credit of $8,000: If the Buyer purchase a Short Sale home before the end of November 2009, they will receive an $8,000 credit from the government!
5). Tax Relief: Buyers will also be able to deduct all interest, taxes and points from their taxes.
6). Pride of Home Ownership: No further explanation.
7). Reduce REO Inventory: Buyers purchasing Short Sale properties are in fact helping Sellers avoid foreclosure.
8). Negotiations: Buyers will have the ability to negotiate closing fees, home warranty fees and credits for repairs, etc.
9). Quicker Bank Approvals: The time to obtain Short Sale approval has been shortening. Some banks are able to approve Short Sale Approval Letters within 30 days.
10). Advantageous Edge: Banks are very motivated and willing to work with Buyers in order to avoid another foreclosure.

If you have any questions in regards to Short Sale transactions, I can be reached at (562)334-7393.

Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909) 364-9005 Ext. 471
Fax: (909) 364-9262
ihorpochay@tarbell.com
http://www.myrealtorihor.com/
http://www.shortsaleyourhome.blogspot.com/
Twitter: @ihorpochay

SHORT SALE PROPERTIES ARE ON THE RISE

There are more and more Short Sale properties on the market these days. In my market area (Chino Hills, Chino, Phillips Ranch, Diamond Bar) it is about 50% of all the sales. The inventory of the listings is very short. The banks are not releasing the REO properties (shadow inventory), and the government's incentive of $8,000 tax credit for first time home buyers creates a huge demand for properties including short sales.

Recently, I've listed short sale properties on the market and within a few days attracted more than 20 offers from home buyers. The homeowners who listed their properties as short sales are now seeing an opportunity to sell their homes at the current market price, and in some cases even above the market price.

On the other side, the U.S. Department of Treasury will provide a $1,000 incentive to a loan servicing company for every successful Short Sale. It will also offer $1,500 to a borrower to assist with relocation expenses. Also, many REALTORS are encouraged to do Short Sales knowing that the commission will not be reduced if the investor is Fannie Mae. So many factors lead to the increase of the Short Sale transactions in 2009. That will help the Lenders minimize their loss and also will help the borrowers to move on with their lives without going into Foreclosure.

Ihor Pochay
REALTOR / SHORT SALE & REO SPECIALIST
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com

Who Pays The Commission In A Short Sale Transaction?

Many homeowners do not want to Short Sale their homes simply because they think that they will have to pay commission to REALTORS. That is not true. In all cases, when there is a Short Sale transaction, the Lien Holder (Bank) will pay all the commission and all the expenses (taxes, seller’s escrow fees, etc), so homeowners will not have to spend any additional money from their own pockets.

The banks are very particular in regards to how much they will pay to REALTORS for the complete Short Sale transaction. If the Buyers and Sellers are represented by two different REALTORS, the banks usually will pay 5% for them to split. If the Buyers and Seller are represented by one REALTOR – 4% commission is most likely to be approved by the Bank, as they are trying to cut the cost and get as much out of the transaction as possible, and in some cases it is a policy of the Bank.

However, if the investor of the loan is FNMA or Freddie Mac, the REALTORS will be able to receive commission up to 6%. Realtors should ask the sellers to contact their loan service company and find out who is the investor of the loan (most likely the loan will be sold on the Secondry Market to different investors). In many cases it will be FNMA or Freddie Mac as they are the investors for approaximately 60% of all the mortgages in US.

If you have any questions in regards to the Short Sales or need to conduct one, feel free to call me directly (562) 334-7393.

Ihor Pochay
REALTOR®/SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext.339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com

What is a Short Sale?

A Short Sale is when the Lender (bank) agrees to accept less of what is owned on the property. For example if you have a mortgage of $400,000 on your home and the current market price is only $300,000, the bank will end up with the loss of $100,000 if they approve the Short Sale.

Now why would the bank will do a Short Sale and lose money? The answer is simple. The banks are in the business of lending money and making interest on those loans, not in the business of owning houses. If the bank does not approve the short sale, they will have to foreclose the property and try to sell it as a Real Estate Owned by Bank, which will bring them a lot less money than they could receive from a Short Sale. That is why banks are very motivated to do a Short Sale instead.

Why would the seller want to do a Short Sale? The reasons simply are:

• To be able to buy a new home as soon as 24 months from the close of a Short Sale (a Foreclosure will stay on the homeowner's record for 5-7 years);
• To be able to preserve the homeowner's credit score (a Short Sale has a lot less impact on the credit score than a Foreclosure);
• To avoid the Foreclosure;
• To have the opportunity to start all over again.

Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Off: (909) 629-6186 ext. 339
Fax: (909) 629-6710
ihorpochay@hotmail.com
http://www.myrealtorihor.com/