Patrick Lawson's Real Estate Blog

I just had to reprint this article here because it is such good news.

Imagine finally selling your home in a short sale transaction. You are out of the trap that strangled you for so long and your credit is only slightly damaged. Then the second lein holder contacts you for the balance of your debt that wasn’t paid off.  Then the credit calls start all over again. This new law prohibits them from doing that if they accept the short sale. It is very good news for home owners needing to get out of their homes that are not worth what they owe

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New law gives added protection to short sale hopefuls

By Lily Leung

 A new California law will further protect homeowners pursuing short sales by barring first and secondary lien holders from going after sellers for money owed after the short sales close.

Gov. Jerry Brown signed Senate Bill 458, authored by Senate Majority Leader Ellen Corbett (D-San Leandro,) into law on Friday.

A short sale is a transaction in which the homeowner owes more on the loan than the property is worth. To sell the home, the lien holder or lien holders must approve the sale because the amount owed to the lien holder will be “short” of what is currently owed by the borrower.

Real estate tracker DataQuick said short sales made up 17.7 percent of Southern California home resales in June.

The new law builds on the protections offered by a previous law, SB 931, which required the first lien holder in a short sale to accept an agreed-upon payment as the full payment for the outstanding loan balance. The previous law did not address junior lien holders.

The new law, which became effective immediately, now prohibits secondary lien holders from pursuing deficiencies after a short sale closes.

“As the economic recession continues to impact Californians, SB 458 will allow homeowners forced to sell at a loss to have closure at the end of the process,” said Corbett, in a statement to the Union-Tribune. “By extending anti-deficiency protection to all loans on a home when a short sale occurs, a homeowner can use a short sale as an alternative to foreclosure or bankruptcy.”

The California Association of Realtors call the bill’s signing a “victory for California homeowners.”

“SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property,” said Beth L. Peerce, president of the Realtors group, in a statement.

Reprinted from San Diego Union- Tribune online article July 22, 2011

Fannie Mae to offer 3.5 percent buyer assistance

Here is some good news of a program that Fannie Mae is sponsoring with their owner occupied REO properties. It is perfect if you have the down payment but are having trouble with the many closing costs associated with buying a home.   The article below is reprinted from the California Association of Realtor’s Newsline.  To find homes in your area go to http://www.homepath.com/.

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Fannie Mae recently announced that people purchasing a Fannie Mae-owned HomePath property will receive up to 3.5 percent in closing cost assistance. The initial offer must be submitted on or after April 11, 2011; and the sale must close on or before June 30, 2011, to be eligible for the incentive. Additionally, buyers must reside in the home as their primary residence (sales to investors are excluded).

All Fannie Mae-owned HomePath properties are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information, and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers home buyers an opportunity to purchase with as little as 3 percent down.

More info

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By Bradley Markano • Mar 14th, 2011 • Category: real estate newsflash

The Internal Revenue Service (IRS) has clarified that some homeowners who receive financial assistance from the federal government under the Home Affordable Modification Project (HAMP) will not be required to pay taxes on that support. Specifically, funds received from the U.S. Treasury Department’s Housing Finance Agency (HFA) Innovative Fund for the Hardest-Hit Housing Markets (The “HFA Hardest Hit Fund”) and the Department of Housing and Urban Development’s (HUD) Emergency Homeowners’ Loan Program are exempt from taxation.

These aid programs provide financial assistance to struggling homeowners, either by making payments on the homeowner’s mortgage loan or by providing financial support during an owner’s transition to lower-income housing. Since payments under these programs are not made in exchange for any service performed by the homeowner, they can be excluded from the homeowner’s gross income for tax purposes under the general welfare exclusion.

Homeowners and lenders also should not report any mortgage interest deductions or receipts for payments made by a government agency.

The IRS has confirmed it will not penalize any mortgage loan servicer who reports payments received on a mortgage interest statement in 2010. Servicers who report payments in 2011 and 2012 will also be excused, so long as the servicer notifies homeowners that the amounts reported have been overstated due to inclusion of government subsidy payments.

State housing finance authorities (HFAs) that fail to file and furnish a mortgage interest statement will be exempt from penalty in 2010. HFAs that fail to file in 2011 and 2012 will also be exempt if they provide, to each homeowner and to the IRS, a statement containing the homeowner’s name and taxpayer identification number (TIN), and a separate statement with the amounts paid by the HFA and the homeowner to the mortgage servicer under the homeowner aid program.

Re. “Guidance on Tax Consequence of Distressed Homeowner Payments Provided (IRS Notice 2011-14)”

Copyright © 2010 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

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The current Real Estate Market is a difficult one.  Credit is hard to come by and the upgrade home buyer is scarce. This is no surprise with most  home owners in California underwater or upside down. Their mortgage debt is more than the value of the house.

This is a good time to utilize a creative home purchase program called a Lease Option contract.  Lets face it, if your credit is bad right now you will need time and work to get it back.  So, why not put time on your side and let your monthly rent payments work for you.

What Is a Lease Option?
Lease options are a way to buy and sell homes without an immediate conventional mortgage. It gives buyers who can’t qualify for a mortgage the opportunity to get into a home right away. Then they have time to improve their credit and build up a down payment. Some components of the Option Contract establishes the price of the home, how much money accumulates each month toward purchase and how long the buyer has to purchase the home before the contract expires.

Advantages for the Buyer:
Here are some of the advantages when buying on a lease option:

1. The buyers can get into a home now, even if they can’t currently qualify for a mortgage.

2. It gives them time to improve their credit and build up a down payment.

3. They are not obligated to purchase the home at the end of the option if they decide: this home is not right for them, or if the real estate market changes significantly.

4. The buyer can end up with instant equity if the purchase price is well below the value of the house when the contract is exercised.

5. The monthly rent payments help accumulate money to be used in the transaction when the option is exercised.

6. The buyer gets to know everything about the house and the neighborhood first hand before buying.

The lease option is a great tool for buying a home. It is important to know all the in’s and out’s before entering into the contract. Be sure all of your questions are answered, and talk to a Realtor to see if its right for you.

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If your credit ratings are suffering because of mistakes on your credit report, it is your right to have it corrected at no cost. Credit bureaus are legally required to investigate disputed information by contacting the creditor that originally supplied them with the information. Keep in mind that the three major credit bureaus — Experian, Equifax and Trans Union — usually have the same information for each consumer file, but not always. You need to contact the bureau that shows the error and provide the required documentation.
Factual information cannot be removed from a credit report, and the credit bureaus will not automatically remove information from your  report just because you dispute it. You have to prove that information is wrong with supporting documentation before a credit bureau will correct a report. Under the Fair and Accurate Credit Transaction Act (FACT Act), a credit bureau must remove or modify a disputed item within 30 days if it is found to be inaccurate, incomplete, or unverifiable after a reasonable investigation.

No one knows your credit better than you do. So, it is imperative that you take charge and clean up your report. It not only effects your ability to buy a house, but it also reflects on interest rates you pay, and now more than ever your ability to get a job.

Contact information for the three major U.S. credit bureaus:

Experian:  P.O. Box 2002, Allen, TX 759013.  (888) 397-3742,    www.experian.com

Trans Union: P.O. Box 1000, Chester, PA 19022. (800) 888-4213,     www.transunion.com

Equifax:  P.O. Box 740241, Atlanta, GA 30374.  (800) 685-1111,   www.equifax.com

At www.annualcreditreport.com,  you can request a free credit report once every 12 months from each of the credit-reporting companies listed above.

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