New HAFA Program for Homeowners Hoping to Avoid Foreclosure

Back in February, I wrote about Short Sales and covered the following topics: 

• Are you underwater? 
• What is a Short Sale?
• New Arizona Short Sale Seller's Advisory.

Today I am providing information on the new HAFA (Home Affordable Foreclosure Alternatives) program that began on April 5, 2010 as a follow-up to that previous posting.  The new HAFA program is intended to make the Short Sale process easier, for those who qualify.  If you would like to revisit my earlier information about Short Sales, it is available at my blog, Pook's E-News.  Here is a direct link to that posting:  http://pook-enews.blogspot.com/2010/02/todays-topics-are-you-underwaterwhat-is.html

The following is offered for informational purposes only.  It is not offered as legal advice.  

New HAFA Program for Homeowners Hoping to Avoid Foreclosure

Source:   http://makinghomeaffordable.gov/hafa.html

Home Affordable Foreclosure Alternatives (HAFA) Program

Many homeowners may feel that they can no longer afford their home, but want to avoid the negative effects of foreclosure. The Home Affordable Foreclosure Alternatives (HAFA) Program offers homeowners, their mortgage servicers, and investors an incentive for completing a short sale or deed-in-lieu of foreclosure. With these options, under HAFA, a homeowner leaves their home to transition to more affordable housing and alleviate the mortgage debt they owe. These options are available for homeowners who: 1. do not qualify for a trial mortgage modification under the Making Home Affordable Program; 2. do not successfully complete the trial period for their modification; 3. miss at least two consecutive payments during their modification period; or 4. request a short sale or deed-in-lieu of foreclosure.  Short Sale In a short sale, the servicer allows the homeowner to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage.   Deed-in-Lieu of Foreclosure Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a deed-in-lieu of foreclosure. With a deed-in-lieu, the borrower voluntarily transfers ownership of the property to the servicer— provided the title is free and clear of mortgages, liens, and encumbrances. The HAFA Program streamlines both of these options to make them easier for a homeowner to work with their servicer. Under the program, a homeowner can receive $3,000 to help with relocation costs. Mortgage servicers and investors write their own guidelines under the Federal requirements to determine how to implement the program. For more information about your options, you should contact your mortgage servicer. If you have questions about the program, or want guidance about how these options may impact your personal situation, you may wish to speak to a HUD-approved housing counselor for free. Your Graceful Exit Watch a video to learn more about the Home Affordable Foreclosure Alternatives Program. Making Home Affordable and Other Options to Remain in Your Home Mortgage servicers who participate in the Making Home Affordable Program are required to evaluate homeowners for a Home Affordable Modification before evaluating them for other options.  If you request a modification from your mortgage servicer, and are determined to be eligible, you will enter into a trial period plan.  If it is determined that you are not eligible for a Home Affordable Modification, your mortgage servicer will evaluate you for other alternatives they offer to keep you in your home, such as their own modification programs or a forbearance. A HUD-approved housing counselor can work with you for free to help you understand your options. Avoid Foreclosure: Know Your Options Watch a video to learn more about the Making Home Affordable Program and other options your mortgage servicer may provide. › Frequently Asked Questions

Beware of Foreclosure Rescue Scams - Help Is Free!

• There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.
• Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay - walk away!
• Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
• Never submit your mortgage payments to anyone other than your mortgage company without their approval.

The Obama Administration has launched a coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams that threaten to hurt American homeowners and prevent them from getting the help they need during these challenging times.  Click here for more information.

If you are facing foreclosure and are considering a Short Sale or Deed-in-Lieu of foreclosure, it is extremely important that you get professional legal and tax advice.

Understanding Capital Gains in Real Estate

Source:  REALTOR®Mag (National Association of REALTORS®)

When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:

1. Purchase price: _______________________

The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.


2. Total adjustments: _ ______________________

To calculate this, add the following:

• Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
• Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
• Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.

3. Your home’s adjusted cost basis: _______________________

The total of your purchase price and adjustments is the adjusted cost basis of your home.

4. Your capital gain: _______________________

Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.

A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:

You have lived in the home as your principal residence for two out of the last five years.

You have not sold or exchanged another home during the two years preceding the sale.

You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.

Website Update

I'm very excited about the newest additions to my website, pookbellini.com, and hope you will take a moment to visit and discover all of the features that make it a one-stop portal for local information.

IDX Property Search - Allows you to search the entire inventory of properties available on ARMLS (Arizona Regional Multiple Listing Service) right from my website.  It's quick and easy to do.  Simply enter a City, Zip or an MLS # to start your search.  Select property type, price range, and the features you want to search for. 

Community Happenings - Links to your favorite Arizona sports teams and information about special events (festivals, car shows, art fairs, and more).  Feel free to contact me with news of an event you would like to see posted.

Community Information - Links to...

• Arizona Department of Education
• Arizona Golf
• Arizona Guide
• Arizona Hiking
• Cactus League Baseball
• Current Gasoline Prices
• Current Road Conditions
• Movie Theaters
  
• Phoenix Convention and Visitors Bureau
• Scottsdale Convention and Visitors Bureau

Seller Information
Buyer Information

Arizona Appliance Credit Begins April 12th

The State of Arizona will implement a mail-in rebate program to help residents replace older, inefficient appliances with ENERGY STAR^® qualified appliances. The program begins Monday, April 12th and will last until funds are depleted.  There are an estimated 35,000 rebates available in Arizona's $6.2 million program. You must register for the rebate (starting at 6:00 a.m. on Monday) before making your purchase.  You can call (877-307-5336) or sign up online (www.arizonarebates.com).  Based on what has happened in other states, it is expected that all rebate funds will be exhausted before the day is over.  Although on the news they are saying that stores are having big sales and expect people to be lined up to make purchases, many folks may not be aware that they need to have the rebate before shopping.  According the a report in the Arizona Republic, a purchase must be made within a couple of weeks of getting the rebate or the rebate opportunity will be turned over to someone else. 

Eligible products include:

• Clothes washers
• Dishwashers
• Water heaters

New appliances must replace older existing appliances and must be bought in a store in Arizona.  Rebates vary based on the appliances' efficiency levels. Rebate claims must be made within 14 days of purchase. Arizona encourages residents to recycle the old appliances.

Before purchasing a product, check to ensure rebates are available, and to confirm product eligibility and program requirements. Products purchased must meet efficiency criteria as established by the state.

Deadline Nearing for First-Time Homebuyer Tax Credit

Time is running out to take advantage of the First-Time Homebuyer Tax Credit. New homebuyers (anyone who hasn't owned a home in the past 3 years) may qualify for a tax credit of up to $8,000. Current homeowners may qualify for a tax credit of up to $6,500. Purchases must be made by April 30, 2010 and must close by June 30, 2010. Click HERE for more information.

30-Year Rate Back Above 5%

Source: Los Angeles Times, E. Scott Reckard (4/2/10)
©Copyright 2010 Information Inc.
Reprinted from REALTOR® Magazine, April 2010 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2010. All rights reserved.

Mortgage rates rose to 5.08 percent from 4.99 a week ago, pushing the average interest rate offered on 30-year fixed rate mortgages to its highest level since the first week of 2010, according to Freddie Mac.

The increase in mortgage rates occurred as long-term interest rates rose higher due to conerns about inflation as the economy improves, and as the Federal Reserve ended its program to buy $1.25 trillion in mortgage-backed bonds issued by Fannie Mae, Freddie Mac and other government-sponsored agencies.

Also, the 15-year fixed mortgage rose to 4.39 percent from 4.34 percent, while 5-year hybrid mortgages fell to 4.10 percent from 4.14 percent.

It is most important that a buyer stays in touch with their mortgage consultant to make sure they have a locking strategy in place. Rates can move very quickly and, in some cases, this could mean the difference between a loan approval and a denial. A rate change of just a 1/2 point can affect your buying power significantly.

Most experts believe that once the current government program ending the purchase of mortgage backed securities ends, interest rates will rise quickly and dramatically. Some forecasters are saying that rates could go above 6% by the end of the year.

The matrix below shows how mortgage payments will be affected by this rise in rates.


Source: Steve Harney, Keeping Current Matters, January 14, 2010

The Difference Between Pre-Qualification and Pre-Approval

Thanks to Rob Kanyur, Senior Loan Officer Nova Home Loans - Scottsdale
for the following information:

Pre-qualification is the first step in obtaining mortgage financing. A potential borrower answers a few questions to provide the loan consultant with a quick snapshot of the borrower's income, existing debt, accumulated savings and whether or not there is a co-borrower. Signature(s) allow the loan consultant to run a credit report and begin to determine what loans are good candidates for this particular client. However, there are literally thousands of loan programs available. It is important for the loan professional to know the long-term financial objectives of the prospective homeowner.

Pre-approval is a written documentation that proves the borrower has full support of a lender. It means the form 1003 Uniform Residential Loan Application has been completed and reviewed by an underwriter. Based on the borrower's income, debt ratio and savings, the underwriter will provide a dollar amount this borrower is eligible for. Now the borrower has the convenience of shopping for a home in the price range agreed upon by the lender.

Pre-approval allows potential homeowners to shop as cash buyers, and that means negotiating power. Sellers will take an offer from a pre-approved shopper much more seriously and may even accept a lower bid because they know the financing is in place and the deal is secure.