Deed In Lieu- are they for you?

AP- Short sales have been the hot solution for financially stressed homeowners and their lenders for the past year, but here's another potent foreclosure alternative that's about to take center stage: deeds-in-lieu.

Some of the nation's largest mortgage servicers and lenders are gearing up campaigns to reach carefully targeted borrowers with cash incentives that sometimes range into five figures, plus a simple message: Let's bypass all the time-consuming hassles of short sales and foreclosures. Just deed us the title to your underwater home, and we'll call it a deal. We won't come after you to collect any deficiency between what you owe us and what we obtain from the home sale. We might even be able to wrap up the whole transaction in as little as 30 to 45 days. How about it?

Mortgage companies say troubled borrowers increasingly are signing up. One of the largest servicers, Bank of America, has mailed out 100,000 deed-in-lieu solicitations to customers in the past 60 days, and its volume of completed transactions is breaking company records, according to officials.

What precisely are deeds-in-lieu? The full name is deeds-in-lieu-of-foreclosure. They are voluntary transfers of property ownership from borrowers to creditors that make court-directed foreclosures unnecessary.

The concept is one of the oldest in real estate, but it got a special boost this year when the Obama administration included it as an option in its Home Affordable Foreclosure Alternatives program, and mortgage giant Fannie Mae cut the penalty-box time for homeowners who use the technique from four years to two before they can qualify for another home mortgage.

Deeds-in-lieu also are surging because they provide a win-win for borrowers and mortgage investors that short sales often cannot match. Tops on the list: speed.

Travis Hamel Olsen, chief operating officer of Loan Resolution Corp., a Scottsdale, Ariz., firm that works with lenders to solve troubled borrowers' problems, said deeds-in-lieu represent "a very expeditious way to move on" for underwater borrowers facing potential foreclosure.

"A lot of owners just want to be finished with it, now," he said. "They don't want to deal with (the house) anymore."

They don't want to deal with real-estate agents or signs on the front lawn that reveal their financial squeeze to neighbors. They don't want to haggle with potential buyers coming in with lowball prices. But they also don't want to simply walk away — strategically default — because that will crater their credit files and scores for as long as seven years.

Not only is it cheaper for lenders to do deeds-in-lieu to gain control of those properties, but with current mortgage rates below 5 percent, they're likely to be able to resell them faster and on potentially more favorable terms in the summer and fall.

"If you can get a lot of inventory moving in the next couple of months" of prime homebuying season, said Hebner, "you are solving a lot of problems."

Matt Vernon, Bank of America's top short-sale and deed-in-lieu executive, said the technique works so well for both borrowers and mortgage owners that his company is running pilot programs in major markets to alert borrowers who might benefit.

To sweeten the pot, Bank of America is offering cash incentives that range anywhere from $3,000 to $15,000 — and it is getting a strong response, according to Vernon.

What are the downsides or limitations of deeds-in-lieu for homeowners? Probably the most important, say experts, is they don't work for every situation involving serious mortgage default.

For example, if you have equity in the property, you'll probably want to pursue a loan modification first, then a short sale, rather than hand your equity stake over to the lender.

Deeds-in-lieu usually don't work when there are multiple mortgages from different creditors encumbering the property. Also, though deeds-in-lieu do less damage to credit histories than foreclosures or bankruptcies, they definitely leave a mark.

Fair Isaac, developer of the widely used FICO credit score, says on its "MyFico" website that deeds-in-lieu and short sales are both treated as "not paid as agreed" accounts, and are treated the same by the FICO scoring model.

Weitz- In some situations, this can be a great deal for both the lender and the borrower. That said, if the ability to live rent and mortgage free for a period of 6 months (and potentially much longer) is of interest, then foreclosure may be the desired choice for the borrower.

For more information on your options with foreclosure, short sale and other distressed issues, consider seeking the advice of a Seattle Short Sale Attorney.

Fannie set to penalize defaulters

AP-

Fannie Mae said Wednesday it would "lock out" borrowers from getting a new loan for seven years if they default on a mortgage they could afford to pay. (Weitz – seems incredibly subjective – can someone afford to pay if it means that every last disposal dollar goes into their mortgage?) The move represents the latest effort by the mortgage industry to prevent a new wave of losses that could result if more borrowers who can afford their monthly payments instead opt to "strategically" default on loans, because they owe far more than their homes are worth.

"Walking away from a mortgage is bad for borrowers and bad for communities, and our approach is meant to deter the disturbing trend toward strategic defaulting," said Terence Edwards, Fannie's executive vice president for credit portfolio management.

The government-owned mortgage-finance titan also said it planned to step up legal actions to pursue deficiency judgments in states that allow lenders to go after borrowers' other assets. In addition, Fannie said it would instruct its lender partners to monitor delinquent loans owned by Fannie, and recommend cases that warrant attention. (Weitz – Post foreclosure, the general course of action has been to sell off the debt to third party creditors who already go after assets. That said, they typically are willing to settle the debt).

Fannie's move comes amid greater concern that it has become socially acceptable for borrowers to stop paying their loans, and that such a shift could exacerbate the housing bust. Those worries are particularly acute in Arizona, Nevada, Florida and other hard-hit housing markets where it could take years for borrowers to return to positive equity.

Nearly one in four homeowners with a mortgage is underwater, or owes more than their home is worth, according to CoreLogic, a real-estate data firm. A Morgan Stanley report estimated that around 12% of all mortgage defaults in February were strategic.

In 2008, Fannie revised to five years from four the period that borrowers with a foreclosure must wait before they are eligible for a new loan. Under the new rules, the five-year waiting period is eliminated. Borrowers who can't document "extenuating circumstances" or show that they made an effort with their lender to avoid foreclosure will have to wait seven years to get a new loan; those who can demonstrate hardship or attempted a workout with their lender may have to wait only three years.

Its smaller sibling, Freddie Mac, also requires borrowers with a foreclosure to wait at least five years. Foreclosures can stay on a credit report for up to seven years.
Even as it steps up penalties, Fannie is preparing to reduce waiting periods for borrowers facing hardship who surrender their homes and avoid foreclosure.

Under previously announced rules that take effect next month, Fannie will reduce waiting periods to two years for borrowers who agree to transfer their homes to the company through a "deed in lieu of foreclosure," or who complete short sales, where homes are sold for less than the amount owed.

Weitz – Freddie wants to preclude you from getting a loan through them for an additional 2 years after foreclosure. Perhaps Freddie should preclude themselves from issuing loans as their failure to maintain credit standards partially caused the problem in the first place….just a thought.

For information on your rights in Foreclosure, consider contacting a Foreclosure Attorney.

Our Contact Information:

Weitz Law Firm, PLLC
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300
scottweitz@weitzlawfirm.com

New Administration Loan Program

AP Report: 6/22/10

Another day, another questionable use of your tax dollars:

The Obama administration has approved five state-designed plans to help homeowners as part of a $1.5 billion effort to assist areas slammed by the housing bust.
The Treasury Department said Wednesday that plans for Arizona, California, Florida, Michigan and Nevada had received approval.

The states estimate that the plans are projected to help up to 93,000 homeowners. That's a small part of the administration's main existing $75 billion mortgage assistance program, which is widely viewed as a disappointment.

The states were picked because they experienced at least a 20 percent decline in home prices. The programs, which vary by state, will help borrowers who have lost jobs make mortgage payments, cancel second mortgages that have blocked loan modifications and assist with the payment of piled-up mortgage bills.

According to the proposals from state housing finance agencies, the largest recipient of the funding is California, which will get nearly $700 million to assist about 46,000 borrowers. California officials are asking for matching contributions from lenders for its programs, which provide subsidies to unemployed borrowers and those who have missed mortgage payments, and for reductions in borrowers' principal balances.

Florida is getting the second-largest pot of money, $418 million. That will help about 12,500 borrowers. Treasury officials approved the state's plan to help the unemployed, but rejected two of the state's proposals.
Those included a plan to provide homeowners facing foreclosure with legal representation. A proposal to give homebuyers assistance with downpayments was also rejected, according to the Florida Housing Finance Corp.

Michigan will receive about $155 million to assist 17,000 borrowers, including 11,000 who are currently drawing unemployment benefits. It plans to start distributing the money in mid-July and estimates it could take up to 18 months to distribute all the cash. A major piece of Michigan's plan offers assistance to homeowners receiving unemployment benefits. Those who qualify could get half of their monthly mortgage paid for through the program -- as much as $750 a month for up to a year.
The state also would help homeowners who have fallen behind on payments because of a temporary layoff or a medical condition.

Arizona will receive $125 million for 12,000 borrowers. Nevada will receive $103 million for about 5,000 homeowners.

Besides these states, the Obama administration is providing an additional $600 million in financial support to help homeowners in states with high rates of unemployment. Those states -- Ohio, North Carolina, South Carolina, Oregon and Rhode Island -- have submitted plans to the Treasury Department. They are being reviewed now, with approvals expected in August.

More than a third of the 1.2 million borrowers who have enrolled in the Obama administration's main mortgage modification program have dropped out, officials said this week. About 340,000 homeowners, or 27 percent of those who started the program, have received permanent loan modifications and are making payments on time.

Weitz: Since the Making Home Affordable Program has gone so well (not really), I'm sure this will solve all our problems (not really). To sum up what the government is doing: we are going to pay the mortgage payments for unemployed folks in hard hit states....hardly seems fair to those that are working hard every day to pay off their mortgage(s). In general, I am not a big fan of this type of policy. Sure, unemployment benefits have utility to provide essentials...but paying off a mortgage!!...in the legal world, we like to call this 'a slippery slope' or 'grounds for abuse'.

1099 Income from a foreclosure or short sale?

I have a lot of clients that are concerned of incurring tax liability upon a short sale or foreclosure. Luckily, there are few circumstances in which a taxpayer would actually be subject to 1099 income in the case of a foreclosure or short due to the 2007 Mortgage Debt Relief Act. Below is an outline of the Act and how it applies to you. For more information, consider contacting a Seattle Foreclosure Attorney.



The Mortgage Debt Relief Act and Debt Cancellation

As a general rule, the Mortgage Debt relief Act generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Additionally, debt reduced through mortgage modifications and principal reductions qualifies for this relief.

This provision applies to debt forgiven in calendar years 2007-1012 up to $ 2 Million.

Other exceptions to Cancellation of Debt 'COD' income:

1) Qualified principal residence indebtedness (same as outlined above)
2) Debts discharged in bankruptcy are not taxable income
3) If a taxpayer is insolvent (debts are more than the fair market value of total assets)
4) Non-recourse Loans – if a lender’s only remedy is to repossess property being financed (ie. The lender cannot pursue you personally in the case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in COD income. However, it may have other tax consequences.

Frequently asked questions:

Does the Mortgage Forgiveness Debt Relief apply to all cancelled debts?
No, the Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your primary residence, or to refinance debt incurred for those purposes. Additionally, the debt must be secured by the home.

Do I have to report forgiven debt on my tax return?
Yes, the amount of debt forgiven must be reported on FORM 982 and this form must be attached to your tax return.

Are losses on my home deductible as ‘Capital Losses’?
No. Losses from the sale or foreclosure of personal property are not deductible.

For more information on your rights in foreclosure or short sale, consider contacting a Seattle Foreclosure attorney.

Our Firm:

Weitz Law Firm, PLLC
5400 Carillon Point, Building 5000
Kirkland, WA 98033
(425) 889-9300
www.weitzlawfirm.com

Housing Double Dip? Is the debate over?

The home buyer tax credit is done. Sales contracts had to be entered by April 30.

What have the after effects been, you ask?

May, traditionally the height of the spring housing season, has seen Mortgage purchase applications drop nearly FORTY (not a typo) percent from a month ago to their lowest level since April 1997!

Weitz:

Dare I say: look out below. While I applaud the government for trying to fix our housing problems with arbitrary government stimulus, the simply reality is that you can not artificially pull forward future demand and not expect severe consequences. The government wrongly assumed that the economy would have fully recovered by the expiration of the tax credit. This has not come to fruition. What program are they going to come up with next to 'save the housing market'? Your guess is as good as mine.


Our Firm:

Weitz Law Firm, pllc
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300
scottweitz@weitzlawfirm.com

Bank of America: Mortgage Walkaways have huge incentive

Yesterday, Bank of America Executives unveiled their new "Principal Reduction Enhancement Program", which is an earcned principal forgiveness plan for broowers behind on their mortgages and whose loans are at least 20 percent underwater.

The Plan employs a 'principal reduction as the first step toward reaching HAMP's affordable payment target of 31 percent of household income when modifying certain NHRP eligible mortgages (rather than lowering the interest rate)

WHY ARE THEY GETTING MORE AGGRESSIVE?

The simple reality, as we've predicted since the blog began, is that borrowers are walking away in masses. The B of A exces now acknowledge that the problem is beginning to snow ball. Jack Schakett, a B of A credit loss mitigation executive, admitted that the number of 'strategic defaulters' were more than B of A has ever experienced before. Schakett says that the foreclosure process is still taking 13 to 14 months, which equates to over a year of free rent for defaulters.

In March, 31 percent of foreclosures were deemed to be 'strategic defaults' according to a recent study by Northwestern Univeristy.

Weitz:

While its encouraging that Bank of America, who has been notoriously difficult on borrowers in the short sale and foreclosure process, is working to assist borrowers, I question the secondary effects as those that stay current on their mortgage question why they are not privy to the same privileges. In the end, I fear it will only encourage more homeowners to default on payments.

For more information, consider contacting a Seattle Foreclosure Attorney.

Our Firm:
Weitz Law Firm, PLLC
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300
scottweitz@weitzlawfirm.com

Mortgage Aide leaves some worse off

An Article from the May 18, 2010 Wall Street Journal

The government's mortgage-modification program has left some struggling homeowners worse off than they were before.

The Treasury reported Monday that nearly one in four homeowners who were offered lower payments under the Obama administration's 15-month-old effort have been weeded out of the program. Many people were removed from the trials because they failed to make payments, didn't provide all the financial documents needed to qualify or were found to be ineligible.



Homeowners are first offered trial modifications under the program, which provides incentive payments to loan servicers, investors and the homeowners. If borrowers make the payments and satisfy other criteria, those trials are made permanent, ensuring a cut in payments for five years.

Did Bankruptcy Reform Lead to More Mortgage Defaults The Maddening World of Mortgage Modifications While awaiting answers, some borrowers keep making payments, exhausting their savings in what may be a futile effort to save their homes. They also incur fees from the banks and delay taking action that might give them a fresh start in a more affordable home.

Some borrowers had unrealistic expectations about loan-relief programs, which were never designed to prevent all foreclosures. Another big problem is that banks often take six to 12 months to determine whether applicants are eligible.

Some win modifications, cutting monthly payments by hundreds of dollars. Others who ultimately can't get modifications at least are allowed to stay in their homes for months, making either no payments or reduced payments.

Eager for quick results, the Obama administration last year prodded banks to start people on trials without first obtaining documents proving they were eligible. That has led to many crushed hopes. The Treasury earlier this year changed its rules and told banks to start trials only after getting documents that proved borrowers qualified.

The Treasury said in a monthly report on the government's $50 billion Home Affordable Modification Program, or HAMP, that about 1.2 million trial modifications had been started under the plan, and about 281,000 borrowers had washed out by the end of April.

Only about 30% of borrowers who seek help from the main foreclosure-prevention counseling program at Neighborhood Housing Services of South Florida end up with modifications, said LeeAnn Robinson, chief operating officer of the Miami-based nonprofit. Many borrowers don't have enough income to support even reduced loan payments; others give up before completing the paperwork.

On average, it takes seven months to resolve a borrower's situation, up from four months a year ago, Ms. Robinson said. Banks and other loan servicers can't keep up with the demand for help, she said.

WEITZ: The HAMP program, the centerpiece of the government foreclosure assistance, has been largely ineffective. For some with steady income, it can be a valuable tool. That said, when deciding whether to pursue such an option, it is important to be realistic about your ability to repay the loan. For some, it is simply better to walk away and save the cash.

For more information on the Foreclosure Crisis, consider contacting a Seattle Foreclosure Attorney.

Our Information:

Weitz Law Firm, PLLC
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300

Strategic Foreclosures - 60 Minutes Report

A 60 Minutes report that aired on May 9, 2010 outlinging Strategic foreclosures.

Some of the facts that jumped out at me: 7 Million people are currently late on their mortgage, and 1 Million have ALREADY strategically foreclosed.

See story here.


Weitz: I've been concerned about this from the beginning of the credit crisis. Knowing the foreclosure laws that are in place in states like Arizona, California, and yes...Washington....many people will find it economically advantageous to simply walk away from their homes. That will, of course, make a bad problem worse, but its not illegal for homeowners to do just that. Thus, I except we are just in the infancy of this phenomenom (assuming real estate does not drastically improve).

Someday, State Legislatures may change this law to protect the banks, but that will likely just push people into bankruptcy to wipe away the debt and start over.

For more information on Foreclosure law in Washington, consider calling a Seattle Foreclosure Attorney.

Our Information:

Weitz Law Firm, PLLC
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300

Freddie Mac needs more money - issues concerning 10Q statement

Below are some excerpts from an article posted on CNBC by one of my favorite sources on Real Estate Diana Olick. See entire article here.

Freddie Mac's request for an additional $10 billion in aid from the Federal Government has debate swirling once again around GSE (Government sponsored entities) reform.

Let me preface by reiterating what everyone from Secretary Tim Geithner on down has said: It isn't going to happen any time soon because of the fragility of the housing market.

But it's just that fragility that we have to dig into a bit deeper, and you find it in the Executive Summary section of Freddie's 10Q.

From the Freddie 10Q:

Mortgage and credit market conditions remained challenging in the first quarter of 2010. A number of factors make it difficult to predict when a sustained recovery in the mortgage and credit markets will occur, including, among others, uncertainty concerning the effect of current or any future government actions in these markets. We estimate that home prices decreased nationwide by approximately 0.9% during the first quarter of 2010 based on our own index of our single-family credit guarantee portfolio. Our assumption for home prices, based on our own index, continues to be for a further decline in national average home prices over the near term before any sustained turnaround in housing begins, due to, among other factors:

• our expectation for a significant increase in distressed sales, which include pre-foreclosure sales, foreclosure transfers and sales by financial institutions of their REO properties, due in part to HAFA. This reflects, in part, the substantial backlog of delinquent loans lenders developed over recent periods, due to various foreclosure suspensions and the implementation of HAMP. We expect many of these loans will transition to REO and be sold in 2010. This may cause prices to decline further as the market absorbs the additional supply of homes for sale;

• the April 2010 expiration of the federal homebuyer tax credit;

• our expectation that mortgage rates may increase in 2010, which will make it less affordable to buy a home; and

• the likelihood that unemployment rates will remain high.

There is definitely more demand and more confidence in the housing market today than there has been in a long time, and that is causing more organic home sellers to finally bite the bullet and put their homes up for sale, not because they have to, but because they want to. While inventories historically always rise in the Spring, this Spring the increase is nearly twice the norm. Add that to the shadow supply that Freddie's report suggests is working its way through the government's flawed loan modification program, and you can see where home prices will still be under considerable pressure.

So while Republicans try to jam GSE restructuring onto the financial services reform bill, the fact is that tinkering with those two at this point in housing's shaky recovery would be something close to negligent.

Weitz: When Freddie states these concerns in a 10Q, its safe to say that we may be in for furthered deterioation of the housing market both locally and nationally. In my opinion, the massive government aide from the 'stimulus' package to the homebuyer tax credit has done nothing more than steal from future demand and prolong our credit problems. While I hate to be so pessimistic, I continue to very skeptical in the proported "recovery" the pundits are celebrating.

Tax Consequences of Foreclosure

We have been getting a lot of questions concerning the tax consequences of Foreclosures. It is definitely an important issue as IRS debt cannot be discharged in bankruptcy, and the income can be significant given the costs of housing in the Puget Sound. For more information, consider contacting a Seattle Foreclosure Attorney.

As a general rule, an debt that is forgiven (COD income)is subject to income tax consequences. Thus, debt discharged in a short sale or foreclosure would be subject to taxation.

There are, however, two very LARGE exceptions to the taxation of this COD income:

1) The 2007 Mortgage Forgiveness Debt Relief Act - this act protects borrowers for up to Two Million in COD income provided the home was purchased BEFORE JAN. 1, 2009 and was used solely to buy/ build repair or remodel a PRIMARY RESIDENCE.

2) The second, less talked about, and more relevant exception is when a taxpayer is deemed to be 'insolvent', defined as liabilities exceeding assets. For many borrowers facing a foreclosure, or short sale, this is often the case and protects many borrowers from tax burdens.

If you are not able to qualify under either of these exceptions, and you are faced with a tax burden, you should consider one of these 3 programs to protect yourself from IRS liens, and potential garnishments:

1) An Offer in Compromise
2) Entering Currently Not Collectible Status
3) A Payment agreement in which the debt can be spread out over 60 months.

See Tax dispute options here.

For more information, consider discussing your issues with a Kirkland Real Estate and Tax Law Firm.

Our Information:

Weitz Law Firm, PLLC
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300

Seattle/ National Foreclosure Update - April, 2010

A recent report from CNBC 'Realty Check'. For those not familiar, Diana Olick is own of the most well informed, unbiased sources for real estate information. I highly recommend her website www.realtycheck.cnbc.com.

An overview of updated stats:

1) Home builder sentiment rises in April 2010....however.....
2) Foreclosures notices spiked 19% in a month and up 8% year over year.
3) The report estimates that an estimated 3 to 4 million distressed homes that will be put onto the resale market in the next couple years either via short sale or bank owned inventory.



Weitz: My personal belief is that the number of distressed sales both in Seattle and across the country will spike fairly dramatically over the next 6-12 months as the home buyer tax credit expires and foreclosures continue to increase.

If you're a buyer, consider buying a bank owned or foreclosure property (Bank owned is preferable in my opinion as you would have the ability to thoroughly inspect and negotiate with the banks).

If you're a seller looking at your rights, check out the 'search' feature of the blog. There is some useful information regarding the foreclosure process and short sales throughout the blog.

For more information, consider contacting a Seattle Foreclosure Attorney.

Our Firm:

Weitz Law Firm, PLLC
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300
scottweitz@weitzlawfirm.com

Fannie and Freddie Update

An interesting dialogue from Yahoo Finance regarding the Fannie and Freddie situation:

See VIDEO HERE.

Weitz: Clearly, the 'recovery' has been generated by government intervention in the financing market via FHA, Freddie, and Fannie backing approximately 70-90% of all mortgages currently. Additionally, the home buyer tax buyer credit has clearly contributed to the increased demand for housing in the past 9 months. Moving forward, the tax credit and the buying of mortgage backed securities are set to expire within the next 2 months. It will be very interesting to see how the real estate market responds when the 'training wheels come off'. My best guess: the tax credit simply stole demand from future potential sales. I expect sales to drop rather sharply in the coming months, and for the inventory of homes to once again begin to rise as sellers who have been holding out for a recovery give up hope and seek short sales and/ or allow their homes to be foreclosed upon....time will tell.

From more information, contact a Seattle Foreclosure attorney.

Our Information:

Weitz Law Firm
Scottweitz@weitzlawfirm.com
(425) 889-9300

Should Banks write down 2nd Mortgages?

Realty Check Story on CNBC:

Click here for story.

Barney Frank requested that Banks write down 2nd mortgages to help modification of primiary loans.

Weitz: I think the real story here is that the banks do not have to 'mark their assets to market', thus there is no incentive for the banks to take the write down because they can pretend the loan still has value under current accouting rules which where changed at the peak of the crisis. That said, without the fraudulent accounting, the banks would likely be out of business thus its a 'heads you win, tails I lose situation'.

For more Information on the Foreclosure issues, consider seeing a Seattle Foreclosure Attorney.

Our Firm:

Weitz Law Firm
(425) 889-9300
scottweitz@weitzlawfirm.com

Seattle Times: "Borrowers on the Hook after losing home"

Below is a Seattle Times article from 3/7/2010 that claims 'borrowers are on the hook after foreclosure'. This is one of the reasons you will hardly ever see a Seattle Times article on this site. They simply don't do their homework in my opinion. This type of issue is primarily in 'Judicial Foreclosure' states like Florida, yet the Times leaves the issue open so people in Seattle assume it will happen to them as well.

When John King stopped making payments on his home in Coral Gables, Fla., two years ago, he assumed the foreclosure ended his mortgage contract, he said. In December, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default.

King is among a rising number of borrowers learning that they can be on the hook for years after losing their homes. Amid a crisis that stripped $6.4 trillion, or 28 percent, from the value of U.S. residential real estate since the 2006 peak, lenders are exercising their rights to pursue unpaid mortgage balances. To get their money, they can seize wages, tap bank accounts and put liens on debtors' other assets.

Weitz: This only applies when banks 'judicially foreclosue' as is custom in Florida. In Washington, the predominate foreclosure action is to excersize non-judicial foreclosure. In these types of Foreclosures, the foreclosing party cannot pursue a deficiency.

Bailouts
"The big dogs get a bailout, and the little man gets no mercy," said King, 39, referring to the U.S. government's rescue of banks and other financial institutions.

While there are no statistics on the number of deficiency judgments approved by courts, the Federal Deposit Insurance Corp. (FDIC) tracks the amount banks collect after defaulted loans were written off.

These mortgage recoveries rose 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period, according to the Washington-based regulator. Recoveries on defaulted home-equity loans almost doubled to $392 million, the FDIC data show.

The figures don't include money retrieved by trusts overseeing mortgage-backed securities, such as the one that holds the loan on King's former home, or efforts by distressed-asset funds and companies that buy bad loans to profit from collection rights. Judgments such as the one levied against King usually tack on court fees, fines and interest.

Deficiency judgments were rare in the 15 years since the last real-estate slump, said Ben Hillard, a former investment banker who now is a real-estate and corporate attorney at Hillard & Rogers in Largo, Fla.

"The banks have been too underwater with foreclosures to spend much time on deficiency judgments, but that's beginning to change," Hillard said. "This is going to be the next big crisis."

Almost 4.5 percent of mortgaged U.S. homes were in foreclosure during the third quarter, the highest rate in the 37 years of tracking the data, the Mortgage Bankers Association said Nov. 19. A record one in every 10 mortgages was at least one payment overdue in the same period, the Washington-based trade group reported.

The Obama administration is seeking to modify as many as 4 million loans by 2012 to prevent foreclosures through the Home Affordable Modification Program, which cuts monthly payments to about a third of borrowers' income. By the end of December, the program was responsible for more than 850,000 modifications, the Treasury Department said in a Jan. 15 report.

Weitz: this program has had mixed results. See previous post here on the HAMP program.

The federal government spent $230 billion in the year that ended in September to support homeowners, according to the Congressional Budget Office in Washington. Those efforts didn't help people who had already walked away from their houses.


In states such as Florida, courts give mortgage holders as long as five years to seek a deficiency judgment and, if granted, up to 20 years to collect. Usually, they have the option of renewing the judgment if it's not paid off within 20 years.

Weitz: Different story in WA!

About a third of U.S. states, including California and Arizona, prohibit collection efforts on primary residences after foreclosure. In some cases, homeowners waive that protection if they refinance. Most states allow collection on unpaid home-equity loans.


Weitz: This is much closer to the WA Law.

The laws in states that protect some borrowers stem from the Great Depression in the 1930s, when a lack of bidders at foreclosure auctions caused deficiencies that, with added fees and interest, sometimes were bigger than the original loan amount, according to a 1934 Virginia Law Review article by Sol Phillips Perlman. Today, many courts measure the shortfall using a property's market value at the time of foreclosure rather than auction results.

The likeliest candidates for deficiency judgments are so-called rational defaults, said Larry Tolchinsky, a real-estate attorney in Hallandale Beach, Fla. In those cases, people who are current on their mortgages decide to walk away from a property because its value has sunk so far below their loan balance they have no hope of recouping the loss.

About 21 percent of American homeowners owe more on their mortgages than their properties are worth, according to Zillow.com, a Seattle real-estate data firm.

"Walking away from a property comes with a cost, especially for people who otherwise have good credit," Tolchinsky said. "The bank is going to pull your credit report, and if you're current on your other bills they are going to come after you and potentially ruin you."

It's not just foreclosures that can trigger debt collections. Short sales also may lead to deficiency judgments years after former homeowners have moved on, according to Hillard, the attorney in Largo. In a short sale, lenders agree to let borrowers sell a home for less than the mortgage balance.

"Banks are being very careful to preserve their rights, either outright in the short-sale agreement or by using vague language that leaves that door open," Hillard said. About 90 percent of people who do a short sale think they are "off the hook."

Weitz: This is a big issue in WA. Banks can pursue deficiencies after Short Sales. You should always have all documents reviewed by a Seattle Short Sale Attorney if you do a short sale.

That was the case when two of his clients, Brigitte and John Howard, sold their home in New Port Richey, Fla., almost two years ago without using a lawyer to check the bank's short-sale agreement.

"Still paying"

"We got a call out of the blue saying we owed $20,000," said Brigitte Howard, 45. "It was a shock. There was no mention in the short-sale contract that the bank might come after us for the difference."

The money King owes to the Soundview Home Loan asset-backed security that holds the mortgage on his former Coral Gables condominium consists of $38,000 for unpaid principal and nearly $6,000 in legal fees and interest accrued before the ruling. According to the judgment, the security can charge 8 percent interest until he pays off the debt.

King, who said his default was caused by a reduction in his income, now rents near Fort Lauderdale, Fla.

"I thought the foreclosure was the worst of a bad situation, but it's not," said King. "The people who got sucked into the real-estate bubble are still paying for it, even after they've taken our homes."

For more information on your rights in Foreclosure, and Short Sales, consider contacting a Seattle Foreclosure Attorney.

Our Informmation:

Weitz Law Firm
5400 Carillon Point
Kirkland, WA 98033
(425) 889-9300
scottweitz@weitzlawfirm.com

Federal Mortgage Modifcations Falling Short

Below is an execerpt from the Wall Street Journal regarding regarding the success (or lack thereof) of the Modification programs implemented by the Federal Government. For more information on your rights in Foreclosure or Short Sales, consider talking to a Seattle Foreclosure Attorney.


The Federal Reserve has pushed mortgage rates to near half-century lows, but millions of U.S. homeowners haven't benefited from that because they can't—or won't—refinance.

Falling home prices have left many owners with little or no equity, making it harder to qualify for refinancing. Moreover, stricter lending standards and higher fees by banks and mortgage giants Fannie Mae and Freddie Mac and declining incomes have made it tougher and less attractive for borrowers to seek new loans.

Around 37% of all borrowers with 30-year conforming fixed-rate mortgages—who collectively hold about $1.2 trillion of home loans—have mortgage rates of 6% or higher, according to investment bank Credit Suisse. Many could reduce their rates by a full percentage point if they refinanced at current rates, about 5%. More than half could lower their rates nearly three-quarters of a percentage point, according to Credit Suisse.

About a quarter of all mortgage holders are "underwater"—they owe more on the house than it's worth—which normally makes it impossible to get refinancing: Banks want collateral to back the value of home loans they make. The Obama administration recently extended a program intended to help underwater homeowners refinance, but few people have tapped it so far. The program has faced logistical hurdles, delays and confusion from brokers and lenders.

Some mortgage bankers say higher fees by lenders have undermined the effort to encourage refinancing. Fees that Fannie and Freddie began imposing in 2008, as loan delinquencies began to rise, have made it unattractive for some borrowers to refinance. For example, a borrower with 20% down and a 695 credit score seeking to refinance must pay fees equal to 1% of the loan amount. Those fees rise for borrowers with weaker credit scores, higher loan-to-value ratios, or other risk factors.

Overcorrecting for the abuses of financial institutions "has defeated the Fed's purchase program," said Alan Boyce, a mortgage-securities-market veteran. Those loan fees, he said, are partly "responsible for why there's been no refi boom."

The higher fees and tight credit standards show the tensions facing Fannie and Freddie. As the government-controlled companies try to raise revenue to offset their losses, those efforts can conflict with their basic public-policy mission: to help stabilize the housing market.

Fannie and Freddie have to strike a balance between risk and access to credit. Figuring out "where that line is involves some trade-offs," said Edward DeMarco, acting head of the Federal Housing Finance Agency, which oversees Fannie and Freddie.

The last time mortgage rates were at current levels, in 2003, refinancing activity hit $2.9 trillion, according to trade publication Inside Mortgage Finance. Last year, refinance volume reached $1.2 trillion, the highest amount since 2003 but not nearly as much as expected, considering how low interest rates have fallen.

Traditionally, borrowers have an incentive to refinance when they can reduce their mortgage rate by one percentage point or more.

Borrowers who are refinancing tend to be those who need it least. Fannie and Freddie refinanced 4.2 million borrowers last year. On average, borrowers who refinanced through Freddie Mac saved $2,600 annually. But the savings on the whole have gone to "very, very good credit borrowers and it really isn't going very far down the credit spectrum," said Michael Fratantoni, the head of research and economics for the MBA.

On Monday, the Obama administration said it would extend for a year a program launched last April to help homeowners with little or no equity to refinance. That program, which had been set to expire this June, was called a "failure" last week by analysts at Barclays Capital. While the administration had said it would benefit millions, so far just 188,000 borrowers who owe between 80% and 105% of the value of their homes had refinanced through December. Last September, it was expanded to include borrowers who owe up to 125% of their home value, but fewer than 2,000 borrowers have used that program through December.

The administration says it is also considering new ways to allow distressed homeowners to refinance through the Federal Housing Administration.

Unfortunately, many of the programs the government has created have been largely unsuccessful. Borrowers should know their rights in short sale, and the foreclosure process. For more information, contact a Kirkland Foreclosure Attorney.

Our Firm:

Weitz Law Firm, PLLC
Kirkland, WA 98033
(425) 889-9300
scottweitz@weitzlawfirm.com

January Foreclosure Update

Below is a AP release discussing the Foreclosure Crisis in Amercia. My general take from the article is that the yoy increase in Foreclosures is an indication that the 'recovery' is not taking hold. For more information on your rights, consider seeking counsel from a Seattle Foreclosure Attorney.
AP, 2010

The number of U.S. households facing foreclosure in January increased 15 percent from the same month last year, and a surge in cash-strapped homeowners who've fallen behind on mortgages could be on the way.

More than 315,000 households received a foreclosure-related notice in January, RealtyTrac Inc. reported Thursday. That number is down nearly 10 percent from 349,000 in December, which saw the third highest total since the company began tracking foreclosure data in 2005.

In January, one in 409 homes were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions. Banks repossessed more than 87,000 homes last month, down 5 percent from December but still up 31 percent from January 2009.

January marked the 11th straight month with more than 300,000 properties receiving a foreclosure filing. The numbers could stay above that level as unemployed homeowners who have tried to keep up with their mortgages finally start missing monthly payments.

Mortgage financier Fannie Mae reported in late January that the rate of borrowers who have a conventional loan on a house and are seriously delinquent was 5.29 percent in November, more than doubling the rate of 2.13 percent in November 2008. Borrowers are considered seriously delinquent if they are past due by three months or more, or are in foreclosure.

"There's a lot of foreclosures in the pipeline, and the number is going to continue to get bigger," said Patrick Newport, an economist with IHS Global Insight.

Last month's foreclosure activity followed a pattern similar to that of a year ago, when a double-digit percentage increase in December was followed by a 10 percent drop in January.

The dip in January's numbers may be due to processing delays by lenders during the end-of-year holidays, said Rick Sharga, senior vice president of RealtyTrac, which is based in Irvine, Calif.

"I don't think it's an early sign of the coming of the end of the foreclosure crisis," Sharga said.

A record 2.8 million households were threatened with foreclosure last year, and the numbers are expected to rise to between 3 and 3.5 million homes this year, RealtyTrac said.

Slowing the foreclosure rate is a key step in the recovery of the real estate market and the overall economy. The foreclosure crisis forced the federal government and several states to come up with plans to prevent or delay the process to help delinquent borrowers.

Foreclosed homes are usually sold at steep discounts, so they often lower the value of surrounding properties. Cities lose property tax dollars from foreclosure homes that sit empty and from declining home values, straining local economies. Home prices have stabilized in some cities, but are still down 30 percent nationally from mid-2006.

Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, subprime mortgages were mostly the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

Among states, Nevada posted the nation's highest foreclosure rate, followed by Arizona, California, Florida and Utah. Rounding out the top 10 were Idaho, Michigan, Illinois, Oregon and Georgia.

The metro area with the highest foreclosure rate in January was Las Vegas, with one in every 82 homes receiving a foreclosure filing. It was followed by Phoenix and the California cities of Modesto, Stockton, and Riverside-San Bernardino-Ontario.

Fannie & Freddie problems

Excerpts from a terrific Article in the WSJ regarding Fannie, and Freddie

MCLEAN, Va.—When Charles E. Haldeman Jr. became Freddie Mac's chief executive officer in August, the ailing housing-finance giant had already consumed $51 billion of government money to stay afloat. It's likely to need even more.

Freddie's federal overseers nevertheless have instructed Mr. Haldeman to focus on something that isn't likely to make the bleak balance sheet look any better: carrying out the Obama administration plan to allow defaulted borrowers to hang onto their homes.

Former Fannie CEO Daniel Mudd testifying in 2008, says the U.S. is running Fannie and Freddie 'not as a business.'On a recent afternoon, employees at Freddie's headquarters here peppered Mr. Haldeman with concerns about the company's future. He responded that they were "fortunate" to have such a clear mission—the government's foreclosure-prevention drive. "We're doing what's best for the country," he told them.

Freddie and its larger rival, Fannie Mae, were among the first big financial institutions to receive massive federal bailouts after the financial crisis hit in 2008. Government officials have been racing to fix bailed-out car makers and banks and are pushing to reshape the financial-services industry. But Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government.

Nearly a year and a half after the outbreak of the global economic crisis, many of the problems that contributed to it haven't yet been tamed. The U.S. has no system in place to tackle a failure of its largest financial institutions. Derivatives contracts of the kind that crippled American International Group Inc. still trade in the shadows. And investors remain heavily reliant on the same credit-ratings firms that gave AAA ratings to lousy mortgage securities.

Fannie and Freddie, for their part, remain at the core of a housing-finance system that inflated a dangerous housing bubble. After prices collapsed, sending shock waves around the world, the federal government put America's housing-finance system on life support. It has yet to decide how that troubled system should be rebuilt.

On Dec. 24, Treasury said there would be no limit to the taxpayer money it was willing to deploy over the next three years to keep the two companies afloat, doing away with the previous limit of $200 billion per company. So far, the government has handed the two companies a total of about $111 billion.

This is a scary thought. Considering Fannie and Freddie back a huge portion of the mortgages in the U.S., loses to the taxpayer will be staggering.

The government is willing to tolerate such open-ended exposure for two reasons. First, it sees the companies as essential cogs in the fragile housing market. Fannie and Freddie buy mortgages originated by others, holding some as investments and repackaging others for sale to investors as securities. Together with the Federal Housing Administration, they fund nine in 10 American mortgages. Worries about potential insolvency would cripple their ability to fund home loans, which would hamstring the market.

Second, the companies are a convenient tool for the administration to use in its campaign to clean up the housing mess.

"We're making decisions on [loan modifications] and other issues, without being guided solely by profitability, that no purely private bank ever could," Mr. Haldeman said in late January in a speech to the Detroit Economic Club.

Besides playing a key role in the loan-modification program, Fannie and Freddie have jump-started lending by state and local housing-finance agencies by helping to guarantee $24 billion in debt. They also are lending support to the apartment sector by becoming the main funders of loans to builders and buyers of apartment buildings.

Freddie CEO Charles Haldeman says: 'We're doing what's best for the country.'
By using Fannie and Freddie for such initiatives, the White House doesn't have to go to Congress for funding. The Treasury and White House can simply issue instructions to Fannie and Freddie via their federal regulator, the Federal Housing Finance Agency, or FHFA.

The government is "running Fannie and Freddie as an instrument of national economic policy, not as a business," says Daniel Mudd, who was forced out as Fannie Mae's chief executive in September 2008 when the government took control.

Assistant Treasury Secretary Michael Barr says that because Fannie and Freddie are "owned by the taxpayers in the middle of the biggest housing crisis in 80 years," it would be unrealistic to expect the companies wouldn't be used to help stabilize the market. He says the administration's actions have been "prudent" and "consistent with taxpayer protection."

I pose the question: Are we stabilizing the market or prolonging the agony?

Some housing experts contend that prolonged government intervention will make it more difficult and costly to eventually wean the companies off government support. "The more aggressively we continue kicking the can down the road, the larger the losses become and the harder it becomes" to address the companies' future, says Joshua Rosner, managing director at investment-research firm Graham Fisher & Co.

As mortgage delinquencies rise, Fannie and Freddie are required to set aside more capital to cover anticipated losses. Each quarter, if their revenues are insufficient to meet those financial needs, the Treasury has to kick in more money.

With delinquencies still rising, the outlook is grim. At Freddie, 3.87% of single-family mortgages were at least 90 days past due at the end of December, up from 1.72% a year earlier. Fannie is worse: 5.29% were 90 days past due in November, up from 2.13% a year earlier.

With the fate of the two companies now largely in the hands of the government, employees have shifted their attention to the administration's loan-modification effort, called Home Affordable Modification Program, or HAMP. It provides financial incentives for banks and other owners of mortgages to reduce monthly loan payments for at-risk borrowers. Fannie and Freddie's job is to oversee how loan servicers—the firms that collect monthly payments on mortgages—are working with homeowners on the front lines.

The program is off to a slow start. The administration said it would offer three million to four million borrowers the chance to modify loans. Through December, loan servicers have signed up 903,000 borrowers for trial modifications. Just 66,000 have received a permanent fix so far.

Both Fannie and Freddie have struggled at times to adjust to the new marching orders. Fannie has warned in financial filings that the modification program had shifted "significant levels of internal resources and management attention" from other parts of the business, which could lead to a "material adverse effect" on the business.

He says he and others warned administration officials that the loan-modification goals were unrealistic, that borrowers whose homes weren't worth what they owed were unlikely to take part, and that many participants would be likely to re-default within months. "They really didn't want our views," Mr. Moffett says.


Freddie's current chief executive, Mr. Haldeman, 61 years old, says it was immediately "very clear" to him that the loan-modification program was a top priority of the Obama administration. But the program isn't his only headache. As foreclosures mount, Freddie finds itself with title to more and more homes. The company wants to price them to sell, but doesn't want to put downward pressure on overall housing prices.

"Imagine having to keep the lawns mowed, the lights on, and the property secured for one house, let alone more than 40,000 homes all over the country," says Mr. Haldeman. "It's not an easy process."

The Mortgage Bankers Association estimates that mortgage delinquencies won't peak any sooner than the middle of this year. At the current pace, around 6% of Fannie's loans and 4.9% of Freddie's are expected to go into default over the next 18 to 24 months, producing losses that would raise the price tag on Treasury's bailout to $175 billion, according to October estimates by investment bank Keefe, Bruyette & Woods Inc. The bank has since said that even that dire forecast is too optimistic.

Former FHFA head James Lockhart, the companies' top regulator until last August, says the U.S. is unlikely to ever fully recoup its investment in the two companies.

As I've mentioned before, I don't think this is a political issue as both sides of the congressional aisle are culpable and there is simply no quick fix to this crisis. The government simply needs to decide if we are going to be socialists or capitalists. Pick one and go with it. Playing this game where we pretend to be capitalists, while acting like socialists will only prolong our problems.

For more information on the Foreclosure Crisis, consider contacting a Kirkland Foreclosure Attorney.

Our Information:

Weitz Law Firm, PLLC
5400 Carillon Point
Building 5000
Kirkland, WA 98033

HAMP Program Results

Below are some excerpts from a recent article in the Wall Street Journal:

Modified Loans Helps Housing Market:

President Barack Obama's plan to ease mortgage terms for millions of distressed homeowners, announced nearly a year ago, now is widely panned for having fallen short of its ambitious goals.

But some analysts say the program is a success in one sense: By slowing the flow of foreclosed homes to the market, it has helped prop up housing prices, at least for now. The administration's Home Affordable Modification Program, or HAMP, and other state and federal efforts to avert foreclosures have helped "buy time" for the housing market, preventing steeper home-price declines.

The official goal of HAMP is to reduce monthly loan payments for distressed borrowers so they can afford to stay in their homes. But housing analysts at UBS Securities in New York, in a report last week, described HAMP as "a vehicle to delay the timing of new foreclosures hitting the market."

UBSis dead on. For many borrowers, HAMP has become nothing more thana a great tool to extend the Foreclosure process and remain in their home without paying their mortgage.

Most analysts assume that a large share of the people who get modifications will default again within a year or two. Thus, some critics say the government and banks are merely "kicking the can down the road" on foreclosures that will hit the market eventually. The unresolved question is whether the housing market will be better able to absorb foreclosed homes in a year or two. That depends on whether the economy and job growth recover.

Treasury officials argue that the loan-mod program is working out well in terms of keeping many people in their homes, but they also acknowledge the broader effect on home prices: "I think it has had quite a strong stabilizing influence" on the housing market, Treasury Assistant Secretary Michael Barr said in a briefing Friday.

In late 2008, banks dumped many of their foreclosed homes on the market, pushing prices down sharply in some areas. Around that time, though, banks began acquiring fewer homes through foreclosure. That was partly because of various moratoriums on foreclosures at the state and federal level, followed by HAMP. Because of HAMP, banks feel heavy political pressure to carefully screen borrowers to see which ones might qualify for loan modifications before proceeding with foreclosures. That has extended the time it takes to decide whether to force through a foreclosure, creating a huge backlog of unresolved cases.

As a result, there are fewer foreclosed homes on the market. The number of such homes available for sale dropped to 637,000 in November 2009 from 845,000 a year earlier, Barclays Capital estimated. Barclays expects the number to start rising again as people who don't qualify for a loan modification or don't want one lose their homes, and peak at 747,000 in April before declining gradually.

That has implications for pricing. The S&P/Case-Shiller 20-city home price index is down 29% from its peak in 2006 but has leveled off in recent months as fewer foreclosures have hit the market.

As of Sept. 30, about 7.5 million households were behind on their mortgages or in the foreclosure process, according to the Mortgage Bankers Association, a trade group. It isn't clear how many of those homeowners can ultimately be rescued. HAMP so far has resulted in about 900,000 loan modifications, most of which are still in a trial period.

Louis Amaya, chief operating officer of National Asset Direct Inc., a New York-based asset manager whose affiliates purchase and service troubled mortgage loans, said the administration has used HAMP to shame lenders into offering lots of loan modifications but that a large share of those aren't sustainable. "The reality is that most people aren't going to qualify for a loan mod" that makes economic sense for both the borrower and lender, Mr. Amaya said. Those who can't afford their homes should be allowed to exit with dignity, such as through a short sale, in which the house is sold for less than the loan balance, he said.

Instead, HAMP is "dragging out" the foreclosure process, Mr. Amaya said, and "we need to let the market correct itself." Until the huge backlog of loans headed for foreclosure is cleared, he said, the housing market can't recover.

For better or for worse, we have mitigated the foreclosure problem in the short term. The question remains whether the economy can improve sufficiently to overcome the current credit hurdles before the next waves of foreclosures come.

For more information on the HAMP Program or other Foreclosure issues, you should consider talking to a Seattle Foreclosure Attorney.

Strategic Foreclosure - Immoral or Smart Business?

There was an interesting piece on Yahoo.com/finance regarding the ethical issues involved with walking away from your mortgage.

Click Link Here:

When making the decision to 'strategically default', you should consult a Washington Foreclosure Attorney, or an Attorney who does a lot of Foreclosure work in your State. The law varies State to State in regards to deficiency options, and the ability of the banks to pursue other assets.

Basics of Washington Law:

In Washington, the general rule is that the foreclosing party (Bank) cannot pursue a deficiency. The foreclosing party will simply be able to foreclose on the secured collateral. Washington does, however, allow the parties with Jr. Liens (ie. 2nd & 3rd mortgages)to the foreclosing party to seek a deficiency judgment. Accordingly, the decision to walk away should be well thought out based on the facts of your particular situation.

For more information, see a Seattle Foreclosure Attorney.

Our Firm:

Weitz Law Firm, PLLC
5400 Carillon Point
Building 5000, 4th Fl
Kirkland, WA 98033
T: (425) 889-9300

Nationwide Foreclosure Update

Here is an interesting video from WSJ.com featuring Rick Sharga of Realty Trac, a group that tracks foreclosures nationwide:

Click Link here.

Mr. Sharga explains that we are currently in the 2nd phase of 3 phases in the foreclosure/ credit crisis. In Washington state, I would argue that we are closer to the first phase. That said, you should be aware of your rights in protecting your home from the Banks.

For more information on the Foreclosure process in Washington State, please consider contacting a Kirkland Foreclosure Attorney.

Short sales & Your Credit

Facts about Short Sales:

Effects of Short Sale on your Credit Report:• 200-300 point reduction on your FICO score, depending on the borrower.
• Inability to obtain a mortgage for at least 24 months.

Effects of late payments on Credit Report:• 30-60 day late payments: an “isolated occurence” (do not have 30-60 day late payments on multiple accounts) does not cause long term damage to your credit.
• 90-120+ day late payments: drop credit score for the long haul (around 7 years).

Effects of Collections (post Short Sale Deficiencies) & Debt Settlement• Credit score will suffer with both; with debt settlement, however, you’ll eventually repay your debt and thus helping to rebuild your credit score
• Do not simply leave your debt hanging with collections in hopes that they will charge off the loan. They will continue to report that you are in default of “installment payments,” etc. They can do this for years. It is better to settle your debt and move on. You especially do not want additional 90 day late payments reported as your credit score at that point will drop significantly.

For more information, feel free to contact us at (425) 889-9300 or @ ScottWeitz@weitzlawfirm.com.

For our website, please clink link for Short Sale Attorney in Kirkland.

Lowering Your Mortgage Payments

If you are like many people right now and behind on your mortgage payments, you can lower your mortgage payments in a variety of ways.

Loan Modification: This is negotiated between you and your lender. While it is at the discretion of your lender to approve the modification, here are a few ways through a Loan Modification to reduce your monthly mortgage payments:

Extend the Repayment Period -- By extending the repayment period on your loan, you bring down the monthly payments and allow your home to appreciate in value, gaining equity.

Reduce the Interest Rate -- Negotiate with the lender to apply the current market interest rate, assuming it is lower than what you are paying right now.

Forbearance: This allows for you to reduce or suspend your payments for a period of time. The downside here is that at the end of the period, you must pay an extra amount on top of the payment due.


For more information, contact a Kirkland Real Estate Attorney.

Economic Considerations of Foreclosure

Foreclosing on your home requires serious consideration for any homeowner. Besides the emotional strain, homeowners must also look at the economic considerations involved in possibly foreclosing on their home. Here is what you should ask yourself:

(1) Do I have equity in my house?

This is a highly important question for any homeowner considering foreclosure. To find out what your home is worth, put your address in at www.zillow.com, www.housevalue.com, or similar websites.

If your home is worth at least as much as you owe on it, foreclosure may not be your best option. Or you can sell the house and free yourself from the mortgage.

(2) Can you make your monthly payments?

An old rule of thumb is that a homeowner should not pay more than 25% of their gross income for shelter. If your mortgage payment exceeds 25% of your gross income, you may need to evaluate whether this is sustainable for the future.

Additionally, there are also online calculators that, while imperfect, can give you an idea of how much house you can afford. Google "home affordability calculators" and choose one for yourself.

Finally, ask a Budget-Counseling Agency to look over your income and expenses to help determine if you can afford your monthly payments.

For more information, contact Kirkland Foreclosure Attorney.

Washington Deficiency Judgments Post-Foreclosure

One of the major components of deciding whether to stay in your home or simply walk away is whether you will owe in money should you decide to walk away. In Washington State, the foreclosing lender (typically your 1st mortgage) can not pursue a deficiency judgment except under rare circumstances (a judicial foreclosure - which is extremely rare). Unfortunately, all other mortgagees & lines of credit can pursue a deficiency, however, it is possible to wipe them out by filing a Ch. 7 Bankruptcy or Ch. 13 Bankruptcy.

In sum, if you have just one mortgage, you will be able to walk away from your mortgage without owing any money. If you have multiple mortgages, the decision process will be more complicated.

For information on Washington Foreclosure Laws, please consider seeing a Washington Foreclosure Specialist.

Our Firm:

Weitz Law Firm
Kirkland, WA 98033

(425) 889-9300

weitzlawfirm.com

Washington Foreclosure Timeline/ Process

Over the course of this blog, I will provide detailed information on the Foreclosure porcess in Washington. Detailed information on the foreclosure process, tips to stop foreclosure, arguments to fight foreclosure, and ways for consumers to maximize their time in their homes throughout this process. Millions of people throughout the country find themselves struggling to stay in their homes, we want to a valuable resource for people in this unprecedented economic times. While this information will be helpful, it should not be construed as legal advise, and should not take the place of Seattle Foreclosure Attorney.

PLEASE SEE RCW 61.24 for any updated laws to the Washington Foreclosure Laws.

The Washington Foreclosure Timeline:

1) The Mortgage holder (ie. bank, investor) generally must provide an option for the homeowner to elect a Face to Mediation to review their loan rights and avoid foreclosure whether that be short sale, loand modificaiton or otherwise at least 30 days before serving a Notice of Default. This is will come in the form of a 'Notice of Pre-foreclosure Options'.

Note that this law is new as of July, 2011 and there are exceptions to this rule that should be discussed with a Attorney or HUD Counselor.

2) A Notice of Default must be served on a Homeowner at least 30 days prior to serving a Notice of Trustee Sale.

3) A Notice of Trustee Sale must be served at least 90 days prior to the actually Trustee Sale (Foreclosure sale).

4) The Trustee Sale is the actual foreclosure

5) After the sale, a homeowner has 20 days to abandon the property under Washington law.

Homeowner Tip: Without any additional delays like a loan remodification request, or bankruptcy, a Homeowner can have 170 days of rent free living!!!

For further tips on navigating the foreclosure process, please see a Seattle Foreclosure Attorney.

Our Firm Contact information is below:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
(425) 889-9330

scottweitz@weitzlawfirm.com

Protest Your King County Property Tax Assessment

General Facts about King County Property Tax Assessments:

King County property owners who believe the assessed value of their property exceeds its true value may appeal following the receipt of the Assessor’s revaluation notice by timely filing a petition to the King County Board of Equalization on OR before July 1st of the assessment year OR within sixty (60) calendar days after the date listed on the Assessor’s value change notice (whichever date is later). For more information, please see an experienced King County Real Estate Attorney.

How to Appeal

Filing an appeal with the BOE only requires the submission of two sets of the BOE’s petition form. As long as your petition includes sufficient information or statements to apprise the Board and the Assessor of the reasons why you believe the Assessor’s determination is incorrect, it is not necessary to include all the documentary evidence you intend to submit within you initial filing.
Factual Error Corrections


Assessor’s Response to Your Appeal

You can expect a response from the Assessor in two to six months. Based on the evidence included within your petition, the Assessor may choose to recommend an adjustment in the assessed value. If this occurs and you agree to the Assessor’s stipulated or recommended value amount, the need for a hearing will likely be eliminated. About 20% to 25% of the petitions filed each year are resolved in this manner.

For assistance in appealing your property value, consider contacting a Kirkland Real Estate Attorney.