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  Dos and Don’ts of Homebuyer Incentives

  Homebuyer incentives can be smart marketing or a waste of money. Find out when and how to use them.

  Be sure you’re sending the right message to buyers when you throw in a homebuyer incentive to encourage them to purchase your home. 

  When you’re selling your home, the idea of adding a sweetener to the transaction—whether it’s a decorating allowance, a home warranty, or a big-screen TV—can be a smart use of marketing funds. To ensure it’s not a big waste, follow these dos and don’ts: 

  Read more: http://buyandsell.houselogic.com/articles/dos-and-donts-homebuyer-incentives/#ixzz1FTVlORYw

   Read

   

Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:

1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.

2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.

3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.

4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.

5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the “seriously delinquent rate” — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.

Source: Freddie Mac (12/09/2010)

When it was time for George Gabelman to cook up some offers for his home, he hired a real estate agent. And he picked one the same way most people do:

“He was a personal friend. I live in New Jersey and I come down here visiting and I met him one day and we got to be friends.”

Is that how you were hired where you work? Look, you’re paying 6% of your home’s value for this person. Make sure you get your money’s worth.

Boil it down, and agents get paid big bucks for two reasons: one, first, they have access to Multiple Listing, that exposes your home to the most potential buyers. Second, they should be good at marketing that house. .

And that’s where you separate the wheat from the chaff. How? By asking the same questions you were asked when you applied for your job. Like experience:

“I’m new. I’m new in the business. Only 28 years.”

And effectiveness. How much property have you personally sold in the last year?

“In the last year, I have sold nearly 20 million dollars.”

And then how are you specifically planning to market my property? What’s your plan?

“Newspaper advertising is usually done today just for the benefit of the owner. But that’s not how a piece of property gets sold. Internet. Internet, internet, internet.”

And then there’s the feeling you get…the same feeling that someone had the day they hired you.

Bottom line? Selling a home is tough, especially these days. If you’re going to hire help, get your money’s worth.

By August 1, 2010, all servicers who are participating in Making Home Affordable will be helping homeowners who are struggling to stay current because of unemployment.

Here are the details:

Forbearance Plan Eligibility:

A borrower must meet the Home Affordable Modification Program (HAMP) eligibility criteria as well as:

• be unemployed when request is made;
• be entitled to receive unemployment benefits in the month of the UP forbearance plan effective date (servicers have discretion to require a borrower to have received unemployment benefits for up to three months before commencement of the forbearance plan); and
• request an UP forbearance plan before they become seriously delinquent (i.e., miss three monthly mortgage payments).

Forbearance Plan Evaluation:

Servicers must follow these requirements when evaluating a borrower for an UP forbearance plan:

• Unemployed borrowers who request assistance for HAMP must first be evaluated for an UP forbearance plan. If they qualify, they must be offered an UP forbearance plan before they can be considered for HAMP.
• Borrowers currently in a HAMP trial period plan who become unemployed may receive an UP forbearance plan if they have missed less than three monthly payments as of the first payment due date of the HAMP trial period plan. If they do qualify, their existing HAMP trial period plan must be cancelled and the UP forbearance plan must immediately begin without waiting until the borrower has received three months of unemployment benefits.
• Borrowers previously determined to be ineligible for a HAMP modification may request an UP forbearance plan if they meet the eligibility requirements.
• Borrowers in a permanent HAMP modification who become unemployed are not eligible for an UP forbearance plan.

Forbearance Plan Terms

• Term must be three months or upon reemployment (whichever is less). Servicers may extend this period according to their investor/regulatory guidelines.
• Monthly mortgage payment must be reduced to less than or equal to 31% of the borrower’s gross monthly household income and may be suspended in full.

Transition to HAMP

• Borrowers in an UP forbearance plan will be evaluated for HAMP at either reemployment or 30 days prior to the UP forbearance period expiring (whichever happens first).

For those with questions (after speaking with your servicer), you can talk with a HUD-approved housing counselor by calling 1-888-995-HOPE (4673).

Contact Lee Williams

Keller Williams Palos Verdes Realty

Lenders and loan servicers participating in HAFA must sign a servicer participation agreement with Fannie Mae — the program administrator and financial agent representing the United States in this case — to participate in HAMP by October 3, 2010 (the previous deadline was December 31, 2009. This was updated March 26, 2010)1 Therefore, most lenders are participating and those who are not have the opportunity to at any time. Lenders are developing comprehensive programs in order to prepare for the expected flood of applications for short sales and deeds-in-lieu of foreclosure that HAFA will unleash.  

Bank of America
  

• Bank of America announced in March its commitment to participate in HAFA when it activates. It has been preparing for a more streamlined process for months though its support of HAMP
• Bank of America’s short sale processor Equator announced the launch of a brand-new best practices software workflow solutions directly related to HAFA2
• Bank of America’s HAFA website gives homeowners details on their support of the program

Citibank  

• Citibank is participating in HAMP, which is a requirement for participating in HAFA
• CitiMortgage has launched a pilot Foreclosure Alternatives Program that assists its borrowers in avoiding foreclosure by offering a deed-in-lieu that allows homeowners to remain in their homes for six months after they agree to sign over their property deeds to CitiMortgage. The pilot program offers relocation counseling and a minimun of $1,000 in relocation assistance. Currently the program is available in Texas, Florida, Illinois, Michigan, New Jersey, and Ohio.3

JP Morgan Chase  

• Chase has announced their support of HAFA and posted a Short Sale Information Packet on their website

GMAC Financial Services  

• GMAC has started a program to preemptively contact borrowers who are not eligible for loan modifications under HAMP and offering alternatives through HAFA and claims a three-day turnaround on short sale applications4

Wachovia  

• Wachovia is participating in HAMP, which is a requirement for participating in HAFA

Wells Fargo  

• Wells Fargo is participating in HAMP, which is a requirement for participating in HAFA
• Wells Fargo has been ramping up efforts to assist homeowners by actively contacting those who are facing hardships5
• Wells Fargo announced on April 14, 2010 their support of HAFA and ongoing support for foreclosure avoidance programs. Wells Fargo has more than 17,400 U.S. staff focused on home retention and foreclosure avoidance.6

NATIONAL PARTICIPATING SERVICERS  

Servicers that participate in HAFA are also participating in HAMP. For a full list of servicers participating in HAMP, visit Making Home Affordable’s Participating Servicers List.Below is a list of the Non-GSE Participants in HAMP7

Last updated: 17 May 2010
  

Sources: 

1. Making Home Affordable. Supplemental Directive 09-09 “Background” p. 1 (2010): https://www.hmpadmin.com/portal/docs/hafa/sd0909r.pdf
2. PR Newswire. “Equator Launches HAFA Solution” (2010): http://www.prnewswire.com/news-releases/equator-launches-hafa-solution-88226552.html
3. Citigroup Inc. “Citi to Pilot Foreclosure Alternatives Program to Help Distressed Borrowers” (2010): https://www.citimortgage.com/Mortgage/misc/ForeclosureAlternativesProgramPressRelease.pdf
4. HousingWire. “Servicers Streamlining Short Sales as HAFA Nears” (2010): http://www.housingwire.com/2010/03/22/servicers-streamlining-short-sales-as-hafa-nears/
5. Wells Fargo. “Wells Fargo Doubles HAMP Completions and Continues Modification Efforts” (2010): https://www.wellsfargo.com/press/2010/20100217_hamp_updates
6. Wells Fargo. “Wells Fargo Continues to Deliver Modifications to More Borrowers and Focus on Home Retention Effort” (2010): https://www.wellsfargo.com/press/2010/20100414_HAMP
7. Making Home Affordable. “Servicer Perfomance Report Through April 2010″ (2010): http://www.financialstability.gov/docs/April%20MHA%20Public%20051710%20FINAL.pdf

California’s real estate association is warning people who lose — or are in danger of losing — their homes to foreclosure that they could face a hefty lawsuit from the lender, even after handing over the keys.

California law has protected borrowers from so-called “deficiency” liability, where in essence the house serves as collateral for the loan, for their original mortgages since the 1930s.

But if consumers refinanced their original mortgage — even for a lower interest rate or to finance home improvements — and fail to make payments leading to foreclosure, lenders can sue for the difference between the money owed and the value of the property, according to the California Association of Realtors. For example, if a homeowner has $200,000 outsanding for a refinanced mortgage and the lender forecloses on the house with the property valued at $150,000, the former homeowner could be liable for the remaining $50,000.

“Most homeowners have no idea they are personally liable,” CAR president Steve Goddard said in a news release Tuesday. “Foreclosure is difficult enough on a family. Getting sued for tens of thousands of dollars after losing your home is much worse.”

The state association has sponsored legislation — Senate Bill 1178 by state Sen. Ellen Corbett, a Democrat from San Leandro — to close the loophole.

Corbett says many homeowners are not aware of the law, which allows banks to seek funds for refinanced loans. The bill only affects refinanced mortgages.

“Lenders have a responsibility to ensure that borrowers understand loan terms and can meet them,” Goddard said. The bill “puts in place much-needed consumer protections and deserves swift passage by the California Legislature next week.”

A short could negotiate away the liability and protect home owners from collections and law suits. Click here for details AVOID FOECLOSURE

But the bank cautioned that it is seeing the beginning of a decrease in the number of active trial modifications, in part because of stricter HAMP requirements.

New rules requiring financial information before a borrower can enter the trial modification period “will slow the inflow of new trial modifications.”

Bank of America claimed the most active trail modifications as of HAMP’s March update with more than 283,000. Wells Fargo was second with nearly 145,000. But Bank of America’s share of those eligible that are in active modifications was only 26 percent, compared to 38 percent for Wells Fargo and 37 percent for JPMorgan Chase.

Under HAMP guidelines, Bank of America is also notifying customers who did not meet eligibility requirements for HAMP or who did not meet the requirements of their trial period plan.

The bank is mailing letters to thousands of these customers, telling them they are not eligible to complete a permanent HAMP modification.

“We are letting customers know that we may explore other homeownership retention options, depending on individual circumstances and investor guidelines,” said Jack Schakett, credit loss mitigation strategies executive for Bank of America Home Loans.

The bank said it has completed a total of 600,000 modifications in foreclosure mitigation efforts since January 2008 “through all available programs.”

Watch this video “Understanding Federal Short Sales Rules: HAFA (Revised, Apr. 5)” from National Association of REALTORS®

Los Angeles South Bay Residents may contact Lee Williams of Keller Williams Realty by completing the form below. We offer local assistance in conjunction with your HUD Approved Housing Counselor and your Mortgage Loan Servicer.

To request a modification fill out these two forms:

• Request Form (Request for Modification and Affidavit)

• Tax Form (Form 4506T-EZ)

Determine if you are eligible for a Home Affordable Modification by using the simple tool on this website.

If you are eligible, you can request a Home Affordable Modification by completing the easy steps below. If you need assistance completing the forms or have questions about the process, free help is available by calling the Homeowner’s HOPE Hotline at 1-888-995-HOPE (4673) and asking for MHA HELP.

Step 1 – Complete the Request Form (Request for Modification and Affidavit)

The Request Formprovides information to your mortgage servicer about your home and financial situation. You can download an instruction guide for completing the Request Form here. After you have completed the form, print two copies—one for your records and one to send to your mortgage servicer.  All of the borrowers on the mortgage must sign the Request Form.

Step 2 – Complete the Tax Authorization (IRS 4506T-EZ Form)

The Tax Formgives permission to your mortgage servicer to request a copy of the most recent tax return you have filed with the Internal Revenue Service (IRS). Click here for instructions on completing the form.After you have completed the form, print two copies—one for your records and one to send to your mortgage servicer.  Only one taxpayer is required to sign the Tax Form.

Step 3 – Gather Proof of Income

Your mortgage servicer is required to verify your income to ensure that the modified mortgage payments will be affordable for you.  The type of documentation you need to provide depends on the source of your income.  The simple Proof of Income Checklist will tell you what documents you need to collect if you are a wage earner, self-employed, or receive retirement income.  Be sure to make copies of your income documentation and keep the originals for your records. 

Step 4 – Send the Documents to Your Mortgage Servicer

After you complete, print, and sign the Request Form and Tax Form, send these documents, along with your proof of income, to your mortgage servicer.  You will find the correct mailing address and fax number at Contact Your Mortgage Servicer.

Step 5 – Contact a knowledgeable Realtor in your area who can help tie it all together. Complete the questions below to find out more about these and other foreclosure avoidance programs.