October 18, 2014

Mortgage Debt Relief Act

An article on Housingwire suggests “extending the tax break through 2015 and making it retroactive to cover all of 2014 would be a good start. Congress should follow the leadership of Sen. Debbie Stabenow, D-Mich., and Sen. Dean Heller, R-Nevada, and move immediately to extend the bipartisan Mortgage Forgiveness Debt Relief Act before more damage is done”.

I like the sound of that but these articles always center around the 1099-C which a short seller can receive on a short sale but never discuss the 1099-A that they get when they do a deed-in-lieu or complete a foreclosure.  On top of that the foreclosing lender can also pursue a deficiency judgment in the state of Florida where a short sale can provide debt forgiveness with no deficiency collection.

Even if the Mortgage Debt Relief Act is not extended, there is always the insolvency exclusion to debt forgiveness, so please be sure to check with your tax advisor.

October 5, 2014

EverBank FHA Short Sales

Filed under: FHA Loan,Short Sale
Looks like FHA caught up with EverBank and their short sale shenanigans recently.  HUD OIG reports:

“EverBank did not ensure that the mortgagors’ default on the FHA-insured mortgages was due to an adverse and unavoidable financial situation….Also, EverBank did not conduct a thorough and independent verification of the mortgagors’ income, claimed expenses and personal resources to properly determine if they had the ability to pay their mortgage payments. Lastly, EverBank did not substantiate that mortgagors’ need to vacate the FHA-insured property was due to the cause of the default.”

But is anyone really surprised?  I mean, this is EverBank after all.

September 21, 2014

Home Prices to Fall 15% in the Next 3 Years

Filed under: Real Estate

House prices are 12% overvalued today. They have already started to decline. Today’s misevaluation matches the excess of 2006-2007, just before the Great Recession. Since World War II home prices have been tightly correlated to income and mortgage rates (R2 = 96%). Investors/cash purchasers, which make up 50% of home sales, have driven real estate volatility to unrivaled levels in trackable history. As public policy makers debate seminal decisions on “forward guidance” and unconventional monetary stimulus we note that each 1% increase in rates drops home valuations by another 4%; at a 2% fed funds rate, where fed officials and investors expect to be by the end of 2016, the overvaluation equals 20%. Respectfully, the United States can not afford another housing driven recession. The facts and correlations – the tenets of probabilities – suggest it is more likely than not that home prices fall 15% in the next three years.

Joshua Pollard
“A Financial Imbalance”
Sept 17, 2014

August 21, 2014

Fannie Mae Florida Deficiency Judgments

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It took longer than I had anticipated but it has now officially arrived – a real life nightmare for thousands of homeowners who simply walked away from their upside-down Florida home.  They knew the bank would foreclose but they thought that would be the end of it.  Now they realize this is just the beginning, as the mortgage behemoth Fannie Mae has hired creepy debt collector company Dyck O’Neal to pursue deficiency judgments through the Florida courts.  The Palm Beach Post reports:
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“People are getting served with these deficiency suits and are absolutely shocked,” said Paul Baltrun, director of corporate development for the Law Office of Paul A. Krasker in West Palm Beach. “The size of the judgments — we’re not seeing $30,000 — these are at a minimum of $100,000.”
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But there is a silver lining for those of you who are presently upside-down and facing foreclosure.  A short sale can provide a full release of liability meaning once it’s closed you no longer owe anything to Fannie Mae or her creepy red headed step-child Dyck O’Neal.
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August 10, 2014

BofA HIN Short Sale Incentive Still Pays

Filed under: Florida,Short Sale
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My client went missing for three weeks and then called me out of the blue.  I asked him where he was living and he said on the street.  I said you mean you are sleeping outside on the ground?  He said no, i sleep in a cardboard box behind the Cumberland Farms on Seminole Boulevard.  I said why aren’t you living in the house?  He said i didn’t know i could.  I said i’m coming to get you right now.  OK, I’ll pack my bags he says.
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I pull up to the Cumberland Farms on Seminole Blvd and there he is with a glad trash bag filled to the max about four feet tall.  We put it in my trunk and my trunk still smells today.  Anyways, brought him back to the house and explained that BofA’s short sale letter states that you may be eligible for $5,000 if you live in the house.  He wrote a handwritten letter that i attached to the HUD that was submitted stating he was now living in the house.
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BofA tried a couple times to get me to remove it but fortunately they agreed to pay it in the approval letter i received today even though they knew he wasn’t living in the house at the time he made application.
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I think this $5,000 is going to change his life.

April 24, 2014

Completing A Short Sale Without Paying A Dime

Filed under: Florida,Mortgage,Short Sale

If you’re curious why your short sale lender is asking you to pay them either by way of cash contribution or promissory note executed at closing of your short sale then the below information may be useful.  Here is an excerpt from the article:

Is your mortgage current or delinquent?  And if delinquent, how delinquent?  Shorting lenders are going to look at your short sale through different glasses depending on whether your mortgage is up-to-date or past due at time of short sale request.  When a mortgage is current and not past due, the short sale lender presumes there is no hardship.  We’ll get into this in more detail in a future article but generally, a short sale lender will not even consider completing a short sale for a borrower who is current unless there has been a death, divorce, disability, or distant employment transfer.  The ideal situation for completing a short sale with no contribution is when..

July 4, 2012

Independence From Debt

The Declaration of Independence was the document that announced to the world the American colonies status as free and independent states.  It was adopted in Congress on July 4, 1776.  The final sentence reads: “And for the support of this declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor”.

(pause)

I want the best for everyone everywhere and this article won’t travel down a political road, other than to make a comment that we, as a people, have become complacent.  I’m reminded of these words: “But many [that are] first shall be last; and the last first”.  I’ll now turn this article’s steering wheel into the Personal Finance Path.  Woah!  Look out!  It’s a rocky road and for some there’s a roadblock up ahead.  Fortunately, with a little maneuvering, the roadblock can be avoided altogether.  And don’t ask me about the cliff – we’ll get to that later.

The Broken Credit Blog is thankful for the many positive responses from readers who’ve shared true to life experiences of how they’ve triumphed over adversity.  It’s the goal of this site to be a positive voice in the marketplace sharing free information to anyone desiring credit score improvement.  This month marks our eighteenth-month on the internet and we’ve recorded over two million hits in one month.  We are at the same time, amazed and thankful – it keeps us writing and working for you.

In my view, personal finances are similar to personal fitness.  I regularly see people working out at the gym with a personal trainer.  The same trainer may be working out with one person on one day and another on another day.  Regardless of that person’s fitness level, the trainer’s goal is to improve that individual at that time.  It doesn’t matter how out-of-shape or how Olympic-world-champion someone might be – the trainer’s goal is to assist that person with improvement.  Such is the same as the Broken Credit Blog’s role.

So, wherever you are, and whatever your station in life, this trainer wants to see improvement in you.  I hope everyone enjoys their 4th of July and remembers what prompted the celebration in the first place.  Now then, after everyone has finished eating hamburgers and hotdogs, it’s time to start working out.

Hey you with the 672 FICO, give me eight more reps!

June 18, 2012

HAFA Short Sale Credit Report

Filed under: Credit Reports,Short Sale

There is something that the readers of the Broken Credit Blog will learn today that hasn’t been posted anywhere on the internet.  Of course, once it’s posted by yours truly it will then become fodder for so-called pseudo credit experts to post on their blogs but I say so be it!  The accurate, correct, credit reporting information is what is most important – accurate, correct, credit reporting – now there’s an oxymoron!

OK, enough with the suspense.  There’s been a change to non-GSE HAFA short sales that went into effect this month.  Quoting from HAFA Supplemental Directive 12-02 (page 19):

The requirements in Section 11.2, Chapter IV of the Handbook related to credit bureau reporting of HAFA transactions are amended as follows:

If the real estate is sold for les than the full balance owed and the deficiency balance is forgiven, report the following Base Segment fields as specified:

Account Status Code = 13 (Paid or closed account/zero balance) or 65 (Account paid in full/a foreclosure was started), as applicable.

Do you know what that means Broken Credit Bloggers?  That means that a short sale under HAFA guideleines for non-GSE loans is required to appear on a credit report the same as a full sale.  Did you do a short sale they will ask in the future?  Shhhhhh!  We’ll keep it a secret.

This has been a public service announcement from the Broken Credit Blog.

We now return to our previously scheduled programming.

April 16, 2012

Sorry Daughter But No Pay No Stay

I hold a private note and deed of trust on a house in Calif.  If I foreclose on that note, does that effect the trustors’ credit(it’s my daughter going thru divorce)?

John (more…)

April 14, 2012

Debt Collection after a 1099-C

First of all I want to say you have an excellent and very informative web site.  I have a question that I think will stump you. 

Let’s assume I have a credit card with a credit card company.  Let’s also assume that I quit paying on this account and the credit card company reports that loss on their taxes as most businesses do.

If a business would write that account off and the credit was given by the IRS on the proper form then in my opinion there is no debt anymore.  If anybody owns it the government does.

My question is this.  If the credit card company writes it off as a loss how can they turn around and sell that account to a Junk Debt Buyer?  Just to make this more interesting I will ask a second question.  If the account was written off how can the Junk Debt Buyer purchase anything that really no longer exists? 

I personally don’t know of any company after a debt has been written off that will even attempt to collect it at a future date.

It just appears to me that the credit card company is trying to have it both ways.  First claiming the loss on taxes.  And secondly then turning around and selling something they really don’t have the right to sell. 

Can I please take my star now or must I continue to try and Stump The Experts.

Thanks again for a really great web site.

Robert (more…)

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