In the news : Wells Fargo joins Bank of America participating in a government program to modify second mortgages if the home owner has already modified their first mortgage.
The program is part of the government’s Home Affordable Modification Program (HAMP) that aims at reducing monthly payments to help customers stay in their homes.
HAMP offers lenders who made “piggyback” loans — second mortgages that allowed consumers to make a small or no down payment in recent years — incentives to lower payments or eliminate the loans entirely. As usual, it remains to be seen if these incentives will be passed thru to second mortgage holders.
Customers of Wells Fargo or Bank of America who have already modified their first mortgage through the HAMP modification programcan also apply to modify their second mortgage. All first-lien HAMP customers with second-lien mortgages should received mailed notices to make them aware of the new payment relief option … but maybe you heard about it first here.
More a consumer warning, I digress a bit here on a topic indirectly related to home ownership … the matter of trust(s) …. (thank you Billy Joel).
There are a goodly number of snake oil vendors catering to everyone’s fantasy that you can lower or eliminate your tax bill putting your home in a legal Trust of some kind.
No surprise when it involves an attorney, establishing a Trust is expensive, depending on the complexity of your situation and what you’re trying to achieve. One or two thousand dollars or more is not uncommon. But as usual, Buyer Beware, and make sure you retain a lawyer that will back up their work and not just tell you what you want to hear while they’re collecting on their invoice.
Not that it’s encased in concrete, the following is the IRS take on Trusts as a tax avoidance strategy (notice that they use the word “evasion”). As always, do your own due diligence and also retain good legal counsel. Establishing a Trust that will withstand the scrutiny of IRS will need more than a boilerplate form bought on eBay.
IRS View on Trust Tax Evasion Schemes (source : irs.gov)
Trust/estate matters are the third highest area of growth among top CPA firms.
Domestic trusts filed 3.6 million Form 1041 returns in 2003; the third most frequently filed income tax return behind individual and corporate returns.
Since the mid-1970s the number of Form 1041 returns filed has doubled and there has been a proliferation of abusive trust schemes marketed to avoid or evade income taxes.
Results of a recent consumer survey conducted by Thomas Reuters and the University of Michigan indicated approximately 75 percent of homeowners who participated in the survey viewed current home buying conditions as favorable because of attractive home prices and low interest rates.
However, nine out of ten of those home owners viewed the conditions for the sale of their own home as unfavorable, not because of lack of buyers, but because of price declines.
The information currently in the news is one of the plight of home Sellers . . . foreclosures, short sales, home loss, great drops in home values and prices . . . all makes you think this is a Buyers market.
The underlying problem is that there are too many buyers, too many short sales, too many REO/bank-owneds, which actually makes this more of a Sellers market.
Not invaluable in this market, Buyers have the wrong expectations going into the home buying process.
Buyers need to better understand what is actually happening :
they are not going to be able to go into a short sale and offer 30% under asking price, and expect the offer to be accepted
a home which has been on the market for 200+ days is not a “desperate” Seller
It is more more likely there have been many buyer offers over that time frame and Lenders are taking their time to pick and choose, often countering with a higher selling price, to see which buyers wish to compete for the house.
The main problem Buyers have right now is that it’s actually more of a Seller’s market in some geographical areas.
I don’t have an answer for this rhetorical question, so this is more a buyer-refinancer beware comment : how to get an honest early on answer from your Lender as to whether your refinance is do-able or not.
Assuming your credit and employment documentation are good or better, there appear to be two main factors influencing refinancing your home in the current mortgage market : market values and foreclosure activity in your community.
I’ve previously blogged in favor of toughing it out and not walking away from your upside down/underwater mortgage if you could afford to maintain your payment. Been there, done that. In my scenario, it was a hurricane that drove prices down for about five years, but they did come back to original levels and more.
An article in New York Times Magazine in the last few days somewhat said for some it was o.k. to abandon their mortgage commitment. I posted a good bit of that article yesterday because I agree that everyone is unfairly putting this decision burden entirely and unfairly on the shoulders of the Borrower. If Lenders have been given a big slice of the Stimulus Package Pie, why can’t they meet Borrowers half way or more, and modify their mortgages, specifically lower their interest rates ?
“Walk Away From Your Mortgage” By Roger Lowenstein Contributing writer for the New York Times Magazine Published: January 7, 2010
Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?
I don’t know if this entire commentary has a place here, perhaps only parts of it, but for now I’m going to post it for no other reason than to archive it and refer to it from time to time as 2010 unfolds.
Mr. Wien reviews his predictions for 2009 and how they fared, in addition to laying out 10 new ones for 2010. As he himself writes “everyone keeps score on everything” so time as always will reveal the clarity of Mr. Wien’s crystal ball and researched opinion.
The Federal Reserve could remove some of the extraordinary support it has extended to the U.S. economy once the recovery looks solid and monthly job growth has returned. St. Louis Federal Reserve Bank President James Bullard said he would not favor tightening monetary policy before recovery was well-established.
The central bank, wary of undercutting the fragile recovery by withdrawing its support too soon, is also on guard for any indication that its emergency lending efforts are fueling an unwelcome bout of inflation as the economy heals.
The Fed cut the benchmark the federal funds rate to near zero last December and put in place a vast array of emergency liquidity facilities in an effort to combat the worst financial crisis and recession since the 1930s.
As part of its emergency efforts, it has bought long-term government and mortgage-related debt to try to drive down borrowing costs.
The central bank has pledged to keep interest rates extraordinarily low for “an extended period”. Most analysts expect it to hold rates near zero until mid-2010 or later.
I don’t think the market is going to let rates get much lower. Actually I’m surprised we’re seeing these again, but with continued Government intervention in the mortgage securities market for now (this too will end), it’s a crapshoot.
A simple rule of thumb, rates go up a lot quicker than they go down.
Get off your decision fence, get that paperwork in and lock in your rate. Especially those of you that qualify for the first time homeowners tax credit !
These “planets” will only stay aligned for so long, after which you’ll only be able to look back and kick yourself for not making a move then.
Gold briefly topped $1000 per ounce but then dipped back below that psychologically important level.
The dollar slid to its lowest level since September 2008 as China expressed inflationary concerns about the U.S. amid more calls for a diversification out of the dollar as the sole reserve currency.
The Federal Reserve reported that consumer credit plunged by $21.6 billion in August, its largest decline on record. The decline came as banks cut credit lines and consumers continued to deleverage.
While this cycle’s current decline in consumer credit is a first, it is difficult to draw conclusions for the future – Will consumers releverage? Is the deleveraging a lasting retracement of past overleveraging? Does it indicate that the economic retrenchment has further to go?
None of those questions are likely to be answered in short order.
Perhaps the most meaningful comment in early September came from Dallas Fed President Fisher, who spoke of deflationary concerns and sluggish growth. He said, “for the immediate future, the risk to price stability is a deflationary risk, not an inflationary one” and that “we are likely to see a prolonged period of sluggish economic performance and uncomfortably high unemployment as businesses reallocate capital and labor to fit the new economic landscape.”
For anyone’s guess or comment : how long is “prolonged” ?
(WASHINGTON, D.C.) — The Federal Housing Finance Agency has authorized Fannie Mae and Freddie Mac to expand the Home Affordable Refinance Program (HARP) to homeowners who are current on their mortgage payments from the present loan-to-value ratio ceiling of 105 to 125 percent. With these expanded refinance opportunities, qualified borrowers whose mortgages are currently owned or guaranteed by Fannie Mae and Freddie Mac will be allowed to refinance those loans according to the terms of the Home Affordable Refinance Program established earlier this year.
HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure. As part of President Obama’s comprehensive Homeowner Affordability and Stability Plan (HASP), you may be eligible for a special Making Home Affordable loan modification or refinance, to reduce your monthly payments and help you keep your home.
If you need help understanding the Making Home Affordable Program, you can use the search tool at the link below to find a counseling agency in your area that will provide you with free foreclosure prevention services. If you are eligible for the loan modification or refinance program, the counselor will work with you to compile an intake package for your servicer.
Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services.
To promote a stable and liquid mortgage market, affordable housing and community investment through safety and soundness oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
