Entries Tagged 'Resources' ↓

The Treasury Department and the Department of Housing and Urban Development will announced Project Lifeline today. Project Lifeline is a program that will allow those who have fallen behind on payments to work out a more affordable loan with their lenders, starting with six majors lenders. They would effectively suspend foreclosures for 30 days in order to work things out. The six lenders in the pilot program are Bank of America Corp, Citigroup Inc., Countrywide Financial Group, JPMorgan Chase & Co., Washington Mutual Inc., and Wells Fargo & Co.

Those six are also involved in an organized effort known as Hope Now. Hope Now seeks to freeze rates on subprime mortgages for five years to help borrowers with loans that will spike after an ARM resets. The plan seeks to help out people who have mortgages that are 90+ days late.

The group said it helped 545,000 subprime borrowers with spotty credit in the second half of last year, compared with its January estimate of 370,000. That works out to 7.7% of 7.1 million subprime loans outstanding as of September 2007.

Unfortunately, many borrowers can’t work things out even after getting a brief respite. If you think you can, trying one of these programs may give you the room you need to survive.

Source: CNN Money

Being a resident of the Baltimore-Washington D.C. area, I read the Baltimore Sun quite often and recently there was a blog post by one of their bloggers, The Real Estate Wonk, that contained a lot of valuable information for those looking for help in dealing with a potential foreclosure. She gave the usual “call your lender” advice but then followed it up with some valuable resources if you find that the loss mitigation department of your lender is, as many are, swamped.

Let’s play the other side of the game for now, let’s say you are a prospective real estate investor and you’re looking to find a few good investments in our down market. One of the resources you might consider turning to is a foreclosure listing service such as RealtyTrac. RealtyTrac is a monthly paid service that will let you search for the foreclosure listings online and give you the address of the homeowners (and homes, of course).

Now, you might be saying – “What? Those people are evil!” Well, before jumping to that conclusion, recognize this if you are about to be foreclosed. The evil party in this whole ordeal isn’t the investors looking to buy your place on the cheap, it’s everyone else. The bank gave you a loan you couldn’t afford, you didn’t do the due diligence to know whether you could make the payments, the seller didn’t seem to complain much when they took your money (I wouldn’t call the seller evil though!). The real estate investor might be your one chance at getting a little of your equity out of the house, depending on how much you paid vice the value of the home.

So, if you’re an investor, don’t hesitate to call up one of these to-be-foreclosed to see if you can work something out. Don’t see it as kicking someone out of their home (the bank will do that in a month or two), see it as perhaps getting a bit of the owner’s equity out from the walls before the bank takes the whole thing.

The IRS is very picky when it comes to income taxes and in most cases, except for those outlined below and reiterated in a recent release, a cancellation of debt is considered income for the debtor. Let’s say you owed $10,000 to a bank, the bank cancels it, essentially the bank gave you $10,000 for nothing right? That’s considered income unless it’s one of the conditions below:

Bankruptcy: If you go through bankruptcy and the debt is canceled then it’s not considered taxable income.

Insolvency: If you are insolvent, if your total debts are more than the fair market value of your total assets, then it’s not taxable. This is hard to prove and very complicated so you’ll need a tax professional to help you prove this.

Certain farm debts: I won’t go into this one since it doesn’t apply, search for it if it does.

Non-recourse loans: According to the IRS, this is “a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default.”

The IRS release contains more information and is definitely worth reading.

Courtesy of the Consumerist, looks like the Fed has a page that lists federal agencies, federally-affiliated organizations, and other reputable organizations that can help you overcome foreclosure. In addition to the agencies, it has links to tips as well that may be of some use as well. Information is power so get some!