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Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

BRE #  01051535  

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Na#onwide Distressed  Homeowners   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

•  Lost  3.8  millions  homes  to  Foreclosures  

5,641,601

•  Currently,  there  are  

homeowners that  are  30  days  or  more   delinquent  in  their  mortgages  

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Distressed Homeowners  

Na$onwide Figure:  Currently,  there  are  5,641, 601 homeowners  that  are  30  days  or  more   delinquent  in  their  mortgages   Riverside County

San Diego County

Tolal Loans:  471,298  

Tolal Loans:  582,219  

Foreclosed upon:  92,695  

Foreclosed upon:  51,937  

Delinquent/Imminent Default: 142,475

Delinquent/Imminent Default: 119,850

Underwater: 185,331  

Underwater: 156,428  

Orange County

Los Angeles

Total Loans;  565,760  

Total Loans;  1,505,109  

Foreclosed upon: 33,528

Foreclosed upon: 111,719

Delinquent/Imminent Default: 109,547

Delinquent/Imminent Default: 345,287

Underwater: 143,466  

Underwater: 450,639  

Delinquent/Imminent Default for Orange, LA, Riverside, & San Diego County www.certifiedhomeowneradvocates.com totals 717,159!!!

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Real Estate  Agents  vs.  Servicers   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Front  Line:  First  to  contact  homeowners.  Real  estate   professional  "fiduciary"  relaPonship  to  homeowners     •  Banks  and  services  don't  owe  fiduciary  duty  homeowners;   but  really  represent  interest  of  shareholders     •  Important:  Outrowth  in  government  created  and  funded   programs  since  crisis  started  -­‐  but  few  real  estate  agents  or   HOMEOWNERS    understand  all  the  opPons  and  programs   available.  Plus  all  the  new  laws.    

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Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

Government Programs  

NaPonal Mortgage   Se_lement  

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CA Homeowner  Bill  of   Rights  

CA Foreclosure  &  Short   Sale  Laws  

IRS Short  Sale  Laws  

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Na#onal Contractual  Programs   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Making  Home  Affordable  Programs:  

― Modifica>ons:   •  Home  Affordable  ModificaPon  Program  (HAMP)   •  Principle  ReducPon  AlternaPon  (PRA)-­‐  see  using  more  and  more     •  Second  Lien  ModificaPon  Program  (2MP)     •  FHA  Home  Affordable  ModificaPon  Program  (FHA-­‐HAMP)     •  Second  Lien  ModificaPon  Program  for  Federal  Housing   AdministraPon  Loans  (FHA-­‐2LP)     •  Veteran's  Affairs  Home  Affordable  ModificaPon  (VA-­‐HAMP-­‐Similar)    

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Na#onal Cuntractual  Programs   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Other  Foreclosure  Preven>on  Programs:   ―  Home  Affordable  Unemployment  Program  (UP)   ―  Neighborhood  StabilizaPon  Program  (HUD)   ―  Housing  Finance  Agency  InnovaPon  Fund  for  the  Hardest  Hit  Fund   (HHF)  -­‐  $7.6  Billion  >>  $2  Billions  ot  CA  -­‐-­‐  Keep  Your  Home  California   •  Refinances:  (30-­‐50  Years  low  rate)   ―  Home  Affordable  Refinance  Program  (HARP)  most  Fannie/Freddie              should  take  advantage  of  the  low  interest  rate   ―  FHA  Short  Refinance   ―  VA  Interest  Rate  ReducPon  Refinancing  Loan  (IRRRL)   •  Foreclosure  Alterna>ves:   ―  Home  Affordable  Foreclosure  AlternaPve  Program  (HAFA)  –              Short  Sales  -­‐-­‐  Must  Know  -­‐  NaPonal  Standard  

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LOAN MODIFICATIONS:  CORE   CONCEPTS   •  Loan  ModificaPon  is  the  same  with  be_er  terms   •  The  goal  is  to  lower  homeowner  monthly  payments  to  make  them  more  affordable  and   sustainable  (HAMP  reduces  to  31  percent  of  their  verified  gross  (pre-­‐tax)  income  to  make  their   payments  more  affordable)   •  Borrowers  have  a  JOB  or  have  a  conPnuing  source  of  income  to  support  the  mortgage   (excepPon  UP  for  12  months)   •  Common  ways  used  by  loan  Servicers  to  reduce  monthly  payments  (one  or  more  of  the  4  things   done)   ―  ReducPon  in  interest  rate  (most  common  -­‐  2%,  3%  and  may  be  stay  at  4%)   ―  Extend  life  of  the  loan  (may  from  30  years  to  40  years  -­‐  analyze  now  or  try  a  different  programs)   ―  Principal  forbearance     ―  Principal  ReducPon  (not  offer  in  most  cases  but  it  does  happen  -­‐  not  all  loan  mod  is  a  good  one)  

• Borrower  must  provide  financial  and  hardship  documentaPon  to  complete  applicaPon  (lack  of   documentaPon  is  key  issue  in  loan  modificaPon  -­‐  but  now  might  be  cure  with  SPOC)-­‐  Filling  out   the  Loan  ModificaP0n  Packge  

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LOAN MODIFICATIONS:  CORE  CONCEPTS   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Trial  offer:  Generally  homeowners  get  a  90  day  trial  period  oren  involved  before   loan  modificaPon  becomes  payment   •  The  best  way  for  borrowers  to  move  forward  with  loan  modificaPon  applicaPon  is   to  contact  and  work  directly  with  loan  Servicer   •  Real  Estate  Agents  can  help  homeowners  with  the  process  of  gathering  the  loan   modificaPon  package  for  the  Services  -­‐  good  deed.   ―  When  loan  modificaPon  is  not  an  opPon  or  fails  -­‐  high  percentage,  short  sale  is  a   consideraPon  so  conPnuing  communicaPon  is  important  

• Note:  Loan  modificaPon  support  is  always  available  for  FREE  the  servicers.  There   are  a  lot  of  scams  in  this  arena  so  warm  your  clients/families  about  those  charging   up  front  fees.  

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HAMP ELIGIBILITY   .  

Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Mortgage  Loan  originated  on  or  before  January  1,  2009   •  First  Mortgage  Loan  balance  less  than  or  equal  to  $729,750  on  primary  residence   or  single  unit  rental  property  -­‐  This  is  all  across  the  board  -­‐  these  numbers  are  same   ―  When  loan  modificaPon  is  not  an  opPon  or  fails  -­‐  high  percentage,  short  sale  is  a   consideraPon  so  conPnuing  communicaPon  is  important  

• Property  not  condemned   •  Financial  hardship  present  and  either  delinquent  or  in  danger  of  falling  behind  on   mortgage  payments  -­‐  losing  job  soon  (Rental  ProperPes  only  eligible  if  delinquent)   •  Financials  documentaPon:  Pay-­‐stubs,  W-­‐2,  tax  returns,  servicers  package   •  10  Years  rule:  Not  convicted  in  past  10  years  of  felony  larceny,  ther,  fraud  or   forgery,  money  laundering  or  tax  evasion,  in  connecPon  with  mortgage  or  real   estate  transacPon   •  Next  step  if  qualify  then  is  to  check  to  see  if  that  mortgage  servicer  parPcipates  in   program  (servicer  signed  into  the  program  and  must  offer  it)  and  apply.  If  not   eligible,  check  other  alternaPves  available   •  List  of  over  100  parPcipaPng  MHA  servicers  at:  (90%)   www.cerPfiedhomeowneradvocates.com  

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PRINCIPAL REDUCTION  ALTERNATIVE   (PRA)   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• PRA  is  Offered  by  the  same  100+  HAMP  Servicers  but  subject  to  investors'   guideline:  The  largest  servicers  include  Bank  of  America,  CiPMortgage,  JP  Morgan   Chase,  and  Wells  Fargo   •  Eligibility:   ―  Not  owned  or  guaranteed  by  Fannie  Mae  or  Freddie  Mac   ―  Underwater  value  house  -­‐-­‐Borrower  owes  more  than  property  worth   ―  Primary  residence  (HAMP  is  for  primary  and  rental)   ―  Mortgage  payment  must  be  more  than  31%  of  gross  monthly  income  (pretax)   ―  You  owe  up  to  $729,750  (max)  on  your  1st  mortgage   ―  Financial  hardship  and  delinquent  or  imminent  default  documented   ―  Same  10  year  felony  larceny  etc.  ban  (as  HAMP)  

• As  of  mid-­‐2012,  there  is  about  over  1  million  permanent  HAMP  modificaPons  and   slightly  under  100,000  PRA's  with  principal  reducPon  

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SECOND LIEN  MODIFICATION   PROGRAM  (2MP)   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• HAMP  only  modificaPon  the  1st  mortgage  only   •  The  2MP  is  Offered  to  borrowers  receiving  permanent  HAMP  modificaPon  on   their  1st  lien,  who  have  a  2nd  lien  on  same  property  (includes  home  equity  loans)  -­‐   only  17  servicers  for  the  2MP   •  2MP  works  in  tandem  with  HAMP  to  improve  home  affordability     •  Eligibility:   ―  First  mortgage  permanently  modified  under  HAMP  and  second  on  same  property   ―  You  must  not  have  been  convicted  within  the  last  10  years  of  felony  larceny,  ther,  fraud  or   forgery,  money  laundering  or  tax  evasion,  in  connecPon  with  a  mortgage  or  real  estate   transacPon.   ―  Borrow  have  not  missed  there  consecuPve  payments  on  HAMP  modificaPon  

• 2MP  may  have  a  trial  period  -­‐  a  forbearance  agreement   •  17  par>cipa>ng  servicers:  Bank  of  America,  CiP  Mortgage,  JP  Morgan  Chase,   Wells  Fargo  Bank,  NaPonstar  Mortgage,  OneWest  Bank,  PNC  Bank,  PNC  Mortgage,   PennyMac  Loan  Services,  ResidenPal  Credit  SoluPons,  Bayview  Loan  Servicing,   Community  Credit  Union  Of  Florida,  GMAC  Mortgage,  Green  Tree  Servicing,  iServe   ResidenPal  Lending,  iServe  Servicing,  ServisOne  Inc.,  dba  BSI  Financial  Services  

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HOME AFFORDABLE     UNEMPLOYMENT  PROGRAM  (UP)   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Unemployed???  UP  program.  This  is  a  big  DEAL!!   •  The  "UP"  provides  Servicers  with  the  flexibility  to  provide  assistance  to  borrows          whose  hardship  is  related  to  unemployment.   •  Unemployed  borrowers,  depending  on  their  specific  situaPon,  may  be  eligible  to          get  their  mortgage  payment  suspended  for  12  months  or  more   •  Eligibility:   ―  Unemployed  and  eligible  for  unemployment  benefits  (involuntary)   ―  Property  is  primary  residence   ―  Borrower  has  not  previously  received  a  HAMP  modificaPon  (Borrowers  who  were  previously              deemed  ineligible  for  a  HAMP  modificaPon  are  eligible  to  apply  for  the  UP  program.)   ―  Obtained  mortgage  on  or  before  January  1,  2009   ―  Mortgage  does  not  exceed  $729,750  

• More  than  100+  same  HAMP  parPcipaPng  servicers  offer  UP  to  eligible  borrowers     •  Borrowers  may  be  required  to  make  a  parPal  payment  not  to  exceed  31%  of  their          pre-­‐tax  income  including  unemployment  benefits   •  at  end  of  UP  forbearance  period  -­‐-­‐  Borrowers  evaluated  for  HAMP     •  But  remember  this  program  not  available  with  mortgages  held  by  Fannie  Mae  or          Freddie  Mac  -­‐  both  have  their  own  forbearance  arrangements  

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HOME AFFORDABLE  REFINANCE  PROGRAM   (HARP)   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Current  and  Underwater  house  >>  HARP  >>  Great  interest  rate   •  Most  Ninja  loan  interest  rate:  6.25%  >>  First  thing:  find  out  if  Mortgage  is  owned          or  guaranteed  by  Freddie  Mac  or  Fannie  Mae   ―  Goal  is  to  enable  current  borrowers  with  Fannie  or  Freddie  loans  to  take  advantage  of  low              interest  rates  even  if  their  home  has  fallen  in  value  to  get  a  more  affordable,  more  stable              mortgage.   ―  About  10%  of  Fannie  and  Freddie  are  delinquent  so  this  is  for  the  other  90%  Fannie  Mae/                Freddie  Mac  

• Shop  around  with  various  different  banks  -­‐  if  you  get  a  le_er  from  your  service          with  trying  to  lock  you  into  a  lower  rate...  be_er  to  shop  around.   •  Eligibility:   ―  Mortgage  must  have  been  sold  to  Fannie  Mae  or  Freddie  Mac  on  or  before  May  31,  2009   ―  Mortgage  cannot  have  been  refinanced  under  HARP  previously  -­‐  Refinanced  under  HARP              once  only   ―  Current  LTV  raPo  greater  than  80%  (must  banks  won't  refinance  if  you  go  above  80%)   ―  Borrower  must  be  current  at  Pme  of  refinance  (no  late  payments  in  last  6  months,  and  only              1  late  payment  in  past  12  months)  

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FHA SHORT  REFINANCE   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• This  is  for  underwater  value  and  current  on  mortgage  -­‐  like  HARP  but  a  smaller          program  Borrower  is  not  behind  on  mortgage  payments  but  owes  more  than              property  is  worth   •  Current  lender  will  agree  to  reduce  the  amount  owed  on  first  mortgage  to  no          more  than  97.75%  of  property's  current  value   •  Eligibility:   ―  Mortgage  is  not  owned  or  guaranteed  by  Fannie  Mae,  Freddie  Mac,  FHA,  VA  or  USDA   ―  Borrower  owes  more  than  property  is  worth  -­‐  Underwater  Mortgage   ―  Current  on  mortgage  payments   ―  Occupy  home  as  primary  residence   ―  Eligible  for  new  loan  under  standard  FHA  requirements   ―  Borrower's  total  debt  does  not  exceed  55%  of  monthly  gross  income   ―  You  must  not  have  been  convicted  within  the  last  10  years  of  felony  larceny,  ther,  fraud,              forgery,  money  laundering  or  tax  evasion  in  connecPon  with  a  mortgage  or  real  estate              transacPon.  

• ParPcipaPon  of  mortgage  servicers  is  voluntary   •  Contact  your  mortgage  servicer  and  ask  whether  they  parPcipate  in  FHA  Short          Refinance  

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VA Refinance  Program:     INTEREST  RATE  REDUCTION  REFINANCING  LOAN   (IRRRL)   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• If  you  have  a  VA  loan...  this  is  for  you.   ―  Must  have  an  exciPng  VA  guaranteed  loan  to  be  eligible  

• It  must  be  a  VA  to  VA  refinance,  and  it  will  reuse  the  enPtlement  you  originally          used   •  HUGU  IDES:  No  appraisal  or  credit  underwriPng  package  is  required  when          applying  for  an  IRRRL   •  May  be  done  with  "no  money  out  of  pocket"  (by  including  all  costs  in  new  loan  or          making  new  loan  at  rate  enabling  lender  to  pay  costs)   •  Borrower  may  not  receive  any  cash  out  from  refinance   •  It  is  a  Voluntary  program  -­‐  lenders  not  required  to  offer  -­‐  but  any  lender  of          borrower's  choice  may  process  the  IRRRL  applicaPon  -­‐  should  be  able  to  find  a          lender  even  if  their  servicer    does  not  do  it.   •  Veterans  are  strongly  urged  to  contact    several    lenders  because  terms  may  vary  

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HAFA -­‐-­‐  HOME  AFFORDABLE     FORECLOSURE  ALTERNATIVES   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• If  you  can't  afford  your  mortgage  payment  and  it's  Pme  for  you  to  transiPon  to          more  affordable  housing,  the  Home  Affordable  Foreclosure  AlternaPvesSM(HAFA)          program  is  designed  for  you  -­‐  very  pro-­‐consumer.   •  Sister  program  of  HAMP  with  similar  eligibility  guidelines:  sets  federal  standards          for  (pro-­‐consumer)  short  sales-­‐  no  deficiency  in  all  states   •  This  is  the  only  NaPonal  short  sale  program  that  mandates  debt  forgiveness.   •  Designed  to  help  those  who  don't  qualify  for  or  fail  HAMP,  or  who  don't  want  to          keep  their  home,  leave  home  but  sPll  avoid  foreclosure  by  pursuing  a  short  sale          or  deed  in  lieu  of  foreclosure-­‐  Lenders  prefer  short  sales.     •  Key  point  is  that  the  government  provides  financial  incenPves  to  borrowers,          servicers,  and  investors  for  complePng  the  HAFA  short  sale   •  General  eligibility:   ―  Primary  residence,  one-­‐to-­‐four  units  -­‐  making  short  sales  more  accessible   ―  Delinquent  or  imminent  default   ―  Mortgage  originate  on  or  befare  January  1,  2009   ―  Loan  amount  less  than  $279,750  (higher  amounts  apply  for  2-­‐4  unit  properPes/same  as              HAMP)   ―  HAFA  is  available  for  mortgages  that  are  owned  or  guaranteed  by  Fannie  Mae  and  Freddie              Mac  or  serviced  by  over  100  HAMP  parPcipaPng  mortgage  servicers.  

www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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HAFA: HOME  AFFORDABLE  FORECLOSURE   ALTERNATIVES   •  Program  was  significantly  expanded  mid-­‐2012:  many  more  borrowers  eligible          than  before  (e.g.,  investor  owned  properPes)  -­‐-­‐Pre-­‐approved.     •  Why  HAFA  vs.  a  tradiPonal  short  sale?   ―  Mandatory  debt  forgiveness  -­‐  Starts  that  does  not  have  anP-­‐  deficiency.  Big  deal  outside  of              California.  Releases  borrower  from  remaining  mortgage  debt  on  first  and  subordinate  lines   ―  Borrower  or  tenant  receives  at  least  $3,000  relocaPon  assistance  at  closing     ―  Up  to  $8,500  available  to  pay  subordinate  mortgage  holder(s)  to  release  lines  and  borrower              liability   ―  Sets  standards  for  payments  to  non-­‐mortgage  lien  holders   •  no  cash  contribuPons  or  promissory  notes  allowed!   •  Mechanic  lien,  child  support  issue,  -­‐-­‐  close  more  in  HAFA  in  theory  

― Lenders  Must  consider  HAFA  first  before  offering  non-­‐HAFA  short  sale  programs  considered              or  pursued  

• Investors:  Buyers  cannot  flip  the  property  within  90  days  purchase  per  HAFA          short  sale.  

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NEIGHBORHOOD STABILIZATION     PROGRAM  (HUD)   The  neighborhood  StabilizaPon  Program  (NSP)  was  established  for  the  purpose  of   stabilizing  communiPes  that  have  suffered  from  foreclosures  and  abandonment.   This  fund  accomplishes  this  through  the  purchase  and  redevelopment  of  foreclosed   and  abandoned  homes  and  residenPal  properPes  -­‐  land  banks   •  Total  funding  of  almost  $7  billion  in  3  rounds  of  funding   •  Funding  focused  on  census  tracts  with  highest  rate  of  foreclosures   •  123  CA  NSP  funding  recipients  (HUD  grantees)  received  over  $1.3  billion  of  the          $7  billion  -­‐  this  is  the  down  payment  assistance  and  silence  2nd  mortgage.   ―  Get  to  know  them  and  find  the  government  funding  for  your  clients.  

• NSP  grantees  should  be  contacted  for  special  homebuyer  programs  offered  and          available  in  each  locaPon:  programs  offered  vary  by  grantee  

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TREASURY: HOUSING  FINANCE  AGENCY     INNOVATION  FUND  FOR     HARDEST  HIT  STATES   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• In  early  February  2010,  the  Treasury  announced  funding  that  the          Hardest  Hit  Fund  of  $7.6  billion  to  aid  homeowners  in  states  hardest  hit          by  the  housing  crisis   •  Funding  managed  by  state  housing  finance  agencies  (18  states  -­‐  AZ,  CA,          FL,  NV)   •  In  California,  this  program  is  call:  Keep  Your  Home  California  -­‐  run  by          CALHFA   •  CA  received  almost  $2  Billion  (a  lot  of  money);  less  than  $500  million          spent  as  of  mid  -­‐2012  -­‐  fund  are  sPll  available   •  Hardest  Hit  programs  complement  Making  Home  Affordable;  so  if  you          don't  qualify  for  HAMP  you  can  do  keep  Your  Home  California  

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KEEP YOUR  HOME  CALIFORNIA   HARDEST  HIT  FUND  (HHF)  PROGRAMS:

Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Keep  Your  Home  California  is  a  free  service  for  homeowners  who  have  suffered  a          financial  hardship,  to  help  them  stay  in  their  home,  maintain  an  affordable          mortgage  payment  and  avoid  foreclosure.   •  This  is  a  $2  Billion  program  run  by  California  Housing  Finance  Agency   •  4  major  programs;  available  Pll  December  31,  2017  or  unPl  funds  run  out     •  Here  are  the  4  programs:   ―    Unemployment  Mortgage  Assistance  Program  (UMA):  Up  to  9  months  of  mortgage                payment  subsidy  if  unemployed   ―    Mortgage  Reinstatement  Assistance  Program  (MRAP):  Funds  to  help  reinstate  mortgage  if                fallen  behind  on  payments     ―    Principle  Reduc>on  Program  (PRP):  Assistance  in  paying  down  principle  in  case  of  negaPve                equity  -­‐  for  people  underwater.   ―    Transi>on  Assistance  Program  (TAP):  RelocaPon  or  moving  support  for  those  pursuing  a                short  sale  or  deed-­‐in-­‐lieu  of  foreclosure  

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CA HARDEST  HIT  FUND  (HHF)  ROGRAMS:     KEEP  YOUR  HOME  CALIFORNIA   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• These  programs  are  Only  offered  by  par>cipa>ng  servicers:  list  of  parPcipaPng            servicers-­‐   •  Which  of  the  4  programs   •  www.cerPfiedhomeowneradvocates.com   •  Eligibility  criteria  and  county-­‐by-­‐county  income  limits  apply.  ($76,800  Organe          $101,050)   ―    Eligibility  criteria  include  but  are  not  limited  to:  

• Ownership  and  occupancy  of  property  as  primary  residence   •  LocaPon  in  California   •  First  mortgage  loan  balance  less  than  or  equal  to  $729,750  -­‐  same  as  HAMP   •  Mortgage  originated  on  or  before  January  1,  2010  (so  here  if  you  don't  qualify  for          HAMP,  you  qualify  here  if  mortgage  in  2009)   ―  There  are  Income  limits  by  County  for  eligibility  

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CA HHF:  UNEMPLOYMENT  MORTGAGE  ASSISTANCE   PROGRAM  -­‐  UMA  -­‐  DETAIL   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• The  Program  provides  mortgage  payment  assistance  to  eligible  homeowners  who          have  experienced  an  involuntary  job  loss  and  are  receiving  California  EDD          unemployment  benefits  (people  are  terminated  not  people  who  quite)   •  UMA's  goal  is  to  help  homeowners  remain  in  their  homes  and  prevent  avoidable          foreclosures  despite  loss  of  income  due  to  unemployment.   •  Benefit  assistance  through  UMA  can  be  up  to  $3,000  per  month  and  can  last  up          to  nine  months.  >.  MAX  is  $27,000   •  Designed  to  help  low  to  moderate  income  homeowners   ―    LA  >>  $76.8k   ―    OC  >>  $101k  

• hardship  Affidavit  is  required  to  get  this   •  So  call  the  servicer  to  find  out  

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CA HHF:  MORTGAGE  REINSTATEMENT  ASSISTANCE   PROGRAM  -­‐  (MRAP)   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

• Make  the  mortgage  current  is  the  goal     •  This  Program  provides  assistance  to  eligible  homeowners  who,  because  of  a          financial  hardship,  have  fallen  behind  on  their  payments  and  need  help  to          reinstate  their  past  due  first  mortgage  loan.   •  Benefit  assistance  through  MRAP  can  be  a  one  -­‐  Pme  payment  of  up  to$25,000  to          cover  principle,  interest,  taxes  and  insurance,  any  HOA  dues   •  Designed  to  help  low  to  moderate  income  homeowners     ―  Riverside  -­‐  75k   ―  San  Diego  -­‐89k  

• Hardship  Affidavit  is  required     •  Contact  servicer  to  move  forward  and  see  if  they  parPcipate  

www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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CA HHF:     PRINCIPLE  REDUCTION  PROGRAM  -­‐  (PRP)   •  Goal  here  is  to  provide  capital  and  make  property  more  affordable   •  The  Principle  ReducPon  Program  Provides  assistance  hardship  coupled          with  a  severe  decline  in  the  home's  value.   •  Homeowners  who  qualify  for  the  PRP  could  be  eligible  for  up  to                $100,000  in  assistance  from  Keep  Your  Home  California.   •  Provides  monies  to  reduce  principal  balance  of  1st  loan   •  Designed  to  help  low  to  moderate  income  homeowners  with  mortgages          that  are  delinquent  or  at  risk  of  imminent  default   •  This  program  requires  Hardship  Affidavit  required   •  Borrower  to  contact  servicer  

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CA HHF:  TRANSITION  ASSISTANCE     PROGRAM  -­‐(TAP)   •  Goal  her  is  to  help  with  moving  expense  and  relocaPon   •  The  TransiPon  Assistance  Program  provides  one-­‐Pme  funds  to  help  eligible          homeowners  relocate  into  a  new  housing  situaPon  arer  execuPng  a  short  sale  or          deed-­‐in-­‐lieu  of  foreclosure  program.   •  TAP  to  be  used  in  conjuncPon  with  short  sale  and  DIL  programs.  Homeowners          required  to  occupy  and  maintain  properPes  unPl  conveyed.   •  Designed  to  help  low  to  moderate  income  homeowners   •  One  Pme  funding  of  up  to  $5000  per  household;  can  be  used  or  layered  with          other  HHF  programs   •  Funding  intended  to  help  homeowner  secure  new  housing  (e.g.,  rent,  moving          expenses,  security  deposits)   •  Hardship  affidavit  is  required   •  Borrower  to  contact  servicer  

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CALHFA:   DOWN  PAYMENT  ASSISTANCE   CaIHFA  home  buyer  programs:  Down  Payment  Assistance:    

• Down  payment  typically  largest  hurdle  for  many  first  Pme  home  buyers        Assistance  typically  offered  through  a  second  or  subordinate  loan  "silent  second"  with          payments  deferred  unPl  home  sale,  refinance,  or  full  loan  repayment     •  California  Homebuyer's  Down  payment  Assistance  Program  (CHDAP)  offers  deferred  payment          subordinate  loan  in  amount  of  3%  of  purchase  price  or  appraised  value  (whichever  is  less)  to  be          used  for  down  payment  and/or  closing  costs   •  CHDAP  may  be  combined  with  a  CaIHFA  or  non-­‐CaIHFA  first  mortgage  loan   •  Borrower  requirements:   ―  First  Pme  home  buyer:  That  means  if  you've  never  owned  a  home,  you're  a  first-­‐Pme              homebuyer.  It  also  means  that  if  you  owned  your  home  three  or  more  years  ago,  but  sold  it,              you  are  right  back  to  being  a  first-­‐Pme  homebuyer  again,  and  you  can  take  advantage  of  all              of  the  benefits  of  CaIHFA's  first-­‐Pme  homebuyer  programs.   ―  Occupy  property  as  primary  residence  

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CALHFA: INDIVIDUAL  DEVELOPMENT   ACCOUNTS  (IDA'S)   •  IDA's  are  special  savings  accounts  designed  to  assist          low  income  borrowers  on  their  path  to  ownership  of          a  long  term  asset  such  as  a  home,  through  matched          contribuPons  by  non-­‐profit  organizaPons  and  eligible  banks       •  ParPcipaPng  organizaPons  may  offer  up  to  a  3:1  savings          match  

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NaPonal Mortgage   Se_lement  

CA Homeowner  Bill  of   Rights  

CA Foreclosure  &  Short   Sale  Laws  

IRS Short  Sale  Laws  


Landmark Se`lement     Landmark  Relief   www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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$25 Billion  Na>onal  Mortgage     Se`lement   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

The NaPonal  Mortgage  Se_lement  is  the  product  of   sixteen  months  of  intensive  negoPaPons  between  the   five  largest  banks  and  an  unprecedented  condiPon  of   state  a_orneys  general  and  federal  agencies,  including   the  Departments  of  JusPce,  Treasury,  and  HUD,  that   spanned  parPsan  lines.  

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Background:   The  2010  Robo  Signing  Scandal   •  The  states  and  federal  agencies  established  that  the          servicers  have  done  wrong:   ―    improper  lending  pracPces,   ―    improper  foreclosures,  etc.  –  and   ―    in  response  the  banks  have  agreed  to  a  $25  Billion                se_lement  that  helps  homeowners  who  have  been                hurt  by  misconduct  in  the  marketplace.  

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$25 Billion  Dollars  Mortgage   Se`lement   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

How will  know  whether  this  se_lement  affects   my  situaPon?      

Borrower from  Oklahoma  will  not  be  eligible   for  any  of  the  relief.    

Lets start  by  telling  you  which  homeowners  do   not  qualify  and  the  rest  you  or  homeowners   can  contact  the  servicers.  

www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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$25 Billion  Na>onal  Mortgage     Se`lement   •  February  2012  and  10/3/2012  date  to  get  act          together     •  Largest  Mortgage  Se_lement  Ever  in  History     •  What  does  it  means:   ―  Underwater  houses  and  on  those  on  the  brink  of              foreclosure  might  be  able  to  keep  house   •  Money  for  banks  to  encourage  short  sales  

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Which Banks/Servicers??   •  So  banks  were  sued  and  they  lost  and  these  5  servicer          has  to  pay  $25  Billion  Dollar  to  homeowners.   •  Bank  of  American   •  JPMorgan  Chase   •  Ally/GMAC   •  CiPbank   •  Wells  Fargo   •  These  5  servicers  account  for  about  50%  of          mortgages  out  there  

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Government-­‐sponsored enterprises-­‐-­‐   GSE  loans  are  not  eligible   •  For  Fannie  Mae  &  Freddie:   ―  If  serviced  by  one  of  the  five,  must  abide  by              the  new  servicing  guidelines   ―  BUT  Fannie  &  Freddie  mortgages,  even  if              serviced  by  one  of  the  five,  are  not  subject              to  se_lement  provisions  pertaining  to              principal  reducPon  

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Fannie Mae  or  Freddie  Mac  Loan  Look   UP:   •  Fannie:   ―  www.fanniemae.com/loanlookup   •  Freddie:   ―  www.freddiemac.com/mymortgage  

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Principal ReducPon   •  $10  Billion  Principal  reduc>on:  At  least  $10  billion          will  be  dedicated  to  reducing  principal  for  borrowers          who,  as  of  the  date  of  the  se_lement:   ―  owe  more  on  their  mortgages  than  their              homes  are  worth  and   ―  are  either  delinquent  or  at  imminent  risk  of              default.  

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Principal ReducPon  Eligibility  Criteria   •  1.  In  default  -­‐  Delinquent  by  at  least  60  days  as  of  1/31/2012     •  2.  Underwater   •  3.  Have  not  defaulted  on  payment  under  a  HAMP   •  4.  Ownership  of  loan:  No  Fannie/Freddie  or  FHA  Hud/VA   •  5.  Servicer:   ―  Wells  Fargo,  CiP,  &  GMAC   •  Servicer   •  Own  loans  

― Bank  of  American  and  Chase   •  Servicer-­‐owned  loans   •  Investor-­‐owned  loans  with  delegated  Authority   www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com https://www.facebook.com/julie.boyd.9083  


1st Lien  Principal  Reduc>ons   •  Bank  of  America   ―  Mandatory  solicitaPon  of  certain  group  of  borrowers  (60  days              default  as  of  1/31/2012  and  other  criteria)  

• Wells  Fargo,  Chase,  CiP  &  Ally/GMAC   ―  Not  subject  to  the  same  solicitaPon  requirement  as  BOA  

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BOA Principal  Reduc>on   •  Your  current  mortgage  payment  is  25%  or  more  of              your  gross  monthly  income.   •  You  owe  more  on  your  first  mortgage  than  your          home  is  worth.   •  You  were  delinquent  by  at  least    60  days  as  of  HAMP                or  HAMP-­‐style  loan  modificaPon.   •  Your  mortgage  is  owned  by  Bank  of  America  or  part          of  a  Countrywide  securiPzaPon  that  Bank  of  American          has  authority  to  modify  principal.   www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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2nd lien  principal  reduc>ons   •  Bank  of  America   ―  Sending  solicitaPon  to  eligible  borrowers  

• Wells  Fargo,  Chase,  CiP,  and  Ally/GMAC   ―  Second  line  modificaPon  programs  vary  but  primary  occur  when              1st  lien  is  modified  under  the  Se_lement  by  them  or  another              se_lement  bank  

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Breakdown of  the  $25  Billion   •  $3  Billion  will  be  dedicated  to  a  refinancing  program          for  borrower  who  are  current  on  their  mortgage  but          who  owe  more  on  their  mortgage  than  their  homes          are  worth.  

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To be  eligible  for  refinancing  you  must   meet  the  following  requirements:   •  Loan  Serviced  and  Owned  by  the  Same  Bank   •  Underwater   •  Current   •  Minimum  Interest  Rate-­‐-­‐  Your  current  interest  rate          must  be  greater  than  or  equal  to  5.25%.   •  Maximum  Unpaid  Mortgage  Balance   ―

One  unit  -­‐  $729,750    Two  units  -­‐  $934,200    Three  units  -­‐  $1,129,250    Four  Units  -­‐  $1,403,400  

• Loan  Originated  Prior  to  January  1,  2009   www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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Breakdown of  the  $25  Billion   •  $7  billion  to  other  forms  of  relief,  including  forbearance          of  principal  for  unemployed  borrowers,  anP-­‐blight          programs,  short  sale  and  transiPonal  assistance.  

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Breakdown of  the  $25  Billion   •  $7  billion  to  State  and  Federal  government.   •  Wrongful  foreclosure  from  1/1/2008  to  12/31/2012.   •  Legal  aid,  fund  housing  counselors,  etc  

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The process   •  These  big  5  are  going  through  their  loans  and  figuring          out  which  loans  are  which  and  which  qualify.   •  These  bank  do  get  credit  for  principal  reducPon   •  So  reach  out  to  your  servicer   •  Happening  within  the  next  3  years.10/3/2012  was  the          date  for  the  big  5  to  get  in  order.  

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CA Homeowner  Bill  of   Rights  


Homeowner Bill  of  Rights  

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CA HOMEOWNER  BILL  OF  RIGHTS   •  Signed  into  law  July  2012;  goes  into  effect  January  1,  2013   •  62%  Foreclosure  dropped  in  January  2013   •  CAR  was  not  supporPve  of  the  bill  because  CAR's          posiPon  was  that  it  might  slow  down  the  real  estate          market.  

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California's Homeowner   Bill  of  Rights-­‐-­‐2018   $25  Billion  Na#onal  Mortgage  SeSlement-­‐-­‐2015   •  Is  a  package  of  bill  not  just  the  secPon  that  we  are  going  to  focus  on          today,  where  homeowners  will  use  to  try  to  save  their  home.  For          example  it  has  a  secPon  to  protect  tenants  on  foreclosed  tenant  is  90          day  noPces  on  foreclosed  property,  give  grand  jury  power  to  a_orney          general  to  go  across  county  to  chase  arer  foreclosure  scammer.   •  It  does  not  over  throw  anything  substanPve  contract  right  between          investor  and  the  Loan  Servicer.  BUT  it  does  include  very  strict          procedures  and  rights  for  homeowners  before  foreclosure.   •  This  was  model  arer  the  $25  Billion  NaPonal  A_orney  General          Se_lement  -­‐  which  is  effecPve  another  3  years  or  so  BUT  the  CHBOR  will          remain  unPl  2018  and  some  porPon  will  be  an  indefinite  future.  

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Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

California's Homeowner   Bill  of  Rights     Purpose:   Civil  Code  §  2923.4:   "..to  ensure  that,  as  part  of  the  non-­‐judicial   foreclosure  process,  borrowers  are  considered     for,  and  have  a  meaningful  opportunity  to     obtain,  available  loss  mi#ga#on  op#ons     (include  short  sale),  if  any,  offered  by  or     though  the  borrower's  servicers,  such  as  loan     modifica$ons  or  other  alterna$ves  to     foreclosure..."  (emphases  added)  

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High Light  of  CHBOR   •  Modeled  on  AG  Se_lement  Agreement  servicing   standards,  but  not  idenPcal   •  Heightened  pre-­‐foreclosure  outreach  and   communicaPons  requirements   •  AnP-­‐dual  tracking  requirements   •  Heightened  documentaPon  requirements   •  Private  right  of  acPon  

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Defini>ons and  Exclusions   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

Ø  Key Exclusions/LimitaPons      ▪  Only  applies  to  first  liens  on  owner-­‐occupied,  1-­‐4    unit  properPes   Borrower  is  going  to  mean:  Only  applies  to  first  liens  on   owner-­‐occupied,  1-­‐4  unit  properPes.     In  the  CHBOR  you  will  find  the  phrase:     “Foreclosure  prevenPon  alternaPve”  —  applying  to  means   the  1st  lien  holder;  which  includes  short  sales  or  any     other  available  loss  miPgaPon.     SO  VERY  BROAD!!!    

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SPOC ―  Key  Component   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

one of  the  key  component  is  a  single  point  of  contact  of  this  Bills.  The  experiences   of  homeowners  been  ge•ng  bounced  around  from  staff  person  to  staff  person  and   really  there  were  no  consistency.  

Ø  Single Point  of  Contact  (SPOC)(§2923.7)            ▪  Allows  for  a  team  vs.  a  specific  person      ▪  Specifies  responsibiliPes:  SPOC  is  responsible  for  the                        communicaPon  the  process  to  the  homeowners,  the  process                        which  the  homeowners  can  apply  for  a  loan  mod  or  foreclosure                        alternaPve  or  the  deadline  for  any  of  the  opPon.      ▪  Communicate  to  borrower  the  Process/Deadline      ▪  No  more  different  answers!      ▪  Does  not  expire  -­‐  remained  assigned  unPl  all  opPons  exhaust      ▪  Small  servicers  exempt  (≤175  foreclosures  in  prior  annual                      reporPng  period  per  $2923.18(b))      ▪  Enforceable  by  PRA  

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An>-­‐Dual Tracking  Provisions   •   An>-­‐Dual  tracking  provision  is  a  good  thing,  it  provides:                  good  protec>on  for  homeowners—     •   Basic  an>-­‐dual  tracking  rule    —  If  borrower  submits  a  first  loan  modifica>on  offered,  servicer  may  not                            record  NOD,  record  NTS  or  conduct  a  scheduled  foreclosure  sale  (  as                            applicable)  while  applica>on  is  pending  and  un>l  servicer  provides  a                            wri`en  determina>on.                        —  Need  a  wri`en  explana>on                        —  Enforceable  by  PRA  

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Dual Tracking  -­‐  30  Days  Wait  if     Denied   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

Ø  Large servicers  -­‐  no  NOD/NOS/  sale  un>l:            ▪  30  days  arer  date  of  wri_en  denial  noPce  (appeal  period);  or      ▪  If  borrower  appeals  a  denial,  15  days  arer  denial  of  appeal;  or      ▪  If  offered  a  first  lien  loan  modificaPon,  at  least  14  days  arer  offer  if  borrower  doesn't  accept      ▪  If  there  is  a  appeal  of  the  deny;  then  absolutely  bank  has  to  wait  another  15  days  before                            foreclosure  or  take  the  next  step  toward  foreclosure.  So  let  says  homeowner  is  deny  and  you                            dispute  and  say  the  income  is  higher  and  the  servicer  come  back  say  well  even  with  that                            higher  income  you  don't  qualify...so  now  form  this  date...bank  has  to  wait  15  days  before  the                            next  foreclosure  step  because  deny  can  be  incorrect  for  borrower  to  address  the                            incorrectness.      ▪  Does  not  expire  -­‐  remained  assigned  unPl  all  opPons  exhaust      ▪  Small  servicers  exempt  (≤175  foreclosures  in  prior  annual  reporPng  period  per  $2923.18(b))      ▪  Enforceable  by  PRA    

Ø  Small servicers          ▪  No  required  appeal  period  or  specific  Pmelines   Ø  Aker  1/1/18   But  arer  1/1/2018  -­‐-­‐  no  regulaPon  -­‐-­‐  no  nod  protecPon...       no  waiPng  period...No  brakes  put  upon  foreclosure.  

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An>-­‐Dual Tracking   ―  If  borrower  is  approved  in  wriPng  for  a  foreclosure  prevenPon              alternaPve...   •  Pre-­‐NOD:  Short  Sale  Approval  Servicer  cannot  record  NOD  while  borrower          complying  with  terms  of  the  offer  or  all  parPes  have  approved  in  wriPng  

― Post-­‐NOD:  Short  Sales  Approval   •  Servicer  cannot  record  NOS  or  conduct  sale  while  borrower  complying  with  terms          of  the  offer  or  all  parPes  have  approved  in  wriPng  

― Transfer  of  servicing:  Carry-­‐over   •  Transferee  servicer  must  honor  the  agreement  between  transferor  servicer  and          borrower  [sunsets  1/1/18]  -­‐  chase  to  naPonstar  -­‐  agreement  is  good  to          naPonalstar  

         Must  provide  copy  of  fully  executed  agreement              [small  servicers  exempt;  sunsets  1/1/18]              Apply  to  Short  Sale   www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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Trustee sales   Postponement   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

Amendments to  Non-­‐Judicial  Foreclosure   Procedures  ($2924)     servicer  must  provide  wri_en  noPce  to  borrower  within     5  business  days  when  a  scheduled  sale  is     postponed  by  more  than     10  days  [sunsets  1/1/18]      

No enforceable  by  PRA  

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Enforcement and  Remedies   TRO   Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

Ø  Injunc>ve relief  -­‐>  So  before  sale  you  can  sue  to  raise  the  viola>ons   you  want  to  allege  before  the  final  act  of  trustee  sale.  But  be  aware   that  all  other  state  law  are  s>ll  valid  but  under  CHBOR  it  draws  a  line   in  the  sand  that  says  before  the  trustee  sale.  

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CA Foreclosure  &  Short   Sale  Laws  


California Foreclosure/Short  Sale  Law  

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California =  Judicial  vs.  Non-­‐Judicial   Judicial  

Non-­‐Judicial

How IniPated  

File a  Complaint    

Record and  serve  a  NoPce  of   Default  

Time

Requires court  proceeding   (approximately  6-­‐12  Months)   could  be  longer  if  counter   claims/affirmaPve  defenses  are   raised  and  other  TILA/RESPA   issues  

4-­‐5 months  (minimum  135   days)  

Expense  

Typical costs  of  a  lawsuit    

Trustee fees  

RedempPon  

Yes (1  year  if  def  3month  if  no   deficiency  -­‐  CCP  729.030(b)  

No (5  days  before)  

Deficiency against  

Yes, determine  by  court  as  to   value  

No!!!

Pursuit of  Guarantor  

Yes  

Yes

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Non-­‐Judicial Foreclosure   •  In  California,  lenders  who  intend  to  foreclose  on  a    

 property  when  the  loan  is  delinquent  typically  use  the        non-­‐judicial  foreclosure  process  also  known  NOD        follow  by  a  trustee's  sale.   ―  This  process  is  less  expensive  for  the  lender  than  the  judicial  foreclosure              process.   ―  A  non-­‐judicial  foreclosure  doesn't  require  a  count  proceeding  and  ,  thus,  is              a  more  expediPous  process.   ―  Get  a  hold  of  the  NOD  or  Trustee  Sale  NoPce  

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Purchased Money  Loan  (Non-­‐Recourse)   •  A  non-­‐recourse  loan  is  a  loan  that  the  creditor  can    

 only  look  to  their  secured  interest.   •  To  qualify  as  a  purchase  money  mortgage  in        California,  the  loan  must  be  obtained  at  the  Pme        of  purchase  of  the  borrowers  primary  residence.      

Owner-­‐Occupied Residence  –  Defini>on:

•          To  be  a  non-­‐recourse  loan,  the  loan  in  quesPon  must  be  secured  by  an                    

 owner-­‐occupied  dwelling  of  no  more  than  4  units.  

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Recourse loan   •  Recourse  

A  recourse  loan  is  one  where  the  lender  has  the  

legal  means  to  collect  the  deficiency  balance  from    the  borrower.  

•  Recourse  type  of  loan?    •  vacaPon  homes,  

 •  home-­‐equity  lines  of  credit  (HELOC),      •  investment  properPes  where  the  borrower  does  not  reside            there,  apartment  buildings  more  than  4  units.      •  Refinanced  the  property      •  A  refinanced  2nd  mortgage  

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California's An>-­‐Deficiency  Statute   •  CCP  Sec.  580d:  Homeowner  has  no  post-­‐        foreclosure  liability  to  a  lender  who  uses          the  (NOD  -­‐  Trustee  Sale)-­‐non-­‐judicial          process  to  foreclosed.  

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CCP 726  -­‐  One  Form  Ac>on  Rule   •  Non-­‐Judicial  JurisdicPon  >>>  NOD  >>          Trustee  Sale  >>  Too  bad  so  sad  for  lender     •  This  means  the  creditor  must  bring          judicial  or  non-­‐judicial  foreclosure  acPon        first  against  the  real  property  collateral.  

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California's An>-­‐Deficiency  Statutes   •  CCP  Sec.  580b:  Homeowner  has  no  post  foreclosure          liability  on  purchase  money  loans  for  a          primary  residence  of  1-­‐4  units-­‐    ―  Note  re:  refinancing  and  home  improvements  

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California's Post-­‐Short  Sale     An>-­‐Deficiency  Statute  -­‐  CCP  580E   •  CCP  Sec.  580e-­‐  Homeowner  has  no  post-­‐        foreclosure  liability  to  a  lender  who          consents  in  wriPng  to  a  short  sale  of  a          1-­‐4  unit  dwelling.    ―  7/15/11  through  12/31/2012  (all  liens)    

―      Not  retroacPve  

Note: SB30,  it’s  replacement  Bill  is  currently  stalled  out  on   the  Senate  Finance  Commi_ee  Floor  with  the  introducPon  of   “poison  pill”  legislaPon  in  the  form  of  a  major,  hidden  tax.     LegislaPve  Liaison’s  like  myself,  and  major  Lobbies  like  the     California  AssociaPon  of  Realtors  are  doing  all  that  we  can  to   push  this  legislaPon  through  without  the  added  tax  burden.  

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2nd Mortgage  Liability  —  Analysis   •  In  certain  cases,          a  home  is  foreclosed  upon  but          the  homeowners  sPll  liable  for  the  2nd.     Determining  Liability:  

• 1.  Is  this  your  primary  residence?   •  2.  How  did  you  get  your  second  mortgage?   •  3.  If  2nd  mortgage  is  refinanced,  a  heloc  loan,  or  if                    the  property  is  a  rental  property                                  or  vacaPon  home...then  problemaPc   www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com  

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5 Types  of  Bankruptcy   •  Chapter  7                      Discharge  Debt  –  BK  Law  places  income  &                                                                    Asset  Caps  on  qualifying  for  a  bankruptcy   •  Chapter  9  municipaliPes  -­‐  government     •  Chapter  11  -­‐-­‐1.1149  million  sec.  383k  unsce   •  Chapter  12  -­‐farmer  –fisherman   •  Chapter  13  A  “Repayment  plan”  

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IRS Short  Sale  Laws  


The last  thing  a  person  involved  in  a  foreclosure  or  short  sale  needs  is  a  crushing  tax     bill,  so  it  is  important  to  understand  and  be  aware  of     poten>al  tax  consequences.         The  materials  provided  in  this  presenta$on  do  not  cons$tute  legal  or  tax  advice.    We   can  arrange  for  a  FREE  Consulta$on  with  a  CPA  and  A_orney  –  Just  call  Julie  at   1-­‐888-­‐668-­‐9680  extension  201  to  arrange  this  excep$onal  service.  

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Taxable Event:  Cancella>on  of  Debt     (COD)   •  The  tax  triggers:    ―  Foreclosure  (Generally  about  31%  Higher  than  short  sale)      ―    Short  Sale      ―    Loan  ModificaPon  Principal      ―    Deed-­‐in-­‐lieu  of  foreclosure  

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No Tax  IF:   •  1.  Non-­‐Recourse  Mortgage  -­‐  (Purchase  Money  Loan)   •  2.  MORTGAGE  FORGIVENESS  DEBT  RELIEF    ACT   •  3.  Insolvency     •  4.  Bankruptcy  

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Non-­‐Recourse Loan   •  State  law   •  Non-­‐Recourse  -­‐  Purchase  Money  -­‐  Ninja  Loan    ―  Lender's  only  remedy  is  the  property  used  as  collateral.    ―      No  COD  

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MORTGAGE FORGIVENESS  DEBT  RELIEF  ACT  OF  2007   Qualified  Principal  Residence  Indebtedness:   The  debt  must  have  been  used  to  buy,  build  or  substanPally   improve  the  taxpayer's  principal  residence.   Debt  forgiven  on  second  homes,  rental  property,  business   property,  credit  cards  or  car  loans  does  not  qualify  for  the  new   tax-­‐relief  provision.  EffecPve  through  December  31,  2013   Obama  administraPon  proposing  extension  unPl  January  1,  2015     Note:  IRS  consumer  brochure  with  details  above  and  more  at:   h`p://www.irs.gov/pub/irs-­‐pdf/p4705.pdf  

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Primary Residence  -­‐-­‐  Defini>on   •  Primary  Residence      ―  A  principal  residence  for  tax  purposes  is  a  home  that  a                taxpayer  has  owned  and  lived  in  for  at  least  two  of  the                past  five  years.  Those  two  years  do  not  need  to  be                consecuPve.  

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Qualified Principal  Residence   Indebtedness  Exclusion   •  Qualified  Debt   ―  Used  to  buy,  build,  or  improve  principal  residence  

• Maximum  Debt  Allowed   ―  Federal-­‐  $2,000,000  ($1,000,,000  if  MFS)   ―  California  -­‐  $800,000  ($400,,000  if  MFS)  (as  not  pass  2013  -­‐  check              for  extension)  

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Insolvency •  COD  excluded  to  the  extent  insolvent   •  Debts  exceed  value  of  assets   ―  The  forgiven  debt  may  qualify  under  the  "insolvency"  exclusion.              Normally,  a  taxpayer  is  not  required  to  include  forgiven  debts  in              income  to  the  extent  that  the  taxpayer  is  insolvent.  A  taxpayer  is              insolvent  when  his  or  her  total  liabiliPes  exceed  his  or  her  total              assets.  

• RePrement  plans  create  problems!  

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Cash for  Key  in  Short  Sale   •  As  much  as  $30,000   •  Taxable  to  homeowner?   1)  Receipt  of  1099  does  not  mean  it's  taxable   2)  "Cash  due  homeowner"  is  return  of  equity  

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Tenant (Investors)  

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KEY FEDERAL  LEGISALTION:  PROTECTING  TENANTS  AT     FORECLOSURE  ACT  OF  2009   •  Federal  Law   •  EffecPve  May  2009  through  December  31,  2014   •  Protects  tenants  from  immediate  evicPon  by  persons  or  enPPes  that  become          owners  of  residenPal  property  through  the  foreclosure  process   •  Fundamental  purpose  is  to  ensure  tenants  facing  evicPon  from  a  foreclosed          property  have  adequate  Pme  to  find  alternaPve  housing     •  Establishes  a  minimum  Pme  period  that  a  tenant  can  remain  in  a  foreclosed          property  before  evicPon  (but  does  not  affect  any  state  or  local  law  that  provides          longer  Pme  periods  or  addiPonal  tenant  protecPons)   •  A  lease  or  tenancy  is  bona  fide  if:  

not

― The  tenant  is    the  mortgagor  or  the  parent,  spouse,  or  child  of  mortgagor   ―  It  is  the  result  of  an  arms  length  transacPon   ―  Rent  is  not  substanPally  lower  than  fair  market  rent  or  is  reduced  or  subsidized  due  to  a  federal,              state,  or  local  subsidy  

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KEY FEDERAL  LEGISLATION:  PROTECTING   TENANTS  AT     FORECLOSURE  ACT  OF  2009  (CONTD.)   •  Requires  that  immediate  successor  in  interest  at          foreclosure  must:   ―  Provide  bona  fide  tenants  with  90  days  to  terminate              tenants  in  a  month  to  month  tenancy   ―  Allow  bona  fide  tenants  with  leases  to  occupy              property  unPl  the  end  of  the  lease  term,  except  the              lease  can  be  terminated  on  90  days  noPce  if  the  unit              is  sold  to  a  purchaser  who  will  occupy  the  property  

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Tenant En>tled  to  a  90-­‐Day  No>ce  to   Terminate  Aker  Foreclosure   •  EffecPve  January  1,  2013,  a  month-­‐to-­‐month  tenant  in  possession  of  a   rental  housing  unit  at  the  Pme  the  property  is  foreclosed  must  be  give  a   90-­‐day  wri_en  noPce  to  terminate  under  California  law.  For  a  fixed-­‐term   residenPal  lease,  the  tenant  can  generally  remain  unPl  the  end  of  the   lease  term,  and  all  rights  and  obligaPons  under  the  lease  shall  survive   foreclosure,  including  the  tenant's  obligaPon  to  pay  rent.  However,  the   landlord  can  give  a  90-­‐day  wri_en  noPce  to  terminate  a  fixed-­‐term  lease   arer  foreclosure  under  any  of  the  following  four  circumstances:  (1)  the   purchaser  or  successor-­‐in-­‐interest  will  occupy  the  property  as  a  primary   residence;  (2)  the  tenant  is  the  borrower  or  the  borrower's  child,  spouse,   or  parent;  (3)  the  lease  was  not  the  result  of  an  arms'  length  transacPon;   or  (4)  the  lease  requires  rent  that  is  substanPally  below  fair  market  rent   (except  if  under  rent  control  or  government  subsidy).  The  purchaser  or   successor-­‐in-­‐interest  bears  the  burden  of  proving  that  one  of  the  four   excepPons  has  been  met.  This  law  does  not  apply  if  a  borrower  stays  in   the  property  as  a  tenant,  subtenant,  or  occupant,  or  if  the  property  is   subject  to  just  cause  rent  control.  This  law  will  expire  on  December  31,   2019.   www.certifiedhomeowneradvocates.com www.RETHINKShortSaleSolutions.com

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Julie Boyd Certified Homeowner Advocate 1(888)668-9680 ext 201

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Credits: •  Julie  Boyd,  SFR,  CDPE,  CerPfied  Homeowner   Advocate,  CerPfied  Expert  Advisor,  LegislaPve   Liaison  &  Frequent  Keynote  Speaker  for   AAREA,  NAHREB,  CDPE,  Wells  Fargo  and   Chase.    Founder  of  RETHINK  Short  Sale   SoluPons.   •  Paul  Horn,  CPA  and  A_orney   •  Copyright,  TM  9/22/2013  

Julie boyd foreclosure laws tax issues  

Julie Boyd Julie Larson Boyd Foreclosure Laws Tax Issues