New simplified loan modification initiative announced to help troubled homeowners avoid foreclosure

Fannie Mae and Freddie Mac will offer a new loan modification initiative designed to help troubled borrowers avoid foreclosure and remain in their homes, according to an announcement today from the Federal Housing Finance Agency.

Consequently loan servicers will be required to send a Streamlined Modification Solicitation Offer to troubled borrowers who are delinquent on their mortgages for at least 90 days beginning July 1, 2013.

The purpose of the initiative is to simplify the way a borrower’s current mortgage payments are reduced and modify their current loan without requiring the borrower to document their income and financial hardship. The offers will include a reduction in mortgage payment based on a fixed interest rate, potential extension of the loan term to 40 years, or a principal forbearance for qualified underwater borrowers.

Click beyond the jump to continue reading

South Florida among top markets for buying foreclosures

Although there have been recent concerns about a shortage of homes for sale, South Florida currently ranks among the top 20 markets nationwide in which to buy foreclosures in 2013.

Miami-Dade, Broward and Palm Beach counties rank at No. 12 on the list recently compiled by Realty Trac Inc. Realty Trac’s report analyzed foreclosure inventory in the pipeline, average discounts and other factors for more than 200 metropolitan areas with populations of at least 500,000.

South Florida’s recent ranking is a somewhat of a surprise, given that local real estate agents and buyers have complained about a lack of properties for sale. Inventories of all available properties have fallen by approximately 50 percent in the past year, with many underwater homeowners still unable to sell and others waiting on the sidelines for prices to continue to improve. 

In addition, lenders have generally held off listing foreclosed properties, in part to avoid depressing prices. The limited quantity of homes for sale has led to bidding wars and offers well above asking prices. 

However, as South Florida has one of the nation’s highest foreclosure rates with 1 in 27 homes being in distress, the available inventory of bank-owned homes should likely increase providing further opportunities for investors and end users to acquire South Florida properties at historically low prices. 

Greatest media hits of 2011

If there's one point we really like to drive home around here, it's that consumers should shop title companies in the same way they shop for a lender or real estate agent. The savings could be in the range of thousands of dollars.

When our attorneys aren't busy providing expert settlement services to our clients, they are spreading the Federal Title gospel to all who will listen. Here's a sample of some news stories we got to weigh in on this year:

New refinancing options for lower title fees
Washington Post
In the Washington area, Federal Title & Escrow provides as much as to $1,000 off total closing costs for home buyers who use its online “Real Credit” software platform for their transactions.

Shop for title insurance and closing services
Fox Business
If you have already been shopping for a real estate agent, a lender, a home and a moving company, you may be feeling shopped out. Before you put your feet up and relax, you should take the time to shop for title and closing services.

Shopping for title insurance can save you bundles
Whether you're buying a home or trying to refinance your mortgage, you should expect your title insurance to be among the more expensive items you'll have to pay for to get your new mortgage. However, you can save a bundle by shopping around for the most cost-effective policies that will protect you and your investment.

Buying a home? Shop around for title insurance
Washington Examiner
It may not seem like that much when you put that number next to the $400,000 you're going to owe the bank. But when you're paying those up-front closing costs, it can help ease that immediate burden.

New DC title insurance shortcomings
Washington Post
[T]he new law does not require settlement services providers to disclose their fees in writing or publish them on their Web site. The new law creates a huge disincentive to continue to publish settlement fees and costs since those disclosures could later be used by the District as evidence that those fees were not applied in all similarly situated settlements.

Get the refi that the lender promised
Section 1300 on the HUD-1 lists "additional settlement charges." It's a good idea to ask what these fees are for, and whether they are necessary. Ewing suggests that consumers go online to check for average closing cost fees at other local title companies to make a comparison.

Closing on your home: Are you walking in blind?
Homebuyers should stay in close touch with their real estate agent and lender in the days leading up to the closing to be certain all the necessary documents and financial arrangements for the mortgage are in place.

Who owns the foreclosure you bought?
Fox Business
Although most buyers have little to fear, the recent chaos surrounding sales of distressed properties highlights the importance of protecting yourself when purchasing a foreclosure.

Sponsored: 10 things you should know about closing costs
DC Urban Turf
Closing costs will inevitably take a large bite out of your wallet at the settlement table — anywhere from a few to several thousand dollars. The information in this article will help you better understand closing costs and teach you the right questions to ask your title or real estate agent.

New rules attempt to clarify DC mortgage foreclosure legislation

The D.C. Department of Insurance, Securities & Banking ("DISB") proposed new rules for governing residential mortgage foreclosures in an attempt to clarify legislation that affects the city's mortgage foreclosure process.

D.C. Council had made fundamental changes to the city's mortgage foreclosure process last year by adding (among other things) a requirement that lenders and borrowers make an attempt to mediate their disputes.

After the parties concluded their attempt to mediate, the lender was then entitled to record a "mediation certificate" and proceed to a foreclosure sale and enforce its rights under the deed of trust.

However, the requirement mandated by the "Saving D.C. Homes from Foreclosure Act of 2010," which the Council passed in an attempt to keep pace with reforms made by Maryland and other states, raised concerns among lenders and title insurers.

The raft of changes to the D.C. mortgage foreclosure law and rules thereunder opened a Pandora's Box of loopholes that increased the risk of clouded title for any property sold at, or even after, a foreclosure sale.

The aim of the new rules is to clarify the legal effect of recording a mediation certificate and make an amendment to the wording in the certificate.

Lenders and their allies have been clamoring for a change to the rules to state that recording a mediation certificate is prima facie evidence - that means presumptive validity - of all the procedural steps taken prior recording.

This change would prevent a borrower who participated in mediation and loss prevention from raising any objection to the conduct of this process after the foreclosure sale.

An aggrieved borrower could still raise objections, file a lawsuit, or take any other action to contest the lender's conduct during the process.

It will still take some initial stumbling through the maze of new rules by both lenders and borrowers to work out the kinks in the new procedure.

Hopefully, the new requirements will give borrowers increased opportunity to modify loans, and if modification isn't realistic, it will give title insurers, lenders and purchasers confidence that their title will be undisturbed.


About the author

Jack Reid is Of Counsel with the firm Tobin, O'Connor, Ewing and handles matters in the areas of real estate, probate and business law.

How short sales and foreclosures impact your credit score

As the number of home foreclosures and short sales continue to dominate the housing market, it is important for foreclosure homeowners and short sale sellers to understand the impact of their decisions on their credit scores. 

In a May 2, 2011 article in the Baltimore Sun by Eileen Ambrose, an interview with FICO scores director Joanne Gaskin, discusses the potential hazards on credit scores.

While many argue that a short sale impacts credit scores less than a foreclosure or deed-in-lieu of foreclosure, Ms. Gaskin states that "[B]oth are considered a default. There is little difference in impact."

However, it is possible for a short sale to have less impact depending on how the lender reports the short sale to the respective credit bureaus. If the short sale lender does not include the amount of shortage from the sale, the homeowners FICO score would be approximately 35 points higher than if the homeowner underwent a foreclosure.

Another myth that Ms. Gaskin addresses is that being 30 days late on a mortgage payment will not affect a credit score as much as being 90 days late. This is untrue because once you are late, the damage to your credit score has been done. “The first 30 days late makes a significant impact and it takes a good deal of time to repair that credit,” according to Ms. Gaskin.

Click beyond the jump for a chart that shows how foreclosure and short sale can impact your credit score.

  • Ways to save at closing

    Title charges are the largest chunk of closing costs and can vary by hundreds of dollars.

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  • What are closing costs?

    The real estate closing process involves loan steps, legal steps and title steps.

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  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

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