Home Foreclosures: The Next Stage

Wells Fargo Home Mortgage, the nation’s largest mortgage originator, has extended its foreclosure moratorium on loans it owns to March 13 as it works to help implement the Obama administration’s foreclosure-prevention plan.

“To give at-risk customers time to explore the new solutions in the administration’s plan with us for loans Wells Fargo owns, we will not proceed with home foreclosure sales until at least March 13,” says Mike Heid, co-president of Wells Fargo Home Mortgage.

For loans that Wells services for other investors, the company says it won’t proceed with home foreclosures until a date allowed by those investors. Investors holding a “substantial portion of these loans” already have said they will honor a foreclosure moratorium until March 6, Wells Fargo said.( Wells does not own alot of their loans but rather services them for investors.)

Wells Fargo Home Mortgage is owned by San Francisco-based Wells Fargo & Co. (NYSE:WFC), which recently acquired Charlotte-based Wachovia Corp.

Proposed Amendments to The First Time Homebuyers Credit

This appears to be the amendments to the First Time Homebuyers Credit.

The time period in which to buy a home under the program has been extended to December 1st 2009 from the original July 1st 2009.

The credit continues to be 10 percent of the purchase price of the home. However the maximum available credit allowed has been increased to $8,000 for a single taxpayer or a married couple filing a joint return. The credit for married couples who file separate returns has been increased to $4,000 per person (for a maximum of of $8,000) This is an increase from $7,500 and $3,750 respectively.

The biggest amendment to the previous law is the 'recapture' or payback of the tax credit. Previously, taxpayers were obligated to pay back $500.00 per year for approximately 15 years (the exception was death of the homeowner). But if you purchase or have purchased a home after December 31st 2008 and before December 01 2009, the tax credit will no longer have to be paid back to the government. There are exceptions;

The previous legislation had language that stated if you sold your home, transferred your home to a family member or no longer used the home as your principal residence, you were obligated to repay the loan back to the government.

What the law now appears to say that if you have owned the home for three years (and you have met the previous criteria) you are no longer obligated to repay the credit. However if circumstances change within the first 36 months that you own the home, you would be required to repay the tax credit. Death is the only 'out'.

Unless I am wrong, the amendments will take effect immediately upon the presidents signature. Until then, the previous law (without these amendments) stands. This is not new legislation, it is an amendment to the previous act.

For a complete understanding of the current and proposed law, I urge you to contact an trained tax professional or attorney. I am not an attorney and am not offering legal advice.

Citibank, JP Morgan Chase Give Homeowners A Break

Citigroup Inc. and J.P. Morgan Chase & Co. on Friday announced that they would temporarily suspend foreclosures, as Washington's debate continued about how to save the U.S. economy and moribund housing market.

In a letter to House Financial Services Committee Chairman Barney Frank, D-Mass, JPMorgan Chase Chief Executive Jamie Dimon said that he would set up a three-week moratorium on foreclosures. Citibank, in its own statement, said that it would suspend foreclosures until the Treasury plan is finalized.

The announcements by Citigroup and J.P. Morgan come as President Obama prepares to announce more details about his plan to stem home foreclosures in an address on Wednesday in Phoenix, Arizona, according to White House press secretary Robert Gibbs. The Arizona housing industry has been pounded by the slow economy and the state is now seeing some of the highest foreclosures rates in the country.

The Treasury plans to use $50 billion of the remaining $350 billion in bank-bailout funds for some form of foreclosure-mitigation program, but it has yet to produce details on the subject. The goal of the program, which is part of a $1.5 trillion financial rescue program, is to help troubled homeowners avoid defaulting on their loans.

The Obama administration is working on a program that would subsidize mortgage payments for troubled homeowners subject to an affordability test, according to reports. This approach would be different from other assistance programs, because borrowers would go through a standard eligibility test and could be approved before their mortgage becomes delinquent.

Citigroup and J.P. Morgan are responding to a request from Frank, who pressed bankers on Wednesday to voluntarily set up a moratorium on foreclosures until the Treasury Department has put in place a plan to alter mortgages.

In addition to Frank, the Office of Thrift Supervision asked the federal and many state-chartered thrift institutions it regulates to stop foreclosures on owner-occupied homes until the new plan is finalized in the next few weeks.

Frank, in a meeting with reporters on Wednesday, said he expects that more than 90% of banks will halt foreclosures until the program is up and running. He declined to provide details of what kind of plan he would like to see take place, but he said some principal write-down for troubled borrowers would be a key part of it.

A Treasury staffer said Tuesday that the program could resemble a proposal introduced by Federal Deposit Insurance Chairwoman Sheila Bair that would use funds from the bailout package in a program to help avoid foreclosures. It is a loss-sharing program between mortgage servicers or investors and the FDIC and deals with loans that fail six months or longer after being modified. Courtesy Marketwatch.com