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New Federal Rules on Foreclosure

Posted in Foreclosure

New Federal Rules on Foreclosure —By Erika Eichelberger – Thanks to Mother Jones On Thursday, the Consumer Financial Protection Bureau, the federal consumer watchdog set up by the Dodd-Frank financial reform bill, announced a new set of foreclosure-prevention rules focused on keeping loan servicers honest. Servicers, which collect mortgage payments from borrowers and work out terms of a loan, are supposed to explore all alternatives to foreclosure before reclaiming a home, and to give homeowners a fair and clear evaluation process. But as millions of borrowers fell behind on payments in the wake of the financial meltdown, loan servicers got slammed by tons of added legwork and administration, and many more got perverse incentives to fast-track borrowers into default. Some servicers put on a spectacular show of incompetence and outright fraud, routinely losing paperwork, “robo-signing” people into wrongful foreclosures, and locking people out...

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Renters’ Rights in Foreclosure`

Posted in Foreclosure, Rental Modification

Renters in Foreclosure: What Are Their Rights? Federal law gives important rights to tenants whose landlords have lost their properties through foreclosure. Renters and tenants are now being affected by foreclosures almost as often as homeowners. The financial downturn resulted in thousands — no, make that millions — of foreclosed homes. Most of the occupants are the homeowners themselves, who must scramble to find alternate housing with very little notice. They’re being joined by scores of renters who discover, often with no warning, that their rented house or apartment is now owned by a bank, which wants them out. Who Are the Renters? Renters who lose their homes to foreclosures don’t fit a single profile. Many of them live in smaller buildings, condos, and single-family homes. They’re located in cities and surrounding suburbs, in low-income and upscale neighborhoods. In short, foreclosed homes...

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Foreclosure and Income Tax Consequences

Posted in Foreclosure

Foreclosure and Its Income Tax Consequences (TheNicheReport) — In a recent issue of The Niche Report I wrote an article on how to safely “walk away” from your mortgage. That article discussed consumer protection statutes, enacted by such states as California, known to lawyers and real estate professionals alike as “anti-deficiency” legislation. This legislation protects homeowners who can no longer afford to debt service their mortgage from personal liability on their mortgage and allows them to simply “walk away” from an over-encumbered or “underwater” property. That article sparked a number of inquiries from our readers, many of whom wondered what the impact of the Internal Revenue rules on cancellation of debt had on those homeowners who elected to “walk away” from their mortgage, lost their home through foreclosure or benefited from a short-sale or modification that included a principal...

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Modification Guidelines

Posted in Bankruptcy, Foreclosure, Mortgage Modification, Principal Reduction

Read the Hamp Handbook here. It will answer a lot of questions. Lenders may but are not required to reduce principal balances in a modification down to 115% of the principal balance owing. Lenders may not foreclose on a borrower who is in the process of modification until after the borrower is declined and other options have been considered. A borrower in bankruptcy may proceed with a modification. Unemployed borrowers can have up to six months of reduced payments will seeking new employment. There are many other points these guidelines clarify....

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