Mortgage Debt Forgiveness Officially Extended

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 30, 2014 

President Obama signed into law the Mortgage Debt Forgiveness Act, which will grant tax relief to home owners who did short sales in 2014.

Any mortgage forgiveness in a short sale will not be counted as "phantom income" if the home owners' properties are sold by banks for less than the amount of their mortgage. The law was due to expire at the end of the year. The House and Senate recently passed measures by wide margins in December to extend it.

The average short sale has a mortgage forgiveness of about $75,000.

The extension will only apply to short sales conducted in 2014. Any further extension of the short sale tax break will need to be addressed by the newly elected Congress, which convenes its new session in January.

The National Association of REALTORS® issued a call to action earlier this month, urging REALTORS® to submit letters to their Congressional representatives in support of extending the Mortgage Debt Forgiveness Act.

"NAR applauds Congressional leaders in both chambers for their effort to pass this legislation before adjournment," NAR President Chris Polychron said in a statement at the time. "REALTORS® strongly supported the bipartisan Mortgage Forgiveness Tax Relief Act, which was included in the package to prevent underwater borrowers from paying taxes on any mortgage debt forgiven or canceled by a lender in a workout, or after their home was sold for less money than was owed."

Source: “Short Sale Tax Break Signed Into Law,” HousingWire (Dec. 29, 2014)

Couple Wins $1 Million in Lawsuit From Bank of America After Receiving 700+ Robocalls

Friday, December 12, 2014 12:11PM

A Florida couple recently won a $1 million lawsuit against Bank of America after receiving more than 700 collections calls over the course of four years.

Nelson and Joyce Coniglio of Tampa, Florida received 700+ robocalls from the bank after falling behind on their mortgage payments in 2009, according to WFTS. The couple says their phone would be ringing off the hook from Bank of America robocalls throughout the day. After filing a complaint in Federal court, a judge ordered Bank of America to pay the family $1 million for the harassment or $1,500 per call.

This isn't the first time people have been harassed by Bank of America. According to WFTS, an elderly couple in California claims they received over 2,000 collections calls from the bank. An Arkansas family saw over 350 collections calls from Bank of America, and more than 600 to a family in Indiana.

In 2010, Bank of America was revealed to have been using a collections agency based out of Texas, whose associates were recorded using foul language and racist remarks when attempting to collect on debts, WFTS says. Bank of America stopped working with that firm shortly after the recorded remarks went public, according to WFTS.

Bank of America sent a statement to ABC News regarding the ruling.

"Bank of America has helped 2 million homeowners avoid foreclosure. Our calls to the Coniglios were not to collect a debt, but rather to help them avoid foreclosure after they fell behind on their mortgage payments in 2009," Bank of America Senior Vice President Dan Frahm said. "Because our calls were not answered and our efforts to help the Coniglios avoid foreclosure were urgent, these calls continued. We are committed to help homeowners in need of assistance avoid foreclosure."

ABC Eyewitness News

3% Down Payments May Be Game Changer

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 09, 2014

Mortgage giants Fannie Mae and Freddie Mac announced Monday that first-time home buyers can now qualify for loans with down payments as low as 3 percent. That will expand credit for qualified home shoppers who may have been sidelined the last few years because of higher down-payment requirements, housing analysts say.

With Fannie Mae's 3 percent down-payment offering, borrowers must still meet standard eligibility requirements, including underwriting, income documentation, and risk management standards. Any buyer can take advantage of Fannie's loans as long as at least one co-borrower is a first-time buyer. The loans will require private mortgage insurance.Freddie Mac launched Home Possible Advantage, a conventional mortgage with a 3 percent down-payment requirement geared to low- and moderate-income borrowers. It's a conforming conventional mortgage with a maximum loan-to-value ratio of 97 percent. To qualify, first-time home buyers are required to participate in a borrower education program.

"Our goal is to help additional qualified borrowers gain access to mortgages," says Andrew Bon Salle, Fannie Mae executive vice president for single-family underwriting, pricing, and capital markets. "This option alone will not solve all the challenges around access to credit. Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage."

The National Association of REALTORS® applauds the move by the Federal Housing Finance Agency, which oversees Fannie and Freddie.

NAR said in a statement that the action by FHFA demonstrates its "commitment to home ownership by serving creditworthy borrowers who lack the resources for substantial down payments, plus closing costs, with a new 3 percent down-payment program that mitigates risk with strong underwriting. The new program ensures that responsible home buyers will have access to safe, affordable mortgage credit."

Source: Fannie Mae and Freddie Mac

Wells Fargo Faces Predatory Lending Charges

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 02, 2014

Cook County, Ill., is accusing Wells Fargo of making mortgages more expensive for black and Latino borrowers than whites.

Officials in Cook County, which includes Chicago, allege that the mortgage giant is taking part in predatory lending, and they've filed a complaint with the federal court in Chicago. Other municipal governments in Los Angeles and Miami have recently filed similar complaints.

Cook County officials say Wells Fargo has engaged in "equity stripping" with 26,000 loans, from origination to refinancing loans and foreclosures.

"Equity stripping is an abusive form of 'asset-based lending' that maximizes lender profits based on the value of the underlying asset and onerous loan terms, while disregarding a borrower's ability to repay," the complaint alleges.

County officials say the practice uses the bundling of mortgages to sell as securities and allows the lender to make a profit off the loans, even if they fall into foreclosure. Officials are seeking up to $300 million in damages, Bloomberg reports.

Wells Fargo officials call the accusations "baseless."

"It's disappointing they chose to pursue a lawsuit against Wells Fargo rather than collaborate together to help borrowers and home owners in the county," says Tom Goyda, a spokesman for Wells Fargo. "We stand behind our record as a fair and responsible lender."

Source: “Wells Fargo Accused of Predatory Lending in Chicago Area,” Bloomberg (Nov. 28, 2014)