Wendy Cutrufelli, Contra Costa Realtor

Due to my extensive lending background, I have received numerous phone calls from homeowners who are delinquent on their mortgage payments asking for advice. As a result of these calls I have learned the unfortunate truth that many homeowners wait too long to determine their options, the end result being a short-sale or foreclosure.

The first thing you should review is the underlying cause of the delinquent payments. If it is due to a temporary change in circumstances, you should contact you mortgage lender and ask for a Forbearance Plan. Forbearance is when the lender agrees to temporarily reduce or suspend your mortgage payment for a specific period of time ending with a reinstatement plan in which you agree to resume your regular monthly payments plus a portion of the past due amount until you are caught up.

If you have been late in the past, can currently make the monthly payment but don't have the additional money to bring the account current, your lender may agree to a Note Modification. Your lender could change the terms of the original loan by adding the missed payments to the principal balance or extending the number of years you have to repay your loan. Willingness and ability to modify the Note varies by lender and typically requires income and asset documentation as well as an explanation of the hardship that caused the situation.

If your mortgage payments are late because you are over-extended financially and you need help restructuring your budget to regain control of your finances, contact a HUD Approved Counseling Agency for Default Resolution Counseling. In Contra Costa county of California, the HUD Approved Counseling Agency is:

CCCS of the East Bay
1070 Concord Avenue, Suite 105
Concord, CA 9450
800-308-2227

Regarless of your situation, it is important to take action steps immediately. Any delay in taking action will reduce the number of options available to you and the timeframe of each option!

Fannie Mae's new Jumbo-Conforming loan limit in Contra Costa county is $729,750. (A loan is classified as Jumbo-Conforming if it is between $417,001 - $729,750). While that is exciting news, there are several very specific limitations that you should be aware of:

The increased loan limits are only approved through 12/31/08

Only the following loan programs are included in the increased loan limits:

• 15 and 30 year fixed and amortized (principal & interest)
• 5 Yr Fixed-Adjustable, amortized, LIBOR index with 5/2/5 interest rate caps (the first adjustment is limited to a 5% change, subsequent annual adjustments are limited to a 2% change, the lifetime interest rate cap is 5% over the starting Note rate)
• 5 Year Fixed-Adjustable, Interest-Only for 10 years with a 30 year term, LIBOR index, 5/2/5 caps.
  

Additional limitations of note:

• "Cash-out" refinances are not permitted
  
• Existing subordinate financing (2nd mortgages or Home Equity Lines of Credit) must be re-subordinated. Consolidation of 1st and 2nd mortgages is not permitted.
  
• You must qualify for an adjustable mortgage based on the higher of the amortized Note rate or the Fully Indexed Rate (index + margin). In short, you cannot use the interest-only payment to qualify for the mortgage.
  
• At least 6 payments must have been made since the most recent refinance or purchase.
  
• These loans must be manually underwritten, automated underwriting is not currently available.

Pleasant Hill Recreation is offering a Home Buyer Education class, presented by Angela Martinez and Wendy Cutrufelli to teach you:

• How each type of purchase - Auction, Short-Sale or Foreclosure - differs
• The Pros and Cons of each for you as a buyer
• How to use the current Buyers Market to Buy a Home Under Market Value

This class will be valuable whether you are a first-time buyer, a move-up buyer or are contemplating the purchase of investment property.

Thursday, March 20, 2008
7:00 - 9:00 pm
Pleasant Hill Community Center
(Off Taylor Blvd and Pleasant Hill Rd)

Fee: $14 Resident / $29 non-Resident

925-676-5200 or www.pleasanthillrec.com

The Mortgage Debt Relief Act of 2007 will save some homeowners facing short-sales or foreclosures from paying federal taxes on the forgiven debt. There are very specific requirements:

The mortgage is for the homeowners principal residence. The relief does not apply to any debt forgiveness for any vacation or investment home.

Forgiveness is only for the "acquisition indebtedness" of the principal residence. Acquisition Indebtedness is defined as "the debt used to acquire, construct or rehabilitate the home".

No relief is available for cash-out mortgages whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, a home equity line of credit or a similar arrangement.

Exception: If the cash-out was specifically used to improve the home and the homeowner has adequate records to prove it.

Important note: This bill relieves these specific homeowner of their federal tax liability but does NOT relieve the homeowner of their state income tax liability. California must enact its own legislation to relieve homeowners of their state tax liability. Pending legislation, Senate Bill 1055, will provided modified conformity to the federal legislation. This legislation can be tracked at http://www.ftb.ca.gov/, click on "law and legislation" for updates.