Peter Goodman

On Feb.18^th the Obama Administration announced the Making Home Affordable (MHA) Program, a comprehensive plan to stabilize the US housing market and offer assistance to up to 7 to 9 million homeowners by reducing mortgage payments to affordable levels and preventing avoidable foreclosures.

As promised, two weeks later on March 4^th, the Administration published detailed program guidelines and authorized servicers to begin modifications and refinancings under the plan immediately. On April 28^th, the Administration announced additional details related to the Second Lien Program and strengthening Hope for Homeowners. Fourteen servicers, including the five largest, have now signed contracts and begun modifications and refinancings under MHA. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75 percent of all loans in the country are now covered by the MHA program.

Today, the Law Office of Peter J. Goodman is providing a program update on Home Price Decline Protection Incentives. Building on insights developed by the FDIC, Home Price Decline Protection Incentives will provide additional payments based on recent home price declines, and therefore will incentivize additional modifications in areas where home prices have been falling. By increasing MHA modifications and the use of alternatives to foreclosure, we will reduce the negative impact of foreclosure, minimizing damaging costs for financial institutions, borrowers and communities.

The hope is, together with the other comprehensive elements of the Making Home Affordable program, property values will be stabilized for homeowners in neighborhoods hardest hit by foreclosures. Based on estimates of the relationship between foreclosures and home prices, the Home Affordable Modification program could help to bolster home values for the average homeowner by as much as $6,000.

Home Price Decline Protection Incentives to Protect Against Falling Home Prices:

This initiative provides lenders additional incentives for modifications where home price declines have been most severe and lenders fear these declines may persist. These incentives will encourage servicers to undertake more modifications by assuring that incremental investor losses will be partially offset.

To encourage the modification of more mortgages and enable more families to keep their homes, the Administration, building on insights pioneered by Chairman Bair and the FDIC, has developed an innovative payment that provides compensation based on recent home price declines, structured as a simple cash payment on every eligible loan. Home Price Decline Protection (HPDP) incentives are designed to address investor concerns that recent home price declines may persist. Together the incentive payments on all modified homes will help cover the incremental collateral loss on those modifications that do not succeed. HPDP payments will be linked to the rate of recent home price decline in a local housing market, as well as the average cost of a home in that market.

• Increases Number of Loans that Are Modified: Making Home Affordable will make payments totaling up to $10 billion to to encourage lenders, servicers and investors to modify rather than foreclose by addressing concerns that home price declines will persist in the future. This should increase the number of modifications completed under the MHA program in markets hardest hit by falling home prices.

How The Program Works:

•• Payments will be based on the total number of modified loans that successfully complete the modification trial period and remain in the modification program.

•• Each successful modification will be eligible for a HPDP incentive, up to a cap for HPDP incentives of $10 billion.

•• If the trial modification remains successful, 1/24^th of the HPDP incentive will accrue to the lender/investor each month for up to 24 months. HPDP incentive payments will be made at the end of the first and second year of the modification.

Calculation of HPDP Incentives: HPDP incentive amounts will be calculated based on a formula incorporating:

•• Declines in average local market home prices over recent quarters prior to the quarter in which the loan was modified based on housing price indices; and

•• The average price of a home in each particular market, since the potential loss due to a given rate of home price decline will be larger in higher cost areas.

For more updates on the Making Home Affordable Plan - or any other real estate legal matters - please contact us at www.pjgoodmanesq.net.

As you may know, on February 18, 2009 the Obama Administration announced the Making Home Affordable (MHA) Program, a comprehensive plan to stabilize the US housing market and offer assistance to up to 7 to 9 million homeowners by reducing mortgage payments to affordable levels and preventing avoidable foreclosures. Part of this plan includes a Short Sales/Deeds-In-Lieu Program as a foreclosure alternative.

For eligible borrowers unable to retain their homes through a Home Affordable Modification, MHA will provide incentives to borrowers, servicers and investors to encourage short sales and deeds-in-lieu. Both allow families and servicers to avoid the costly foreclosure process, and to minimize the negative impact of foreclosures on borrowers, financial institutions and communities.

Both a short sale and a DIL provide an opportunity for borrowers to avoid the foreclosure process. In a short sale, a servicer allows the borrower to sell the property at its current value, even if the sale price is less than the total amount owed on the mortgage. Approval of a short sale requires the borrower to list and actively market the home at its fair value. The sale must have all proceeds (after selling costs) applied to the discounted mortgage payoff. If the borrower actively markets the property but is unable to sell it within the agreed upon time period, a servicer may consider a DIL. With a DIL, the borrower voluntarily transfers ownership of the property to the servicer - provided the title is free and clear.

How The Home Affordable Short Sale/DIL Program Works:

Borrower Eligibility. Borrowers will be eligible for the Foreclosure Alternative Program if they meet the minimum eligibility criteria for a Home Affordable Modification but did not qualify for a modification or were unable to sustain payments under a trial period plan or a modification. Prior to going into foreclosure, participating servicers must evaluate each eligible borrower to determine if a short sale is appropriate. Considerations in the determination include property condition and value, average marketing time in the community where the property is located, the condition of the title including the presence of junior liens and a determination that the net sales proceeds are expected to exceed the investor's recovery through foreclosure Incentive Payments. Borrowers may receive incentive compensation of up to $1,500 to assist with relocation expenses.

Standardized Documentation: The program will publish streamlined and standardized documentation, including a Short Sale Agreement and an Offer Acceptance Letter. These documents will outline specific marketing terms, describe the rights and responsibilities of all parties and establish clear timeframes for performance. Creating one standard set of documents that the industry can use is expected to minimize the complexity of these transactions and significantly increase use of the short sale option.

Property Valuation: The servicer will independently establish both property value and the minimum acceptable net return in accordance with investor guidance and will provide instruction to the borrower regarding the list price and any permissible price reductions. The price may be determined based on either: (1) an appraisal performed in accordance with USPAP and/or (2) one or more Broker Price Opinions either of which must be dated within 120 days of the Short Sale Agreement.

Minimum and Maximum Duration: Under the program, servicers will allow borrowers at least 90 days to market and sell the property, with possibly more time based on local market conditions. The property must be listed with a licensed realtor experienced in selling properties in the neighborhood. Marketing of the property may run concurrently with the foreclosure process; however no foreclosure sale can take place during the marketing period specified in the Short Sale Agreement as long as the borrower is acting in good faith to sell the property. There will be a maximum marketing period of 1 year for the property,

Fees and Charges: Servicers may not charge borrowers fees for participation in the Foreclosure Alternative Program.

Property Eligibility: Any junior liens, mortgages or other debts against the property must be cleared for the property to be sold as a short sale or deeded to the servicer. The servicer can proceed with a short sale or deed-in-lieu if there is a reasonable belief that all liens on the property can be cleared.

Program Expiration: Eligible borrowers will be accepted until December 31, 2012. Program payments will be made upon successful completion of a short sale or DIL.

Deed-in-Lieu: At the servicer's option, the Short Sale Agreement may include a condition that the borrower agrees to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time specified in the Agreement. In this case the borrower would have 30 days to vacate the property and would be entitled to $1,500 to assist with relocation expenses, in addition to any other funds the servicer may provide to the borrower.

We believe an educated public is vital in this market, and will continue to provide updates on this program and others. Please contact our office with any questions/concerns you may have 866-716-0348 or visit us at http://www.pjgoodmanesq.net

We are all asking the same question: What is going on with the new Helping Families Save Their Homes In Bankruptcy Act of 2009? Our website www.pjgoodmanesq.net now offers a link to real time updates as to the status of this bill. It can be viewed by clicking here. This way everyone will be privy to the actual information as it comes to light. We are getting calls from dozens of homeowners asking us what the status of this bill is and wondering if they will qualify. As this is new information to all of us, it is helpful to know exactly what is going on with this bill. By clicking the link on our website you are even able to read the entire text of the bill and make comments as well as read others' comments. This is certainly a time where up to the minute information is helpful to all of us - professionals and homeowners alike. Knowledge is power!

Peter J Goodman, Esq.

www.pjgoodmanesq.net

If you are considering selling your Long Island home as a short sale, there is certain information you will need to have. A short sale is one where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it. Here are some tips and strategies for homeowners that may be facing a short sale.

1. Hire a qualified team. Qualified being the most important rule. The first step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have sky-rocketed just in the last few years, so it may be more difficult to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest. Rule of thumb: A qualified real estate professional should:

• Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
• Help you set an appropriate listing price for your home, market the home, and get it sold in a reasonable amount of time.
• Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (The Long Island MLS permits and requires that the short-sale status be disclosed to potential buyers).
• Ease the process of working with your lender or lenders.
• Negotiate the contract with the buyers.
• Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can't sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

Ask your potential realtor if he/she will provide these services when you speak with them initially. If they are not willing to do so then keep shopping! Try to fond an attorney who is recommended or has an association with a reputable organization.

2. Gather documentation before any offers come in. Your lender will give your attorney a list of documents required to consider a short sale. The short-sale "package" that accompanies any offer typically must include:

• A hardship letter detailing your financial situation and why you need the short sale
• A copy of the purchase contract and listing agreement
• Proof of your income and assets
• Copies of your federal income tax returns for the past two years
• Recent paystubs and bank statements

3. Prepare buyers for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender's review of the short-sale package on average can take several months.

• If you have only one mortgage, the review can take about two months.
• With a first and second mortgage with the same lender, the review can take about three months.
• With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender's loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

For more information or a discounted one-hour consultation visit us at www.pjgoodmanesq.net

While in office, President Bush signed the Economic Recovery Act of 2008 which provides a $7,500 Homebuyer Tax Credit that will be available for qualified purchases between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

The IRS has issued a new Form 5405, First-Time Homebuyer Credit to incorporate provisions from the recently enacted American Recovery and Reinvestment Act. Under the new law, qualifying taxpayers who buy a home this year before December 1 can claim up to $8,000, or $4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns. Unlike the prior first-time homebuyer tax credit, this is money individuals do not have to pay back. This new Form 5405 provides additional information on who can and cannot claim the credit, income limitations and repayment of the credit. The form and IRS news release can be found here: www.irs.gov

To learn more about this and other matters effecting first time homebuyers please visit me at www.pjgoodmanesq.net.