Deadlines are looming for anyone seeking a review of their foreclosure proceeding and for homeowners considering a short sale.
Few taking advantage of foreclosure review
Under the terms of an enforcement action between Uncle Sam and large mortgage servicers, you still have time to ask someone to ensure that you were treated fairly if you were involved in a foreclosure.
In February, the Office of the Comptroller of the Currency and the Federal Reserve Board extended the deadline for the "independent foreclosure review" to July 31 from April 30. Now the deadline has been extended again, to Sept. 30.
The extensions provide more time to publicize the enforcement action, which requires participating servicers to retain independent consultants to identify borrowers who may have been harmed during foreclosure proceedings in 2009 or 2010. So far, the response has been disappointing.
As of this writing, just 196,000 borrowers had actually asked for a review. The servicers have selected 142,400 more cases for review on their own, for a total of 338,400. That number is expected to grow, says Bryan Hubbard, a spokesman for the Office of the Comptroller. But as of now, that's just 7.5% of the estimated 4.5 million borrowers covered by the enforcement action.
The requirements for a review are simple: A borrower is eligible if the loan was serviced by a participating lender, if the house was the principal residence and if the loan was active in the foreclosure process from Jan. 1, 2009 to Dec. 31, 2010.
You don't need to have lost your house to be eligible. You also may be covered if you paid your way out of the foreclosure process by bringing your loan current, participated in a loan modification, sold the house for less than what you owed or simply handed the keys back to your lender.
Participating servicers include America's Servicing Co., Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, SunTrust Mortgage, U.S. Bank, Wachovia Mortgage, Washington Mutual, Wells Fargo and Wilshire Credit Corp.
There is no cost for a review, and you should have been contacted by now if you are eligible. If not, start the ball rolling right away by getting in touch with your servicer. Keep accurate records of any attempt to do so and of what is said in any conversations.
Short-sale tax provision set to end Dec. 31
The window is closing on one of the most important tax-relief provisions enacted by Congress during the housing crisis to help financially strapped homeowners.
Under a 2007 law that expires Dec. 31, taxpayers are allowed to exclude from income the amount of debt on their principal residence that is forgiven or canceled by their lenders. After that, if you participate in a short sale in which the lender allows you to sell the home for less than what you owe, you will be required to report the difference as income on your federal tax returns.
Partly because of the looming deadline, and partly because lenders realize less of a loss on short sales than on foreclosures, the number of short sales is growing. According to mortgage data collector RealtyTrac, 26% of the houses sold in the first quarter were short sales.
As of now, there seems to be no urgency on the part of lawmakers to extend the tax break. But stay tuned.
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