Tag Archives: Mortgage Debt

The Consumer Financial Protection Bureau (CFPB) is reopening a comment period regarding proposed ability-to-pay rules. The bureau reopened the comment period until July 9, 2012 to receive feedback on new data and information it received. The original comment period to the proposed rule closed on July 22, 2011.

In accordance with an agreement made with Memphis and Shelby County, Wells Fargo announced Tuesday it is investing $7.5 million into the area as part of new recovery efforts. Under the agreement, Wells Fargo will provide $4.5 million in grants for mortgage down payment and home renovation assistance. The agreement comes after months of negotiations and dismisses a lawsuit filed by Memphis and Shelby County against the bank at the end of 2009. The city and county alleged that Wells Fargo was engaging in discriminatory and deceptive lending practices and had violated the Fair Housing Act.

A foreclosure prevention agency found that the pending expiration of the Mortgage Debt Relief Act of 200 is prompting struggling homeowners to strategically default on their loan. YouWalkAway.com conducted a national survey and found 34 percent of respondents indicated that the act, which is set to expire December 31, 2012, contributed to their decision to walk away sooner rather than later from their property. The Mortgage Debt Relief Act releases homeowners from the obligation of paying taxes on mortgage debt forgiven from a short sale, foreclosure or modification.

The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), along with the Consumer Financial Protection Bureau (CFPB) and the Treasury issued a fraud alert Thursday warning the armed services community about scams targeting homeowners seeking mortgage assistance. The alert specifically warned about scammers attempting to exploit the Home Affordable Modification Program (HAMP), which can provide mortgage relief for struggling homeowners through modified payments.

According to a survey conducted by Money Management International, struggling homeowners are reluctant to seek professional mortgage relief help. The survey found that half of respondents would first seek help from a family member or friend.

As of December 31, 2011, the Hardest Hit Fund (HHF), which is meant to fund innovative measures to help families through the housing crises in hardest hit states, has spent just 3 percent of its budget since its February 2010 inception, a report published by a watchdog organization for taxpayers revealed Thursday. More specifically, as of the end of 2011, HHF spent $217.4 million of the $7.6 billion available for the program, and has provided assistance to just 30,640 homeowners, which is about 7 percent of the 458,632 to 486,536 homeowners it is estimated to help over the life of the program, which ends in 2017.

Homeowners who have had mortgage debt forgiven after a foreclosure, modification, or short sale may be able to exclude the canceled debt from their taxable income if they meet specific criteria. According to Gil Charney, principal analyst at The Tax Institute at H&R Block, the specific criteria to have forgiven debt excluded are the debt must have been incurred to buy, build or substantially improve the residence, called ""acquisition debt, and the property must be the taxpayer's primary residence.

States and metro areas known for being risky when it comes to mortgage fraud seem to be repeat offenders, according to the 2011 Annual Mortgage Fraud Risk report released by Interthinx. The top six states with the highest levels of mortgage fraud risk in 2010 maintained their spots as the riskiest states into 2011, a trend also seen when looking at data for fraud in Metropolitan Statistical Areas (MSAs). Nevada, Arizona, Florida, California, Colorado, and Michigan were the six riskiest states for 2011 and 2010.

NPR reported Friday that Fannie Mae and Freddie Mac might consider principal reduction as a means to help underwater homeowners. Edward DeMarco, acting director of the FHFA, has stood firm in his decision to not allow for principal reduction, despite mounting criticism from Democrats and petitioning from organizations to have DeMarco fired. ""NPR and ProPublica have learned that both firms have concluded that giving homeowners a big break on their mortgages would make good financial sense in many cases,"" NPR stated in its story.

Consumer credit data suggests spending will increase and the housing market will begin to emerge from its slump this year, according to Equifax and Moody's Analytics. Both companies note that as key market data align with pre-recession totals, consumers should anticipate steady economic growth for major credit sectors, including auto, bank card, and consumer finance. While the mortgage lending sector continues to see the highest percentage of delinquencies, it too is showing signs of increased traction in the coming months.