While the percentage of homes in the United States with negative equity has declined substantially since the fourth quarter of 2013, they experienced a slight increase quarter-over-quarter in Q4 2014, according to CoreLogic‘s Q4 2014 Equity Report released last Tuesday.
CoreLogic reported that 10.8 percent of all residential homes were underwater in Q4, this is about 5.4 million properties approximately, which was down from 13.3 percent in the same quarter a year earlier. The Q4 total was up slightly from the 10.3 percent that was reported for Q3 2014 – an increase of 3.3 percent.
Despite the year-over-year decline in the percentage of underwater residential properties, negative equity remains a serious issue, according to Anand Nallathambi, president and CEO of CoreLogic. For the full year of 2014, 1.2 million borrowers regained equity – but nearly five and a half million properties remained in negative equity as of the end of the year after approximately 172,000 homes slipped into negative equity from the third quarter to the fourth quarter in 2014.
Approximately 10 million of the nearly 50 million residential properties with a mortgage in the United States, which is about 20 percent of these properties have less than 20 percent equity, a condition known as under-equitied.
The Senate approved the long time waiting extension of the Mortgage Debt Forgiveness Act , bringing home owners who did a short sale this year one step closer to tax relief. The bill, which passed the House of Representatives two weeks ago, is expected to be signed by President Barack Obama. The Senate approved the bill in a 76-16 vote.
The Mortgage Forgiveness Debt Relief Act of 2007 was created to help distressed homeowners; that were faced with taxes after a Principal reduction; however this law expired Dec. 31, 2013 making distressed home owners responsible for paying taxes on “phantom income” from the forgiven debt. The tax on a 2014 short sale or workout would have been due this coming April 15 had Congress not extended the measure.
The extension will only apply to short sales conducted in 2014. Any further extensions will have to be considered by the new Congress, which begins its 2015 session in January.
Paying a mortgage is cheaper than paying rent. But owning a home costs more. The never ending debate…Is better to buy or rent? This could be answered only after considering all of the expenses that contribute to homeownership.
The Bureau of Labor Statistics (BLS) says it’s cheaper to own. It has become less expensive to own. From 2009 to 2012, fueled by falling interest rates, homeownership has become more affordable, while renters saw costs go in the opposite direction, according to the BLS.
A recent report by Zillow found that current U.S. home buyers can expect to pay 15.3% of their incomes to a mortgage on the typical home – down considerably from the 22.1% of income homeowners had to budget in the pre-bubble years but renters pay today over 29.5% of their income to rent, compared to 24.9% in the pre-bubble period.
The main reason for the budget disparity is the income gap between owners and renters. At the end of the second quarter, the Census Bureau reported the median annual income in the U.S. was $53,216. But among homeowners, median salaries were $65,514 per year, while the typical renter’s income was just $31,888.
The HAFA, Alternative Program to Avoid Foreclosure, officially went into effect on April 5, 2010 and expires on December 31, 2013. In November 2009, the Treasury Department introduced the feasible alternative program focused on providing homeowners who can not keep their property under a loan modification with other options to avoid foreclosure.
If eligible under HAFA, through the HAFA – Short Sale, banks shall undertake to accept less than the full balance of its debt and provide up to $ 3,000 for moving expenses. Under HAFA, the bank is required to exonerate the owner of the financial responsibility for the “NOTE” on the main mortgage loan, and the bank undertakes to NOT go after the homeowner for the difference between the outstanding balance, or require any contribution by homeowner.
With the HAFA program is intended to encourage the “Short Sales” and “Scripture instead of repossession”, allowing families and avoid the process servers Foreclosure is very expensive, so as to minimize the negative impact of foreclosures on borrowers, financial institutions and communities.
The Alternative To Program simplifies Avoid Foreclosure (HAFA) and streamlines the short sale process, providing procedures, deadlines, standard documentation and effective. You will be eligible under the rules of Fannie Mae, to buy another home in a minimum of two years instead of five to seven years if your credit report does not reflect “repossession”.
“Scripture instead of repossession” or “Deed in lieu of foreclosure” is an instrument in which the mortgagor (borrower) transfers all interest in a property to the mortgagee (lender) to satisfy a loan that is in default and thus avoid the foreclosure process. The main advantage is that the debtor is discharged of debts associated with the mortgage loan in question.
HAFA provides incentives to homeowners who opt for a “short sale / short sale” or “deeds in lieu of repossession” to avoid foreclosure.
It is very important that you gather as much information as you can, before taking a final decision on which option would be more assertive for you. It is advisable to obtain all necessary guidance and advice of a qualified professional, to know which alternative is the most convenient and favorable to you.
Take action immediately if this is happening, or is in a similar situation. Time goes so fast! Not only have less time to take action, but also less possibilities and solutions to work with them and avoid repossession of your property. You can find more information on the HAFA program and other programs to assist homeowners facing a financial crisis in the website: www.makinghomeaffordable.gov / english / Pages / default.aspx