Penalties Increase for Borrowers Who Walk Away

Borrowers who consider walking away from their mortgages have yet another reason to think twice.  Fannie Mae has implemented a new policy that penalizes borrowers who walk away even though they had the ability to pay or who did not complete a workout arrangement.  Such borrowers now will be ineligible to obtain a Fannie Mae-backed loan for seven years.  However, borrowers who experience extenuating circumstances may be eligible for a new loan within two to three years depending on the situation.  Fannie Mae is also considering legal action to recoup the outstanding loan debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments.
Fannie Mae plans to instruct its servicers to monitor delinquent loans facing foreclosure and recommend cases that might warrant the pursuit of deficient judgments.

FHA Conditions that will Require Automatic Repair for Existing Properties

*Inadequate access/egress from bedrooms to exterior of home
*Leaking or worn out roofs (if 3 or more layers of shingles on leaking or worn out roof, all existing shingles must be removed before re-roofing)
*Evidence of structural problems (such as foundation damage caused by excessive settlement)
*Defective paint surfaces in homes constructed pre-1978
*Defective exterior paint surfaces in homes constructed post-1978 where the finish is otherwise protected.

While not all inclusive, this should give you an idea what issues might concern an FHA appraiser doing an appraisal on your home.


Linda Shank Broker Owner Linda Shank and Company is a 32 year real estate veteran in Phoenix's Southeast Valley.  Contact her at www.ISellAZSunshine.com

Minor Property Conditions that FHA does NOT REQUIRE Automatic Repair

 *Missing Handrails

*Cracked or damaged doors exit doors that are otherwise operable

*Crack Window glass

*Defective paint surfaces in homes constructed post 1978

*Minor plumbing leaks (such as leaky faucets)

*Defective floor finish or covering (worn through the finish, badly soiled      carpeting

*Evidence of previous (non-active) Wood Destroying Insect/Organism damage where there is no evidence of non-repaired structural damage

*Rotten or worn out counter tops

*Damaged plaster, sheet-rock or other wall and ceiling materials in homes constructed post 1978

*Poor workmanship

*Trip hazards (cracked or partially heaving sidewalks, poorly installed 

carpeting)

*Crawl space with debris and trash

*Lack of an all weather driveway surface

While not all inclusive, this should give you an idea what issues might concern an FHA appraiser doing an appraisal on your home.

Linda Shank Broker Owner Linda Shank and Company is a 32 year real estate veteran in Phoenix's Southeast Valley.  Contact her at www.ISellAZSunshine.com

Protecting Tenants at Foreclosure Act

The Federal Protecting Tenants of Foreclosure Act enacted into law a little over a year ago trumps Arizona law by requiring purchasers of home from foreclosure sales to honor certain existing leases.  They must also provide a 90-day notice prior to suing for eviction.  

There are exceptions and qualifications purchasers should be aware of prior to buying a foreclosure property.  Purchasers who buy with the intent to occupy the home as their primary residence are not required to honor existing leases but still must give the tenant a 90-day notice to vacate before they can sue to evict the tenant.  


The law also does not apply to tenants or leases that are not bona fide.  To qualify under the law the foreclosed owner or his/her spouse, child or parent cannot be listed as the tenant.  Furthermore a lease must be the result of an arms-length transaction and the set rental rate cannot be substantially below fair market.  Lastly, the lease must have been signed prior to the foreclosure notice being recorded.

Linda Shank Broker Owner Linda Shank and Company is a 32 year real estate veteran in Phoenix's Southeast Valley.  Contact her at www.ISellAZSunshine.com

FHA APPRAISAL REQUIREMENTS - GENERAL RULES TO REMEMBER

Think of Safety and Soundness as best describing the FHA Appraisal Requirements as listed below:

Safety - FHA underwriting guidelines require that lenders review the appraisal to see if the appraiser has made note of property conditions that will affect the health and safety of the occupants.

Soundness - FHA underwriting guidelines require that lenders review the appraisal to see if the appraiser has made note of property conditions that jeopardize the soundness and structural integrity of the home.

When an FHA appraisers do an appraisal they are making sure that their aren't any safety hazards and that home is structurally sound. 


Linda Shank Broker Owner Linda Shank and Company is a 32 year real estate veteran in Phoenix's Southeast Valley.  Contact her at www.ISellAZSunshine.com

Are You Eligible for HAMP-Home Affordable Modification Program?

In order to be considered for a loan modification under HAMP, you must meet the following basic criteria:

1. Primary Residence -This must be your primary residence.
2. Date - The loan must be dated prior to January 1, 2009.
3. Size Limit - The loan must be equal to or less than $729,750.
4. Hardship - Borrower must demonstrate a hardship or change in circumstances which make it more difficult to pay the loan such as a reduction in household income, increase in necessary medical bills or a significant increase in the monthly loan payment due to an interest rate increase.
5. Debt to Income Ratio - First loan payment which includes principal, interest, taxes, insurance and HOA dues equals more than 31% of the borrower's current gross income.
6. Current Income - Borrower must show adequate current income to make the reduced payment if the modification is allowed.


Lender loan modifications can be a forbearance agreement, interest rate reductions, conversion of ARM's to fixed rate loans, deferral of past due payments and in rare instances even principal reductions.

Unfortunately, negative equity is not sufficient grounds for a modification!!!!  So it's best to explore other options (with a lawyer or real estate broker) such as a short sale before walking away from a home and letting it go into Foreclosure.




Linda Shank Broker Owner Linda Shank and Company is a 32 year real estate veteran in Phoenix's Southeast Valley.  Contact her at www.ISellAZSunshine.com

Easy Short Sale Explanation

Here's my definition in a nutshell: A short sale is nothing more than negotiating with loan holders a payoff for less than what they are owed. Otherwise, a sale of debt generally on a piece of real estate, short of the full amount owed. It does not extinguish the remaining balance unless this is clearly settled in the acceptance of the offer. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing since there are legal and other carrying costs that are associated with a foreclosure. This occurs on a daily basis since many homes have loans that are considerably higher than the current value of the home. If you would like my Homeowner's Short Sale 16-Step Instructions emailed to you please contact me through this blog site.

Linda Shank Broker/Owner Linda Shank & Company is a 32+ year veteran of Arizona Real Estate.  Contact her at www.ISellAZSunshine.com