According to an article in USA Today, the U.S. Government’s push for principal forgiveness on Fannie Mae and Freddie Mac home loans seems to be gaining traction.
According to KTAR, Arizona could benefit from U.S. Government’s push to help homeowners avoid foreclosure.
If you have been following my Real Estate Law Blog posts you may have already read about some of the recent legal developments related to foreclosures and short sales in Arizona. However, in light of a new Court of Appeals case just decided last month, I felt it was time for a summary of these recent developments.
Construction Loans and Home Improvement Loans:
A ruling last month by the Arizona Court of Appeals in the case of Helvetica Servicing Inc. v. Pasquan answers important questions in the law and may impact anti-deficiency protections for some people. This case involved the refinance of an original purchase money loan, in which the borrower was loaned additional funds. The additional funds were primarily used by the borrower: (1) to reconstruct a large portion of the home, and (2) for home improvements and related purposes.
The Court of Appeals ruled on several key issues that have been in dispute in Arizona. The Court laid out the following rules to follow when determining whether a refinanced loan or construction loan will be given purchase money status under Arizona law in certain situations and thus, afforded anti-deficiency protection in the judicial foreclosure context:
A refinance of a purchase money loan, whether by the original lender or a new lender, does NOT destroy purchase money protection to the extent the loan proceeds from the refinance are used to satisfy the underlying purchase money loan.
A construction loan given to borrower that is (1) secured by a deed of trust that covers both the land and the dwelling to be constructed on the land (provided the dwelling is a qualifying property under the anti-deficiency statute), and (2) actually used to construct the dwelling, will be afforded purchase […]
Fannie Mae and Freddie Mac are mulling over the possibility of reducing the amount of principal homeowners owe on their home loans. Homeowners who would qualify would need to meet certain hardship criteria. Critics say the principal write-downs would fall to taxpayers.
According to a report issued by data provider Lender Processing Services, foreclosure starts rose 28% in January leading to speculation that a clogged system was rapidly clearing.
Recent data released by RealtyTrac shows an increase in Arizona foreclosures from December, 2011 to January, 2012. The good news is there was actually a year over year decline of 41%.
A report issued by TransUnion shows Florida still leading the nation in mortgage delinquencies with Arizona placing fourth on the list.
President Obama seems determined to wind down Fannie Mae and Freddie Mac and he has the support of Treasury Secretary Timothy Geithner.
President Obama is expected to announce a strategy to address the flagging housing market. His plan would allow for homeowners who are underwater, even those with less than stellar credit, to refinance their homes at lower rates and potentially reduce the principal balance owed.
New figures released by CoreLogic, a real estate data firm, indicate that foreclosures and short sales continue to put downward pressure on the overall housing market nationwide.