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C.A.R. Mortgage Update

This week’s C.A.R. Mortgage Update contains information about new government programs to
assist troubled homeowners, rising foreclosures in California’s Inland Empire, short sales,
mortgage rescues, and current mortgage rates.
                                                    Treasury Dept. is giving “cash-for-keys”Under the
                                                     Foreclosure Alternative Program (FAP)
                                                     announced last week by the Obama Administration,
                                                     some borrowers may be eligible for the U.S.
                                                     Treasury Dept.’s deed-in-lieu program, also referred
                                                     to as “cash for keys.”
                                                     A deed-in-lieu is an option offered to homeowners
                                                     who are not eligible mortgage modification or a
                                                     short sale. In most cases, banks acquire properties
                                                     back from delinquent borrowers who can no longer
                                                     afford to make payments. The bank also agrees to
                                                     write off the debt. In exchange, the homeowner
                                                     receives a small incentive, typically about $1,000,
                                                     if they vacate the property by a set date and the
                                                     home is not vandalized.
Those who would benefit most are borrowers who likely would not be able to repay their
mortgages under any reasonable modification program. These would include delinquent
borrowers who are underwater,borrowers who have lost their jobs with little hope of finding
another, and may include those who have gone through a divorce or another life-changing event.
There also are obstacles to overcome when dealing with deeds-in-lieu. The least complicated
scenario is a borrower with no other debt on the home. However, if there is a second mortgage,
the lender most likely will not agree to a deed-in-lieu unless it receives the full cooperation of the
holder of the second mortgage.
As part of the FAP, the Treasury Dept. also will make incentive payments to second mortgage
holders, up to $1,000, if the second mortgage holder relinquishes all claims to the property.

To read the full story, please click here:
http://money.cnn.com/2009/05/15/real_estate/government_giving_cash_for_keys/index.htm?
postversion=2009051508

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