Short Sale With A $$ Payout By Owner???

Discussion in 'Short Sale Outpost' started by ByetoNegAmort, Jan 11, 2016.

  1. ByetoNegAmort

    ByetoNegAmort LoanSafe Member

    Hello all,

    After a six month paper shuffle with Ocwen for a short sale approval, we got news today that the deal will go through but only with a 30k promissory note to Ocwen, or a 15K cash from owner. Does this even sound sensible? If I had such cash, I would not be requesting a short sale on property. Now, the property is over 100k underwater and Ocwen hasn't received a payment from me in eight months.

    How do I fight this? I am not paying anything to Ocwen. We are in an area that has yet to recover from the financial blowout of 2009 and I get nothing from the short sale. Not a dime after owning the house for about 15 years.

    Also, is the deficiency law still in place? If this goes through by some miracle, do I get taxed on the "forgiven" amount? Need information ASAP. Ocwen of course wants an answer in three days or deal is off. Go figure!
  2. Moe Bedard

    Moe Bedard Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    Hello,

    This happens quite often. The reason they are doing this is because they would get nothing in a short sale so they having nothing at all to lose by asking for money, and or just blocking the same by refusing to cooperate. This is just business. All you can do is come up with the money or counter their offer with something less that you can come up with. You can even ask the real estate agents on the same to contribute part of their commissions to the sale if that would help.

    The Mortgage Debt Relief Act of 2007 for an additional two years of protection covering tax years 2015 and 2016. This tax relief applies to qualified borrowers when a lender cancels, forgives and or reduces the mortgage debt on their primary residence through various loss mitigation methods such as a loan modification, and debt forgiven in connection with a foreclosure or a short sale.

    The IRS Publication 4681 says: “Nonrecourse debt” applies to when you have owned a property that was subject to a nonrecourse debt in ex-cess of the FMV of the property, the lender’s foreclosure on the property does not result in ordinary income from the cancellation of debt.”

    If you qualify, you can claim a special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.

    See this link for more info: http://www.loansafe.org/home-mortgage-debt-cancellation-tax-tips
  3. ByetoNegAmort

    ByetoNegAmort LoanSafe Member

  4. ByetoNegAmort

    ByetoNegAmort LoanSafe Member

    Thank you so much, Moe for your response. I'm being told the requested fund is due to the fact that I paid less than 20% at initial closing and the insurer is the one requesting this payment. I'm trying to negotiate it down but open to other ideas and suggestions for this. I'll be calling the insurer directly to attempt to negotiate. Isn't all the fines collected from the mortgage companies by the States intended to assist with something like this? Who is being helped by any of those funds?
  5. Moe Bedard

    Moe Bedard Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    You are welcome.

    Most of the fines against the mortgage servicers have been already paid, or you have to ask OCWEN if you qualify. For example, in 2013, OCWEN was ordered to provide $2 billion in principal reduction to underwater borrowers, and refund $125 million to the nearly 185,000 borrowers who have already been foreclosed upon.

    According to the proposed order, Ocwen must:

    • Provide $2 billion in relief to underwater borrowers: Over a three-year period, Ocwen must complete sustainable loan modifications that result in principal reductions totaling $2 billion. For loan modification options, eligible borrowers may be contacted directly by Ocwen. Or borrowers may contact Ocwen to obtain more information about specific loan modification programs and to find out whether they may be impacted by this settlement. Ocwen can be reached at 1-800-337-6695 or ConsumerRelief@Ocwen.com. If Ocwen fails to meet this commitment, it must pay a cash penalty in the amount of any shortfall to the CFPB and the states.
    • Provide $125 million in refunds to foreclosure victims: Ocwen must refund $125 million to consumers whose loans were being serviced by Ocwen, Homeward Residential Holdings, or Litton Loan Servicing, and who lost their homes to foreclosure between Jan. 1, 2009 and Dec. 31, 2012. All eligible consumers who submit valid claims will receive an equal share of the $125 million. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Ocwen will also pay $2.3 million to administer the refund process. Eligible consumers can expect to hear from the settlement administrator about potential payments.
    • Stop robo-signing official documents: Ocwen must ensure that facts asserted in its documents about borrowers’ loans used in foreclosure and bankruptcy proceedings are accurate and supported by reliable evidence. Affidavits and sworn statements must be based on personal knowledge.
    • Adhere to significant new homeowner protections: Ocwen must change the way it services mortgages to ensure that borrowers are protected from the illegal behavior that puts them in danger of losing their homes. To ensure this, the CFPB and the states are proposing that Ocwen follow the servicing standards set up by the 2012 National Mortgage Settlement with the five largest banks. Because of Ocwen’s track record of problems handling the large volume of mortgage servicing rights it has quickly acquired in recent years, Ocwen is also being ordered to adhere to additional consumer protections, including how it manages transferred lans. Among other things, Ocwen must:
      • Properly process pending requests: For loans that are transferred to Ocwen, the company must determine the status of in-process loss mitigation requests pending within 60 days of transfer. Until then, Ocwen cannot start, refer to, or proceed with foreclosure.
      • Honor previous loan modification agreements: If the borrower has a loan modification agreement, Ocwen must honor it under the terms of the company that transferred the loan.
      • Ensure continuity of contact for consumers: Ocwen will have to ensure that consumers get regular and dependable assistance when they call for help. This includes requiring more than just a single point of contact assigned to each borrower, but also that other Ocwen employees with access to the borrower’s information be available if the borrower wants to speak to someone immediately.
      • Restrict servicing fees: All servicing fees must be reasonable, bona fide, and disclosed in detail to borrowers. For example, Ocwen cannot collect any late fees if a loan modification application is under review or if the borrower is making timely trial modification payments.
      • Notify consumers of loss mitigation options and restrict dual tracking: Ocwen generally cannot refer a borrower’s account to foreclosure while the borrower’s application for a loan modification is still pending. If the loan-modification request is denied, the borrower can appeal that decision and Ocwen cannot proceed to foreclosure until that appeal has been resolved.

    The proposed Ocwen Consent Order is available at:http://files.consumerfinance.gov/f/201312_cfpb_consent-order_ocwen.pdf

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