Deadlines are looming for anyone seeking a review of their foreclosure proceeding, for borrowers whose lenders require them to carry flood insurance and for homeowners considering a short sale:
-- Under the terms of an enforcement action between Uncle Sam and large mortgage servicers, you still have time to ask someone to ensure that you were treated fairly if you were involved in a foreclosure.
Back in February, the Office of the Comptroller of the Currency and the Federal Reserve Board extended the deadline for the "independent foreclosure review" from April 30 to July 31. Now the deadline has been extended again, to Sept. 30.
The extensions provide more time to publicize the enforcement action, which requires participating servicers to retain independent consultants to identify borrowers who may have been harmed during foreclosure proceedings in 2009 or 2010. So far, the response has been disappointing.
As of this writing, just 196,000 borrowers had actually asked for a review. The servicers have selected 142,400 more cases for review on their own, for a total of 338,400. That number is expected to grow, says Bryan Hubbard, a spokesman for the Office of the Comptroller. But as of now, that's just 7.5 percent of the estimated 4.5 million borrowers covered by the enforcement action.
The requirements for a review are simple: Borrowers are eligible if their loans were serviced by one of the participating lenders listed below, if the house was their principal residence, and if the loan was active in the foreclosure process between Jan. 1, 2009, and Dec. 31, 2010.
You don't need to have lost your house to be eligible. You also may be covered if you paid your way out of the foreclosure process by bringing your loan current, participated in a loan modification, sold the house for less than what you owed or simply handed the keys back to your lender.
Participating servicers include America's Servicing Co., Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, EverBank/EverHome Mortgage Co., Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia Mortgage, Washington Mutual, Wells Fargo and Wilshire Credit Corp.
There is no cost for a review, and you should have been contacted by now if you are eligible. If not, then start the ball rolling right away by getting in touch with your servicer. Keep accurate records of any attempt to do so and of what is said in any conversations.
-- If you want an example of the gridlock that has gripped the legislative process, consider the National Flood Insurance Program.
Eighteen times since 2008, this vital program has been extended at the last minute by lawmakers who can't seem to agree on how to reform it. In 2010 alone, it was allowed to expire four times because Congress couldn't get its act together. By the Property Casualty Insurers Association's count, coverage could not be purchased for a total of 53 days.
Now the program is set to expire again, this time on July 31.
Without flood insurance, borrowers cannot obtain federally insured mortgages or loans that qualify for purchase by Fannie Mae or Freddie Mac, the two government-controlled mortgage giants. Together, Fannie, Freddie and the Federal Housing Administration have their stamp on perhaps 90 percent of the mortgage market.
More than 5.5 million owners rely on the National Flood Insurance Program to insure their homes. It's not just a coastal problem, either. Nearly 10 percent of the houses in the Midwest are in floodplains.
The National Association of Realtors estimates that 1,300 sales are either canceled or delayed each day that coverage is not available. During the 2010 lapses, the association says, about 40,000 deals were stalled.
Last year the House passed, by a resounding 406-22 vote, a bill that would reform and reauthorize the flood-insurance program for five years. But a similar bill loaded with superfluous amendments has languished in the Senate. Now, Senate Majority Leader Harry Reid of Nevada has promised to schedule floor debate on similar legislation this month.
Will it happen? We'll have to wait, probably until the last minute, to find out.
-- The window is closing on one of the most important tax-relief provisions enacted by Congress during the housing crisis to help financially strapped homeowners.
Under a 2007 law that expires Dec. 31, taxpayers are allowed to exclude from income the amount of debt on their principal residence that is forgiven or canceled by their lenders. After that, if you participate in a short sale in which the lender allows you to sell for less than what you owe, you will be required to report the difference as income on your federal tax returns.
The other alternative is a foreclosure. Under the tax code, there is no levy on canceled debt. But the black mark a foreclosure leaves on your credit record is more devastating than a short sale, which itself is more than just a ding.
Partly because of the looming deadline, and partly because lenders realize less of a loss on short sales than on foreclosures, the number of short sales is growing. According to mortgage data collector RealtyTrac, 26 percent of the houses sold in the first quarter were short sales.
As of now, there seems to be no urgency on the part of lawmakers to extend the tax safety net. But stay tuned.