Real Estate Foreclosures and Mortgage Defaults

Fannie Mae acquired 145,617 properties through foreclosure last year and spent about $267 million to maintain them. The mortgage finance company also spent $182 million to repair about 38,000 properties. In the fourth quarter, mortgage loans in foreclosure rose to 4.58 percent of all mortgages; and mortgage loans with payments more than 90 days overdue increased to 5.09 percent, according to the MBA.

Home Page

Home Equity Loans May Haunt Foreclosed or Short Sale Homeowners

When the home foreclosure crisis started, Congress passed the Mortgage Forgiveness Debt Relief Act so homeowners would not be liable for their canceled debt.

However, people who lost their homes to foreclosure or short sale may still have some tax liability at both federal and state levels. The tax exclusions apply only to money used to purchase, build, or improve a home.

Foreclosed or short sale homeowners who took money out with a home equity loan or cash out refinance for purposes other than home improvement such as, debt consolidation or to buy a car, may have to report that forgiven debt as taxable income.

When home equity was plentiful, many people used their house like an ATM machine using credit lines, home equity loans, or refinancing. If the debt is forgiven by the lender, they may find themselves owing the IRS and the state unless they qualify for an exception because of bankruptcy or insolvency.

Mortgage Loan Rates

Interest Only Mortgage Loan News

News from Freddie Mac says that it plans to stop buying and securitizing interest-only mortgage loans. They gave no explanation for the decision, but their January summary of operational activity indicated that delinquency on interest-only mortgages is running around twice the rate of fully amortized mortgages. For example, on interest-only fixed rate mortgage loans originated in 2006, 90 day delinquencies were substantially higher than fully amortized loans from the same time period.

Current Mortgage Rates and Information