Soccer, Phantom Extension and Strategic Defaults

Many of life's failures are people who did not realize how close they were to success when they gave up. - Thomas Alva Edison


Except maybe the Olympics, I am the world’s most non-sports spectator ever. I often have to ask my husband to tell me the outcome of the previous night’s events so I don’t sound completely isolated when people start talking about the awesome “Suns” game or the “Diamondback” clincher. Yet even I have to profess however, that yesterday’s win by the American soccer team in the World Cup was awe-inspiring. For me though, it wasn’t because I am drawn to soccer by any means; (other than the fact that the players aren’t horrible to look at) it is the sheer diligence of the participants that are playing so hard for something, that from my perspective, is so fleeting.

As I watched many excerpts of the game, I found it interesting how in soccer, and really most other sports, that much of the action does not occur in the majority of the field. Most of the action, the intensity, and the fights usually occur in the small area surrounding the goal. It does not go without notice that when the action is so close to the goal, especially in a close game with much riding on the outcome, my tummy starts tightening, my jaw might clench and I hold my breath a little to see the result. The players are much more intense at the goal than they are mid field. They fight harder and they make more aggressive moves as the opposition fights more vigorously to keep the other team from their victory.

Now consider the thoughts of those individual players on the USA team. Their team has worked and trained hard for four years in a sport that does not receive the national recognition of so many others. They have this one final shot to achieve their goal of World Cup victory, and after two games ending in a tie and in the final moments after 90 minutes of brutal physical excursion of the third game, it comes down to the goal where the opposition is gaining strength. Are the players angry? Maybe. Do they wish it were easier? Probably. Do they give up? No. Their “goal” is so close and they know the only way they can win, is if they continue to play...at their best!

I recently posted this quote on my fan page…"Difficulties increase the nearer we get to the goal." by Johann Wolfgang von Goethe; and how apropos it is to the experiences we are all facing, in this real estate market, in this economy and in our lives. This perspective has helped me through a difficult week and I hope it may resonate with you!

The Tax Credit Extension

I have heard it all…yes the tax credit has been extended…no it has not been extended and I am here to tell you…both sides are a little right! As you have all heard the rumors, the House passed an amendment to HR4213-American Jobs and Closing Tax Loopholes Act (there is something about that name that makes me laugh). The Senate passed an amendment yesterday to this bill that included the language which would extend the tax credit for those under contract by April 30th but unable to close by June 30th and extends it to September 30th. The problem is that the rest of the bill, including thousands of tax provisions from Medicare to unemployment still needs to be hammered out and agreed to by both chambers before it can be signed into law by the President.

For all those frustrated buyers who are ready to walk because of short sale, lender or construction delays, and for all the Realtors, Lenders and Homebuilders who are trying to help…remember the USA World Cup team!

Fannie Mae Revises Foreclosure Guidelines

On April 14, 2010, Fannie Mae made changes to the timeframes required after a “PRE-Foreclosure Event” before someone could obtain new Fannie Mae financing. They have stated that since there are a variety of foreclosure alternatives available to borrowers who are having difficulty making their mortgage payments that the changes would highlight the importance of borrowers working with their servicers to avoid foreclosure. As a follow-up to that Announcement, yesterday Fannie Mae modified the waiting period that must elapse before a borrower is eligible for a new mortgage loan after a “foreclosure.” The combination of the waiting period policies for foreclosures and preforeclosure events continue to favor borrowers who work with their servicers to avoid foreclosure by allowing these borrowers to be eligible for a future Fannie Mae loan in a shorter period of time.

Under the new guidance, unless the foreclosure was the result of documented extenuating circumstances*, which only requires a three-year waiting period (with additional requirements of minimum of 10% down, primary residence purchase or rate/term refinance for all occupancy types), ALL borrowers will now be required to meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan eligible for sale to Fannie Mae.
* Fannie Mae Definition of Extenuation Circumstances: These are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations. If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower’s claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower’s inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, property listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.). The lender must obtain a letter from the borrower explaining the relevance of the documentation. The letter must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no reasonable options other than to default on their financial obligations.


My wife was in labor with our first child. Things were going pretty well when suddenly she began to shout,

"Shouldn't, couldn't, wouldn't, didn't, can't!"

"Doctor, what's wrong with my wife?"

"Nothing. She's just having contractions."

Rates are incredible...don't miss the boat.  I would love to have the opportunity to assist you or your clients with their home financing needs.  I hope you have a great rest of the week!