On November 20, 2008 Fannie Mae and Freddie Mac announced a moratorium on foreclosures. The moratorium was scheduled to run through January 9, 2009. Approximately 16,000 homes were expected to be affected.

As a result of the moratorium, you can expect a surge of foreclosures during January, February and March of 2009 unless Fannie Mae and Freddie Mac take corrective action.

WHAT DOES THIS MEAN FOR YOU

If you are planning on selling your home in the first quarter of 2009 – especially if it is a short sale – expect a lot of competition from a wave of foreclosed homes that will be coming on the market.

It also means that there will be added pressure on home prices, and values are more likely to continue falling in the first half of 2009. If you are already upside down on your home, expect it to get worse before it gets better.

In a major concession to homeowners, the Internal Revenue Service announced that it would expedite the process of subordinating a tax lien when a homeowner is refinancing or restructuring a home loan. Moreover, the IRS may waive the tax lien altogether when a homeowner is doing a short sale.

What this Means for You

If you have a tax lien on your property and are in the process of refinancing or restructuring your mortgage you will need the IRS to waive payment of the tax lien, and an agreement from the IRS that the lien will be in a second position to the new loan. Under the new IRS plan the agency will be more lenient in granting waivers, and grant them more quickly.

Moreover, the IRS may waive the tax lien altogether in the event of a short sale.

Props to the IRS

The IRS is about the last place that you would expect a helping hand from – special props to IRS Commissioner Doug Shulman for pushing this reform through.

Posted by Mark Williams

Yesterday the House Oversight and Government Reform Committee ripped into former Fannie Mae CEO Daniel Mudd and former Freddie Mac CEO Richard Syron.

The Committee is chaired by Henry Waxman, a democrat from Beverly Hills who has been attacking a lot of people lately. It often appears that Mr. Waxman is more interested in obtaining confessions and laying blame and generally attacking the free market than he is in sorting out the foreclosure fiasco.

At this particular hearing he was flummoxed when the executives refused to take personal blame for the subprime meltdown.

Fannie and Freddie have been taken over by federal regulators. The two agencies own or guarantee more than $11 trillion in home loans.

Damaging Emails Found

The Committee uncovered internal emails at the agencies that warned senior executives about the risky nature of the loans that they were buying, specifically stated income loans. Not only did the CEOs ignore the emails and continue to acquire increasing questionable loans, but in Freddie Mac’s case the former chief risk officer that sounded the alarm was fired.

How Does This Impact You?

Not at all. This hearing was more about playing the blame game than it was about helping out distressed homeowners. The real work is already underway at Fannie, Freddie, the FDIC and Treasury.

It’s just interesting to know that the two agencies that bought or guaranteed 50% of all home loans suspected as early as 2005 that many of the loans would eventually be defaulted upon, and that the warning bells were ignored.