As of June 21, 2012, The Federal Housing Finance Agency (aka FHFA) announced changes to short sale policies which will make it easier for Military Homeowners with Freddie Mac and Fannie Mae loans to deal with short sale and or foreclosure. The complete news release from the FHFA can be found here
For Military families looking for help with foreclosure in Silicon Valley, here are the two key provisions you should be aware of:
- Military homeowners who receive Permanent Change of Station (PCS) orders will be eligible to sell their homes in a short sale even if they are current on their mortgage.
- Fannie Mae and Freddie Mac will not pursue a deficiency judgment or any cash contribution or promissory note from members of the military with a change in duty station for any property purchased on or before June 30, 2012
You should also remember that the existing California protection for a Military Service Member against foreclosure by a mortgage lender during the period of military service or within 3 months thereafter, has been extended to 9 months thereafter.
Exceptions apply to sales made by agreement or court order. This law applies to mortgage loans originated before a service member’s period of military service for which the service member is still obligated. The nine-month period mirrors the foreclosure protection under the Federal Service Members Civil Relief Act.
However, President Obama recently signed into law the Federal Honoring America’s Veterans and Caring for Camp Lejeune Families Act which extends, from February 2, 2013 to December 31, 2014, the foreclosure protection to one year after the period of active duty. (Source: Assembly Bill 2475 and H.R. 1627)
Here are also some miscellaneous real estate news pertinent to Veterans and Active Military Service Members:
- Effective January 1, 2013, if, before entry into the Military, a Service Member has a mortgage or trust deed with an interest rate over 6%, the interest rate must be reduced to 6% or less during that person’s Military Service and one year thereafter. The lender can, however, seek a court order that Military Service does not materially affect the Military member’s ability to pay over 6%. This new law expands existing law that caps the interest rate for other obligations or liabilities at 6% during Military Service (Assembly Bill 2476, codified as Cal. Mil. & Vet. Code § 405).
- Effective January 2013, any board within the Department of Consumer Affairs (DCA) must expedite the License process for an applicant who meets the following two requirements: (1) is married to, or in a domestic partnership or other legal union with, an active duty member of the U.S. Armed Forces assigned in California; and (2) holds a license in the same profession or vocation in another U.S. state, district, or territory. The Department of Real Estate (DRE) will be a division of the DCA commencing July 1, 2013 (Assembly Bill 1904, codified as Cal. Bus. & Prof. Code § 115.5).
- Effective September 20, 2012, the Department of Veterans Affairs is authorized to adopt regulations to assist Veterans in acquiring cooperative dwelling units as follows: Under the Veterans’ Farm and Home Purchase Act, any VA can acquire homes and farms to sell to a creditworthy buyer with a minimum initial down payment of only 2% (Assembly Bill 1224, codified as Cal. Mil. & Vet. Code § 987.93).
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San Jose Realtor
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