RENO, Nev. - The seminar, Truth & Options: Help for Nevada Homeowners held Tuesday gave homeowners a chance to get their questions answered and find out what options they have.
More than 70,000 people in Nevada are delinquent on their mortgage.
"We have a home that we had to move out of 30 months ago, and they have not foreclosed on it," Diana Gaudreault of Reno said.
Gaudreault's husband lost his job in construction in 2008 and she was laid off from St. Mary's Hospital in June. They had lived in the home since 1989.
"We've tried to short sale twice and Bank of America has declined to do that because it has PMI on it, and they want to get their money from the government rather than short selling it.
PMI is private mortgage insurance. It is insurance to offset losses in the case where a homeowner is unable to repay the loan and the lender can't recover its costs after sale of the mortgaged property.
In Gaudreault's case, experts at the seminar said she should hire help.
"I would suggest she come talk to us," Jamie Cogburn of Cogburn Law Offices said. "The banks are much easier to work with these days, but it's about knowing their rules. They set the rules and we have to play by them."
So what are your options if you're underwater? First, experts say an underwater home does not mean you have to give it up.
"Your home might not be worth what your mortgage says it's worth, but you love that home and your family is in it, you love the neighborhood and you can afford the payment stick it out," Rob Wigton, CEO of the Nevada Association of Realtors said.
Here are some options available to homeowners discussed at Tuesday's seminar.
1. Adjusting your Loan and Refinancing to Today’s Low Rates.
If you'd like to keep your home, the best action to take is to refinance your loan. In Nevada, the average mortgage rate currently is 3.30%.
You can also look into a loan modification. As part of the Making Homes Affordable Program of 2009, a loan modification portion called the Home Affordable Modification Program (HAMP), is designed to reduce mortgage payments struggling homeowners pay per month.
However, this option has its boundaries.
"They've changed the guidelines drastically," Cogburn said. "Some of it is still based on how much income you have. So some people still don't qualify because they have too much income."
2. Short Selling Your Home:
"There are new guidelines as of November 1," Cogburn said. "If it's a Fannie May or Freddie Mac loan, you don't have to be delinquent to start the short sale."
Short selling is also the best option if you need to get rid of the house.
"It's the cleanest and most beneficial to both the distressed property owner and the bank," Wigton said.
Short selling will hurt your credit- about 40 or 50 points- but it's better than foreclosing.
"Being foreclosed upon gives you the biggest ding in your credit history," Wigton said.
People looking into a short sale will want to keep their eye on Congress. The Mortgage Forgiveness Debt Relief Act is set to expire on December 31. This act stops the IRS from taxing the amount of debt you've been forgiven as income if you short sale or get a principle reduction on your house.
"So if you owe $400,000 and you sell your house for $200,000, you would normally have to pay income on the $200,000," Cogburn said. "If they don't extend that act, which they're trying to extend it, you could see your taxes go up."
3. Utilizing free help.
"There's tons of options out there," Cogburn said. "Nevada's Hardest Hit is a non-profit and they have over $190 million they're giving away.
Part of Nevada's Hardest Hit is a Principle Reduction Program reducing a home owner's principle up to $100,000.
Looking to the Future:
"I believe we're absolutely heading in the right direction," Wigton said. We've turned the corner and prices will continue to grow in the next 2 to 3 years."
But Cogburn believes that may be a temporary silver lining.
"We're already seeing foreclosures start to pick up," he said.
Cogburn says they will continue to increase as the Legislature looks to amend Assembly Bill 284.
AB 284 stalled the foreclosure process by increasing the requirements necessary for lenders to foreclose. Cogburn says this Legislature will look at easing some of those requirements.
Though experts disagree on what our housing future looks like, they all agree you shouldn't do it alone. If you have applied for a loan modification or refinance and have been turned down, the panel at the seminar says you should apply again since some programs have changed just in the last few weeks.
If you have questions about your mortgage, you can call the program Truth and Option at 775-299-4446.
To find out more about Nevada's Hardest Hit visit: http://nevadahardesthitfund.nv.gov/
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