The California Franchise Tax Board announced that it will stop accepting applications for the state first-time homebuyer tax credit at midnight on Sunday, August 15, 2010.

As of 8/6, the FTB had received 32,020 applications. Because some are invalid or duplicates, it will continue to accept them through August 15 to make sure enough valid applications are received to allocate the full $100 million of tax credit available. The FTB estimates it can award about 17,500 to 20,000 tax credit certificates to valid applicants. However, once the funds are exhausted, any remaining applications, even if valid, will be denied.

California homebuyers still have time to qualify for the state's other $100 million tax credit for the purchase of a brand-new home. The new-home credit is available for taxpayers who close escrow a home that has never been occupied on or after May 1, 2010 and before August 1, 2011, as long as they enter into an enforceable contract before January 1, 2011.

More details at: http://www.ftb.ca.gov/individuals/new_home_credit.shtml

7/29/10 SF Chronicle: "Feds put up $1 billion more for mortgage relief"

"Congress has just come up with an extra $1 billion to help people who can't pay their mortgage because of unemployment or a medical problem... Under this new Emergency Mortgage Relief program, eligible homeowners who are at least three months delinquent can get up to $50,000 apiece in federal loans to pay their mortgages.

On June 30, the Senate passed HR 5623, extending the closing deadline for the Federal homebuyer tax credit eligibility from June 30 to Sept. 30, 2010.The extension applies only to transactions that were under contract as of April 30, 2010 and have not yet closed.

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Fannie Mae recently announced policy changes designed to encourage borrowers to work with their loan servicers and pursue alternatives to foreclosure.  Under the new policies, borrowers who strategically default on their home loan despite having the capacity to pay and those who do not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.

Fannie Mae also will take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, Fannie Mae will instruct its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years or in as little as two years depending on the circumstances.

Related LA Times Article: Fannie Mae gets tough on homeowners who walk away