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.

Video of "A tiny home tour: living in 96 square feet"

More information at Tumbleweed Tiny House Company.

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

6/24/10: The Sacramento Bee: California to offer program to trim underwater mortgages

"California is going to use federal money to pay down the mortgages of struggling homeowners.

California Housing Finance Agency announced Wednesday that it will spend $420 million to trim individual mortgages by up to $50,000. Lenders will be asked to match the amount, a deal that could make thousands of mortgages newly affordable across the Sacramento area.

The program, launching Nov. 1, will be run on a first-come, first-served basis, said Evan Gerberding, marketing manager for the CalHFA's "Keep Your Home" initiative....

More information is available at the Keep Your Home website: www.keepyourhomecalifornia.com; or call (916) 373-2585."

California home owners who sell their home through short sales may not have to pay state income tax on the forgiven mortgage debt. On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013. For more details, visit the Franchise Tax Board web page on the Mortgage Debt Relief Law.