Dec
30
Sean Flanagan asked:
1) Make the House Beautiful
“Curb appeal” is the word usually used to describe this. In other words, when someone pulls up to the house and looks at it, it is very appealing. A little well thought out landscaping can go a very long way. Plus, it’s cheap.
Remember, you never get a 2nd chance to make a 1st impression. If you keep this in mind when preparing your house to sell, you will be just fine. If not, you are fighting an uphill battle.
Key areas to pay extra attention to are front yard, foyer, kitchen, bathrooms and master bedroom. I’m not saying to neglect the other areas, but these are usually the most important… especially to the wife. By the way, the wife is usually the decision maker, at least in my house anyways!
2) Drive traffic
The next step in the house sale process is to drive traffic to the house. I don’t mean physically get in your car and drive people there, what I mean is make as many people in the area know that the house is for sale as possible. In short, market the house! Marketing is one of, if not the, most important part of sales processes. After all, if you have enough people who know about and want what you are selling, it shouldn’t be that hard to sell, right?
There’s many ways to market a house for sale.
The absolute best way I know to sell a house is to already have buyers waiting before you even put it up for sale. I accomplish this by building a solid buyers list and staying in touch with them. I use a website designed specifically for finding buyers in a certain area, then capture their contact information and make them aware every single time I have a house available in their area. I sell most of my houses this way without ever even lifting a finger.
If you are going to market the house on your own, the 2nd best way I have found is to use handwritten or printed “bandit” signs which give a description of the house and the approximate down payment and monthly payment to purchase. I never put the actual price on these signs for the same reason that car dealerships don’t advertise price. Most consumers think in terms of how much it will cost to get into the deal and how much it will cost each month to stay in it.
If you intend on using a realtor® to market your house, be very careful!
Marketing is a key ingredient in selling your house and if you get locked into a contract with a realtor® who doesn’t do his part, you will have a long road ahead of you. If you must list the house, try to negotiate an agreement with the realtor® which allows you to find your own buyer and avoid paying a commission.
After all, you don’t want to do all the work and still have to pay a commission do you?
However, make sure you operate honestly. If the realtor® does his job, make sure he gets the commission he earned.
NOTE: Unless you know a “good” realtor®, you are often better off just using a flat fee listing. The way this works is you pay a company a small fee and they put the house in the MLS for you.
3) “Guide” the buyer
This is an extremely important step to making this system work. Whenever possible, you want the buyer to obtain financing through a mortgage broker or lender that you know will do a great job. Believe it or not, it is very hard to find one that will do a good job. While they do exist, they are far and few between.
This is a critical step because if you send your buyer to the wrong person, you can end up wasting a month or more with a broker who doesn’t know what they are doing. Unfortunately, some brokers will tell you they can do a loan and then 45 days later tell you they can’t. While their intentions may have been good, their knowledge of the lenders programs weren’t.
The end result is that you have wasted a month or so and probably lost your buyer. So, make sure you find a good mortgage broker or lender and then build a sound relationship with them. Once you start sending them business regularly you will become their top priority.
4) Manage your team
Your “team” is your buyer, mortgage broker and title agent. If you are using a realtor®, they are part of your team as well. Regardless, they all need to be managed. If you want to make sure your house sells, you can’t sit back and expect everything to fall into place. This will ever happen in real estate. You need to stay in regular contact with your mortgage broker, buyer and title agent. Whenever you speak, ask probing questions. This way you can help solve any problems that may arise, hopefully before they turn into major problems.
5) Collect Check
Congratulations! You sold your house. Now take your profits and reinvest in strong marketing to find more great deals.
SEBASTIAN
1) Make the House Beautiful
“Curb appeal” is the word usually used to describe this. In other words, when someone pulls up to the house and looks at it, it is very appealing. A little well thought out landscaping can go a very long way. Plus, it’s cheap.
Remember, you never get a 2nd chance to make a 1st impression. If you keep this in mind when preparing your house to sell, you will be just fine. If not, you are fighting an uphill battle.
Key areas to pay extra attention to are front yard, foyer, kitchen, bathrooms and master bedroom. I’m not saying to neglect the other areas, but these are usually the most important… especially to the wife. By the way, the wife is usually the decision maker, at least in my house anyways!
2) Drive traffic
The next step in the house sale process is to drive traffic to the house. I don’t mean physically get in your car and drive people there, what I mean is make as many people in the area know that the house is for sale as possible. In short, market the house! Marketing is one of, if not the, most important part of sales processes. After all, if you have enough people who know about and want what you are selling, it shouldn’t be that hard to sell, right?
There’s many ways to market a house for sale.
The absolute best way I know to sell a house is to already have buyers waiting before you even put it up for sale. I accomplish this by building a solid buyers list and staying in touch with them. I use a website designed specifically for finding buyers in a certain area, then capture their contact information and make them aware every single time I have a house available in their area. I sell most of my houses this way without ever even lifting a finger.
If you are going to market the house on your own, the 2nd best way I have found is to use handwritten or printed “bandit” signs which give a description of the house and the approximate down payment and monthly payment to purchase. I never put the actual price on these signs for the same reason that car dealerships don’t advertise price. Most consumers think in terms of how much it will cost to get into the deal and how much it will cost each month to stay in it.
If you intend on using a realtor® to market your house, be very careful!
Marketing is a key ingredient in selling your house and if you get locked into a contract with a realtor® who doesn’t do his part, you will have a long road ahead of you. If you must list the house, try to negotiate an agreement with the realtor® which allows you to find your own buyer and avoid paying a commission.
After all, you don’t want to do all the work and still have to pay a commission do you?
However, make sure you operate honestly. If the realtor® does his job, make sure he gets the commission he earned.
NOTE: Unless you know a “good” realtor®, you are often better off just using a flat fee listing. The way this works is you pay a company a small fee and they put the house in the MLS for you.
3) “Guide” the buyer
This is an extremely important step to making this system work. Whenever possible, you want the buyer to obtain financing through a mortgage broker or lender that you know will do a great job. Believe it or not, it is very hard to find one that will do a good job. While they do exist, they are far and few between.
This is a critical step because if you send your buyer to the wrong person, you can end up wasting a month or more with a broker who doesn’t know what they are doing. Unfortunately, some brokers will tell you they can do a loan and then 45 days later tell you they can’t. While their intentions may have been good, their knowledge of the lenders programs weren’t.
The end result is that you have wasted a month or so and probably lost your buyer. So, make sure you find a good mortgage broker or lender and then build a sound relationship with them. Once you start sending them business regularly you will become their top priority.
4) Manage your team
Your “team” is your buyer, mortgage broker and title agent. If you are using a realtor®, they are part of your team as well. Regardless, they all need to be managed. If you want to make sure your house sells, you can’t sit back and expect everything to fall into place. This will ever happen in real estate. You need to stay in regular contact with your mortgage broker, buyer and title agent. Whenever you speak, ask probing questions. This way you can help solve any problems that may arise, hopefully before they turn into major problems.
5) Collect Check
Congratulations! You sold your house. Now take your profits and reinvest in strong marketing to find more great deals.
SEBASTIAN
Dec
23
Foreclosure Auction Faq
Filed Under Real Estate | Leave a Comment
John Montgomery asked:
Q: Who can participate in a foreclosure auction?
A: Unless otherwise specified by the seller, anyone can participate in a foreclosure auction. Some organizations, such as HUD, give priority to owner-occupant bidders before allowing investors to participate. For additional information on an upcoming foreclosure auction, check with the lender who currently owns the property or the auction house conducting the sale.
Q: When should I have an inspection completed?
A: The answer to this question will differ depending on who you ask, but the one consistent statement is that inspections are important. If you are permitted to have a professional inspection completed prior to the foreclosure auction, this will give you a good idea as to a fair bid amount when considering the cost of any necessary repairs. On the other hand, a professional inspection isn’t cheap and some investors may choose to complete the task after their offer is accepted. If in doubt, speak with a real estate attorney regarding your responsibilities when participating in a foreclosure auction.
Q: Are there any warranties offered in a foreclosure auction?
A: Most, if not all, foreclosures are sold ‘as is’ and with no warranty of any kind. This means that you, the buyer, will be responsible for any necessary repairs or improvements on the property. If possible, it’s recommended to have a professional inspection conducted.
Q: What type of financing options are available for a foreclosure auction purchase?
A: As is the case with any type of home purchase, including that of a foreclosure auction, you will be responsible for making sure that the funds are in place before you agree to purchase. Whether your ability to participate in a foreclosure auction comes from cash assets or a mortgage loan, it’s important to research your options before making an offer.
Q: What can I expect from a foreclosure auction?
A: Because some homeowners are forced out of their home due to unsettling circumstances, such as a divorce, job loss, illness or other hardship, the foreclosure process is understandably difficult. A foreclosed property may or may not be in good condition and could require extensive repairs. No two homes are alike in this respect as the condition of the home will greatly depend on its former residents.
Q: Will I be required to pay in full on the day of the foreclosure auction?
A: Policies vary from one auction foreclosure to another, but most will require that you at least place a good-faith deposit if your bid is accepted. In some cases, you may be required to pay for the property in full on the day of the foreclosure auction. If you have questions, contact the lender who currently owns the property or the auction house conducting the sale.
The information contained in this article is designed to be used for reference purposes only. It should not be used as, in place of or in conjunction with professional legal, financial and/or investment advice regarding the foreclosure auction process. For additional information, consult an attorney who specializes in real estate and/or financial matters.
CECIL
Q: Who can participate in a foreclosure auction?
A: Unless otherwise specified by the seller, anyone can participate in a foreclosure auction. Some organizations, such as HUD, give priority to owner-occupant bidders before allowing investors to participate. For additional information on an upcoming foreclosure auction, check with the lender who currently owns the property or the auction house conducting the sale.
Q: When should I have an inspection completed?
A: The answer to this question will differ depending on who you ask, but the one consistent statement is that inspections are important. If you are permitted to have a professional inspection completed prior to the foreclosure auction, this will give you a good idea as to a fair bid amount when considering the cost of any necessary repairs. On the other hand, a professional inspection isn’t cheap and some investors may choose to complete the task after their offer is accepted. If in doubt, speak with a real estate attorney regarding your responsibilities when participating in a foreclosure auction.
Q: Are there any warranties offered in a foreclosure auction?
A: Most, if not all, foreclosures are sold ‘as is’ and with no warranty of any kind. This means that you, the buyer, will be responsible for any necessary repairs or improvements on the property. If possible, it’s recommended to have a professional inspection conducted.
Q: What type of financing options are available for a foreclosure auction purchase?
A: As is the case with any type of home purchase, including that of a foreclosure auction, you will be responsible for making sure that the funds are in place before you agree to purchase. Whether your ability to participate in a foreclosure auction comes from cash assets or a mortgage loan, it’s important to research your options before making an offer.
Q: What can I expect from a foreclosure auction?
A: Because some homeowners are forced out of their home due to unsettling circumstances, such as a divorce, job loss, illness or other hardship, the foreclosure process is understandably difficult. A foreclosed property may or may not be in good condition and could require extensive repairs. No two homes are alike in this respect as the condition of the home will greatly depend on its former residents.
Q: Will I be required to pay in full on the day of the foreclosure auction?
A: Policies vary from one auction foreclosure to another, but most will require that you at least place a good-faith deposit if your bid is accepted. In some cases, you may be required to pay for the property in full on the day of the foreclosure auction. If you have questions, contact the lender who currently owns the property or the auction house conducting the sale.
The information contained in this article is designed to be used for reference purposes only. It should not be used as, in place of or in conjunction with professional legal, financial and/or investment advice regarding the foreclosure auction process. For additional information, consult an attorney who specializes in real estate and/or financial matters.
CECIL
Dec
22
Top Faqs for Home Loan Modifications
Filed Under Real Estate | Leave a Comment
Chris Fuelling asked:
1. What is a Loan Modification?
A Loan Modification is when the bank allows a change in the terms of your existing mortgage. The purpose of a modification is to ultimately and significantly lower your monthly payments, for either a temporary or permanent period of time.
2. Who qualifies for a loan modification?
Anyone that is having trouble paying their existing loan. In today’s housing conditions banks are willing to work with mortgage holders that are having trouble paying their mortgage. However, high probability characteristics are homeowners currently in an adjustable rate mortgage, have a high interest rate, are upside down on their home, and/or experiencing any kind of hardship.
3. Why will it work for me?
The government has asked for ALL lending banks to help in the foreclosure epidemic and modify mortgages for all troubled homeowners. Certain websites can automatically produce your Bank Approved Loan Modification Package. Going to your lender with a complete modification package that has been reviewed by modification consultants, will make a scary process seem simple.
4. What if my credit is bad?
A Loan Modification is not based on credit. The banks are trying to make a good loan out of a troubled loan.
5. What if I have no equity or I am upside on my home?
It does not matter! Some banks are doing principal reduction, which means the bank will discount the total loan amount to the current value of your home. This is called a principal reduction and is becoming popular for banks.
6. What if my income is too low?
You will need to show the bank, you or all others in your household can afford the new payment proposed by your bank.
7. What should I expect the terms to be on my new loan?
Banks have rapidly changing guidelines for Loan Modifications. A bank will typically modify your loan into a loan you can afford and continue to pay. This may include a lower interest rate, payment reschedule, principal reduction, longer terms or any other function that will make and keep the loan performing.
8. How much can I really save by doing a loan modification?
Hundreds or Thousands a month. Remember, a Loan is typically for 30 years. So the Loan Modification that saves you $500 a month, really equals $150,000 over the life of the loan.
9. Does every bank do loan modifications?
Yes. We are in a housing crisis and banks are willing to work with clients to help save their homes.
10. How does the bail out bill affect my chances of getting a loan modification?
The government is telling banks they need to do their part to fix the housing crisis. The Bail Out Bill will only help your chances of getting a Loan Modification.
11. What should I do to ensure the best loan modification?
Take Advantage of Attorney services that fully process your modification. Read up on submission steps, and negotiation tips.
12. How long does the process take?
With the right documents you will be able to submit a full package ready to go to the bank. All Banks are different and can take 30-90 days for a decision. It all depends how busy their are with current modification requests and how many loss mitigators they have on staff. It is not uncommon for one loss mitigator to have up to 700 files under their management at a time.
13. What is the difference between doing a loan modification myself or hiring an attorney?
A Loan Modification firm will charge you a high fee ($2000-$5000) to submit the docs that you can submit yourself. Banks are willing to help their clients with a Loan Modification with out an Attorney. What is important, is you have the CORRECT, BANK APPROVED documents ready for submission, so the bank can efficiently and more effectively review your case.
14. Are there any other costs involved? Appraisal, credit report, title, closing costs, broker fees, etc…
There are no costs assigned with a Loan Modification. The banks are modifying loans for no charge.
NIGEL
1. What is a Loan Modification?
A Loan Modification is when the bank allows a change in the terms of your existing mortgage. The purpose of a modification is to ultimately and significantly lower your monthly payments, for either a temporary or permanent period of time.
2. Who qualifies for a loan modification?
Anyone that is having trouble paying their existing loan. In today’s housing conditions banks are willing to work with mortgage holders that are having trouble paying their mortgage. However, high probability characteristics are homeowners currently in an adjustable rate mortgage, have a high interest rate, are upside down on their home, and/or experiencing any kind of hardship.
3. Why will it work for me?
The government has asked for ALL lending banks to help in the foreclosure epidemic and modify mortgages for all troubled homeowners. Certain websites can automatically produce your Bank Approved Loan Modification Package. Going to your lender with a complete modification package that has been reviewed by modification consultants, will make a scary process seem simple.
4. What if my credit is bad?
A Loan Modification is not based on credit. The banks are trying to make a good loan out of a troubled loan.
5. What if I have no equity or I am upside on my home?
It does not matter! Some banks are doing principal reduction, which means the bank will discount the total loan amount to the current value of your home. This is called a principal reduction and is becoming popular for banks.
6. What if my income is too low?
You will need to show the bank, you or all others in your household can afford the new payment proposed by your bank.
7. What should I expect the terms to be on my new loan?
Banks have rapidly changing guidelines for Loan Modifications. A bank will typically modify your loan into a loan you can afford and continue to pay. This may include a lower interest rate, payment reschedule, principal reduction, longer terms or any other function that will make and keep the loan performing.
8. How much can I really save by doing a loan modification?
Hundreds or Thousands a month. Remember, a Loan is typically for 30 years. So the Loan Modification that saves you $500 a month, really equals $150,000 over the life of the loan.
9. Does every bank do loan modifications?
Yes. We are in a housing crisis and banks are willing to work with clients to help save their homes.
10. How does the bail out bill affect my chances of getting a loan modification?
The government is telling banks they need to do their part to fix the housing crisis. The Bail Out Bill will only help your chances of getting a Loan Modification.
11. What should I do to ensure the best loan modification?
Take Advantage of Attorney services that fully process your modification. Read up on submission steps, and negotiation tips.
12. How long does the process take?
With the right documents you will be able to submit a full package ready to go to the bank. All Banks are different and can take 30-90 days for a decision. It all depends how busy their are with current modification requests and how many loss mitigators they have on staff. It is not uncommon for one loss mitigator to have up to 700 files under their management at a time.
13. What is the difference between doing a loan modification myself or hiring an attorney?
A Loan Modification firm will charge you a high fee ($2000-$5000) to submit the docs that you can submit yourself. Banks are willing to help their clients with a Loan Modification with out an Attorney. What is important, is you have the CORRECT, BANK APPROVED documents ready for submission, so the bank can efficiently and more effectively review your case.
14. Are there any other costs involved? Appraisal, credit report, title, closing costs, broker fees, etc…
There are no costs assigned with a Loan Modification. The banks are modifying loans for no charge.
NIGEL
Dec
18
9 Faqs About Reverse Mortgages
Filed Under Mortgage | Leave a Comment
reversemortgage asked:
What is it?
A reverse mortgage is a special finance option available only to seniors, age 62 or over. It works by allowing seniors to turn their home equity into income, without having to sell the actual home. This can be a great option for low-income seniors looking for some additional income.
Who qualifies for one?
Reverse mortgages are available exclusively to seniors over the age of 62. There are specific qualifications for different programs, but they are some general qualifications. The applicant needs to own their home, the residence must be lived in the majority of the year, and it usually needs to be the applicant’s primary place of residence.
What are the fees?
In order to get into a reverse mortgage there will usually be an affordable set-up or application fees, however some lenders may waive this initial fee to entice a qualified applicant. Additional fees (such as appraisal fees, etc.) can often be tacked on to the loan itself, making it more easy and manageable for applicants to pay.
Is a reverse mortgage considered taxable income?
No, the IRS does not consider reverse mortgage payments taxable income and you will not be taxed on it. However, on the opposite side, this also means you cannot deduct any loan expenses or fees on your tax return.
Why is it called a reverse mortgage?
In a regular mortgage, you use debt to turn your income into equity. In a reverse mortgage, you use debt to turn your equity into income. This means you are literally reversing the method of purchasing a home. Instead of having extra income and wanting to purchase equity, you have equity and need additional income.
What does TALC mean?
TALC, or Total Annual Loan Cost, is certainly something you will want to ask potential reverse mortgage lenders about. TALC refers to the combined costs of a reverse mortgage to a single annual price quote. It is especially useful when comparing and contrasting various lenders.
How and when are the funds paid to me?
When you setup a reverse mortgage you get the option to decide just how you want to receive payments. Most reverse mortgage lenders offer monthly payments, credit accounts that can be accessed when you wish, and full one-time payouts.
If I get a reverse mortgage, will I still own my home?
Of course, the owners name will remain on the house’s deed until it is sold, or the owner’s estate is settled. Although the mortgage company will have a lien against your home, they will not own it and they cannot kick you out, or take your home from you.
Do I need a mortgage counselor?
Yes, you will need to see a mortgage counselor in order to get a counseling certificate, which will be your proof that you qualify for a reverse mortgage. The counseling session is free, and can be helpful too!
CHRISTIAN
What is it?
A reverse mortgage is a special finance option available only to seniors, age 62 or over. It works by allowing seniors to turn their home equity into income, without having to sell the actual home. This can be a great option for low-income seniors looking for some additional income.
Who qualifies for one?
Reverse mortgages are available exclusively to seniors over the age of 62. There are specific qualifications for different programs, but they are some general qualifications. The applicant needs to own their home, the residence must be lived in the majority of the year, and it usually needs to be the applicant’s primary place of residence.
What are the fees?
In order to get into a reverse mortgage there will usually be an affordable set-up or application fees, however some lenders may waive this initial fee to entice a qualified applicant. Additional fees (such as appraisal fees, etc.) can often be tacked on to the loan itself, making it more easy and manageable for applicants to pay.
Is a reverse mortgage considered taxable income?
No, the IRS does not consider reverse mortgage payments taxable income and you will not be taxed on it. However, on the opposite side, this also means you cannot deduct any loan expenses or fees on your tax return.
Why is it called a reverse mortgage?
In a regular mortgage, you use debt to turn your income into equity. In a reverse mortgage, you use debt to turn your equity into income. This means you are literally reversing the method of purchasing a home. Instead of having extra income and wanting to purchase equity, you have equity and need additional income.
What does TALC mean?
TALC, or Total Annual Loan Cost, is certainly something you will want to ask potential reverse mortgage lenders about. TALC refers to the combined costs of a reverse mortgage to a single annual price quote. It is especially useful when comparing and contrasting various lenders.
How and when are the funds paid to me?
When you setup a reverse mortgage you get the option to decide just how you want to receive payments. Most reverse mortgage lenders offer monthly payments, credit accounts that can be accessed when you wish, and full one-time payouts.
If I get a reverse mortgage, will I still own my home?
Of course, the owners name will remain on the house’s deed until it is sold, or the owner’s estate is settled. Although the mortgage company will have a lien against your home, they will not own it and they cannot kick you out, or take your home from you.
Do I need a mortgage counselor?
Yes, you will need to see a mortgage counselor in order to get a counseling certificate, which will be your proof that you qualify for a reverse mortgage. The counseling session is free, and can be helpful too!
CHRISTIAN
Dec
15
Mortgage Loss Mitigation Leads Factsheet
Filed Under Mortgage | Leave a Comment
Darewin Ocampo asked:
Mortgage loss mitigation leads are most efficient tools that can turn the tides of battle between homeowners and the dreaded foreclosure favorable to the former. Mortgage mitigation leads can be said to be the guardian angels of households as their primary purpose is keeping the homeowner and the home together. However, mortgage mitigation leads should not be dealt with haste and time should be taken to understand them more, because there is no room for ignorance when combating foreclosure.
Mortgage loss mitigation is the act of saving ones home or if such proves to be unachievable, mitigates the losses the homeowner will suffer. Caution should be taken when partnering with companies that claim to offer loss mitigation help because the less you understand about mortgage loss mitigation, the more likely you will fall prey to these predators that seek only to deprive you of your money.
Given below are some facts about mortgage loss mitigation as provided by the federal government to help enlighten homeowners about things they should and have to know.
Assumptions
Assumption of an FHA-insured mortgage is a servicing function where the responsibility or paying for a mortgage is taken over by another person through simple assumption or creditworthiness assumption.
Claims
The vehicle utilized for payment of insurance proceeds from HUD to a Mortgagee is the Insurance Benefit Claim form HUD- 27011. This form is utilized for all submissions of claims for Conveyance of Property and Loss Mitigation Option incentives.
Deed-in-Lieu
A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments. DIL Fact Sheet
Extension of Time
To comply with required time frames, an Extension of Time may be granted for a mortgagee to initiate or complete a Loss Mitigation (except Pre-foreclosure Sales) and/or foreclosure action. A mortgagee is required to submit to NSC-Oklahoma City, form HUD-50012, Request for Extension of Time, prior to the expiration of the respective time frame to Fax Number (405) 609-8405.
FHA Connection
FHA Connection (FHAC) is a portal used by mortgagees to report on and update the status of their FHA portfolio. In addition, the FHAC facilitates the following Single Family Servicing functions: Claims Processing, Delinquent Loans, HECM Reports, Monthly Premiums, Mortgage Record Changes, Mortgage Calculator, Mortgage Servicing Data Quality system and Lender Query by Case Number. FHAC FAQs.
Foreclosure
Foreclosure should only be considered as a last resort and should not be initiated until all relief options have been exhausted. When foreclosure cannot be avoided, it must be started quickly and prosecuted vigorously to minimize losses to both the mortgagee and HUD.
General Loss Mitigation
This category includes all Loss Mitigation questions that are not specific to one of the five Loss Mitigation Options.
General Servicing
This category includes all General Servicing items stated within HUD Handbook 4330.1 REV-5, Administration of Insured Home Mortgages.
Loan Modification
A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. Loan Modification Fact Sheet
Partial Claim
Under the Partial Claim option, a mortgagee will advance funds on behalf of a mortgagor in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI). The mortgagor will execute a promissory note and subordinate mortgage payable to HUD. Currently, these promissory or “Partial Claim” notes assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property. Partial Claim Fact Sheet
Pre-foreclosure Sale
The Pre-foreclosure Sale (PFS) Program allows the mortgagor in default to sell his/her home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed. Pre-foreclosure Sale Fact Sheet
Pre-foreclosure Sale Variance
A mortgagee is required to submit to NSC - Oklahoma City, form HUD-90041, Request for Variance Procedure, to request permission from HUD regarding any Pre-foreclosure Sale Program exception as well as to request an Extension of Time pertaining to the Pre-foreclosure Sale Program. Variances are considered on a case-by-case basis. Requests are to be faxed to (405) 609-8405.
Single Family Default Monitoring System
Data reported to the Single Family Default Monitoring System (SFDMS) is used to measure the effectiveness of origination and servicing activities, and the potential risk to the insurance fund. For additional information, please see www.hud.gov/offices/hsg/sfh/nsc/sfdms.cfm
Special Forbearance
A Special Forbearance (SFB) is a written repayment agreement between a mortgagee and a mortgagor, which contains a plan to reinstate an asset that is minimum three mortgage payments due and unpaid. Special Forbearance Fact Sheet
Variance
On company letterhead, mortgagees are required to submit to NSC-Oklahoma City any request requiring a variance associated with Special Forbearance, Loan Modification, Partial Claim or Deed-in-Lieu of Foreclosure eligibility criteria or servicing guidelines. Variances are considered on a case-by-case basis. Requests are to be faxed to (405) 609-8405.
For more clarification regarding terms about mortgage loss mitigation or for high quality mortgage loss mitigation leads please take time to visit CallComLeads
CallComLeads also offers high quality insurance leads
CLARK
Mortgage loss mitigation leads are most efficient tools that can turn the tides of battle between homeowners and the dreaded foreclosure favorable to the former. Mortgage mitigation leads can be said to be the guardian angels of households as their primary purpose is keeping the homeowner and the home together. However, mortgage mitigation leads should not be dealt with haste and time should be taken to understand them more, because there is no room for ignorance when combating foreclosure.
Mortgage loss mitigation is the act of saving ones home or if such proves to be unachievable, mitigates the losses the homeowner will suffer. Caution should be taken when partnering with companies that claim to offer loss mitigation help because the less you understand about mortgage loss mitigation, the more likely you will fall prey to these predators that seek only to deprive you of your money.
Given below are some facts about mortgage loss mitigation as provided by the federal government to help enlighten homeowners about things they should and have to know.
Assumptions
Assumption of an FHA-insured mortgage is a servicing function where the responsibility or paying for a mortgage is taken over by another person through simple assumption or creditworthiness assumption.
Claims
The vehicle utilized for payment of insurance proceeds from HUD to a Mortgagee is the Insurance Benefit Claim form HUD- 27011. This form is utilized for all submissions of claims for Conveyance of Property and Loss Mitigation Option incentives.
Deed-in-Lieu
A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments. DIL Fact Sheet
Extension of Time
To comply with required time frames, an Extension of Time may be granted for a mortgagee to initiate or complete a Loss Mitigation (except Pre-foreclosure Sales) and/or foreclosure action. A mortgagee is required to submit to NSC-Oklahoma City, form HUD-50012, Request for Extension of Time, prior to the expiration of the respective time frame to Fax Number (405) 609-8405.
FHA Connection
FHA Connection (FHAC) is a portal used by mortgagees to report on and update the status of their FHA portfolio. In addition, the FHAC facilitates the following Single Family Servicing functions: Claims Processing, Delinquent Loans, HECM Reports, Monthly Premiums, Mortgage Record Changes, Mortgage Calculator, Mortgage Servicing Data Quality system and Lender Query by Case Number. FHAC FAQs.
Foreclosure
Foreclosure should only be considered as a last resort and should not be initiated until all relief options have been exhausted. When foreclosure cannot be avoided, it must be started quickly and prosecuted vigorously to minimize losses to both the mortgagee and HUD.
General Loss Mitigation
This category includes all Loss Mitigation questions that are not specific to one of the five Loss Mitigation Options.
General Servicing
This category includes all General Servicing items stated within HUD Handbook 4330.1 REV-5, Administration of Insured Home Mortgages.
Loan Modification
A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. Loan Modification Fact Sheet
Partial Claim
Under the Partial Claim option, a mortgagee will advance funds on behalf of a mortgagor in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI). The mortgagor will execute a promissory note and subordinate mortgage payable to HUD. Currently, these promissory or “Partial Claim” notes assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property. Partial Claim Fact Sheet
Pre-foreclosure Sale
The Pre-foreclosure Sale (PFS) Program allows the mortgagor in default to sell his/her home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed. Pre-foreclosure Sale Fact Sheet
Pre-foreclosure Sale Variance
A mortgagee is required to submit to NSC - Oklahoma City, form HUD-90041, Request for Variance Procedure, to request permission from HUD regarding any Pre-foreclosure Sale Program exception as well as to request an Extension of Time pertaining to the Pre-foreclosure Sale Program. Variances are considered on a case-by-case basis. Requests are to be faxed to (405) 609-8405.
Single Family Default Monitoring System
Data reported to the Single Family Default Monitoring System (SFDMS) is used to measure the effectiveness of origination and servicing activities, and the potential risk to the insurance fund. For additional information, please see www.hud.gov/offices/hsg/sfh/nsc/sfdms.cfm
Special Forbearance
A Special Forbearance (SFB) is a written repayment agreement between a mortgagee and a mortgagor, which contains a plan to reinstate an asset that is minimum three mortgage payments due and unpaid. Special Forbearance Fact Sheet
Variance
On company letterhead, mortgagees are required to submit to NSC-Oklahoma City any request requiring a variance associated with Special Forbearance, Loan Modification, Partial Claim or Deed-in-Lieu of Foreclosure eligibility criteria or servicing guidelines. Variances are considered on a case-by-case basis. Requests are to be faxed to (405) 609-8405.
For more clarification regarding terms about mortgage loss mitigation or for high quality mortgage loss mitigation leads please take time to visit CallComLeads
CallComLeads also offers high quality insurance leads
CLARK
Dec
12
Simon Burgess asked:
Losing your job and income after being made redundant would be hard, struggling to pay your outgoings would be even harder. You would need to find the money to pay your mortgage. If you had credit cards or loans then you would also need to maintain these and of course there are many other outgoings which have to be maintained also. You would be able to continue meeting your bills and continue paying out if you take redundancy insurance.
You have to look around online and compare the cost of redundancy insurance as some premiums are a lot higher than others. You also have to compare the quality of the policy as this can differ too along with when and for how long the policy would payout. You can find all the information in the key facts of the particular policy and this should be available on the provider’s website. You can also find a wide variety of information with the provider by way of FAQs and articles, and you should find as much as possible about the product you are considering buying before taking it out. Policies will come with exclusions and some will have more than others and you have to check them against your personal circumstances if you want the peace of mind and security that protection gives.
Providers usually offer payout on cover for between 12 and 24 months and you are asked to wait for between 30 and 90 days before putting in a claim after becoming unemployed. Upon commencement of the policy some providers will backdate their insurance to the first day of being unemployed. You can find out the exact terms in the small print or key facts of the cover before buying and this is something that should be compared along with the cost.
The cost of redundancy insurance will depend on your age at the time of applying for your policy and how much you wish to insure each month. All lenders will only allow you to cover up to a certain amount of your outgoings each month so when comparing the cost of the premiums also compare the terms of the cover.
Unemployment insurance to protect against redundancy can be taken out to safeguard your loan and credit card repayments if you choose to take out loan payment protection. This would give you an income that is tax-free to ensure that you are able to maintain your outgoings and so not get into debt. It will protect your credit rating and also ensure that you will not get a CCJ.
Mortgage payment protection taken as unemployment insurance would allow you to maintain your mortgage each month and so you are not at risk of losing your home. You would not have to worry about the lender threatening repossession.
If you safeguard your income on the whole with income payment protection insurance taken out as redundancy insurance, you would be able to continue meeting all your outgoings in general. This would include loan and mortgage repayments along with the smaller outgoings which means you wouldn’t have to change your lifestyle drastically.
SCOTT
Losing your job and income after being made redundant would be hard, struggling to pay your outgoings would be even harder. You would need to find the money to pay your mortgage. If you had credit cards or loans then you would also need to maintain these and of course there are many other outgoings which have to be maintained also. You would be able to continue meeting your bills and continue paying out if you take redundancy insurance.
You have to look around online and compare the cost of redundancy insurance as some premiums are a lot higher than others. You also have to compare the quality of the policy as this can differ too along with when and for how long the policy would payout. You can find all the information in the key facts of the particular policy and this should be available on the provider’s website. You can also find a wide variety of information with the provider by way of FAQs and articles, and you should find as much as possible about the product you are considering buying before taking it out. Policies will come with exclusions and some will have more than others and you have to check them against your personal circumstances if you want the peace of mind and security that protection gives.
Providers usually offer payout on cover for between 12 and 24 months and you are asked to wait for between 30 and 90 days before putting in a claim after becoming unemployed. Upon commencement of the policy some providers will backdate their insurance to the first day of being unemployed. You can find out the exact terms in the small print or key facts of the cover before buying and this is something that should be compared along with the cost.
The cost of redundancy insurance will depend on your age at the time of applying for your policy and how much you wish to insure each month. All lenders will only allow you to cover up to a certain amount of your outgoings each month so when comparing the cost of the premiums also compare the terms of the cover.
Unemployment insurance to protect against redundancy can be taken out to safeguard your loan and credit card repayments if you choose to take out loan payment protection. This would give you an income that is tax-free to ensure that you are able to maintain your outgoings and so not get into debt. It will protect your credit rating and also ensure that you will not get a CCJ.
Mortgage payment protection taken as unemployment insurance would allow you to maintain your mortgage each month and so you are not at risk of losing your home. You would not have to worry about the lender threatening repossession.
If you safeguard your income on the whole with income payment protection insurance taken out as redundancy insurance, you would be able to continue meeting all your outgoings in general. This would include loan and mortgage repayments along with the smaller outgoings which means you wouldn’t have to change your lifestyle drastically.
SCOTT
Dec
10
Selling Your Owner Financed Loan - Faq
Filed Under Real Estate | Leave a Comment
Craig Meriwether asked:
Selling Your Owner Financed Loan - FAQ
If you\’ve ever taken out a mortgage with a bank then maybe you\’ve experienced this: about 6-8 weeks after closing you receive a letter from a totally different lender who now has control of your loan and you are to send the monthly payments to them.
Well the original bank sold your mortgage or real estate note for cash to another financial institution that wanted a long-term cash flow investment. If you have \”owner financed\” the sale of your house with the buyer you can do the same thing. Sell your deed of trust or real estate note for cash to an investor who is looking for a long-term cash flow. There are lots of different names for a note: Deed of Trust, Contract For Deed, Mortgage, Loan, IOU, Promissory Note and others. For simplicity sake I\’m going to use the term note.
Let\’s say you have $80 in one hand and $100 in the other and I said you could keep only one. Well you\’d keep the $100 of course but what if I told you you could have that $100 but it will be paid out at $1 a month over the next 8 years but you can have the $80 right now. Well that changes everything.
If you looking to purchase something really special for your family or to pay off some high-interest, nagging debts; maybe you have another promising investment opportunity, or you simply prefer not having the responsibilities and risks of carrying a Note. I can help you sell that note for cash to a buyer looking for a long-term cash flow investment.
Due to the current economic crisis, the price an investor is willing to pay for your owner financed loan has never been higher! If you are interested in finding out how much an investor is willing to pay for your real estate note call or email me today for a free quote.
For a more detailed description of the different kinds of notes please see the faq section of my website or a more in depth overview please download my free ebook \”How To Owner Finance Your Home\”
Here are some faq:
1. WHO BUYS NOTES?
There are various people and companies who like to invest in real estate notes instead of the stock market, commodities or apartment buildings. They could be a one-person operation, or an office of 4 or 5 people, or 20 people, or a big investment house of 100 people. I don\’t put your note on a web site forum and hope somebody sees it or market to people right out of a \”How To Get Rich Investing In Real Estate Notes Seminar\”. I work with only reputable, long-term investors.
2. WHAT KIND OF NOTES ARE YOU LOOKING FOR?
I can help you find an investor for various kinds of Real Estate Notes:
• Single or in portfolios.
• Single Family Residential
• Duplex, Triplex, Fourplex
• Apartments
• Income Property
• Improved Land Contracts
• Recreational & Resorts
• Commercial Land Contracts
• Farm & Ranches
• Condos
• Vacant Land
• Bulk REO (Real Estate Owned) and real estate property portfolios
• Bulk mortgage note portfolios
3. WHAT IF THE HOME BUYER IS BEHIND IN PAYMENTS?
If you have a delinquent mortgage note I can help you. There are investors who will purchase notes that are behind in payments. If you are frustrated and not getting your monthly payments and just want to be done with the whole thing, I can help you find an investor who will purchase that delinquent note. This includes semi-performing (buyers are over 30 days late with payment) and non-performing (buyers are over 3 months behind in payments) mortgage notes. Get rid of that headache note and let someone else deal with it.
4. HOW MUCH IS THIS GOING TO COST ME?
There is no charge to you, the note holder ever. Getting a quote from an investor is free with no obligation to sell your note and the entire process is completely confidential. The borrower until the transaction is complete. The investor pays all broker fees.
5. HOW MUCH WILL I GET FOR MY NOTE?
This unfortunately I can\’t answer, as there are too many variables involved. Each transaction is unique so an investor looks at several key factors for pricing. These include the type of property and location, down payment, equity, the buyer\’s credit, how long the buyer has been paying you, and the terms of your note like interest and monthly payment amount. All that goes into their risk assessment and they make their offer based on that. Having said that though an average note will demand anywhere from 80 to 93 cents on the dollar depending on those factors.
6. HOW LONG WILL IT TAKE BEFORE I GET MY MONEY?
All deals vary, but normal closing time is 2 to 4 weeks once the investor starts their due-diligence process (inspection, appraisal, credit check, etc).
7. I JUST NEED SOME CASH NOW BUT I LIKE HAVING THE MONTHLY CASH FLOW.
There are a couple of ways to get creative:
Partial Purchase
A great option for note sellers because of it\’s extreme flexibility and because in many cases it is possible to receive MORE MONEY than the original selling price. If you need cash right now but want to keep your note for the cash flow investment you can structure a deal so that you sell just a portion of your monthly payments for a certain amount of cash.
Let\’s say that you sold your house for $250,000, the buyer gave you $25,000 as a down payment, and you now have a $225,000 note at 7% interest for the next 15 years. You want the monthly income but are in need of $50,000 cash right away. An investor could give you that $50,000 in exchange for buying \”x\” number of monthly payments, after which the note reverts back to you for the remainder of the term.
Split Partial Balloon
If your note has a certain amount of payments then a balloon payment at a certain date you can sell the payments leading up to the balloon and a portion of the balloon when it comes due. You get a lump sum of cash at closing and then receive a portion of the balloon payment when it gets paid off.
8. I HEARD I SHOULD HOLD ONTO MY NOTE FOR A NUMBER OF YEARS TO GET A BETTER PRICE.
This is called \”seasoning\” the note. The reason for waiting is that you are hoping to increase the equity in the house, which will help the note command a higher price. While this could happen other variables might decrease the price of the note the longer you wait.
It\’s possible that maybe the property might devalue in price. What if the homeowners rack up a lot of credit card debt buying appliances, furniture, landscaping or remodeling and their credit score goes down? What if the homeowner loses their job and they stop making payments?
An investor looks at many things when assessing risk on a note and how old the note is is just one of them. A 3-year-old note with a bad credit score might be priced less than a 3-month-old note with a great credit score all other things being equal. Every note is different. Brand new notes and 20-year-old notes are sold everyday.
9. CAN I GET CASH AS SOON AS I CREATE THE NOTE?
Yes this is called a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note. If you\’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the initial process and you don\’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.
10. HOW MUCH DOES THE NOTE HAVE TO BE FOR?
The minimum is around $100,000 if it\’s under that then it\’s really not worth it for the investor. So a note could be for $100,000, $250,000, $500,000, $800,000, $5 million and everything in between. There are all different kinds of investors looking for all different kinds of note amounts.
11. CAN I SELL MY 2ND LIEN NOTE?
If you have a 2nd lien, where there is a bank or another investor with a more senior lien
against the property, you may be able to sell the note, but the price that you receive won\’t be nearly as high. You generally won\’t be able to sell those types of notes at any sort of decent price unless the buyer has put in at least 30% of his own money as a down payment or in built-up equity and has fantastic credit. Unfortunately investors just aren\’t interested in 2nd lien notes or mortgages right now.
12. IF I OWNER FINANCE WON\’T I ACTIVATE THE DUE-ON-SALE CLAUSE IN MY MORTGAGE. AND IF I\’M ONLY GETTING A SMALL DOWN PAYMENT HOW WILL I PAY THE BANK LOAN BACK?
The Due-on-Sale Clause is a provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. It is probably the most talked about, feared and misunderstood topic in real estate.
The link below is to a great article by real estate lawyer William Bronchick and will dispel any misunderstandings you may have about the due-on-sale and suggest a simple, yet effective strategy to get around it.
There Is No Due-On-Sale Jail
If you\’re thinking about owner financing your home you can also do a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note. If you\’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the process and you don\’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.
13. WILL THE HOME OWNERS HAVE TO REFINANCE?
When an investor purchases your note, all terms remain the same. The only thing that changes is where they send the payment. If fact the borrowers are not contacted until the transaction is complete.
14. HOW DOES THE NOTE SELLING PROCESS WORK?
You\’re interested in finding out about to selling your note. Give me a call or email and I\’ll get some information about the property and note from you. We can do it over the phone or I can email or fax you the form. It\’s an easy 2-page worksheet you can fill out in about 10 minutes. It asks for the loan balance, interest rate, length of loan, and basic information about the property. Then with the information you gave me I look for an investor who is interested in buying your note.
If I find an investor who is interested they take 2 or 3 days to crunch the numbers, assess their risk and see if it\’s a good investment for them. If they are interested they make what is called a soft quote, which is their best offer before having reviewed any supporting documentation, such as the payee\’s credit report and property appraisal. The quote will state something to the effect: \”subject to review of credit - assumes good credit\” but pricing should not change that much unless the property value comes in low or the homeowner has a low credit score or subsequent documentation does not support the information provided on the worksheet.
If you accept their offer you\’ll draw up an option of purchase and sales agreement with the investor. The investor then starts their due-diligence on the property and the homeowners. Just like selling a house — home inspection, appraisal, credit checks, copies of legal documents, payment history and verification of current balance. This enables the note investor to verify the information provided, analyze the risk, and confirm their pricing of the note.
Once all the T\’s are crossed and I\’s dotted and contracts signed the investor takes control of the note and the title company sends you a check.
REUBEN
Selling Your Owner Financed Loan - FAQ
If you\’ve ever taken out a mortgage with a bank then maybe you\’ve experienced this: about 6-8 weeks after closing you receive a letter from a totally different lender who now has control of your loan and you are to send the monthly payments to them.
Well the original bank sold your mortgage or real estate note for cash to another financial institution that wanted a long-term cash flow investment. If you have \”owner financed\” the sale of your house with the buyer you can do the same thing. Sell your deed of trust or real estate note for cash to an investor who is looking for a long-term cash flow. There are lots of different names for a note: Deed of Trust, Contract For Deed, Mortgage, Loan, IOU, Promissory Note and others. For simplicity sake I\’m going to use the term note.
Let\’s say you have $80 in one hand and $100 in the other and I said you could keep only one. Well you\’d keep the $100 of course but what if I told you you could have that $100 but it will be paid out at $1 a month over the next 8 years but you can have the $80 right now. Well that changes everything.
If you looking to purchase something really special for your family or to pay off some high-interest, nagging debts; maybe you have another promising investment opportunity, or you simply prefer not having the responsibilities and risks of carrying a Note. I can help you sell that note for cash to a buyer looking for a long-term cash flow investment.
Due to the current economic crisis, the price an investor is willing to pay for your owner financed loan has never been higher! If you are interested in finding out how much an investor is willing to pay for your real estate note call or email me today for a free quote.
For a more detailed description of the different kinds of notes please see the faq section of my website or a more in depth overview please download my free ebook \”How To Owner Finance Your Home\”
Here are some faq:
1. WHO BUYS NOTES?
There are various people and companies who like to invest in real estate notes instead of the stock market, commodities or apartment buildings. They could be a one-person operation, or an office of 4 or 5 people, or 20 people, or a big investment house of 100 people. I don\’t put your note on a web site forum and hope somebody sees it or market to people right out of a \”How To Get Rich Investing In Real Estate Notes Seminar\”. I work with only reputable, long-term investors.
2. WHAT KIND OF NOTES ARE YOU LOOKING FOR?
I can help you find an investor for various kinds of Real Estate Notes:
• Single or in portfolios.
• Single Family Residential
• Duplex, Triplex, Fourplex
• Apartments
• Income Property
• Improved Land Contracts
• Recreational & Resorts
• Commercial Land Contracts
• Farm & Ranches
• Condos
• Vacant Land
• Bulk REO (Real Estate Owned) and real estate property portfolios
• Bulk mortgage note portfolios
3. WHAT IF THE HOME BUYER IS BEHIND IN PAYMENTS?
If you have a delinquent mortgage note I can help you. There are investors who will purchase notes that are behind in payments. If you are frustrated and not getting your monthly payments and just want to be done with the whole thing, I can help you find an investor who will purchase that delinquent note. This includes semi-performing (buyers are over 30 days late with payment) and non-performing (buyers are over 3 months behind in payments) mortgage notes. Get rid of that headache note and let someone else deal with it.
4. HOW MUCH IS THIS GOING TO COST ME?
There is no charge to you, the note holder ever. Getting a quote from an investor is free with no obligation to sell your note and the entire process is completely confidential. The borrower until the transaction is complete. The investor pays all broker fees.
5. HOW MUCH WILL I GET FOR MY NOTE?
This unfortunately I can\’t answer, as there are too many variables involved. Each transaction is unique so an investor looks at several key factors for pricing. These include the type of property and location, down payment, equity, the buyer\’s credit, how long the buyer has been paying you, and the terms of your note like interest and monthly payment amount. All that goes into their risk assessment and they make their offer based on that. Having said that though an average note will demand anywhere from 80 to 93 cents on the dollar depending on those factors.
6. HOW LONG WILL IT TAKE BEFORE I GET MY MONEY?
All deals vary, but normal closing time is 2 to 4 weeks once the investor starts their due-diligence process (inspection, appraisal, credit check, etc).
7. I JUST NEED SOME CASH NOW BUT I LIKE HAVING THE MONTHLY CASH FLOW.
There are a couple of ways to get creative:
Partial Purchase
A great option for note sellers because of it\’s extreme flexibility and because in many cases it is possible to receive MORE MONEY than the original selling price. If you need cash right now but want to keep your note for the cash flow investment you can structure a deal so that you sell just a portion of your monthly payments for a certain amount of cash.
Let\’s say that you sold your house for $250,000, the buyer gave you $25,000 as a down payment, and you now have a $225,000 note at 7% interest for the next 15 years. You want the monthly income but are in need of $50,000 cash right away. An investor could give you that $50,000 in exchange for buying \”x\” number of monthly payments, after which the note reverts back to you for the remainder of the term.
Split Partial Balloon
If your note has a certain amount of payments then a balloon payment at a certain date you can sell the payments leading up to the balloon and a portion of the balloon when it comes due. You get a lump sum of cash at closing and then receive a portion of the balloon payment when it gets paid off.
8. I HEARD I SHOULD HOLD ONTO MY NOTE FOR A NUMBER OF YEARS TO GET A BETTER PRICE.
This is called \”seasoning\” the note. The reason for waiting is that you are hoping to increase the equity in the house, which will help the note command a higher price. While this could happen other variables might decrease the price of the note the longer you wait.
It\’s possible that maybe the property might devalue in price. What if the homeowners rack up a lot of credit card debt buying appliances, furniture, landscaping or remodeling and their credit score goes down? What if the homeowner loses their job and they stop making payments?
An investor looks at many things when assessing risk on a note and how old the note is is just one of them. A 3-year-old note with a bad credit score might be priced less than a 3-month-old note with a great credit score all other things being equal. Every note is different. Brand new notes and 20-year-old notes are sold everyday.
9. CAN I GET CASH AS SOON AS I CREATE THE NOTE?
Yes this is called a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note. If you\’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the initial process and you don\’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.
10. HOW MUCH DOES THE NOTE HAVE TO BE FOR?
The minimum is around $100,000 if it\’s under that then it\’s really not worth it for the investor. So a note could be for $100,000, $250,000, $500,000, $800,000, $5 million and everything in between. There are all different kinds of investors looking for all different kinds of note amounts.
11. CAN I SELL MY 2ND LIEN NOTE?
If you have a 2nd lien, where there is a bank or another investor with a more senior lien
against the property, you may be able to sell the note, but the price that you receive won\’t be nearly as high. You generally won\’t be able to sell those types of notes at any sort of decent price unless the buyer has put in at least 30% of his own money as a down payment or in built-up equity and has fantastic credit. Unfortunately investors just aren\’t interested in 2nd lien notes or mortgages right now.
12. IF I OWNER FINANCE WON\’T I ACTIVATE THE DUE-ON-SALE CLAUSE IN MY MORTGAGE. AND IF I\’M ONLY GETTING A SMALL DOWN PAYMENT HOW WILL I PAY THE BANK LOAN BACK?
The Due-on-Sale Clause is a provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. It is probably the most talked about, feared and misunderstood topic in real estate.
The link below is to a great article by real estate lawyer William Bronchick and will dispel any misunderstandings you may have about the due-on-sale and suggest a simple, yet effective strategy to get around it.
There Is No Due-On-Sale Jail
If you\’re thinking about owner financing your home you can also do a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note. If you\’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the process and you don\’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.
13. WILL THE HOME OWNERS HAVE TO REFINANCE?
When an investor purchases your note, all terms remain the same. The only thing that changes is where they send the payment. If fact the borrowers are not contacted until the transaction is complete.
14. HOW DOES THE NOTE SELLING PROCESS WORK?
You\’re interested in finding out about to selling your note. Give me a call or email and I\’ll get some information about the property and note from you. We can do it over the phone or I can email or fax you the form. It\’s an easy 2-page worksheet you can fill out in about 10 minutes. It asks for the loan balance, interest rate, length of loan, and basic information about the property. Then with the information you gave me I look for an investor who is interested in buying your note.
If I find an investor who is interested they take 2 or 3 days to crunch the numbers, assess their risk and see if it\’s a good investment for them. If they are interested they make what is called a soft quote, which is their best offer before having reviewed any supporting documentation, such as the payee\’s credit report and property appraisal. The quote will state something to the effect: \”subject to review of credit - assumes good credit\” but pricing should not change that much unless the property value comes in low or the homeowner has a low credit score or subsequent documentation does not support the information provided on the worksheet.
If you accept their offer you\’ll draw up an option of purchase and sales agreement with the investor. The investor then starts their due-diligence on the property and the homeowners. Just like selling a house — home inspection, appraisal, credit checks, copies of legal documents, payment history and verification of current balance. This enables the note investor to verify the information provided, analyze the risk, and confirm their pricing of the note.
Once all the T\’s are crossed and I\’s dotted and contracts signed the investor takes control of the note and the title company sends you a check.
REUBEN
Dec
10
Sub Prime Mortgage Cheat Sheet
Filed Under Mortgage | Leave a Comment
Mark Hostetler asked:
It’s a challenge trying to keep track of the events of the current sub prime mortgage crisis. Compare it to an over laden cart gathering momentum on a steep and rocky slope - now it’s built up so much speed, it’s passing by as a blur.
When looking at the causes of this crisis we’re hit with catch phrases such as Banking Liquidity Crisis, Mortgage Backed Securities, Interest-only Loans, Sub prime Mortgages, and as of late the dreaded Bailout.
We gather around the water cooler, absently nodding in agreement when a co-worker mentions how Hedge fund losses have contributed to the crisis, but what does it really mean?
Consider this your subprime mortgage cheat sheet, defining some of these terms and explaining their contribution to current economic climate.
Subprime Mortgages: An alternative to a conventional mortgage, subprime mortgages allowed people with bad or no credit history to buy homes with very little or no money down. Not only are these considered high risk mortgages, but history has demonstrated that these homeowners are most likely to default when times get bad. Subprime Mortgages are considered the primary cause of the housing slump; eventually spreading their infectious roots throughout the stock market and general economy.
Interest-Only Loans: Generally used in conjunction with a subprime mortgage, homeowners were offered a payment plan where for a pre-determined length of time, they paid off only the interest, and no principal on their home. The banks and lending companies found quite a niche and it wasn’t long before the market was saturated with borrowers that should never have received mortgages to begin with.
When their “interest-only” period expired, borrowers switched to a conventional mortgage, but monthly payments often rose to unaffordable levels and forced them to default, leading to widespread foreclosures. Adding insult to injury, housing prices began to fall and often, these distressed home owners owed more money than their house was worth.
Mortgage-Backed Securities: Banks, laden with high risk mortgages, bundled them into mortgage-backed securities and sold them off to Fannie Mae, whose sole purpose was to resell these mortgages to private investors.
Hedge Funds: These are a higher risk, investment fund not privy to the same controls and safeguards as mutual funds. Hedge funds have invested billions in Mortgage-Backed Securities – when this unlikely pair met up, the stock market was flooded with unstable investment funds.
Suddenly the effects of these irresponsible lending and investment practices were visible in the form of a nationwide housing slump and economic crisis. Huge financial institutions the likes of Washington Mutual Bank, AIG and Lehman Brothers were over-burdened by the weight of high risk mortgages they could no longer sell off, and the resulting flood of foreclosures. Existing customers reacting out of fear, closed their accounts, withdrawing their life-savings.
Instilled with panic, investors recently withdrew over $140 billion from their money-market accounts, transferring the funds to U.S. Treasuries, causing values to decline to zero.
Federal Bailout: In an effort to stabilize the economy, a $700 billion bailout scheme has been proposed and rejected by congress. However, a 2nd draft was in the works during the writing of this article. In the proposal, the government would eradicate these debts from the banks, Hedge funds and pension funds, and basically give them a clean slate.
Some feel that this removes any burden of responsibility from the corporate giants who saw an opportunity and exploited it, and instead transfer the debt to the taxpayer. Alternatively, experts say if we don’t instigate some sort of bailout, it will be next to impossible for the average consumer to get a loan or mortgage. On the surface, this doesn’t seem so bad, after all that’s how the trouble began, with shaky borrowers getting loans they couldn’t handle. However, considering the amount of employment and industry that just those two products alone support, and the negative effect on the economy if people stopped buying cars and houses, this may be the bitter pill Americans need to swallow.
BRENDAN
It’s a challenge trying to keep track of the events of the current sub prime mortgage crisis. Compare it to an over laden cart gathering momentum on a steep and rocky slope - now it’s built up so much speed, it’s passing by as a blur.
When looking at the causes of this crisis we’re hit with catch phrases such as Banking Liquidity Crisis, Mortgage Backed Securities, Interest-only Loans, Sub prime Mortgages, and as of late the dreaded Bailout.
We gather around the water cooler, absently nodding in agreement when a co-worker mentions how Hedge fund losses have contributed to the crisis, but what does it really mean?
Consider this your subprime mortgage cheat sheet, defining some of these terms and explaining their contribution to current economic climate.
Subprime Mortgages: An alternative to a conventional mortgage, subprime mortgages allowed people with bad or no credit history to buy homes with very little or no money down. Not only are these considered high risk mortgages, but history has demonstrated that these homeowners are most likely to default when times get bad. Subprime Mortgages are considered the primary cause of the housing slump; eventually spreading their infectious roots throughout the stock market and general economy.
Interest-Only Loans: Generally used in conjunction with a subprime mortgage, homeowners were offered a payment plan where for a pre-determined length of time, they paid off only the interest, and no principal on their home. The banks and lending companies found quite a niche and it wasn’t long before the market was saturated with borrowers that should never have received mortgages to begin with.
When their “interest-only” period expired, borrowers switched to a conventional mortgage, but monthly payments often rose to unaffordable levels and forced them to default, leading to widespread foreclosures. Adding insult to injury, housing prices began to fall and often, these distressed home owners owed more money than their house was worth.
Mortgage-Backed Securities: Banks, laden with high risk mortgages, bundled them into mortgage-backed securities and sold them off to Fannie Mae, whose sole purpose was to resell these mortgages to private investors.
Hedge Funds: These are a higher risk, investment fund not privy to the same controls and safeguards as mutual funds. Hedge funds have invested billions in Mortgage-Backed Securities – when this unlikely pair met up, the stock market was flooded with unstable investment funds.
Suddenly the effects of these irresponsible lending and investment practices were visible in the form of a nationwide housing slump and economic crisis. Huge financial institutions the likes of Washington Mutual Bank, AIG and Lehman Brothers were over-burdened by the weight of high risk mortgages they could no longer sell off, and the resulting flood of foreclosures. Existing customers reacting out of fear, closed their accounts, withdrawing their life-savings.
Instilled with panic, investors recently withdrew over $140 billion from their money-market accounts, transferring the funds to U.S. Treasuries, causing values to decline to zero.
Federal Bailout: In an effort to stabilize the economy, a $700 billion bailout scheme has been proposed and rejected by congress. However, a 2nd draft was in the works during the writing of this article. In the proposal, the government would eradicate these debts from the banks, Hedge funds and pension funds, and basically give them a clean slate.
Some feel that this removes any burden of responsibility from the corporate giants who saw an opportunity and exploited it, and instead transfer the debt to the taxpayer. Alternatively, experts say if we don’t instigate some sort of bailout, it will be next to impossible for the average consumer to get a loan or mortgage. On the surface, this doesn’t seem so bad, after all that’s how the trouble began, with shaky borrowers getting loans they couldn’t handle. However, considering the amount of employment and industry that just those two products alone support, and the negative effect on the economy if people stopped buying cars and houses, this may be the bitter pill Americans need to swallow.
BRENDAN
Dec
5
Adam Hefner asked:
Whether you would like to work face to face or on-line to secure a home loan, a Chase home mortgage is your answer. Either that you choose has advantages that you can’t find anywhere else. The satisfaction of working with a successful industry known company that is focused on customer service will be yours.
While using the internet you can will be able to enter and print all the information you need for your home mortgage. Tools, calculators, comparisons and FAQ’s are located at the Chase website to guide you through the mortgage process. Chase has options for all of your mortgage needs in a variety of options.
Once you have completed you internet application, you will be able to follow up with Chase on-line as well. If you prefer, you can call Monday through Friday between 8am and 8pm.
Maybe you are looking for a 15, 20, 30 or even 40 year fixed mortgage, regardless of your credit, Chase has a loan for you. Adjustable rate mortgages (ARM) or jumbo mortgages are other types of loans you can obtain. Specialty loans available are: interest only, self employed, or if you are in a foreign country.
For those who have never had a mortgage before, loans are also available. There are times that first time buyers don’t have the required down payment. In this case a 3% down loan can be an option, with the other 97% being loaned. 100% may be loaned for rural housing. This is just an example of the loans available from Chase.
Some people may not have achieved the level of comfort needed for doing financial transactions on-line, so there are also branch offices available. Mortgage insurance is another offering from Chase. If you like making your payments on-line, you can do this with Chase. No stamps or payments being lost in the mail just click and pay.
The Home Buyers Guide section of the website is the optimum way to start your home loan process. This will show you how to start the mortgage process, as well as plan for and organize for it. From your home search to the closing of the loan process, Chase has you covered.
Links to homes and realtor’s that can serve your needs, in your area, are offered on the Chase website. Your comfort level will increase when you realize that the professionals serving you have the experience and focus needed to take care of your home mortgage needs. You’ll be offered a level of professionalism from Chase that will be more than you expect. While your signature at the end of the documents will secure your loan, it will not be the end of your successful loan partnership with Chase.
LEWIS
Whether you would like to work face to face or on-line to secure a home loan, a Chase home mortgage is your answer. Either that you choose has advantages that you can’t find anywhere else. The satisfaction of working with a successful industry known company that is focused on customer service will be yours.
While using the internet you can will be able to enter and print all the information you need for your home mortgage. Tools, calculators, comparisons and FAQ’s are located at the Chase website to guide you through the mortgage process. Chase has options for all of your mortgage needs in a variety of options.
Once you have completed you internet application, you will be able to follow up with Chase on-line as well. If you prefer, you can call Monday through Friday between 8am and 8pm.
Maybe you are looking for a 15, 20, 30 or even 40 year fixed mortgage, regardless of your credit, Chase has a loan for you. Adjustable rate mortgages (ARM) or jumbo mortgages are other types of loans you can obtain. Specialty loans available are: interest only, self employed, or if you are in a foreign country.
For those who have never had a mortgage before, loans are also available. There are times that first time buyers don’t have the required down payment. In this case a 3% down loan can be an option, with the other 97% being loaned. 100% may be loaned for rural housing. This is just an example of the loans available from Chase.
Some people may not have achieved the level of comfort needed for doing financial transactions on-line, so there are also branch offices available. Mortgage insurance is another offering from Chase. If you like making your payments on-line, you can do this with Chase. No stamps or payments being lost in the mail just click and pay.
The Home Buyers Guide section of the website is the optimum way to start your home loan process. This will show you how to start the mortgage process, as well as plan for and organize for it. From your home search to the closing of the loan process, Chase has you covered.
Links to homes and realtor’s that can serve your needs, in your area, are offered on the Chase website. Your comfort level will increase when you realize that the professionals serving you have the experience and focus needed to take care of your home mortgage needs. You’ll be offered a level of professionalism from Chase that will be more than you expect. While your signature at the end of the documents will secure your loan, it will not be the end of your successful loan partnership with Chase.
LEWIS