Chuck Lunsford asked:




Homeowners looking to stop foreclosure are faced with a number of options, one of which is doing a short sale. Some people, depending on their situation, may allow a property to go into foreclosure instead of attempting a short sale. One reason is they don’t want to keep the home in the first place. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes. The primary consideration above all is the affect both can have on your credit score.

The Basics Of A Short Sale

The concept of a short sale is fairly simple. A short sale occurs when the sale proceeds of a house fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. A few words of warning are in order. Not every lender will negotiate a short sale. If for example your payments are current, yet you foresee imminent cash flow problems arising that will affect your ability to make your monthly mortgage payment. Lenders have no interest in negotiation unless your payments are several months late. Another consideration is you may be held liable for taxes on the difference between the sale amount and the original loan amount. Short sales require nerves of steel.

The Credit Affects

Foreclosure

Without a doubt sellers will incur more damage on their credit report by going through foreclosure. Typically your credit score will take plunge between 200 to 300 points.

Short Sale

Short sales have a far less damaging affect on a seller’s credit report. Credit scores typically lose between 80 to 100 points. What happens to your credit down the road? It is takes around three years after a foreclosure before a lender will offer a sensible interest rate, whereas for a person who went through a short sale typically waits around 18 months to buy another home at a good interest rate.

Salvaging your credit should always be the primary concern when making the decision between a short sale and stopping foreclosure. The savings in interest payments alone should be convincing enough for most people, not to mention your buying power in the near and distant future.

Tonya

Susan V. Gregory asked:




The loan modification process can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information upfront as possible so you will be prepared and able to present your case in the best possible light. Programs and guidelines are changing and it is getting much easier for homeowners to get the help they need.

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Steven Sheasby asked:




With the Economic Stimulus bill passed, it looks like the FHA modernization bill has been held up once again. The President asked Congress to move forward with the latter bill during the signing of the Economic Stimulus bill, and many are hoping it will pass this month.

Massachusetts finally released the new bond format. The previous format released about 6 months ago has made it virtually impossible for anyone to get a bond without posting $75,000 in a business line of credit. Hartford, one of the largest surety carriers in the world, still has declined to issue the new bond stating in a press release that “the State now intends to be able to look to the bond to recover any “past due Division costs, assessments, penalties, and other obligations…all of which were outside the obligations of the prior bond form.” Most surety companies still find it too risky to issue a bond in this State, which will make it difficult for those trying to start new business and those trying to renew in the state.

FHA Licensing Update

Everyone seems to have their own opinion on the FHA modernization bill.

There are those who are very optimistic, somewhat optimistic,
and pessimistic. Some think the bill will definitely pass on March 15,
some think it will hopefully pass by August 15, and some don’t think it
will ever pass this year. I am of the persuasion that we have
no idea what Congress intends on doing so we need to move forward with
hope that it passes soon but expectation that it may never pass.

With this in mind, if you are planning on getting FHA
licensing this year and you meet the net worth requirement ($63,000
company net worth), I recommend starting the process now. If
you don’t meet the net worth requirement, I recommend looking for an
employment relationship with a company that will allow you to originate
FHA loans. There are numerous small companies that will give
you the flexibility of working as if you are running your own mortgage company while being an
employee of theirs. Hopefully we’ll know more in two weeks,
but don’t delay. Act now to start taking part in the FHA loan
market.

Massachusetts Issues FAQs on Licensing Law

The Massachusetts Division of Banks just released answers to frequently
asked questions (FAQs) in regards to recent changes to that
state’s mortgage lending laws and regulations. The FAQs discuss newly
established (i) loan originator
licensing provisions, (ii) 90-day Right to Cure for residential
mortgages, and (iii) a requirement to provide counseling to subprime
borrowers. To view the FAQs in full, take a look at http://www.mass.gov/dob.

MORTGAGE LOAN ORIGINATOR LICENSE APPLICATIONS ACCEPTED
THROUGH NMLS BEGINNING FEBRUARY 19TH

Individuals who were employed by their current employer
prior to November 30, 2007 may submit a license application to the
Division through the Nationwide Mortgage Licensing System (NMLS)
between February 19, 2008
and May 27, 2008.

New Colorado Licensing Requirements

1. Pre-Licensing Education – All mortgage brokers will need to complete the pre-licensing education requirements and the requisite test. This will need to be completed by all mortgage brokers prior to January 1, 2009. Mortgage brokers who fail to complete the pre-licensing and test requirement are subject to disciplinary action regarding their license. The Director, Erin Toll, appointed a 10 member Mortgage Broker Education Task Force to help develop and determine the number of pre-licensing hours required, course content, course approval, the pre-licensing test and continuing education.

2. All mortgage brokers will need to complete a minimum of nine (9) hours of continuing education every three years.

Alaska Proposes Mortgage
Lender, Loan Originator Rules

On February 12, the Alaska Department of Commerce published a notice
proposing rules implementing the Mortgage Lending Regulation Act,
requiring licensure of mortgage lenders, brokers, and loan originators.

Fortunately the Alaska legislature gave ample time for the
state to prepare the new licensing requirements.
The act was passed last summer, but does not go into effect until July
1, 2008.
The proposed rules cover (i) lender and broker licensing obligations
and procedures, (ii) loan originator licensure and education
requirements, (iii) record retention format and requirements for
regulated entities, (iv) outlines specific deceptive advertising
practices, and (v) enforcement powers and procedures of the Department
of Commerce. It also details applicable fees for licensure,
registration, and renewals. Full text of the rules can be found at http://www.commerce.state.ak.us/occ/pub/MTG0208.pdf.

Darlene

Jeff Rauth asked:




Have a few questions regarding a commercial mortgage refinance? Few are the most typical questions we are asked on a daily basis.

Timing – will it really take 30 days to close?

No, unfortunately it will probably take longer than 30 day from start to finish to close your loan. 60 days is really the norm on an average deal, though 45 days is doable. 30 days is universally under estimated by banks, lenders and brokers. If someone tells you they can close your loan in 30, they’re either a rookie, or just trying to tie up your loan. Which of course, is a really poor way to start off the transaction.

Despite your potential frustration and aggravation on why it takes so long, it better to just accept the process and be as diligent as possible in submitting all of the required documentation from the bank. One of the biggest delays is the borrower’s inability or just plan reluctance to provide the required items. Too often the borrower feels justified that the bank is just being overly conservative or to thorough. All this does is simply stalls the process. Once requested, banks rarely back down from needed documentation.

What are the fees?

They’re actual pretty much the same across the board. There is normally a 1% bank fee, often lenders will have a processing fee of approximately $1000, appraisal reports range in cost from $2,000 – $5,000 (though it’s not uncommon to see appraisals more like $10,000 or more on larger, special use properties), title ranges from $800 – $2000 again depending on the loan amount/state, and a phase one environmental report will cost around $1,500 – $2,000. Some properties like multifamily will not normally have environmental fees or if they do it will be more of an environmental survey which costs approximately $800.

What can I expect for loan programs?

It really ranges widely depending on the deal. Amortization periods range from 15 to 30 years, fixed periods from floating to 30 years, stated income, .8 dcr minimum required, 90% financing, etc. Also, it pays for the borrower to keep in mind that banks can use the same loan program but roll it out it different ways. For example 99% of banks offer the SBA 7a loan as a floating product. However, there are a few that offer this as a 5 year fixed, 25 year amortization loan.

What is a prepayment penalty, and can I get out of it?

Prepayment penalties are fees that borrowers incurs if they pay off the loan, either by selling the property or refinancing the debt, before the agreed upon period. The timing is normally between 3 -5 years with some CMBS lenders going as long out as 10 years. The fee is almost always in the form of percentage of the loan balance, i.e. 3 -5% of the loan amount. In other words if the loan amount is $1,000,000 and the borrower has a 5% pre pay it would cost him $50,000 to pay off the loan early.

It terms of getting out of it, yes it is possible, though the pool of lenders that offer this is greatly reduced. It’s probably, and this is a guess, 1 out of a 100 banks or lenders will either outright waive it or more likely ask for an increase in interest rate to justify the compromise. And I’m referring to a new loan. Once in place, you are pretty much stuck (though you could look into a defeasanse or have another borrower assume your loan). We work with a bank out of Virginia that commonly waives all prepay’s though their rates are a little high.

What is the application process?

After the borrower agrees to move forward with a bank/lender they will be asked to fill out an application and provide documentation. What is normally requested is a personal financial statement, three years of business and personal tax returns, year to date profit & loss statements and year to date balance sheets. After a full “scrub” of the above by underwriting, the lender will normally issue a term sheet, which itemizes the offer by the bank. Its normally a couple of pages long, and spells out the bigger issues such as rate, amortization period, etc and smaller issues with of course includes a lot of small print protecting the bank. If the borrower wants to move forward they will need to sign the letter and write a check to the bank to cover the appraisal, environmental and sometimes a processing fee.

At this point the loan is officially in process. The lender will engage an underwriter to thoroughly review the funding request and will issue a needs list with additional documentation needed beyond what they already have. The third party reports will also be ordered at this point. Once the needs list has been satisfied, and all third party reports are in the bank will officially approve the loan (or not) and set up a time to close.

It is a good idea for the borrower to be patient and encourage the bank to be as thorough as possible with their preliminary underwriting so you do not waste your time and money on third party reports, as it can be difficult to get a “refund”.

Leslie

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.

Douglas

Susan V. Gregory asked:




Delinquent borrowers or those facing mortgage payment hardship could get the relief they need with a Countrywide loan modification that features a lower, more affordable monthly payment. Beginning December 1, 2008, Countrywide has launched a far reaching loan workout program aimed at offering help to approximately 400,000 households across the nation. As part of a $8.4 billion predatory lending lawsuit, Bank of America, owner of Countrywide, is launching a program that represents significant interest rate reductions, longer loan terms and principal reductions to qualified borrowers.

Here are 10 Frequently Asked Questions about the Countrywide loan modification program:

Who qualifies for the program? Countrywide borrowers who have an adjustable rate mortgage that has become unaffordable due to a financial hardship, interest rate adjustment causing payment shock or who were victims of predatory lending practices may qualify for help. What homes are eligible? Only principal residences are included in the program, investment properties and second homes are not. What if I am in Bankruptcy-can I still apply? Your bankruptcy must be discharged or if in Chapter 13 you must get court approval. Do I have to be delinquent on my payments in order to qualify for a Countrywide loan modification? At this time, those borrowers facing imminent foreclosure are receiving help first. However, the lender has announced that those homeowners facing a hardship in the future due to rate resets or or acceptable hardship, may also apply for help, just be aware that it may take a little longer to get thru the system. Is there any fee for the program? No, the loan modification is free of charge to homeowners. There is no title, escrow or appraisal required. What about my past due amount-can that be included in my Countrywide loan modification? Yes, one available option is to include your arrears into the new loan balance and spread that amount over the new loan term to get the loan current. The lender may require one months payment to start the new loan repayment program for you. I have a Pay Option Arm with negative amortization and my loan balance is more than my home is worth-what are my options? In some cases, as part of the predatory lending settlement, lost equity due to negative amortization is being restored by reducing the loan balance, eliminating the deferred interest that was added to the principal balance. What about all the fees and penalties that have been charged-do I have to pay that too? Under the settlement, Countrywide is waiving fees and penalties to qualified borrowers who obtain a loan modification. I already lost my home due to foreclosure from Countrywide, is there any help for me? Yes, under the settlement agreement, Countrywide has allocated $200 million as payment to customers who have had a foreclosure or even those at serious risk of foreclosure. What is the best way for me to apply for a Countrywide loan modification and how do I get started?

Interested homeowners need to take the time to research, learn and prepare before contacting the lender about a Countrywide loan modification. As not all borrowers will qualify for help, it is extremely important to have a good general understanding of the process, know what is required to qualify, then be able to present your situation correctly so that you will have a good chance of success. Homeowners seeking relief can deal directly with Countrywide or hire a loan modification company to represent them. Either way, before you proceed, learn as much as you can about loan modifications so that you will increase your chance for success. This is really important as your home, credit and families future may depend on the outcome. Decide to take control of your future by becoming a informed and knowledgeable borrower.

Charlie

Louie Frias asked:




I’ve been a mortgage banker and real estate broker since 1981 in California and Nevada. If I had to put it to numbers, I’d estimate nearly a billion dollars of business has crossed my desk. Meaning, that’s a lot of customers. I can also state that not ONE has EVER lost their home due to being in any sort of toxic mortgage product. That’s not saying no one has ever lost their home; there have been a handful that have. Unfortunately, divorces, business closing, injuries, etc happen in people’s lives.

I’m buried with calls and emails from friends and friends of friends who all ask the same qquaerion: “Can you help me fix my mortgage because my house is worth only half of what it used to be.”

How do you say “No”? I don’t.

For many years I’ve advocated safe mortgage practices and made some enemies along the way while lobbying for stricter mortgage loan officer pre-licensing and training. Seems as long as politicians or regulators are making money, they simply turn their head when it comes to doing the right thing.

I have no objection to someone who strips at night or bartends or landscapes, in trying to better themselves, BUT, I take GREAT offense to all the idiots who caused this problem by getting in without training or licensing, made a bucket of money, then abandoned the industry when it required skill to get business. Those of us still in business are the professionals. The ONLY ones who deserve to be in business.

I will fight harder than ever to assure the public at large never suffers at the hands of illegitimate charlatans. In the meantime, we are here to help those who need it. That, unfortunately means loan modification.

It’s not difficult to perform, but neither is a root canal or a contested divorce – for a professional. You can’t do either yourself; nor should you try. It takes knowing the laws of lending, underwriting and most importantly; the art of negotiating. Having patience, a LOT of time and established contacts is THE key to successfully performing a permanent loan modification that actually helps the homeowner. Only when a lender, servicer or investor challenges us or says “No”, do we send in the attorney. The attorney function is to submit an extremely complicated litigation proposal that permits us to entangle the opposing party for YEARS if necessary. Imagine how the homeowner feels when we get to do that. We have no fear of litigation nor creating bad press for the 800 pound gorillas threatening the consumer.

Phyllis

Richard Geller asked:




Is a mortgage short sale possible if you have not one mortgage company to deal with, but two?

I am the developer of the Mortgage Relief Formula home study course. In my work I receive hundreds of questions from homeowners who owe more than their house is worth and cannot afford to continue making the payments. They want to avoid foreclosure appearing on their credit and they also want to do the right thing under the circumstances.

A mortgage short sale beats foreclosure both from the homeowner’s viewpoint and from the perspective of a mortgage lender. If you cannot pay on a mortgage, the bank would rather get partial payment of the mortgage, and not get your house back.

They can in fact deal with getting your house back because they are set up for it. But when they get a house back they must add it to their already bulging inventory. They must insure it. They have to fix it up. They have to put it on the market and sell it. They are selling into the same terrible market that you are facing.

But, a mortgage short sale helps the lender get partial payment on your mortgage and avoid getting your house.

Let’s recap what this type of sale is. It’s when you sell your house for less than the mortgage. The lender approves the sale and the lender collects the proceeds from the buyer, whatever is left at closing after paying closing costs and real estate broker commissions and so forth. They mortgage lender releases the mortgage so the transaction can close.

The mortgage company now has a financial loss. They may pursue you for that financial loss, which they can sometimes do through a civil court proceeding. Sometimes they cannot pursue you at all because state law prevents them from doing so. And sometimes you can negotiate with the home loan lender before the sale goes through, and they will agree in writing not to come after you for their financial losses.

But be that as it may, the question we are addressing is how you can do a sale that yields only partial payment of your first mortgage, if you have a second mortgage and not just a first mortgage?

What people forget is that even if they do a sale of their house, the loans go with the house so if they deed their house to someone else, the loans stay in place. A sale of a house does not affect the loans on that house.

The reason a short sale works is that the lender agrees to release their claim on the house at the closing table. So the new buyer can get the house free from your crushing mortgage. But if you have two mortgages such a sale is much more complicated. The buyer will want to be free of both your first and second mortgage.

That makes it twice as complicated.

Because if the first mortgage lender agrees to the sale even though it will not pay off the first mortgage, that isn’t enough. The house will be sold and still have a second mortgage on it.

A foreclosure sale, on the other hand, wipes out all the loans on the property. The lender who forecloses may get the property back through their “credit bid”. That is, if nobody bids higher than the balance on the loan including all delinquent payments and fees, the lender gets the house back. If someone bids higher, they will get the house.

Either way, all the junior loans are extinguished in the foreclosure sale. A foreclosure sale results in a transfer of title through a trustee’s deed or sherriff’s deed. A trustee’s deed or sheriff’s deed transfers title to either the lender, or the high bidder if there is a party that outbids the lender. And with that foreclosure deed, the junior loans are wiped out. So junior loans are not an issue in a foreclosure and in fact a lot of houses go through foreclosure in order to wipe out the junior loans.

But what if you want to avoid foreclosure through a short sale process, in order to help your credit and the lender? And what if you have junior loans?

There is a way to do it. Actually three ways.

Is the second mortgage a piggyback loan? Sometimes the lenders who made the first mortgage also made the second. Maybe they can allocate the short sale proceeds to release both loans.

Or, you may be able to buy out the second. They are in a position where they will get nothing at this point. If you can offer them a nickel on the dollar of debt, or a dime, maybe they will take it. That assumes you have a bit of cash. But it may not take much. After all they are already prepared to be wiped out. If you do a deal like this, make sure you get the arrangement in writing including how they will report to the credit bureaus (you want to avoid foreclosure appearing there) and also that they will not go after you any more — this is full payment of the second mortgage and forever wipes clean that debt.

And there is a third option for most folks who do not have cash to buy out the second mortgage.

This third option is doing a deal with the second mortgage holder: They will release the second mortgage in order to allow the short sale to go through. In return, you will sign a note for a percentage of that loan.

Such a note is a personal loan, an unsecured loan, and would be dischargeable in bankruptcy. But if you can manage the payments this is a good outcome for all concerned compared to the alternatives. Remember that if they get wiped out, the second mortgage holder can still come after you in civil court but by signing a note you make it cheaper for them and either way, something is better than nothing.

These three options are the best ones to consider if you want to do a short sale and avoid foreclosure, but have a second mortgage on the property. I would always recommend you consult a good lawyer to help you and best of luck.

Angela

Terry Edwards asked:




In this article we will discuss and answer different frequently asked questions as they apply to reverse mortgages. Treat this article as your own personal reverse mortgage FAQs.

What is a reverse mortgage?

It is a loan against the equity of your home and is given to a senior homeowner who is 62 years of age or older.

Are there any other qualifications?

Only that your home has equity, and little or no debt. Other than that, you do not have to earn a specific amount of yearly income, have a certain credit score, or possess any other assets to be used as collateral for the loan.

How can I receive my loan?

There are three different options. You can receive it all in one lump sum, receive it in monthly installments, or choose to take out a line of credit to be used against the loan.

How is the loan paid back?

The mortgage is required to be paid back when the homeowner dies, moves out of the home, or sells it. Then, the proceeds of the sale go to the lending institution. If, the proceeds from selling the home exceed the loan amount, then the owner of the home is awarded the difference. If the owner has died, then the difference goes to the owner’s heirs. When the proceeds are not enough to pay the loan off, then the lending institution itself absorbs the difference.

How is a reverse loan calculated?

Your loan will primarily be determined by the appraisal on your property. Other factors include the interest rate, and your age. The older you are, the more amount of money you will receive on your loan. Also, depending upon how you decide to receive the money and the location of your property determined how it is calculated.

What can I spend my loan on?

If you have a mortgage currently on your home, then you’re required to first pay that off. However, once it is paid off, or if you have no mortgage currently on your home, then you can spend your loan on whatever you desire.

There you have it — a simple, straightforward reverse mortgage FAQ. Hopefully your questions have been answered by this article. If not, I urge you to consult with more resources, and do further research as it applies to these types of loans. This is a wonderful option available to the senior who is looking for a loan to help them with retirement.

Terry

Max Bellamy asked:




Frequently Asked Questions or FAQ is an online document that includes a series of common questions and answers on cash out refinancing. Frequently asked questions about cash-out refinancing helps interested people understand the concept of cash out refinancing, and understand issues that may not have crossed their mind. The information can be vital in a person’s decision to go for a cash-out loan or try to find another means to handle their credit issues. Sensitive information regarding cash-out refinancing or mortgages are some of the topics that are discussed. Many websites dealing with loans provide information to questions you may have regarding procedures that are followed, mortgages that are available and what cash-out refinancing is all about.

For complete information, individuals can also find reliable lending institutions that can be consulted. Visiting such sites may clarify doubts in the minds of people with regard to investing in a cash-out refinance plan or other loan plans.

Apart from general inquiries, topics related to mortgage refinancing, modes of repayment, home equity refinancing, various aspects of cash based refinancing are explained at length. Individuals may be able to choose a viable option by putting forth several hypothetical situations for future references through such services provided online.

People may search for accurate information on any hidden costs relating to cash-out refinancing that are legally recommended by lending institutions. Most facts about policies relating to borrowing and reduced interest rates may be available online at websites where bidding can be done for the best possible rates.

Most websites respond to queries of customers only after thorough research is conducted, taking several parameters into consideration. These sites enable individuals to get answers to general topics as well as technical issues.

Dennis