Tag Archives: borrower

Guest Post: Managing your finances before homeownership to save your home from a foreclosure

Managing your finances before homeownership to save your home from a foreclosure

Are you planning to purchase a new home? If yes, you have to buck up your finances so that you don’t fall in trouble in the near future and then risk losing your home to a forced foreclosure. Managing your finances is the most important job that you have to do when you plan to take out a home mortgage loan from a bank. The mortgage loan entails your home as collateral so that when the borrower defaults to make the payments on time, the lender can foreclose the house and recuperate the money. How much house can I afford is the most important question a borrower should ask himself before taking the plunge. Here are some important steps that you should take in order to manage your finances once you plan to take out a home loan.

  • Stop all the unnecessary expenses: Whenever you contemplate buying a new house and forget paying further rent, you should stop making all the unnecessary expenses that you can do without. If you don’t read magazines, stop the monthly subscriptions to magazines. If you can cook well, stop dining out every weekend as this will save your dollars in the long run. You can even do without the cable connection at home. If you can build an emergency fund, you can easily take out a mortgage loan at an affordable rate.
  • Stop using your credit cards: Are you aware of the fact that the mortgage lender will check your DTI ratio or the debt-to-income ratio that is the ratio between the total monthly debt obligations with your monthly income. If you keep on purchasing things with your credit cards, you’ll drown in unsecured debt and thereby be forced to take out a home mortgage loan at an unaffordable interest rate. Therefore, stuff your wallet with cash so that you may stop buying things when you’re exhausted.
  • Save enough money: Yes, this is the ultimate secret that will take you to the path of a smooth mortgage loan approval. The mortgage loan underwriter will check the amount you’re paying down while taking out the loan amount. The more you pay down, the lower will be the rate offered to you. You should save enough money so that you can at least pay down 20% of the loan amount and avoid paying PMIs later on.
  • Keep track on your credit score: Don’t take any wrong step that can hit your credit score. Pull out a copy of your credit score time to time so that you know where you stand financially. Repair your credit as much as possible so as to grab the best mortgage loan at the most covetable cost.

When you’re dreaming of homeownership, make sure you follow the money tips mentioned above. By taking all the tips mentioned above, you can get the most appropriate loan in accordance with your affordability. Don’t forget to ask yourself “how much house can I afford” before taking out the loan.

New Modification Law & Avoiding Foreclosure

A new law that will be implemented on November 15, 2011 is yet another slap in the face to the American Homeowner regarding modifications.

Making Home AffordableThe basic eligibility requirements for an enhanced HARP (Home Affordable Refinance Program) loan are as follows:

  • Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. To check whether a borrower has a Fannie Mae or Freddie Mac loan, go to MakingHomeAffordable.gov’s page on “Look up your loan“.
  • Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
  • Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
  • Current loan-to-value (LTV) ratio must be more than 80%.
  • Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.

More information is available from the Federal Housing Finance Agency (FHFA) on the agency’s website: www.fhfa.gov.

The reason why HARP is not good, is the same basic reason that HAMP (Home Affordable Modification Program) and the traditional modification is as follows:

It is strictly voluntary with all lenders; even though they say they participate.  Of course, there are factors with the seller or borrower that have an affect on being put in a modification plan that eliminate many from it.  This problem could be avoided if the banks would just lower the loan amount to the fair market value and a greater percent of people would have been able to keep their homes.  Even a future shared equity with the lender would have been acceptable if the property was sold for a profit in the future. Few banks are offering this program as well.

In conclusion, it is obviously important that we talk ASAP to go over your situation. I have several associates waiting to help: accountants, attorneys, and credit repair company.  If you’re moving on, getting back on track with your credit, staying in your home with an extended time without payments due in order to recoup finances, and most importantly receiving thousands from your bank at closing are all opportunities within your grasp!  I am just a phone call away!

John | (619) 890-3648

Namaste!

Why you can’t get the lowest mortgage rates

Five reasons near-record low rates are out of reach for some

CHICAGO (MarketWatch) — Mortgage rates are near historical lows, but the rates lenders are quoting you aren’t as eye-popping as those you see in the news.

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Buying a retirement or second home might sound like a great idea, until friends and family begin using your place as a crash pad. Here are tips on how to handle unexpected guests without damaging relationships.

Why is that?

First, remember that mortgage rates are moving constantly, and rate surveys are capturing rates from past points in time. For example, Freddie Mac’s weekly survey collects rate data over the course of a week. Bankrate.com’s survey collects rate data every Wednesday…By the time results are released, they’re already outdated.

There are other reasons your rate might be higher. Below are five of them.

mortgage rates1. You’re not paying points

Average rates in Freddie Mac’s survey include average discount points paid for the mortgage. But not everyone is willing to pay points.

For the week ending Oct. 27, rates on the 30-year fixed-rate mortgage averaged 4.1%, but that rate required an average 0.8 point to get it. A point is 1% of the mortgage amount, charged as prepaid interest.

Unless you’re going to live in your home for a very long time, paying points often doesn’t make sense…

2. Your borrower characteristics mean price adjustments

A credit score on the low side will prevent you from getting the lowest rates. Low levels of home equity will also mean a pricier mortgage rate.

That’s thanks to loan level price adjustments from Fannie Mae and Freddie Mac that have been making it tougher for borrowers to get the best rates for the past few years…

3. Your property type means higher rates

For condo-unit mortgages, you need a 75% loan-to-value ratio, or a 25% equity position, to get the best rates, said Christopher Randall, vice president, secondary marketing, at the Real Estate Mortgage Network, a mortgage lender.

And if your mortgage is for a vacation home or investment property, you can also expect to pay a higher rate, McBride said…

4. You don’t have recent proof of income

For the self-employed — who don’t have pay stubs as proof of recent income — the most recent tax returns are what a lender will look at before giving you a mortgage. If business has improved after your past tax return, that’s not going to be of any help as you try and get a mortgage today…

5. Your lender isn’t hurting for business

There can be a big disparity in what rates are offered from lender to lender, Findlay said. And it may have to do with how many mortgages they’ve been originating lately.

“Some that are lacking volume will tend to be more competitive,” he said. “Those that have enough volume may say we’re going to keep rates high.”

But the rate isn’t everything, Randall said. When shopping for mortgages, borrowers need to focus on comparing their monthly payments. “People are drawn to the interest rate… but you have to look deeper. Review the documentation,” Randall said.

For instance, it’s possible for someone to get an offer of a very low rate on a mortgage backed by the Federal Housing Administration — that loan also may come with a higher insurance premium, Randall said. That person may be better off taking a conventional mortgage with lower priced private mortgage insurance, even if their interest rate is a little higher, he said…

Read the article in full by going to MarketWatch.com.

ING Attempting to Steal Money From United States Military Personnel in a Short Sale

The following is an excerpt of recent negotiations ongoing with ING bank for a short sale transaction. Here is an example of what certain banks are still doing to literally steal money from innocent people, let alone in this case, an active duty military stationed locally and getting ready to retire, who does not have large income.  The new short sale law SB 458 has a controversial statement that was covered in a prior blog post (viewable here: “Short Sale Memoirs & New Laws“) regarding a contribution by a seller towards closing costs as being allowed.  This fact has been confirmed by attorneys as being interpreted as a direct violation of the law due to the fact any contribution for closing costs, taxes or otherwise is directly increasing the balance of the net sale for the lender and lowering the loss for their loan, thus breaking the law.

In addition, this lender as you can see wants to also steal money from the agents, leading me to believe that the negotiating person will get a cut of whatever he brings in. This needs to completely stop as these lenders are making it hard for most agents to earn a living themselves for their families.

While this one is not over, it shows you what is partly going on in a short sale transaction, not including negotiation with buyers and other lien holders, that make the work even more cumbersome only to have your income reduced due to the greedy tendencies of lenders that are still out there.

I anticipate a successful result as long as this lender comes to their senses.

I welcome comments…..

ING logo

 ING’s letter to me:

John,

I received the 2nd lien approval, and ran the numbers. Rather than going back and forth on negotiations, here is what I need to get this deal approved:

  • $3,700 cash at closing from the seller to cover the property taxes and closing costs

o Yes, we are allowed to ask for this money, as it is not going to the mortgage or missed payments

  • 4.5% commissions to help with part of the 2nd lien.

o As I said before, your listing agreement is not with ING DIRECT, and our max commissions are 5%. This is only a .5% reduction to help the deal get approved.

I will pay the 5% commissions if the $1,300 is added to the purchase price. I have been doing this job for a while, and knows what my credit review committee needs to get a deal approved. This terms are it. Assuming all parties agree, I can finish the file and have a decision for you in a few business days.

 

And my reply:

Dear ING

The seller will not be bringing any contribution to the table. I have already stated that. Any difference in costs, including commission contribution that ING refuses to pay or absorb will have to be covered by the buyer and if the buyer refuses, then I will have to find another buyer to pay that or the property will go to foreclosure.

Any contribution by the seller can be interpreted as a contribution to the loan and this has been confirmed by numerous attorneys. You are directly taking advantage of military personnel that has sacrificed his life for 20 years for our country, besides if the property goes to foreclosure, there is no recourse on this loan by ING, only more losses. No other lien holder in a short sale has ever done this to a United States military personnel borrower. You and ING are now crossing the forbidden line of respect for our military. I hope you cause ING to reverse their stance in this case. You have a borrower trying to do a good thing by selling the property early to avoid further losses to the bank only to get penalized for it.

Mortgage Modifications are a Mess

You have probably heard about the robo-signing fiasco and the fact that mortgage modifications are grinding to a standstill. We’re also seeing foreclosures occur after a modification has been approved–even occasionally when borrowers have the ability to make the payments. The whole process is a mess, and according to a top federal regulator, major U.S. banks are about to be penalized for “critical deficiencies” and shortcomings in their handlings of foreclosures.

One of the problems is that it is in loan servicers’ best interest to stall a foreclosure or modification.  This is because they can continue to charge fees while they’re servicing the loans. They charge fees for paying taxes, sending payments to the investors after receipt from borrower, maintaining records, etc.–and those “nickels and dimes” add up.

Having gone through the modification process firsthand, I can confirm that the process is daunting at best. The most painful part was when I had to pay 11% interest on my $400,000-first mortgage when the loan was adjusting at one point; only to have the bank tell me (on multiple occasions over a three-year period) that I either made too much money…or not enough. I went to court to stop a threatened foreclosure, but I still had to pay the ridiculous interest until my modification was approved.

While I won the victory of a modification, every situation is different. Like probably many of you, I’m still upside-down on the property, but at least I’ve lowered my payments while I await the market’s recovery.

In the interim, the Controller of the Currency and Federal Deposit Insurance Corp. has put sanctions on the banks, as I mentioned above, but the sanctions barely amount to a slap on the wrist. The reality is that the regulating agencies have a history of negatively impacting borrower’s rights rather than protecting them. So where does this leave you if you are fighting to keep your homes?

My personal experience has inspired me to grow my expertise in this area so that I can help others. No American should be subject to the whims of the system, and no American family should lose their home because of the negligent practices of a third party. If you need help fighting through the process, give me a call. I’ll stand by your side.

John A Silva
www.johnasilva.com
619-890-3648