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Fannie Mae Extends Mortgage Relief
Posted by: | CommentsWASHINGTON – Jan. 13, 2012 – Fannie Mae says it will provide more mortgage aid to the unemployed, possibly extending the forbearance period up to a year for those who qualify.
Starting on March 1, Fannie Mae will require mortgage servicers to extend the forbearance relief to qualified unemployed borrowers for six months – without any approval needed from Fannie Mae. The government-sponsored enterprise also says special consideration will be made for some borrowers in suspending mortgage payments or reducing them for up to a 12-month period.
Fannie’s announcement follows on the heels of Freddie Mac’s announcement earlier this week about similar changes to its mortgage relief program for the unemployed. Freddie Mac announced it would begin offering a 12-month forbearance period to qualified unemployed borrowers starting on Feb. 1.
To qualify, mortgage servicers will determine if the “borrower has less than 12 months worth of mortgage payments in reserves and has monthly housing expenses above 31 percent of their incomes before extending a forbearance plan,” HousingWire reports.
During the third quarter of 2011, the GSEs issued more than 7,000 forbearance plans, according to the Federal Housing Finance Agency.
Source: “Fannie Mae Unveils new Forbearance Program for Unemployed,” HousingWire (Jan. 11, 2012)
Bank of America Announces Foreclosure Moratorium
Posted by: | CommentsAs the Christmas Holidays approach, Bank of America will comply with applicable Holiday Moratorium requirements.
For this reason, foreclosures, evictions, relocation assistance (cash for keys) or lockouts should not be scheduled or occur during the following Holiday Moratorium dates:
• Dec. 22-26, 2011, returning to business as usual on Dec. 27, 2011.
• For VA properties, the year-end dates are Dec. 22 through Jan. 2, returning to business as usual on January 3, 2012.
If you receive any tasking or communications related to foreclosure, eviction, relocation assistance or lockouts during these moratorium periods, you must place a clarification call to the eviction specialist at Bank of America before proceeding with the tasking or communication.
Defaulting Homeowners – Issues to Consider
Posted by: | CommentsMillions of homeowners reach the point where they feel they have exhausted every last option. They can no longer make payments on their mortgage, their credit is in tatters, their patience and pride has been worn down by banks that refuse to work with them on a loan modification or short sale strategies that will leave them financially vulnerable.
When it comes down to a choice to either “pay or walk away” more and more homeowners are opting to abandon their homes to the foreclosure process.
If you decide to default on your mortgage and allow the lender to foreclose on the house, the important thing to remember is to avoid any risky behaviors that will have negative consequences for you once you have walked away. This sort of planned foreclosure is called a “strategic default.” Here’s how to protect yourself from prolonged and serious legal consequences:
1. Do know the type of foreclosure you are facing.
Non-judicial foreclosures do not go through the state court system. Essentially, homeowners simply stop paying their mortgage and wait for their lender to institute foreclosure proceedings. Depending on the housing market in their area, banks may be more or less eager to take back a particular property.
I know people who are still living in their homes several years after they have stopped making mortgage payments.
A judicial foreclosure proceeds through the state court system and in states where it is allowed a judgment for the deficiency (between what the house is worth and what you owe on the mortgage) will be rendered against you in a court of law.
In some states, lenders have the ability to sue for the unpaid balance for a period of time ranging from 6 months to 6 years depending on the circumstances. Research whether you live in a “non-recourse” state where lenders can take back the house, but not touch your other collateral or assets to close the gap in what you still owe them.
2. Don’t try to get “revenge” on the lender. No matter how angry you are over the circumstances that have caused you to abandon your home, do not take it out on the house! There are serious legal consequences to destroying a home in foreclosure.
3. Do remember that until the bank forecloses, you are still the owner of the property. Even if you aren’t living in the house, you are the responsible party until lender legally takes possession.When you leave, be sure to leave the house in good condition. Do a walk-through and make sure everything is okay. Take pictures that show the home is in good condition.
Keep your liability insurance current—remember, if someone is injured on the property, you are still the owner of record.
If you continue to live in the area, do occasional drive-bys. Make sure the house has not been broken in to or vandalized. Even if you are angry with your mortgage holder, try to have some compassion for your neighbors. Homes that have been foreclosed devalue the entire neighborhood; homes that have been foreclosed and are in bad repair drop everyone’s property values even more.
4. Do have a responsible plan for the future. Get a strong financial plan in place that will let you use the money formerly put toward your mortgage payments to regain stability.Rent a home if the rent is less than your monthly mortgage (otherwise, why leave the home at all?)
Know that your credit score will suffer moderate to severe negative impact depending on the circumstances around your decision to allow foreclosure.
Remind yourself that bad credit is a relatively short-term outcome (from 1 to 10 yeas) and be prepared to work to repair yours. Avoid other offers that entice you to live beyond your current means. After all, wasn’t it “easy credit” that got you into this situation in the first place?
In all of the solutions for getting out from an underwater housing situation, you must force the lender to come to you. You cannot count on parity, equality, good faith—you can’t count on any promises—on the part of the lender.
The fact is, you took their money on their terms and now they are entitled to take your money every month, change your interest, take or sell your house.
Homeowners in trouble need to be smart about their options to walk away, it’s the only way to maintain the possibility of ever gaining back their piece of the American Dream. Therefore, contact a reputable real estate attorney in your area for legal advice before making any rash decisions.
HUD Offers REO Homes For $100 Down!
Posted by: | CommentsHUD has approved a program aimed at putting foreclosed homes back into the hands of owner-occupant buyers.
In select states (Florida), from now into October of next year, buyers need a down payment of only $100 to purchase a HUD-owned REO home.
The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price.
The $100 down payment incentive program has been approved for two of HUD’s four national regions – the regions managed by the Denver Homeownership Center and the Atlanta Homeownership Center. HUD homes in the states listed, as well as the Caribbean are currently eligible for the program.
HUD’s $100 down payment incentive program can also be applied to an FHA 203k loan, which can be used to fund repairs and renovations on the home. The 203k program allows buyers to finance both the mortgage and additional money for rehabilitation needs with a single government-insured loan. This is one of the most exciting features of the new incentive program and should drive a lot of exposure to FHA’s 203k offering.
With an FHA 203k loan, “buyers can find a property that needs some TLC, fix it up however they want to, and finance the whole thing for $100.”
In addition to $100 down instead of FHA’s typical 3.5 percent down payment, HUD says it will also cover up to 3 percent of the closing costs in most cases.
Mortgage Scams to Avoid
Posted by: | CommentsMortgage scams. Here are 3 top choices of con artists, and how to avoid them.
Scammers know that people in trouble make easy victims. They’re swooping in and offering to “help” borrowers — and ending up with their house. Victims sometimes spend years fighting to get their homes back and some never succeed.
Scam No. 1: The Bailout, or Equity Stripping
In theory, a person or company could help an owner keep his house via a process in which the homeowner sells the house very cheaply to them while the homeowner gets his finances in order. The new owner/buyer pays the mortgage, and the old homeowner pays to live in the home in the meantime, buying back the home (with interest) in a fixed amount of time. If the financial setbacks are temporary, everybody can win: The homeowner keeps the house and the company earns a profit for its role as rescuer.
But reconveyance, as it’s sometimes known, is ripe for abuse.
Suppose you have a $400,000 home, with $100,000 of equity in it. A loss of job and medical bills have you facing foreclosure. Suddenly, the phone rings with a bailout proposal.
So you sell your home, for $320,000 — not much more than what’s owed on the mortgage. Why sell for so little? Because it’s never intended to be a true sale; remember, you don’t think you’re selling the house permanently, but buying it back in a short period, right?
The new Buyer then takes out a $320,000 loan, wipes out any liens on your property and even gets you a little cash back; and you get a two-year lease with an option to purchase at the end.
But soon you realize you’re in trouble. Why? Because scammers aren’t about to let you get your home back. Often, the lease terms desperate homeowners initially agree to turn out to be as onerous as their previous mortgage payments that helped get them into trouble. Con artists also manipulate victims when facing crucial deadlines.
Clients are often told that payments are going be to under $1,000 a month. But the criminals dragged out the process until the foreclosure was imminent and they were backed into a corner. When they got to the closing they often change the terms for rent, example would be to raise the rent to $1,450. This increase is likely to make the Seller/Owner default on the rent.
The process to get to this point is often dragged out and leads to the home owner having very few options at this point because the bank is so close to foreclosure and taking back the home.
This likely leaves you with the only option of agreeing to the higher rent, and once you default on this rent payment the new purchaser/buyer evicts you as soon as possible, sells your $400,000 house, pays off the $320,000 loan and pockets about $80,000 — all for a few months of work. Some people don’t even fight back because they don’t know they have options — such as calling an attorney.
Don’t do any of the following:
Don’t fall for promises like “We’ll save your credit”; “We’ll buy your house ‘as is’”; or “We’ll get you a new mortgage with low monthly payments.”
- Don’t sign away ownership of your property (sometimes called a “quit claim deed”) to anyone without the advice of a lawyer you trust. “When people get behind on their loan payments, they get a bit desperate, but the answer is not putting someone else on your title”.
- Beware of any home sales contract where you aren’t formally released from liability for your mortgage. Also, make sure you know what rights you’re giving up and that you agree to giving them up.
Scam No. 2: Phantom Help
This scheme is fairly simple: Let’s say you’re way behind on your home payments and facing foreclosure. An individual or group approaches and offers to help — then charges you thousands of dollars for various administrative duties like filing forms and phone calls, or else keeps simply promising a big rescue later. You can probably guess what’s really going on: The “helper” isn’t really doing anything at all to stop your foreclosure despite collecting thousands from you. By the time you figure out you’ve been hoodwinked, it’s often too late.
How did the scammer know to target you, anyway? That’s easy: When a lender schedules the home for public auction, the matter becomes public record. In just more than half of the states, a lawsuit must be filed in order to spur a sale. In Florida, it’s called a “Lis Pendens”. Anyone can check the court documents to find the list of lawsuits. Soon a letter or phone call comes like something from a guardian angel — only it’s a vulture.
In the other states (including California and Massachusetts, for example), the process doesn’t go through the courts; foreclosure sales simply must be advertised publicly, as in the local newspaper. This latter process usually moves faster — and makes an already-stressed homeowner even more vulnerable to a scam.
Do’s and don’ts:
- Do call your mortgage company or lender if you’re in trouble. Ask for the loss mitigation department. If you take a proactive aproach you will have a better chance of working something out with your current lender and avoid possibly avoid foreclosure. Lenders do not want to take back your home through foreclosure.
- Don’t call for assistance from one of those ubiquitous signs on telephone poles that advertise help. Chances are, that’s not where help lies.
- Do proceed with caution, if a company or person:
- Describes itself as a “mortgage consultant,” “foreclosure service,” or something similar;
- Collects a fee before giving any services;
- Advertises to people whose homes are listed for foreclosure, including anyone who sends fliers or solicits door-to-door; and says you should make home mortgage payments directly to them or to their company instead of your mortgage lender. - Don’t panic. Get full information on the foreclosure process in your state. Make sure you know ALL deadlines — for court, for document filings, etc. States usually have associations that can offer free advice.
Scam No. 3: The bait-and-switch
In this scam, which we call the “bait-and-switch,” con artists actually trick a homeowner into signing over the deed to a home — without his knowledge.
How could somebody fall for this?
You don’t have to be old or a non-English speaker to be stymied by the legalese. These schemers get their victims to sign incredibly complicated legal documents that resulted in their property being transferred to specific entities. Most attorneys can’t understand some of these legalese agreements. And if a criminal can’t get the signature, forgery goes a long way in real estate these days.
Do’s and don’ts
- Don’t sign anything that has any blank spaces. Information could be added later that you didn’t agree to. (Yes, it happens.)
- Never sign a contract under pressure. Always know exactly what you’re signing. Take your time to review the paperwork thoroughly — ideally with an attorney who only represents your interests.
- Never make a verbal agreement. Get all promises in writing and get full copies.
Cast a jaundiced eye at deals that sound too good to be true. Lately, some scam artists promise they’ll wipe out or pay off your home’s debt for you (so-called “debt elimination”). Some flustered homeowners bite. Just remember the free lunch rule: There isn’t one.
A final thought: Remember, if you can’t fix your finances, selling your house may not be the end of the world. Sure, you’ll be a renter again, but chances are you’ll make more money in the future, which you can use to get back on your feet.
