Mortgages And More

New Licensing Requirements

Wow! Not only was 2010 a rough year for all American, bt it was extremely tiresome for the housing industry.  On the real estae side, short sales and REO's became the sale of the day.  Though time consuming and often disappointing, they became the trend in sales.  Real estate and mortgage professionals alike have adjoined themselves to the political arena as never before.  Our national lobbyists have had to fight to stave off laws that could directly harm our livelihoods. The words, "transparency", usually only spoken by government officials, has had a tremendous impact on our industry with more and more disclosures being presented to the consumer either in the form of a new Florida Bar contract or the new 4-page Good Faith Estimate.  It is still up for debate whether the new forms are providing clarity to the consumer or confusing the consumer more.

New licensing regulations for the mortgage professional began with the SAFE ACT in 2008.  The enactment of the SAFE ACT required a new licensing process - no more renewals in 2010.  Mortgage professionals have had to re-apply for licensing.  There are two types of mortgage professionals now.  Those who are employed by the bank, and those who are employed by non-depository institution, such as mortgage companies. Although our functions are the same, there is a big difference between a licensed mortgage loan originator and a registered loan officer at a bank.

Licensed Mortgage Loan Office

Pass national licensing test

Pass state licensing test

Criminal background check

Fingerprinted

Credit report analyzed annually

Listed on a national website for consumers to review

Registered Mortgage Loan Originator (Bank employee)

Routine background check - by the bank they work for

Listed on a national website for consumers to review

Only mortgage originators who have an NMLS number can do business. Therefore, be sure the originator you are working with has a number.

Maybe some of the changes of 2010 were needed, or maybe our government was merely grasping at straws as a rescue attempt for our industry.  Nonetheless, the changes are here and how we do business must also change.  As my granddaughter recently observed, "We tend to change at the peak of destruction.  When our life or livelihood is threatened, we change."  And as you know, change did come in the form of regulations and new guidelines.  Rather than fight the change, perhaps a better approach would be to embrace the nuances of our industry.  Mortgage Brokers of the past are now Licensed Mortgage Loan Originators, which adds a level of professionalism that may have been absent in the past.  This is the time to preserve homeownership and the housing industry.  The formula for succeeding in 2011 is to be aware of the continual shifts and prepare our clients for not only what will be, but all that may be.  New changes will come, and when they do, I will be here with Hamilton Funding Group, Inc to walk you through them.

January 1st, 2010 RESPA implemented the new 4-page Good Faith Estimate. But is it an Estimate or a Guarantee?

Page 1 defines the mortgage loan:

• Whether the rate is floating or locked,
• When the GFE will expire (10 business days from creation,
• If the rate is locked and when the lock expires,
• How many days before settlement the rate must be locked, and
• The terms of the loan:
  • If the payment can increase, and if so, how often and how much over the life of the loan,
  • If there is a prepayment penalty and the maximum amount
  • If the loan is a balloon, and if so, when it is due.

Also on page 1 is an escrow disclosure section:  The PITI (principal, insurance, taxes and insurance) payment is revealed as well as whether or not the borrower has a choice of paying the taxes and insurance directly or having them escrowed within the payment.

And lastly, the 1st page gives a summary of the settlement charges. 

As I said, Page 1 is informative and clearly defines the mortgage.  If the borrower does not understand the mortgage after reviewing this page, the borrower needs to stop here, and get more clarification.

Page 2 is divided into two sections:  A & B

• Section A is Your Adjusted Origination Charges.  Notice the title does not include the word ESTIMATE. Why? Because these charges can only change if the loan amount changes, or if the buyer did not provide accurate information to the lender or there is new information which would affect the costs, or, because of an act of God, such a natural disaster, or war.  These are called Changed Circumstances.  If there are no Changed Circumstances, the Adjusted Origination Charges cannot change.  In essence, the lender cannot charge any more for the loan than initially quoted in this section. The origination fees are guaranteed.
• Section B contains a list of all the other settlement service charges, such as the appraisal, credit report, and tax service fees, flood certification, title services, and services that the borrower can shop for such as termite inspection, survey, roof inspection, etc.  In Section B all charges may increase by an aggregate of 10%.  However, those services which the borrower may shop for are not included in the 10% if the borrower selects a servicer who is not on the lender's provider list.  Escrow deposit, interest charges and homeowner's insurance, which are disclosed near the bottom of this section, can change to an unlimited amount.  There is no cap. Finally, the  bottom line is an addition of the Adjusted Origination Charges and Other Settlement services.

After reviewing this page, the borrower will know all the charges associated with the mortgage loan. There is no guess work here. Mortgage Originators and Settlement Agents must be precise when presenting costs to the borrower.

Page 3 - This is the page I really like.  The 1st section explains to the borrower what charges can change, which ones cannot, and if they can change, by how much.

There is a trade off table which summarizes the GFE:  loan amount, interest rate, monthly payment, and estimated settlelment charges. The form explains that if the borrower chooses the same loan amount with lower settlement charges, then the interest rate will be higher. And, conversely, if the borrower chooses a lower interest rate, the settlement charges will be higher.

The bottom section of this page reiterates the terms of the mortgage and the total settlement charges to enable the borrower to compare this loan to other loans.  As a mortgage broker, I give the comparisons from different lenders to my borrowers.

Page 4 is a Settlement Services Provider Statement. This is a list of service providers, their charges, the company information, on what line the charge will appear on the Settlement Statement, and whether the borrower may have the choice of selecting the servicer.

Once a credit application with the financing property address has been received by the originator, the originator has 3 days in which to present the GFE to the borrower.  The Borrower than has 10 business days to accept the GFE by signing and returning the form.  This is important because after 10 days, the GFE will expire. 

As part of the Respa Reform, this new Good Faith Estimate was developed to not only inform the borrower, but hold the originator accountable for what is disclosed.  As a Guaranteed Fee Explanation, no one may arbitrarily make changes to the figures, thus the borrower should not expect an increase in costs at the closing table, nor claim to have never been properly informed. This is only a guess, but I would imagine the redundancy in the form is to drive home to the borrower that this is what his mortgage is all about.  The major flaw I see in the new Respa Form is the lack of disclosure of what the borrower needs to bring to the closing table.  The settlement fees quoted are all the fees whether buyer or seller or paying them.  As an added service and convenience, many of us give the borrower a copy of our worksheet which does spell out the borrower's costs.

We may not all like the new 2010 Good Faith Estimate or Guaranteed Fee Explanation, but we have to abide by the law.  This is now the universal form used by bankers and broker alike.  So, let's make the best of it and deal with it. 

 

 

With the new Short Sale guidelines coming out April 5th, 2010 and the announcement of the HAMP Improvements, I have been getting numerous calls asking who are the participants of HAMP.  Great question?

If a lender signed up with HAMP, they are obligated to participate in the Short Sale program which:

• Has the seller approved for a short sale prior to the home going on the market
• Establishes the value, thus minimum purchase price of the property prior to being placed on the market
• Limits to servicer to making a yes or no decision on the purchase offer
• And gives monetary incentives to servicer, seller, and investor who is willing to help with any second liens.

On the same token, any lender who participates with HAMP is obligated to participate in the NEW HAMP Improvements:

• Temporary assistance for unemployed homeowners why they search for re-employment - mortgage payments are reduced to affordable level for a minimum of three months, and up to 6 months for some borrowers.
• Requirement to consider alternative modification approach that emphasizes principal write-down for eligible HAMP borrowers who own more than 115th of current appraised home.
• Expansion of HAMP to include homeowners with FHA loans.
• Double the relocation assistance payment for borrowers successfully completing foreclosure alternative to $3,000.

The HAMP Participant list as of March 10th, 2010 is posted on the website of The Law Offices of Charles Restrepo, Esq, PA.  If your lender/servicer is on the list, you may be eligible for the new programs. 

 

 

Tax Credit Not Just For First Time Home Buyers

 

The Tax Credit debate is heating up and we could see some kind of extension fast.  Senator Harry Reid and Senator Isakson each had their own proposals, but the Senators compromised and agreed to extend the Homebuyer Tax Credit into 2010.

The current Tax Credit is for First Time Homebuyers.  This new amendment will include repeat buyers who have owned their homes for at least 5 years. These repeat buyers will be eligible for a tax credit up to $6,500.  The First Time Homebuyers will have a tax credit up to $8,000 and cannot have owned a home for the past 3 years.

Income Limits for the Tax Credit will also increase with the new amendment.  For both first timers and seasoned homebuyers, an individual cannot earn an annual income greater than $125,000, and a couple's income cannot be more than $225,000.

The extension will allow homebuyers to sign contracts no later than the end of April and they must close by the end of June

One the Homebuyer Tax Credit reaches the floor of the senate in the form of an amendment to legislation, passage is expected to be easy.  The amendment may reach the President's desk as early as next week.   

 

I recently read an article on what economists are saying about our nation's economic recovery.  There appears to be quite an array of opinions - however, the consensus is that this recover is unlike any other.  Historically, every recession is different in its own way, but recoveries are normally all alike.  This recovery is an exception.

"In previous recessions, with stimulus programs in housing underway, a little more confidence is created, banks start to lend more, consumers start to borrow more," says Barbara Marcin, a portfolio Manager with GAMECO Investors. 

Though housing may be showing signs of stabilizing recently, and housing starts (new and existing home sales) have bragged of 3 consdecutive months of gains, we are basically back to where we were 6 months ago.  New home sales are still one-half of what they were in 2007. Retail sales are at 2005 levels.  

The consumer should be at the leading edge of recovery, but unemployment and debt hovers over. In past recoveries, personal consumption was close to or surpassed the general economic growth rate.  In this recovery, it appears consumers will have to make the adjustments - save more and consumption will grow gradually.

Rather than a national economic recovery - this is an individual recovery with our own families.  Many of us have already begun by eliminating unnecessary expenses, such as 2000 television channels, being smarter shoppers through comparison shopping and avoiding impulse shopping.  If we didn't need it yesterday, do we really need it today? How about paying cash for things instead of using credit cards, and eliminating unnecessary driving - run errands all in one trip.

As our family's financial situation improves and we obtain more discretionary income, we will be able to spend again, and our national economy will grow.

Think about it.  We can all cut costs and get this economy moving.  Besides, what choice do we have?

 

As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping teetering buyers take the plunge and purchase a home.  The $8000 tax credit, however, is only collectible at tax time after the purchase is made. Indeed, this is a great incentive for people who have the resources to save their down payment money.  But, for those whose income provides for them to live pay check to pay check (the vast majority), the tax credit is just a carrot that they will never reach.  

In efforts to further stimulate the economy, it was announced May 20th that the US Department of Housing and Urban Development is working on a plan that will allow FHA approved lenders to provide buyers with the tax credit cash up front. Thus, the tax credit funds will be used at closing on their home as the down payment.

Although details of the plan have yet to be revealed, the plan could be modeled after programs that are currently in place in Colorado, Missouri, New Jersey, Pennyslvania, Tennessee and Washington. These states credit "bridge loans" that allow buyers to borrow against the $8000 tax credit and then repay it with their tax refunds.

For example, if modeled after Missouri's plan, the first state to instill such initiative, borrowers can access $6,750 of the $8,000 credit for the down payments.   At closing, the borrower signs their first mortage, plus a second mortgage issued by the state.  The second mortgage is $6,750, with a $350 set-up fee.  No interest is charged if the debt is repaid by June, 2010. If the borrower does not pay off the note, it becomes a 10-year fixed rate mortgage with an interest rate one-half percentage point above that of their first mortgage.  For instance, borrowers paying 5% on their first mortgages would be charged 5.5% on the second.

 

Making Homes Affordable - That is the aim of the Obama Administration's Program. This plan is estimated to offer assistance to as many as 7 to 9 million homeowners.

So much news has been put out across the wires that it can be confusing.  As one person emailed me, “I have heard that the program will only help those who are not delinquent on their payments, yet, someone else told me it is to help those who are behind.”  Well, the truth is that the program is designed to help both.

The Making Home Affordable Program is broken down into 3 components:

1. Home Affordable Refinance Program for responsible homeowners suffering from falling home prices (decline in value)
2. A comprehensive $75 Billion Home Affordable Modification Program
3. Support Low Mortgage Rates by strengthening confidence in Fannie Mae and Freddie Mac

Each component deserves a blog of its own, but I want to get this important news out as quickly as possible. 

Home Affordable Refinance Program

This program is aimed at helping homeowners whose mortgage is higher than their property’s value. Rather than the normal 80% of the current value being financed, this program will allow up to 105% of the current value.  The current mortgage, closing costs, prepaid taxes and insurance and any discount points associated with the financing may be financed in the new mortgage, as long as the total loan amount does not exceed the 105%. 

Eligibility requirements include being current on the mortgage, living in the subject property, and having sufficient income to make the new payment. 

As in all new programs, guidelines are constantly adjusting. This program is no exception.  Since the details of this program were published by the US Treasury Dept, Fannie has already enhanced this refinance program.  I will publish the enhancements in my next blog.

Home Affordable Modification Program

The goal of this modification program is to reduce the amount homeowners owe per month in order to prevent foreclosure and to stabilize communities.  I have broken this program down into 5 parts.

1. The lender is to bring down the monthly payments so that they are no greater than 38% of the homeowner's gross income. The key here is that although the monthly payment is 38% of the homeowner’s income, the homeowner will only be charged a payment of 31% of the monthly income.
2. The US Treasury Dept. will pay the difference between the payment at 38% of the money income and the 31% of the monthly income that the homeowner pays.
3. The 31% payment is the modified payment which will be in place for 5 years.  After 5 years, there is be a gradual increase in the payment of 1%  until the payment reaching the conforming rate in place at the time of the modification.
4. To reach the target interest rate the payments will be reduced down to an interest rate of 2%.  If the debt to income is still over 31%, the term of the mortgage loan may be extended to 40 years or the lender may do a forbearance of principal at no interest until the payment is at the 31% target.  Lenders may also reduce the principal balance.
5. In the case where there is a second mortgage, second lien holders are encouraged to extinguish the second lien.

For Further Clarification here is an example:

Current Mortgage - $200,000

Gross Monthly Income - $3,500

38% of $3,500 = $1,330

31% of $3,500 = $1,085 – Maximum Monthly Payment

At 2% interest rate for 30 years, the principal and interest payment is $739.00. This leaves $346 for taxes and insurance.  Since the 38% payment is $1330, the US Treasury pays the lender $245.00 ($1,330-$1,085)

If the combined payment of principal and interest, plus taxes and insurance, and possibly mortgage insurance is greater than the $1,085 limit, the lender may provide a 40 year term, lowering the payment.  Bear in mind, too, that if you qualify at a higher rate, say 4%, you will start at 4%.

With this example, the principal and interest payment will remain fixed for 5 years.  At the end of the 60^th  month, the rate will gradually increase in 1% increments until the interest rate is at the current conforming rate which today is 5%.

Although, this program’s goal to help struggling homeowners, anyone can apply through their current lender.  A word of caution, though:  Just because the program can help you and just because you qualify, does not mean that you lender is a participant in the Affordable Loan Modification program.  In order for the lender to receive TARP money (Bailout Money) the lender must participate in this program.

An important point to remember is that this is a NO COST TO THE BORROWER modification.  In addition, the homeowner does not need to be late to apply.  Let me repeat.  Although the program is aimed at helping those behind in their payments, those who are making their payments, but struggling to do so, may qualify.  

Ok, I know this is a lot to digest, so if you have any questions, you can always give me a call or shoot me an email at tsublette@mortgagecrafters.net.  Your first step in helping yourself is to call your lender.  I would be happy to hear how your lender responds.

My Gosh!  My head is in a whirlwind!  First came the Economic Stimulus Plan for 2009; and right behind it came the Homeowner Affordability and Stability Plan.  Is help on its way?  I think so.  The news for homeowners and soon-to-be homeowners is promising.  So, get your documents ready because now is the time to either refinance or purchase a home.

 

 Here is what the Economic Stimulus Plan has to offer for the soon to be homeowner:

The $787 Billion stimulus bill is made up of tax cuts and spending programs aimed at, just as the name of the name of the plan implies, stimulating the US economy. One of the major benefits of the plan is a tax credit for new homebuyers. According to the plan, first-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for a tax credit of $8,000 or 10% of the value of the home, whichever is lower. Therefore, if the home you purchase is valued at least $80,000 you will eligible for the $8,000 tax credit.  If the home is valued less than $80,000, the tax credit will be 10% of the value of the home.

 

The $8,000 tax credit is a true tax credit. It's a dollar-for-dollar tax reduction, rather than a reduction in a tax liability. In other words, the $8,000 is not subtracted from your income before taxes are applied. Instead, the tax credit is deducted from taxes due.  So, if you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.

 Even more amazing, the tax credit is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you owe $4,000 in income tax, the $8,000 tax credit will be applied to the amount owed... and you will receive a check for the remaining $4,000!

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

 

The tax credit is applicable to any home that will be used as a principle residence. Qualifying "homes" include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured homes and houseboats used for principle residence also qualify. The only catch is that buyers will have to repay the credit if they sell their homes within three years.

 

The Homeowner Affordability and Stability Plan is twofold:

 

This plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. Many of the plan's details are still being worked out and will not be announced until March 4. Here is an overview of the plan's main components.

 

Refinancing Initiative

 

For those whose homes are in an “upside down” position, meaning the mortgage balance is more than the current property value, refinancing the mortgage may be possible. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.

 

According to the plan, "responsible" homeowners, those that have been making their payments, but are struggling to do so, can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

 

As with the rest of the plan, details about this initiative will be released at a future date--including what, if any, credit score requirements will be included.

 

Stability Initiative

 

The stability initiative aims at providing help to individual families, as well as entire neighborhoods, by helping reduce foreclosures and stabilize home prices. Remember that a foreclosure in the neighborhood affects everyone – prices go down, property values are reduced.

 

This plan is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly. The goal of this initiative is simple: "reduce the amount homeowners owe per month to affordable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31% of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with the Treasury Department sharing in the costs.

 

An important part is that homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.

 

This initiative also includes a number of additional elements and incentives, including an extra incentive for borrowers to keep paying on time. The initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

 It is important to note that both the refinance initiative and the stabilization initiative are for owner occupancy residences only.  Neither plan is for investment property.   My Comments 

In a nutshell, we should all have hope of a recovery.  This recession has been hard on all Americans.  I truly believe that the first step out of this recession is the stabilization of the housing market.  We would be silly not to take advantage of these soon to be available programs.  March 4^th is just a few days away, so pay close attention to news broadcasts and to my blog.  I will keep you posted as to what steps to take.  In the meantime, gather your documents together – 30 days of paystubs, the last 2 years of W-2’s, and 2 months of bank statements (all pages).  If self-employed, you will need the last 2 years of tax returns (all pages). 

Granted, these plans will not help everyone.  But, for the majority, those who did not buy more than they could afford, they are a lifeline.  Grab onto and do your part to get this economy moving again.  

Predatory lending has been a huge issue this past year and a half.  Laws are in place now, and more are on the way to prevent predatory lending.  However, the best way the consumer can protect oneself is by learning the vocabulary of the mortgage industry. 

I will be presenting to you a series of blogs pertaining to the mortgage vocabulary used frequently by the financial institutions. I will address each word or phrase in layman's terms.  This post is dedicated to explaining "Adjustable Rate Mortgage". 

By definition, an adjustable interest rate is an interest rate that is subject to change, depending on how the mortgage is structured.  The rate can move up, or it can move down.  Well, that sounds simple enough.  Wrong!  We need a lot more explanation to understand adjustable rate mortgages.  We need to know how the rate changes, why it may change, and what safeguards should be in place to protect us, the consumer.

The interest rate is determined by the addition of the margin and the index - two new terms. The margin is the spread between the rate and the index.  The margin is the only figure in our calculation which remains constant.  The index is what the interest rate is tied to. In other words, wherever the index goes, the interest rate will follow.  The index could be prime rate, the treasury bill, the federal discount rate, the libor, the 11th District Cost of Funds, etc.  The name of the index is not as important as knowing what the index represents and its history. For instance, prime rate today is at 3.25%.  Last year, the rate was 7.25%.  Now compare the value of prime rate to that of the 11th District Cost of Funds, which today is 3.155, and last year was 4.172.  When prime rate was high (7.25%), the 11th District Cost of Funds was 3 points less.  This is an example of how one index can move slower than another.  If opting for an adjustable rate mortgage, it is in the consumer's best interest to ask the mortgage broker how the index has performed in the past.

The margin, as stated previously, is the difference between the interest rate and the index.  The margin can range from 1.00% to 3.75% or higher.  

Example:  Index  =  3.155

          +  Margin =  2.50

    Interest Rate  =  5.655

Whether the adjustable rate mortgage is a 1 year ARM, 2 year, 3 year, 5 year, etc., the interest rate is determined the exact same way at each change.

The following is a list of common types of adjustable rate mortgages:

1/1 = Fixed for 1 year, then adjusts every year thereafter.

3/1 = Fixed for 3 years, then adjusts every year thereafter.

5/1 = Fixed for 5 years, then adjusts every year thereafter.

3/6 = Fixed for 3 years, then adjusts every 6 months thereafter.

If electing an adjustable rate, to further protect yourself, be sure the mortgage has payment caps in place.  Caps limit the adjustmentof the rate.  A 2% payment cap means that no matter what the result of the addition of the index and the margin,  the interest rate can not exceed the current rate by more than 2%.  Likewise, the interest rate cannot decrease any more than 2% at each change date.

In addition to payment caps, watch for lifetime caps.  Lifetime caps prohibit the lender from increasing or decreasing the interest rate beyond the lifetime cap specified for the life of the loan.  A 5% lifetime cap says if the beginning interest rate is 7%, the maximum interest rate that can ever be charged is no more than 12%, and the lowest rate is 2%.

Personally, I believe FHA has the best adjustable rate mortgage.  The payment cap is 1% and the lifetime cap is 5%.  The index is the 1 year Treasury Bill which currently is at .44%.  FHA offers a 1 Year ARM, 3/1 ARM, and a 5/1 ARM.  For explanation purposes, let's take a look at the 3/1 ARM.

At today's pricing, the interest rate is 4.625%.  This rate is fixed for 3 years.  At the beginning of the 4th year (change date), if all things remained the same (Index = .44 and Margin = 2.25%), the rate would be 2.69%.  However, remember the 1% payment cap (up or down).  At the change date, the interest rate could only decrease to 3.625%, and, as a safeguard, could only increase to 5.625%.

Added to our list of terminology associated with an adjustable rate mortgage is payment rate and negative amortization.  It most cases, the payment rate and the interest rate are synonymous.  However, a payment rate may not always be the same as the interest rate. 

As most often, if things sound to be true, be skeptical.  If offered a payment rate of 1%, know that 1% is not the interest rate, and that there is a monetary difference between the payment you are paying and what, according to the terms of the mortgage note, you should be paying (the true interest rate). 

Example:  1% payment rate, 5% interest rate

On a $100,000 mortgage, the principal and interest payment is $321.64; however, the 5% interest rate payment is $536.82.  What happens to the different between what you are paying ($321.64) and what the interest rate dictates ($536.82)?  The difference of $215.18 is added to the principal balance of the loan. Over a 12 month period, $2582.16 is added to the principal balance.  This is called negative amortization.  Each month that you all pay the minimum payment rate, the negative amortization will accrue.  Ultimately, you will owe more than you started with and you will have negative equity in your property.  We all complain abut the interest charged by credit card companies so that we cannot see day light.  Well, this is far worse.  We are talking about your home and shelter. 

Bottomline is be very careful when selecting any mortgage, but especially one with an adjustable rate. As we have seen throughout the country, no one has a crystal ball.  No one can predict where property values are going or where rates and indices be will in the future.  Know from the get-go what you are up against.  Learn the vocabulary and ask questions.  Educate yourself to protect yourself.

 

 

 

 

 

Congratulations on completing the required steps to join RealestateloanS.com. We have been building our name and reputation since 1997 and now you are able to promote yourself to thousands of clients each month.

Please take the necessary steps at this moment to include the following information into your blog: Full name, company name, company address, photo, telephone and email address. Blogs that remain incomplete will be deleted. You will soon find that clients from all over the nation and the world are looking for service representatives in your region. Please take a moment to present yourself in the most professional manner possible so that you can capitalize on this opportunity.

RealestateloanS.com prioritizes promotion of members that routinely and professionally blog about their specialty. Those that blog more will experience higher viewership and search engine promotion. We recommend that you blog two to three times a week with blog articles consisting of 200-600 words. Please pick up to ten keywords and write about those topics regularly.

Thank you for joining us.

                                                                                                                                         2008-12-15

Dear Homeowner,

Welcome to my blog. 

Recently reported, out of the 400,000 homeowners in America struggling with their mortgages, only a few, in comparison, have actually been helped.  Congressmen and women have been pressuring the US Treasury to come to the aide of the homeowners, and are preparing new legislation as I write this article.  Financing programs have been initiated, but are they enough to help?

The Federal Housing Administration introduced the FHA Secure loan last year for non-FHA insured mortgages which are currently adjustable rate.  The adjustment of the rate must be the cause of the unaffordability of the mortgage payment.  This program has helped many remain in the homes, but what about those with fixed rates, and those who have government loans, such as FHA? 

October 1, 2008, FHA announced the Hope for Homeowners Program (H4H).  Thus far, the lenders have been resistant to the program, citing they would rather absorb the cost of foreclosure proceedings than the loss received by reducing the mortgage balance to 90% of the current property value.  FHA has even increased the maximum loan to 96.5% of the value, but the lenders remain reluctant.  So, what recourse does the homeowner have?

For those with non-FHA adjustable rate mortgages, the FHA Secure may be the answer.  Another option is the short refinance.  This one is a bit tricky, though, because not only does one have to qualify for the new FHA mortgage, but the current lender must agree to reduced the payoff of the current mortgage.  However, this is not impossible.  And for those with good credit and a good mortgage payment history, this is certaininly an option worth looking into.

For the delinquent homeowner, a loan modification is many times the best alternative to losing your home.  On December 12, 2008, the Federal Housing Finance Agency (the agency who scooped up Fannie Mae and Freddie Mac), announced a streamlined modification program making modification of a mortgage much simpler, thus encouraging lenders to modify more mortgages.  In order to qualify, the homeowner must have at least three (3) late payments.  Although, the Streamline Modification Program is primarily for Fannie Mae and Freddie Mac mortgages, the US Treasury is encouraging all mortgage servicers to participate in the program.

In some cases, a home cannot be saved for various reasons.  When this is the case, a short sale may be the answer.  With a short sale the home is sold for less than the balance onthe mortgage.  The remainder is essentially forgiven if the home was a primary residence. This type of sale enables the homeowner to back away gracefully from the liability.

So, where do  you begin to save your home?  The first step is to call your current lender and ask for a workout program. If you are not delinquent on your payments, your lender is most likely not going to be receptive to your request.  It appears that only the "squeaky wheel" gets attention. 

If your lender is not willing to help you, your next step is to contact me either by phone or email, or just simply go to the following link and complete the application to see what program works for you. This can be faxed to me at 321-821-1847.  www.realestateloans.com/1003.pdf

I have been helping people finance homes for over a quarter of a century, and I will not stand by and watch these same people lose their homes.  It's not fair, it's not right, and it's not moral.  If I cannot help you save your home, I'll be honest with you, and I'll steer you in the right direction.

Respectfully yours,

Trish Sublette, Mortgage Consultant

MortgageCrafters, Inc.

(321)543-4517