Loan Modification – Becoming More Open to Short Sales

ONE avenue for escaping foreclosure may be getting a little easier to navigate: the so-called short sale, through which distressed owners sell their homes for less than the mortgage amount and are forgiven the remaining loan balance.

Borrowers were initially wary of short sales because they could not be processed fast enough to prevent foreclosure. Loan modification, which stopped the foreclosure proceedings, was a more popular option.

The Treasury Department has already announced an incentive scheme for borrowers to work out more short sales. Although details have yet to be released, major lenders seem generally supportive. Bank of America management executive David Sunlin believes that a more systematic negotiation scheme could help steer the industry in the right direction.

At the Bank of America, Sunlin added, internal policies have been changed to make room for more short sales. Before the shift, the finance giant followed Fannie Mae recommendations in which second lien holders were given about 10% of the balance on second mortgages where the bank held the first lien. Recently, the bank has agreed to take 5% of the short sale proceeds on loans where it holds the second lien.

The borrower is not off the hook completely, since after the short sale his or her credit score is likely to fall. But even then, the credit score would probably be far better than it would be after a foreclosure.

The point where people understand that sometimes you have to start over, A loan modification might help you in the short term, but sometime  people need to do is get out completely.

Mortgage Modification – Rates Show Slight Climb

Yesterday Freddie Mac released a fixed rate mortgage report witch shows slight increase in it. prompting further hope of a recovery.This week thirty year fixed rate mortgages were up by .02 percent , while 15 -year mortgages climb up by .01 percent.

All expert believe that thiscould prompt a rise in mortgage applications, as consumers start to believe in market to take out new credit. However ,borrowers are are still warned to make mortgage – related decision with care. They explained more on that the rise could prompt many homeowners to refinance or take out new loans, which could slow down the application process.

Many lenders are also retightening their policies, requiring more documentation to guard against unstable borrowers. President Obama’s $50-billion mortgage aid program, which was recently expanded to include foreclosure prevention measures, is also expected to boost the lending market.

According to the Associated Press, the new measures will make it easier to sell homes with values lower than the mortgage, and to transfer homeownership to the lender.

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Yet Another Bailout Package for ‘Fannie Mae’ !

One of the renowned mortgage service provider company of US – ” Fannie Mae has requested for yet another bail out package of worth $ 19 billion from the Government. As due to increased unemployment and large defaults in sub prime loans company may not do well in future.

Yet Another Bailout Package !

If Fannie Mae gets this aid from government, then this would be their second aid package after march, 2009 when they received 15$ billion aid. Company  officials made it clear that this aid would not be enough to make company completed solvent. In addition officials added,  there are no assurances  for financial stability in future. If we look at the figures, Fannie Mae lost $23.2 billion in this financial quarter which is ten times when compared for  same period last year.

Government agencies seized America’s two leading mortgage companies in last september, and has already spent about $60 billion to stabilize two struggling companies. With this aid the combined aid amount to these struggling companies would reach $75 billion.

Fannie Mae and Freddie Mac played a important role in mortgage market. Together both the companies own about half of all American Home Mortgages.

Fannie Mae has suffered these huge losses due to default house loans in the recent housing bust.  As a result Fannie has $145 billion felonious loans, which are more than the 10 times last year.

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Obama’s Budget Boost to Reverse Mortgage

President Obama has sanctioned a request made by Department of Housing and Urban Development (HUD) worth $ 800 million. The basic motive behind this is to fund the Government backed Reverse Mortgage Program through Federal Housing Administration (FHA). This program has not required money collected through taxes in the past, but decline in home values will increase costs for the government.

Reverse Mortgage

Reverse mortgages provide loans to homeowners aged 62 and above, against their home’s value. The condition is this that the loan is paid back with interest when the homeowner sells the property or dies. The concept of reverse mortgages was in its prime when home prices touched new heights earlier this decade, but once the prices for home prices have fallen, the market for the those loans has disappeared. As a result FHA is as the lone source  for reverse mortgages.

The Federal Housing Administration insures loans against losses, but doesn’t make any loans. For Example, if  FHA guarantees a $300,000 reverse mortgage, (which is known as a Home Equity Conversion Mortgage) and then value of that home has fallen to $257,000 when the borrower dies, the government covers the shortfall to the lender.

This bill was signed by President Obama in February, which increases limits on reverse mortgages to $625,500 from $417,000.

The Federal Housing Administration is not asking for taxpayer’s money for its larger conventional mortgage program, despite of the fact that its revere mortgage value might fall below its threshold value.

According to HUD secretary Shaun Donovan, ” Fundamentally, FHA business is sound and will make money for the taxpayer in 2010.” He added, “he was quite comfortable that the FHA wouldn’t need to increase premiums to cover losses.”

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Loan Modification – Pending Home Sales

Loan Modification - Pending Home Sale

According to a report provided by NAR – National Association of Realtors, ending home sale index showed a unexpected rise since March 2008. The index gained 3.2 % which is beyond expectations, and as a result the index came to an 84.6 point mark, showing signs of revival to housing market.

Experts believe pending sales are based on signed but non-finalized contracts, which they consider to be an important indicator for market activity. These non-finalized contracts forecasts current home sales, which are responsible for each month’s housing market.

According to Lawrence Yun, Chief Economist at National Association of Realtors, this may be a sign of stabilization of economy but still more continous efforts and growth is needed to bring back economy on right track. He added that if  housing industry improves continously with this pace then an economic turnaround may not be far behind.

National Association of Realtors believes that the trend of mortgage lending will soon be back on the market, as the housing reaching affordibility levels up to 31% which is higher than the last year.  In addition arrangements are made to provide tax credit upto $8,000 to first-time buyers which ultimately will boost credit flow. Thus today’s real estate market offers unique conditions for first-time buyers.  Moreover many buyers have been waiting for prices to deflate, but experts believe that this is the best time to invest.

But the rise in pending sales is not evenly distributed, as West and the Northeast and Midwest states are experiencing sligh declines when compared to Southern states which is experiencing a much higher rise. In additionConstruction spending also dropped by 11% compared to the March 2008 estimate.

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Laguna Loan Modification, Orange County, CA

Laguna is known for its seven-figure property values, but even upscale

Laguna Beach

residents are feeling the real estate crunch. But you don’t have to risk losing your Laguna Beach home to a short sale or foreclosure. If you’re having trouble managing your mortgage, you can look into loan modification— a change in the terms of your loan designed to help you through financial hardship. In a loan modification, a loan modification attorney talks to the bank’s Loss Mitigation department about lowering your rates and giving you mortgage assistance. He or she has to prove that you are in a crisis and have no other source of financing. Also part of the package is helping you with the paperwork, and sometimes even giving legal foreclosure assistance. Needless to say, choosing a good Laguna Beach loan modification attorney is crucial to your application. No bank will make it easy for you, but with a good Laguna Beach loan modification attorney, you can be sure you’ll get the mortgage assistance you deserve.

Loan Modification – Shadow Foreclosures May Slow Down Housing Recovery

Loan Modification – Shadow Foreclosures May Slow Down Housing Recovery

New hope over last month’s unexpected rise in home sales may be a bit premature, even with aggressive intervention from the government. Studies show that progress from new programs may be undermined by “shadow foreclosures”—foreclosed properties that remain unlisted and unsold, causing potential delays in market recovery.

RealtyTrac, an Irvine, CA-based foreclosure listing firm, reports that up to 700,000 foreclosed homes are not included in the multiple listing service (MLS). The housing inventory is currently pegged at 3.8 million properties, or close to 10 months of waiting at the present sales pace. With this shadow supply, however, selling is expected to take a lot longer, causing a further drop in prices.

Meanwhile, the number of delinquent mortgages has continued to rise in the past few months, although foreclosure rates have largely stabilized. Experts believe that most of these homes will eventually be foreclosed, and that lenders may be unaware of how shadow foreclosures can affect their balance sheets.

Richman & Associates, a Glendale mortgage restructuring firm, believes that lenders should be more proactive in mortgage assistance. According to Jim Richman, the company’s president and founder, lenders are simply waiting for government bailout rather than actively helping homeowners and organizing foreclosures.

A former banker and U.S. Department of Housing and Urban Development (HUD) commissioner, Richman adds that lenders may be violating current rules by not accurately recording these foreclosures. Regulators, on the other hand, hardly enforce these rules because more banks will fail and have to be bailed out.

Surveys with foreclosure attorneys also show that few, if any, of the firms in several states are doing formal appraisals. Thomas Barrack Jr. of Colony Capital, a private equity firm based in LA, believes that lenders have taken to waiting for new programs every week instead of taking action.

Moe Bedard, president of Loan Safe Solutions, believes that some of the shadow supply comes from a “gray market” of foreclosures sold through in-house divisions. Lenders may also be privately selling defaulted documents to investors. However, he says, these cannot make up the entire supply of unlisted properties.

Banks cannot let go of these properties in one go, as it could drastically reduce prices in the most hard-hit communities. Home prices have already dropped as much as 30% in some communities, and experts say they can fall even further. Some areas may need to drop another 30%, says, Barrack, just to get back to normal levels from 1998.

Investors Demand Changes in Obama’s Housing Plan

Several mortgage investors have urged the government to amend its $75-billion housing rescue plan. The investors, who collectively hold billions of dollars in securities backed by residential mortgages, said the legislation violates some of their rights and that they are considering legal action.

The investors have met repeatedly with Treasury officials but are still unsatisfied with the plan. According to them, certain measures in the bill prevent them from filing lawsuits against the servicers responsible for collecting payments and granting loan modification. Read more here

First Horizon Loan Modification

First Horizon Loan Modification

First Horizon is a leading financial services company operating in Texas and Tennessee. Established in 1864, it is one of the top 30 bank holding companies in the United States. Like most regional banks, its major products include sub-prime mortgages to less-than-ideal borrowers, and mortgage assistance to help these borrowers stay on track. Many First Horizon borrowers are particularly interested in loan modification. This process involves negotiating better terms with the bank to help them avoid foreclosure. A First Horizon mortgage modification also stops the foreclosure process, giving borrowers enough time to get back on track while working things out with the bank. To qualify for a First Horizon loan modification, one has to prove that he or she has a stable income and a valid reason for falling behind. The latter has to be stated in a hardship letter explaining their financial situation. Valid hardships include medical emergencies, job loss, demotion, military service, or a death in the family. Although it’s technically possible to get a loan modification on one’s own, it’s best to hire a loan modification attorney. A lawyer can ensure faster response from the bank and use lending laws to give the case more leverage. If the mortgage modification isn’t granted, they can also discuss alternatives such as a short sale, forbearance, or deed-in-lieu.

Countrywide Loan Modification

Countrywide is one of the biggest names when it comes to sub-prime mortgages, and subsequently in mortgage assistance and loan modification. The bank offers a loan workout option to borrowers in financial crisis, allowing them to stay in their homes while they talk their lenders into improving their mortgage terms.

A Countrywide loan modification is granted to homeowners who can prove that they are in real financial need, and that they can stay current once the loan is modified. To qualify, one must present a hardship letter explaining their situation, and financial documents such as pay stubs, bank statements, and tax returns for the past two years.

Other options are also available for borrowers who don’t qualify for a Countrywide mortgage modification. The most common alternative is a short sale, wherein the borrower sells his home for less than its fair market value and uses the proceeds to pay off the loan. Countrywide considers it a full payment, reducing the damage to the borrower’s credit.

Because of the large number of requests, a Countrywide loan modification application can drag on for several months. This is why it’s best to get a loan modification attorney to help you out. Working with a lawyer can ensure faster, better response from the bank, and more reasonable offers than you can get on your own.