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| Helping You Avoid Foreclosure Many of us are one or two pay checks away from being delinquent in our mortgage payments. When coupled with expenses for a chronic illness, or for a major house repair, this could spell the beginning of foreclosure. In 2009, almost a quarter of a million delinquent borrowers received help from Freddie Mac, and thus were spared foreclosure. Contact your lender As soon as your circumstances change, you should contact your lender or loan servicer. If you know that you will be late with your payment, call your lender. The longer you wait the worse it will get. Your lender will be able to tell you which programs can help you. Prepare a budget If you are preparing to move forward, you need a plan. First, prepare a budget so that when you are discussing why you are facing hardship, and are struggling to pay the mortgage, you can refer to some solid facts. The budget shows you how much money you have coming in, and how much is going out. Your lender will examine the budget and make recommendations. Do you qualify for HAMP or HARP Making Home Affordable is one of President Obama's strategies to stop foreclosures and to revive the housing market. There are two main programs that are aimed at struggling homeowners, the Home Affordable Modification Program (HAMP), and the Home Affordable Refinance Program (HARP). HAMP will modify your mortgage, so that your monthly payments are much lower. To qualify under HAMP your monthly mortgage payments (Principal, Interest, Taxes, and Insurance) must be more than 31% of your gross monthly income. In addition to this, your mortgage must have been originated on or before January 1, 2009, and most importantly, you have to prove hardship. Loss of a job, reduced hours, permanent disability or chronic illness, will all be considered hardships. There were some recent changes to HAMP. Borrowers will now have to provide proof of income upfront. For all HAMP trial period plans, effective on or after June 1, 2010, the loan servicer must receive the following.
HAMP is also addressing the problem of second liens. There is a possibility that a second lien can force the homeowner into foreclosure even if he had his first mortgage modified. So if you have a first and a second mortgage, try and get both mortgages rolled into one loan at the time of modification. HARP allows the homeowner to refinance in order to take advantage of today's low mortgage rates. The homeowner must be current with his mortgage and he must be able to make the new mortgage payments. The important feature of this program is that it allows for a first mortgage of up to 125% of the appraised value of the house. In the long term, the refinance should improve the affordabilty of the loan, and thus keep the homeowner in his house. Freddie Mac and non-profit groups Freddie Mac has teamed up with 13 national non-profit organization in order to reach many homeowners who are struggling with their mortgage payments, but who are not coming forward and asking for help. Many are frustrated and overwhelmed. And they find themselves in some unchartered waters. The National Urban League is one of the non-profits working with Freddie Mac. The free Borrower Help Centers will service delinquent borrowers and help them to pursue loan modifications. This program is proactive. The non- profit organizations call and send letters to the homeowners. This approach seems to work. There is a trust and bond between the homeowners and the local non-profit group which makes it easier for the homeowners to open up and express themselves. The Borrower Help Centers focus on the mortgage payments, as well as on credit cards, car loans and other obligations that would impact the borrowers' ability to keep their homes. HUD-approved housing counselor A housing counselor is a trained professional and can walk you through the various options available. The U.S. Department of Housing and Urban Development (HUD) sponsors the housing counselor programs across the US. The service is free. When you call the housing counselor you should have some documents ready.
Partial claim A partial claim is an option that is often overlooked. All the overdue and past payments are put into a second mortgage. The contract is between you and HUD. A promissory note is made payable to HUD. There is no interest on the loan, and the mortgage will be paid off when the house is sold or if the borrower pays off the first mortgage. The maximum amount allowed on the partial claim is the equivalent of 12 monthly payments (PITI). Certain fees associated with the delinquency can be included in the partial claim. *continued next column. |
| Deed-for-Lease program (D4L) With the deed-for-lease program, the homeowner gives up the house after exhausting all possibilities. The blemish of a foreclosure will not show on the homeowner's credit report. The lender will then lease the house back to the homeowner. It gives the homeowner about a year to get his finances in better condition. One of the benefits of staying in the house and becoming a renter, is that if there are school age children involved, they will not be uprooted. They will have the same friends and will be attending the same school. ================================= The Home Affordable Foreclosure Alternatives (HAFA) If the homeowner does not qualify for HAMP, then HAFA presents a different set of options. The homeowner can still avoid foreclosure. HAFA is targeted to short-sales and deeds-in-lieu of foreclosure. It was designed by the Treasury Department with the intention of simplifying the process. Their hope is that HAFA would stem the tide of strategic defaults. Repayment plan A repayment plan can be discussed with your lender. The amount that is past due is repaid over a period of time, normally 18 months. A small amount is added to the mortgage payment each month until the delinquent amount is paid in full. Summary Prepare a budget. Call your lender or loan servicer immediately. Ask for a repayment plan. Contact a HUD-approved housing counselor. To find one in your area, visit the website www.HUD.gov. Ask the counselor if a partial claim would be a good option. Contact the Freddie Mac sponsored Borrower Help Center. Complete the application for HAMP or HARP. If you do not qualify for HAMP, try HAFA. There are two issues that need clarifying. First, the bank doesn't want your house. Banks are not in the real estate business. Secondly, the bank makes a profit when you make a mortgage payment. Therefore, keeping in your house and collecting a mortgage payment every month is in the bank's best interest. Help is there to prevent foreclosures. However, you have to take the bull by the horns and go and get it. |
| Middle Class Foreclosure Foreclosed homes are still a ball and chain to the housing market recovery. Some houses are vacant and some are rented. "Are we at the peak of foreclosures?" Many analysts think we are still far from the peak. Currently, there are over 4 million residential mortgages past due. The underlying problem we have now is that the delinquency is no longer reserved for the subprime market. Middle-class homeowners with good credit scores are falling behind. So, if you are considering refinancing, the window of opportunity might be slipping away. Home values will plummet as more foreclosed houses come on the market. This will seriously effect the equity you have in your house, and thus, how much you can borrow. |
| Foreclosure By Tax Lien We are all caught up in the foreclosure fiasco. We are focused on foreclosure as a result of non-payment of the mortgage. However, lost in the chaos is foreclosure due to non-payment of taxes to the city. Watch the above video. The city sold the debt to investors. The investors foreclosed. The city debt was $710.57 for water and sewer. The investor added all sorts of fees bringing the total to $3,604.41. THERE WAS NO MORTGAGE. |
| Boston Community Capital (BCC) You can get a second chance after a foreclosure. Contact Boston Community Capital. BCC will buy the property from the bank at market prices. Which is Ninety percent of the offers are accepted by BCC. Watch the above video. |
| Subprime To Main Street - Mortgage Mess The foreclosure fiasco has not been resolved. Foreclosed properties will hit the real estate market over the next 12 months. Expect house prices to drop in the short term. Watch the above video. |
| MERS Loophole Stalls Foreclosures If you haven't paid your mortgage there is a good chance that you will lose your home to foreclosure. Because of the MERS fiasco, maybe not today, but eventually your home will go. MERS just buys you some time. Does MERS have the power to foreclose? That's the question. Watch the above video. |
| Is It Safe To Buy A Foreclosure? Considering the "robo-signing" fiasco and the foreclosure mess, many buyers are cautious about buying a foreclosure. Some buyers believe that if there is a cloud on the title, or if the home is wrongly repossessed, the previous home owner will get the house back. Housing and finance experts agree that there could be some hurdles to overcome. However, they stress that the new home owner should get title insurance. As long as title insurance is in place, the house can not be seized by the previous owners. The new owner will keep the house and the displace owner will be compensated with money by the title insurance company. Remember, the new owner is buying the house in "good faith". It will be up to the title insurance company and the seller to work out details of the "defect in title". Examples of defects are, undiscovered liens, forged signatures or defects in documentation. If title insurance can not be obtained, my advice for the buyer will be to walk away from the deal. Who needs the headache? There are thousands of properties to choose from. |
| Squatters Move Into Foreclosure Homes Foreclosure houses are now being claimed by squatters. This reveals another chapter in the foreclosure fiasco. The neighbors like the idea of a family living in the house. Many neighborhoods have been blighted by vacant properties. In many cases the windows are broken, the door busted and the lawn covered with overgrown weeds. The squatters fix the houses and make them livable. And this reduces or deters any criminal activity. At the forefront of this new "movement" is Save Florida Homes Inc., and its owner, Mark Guerette. He is using a 1869 Florida statute that says that the properties he claims will be his if the owners do not claim them within seven years. Mr. Guerrette has filed court claims on about 100 properties that appear to be in foreclosure. He has sent letters to the owners and the banks making them aware of his plans. Adverse possession, as this concept is called, has its proponents. Many homeless family are overjoyed to find a month. In return for the low rent, the tenants do some minor repairs and maintain the house. Opponents claim that they are merely trespassers and should be evicted. Furthermore, that people like Mr. Guerrette does not have the right to collect rent. Rightful owners are left to evict tenants. This prolongs the foreclosure process and prevents the house from being sold sooner. |
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