FHA Short Refi Program - Hmmm....

Five of the largest US lenders are signed up to participate in the FHA Short Refi program... but don't count on it helping you. While 50 MILLION dollars have been allocated to the program, a whopping 44 (yes, forty four) people have been helped. (Source: Housing Wire - see article here. 

This falls under the category of "Things that make you go Hmmm...."  Sort of.

Why aren't they actively participating?  And, for that matter, why don't banks just adjust the loans that are in place rather than doing a short sale?  

By and large, banks need cash, so if they are going to write down their "receivables" (aka - reduce the amount due to them) then in exchange they want cash, the highest amount they can get.  Simply modifying the loan doesn't provide them with a lump sum of cash... so they it really isn't in their best interest.

This is yet another reason short sales are their preferred way to dispose of risky loans.

For news tidbits like this, stay tuned to http://www.therealestatewhisperer.blogspot.com/ or www.Facebook.com/TheRealEstateWhisperer.

Need help evaluating your options?  Give me a call!

Vicky Chrisner

Keller Williams Realty

703-669-3142

http://www.vickychrisner.com/

MARS Ruling - New Protections for Homeowners

Recently, there was new legislation regarding companies negotiating loan modifications and/or short sales on behalf of homeowners.  Essentially, there are new disclosures required from the agents or modification companies and the law now says that these companies/agents may not require an up front fee be paid, that the companies can only get paid on a contingency - meaning if they are successful, then their fee becomes due.

This is great legislation for homeowners, and is being referred to within the industry as the MARS ruling. 

ALSO SEE:

Required disclosure for General Communications (MARS)

Guidelines for servicers/REALTORS from the National Association of REALTORS re: MARS RULING:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B2PfdTb2RWFGYTk3ZGFmYmQtZmZmNC00Zjc4LWE4MDctYTU4MGExMTJlZWE4&hl=en&authkey=CLmGsNQD&pli=1

New Loan Modifications (In a Nut Shell)

I received a wonderful email from a trusted lender. 

She was explaining "in a nutshell" the newer loan modification/refinance initiatives coming from the White House.  I wanted to pass this along to you:

*  Once again, the programs are VOLUNTARY.  Banks do not have to participate.

*  The offer from the government is to provide a federal loan insurance (FHA) on refinanced mortgages if the current lender will reduce the first mortgage to 96.5% of the current market value.  If there is a second trust on the home, the total loan to value cannot exceed 115% of the total value of the home.  In the case of having two separate lenders, they may have to be working together to reduce what was originally owed to them.

*  What makes this a good idea is that the lenders get the underwater borrowers and risk of foreclosure; and replace it with an insurable loan program through FHA.  The fed has allotted $14 billion dollars to pay for this program. That will be the incentive to the banks to participate.  If you already have an FHA loan, this is not a program for you, but there may be other products, such as a streamline FHA refinance that is available to you.

*  It will take a few months (at best) for lenders to assess the risk and determine how or if, they will participate.

I'd like to thank Cindy for providing me, and in turn, you, with reducing this complicated program to the basics, so I can provide you this information... in a Nut Shell!

Who do I think this will help?  Those with 2 mortgages with the same bank (careful, you do  not always know who the "investor" is - just because you pay both mortgages to Bank of America doesn't mean that they own the loan; they are the largest loan SERVICER in the country, but they don't actually own all the mortgages they service.

Why?  Because let's say BofA does own both mortgages: an $80K loan and a $20K loan on the same house that is now worth $60K.  They can foreclose and get $60K minus the costs to foreclose and sell, so someething like $50K... OR they can refi with an insured loan for $69,000. 

We'll see how this plays out, but this is my expectation.

==========================

For all your lending needs, please contact:

Cindy Fox, Senior Mortgage Planner

12500 Fair Lakes Circle, Suite 130

Fairfax, VA 22033

cfox@mcleanlending.com

(703) 409-2002 cell

Warning to Homeowners Doing Loan Mods

I keep hearing the same story over and over, and I've written about it before.... and it is breaking my heart.  Please don't be the next victim... Please avoid an unexpected foreclosure. 

If YOU are attempting a loan modification with your mortgage company, and they are sending you delinquent notices and tell you to "pay no attention" to those notices... do not believe them. 

Time and time again, homeowners are being told by their mortgage company that they (a) should stop paying their mortgage while they are applying for their loan modification (b) to pay no attention to the delinquency notices or default notices or warnings of an impending foreclosure.. and the loan mod department continues to ask for documents, information and more "stuff" from the homeowner.  All the while, the department that processes delinquents/foreclosures is indeed moving forward with foreclosure measures, and before you know it, the mortgage company forecloses on the property. 

In one case that I know of, the loan modification department asked for information to process the modification twice AFTER they'd already foreclosed on the home!

In another case, the loan mod department told the homeowner that their modification had been completed successfully, and reduced the payment... and then suddenly sent a letter saying that the full amount that was delinquent was due immediately or the home would be foreclosed upon 10 days later. Needless to say, another home was lost.

In still another case, a friend lost a home that had been in her family for generations when in fact she could have begged or borrowed funds from other family members to bring the loan current, had the loan modification department not told them that the loan modification was going through!

Please don't be the next victim. These stories are breaking my heart, especially when they happen to friends. 

An important note to this story -  Wells Fargo seems to be the name I am hearing most often associated with these kinds of stories, although it is certainly not the only bank. 

Some loan modifications are successfully approved, but VERY few... and of those, even less modify the loan enough to make the loan affordable.  You may be better off to consider a short sale. 

If you are in the Loudoun/Dulles area, and are considering a short sale, I'm pleased to offer you a free consultation to determine if that is a good option for you.

Vicky Chrisner * Real Estate Consultant

Keller Williams * Leesburg, VA

703-669-3142

VChrisner@KW.com

Other blog posts with short sale information:

Short Sales, Anything But Short

The Affect of a Short Sale on Your Credit Report

Buying After A Short Sale