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

Adjusting ARM, but Your Upside Down... Now What?

Many people are finding themselves in exactly this situation... the payments have been affordable, up until now, but their ARM (Adjustable Rate Mortgage) is adjusting, and maybe more than a little. This could be the difference between "a house you can afford" and one you can't. Originally when you took this loan, you figured you would be ready to sell by now, but it's a different world than you expected. You'd refinance, but you're upside down and don't have a bunch of cash to bring to the table. So now what? There is a product that might help you. It won't help everyone, but it will help some.... a lot of people, actually, if they know about it. So tell everyone you know! It's called an FHA Streamline Refi. They don't look at your income, your credit, your debt, or even the equity you have in your house... they ONLY look at your mortgage payment history. If, up until now, you've been paying your mortgage payments every month, on time, then you probably qualify. You can borrow up to the amount you originally borrowed. If you have not paid down your mortgage at all, then you may have to come "out of pocket" for closing costs. But, if you've paid down a bit of your loan since you originally got it, it may not be that much. So, it's worth checking into. I recently met with sa couple who owned 2 homes, and they could not afford them. They were considering doing short sales on both to get out from under the debt, but they really do need "somewhere" to live and they really do love their home and want to stay there. Being upside down is not what bothered them, it's the fact that they would soon have no savings left and would not be able to continue to make the monthly payments. After having them talk to a lender that I work with, we were able to determine that if they brought about $3,000 to the settlement table to cover closing costs, they'd be able to refi using this product and drop their rate from 7.35% to about 5%, saving them $500-600 a month... yes, A MONTH. It does not take a rocket scientist to realize that this would make a significant lifestyle difference for them. True, they may still short sell the second home, but that is yet to be decided. They think they can continue to pay both payments with the new payment amount....and that is a big win for everyone. Interested in learning more? Visit my web site, and talk to one of the Preferred Lenders listed there.