Financial Troubles? How to Handle Your Mortgage Payments

None of us can appreciate — nor anticipate — the future. Although we always believe it will never happen to us, once in a while, calamity strikes, and then we have to address these very hard and difficult questions.

You own a house, with a sizable mortgage. Suddenly, you (or your spouse) lost their job, and you cannot make the monthly mortgage payments.

There are a number of options you should immediately consider. However, the very first thing you should do is to talk with your lender. Don’t just discuss your issues with a low-level employee. Try to go as high up the corporate ladder as you possibly can. And don’t be afraid to be honest. Legitimate mortgage lenders will try to work with you, since they don’t want to evict you and have to own and carry your house until they sell it.

Here are some of the options which are available to you.

1. Temporary indulgence.  Here, the lender, at your request, may grant you a short period of time — usually not more than three months — in order to cure any delinquency. However, this is merely temporary relief, and by the end of that short period of time, the borrower must be completely current.

2. Repayment plan.  Here, the borrower is given a fixed period of time — usually not to exceed one year — in which to bring the mortgage current by immediately making and continuing to make payments in excess of the monthly mortgage payment. It is important to get this repayment plan reduced to a written document, signed by both the lender and the borrower.

3. Special forbearance relief agreement.  Here, the regular monthly mortgage payments are suspended or reduced for a period of up to eighteen months from the due date of the first unpaid monthly installment. At the conclusion of this relief period, the regular payments must be resumed; additionally, a comprehensive plan must be agreed upon for the repayment of the amount that has been suspended.

In this case, the lender will make a determination that the default is curable, and based on the current financial and appraisal data, the lender must be satisfied there is a likelihood that the borrower will be able to comply with the repayment plan. Clearly, the burden will be on you to document and justify the plan, so as to satisfy the lender’s requirements.

If you are in the military, the Soldier’s and Sailor’s Relief Act provides various forms of relief, but you should check with your military or civilian lawyer to determine your eligibility under that Act.

4. A short sale.  Here, the lender will authorize you to sell the property for what it is really worth, and the lender will get all the proceeds. Let us look at this example. The house can probably be sold at $395,000, but the mortgage is $425,000. The lender may allow you to sell the property for $395,000, giving a real estate broker a commission. The lender gets all the remaining sales proceeds; you get nothing from the sale. However, under this “short sale” approach, you will be relieved of your mortgage. In some cases — depending on your financial situation — the lender may want you to pay a portion of the mortgage shortfall; this depends on the lender and is clearly negotiable.

5. Deed in lieu of foreclosure.  This is another remedy that may be available to you. Under this arrangement, you deed your property to the lender (or to whomever the lender designates) and this is in lieu of (instead of) foreclosure proceedings. This arrangement is an acceptable and customary procedure when, for example, the borrower is deceased and the estate is willing and able to transfer the property, or the borrower has filed Chapter 7 bankruptcy, and the trustee has abandoned interest in the property.

6. Foreclosure.  Here, the lender will sell your property at auction (or in some states at the Courthouse), and you will lose your home and your credit rating (whatever is left of it. Legitimate lenders do not want to foreclose. and they will reluctantly start the process if all else has failed.

7. Bankruptcy.  Your final option, of course — which should be used only as a last resort — is for you to file bankruptcy. When someone files for bankruptcy, there are many protections that automatically apply from the day the bankruptcy petition is filed with the Bankruptcy Court. The most important protection under the bankruptcy law is known as “the automatic stay.” If you are in bankruptcy, no legal action can be taken against your house unless the lender requests the Court for permission to “lift the stay.”

You cannot ignore your financial problems hoping you will win the lottery or find some other immediate source of funds. The level of your cooperation is the most significant aspect that will determine how willing the lender is to similarly cooperate [with you].

courtesy of:  http://realtytimes.com/consumeradvice/mortgageadvice1

Derogatory Credit Waiting Periods

CONVENTIONAL LOANS 

Bankruptcy Chapter 7:

2 years from Bankruptcy Discharge date with extenuating circumstances. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

4 years from Bankruptcy Discharge date. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Bankruptcy Chapter 13:

1 year from Bankruptcy date with extenuating circumstances. Borrower must have a re-established credit history. Lender must include Bankruptcy payback payments into Debt Ratios and the borrower must obtain court approval prior to entering into a purchase contract. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

Foreclosure:

3 years from Foreclosure date in which title was transferred back to the Lien Holder with extenuating circumstances. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

7 years from Foreclosure date in which title was transferred back to the Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Short Sale:

2 years from Short Sale date in which title was transferred to the new Lien Holder, with extenuating circumstances and a minimum down payment of 10%. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

2 years from Short Sale date in which title was transferred to the new Lien Holder, with a minimum down payment of 20%. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

4 years from Short Sale date in which title was transferred to the new Lien Holder, with a minimum down payment of 10%. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

7 years from Short Sale date in which title was transferred to the new Lien Holder, with a down payment less than 10%. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

FHA LOANS 

Bankruptcy Chapter 7:

2 years from Bankruptcy Discharge date. Borrower must have a re-established credit history with extenuating circumstances. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

3 years from Bankruptcy Discharge date if borrower included property into the Bankruptcy. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Bankruptcy Chapter 13

1 year from Bankruptcy date if borrower has a re-established credit history and extenuating circumstances. Lender must include Bankruptcy payback payments into Debt Ratios and the borrower must obtain court approval prior to entering into a purchase contract. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

Foreclosure:

2 years from Foreclosure date in which title was transferred back to the Lien Holder with extenuating circumstances. Borrower must have a re-established credit history. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

3 years from Foreclosure date in which title was transferred back to the Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Short Sale:

1 day from Short Sale date in which title was transferred to the new Lien Holder. Borrower cannot be more than 30 days late on previous mortgage/s or other credit obligations and can prove the Short Sale was necessary for financial purposes only such as employment relocation.

3 years from Short Sale date in which title was transferred to the new Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

VA LOANS

Bankruptcy Chapter 7:

2 years from Bankruptcy Discharge date. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Bankruptcy Chapter 13:

1 year from Bankruptcy date if borrower has a re-established credit history and extenuating circumstances. Lender must include Bankruptcy payback payments into Debt Ratios and the borrower must obtain court approval prior to entering into a purchase contract. See acceptable reasons for extenuating circumstances and clarification of re-established credit history at bottom.

Foreclosure:

2 years from Foreclosure date in which title was transferred back to the Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

Short Sale:

2 years from Short Sale date in which title was transferred to the new Lien Holder. Borrower must have a re-established credit history. See clarification of re-established credit history at bottom.

CLARIFICATIONS:

1. All loans must receive AUS Approve/Eligible in order to obtain Lender Financing.
2. Extenuating Circumstances are events that are beyond a borrower’s control. Such events that cause an immediate decrease in income, and or an abrupt increase in a borrower’s financial responsibility, such as death of the primary wage earner or serious medical illness.
3. Re-established credit is when a borrower has no late payments or negative items reflecting on their credit report for a consecutive 12 month period or longer after an event such as a Bankruptcy, Foreclosure or Short Sale. Borrower must prove they are credit worthy through acts or credit responsibility. A 12 month rental history is also required with no late payments.

courtesy of:  http://brianberes.myallwestern.com/

Common Mortgage Loan Modification Scams!

courtesy of:  http://www.loanscamalert.org/common-scams.aspx

 

Loan modifications are changing every day. Here are some of the most common loan modification scams out there today.

Phony Counseling or Foreclosure Rescue Scams
The scam artist poses as a counselor and tells you he can negotiate a deal with your lender to modify your loan or save your house ……… (read more —>)

Fake “Government” Modification Programs
Some scammers may claim to be affiliated with, or approved by, the government, or they may ask you to pay high, up-front fees to “qualify” for government mortgage modification programs. The scammer’s company name and Website may sound like a real government agency, but the Website may end with .com or .net instead of .gov. You may also see terms like “federal,” “HAMP,” “MHA,” “HARP” or other words related to official U.S. government programs.

Contact your lender first. Your lender will be able to tell you if you qualify for any government programs to prevent foreclosure or modify your loans. And you do not have to pay to benefit from these programs ………. (read more —>)

Forensic Loan Audit
The scammer who may be called a forensic or mortgage loan “auditor” offers to review your mortgage loan documents to determine ……….. (read more —>)

Mass Joinder Lawsuit
The scam artist, usually a lawyer, law firm or a marketing partner, will promise that they can force your lender to modify your loan. ……… (read more —>)

Bait-and-Switch
The scam artist convinces you to sign documents for a “new loan modification” ………. (read more —>)

Rent-to-Own or Leaseback Scheme
A scammer urges you to surrender the title or deed of your home as part of a deal that will let you stay in your home as a renter ……….. (read more —>)

Short Sale Scam
Scammers, sometimes called “short sale negotiators” or “short sale processors,” may promise ………… (read more —>)

A short sale may be a legitimate option for a homeowner in default or homeowner who is current yet the value of the home has fallen — if the lender agrees to the short sale. But homeowners should only work with a licensed real estate professional or licensed real estate attorney ………. (read more —>)

Bankruptcy to Avoid Foreclosure
The scammer may promise to negotiate with your lender or get refinancing on your behalf if …………. (read more —>)

Resource Links (click below):

U.S. Dept of Housing & Urban Development, HUD.gov

Loan Modification Scam Alert:	http://www.loanscamalert.org/
Prevent Loan Scams:	http://www.preventloanscams.org/
Homeowners’ HOPE Hotline:	http://www.995hope.org/