Consumers who are facing foreclosure have become prime targets for former or current mortgage brokers, and other “loss mitigation” or “loan Modification” companies. You should think twice before sending your money and signing a contract with any company that does not allow you to actually retain an attorney to negotiate on your behalf. Many of these predatory companies state they are “Attorney based”, Attorney backed”, “Stop foreclosure companies”, “Foreclosure consultants” or a myriad of other new terms that keep popping up. In most cases these companies offer money back guarantees, but actually keep their “hard costs” leaving you with a paltry refund when they are unsuccessful in modifying the terms of your original loan. Many of these companies do nothing for you an may just run with your money. In most cases the best they can get for you is a Forbearance agreement from your lender allowing you to repay past due monies, which you may be able to easily do yourself. Be sure to ask if the Attorney is onsite and available for a consultation, and ask for their Bar number as part of your diligence.

Unless you retain an Attorney or a Federally licensed HUD counselor, beware you may be getting scammed out of the last of your hard earned dollars. An attorney can leverage many issues and deal with the actual legal department of your lender who likely wants to avoid going to court on your case and would rather modify your interest rate to get you a new payment you can afford. In speaking with California Real Estate Attorney Marc Bonanni of Consumer Debt Advocate ( http://www.consumerdebtadvocate.net ), a law firm specializing in just such Home Loan Modifications and Loss Mitigation in all 50 states, Marc told me that ” We’ve had tremendous success working with lenders to get them to modify the existing terms of the loan, lowering interest rates and monthly payments to one the borrower can afford, and also getting them to forgive past due balances or principal balance with forbearance agreements to avoid a foreclosure. It all is predicated on the true financial hardship we can prove to the lender and if there were any Truth in Lending violations or Predatory Lending violations on the original loan. Mortgage fraud has been rampant, specially with sub-prime borrowers and our success rate has been excellent in the loan modification process”. Marc also states that “Unfortunately, many of our clients have been through the ringer with these non attorney loan modification companies who wind up doing nothing for them and who make matters worse as they cannot afford the client any legal protection. By the time they get to us, it may be too late to save their home and they are out thousands of dollars and critical time that were wasted in a poorly handled attempt to modify their loan by non-attorneys who are dispensing legal advice. It’s really sad when I have to tell a potential client who I knew we could have helped save their home and modify their loan that they are too far down the path with their lender to stop the pending auction of their home.”

Also beware of companies who offer to save your home and who offer you a new loan, but require you to deed title to them for doing so. Most of these scams are stealing all of your equity by paying the amount you are in default to the bank. If you have $60,000 in equity, and are $11,000 in the arrears with your lender, that company just made a 6x return off their investment and left you with a mortgage payment and no equity in your home. They will then be waiting for you to default or will force you out of your home to realize their profit. By hiring an Attorney, you could likely get your lender to take that arrearage you owe and make a repayment plan you can afford, or even get them to put that money on the back of your loan so you can start meeting your new lower monthly obligation.

Regardless of your situation, it is important to make sure you due diligence on any company you engage to help you avoid foreclosure. Beware of the scams that are out there and make sure an attorney is actually retained by you as part of the process to protect your legal rights and ensure both compliance and success in the loan modification process. Licensed Attorneys are held to a strict code of conduct and higher ethical standards, and although they cannot guarantee a successful outcome of your case, they are much more likely to take it only if they feel they have a strong chance of success.

Contacting your lender’s Loss Mitigation department is the first step to seeing if you can work with your lender to save your home.

 

Although lenders do not want to foreclose if it can be avoided, they do want to make sure you can follow-through on any promises you make to bring your account current.

 

The lender will probably ask you to fill out a package of documents that describe your financial situation. They will review and analyze the documents before offering a solution to bring your loan up-to-date. This is called a “Loan Workout Package”.

 

If the lender sends you a packet, fill it out as quickly as possible and answer all questions honestly. Then get it back to your lender immediately. This will determine the options you have available to you.

 

If you agree to a lender’s “workout” or “loan modification” solution, and then fail to make the agreed-upon payments, you’ll be back into foreclosure with even fewer options left open to you.

 

This can be a big problem if the financial crisis that caused you to fall behind in the first place isn’t over. You need to determine realistically whether your financial reversal is temporary or permanent.

 

A temporary reversal is one where, if you are provided payment relief for up to 6 months, you will be able to resume regular payments at the end of that period, and repay all the payments you missed within the following 12 months.

 

You must document the case for the reversal being temporary. If you cannot make a persuasive case that the change in your financial condition is temporary, the lender will assume it is permanent.

 

If you don’t know where you’re going to get the money to make the payments, trying to work out a solution with your lender will be tough, and loss mitigation is probably not going to work for you.

 

Whether you are building your home as an Owner Builder or hiring a General Contractor, there are several people that will be involved with your loan process in addition to the loan officer with whom you choose to work. Knowing the roles of each of these people will make your loan process flow smoothly and quickly.

Here is a brief summary of each person and their job description. All of these people working together are needed to get you from application to closing in a timely and stress-free manner.

You and Your Family.

As important as the construction loan professional is to your application, your family and you almost completely dictate the pace and direction of the loan process.

All members of the family will need to understand the time commitment involved in this project. It is crucial to remain focused on the goal of building your dream home.

The Processor.

The loan processor will often be your primary point of contact for all items related to documenting your loan application. The processor will collect any and all required documents and package the loan file for submission to the underwriter.

Typically, the processor and the loan officer work together on the file to insure that the loan closes properly and in a timely manner. It is good advice to learn the name of your processor and develop a good working relationship with him or her.

The Appraiser.

The appraiser has the job of examining your home plans and specifications to determine the final “as-built” value of your new home. This can be a tricky process with new construction, as the house is not yet built and everything is based on the plans.

The appraiser must follow certain rules regarding how an appraisal is conducted. They must locate similar homes within a close proximity to your location (usually 1-3 miles in most cases), and they must also be on similar size land. This is called finding “comparables,” or “comps.” A “comp” is not a “comp” if the home has not sold on the open market within the last six to twelve months.

The best advice is to know the area you are building and not try to build a home that is way out of the ordinary for the area. Borrowers often want to build a home that is significantly larger and more expensive than the other homes in the area (called “overbuilding for the area”). They may be perfectly qualified as a borrower, but if the appraiser has problems establishing a proper appraised value, the loan could be denied.

The Underwriter.

The underwriter is the person who makes the final decision on your loan approval once all of the documentation is complete. Many lenders now use a computer based underwriting system to issue a pre-approval, but there is always a human to review and verify the documentation as the last step of the process.

The underwriter’s main job is to review and verify the submitted documentation and compare it to the loan program’s guidelines. If everything fits and is in order, the underwriting process is a quick and painless affair. If the documentation is questionable or does not exactly fit the guidelines, underwriting can take longer and require additional paperwork.

Once the loan receives final underwriting approval, your loan will move from the underwriter to the lender’s closing department. There, the loan’s documents will be prepared and sent to your closing agent for you to sign and “close.”

The Closing Agent.

The closing agent is the person who will assist you with the signing of all the final loan documents. This is typically an attorney or a title company. Generally, you can freely choose between either of these to do the closing for you. A few states, however, require you to use an attorney for the closing.

Once your closing agent receives the files from the lender, he or she will need to prepare the documents, including the note, the deed and the settlement statement (called a “HUD-1″ most of the time). This usually takes the closing agent a day to do all of this, so schedule accordingly with them. Remember that construction-to-permanent loans are actually two loans in one, so there will be a ton of paperwork for them to prepare and for you to sign.

The fees for closing agents vary around the country and are usually pretty consistent from one to another within a particular market area. Nearly all lenders will allow you to choose your own closing agent, so it is advisable to check around and get an estimate of the costs.

The Insurance Agent.

You will need insurance in place prior to closing your new construction loan. You should contact your insurance agent as soon as you do your application to be sure that he or she can provide the type of insurance you will need. Your loan officer should be able to describe the type of insurance coverage that you will need for the construction loan.

The General Contractor or the Site Supervisor.

If you are hiring a builder, of course your general contractor will be an integral part of your loan process. Your lender will almost always require that the general contractor meets a particular set of criteria. So, make sure that your builder can meet these qualifications prior to applying for the loan.

If you are doing an owner builder construction loan, you may want a “site supervisor.” Some lenders will actually require one, though this is not always the case. Typically, the site supervisor does not need to be a licensed general contractor. But, they do require the person to have relevant and recent residential construction experience. This means your buddy who builds highways or office buildings does not qualify to be a site supervisor.

Your Sub-Contractors.

If you are acting as an owner builder, your sub-contractors and suppliers are a very important part of completing your building budget in a timely manner. Therefore, it is crucial that you begin the budgeting process as early as you can.

One tip for owner-builders about getting bids: do not underestimate the number of sets of plans you will need to get through the bid process. It is likely that you will not get back every set you give out. Five or six sets of plans will not be adequate. We recommend getting at least a dozen sets and always keeping two for you.

The County Building Department.

Before you even make an offer on your land, you should contact that county’s building department and learn the requirements for building permits.

It is also important to know and understand which building code the county follows. This is especially important if you are buying your plans from anyone other than a local architect, who should naturally know the local rules.

Plans from plan sites on the internet, while often very good, are not typically done to a particular code. You just need to ask these questions of the county and of the plan supplier to make sure you can use the plan without modification.

If you understand the roles of all of the people discussed in this article, your construction loan will be a smoother process, which means you can begin building your new home that much faster.

I currently owe about $330,000 on my home loan if my bank accepted $300,000 because of a short sale, how will this affect me?

Ok, so I was divorced in 2006. Our house was orignally in my name (title and mortgage) only. My ex husband and I agreed (Court order) that he would take over the house and get his own financing and I would get 10K from the refinance on his new loan. I did my part and signed over the house and recieved a letter from the lending co. saying I would get 10K upon close of escrow. I asked for proof of mortgage papers such as escrow instructions, but the lending co. told me that was against the law since I am not apart of my ex’s loan. Well the house never closed for his refinance. So later on I find out that I am no longer on title but I am on the mortgage. My ex husband is now on title. I contacted the lending co. and they would not help me.I lived in the house for 2 years on my own with no late payments. A hardship came my way and my ex husband and I went back to court (court order) and decided that he would pay me payments of the 10K and he would live in the house and assume the mortgage. So he moves in and pays the payment for 9 months. The house is now 5 months late on the payment, but it has been up for sale and both my first and second mortgage settled for the short sale price. I realize that I will have to do a 1099C on my taxes. My question is how long do I have to wait until I purchase another house and how long will the above disaster stay on my credit? Second question: How does the 1099 C work?
Thank you,
Noel -LomaLinda, CA

I can’t get a personal loan and business loan from a bank such as Bank of America and US bank. Do you have any other else resouse? I think I need around 20K to 30K only.

People across America are increasingly being faced with a homeowner’s worst nightmare: Foreclosure. The possibility of losing your home to the bank is very real, and it’s very normal to be scared and confused as the process moves along. What’s important is to keep a cool head, don’t panic, and evaluate your options as early in the process as possible. Many people who are approaching or are currently in a foreclosure do not realize that they may be qualified to refinance while in foreclosure and save their home, mainly because by this point in the process they have experienced rejection and denial by their own lender and often several others. But if you have Equity in your home, you can refinance in foreclosure and get back on track to improving your credit.

Refinancing in foreclosure is not like normal refinancing. When you apply for a regular, or conventional mortgage refinance, the most important thing a lender looks at when deciding whether or not to approve the loan is your credit and mortgage payment history. If you have not been more than 90 days late or behind on your mortgage payments, and your FICO credit score is above 500, conventional lenders will look at your refinance application and consider it. They may not approve it, but you’ll at least get looked at. When you go beyond 90 days late on your mortgage payments, no conventional lender will review your application, no matter how much money you make or how much better your situation is now than when you fell behind. Once you are considered 120 days late or behind on the mortgage, or your credit score falls below 500, the conventional lending industry simply cannot take the risks of lending to you anymore. If you’ve been rejected for a loan during the foreclosure process, even before the notice of default was recorded, it is usually because you are over 90 to 120 days late or your credit score is under 500, or both.

You are now in a special situation, and banks don’t like “special”. They just aren’t set up for “outside the box” financing, no matter how much sense it makes, so their response is to either deny your application, or in the case of the lender who holds the mortgage on your home which has fallen behind, they do the only thing they can, foreclose on the home and force its sale at auction to the highest bidder.

In order to handle special situations like this, you need a lender who specializes in refinancing foreclosures. There are only a few out there, but you’ll know one when you find one, because the first question they will ask you is “If you had to sell your home quickly, how much would it sell for?”, followed quickly by “And how much do you owe on your first mortgage”. This is because they are trying to establish how much Equity you have in the property. Equity for these purposes can be calculated easily:

A) Just subtract the Balance of your first mortgage from the Value of your home.

B) Take that Number and divide it by your property Value (there’s that word again),

C) Multiply by 100 and you’ve got your gross Equity percentage.

Because your credit and mortgage history cannot be considered for the purpose of qualifying you for a foreclosure loan, foreclosure refinancing is all about Equity. Lenders specializing in foreclosure refinancing will routinely request that you order an appraisal and an additional appraisal review performed by a realtor, commonly referred to as a BPO or Broker Price Opinion.

Here’s a general guideline: If you have 35% or more Equity in your property, and your property is Valued at $200,000 or more, you are probably qualified for a foreclosure refinance, and you can save your home from the auction block if you act quickly. Again, this is a rule of thumb. Sometimes, you may be able to get away with having a little bit less Equity, or a little bit less Value, and in some states you will need much more Equity and a much higher Value to qualify for a refinance in a foreclosure scenario.

If you have two mortgages, a first and second, you still may be eligible for a foreclosure refinance if you meet one or more of the following conditions:

1. The Balances of your 1st and 2nd mortgages added together amounts to less than 70% of the Value of your home.

2. Your 2nd mortgage can be “subordinated”, or kept in place while you refinance the 1st mortgage.

I can’t emphasize enough the importance of acting as quickly as possible to save your home through a foreclosure refinance. The foreclosure clock starts ticking from the day on which you receive a notice of default or on which you become 120 days past due on your mortgage payments, and it can move very quickly. While most foreclosures don’t get to the stage of a property auction, sherrif’s sale or trustee sale in which you will lose your home until about 120 days from the recording of the NOD ( Notice Of Default ), in many states this can happen much more quickly, as fast as 60 days. While you delay, your mortgage company’s payoff balance, the mount required to cure the default and prevent foreclosure, will increase as legal fees and interest pile up, eating away at your Equity and robbing you of the ability to refinance out of the foreclosure. It’s easy to feel lost, almost paralyzed by the shock and fear of losing your home, but if you are serious about saving your home from foreclosure, get on the phone and find a foreclosure refinancing specialist as quickly as possible.

Don’t forget, your first priority is to save your home, and a foreclosure refinance is considered a short term loan, usually with a fixed rate for 2 or 3 years. This gives you enough time to get your credit back together and refinance at the end of the fixed period into a much lower payment. Because you have shown your current lender, as well as the credit reporting agencies and by association every other lender in the country that you could not make the mortgage payments in accordance with the terms of the loan which is in foreclosure, it’s understandable that the lender providing the foreclosure refinance is taking a substantial risk in lending you the money to prevent the foreclosure, and the financing will not be at a very low rate. However, in most cases, the foreclosure refinance loan’s payments are Interest Only, and will be lower than the payments on most forbearance, or payment agreements, which your lender may have proposed or enrolled you in prior to filing for foreclosure. And if you consolidate high interest debts like credit cards and personal loans, payoff judgments, and clear away liens, you can potentially free up a lot of cash flow from your monthly budget and begin improving your credit score with a clean slate.

Don’t waste time talking to lenders and brokers who don’t know the foreclosure refinance process inside out, there are simply too many out there who will just waste your time and money trying to learn how to get your foreclosure refinanced while you slide closer and closer to a sale date and the real possibility of losing your home. On the other hand, the right lender can help you lay out other options to save the equity in your home even if you don’t qualify for a foreclosure refinance. Find a special lender for your special situation, and you will have a fighting chance of refinancing in foreclosure and saving your home.

If you have found the home of your dreams and are pursuing a short sale, you had better be prepared to write a proposal to buy the property. In most cases, if you were smart you will have a real estate agent by your side to aid you in writing up a proposal that will get you in that home whether for an investment or for your self.

The proposal will include the application for a short sale, an authorization letter, and the purchase and sale contract signed by the seller and you. The contract will have the amount that you and the seller has agreed to prior to sending the offer to the bank. Do not think you are going to steal the property, the bank can rightfully ask for the full amount of the loan and they are not going to take an offer that will put them in red farther than a foreclosure would. The proposal must be a reasonable offer. This is where a real estate agent is loads of help. A real estate that works with short sales, can guide you in the right direction as the true value of the home, what other homes are valued at in the area, what the real estate market is like in the area, and of course, a pretty good guesstimate as to what the bank will accept as an offer.

In most cases, you will need a rather large down payment. The lending company does not desire to have another buyer that cannot make their payments. In the majority of cases, the lending company will not even look at a proposal until the seller is 90 days in arrears on their mortgage payment. However, a smaller loss now can be better for the lending company than a huge loss after a foreclosure.

In your proposal, you should include a letter from the seller giving an overview of the situation that has caused them to be in default on their home loan. The lending company must see that the homeowner does not have the means to repay the loan, before they look at another buyer. The seller will need proof and documents that show the situation that has caused their financial problems such as loss of employment, illness, or death in the family, divorce, etc… If the lending company believes the homeowner has the means to repay the loan, they are not going to agree to a short sale.

You will need a statement of the value of the property such as an appraisal. Of course, the lower the estimate the better. Write a list of all repairs that will need to be done, which will show the home does not have a good resell value. Include a list of costs and liabilities. You want the lending company to know the home is in bad shape, thus it will take longer to sell. The longer the lending company has the home the more money they lose.

Even though a short sale is always an “as is” property, you want the lending company to realize all the problems with the property. They will be ready to unload a home if they think it will be a hard sell.

A home is a dream comes true for most of the individuals. Owning a home and making it living are two quite different things. Since modification of a home requires substantial amount of finances, it is not possible for a person to raise the finance from a single source. If the same person is having credit problems and thinks that he cannot avail finances to make the necessary changes, then he is wrong. For these particular borrowers with credit problems, lenders are now offering Bad Credit Home Improvement Loan.

This loan can be used to serve a number of purposes like extending a room, constructing a wall, swimming pool, flooring of tiles, purchasing furniture’s, installing water pump, garden, painting of walls etc. This loan is meant for borrowers with credit problems such as CCJs, IVA, arrears, defaults etc. Not only this, the loan also helps to raise the equity value of the home that too at reasonable terms and conditions.

This loan is offered to borrowers in the classical format of secured and unsecured. The secured form of the loan is available against a security which has got some value. This option of the loan offers a bigger amount in the range of £5000-£25000 with a repayment duration that spreads for a period of 5- 25 years. Considering the credit status, the rate of interest is comparatively low as the amount is secured against an asset.

On the contrary, unsecured option of the loan can be accessed without attaching any collateral. However, for the approval lender must be convinced that the borrower is capable of repaying the borrowed amount. Under this loan option, borrower can obtain amount in the range of £1000-£25000 for a repayment period that lasts for 6 months- 10 years.

Borrower should ensure that the loan installments are being paid on a regular basis. This is the only chance the borrower has got to increase the credit score, which helps the borrower to avail future finances at very competitive rates.

These days most of the individuals prefer the online application mode to avail the loan. Online lenders allow the borrower a greater degree of flexibility to select the best available deal, which can be done by comparing the quotes of various lenders

With bad credit home improvement loan, borrower can make the necessary changes to their respective home, the way they want.

Refinancing your home loan may sound tempting and a good option to ease your current financial situation. However, even if you get a momentary relief and you can dispose of the surplus on you income for other expenses, you may find yourself in a debt trap in the near future. One from which it may be too complicated to escape.

Many people refinance their home loans in order to reduce their monthly payments and thus, provide some ease to their income. But later, they incur in new debt or market conditions turn their home loans more burdensome and they can not afford the monthly installments. Eventually they default on their home loan or other debt. This has terrible consequences on their credit score and could lead to bankruptcy among other costs.

Variable Rate Vs. Fixed Rate

Usually in order to reduce the amount of the monthly payments, people refinance their fixed rate mortgage loans with a new loan with variable rate. Though variable rate loans have lower interest rates, the rate changes according to market conditions and if the situation worsens, then the monthly installments may become unaffordable.

Thus, when refinancing you should always contemplate the possibility (that a variable rate implies) that your loan installments will vary with time. If you can not cope with those variations you should stick to a fixed interest rate that will keep your monthly installments unchanged through the whole life of the loan.

Higher Interest Rate

Refinancing for a higher interest rate loan in order to get longer repayment programs and thus smaller loan installments, may provide some relief in the short time but you need to consider that it will raise the amount of your overall debt and compromise your ability to get further finance in the future.

A higher debt exposure will limit your possibilities of getting a new loan if you need financial assistance in the future. It is sometimes better to make some sacrifices in order to keep the original repayment program and maintain the amount of the monthly payments in exchange for being able to request a loan if something unexpected happens.

No Further Loan Spreading Possible

After refinancing for a longer term loan and getting a lower monthly payment, you probably will not be able to refinance your home loan again and thus, if you do not do your math carefully or if your financial situation worsens, you will not be able to resort to refinancing to reduce your monthly payments again.

So, if you currently can cope with your monthly payments even if you are a bit tight, it is better to keep your present mortgage the way it is and request a personal loan for other expenses. Refinancing can make a larger portion of your debt more costly just to afford something that you could finance by other means. And, unless you refinance for a lower interest rate or the same interest rate but a longer repayment program, it is better to keep your current mortgage and resort to other sources of finance if possible.