FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

 

The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.

 

Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.

 

For borrowers who went through a recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

 

In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond the borrower’s control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.

 

Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.

 

According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.

 

The new guidance is for case numbers assigned on or after August 15, 2013, and is effective through September 30

Enhanced by Zemanta

HUD-Owned Homes Expected to Increase

The following article appeared in REALTOR Magazine on April 30, 2013:

HUD-Owned Homes Expected to Surge

Daily Real Estate News | Tuesday, April 30, 2013

The U.S. Department of Housing and Urban Development is reportedly going to be releasing more of its homes to the market, which could be welcome news to buyers who have faced slim pickings in for-sale inventories.

Over the next two years, experts predict that HUD homes on the market will increase significantly as lenders work through the backlogs of foreclosures and foreclosure reviews.

“The inventory is there, [it’s] just not being released during the banks/servicers review of the loan/mortgage documents,” says Nat Genis, a HUD listing broker in Riverside County, Calif., which is already seeing an increase in HUD-owned homes.

“HUD homes are back,” Genis told HousingWire. “FHA financing went away with the ‘creative’ financing of the 80/20 loans, and now with the increase of FHA financing, these government-backed loans guarantee that if the borrower defaults, HUD will pay off the mortgage, obtain the deed, and re-sell the home.”

HUD-owned homes can be appealing because of the discounted sales price, even though they can be in poor condition often times, HousingWire reports.

HUD had 39,442 homes in its REO inventory nationwide as of Feb. 28, 2013—with 20,536 of those having pending contracts on them, according to HUD.

SOURCE: Housingwire (04/29/13)

Enhanced by Zemanta

Tips when applying for Loan Modification

The following tips were given by Stephfan Nurse, CEO of Consumer Education, makers of mortgage reduction software designed to help people thru the modification process: 

1)      When faxing or sending in your paperwork to your lender, make sure that your loan number is printed on every page you are sending in.  Lenders received thousands of papers a day and sometimes the cover sheet gets lost or the fax gets misplaced.  If you have the loan number on every page, they can make sure it gets in your file.

2)      Make sure that ALL of the requested paperwork is included in the file.  If you are missing just one required document, they will show your account is incomplete and your file sometimes goes to the bottom of the pile.

3)      Follow up every week with your lender to make sure all of the documents they have are up to date.   Don’t worry about being a pest; this usually keeps your file moving along.

 These tips are the same tips we use when submitting Short Sales.  The complete packages move along much quicker then the packages submitted with missing documents.  Some lenders even tell us to keep sending in pay stubs and bank statements so the file is kept current at all times.

Enhanced by Zemanta

Credit Scoring to Change!

CoreLogic and Fair Isaac Corp known as FICO, recently announced a collaboration that will result in a separate score that will be available to mortgage lenders and incorporates information that will include payday loans, evictions and child support payments.  In the future, information on the status of utility, rent and cell phone payments may also be included. 

Separately, last month, the Experian, Equifax and TransUnion, began providing estimates of consumer income as a credit report option.  And, earlier this year, Experian began including data on on-time rental payments in its reporting. 

This new information could either help some potential homeowner’s to obtain a loan or could be detrimental to those who are on the board of qualifying for a loan. 

The CoreLogic – FICO partnership won’t result in a credit score that will rule out a borrower for a mortgage backed by Fannie Mae, Freddie Mac or the FHA, which together own or guarantee at least 90 percent of the mortgages being written.    That’s because the Experian, Equifax and TransUnion “tri-merge” report required for such a loan does not rely on CoreLogic data.  But it could mean either more or fewer mortgage fees or a higher or lower interest rate charged by lenders that in today’s cautionary lending environment have heartily adopted risk-based pricing.

Enhanced by Zemanta

August Foreclosure Statistics

Foreclosure filings rose in August, as more homeowners fell behind on their mortgage payments.  

Filing were up 7% compared to July, but were still 33% lower than a year ago. 

According to Realty Tract’s report, 228,098 homes in the US received some kind of foreclosure filing in August.  Foreclosure auctions and bank repossessions, which come later in the process, both fell slightly. 

The increased in default notices may signal that lenders are starting to finally push through foreclosure paperwork that was previously delayed by “robo-signing”. 

The good news is that bank repossessions have been falling.  Lenders repossessed 64,813 homes in August, a six-month low and a 37% decline after they hit a peak in September last year. 

Meanwhile, foreclosure auctions were scheduled for 84,405 homes, the lowest number in more than three years. 

Nevada, California and Arizona housing markets are the hardest hit by foreclosures. 

Information from CNNMoney.com

Enhanced by Zemanta

Loan Modification Scammers

One in 240 California housing units was in foreclosure in April 2011, according to Realty Trac, a statistic that places California foreclosures about 2.5 times higher than the national average.  Those statistics alone make the state a ripe market for loan modification scammers.

The Lawyer’s Committee is starting to file complaints against Nathanson Law Center and other alleged loan mod scammers.  The suit claims that the defendants lured desperate homeowners into paying up-front fees to secure them loan mods, and then did little or no work to follow up on their promised services.  While homeowners were offered 100% guarantees that their funds would be returned if a modification could not be obtained, the defendants later refused to turn their fees.  Many of the victims lost thousands of dollars – or worse, their homes. 

If you believe you have been the victim of a loan mod scam, you are encouraged to call (888) 995-HOPE or visit www.preventloanscams.org and click “Report a Scam!”  Victims are being represented free of charge.

Enhanced by Zemanta

New wave of foreclosures hit Sacramento again

The Sacramento skyline, as seen from The Ziggu...
Image via Wikipedia

The Sacramento Beepublished an article September 26, 2011 with the following statistics compiled by RealtyTrac and Foreclosure-Response.org.  They placed our region’s shadow inventory at 53,256 homes in the four surrounding areas of Sacramento, Yolo, Placerand El Dorado counties.

They included in this number three categories of distressed properties:

  • 12,285 houses already owned by banks but not sold
  • 19,367 units whose owners have received an initial foreclosure notice, or notice of default, but have not been foreclosed on
  • 21,604 homeowners who are 90 days or more delinquent on their payments but have not received a notice of default

Lenderare starting to pick up the pace on repossessions once again.  The figures provided by RealtyTrac show foreclosures in the area soared 76% from July to August, the highest number in 11 months.

Based on this “shadow inventory” it would take a year and a half to sell these distressed homes.

To read the complete article by Rick Daysog of the Sacramento Bee click here

Enhanced by Zemanta

California Law Helps Protect Distressed Homeowners doing Short Sales

Effective January 1, 2011, California first trust deed mortgage holders who consent to a short sale of residential property (up to 4 units) are prohibited from seeking a deficiency judgment for the difference between the mortgage balance and proceeds realized through the sale. 

Senate Bill931 was passed by legistature in August and approved by the Governor on 9/30/10 to help strapped homeowners.

See the complete article at Realty Times 

Enhanced by Zemanta

WHY ARE MY CREDIT SCORES DIFFERENT?

Factors contributing to someone's credit score...
Image via Wikipedia

Your credit score is a three-digit number that helps lending institutions assess their risk associated with lending you money.  They are used for loans, credit cards, renting, insurance and background checks on employment.

People with lower credit scores may pay higher interest rates or may not be approved at all.  Those with higher, less-risky credit scores often qualify for lower interest rates and special options.  Credit scores are calculated based on computer “predictability” models that analyze credit information and patters from your credit report against those of other consumers.

There are trillions of score combinations used in the calculations.  Most scores are calculated and provided individually by each credit bureau, including the three major ones in the United States, which are Experian, Equifax and TransUnion.  Additionally, many lenders use third-party credit scoring systems, such as FICO, NextGen, CE Score and VantageScore.  For consumers, the variations in scoring models and score ranges can create some confusion.

In 2006, the three major bureaus joined forces to create a single credit scoring system called the VantageScore.  The VantageScore and FICO model lead the industry as competitive rivals in credit-scoring systems.

Your VantageScore may not be exactly the same if your lender only orders a credit report from one of the bureaus.  This is because the data each bureau receives may be slightly different.  If your lender does not report your payment history to Equifax but does report to Experian and TransUnion, it will create a difference in scores.  The VantageScore should be more consistent across all three bureaus since the mathematical formula is the same.

Unlike FICOs traditional 300-850 credit score range, the VantageScore ranges from 501-990.  There is no way to compare the results of the VantageScore to a FICO score especially when the formulas are constantly changing.  However, to put some perspective in place a 650 FICO score approximately compares to a low, 800-range VantageScore.

The one constant for both scoring systems is that paying your debts on time will typically be the primary factor that positively impacts your credit score.

Enhanced by Zemanta

What you Should Know Before Buying a Home

This past week, I have posted several articles on credit reports.  Below are a few things you should know before buying a home:

1)  Get Pre-Qualfied – you will need to find out what you can qualify for and obtain a Pre-Approval letter before going out to look at homes.

2)  If you have marginal or bad credit, consult your lenderthey will be able to advise you on whether your credit history will prevent you from qualifying for a home loan.

3)  You will need a down paymentDown payment requirements vary depending on the type of loan.  There are a few down payment assistance programs, but gone are the days of lots of  ZERO down loans, unless you are a Veteran.  Consult with a lender about the programs available in your area.

4)  You will need funds for closing costs – In addition to your down payment, you may need to have additional funds for closing costs (i.e. Escrow, title, mortgage insurance, taxes, loan fees and fire insurance).

5)  Some loans have “points” and some do not – A point is a loan origination fee equivalent to 1% of the loan amount.  Together with the interest rate they constitute the yield on your loan for the lender.  Some lenders charge a higher interest rate to compensate for charging no points.  It is important to comparison shop lenders to make sure your loan is at a competitive yield.

6)  Should you select a mortgage with a fixed rate or an adjustable rate?  It depends on whether mortgage rates are at a high or a low point when you purchase, and on how long you plan to live in the home.  If rates are low, a fixed rate would be more attractive and if rates are high, an  adjustable rate might be attractive since subsequent rate drops could reduce your monthly payments.  Also lenders may offer a low rate during the first few years of an adjustable mortgage to make it appealing to you.

7)  Be aware of the two main type of loan categories – Conventional Loans and Government Loans (FHA/VA) .  Both of these loan types are available with fixed or adjustable interest rates and some require mortgage insurance.

8)  If you are a low or moderate income home buyer – there are some local and state housing agencies, like the California Housing Finance Agency(CalHFA) that have special loan programs available.

9)  Why might I have to pay mortgage insurance?  Generally, conventional loans that require larger down payments do not require mortgage insurance.  Mortgage insurance is always required on FHA loans.  Mortgage insurance protects the lender from potential loss if you should default on your mortgage loan payment. 

10)  Many organizations offer home loan counseling to prospective home buyers– These organizations provide classes for home buyers to cover the steps to home ownership.  They will cover home selection, realtor services, lenders, loan programs, home ownership responsibilities, saving for a down payment, and other important pieces of information.  Many first-time home buyer programs require home buyers to attend this type of class to be eligible for selected programs.

Enhanced by Zemanta