Mortgage lenders halt foreclosure temporarily
By admin | February 19, 2008
Six of the largest mortgage lenders in the country have stopped foreclosure proceedings for the time being. This new program which is called Project Lifeline, gives borrowers with little hope of paying off their debts up to 30 days more in which to work out some kind of payment arrangement with their mortgage lender. It gives delinquent borrowers one a chance at a last ditch attempt to settle things with their mortgage lenders.
Project Lifeline is also not restricted only to subprime borrowers with adjustable rates of mortgage but will also bring under its fold homeowners who have any type of mortgage loan. This is great news for homeowners who are struggling with the mortgage payments.
In the 30 day grace period that is granted to such borrowers, the mortgage lender will try to work out a way that will keep the borrower away from foreclosure. Hopefully in order to allow this allowance to work the lenders will be able to come up with a solution that will help these homeowners. In many cases people just let go of their homes and mortgages because their debt in many cases is more than the value of their homes.
Further compounding this problem is the fact that property values have been crashing in the country so it remains to be seen whether people take advantage of this offer at all. Bank of America, Countrywide Financial, Citigroup, JP Morgan Chase, Washington Mutual and Wells Fargo are the lenders who have come out with this offer. They hope that during the 30 day period in which foreclosure proceedings are stopped, the mortgage lenders will be able to come up with a plan that prevents homeowners from having to face foreclosure. At the top of their list are homeowners who have not made their mortgage payments for more than 90 days.
Topics: Subprime Mortgages | No Comments »
Get preapproved today
By admin | February 18, 2008
Purchasing a new home today? Then get yourself pre approved for a new mortgage before you do anything else. From now on it is imperative to get a mortgage preapproval letter before you start looking for your new home since most real estate agents will not show you any homes if you don’t have a mortgage preapproval letter.
It is also important that you know upfront how much you can afford. Lenders have been changing their underwriting guidelines these days and they aren’t willing to go as high up on the debt to income ratios as they used to previously. So you should know that you have been preapproved to purchase a home for a certain amount before you start looking. Another thing that you should be doing at the same time is to pay down any credit cards that you can and stop charging on them before your credit scores go any lower and you then have credit problems.
After you have been preapproved for a mortgage you shouldn’t get any new credit cards or take out any new loans as that will automatically lower your credit score. Also if you have a low credit score it would be wise to get your credit repaired. You could try to repair your credit by yourself of course, but since you probably don’t know the relevant laws and statutes involved you wont be able to get the negative items removed from your credit report.
With a higher credit score you will be able to negotiate a lower interest rate with the mortgage company and so a low credit score could potentially stand in the way of you and your dream home. Bad credit could always result in your mortgage application being turned down, so do your best to improve your credit record.
Topics: Home Loans, Interest Rates, New Buyers | No Comments »
100% financing?
By admin | January 31, 2008
100% financing is a term that is thrown around a lot and mostly with astonishment. Most people don’t know much about 100% financing and so they display disbelief when they hear that somebody is providing 100% financing. The real truth is that it isn’t all that difficult. The lender isn’t incurring a loan and he isn’t being kind either. This is just business and the people in the mortgage market just have to find new ways of giving out loan each day.
100% isn’t a very risky proposition for lenders at this point of time, in contrast to popular belief.  Earlier it was believed that if you did 100% financing and the borrower defaulted you would recover 80% through a foreclosure sale, but would suffer a 20% loss.Â
These days however the reality is different and there is cushioning for lenders through what is known as Private Mortgage Insurance or PMI. Here what happens is that the borrower pays the premium to the insurance company for a policy that insures a lender against a bad debt. Now if the borrower defaults the lender will get back 80% from the foreclosure sale and the remaining 20% will be reimbursed to him through a claim against the insurance company.
The risk of giving a loan depends upon the ability of the person to repay as well as the collateral that secures the loan. These days the risk isn’t very high. Loans are checked and re-checked to see if the borrower has the financial wherewithal to pay back the loan. PMI is also done to secure the loan. When lenders aren’t a much risk when they give out such loans, there is no reason why they shouldn’t.
However even when you hear that someone is doing 100% financing don’t take that as the truth. Do some research for yourself and find out. If they aren’t, there will be someone else who is.
Topics: Home Loans, Uncategorized | No Comments »
Home mortgage sharks
By admin | January 25, 2008
Sub Prime loans are a great alternative for people who can’t otherwise get a loan from lenders in the prime market. But very often masquerading as a sub prime loan is a predatory loan.
The difference between the two is that while a sub prime loan charges a higher rate of interest from you it does so because when the lender lends money to someone with a low credit ranking he has to in some way recover his money and he does this through the high interest rate to safeguard himself from defaulting borrowers. A predatory loan however is different because here the ultimate aim of giving a borrower a loan is to acquire control over his house.
In such a type of loan system the lender imposes an unreasonably high interest rate upon the borrower along with other such unfair terms and because of this the borrower is unable to pay off the loan. Predatory loans are usually given against things that are secured against some kind of collateral so that when the person is unable to pay off the loan with the unreasonably high interest rate, the lender can repossess the property and sell it off to recover his money.
Many activists and consumer interest forums have raised the worry that such predatory lenders tend to target older people and ethnic groups that are in the minority as far as predatory loans are concerned.
There is a very thin line of distinction between sub prime loans and predatory loans. However a basic point of distinction does exist. Sub Prime lenders merely charge a rate of higher slightly higher than normal in order to cover their risks while predatory lenders charge such high interest rates so as to result in the borrower being unable to pay off the loan so that they can repossess the property.
Topics: Home Loans, Interest Rates, Subprime Mortgages, Uncategorized | No Comments »
caveat emptor
By admin | January 15, 2008
When you are buying a house there are only two ways to pay for it; one is paying cash which is highly unlikely as far as most people are concerned. People are more likely to take out a mortgage loan to finance buying a home. Which means that they are going to have to approach a lender for the loan. Some lenders can cheat you of your money. This is not to say that all mortgage professionals are crooks, but it is always good to be careful.
The reality about the mortgage industry is that it is an industry after all. People are out to sell you loans and make money off you. Every broker, lender and loan officer has something to sell and he’s done his job if you buy his product. So they’re targeting you. It is very important that consumers make an informed industry in order to safeguard themselves.
Be aware of the fact that lenders tend to exaggerate things and you can’t take anything they say for granted. Not until you find out for yourself. When a loan agent tells you something remember that he is getting something out of it if you buy what he is saying. He is not doing you a favour. He needs you just as much as you need him. Probably more.
The higher interest rates a lender charges, the more he makes from the deal. And do not believe lenders who promise you everything. Though a credit ranking is not everything, it is important. If a lender is advancing you a big loan with your low credit ranking, be sure he will gain something in return. When lenders promise things that seem too good to be true, its time you became wary.
Think realistically and it is very important to remember that there are no free lunches in the world.
Topics: Uncategorized | No Comments »
crooked mortgage broker indicted
By admin | January 10, 2008
A mortgage broker from Lynwood, Indiana has been indicted on 14 counts of fraud in 27 homes most of them located in Gary, Indiana. She has also been indicted for misuse of a social security number. Tameka Bryant, 35 has pleaded not guilty to the charges.
Bryant allegedly deposited money into her clients’ account to boost their creditworthiness and created fake identities and employment records for them. She was also married to James Clark twice under two different identities. She also conspired with her husband and two other people to obtain loans through her two brokerage businesses which were located in Merrillville, Indiana. She carried out all her activities through her two offices Guarantee Mortgage and Challenge Mortgage.
Bryant was also in cahoots with Anthony K. McDonald who was charged with buying 10 homes in Gary through a mortgage firm ‘Company A’. Despite earning a very low income ranging between $ 14,000 and $ 20,000 a year McDonald was able to obtain loans amounting to nearly $ 500,000. This was made possible through various misrepresentations and untruths stated in applications submitted to lenders through one of Bryant’s company.
Mortgage frauds have become an increasing source of worry in the mortgage industry with brokers losing reputation due to such frauds being committed by some unethical characters in the same industry. The number of people convicted of mortgage frauds has skyrocketed in the past few years and is a major blot on the credibility of the mortgage industry. The loopholes present in the system of verification along with the presence of lenders who lend at a higher rate of interest to persons with a dubious credit record has only compounded things further. The process of sanctioning loans needs to be made stricter with lenders themselves taking steps to assess the creditworthiness of the borrower.
Topics: Uncategorized | No Comments »
Buying a new house -Getting a loan
By admin | January 4, 2008
Buying a house is one of the biggest investments and most important decisions in a person’s life. So before you put your money into a house there are a few things you need to keep in mind:
Getting a loan: One of the main concerns in the mind of prospective buyers is that they may not be eligible for a loan. So one thing that can be done to help such buyers is to get the loan pre-approved. This is beneficial in more ways than one as when there a number of prospective buyers, you will get preference and also that since the seller knows that you have monetary backing he will be more willing to sell you the real estate.
Interest and Mortgage payments: There a quite a number of costs involved in purchasing a house. But you can calculate how much you will be charged and you can decide on a practical payment plan.
In most cases people put a down payment down on the house. In some cases also new buyers are not required to give any down payment.
Another thing that prospective buyers do wrong is make an offer for the very first house they see. It is important to see a good deal of houses before you can decide on the correct one.
Another thing that is very important is the condition of the home. A house that has a few problems, very often has a lot of expenditure than the amount that is given at the very beginning. You should make sure that the price of the house is fixed according to the state the house is in.
It is important to know everything about a new house rather than to end up having some problems. Thus certain things are to be kept in mind before buying a new house.
Topics: Home Loans, New Buyers | No Comments »
Mortgage brokers
By admin | December 24, 2007
Mortgage brokers are like any other brokers; they provide a service to the borrower as well as the lender and take a commission or brokerage from both parties. In most situations banks are the brokers but in some cases individuals also act as brokers in mortgage deals.
Since for many people getting a loan may be quite a daunting task, the mortgage broker was born. In the present times debtors get fleeced and are taken advantage of by the creditor and a mortgage broker helps the borrower to find the best deal for him and the lender the best for him. They communicate terms between the two parties and help them settle at a situation that is agreeable to both.
A mortgage broker performs the following functions: A mortgage broker is consulted by both parties so it can be decided what kind of deal, interest rate, time period etc is suitable to them and then accordingly a borrower and a lender are matched. Also they provide their knowledge and experience to the client and they advertise and let the situation of the lender be known in the market. The brokers complete the documentation of the deal and help in finalizing and sealing the deal. The fact that brokers advertise the services of a lender makes him well known and gets the lender more prospective borrowers.
Brokers are useful when a mortgage deal is being negotiated because it happens very often that the borrower or the lender are not very knowledgeable about market rates etc and hence the other party can take advantage of this. A broker can give them both his expertise and prevent a party from suffering losses. It however is important to go to a broker who has a good reputation because a broker is privy to confidential information which he can make use of if he is so inclined.
Topics: Brokers | No Comments »
Commercial Mortgages
By admin | December 20, 2007
A commercial mortgage is a loan taken by securing real estate to ensure repayment. The only difference between a commercial mortgage and a residential mortgage is that under a commercial mortgage the real estate that is secured is a commercial building or other real estate property that is used for business. Commercial mortgages are entered into by commercial concerns or businesses and not by individuals. Ascertaining the credit worthiness of a debtor under such kind of a mortgage may be a daunting task since the debtor may be a company or a partnership concern and going into the financial condition may be a slightly tricky proposition. One peculiar characteristic of a commercial mortgage is that they are non-recourse meaning that in case of default the creditor can seize control over the collateral but cannot make any further claims towards the repayment of the debt.
The lender may only advance money on the basis on the debtor’s financial situation and they require the businesses to have a good credit rating. It is also required that the business be profitable and stable because the lender also has to look after his own interests. The terms of the mortgage will depend on the credit rating of the business and the size of the loan.
The interest rates for commercial mortgages are also much higher and generally the rate of interest is stable throughout the period of the mortgage. A second mortgage may also be taken on a commercial property but since it subordinate to the first loan, the rate of interest is much higher so that the creditor can recover his money.
Thus commercial mortgages are not much different from residential mortgages excepting a few details and it provides the option to business concerns to borrow money in a way that is convenient to them.
Topics: Commercial Mortgages | No Comments »
Refinancing: An overview
By admin | December 14, 2007
Refinancing basically is a situation where a debt is replaced by another one with different terms and conditions and is mostly resorted to in case of a mortgage on a home.
Refinancing is done for a host of reasons that work in the borrower’s advantage including in order to reduce the interest rate, to extend the repayment time, to raise cash etc. Refinancing may also be done to reduce the risk of borrowing. This is done by converting a flexible rate mortgage into a fixed one. By this the rate of interest payable remains constant, thereby reducing the risk of paying a higher dividend. This may also backfire as in a flexible rate mortgage the rate may also fall, but when money is at a premium it is always better to reduce one’s exposure to risks.
Refinancing also has its drawbacks. The cost of refinancing a loan may be more than the risk minimized by doing so and while some refinanced loans may have lower initial payments, the cost of payment over a long period of time may increase.
Refinancing has a unique feature known as points. Points refer to a percentage of the loan which needs to be paid up initially. The points vary from dealer to dealer and plan to plan.
There are two types of refinancing- no closing cost and cash-out. In no closing few upfront fees are paid and as long as the market rate of interest is a little lower than your existing rate it is beneficial to refinance. In cash-out system a person can increase the loan amount and keep the excess amount. This merely increases the amount of money but does not reduce the interest payable.
Thus for many people, refinancing could solve the economic problems that they have.
Topics: Refinancing | No Comments »