Of all loan modifications made at the banks, 22% end up in default. The figure for the government sponsored HAMP is only 11%. Why the big difference? HAMP has been able to lower the monthly payment by $608 on average. On the other hand, the banks are lowering the monthly payment by only $307.
Many homeowners are living paycheck to paycheck. Therefore the difference of $301 is huge. This amount is enough to push them over the edge into default.
Home Affordable Modification Program (HAMP) is a government program and it is very simple. Homeowners who are having trouble with their mortgages apply to the federal government for help. They have to meet certain criteria. If they qualify a “trial” modification is granted. During the trial modification period the homeowners must make their payment on time without failure. If this phase is successful then a permanent modification is given. Unfortunately less than 45% of trials move on to permanent loan modifications.
Under the banks’ system there is not a trial period. Therefore one can argue that many of the “failures” from the HAMP process are not counted under the bank system. This makes it difficult to compare the two modification systems.
Related articles by House Refinance Center
Fannie Mae Sets Timeframe For Foreclosures
Fannie Mae Has A house For You
Recourse And Non-Recourse Loans
Who Benefits From A Short Sale? Not The Homeowner!
Foreclosure Procedures
FHA Short Refinance
November 5th, 2010
Abusive lending practices are not limited to big banks.
Continue Reading October 28th, 2010
Mortgage brokers are no longer necessary. A borrower can go on the internet and find a house and a lender to give him a mortgage.
Continue Reading October 6th, 2010
Banks and lenders are taking possession of houses at a record pace in August. The increase was 3 percent from July and stands at 95,364.
Default notices decreased slightly. Real estate experts suggest that this is because lenders are working through their backlog, and are trying not to flood the market with houses.
The bank repossessions (REOs) represent a great opportunity for first time homebuyers to get a good deal on a house. Real estate investors also like to tap into this inventory of houses. Lenders are usually in a rush to sell off repossessions. It’s not uncommon to buy a REO at 50 percent lower than the market value.
Investing in real estate can provide a good living. If you are handy with tools and don’t mind getting dirty, this could be the beginning of a new career.
The housing market recovery is a major concern for homeowners and real estate investors. If you are an investor, you buy, you fix, you sell. In today’s market many investors have to rent the property and wait until the market picks up before they can sell at a good profit.
Fewer than one-third repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.
Related articles by House Refinance Center
What is Foreclosure?
Who benefits from a short sale? Not the homeowner!
September 16th, 2010
You should submit a professional hardship letter to your lender. This will help in the mortgage loan modification process.
Continue Reading September 7th, 2010
- Image by akeg via Flickr
This opportunity doesn’t occur everyday. Certain individuals can buy a house at half the list price. For example, if the house is listed for $300,000 you can buy it for $150,000. It’s a great deal.
One of the many programs designed to revitalize communities is HUD’s Good Neighbor Next Door. Law enforcement officers, pre-Kindergarten to grade 12 teachers, firefighters, and emergency medical technicians, can purchase a HUD house and get a substantial discount of 50% off the list price.
The basic features of the program are as follows: The property must be located in a revitalization area. The property must be listed exclusively through the Good Neighbor Next Door program and will be available exclusively for five days. If more than one person submits an offer on the same house, there will be a random draw. All the purchaser need is as little as $500 for the downpayment, but no more than $2,000.
The homeowner can sell after 3 years and keep the profit if there is any. The contract is not violated when a purchaser leaves his or her employment, as long as the homeowner remains in the house for 3 years.
The buyer does not have to be a first time home buyer. However, he must not have owned a house one year prior to the purchase. HUD requires the homeowner to sign a second mortgage for the discounted amount. This is referred to as a silent second. There is no interest, and no payment on the second mortgage as long as the homeowner keeps his or her side of the bargain. If the homeowner moves out of the house before the contract term of 3 years, the silent second mortgage has to be paid off on a prorated basis. For example, if he stays for 18 months, he will be required to repay 50% of the second mortgage. In this case, if the house was listed for $200,000, the selling price to the homeowner was $100,000. The prorated amount of the second will then be $50,000.
There is an Annual Certification. When the homeowners purchased the house under the Good Neighbor Next Door program, they agreed to live in the house for three years, as their principle residence. Homeowners are required to sign a certification every year. The annual certification is mailed to the homeowners. They sign, date and return the form. If they do not return the letter, a second letter is mailed. Failure to return the annual certification letter will result in an investigation. An investigator will make a personal visit to the house. If the investigator suspects fraud, the file will be turned over to the Inspector General for further proof of wrongdoings and possible prosecution. Falsifying information is a felony. Penalties are substantial if a homeowner is found guilty. The fine can s up to $250,000, in addition, the guilty party can expect to spend two years in a federal prison.
The program allows for Military Duty. There is clemency for homeowners who are called to military duty. They can rent the house while they are away. They have to provide proof of their military service to the mortgage servicer.
Economic benefits are bountiful. The Good Neighbor Next Door program brings employed professionals into low to moderate income communities. It helps reduce some of the mounting housing inventory and brings economic resurgence to the community.
The borrower is release from the mortgage obligation at the end of the three-year contract. The HUD’s silent second mortgage will be released if all of the condition are met. These terms and conditions include: the homeowner has completed, signed and returned all annual certifications, the homeowner is not under investigation by the office of the Inspector General, and the homeowner is in full compliance with all Good Neighbor Next Door regulations. Releases are mailed to the county office thirty days after the end of the contract. This will facilitate having the silent second mortgage removed from the property.
Related article by House Refinance Center
Refinancing a Good Neighbor Next Door mortgage
August 25th, 2010
Cash-in refinance is king. Homeowners are propping up their home equity by putting cash into the refinance and increasing the value of their homes.
Continue Reading August 20th, 2010
The FHA Short Refinance mortgage is designed to help homeowners keep their homes. If you are underwater on your mortgage, this is an option worth checking out.
Continue Reading August 11th, 2010
Nonprofit mortgage organizations have to share some blame for the mortgage meltdown. These organizations were in the midst of the housing crisis promoting 100% financing, and down payment assistance programs.
Continue Reading August 5th, 2010
Many non-profit organizations are entering the mortgage market. They are offering mortgages to low income Americans and people with limited downpayments or blemished credit.
Continue Reading August 1st, 2010
Next Posts
Previous Posts
