Mortgage Rate Trends - Loan Modification Vs Fha - Hope For Homeowners program - Comparative Analysis!
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In the last 3 or 4 years, a large estimate of homeowners have been trying to unblemished a "loan workout" with their current mortgage lender to lower the interest rate and improve the terms of their loan. Many lenders have chosen not to accept any new terms, rather, let the property go into foreclosure.
Because lenders have an fabulous estimate of properties in foreclosure, they are beginning to accept loan modifications via their loss mitigation departments. The time is ripe for consumers (who own homes) to take performance and ask that their loans be modified towards good terms and a lower interest rate they can afford, if they have high interest rate sub-prime loans or are at risk for foreclosure.
Since, the rate of foreclosures is increasing, everyday, the federal government, congress and the president have stylish and signed a new bill which will allow homeowners to take advantage of a new "Fha - Hope for Homeowners Program" designed to save more than 400,000 homeowners from foreclosure. This program will go "live" on October 1st, 2008.
The new Fha loan program will assist homeowners who are currently in foreclosure, close to foreclosure or those who have high interest rate mortgage loans like those called sub-prime loans. The program is separate than a loan modification in any ways.
The following is a bulleted layout of the deference's in the middle of completing a loan modification and getting stylish to do a Fha -Hope for Homeowners program.
Loan Modification:
1. You can recast your current loan into separate terms, with the hope to advantage from a lower interest rate, which is fixed rather than an adjustable interest rate.
2. The costs of the loan modification are rolled on the "back-end" of the loan, which will increase the estimate of money you owe.
3. The loss mitigation group may choose to keep the estimate (that you own on your loan) higher than your current home value. Or they may choose to lower that amount, some, but not as much as it could be to make your new cost comfortable in the long term. This could mean that you may be in financial jeopardy, in the future.
4. It's a fact, what cause your current lender to be curious in keeping your loan on their books are the servicing rights. They make money servicing your loan over the term of the amortization schedule. The question is that many lenders have filed for bankruptcy or just got out of the enterprise (due to poor earnings markets) and the servicing possession have been sold to other investors. This often causes a strain, since; the servicer does not absolutely have your loan documents at their facility, so they rely on others to get your customary loan information to them for review. This process can cause the loan modification workout to be slow, in many cases. Timing is very important, since, homeowners are not knowledgeable in the process and they often wait to late to get the loan modification process started. It is foremost to communicate with your current lender and get the loan modification process stated, months before your home goes to foreclosure sale.
5. If your ask for a loan modification is rejected, you may want to try it again in a few months, since; some lenders don't document the loan modification attempt you made. They are often motivated by changes in the housing shop and their intent changes as more and more loans go into default. It does not hurt to try again. It is smart to work with a loan modification specialist, a seasoned loan officer or an attorney who specializes in real estate, mortgage lending and loan modifications. They understand how to speak to loss mitigation department, personnel and can get a general idea of the mood and trends of your lenders loss mitigation department.
6. Many loan modification specialist work together with attorney firms to get the loss mitigation departments to act in a timely manner. Those same attorney firms work with the loan modification specialist to make sure the customary loan documents are not fraud ridden. This is a good approach, yet it can cost the homeowner additional money, since both the loan modification specialist and the attorney need to be paid for their services.
7. Homeowners are required to pay the loan modification specialists and attorneys for the services, provided. Many homeowners think that the cost will be included in the new loan amount, but this is not the case. Logically, lenders are already losing money when they agree to modify the loan terms and conditions for the homeowner, so, you can bet that they will not agree to "package" the costs of doing the loan modification into the new loan. That cost is paid by the homeowner, directly to the loan modification specialist and/or the attorney. The cost can range in the middle of 5.00 and $, 5000.00; as an average. Many loan modification specialist, senior loan officers and attorney firms can work out a cost plan, yet, many require at least 1/2 upfront before they start the loan workout. Understand, there is no guarantee that your loan modification or loan workout will be accepted. You will still have to pay your representation your agreed amount. A large ration of loan modifications and workouts are accepted. So, it's a good bet, since, most population do not want to loose their homes to foreclosure.
8. Loss mitigation representatives, (most often) do not require you to pay for a new appraisal. Instead, they have your representative contribute census track data, a Bpo (broker price opinion) or a print out of valuation from title enterprise shop sales data. 9. If you are in foreclosure and costs have been incurred from posting your foreclosure sales data, attorney fees, title costs or other costs; you could be liable for those costs, if our current lender requires it (as a requirement to the loan modification).
10. Loss mitigation departments may choose to approve you for a new loan which is (another adjustable or tiered -fixed loan). Be careful. Do your homework or "talk-it-over" with your representation.
Fha- Hope for Homeowners Program:
1. The federal housing supervision (Fha) has required that all homeowners who become stylish for this program accept a 30 year fixed rate program. No other loan types will be accepted. You can only qualify for this program.
2. Fha will loan up to 90% of the current value of your property. This means that if you purchased your property for a higher buy price and currently have a loan estimate higher than what the value of the property is presently, you can become stylish to do a loan estimate at 90% of what your current house is worth.
3. If you have more than a 1st trust deed lien (subordinate liens) on your property and your property value has severely, diminished; your current lenders may take the loss when you get stylish under the "Hope for Homeowners Program". Usually, the subordinate lenders loose, unless they buy the customary lien. Most do not buy the 1st trust deed lien. So, the subordinate lender takes a loose on their investment.
4. Fha's goal is to keep as many homeowners in their homes. They understand that it would be good to do a loan for a homeowner rather than have that property go into foreclosure, be place into the sell real estate marketplace, causing a additional degrading of the housing market.
5. The Fha underwriting guidelines are currently more liberal than any other loan guidelines in the current market. Fha is more forgiving in their arrival to mortgage lending.
6. The Fha underwriting guidelines have not been disclosed. As October, 1st, 2008 approaches, lenders, processors and underwriters will have a more clear idea as to what is required to get a loan approval.
7. Homeowners will (probably) be required to pay for a new Fha appraisal, as a condition for loan approval and closing. Underwriting guidelines will determine if this is true. The mean costs for an Fha evaluation is ranges, 0 - 0.
8. Revenue to debt ratios will be considered and posted in the underwriting guidelines. Consult your loan modification specialist or loan officer.
9. The loan servicing associates that service, sub-prime loans will (probably) be more inclined to accept a loan modification, since they will want to exchange the lien to Fha, rather than keep it on their books. They have taken huge losses and have an fabulous desire to get rid if their current problems. Have patience with these lenders, since, they do not keep your actual loan documents at their facilities. They will have to ask them. Many loss mitigation personnel are stressed and will want to make a estimation as to your file, fast. This is an advantage to you! Work intimately with your loan officer to get the items needed for loan submission.
10. If you live in a heavily populated area like Los Angeles, Orange County, San Francisco, Seattle, Portland, Denver, Miami, etc., you will more than likely have a higher ration of success with a loss mitigation department. This is because there are more homes in foreclosure in concentrated housing areas.
11. Even though we have not seen the Fha underwriter guidelines, (since they have not been delivered to the underwriters) they will be ready on or before October, 1st, 2008. We can expect that the guidelines will probably focus on a someone quality to make the new housing cost and not the persons reputation score. We call this "ability to pay"!
12. If you're, Fha -"Hope for Homeowners Program" loan application is approved by Fha; your current lender will still have to accept the condition which Fha places on the loan. This means that your current lender may to take a loss in equity by accepting the Fha loan buyout, offered.
13. The good news is that your current lender (already) understands that they will take a loss in equity, if the property goes into foreclosure. If they don't accept the Fha buyout, they may have to place your foreclosed property into the sell sales marketplace. This means that they may have to pay a Realtor up to 6% commission, wait for the property to be purchased, incur additional keeping cost, pay a gardener, electricity and water bills. All the while, they comprehend that the property will probably be reduced in value even more as additional foreclosure properties come on to the marketplace. This is not a rosy situation for them, so, most will comprehend that it would be good to sell the loan to Fha and take less of a financial loss.
14. The main advantage to your current lender in accepting the terms of a Fha buyout is that under the Fha guidelines, they can advantage from a portion of any equity gain in the property for up to 5 years, at the time Fha buys the loan. If the homeowner chooses to sell the home within the 5 year duration after the close of the new Fha loan; the lender can partake in a ration of any equity gain. This singular condition will cause many lenders to accept the Fha loan buyout. Ask your loan officer for information about lender participation in an equity gains.
15. Many lenders are fully; "Fha stylish lenders" and will require that your loan be recast within the Fha loan group of your current lender. Therefore, ask your loan officer if your current lender (note holder) is Fha licensed. This will save you time and headaches, since; many loan officers will try to do the loan on your behalf without determining if your current lender wants the new Fha loan on their own books. This may be a condition for an Fha loan approval, by your current lender. If our current lender is already an stylish lender, they might as well sell the loan to Fha, direct, correct?
16. Third party cost like, attorney fees, loss mitigation fees, foreclosure posting fees, etc., will be absorbed by your current lender under the Fha - Hope for Homeowners Program. You will not incur these fees under the program. The lender will take this loss, too.
17. As part of the Foreclosure arresting Act of 2008, 1st time homebuyers are encouraged to buy homes in the middle of April, 2008 and July 2009. They can receive up to 00 dollars in tax earnings from the federal government. This program has been established to speed up the housing salvage by getting population to buy homes. Additionally, it will cause home sellers to buy homes, as well, since they are often "move up" buyers. This program is part of the uncut attempt to strict the bad housing market.
18. reputation Score vs. Your quality to Make the Payment: These two factors will be outlined in the underwriting guidelines. I would expect that the quality to pay will override the reputation score issue, since, most population having problems development their housing payments, already, have degraded reputation scores. Consult your loan officer for details.
Summary:
Loan Modification:
Consumers, now have any options to sustain home ownership. If one choice does not work try the other. Remember, time is of the essence, so act promptly to give your self time to use one or both options.
1. Loan modification is a good choice for many, if your have permissible representation and get a favorable deal. 2. You will have to pay the costs for this type of loan modification. 3. You will not have to pay for an appraisal, in most cases.
Visit this site for more information: http://www.LoanModificationContacts.com
Fha - Hope for Homeowners Program:
1. This program may be a good deal for you, if your lender is no longer in enterprise (sub-prime lenders and prime lenders). It can still be a great advantage to you if your lender is still in enterprise and wants to take off some bad assets from their books (understanding) you might become one of those bad assets. Your loan officer can contribute this information for you.
2. Since, Fha will go to 90% of the current value of your property; you can be the real winner. This uncomplicated fact means that you will have a good opening to qualify under a 30 year fixed loan and your housing cost will be more affordable, then what you are currently paying.
3. You will most likely, be required to pay for an appraisal. Ask your loan officer about this, since; the underwriting guidelines have not come out, yet.
4. You may or may not have to pay for the windup cost to gather the loan. It has not been determined, who absolutely pays for the windup costs. It will be in the underwriting guidelines, when they come out. Ask your loan officer.
5. reputation Score vs. quality to Pay: Underwriting guidelines will determine these two factors. Fha underwriters will probably be more forgiving and weight their approval on your quality to make the monthly housing payment. We will have to wait for the underwriting guidelines. Ask your loan officer about these two factors.
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