Helping U Find A Way  

Not long ago we went through a period when lenders were able to qualify just about anyone for financing of a new home. Now, primarily because of the large default rate, lenders are requiring higher credit standards and fewer people can qualify for financing.

A buyer may not meet the financing criteria because he:

• Doesn't meet the lender's debt to income (DTI) ratio,
• Has a spotty credit history and as a result a lower FICO credit score,
• Can't come up with enough cash for the down payment.

There are also some other buyer benefits:

• The loan can be approved with less than perfect credit because you're dealing with the seller's requirements and not the more stringent standards of a lending institution,
• You need less cash to close
• Can become the owner of a property that was out of reach financially.

Sometimes the seller doesn't see the advantages and needs convincing. Try these points:

• Seller can ask for a higher price for the property,
• A cash stream is created...income in the form of payments are collected each month,
• Seller's income from the second is paying larger interest dividends than placing a cash lump sum in an investment account at the bank that earns possibly only 5-6%,
• The loan can be sold for cash if desired.

How do these seller carryback seconds work?

The interest rate and the term for the second loan are agreed upon between the buyer and seller. These figures usually range between 8-15% for a period of 5-7 years (remember these figures are agreed upon between the buyer and seller).

This can be a win-win-win situation:

• The seller is able to sell his property,
• The buyer, who may not have been able to qualify for financing before, is able to become an owner,
• As the agent, you have made a commission you might have otherwise lost!

© Copyright 2007 by Lynnette Phillips

Life is full of ups and downs. Any of us can suffer from a financial setback for any number of reasons...unemployment, illness or injury, divorce. But there ARE options to help you get back on track. The first and possibly most important thing to remember in this situation is time is crucial. If you have already received a Notice of Default you usually have only 90 to 120 days.

To help put your thoughts in order keep these important points in mind.

• Respond to letters or calls from your lender.
• Analyze your budget and financial situation.
• Be prepared to share details about your finances and circumstances.
• Get all "promises" in writing.
• Check with your lawyer, lender, tax professional or realtor before entering into any matter involving your home.
• Be cautious of any transaction causing you to sign over your deed of trust. Signing the deed over to someone else does not necessarily relieve you of your loan obligation.
• Watch out for any buyer who tries to hurry you through the sale process.
• Take heed of any credit counseling or credit repair company that offers to perform services for a fee that you can perform yourself for free.
• Above all, don't abandon your home. Walking away may not be the simple solution it seems.

Call your lender immediately. Unless you are in a position to pay a lump sum to bring the payments current reinstatement is not an answer. Any foreclosure workout, such as a formal repayment plan (forbearance) or loan modification plan will be initiated in the Loss Mitigation Department. YOU'LL be the one who has to get the ball rolling, though.

Refinancing your mortgage will allow you to cash in on the equity in your home and wrap late payments, interest charges and fees into a new loan, putting you back in charge. It may take time to find financing. Contact a home loan professional to ask any questions regarding a refinance immediately.

Another alternative would be the sale of your home. Waiting to put your home on the market can mean the chances of getting a fair price for your home disappear. Waiting may also mean putting off any repairs or simple sprucing up and offering your house in "as is" condition at a discounted price. Consult a real estate professional experienced in distress sales as soon as possible.

You should be conscious of any tax implications attached to a short sale of your home. Please contact a qualified tax advisor.

Lenders DO NOT want your home. The foreclosure will cost any lender tens of thousands of dollars. Understandably they would rather avoid foreclosure as much as you.

Don't let time become your enemy. Act Now!

** To locate a certified credit counselor get in touch with the National Foundation for Credit Counseling at http://www.debtadvice.com/

You may reach HUD's interactive voice response system at
800-569-4287

To find a VA Loan Service Representative in your area call 1-800-827-1000**

© Copyright 2007 by Lynnette Phillips

I was recently talking with a new member of our office team. He was telling me of a veterans group that he works with known as Operation Home Front dedicated to helping military families achieve home ownership and about the thousands of reservists that have been called to active duty, many of whom are now having trouble meeting their mortgage payments and are falling into foreclosure.

My immediate thought was “These people deserve so much better from their country!” Well, I found out that their country thought of this way back in 1940 when they enacted the “Servicemembers Civil Relief Act” (SCRA). In December of 2003 , H.R. 100 was signed into law. This law completely rewrites the Soldiers and Sailors Civil Relief Act of 1940, expanding many of the previous law's civil protections.

Senator Diane Feinstein’s website gives us a referral site that answers more questions regarding the SCRA

http://portal.hud.gov/portal/page?_pageid=33,717388&_dad=portal&_schema=PORTAL

To locate a local military legal assistance office and learn more about active duty relief they can follow this link

http://legalassistance.law.af.mil/content/locator.php

(This law applies to ALL consumer credit!)

I came across an article outlining FHA guidelines. I wanted to share this with other AR professionals who talk with people who believe they aren't able to buy a home.

Here's a few of the non-traditional credit guidelines that may help your clients:

1. The borrower may have no collection accounts appearing on their credit report within the most recent 12 months.

2. There may be no more then 1x30 day late in the most recent 12 months on any of the non-traditional credit trade lines.

3. Borrowers ratio’s may not exceed the 31/43% housing to income and debt to income ratio guidelines.

4. The borrower must have 2 months PITI in reserves after closing which must be borrowers own funds and can not come from gifts, grants etc.

5. There may be no non-occupying co-borrowers used to help the borrower qualify

Example: The Federal Housing Administration (FHA) has long permitted mortgage lenders to establish a borrower’s credit history through nontraditional means, including the compilation of performance on rental payments; utility bills; telephone and cellular phone services; cable television service; payments to local stores, etc.

Written By: Bonnie Wilt-Hild Senior DE Underwriter & NAMP Instructor

As we all jump back into the FHA game it seems that guidelines are changing as rapidly as the FHA program itself is changing. Each week new mortgagee letters are being issued to appropriate new and expanded guidelines and this week is no different.

FHA has long allowed non-traditional credit guidelines for borrowers who demonstrate no traditional credit trade lines. The approach that was always taken was that if a borrower chooses not to incur debt as a means to manage their financial responsibilities then that individual should be looked upon favorably as he or she managed their financial affairs without incurring debt. In these instances it was the lenders responsibility to develop an overall credit history using non-traditional credit sources to determine the borrowers ability to make monthly payments in a timely fashion.

Read complete article

I attended another seminar this week (you can’t have too much information.) Anyway, there are definite advantages for VA loans as we already knew - VA & Cal-Vet loans offer lower than market interest rates, a low or no down payment and expanded eligibility – but there are a couple things to keep in mind.

>> Our office received an offer on a short sale. Not a bad offer but they had stipulated VA financing. The home was in need of some repair work. Here’s the first reminder…

All repair work has to be completed before the loan is closed.

>> This particular point was repeated several times so evidently this one is important…

The lender arranges the appraisal and should be the only contact for the appraiser. The horror stories used to illustrate this point indicated that evidently VA appraisers are very touchy & very easily offended – some would say p****d off.

>> In the past the interest rate was decided by the VA BUT now the interest rate for these loans are set by the lender.

>> If someone is due to be discharged within the next 12 months they need proof of an income after separation such as a letter certifying a gauranteed position from an employer or something showing commencement of retirement benefits.

Some especially good news was that VA loans can usually be closed within 30 days. Everything can now be handled through a computerized system (email, etc.). Even getting vital documentation like a Certificate of Eligibility usually takes only minutes as compared to days or weeks in the past.

**There are definitely more than a couple of financing options out there to help everyone become homeowners.**

Lately I have received quite a few questions about using a quit claim deed to relinquish titles to property, usually turning title over to a relative, while the current owner continues to make the payments on a mortgage signed by him or her.

While this seems incredibly generous on the part of the mortgagor (the borrower) this could create a problem. The mortgagee (the lender or creditor) holds a note secured by the property that will no longer be held in title by the person who signed the loan agreement. For this reason most mortgages or trust deeds today contain alienation or acceleration clause.

An alienation or acceleration clause is language contained in the loan documentation (mortgage or deed of trust) allowing the loan to become due and payable in the event the owner sells or transfers title to the property. I.E. Title to the property cannot transfer either by sale or quit claim deed without triggering the Acceleration or Alienation Clause thus causing the loan balance to become due and payable.

If you aren’t sure about whether your loan documents contain this clause contact your lender before taking any action that transfers title to your property.