Borrowers To Be Paid To Pay Their Mortgage
I don’t know how effective this will be because the borrower doesn’t get the cash incentive upfront. They get it once the mortgage is paid off. The purpose behind the program is to curtail borrowers from strategically falling behind on their mortgage.
“Here’s how the program works: The mortgage investor (possibly joining with other risk holders, such as mortgage insurers or second-mortgage holders) offers a cash reward to borrowers if they agree to keep paying their mortgage. The incentive amount varies by borrower depending on income, negative equity, geography and other risk factors—those who are more likely to cause steep losses receive a bigger carrot. The “responsible homeowner reward” grows for up to five years as the borrower makes monthly mortgage payments.” http://blogs.wsj.com/developments/2010/02/08/pay-borrowers-to-pay-their-mortgage/
Again, I feel you either need to do a principle reduction or a short sale if you are going to try to do anything improve it. I don’t think this program is enough to entice someone especially since people still don’t understand anything about financial responsibility. More and more people feel that is the case but the biggest problem is the individuals who aren’t behind will stop paying.
“As the mortgage crisis drags on, some activists and investors have formed a loose coalition to prod banks into sharply cutting the amounts owed by borrowers whose loans far exceed the depressed values of their homes. Principal reductions are the best incentive for such borrowers to keep making monthly mortgage payments, some activists and investors say.”
http://online.wsj.com/article/SB10001424052748703615904575053610885133270.html?mod=rss_whats_news_us
An Alternative To A Reverse Mortgage
Reverse mortgages can be expensive so some are giving their parents a private reverse mortgage. It sounds like it could be a good idea if you have the cash to do it.
It’s pretty interesting article that talks about the pros and cons of doing it. Always make sure to consult your CPA and Financial Planner before doing it.
“When Wayne Tew, a credit-union president in Las Vegas, realized that his parents needed money, he bought their house and leased it back to them, freeing up their cash for a new car and travel. The son claimed tax deductions for the home’s depreciation. And after his mother died four years ago, he sold it for a small profit.”
http://online.wsj.com/article/SB10001424052748704194504575031532356220378.html?mod=rss_Money
Americans Are Passive As They Lose Their Homes
Isn’t that the truth. Everyone wants to complain, point fingers, etc. but won’t do anything about it. If you are trying to save your home go to a “Save the Dream” event offered by the Neighborhood Assistance Corporation of America (NACA), get counseling, see if you can get mediation, etc.
The article asks this question, “Why do Americans remain disorganized at home while their European and Asian counterparts flood into the streets and strike in militant, organized protest? Why do others believe in their potential to reclaim their lives while we do not?”
Click on the link below to read the answers to this question. Pretty interesting.
Reverse Foreclosures
This was very interesting. A reverse foreclosure apparently is where you speed up the process of the foreclosure. Now, why would anyone want to do that? It can allow an association to get paid their past association dues much faster.
“The Association Law Group of Miami won the case on behalf of the Keys Gate HOA using what it calls a reverse foreclosure, designed to speed up the process of awarding a property to a bank, thus making the bank liable for fees and maintenance, even if the property is vacant.”
http://southflorida.bizjournals.com/southflorida/stories/2010/01/25/daily10.html
Mortgage Bond Securitization May Revive
But it will be slowly. More and more players will get back into the game. I think Rob Chrisman, who I got this article from, said it best:
“What is the American Securitization Forum? Darned if I know, exactly, but they were meeting in Washington DC and came out with a statement conjecturing that non-agency product (a $1.2 trillion market 4-5 years ago, $25 billion in ‘08 and $44 billion in ‘09) may start to be securitized again later this year. The reason? There’s more talk about it this year than last! Right now, however, jumbo loan production is pretty small, and profit margins are pretty slim since jumbo rates aren’t all that much higher than agency rates. (I have an idea! Let’s split the pools into tranches, and then have Wall Street work with the rating agencies… oh, never mind, I guess we tried that.) As I mentioned yesterday, banks are holding onto this product, but if other buyers materialize and the loans can be sold at profits, things could loosen up. Whole loan packages and syndications of interests in pools of loans may be steps in the right direction.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajsXmyJJltjs&pos=5
It’s Better To Be In 2nd Lien Position
Who would have thought that but I guess the article below does make sense to a certain extent. It is because the government programs are aimed at modifying the 1st mortgage since it is the larger one and will have a bigger impact on the borrower’s mortgage payment.
However, we also need to take a look at how many of these modify loans redefault along with short sales and foreclosures where the 2nd lien holder gets $1. A bank still wants to be in first lien position and I think the article is referring to a very small percentage of 2nd liens.
Banks Are Going After Deficiency Judgments
Filed under: Foreclosure, Short Sales | Tags: Deficiency Judgments, Foreclosures, Short Sales
Leave a Comment Even in short sale situations. I am copying and pasting what I feel is important because I am not an attorney.
“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”
“What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.”
I think you are going to see people buying these judgments for pennies on the dollar and going after everyone just to try to get something. I believe this is already starting to happen.
Homebuilders Battle Back
And they are doing this by driving their prices down to stay competitive with foreclosures along with warning against the hidden costs of foreclosures. That is a great argument seeing as so many have gotten burnt already with foreclosures and I fear that in years to come there are going to be a lot of title issues that pop up when they go to sell their home. I hope they are wrong but too many aren’t dealing with professionals and getting attorney representation. At the very least paying an attorney should give you piece of mind. If you need someone good in the South Florida area please do not hesitate to contact me so I can put you in touch.
“Builders can afford to lower their prices now in part because land is much cheaper. They’re also able to squeeze their suppliers and subcontractors harder. Housing starts are running at less than a third of the 2005 level, making suppliers and subcontractors eager for orders and willing to work for less.
Evaluate Potential Houses For Resale Value Before You Buy
I found this article on Twitter. It was written by another mortgage professional and I could not have said it better myself.
Lending Standards Remain The Same
They aren’t tighter or looser. The article does state that they remain tight which is true for certain things like condos and appraisals. But people who are getting a mortgage or have recently obtained a mortgage see this headline and automatically state that there is way too much that the bank is asking for. That may be true to a certain extent but it certainly doesn’t have to do with asking for your tax returns, W-2’s, all pages of your bank statements, explanation for large deposits, a divorce decree, property settlement agreement, etc. The bank has every right to ask for this to make sure you can afford the home.
This has always been required with Conventional and Government loans. If you got a mortgage a couple of years ago you may argue that this was never asked for but you probably have no idea what type of loan you got. If you were getting a true full documentation loan (Not a SISA, Freddie Mac LP Accept Plus, etc.) then you would have had to provide these things. Too many people think they know more about the business than the people who do it for a living. If you had any idea the amount of information a mortgage professional has to know right now they would get a lot more respect because it isn’t easy.
Quit complaining about having to save and email a document, it’s not hard. No one is asking you to swim the Atlantic. Be glad you didn’t buy 3 years ago. Be excited that you are getting a 30 year fixed rate in the low 5%’s or high 4%’s. Be happy that you are getting an $8,000 or $6,500 tax credit. Do I need to continue on?
