Positive Real Estate Professionals

Earlier today I left a comment on the last article that was written on PREP called Common Myths and Misconceptions about FHA Loans. First, let me say that I was glad to see some conversing going on and I want to thank those that do comment. With that said, today, I am going to step out of my normal trend of talking about the positive aspects of the Real Estate and Mortgage industries to tackle the subject of negative media and the grip that it has on the public. I told them that I would finish answering their question in this new article.

Today, I was reading an article from a blogger that also discusses the mortgage industry. I was shocked to read that he was telling his readers in a nutshell that it takes a 740 credit score and at least 80% equity in a property for someone to get the lowest rates on the market. So, in essence, he wants you to believe that unless you have these scores and loan to value, you will not get 4.5% if that is the lowest rate on the market. While that may be true in essence, it misses the target. While you might not get the “lowest rate in the market, you might get very close with less credit score and a higher loan to value. Each loan is different.

So, let’s get back on subject here. I ran into this article in the social media world. I was amazed at how many people had thumbed up this particular article. Whether people realize it or not, when you thumb up an article in social media, it is basically making the statement that you agree with that particular article and the context in there. With that being said, this was the first time that I have realized that the negative media has its claws into the consumers so deep that they actually believe the garbage that is being feed to them. That is one of the reasons were are in the position we are in now, people didn’t do the necessary research.

In this particular article they blame most failed applications on the appraised value of the property not coming in. They blame that on the foreclosures and all the short sales that are going on. There is no way to combat the drop in appraised value, however, we need to realize we are part of the problem. During falling Real Estate times, the buyers begin to act like vultures. When someone starts drowning, they start circling. When the person has reached the last rung on the rope, the vulture pushes them just a little more. In this mentality, values of properties will continue to fall until people start resisting. This feeds into the negative media and just strengthens the stronghold that they have already obtained.

Now, what these same people do not realize is that the very property that they bought today can go down in price if other people do the same thing that they did. Or, even worse, let’s say that they bought an investment property and they are not really concerned with value at this point. But, in the neighborhood that they live in, the house next to them sells in a foreclosure and one just at the end of the street is a short sale, their house will also suffer in value. In principle, the same method that they used to buy the investment property is also the same method that caused them to lose equity in their primary residence.

So, in closing, let me say this. You have to be careful what you listen to and wish for. In the end, it can be what eats you up. The reason you buy a home primarily is to have a place to live. Shelter is one of the basic human needs. Consider what this means when you are looking at houses, will this fit your needs? Waiting until the last rung on the ladder will probably mean you missed it. No one knows where the bottom is until it on past.

If you have questions or need advice, please feel free to ask. If Rich or myself cannot answer it, we will find someone that can give an accurate answer. Having someone in the business that will work for your best interest is very important.

One of the biggest questions that is being asked today is how to combat foreclosure when you are faced with it. Fred Chamberlin sheds some light on this very important subject. We have reposted his most recent article for everyone to see. If you have questions, then please ask and we will direct you to the right person you need to speak to.

Via Fred Chamberlin – Eugene/Springfield’s #1 Experienced FHA Mortgage Consultant:

Becoming a home owner is a great accomplishment but retaining the home is just as important. There are several things that the home owner can do to avoid foreclosure. Most everyone encounters financial difficulties at one time or another, it is how you handle those difficulties that could lead to foreclosure or help you survive and keep your home. With the negative press about the rise in foreclosures, I thought it was time to talk about how to avoid the stigma of foreclosure. I will be giving you some information about ways to legally, and ethically, retain ownership in your home.

Foreclosure is a legal means for your lender to take your house if you are in default. Foreclosure can be initiated by anyone with a lien on the property, including the county if you don’t pay your taxes. Foreclosure not only means that you lose your home, but it can significantly damage your credit for years to come.

There are things you should have already done if you are falling behind, but if you haven’t, start now. Review your loan documentation. See what your rights and responsibilities are. Is there a pre-payment penalty on your loan? Can you make any type of partial payments? How is your payment credited? Has your loan been transferred to a different servicer than the one that made the loan? Were you properly notified and were your payments posted correctly?

In the case of payments not being credited properly, contact the National Servicing Center. This is operated by the Department of Housing and Urban Development (HUD). You can reach them at 888-297-8685 or on the net at www.hud.gov/offices/hsg/sfh/nsc/nschome.cfm. Foreclosure prevention counseling is also available through HUD at 800-SAFENET or 800-723-3638 or on the net specific to Oregon at www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=OR. For other states, just change the last two letters to your state’s abbreviation. Local help can be received through NEDCO. Please check out my blog about NEDCO on Active Rain.

Here are some ways to avoid foreclosure, some good, some not so good.

· Forbearance – Ask your lender to reduce or suspend your monthly payments. Often times it will be added to the end of the loan. Most often this will cause late payments to be posted to your credit report.

· Mortgage Modification – This is currently a very popular way of handling a temporary problem. Most lenders will not entertain a modification unless the borrower is delinquent. You can do this yourself or ask a company to handle the process for you. If you are having difficulty getting the lender to work with you, give me a call, I can refer you to a reputable modification company.

· Partial Claim – If you have an FHA loan, your lender can ask for a partial mortgage insurance claim to bring you current. There are several requirements for this to work, not the least being that the underlying problem has been resolved. This amount will also need to be repaid.

· Pre-foreclosure sale – This allows you to sell the home prior to the bank taking it back. An additional option in this is a short sale which allows for the home to sell for less than is owed on it due to market conditions.

· Short Sale refinance – handled just like a short sale but is an actual refinance of the property after the bank agrees to release the lien for less than is owed on it. Since the FHA Secure is no longer in existence, this will probably only work with a loan that is current.

· Hope for Homeowners – This FHA program has not been a rousing success. Currently, the only operational use of this program that I know of is for those loans serviced by Wells Fargo and the new loan made by Wells Fargo. I am sure there are other lenders available; you will need to ask your servicing company.

· Deed-in-lieu of foreclosure – With this option you “give back” your home to the bank and avoid foreclosure. It still counts the same as a foreclosure on your credit.

· VA Interest Rate Reduction Refinance Loan (IRRRL) – This can be done on a delinquent VA loan under certain circumstances. The main condition for this to work is that the reason for the delinquency must no longer exist.

· VA Refinance – VA refinance of existing conventional (sub-prime) loans to help a veteran that may be having difficulty. Must be a veteran and qualify for the new loan.

Delinquency on your mortgage is a serious business. There are counselors available through several sources to help you if you are in trouble. Don’t lose your home because you were unwilling to ask for help. There are numerous agencies that are available to help home owners with their finances. If you can’t find someone locally, call the number for HUD. There are times that even tough people need help. There are positive ways to make it through tough times.

Fred Chamberlin breaks out with another article that can help during this economic crisis that we are in. If you are unfamiliar with HUD’s new Neighborhood Stabilization Program, then you most certainly want to read this very informative post by Fred. This is a great program that can help the local government acquire some of these foreclosed properties.