Positive Real Estate Professionals

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.

When Rich and I started up PREP, we made a commitment to bring positive news to the public’s attention. Too many times the media puts out statements that are so generalized it leaves mortgage people like myself and Fred Chamberlin scratching our heads. Below is another great post by Fred that might help you clear up some misconceptions that you have heard. As always, if you have questions, then please ask.

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

My last blog entry discussed conventional mortgage loan pricing and how to determine what PAR pricing is. Without that information, how can you know that the 4.5% interest rate you are being offered is really a great rate. Now, I want to go over the other pricing issues with conventional mortgage loans. Real estate purchase and refinancing are subject to a number of different pricing issues. First time home buyers should pay special attention to the following information. This information is available to the home buyer if they ask for it, but most times they only want the bottom line.

In my last blog, I showed how the PAR rate was calculated but I didn’t go into the additions and subtractions that effect the final pricing. Most pricing are calculated by a combination of credit score (CS) and loan to value (LTV). So, let’s discuss how these work together. Every lender will have their own additions and adjustments, these are an example.

First, purchase of an owner occupied property:

1. 740 is the new standard for conventional loans.
2. Below 620 will probably not be accepted for conventional pricing.
3. 60% and below LTV gets the best pricing. There are no adds for under 60% for any credit score above 620 and actually subtractions for CS over 700.
4. Over 60% to 80% will go up in cost. For example, 640 CS at 80% will cost 2.25% in fee. Over 80% actually comes down in loan cost because of mortgage insurance protection.
5. 5. If the property is a 2-4 unit property, there is a cost of 1% fee.
6. 6. If it is a manufactured home (M/H), there is a 1.5% fee.

So, add all that applies and get the bottom line. Example, 650 credit score, 20% down, manufactured home is an addition of 2.25% for the CS/LTV and 1.5% for M/H or a total of 3.75%. Now, looking at Friday’s pricing, we have 4.875 at close to par (you never get exactly there) and 5.25 with a 1% rebate. So, the choice is paying a total of 4.75% in fee to get a 4.875%/5.361% APR rate or 3.75% in fee to get the 5.25%/5.660% APR rate. That is one of the reasons that FHA loans are often more cost effective for lower credit scores.

Now, if it is a cash out refinance, and that includes paying of a second mortgage as part of this loan, the cost goes up again. Even with a credit score of 740, there is a cost for a cash out refinance over 70% loan to value. Rate sheets are not for public dissemination but I am always willing to discuss what the rates are and the actual costs based on loan to value and credit score. If you are interested in finding the loan that is right for you, ask the right questions.

If it is an investment property, the additions are even more, from 1.75% to 3% depending on loan to value again, in addition to the other additions.

Calling someone on the phone and asking what the rate is won’t get you the information that you need to make a decision. As you can see, there are several things that are involved in finding out what your personal mortgage rate is. Oftentimes, first time home buyers are not aware of what goes into quoting a rate and will go with what they are told on the telephone. Anyone that quotes a mortgage rate on the telephone doesn’t have enough information to make that decision. Develop a relationship with your mortgage lender.

The United States Department of Agriculture may not seem like a vehicle for home loans but as Fred Chamberlin explains in another excellent and informative post, utilizing the often overlooked USDA mortgage programs can be a real benefit to many prospective home buyers. Though Fred primarily discusses the use of USDA loans in Oregon and the Pacific Northwest, these loans are available in most parts of the United States.

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

The USDA Rural Guaranteed Loan Program is an exceptional vehicle for first time home buyers who often times have trouble coming up with the down payment. The credit crunch keeps some home buyers sidelined because of credit problems, many others with good or adequate credit are able to purchase real estate and get best deals in years, including mortgage programs with no down payment like this! Large portions of Lane County qualify for this program.

This loan program is available right now for Florence, Veneta, Junction City, Cottage Grove, Creswell, Oakridge, Westfir, Swiss Home and Pleasant Hill. The credit guidelines are quite liberal and more people can qualify that may think they can.

To qualify for the program (it is income limited), a family of four cannot have a total household income of more than $70,750 per year. That is a pretty liberal guideline. After Jan. 1, a family of 1-4 qualifies with the same income. Larger families have much higher income limits.

If you are interested in property in this area and would like to see if the address falls within the USDA “footprint” click here.

So – THE TIME IS RIGHT!  We have many properties on the market, we have MONEY TO LEND, and the Federal Government is giving First Time Homebuyers a $7500 tax credit if they purchase prior to next summer!

Visit Fred for more information on USDA mortgage loans in Lane County, and to see if your household income qualifies for this NO PMI (private mortgage insurance) loan check this link.