Foreclosure Bailout Loans are all the buy right now and for good reason. With many homeowners facing foreclosure and very few options. These loans are made when an NOD (Notice of Default) has been filed on a borrower.
This is a legit foreclosure bailout loan. Here are some brief guidelines on how these loans can be offered:
- Maximum Loan to Value (LTV) is 65-70%
- The borrower’s income will also need to be verified via tax returns and/or VOD/VOE
- Ability to repay. You must be working and have stable income
- Rate are typically 12-14%.
- May have a balloon at 3-5 years. Some lenders will do it for 30 years but I don't know who in their right mind would do that.
- Lender points are high. 4-5%/ points (Multiply your loan amount by 4-5% for fees) expect to be maxed out to the states allowable fees by law
Homeowners need to be aware of the scams and predators if you are facing foreclosure. Many companies see your bad fortune as an opportunity to steal the remaining equity from your home, often leaving you both homeless and penniless.
Here is how these Foreclosure Bailout Loan Scam companies work.
This is a 12 month Lease and Buy back loan... A Lease and buy back is when a lender will enter into a contractual agreement with you to purchase the home for a 12 month period and then sell you the home back (At the same price) The Max. LTV for approval is 85% (Meaning you must have at least 15% equity in the home).. There is an actual LTV formula but I will spare you the calculations.... Your credit score and employment history will be checked, however, they are not a factor on whether your loan is approved or not.
The borrower must have the ability to pay the monthly payments... The interest rate is a hard money status (10-12%) They may give you a Neg-am (Negative amortization) loan (It's kind of like an interest only) so that the homeowner can make the payments on time. (trick to steal equity)
After 12 months the ownership will be transfered back to the homeowner at the same price it was bought...
The only problem with this is that 12 months is no way near enough time to work on your credit and get your scores high enough to obtain a new mortgage and many lenders will not give you a mortgage for 2-3 years after and NOD is on your credit.
So please be aware that this is just a scheme to take you home under the guise of a foreclosure bailout loan. 
Foreclosure Bailout Loans - The Truth 
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