The real estate crisis that began in 2007 brought with it a whole new industry of loan modification and foreclosure rescue scams that have become a major problem for both homeowners and law enforcement across the country.
The loan modification scam stories are all quite similar.
A person or group of people start a company with the intentions of stealing money from unsuspecting consumers such as struggling homeowners who are looking for professional help to save their homes from foreclosure. These companies than make false promises to these homeowners that they cannot keep in order to obtain a large upfront fee usually to the tune of a few thousand dollars. In the end, these companies end up taking the money and not performing the promised work they said they would handle for the homeowner who ends up losing their money and often their home in the process.
These scams are often successful because these stressed out homeowners they defraud are often desperate to save their homes. This makes them the perfect target for white-collar crooks who capitalize on their vulnerability by creating elaborate scams so they can easily steal money from these people.
The best way to avoid these scams is for people to simply educate themselves on what to look out for. In this article I will list the most common type of frauds that homeowners encounter when seeking professional help for a loan modification. (more…)
Many homeowners and other property owners pay their dues to their local homeowners association (HOA). An HOA can be defined as a legal entity that manages and maintains a neighborhood. Although the members of the community (the property owners) fund the entity, they still must follow the rules put into place. These are generally known as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs).
As an entity that exists as a rule enforcer and as a fee collector, HOAs hold the power to foreclose on you if you do not pay your dues.
Property owners who live in a jurisdiction of an HOA probably know the rules of their community, but if you do not, it is essential that you study up on the powers that rule over you. If you default on HOA fees, the association can place a lien on your home which can lead to them foreclosing on you. (more…)
Delinquent borrowers living in non-judicial states have the luxury of not having to worry about their lender or servicer coming after them following a short sale or foreclosure. Someone living in a judicial state however faces the consequence of a deficiency judgment if they are going through a short sale or foreclosure.
The Logic of deficiency judgments
A deficiency judgment can be defined as the amount acquired through a delinquency sale (foreclosure auction or short sale) subtracted by a fair market estimation of the property (an appraisal). The sales are either conducted at a foreclosure auction, short sale, or through the lender itself. For example, a home that was recently appraised at $400,000, but that only sells for $300,000. The difference of $100,000 would be the deficiency judgment that the lender or servicer may sue the borrower if it is allowed under state law. (more…)
(Source: Realtor Brett Furman) – With millions of homes across the country being sold each year, and the increasing number of foreclosures and short sales, the process of selling your home has become more complex than ever before.
“Seller disclosure statements, lengthy and tedious forms, and the emergence of buyer-brokers have made the process one that is difficult to navigate. You’ll benefit from the services of a real estate agent with experience in many aspects of real estate transactions,” says Brett Furman, broker and owner of REMAX Classic in St. Davids, Pennsylvania.
Some of the distinct advantages of enlisting the services of a real estate agent include: (more…)
Private mortgage insurance (PMI) is an extra mortgage cost that is used to cover the risk to a lender, and that is paid by a borrower in monthly premiums tied into their mortgage payments. It is not for the benefit of the borrower. This extra insurance is for the purpose of helping the lender recover losses in case the borrower defaults on their loan.
This type of insurance is usually required by lenders when a mortgage loan amount is above 80% loan to value (LTV) and the borrower has less than a 20% cash stake in the property. A loan amount above 80% is considered a lot more risky to lenders, and in order to cover this risk, they require insurance which will pay them in case the borrower defaults on the loan. (more…)
Florida has been one of the top states for foreclosures since the crisis began in 2007. As of November 2013, the state had topped the charts once again with 1 out of every 392 housing units receiving a foreclosure notice. Thousands of struggling Florida homeowners have been foreclosed on, performed a short sale, or simply walked away from their homes over the past seven years and are now starting to feel the true pain of their unfortunate real estate pasts.
This pain that is starting to haunt Florida homeowners is what is called a deficiency judgement.
When a home is foreclosed on in Florida, it must be filed with the state courts through a judicial foreclosure. If the foreclosure is granted and there is more money owed by the former homeowner (borrower) than what is recouped by the lender from the sale of the home minus the costs and fees, this is called a deficiency.
This lender will then make a decision on whether or not they will pursue the person for a deficiency judgement. If the amount of money is large, and the ability to collect possible, they will most likely sue the defaulted borrower in order to obtain from the courts a deficiency judgement. (more…)
America is changing. It will simply never be the same.
However, some people are still trying to hold on to their old ways of living, which for many Americans is based on spending, debt, and consuming whatever their money and credit cards can buy.
If you take a walk down any typical American suburban street, you will see the old way of living with massive green grass lawns and towering trees that adorn every home on the block. Grass and trees that are not edible and that take a tremendous amount of water and effort in order grow. Some people have spent hundreds, and even tens of thousands of dollars on their landscaping and irrigation systems to essentially water vegetation that they will never be able to consume. But hey, it looks nice. (more…)
In 2012, the VA had assisted 72,391 Veterans and service members who were in default on their mortgages and help save their homes or stop foreclosure. That was an increase from 66,030 in 2011. As you can see from the numbers, tens of thousands of Veterans are currently having financial difficulties in this tough economy and it will probably get worse before it gets better. Hence, if you are having mortgage problems, you need to know that you are not alone in your struggle.
The VA has specific guidelines that they expect all mortgage servicers to follow in order to help veterans save their homes. Possible solutions include repayment plans, special forbearances, short sales, and loan modifications etc. For this article, I will list the general qualifications for a VA modification for those people who wish to save their homes and just need some help modifying their current home loans.
A loan modification is when your current mortgage servicers agree to change the terms of your mortgage, such as lowering your interest rate and/or allowing missed payments to be applied to your mortgage balance so that you can afford the monthly payments. The goal is to modify your loan so that you can get back on track long term and so that you can save your home.
What you need to know, is that the VA allows you a few options when you need a loan modification. They are a traditional loan modification, a VA HAMP loan modification and special assistance for deployed military through the Servicemembers Civil Relief Act (SCRA).
One of these programs is the traditional VA loan loss mitigation which is referenced in Title 38, Code of Federal Regulations, section 36.4819 (38 CFR 36.4819). If it is determined by the mortgage servicers that your payments are affordable under this traditional program, then it will most likely be used to help you avoid foreclosure. Any claim under guaranty on an unsuccessful case is limited to 210 days from the due date of the last paid installment, plus the published timeframe for foreclosure in the State where the security is located.
If you still cannot obtain an affordable payment through this method, then your servicer must evaluate your mortgage for what is called a VA HAMP (Home Affordable Mortgage Program) loan modification. The main goal of HAMP is to lower your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income, and any back end debt to ratios such a credit cards, car payments, installment loans, etc. not to exceed 55 percent of your gross income. If your back end ratio is more than 55%, you would be required to attend credit counseling in order to help with a budget to get that in check.
Another option for Veteran borrowers is through the law, by what is called the Servicemembers Civil Relief Act (SCRA). In order to qualify for certain mortgage protections available under the Act, your loan would need to be originated prior to your current period of active military service. SCRA may provide a lower interest rate for up to one year, and provide forbearance, or prevent foreclosure or eviction up to nine months from period of military service.
You may also seek a VA mortgage principal reduction. Here is some information from the VA on this program;
Under section 36.4315 of Title 38 of the Code of Federal Regulations (38 CFR 36.4315), VA authorizes loan holders to modify VA-guaranteed home loans without VA prior approval, as long as all conditions listed in the regulation are satisfied. When the Department of Treasury established the Home Affordable Modification Program (HAMP), VA issued Circular 26-10-6 to authorize modifications of loans in accordance with the HAMP guidelines, including principal deferment, even when the terms of modification differed from those allowed for traditional modifications under 38 CFR 36.4315. As the Department of Treasury modified HAMP to include a PRA, the fact that VA had authorized HAMP-style modifications meant that a loan holder could complete a PRA on a VA loan modification without seeking VA prior approval. VA considers the PRA as a partial prepayment of the loan (albeit by the holder), which is authorized by 38 CFR 36.4311.
The VA also offers supplemental servicing assistance to help cure the default through their Loan Guaranty program which has Loan Technicians in eight Regional VA Loan Centers, and two special servicing centers who will help you deal with your mortgage servicer in order to explore all options to avoid foreclosure. You can call (877) 827-3702 to reach the nearest Loan Guaranty office.
You can also get free mortgage help from housing counselors supplied by the Department of Housing and Urban Development (HUD). They have offices all around the country that you can search online at HUD.gov/offices/hsg/sfh/hcc/hcs.cfm, or call (800) 569-4287.