Mortgaging the Future?

Here is a great article from the Federal Reserve Bank of San Francisco research department on a study of bank lending and how the expansion in credit over the last 50 years or so had caused the ratio to GDP to have quadrupled in advanced economies.

A dramatic growth caused mainly in mortgage loans backed by real estate. (more…)

Fannie Mae and Freddie Mac to Streamline Loan Modifications for Struggling Homeowners

The  two Government-sponsored enterprises (GSEs), Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), announced on Tuesday that they are changing the way they modify some mortgages.

The reason for the change is because many of the loans previously modified under the Home Affordable Modification Program or “HAMP” were often fixed for only five years. Many of these homeowners are now struggling, or simply cannot make their higher monthly mortgage payments once their rates had adjusted upward. (more…)

Required paperwork needed to apply for a loan modification

When you apply for a loan modification, your mortgage servicer is going to review your entire hardship and financial situation to determine your eligibility for a modified payment. With that said, you will need to gather all the required paperwork and financial information required to begin the process.

Here’s a quick and simple list of items you will need to apply for a loan modification. Keep all these documentations in a folder that is easily accessable, and please keep in mind that you may have to send this paperwork many times to your mortgage servicer because they will claim they never got it, or you need to update it, etc. (more…)

Debt to Income Ratios for a Mortgage

When you are applying for a mortgage or a loan modification, the lender will want to know if you have the capability to pay back the loan. They do this by calculating your debt to income ratio which is the percentage of your monthly gross income that goes toward paying debts. Your gross income is your entire income that your receive prior to any tax deductions.

The higher your debt to income ratio, the higher the chance that you will default on your payments in the future. If it is too high, you are denied, and if it is low or right on target, then you are approved. (more…)