Another Government Foreclosure Help Plan Failure?
May 22, 2009, 10:53 amPosted by Nick in Government Intervention Rating: 0/5 Votes : 0
digg_skin = 'compact';
The government, since the financial crisis began, has been offering one preposterous foreclosure help program after another in a blind attempt to keep property owners in their homes. All the while, the same banks and companies that helped set the mortgage market up for failure have been given essentially free handouts from Congress.
The latest government failure to be discovered is Fannie Mae's HomeSaver Advance program, which was begun over a year ago in February 2008. The brilliant plan was to allow servicing companies to give homeowners in financial hardships and facing foreclosure a personal loan. The idea was to give homeowners a line of credit they could tap into to pay their mortgages until they were back on their feet financially.
Hopefully, most people by now realize that a problem caused by too much credit and too little income can not be solved by more credit and an unchanged income. But this was the course of action that Fannie Mae embarked upon to assist borrowers in default of their home loans.
Now that Fannie Mae and Freddie Mac have become government run corporations, the failure of such programs costs American citizens directly, as they are providing some of the funds to bail out these companies and keep government foreclosure assistance operations going. And just as with a number of the other government solutions to foreclosure, Fannie Mae's HomeSaver Advance has been a disaster.
Close to 70% of the personal loans made through the program are redefaulting, putting the homeowners back into foreclosure. The only difference now is that they have even more debt to default on, and the American government has even more Fannie Mae debt on its balance sheet.
It seems that, with each new failure of a program to help homeowners in foreclosure, the American people have more of their money taken from them to provide additional funds to the companies or organizations offering the failing programs. And while all of these programs have benign-sounding names, they are offering little more than a false sense of security to borrowers who later fall back into foreclosure.
After the failure of this program, Fannie Mae has begun shifting its resources in the direction of mortgage modification programs, rather than extending personal loans to foreclosure victims. If the government's previous modification numbers are any indication, this move will result in an additional 10-20% of homeowners receiving assistance.
Of course, this still leaves 50-60% of homeowners receiving government sponsored or guaranteed modification programs back in foreclosure within six months. But at least it is not a 70% redefault rate, as with the HomeSaver Advance program.
Maybe, if the government comes up with enough foreclosure assistance programs, it will finally hit upon one that allows borrowers who can afford to pay their mortgages do so, and allows homeowners who can not keep their homes not become a huge drag on the housing market or economy in general. I am doubtful of this result, however.
Instead, the politicians seem to think that they can run the mortgage markets better than anyone, despite 50-70% redefault rates, allocating more than $300 billion to help a single homeowner, decrying "frozen" credit markets while imposing new limits on consumer lending, and taking resources from productive consumers to prop up bankrupt industries and companies.
But who knows? Maybe a relative handful of experts knows more about the economy than all the rest of us combined.
Tuesday, July 21, 2009
Monday, June 22, 2009
Loan Modification vs. Refinance.
How much money can a modification or a refinance save me?
Sure, I bet that is a question many of you are wondering. Well the math is pretty simple really.
A savings of merely $200 a month can save you $72,000 dollars over the course of a 30 year loan!
How about $300 a month...$108,000 savings!
$400 a month? $144,000 savings!!
$500 a month? $180,000 savings!!!!!
Those are some real numbers.
Think about this. Many people refinance so that they can lower their monthly rate. Why are you lowering your interest rate?
IT SAVES MONEY MONTH AFTER MONTH! Theoretically, a refinance should lower your payment if you are lowering your interest rate. There are several reasons why this would not happen.
1. You took cash out for whatever reason and now your loan amount is much higher.
2. Maybe you dropped it from 30 years to 15 years (I don't know why anyone would do such a thing! *ask me and I'll tell you why)
3. You added escrows where you didn't have them before.
4. Now you have MI where you didn't before.
Anyhow, most of these are still money savers except for the last one.
Ok now let's say you had a mortgage for 4 years and paid $1500 a month for. Let's just say that was all interest. Now you refi and get a new 30 year loan.
WHAT ABOUT THE $72,000 DOLLARS YOU JUST PAID FOR 4 YEARS!!!! Where did that go? In your mortgage companies pocket! Now think about how much you really need to save to compensate for that! It's mind boggling.
The thing is, a refinance is never cheap. There are so many closing costs involved that end up getting added to your loan, thereby eating in to those savings you are trying to create. Closing costs can increase your loan anywhere from 4k-10k or more depending one your loan size.
$1495 for a loan mod? Pretty inexpensive if you consider the options.
PLUS...The interest rate you get is only based on current market. If the average out there is 5.5%, well then that's what you might get...if you can even qualify! The market has made it so that most people cannot refinance at all. Unless you are one of the few that have 700 credit scores still, and actually have equity in your home, good luck getting refinanced. FHA allows 620 scores but you still have to owe less than what the house is worth. With the real estate downturn, you would be very fortunate if you are not included in that number.
According to CNN "41.2% of all mortgages for homes bought in the past five years are 'underwater'".
That does not include all the homeowners who refinanced and cashed in their equity when their values skyrocketed.
With a loan modification, you may be eligible for rates that are well below the market average.
I have seen countless people get anywhere from 2-4% interest rates!!!
Remember if you are eligible for a refinance, then this is not for you.
A loan modification does not require credit to qualify, you don't need any equity, in fact if you are "upside down" that's even better.
In all, you must be in a situation that is keeping you from being eligible for a regular refinance.
Think about it. If you really think about it, you will see that what I say is true. Do your own research. I certainly have.
Thank for taking the time to stop by.
Dennis
Sure, I bet that is a question many of you are wondering. Well the math is pretty simple really.
A savings of merely $200 a month can save you $72,000 dollars over the course of a 30 year loan!
How about $300 a month...$108,000 savings!
$400 a month? $144,000 savings!!
$500 a month? $180,000 savings!!!!!
Those are some real numbers.
Think about this. Many people refinance so that they can lower their monthly rate. Why are you lowering your interest rate?
IT SAVES MONEY MONTH AFTER MONTH! Theoretically, a refinance should lower your payment if you are lowering your interest rate. There are several reasons why this would not happen.
1. You took cash out for whatever reason and now your loan amount is much higher.
2. Maybe you dropped it from 30 years to 15 years (I don't know why anyone would do such a thing! *ask me and I'll tell you why)
3. You added escrows where you didn't have them before.
4. Now you have MI where you didn't before.
Anyhow, most of these are still money savers except for the last one.
Ok now let's say you had a mortgage for 4 years and paid $1500 a month for. Let's just say that was all interest. Now you refi and get a new 30 year loan.
WHAT ABOUT THE $72,000 DOLLARS YOU JUST PAID FOR 4 YEARS!!!! Where did that go? In your mortgage companies pocket! Now think about how much you really need to save to compensate for that! It's mind boggling.
The thing is, a refinance is never cheap. There are so many closing costs involved that end up getting added to your loan, thereby eating in to those savings you are trying to create. Closing costs can increase your loan anywhere from 4k-10k or more depending one your loan size.
$1495 for a loan mod? Pretty inexpensive if you consider the options.
PLUS...The interest rate you get is only based on current market. If the average out there is 5.5%, well then that's what you might get...if you can even qualify! The market has made it so that most people cannot refinance at all. Unless you are one of the few that have 700 credit scores still, and actually have equity in your home, good luck getting refinanced. FHA allows 620 scores but you still have to owe less than what the house is worth. With the real estate downturn, you would be very fortunate if you are not included in that number.
According to CNN "41.2% of all mortgages for homes bought in the past five years are 'underwater'".
That does not include all the homeowners who refinanced and cashed in their equity when their values skyrocketed.
With a loan modification, you may be eligible for rates that are well below the market average.
I have seen countless people get anywhere from 2-4% interest rates!!!
Remember if you are eligible for a refinance, then this is not for you.
A loan modification does not require credit to qualify, you don't need any equity, in fact if you are "upside down" that's even better.
In all, you must be in a situation that is keeping you from being eligible for a regular refinance.
Think about it. If you really think about it, you will see that what I say is true. Do your own research. I certainly have.
Thank for taking the time to stop by.
Dennis
Wednesday, June 17, 2009
Its not just a cliche, it's absolutely true!
Have you ever heard the old cliche, "You get what you pay for"? In the loan modification business, it is proving to more and more true every day.
Working in the mortgage and modification business, I speak to people on a daily basis regarding their experiences in working with lenders, modifiers, and the government . Many people today believe they can get assistance for free...in fact you read it and hear it everywhere. You can call your lender or the government directly and get your modification done for free. It's absolutely TRUE, but..."you get what you pay for".
For example...I spoke with a gentleman a couple of months ago who is going through many of the same problems homeowners are facing these days. He contacted the government about getting "free" help and went on the explain that he really wanted to save his home but didn't know how.
Now get ready, here's the kicker...the government representative told him "You might as well mail them (bank) your keys and get ready to pack up and move."............. O-M-G!!!
Does this sound like Obama's plan being put into action properly? I don't think so. Needless to say this modification was so easy to get done that we had it done in less than 30 days and typically it can take anywhere from 30-90 days.
Another customer I worked with tried going directly to his lender. He qualified for a loan modification , expected results, and was excited it wouldn't cost him anything. He currently had a 9% adjustable rate and was having an extremely difficult time paying it, and was already 3 months behind. The rate was set to adjust to 12% and if that happened, he was surely never going to be able to catch up.
Ok...are you ready??? His lender, who shall remain nameless, offered him 9.5% fixed. Ok, I'll grant the fact that it was helping by the mere fact that it was now fixed and won't adjust but still!! The rate still went up even though he is experiencing serious trouble making the payment at 9%. Can someone please tell me how this is going to help? I think you can very well see that it will not. We obtained 4% fixed for the remainder of his loan.
Please understand that the lenders are in this to make the best deal for themselves that they possibly can. It's like going to the car dealer and trying to negotiate a good deal. You NEVER take the first price they offer, everyone knows that! The dealer is not going to just give you the bottom line price even if you ask for it. You are going to go back and forth until you reach a mutually agreed on sales price. So it does not surprise me that the modification department for this customer did the bare minimum to help.
I'm sure you see where I am going with this. "You get what you pay for" in many cases.
Look at it this way for a moment. If you were, hypothetically, in trouble with the law and you needed representation in court...would you represent yourself? What's the old saying? "He who represents himself, has a fool for a client." Even attorney's aren't foolish enough to represent themselves.
Sure, perhaps you can represent yourself and make progress. But would you leave it up to chance and hope that you have what it takes to get you out of a mess? Unless you are an attorney, you just don't have the law experience or education to represent yourself. It just wouldn't be in YOUR best interests, would it?
Similar applies here. There is so much to know about the mortgage industry and when it comes to modifying your mortgage, leave it the mortgage professionals. Someone who knows the in's and out's of the mortgage business can really help you get the best deal you can possibly get. It is not like a mortgage loan where the higher the rate the more we get paid. It is not like a bunch of points will be charged on your loan at the last minute. It just cant happen, this is not a refinance. There is no bait and switch. There are, however, scammer out there to take your money so just be careful.
This brings me to another issue. I used the "attorney" scenario to prove a point. Yes, if you are in trouble with the law, use an attorney. If you need to file bankruptcy, sure use an attorney (not really necessary). When it comes to a modification, YOU DO NOT NEED AN ATTORNEY! I keep reading all over the place about needing an attorney for this.
It's just not true. In fact you don't really "need" an attorney for anything. I can guarantee this, if you use an attorney, you will pay a lot more. I can also guarantee that many of these attorneys know less about mortgages than your average loan officer. So how can they help? They will probably do a little better than you can on your own, I'll give them that. But that is mainly because of the ".esq" after their name. I'm not trying to put attorney's down at all, I'm just trying to explain to you that if you beleive you "need" an attorney for this, you are mistaken. It may be your choice to use an attorney... but definitely not a necessity. (I can't wait to see all the attorney's posts on here)
Some things you need to be aware of when looking for a modification company.
1. Do they offer a 100% money back guarantee? If so what are the terms? Are they reasonable?
2. Are they a licensed?
3. Are they taking payments immediately over the phone with a credit card? Beware of this. Many times they are just taking money and never provide a service.
4. Do they out source the modification or do they actually do them "in-house" themselves? You really want a company that does it themselves. There are many companies out there that take your money and then pay another company to do the modification for you. What is that all about! I think you can see the problems with that.
5. Do they ask you to pay them a full mortgage payment and tell you that this payment shows your lender "in good faith" that you can afford to make the payment? This is BS! They make it seem like they are giving the money to your lender when, in fact, they are keeping it for themselves. And if your mortgage payment is $3000 and the next person's payment is $1200, why should you pay more for the same exact service?
Ultimately, although "You get what you pay for"...you really have to be careful who you pay as well. You should never pay more than $1500 for a modification . Anything over $2000 is just a rip off. Keep an eye out for these tell tale signs and you will basically have to make the decision for yourself. If you don't make a decision to help yourself, I can guarantee one thing...you will end up in foreclosure.
I am tired of seeing folks paying hard earned money and not getting anything in return.
I am tired of seeing people get ripped off!
I am also tired of people blaming everyone else and not getting off of their butts to do something about it!
I'm telling you like it is because I care. We can sit here and beat around the bush all day long but what is that going to do to help resolve your problem? Zero, zilch, nada.
So due your diligence and find a company that you can trust to help you with your modification. Make sure you get everything in writing and take a couple of days to decide. Ask your friends and family. Maybe someone you know had a modification done and are very happy.
Remember...expensive is not always better, free is almost never free (it will cost you something even if it's not cash), and ignoring it will only make it go away...(your home that is). If you dont do something about it you will lose your home. If you have received a "Lis Pendens", you better hurry. If you have received a sale date, you better RUN and GET IT DONE!
I can't stress it enough people! The SAVE OUR HOMES ACT does nothing if you do you not ACT TO SAVE YOUR HOME!!! Just be careful when choosing. Make sure you feel comfortable that they have your best interests at heart and that they are going to work hard for you.
If you need any advice please feel free to contact me directly. I would be more than happy to speak with you.
Sincerely and respectfully,
Dennis Rosa
727.722.9111 x 2223
Working in the mortgage and modification business, I speak to people on a daily basis regarding their experiences in working with lenders, modifiers, and the government . Many people today believe they can get assistance for free...in fact you read it and hear it everywhere. You can call your lender or the government directly and get your modification done for free. It's absolutely TRUE, but..."you get what you pay for".
For example...I spoke with a gentleman a couple of months ago who is going through many of the same problems homeowners are facing these days. He contacted the government about getting "free" help and went on the explain that he really wanted to save his home but didn't know how.
Now get ready, here's the kicker...the government representative told him "You might as well mail them (bank) your keys and get ready to pack up and move."............. O-M-G!!!
Does this sound like Obama's plan being put into action properly? I don't think so. Needless to say this modification was so easy to get done that we had it done in less than 30 days and typically it can take anywhere from 30-90 days.
Another customer I worked with tried going directly to his lender. He qualified for a loan modification , expected results, and was excited it wouldn't cost him anything. He currently had a 9% adjustable rate and was having an extremely difficult time paying it, and was already 3 months behind. The rate was set to adjust to 12% and if that happened, he was surely never going to be able to catch up.
Ok...are you ready??? His lender, who shall remain nameless, offered him 9.5% fixed. Ok, I'll grant the fact that it was helping by the mere fact that it was now fixed and won't adjust but still!! The rate still went up even though he is experiencing serious trouble making the payment at 9%. Can someone please tell me how this is going to help? I think you can very well see that it will not. We obtained 4% fixed for the remainder of his loan.
Please understand that the lenders are in this to make the best deal for themselves that they possibly can. It's like going to the car dealer and trying to negotiate a good deal. You NEVER take the first price they offer, everyone knows that! The dealer is not going to just give you the bottom line price even if you ask for it. You are going to go back and forth until you reach a mutually agreed on sales price. So it does not surprise me that the modification department for this customer did the bare minimum to help.
I'm sure you see where I am going with this. "You get what you pay for" in many cases.
Look at it this way for a moment. If you were, hypothetically, in trouble with the law and you needed representation in court...would you represent yourself? What's the old saying? "He who represents himself, has a fool for a client." Even attorney's aren't foolish enough to represent themselves.
Sure, perhaps you can represent yourself and make progress. But would you leave it up to chance and hope that you have what it takes to get you out of a mess? Unless you are an attorney, you just don't have the law experience or education to represent yourself. It just wouldn't be in YOUR best interests, would it?
Similar applies here. There is so much to know about the mortgage industry and when it comes to modifying your mortgage, leave it the mortgage professionals. Someone who knows the in's and out's of the mortgage business can really help you get the best deal you can possibly get. It is not like a mortgage loan where the higher the rate the more we get paid. It is not like a bunch of points will be charged on your loan at the last minute. It just cant happen, this is not a refinance. There is no bait and switch. There are, however, scammer out there to take your money so just be careful.
This brings me to another issue. I used the "attorney" scenario to prove a point. Yes, if you are in trouble with the law, use an attorney. If you need to file bankruptcy, sure use an attorney (not really necessary). When it comes to a modification, YOU DO NOT NEED AN ATTORNEY! I keep reading all over the place about needing an attorney for this.
It's just not true. In fact you don't really "need" an attorney for anything. I can guarantee this, if you use an attorney, you will pay a lot more. I can also guarantee that many of these attorneys know less about mortgages than your average loan officer. So how can they help? They will probably do a little better than you can on your own, I'll give them that. But that is mainly because of the ".esq" after their name. I'm not trying to put attorney's down at all, I'm just trying to explain to you that if you beleive you "need" an attorney for this, you are mistaken. It may be your choice to use an attorney... but definitely not a necessity. (I can't wait to see all the attorney's posts on here)
Some things you need to be aware of when looking for a modification company.
1. Do they offer a 100% money back guarantee? If so what are the terms? Are they reasonable?
2. Are they a licensed?
3. Are they taking payments immediately over the phone with a credit card? Beware of this. Many times they are just taking money and never provide a service.
4. Do they out source the modification or do they actually do them "in-house" themselves? You really want a company that does it themselves. There are many companies out there that take your money and then pay another company to do the modification for you. What is that all about! I think you can see the problems with that.
5. Do they ask you to pay them a full mortgage payment and tell you that this payment shows your lender "in good faith" that you can afford to make the payment? This is BS! They make it seem like they are giving the money to your lender when, in fact, they are keeping it for themselves. And if your mortgage payment is $3000 and the next person's payment is $1200, why should you pay more for the same exact service?
Ultimately, although "You get what you pay for"...you really have to be careful who you pay as well. You should never pay more than $1500 for a modification . Anything over $2000 is just a rip off. Keep an eye out for these tell tale signs and you will basically have to make the decision for yourself. If you don't make a decision to help yourself, I can guarantee one thing...you will end up in foreclosure.
I am tired of seeing folks paying hard earned money and not getting anything in return.
I am tired of seeing people get ripped off!
I am also tired of people blaming everyone else and not getting off of their butts to do something about it!
I'm telling you like it is because I care. We can sit here and beat around the bush all day long but what is that going to do to help resolve your problem? Zero, zilch, nada.
So due your diligence and find a company that you can trust to help you with your modification. Make sure you get everything in writing and take a couple of days to decide. Ask your friends and family. Maybe someone you know had a modification done and are very happy.
Remember...expensive is not always better, free is almost never free (it will cost you something even if it's not cash), and ignoring it will only make it go away...(your home that is). If you dont do something about it you will lose your home. If you have received a "Lis Pendens", you better hurry. If you have received a sale date, you better RUN and GET IT DONE!
I can't stress it enough people! The SAVE OUR HOMES ACT does nothing if you do you not ACT TO SAVE YOUR HOME!!! Just be careful when choosing. Make sure you feel comfortable that they have your best interests at heart and that they are going to work hard for you.
If you need any advice please feel free to contact me directly. I would be more than happy to speak with you.
Sincerely and respectfully,
Dennis Rosa
727.722.9111 x 2223
Subscribe to:
Posts (Atom)
