Joy Olivia Miller

Archive for the ‘Mortgage’ Category

Lately, there are many reports about mortgage banks being less functional and considerably fussier with mortgage applications. After the details of foreclosure mess made public it is barely astonishing to hear such reports. At times, to an disturbing level providers check twice and verify third time the details entered in the application forms and additional documentations. Then at the end they like to recalculate the home loan amount and readjust their rates that induce real stress on applicants. As a result of one or two fraud occurrence and plenty mishandled mortgage papers, lenders are now being over zealous.

They are investigating and requiring the applicants account for every penny within down payment. Double verifying income and employment documents and triple pulling the credit ratings that it is exceptional they achieve to issue any mortgages at the end of the day. Stories of displaced documents, requiring the exact documentation several times over seem to be everyday affair in some of the mortgage banks. Unfortunately, it does not help that you have accumulated a few years of account history with the same bank and the down payment was sitting in your account for a while.

These problems are seen even in some large lenders. Some of these concerns are the consequences of laying off a few experienced mortgage workers in recent times and part of them because of rules that interpreted poorly by certain banks and their employees. Unfortunately few of the companies look to have systemic issues and doing a quick search online will tell their identity. Do not be startled to see few giant banks in the lists of most problematic mortgage handlers. Unless they are offering remarkably low rates stay away from such home loan providers. These are timely signals of likely troubles in the future. There are plenty great small and large lenders that you do not need to care about incompetent ones. Plus you want your application to be passed with minimal headache eventually.

When you are thinking of buying a house there is a good chance you will need a mortgage to be able to complete the transaction. However, for some people this becomes more difficult because they will not pass (or do not want) a credit check. This means that many lenders will not want to take the risk in supplying them with a home loan. Fortunately there are some financial institutions that have started to offer no credit check mortgages.

These type of mortgages offer an alternative for those who might have a poor credit history or no credit history at all. In most cases to apply for a no credit check loan you will need supporting documentation such as; savings history, earnings or investments and any other relevant information that will help the lender make their decision.

For all the benefits of this type of home loan there are also some disadvantages that should be considered. Generally this type of loan will have a higher interest rate attached to it meaning that you will pay more over the life of a loan than if you had a standard mortgage. Some lenders will also require you to put a larger down payment on the home you want to buy.

Before you make any decisions it is a good idea to compare the different loans from the many available lenders. With this research you will be able to find the best loan for your needs and you might even save a few dollars in the process. You could talk to a mortgage broker, but one of the best ways to conduct your own research is to use the Internet!

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Being a First Time Home Buyer can increase the difficulty in the process of obtaining finance, not only due to the lack of credit history that it implies but because of the inexperience and lack of knowledge on the field. Following, you will find some tips to help you get started.

The Down Payment Issue

A Down payment in the range of 10% to 20% is usually required for obtaining a home loan to buy a house. There are also closing costs that you’ll need to pay in order to secure the loan. If you add up these two factors, very few can afford putting down so much money.

The financial industry, however, has found a solution to this problem and offers a new financial option. Zero Down Mortgage Loans are meant for those who cannot put away enough money for a down payment. With these loans you can finance 100% of the property’s value. Moreover, for those who cannot even raise the money for closing costs, there are lenders offering 103% or 105% Finance Home Loans. The extra percentage is used for covering the closing costs which will then be included in the overall debt that you’ll have to repay in monthly installments.

Drawbacks of Lack of Down Payment

Zero Down Mortgage Loans sound tempting but though not having to put money down in order to purchase a house can seem to be a fabulous waiver, it has many drawbacks and unless strictly necessary, it should be avoided by all means possible.

A down payment has not only direct positive financial consequences but it also can be a positive factor when the lender has to decide whether to approve your loan or not and on what terms. When the lender has to consider your application, a down payment tells him that if you were able to save enough money to make a considerable down payment, you’ll probably be able to meet your monthly payments without any difficulty.

A down payment will also imply that you have the ability to obtain finance elsewhere and so, the lender will try to offer you a more tempting loan proposal in order to keep you as a client. Those who can offer a down payment always get a considerably lower interest rate than those who cannot.

As you can see, a down payment reduces dramatically the risk implied for the lender in the financial transaction, and thus, you’ll be able to get a better deal on your loan. A down payment won’t only reduce the interest rate you pay; it will also lessen all the other loan requirements and will turn the loan terms more flexible. You’ll be able to get stretchy monthly payments and larger loan lengths too.

Home Equity Loans

If you wanted to use that money for making home improvements or for other expenses, you don’t need to worry. Once the deal is closed, the amount you had to put down will become home equity and you’ll be able to request a home equity loan for the difference between your home value and the amount owed on the mortgage. These loans are secured and carry low interests; they are the perfect solution if you ever need the money you used for the down payment.

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In this day and time with so much negative news about the credit crunch, subprime crisis or housing meltdown it is easy to get discouraged as a first time home buyer or even if you already own a home and are simply trying to get your mortgage payment down. Many news reports are telling people that there is no way that you can get approved for a mortgage if you have credit issues in this market. That is simply not true.

Yes, it will take some additional work and documentation than in previous years but it is very possible and we are seeing Connecticut home mortgages get approved every day. You cannot let all of the negative news and negative people stop you from working towards consolidating your debt to get some monthly savings. You must be prepared to document your story so that the Connecticut mortgage broker you work with will know how to present your mortgage application to the underwriter.

You also have to be prepared that there are not that many Connecticut mortgage lenders remaining who specialize in helping people after major credit issues like bankruptcy, foreclosure or multiple late payments. However, we know many lenders that are taking a serious look at Connecticut mortgage applicants who have gotten back on their feet and are making the right steps towards recovery. These are the mortgage lenders we focus on working with because we have many years of experience with them and they realize that honest Connecticut mortgage brokers are still around.

There are times that your credit past will take more time and more documentation than you want to spend. In cases like this it is important that you start with simple manageable steps that keep you moving forward, but don’t get you bogged down and feeling depressed over your past. If you are worried that you have too much luggage then you may need to work with a Connecticut mortgage broker that can help you map out your road to credit recovery.

I’ve been receiving LOTS of great questions from homeowners lately and I’m honored that you trust us enough to send us your questions.

Today I received an e-mail along the following lines, with the pertinent part in bold:

Hi Christine:

My servicer is National City. I have been trying to get a loan mod for 10 months.

You’ve probably heard this many times, but until I was in default I could not get their attention. Eventually they listened; of course my credit is now destroyed. Anyway, long story short my “modified” loan is now more than I was previously (and could not afford) paying, as my previous loan was 6% interest only, and the modified loan is 4% for 5 years, 5% for 25 years, but fully amortized.

My request to the servicer to find out my investor, so that I could talk to them, rather than a National City loss mitigation person was fruitless. National City claims they cannot reveal the investor. I even wrote a letter asking for the investor, but got a letter stating they could not reveal the investor because of some agreement they have.

How can I find out who owns my loan. If I am able to 3% interest I can stay in my home. As it is right now, I’m on borrowed time.

Is your B.S. alert on right now? Mine went off a long time ago. I wish I could say that I’m surprised, but I’m not. If this is happening to this person, I’m sure it’s happening to a lot of you because someone took the time to e-mail me about it. If there’s one person struggling with it, which means there are probably thousands of you out there struggling with the same issue.

As Garfield says, begin with the QWR. The lender has twenty days to acknowledge your correspondence and sixty days to make a good faith effort to provide the documents under RESPA.

If you don’t get a response or it’s not a complete response, send them another letter and bug the hell out of them. Threaten to file a lawsuit if you have to.

After you get the response, get yourself a loan audit with an auditor who can research the chain of assignment issues, securitization and undisclosed finance charges. (I offer this service currently.)

Once you have the audit and a clear picture of what’s happening with your loan, you can proceed from there. Options may include filing a TILA/RESPA lawsuit, getting a loan modification or fighting foreclosure using the audit results.

If your QWR and loan audit reveals the lender is a mortgage pool, look on the Securities and Exchange Commission’s website, called the EDGAR database. There’s a wealth of information on that site and will reveal a lot of about the mortgage pool security.

Check this out: some of you have mortgages that may have already been paid off!

For example: Aurora Loan Services is the servicing arm of Lehman Brothers, who securitized ALL of its mortgages. They cannot prove which of these loans have been paid, written down, bailed out or who even owns them.

If, during the discovery phase of litigation it is revealed (1) payments from TARP (Troubled Asset Relief Program, a.k.a. “bailout”) or from investors have been applied to your collateral in the stream of securitization and investment and/or (2) the loan was table funded (your lender was paid a commission to “act” as the lender at the table, ostensibly to pretend to underwrite the loan, perform due diligence, confirm the appraisal, confirm the viability of the transaction, and confirm the affordability and benefits) and/or (3) the debt was released in bankruptcy, you may have a legal claim of satisfaction on some or all of your debt.

Loan modifications have been a great tool, but ultimately if you don’t owe the money on your loan, why modify it? This is why I think more people are missing the boat when it comes to resolving their mortgage issues. Many of you have serious predatory lending issues in your documents and have causes of action under TILA and RESPA that could show your loan was paid off. It’s possible that many of you are paying for something you really don’t owe.

Whatever you do, don’t wait until the last minute to deal with these issues. If you know you’re looking at a mess down the road, get started early. Sixty days isn’t a lot of time in the scope of a foreclosure filing. Plan ahead and execute so you have your strategy in place for whatever you want to accomplish.

Obtaining a loan modification is the latest magical solution to foreclosure. One new government program after another has been released to help borrowers modify the terms of their mortgages to make them more affordable, and thousands of private companies have begun to offer assistance in qualifying for a loan mod. Obviously, if everyone who can make a payment was given such a program, the foreclosure crisis would have been solved before it began.

Unfortunately, though, the real world has foiled many of the designs of the mortgage industry central planners and regulators. All of the government programs have failed for a variety of reasons, including voluntary participation, lack of clearly defined rules for compliance by the lenders, and unaccountability. Even for the few mandatory participants, the same problems keep creeping up.

Homeowners should expect to run into at least three major issues when attempting to qualify for a loan modification. These problems should be considered before the borrowers decide whether to apply for a modification or not, as they may not apply to other solutions to foreclosure. Of course, some of them will apply to alternative plans to save the house.

First, homeowners will have to deal with unresponsive mortgage lenders and servicing companies. Loss mitigation departments of these large financial institutions have not dedicated the resources necessary to assist all of the borrowers attempting to apply for various solutions. This means that collection departments may call owners tens times a day, but any call made back to the loss mitigation department will not be answered in a timely fashion, if at all. Faxes containing personal financial information and application documents are routinely lost, as well.

Second, the documents governing the securitization process for the mortgage may restrict the number of loan modifications that can be offered. The pooling and servicing agreements (PSAs) may only allow a certain percentage of loans in a pool to be modified. Even if the borrowers can show financial ability to pay a modification plan, they may have to be turned down by the servicing company, unless the loan is moved out of the securitization pool.

A final consideration homeowners should make before applying for a mortgage modification is if they would require a principal reduction. Many loan mods would not be affordable for the long term without decreasing the amount the borrowers owe in total. However, any reduction of principal may be considered by the IRS as taxable income to the owners. This may result in a large, unaffordable tax bill that will cause the modification to fail is the borrowers can not make the monthly mortgage payment and pay the taxes for the forgiven debt.

While loan mods can be a great way for homeowners to modify their mortgages so they are more in line with the borrowers’ current financial situations and market conditions, there are also a number of drawbacks. If the servicer takes too long to respond, the foreclosure will proceed anyway. If the PSA does not allow for any more modifications, qualified borrowers may be turned away. And if there is a large tax bill due to the modification, it may be impossible to pay the mortgage and the taxes.