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Posts Tagged ‘Associated Press’

New Rules to Fight Foreclosure

April 16, 2012 Leave a comment

Last week, Congress mandated changes in the rules covering the mortgage servicing industry.

According to the Associated Press, “The Consumer Financial Protection Bureau‘s proposed rules would require mortgage servicers to give all borrowers standardized monthly statements and warn borrowers about interest rate or insurance change.”

The proposed rules also require the mortgage servicers to make “good-faith efforts” to contact borrowers at risk of foreclosure and give them options to avoid losing their homes and also include stipulations for improving record-keeping and providing foreclosure counseling to those who need it.

The Consumer Financial Protection Bureau, which supervises U.S. payday lenders, mortgage companies and private student lenders and also can write rules to supervise big lending companies and institute fines, will formally propose the rules this summer and finalize them by January 2013.

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Nationwide Draft Settlement Does Little for Homeowners

January 23, 2012 2 comments

According to the Associated Press, a $25 billion draft settlement between the nation’s major banks and U.S. states over deceptive foreclosure practices has been sent to states for review.

Negotiations between banks and state attorneys general have been dragging on for more than a year over the fraudulent foreclosure practices that drove millions of Americans from their homes during the housing crisis.

While those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from thesettlement, it could reshape long-standing mortgage lending guidelines and make it easier for those at risk of foreclosure to restructure their loans.

According to the AP:

The settlement would only apply to privately held mortgages issued between 2008 and 2011, not those held by government-controlled Fannie Mae or Freddie Mac. Fannie and Freddie own about half of all U.S. mortgages, roughly about 31 million U.S. home loans.

As part of the deal, about 1 million homeowners could also get the principal amount of their mortgages written down by an average of $20,000. One in four homeowners with a mortgage — or roughly 11 million people — owe more than their home is worth.

Under the deal:

— $17 billion would go toward reducing the principal that struggling homeowners owe on their mortgages.

— $5 billion would be placed in a reserve account for various state and federal programs; a portion of that money would cover the $1,800 checks sent to those homeowners affected by the deceptive practices.

— About $3 billion would to help homeowners refinance at 5.25 percent.

State attorneys general are meeting today to discuss the deal. But some states have disagreed over what terms to offer the banks, including California Attorney General Kamala Harris who announced she would not agree to a settlement that would allow too few California homeowners to stay in their homes and let the banks off easy for their wrongdoings.

5 Tips for Underwater Borrowers

November 17, 2011 Leave a comment

Number of Underwater Mortgages on the Rise

Unfortunately, the Home Affordable Refinance Program hasn’t helped as many homeowners as planned – with nearly 29 percent of homeowners with mortgages owing more on their loans than their homes are worth. With that in mind, here some tips underwater borrows should consider now before their situation worsens.

1.)    Wait it out – If you can afford it, you’re not behind on payments and you want to stay in your house for the long run, waiting it out  until the market recovers is an obvious, yet, difficult options to consider, especially since you’ll be paying more in interests than you should be. According to a recent study by CoreLogic and the Associated Press, the average underwater homeowner is paying an interest rate that’s nearly 40 percent higher than they could get if they bought a home today. That translates to paying an extra $200 a
month on a home valued at $250,000, according to the report

2.)    Foreclosure is never the best or only answer – there are many ways to fight to keep your home. Underwater borrowers who don’t qualify for HARP should try to negotiate a loan modification with their mortgage lender. If restructuring the loan is not an option, ask about the possibility of a short sale — which means selling your house at market value, with the remaining loan balance forgiven by the lender.

3.)    Don’t stop making payments – some so-called experts would advise you to stop making payments until the bank forecloses on the property – also known as “strategic default.” The consequences of walking away from your home are severe. Your credit scores will plunge, your lender could sue you, and it may be up to seven years before you can get another home loan – or any other line of credit.

4.)    Declaring Bankruptcy – in extreme cases and as a last resort, bankruptcy is an option that shouldn’t be ruled out. There are two basic types of bankruptcy: chapter 7, where you simply declare you can no longer pay and your debts will be discharged, and chapter 13, where you will be able to pay off your debts over a period of time. However, being underwater on your mortgage by itself isn’t a reason to file bankruptcy. Before taking this drastic step, consult an attorney for the details and ramifications.

5.)    Renting your home – If you decide to put your house up for rent, you might make enough each month to cover your mortgage. That would free you up to live somewhere else. Keep in mind there will be expenses involved with managing your property. Also, many homeowners’ associations regulate or prohibit renting homes out.

Also remember you are not alone so feel no shame in asking for help from qualified experts.  Realtors are not always equipped to provide you with all your legal options. With very rare exceptions, real estate agents aren’t trained or licensed to give legal advice.