Roseville Loan Guy » loan modification

HARP 2.0: The Facts!

Greg Cowart — Thu, 01 Mar 2012 21:12:30 +0000

With more than 11 million homeowners underwater on their mortgages, 2008’s HARP (Home Affordable Refinance Program) mortgage has been updated to allow more homeowners to refinance their mortgages, taking advantage of today’s historically low interest rates. AKA: HARP 2.0…

The first edition of HARP was a great idea, in theory anyways. If the banks, lenders, and servicers implemented the program exactly as it was written it would have helped many millions of homeowners refinance to lower interest rates, lowering their payments, and even probably had a positive effect on the national housing market and overall economy as less of those homeowners would have lost their homes and had more money in their pockets to spend.

But that’s not how it happened, the banks and servicers applied their own “overlays” to the program’s guidelines, making it hard for many underwater homeowners to qualify. Because of this only about 800,000 homeowners were able to take advantage and lower their rate/payment.

In comes HARP 2.0, with easier guidelines for borrowers to qualify, now unlimited Loan-To-Value ratios are allowed, as well as “Representation & Warrants” requirement waivers, relieving lenders of almost all Reps & Warrants of the original loan, making it much more likely that they participate. The Federal Housing Finance Agency estimates that at least another 1 million homeowners will benefit from a HARP 2.0 refinance before expiration of the program at the end of 2013.

Here are some important facts!

The current loan must be backed by Fannie Mae or Freddie Mac. You may not know your loan is backed by either of these entities because you make your payment to someone else (Bank of America or Wells Fargo for example) but in reality they are probably just the servicer of your loan and the security was at some point sold to Fannie/Freddie. I can quickly help you do this search to find out.
The current mortgage must have been originated before May 31^st, 2009.
HARP loans are available for all occupancy types (primary residence, second home, and investment properties).
The mortgage must have not had a 30 day late payment in the past 6 months, and must have had no more than one 30 day late payment in the last year.
The current Loan-To-Value ratio must be over 80% (otherwise you may already qualify for a non-HARP refinance)
Except for a small exception for some of the earliest HARP refinances in March-May of 2009, those that have previously refinanced under the HARP program will not qualify.
Both Fannie and Freddie’s guidelines are nearly the same but Fannie Mae’s are actually a little bit more liberal (which is a good thing as they hold many more HARP-eligible loans than Freddie Mac does).
Loan-Level-Price-Adjustments (LLPA’s), fees added on that can increase closing costs, the interest rate, or both (depending on how your lender structured your scenario) have been drastically reduced for HARP 2.0 loans. This was one of the issues with HARP the first time around, LLPA’s would make it very tough to refinance as they would add up to a point that HARP borrowers were no longer eligible for the lowest rates. Under the new program it’s feasible for a HARP borrower to get a lower rate than an non-HARP borrower because of the LLPA cap.
Property Inspection Waivers (PIW’s) are the big one here. Under the new rules lenders will be issuing PIW’s allowing the HARP borrower to not have to have an appraisal at all. Not only making a lot of these refinances possible, but saving consumers a few hundred more dollars in the process! PIW’s will not be issued on all refinances, but they will be on many (I can tell you before you shell out $400 for an appraisal if your loan was issued a PIW).

This is great news for homeowners who have made it a point to keep up with their payments! With the updated guidelines rolling out in March eligible homeowners in this category may be able to take advantage of HAPR 2.0 in the very near future. And even if you did miss a payment this program is available through December 2013. If you can get and stay current for the next 6 months, you may be eligible too.

Fannie & Freddie making important policy changes…

Greg Cowart — Thu, 26 Jan 2012 21:57:39 +0000

If you’re unemployed and in danger of going into default on your mortgage the nation’s Government Sponsored Enterprises (GSE’s), Fannie Mae & Freddie Mac, are making some important changes to their foreclosure and forbearance (when the bank suspends collection of payments for a period of time, kind of like a timeout on making payments) policies.

The new rules will direct mortgage servicers (who you make your payment to) go through a forbearance process when the homeowner has lost their job before moving into foreclosure territory. Under the new rules these services have automatic authority to grant homeowners on unemployment a full six months forbearance and can go to the GSE’s for approval of another six months if the homeowner’s unemployment income lasts for longer than six months.

That’s adding up to a year to get back on track before any sort of foreclosure process begins!

There are some exceptions to the new rules however. The house must be a primary residence, not an investment or second home. And the mortgage must be backed by one of the GSE’s themselves, not FHA or VA, and not a private/portfolio loan held by the bank themselves.

That covers the basics. But, of course, there are some more details that might affect you. If you have any questions, please ask! I’m always here to help…

Greg

Bank Of America joins state’s homeowner rescue program

Greg Cowart — Thu, 04 Aug 2011 21:35:45 +0000

A few weeks ago Bank of America agreed to participate in a state-run program to reduce mortgage balances for struggling homeowners in California. This announcement makes them the 7^th to do so and also the biggest mortgage lender to be part of the aid program.

BofA’s participation was almost necessary for the $2 billion program, called ‘Keep Your Home California’, which originally rolled out in February but was not able to reach many homeowners with the small lenders that were participating at the time.

Keep Your Home California provides a number of forms of help to homeowners, from interest rate modification all the way up to reducing the actual principal balance of the mortgage. The principal-reduction program requires the lenders to match the program’s assistance dollar for dollar. Meaning if the Keep Your Home California program were to offer $20,000 in assistance, the lender/servicer (BofA in this case) would also have to contribute $20,000, reducing the mortgage balance by $40,000 in total.

California Housing Finance Agency’s (CalHFA) program manager, Diane Richardson, said $94 million worth of aid has been committed to over 5,000 homeowners so far. Of those, about 10% have received some amount of principal reduction.

For more information click on www.keepyourhomecalifornia.org

~Greg

Credit Makeover In Five Steps

Greg Cowart — Fri, 03 Jun 2011 19:56:24 +0000

My friends at local credit repair agency, Blue Water Credit Repair, gave me this GREAT five step path to a credit makeover. While I know all of this myself I can’t take credit for putting it into words (and Blue Water taught me a bit of this stuff anyways). Here you go, a free five step outline to a complete credit makeover!

CREDIT MAKEOVER IN FIVE STEPS

A lot of homeowners have the mind set that making payments on time automatically equates to good credit and credit scores.

Unfortunately, this couldn’t be further from the truth.
While paying your bills on time accounts for a large portion of your credit score, there’s still a lot more to it. In fact, paying your bills on time only drives 1/3rd of the points in your credit score, which means that 2/3rds of your score has nothing to do with making on time payments.
Five main categories go into making up your overall credit score calculation. Let’s briefly review each category and how much they count:

1. Payment History – The Most Important Category

This category is pretty self-explanatory. It doesn’t take a rocket scientist to figure out that if you pay your bills on time, you’ll do well in this category. Likewise, if you have a history of late payments, collections, chargeoffs, public records, etc. – you’re not going to do so well in this category.

In addition, the number of negative items on your credit reports is important. The more incidents of credit transgressions, the more your score will suffer. And if you have recent negative information that will punish your scores more than if they are several years old.

2. Debt – A Very Close Second

The most important non-payment category in your credit score is, by far, the amount of debt that you carry. And while your installment debt (auto loans and mortgages) are factored into your scores, it’s really your credit card debt that’s most important.

This includes anything from Visa, MasterCard, Discover, American Express, gas cards and/or retail credit cards like Macy’s or Target. The balances that you carry on your credit cards can affect your scores almost as much as whether or not you make your payments on time.

This category calculates the proportion of balances to credit limits on your revolving credit card accounts – also referred to as ˜revolving utilization’. Simply put, the higher your revolving utilization percentage, the fewer points you will earn in this category.

So what is revolving utilization and how is it calculated?

To determine your revolving utilization, you’ll need to add up all of your current balances and all of your current credit limits on your open revolving credit accounts (except for Home Equity Lines of Credit). This will give you a total balance and a total credit limit. Divide the total balances by the total credit limit and then multiply that number by 100. This will give you your total revolving utilization percentage.

See the example provided below:

Remember, the lower your utilization percentage, the more points you’ll earn and the higher your credit score will be. To earn the most possible points in this category, you should try to keep your revolving utilization at 10% or less. If you can’t reach 10%, just remember that the lower the better. While 50% is better than 60%, 40% is better than 50% and so on.

How you pay your bills and your revolving utilization are by far the most important factors used to determine your credit scores. They account for 2/3rd of the points in your score. That’s a hefty chunk! Needless to say, if you don’t do well in both of these categories, your scores aren’t going to be very good regardless of how you do in the remaining categories.

While the remaining categories are worth fewer points, they are still very important for consumers who want to earn the highest scores possible, certainly a requirement in today’s difficult credit environment:

3. The Age of Your Credit History - Secondary Category

Don’t confuse this with your age. It’s the age of your credit reports. Basically, the score is looking to see if you have a lengthy history of managing your credit obligations. The age of your credit history is determined
by the “date opened” on the oldest account listed on your credit report. The older your credit report, the more points you will earn in this category.

There’s really not much you can do in this category except wait it out. As your reports get older, you will gradually earn more points. This means that you should never try and get old, good accounts removed from your credit reports.

You want the history!

4. New Credit/Inquiries – Secondary Category

When you apply for credit you are giving the lender permission to pull your credit reports and credit scores. Each time this happens, your credit report will reflect what’s called an “inquiry.” To perform well in this
category, you should really only apply for credit when you need it.

5. Credit Mix – Secondary Category

What types of accounts do you have? You will do well in this category if you have a nice diverse list of different types of accounts in your credit report. This includes mortgages, auto loans, installment loans, credit cards, etc.

If your credit report is dominated by one type of account (or lack of others), this could negatively affect the number of points that you earn from this category.

That pretty much covers the factors that are used in determining your credit scores. Let’s do a quick recap:

1. How you pay your bills – on time is good, late is bad

2. How much you owe your creditors – keep your credit card debt low (10% utilization is optimal)

3. How long you’ve had credit – the longer the better

4. How often you apply for credit – apply only when you really need it

5. Account mix – diversity is good
If you can stick by these five key principles, you should be well on your way to healthy credit and credit scores.

Is the “loan mod” business dead? Is that a bad thing?

Greg Cowart — Tue, 15 Feb 2011 01:25:41 +0000

As of January 31, 2011; the FTC has banned consulting firms from charging up-front fees for negotiating modifications of residential mortgage loans. In Nevada, the Mortgage Lending Commissioner said the constraints of the federal rule “will have substantial impact” on the number of licensed consultants for mortgage loan modifications. His office counts 39 licensed loan modification firms with 185 licensed associates in Nevada (I would guess there was that many in the Sacramento area alone a year ago).

Critics say that the ruling favors large banks, which don’t want advocates representing homeowners. However while there might be a small grain of truth to that, the ruling really favors consumers in my opinion. As one would suspect, unethical mortgage modification firms often fail to do any work after collecting fees, and the FTC rule will prohibit mortgage modification firms from being paid in advance so this can not (legally) happen ever again. What some may not expect is the vast majority of these companies should be considered unethical. Most of them have little to no experience in the business and if they so it’s usually that they were mortgage originators for the predatory lenders than put so many people into very bad situations during the real estate boom of 2004-07, but couldn’t get the proper licensing required to originate mortgage loans in today’s regulatory environment. Taking advantage of people on their way in (giving them the predatory loan) and again on the way out (charging thousands up front to try and modify their mortgage)…

Greg

Top 10 rules for handling collection agencies

Greg Cowart — Fri, 09 Apr 2010 21:39:58 +0000

1. Realize that Credit collection agents are usually working on commissions. This is a JOB to them and the more they get you to pay, the larger their paycheck. They will be persistent and more often than not MEAN, be prepared.

2. Don’t argue with the agent, because you will lose. This is what the do all day, every day and they have heard every excuse in the book. They are prepared with an answer to everything. State your case but don’t argue.

3. It usually doesn’t help to ask to speak to someone’s boss. In this case, talking to the supervisor normally won’t help (in fact it could be worse). Remember, he ended up with his job because he was good at what he did and was able to squeeze every dime out of past consumers who had disputes.

4. Never give information out over the telephone to a collection agency. This includes your driver’s license number, social security number, debit card numbers, check numbers, credit card numbers, or bank account numbers. For the most part they should already have this information.

5. Use a money order or certified funds to make all payments. Make a copy of it and staple it to the bill.

6. Keep records of everything (including dates of phone calls and what was said), and make sure that anything sent through the mail has a return receipt.

7. Make sure you get written confirmation of any deals or negotiated payoffs. Make sure you have something that says the collection has been satisfied.

8. Never take their first offer when negotiating a lower payment as they will always call back with a better offer.

9. Use powerful sentences like, “This is all I can afford to pay,” rather than “this is all I am going to pay.” This is a much better negotiation tactic when you are trying to lower the payoff with the collection agent.

10. When repairing your credit, it is a good rule to keep copies of all your credit reports. That way you can track the process of what has been repaired and make sure that what you negotiated is coming to pass.

While it would be impossible to include everything there is to know about dealing with collection agents, these 10 tips will almost always result in more money in your pocket and less in theirs. I help all of my clients through this process as needed, don’t hessitate to call or e-mail if you have any questions…

~Greg

“We want to streamline and standardize the short sale process”

Greg Cowart — Tue, 09 Mar 2010 00:39:08 +0000

News on the short-sale front? News straight from Washington? It looks like the long rumored short sale streamline process is finally on it’s way. This could be big news for Sacramento and the entire California Real Estate Market. Check out all the information in this article from the NY Times.

The Long & Short

Greg Cowart — Tue, 21 Jul 2009 16:00:42 +0000

In today’s “real world” a short sail should be a no-brainer. A win-win for all parties. Allowing the seller to avoid foreclosure, the buyer to get a great deal on the sale of the home, and the bank to get out of the deal without the considerable loss and expense of foreclosure proceedings. While the process is getting both better and easier we’re still not quite where we need to be. Here are some things to remember in doing it right…

BUYERS…

Have your agent do some research. Make sure the current owner’s agent is experienced with short sales. Less than half of short sales result in closed escrows so it’s important to make sure you are working with the right short sale seller or you could just be wasting a whole lot of time, possibly letting other opportunities pass while you wait.

Listen to your agent when he/she tells you what an appropriate offer is. The severe lowball offer just isn’t going to fly. Local short sale experts say to make an offer no less than 10% below current market value. And make sure to GET PROQUALIFIED before you make your offer (this goes for short sales and any other real estate transaction).

Patience is a virtue. Especially important when dealing with banks on short sales. We already talked about how important it is to work with a listing agent that is experienced with short sales but even if you do this is going to take some time. Most of my clients end up waiting a minimum of 3 weeks, up to 3 months, for the bank to get back to them on their offer. A good buyers agent will also put in a clause allowing the buyer to search for and bid on other homes while they wait. There is no reason to miss a great opportunity just because the banks are months behind of short sale offers…

SELLERS…

Be ready to provide evidence of a hardship before going to your lender with a short sale request. It’s more than likely that the bank will not approve your request just because you are upside down on your mortgage. Be able to support some sort of financial hardship. The most common would be the loss of a job, medical bills, death in the family, or divorce.

Get started in conversation with your lender ASAP. Once you have made the decision to try and sell you home by way of short sale let them know! This can possible shorten the process by months and you may end up one of the lucky ones knowing what the bank will accept in short sale before you actually get an offer on the house.

Share the pain. Even if it’s just a little. Odds are the bank is taking a bath costing them tens of thousands of dollars. Sweeten the pot for them. Maybe offer them a couple grand on top of the sale. If it is what it takes to get you out of a foreclosure or a loan on a house worth tens of thousands of dollars more than the house is worth, it just might be worth it.

That’s it for now….

Sincerely,

Greg :: The Roseville Loan Expert

Sacramento Ca, leads the way in battling Loan Mod scammers in “Operation Loan Lies”

Greg Cowart — Mon, 20 Jul 2009 19:16:34 +0000

I don’t have too much for today’s post (there’s a lot coming this week) but look at this press release from the Federal Trade Commission on “Operation Loan Lies”; the new project to reign in on the loan modification industry. An industry that, if you read my blog often you know, I don’t think highly of…

FTC Leads “Operation Loan Lies” to Stop Fraud and Help Distressed Homeowners

~ Greg Cowart :: Roseville Loan Expert

MBA Press Release on Loan Mod scams…

Greg Cowart — Thu, 14 May 2009 16:40:08 +0000

The Mortgage Banker’s Association weighed in on the huge problem of loan modification scammers…

http://www.mbaa.org/NewsandMedia/PressCenter/68855.htm

Take a look and you’ll see a couple of ways that this has been happening and what to avoid. You’ll notice that, just like my last post on the subject, they mentioned that these new loan mod companies popping up every day are (or aren’t) doing things that you can do yourself. I have some reference tools that can help you if you simply can not refi and are considering one of these loan mod companies. Before paying someone thousands of dollars to possibly get some sort of modification done, consider the less expensive option of doing it yourself.

Let me know if I can help you in any way…

~Greg :: The Roseville Home and Loan Expert