Archive for Mortgage & Lines of Credit
How Much Is A Short Sale or Foreclosure Going To Drop My Credit Score?
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Believe it or not, a Short Sale does not have to be a negative occurrence on your credit report. On the other hand, a foreclosure ranks up there just under a Bankruptcy, which is an extremely negative occurrence on your credit. Let’s talk about how these two affect your credit.
How Many Points Will My Credit Score Drop With A Short Sale?
The mortgage that is affected by the short sale should reflect the short sale verbiage within 60 to 90 days. This short sale verbiage is made in the form of a notation made under the account which says “Agreed Settlement Short of Full Payment”, or words to that effect. I’ve got some good news for you though; these types of notations mean nothing as they don’t affect your credit scores in any way.
If you were late on your payments prior to the completion of the short sale, you can expect your credit scores to drop about 120 points on the average. The amount your score actually drops depends on the amount of trade-lines you have, the length of history on your credit, and whether or not you’re late on anything else, among other things.
It will take about 2 years to recover from a Short Sale on your credit if you had late payments associated with it. Of course this is assuming you have good credit in other areas and continue to keep it that way.
How Many Points Will My Credit Score Drop With A Foreclosure?
A foreclosure on your credit can drop your credit score up to about 250 points on the average.
It takes about 3-4 years for your credit to recover after a foreclosure.
Are Second Mortgage Modifications Stuck In The Mud?
Posted by: | CommentsAn Obama administration plan announced in April to help up to half of all struggling homeowners modify their second mortgages has yet to officially launch, the
Treasury Department acknowledged Friday.
The program, a component of the administration’s $75 billion Making Home Affordable effort, was supposed to attack second-lien mortgages, which are additional, second mortgages taken out on a home on top of the initial first mortgage. It’s like taking out two loans to pay the same debt.
The Second Lien Program is supposed to automatically reduce the payments on a second mortgage when the first mortgage is modified under the administration’s loan modification effort, the Home Affordable Modification Program. The administration says that by lowering monthly mortgage payments, HAMP will eventually help up to four million homeowners stay in their homes
Some housing experts say the second-mortgage component of the plan is necessary to effectively tackle the foreclosure mess — 3 million foreclosure notices were sent out in 2009; another 3 million are estimated to go out this year — because so many distressed homeowners have second mortgages. When rolling out the program in April, the administration estimated that “up to 50 percent of at-risk mortgages currently have second liens.” Addressing only the first lien is insufficient, experts say, if no changes are made to seconds.
Loan Modifications – Banks Not Following The Rules?
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Nathan Reynolds is something of an expert on the government’s foreclosure prevention program. A mortgage broker who’s worked in the Chicago area since 1998, he’s seen both his business and his home’s value plummet in the past few years. After receiving his own trial loan modification from JPMorgan Chase, he’s helped others apply for modifications through the program on his own time.
But in November, after Reynolds had made trial loan payments for seven months, Chase told him his mortgage would not be permanently modified. Chase had determined that his personal financial troubles were only temporary — because Reynolds had expressed optimism that the administration’s policies might rescue the housing market, boosting his income.
That’s not a legitimate reason for a loan servicer to deny someone’s modification, according to the Treasury Dept.’s guidelines for the program. And Reynolds’ experience — along with the cases of two other homeowners examined by ProPublica, shows how servicers have created unnecessary hurdles that, in some instances, violate the loan program’s rules.
Mortgage Issues are Spanking Credit Scores
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Late payments, delinquencies, short sales and foreclosures are on the rise — and so are the number of borrowers seeing their credit scores plummet.
When you do a short sale of a house, or modify the mortgage, is there much of an effect on your credit score? What if you walk away from the mortgage altogether?
A scoring company created by the three national credit bureaus — Equifax, Experian and TransUnion — has some eye-opening numbers. VantageScore Solutions, whose risk-prediction scores are now being used by some of the largest mortgage companies and banks, has found that the way consumers handle their mortgage problems can have profound effects on their credit scores. Read More→
What Is A Loan Modification?
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A Loan Modification is a negotiation between a lender and a borrower whereas the loan terms are restructured without refinancing. The rate and terms of the loan are restructured to fit the current financial situation of the borrower.
Banks and lenders would rather take less money and keep homeowners in their home making a payment that they can afford, rather than go through the expense of foreclosing on the home, hiring a listing agent, rehabilitating the home, and letting it sit empty on the market for months, only to lose thousands in the process.
A loan modification is a good solution for those who cannot refinance, are behind on payments or struggling to make the payments, have experienced a genuine hardship, and want to stay in the home. A loan modification is a permanent solution and is not meant to be used as a temporary stop to the foreclosure process.
What Is Imminent Default?
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Imminent Default Loans
I get asked “What is Imminent Default?” quite a bit in relation to mortgages and home loans, so I thought I’d explain this in a little more detail.
If you break down the two words in a basic sense, “imminent” means: likely to occur at any moment, impending, near, at hand, about to happen.
The word “default” means: failure to act, inaction or neglect, failure to meet financial obligations, to fail in fulfilling or satisfying an engagement, claim or obligation, failure to account properly for money in one’s care.
So, what this term boils down to is: Borrowers in jeopardy of “imminent default” cannot continue to make full monthly contractual loan payments.
Foreclosure Alternatives Plan
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Foreclosure Alternatives Plan
Good news from Washington, D.C., today (5-14-09). The Obama administration announced new details under its Foreclosure Alternatives Program (FAP) enabling servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases where the borrower is generally eligible for a Making Home Affordable modification but does not qualify or is unable to successfully complete the three month trial period. The program, effective through 2012, requires that prior to proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
We’re gratified that the administration has recognized the need to streamline the short sale and deeds-in-lieu processes, and has provided viable options to homeowners who have fallen behind on their mortgages but owe more than their homes would sell for in today’s challenging market.
Homeowner Mortgage Workout Programs
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On Wednesday, February 18, 2009, President Obama announced his new Homeowner Affordability and Stability Plan to help troubled homeowners avoid foreclosure.
For a free Homeowner’s Guide to Making Home Affordable - click here.
This plan will offer assistance up to 9 million homeowners and applies only to primary residences.
The first component of the plan allows homeowners who are current to refinance an existing Fannie Mae or Freddie Mac conforming loan with a loan-to-value ratio up to 105 percent.
The second component addresses homeowners who are at risk of foreclosure on their mortgages, but they do not have to be delinquent.
The government will work with the lenders to ensure that monthly mortgages do not exceed 31 percent debt-to-income ratio.
Furthermore, the government will seek to create clear and consistent guidelines for loan modifications.
The details of the Homeowner Affordability and Stability Plan were released on Wednesday, March 4, with the introduction of the Making Home Affordable plan. Please look at the appropriate charts below to read about the summary of these new programs.
Second Mortgage Modifications
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The Obama administration this week announced a new government program that will help some struggling homeowners to reduce their payments on a second mortgage at the same time they are modifying their first.
For a free Homeowner’s Guide to Making Home Affordable, click here.
This is great news if you’re a homeowner who can’t repay your debts, not so great news if you would rather not see tax dollars subsidizing second mortgages. During the housing boom, many homeowners took out a second mortgage - either a home equity loan or line of credit - to make a down payment or pay for home improvements, medical bills, college bills, cars, vacations or other expenses.
Short Sale Guidance
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If you need to sell your home in today’s market, you may be in for a big shock if you discover that the current market value of your home is in the toilet, and you now owe more than your home is worth. If there is any possible way you can postpone selling right now until the market begins to turn around, that would be your best bet. However, if you find yourself facing a certain financial hardship that you know you can’t recover from or you’re facing a divorce or you’re relocating to a new job and have no choice but to sell, here is some information to help guide you through the process.
