Forbearance: under a forbearance agreement, your lender may permit you to reduce or suspend your mortgage payments for a short period of time. Then, typically, at the end of the forbearace period, you will beging making your regular payments PLUS an additional amount as negotiated between you and your lender until you are 'caught up'. A forbearance agreement will only work for you if you expect your current financial difficulties to last a short time.
Loan Modification: If you are behind on your mortgage payment and can not afford to bring them current and a forbearance agreement will not work with your situation a loan modification is an option. In a loan mod, your lender permanently alters the terms and conditions of your loan in an effort to make your payment more affordable. You have, no doubt, heard or read about the failure of the govt promoted loan mod program, HAMP. Loan mods are very difficult to get approved for a number of reasons and work out for only a very small percentage of homeowners.
Deed-in-lieu of foreclosure: If you are unable to do eother of the 2 prior options, your lender may agree to a voluntary transfer of your property back to them. Some people feel that this is a better option than an actual foreclosure...but a short sale is almost always a better option than a deed-in-lieu.
Short Sale: If you can no longer afford your mortgage payments and your home is worth less than your mortgage balance a short sale may be your best option. In a short sale you negotiate generally three things with your lender; 1) The approval of your hardship and thier willingness to entertain a short payoff, 2) how the short sale will be reported to the credit bureaus, and , most importantly 3) the treatment of how the defeciency will be handled.
With a short sale, you will be able to become a homeowner again well before you could with a foreclosure or deed-in-lieu on your credit report. And the impact on your credit score has been reported to be much less.
Also, if your lender forgives any deficiency under the terms of your negotiated short sale, the Mortgage Forgivness Debt Relief Act of 2007 may relieve you of any tax libilities for the forgiven debt....check with your tax advisor on this.
Showing posts with label Foreclosures. Show all posts
Showing posts with label Foreclosures. Show all posts
2/3/10
The next chapter in the book entitled: The housing crisis..what they DON"T want you to know!
Here are a few interesting charts and accompanying analysis from a blog called ZeroHedge and a guy writing under the name ‘Tyler Durden’ (anyone see Brad Pitt in The Fight Club?), released yesterday, (along with my comments).
Everything that the government has done so far, with a few minor detours, has been almost exclusively focused on maintaining home prices high, by tweaking either the supply or the demand side of the housing equation. As the bulk of consumer net wealth is concentrated in the housing sector, and a wealthy and confident consumer, much more so than the banking system, is critical to the recovery of America’s economy, the Administration will do everything in its power to achieve its goal of artificially manipulating the housing market...the continued pursuit of such flawed policies by the Fed and President Obama merely pulls the market ever further away from its equilibrium, thereby making the anticipated second dip so much more likely and not that far off in the distant future...After being extended once by the Obama Administration, the tax credit will expire at the end of April—putting downward pressure on demand for existing home sales. That prospect will make it more difficult to clear out the next wave of foreclosures, prompting another down leg in US house prices.
I have blogged about the "shadow" inventory before...it is spoken about amongst real estate agents and mortgage professionals...but they don't report about it in depth on CNBC, MSNBC or the like...take a look at the chart below:
In Florida, almost 49% of all homes with mortgages are in a "negative equity" position...on top of that, about 1 in 4 Florida homeowners with a mortgage is 30 or more days delinquent.
I don't know the actual (or make believe) lender figures...but common sense tells me that someone who is unemployed, upside-down on their mortgage and is behind on their mortgage payments, is NOT going to ravage their IRA or borrow from their mother-in-law to pay all of the banks penalty fees, late fees, interest fees and lawyer fees to get caught up with the bank ...but that's just my opinion.
In a recent post, I spoke about one of the major roadblocks to a housing recover being the "real" unemployment rate. And this issue is a driving factor in the "strategic default" wave. A record 15 million Americans are unemployed and another 9 million are underemployed. However, just as significant is the roughly 10 million households in a negative home equity position of worse than -20%, for whom strategic default - failing to pay when one could - is a very real option.
Now for the elephant in the room: Interest rates...this was one prong of the two pronged lightening rod for the housing crisis blame...the other being lax lending standards. "They" blame artifcially low mortgage rates as the first major contributing factor. Then WHY is no one saying the same thing now? The Fed is buying MBS in the open market in an effort to KEEP the mortgage rates (artificially) low. Aggressive central banks’ rate cuts along with large amounts of agency MBS purchases by the Federal Reserve have lowered mortgage rates by over 100 bps since the height of the financial crisis.
Although we don’t expect policymakers to raise the fed funds rate until 2011, mortgage rates have already started to head higher, and could keep climbing towards the end of the first quarter when the Fed’s $1.25 trillion agency MBS purchase program is completed. Those purchases made up almost 50% of all MBS issuance last year, and despite the improvements in the securitization market, their absence will likely have a material impact on rates (See Chart above).
As stated by the writer of the original article: "And there you have it: the best that the government can hope for is to extend and pretend, and to avoid presenting the sad but very simple reality to the American public. Because lack of knowledge is half the battle."
I couldn't have said it better myself!
Thanks for reading...Steve Jackson
Everything that the government has done so far, with a few minor detours, has been almost exclusively focused on maintaining home prices high, by tweaking either the supply or the demand side of the housing equation. As the bulk of consumer net wealth is concentrated in the housing sector, and a wealthy and confident consumer, much more so than the banking system, is critical to the recovery of America’s economy, the Administration will do everything in its power to achieve its goal of artificially manipulating the housing market...the continued pursuit of such flawed policies by the Fed and President Obama merely pulls the market ever further away from its equilibrium, thereby making the anticipated second dip so much more likely and not that far off in the distant future...After being extended once by the Obama Administration, the tax credit will expire at the end of April—putting downward pressure on demand for existing home sales. That prospect will make it more difficult to clear out the next wave of foreclosures, prompting another down leg in US house prices.
I have blogged about the "shadow" inventory before...it is spoken about amongst real estate agents and mortgage professionals...but they don't report about it in depth on CNBC, MSNBC or the like...take a look at the chart below:
In Florida, almost 49% of all homes with mortgages are in a "negative equity" position...on top of that, about 1 in 4 Florida homeowners with a mortgage is 30 or more days delinquent.
I don't know the actual (or make believe) lender figures...but common sense tells me that someone who is unemployed, upside-down on their mortgage and is behind on their mortgage payments, is NOT going to ravage their IRA or borrow from their mother-in-law to pay all of the banks penalty fees, late fees, interest fees and lawyer fees to get caught up with the bank ...but that's just my opinion.
In a recent post, I spoke about one of the major roadblocks to a housing recover being the "real" unemployment rate. And this issue is a driving factor in the "strategic default" wave. A record 15 million Americans are unemployed and another 9 million are underemployed. However, just as significant is the roughly 10 million households in a negative home equity position of worse than -20%, for whom strategic default - failing to pay when one could - is a very real option.
Now for the elephant in the room: Interest rates...this was one prong of the two pronged lightening rod for the housing crisis blame...the other being lax lending standards. "They" blame artifcially low mortgage rates as the first major contributing factor. Then WHY is no one saying the same thing now? The Fed is buying MBS in the open market in an effort to KEEP the mortgage rates (artificially) low. Aggressive central banks’ rate cuts along with large amounts of agency MBS purchases by the Federal Reserve have lowered mortgage rates by over 100 bps since the height of the financial crisis.
As stated by the writer of the original article: "And there you have it: the best that the government can hope for is to extend and pretend, and to avoid presenting the sad but very simple reality to the American public. Because lack of knowledge is half the battle."
I couldn't have said it better myself!
Thanks for reading...Steve Jackson
10/27/09
8/20/09
Florida leads the way
13.16% of Mortgages Delinquent: MBA
By DIANA GOLOBAY August 20, 2009 10:04 AM CST
Single-family mortgages set a new record delinquency rate of 13.16% in Q209, according to the quarterly survey by the Mortgage Bankers Association. The delinquency rate includes mortgages at least one payment past due or in foreclosure.
The results were lead by Florida with 12% of mortgages somewhere in foreclosure, another 5% at least 90 days past due and a total 22.8% at least one payment delinquent or in foreclosure at the end of June. Nevada followed Florida with 21.3% at least one payment past due or in foreclosure.
By DIANA GOLOBAY August 20, 2009 10:04 AM CST
Single-family mortgages set a new record delinquency rate of 13.16% in Q209, according to the quarterly survey by the Mortgage Bankers Association. The delinquency rate includes mortgages at least one payment past due or in foreclosure.
The results were lead by Florida with 12% of mortgages somewhere in foreclosure, another 5% at least 90 days past due and a total 22.8% at least one payment delinquent or in foreclosure at the end of June. Nevada followed Florida with 21.3% at least one payment past due or in foreclosure.
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