South Orange County Blog from Bob Phillips

The subprime mortgage crisis wasn’t about subprime mortgages

By Chris Mathews, of Fortune Magazine, 6/17, 2015

next-exitNew research challenges the conventional wisdom on the financial crisis.

In the years following the financial crisis, a cottage industry arose that tried to explain just what happened to the American economy and the financial system.

Early on in the process, journalists zeroed in on one set of villains: subprime lenders and the supposedly irresponsible borrowers who were their customers. We were regaled with stories of mortgage lenders like Countrywide handing out loans that borrowers couldn’t possibly repay, and then selling them on to investment banks, who packaged them into “toxic” bundles like Goldman Sachs’ infamous Abacus collateralized debt obligation.

When these subprime borrowers began to default, so the narrative goes, the dominoes began to fall, eventually helping to send the entire mortgage market, U.S. financial system, and global economy into crisis.

At the time, the press spent a lot of energy scrutinizing subprime borrowers and lenders, based on the fact that in the early days of the crisis, the rate and absolute number of subprime foreclosures were much higher than foreclosures in the prime market. It was around this time that CNBC’s Rick Santelli gave his famous rant against talk of bailing out underwater homeowners that helped launch the Tea Party movement, calling the folks who were at risk of foreclosure “losers.”

Furthermore, much of the reforms instituted since the financial crisis have centered around increasing scrutiny of mortgage lending, to make sure that these sorts of irresponsible loans aren’t made again.

But if journalism is the first-draft of history, then it’s about time for a second draft. In a new working paper by Wharton economists Fernando Ferreira and Joseph Gyourko, the authors argue that the idea that subprime lending triggered the crisis is misguided. The paper looks at foreclosure data from 1997 through 2012 and finds that while foreclosure activity started first in the subprime market, the foreclosure activity in the prime market quickly outnumbered the number of subprime foreclosures.

The following chart shows the total number of foreclosures and short sales per quarter in various classes of mortgages:

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While subprime borrowers default at a higher rate than prime borrowers, Fierra said in an interview with Fortunethat the data shown above suggest that the foreclosure crisis would have happened even in the absence of such risky lending. “People have this idea that subprime took over, but that’s far from the truth,” says Ferreira. The vast majority of mortgages in the U.S. were still given to prime borrowers, which means that the real estate bubble was a phenomenon fueled mostly by creditworthy borrowers buying and selling homes they simply thought wouldn’t ever decrease in value.

We can draw two conclusions from this data. One is that your chances of being foreclosed upon in the past decade was more a matter of timing than anything else. If you were a subprime borrower in, for instance 2002, who bought a bigger house than a more prudent and creditworthy borrower would have bought, chances are you would have been fine. But a prime borrower who did everything right—bought a house he could easily afford, with a large downpayment—but did so in 2006 would have had a higher chance of defaulting than the subprime borrower with better timing.

Since whether you were hurt by the crisis had more to do with luck than anything else, Ferreira argues we should rethink whether doing more to help underwater homeowners would have been a good idea.

The research also offers some sobering policy implications. Ferreira’s data show that even with strict limits on borrowing—say, requiring every borrower to put 20% down in all circumstances—wouldn’t have prevented the worst of the foreclosure crisis. “It’s really hard for certain regulations to stop the process [of a bubble forming],” Ferreira says. “I really wish my research had showed that it’s all about putting down 20% and all problems are solved, but the reality is more complicated than that.”

Furthermore, we still don’t have the tools to understand the cycles of real estate prices, or to recognize bubbles, in any asset class, before they form. So it would be a mistake to think that any regulatory reform will offer fool-proof protection against the next financial crisis.

The booms that capitalism confers on us, it seems, will inevitably be followed by busts. ( End of Chris’ article.)

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HARP and HAMP Receive Probable Final Annual Extension

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( An article from Colin Robertson of TheTruthAboutMortgage.com dated May 11, 2015 )

Since being introduced back in 2009, both and the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) have helped millions either avoid foreclosure and/or save money on monthly mortgage payments.

Both programs have been deemed pretty successful, though the numbers did fall short of original projections (as everyone probably expected) despite several annual extensions. I think the original estimate was nine million.

HAMP Is Finished at the End of 2016

HAMP

Since HAMP was launched in the spring of 2009, a total of about 1.5 million homeowners have received permanent loan modifications through the fourth quarter of 2014.

Nearly 2.3 million trial modifications were started but fewer than one million are permanent and still active either because of a positive outcome such as loan payoff or alternative modification, or because of something negative like a short sale or foreclosure.

This has resulted in aggregate savings of approximately $32.7 billion compared with prior unmodified mortgage obligations.

The goal of HAMP is to get the borrower’s front-end DTI ratio down to 31% by reducing the interest rate, extending the loan term, and potentially forgiving principal.

About 95% of HAMP loans received an interest rate reduction, though those are temporary and subject to rise.

Just over 60% of HAMP borrowers received a term extension and less than a third (30.3%) received principal forbearance.

[HAMP participants are now eligible for $5,000 more in principal forgiveness.]

HARP Probably Done After 2016

The Home Affordable Refinance Program (HARP) is a program that allows underwater borrowers with Fannie Mae- and Freddie Mac-backed mortgages to refinance to take advantage of lower interest rates.

It originally allowed borrowers to refinance with LTVs as high as 105%, but that number was later increased to 125% and eventually the cap was removed entirely for most types of loans.

Over the years there were pleas to expand the program and open it up to borrowers with non-agency mortgages (remember HARP 3), but those demands fell on deaf ears.

To date, roughly 3.3 million borrowers have taken advantage of the program, though the numbers have been waning lately. Around 10,000 borrowers are refinancing monthly via HARP nowadays.

This is not unexpected given the fact that most have already applied for assistance under the program or no longer need it thanks to rising home prices.

During FHFA director Mel Watt’s speech at the Greenlining Institute 22nd Annual Economic Summit last Friday, he spoke about both programs and revealed that HAMP would be finished after one final extension through the end of 2016.

Since March 2013, Fannie and Freddie have also offered a proprietary Streamlined Modification that requires less paperwork than HAMP, and this could serve as an ongoing loss mitigation solution for borrowers.

As far as HARP goes, he said “we anticipate that this will also be the final extension for HARP.”

Apparently some 600,000 plus borrowers could still benefit from HARP though they’ve yet to come forward for one reason or another.

Watt said the FHFA will use the next year and a half “to explore possible streamlined refinance solutions for future Enterprise loans,” so there might be some kind of permanent HARP solution for Fannie and Freddie loans that “might apply in a non-crisis environment.” ( End of Colin’s article.)

From Bob Phillips:  Over the past couple of years, local house prices have risen substantially, which may help in two different ways.  First, former underwater homeowners may now actually have some equity, hopefully allowing a little breathing room.

Second, owners having difficulty making their payments on a loan that has a high interest rate, may, in fact, be able to refinance now, where they couldn’t before, staying in their home with a lower payment, OR, they may now be able to sell their home without going through a short sale, getting themselves out from under a terrible loan that they’ve been living with, for years.

Even if the home is STILL underwater, solutions have become easier to accomplish, if you’re dealing with an agent who has both training and experience, in dealing with distressed loan situations.  I, Bob Phillips, have both the training, and the experience, to help you sort out the many options you might have.

If you – or someone you know – is still having difficulty making their house payments, please consider calling me at (949) 887-5305, or shoot me an email to BobPhillipsRE@gmail.com.

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Foreclosures Across California Reach Eight Year Low

Initially posted by re-insider.com, on November 14th, 2014

“While California’s real estate market has remained flat throughout the year, recent changes have revealed that things may be making a turn for the best. In addition to September’s jump in sales, a new study has found that foreclosures across California have hit their lowest mark in over eight years – the latest sign that our economy is finally catching up with the housing market.
Foreclosure home
According to San Diego-based research firm DataQuick, fewer foreclosures were initiated across California in the third quarter of 2014 than any in the past eight years. This is largely an outcome of a recovering market and a declining number of toxic loans made between 2006 and 2007.

The study found that during the July-through-September period, there were a total of 16,833 Notices of Default (NoDs) recorded – 691 fewer than the second quarter of 2014 and a 17.1% drop from the same time last year.

One should also note that the recent drop in foreclosure starts is actually part of a larger trend. Prior Q3, DataQuick found that Notices of Default were declining during the second quarter of 2014 – the lowest since the fourth quarter of 2005 when only 15,337 NoDs were reported. Similarly, NoDs have dropped significantly since their peak in 2009, when a total of 135,431 NoDs were recorded.

“This home repo pipeline isn’t exactly drying up, but it sure is diminishing. Its negative effect on the overall market is only a fraction of what it was several years ago, and is really only still noticeable in some pockets of the hardest-hit markets of the Inland Empire and Central Valley,” said John Karevoll, a CoreLogic DataQuick analyst.

Do you think this is an indication of a stronger market in Q4?” ( End of re-insider.com’s article.)

From MY vantage point, it looks as though this quarter is turning out to be a fairly “normal” one for Southern Orange County. The type that frequently leads to a more robust Spring home buying season – which in this area usually starts between the last week of January, and February 15th.

If you are thinking of BUYING your next home anytime soon, there are two things to consider right now – today. First, there aren’t going to be many foreclosure houses to look for – less than 2% of available houses – and second, you’ll have much better negotiability on regular, non-distressed properties before that Spring buying season begins.

Give me a call – at (949) 887-5305 – or shoot me an email – to BobPhillipsRE@gmail.com – and let’s talk about your real estate goals.

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CoreLogic: Nearly 1 million houses return to positive equity

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An article by Brena Swanson, of HousingWire.com, dated 9/25/2014:

Nearly 1 million properties returned to positive equity in the second quarter of 2014, bringing the total number of mortgaged residential properties with equity in the U.S. to more than 44 million.

The latest CoreLogic report revealed that 946,000 residential properties regained equity, and nationwide, borrower equity increased year over year by approximately $1 trillion in second quarter 2014.

Negative equity means that borrowers owe more on their mortgages than their homes are worth.

“The increase in borrower equity of $1 trillion from a year earlier is evidence that things are moving solidly in the right direction,” said Sam Khater, deputy chief economist for CoreLogic. “Borrower equity is important because home equity constitutes borrowers’ largest investment segment and, as a result, is driving forward the rise in wealth for the typical homeowner.”

However, there are still approximately 5.3 million homes, or 10.7% of all residential properties with a mortgage, that are still in negative equity as of second quarter 2014. This is compared to 6.3 million homes, or 12.7%, for first quarter 2014, and a negative equity share of 14.9%, or 7.2 million homes, in second quarter 2013, representing a year-over-year decrease in the number of homes underwater by almost 2 million, or 4.2%.

“Many homeowners across the country are seeing the equity value in their homes grow, which lifts the economy as a whole,” said Anand Nallathambi, president and CEO of CoreLogic.

“With more and more borrowers regaining equity, we expect homeownership to become an increasingly attractive option for many who have remained on the sidelines in the aftermath of the great recession. This should provide more opportunities for people to sell their homes, purchase a different home or refinance an existing mortgage,” Nallathambi added.

For the homes in negative equity status, the national aggregate value of negative equity was $345.1 billion at the end of second quarter 2014, down $38.1 billion from approximately $383.2 billion in the first quarter 2014. Year-over-year, the value of negative equity declined from $432.9 billion in second quarter 2013, representing a decrease of 20.3% in 12 months.

In addition, of the 44 million residential properties with positive equity, approximately 9 million, or 19%, have less than 20-percent equity (referred to as “under-equitied”) and 1.3 million of those have less than 5%(referred to as near-negative equity). ( End of Brena’s article.)

From Bob Phillips, CDPE, Realty One Group, South Orange County, CA

The initials after my name, above, CDPE, stand for Certified Distressed Properties Expert, and reflect some unique training I’ve received, over the past several years.  They also validate that I have both training and experience, in guiding homeowners who are having difficulties with their mortgages, to solutions, either in continuing to keep their homes, or in assisting them to get out from under an unmanageable mortgage, and on with their lives, as painlessly as possible.

If you, or someone you know, is STILL having difficulty with making your mortgage payments, I am prepared to offer solutions – most of which have ZERO costs associated with them.  Give me a call or text today.  Bob Phillips, CDPE, Realty One Group, Cell: (949) 887-5305 or email me at BobPhillipsRE@gmail.com

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Scam Alert! 3 Mortgage Modification Scams to Watch out for (And How to Avoid Them)

Scam Alert! Three Mortgage Modification Scams to Watch out for (And How to Avoid Them)As if homeowners who are facing foreclosure don’t have enough to worry about, a multitude of loan modification scam artists have invaded the internet, public files and even foreclosure notices in newspapers in hopes of targeting their next victim. By identifying the top three modification scams and learning how to avoid them, at-risk homeowners can protect themselves (and their homes).

Never Pay For Mortgage Modification Assistance

Many desperate homeowners fall victim to scam artists who offer to provide them with assistance in the loan modification process for an exorbitant fee. Many times the scam artist who promises to provide assistance will require that the homeowner pay the fee upfront, after which they will provide very little assistance or simply take the money and run. Consumers should be aware that assistance and counseling services are offered for free through a number of reputable HUD approved counseling agencies.

Avoid Transferring The Deed

One popular scam that at-risk homeowners often face is the property deed scam in which scam artists promise to purchase the home in question, agreeing to let the desperate homeowner rent it out. They suggest that turning over the deed to a borrower with a better credit rating will offer additional financing opportunities, thus preventing the loss of the home. The scammer often promises to sell the home back to the homeowner, but in reality has no intention of doing so.

Many times the scam artist will sell the home to another buyer. In some instances, the crook will collect any processing fees, take the title to the home and any equity, and then leave the home to default. It is a good idea for consumers who are approached with a property deed scam to report it to the FTC.

Ignore Unrealistic Promises

Mortgage modification scammers often make promises to do such things as negotiate a solution to the foreclosure more quickly, process mortgage payments for the consumer while the negotiation is being worked out, or even guarantee a loan modification. Since the actual lender is the only one who can agree to a loan modification, and this solution requires additional processing time, overnight fixes are almost always scams. Additionally, consumers should never make mortgage payments to anyone other than their lender.

For additional information about mortgage modification scams and how to avoid them, or to receive assistance with working out a solution to avoid foreclosure, at-risk homeowners should contact someone with distressed property training and experience. In South Orange County, California, I am just such a person.

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Foreclosure Inventory Continues to Shrink in May

An article by Colin Robins, of DSNews.com  June 24, 2014

foreclosure-signBlack Knight Financial Services released its “First Look” at May Mortgage data, which found that foreclosure inventory declined to its lowest level since July 2008. As a percentage of total inventory, foreclosure pre-sale inventory is 1.91 percent, down 5.56 percent month-over month.

The percentage of total U.S. foreclosure pre-sale inventory is down 37.23 percent year-over-year.

Foreclosure starts, however, are creeping back upwards. Foreclosure starts totaled 86,300 for the month of May, an increase of 9.52 percent from April. Yearly, foreclosure starts remain down by 26.11 percent. Overall delinquency rates remained steady, down a mere 0.01 percent to 5.62 percent in May.

The number of properties that are 30 days or more past due but not yet in foreclosure totaled roughly 2.8 million, an 18,000 property increase from the previous month yet a decline of 204,000 from the previous year.

Properties 90 days or more past due totaled 1.1 million, down monthly and yearly by 18,000 and 166,000 respectively. Properties that are 30 days or more past due or in foreclosure totaled 3.8 million.

The top five states by non-current percentage include: Mississippi (13.75 percent); New Jersey (12.62 percent); Florida (11.28 percent); New York (10.91 percent); and Louisiana (10.66 percent)

The bottom five states by non-current percentage include: North Dakota (2.5 percent); South Dakota (3.61 percent); Colorado (3.82 percent); Montana (3.96 percent); and Alaska (4.06 percent). ( End of Colin’s article.)

From Bob Phillips, regarding just Orange County, California.  Here’s some local information on the subject from my good friend Steven Thomas, who produces a bi-weekly “Orange County Housing Report.”

Distressed BreakdownThe distressed inventory dropped to its lowest level since last August.

The distressed inventory, foreclosures and short sales combined, decreased by 7 homes and now totals 246. In 2014, the distressed inventory has not changed much, starting the year at 271. The long term trend is for it to remain at a very low level. Last month, they represented only 6% of all closed sales.

In the past two weeks, the number of active foreclosures increased by 3 homes and now totals 63. Less than 1% of the active inventory is a foreclosure. The expected market time for foreclosures is only 39 days. The short sale inventory decreased by 10 homes in the past two weeks and now totals 183. The expected market time is 38 days. Short sales represent 2.5% of the total active inventory.” ( End of Steven’s excerpt.)

Are YOU ( Or is someone you know.)  having trouble making your mortgage payments?

I have been assisting homeowners having difficulty with their mortgages for the past 5 years, and have both extensive training, ( As a CDPE, Certified Distressed Property Expert.)  and year’s of “in the trenches” experience.  If you, or someone you know, is having difficulty making their mortgage payments, give me a call or text at 949-887-5305, or shoot me an email at BobPhillipsRE@gmail.com.  I have solutions – let’s talk about them.

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Black Knight: 1 in 10 Borrowers Underwater

An article by Colin Robins of DSNews.com, May 5th, 2014:

next-exit“In Black Knight Financial Services’ latest Mortgage Monitor Report, the company found that only one in ten Americans are still underwater, down from one in three in 2010. Overall, the company’s look at March data reflected a shifting landscape. As home prices have risen over the past two years, many distressed loans have worked their way through the system and the percentage of Americans with negative equity has declined considerably.

“Two years of relatively consecutive home price increases and a general decline in the number of distressed loans have contributed to a decreasing number of underwater borrowers,” said Kostya Gradushy, Black Knight’s manager of Loan Data and Customer Analytics.

“Looking at current combined loan-to-value (CLTV), we see that while four years ago 34 percent of borrowers were in negative equity positions, today that number has dropped to just about 10 percent of active mortgage loans,” Gradushy said.

Gradushy references the 10.1 percent negative equity average, but what states homeowners reside in paint a clearer picture of negative equity across the spectrum. Judicial states have a higher negative equity rate at 13.4 percent, compared to the 7.9 percent rate experienced in non-judicial states. ( California is usually a non-judicial state.)

Regardless, Gradushy notes that both judicial and non-judicial states have experienced declines. “Overall, nearly half of all borrowers today are both in positive equity positions and of strong credit quality—credit scores of 700 or above. Four years ago, that category of borrowers represented over a third of active mortgages,” Gradushy said.

The total delinquency rate is 5.37 percent, the lowest since October 2007 according to Black Knight. Month-over-month, delinquency rates have declined to 7.57 percent and are down yearly 16.29 percent in March.

The total U.S. foreclosure pre-sale inventory stands at 2.07 percent, the lowest figure since October 2008. Inventory rates are down 36.69 percent year-over-year.

Black Knight had more positive news in its Mortage Monitor Report: leading indicators, such as foreclosure starts, new problem loan percentage, 90-day defaults count, and 30 to 60 roll count are all down heading into the second quarter.

The company offered that the 2013 population of loans was “the best vintage on record,” but the statement belies the fact that higher credit restrictions severely hampered new originations for lower credit borrowers.

The top five states with the highest total non-current loans were Mississippi (13.4 percent), New Jersey (12.9 percent), Florida (12.1 percent), New York (11.1 percent), and Maine (10.6 percent).

Excluding Mississippi, the remaining four states are judicial states, suggesting the longer timelines required to resolve foreclosures are impacting non-current loan rates, depressing the market’s ability to quickly clear the remaining backlog in foreclosure pipeline.” ( End of Colin’s article.)

From Bob Phillips:   While foreclosure activity in South Orange County is WAY down, there are still a small number of home owners still struggling with their monthly payments, while not having enough equity in their homes to sell, under normal circumstances.  If you, or someone you know, is still struggling with their mortgage payments, with a loan that is higher than the value of their home, there are alternatives available.

You might be able to refinance to a lower rate and payment, or may be able to modify the loan to a lower amount, while also lowering your payments, or you might be able to do a short sale, to get out from under the weight of such a mortgage.  I am trained and experienced in helping find such solutions, and provide such assistance at NO cost to you.  If you are seeking a solution, drop me a line, or give me a call.  Chances are excellent that I can help.

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When rising homes prices are not enough

An article by Brena Swanson, of HousingWire.com, January 28, 2014

next-exitWhen rising homes prices are not enough. Positive equity is not necessarily a barrier to foreclosure

Although rising home prices have pushed many homeowners out of negative equity, escalating values are not a panacea    for all distressed borrowers.

A growing percentage of borrowers are now entering foreclosure with positive equity in their homes, a new report from Fitch Ratings claims.

According to the study, the percentage of borrowers entering this process with equity has roughly doubled in the last two years.

While equity continues to play a significant role in borrower payment behavior, income and the ability-to-pay also remain key factors.

In September 2013, RealtyTrac discovered that 24% of all homeowners who are in some stage of foreclosure have at least some positive equity built up. By December 2013, that number continued to rise and 31% of people in the foreclosure process were struggling despite the presence of positive equity.

“One of the things that stood out is that the percentage of homeowners in foreclosure who have positive equity is increasing,” said Daren Blomquist, vice president atRealtyTrac. “That was even more surprising because that equity is a lifeline that homeowners can use to avoid foreclosure.”

Many of the borrowers with equity are unable to sell their properties because the proceeds of the sale would not be enough to cover the mortgage amount, the closing costs and the backlog of missed payments.

“Loans entering foreclosure today have missed roughly two years of payments on average, more than double the pre-crisis, long term average,” Fitch Ratings said.

Another factor is that the composition of borrowers entering foreclosure is changing. The percentage of loans entering foreclosure, which had been cash-out refinance at origination increased steadily since 2008, and now account for 50% of the total.

Due to today’s tighter loan underwriting and origination guidelines, borrowers are unable to tap the equity in their homes to cover expenses.

“Also, the loan-to-value and cash-out dollar limits are significantly lower than what was available during peak-vintage years and, despite the improved equity situation, few of these delinquent borrowers could materially benefit from further cash-out refinancings,” Fitch Ratings said.

Approximately half of all loans that recently entered foreclosure have been unsuccessful in at least one prior loan modification. In addition, the percentage of loans entering foreclosure that had been underwritten to subprime guidelines is increasing.  

Fitch Ratings did emphasize that there is a chance some portion of borrowers currently in the foreclosure process obtained additional and/or secondary financing subsequent to the origination of their first liens, which could be factoring into their ability to pay.

“I think it is hard to know if this is a glass half full or glass half empty type thing. These are homeowners who now have a lifeline to avoid foreclosure. But the other side of the coin is just that equity is not enough to prevent foreclosure,” Blomquist said.

“I think the real question is are these homeowners that just do not know or are they homeowners that are in such a tough situation even equity is not going to help them avoid it,” he explained.”  ( End of Brena’s article.)

From Bob Phillips:  Looking for solutions?  I am completely trained, and experienced, with distressed property situations, whether helping find a lender who might be able to refinance you, help you with a possible loan modification, or to get your property sold, in a way that satisfies all the lenders, and affords you some dignity of not having to go through a foreclosure.  I have been able to stop foreclosures sales with as little as a week to spare.  In many cases, my clients have been able to emerge from such scenarios with some cash incentives to move, and/or an ability to buy another home in as little as one year.

If you are having difficulty with your mortgage, there may be options you’re not aware of.  Give me a call, and let’s see if we can solve your dilemma.

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Important Tips To Do When Behind On Your Mortgage Payments

What Should I Do If I Am Behind On My Mortgage Payments?What happens if you go through a tough financial period and you find yourself behind on your mortgage payments for your home?

If you are missing mortgage payments and are having difficulty paying, this can become a serious problem. Even just one missed payment can be difficult to catch up on, and if you are in this situation it is important to get help right away.

Contact Your Lender

The first step in this circumstance should be to get in touch with your mortgage lender to explain the situation. Simply leaving things alone and not explaining why you have missed a payment will just make things worse.

When people are struggling financially, they avoid calling their creditors for as long as they can. This is usually the wrong strategy to have if you want to make sure that you keep your home.

When you speak to the lender, you can explain why your payment is overdue. For example, perhaps you were laid off from your job or you have been sick and unable to work. If you have a good payment history and you are the one to initiate contact, the lender may be more likely to consider options for you to repay the mortgage.

Consider All Of Your Options

Is there a relative or a friend who could lend you enough money to pay off your missed mortgage payment? Could borrow from your insurance policy? Is there a way you can sell something that you are not using or cut back on other expenses?

Perhaps you could work a part time job on the side to earn more money. There are a number of ways that you could come up with the extra cash and make the mortgage payment.

However, be careful with payday loan companies or other short term lenders, as they may charge extremely high interest that can make it even more difficult to get out of debt later.

Loan Modification

In some circumstances, you might be able to arrange with your loan servicer to permanently change one or more of the terms of your mortgage contract so that your mortgage payments will be more manageable for you.

This could include reducing your interest rate, adding the missed payments to the loan balance or extending the term of the loan. A loan modification can be a good idea if you are facing a reduction in your income that will last for an extended period.

If you are struggling financially and you have missed a mortgage payment, don’t panic. Instead, follow these steps to make sure that you deal with the situation well and get back on track.

The Last Resort

If all else has failed, you might have to consider selling the property to get out from under the obligation of the mortgage – even if you owe more than the house is worth.

A short sale – selling the house for less than the mortgage owed – is a last resort, but in most circumstances would be a better alternative than going through a foreclosure – both for you, and for the lender.  If you feel that you’re getting to the end of the rope, mortgage payment wise, there are still ways to find solutions, and I, as both a CDPE (Certified Distressed Property Expert.) and an SFR (Short Sale & Foreclosure Resource.) am trained and well experienced to advise you though the maze of alternatives.

If you, or someone you know, is having difficulty with making your mortgage payments, please give me a call – 949-887-5305 – or shoot me an email.  I’m here to help.

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For Veterans: Avoiding Foreclosure: VA Has the Tools to Help ( And so do I.)

July 9, 2013,  by Andrew Trevayne, from VAntage Point, the blog from the Veteran’s Administration

“A home is your most important and largest long-term investment.  VA currently guarantees more than 1.8 million home loans for Veterans, their families and survivors.  Many Veterans with a VA loan sometimes experience difficulties making payments, whether from unexpected medical bills, divorce, expensive repairs, etc.  We understand, and we are here to help you find a solution so you can keep your home.  Over the past few years, we have helped almost 300,000 Veterans who became delinquent in their mortgage find a way to avoid foreclosure.  On our website, you can see real stories of real Veterans who were in trouble with their homes find solutions. There are many ways we can help you too.

Veterans

At VA’s Home Loan Guaranty Service, we have more than 150 VA loan technicians across the country whose job is to help Veterans understand how to retain their homes and/or avoid foreclosure.  For the past five years, VA guaranteed home loans have had only a 2% foreclosure rate – the lowest and best in the industry.  If you, a friend or a family member is experiencing financial challenges that are affecting your ability to maintain home ownership, please give VA a call at (877) 827-3702.  Whether your home loan is a VA guaranteed loan or not – we are available to discuss your situation and help you decide on your best options.

When a VA guaranteed home loan is 61 days past due, our electronic reporting application automatically assigns a VA loan technician to follow up on the Veteran’s situation – offering financial counseling, advice and support, help in dealing with the loan servicer when needed, information and additional tools on avoiding foreclosure.  Sometimes the most helpful service we can provide is a sounding board – someone to bounce ideas off of and discuss options for how to avoid further delinquency. More information on VA’s delinquency guidance services can be found here [PDF].

Here are just a few tips for borrowers experiencing financial challenges:

When speaking with your loan servicer about your delinquency, give him or her accurate information about your financial situation. If you over or under estimate your income and expenses, you may be setting yourself up for failure by agreeing to a payment plan you can’t afford.

Do not stop paying your home loan because you are “under water.” Foreclosure should not be used as a negotiating tool and there are other options that will have a much better impact on your financial future.  Ask instead about a repayment plan, special forbearance, loan modification, or additional time if you determine you can no longer afford the property and you need to consider a private sale.

A home loan is a business contract that you have entered into for up to 30 years. Think of it as a car loan X 6! Any changes to your loan represent risk and you should ensure that you understand the effects of any change, even if it seems small.  Give VA a call and let us help you review any changes before you “sign on the dotted line.”

If paying your home loan bill each month is becoming more difficult – take the time to track all of your expenses over a month.  Figure out which expenses are “obligated” – meaning you must pay them every month (home loan, bills, child care); and which are “unobligated” (eating out, entertainment).  Creating and sticking to a monthly budget calls for hard choices, but you may be surprised to see just how much you are spending in different areas, and how cutting back in a few can make a positive impact.

When you begin to experience financial difficulty or when you believe you may have difficulty making your mortgage payment, contact your loan servicer right away.  The sooner you contact them, the quicker you and the servicer may be able to find a resolution.  Remember, VA technicians are also available to assist you.” ( End of Andrew’s article.)

 Andrew Trevayne  is the Assistant Director for Loan and Property Management, Loan Guaranty Service. He has worked for VA for 15 years, beginning his career at the Houston Regional Loan Center. He previously served in the 82nd Airborne at Ft Bragg.

Note from Bob Phillips:  As a Veteran myself, I am trained to assist fellow Veterans, in either initially purchasing a home, or, in dealing with a distressed loan situation. ( As a Certified Distressed Property Expert – CDPE.)  I’m here to help you – in good times, or bad.

Comments Off on For Veterans: Avoiding Foreclosure: VA Has the Tools to Help ( And so do I.)

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