How is Your Loan Modification Doing?
September 15, 2011 by
Filed under
Buying
If you’re like most, not well. it looks like Lenders are having second thoughts about the program.
Trial loan modifications are being canceled at an increasing rate
Lenders are canceling trial loan modifications at an alarming rate. In fact, the number continues to rise so much that Citigroup has canceled the program altogether.
Citigroup, along with B of A had also been offering principal reductions to try to help home owners in trouble, but that program also seems to be offered at a reduced rate as this housing problem continues to plague, not just the U.S., but the world. Stock markets around the world have been in dive mode – the DOW dropped below 10,000 again today. The reason most often cited is the housing problem here in the U.S. which is not only not improving, but seems to be getting worse. People are not buying – while banks are sitting on cash, and tightening lending guidelines at the same time. The rationale, of course, is the fear of more bad loans.
The government advises home owners who have either been denied a modification, or have had trial modifications canceled mid-stream to keep trying other alternatives before seeking either a short sale, or letting the property go to foreclosure.
I Just Completed a Short Sale. How Long Before I Can Get a New Mortgage?
As I tell my clients, I am a real estate professional. That means I am an expert in buying, selling, marketing and valuations of residential real estate. I am going to defer to a mortgage expert for this answer.
This answer is by Matt Bukovy, Sr. Mortgage Consultant at Wintrust Mortgage
To qualify for an FHA LOAN after a Short Sale: You must either wait 3 YEARS from the date sale closed and transferred to new owner. There is (theoretically) no waiting period if the borrower had no late payments on ANY mortgage or consumer debt within the 12 month period preceding the short sale AND they are not taking advantage of declining market conditions, but … seriously … that’s exceedingly unlikely.
For CONVENTIONAL LOANS, it’s more complicated:
7 years from date sale closed and transferred to new owner or transferred back to bank for new loans with less than 10% down payment.
4 years from date sale closed and transferred to new owner or transferred back to bank for new loans with 10% down payment.
2 years from date sale closed and transferred to new owner or transferred back to bank for new loans with 20% down payment.
2 years from date sale closed and transferred to new owner or transferred back to bank for new loans with 10% down payment and acceptable extenuating circumstances.As far as acceptable extenuating circumstances are concerned, they need to be documentable and verifiable nonrecurring events that are beyond the borrower’s control and cause a sudden, drastic and prolonged reduction in income. Death of a wage earner and catastrophic illnesses would count, divorce would not (since that is within the borrower’s control.)
So, as a rule of thumb, since it seems unlikely that someone with a 10 or 20% down payment would be ALLOWED to short-sell, most of the time, it’s going to be three years before you can get an FHA loan, and 7 years to get a conventional one.
More people are buying their homes with cash – Mar. 10, 2011
The all cash buyer is a big force in today’s market. Most regions are reporting anywhere from 30%-50% of homes sold are being sold for cash.
Laura Dominguez-Vasquez and her husband, Luis, recently sold their Coral Gables, Fla., home to all-cash buyers for just under $1 million. They’re now shopping for a new home and intend to pay cash as well.
The busy professionals have three kids, aged 14 to 20, and they don’t have the time or inclination to mess around with homebuying. "The process has to be painless," she said.
The Vasquezs are not unique; cash buys are becoming common. The number of homes bought with cash jumped to 32% in January compared to 26% a year earlier, according to the National Association of Realtors.
In Southern California, about 30% of the sales in January were cash, according to DataQuick Information Systems. Same thing in Denver. In Phoenix and Las Vegas, cash sales topped 50% of all deals.
Read the full story at More people are buying their homes with cash – Mar. 10, 2011.
The McCoy Case Analyzed – MERS Smackdown! | Q-Law Blog
There is a very interesting thing going on behind the foreclosure mess – MERS. MERS stands for Mortgage Electronic Registration System and was a system concocted to make it easy to transfer a mortgage from one company to another, without having to record it at the county. Problem is, the law in most states requires that it be recorded to be valid. Oops.
“…the powers accorded to MERS by the Lender [whose name appears in the Trust Deed] – with the Borrower’s consent – cannot exceed the powers of the beneficiary. The beneficiary’s right to require a non-judicial sale is limited by ORS 86.735. A non-judicial sale may take place only if any assignment by [the Lender whose name appears in the Trust Deed] has been recorded.”
[Frank R. Alley III, Chief Bankruptcy Judge, published opinion, Donald McCoy III v. BNC Mortgage, et al., Adversary No. 10-6224 -fra, Case No. 10-63814-fra-13, February 7, 2011]
Slapdown! In a relatively uncomplicated adversary proceeding in Oregon’s bankruptcy court, Judge Alley hit the nail squarely on the head: If lenders in Oregon want to foreclose people out of their homes, they must follow ORS 86.735(1). Or in the words of one Oregon title counsel, Judge Alley’s decision means that “…all assignments behind a MERS trust deed must be recorded for a non-judicial foreclosure. In McCoy, it appeared there were unrecorded assignments by the original lender identified in the promissory note. A “beneficiary” in Oregon is defined as the entity or person identified in the trust deed as the one for whose benefit the trust deed is given (or their successor in interest) – that was not MERS, but rather the original lender making the actual loan to the borrower.
For some reason, this relatively simple requirement has been routinely and flagrantly ignored in virtually every non-judicial foreclosure I have reviewed last year and this year. I suspect if I went back to 2008 and 2009, I would see the same thing. And this holding isn’t confined to situations in which MERS is the (nominal) beneficiary.
Read the rest of the story at The McCoy Case Analyzed – MERS Smackdown! | Q-Law Blog.
Home Value Depreciation Picks Up Speed In January | Zillow Real Estate Research
Some bad news from Zillow:
The pace of home value declines further accelerated in January with monthly home value depreciation reaching 1.2% and annual depreciation hitting 7.3%. This rate of monthly depreciation is the highest seen in the national index since December 2008 (see Figure 2). The median home value nationally in January was $172,182, down 28.2% from its peak in June 2006 (see Figure 1).
Of the 131 metropolitan regions with a Zillow Home Value Index in January, 124 metros experienced year-over-year declines in home values (95%), four metros saw annual increases (3%), and three metros were flat from year-ago levels (2%). The markets experiencing the largest annual declines in home values included Ocala, Pueblo, Mobile, Flagstaff, Atlanta, Spokane, and Detroit. See the interactive chart below for data on all 131 metro areas.
