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With today’s economic crisis we are seeing record highs of foreclosures on the market. If you are in this situation there is probably a million questions running through your head.

Probably the most important, and most frequently asked, is how it will affect your credit. Of course a foreclosure on your credit history will be detrimental.

Natalia Osorio Editor of the “Stop Foreclosure Loans” website — http://www.StopForeclosureLoans.org — pointed out;

“…There really is no disclosed number of points that will be docked from your credit score; however an unofficial number has been rumored to be around 260 points. A good credit score is 700 or higher. An average credit score is around 600. Therefore if you’re current credit score is at 650 you can roughly expect your score to drop to around 390. Even if you have an excellent score of 800 your score will be dropped to around 540 which are still considered to be a negative credit score…”

There are two main reasons that we as a country are currently in this housing crisis. The economic crisis was started by borrowers taking out bad loans, and lenders selling the bad loans to the consumers. Most of these loans included arms which is where the payments were low for the first few years. After the first few years the payments would skyrocket. Lenders would sell these loans to consumers by telling them that they would be able to sell their homes or refinance their homes when their payments increased. Other bad loans included variable interest rates. This again would give a good introductory interest rate, and then the interest rate would increase exponentially after the first few years making payments impossible for the home owners.

This started a domino effect which eventually leads us to record breaking unemployment rates. Because there were millions of these types of loans all at the same time it forced many home owners to go into foreclosure. This affected many industries including banking and real estate. It then got difficult for these consumers to afford or finance anything which then hurt other industries such as automotive and furniture.

“…If you are in this situation there are a few things you can do to stop foreclosure. There are many foreclosure assistance companies that can help you go through your bills, consolidate your debts, and negotiate with your mortgage lender to get your monthly payments down to something you can afford. You can also contact your mortgage company immediately and try to work out a loan modification. You should also research options such as short sales, a deed in lieu, or cash for keys…” N. Osorio added.

Further information about how to get professional assistance with a mortgage loan modification by http://www.StopForeclosureLoans.org

Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.

Article Source:http://www.articlesbase.com/mortgage-articles/how-does-a-foreclosure-affect-your-credit-1786824.html

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Many people have questions about foreclosures these days.

One of the many questions being bandied about is can the lender who holds the 2nd note on my home force me into foreclosure if I am delinquent. The answer is yes.

Natalia Osorio Editor of the “Stop Foreclosure Loans” website — http://www.StopForeclosureLoans.org — pointed out;

“…A 2nd loan is also a recorded debt against your home. When borrowers take a 2nd loan they guarantee repayment of the loan and the collateral used to guarantee the loan is the property on which the loan is issued. As with any loan secured by real property if the 2nd loan becomes delinquent the lender who issued the loan will foreclose on the property in order to be repaid…”

When a loan in 2nd position moves to foreclose on the property the lender in 1st position will immediately begin to protect their investment and usually will also begin foreclosure proceedings.

When the lender in 1st position is also the 2nd position lender there is a chance they will work with a borrower to protect their investment. Lenders are usually reluctant to foreclose upon a property unless all other avenues of securing the repayment have failed. For example loan modifications, refinancing of the property, deed in-lieu of foreclosure, and short sales are some of the alternatives to foreclosure.

Also keep in mind that if a property does get foreclosed upon the borrower will still be liable for the amount left over from the foreclosure. For example if a home goes into foreclosure and the money from the proceeds of the sale are not enough to pay the existing 1st mortgage the borrower will still be legally liable for the balance of the 1st mortgage as well as any 2nd loan still on the property.

If a borrower is facing foreclosure, the most important thing for them to do is contact their lender to see what options are available to them to prevent the foreclosure. Next steps to take after contacting the lender should be contacting HUD to see what options they offer to prevent foreclosure. After all other options have been exhausted; a borrower should consider contacting a mortgage modification company.

“…Remember a mortgage is a loan collateralized by a piece of real estate. If a borrower defaults on a 1st or 2nd mortgage the lender will move to protect its investment by foreclosing on the property securing their debt…” N. Osorio added.

Further information about how to get professional assistance with a mortgage loan modification by http://www.StopForeclosureLoans.org

Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.

Article Source:http://www.articlesbase.com/mortgage-articles/can-the-lender-who-holds-the-2nd-on-my-home-force-me-into-foreclosure-1763670.html

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The U.S. President has declared that performing loan modification on distressed mortgages is a key part of keeping families in their homes, and ending the rapid decline of property values.  Critics have said that, in 2008, some 53% of all restructured loans were once again in default by the end of that year, but others say that those loan modifications were poorly executed.

The Obama administration aims to help millions of families avoid foreclosure and stay in their homes through an aggressive loan restructuring program.  Here are the top 7 things homeowners should know about this plan.

1.    The focus of Obama’s loan modification plan is centered around monthly payments – not the long term price of the loan.  The focus is more about keeping families in their homes, and less about helping borrowers get good return on investment.
2.    The end goal of each loan modification is to get the monthly payment on each delinquent mortgage down to 31% of the borrower’s monthly income.  To that end, the government will pitch in up to 7% of family income, and the lender will take steps such as reducing interest rates and extending the loan’s term to 40 years.  
3.    The government will provide cash incentives to both the lender and the borrower, to encourage use of the loan modification program.  Lenders will receive $1,000 per loan modification, plus another $1,000 per loan per year for up to three years.  Borrowers also get a $1,000 discount off the loan’s principal each year for up to five years.  Both of these incentives require the new loan terms to be active for three months, and to be kept current.
4.    This loan modification plan is only for delinquent mortgages for owner-occupied homes which are the primary residence of the owner.  The loan must have an outstanding principal balance. Both occupancy, and financial hardship, must be verified.  Analysts have commented that such measures would have prevented the current crisis if enacted sooner.
5.    Each lender and loan servicer will test each loan using a formula to determine if a loan should be modified.  The formula compares the present rate of repayment, vs. the expected rate of repayment after restructuring.  If the borrower is able to make payments more faithfully on a delinquent mortgage under a modified loan, then this is worth more to the lender, and the loan should be modified.  In tandem with the cash incentives, this will help increase participation.
6.    The Obama administration intends to offer incentives to prevent or remove second liens, but further details on this have not yet been announced.
7.    Real estate speculators need not apply.  The entire focus of this initiative is to keep families in their homes – not to aid small real estate investors.  This is great news for the affected families struggling under a delinquent mortgage, but only time will tell how the real estate market as a whole will benefit from this program.

This loan modification program for delinquent mortgages is now “live” and in effect.  You may have trouble getting the process started with your lending institution, if you live in an area that was hit hard by the recent real estate crash.  Some experts are concerned that lenders don’t have the the capacity to process all the borrowers who will inquire about loan modification.

Krebs Financial of Miami, Florida is a full-service mortgage, credit repair and loss mitigation company with expertise in short sales, loan modifications, reinstatements and more.
www.krebsfinancial.com

Article Source:http://www.articlesbase.com/mortgage-articles/7-things-to-know-about-loan-modifications-1767496.html

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The new FDIC loan modifications program is now supporting a more generous approach to help mortgage holders prevent foreclosure. More than 6 million mortgage loans in America are delinquent; thus, more distress is predicted to affect the real estate business. The Government loan modification bill is considered to be a rescue plan to a high percentage of Americans who are struggling to pay their mortgages.

The new modification plan is encouraging lenders and bankers to modify loans at a cost that is less than the high cost of foreclosures. Moreover, the federal government offers to finance loans to get the monthly payment to less than 30% of a mortgage holders income. The FDIC offers the borrower a wide array of workout solutions. The current net value of the property is considered in modifying the loan. Most real estate properties’ prices have fallen markedly in the past 2 years; thus, most borrowers are paying loans that are much more than the value of their homes.

Extension of terms and amortization of a loan is another modified loan strategy. Delinquent loans can be extended up to 40 years. Borrowers, who are facing foreclosure, can now remain in their houses provided that they modify their loans and deliver one payment on approval of the modification plan. Temporarily lowering the interest rate of the loan is another strategy that can be adopted in loan modification. The lender can cap the interest rate for a while and then re-increase them on annual basis. For the lender, it is actually better to receive less money than not at all. Money lenders and banks are looking to the darker side of the loan modification plans; however, these modified loans are expected to pump more fluidity in the financial market.

The new FDIC loan modification plans are directed to the neediest Americans. The federal government shall fund a modified loan in the following circumstances:

1- A loan that has been delinquent for more than 2 months

2- The borrower hasn’t declared bankruptcy,so that foreclosure isn’t the only solution for the lender

3- The loan is for a house that is used by the borrower as a residence; thus, excluding all investment property mortgages.

The FDIC loan modification plans have evolved following Presidents new bill. The new modification plans are providing solutions to all mortgage holders who are fighting to pay their loans. The new solutions are expected to have positive influences on both lenders and borrowers.

For detailed facts and essential tips about how you can be approved for a FDIC loan modification, visit this simple, easy to understand loan modification guide and resource: Home Loan Modifications.

Article Source:http://www.articlesbase.com/mortgage-articles/fdic-loan-modifications-a-pack-of-solutions-1734525.html

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The new loan modification bill, which has been passed to vote by the US President, has offered hope to thousands of Americans who are burdened with mortgage loans that are continuously ballooning. The new bill offers options that are more malleable and generous; thus, ensuring the approval of more loan modifications than ever. The loan modification requirements are rendering a higher percentage of mortgage holders eligible for modified loan plans.

Qualifying for a modified loan plan requires proof of emergent financial problems. If you have recently lost a job or even had a cut off your monthly pay, you are eligible to a modification plan. Financial hardship should be documented with the appropriate papers that verify the monthly income. The new loan mod plan can secure financial aid to bring down the mortgage payment to less than 30% of the total monthly income of the borrower.

Modification funds are available for personal mortgage loans. In other words, if you live on the property, which you’re paying mortgage for, you’re probably eligible for a modification. Occupancy should be documented with proper bills and other required proofs.

The economic state of the lender is a decisive factor in determination of eligibility of modified loan proposals. A loan mod is an agreement between the lender and the borrower. If a lender has declared bankruptcy, it is legitimate to turn down loan mod proposals. However, the recent loan mod bill has offered incentives to lenders for each completed modified loan; hence, decreasing the overall cost of loan modifications as compared to the cost of foreclosure.

After the lender approves a modified loan plan, he assigns the borrowers to a ‘Trial Period”. The plan is not valid unless the borrower delivers three monthly mortgage payments on time. After the trial period, the plan is considered valid and the borrower would receive a federal incentive for each year of completed payments.

The new loan modification plan has made more Americans eligible for modifying their debts. Recent researches have proved that more than 6 million delinquent loans are the result of a disastrous economic recession. The federal government is offering financing solutions to save mortgage holders from foreclosure.

The economic recession has been passively reflected on the real estate business. Loan modification requirements have created the opportunity for more American to modify their debts. To sum up, financial hardness and occupancy are the two most important factors in eligibility for modified loan.

For detailed facts and essential tips about how you can be approved for a loan modification, visit this simple, easy to understand loan modification guide and resource: Home Loan Modifications.

Article Source:http://www.articlesbase.com/mortgage-articles/loan-modification-requirements-a-resourceful-guide-for-a-complex-subject-1734787.html

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