Monthly Archive for March, 2010

Yes, this is not a typo. Although you may never have expected to be thankful for that %^%*%* CountryWide loan, now you can be. Bank of America, which found itself the proud (?!) owner of some twelve million CountryWide home loans when it bought the company, has announced that it will cut some 45,000 CW borrowers a break.

While the program may be expanded at a later date, initially it will cover those with 2-year adjustable mortgages -- a common subprime or bad credit mortgage product.

B of A's statement: "To make the program even more accessible, we will expand the eligibility date to include loans originated on or before January 1, 2009. We will also extend the program end date to December 31, 2012. As soon as the program details are in place, we will begin offering this enhanced program to all of our qualified customers.”

What's a qualified customer?

Loan Forgiveness Program:

You must be at least 60 days or more delinquent and your loan must be at least 120% of your property's value.

If you have a Pay Option loan with negative amortization, you must be delinquent for 60 days and face imminent default. The loan-to-value must exceed 95 percent.

National Home Ownership Retention Program

B of A does not underwrite subprime mortgages. This program is only available to customers who took out a subprime mortgage or a Pay Option adjustable rate mortgage before 2008. You must be delinquent at least 60 days and your loan to value ratio must be at least 75 percent.

Times are tough, and if you had bad credit when you got your mortgage, you might still have bad credit and be unable to refinance. However, if your mortgage is causing you some hardship and you are in danger of defaulting, contact your mortgage lender about a loan modification.

Check out Making Home Affordable

If your mortgage payment (including principal, interest, taxes, insurance, and HOA dues if applicable) exceeds 31% of your gross monthly income, you may qualify. The HAMP Web page gives a lot more details. You'll also need to know if your bad credit mortgage lender is participating in HAMP. You can find that out HERE.

Even if your lender is not a HAMP participant, or you don't meet the program guidelines, you may be able to score a loan mod anyway. Better for the lender to modify your mortgage than to see the income stream dry up.

Lender May Meet You HAFA Way

An alternative to a HAMP modification is the new HAFA (Home Affordable Foreclosure Alternative) short sale program, which rolls out in April. That provides a formalized and streamlined procedure and timeline for short sales and takes the uncertainty out of the process. Should you wish to sell your property, you'll know up front what price the lender is willing to accept and your buyer can have a lot more confidence that the deal will go through.

Finally, try an FHA or bad credit mortgage lender. You have nothing to lose by filling out the form on this site, and you may find a company willing to get you a better interest rate than you have now.

For those with no down payment, a low or moderate income, and borderline bad credit, USDA rural mortgages can be the fairy godmother. But, unlike FHA or VA, which just guarantee mortgages underwritten by private mortgage lenders, USDA, through its direct lending program, actually funds those loans. That means the agency can run out of money.

USDA loans have a lot to recommend them. The interest rate can be subsidized if you qualify. You can finance up to 102% of the property's appraised value if it needs repairs, and there is no mortgage insurance or funding fee. But if you miss the boat, there's no more money until October, when the federal government starts a new fiscal year.

Other programs aren't unlimited either. While down payment assistance in the form of grants, loans, or both are available courtesy of state, county, and city governments, plus charitable organizations, the money tap does turn off. And demand is higher than ever, thanks to first time buyer tax credits fueling interest in these programs.

Get thee to a mortgage or housing counselor. You can find them on the HUD Web site. Just go to the State Pages, choose your state, then select "Learn About Home Ownership" for a list of housing resources. A housing counselor can help you determine which programs you qualify for and when you should apply to increase your chance of success.

Charitable organizations can help too. Just make sure if you plan to use an FHA mortgage that your assistance comes from an approved group. You can find out by contacting your nearest HUD home ownership center.

If your credit score has taken a beating lately, you are not alone. Unemployment or under-employment has strained many budgets and caused credit score drops across the board in the American population. While many blame credit cards for ruining their credit as companies increased their interest to criminally-high levels, other people with bad credit are using credit cards to help repair their bad credit scores.

Credit cards can help increase your credit score, but you have to be smart and careful in choosing and using them. First, you need to decide on an unsecured card or a secured card.

If you have a poor credit score, unsecured credit cards will likely only be available at a very high interest rates. That's fine, if you have learned to budget and manage credit as part of your rebuilding strategy. You should plan on never carrying a balance with this card, only using it for smaller purchases and paying it off each month. If you think you may not have the discipline to do this and a high interest card is your only option, you may want to pass and look into getting a secured credit card. Or get some credit counseling before you take on a high-interest rate card.

A secured credit card is great for building credit, and comes with a lower rate in most cases. However, it does require you to deposit money into an account that secures the card. Ian addition, fees can be prohibitive--don't pay $200 for a card with a $300 limit. Wait if you have to; better deals will come along eventually. In addition, remember your reason for getting the card -- make sure the creditor reports your good behavior (it IS going to be good, right?) to the credit bureaus before signing up.

When you figure out what credit card to use, make only smart and affordable purchases. You will want to stay within your personal budget so as to avoid missing a payment and be consistent with your credit card repayment plan. By doing so, you be able to more easily repair your credit score in a way that shouldn’t cause you financial strain.

FHA mortgage applications in February increased by 31% over January, with over 165,000 applications. Of the refinance applications, 79.7% were converted from conventional mortgages to FHA or participating in the Hope for Homeowners program. H4H may be getting more support from lenders as its potential for minimizing lender losses becomes more apparent.

Amherst Securities Group researchers discovered in their research that programs that support short sales are best for minimizing losses, and they stated that the Hope-for-Homeowners (H4H) program is a "powerful alternative" to the Home Affordable Modification Program (HAMP). Because H4H provides the same lender relief as short sales, without the borrowing having to lose the home, it may be the best compromise available. The researchers concluded that sale or H4H provide a loss severity 15-20% less than that of a foreclosure sale.

Borrowers completing the H4H program have their balance lowered to 90% of the property value and refinance into a new FHA-insured mortgage.

Who Qualifies?

You should contact your lender to determine eligibility, but you may be eligible if:

• The home is your primary residence, and you have no ownership interest in any other residential property, such as second homes.
• Your existing mortgage was originated on or before January 1, 2008 and you have made at least six payments.
• You are not able to pay your existing mortgage without help.
• As of March 2008, your total monthly mortgage payments due were more than 31 percent of your gross monthly income.
• You certify that you have not been convicted of fraud in the past 10 years, intentionally defaulted on debts; and did not knowingly or willingly provide material false information to obtain existing mortgage(s).

You will be required to share the equity you gain by participating in the program when you sell or refinance your home.
Here's an example of how the equity sharing works.

1. Let’s say your home has an appraised value at the time you receive your FHA mortgage of????????. $400,000.
2. And your mortgage is 90% of this, or????.... $360,000.
3. This means the initial equity is the difference between 1 and 2, or????????????????????????.. $40,000.

In this example, you and the FHA share this $40,000 when you sell your home or refinance your mortgage. Here’s how that $40,000 would be split:

If you sell or refinance:

During Year 1 FHA receives 100%, or $40,000 You receive 0%, or $0
During Year 2 FHA receives 90%, or $36,000 You receive 10%, or $4,000
During Year 3 FHA receives 80%, or $32,000 You receive 20%, or $8,000
During Year 4 FHA receives 70%, or $28,000 You receive 30%, or $12,000
During Year 5 FHA receives 60%, or $24,000 You receive 40%, or $16,000
After Year 5 FHA receives 50%, or $20,000 You receive 50%, or $20,000

In addition, any appreciation the property gains is split equally between you and FHA; this doesn't change no matter how many years go by after the H4H refinance.

Yes, Indiana homeowner Lisa Stuart almost lost her home because she didn't know about an unwritten HAMP rule. She was put into a trial modified mortgage and set her account up to automatically make the payment on the 25th of the month. She was concerned that if she set it up to transfer on the ...

Bad credit lenders, like all mortgage lenders, are usually on the up and up. However, there are some bad apples who don't honor their disclosures, engage in discriminatory practices, bait and switch their interest rates, or take advantage of less sophisticated borrowers. If you think you've been had, what do you do? First, try to resolve ...