Recent statistics indicate that the number of foreclosures in the US are nearly twice what they were a year ago. In some states, foreclosures reportedly claim one in every 199 households!
If you or someone you know has an Adjustable Rate Mortgage (ARM) that is scheduled to adjust in the next 2 to 18 months, please schedule an appointment with us before it's too late. Don't let a foreclosure or default situation sneak up on you. For many borrowers, there are a number of viable foreclosure alternatives that can help, including short sales, FHA refinancing, or FHASecure, to name a few.
Short Sale A short sale is a legally-binding agreement to allow a home to be sold for less than the amount that is owed. For debt-ridden homeowners or those who owe more than the house is currently worth, a short sale could save them some of the enormous pain, embarrassment, and major credit challenges associated with bankruptcy and/or foreclosure. For lenders, it helps avoid some of the hassle and expense of seizing and auctioning off delinquent real estate. For potential homebuyers and real estate investors, a short sale offers a great opportunity to purchase property at a significant discount.
It's important to note that short sales occur at the sole discretion of the existing lender or servicing company. This is not like negotiating the price of a home under normal circumstances. A written declaration and supporting documentation demonstrating financial hardship and an inability to make payments will definitely be required by the lender in order to even consider a short sale. This may include pay stubs, tax returns, and liquid asset statements – including those for retirement accounts – among other documentation. In addition, the borrower must be at least 91–days delinquent before a lender will even discuss a short sale.
This is where an experienced real estate professional becomes invaluable to your cause. Knowledgeable real estate agents have likely negotiated short sales in the past and are well-versed in the substantial risk and reward involved in this extremely complex and often drawn out process.
FHA Refinancing The Federal Housing Administration (FHA) was established in 1934. Its purpose is to provide and improve home ownership opportunities to the general public by insuring home loans made by lenders. The FHA is the only government agency that operates entirely from its own income, and costs the taxpayers nothing. It is also the largest insurer of mortgages in the world. The Federal Housing Administration became a division of the Department of Housing and Urban Development (HUD) in 1965. In the United States, HUD administers low down payment loan programs to help increase and promote home ownership opportunities for Americans.
In recent years, FHA loans had become less popular, especially in areas with higher loan requirements. With the collapse of subprime lending, however, FHA has reemerged as a valuable resource for many borrowers.
The FHA guidelines are not FICO-score driven and are said to be "forgiving" about certain negative financial circumstances, including bankruptcies, foreclosures, or certain consumer credit counseling programs. According to HUD, FHA transactions are projected to surpass 100,000 loans by the end of the fiscal year, which does not include refinances for delinquent borrowers.
You've probably heard about FHA reform in the news recently. As a result of the significant market volatility experienced this summer, lawmakers are clearly invested in updating and expanding the limited reach of FHA lending. All politics aside, this new flexibility will likely help many homeowners who take the initiative and seek out help before it's too late. However, there is still a lot of confusion and misinformation about the features and benefits of new FHA legislation currently awaiting approval.
Home buyers, home sellers, ARM holders, and other borrowers looking to refinance, don't allow yourself to be overwhelmed by all of the information surrounding these initiatives. Call us and find out what real opportunities are available right now to help you meet your financial goals.
FHASecure Initiative FHASecure is a temporary lending program – which expires in late 2008 – announced by President Bush on August 31, 2007, and released to FHA–approved lenders on September 4th. Qualified homeowners seeking payment relief from their ARM may be able to use FHASecure to refinance their loan into a more stable, fixed-rate program, even if they are already delinquent on payments. This program is estimated to rescue somewhere between 80,000 and 220,000 ARMs borrowers.
The FHASecure initiative will utilize existing FHA guidelines. Eligible homeowners will be required to pay a mortgage insurance premium and, like all FHA loans, FHASecure will not include pre-payment penalties or "teaser rates."
A number of important criteria must be met in order to be considered for this and the other programs discussed in this article. Give us a call and, even if you do not meet these specific criteria, we'll help you find the resources you need to overcome challenges and reach your financial goals.
If you would like to learn more about how these and other financing options could help you, please call us at 949-637-9939 to set up an appointment. We would be happy to speak with you about it!
