Loans Now Available To Previously Troubled Borrowers

FHA recently announced a new mortgage rule that will benefit borrowers that have experienced foreclosure, short sale, deed in lieu or bankruptcy.  In the new Back to Work - Extenuating Circumstance program, borrowers with a record of foreclosure, short sale, deed in lieu or bankruptcy will still be able to get a new FHA loan in 12 months instead of the standard three year waiting period.

For a borrower to qualify, they must prove that major economic event like job loss or at least 20% income reduction (for at least 6 months) was the main reason in losing their home.  Furthermore, borrowers will also need to prove that they have recovered from their situation and they must have a satisfactory credit score.  And lastly, potential borrowers will need to complete a one hour one-on-one housing counseling session.  BUT, borrower's MUST have a satisfactory credit score and in good standing prior to the said major economic event. 

Borrowers "MUST" satisfy the following criteria in a minimum of 12 months to be considered borrower with "SATISFACTORY CREDIT":

- No delinquency payments on rentals.
- No more than one 30-day late payment due to other creditors.
- No collection accounts/court records reporting (other than medical and/or identity theft)

Back-to-Work program is now available until September 30, 2016. Once the borrower qualifies the program, the same 3.5% minimum FHA required down payment will apply. Mortgage insurance and closing costs will also apply.

Reverse mortgages are ineligible for Back to Work program.  In reverse mortgage, the home owners can borrow money against the value of his or her home.  No repayment will be applied until the borrower dies or the home is sold.

However, even with the new Back to Work program, the final decision to lend the borrower is still up to the lender.  So, it is VERY important for the borrowers to prove that they can satisfy all requirements for them to be able to obtain a loan. 

If you want to fast-track your home ownership but has trouble in obtaining a loan because of your previous record, then I can help. Don't hesitate to call.

Shorter Processing Time for Short Sale Transactions

FHFA (Federal Housing Finance Agency) released last April 17, 2012 the new timelines for short sale process for Fannie Mae and Freddie Mac backed loans.  The new timelines will help home owners avoid foreclosure. 


The FHFA's new directive requires the servicers of Fannie and Freddie loans to: (Source: www.fhfa.gov)


- Review and respond to borrower requests for short sales within 30 days after receipt of a short sale offer and a complete borrower request.
- If the review is still under way after 30 days, give the borrower weekly status updates.  (This allows more time where necessary, such as where subordinate lenders and/or mortgage insurance is involved.)
- Advise the borrower of the final decision within 60 days after receipt of a short sale offer and a complete borrower request. 


In cases where the servicer makes a counteroffer, the borrower must respond within 5 business days. The servicer in return, must give its reply within 10 business days of receiving the borrower's response.


According to CNBC report, the long response time have been the no. 1 complaint in the short sale sector. It usually takes up to a year or more for a buyer to get a response which results to buyers dropping out of the transaction.  Fannie and Freddie hold hundreds of thousands of distressed loans and with the new FHFA directive, the process will be expedited. The new timelines will take effect in June.


If you have any questions about real estate, please don't hesitate to contact any of our team.  You may reach  James Team Real Estate on (907)-865-6594 or email us at patrickjameshomes@gmail.com. If you are looking for your new home, you may check out our listings at www.anchoragehomedeals.com.

Foreclosure

Foreclosure is a legal process through which lenders reclaim properties from borrowers who can no longer afford to meet their monthly mortgage obligations. It takes away the ownership rights an owner has over a property and gives it to the lender in order to sell the property for the purpose of paying a debt.

The time line for the foreclosure process is usually 3-4 months, it varies depending on the state where the property is located.  The property isn't foreclosed on until it is sold at an auction and as per state's procedure.  Being in foreclosure means that the lender has initiated legal proceedings to foreclose a property.

Usually, on the first month of default, the lender initiates collection process by contacting the borrower over the phone or through mail. On the third month, if the borrower still has not responded to the repeated notices of the lender, a Demand letter or Notice to Accelerate which states the total amount of monthly due that the borrower needs to pay will be sent. If on by fourth month, the borrower still refuses to fulfill his obligations, the lender will then schedule a date for a Sheriff's or Public Trustee's Sale.  A Sheriff's or Public Trustee's Sale is a public auction that is open to all bidders and the property is usually awarded to the highest bidder who meets all the criteria set by the Trustee. The auction date signals the date for the borrower to move out of the property is nearing.  The borrower will be notified of the sale through mail, notice tape on the door or an advertisement in the local paper beforehand. During the transition from the Demand Letter to the Date of Sale, the borrower still has a chance to work out a deal with the lender. He/she can apply for refinancing, pay the debt in full plus attorney's fees or sell the property. If none of the above takes place by the auction date, the property will then be sold to the highest bidder. The proceeds from the sale are used to pay the creditors. Anything in excess will go to the owner of the property that was auctioned.

In the event that the borrower still wants to reclaim the property even after the sale, all he/she has to do is pay the total amount stated in the Demand letter and the attorney's fees and the total cost incurred in the foreclosure process.

You may refer to www.foreclosurelaw.org to know more about foreclosure process specific to your state. Asking for an expert advice from a housing counselor at the earliest possible time is greatly suggested so that the borrower will be properly assisted. It is also important to have an open communication between the creditor and the borrower so that they can work out an arrangement to avoid foreclosure of the property.