Bank Foreclosures Blog

Critics are worrying that the new loan modification plan initiated by the Federal Housing Administration and major financial institutions may not be sufficient to help a big number of homeowners in danger of losing their homes to foreclosures.

They have pointed out several cases of borrowers in trouble who are seeking help from their mortgage companies but did not receive any. These homeowners, who are waiting for help in making their monthly payments, would lose all hope upon receiving a failure notice from the company.

According to experts, mortgage servicers are focused mostly on loan payments, including the management and distribution of these loans. They lack the manpower and skills to deal with defaults, much more to handle requests from homeowners facing foreclosures. This failure to assist homeowners in their time of need have sown the seeds of distrust that created an impediment for homeowners today to participate in a new program to address this critical issue of foreclosures.

Federal officials have recently announced a new program to prevent foreclosures. This new program is offered to loans handled by Fannie Mae and Freddie Mac, the two mortgage giants that were recently taken over by the government. This new program was modeled after a proposed plan from the Federal Insurance Deposit Corporation who has experienced success when they took over IndyMac Bank.

The said program is targeting homeowners who are delinquent for more than 90 days. Their loans will be restructured to trim down their mortgage payments down to 38 percent of their monthly incomes. This would make their payments more affordable and will come from a reduction of interest rates, extended loan terms or deferred payments. With easier and regular payments, foreclosures could finally be averted.

The Federal Housing Finance Authority urged mortgage servicers and securities investors to follow this new government program and make it a standard for the whole industry. However, critics say that in order to get full support from servicers, the government should make loan modifications from these programs mandatory.

CitiMortgage, the fourth biggest mortgage lender in the United States, has launched a payment program aimed at helping homeowners who are having difficulty meeting their mortgage payments avoid the threat of foreclosure.

The homeowners assistance program targets about 500,000 customers of CitiMortgage who are still able to pay their monthly mortgage payments on time but who resides in areas where unemployment rates are increasing and prices of homes are rising.

CitiMortgage Chief Executive Officer Sanjiv Das assures borrowers that the lender will help modify their loans before they miss any payments that may lead to foreclosure of their properties.

The said plan is patterned after the modification program of the FDIC IndyMac. The FDIC program adjusts mortgages for homeowners who are delinquent so that their payments will not be over 38 percent of their total income.

CitiMortgage’s program calls for modification of mortgages that are at-risk to 40 percent. The lender will also adjust loans by cutting the principal owned by homeowners, extending the loan term or lowering the interest rate.

The lender can also modify the monthly payment of borrowers to make it affordable by extending the mortgage loan up to 40 years and then lowering the interest rate to at least 1 percent for two years. This option will allow borrowers to avoid foreclosure.

This program will not be offered to borrowers who are already behind their mortgage payments. It is only for those who are at risk of defaulting on their payments because of circumstances, particularly job loss.

Meanwhile, CitiMortgage has announced that its moratorium on mortgage foreclosures is extended. To be eligible for the extension, homeowners have to stay in their homes which are their principal residence, must be financially capable of paying affordable mortgage payment and must have a good business relationship with the lender.

The lender believes that extending the moratorium will help about 50,000 families avoid losing their homes to foreclosure.

One of the risks in real estate investments is landing on a mortgage fraud. There are several reputable mortgage providers around but lengthy documents become sources of misunderstandings and could even increase risk of foreclosure. Before signing, read first on the following advices of attorneys Jeff Hogue and Jonathan Kurniadi to get you protected:

1. Read all the pages of the document.
Never get pressured in signing the loan documents. Take your time to check on every detail of the document, even the most obvious ones. Simply missing an incorrectly printed street address can take you around a tiresome correction process.
You should be prepared to turn back when something feels uncomfortable. You do not have to feel that you need to sign the documents. Seek for housing counselors from non-profit agencies approved by HUD for some help in reviewing loan applications and documents.

2. Make sure that the original document and the duplicate have similar content before signing them. Do not forget to have your own copy.
If the copies that you receive are not the same, it is the original documents that obligate you and not the other copies.

3. Ascertain that all the information you provided in your loan document is all true. Falsification of information is not worth the risk if you simply want to get your loan approved.
Giving false information has no valid reason and may subject you to penalty. If a broker tells you to do such thing, then let him document it for you.

4. Do a license background check on your loan broker.
Take time for a background review of your broker and real estate agent before providing some personal information or signing loan documents. Find out if they have complaints or pending litigations.

5. Inquire about the earnings of your mortgage broker on your loan transactions.
This is often not disclosed but it is important to know this because their compensation may correspond to the interest rates that you have to pay on your loan.

With an increased number of foreclosure homes for sale in the housing market, this is viewed as a good time by many investors to buy a home involved in the foreclosure process.

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Just how many people see the silver lining in the high numbers of foreclosures for sale remains to be seen. While losing a home to foreclosure would definitely be an unpleasant time for home owner, prospective home buyers and investors in real estate would view this as an opportunity to get a bargain.

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Senators are working overtime this week to push through a massive housing bill. The new bill is a democratic proposal with broad republican support. The proposed housing bill will offer some relief to homeowners facing foreclosure across the country.

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Treasure secretary Henry Paulson announced yesterday that he will ask congress to help the mortgage giants Fannie Mae and Freddie Mac to get better deals on loans from the Federal Reserve as well as a support of $15 billion into the two mortgage giants.

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The falling house prices caused by the real estate foreclosure crisis have pushed thousands of US homeowners to negative equity.

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The foreclosure crisis has been compared to the great recession by many and the number of homeowners facing foreclosure has hit the highest levels in history, but what to do if you are facing foreclosure or if you are willing to invest?

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With the real estate crisis home prices are down despite the low prices many homeowners are stucked with the possibility of foreclosure and many are now opting for short sales.

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