September 30, 2009

Mark’s Short Sale

Filed under: Short Sale

We sold our Minnersota home as a short sale a year ago.  There was only one mortgage on the property.  Are they able to come after us for the deficiency a year later.  On the credit report the mortgage company listed it as “settled”.

Mark (more…)

September 29, 2009

Late Payments During Short Sale

Your website has been very helpful, thank you!
I was unable to find this question in your site.

Whether the mortgage company can still report to the credit agencies the lack of payments during the short sale process?

I just received their short sale packet, but I am unable to pay. Can I dispute it if they put something on my credit report? I will be doing the QWR letter, but what about after they respond to it?

Thank you Paul!
God bless you!
Michelle (more…)

September 28, 2009

Second Mortgage Zero Balance

Hi Paul,

We sold our house in Arizona as a short sale.  We had a second mortgage on the property. We paid the back interest on the second and started making the mortgage payments.  Due to a 30% reduction in pay we could not keep up the second mortgage payments. 

We asked the bamk if they would re-negotiate our payments.  However, they weren’t willing to do this.  We didn’t make a payment on the loan the past two months. 

I just logged into my account and went to make a payment and it stated a zero balance and that the loan had been charged off.  I’m not sure what to do now? I could make half the loan payment for 3 years then start making the full payment since I will have other debt paid off by then.

Not sure why they would charge it off instead of lowering my payment for the short term. Should I contact the bank?  I haven’t received anything in the mail regarding the loan charge off.

Annemarie (more…)

September 22, 2009

Marx Brothers on Housing

Filed under: Florida,Real Estate

You can have any kind of a home you want. You can even get stucco.

Oh, how you can get stucco.

The Cocoanuts (1929)

September 21, 2009

Unanswered Qualified Written Request


I enjoy your site very much, – infact, I check it every day for the latest informatin on how to solve my problem. 

When I was attempting to pull $$ out of my house when I was out of work, I was contacted by a housing lender.   When I told them that I was temp. out of work, they wanted to know if my wife worked.  (My wife is a homemaker, but had a small cleaning business on occasion).  We told them NO, however the persisted and called us back several times.  They took my wife’s business card to show employment–although we had no W2 to back it up.  We were honest with them, but now feel that we were being led to slaughter.   I had a VA note, but when New Century got involved, it reset everything and we re-did another 30-year note.  New Century–almost overnight sold (or assigned) it to Ocwen. After all these years, Ocwen has us on a ARM and told me that I make too much $$ to refinance under the Obama plan, but would qualify under their plan.  I submitted paperwork, W2, paystubs, etc and were told that we were approved. (They didn’t tell me what year). 

As I am attempting to get answers to any/all questions, I submitted an “Extremely Qualified Written Request” some months ago.   As time passed…..and passed…I finally receive a letter with several spreadsheets & explanations as to what the different charges mean.  I have been very persistent to ask “Who is my lender”.   They finally wrote back and told us that it is “confidential information”, and they would not provide it. 

Question:  Where do I go from here?   Is this a TILA violation?   I thought they would have to tell me if I demanded it.   I did–several times with CMRRR.   They will provide me nothing.   I suppose they are afraid that I will go around them if I knew who the lender is–and they are correct.   Straight as a Martin to his hole. 

I make the money again, in a great company and have paid the mortgage on-time ever since my lay-off.   I’m stuck and need your advise.  Is there any law you can provide?  

Thanks for all your help and professionalism.

Rick (more…)

September 18, 2009

FHA Running Out of Funds?

Filed under: FHA Loan,Mortgage

Washington Post – The Federal Housing Administration has been hit so hard by the mortgage crisis that for the first time, the agency’s cash reserves will drop below the minimum level set by Congress, FHA officials said.

The FHA guaranteed about a quarter of all U.S. home loans made this year, and the reserves are meant as a financial cushion to ensure that the agency can cover unexpected losses.

“It’s very serious,” FHA Commissioner David H. Stevens said in an interview. “There’s nothing more serious that we’re addressing right now, outside the housing crisis in general, than this issue.”

Until now, government officials have warned that the agency could be forced to ask Congress for billions of dollars in emergency aid or charge borrowers more for taking out FHA-insured loans if the reserves fell below the required level, equal to 2 percent of all loans guaranteed by the agency.

Both options are politically unpalatable. Congress and the public are weary of bailouts after the government spent hundreds of billions of dollars rescuing banks; insurance companies; automakers; and the mortgage finance giants, Fannie Mae and Freddie Mac. Raising premiums for borrowers could increase the cost of buying a home just as a wounded housing market is showing signs of life.

Stevens said that such drastic actions are not needed. He said he is planning to announce Friday several measures that should help the reserves rebound quickly.

The FHA, which is part of the Department of Housing and Urban Development, insures home mortgages against losses, thus helping prospective borrowers obtain loans. It uses the insurance premiums paid by these borrowers to pay for mortgage defaults. Since its creation in 1934, it has never used taxpayer money to cover losses at its flagship home-buying program. But rapidly rising defaults have burned through the agency’s reserves, raising the prospect that it would have to take dramatic action.

The reserves are meant to ensure that the agency remains solvent and can continue helping people get mortgages, which in turn supports the housing market and wider economy.

An independent audit due out this fall will show that the agency’s reserves will drop below the 2 percent level as of Oct. 1, the start of the new fiscal year, Stevens said.

Although the reserves had remained well above the minimum required level during the housing boom, the audit last year showed they had shrunk to 3 percent as of Sept. 30, compared with 6.4 percent a year earlier. The fund’s value was estimated at $12.9 billion, down from $21.2 billion the previous year.

‘Not Going to Congress’

Earlier this year, HUD Inspector General Kenneth Donohue told a Senate panel that falling below the reserve’s minimum threshold would require an “increase in premiums or congressional appropriation intervention to make up the shortfall.”

But Stevens, who became FHA commissioner in July, said these options are not on the table. “We are absolutely not going to Congress and asking for money for FHA,” he said. “We’re not going to need a special subsidy or special funding of any kind.”

He stressed that the agency plans to take other steps that will help beef up the reserves. Some of these measures address fraudulent loans that can contribute to FHA’s losses.

For one, he will propose that banks and other lenders that do business with the FHA have at least $1 million in capital they can use to repay the agency for losses if they were involved in fraud. Now, they are required only to hold $250,000. Second, he will propose that lenders also take responsibility for any losses due to fraud committed by the mortgage brokers with whom they work.

In an effort to reduce the risks faced by the agency — and thus the potential for losses — Stevens said he plans to hire a chief risk officer by the end of the year. The agency has never had one in its 75-year-history.

Though these changes were in the works before the FHA reviewed the new audit, he said the steps should help fatten up the FHA’s loss reserves faster than projected.

The new audit shows that even without any new measures, the reserves will rebound to the required level within two or three years largely as the result of the recovery in the housing market, Stevens said. This calculation is based on projections of future home prices, interest rates and the volume and credit quality of FHA’s business.

Agency’s Financial Health

The audit appears especially dire because it offers a snapshot of the agency’s financial standing at the depths of a severe recession, and it does not take into account the new loans FHA will insure and the new premiums it will collect, Stevens said. The borrowers receiving recent FHA-backed loans have, on balance, been more creditworthy than those the agency is used to catering to, he said.

And while the reserves are at a historic low, Stevens noted that they represent only part of the money the agency maintains to cover losses on insured mortgages. The agency, on an ongoing basis, pays for losses directly out of a second fund. The reserve fund is intended as a backup should losses exceed forecasts. In total, these two funds had $30.4 billion as of June 30, up from $28.3 billion on Sept. 30, 2008, according to Stevens.

The FHA’s financial health is in the spotlight in part because of its key role in buoying the housing market.

The agency lost much of its relevance during the housing boom when home prices soared and borrowers raced to aggressive subprime lenders. But after the subprime market collapsed, borrowers flocked back to the FHA, the only option for those who lack stellar credit or hefty down payments. Its historic role in backing loans is more crucial now than ever.

The agency does not lend money; it insures lenders against losses. It has captured 23 percent of all new loans made so far this year, up from just 3 percent in 2006.

But the agency’s sudden popularity has alarmed some lawmakers, who regularly question whether the FHA has the resources and expertise to handle its increased workload and avert an avalanche of new defaults.

Vicki & The Banks

Filed under: Collections

I had a perfect payment history until Augusts payments were due and had no money to pay them.  Of course due to my employment situation. I am 60 and am finding it not so easy to be hired.  I am cleaning houses to pay for my car and insurance. The banks are starting to call and I dont know how to tell them when I can make any payments at this point.  What is likely to happen? I dont have any property or any money other than what I earn whenever I can get a cleaning job?

Vicki (more…)

September 15, 2009

More RVs

This is a RV. The bank told us to short sale it. We sell it for less and we get a 1099 from them to report on our taxes. Is this correct?

My husband lost his job and we no longer can afford the payments. The bank will not lower the interest rate.

So it is either give it back or short sale!!

Tenna (more…)

Short Sale Negotiated Release


First off, many thanks to you for providing great insight and information on your blog!!

By following your “words of wisdom” I am in process of completing an approved short sale in which the lender has agreed to allow a full release of liability, a trade line entry of “Settled” (with no further language), and a zero balance.

My question is regarding the “Charge Off” listed (in their letter below). Does the “Charge Off” solely mean they will be writing off the loss in regards to tax filing? Or does it have other ramifications?

Do you have an idea of how this overall scenario (including the charge off) will affect credit and how long will it remain there?

Thanks again for being a “guiding light” for many of us!

Bob L.
Las Vegas

Copy of letter from lender follows:
Yes, we are agreeable to report “Settled” to the credit repositories without further language.  However, due to the large loss the Credit Union will be taking, due to our agreement with you not to pursue any deficiency balance, we will need to charge off the remaining balance on your Home Equity Line of Credit after the settlement.  When that transaction occurs, “Charge Off” will show on the Credit Report, although the amount due will show as “$0.00” as we will not be pursuing any recovery. (more…)

September 14, 2009

Credit Line Reduced

Filed under: Credit Cards

I had a BOA credit card with $20,500 limit.  I called to dispute an auto warranty charge that was cancelled within the 30 day “review” period.  The quick talking customer rep stated that with my long term status and excellent credit, I qualified for the 0% first year credit card.  I could swith my limit to it. 

I asked to keep the first one open with $5000 and the other transferred to the new card.  Imagine my surprize when I got several credit alerts on my credit monitoring of my 853 going to 830.  Well, the new card came and it was $5000 and the old card was also reduced to $5000!  New card only good for cash advances and balance transfers. 

I called to find out what was going on and they said that due to the banking industry, all banks were doing this!  I told her that I have a federal job, paying $60,000 yr/no prospect of being laid off, paid off house and cars, so why was I a risk???? 

Told them to cancel the new card and put the rest back on the higher interest, but longer established card.  I’m hopping mad.  Is this truly a new banking thing or did they just pull a fast one on me?  I’m so mad, I would like to close out the card!  I liked to know I had the high balance “just in case” of emergency.  Didn’t this just lower my score?  She said no.  I think it is BS. 

Your opinion????  Thanks for all your good advise!

Gayle (more…)

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