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PMI removal at 80% loan to value-Homeowners Protection Act

Posted in Credit Notes,Financing- Loss Mitigation,Lender News Reports,Real Estate by Administrator on the September 21st, 2012

PMI removal at 80% loan to value-Homeowners Protection Act

PMI removal is only one of the many laws to be aware of when buying a home.  Most of these laws require the Loan Officer or Lender to take action. Rarely are there laws that allow the borrower to take action and get direct benefit. That is what the Homeowners Protection Act, also known as the PMI Cancellation Act, is for.

The Homeowners Protection Act is all about private mortgage insurance( PMI) and when it can, and when it will, be removed. It’s important to remember about PMI removal that the Homeowners Protection Act does not apply to government loans like FHA, VA or USDA
loans or loans with no PMI.

For conventional loans, PMI applies when the LTV is over 80%. The Homeowners Protection Act says that mortgage insurance cannot remain on loans for the duration. Once a borrower’s principal balance reaches 80% of the original value the borrower can request that the PMI be removed. Most of the time lenders will use the original appraised value of the property, however, they can use the current value if it has gone down or if the borrower pays for the appraisal and did improvements to justify an increase in value. When requesting PMI removal at 80% the lender can say no but when the LTV reaches 78% of the original value the PMI is required to have the PMI removal be automatically done.  Lenders are required to notify the borrower of the details of their PMI at closing, when the LTV reaches 80% and if the PMI has not yet been removed, when the LTV reaches 78%. This way the borrower doesn’t “forget” about their PMI and can have their monthly mortgage payment reduced when their loan to value qualifies.

Remember, when you are working with your loans that are required to have PMI, remember what the Homeowners Protection Act does for you. You will be one of the few borrower’s who know the details of the law and how it can help save money later.

Knowing the laws of the mortgage industry is not only required under the NMLS in order to become a licensed Loan Officer, it also helps realtors to provide a better service to our clients. Real Estate professionals who know about the laws and regulations in their industry tend to have more repeat clients and referrals. Therefore, there’s no better time than the present to get more familiar with the laws and regulations that affect our clients most. With our newsletters, we will continue to assist you in becoming an authority on housing so you have confidence based upon competence!

Read the full ACT here courtesy of the federal reserve at http://www.federalreserve.gov/boarddocs/supmanual/cch/200711/hpa.pdf

PMI removal-opening the door to more informed home ownership

PMI removal-opening the door to more informed home ownership

Short Sale Outcomes why Loan Modifications don’t solve the problem

Posted in Credit Notes,Financing- Loss Mitigation,Real Estate,Welcome by Administrator on the September 20th, 2012

I have listened to recorded countless videos on how to convert homeowners off of loan modifications and into short sales. The basic reality that needs to be understood by both homeowner and agent is that when ANY paperwork is done on or for a short sale there is a 99% chance that there will either be a short sale or a foreclosure in the future.

Why?

Simple, excluding the 1% that hit the lottery and the homeowner gets a full rewrite or recast or even possibly an equity reduction on their existing loan terms, the reality is that they won’t!

It is just basic math.

If 99% of loan modifications do not convert to full new loans, why then do the banks keep pushing for them, why do agents help homeowners and why do homeowners want them?

Banks want information, Agents want to help homeowners and homeowners want to stay in their homes.

Here are the possible outcomes:

2, 5 or 10 year adjustment of terms and rate. This is the best case scenario when requesting a new loan modification. The horrifying reality is this, even if the homeowner makes every single payment they will eventually hit the end of the terms.  99% of these loans will not modify for a second time and all the homeowner has actually done is delay the inevitable sale of their home. To qualify for the longer term adjustment depends on the original loan. Basically the better the original loan the better the offer on the loan modification. A loan modification will always meet an end to its terms. Further it will correct the delinquent payments on their credit and in most cases becomes a short term fix for a long term problem need a very real solution
Trial loan modifications. There is a possibility of a trial loan modification becoming a short term loan modification. However the stats on homeowner not making payments even on trial loan modifications is staggering. The reality is simply this, if a homeowner gets a trial loan modification there is a 90% chance that it will go back in default (missed payment).

So the current market has created the band aid effect to get us through an election period and hopes that the economy and employment will magically all turn around.

Homeowners are trying hail marry passes to get to stay in their home and the banks/government are freezing the sale of REOs in an attempt to inflate home prices.

I still teach, preach and push this basic thought: Write it off, take the loss and move on! It’s a financial decision. Too much debt, too little income. Within 2 years, Short sale owners are able to go right back into the same bank they settled with 2 years ago and make an application for a loan… and get a mortgage approved. (Interest rates and Down Payments might be higher, but not much as you’ve settled to the terms of your previous loan by assisting in the sale of the property). You might find yourself gravitating back to the old neighborhood just in time to buy the neighbors property at current values.

Q and A- General Real Estate Questions

Posted in Real Estate,Real Estate- Q & A,Welcome by Administrator on the September 10th, 2012

Q & A

Real Estate Simplified

Inherited homes-  Repairs or mortgage payments can make inheriting a home a problem

Q: Mother-in-law gave my husband and Siblings her home before she passed. It is paid off, and there is no mortgage in this case. It needs repairs, but none of us can afford to pay for them.  If we have bad credit between all of us- What can we do with the home? – Louann G.

A: Even with good credit, it sounds as if no one could get a typical bank mortgage loan on the house in its present condition but check into FHA lending which has relaxed guidelines and you may be in for a surprise. I wouldn’t advise trying to fix the place up if you can’t get renovation funding from an FHA 203k loan (The Borrower would have to occupy, in this case).

Your 1st choice is to put the house on the market “as is”, at a bargain price, for an all cash payment.   There are always investors looking for fixer-uppers.

2ndly, hold out for an FHA 203k Buyer (Owner-Occupant) that can roll purchase and repairs costs into one loan.

3rdly, call a few real estate agents for advice.  If you find one that is interested in partnering with you or putting you in touch with a Rehabber you may be able to cut a deal for each others contributions to the renovation of the property and subsequent Sale.  (Use an Atty. as this is a complicated transaction).

Is it Illegal not to pay rent for years?

Q: I moved into an apartment in 2010. In the summer of 2012, my landlord wrote us a letter stating that he was no longer the owner of the property and the new owner would contact us. In case we needed to call, we were given a name of a bank and a phone number, which led me to believe this was a foreclosure or simply a case of throwing in the towel.

I tried calling the bank, and they wouldn’t speak to me because my name was not attached to anything. It is now April of 2012, I am still in the house, and I haven’t paid rent in two years. I’ve maintained the property (paid the heat and hot water that I previously was not responsible for, invested in a lawn mower and regularly taken care of the lawn and garden, replaced the washing machine, paid to have the dryer fixed, paid to have some plumbing fixed, etc … ).

I am basically a homeowner without a mortgage. I can’t figure out who pays the water or who pays the taxes. I’m just kind of at a loss of what is going on right now, but I’m just riding with it. Am I doing anything illegal?

A: Possibly a legal advisement is to have been stashing away the rent in a special account until you found out who was entitled to it.  And, of course, that would have to take into account the utilities and maintenance you’ve assumed responsibility for.

You could search the public records and the tax office to determine who owns the property, or have a lawyer do it for you. I suspect, though, that in your shoes, a lot of people might continue “just riding with it.”