Latest Mortgage Articles

Mortgage Frauds Rampant in Florida

Mon, 05 Oct 2009 10:51:42 -0700

When the financial bubble burst, many people’s lives went spinning out of control. Unfamiliar with the fallout they would be facing, homeowners were scrambling for information. Unfortunately, the unscrupulous scammers were just starting to gear up their machines to reel in the catch.

The FBI defines mortgage fraud as "any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan", and there is a plethora of companies doing just that.

There are several organizations across the country that offer rescue plans for people in financial distress. However, incidents such as changing signed documents after the clients leave the office, or other acts of fraud, are all too common.

Some unethical companies may claim to be working in government-sponsored homeowner programs or agencies. Actual or fictional names of government agencies or other official-sounding terms could also be used as the scam artists do their best to appear legitimate.

There is help available for those who have been unfortunate enough to fall prey to these tactics.

If consumers think they have encountered a mortgage fraud situation, or are even suspicious, one of the first stops they can make is the Florida Attorney General's Office. A toll-free Consumer Hotline has been set up, and there is a variety of mortgage- and fraud-related information on their website.

Through its Division of Real Estate, the Florida Department of Business and Professional Regulation sets rules and guidelines for real estate professionals and exercises disciplinary authority. A Consumer Complaints Section is available to report any incidents people believe to be unethical or illegal conduct by real estate professionals.

HUD, the U.S. Department of Housing and Urban Development, also offers consumers the resources they need to make intelligent decisions when it comes to their mortgages.

Here are some points to watch out for when dealing with rescue recovery plans.

Avoid up-front fees:

One prominent scam in play is the requirement for up-front fees by mortgage rescue firms. Consumers facing foreclosure are coerced into paying fees for loan modification or payment rescheduling assistance. All too often, these companies are not legitimate and do nothing to prevent a foreclosure from proceeding. In the end, the homeowner loses the fee, receives no assistance, and forfeits their home.

Because so many have been victimized by this fraud scheme, governments at all levels have put the brakes on these exorbitant fees. The FTC (Federal Trade Commission) recently put out a consumer warning to avoid any company that asks for a large fee in advance, noting it is definitely a red flag to consider. These fees are prohibited in 20 states, with more to come.

While there are a large number of nonprofit agencies that do offer homeowner assistance programs under government sponsorship (usually through HUD), they charge little or no fee for their services.

Leaseback/rent-to-buy scams:

In order to get the consumer to sign on for this scheme, the scam artist offers a deal to have the owner turn over the deed to their property in exchange for a rent-to-own agreement. Supposedly, this will allow the owner to stay where they are and at some point in the future, reclaim their home. Unfortunately, once the deal is signed, the owner may find there are a number of hidden fees and penalties, making it easy for the scam artist to void the deal and evict the owner.

Debt-elimination schemes

In this scenario, the scam artist often claims to be able to eliminate the homeowner’s debt by way of secret laws or other financial trickery known only to his company. When the homeowner buys into this plan, it usually involves a fee for advice, and the owner is convinced to halt their mortgage payments to participate in the false program. This puts the homeowners in a dire position as they end up in a far greater debt situation that is difficult to resolve.

Outsource the payroll services to experts

Wed, 23 Sep 2009 05:14:33 -0700

Not every businessman has the perfect mathematical skills and thus he may come across some problems while calculating the pay of the employees. There are a lot of things that are a part of the payroll and this is why it is the best option to leave the calculation in the hands of the payroll services provider.

Every employee waits for the pay day and it is the duty of the employer to make sure that they are given the correct amount of salary and do not get disappointed due to the mistakes in the payroll.

The employer has to maintain a perfect payroll every month as this serves well to make a good reputation of the company. If you have a business and want the payments to be made in the most effective manner, you need to hire UK payroll services in order to take care of the interest of the employees.

The checks are carried out to see if the payment to the employees has been made in the right manner. If you take the help of payroll services, you will be able to maintain the accounts well and take care of all the payables like medical claims, compensation, bonuses and perks that are to be paid to the employees.

The pay roll provider would use the latest software to make the payment process easier. The software cannot always be used and this is why it is preferred to use the services of the professional providers to take care of the payroll. The software will not serve all the needs and would not be able to do the minute calculations that sometimes need to be done.

In order to make the process more effective, the professional pay roll services came into being. Outsourcing the payroll services will be beneficial for your employees as well as they would get rid of some of the accounting work.

The Mortgage Modification Muddle

Wed, 05 Aug 2009 12:54:34 -0700

After the economical crash, mortgage lenders were given bailouts from the Federal government with the goal that the lenders would help Americans stay in their homes and continue to pay a reduced amount if they qualified for a modified mortgage. This is potentially a huge help to those who're struggling to pay their mortgage payments due to the struggling economy, especially as most of the homeowners who're having their homes foreclosed on have sub-prime mortgages which have been common in recent years for home buyers who have less than ideal credit.

However as the Obama administration has discovered, some of the lenders which have received large sums of money to help out the American people have done very little at all. The US Treasury department has spent or dedicated vast sums of money to financial institutions for the purpose of reducing the number of foreclosures across the country. In response, some of the major banks that have received funds have done very little to help alleviate the situation.

In the first week of August, 2009, the Obama administration published the first of many monthly reports regarding the banks' assistance to those homeowners who qualify for mortgage modification because they've fallen behind on their payments so as to avoid having these homes fall to foreclosure. As many as two and a half million homes may fall into foreclosure this year it is expected.

Unfortunately, the mortgage lender bailout has been revealed as a disappointment by the first of these reports. Some of the lenders, such as Bank of America and Wells Fargo, have only extended offers of modifications to between 12 and 13 percent of qualifying homeowners. JP Morgan bank sits at the other end of the scale with modification offers running at around 30% of eligible homeowners.

It should prove to be interesting what the result of the monthly published figures are; having your figures be easily available to the public can sometimes be a stimulus for businesses or corporations to do a better job. Certainly, having these government funds utilized in the manner for which they were designated would be a move forward at the very least.

Hopefully, with the release of these facts and figures, the banks who've eagerly accepted the government bailouts will feel more obligated to do what needs to be done and help frustrated and strapped homeowners find a way to make their mortgage payments or at least not ruin their credit rating. At the very least, it's time we see more big businesses held accountable for what they do with their federal bailouts.

Successfully Refinancing

Wed, 11 Feb 2009 09:41:32 -0800

With long term interest rates hovering at just over five percent, refinancing a mortgage can be a tempting prospect. Currently, financial institutions have much stricter lending criteria and not everyone who applies for new funding is accepted.

Get an edge before you visit your local lender. Here are some of the things banks consider when determining a borrower's eligibility for refinancing.

Home Equity:

With falling house values it's not uncommon for homeowners to find themselves owing more than their home is worth. A lender won't finance a home with too little or negative equity. Some lenders will refinance without a home appraisal, but those are few and far between.

Currently the federal government is offering assistance to homeowners in a negative equity situation by writing down the value of these mortgages. Details about this program should be unveiled shortly.

Insufficient Earnings:

If you cannot prove that you are making an adequate salary to pay for your new refinancing or have a family member to co-sign, then it's likely you'll not receive your loan.

Poor Credit Score

Even if you are making a good salary, if your debt-to-income ratio is out of whack, or you have a poor credit history, then you are likely to be declined. The banks want to feel confident that you can handle your finances and repay your loan. Generally lenders are looking for a credit score of over 720 to 760, which is considerably higher than it was a few years ago.

You may qualify for a FHA loan which requires a lower credit score than most lenders accept. Check out http://www.Hud.Gov.com for more details.

Attempt to boost your credit history for a few months before applying for refinancing by paying your bills on time, making at least the minimum payments and not carrying large balances.

You Own Too Many Properties:

In the past, a real estate investor could have easily owned up to ten properties and still refinance. Today, however, an investor may experience resistance from lenders if they own more than four properties at the same time.

Unfortunately, too many lending institutions have been burned by investors that owned multiple properties and then experienced a decrease in property values. In many cases they financed using a low interest rate teaser which converted into a higher rate, and have landed in a negative equity situation.

The Refinance Isn't Worth It:

There are a number of factors beyond lower interest rates that determine whether refinancing is the right move.

First: Taking the costs of refinancing into account, will you be able to save enough to recoup these costs in one year?

Second: Will you be remaining in your existing home for at least four to six years?

If you answered "yes" to both of these questions, then it probably makes sense to refinance. Do not, however, reduce your payment, unless you are having a cash-flow problem. The ideal scenario is to keep your payment the same while simultaneously reducing your interest rate, thereby paying off your mortgage sooner.

Typical Lender Required Repairs for FHA Loans

Sat, 15 Nov 2008 00:00:00 -0800

If you are interested in using the FHA 203K Loan program to fund repairs on your home or a home you are interested in purchasing, you should know that there are some repairs that you will be required to make. The lender and the FHA want to know that their investment will be protected, and as such you will have to add these repairs to your work write up in order to get approval for the loan. Standards for Energy Efficiency The Department of Housing and Urban Development (HUD) wants all homes that are renovated under the FHA loan program to be as energy efficient as possible. For this reason, there are several required repairs that contribute to better energy efficiency in the building. Doors and windows must be weather stripped if the weather stripping is old and worn. The outside of the building must be inspected for openings or cracks, and these must be sealed or caulked. If you are opening any walls on the exterior of the home, such as to replace the drywall, you will need to reinsulate behind the wall. You do not have to remove walls for the purpose of insulation, however. It simply must be done if the walls or ceilings are opened. Also, attic and crawl spaces must be ventilated adequately. If you are replacing any HVAC systems, you will need to insulate around the supply and return pipes and the ducts in any parts of the home that are not heated or cooled by the system. You also must not purchase a unit that is too large. The unit cannot be more than 15 percent larger than the house needs, unless the manufacturer does not make a unit that fits better than the one you have chosen. Renovations Required for Safety The FHA does not have many safety requirements. Of course, all repairs must keep the home up to the city's coding standards. The only safety requirement that the FHA gives applies to smoke detectors. All sleeping areas must have at least one smoke detector located adjacent to the room. Requirements for the First $5,000 The first $5,000 of the loan amount must be used for major repairs to the existing structure. Cosmetic repairs can be included in the loan, but they may not make up the first $5,000 you are given. Repairs that qualify for the first $5,000 include the following: * Repairing structural damage * Repairing termite damage * Making the home handicapped accessible * Installing new HVAC systems * Septic or well installation or connection to city sewer * Fixing the roof, flooring, or gutters * Major changes to landscaping * Major projects that increase aesthetics, such as adding new siding or a covered porch Once you have $5,000 of major repairs in your work write up, you can begin including minor cosmetic items like new paint or trim. In addition to these requirements, each individual lender may have repairs that they want to see done to the home. Remember, the lender wants the home to be sellable in the event that you do not repay what you owe, thus the reason for required repairs. This is not a problem, however, because the money will be made available in the FHA 203K Loan for these items.

FHA 203K Loans for Dummies

Sat, 15 Nov 2008 00:00:00 -0800

In an attempt to encourage the revitalization of run down neighborhoods, the Federal Housing Administration began offering a loan program called the FHA 203K Loan program. Under this program, homebuyers can rehabilitate a property using a federally backed loan. What Is an FHA 203K Loan? An FHA 203K Loan is a loan that is insured by the federal government but issued by a traditional lender. The loans offer between $5,000 and $35,000 to homebuyers or homeowners who wish to rehabilitate residential properties. They can be used for one to four-family dwellings, provided the owner lives in a portion of he property. The homes that qualify for this loan must be at least one year old. The loan program allows the homeowner to roll the purchase of the property and the cost of the repairs, up to $35,000, into one loan, rather than purchasing the home and funding the repairs separately. Getting a FHA 203K Loan If you are interested in using an FHA 203K loan to help you fix up a rundown property, you will first need to find an FHA approved lender. The Housing and Urban Development website will help you find one in your area. Then, seek pre-approval for the 203K loan. Once you have pre-approval, you will need to get an FHA consultant and start shopping. If you find a good property, submit a bid. Then, alert your lender of the price you have bid for the property. You will then need to create a work write up. This document shows the repairs you wish to do and the estimated cost for those repairs. Before creating the work write up, you will want to work with the FHA consultant to create a feasibility study. This study shows whether or not the proposed repairs will bring enough of an increase in the value of the property. If you put $10,000 worth of repairs into the house, you want the value of the home to increase at least $10,000. One your lender receives the work write up, an appraisal will be ordered to determine the value of the home after repairs. While you are waiting on the appraisal, you will get actual bids from contractors for the work. You will then submit a final quote to the lender showing how much you need including both the purchase price and the cost of repairs. Your FHA consultant will help oversee this entire process, providing you with help when needed. If your loan is approved, you will close on the loan. The money for your repairs is then placed in escrow. Half of it will be released for you to pay your contractors before they begin working. The contractors will do the work, and the rest of the money will be released so you can pay them after a final inspection. If there is any money left over, it will be placed on the principal balance of the loan. You will be given six months to do the repairs, but extensions are available if absolutely needed.

Will the "Credit Freeze" Keep Me From Getting a Loan?

Thu, 13 Nov 2008 00:00:00 -0800

The latest Gallup Polls on consumer confidence aren't saying good things. Only around 5% of American consumers believe our economy is in good shape. And only about 12% think it's going to get better in the near future. But who can blame them? Housing prices have plummeted, foreclosures have been on the rise, and major lending institutions have recently found themselves on the verge of bankruptcy. The economy is practically the only thing we care about right at the moment. And when phrases like "credit freeze" get thrown around, it definitely doesn't help things, especially when very little clarification tends to be given by those spouting it. That sort of talk unfortunately leads consumers to assume that it's impossible to get a loan on a car or a new home, which simply isn't the case. The U.S. Federal Government has actually taken multiple steps in order to attempt to insulate consumers from the current economic crisis and encourage continued activity in the consumer lending sector. While lending criteria has indeed tightened, many people are still able to receive home mortgage financing. Now may in fact be the best time to buy a home. According to the National Association of Realtors, the average sale price of existing homes has dropped roughly 9.5%, which happens to be the largest fall since they began recording in 1999. The S&P/Case-Shiller 10-city housing price index also saw the steepest decline in its history, dropping about 17.5%. What this means is that those considering the purchase of a new home can potentially do quite well, as housing prices haven't been this low in a long time. In addition to low property prices, new FHA lending regulations also favor potential borrowers. The limits on FHA-insured loans were increased from $362,790 to as high as $729,750, depending on the location. FHA loans are currently running fairly reasonable rates and only require a 3.5% down payment, even allowing family down payment assistance. One interest thing to note for first-time home buyers is that if you make less than $75,000 a year, you can receive a tax credit for 10% of the final sale price of your new home, up to $7,500. This credit is available through July 1, 2009. While it is being called a credit, it's technically a loan. But it isn't often that you can find 0% 15 year loans, so it's a good thing as far as I'm concerned. As I mentioned earlier, lending criteria has tightened a bit, and while minimum credit scores used to be in the low 500's, they now often range from the upper 500's to the low 600's. In addition, 100% financing has become a rarity given the current economic crisis, so it's reasonable to expect that you will need to put some money down. Lenders now typically require more documentation and proof of income as well. It's hard to say who will and will not be approved for a loan, so you will likely best be served by visiting a CMP (Certified Mortgage Planner) who can help you figure out which lenders will finance you, and decide on the offer that best suits your individual situation.

What To Do If You Have Been Mis-Sold An Endowment Policy

Sun, 02 Nov 2008 00:00:00 -0700

Complaining about your mortgage or endowment can be a drawn out affair of phone calls, letter writing and waiting. But if there is a problem with your policy which can be linked to unsuitable advice given by the provider, the matter should be addressed. You can't complain about how your endowment has performed in the marketplace but you can complain about how it was sold to you. The main point is whether the financial product in question was really suitable for you at the time, whether you understood the policy you were undertaking and the risks involved. Your complaint should be dealt with seriously if the salesman did not explain that the policy as a share-based investment and that the predicted payout was not guaranteed. You also have a good case if you were assured that the policy would pay off the mortgage and provide extra, but instead it is falling short, or if you were single when you took out the policy and did not require the life assurance element of the endowment or the salesman failed to make it clear that life assurance was included in the policy. You also have good grounds for a complaint if your endowment matures after your retirement date and the person who sold you the policy did not point this out, or if they told you that the policy would be worth enough by retirement to pay off the mortgage. Making a Complaint The first place to direct your complaint should be the company which sold the endowment to you. If you are not sure whether that was the endowment company itself, your lender or another financial adviser, complain to all of them. You cannot take a complaint of this nature straight to the Financial Ombudsman, you have to complain to the relevant firm first. State your complaint as clearly as you can, quoting any policy numbers or customer references. Explain what has happened and work chronologically, enclosing copies of any relevant documents, and try to communicate by writing as much as possible since then you have a record of who said what when. If you do speak to anyone on the phone, take down their name and take a note of what was said. Follow up with a letter which confirms your phone conversation. What Next? If you feel that your complaint has not been appropriately dealt with after eight weeks of your first contact, you can go directly to the ombudsman. However, some companies are being given longer to deal with complaints because they are so busy. If this is the case you will receive a letter telling you how long you should expect to wait. If you are offered compensation, enquire about how the compensation is calculated, and do not feel pressured into accepting it unless it is an acceptable offer. The compensation should put you in the position you might have been in had you taken out a repayment mortgage. If you aren't happy with the company's response, contact the independent complaints services provided by the Financial Ombudsman. It is free, and if you're still not happy you can persue your complaint in the courts.

First Home Buyers Make A Comeback

Sun, 02 Nov 2008 00:00:00 -0700

The residential property market has been buoyed by the return of first-home buyers, new figures have shown. According to the National Association of Estate Agents (NAEA), new entrants to the market helped to push up total house purchase sales for the first time since January. Figures from the group indicated that while estate agents typically handled five home sales during August, this rose to seven in September. This increase was in part attributed to the abolition of stamp duty tax on properties worth less than 175,000 pounds last month, which was said to have encouraged cautious first-time buyers to put in bids on property. Indeed, Chris Brown, president of the NAEA, said that for those who can secure finance in these difficult lending conditions, now is the perfect time to get their foot on the first rung of the property ladder. Consumers who are looking for an effective way to boost the deposit on the home of their dreams may find that taking out a personal loan is appealing. However, he noted that many current homeowners are hesitant about making moves on the market at the moment. "It is clear that certain factors are in motion within the property market, with a decision being made on stamp duty last month, but this is still not enough. As property prices continue to drop the government needs to take action and make some drastic changes to restore confidence. It is evident from the results that despite some positive indicators, consumers are still cautious, with many continuing to adopt a wait and see attitude and are only moving if it is necessary. Those who are not desperate to move are staying put in their homes and waiting for some stability to be restored across all sections of the market," he said. The group went on to point out that with many homeowners still nervy about plunging house prices, figures indicate that estate agents are now being forced to work harder to secure deals. While the average time between instruction and sale stood 8.64 weeks in September 2007, last month average turnarounds took 14.13 weeks. However, while many consumers are showing a reluctance to commit fully to moving home, the number of people showing provisional interest continued to grow. According to the NAEA, the typical estate agent had 211 house hunters on its books in September, up from 207 in August and 192 in July. However, such a figure is still down considerably on the average 326 people on the search for a home registered with estate agents around the country in September 2007. For consumers who are keen to put in an offer on a property but are finding it difficult to get finance from cautious mortgage lenders, taking out a personal loan may prove an effective way to increase the size of initial deposit and reduce the perceived risk of extending finance for the sale of a home. Potential buyers may be particularly interested in applying for a loan after the monetary policy committee slashed interest rates earlier this month.

Government Aid Package To Help First-Time Home Buyers - More Stamp Duty Exemption

Fri, 31 Oct 2008 00:00:00 -0700

The newspapers might be full of doom and gloom but the credit crunch and general economic downturn has to be good news for someone. Despite the stories about first time buyers being forced out of the market by banks refusing them large mortgages, the housing recession poses a great opportunity for those wishing to get their first foot on the ladder. The government has announced a package to help first time home buyers and those struggling to pay their mortgage. It has suspended stamp duty for houses sold for 175, 000 pounds and under. It also announced HomeBuy Direct scheme allowing those with low incomes to sell a share of their home and rent it back. With the financial turmoil and rising food and petrol prices, many home owners are facing repossession or the possibility of approaching home purchases to buy their home and rent it back to them. The new government scheme allows those who might otherwise have their houses repossessed to keep up with payments without having to surrender their home. Those struggling to keep up with mortgage repayments and facing repossession can sell their home to a registered social landlord (RSL) who will pay off the mortgage and then rent the property back to the occupants at a level which is affordable. In some cases, the RSL could purchase a portion of the property, or provide an equity loan which could help to reduce the homeowners mortgage repayments. This is similar to many Buy and Rent Back schemes offered by many private companies. The new HomeBuy Direct scheme allows first-time home buyers with a household income under 60, 000 pounds to buy newly-built properties with a free equity loan of up to 30% of the property's value. A spokeswoman said "We welcome the Government's stamp duty initiative. This is a sensible measure and it will help the housing market" on behalf of Halifax. The Treasury has estimated that the one-year stamp duty freeze will cost the Government 600 million pounds. Around half of the 90, 000 home purchases made each month are on houses worth 175 thousand pounds or less, but deals below 125 thousand are exempt from stamp duty anyway. It seems that the government has finally stopped dithering and is committed to helping first time buyers and the market as a whole. House prices are falling, but their value at the beginning of the year was probably inflated, so they still probably have a way to fall.