Underwater Mortgages

No Hope In HARP For Underwater Mortgages In Las Vegas

Las Vegas Underwater Mortgages Lose Hope

Homeowners in Las Vegas are disappointed by underwater mortgage HARP relief program. The former HARP refinancing program was a complete failure for the homeowners in Las Vegas as well as a flop in the whole country. A tiny portion of the homeowners could join the HARP strict requirements, leaving too many wet eyes watching the Home Affordable Refinance Program leave the station without them. Most of Las Vegas underwater mortgage borrowers were left out of the program due to the fact their underwater mortgage was over the 125% limit of the HARP requirements.

When the Obama administration first announced the HARP mortgage relief refinancing program, it was part of the Making Home Affordable program. The reality was much more complicated and only a few thousands of the millions in need could actually refinance with the offered program.

Here is what Steve Kanigher, from the 8NewsNow.com  has on this subject:

“One reason too few homeowners have received federal help to make their mortgages more affordable has been program qualifications that are too strict for most of them to meet. Obama conceded as much in Las Vegas outside the home of Jose and Lissette Bonilla when he said that under the HARP guidelines homeowners couldn’t qualify if what they owe on their mortgage exceeds the value of their home by at least 25 percent.”And this is critically important for a place like Las Vegas, where home values have fallen by more than 50 percent over the past five years,” Obama said. “If you’ve got a $250,000 mortgage at 6 percent interest rates, but the value of your home has fallen below $200,000, right now you can’t refinance. You’re ineligible. But that’s going to change. If you meet certain requirements, you will have the chance to refinance at lower rates, which could save you hundreds of dollars a month, and thousands of dollars a year on mortgage payments.”

The Obama administration announced changes to HARP eligibility for homes with fixed-rate mortgages backed by Fannie Mae and Freddie Mac, including removal of the requirement that one’s amount owed cannot exceed the value of the home by more than 25 percent. Certain fees for borrowers will also be reduced or eliminated.  

Considering the 269,560 mortgaged residences in the Las Vegas metro area that were underwater as of June, according to real estate analytics firm CoreLogic of Santa Ana, Calif., the number of Southern Nevadans helped by federal mortgage relief programs has been minimal.” Read the full post..

The new changes to the HARP program may mean more homeowners may have a part of the relief funds. Up to now it is estimated that only as little as 13% of the homeowners who need underwater HARP refinancing in Las Vegas did get aid from the program. The new HARP regulations will loosen the strict requirements, lifting the 125% equity limit, allowing more underwater mortgage borrowers to be included in the program.

Some say, better late than never.. I do not agree, because each of those homeowners who has lost his home could not be compensated by the new HARP. We will see next year if the new HARP did help Las Vegas underwater mortgage owners this time.

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What To Do With Underwater Mortgage When Getting Divorced?

Getting Rid Of Underwater Mortgage When Divorced

Getting divorced is always a bad situation, it gets worse when you have an underwater mortgage too. Who gets the home when divorcing with an underwater mortgage on the house?  Getting divorced is a moment in life where a person realize that all the rational decisions made and the emotional feelings have turned all wrong. But when facing a financial decision like what to do with the under water mortgage situation, a cool rational decision needs to be made.

There may be more than 60% of the homes in a underwater situation, meaning the mortgage loan is larger than the home value. This is a situation where the monthly payments are very high on a property which is worth very little. When getting divorced, the  the couple need to decide how to divide the mutual resources, and who stays with the home is a major question. Staying with the property means getting an underwater mortgage with it..

The experts from MortgageLoan.com have reviewed his situation, read the post by Kara Johnson about getting divorced and underwater mortgages:

“When a divorce occurs and the couple shares a home with a mortgage, one of two things typically occurs. The first is that one person gets the home in exchange for financial considerations in the divorce agreement, and the mortgage is refinanced into that person’s name alone. The other is that the house is sold, and the proceeds are divided among the two according to the divorce agreement.

           

That’s how it works when there’s equity in the house. If the mortgage is underwater, though, the house is a liability, not an asset, and things get much stickier. At the same time, the basic options are the same 1) get rid of the house or 2) one person gets it. Here are some of the ways to do that.

 

Refinance

 

If you can do it, this is probably the best-case scenario. There are programs that allow you to refinance an underwater mortgage, most specifically, the Home Affordable Refinance Program (HARP), which is due to announce new, more relaxed guidelines Nov. 15. If you can, refinance the mortgage under the name of the party keeping the house, and make some other arrangements in the divorce decree to reflect the financial liability he or she is assuming.

 

For this to work, the person getting the house needs to have enough financial resources to continue the mortgage on their own. In addition, some lenders may decline to do a HARP refinance if one person is coming off the mortgage, although it is permitted under the program’s basic guidelines.

 

Another option is a cash-in refinance, where one or both of the divorcing parties contribute money toward paying down the mortgage balance far enough that it can be refinanced. Again, these contributions need to be factored into the overall divorce settlement.

 

 You can read more on cash out refinance solutions and requirements, it might be a way divide the funds differently when getting divorced.

Short sale

 

This is where you try to get the lender to agree to let the home be sold for less than balance owed on the mortgage. Usually, lenders are reluctant to do this unless it’s apparent the mortgage holder will be unable to continue making mortgage payments. A divorce may qualify if both parties’ incomes were contributing toward the mortgage payments.

 

One of the downsides of a short sale is that it does a lot of damage to your credit, since it goes on both of your records as a settled debt not paid in full. In addition, some lenders may still refuse to grant a short sale even though you’re divorcing, preferring to still hold both parties liable even though they are no longer married.

 

Foreclosure

 

If you’re well underwater, this may make the most economic sense, even though it will savage your credit rating for seven years. Many divorcing couples simply choose to mail the keys back to the bank and abandon the property, a process known in the industry as “jingle mail.”

 

In some cases, one of the ex-spouses will continue to live in the property after both have ceased making mortgage payments, simply waiting for the bank to eventually reclaim it. Since some foreclosures are taking in excess of two years these days, this can be a financial benefit to the party staying in the property. The downside, particularly for the non-occupying ex-spouse, is that it’s going to take that much longer for the blot to come off their credit, since it extends the foreclosure process.

 

On the upside, if you remarry soon after, you may be able to buy another home fairly quickly using your new spouse’s unblemished credit, though you may not be able to count your income toward qualifying for the loan.

 

On the downside, foreclosure may not get you off the hook if you have a second mortgage on the property. Typically, a lender’s only recourse in a foreclosure is whatever it can recover from the sale of the property. But if the second mortgage holder gets no payment from the property sale (since it all went to the primary mortgage holder), in some states that means its claim is still valid and it can still seek reimbursement, perhaps years.

 

Deed in lieu of foreclosure

 

This is a somewhat better option than “jingle mail,” if your lender will accept it. You tell your lender you’re getting divorced, won’t be able to afford the home anymore and ask to simply sign the deed to the property back over to them.

 

This gets you clear of the house without any further liability, and will have less impact on your credit than a foreclosure will – and you may be able to negotiate how the lender will report it to the credit bureaus. For the lender, the attraction is that they avoid the cost of foreclosure and get the property in better shape than a typical foreclosure, which is often in neglected condition. You also start rebuilding your credit sooner than if you let the property go straight through the foreclosure process. Get the full post here…

 

Underwater Mortgage When Divorced

Woody Allen once said, when you are looking for a wife pick a wife you would like to get divorced from.. If the divorce are nasty what ever you do will be total mess, because one of the sides getting divorced would invest all the energy to cause harm. Seek  proper advisement from a lawyer, but keep an open mind about some of the divorced solutions for underwater mortgages.

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New HARP 2.0 Program Revisions

New Hope With Government HARP 2.0 Revisions

There is a feeling of new hope as the New HARP 2.0 Program Revisions details are being reviewed. Unlike the original HARP the new HARP 2.0 Program revisions includes new terms and requirements which will apply to thousands of families who are currently hopeless.

The reformatted HARP program has improvements for the borrowers and for the lenders, the borrowers underwater limit of 125% will probably be deleted, and all the underwater mortgages would be included, the lender are free from the buyback sanction which help many of them from participating with the old HARP program.

“ Although details of HARP 2.0 have not been fully announced, some anticipated improvements are:

• In the 1^st HARP, the underwater limit was 125%. In HARP 2.0, it appears there will be NO limit.
• Fees could be reduced – e.g. an automated appraisal may be allowed vs having to pay for a new report
• There will be no “buyback” requirement, where the originating lender would have the possibility of taking back this loan from FannieMae or FreddieMac and having to reimburse them, if the borrowers went into foreclosure.

The buyback requirement in the 1^st HARP program caused many lenders not to want to participate, leaving those lenders who did participate with huge, overwhelming demand. Add to that the underwater limit of 125%, and the probability that the appraisal would even further cause the borrower(s) not to qualify because of getting an appraisal that did not give the value to keep the underwater limit at or below 125% – well, you get the picture.

The intended effect of these (and probably other) improvements is designed to enable millions of underwater homeowners to get better terms on their mortgage to help them prevent foreclosure The mortgage must be currently owned by FannieMae or FreddieMac, and cannot have been refinanced under the 1^st HARP program. The full details are to be announced by November 15, with applications to be taken beginning December 1″ See original Patch..

Government HARP 2.0 Revisions Cons

Here is another opinion of a mortgage broker who thinks that the new HARP 2.0 revisions are government interventions, that  are interfering with the natural way the underwater mortgage housing problem should be solved:

What do you think? Will the new HARP 2.0 Program help or interfere?

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The Reformatted HARP Program Will Lift Underwater Mortgages

Reformatted Home Affordable Refinance Program

Reformatted Government HARP Program

“The numbers are one indication of the demand there may be for the Obama administration’s plan to expand its mortgage refinancing program to homeowners who pay their mortgage on time but have been unable to take advantage of low mortgage interest rates because sinking home values have left them with insufficient equity to refinance their loans.

Officials have said the number of participants in the Home Affordable Refinance Program could double from the current 894,000 by loosening the lender guidelines for government-backed mortgages and removing the current maximum cap of a 125 percent loan-to-value ratio. The program still would exclude homeowners whose loan-to-value ratio is less than 80 percent, but some legislators have called for that to change, too.

Specific details of the program are scheduled to be announced Nov. 14.

It will help some homeowners but a reformatted HARP won’t be a panacea for the housing market,” Humphries said. “There’s no one single overarching policy that’s going to get us out of it,” he said. “The housing economy is not going to get back and operate on all cylinders for four or five years.” Get the full article at ChicagoTribune.com

I think the Government Reformatted HARP Program is not the ultimate solution to the housing problems, yet it is a good step in the right direction. The new Home Affordable Refinance Program might be too late for Obama who is losing popularity, but it will help thousands of borrowers currently with mortgages underwater to float.

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Banks and Homeowners Who Can No Longer Pay Their Mortgage

Homeowner Evictions For Those Who Can’t Pay Their Mortgage

There is little hope for homeowners who have stopped paying their mortgage payment and sit at home behind closed doors waiting for the bank to force them out. Here are two personal reviews from people who’s business is to negotiate between Banks and Homeowners Who Can No Longer Pay Their Mortgage.

Some homeowners do not pay their mortgage not because they can not, but because the home has lost so much of it’s value (negative equity property), they are requested to pay for property (their home) which is not worth paying for. Unfortunately the restructured Home Affordable Refinance Program (HARP) is too late to help them and they will soon join the dark statistics of the nation’s foreclosure list.

Bank Realtors and Homeowners Facing Foreclosures

“The nation’s, and Brevard’s, economic recovery depends in large part on restoring the housing market. That effort will be slowed by foreclosures, area Realtors suggest.

“If the economy recovers and people have jobs and can pay their bills, we’re fine,” said Realtor Gene Collins, a past president of the Melbourne Area Association of Realtors who handles foreclosure sales for banks and others. “But there are new foreclosures happening every day. (Homeowners) are making an economic decision they’re not going to pay the mortgage anymore. Eventually, that becomes another foreclosure.”

Though there are positive signs in the housing market — through September, sales of previously occupied homes are nearly 16 percent ahead of last year’s pace — the tough times in the real estate and housing markets may linger.

“I hate what I’m doing,” Indialantic real estate attorney Jonathan Lack said. His title insurance company and real estate law practice has adapted to handle foreclosures and loan modifications, and business is booming.

“I’m a transactional real estate attorney who’s had to adjust what I’m doing,” Lack said. “I have people crying in my office. It’s a hard, stressful, sad time. Most of my closings are short sales.” Those are the transactions where the bank accepts a sale price of less than the homeowner owes on the loan.

Lack mostly works to arrange deals between banks and homeowners who can no longer afford their mortgages.

“Within my office the ultimate goal is a graceful exit, as opposed to my client being foreclosed on and forced out,” he said.

“Every so often I get one that’s not a short sale and it’s exciting.” See more on this issue

People should know that going into foreclosure means they will have a negative mark on their FICO report for 10 years! This means not only they will be eventually moved from their home, but in the future when they will want to rebuild their life again, the foreclosure remark will be stamped all over their FICO report.

No sensible lender will risk giving funds to borrowers who fail to pay the mortgage and fall to foreclosure. The credit score would be severely damaged. Choosing an underwater property short sale solution may be a better way to solve this issue between Banks and Homeowners Who Can No Longer Pay Their Mortgage.