The Federal Government and several large banks are working on a way to help refinance mortgages that are under water.

According to Reuters, government officials and big banks are working on a plan that would make refinancing available to some borrowers whose houses are worth less than their loans, so long as they are current on mortgage payments, the Wall Street Journal reported.

Such borrowers typically are not able to refinance because they lack equity in their homes. The plan would apply only to mortgages owned by the banks, the Journal said, citing people familiar with the matter.

Federal officials have been trying to broker a settlement with the five largest mortgage servicers – Ally Financial Inc, Bank of America, Citigroup Inc, J.P. Morgan Chase and Wells Fargo & Co — the Journal said.

It is not clear how many borrowers would qualify for help, the paper added.

Officials are pushing for a plan in a bid to break a legal impasse with big banks over alleged foreclosure abuses and ease problems in the housing market, the paper said.

Discussions are still fluid and any final outcome is uncertain. Talks between government officials and the banks are expected to continue this week, the newspaper said.

JPMorgan declined to comment to Reuters on the Journal report. Reuters could not immediately reach the other four lenders for comment outside regular U.S. business hours.

Help For Under Water Mortgages Coming? is a post from: RateNerd - unadvertised deals from banks.

                          

Related posts:

1. Mortgage Rates at 30 Year Low – Do You Qualify?
2. 2011 And 2012 Tax Breaks For Parents And Homeowners

The better prepared you are, the better mortgage and interest rate you will receive.

If you are planning on applying for a mortgage or purchasing a new home it is best that you begin to prepare at least three months in advance.  Here’s how.

Credit History

First, make sure your credit history is being reported accurately. Don’t be fooled or ripped off by companies that will charge you a lot of money and promise to remove negative credit from your report. You cannot remove accurately reported information. But, you can make sure what is there is correct. And there are ways to improve your score.   The section on credit repair goes into greater detail and will show you how to do this.   Remember, you can do it yourself.

Funds To Close Your Mortgage

The money you are going to use for your down payment and closing cost typically have to be sourced and seasoned for three months. If you already have your money in an institution (bank, CD, 401k,) you are ok. However, if you have $20,000 under your mattress and intend to buy a house with it today, you would be turned down. Lenders must see that you have had the money for three months, they must see where it came from. So, put the money in the bank and leave it there for three months. Some loan programs will allow a gift. (FHA and a few non-conforming lenders) However, even the gift must be sourced and seasoned in some cases. The are a few programs that do not source and season funds but the interest rate is considerably higher.

Rent

If you are renting your home or apartment, ALWAYS pay by check. It is the only way you have proof that you paid on time. Some loan programs require twelve months cancelled checks! I have seen people turned down because they can’t produce 12 cancelled checks. Money orders usually will not work. And of course, Always pay on time.

Mortgage Payment History

The same applies here as rent payments, ALWAYS pay by check. If a lender miss-reports your payment history, cancelled checks are the only way to correct it. Or if your mortgage is with a private party the cancelled checks will be mandatory.

Other Bills

Calculate your debt to income. If it is a little high, pay off some of your smaller bills. Installment loans are not counted if you owe less than 9 payments. Revolving accounts (department stores) must actually be closed or the minimum payment will be used to calculate your DTI even if you have a 0 balance. Lenders don’t like to see a lot of revolving accounts. Get rid of them. It will also increase your credit score.

Gather your Documents

You will be required to bring to your broker the following documents. They cannot even start your loan without them and they must see the originals so don’t bother making copies, your loan officer will do that for you. Don’t leave the originals with them. You will need to collect: 3 months bank statements, all pages, all accounts. Last 2 years W2′s and or complete tax returns if you are self employed or paid on commission. One full month of pay stubs from your job. Divorce papers. Bankruptcy papers. 12 months cancelled checks if your rent/mortgage is paid to a private party. There may be other documentation requirements depending on the type of loan and your situation.

Mortgage Applications DON’T's

Change Jobs. Open any new accounts. Be late on any payment. Have any NSF checks show up on your bank statements.

Mortgage Aplication DO’s

Make your mortgage payment on time! No matter what your loan officer tells you, or when you think your new loan is going to close, MAKE THAT PAYMENT. Anything can happen. If your loan is delayed, and your payment shows up late not only will your credit suffer, but you may no longer qualify for the new loan.

How To Get A Mortgage Now is a post from: RateNerd - unadvertised deals from banks.

                          

Related posts:

1. Strategic Mortgage Default – What You Need To Know
2. Mortgage Rates at 30 Year Low – Do You Qualify?

Would you risk the negative impact of strategically defaulting on a mortgage if you didn’t really have to?

About 17 percent of Americans who defaulted on their mortgages in the second quarter of 2010 did exactly that, according to a study by Experian.

“Strategic default” – choosing to stop paying on your mortgage even if you can afford the monthly payments – peaked at the end of 2008 during the height of the Great Recession. At that time, strategic defaults accounted for 20 percent of all mortgage defaults 60 or more days overdue, according to Experian.

And while the percentage of Americans taking this option has steadily declined since then, the credit risks for strategic defaulters remain unchanged.  Anyone considering this option needs to get their Free Credit Score, which is available with enrollment in freecreditscore.com.

“Not paying your mortgage will have a far-reaching, long-lasting impact on your ability to secure future credit, regardless of the reason for your default,” says Charles Chung, Experian’s president of Decision Analytics. “Experian’s study indicates that many strategic defaulters continue to faithfully pay on their other debts. Some even purchase other homes for better terms before selectively defaulting on their upside-down mortgage.”

If you owe more on your home than its current market value, you may feel tempted to walk away from a bad investment, even if you can afford to make the monthly mortgage payment.

When considering strategic default, you should keep several factors in mind:

• Defaulting on your mortgage is the second most damaging thing you can do to your credit, even if you continue to pay your other bills. Only bankruptcy will affect your credit score more adversely than foreclosure.
• Foreclosure remains on your credit report for seven years. During that time, securing other credit at reasonable terms and rates will be very difficult, if not impossible.
• Potential employers are looking at credit reports. In fact, 60 percent now check applicants’ credit reports, according to an article in the Washington Times. By impacting your credit, a strategic default may affect your ability to get a job.
• Last year, Fannie Mae, the government-controlled mortgage giant, said it would implement a policy to prohibit strategic defaulters from getting a new Fannie Mae-backed mortgage for seven years from the date of foreclosure.
• Finally, in some cases, the debt that foreclosure “erases” may be recorded as income, which means you will have to pay taxes on it.

“Some may see strategic default as a way to get out of paying a bad debt,” Chung says. “But its associated costs like a lower credit score, higher interest rates and less ability to secure future credits, can wipe out the financial benefit of no longer having a mortgage payment.”

To learn more about credit management, credit reports, credit scores and the factors that affect them, visit the Credit Center at RateNerd.com.

Strategic Mortgage Default – What You Need To Know is a post from: RateNerd - unadvertised deals from banks.

                          

Related posts:

1. Mortgage Rates at 30 Year Low – Do You Qualify?

If you’re in the market for a home mortgage, you may be in for a very low rate.

According to Freddie Mac’s weekly mortgage survey, rates on 15-year fixed-rate mortgages as well as 5- and 1-year adjustable-rate mortgages hit record lows this week. The 30-year fixed-rate mortgage hit its lowest level for 2011.

Mortgage rates have been falling with U.S. Treasury rates, as investors buy Treasuries as a haven amid fears about the economy and the debt crisis in Europe.

Shopping around for a mortgage is key to getting a low rate, and finding a program that works for you. For example, Michigan based lender Shore Mortgage is offering programs that help eliminate PMI (Private Mortgage Insurance), and mortgage programs that reward those who have good credit and still have equity in their homes.

More than 63% of residential mortgages have interest rates above 5%, says market researcher CoreLogic. Though today’s rates would be attractive to many of those homeowners, the pool of people who can benefit is restricted.

Forty-six percent of homeowners with a mortgage have equity of 20% or less in their homes, CoreLogic says. That makes refinancing harder without having to pay mortgage insurance. High unemployment and tight lending standards will also keep out many borrowers.

Check the mortgage rate center on RateNerd for the latest in mortgage rate updates.

Mortgage Rates at 30 Year Low – Do You Qualify? is a post from: RateNerd - unadvertised deals from banks.

                          

What it means to “walk away” from an upside-down mortgage

Owing more on your mortgage than your house is worth may seem like a bad investment. But the alternative – choosing to default on your mortgage even if you can afford the monthly payments – will take a significant toll on your credit rating.

“Strategically defaulting – deciding to stop paying your mortgage regardless of your ability to actually carry the debt – will have a far-reaching, long-lasting impact on your ability to secure future credit,” says Maxine Sweet, vice president of public education for global information services company Experian, one of the three large credit reporting companies that receive and update consumer credit histories which are scored to help predict risk. “It’s by no means a move to be undertaken lightly.”

About 355,000 borrowers strategically defaulted in the first half of 2009, according to research conducted as part of the Experian-Oliver Wyman Market Intelligence Reports. Interestingly, Experian and Oliver Wyman found that the homeowners most likely to strategically default were also those with the highest credit scores.

While it may seem like a good move to simply stop paying and walk away from a bad investment, keep several factors in mind when you consider strategic default:

• It’s very final. Strategic default will lead to foreclosure by the lender. Foreclosure will negatively impact your credit report and scores. In fact, only bankruptcy will affect your scores more adversely than foreclosure.
• The default will remain on your credit report for seven years. Since credit scores are based on information in your credit report, the foreclosure will greatly impact your credit scores during those seven years. Securing other credit at reasonable terms and rates will be very difficult, if not impossible, during that time.  Even the best credit repair firms can’t erase this one.
• Potential lenders aren’t the only ones looking at credit reports these days. Insurers, employers and even cell phone companies are considering the creditworthiness of those who want to do business with them. By impacting your credit report, a strategic default may affect your ability to get a job, secure insurance and enter into important service contracts.
• No more loans for you. Fannie Mae, the government-controlled mortgage giant, announced on June 23 policy changes that will make you ineligible for a new Fannie-Mae-backed mortgage if you walk away from a current mortgage that you actually could afford to pay.  The ineligibility will last for seven years from the date of foreclosure.
• You may owe taxes. Finally, in some cases, the debt that foreclosure “erases” may be recorded as income, which means you will have to pay taxes on it.

“Strategic default may seem like ‘walking away’ from a bad debt, but it’s really anything but,” Sweet says. “While you will no longer have to pay the actual debt, you’ll almost certainly ‘pay’ in other ways, in the form of lowered credit scores and a drastically curtailed ability to secure future credit for the next seven years. Higher interest rates and unfavorable terms could end up costing you more in the long run than continuing to pay on an upside-down mortgage.”

What should you do if you cant pay your mortgage?

If you are having trouble and need help to pay your mortgage, you first need to contact your loan servicer. This is the company that you make your monthly payments to, not always the same place you got your mortgage home loan. Have your loan number and property address ready when you call, along with any other important documentation you may have. When you call, you will need to give them a brief explanation of your current circumstances, recent income documents (such as pay stubs; benefit statements from Social Security, Disability, Retirement, or Public Assistance and unemployment benefits), and bank statements and tax returns for past 2 years. If you are self-employed, have your tax returns or a year-to-date Profit and Loss statement available for reference.  To see all your options, read our article on What To Do If You Need Help To Pay Your Mortgage.

To learn more about credit management, credit repair, credit reports, credit scores and the factors that affect them, visit the Credit section of RateNerd.com, or find local credit repair companies at ConsumerCreditGuide.org.

– Article Courtesy of ARAcontent

Strategic Mortgage Default’s Long Term Impact is a post from: RateNerd - unadvertised deals from banks.

                          

Hundreds of thousands of homes have gone into foreclosure, offering a unique, once-in-a-lifetime opportunity for many Americans to buy a home at sometimes 30 percent or more off the most recent sale price.

Buying a home is always a challenge. Buying a foreclosed home presents unique challenges, however. You need to be willing to hunt, put up with lenders who offer surprisingly little information about the properties they’ve taken back, real estate agents who have little experience or incentive in selling foreclosed homes, and loan officers who demand nearly perfect credit ratings to obtain a loan in today’s tight-fisted market.

Foreclosed properties are typically referred to as REOs (real estate owned by the lender), according to FindLaw.com, a leading online resource for legal information, and are owned by the lending institution or government agency that backed the mortgage. For one reason or another, the owner failed to make payments on the loan and the lender foreclosed on the property (repossessed it).

Banks and other home-lending institutions are not in the business of owning property. They’re in the business of making money on the money they lend. So it’s in their best interest to sell a foreclosed property, and they are often anxious to do so. Properties of all types, including single-family homes and condominiums, can be foreclosed. Depending upon local regulations and traditions, some lending institutions will sell their properties through real estate agents who specialize in REO properties, while other institutions will sell foreclosed properties through auctions conducted by a county sheriff.

Because of the volume of foreclosed homes currently on the market, a growing number of lenders have turned to selling properties through heavily advertised public auctions in which dozens or sometimes hundreds of properties are sold in one or two days. The Federal Housing Administration (FHA) has sold foreclosed properties through local auctions for many years, typically announced in the classified sections of local newspapers. Potential buyers submit bids on the day of the auction, accompanied by a certified check for a percentage of the bid price. The highest bidder usually gets the home.

Buying a foreclosed property can be risky if you are not familiar with the procedures involved. Such a sale may not include the safeguards that are present in a traditional sale, such as a lender and a title insurance company. Therefore, if you plan to buy foreclosed properties, says FindLaw.com, it is important to familiarize yourself with the process and consult with a lawyer who specializes in this area.

Here are some other tips on buying a foreclosed home:

• Not all foreclosed properties are good deals. It seems like foreclosed properties are everywhere these days; however, not every property is a smart purchase. Search for a foreclosed property as if you were buying a home in a hot market. Start by researching neighborhoods that you really want to live in, then get in your car and drive through the neighborhood looking for properties that aren’t kept up as well as neighboring properties.
• Find an experienced real estate agent. Some sellers of foreclosed properties, including lenders that have repossessed a property, may refuse to work directly with the buyer. Find a real estate agency that has experience in dealing with foreclosures and is willing to represent you.
• Hire a real estate attorney. All states have different laws and regulations involving foreclosed properties. You may need to consult with a real estate attorney specializing in foreclosed properties to assist you. Buying a foreclosed home can be a very complex and time-consuming process in some states; the right attorney may be able to help you cut through the red tape.
• Check the assessor’s office. Many counties now include vital ownership and tax information on their Web sites about residential property, including the identity of the owner, the previous price paid for the home, and how much the property is being taxed. Knowing what the previous owner paid for the property will help you gauge its potential worth now.
• Tour and inspect the property. It’s vital to inspect any property before buying it, but it’s absolutely critical when buying a foreclosed property. Many foreclosed homes are not kept up or have been abused by their former owner and may require thousands of dollars in repairs and maintenance. If the property is located in a neighborhood with a lot of potential, investing to rehab a property may be worth the money.
• Have your financing lined up. Over the past two years, many lenders have tightened their lending standards and are only offering loans to those who have solid credit ratings and the long-term means to pay for a home. Sellers of foreclosed properties are leery of buyers who don’t have their financing together. Like buying a home at the top of the market, it’s in your best interest to offer the most solid financial package in order to win the home you want.  Check the latest mortgage rates, and make sure your credit report is in good shape.

– Article Courtesy of ARAcontent

How To Buy A Foreclosure is a post from: RateNerd - unadvertised deals from banks.

                          

At tax time, your house is not simply a home: It’s also a tax deduction.

But there are other tax deductions besides mortgage interest you can take on your principal residence or second home — such as property taxes — and in some cases the cost of Private Mortgage Insurance.

You know that you can get an income tax deduction on the mortgage interest you pay.  Your home also provides a shelter from taxes you may not have considered.  You get to deduct:

• Your property taxes. And if you bought the home in 2009, you may be able to deduct more property taxes than you think. Don’t forget to include taxes you may have reimbursed the seller for—taxes the seller had already paid before you took ownership. You won’t get a 1098 report listing these taxes. Instead, that amount will be shown on the settlement sheet.
• Property taxes for taxpayers who don’t itemize. You can increase your 2009 standard deduction by up to $500 for real estate taxes paid in 2009 or by up to $1,000 for real estate taxes paid in 2009 if you are married and file jointly.
• The mortgage loan interest on your primary residence, as well as on a second residence. (There are limits, but relatively few taxpayers are affected.)
• The interest on up to $100,000 borrowed on a home equity loan or home equity line of credit, regardless of the reason for the loan.
• Points that you paid when you purchased the house (or those that you convinced the seller to pay for you).
• The premiums paid for Private Mortgage Insurance (PMI) in 2009, but only for policies issued after 2006. The right to this deduction disappears as Adjusted Gross Income rises from $100,000 to $110,000 (or $50,000 to $55,000 for those who use married filing separately status.)
• Home improvements required for medical care.

How much can you save? The actual amount of money you save on your annual income tax bill depends on a variety of factors:

• Your filing status (single, head of household, married filing jointly, married filing separately)
• Your standard deduction amount
• Your other itemized deductions
• Your taxable income
• Your home-related itemized deductions, plus your other itemized deductions must add up to more than the standard deduction (increased by the amount of property taxes noted earlier that are allowed to non-itemizers), or they won’t save you any money.

What can’t I deduct?  You can’t deduct the following payments for a personal residence:

• Dues to a homeowners association
• Insurance on your home
• Appraisal fees for your home
• The cost of improvements to your home, except in the relatively rare case where they qualify as a medical expense. (But keep those receipts. They may help you reduce your taxes when you sell your home.)

And dont forget these important tax credits you may be eligible for:

New Home Tax Credit.  If you purchased a home in 2009, you may qualify for the first-time homebuyer tax credit. Keep in mind the name of the tax credit is deceiving, as current and past homeowners may also qualify. The tax credit is equal to 10 percent of the purchase price, up to either $6,500 or $8,000, depending on the purchase date, price, whether you’ve owned a primary residence and when you last owned a primary residence. Income level and filing status also affect eligibility. Those claiming the tax credit must mail their federal returns along with certain documentation for the home.

Energy Efficiency Tax Credit.  Energy efficient improvements made in 2009 and 2010 may give homeowners up to $1,500 through the Nonbusiness Energy Property Credit. Up to 30 percent of the costs for qualifying improvements to a primary residence can be claimed.

Use TurboTax to help ensure you don’t miss any of the deductions or credits you deserve, so you get your biggest refund, guaranteed.

– Content courtesy of TurboTax contributed to this article

Top 7 Tax Deductions For Homeowners is a post from: RateNerd - unadvertised deals from banks.

                          

Save up to $2,000 on first mortgage or home equity line of credit HELOC closing costs at AIG Bank.

AIG Bank  is extending its $500 credit toward homebuyers’ closing costs through the end of March. The same deal holds true for AIG’s $2,000 closing cost credit for its home equity lines of credit, which has also been extended until March 31, 2010.

AIG BANK CLOSING COST CREDITS

First Mortgages: $500. All borrowers who apply for a first mortgage with AIG Bank from November 1, 2009 through March 31, 2010 and close on that loan by June 30, 2010 will receive a $500 credit toward their closing costs. This offer may not be used with any other AIG Bank closing cost credit or promotion.

Home Equity Line of Credit (HELOC): up to $2,000. AIG Bank will provide a credit up to $2,000 at closing to offset closing costs and the appraisal fee for a HELOC in first lien position or up to a $1,000 credit for second liens. This offer may not be used with any other AIG Bank closing cost credit or promotion.

Whenever you apply for a mortgage, make sure you receive a Good Faith Estimate and don’t be afraid to shop as lenders have a lot of “wiggle room” with rates and fees.  If this is your first time refinancing, be sure to read our Refinance FAQ’s.

Learn more at the AIG Bank website.

$2,000 Mortgage or HELOC Closing Cost Discount – Daily Deal is a post from: RateNerd - unadvertised deals from banks.

                          

As unemployment rises, more borrowers need principal forgiveness on their mortgages, not just restructured loans, Citigroup Inc.’s mortgage chief said.

The comments by Sanjiv Das, president and chief executive of Citigroup unit CitiMortgage Inc., came as Citigroup issued its latest quarterly report on its own mortgage-modification efforts. Citigroup said it helped 130,000 homeowners with $20 billion in mortgages outstanding avoid potential foreclosure last quarter.

That number increased 20% from the second quarter, the bank said in its third-quarter foreclosure-prevention report issued early Tuesday; 3% of the $751 billion of mortgages Citi services were in loss-mitigation programs or in foreclosure, a one-percentage-point increase from the second quarter.

Citigroup is alone among large banks in issuing quarterly reports on efforts to help mortgage borrowers avoid foreclosure. The reports provide a glimpse into how broader national efforts are faring, a keen interest of President Obama, other politicians and community groups.

Citi said it mitigated or modified 82% more mortgages in the third quarter than in the second quarter, and 85% more than a year earlier amid rising unemployment and the impact of the government mortgage-modification program. Mitigation includes all efforts to avoid foreclosure, including nonmodification solutions such as “short sales” of homes for less than the mortgage balance.

As the main problem of the mortgage industry changes from house-price depreciation to unemployment, the mortgage market needs more programs “where there is principal reduction for borrowers with negative equity” in their home, “as opposed to just a loan restructure,” Mr. Das said.

“The solution” of the mortgage crisis “has to move into the next gear,” he said. The government’s Home Affordability Mortgage Program, or HAMP, has “not quite addressed the issue of unemployment.”

Citi already does some modifications that include principal reductions, but only very selectively to avoid raising expectations for such deals among borrowers that don’t need reductions, a spokesman said.

Also, Citi would want lenders to share any potential upside. “In such instances, the mortgage lender should share the benefits if the property rose in value,” the spokesman said.

Rising delinquencies among prime borrowers are predominantly due to unemployment, Mr. Das said. He said the government has been “very receptive and very eager” to find solutions.

Mr. Das said he expects the number of HAMP modifications to rise, but Citi might end up doing more non-HAMP modifications because the standards of HAMP are more stringent than those of banks, including Citi. (In addition, HAMP is eligible only for first mortgages.)

Rising numbers of homeowners are defaulting after their loans are modified, Citi said in its report. Redefault rates in the quarter were nearly 39%; that number compares with 29% in the second quarter.

Nevertheless, “the performance of home-equity loans started to improve” across virtually all FICO score groups, “largely driven by the restructuring of first mortgages” in HAMP, Mr. Das said.

Foreclosures initiated in the third quarter rose about 10% from the second quarter but fell about 11% from a year earlier. Completed foreclosures fell less than 1% from the second quarter and about 48% from a year earlier.

Foreclosures, Mortgage Forgiveness to Rise is a post from: RateNerd - unadvertised deals from banks.

                          

13.16% of all residential mortgages are in trouble.

With about 51 million houses with mortgages in the country, that means 6.71 million bad mortgages out there.

With the number of people out of work still rising, the problem is likely to continue to get worse for quite a while according to an article on the investing blog site Seeking Alpha.  At the end of the second quarter, 4.3% of all residential mortgages were in some part of the foreclosure process, up from 3.85% at the end of the first quarter and 2.75% a year ago. In addition, on a seasonally adjusted basis, 9.24% of all mortgages were delinquent (behind by at least one payment), up from 9.12% at the end of March, and just 6.41% at the end of June 2008.

Both were records since the Mortgage Bankers Association (MBA) started keeping track back in 1972. On a non-seasonally-adjusted basis, the delinquency rate was not quite as bad at 8.86%, but still a record.

The chief economist for the MBA expects that foreclosures will not peak until the end of 2010.  I suspect he might be a little bit on the optimistic side, but that projection is reasonable. If someone is also in a house where the value of the house is less than the amount of the mortgage, the probability that they will continue to pay the mortgage falls rapidly.

If they are also out of work while they are underwater, then continuing to pay their mortgage is simply not an economically rational thing to do.  Far better to simply live rent- and mortgage-free until the sheriff shows up at the door. Given the overwhelming case-load, that can often be well over a year (though it varies greatly by location).

What should you do if you cant pay your mortgage?

If you are having trouble and need help to pay your mortgage, you first need to contact your loan servicer. This is the company that you make your monthly payments to, not always the same place you got your mortgage home loan. Have your loan number and property address ready when you call, along with any other important documentation you may have. When you call, you will need to give them a brief explanation of your current circumstances, recent income documents (such as pay stubs; benefit statements from Social Security, Disability, Retirement, or Public Assistance and unemployment benefits), and bank statements and tax returns for past 2 years. If you are self-employed, have your tax returns or a year-to-date Profit and Loss statement available for reference.  To see all your options, read our article on What To Do If You Need Help To Pay Your Mortgage.

Prime Borrowers Now Going Into Foreclosure is a post from: RateNerd - unadvertised deals from banks.