The unfortunate reality is that tens of thousands of families all across America are currently dealing with the nightmare of foreclosure.  Foreclosure is not only a time of extreme financial stress but emotional stress as well.  For more on the emotional side of foreclosure please visit Dave Magua’s blog which discusses this aspect in detail.

Every foreclosure situation is different and difficult but these 4 tips should make the experience a bit more tolerable.

1) Contact your lender immediately and open all correspondence.  When you call you may want to ask for the “Loss Mitigation” department.  These departments usually handle loans that are in default (behind in payments) but not yet in the foreclosure process.  If you are not currently behind in your mortgage payments your lender may advise you that they can not begin negotiations until you are in default.  You should ask that they make a note on your file that you have contacted them to advise of a potential problem and want to work with them to resolve the situation. 

2) Keep records and take notes.  You should keep a log of everyone you speak to during the process, their contact information, department and title.  Make notes of what you spoke about, the date and time of your conversation.  Don’t throw correspondence from your lender away and save all email correspondence as well. 

3) Get help negotiating with your lender.  If you can afford to, have an attorney or qualified professional contact your lender on your behalf.  Otherwise you can contact a HUD approved Housing Counseling Agency.  To find one in your area go to: South Florida HUD Housing Counseling Agency.

4) Explore all options with your lender.  Ask if a loan modification is possible that will allow you to catch up on your payments and remain in your home.   If and when you are able to reach a payment plan with your lender make sure that it is realistic for your budget.  If you fall behind again in most cases you won’t get a second chance.

Remember that foreclosure is a process that will take weeks or months.  Don't expect immediate results or answers and always try to remain civil with the people you are speaking to that work for your lender, they are human too. 

James R. Venney is a 20 year veteran of South Florida real estate and is currently the top producing Home Mortgage Consultant at HomeServices Lending An Affiliate of Wells Fargo Home Mortgage.  To contact James call 305-960-2671 or email james.r.venney@homesvclending.com

The National Association of REALTORS released its Existing Home Sales report for March 2008.  An "existing home" is one that is not considered new construction.

A sub-headline in the report showed that the median sales price of all homes sold in March increased by 2.5 percent to $200,700.

But don't assume that the housing market is improving because of a statistic like that because in the field of Statistics, median is just the "middle" in a group of numbers.

With respect to the Existing Home Sales, the median sales price is the price point at which half of all homes sold went for more, and half went for less.

If more homes sell in high-priced San Jose, CA than in low-priced Youngstown, OH, for example, the median will be skewed to the high-side.  The reverse is true, too.

Median sales price make for good headlines, but it does nothing to talk about the local market and that's where real estate is bought and sold. 

(Image courtesy: New York Times)

Gasoline prices reached an all-time, inflation-adjusted high yesterday, averaging $3.23 per gallon nationwide. 

According to GasBuddy.com, this represents a 25% increase in the last 12 months.

Higher gas prices are leaving Americans with fewer discretionary dollars to spend and that is playing a role in the U.S. economy's slowdown.  It's one reason why mortgage rates have stayed low despite steady upside pressure from inflation.

High gas prices are also a reason why Thursday's Retail Sales data will be closely watched; markets will gain insight into whether Americans are cutting back on personal spending because of rising energy costs.

Retail Sales are expected to have risen by a slight 0.1%.  If the actual number is lower, mortgage rates should fall on recession fears.  If it's higher, rates should rise.

Click here to contact ~ James R. Venney CMPS, CMA

Definition: A modification or revision of the original mortgage note typically completed to provide payment or adjusting interest rate relief to the borrower.  The lender can modify the mortgage in order to roll delinquent amounts into the principal, extend the term of the loan or freeze/lower the interest rate to lower or maintain the monthly payment.

Is modification right for you? For most a modification is the preferred method of obtaining relief from your current mortgage obligation as it is less costly than a refinance.  That being said modifications are not always available and are approved on a case by case basis. 

What’s the next step?  As with most business matters communication is of the highest importance, so gather copies of your most recent mortgage statements from your lender, copies your bank accounts statements and prepare an explanation of the hardship you are experiencing prior to contacting your lender.  Your payment coupon should have a contact or customer services number that you can call and ask for the “loss mitigation” or “loan modification” department. Remember, lenders are receiving thousands of phones calls regarding mortgage modifications everyday so be patient.  The representative you speak to is there to help but in most instances does not have the authority to make a final decision regarding your loan so be courteous and understand that it may take several days or weeks for a determination to be made in your case.  If you can, contact an attorney or qualified professional to help you negotiate with your lender.

Resources:

http://www.hud.gov/offices/hsg/sfh/econ/econ.cfm

http://www.whitehouse.gov/news/releases/2007/12/20071206-9.html

Click here to contact ~ James R. Venney CMPS, CMA

For a lot of homebuyers, calculating a prospective mortgage payment is an online experience.  For example, a search on Google for "mortgage calculator" returns 39 million options.  Some people, however, prefer to plan on their local hard drive using spreadsheets.  For these people, the hardest part is often figuring out what formulas to use.

Interest Only Payments

Home loans with interest only payments are much more simple to calculate than amortizing loans.  Using the graphic below as a guide, enter your loan size and your interest rate into two separate spreadsheet cells.  Then, create a third cell and input the following formula that calculates the "Monthly Payment". 

The formula is: = (Loan Size) * (Interest Rate) / 12

Principal + Interest Payments

For a home loan with (principal + interest) payments, the formula is a little bit more complicated than with an interest only home loan.  Using the graphic below as a guide, enter your loan size, your interest rate and the duration of your home loan into three separate spreadsheet cells.  Then, create a fourth cell and input the following formula that calculates the "Monthly Payment". 

The formula is: = - PMT(Interest Rate/12, Loan Term in Months, Loan Size)

For additional spreadsheet formulas and more in-depth reporting, explore your software's "Help" feature to see what you can find.

Click Here To Contact: James R. Venney CMPS, CMA

After the passage of the Mortgage Forgiveness Debt Relief Act of 2007, foreclosed homeowners have one less worry: taxes.

When a homeowner defaults on a home loan, a mortgage lender will sometimes "forgive" the debt owed. One example is when a foreclosed home sells for less money than is owed on it.  The mortgage lender will sometimes accept this lesser amount, while considering the mortgage to be "paid in full".  This is often called a "short sale" because the lender is "short" of the full amount owed.

Prior to Thursday, the IRS treated the forgiven mortgage debt as taxable income.  This added thousands of dollars to a foreclosed homeowner's tax liability.  A $50,000 short sale, for example, could yield an additional $12,500 in taxes owed.  After the bill's passage, that tax liability is gone.  No taxes will be owed on primary residence mortgage debt that is forgiven or written off by a mortgage lender.

The bill has two sides, though. 

In order to recover the estimated $650 million in tax revenue that will be lost, Congress has limited the amount of tax breaks available on the sale of second/vacation homes.  That will be impactful on homeowners, too, of course.

If you think the Mortgage Forgiveness Debt Relief Act of 2007 will impact you personally, be sure to talk with your accountant.

30 Year Fixed rates drop below 5.5% for the first time since June of 2005! 

Currently a conforming 30 year fixed rate purchase money mortgage assuming adequate credit scores is 5.375%.  Jumbo mortgages which are loan amounts above $417,000 are currently available as low as 6.125% with no points.  As indicated by the chart above historically 30 year fixed rates average about 9% so we are clearly in one of the most advantageous interest rate environments ever recorded.  The Fed is expected to lower the Fed funds rate another 1/2% later this month.  This reduction in the Fed funds rate will move Prime Rate, to which things like auto loans, credit cards and equity lines of credit are tied, down to 6.75% (Prime rate is always the Fed funds rate +3%).  Don't wait for the Fed to lower rates expecting mortgage interest rates to move lower as well....in most instances mortgage rates actually tic up by .125% when the Fed lowers short term interest rates! (click link above for more information).

If you have an adjustable rate mortgage or would like to utilize some of the equity trapped in your home now is the time to explore a refinance.

Click Here To Email ~ James R. Venney CMPS, CMA

The bailout of Countrywide by Bank of America is not the only consolidation taking place in the mortgage industry.  Watch for announcements regarding the bailout of Washington Mutual, IndyMac Bank and the sale of Suntrust in the coming weeks.

For all that's been said about the bailout of Countrywide by Bank of America , what's not getting talked about is how the merger will impact existing Countrywide customers.

The short answer is that it won't.

A mortgage (and its corresponding note) is a legal contract between the lender and the lendee, signed on the date of closing. It is binding and cannot be altered by either party, even if the mortgage is transferred between lenders.

As a homeowner, the only way to "end" the contract is to satisfy the home loan with a full repayment.  That can happen one of three ways:

1. The home is sold and the mortgage is repaid
2. The home is refinanced and the mortgage is repaid
3. The home loan is paid down to $0 balance by the homeowners

Mortgage payment servicers commonly transfer home loans between each other.  This happens on an everyday-basis -- not just when there's a merger, or a closure. 

When mortgages are transferred, HUD requires the former lender to send a 15-day advance notice to its lendee; the new lender is required to send a similar notice.

So, for homeowners that write their mortgage checks to Countrywide every month, it's possible that the address to which you mail your payment may change, but the terms of your mortgage cannot.

(Image courtesy: The Wall Street Journal Online) 

Click Here To Email ~ James R. Venney CMPS, CMA

Posted on January 15, 2008 | Comments (0)