Real Estate Investing Blog

Making its way through the halls of our government is a bill to eliminate down payment assistance programs such as the Nehemiah Program. Nehemiah Corp. of America, a nonprofit organization was started a decade ago by Antioch Progressive Baptist Church in South Sacramento to help its lower-income members buy homes. The company has evolved into an urban developer with a 65 acre development called Township 9 just north of downtown Sacramento.

It appears Congress and President Bush will ban the decade-old down-payment assistance “gift” program as part of a larger housing bill. The Nehemiah Program is a signature Sacramento program that has helped nearly 300,000 lower-income families buy homes in the past decade.

The way the program helps low-income and often first time home buyers is by having the seller of the home “gift” down payment money to the buyer of the home. The funds are transferred through the Nehemiah Corp. This helps the new family get into the home.

On July 11, the Senate passed a bill that would eliminate the Nehemiah Program and if the House passes the bill, the President is expected to sign it.

There is some good news for first time home buyers in the bill; a federal tax credit for first-time home buyers purchasing homes before July of next year; and a real property tax deduction for non-itemizers. Other provisions in the bill will help existing home owners with costly subprime mortgages refinance with affordable Federal Housing Administration mortgages. I am usually not a advocate of refinancing but this is an exception that can make sense for some families.

Another significant change is making permanent the higher loan limits on mortgages from the FHA, Fannie Mae, and Freddie Mac. Also included is $3.9 billion in anti-blight cash for communities across the country to buy vacant, foreclosed properties. This will help maintain the communities and help values for falling further.

Although the bill still needs the House of Representatives and the President need to approve the bill before it can become law, all indications are it will be approved by early next week.
I am still working on getting the details of the bill but if you have any questions please contact me and if I don’t have an answer I will work on getting one for you.

The federal takeover of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, affectionately referred to as Fannie Mae and Freddie Mac, marks a major change on the local financial front. The financial crisis that preceded the takeover is being touted as the worst since the Great Depression. That’s news no real estate agent, let alone buyer or seller, wants to hear. But it isn’t all bad. In fact, now is a great time to buy.

What does it mean to have the Federal Housing Finance Agency (FHFA) in control of the two major loaning enterprises, and why was this takeover seen as necessary? Well, Fannie Mae and Freddie Mac were experiencing losses of $14.9 billion, and a debt of $1.6 trillion, plus over $3 trillion in non-solvent mortgage backed securities, and the national Treasury had committed $200 billion in preferred stock and credit to keep them up and running. When one of the major financial investment agencies, Lehman Brothers, filed for bankruptcy, and the other, Merril Lynch was bought-out for half of what they’d recently been assessed at, the FHFA saw a need for action, and instigated federal control over Mae and Mac. One of the major impacts on the average real estate buyer and seller is that mortgage rates are dropping because the risk of investment in mortgage backed securities has been reduced.

So with low rates this low, it really is a great time to buy real estate. That was essentially the goal of the takeover. While it seems scary that two major lenders are in the flop house, having lost control of their own operations, the affect is somewhat like a parent signing their consent for something: the risk factor is reduced. The result should be more confident buying, which, ideally, will work to correct the financial problems that caused the breakdown that necessitated the takeover.

When we hear words like “depression” and “bankruptcy” they tend to strike fear into our hearts. But don’t let this bump give you despair. Instead, get out there and be the change you want to see: buy while rates are low and show the country you aren’t scared, and your actions will be a self fulfilling prophecy.

Just what is Loss Mitigation and what can it do for me? This is an understandable question, probably being asked by many Homeowners during these difficult times. I am going to explain what it is and how the Homeowner can benefit from it, plus how they may qualify for this benefit.

First, I think it’s important to explain, that a Home, especially a primary residence, is the biggest and most valuable investment we make in our lifetimes. It’s important to turn to the right source, and employ the experience of the right professionals to represent you to your lender.

Loss Mitigation allows for negotiations on your behalf with your Lender, to achieve the most affordable solutions possible on your existing loan. This is not a new loan, and it won’t change your home title. It’s the process of engineering a viable solution for both the Homeowner and the Lender, backed with decades of Lending, Legal, and Financial Planning experience. Such a process is made possible by a deep understanding of Lending guidelines, Lender protocol and procedures, knowledge of State and Federal laws and regulations, as well as the savvy and strategy of financial planning. The goal is to secure more affordable terms for the Homeowner while managing the risk and losses of their Lender, and in doing so bridging the gap between Homeowner and Lender.

There’s a desperate need for a solution for the struggling Homeowners who can no longer afford their mortgage payment and are unable to qualify for a refinance. A Loan Modification may be the answer to their prayers. Many are afraid that they won’t qualify, many have the courage but are afraid that they aren’t a good candidate for the program but there’s no credit check, no minimum credit score required. There’s no appraisal needed, zero equity qualification. Late payments on their mortgage are OK, unstable job history or income is OK; being upside down on their home is OK.

Homeowners are more than just a “score” and it’s about time that they were treated as such. They need someone who will take the time to find out more about them, their lives, and their families, someone who will find out about the real picture, and care about all the elements of their lives, someone who believes that this is the ONLY way to offer them a real and viable solution for their future, someone who can guide them through the process and together discover the most suitable course of action for their personal situation, someone is committed to doing their part to help families in the community.

Here are some of the solutions that Loss Mitigation can help the Homeowner with, Loan Modification, Forbearance, Term Extension, Rate Reduction, Repayment Plans, Principle Reduction, Deed in Lieu, and Short Sale. However, the Homeowner must be willing to take the first step and contact a quality professional.

It’s important to know that each Homeowner has a team of professionals working for them and on their behalf, and with their best interest at heart. Each case will undergo a process of quality control, underwriting, financial analysis, and negotiations; each department working alongside the other to produce a comprehensive and cohesive solution.

If you haven’t yet heard of “mortgage acceleration,” you will hear of it soon. It is creeping across the country (and somewhat internationally) like a slow burning grass fire. When it reaches the hills and the winds pick up, flames will leap 100 feet into the air.

Mortgage acceleration is technically any methods or techniques that achieve paying off your mortgage principal sooner than scheduled on your 30-year or 15-year note. However, most people use the term to refer to a single technique that draws from the equity in your home to acquire a lump sum to apply to the mortgage principal. In effect, by cycling your equity, you’re reusing the same money you made payments with the first time around, only this time to make a lump sum payment.

Aside from the cleverness of using the same dollars twice, this technique also cancels mortgage interest at an inspiring rate. I employed equity cycling four times in a 2-year period, using only $5000 from my home equity line of credit (HELOC) each time. Paying down $20,000 additional principal with the same dollars we’d used to pay month after month in a more pedestrian manner cancelled nearly $70,000 interest off our mortgage principal and interest pay back.

You can see how following a practice similar to this for a period of several years could completely eliminate home mortgage debt in 5-8 years, depending upon the price of the house and the spread between the buyer’s income and usual monthly expenses.

There are quite a few companies selling software to manage the equity cycling process. Not to deliberately leave anyone of them out, here are a few names you might recognize. United First Financial (aka UFirst) sells a product called the MMA (money merge account) through a multi-level marketing structure for $3500. Sydney Financial Group’s software also goes for about $3500. CMG Mortgage Services sells a similar product; though, their website is not working right now so I can’t confirm the price. Other companies, such as The Mortgage Miracle, represent one of these bigger players, in this case Sydney. UFirst is alleged to have about 30,000 independent sales reps. Norm and Mike, typically referred to as “the two guys from California,” sell a software product for $1295.

A few people are achieving the payoff of equity cycling without the benefit of software. There are books on the subject such as Harj Gill’s “Own Your Home Years Sooner” and John R. Barker and Lin Ennis’s Let Your Mortgage Make You Rich! There are a handful of eBooks that claim to explain the technique, but not every Internet marketer is a writer, so all books are not created equal.

It could also be said no all equity cycling software programs are created equally either. Though I have personally not seen any that don’t work, do not assume they are identical. Unless they’re from the same parent company, regardless of the name of the outfit selling them, they are not exactly alike in every way.

And if you’d like to see how much the equity cycling software might benefit you, go to http://info.equitycycling.com and click on “Free Analysis.” It’s the fourth button across the top under the Equity Cycling logo.

What is an REO Agent?

Most real estate agents sell homes for years without understanding exactly what an REO agent does. REO agent’s responsibilities not only include listing homes for lenders but also include all of the prelisting duties necessary to prepare a foreclosed home for listing on the market. Some of the major duties of a typical REO agent beyond listing the home in the MLS include:

• Scheduling trash outs and cleaning of the foreclosed property
• Water shut off and de-winterization
• Turning on and paying of all utilities during the listing period.
• Scheduling lawn maintenance / snow removal
• Negotiating the contract, sale terms and dates with buyers or their agents

Why Lenders Need REO Agents

Most agents don’t fully understand why lenders need REO agents. They don’t comprehend that listing REO homes requires an agent intimately familiar with the local real estate market the foreclosed home resides in. This area expertise allows lenders to quickly learn the true value of a property.

Without the REO agent’s valuable market knowledge, lenders and banks would be forced to hire and rely on appraisers for a home’s value, a management company’s services to maintain the home while it’s listed on the market and an auction company to market and sell the foreclosed home.

How to Become an REO Agent

Due to the sudden increase in bank foreclosures, many real estate agents are struggling to learn how to become an REO agent and start listing reo homes for lenders. While listing REO homes for lenders can entail a great deal of work, especially early in your REO career, it can also be a very profitable real estate specialty.

The good news for agents is that with some hard work, any licensed real estate agent can become an REO agent. There are no required certifications or licenses to begin listing REO homes for lenders. You only need to know which lenders to contact and how to sign up with those lenders. There are a few good services available that provide agents with comprehensive, up to date lists of lenders that can help you become an REO agent immediately.

Benefits of Becoming an REO Agent

While most agents know that becoming an REO agent can mean increased income, many of the agents that are considering a career listing REO homes for lenders fail to understand all of the benefits that come with it. Obtaining  REO listings can mean a stream of potential buyers calling off your yard signs and advertisements. You can never have too many buyers. In addition, listing a foreclosed home can allow you to begin listing other homes in the same neighborhood as your lender owned homes.

If you are considering listing reo homes for lenders, there has never been a better time to get into the market. Find a good lender and bank list and become an REO agent today!

Good Luck and Don’t Give Up!

There is not actually that much fun renting premises that actually belong to someone else. Despite this fact it is not actually that easy to have a home that is under your own name. In order to try and get your own home you would need to be able to put down payments on the property and then be able to pay the mortgage amounts. There are a lot of advantages of applying for the government grants for housing.

It is a very good idea to use the internet to research the various different grants that are available for assistance with housing. The required research can be done on the internet however it is important to determine if it is a reliable source of information or not.

Most of the government grants for housing do not require the borrower to pay them back so these government grants are a bit like a source of free money that can be used to purchase the house. These government loans also allow you to avoid the hefty levels of interest that are normally applied to various styles of loans that are available.

The second advantage of the government grants for housing is that they actually do not require any form of credit check. These grants are actually relatively easy and it is possible to get these loans even if you have been declared bankrupt in the past. This is actually one of the biggest benefits of these government grants especially in the current times with the economic climate being so tough.

The government grants can be used to pay for the down payment on the property. It is also possible to use the government grant to pay for repairs on the property. There is a lot of research that shows that people actually use the government grants for extensions to the property so these grants are used for a wide range of things and not only for the payment of a property.

There are a lot of people who often apply for only one government grant and wait to see what the result is going to be before applying for another one. There is actually several government grants for housing that are available and if you fit the terms for them you should apply for them all at the same time, if you win a lot of them it is a bit like winning the jackpot as you can be awarded more than one.

It is a very good idea to conduct research into the different grants that available for funding the purchase of housing. One of the best ways of researching this is by using the various different sites that are on the internet. It is also possible to file the applications for the government grants on the internet via the government sites because this site controls the government grants for housing applications. It is very important to ensure that the forms are properly filled out as this will mean that you stand maximum chance of the application being approved by the government.

There are many ways how to find customers and mortgage clients but keeping them can be the harder part of the business. When dealing with your customers, you need to be customer-friendly in a way that builds your business while keeping them loyal to your company.

Before you could make a list of ways on how to help your customers cooperate with you and stick with your company, you will first have to understand the nature of people who make loans from you. You will also need look at your present dealings with your customers and see whether there is something that you will need to improve or change.

One very important way to understand your clients is to simply ask why these people sort to loans. A big percentage of those clients make loans in order to settle their financial problems and many of them may be frustrated with their own finances in life. What you will need to do is to consider that these people may not be very patient with your company’s computers answering their inquiries or complaints with “press this button and that” answers.

Another thing is when you’re dealing with those who couldn’t pay on time or those who seem to have no plans to pay you back at all. You can’t just sue people and cut them off from your company as soon as you get your assets back.

Follow a calm but decisive approach in asking your clients their reasons for not paying. Then, draw a promise from them specifying the exact date and amount of money they would pay you soon. These promises wouldn’t just compel your clients to pay without you threatening them; but will also help you determine which clients are worth keeping.

Today, there are lesser mortgage applications filed, while the number of lending companies increases. It would be great if new clients would just walk in regularly. But since marketing your services is not that easy, you’d better try making new clients while keeping the good old ones.

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Deep inside you, you would really wish to complete your mortgage payments and have a clear ownership of your house. You would want to sleep in peace and not have to worry about someone probably your lender coming to your house demanding to repossess it.

However, times can come when you are not able to have such peace and you’re your payments. You can be sure that such things happen and you can also be wise to find the best solution that you can take so that you are able to complete the payments and even retain your stay in the home.

Let us consider some of the reasons why it would be nice for you to take the best solution.

Sell and rent back house would prevent repossession

Usually, when you are not able to pay your mortgage and you are in enormous arrears, you would receive notification from your lender about the intentions to repossess the house. Instead of letting this happen, you can make a swift move to stop it. You can sell the house and is possible rent it back.

Sell and rent back house leaves you at the house

You would not have to worry about having to find a house that would be as ideal as the house you are about to lose. This is one of the reasons that would really work you down and you can instead choose to stay in the house as a tenant and sell it to offset the debts.

Children not affected when you sell and rent back house

Even when times are so tough, your children must never know about your failings. They should feel the security that you promised them. So, you can actually cover up issues like repossession from them and choose to have the process of selling the house done in a discrete manner where they would not know.

Save marriage by sell and rent back house scheme

Even your marriage can be jeopardized when you are facing serious financial issues. Serious financial issues are those that have gone to an extent where you cannot even afford to pay your mortgage. Your spouse can feel insecure and problems would start. But, you can choose to be smart and sell the idea of selling the ownership of the house so that you have some time to sort out yourself.

Save your self esteem and sell and rent back house

When you certainly come back home and find that you have a different lock on your house, you would be frustrated and your self esteem could also be destroyed. There is no great asset that you can have than your self esteem. You can save it by swiftly selling your house to offset debts and remain a tenant in the same house. No one would know.

The convenience of sell and rent back house

Because when you decide to sell your own house due to unavoidable circumstances you would always want to have your privacy, this is a very good arrangement and it can even save you from the inconveniences that would come when people have to come to view the house. You would take your time to find the right buyer and request to remain a tenant.

Flexible yet reasonable sell and rent back house terms

You can discuss and negotiate your rent when you choose to sell your ownership rights in your house and become a tenant. You have to find an agency that would be willing to offer you flexible terms.

In deed, sell and rent back house is the best solution that you can ever take on your financial crisis that is spreading even to touch on your capabilities to repay back your mortgage.

Just when we thought it was all doom and gloom with banks and their lending criteria a re-mortgage product has come to the market offering Mallorca residents and non residents the opportunity to substantially reduce monthly repayments without the usual costs associated with transferring a loan from one lender to another.

The product offers residents a mortgage rate of euribor + 0.35% and non residents euribor + 0.5 – 0.7% (dependent on the income profile of the client, loan amount and LTV). These rates apply throughout the term of the loan and are not limited “introductory offer” rates as is often the case.

On top of that the bank will cover all Notary, Gestoria and Land Registry costs and incredibly will accept an official valuation the owner may have from the original purchase or mortgage of up to 5 years old (ie if you have an official valuation of your property that is under 5 years old the bank will not require to you to pay for a new one, a saving of circa 400¬)

The only costs not covered are any cancellation fees on your existing mortgage although these can always be added to the new loan amount to help you pay (eg on a 300,000¬ loan with 0.5% cancellation fee of 1,500¬ a new loan of 301,500¬ will be granted. Generally there is a small 0.25% arrangement fee which is easily covered, within 2 or 3 months, with the savings in monthly repayments.

Options include a fixed rate for the life of the loan, a fixed rate for the first 5 years or a fully variable rate that is reviewed annually.

In terms of paperwork key is proof that your current mortgage is fully up to date and that the last 6 monthly payments have been paid on time. Other documentation required is your last tax return, last 3 wage slips, bank statements showing the income etc.

A recent article in the Spanish press highlighted the increasing lengths Spanish mortgage lenders are going to avoid repossessing properties and being left holding a portfolio of assets of diminishing value.

Options offered by banks include repayment holidays, refinancing deals at 125% loan to value ratios (LTV) and even converting mortgages into rental contracts. On top of this is the array of statistics regarding the risk exposure faced by banks in Spain with their enormous retail lending portfolios which help explain the reluctance of Spanish banks to lend save for the very best of clients. Nearly 1 million households are said to be having difficulty paying the mortgage, and 500,000 of them are already in arrears on their payments.

Home repossessions rose by 600% last year. Furthermore one of Spain’s biggest banks, the Banco Sabadell (owner of Solbank on the Costas) has 30,000 clients that have missed at least one mortgage repayment.

If one considers the massive increase in Spanish unemployment it is easy to see that this could well be just the start of the problem of bad debts and repossessions for the banks. With plummeting property values and the spectre of negative equity making an appearance for the first time for a generation of Spanish households, banks will want to continue to find new ways to support clients and avoid being left with the holding costs associated with an increasing portfolio of repossessed properties.

For buyers of Mallorca property and particularly those looking for mortgage finance, ever more critical will be proof of a secure income profile as the banks look to upgrade the quality of the property lending portfolios.