Alternatives for Upside down Homeowners

Are you currently having issues meeting your payments and in addition found that no one wants to buy your house in excess of what you owe and even merely what you owe on it? If this sounds familiar, your house's mortgage is a bit more than what your home is valued at, so you are what is termed an "upside down mortgage loan holder."

Most people are probably surprised when they understand they are upside down, and till just recently, they most likely never knew about something known as a short sale, and that is really simply selling your house for anything you can get and then producing an agreement with the mortgage lender about the remaining balance due.

A lot of people usually are not thrilled with the short sale method, but really do upside down home loan holders have an alternative apart from short sales. The answer these days is yes. There's a different method out there now known as the Principal Balance Reduction Program.

A Principal Balance Reduction Program is basically a program in which home notes are sold to a hedge fund with a enormous lower price, the hedge fund decreases the amount of principal owed to 95% of the market price and modifies a few terms and the rate of interest for the property owner.

Is this new option for you for anyone who is an upside down home loan holder who has been thinking of a short sale? Possibly. The pros to you could be substantial savings, the ability to retain your house by essentially short selling the house to yourself, and keeping your tax incentives and not wrecking your credit score.

Should you discover yourself to be dealing with the housing problems head-on, it is advisable to understand about the principal balance reduction program. Can upside down home loan holders have a choice besides short sales? Absolutely yes. That being said, consider it in the event you need to.

Learn about loan modification procedure & FHA mortgage modification program

Mortgage Modification Rejected? Take Heart!

Rejection has become a way of life to applicants for mortgage modifications. The lenders have made very little progress in improving process performance in spite of over 18 months of financial incentives from the Obama Adminitration's Making Homes Affordable Modification Program (HAMP). Applicants, even very well qualified ones, get rejected routinely.

These days, rejection of your mortgage modification is a very good sign! Of the modifications that we have successfully mnaged for clients in 2010, not one single application was granted without a prior rejection. You read that correctly - every one of the modifications I have completed for clients in 2010 has been rejected before being accepted. Even applications that initially were grantedTrial Modifications resulted in a rejection of the permanent mod before final acceptance. Some of them were rejected as many as three times before being granted! Wow!

It's hard enough to meet the challenging application procedures and follow-up effectively to keep your application on-track. To have to also escalate your rejections to supervisors, managers, Directors , Vice Presidents and CEOs and to contact your local congressperson, the regulatory agencies, the trade associations and even the press in order to get it done? This is tough stuff!

But, that's the deal so dealing with rejections is now part and parcel of the mortgage modification process. There really is no end to the number of reasons for rejection: Your lender does not participate in mod programs, Your application failed the NPV calculation, You make too much money, You make too little money, Your home is too valuable, Your 4506-T has expired, Your Ratios are not right, You failed to provide updated documents, We needed a letter from your renter saying that he pays rent (not just a copy of several of his checks along with a valid/current/signed lease), Your hardship does not qualify and etc. These are bad, but the worst one of all is when the agent can't explain why you were rejected and claims that they do not have to provide a reason.

These reasons may be valid but all too often, they are simply erroneous, resulting from lender mismanagement of the file. Othertimes, they are patently untrue statements that slow or end the application process if you do not object. So, rather than be discouraged and give-up when you get rejected, press on. At least you're not being completely ignored! Promptly get clarity on the reasons for rejection. Go through several agents (by simply calling back at different times) and then escalate to a supervisor if you must to get a straight answer. Then supply the missing documents, sign the updated form, or correct the typo on your income. Do whatever it takes to get them back on track. Request reconsideration when you submit the correction. If you have submitted a good and accurate application upfront, you will - eventually - get the relief that the mortgage modification programs are intended to give.

Take heart. What is worse than rejection is the months of total disregard and that most of us get in the mortgage modification process. It's not likely to change anytime soon. Mortgage modifications will continue to be a great way to throttle the foreclosure rate and they are a great way for homeowners to get some relief. It's just taking a lot more perseverance and nerve than it should!

Need help with your ownMortgage Modification? Visit Rockwood's site about DIY Loan Modification at Home Loan Modification

Short Sale 101, Basics Of A Short Sale, Short Sales Can Be Fun!, Short Sale In Your Future?

Are you "upside down" or "underwater"? These new housing market terms produce negative thoughts, no? With all the due diligence you put into the purchase, and all the business smarts your lender put into it to accept the home as collateral, it's a strange thing indeed that the deal went bad. But, it did go bad. In fact nearly 20 million homeowners in the US are facing this scenario right now. It's psychologically bad for all of them and it's financially bad for those who must sell now due to a job loss, reduction in pay, divorce, death, etc. For them, it's a disaster.

A short sale can be a great solution for such people. The lender has to approve such a sale because they have accepted the home as collateral for the debt. How the sale works, what happens to the "short" amount, what you tax liabilities are and how to be protected from future deficiency lawsuits are the right questions to ask. Let me start with question one, how they work.

This is How a Short Sale Works

The short sale is conducted in exactly the same manner as a traditional sale, with one important additional step. When a suitable buyer is found your "application for a short payoff" is submitted, along with the offer, to the lender. The application includes an explanation of the hardship that led you to this situation.

The application also includes a HUD-1Worksheet of the expenses involved in the execution of this purchase contract, and showing the net proceeds that the lender will receive. One of the items on the HUD-1 is the payoff amount of any "junior" lien holders. Typically, these lien holders settle for a small fraction of the amount owed as their claim on the collateral is subordinate to the 1st, or senior mortgage. That, by the way, is why they always charge higher rates - they are more exposed to loss.

Your lender then reviews the application and gets their assessment of the value of the home and the appropriateness of the offer. They do this by hiring a local Realtor to provide a Broker Price Opinion (BPO) or by using the Automated Valuation Model (AVM). The AVM is a computerized estimate of net proceeds if the home goes to foreclosure and the lender must sell it themselves. Usually this evaluation takes at least 30 days.

There are common misconceptions - myths - about short sales. Here are the most common ones I hear.

1. Banks would rather foreclose than approve a short sale

This is a common error. The reality is that banks do not want to foreclose on your property because the process is lengthy and costly. After all, the lender has to sell the property on the market eventually. Banks lose less through a short sale than a foreclosure.

Myth #2 - You Must Be "Late" on Your Mortgage to Negotiate a Short Sale

Once the case, it is no longer. Lenders are looking for verifiable hardship and monthly cash flow shortfall. Beyond that the deal hinges on determining the current market price and finding a qualified buyer.

Myth 3 Short Sales take so long that the hme is often lost in foreclosure before approved

Many homeowners fail to pursue short sales believing that they take too long and that they won't have enough time to complete them before foreclosure period ends. Actually, lenders extend the foreclosure process to have enough time to evaluate your short sale deal. I have succeeded in short sales when we submitted the deal for the first time just 2 days before the trustee sale.

The foreclosing party-in most cases a lender-can delay foreclosure up to the final day of the process. In these trying times, many lenders will delay the foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will delay foreclosure with a legitimate short sale purchase contract.

Myth 4 - Selling Short is Embarrassing

It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, one out of five homeowners in the U.S. is in the same situation. Estimates are that 40-60% of U.S. home sales in 2009 and 2010 will be short sales or foreclosures, you are not alone.

Myth #5 - Buyers are Not Interested in Short Sales

The opposite is true. Smart buyers and smart agents know that there are great deals to be had in short sales.

Short sales are here to stay for many years. Millions of homeowners will use short sales as a way to workout their portion of the housing crisis. As a workout solution they provide significant advantages over many other options.

Want to find out more about actually getting short sales done? Visit Rockwood's site at Home Loan Modification