Are Loan Modifications Working?

May 10, 2010 by  
Filed under Are, Modifications Working?

After much effort on the governments behalf to dig us out of this inevitable housing crisis we face, the efforts have seemed to fail horribly.  Only a small amount of homeowners were eligible for these modifications to begin with, and those that did receive help are still unable to meet the payment requirements.  The modification always looked like a temporary resolution to a problem that would stir up once again in no time at all.  The answer is to short sale. Get out of the negative debt you owe, stop trying to hold on to this property that has no value.  Throw your emotions to the side and start making smart decisions for your future.

Balloon Loans

May 3, 2010 by  
Filed under Balloon Loans, Blog

Balloon Loans:

Borrowers pay at a rate lower initially than the nominal interest rate on their mortgages. The difference between the two builds up every month and has to be repaid with one huge payment at a specified date.

Fannie Mae gets tougher with interest only loan requirements

Fannie Mae is set to tighten its mortgage requirements, effective August 30, 2010. To qualify for a Fannie Mae-backed interest-only loan, a homebuyer is now required to put 30% of the purchase price down as a down-payment.

ARM’s – Fannie Mae will only buy those in the cases where the borrower can afford to make payments even if their interest rates reset to 2% higher than the loans original interest rate or the industry cap rate.

“These policy changes reflect our intention to continue providing liquidity to different market segments by ensuring that support for ARM products remains in appropriate circumstances,” said Marianne Sullivan, Senior Vice President of Single Family Credit Policy and Risk Management at Fannie Mae.

Fannie Mae a fortune 500 company is mandating that borrowers of these interest only loans have credit scores of 720, and strong reserves of cash. Fannie Mae has also stated that they will stop funding balloon mortgages.

Many borrowers saw those balloons swell to unmanageable proportions and lost their homes when they couldn’t afford or refinance the balloon payment.

Once again these guidelines are supposed to be effective August 30, 2010.

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