Bankruptcy May Prevent Foreclosure

Can Bankruptcy Prevent Foreclosure?

There are some cases where bankruptcy can help homeowners prevent foreclosure.  The first and foremost thing a bankruptcy will do is stop the foreclosure process.  Lenders are unable to proceed with a foreclosure until permitted to do so by the courts.

When filing for bankruptcy, there are two types to decide from: Chapter 7 and Chapter 13.

A chapter 7 bankruptcy will stop foreclosure, but this will usually lead to having to liquidate your assets.  Many BK attorneys prefer this method because it gets rid of all unsecured debt, but leaves secured debt such as your mortgage, exempt.  In a case like this, borrowers will still owe their mortgage payments but they can now afford to make them because all of their other debts have been discharged.

Although many experts claim that Chapter 13 is usually more effective at helping homeowners keep their home.  This gives them time to repair their finances, lasting anywhere from 3-5 years, over this period of time the court allows an income based budget with monthly payments made to trustees.

The trustees pay the bills, first paying off the secured debt. After that, the trustee pays off unsecured debt, starting with back income taxes.  Following this  comes unsecured debt, such as credit cards and medical bills.  If borrowers keep up on their payments they can emerge from bankruptcy with their homes still in their possessions.

Mortgage Loan

What is a mortgage loan?

A mortgage loan is a loan that is secured by real property though a mortgage note.  A mortgage note proves existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan.

Assets definition

What are assets?

Assets are economic resources.   There are tangible and intangible assets that are capable of being owned or controlled to produce value and that is held to have positive economic value. To break it down even more so, assets represent ownership of value that can be converted into cash.

HAMP Program Drops Applicants!

HAMP Program is Failing Horribly

We will give  a head nod for the governments good intentions in attempting to modify a large number of homeowners loans, although they have horribly failed to modify majority of these loans.    530,o0o of the 1.3 million enrolled in the HAMP program have had their one time reduced payments now terminated.   These people enrolled were expected to contribute 1/3 of their income to their mortgage.   A primary reason that these homeowners have been dropped is missing payments and an inability to meet income and debt requiremenets.

A Housing Shortage Is Coming

Are We Facing A Housing Shortage?

As the US economy has faced the worst housing crash since the Great Depression, it is hard to believe that we may be facing a housing shortage soon.  It has been made clear that the nation is not building enough homes to meet with the demand.

Just 672,000 new homes were started in April, an annualized rate and less than half the long-term run rate needed to meet the nation’s natural population growth.

So far, the shortage has been masked by a weak economy that has put a damper on home buying. Once the job market rebounds, however, people will look to have their own homes again. This pent-up demand could get unleashed on unprepared markets, causing shortages and rising local prices.

Rent or Buy?

Is it better to rent a home or buy a home?

I think that most people are starting to realize that it is best for them if they rent a home.   During the boom years this question never arose, if a person could buy a home it was in their best interest purchase a home.   Considering that the national home prices have slid  drastically, buyers are becoming much more cautious as whether it is the right time to buy.

To determine which option is better, Trulia compares the costs of buying a two-bedroom condo with the costs of renting one. Then, Nelson said, the results can be extrapolated to other classes of homes, such as larger single-family houses.

Balloon Loans

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.

Foreclosures Slowing Down

Are foreclosures slowing down?

Foreclosures nationwide have dropped 2% in February, compared to the prior month.  The big question on everyone’s mind is if foreclosures are actually coming to a slow stand still.  Even though we are seeing foreclosures gradually slow down, there are several factors that can be covering the reality of the situation. This is in part due to all the government programs that are attempting to stop foreclosures, when in reality they might just be delaying the inevitable.  Lenders are creating delays by not proceeding with foreclosures as soon as borrowers are in default.  The evaluation period of defaults and foreclosures is what is casting a long delay on these properties going into foreclosure.

California is still leading the pack with about 1 in every 195 homes receiving foreclosure filings.  The number of homes that have been taken back from the banks have fallen from 87,648 in January to 78,683 in February.

For the most part, once homes are back on the market they are not having any problem selling.  Only time will tell if any of these government programs are actually going to work or are just delaying the foreclosure process in general. 

Government Pushes Lenders for Short Sales

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