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FHA Mortgage loans- WHEN YOU ALREADY OWN A HOME.

 IMPORTANT – EFFECTIVE WITH CASE NUMBERS PULLED ON OR AFTER 9-19-08

 DID YOU KNOW?

 Recently, FHA and others in the mortgage industry have observed an increasing number of homeowners who have chosen to vacate their existing principal residence and purchase a new residence. This has been occurring as some homeowners, given the rising price of fuel, are relocating to homes nearer their employment, or are taking advantage of other home buying opportunities arising in the marketplace. Due to FHA’s concern that some homebuyers in these transactions may attempt to provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage, FHA is instituting underwriting guidance designed to assure that the homebuyer can make payments on the full debt service of both mortgages. Consequently, beginning with case number assignments on or after 9-19-08 and until further notice, the underwriting analysis may not consider any rental income from the property being vacated except under circumstances described in this Mortgagee Letter. The exclusion of rental income from property being vacated is being instituted on a temporary basis while FHA further analyzes this situation to determine whether permanent measures may need to be taken. This will assure that a homeowner either has sufficient income to make both mortgage payments without any rental income or has an equity position not likely to result in defaulting on the mortgage on the property being vacated. In either case, this guidance is directed to preventing the practice known as “buy and bail” where the homebuyer purchases, for example, a more affordable dwelling with the intention to cease making payments on the previous mortgage. Although the property being vacated will not have a mortgage insured by FHA, surrounding properties may and, thus, FHA may be indirectly negatively affected should that property result in a foreclosure.

 Exceptions:

Rental income on the property being vacated, reduced by the appropriate vacancy factor may be considered in the underwriting analysis under the following circumstances:

 •Relocations: The homebuyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance. A properly executed lease agreement (i.e., a lease signed by the homebuyer and the lessee) of at least one year’s duration after the loan is closed is required. FHA recommends that underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner.

 •Sufficient Equity in Vacated Property: The homebuyer has a loan-to-value ratio of 75 percent or less, as determined by either a current (no more than six months old) residential appraisal or by comparing the unpaid principal balance to the original sales price of the property. The appraisal, in addition to using forms Fannie Mae1004/Freddie Mac 70, may be an exterior-only appraisal using form Fannie Mae/Freddie Mac 2055, and for condominium units, form Fannie Mae1075/Freddie Mac 466.

Advantages to Using an FHA loan to purchase your next home include:

Florida home buyers should know the many advantages of the FHA mortgage loan programs. FHA home loans  were created to help increase home ownership. For the Florida home buyer the FHA program can simplify the purchase of a home, making financing easier and less expensive than a conventional mortgage loan product. Some highlights of the Florida FHA loan program include:

Minimal Down Payment and Closing costs.

• Down payment less than 3% of Sales Price Gifts are allowed
• Seller can credit up to 6% of sales price towards closing and prepaid costs.
• 100% Financing available
• No reserves required.
• FHA regulated closing costs.

Easier Credit Qualifying Guidelines such as:

• No minimum FICO score or credit score requirements.
• FHA will allow a home purchase 1 year after a Bankruptcy.
• FHA will allow a home purchase2 years after a Foreclosure.

Apply Today at http://www.fhamortgagefhaloan.com/

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Article Source:http://www.articlesbase.com/mortgage-articles/fha-mortgage-loans-when-you-already-own-a-home-1424319.html

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The housing market is in serious need of stabilizing. People wages are going down, housing prices are going down and house payments are going up. These costs must be brought in line with rental payments or those facing foreclosure will and are opting to dump their houses for the lower cost of housing, i.e., renting.

There is not a lot of incentive to continue making payments on a house that is upside down on the mortgage payments.  Especially if the homeowners are financially distressed.

The whole idea is if the homeowners’ payments can be brought inline with the rental market they will stay in their home before opting to move into a smaller home for the same housing payment. Even if the the value of the home is less than the mortgage, given the history of real estate the home’s value will eventually rebound, putting the homeowners back in a favorable equity position.

It becomes a win-win situation for both the homeowners and the lenders they can avoid mortgage foreclosure process.

However, if you have been the unfortunate victim of losing your income with no reasonable expectation of recovering it you may have no choice but to downsize your housing wants and move into something to cover your needs. Of course, this is just until you are back on your feet. A temporary thing.

HAMP modifications:

to be eligible a mortgages have closed before January 1, 2009 
modifications end December 31, 2012
only owner-occupied homes qualify
no vacant or condemned properties
upside down loans are not exempt
financial incentives given to lenders to modify loans that are NOT in default if the borrower can prove imminent hardship
homeowners can get bonus eligibility for annual principal reductions of $1,000 for up to 5 years mortgage payments have been made on-time
borrowers must sign an affidavit of financial hardship & a 4506-T
Lenders will follow steps to reduce monthly payments to no more than 31% of verified gross monthly income. Second mortgage & lines of credit are not included in this calculation
HUD-certified consumer debt counseling program will be required of homeowners with total debt payments over 55% of their income
 
Hope Hotline at 888-995-HOPE (4673), website http://www.hud.gov/offices/hsg/sfh/hcc/fc/

Homeowners in bankruptcy may still be eligible
foreclosure proceedings will be suspended for a period of 90 days to prove the homeowners can make the modified payments. If homeowner defaults on modification plan, they are not eligible for any additional modifications incentives given to lenders to allow short-sales or deeds-in-lieu instead of foreclosing
second mortgages and lines of credit may be extinguished (to be determined)
voluntary participation in the program for lenders, but participation will be required if they receive Financial Stability program funds. Private Mortgage Insurance (PMI) companies have agreed to work out settlements on modified loans.

Homeowners will not be be getting their mortgages reduced as a part of this program. Sorry, but you borrowed the money and the government is not looking to pay it back for you, just yet. But the way things are going, who can tell.

It might be cheaper to buy every defaulting American’s home than do what they are doing. After all, if I had no mortgage payments to make, I might buy a new car. Made in Japan of course.

Procedures to reduce a home owner’s payment to qualify:
Lenders may add to loan amount to be modified:

accrued interest
past due real estate taxes and insurance premiums
delinquency charges paid to third parties in the ordinary course of servicing and not retained by the lender
any required escrow advances already paid by the lender and any required escrow advances by the lender that are currently due and will be paid by the lender during the Trial Period
Late fees are not included
The interest rate will be reduced in 1/8% increments (subject to a floor of 2%) until the payment equals 31% of the home owner’s income
extension of the term of the mortgage up to 40 years is allowed
The 40-year term begins at the start of the modification (after the borrower successfully completes the Trial Period).
 
IF necessary forbearance of principal is allowed. If there is a principal forbearance amount, a balloon payment of that forbearance amount is due:

on the maturity date
upon sale of the property
or upon payoff of the regular mortgage
the modified balance must be no lower than the current property value
there is no requirement to use principal reduction under the Home Affordable Modification program

These are most of the details most relevant to homeowners who might be in need of this program.

So if you are simply worried about your ability to keep up with your current payments…or if you are late making a payment…or your loan is due to reset to a higher payment…or if you are in default…there maybe a some help available through mortgage loss mitigation.
Download the Foreclosure Survival Handbook now and stop the mortgage foreclosure process before it is too late. For even more valuable tips go to Stop Mortgage Foreclosure Precess now.

Article Source:http://www.articlesbase.com/mortgage-articles/avoid-mortgage-foreclosure-process-with-obamas-home-affordble-modifications-program-845632.html

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The loan modification process is actually a very multifaceted process.  What I mean by that is, the entity that actually makes the decisions on loan modifications are not always made by the company that owns the loan.  Instead it’s actually the investors who own the mortgage back security that you loan is a part of that make the decisions as to whether or not to approve your loan modification. 

 The decisions are based on this factor, what is most “beneficial” – which mean how can they keep more money in their pockets and minimize their losses.  This is why the typically result of a loan modification is just a rate reduction and they would prefer to keep you paying than going into foreclosure or committing to a short sale.

 Even though the borrower’s circumstances make an impact on their decision, the lender really doesn’t care what a foreclosure will do to the borrower’s credit.  This is exactly why it is recommended to use a loan modification expert to structure your loan modification and present a strong case to your lender.

If the home owner is upside down and has negative equity, then this will actually increase their chances for getting their loan modification approved, as the amount of equity or lack of is a crucial factor in determining if a loan modification is appropriate for the home owner.  For a home owner to determine their equity position, they will need to get an idea of what homes are selling for in their neighborhood.  They can do this by either contacting a real estate agent or using websites such as www.zillow.com, where the home owner can input their address and this site will show recent sales and active listings in the surrounding areas.

 Adjustable rate mortgages coupled with other life events are almost a guaranteed loan modification, especially if the rate adjusted and caused the home owner to default.  Adjustable rate mortgage are considered an extreme hardship and becomes a major factor when getting a loan modification approved. 

 If done correctly, a loan modification can prove to be a win-win situation for both home owner and lender.  Many lenders have turned to loan modification as a means to protect their real estate investments.

 It is not uncommon in today’s market for the servicer to string along the home owner and tell them every thing is ok, when its not, before the home owner knows it, the sheriff is knocking on their door, serving them with a lis pendens that shows that their lender has filed a lawsuit and has started the foreclosure process.  That is why I want to encourage home owners that are not educated enough to deal with this process to hire a professional loan modification company to assist them during these stressful times to ensure a smooth and quick loan modification.

Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized

in Florida FHA Mortgage Loans for people with Bankruptcies, Foreclosure or with

other credit issues, as well as Florida Loss Mitigation. If you would like a Free Copy

or to get instant access to the remainder of this Insider Mortgage Report, please visit

http://specializedfinancialsolutions.com/lendersexposed.htm or Call 954-678-5796

Article Source:http://www.articlesbase.com/mortgage-articles/a-behind-the-scenes-look-on-loan-modifications-784144.html

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