Category Archives: Mortgage Information

What is a Strategic Mortgage Default?

Posted on April 4, 2012 | Leave a comment

A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt despite having the financial ability to make the payments.

Order an appraisal from the appraisers at www.scappraisals.com to determine the value of your property before starting negotiations. Remember the bank will hire their own “experts” to use in the negotiation; why not have your own ammo.

This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house’s price such that the debt owed is (considerably) greater than the value of the property — the property has negative equity or is underwater — and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble.

A short sale negotiator makes a case for default from the UT Newspaper.

Jacalyn Blank, a Clairemont-based short sale negotiator, wrote this guest post for the U-T San Diego in response to last week’s story about an anti-strategic default website started by a local real estate agent. Blank, who works with strategic defaulters, makes the case for what’s now a more widely accepted practice. We featured Blank in a business Q&A last fall: Meet a San Diego short sale negotiator.

Myth: Strategic defaulters are bringing down home values and impeding a housing recovery.

Truth: Strategic defaulters are not selling their house for a discount. They are selling it for what it is worth in today’s market. A “normal” sale is still selling for less than the house was valued at 6 to 8 years ago, even though it is a “normal” sale. This isn’t because of short sales or even foreclosures. All distressed property sales are a symptom of the real problem: Homeowners owe too much on inflated mortgages they obtained in an unsustainable housing high. The attachment to an inflated value comes from the name “housing crisis,” when really what we have is a “mortgage crisis.”

Disclaimer: for information and entertainment purposes only

BOA Tests Rental Program as Alernative to Foreclosure

Posted on March 29, 2012 | Leave a comment

Bank of America said Thursday that it would offer a small number of customers facing foreclosure the option to remain in their homes and rent the property instead. The program highlights how investors are increasingly interested in becoming landlords on troubled properties.

Thinking of renting your property? Contact the appraisers at www.scappraisals.com and have them do a rent comparable and income report for you; know the numbers before renting.

Under the terms of the pilot program, which will be offered initially to about 1,000 consumers only in New York, Nevada and Arizona, homeowners will give up the title to their property in exchange for bank forgiveness of their mortgage debt. They would then be able to rent the property for up to three years.

The rent payments would be less than the monthly mortgage payment and be set at or below market rates, according to bank officials.

At first, Bank of America would retain ownership of the properties before selling them to outside investors. If the pilot program, known as Mortgage to Lease, is successful, the bank could expand it.

A wide variety of institutional investors, including some large private equity firms, are weighing potential deals in the beaten-down housing market. Bank of America’s move could offer up potential properties for investors who are looking for opportunities.

Disclaimer: for information and entertainment purposes only

Check the Fine Print on FHA re-fis

Posted on March 23, 2012 | Leave a comment

WASHINGTON — The Obama administration’s new plan to stimulate refinancings of FHA mortgages is likely to help large numbers of homeowners cut their monthly costs — even those who are deeply underwater. But it’s also likely to be a disappointment to many borrowers who aren’t aware of the program’s fine print and end up missing an opportunity to switch into a loan with a rate below 4 percent.
To cut through the bureaucratic details, here’s a quick overview of the so-called “streamline re-fi” program and what it will take for you to qualify. First, the baseline criteria: Your current home loan must be FHA-insured and must have been put on the agency’s books no later than May 31, 2009. If you have a mortgage owned or backed by Fannie Mae, Freddie Mac, the Department of Veterans Affairs or private investors, you’re out.

The May 31, 2009, date is crucial. Your lender can tell you precisely when the FHA “endorsed” your loan for insurance. This is different from the dates you applied for your loan or closed on your house. If it turns out to be anytime later than May 31, 2009, you miss the cut.
You also need to have an unblemished record of on-time mortgage payments for the past 12 months. Maybe you were late occasionally a couple of years back.

That’s OK. But the immediate past 12 months need to be pristine.
On top of that, if your refinancing does not provide you a net savings of at least 5 percent in your monthly principal, interest and mortgage insurance payments, you won’t be eligible either. The program won’t take effect until June 11.

Disclaimer: for information and entertainment purposes only

Category Archives: Mortgage Information

What is a Strategic Mortgage Default?

BOA Tests Rental Program as Alernative to Foreclosure

Check the Fine Print on FHA re-fis

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