If you took out a ‘piggyback’ second mortgage (aka a ‘junior-lien loan’) to cover, say, your down payment or private mortgage insurance (PMI), then you may have problems if you need a loan modification. Read the rest of this entry »

The Washington Post recently ran a piece that warned of some of the pitfalls that await borrowers who wish to modify their mortgages. In particular, there are many unscrupulous operators who are willing to take substantial sums in upfront fees, but who then fail to deliver the most appropriate modification.

In fact, the worst for-profit modifiers often do not deliver anything at all. They just take hard-pressed borrowers’ money and run.

If you’re thinking of modifying your mortgage, you may find that a nonprofit advisor can help you for nothing. But–unsurprisingly in this climate–many nonprofits are overwhelmed by demand, and simply cannot respond quickly enough to urgent cases.

That’s when for-profit advisors may be the only alternative. By all means use one. But be very careful who you choose, watch them like hawks, and try to make sure that the bulk of their fees are paid only when a good deal is actually in place.

This blog isn’t really supposed to be about tips, and hints. But, a couple of days ago, the New York Times gave such a good piece mortgage advice that I just have to pass it on. Read the rest of this entry »

On Wednesday I talked about the benefits of re-engineering mortgages. It seems to me that individual borrowers need to experience a period of stability before they’re likely to feel confident enough to trade up to a better home. Read the rest of this entry »

Looks like FHA’s Hope for Homeowners is going over like a lead balloon.  According to CNNMoney, most lenders are rejecting the voluntary programs in favor of their own. The FHA programs requires that the lender write down the balance of the loan to 5% less than the value of the home and in addition pay FHA its fees to originate the new loan. So FHA gets a new loan that is a realistic LTV and at this point unlikely to have much of a downside, while the original lender takes the loss.

Not surprisingly, lenders prefer to take their chances with their own solutions, for example, instituting repayment plans alllowing borrowers to catch up their arreages over time and leaving the loans on the books at full value. Or modifying the terms of the loans to make payments affordable. Principal writedowns force the lender to give up any chance to make up the values when housing prices recover–they are considered too drastic and permanent a solution in most cases.