Archive for the ‘foreclosure’ Category

Real Estate buyers and sellers are concerned with foreclosures everywhere, including Eugene/Springfield. However, what happens to the person who has had their property foreclosed. What are the long term effects?

First of all, I would like to discuss the credit implications. This trend has resulted in various opinions on the types of foreclosures (Short Sale, Deed in Lieu and Foreclosure) and its impact on a borrower’s FICO score. The following is from First American Credco, one the the credit agencies used for mortgage lending:

This topic, which is raised in news articles and other industry collateral, has generated many questions among members of our various sales channels; mainly, how score models calculate each type of foreclosure. After soliciting assistance from various individuals and resources – including each of the three major credit bureaus and CreditXpert – we have compiled the following information for your review.
While many people have associated a target point impact anywhere from 100 points on a Short Sale to 280 points on a foreclosure, Fair Isaac has told us that FICO risk scores do not distinguish between the three types of foreclosures.
There are so many variables in a consumer’s credit report (do they have collections or other public records?) in addition to the foreclosure account that a point impact is almost impossible to gauge. Further complicating the score prediction is how the foreclosure account is reported, and if a public record accompanies it.
Each article we’ve seen suggests that a Short Sale has less of an impact on an applicant’s FICO score than a Foreclosure, but downplays the fact that there could be legal action taken by the lender on the deficiency balance from a Short Sale. If this is the case, there would then be both a derogatory tradeline and a Public Record reporting. This is the same result as a Foreclosure; a derogatory tradeline plus the Foreclosure Public Record. Even without the Public Record filing there would still be the reporting of an MOP 8 on the Short Sale tradeline. This would have a negative impact on the applicant’s score equivalent to a foreclosure tradeline.
Finally, Short Sales are typically facilitated to those applicants who have encountered credit issues. These issues would be reflected in the derogatory reporting of other credit items within the consumer’s credit profile.

All of this means that the credit score for any of the options will be taking a huge hit. To get more credit information, check out my webinar on the subject:

Next, I would like to address what happens to your ability to purchase a home in the future. Remembering that credit changes all of the time, right now, if you have a foreclosure, you must wait seven years from the date of sale before you are eligible for a conventional loan. If you have a short sale or a deed-in-lieu of foreclosure, the minimum time is two years and 20% down, or four years and 10% down. You will also need minimum credit scores, depending on the program.

For FHA, VA & USDA, although they could vary from lender to lender based on lender overlays, we have a 36 month minimum on foreclosures or deed-in-lieu or short sales on all three. However, of note, if the foreclosure was a VA loan and you want to get another VA loan, the deficiency balance has to be paid first. Additionally, a previous loan with USDA that resulted in a loss makes you ineligible for a new USDA loan.

Foreclosures can have a huge effect on your ability to borrow money in the future, not just for a new home, but also for a car purchase, making a difference of a 36% loan rate and a 5% loan rate. Sometimes, however, a foreclosure is the right way to go for a person. Sometimes, it may just seem the right way to go and in reality it isn’t. Ask a foreclosure counselor to find out for you. I believe the counselors at NEDCO are very helpful in this area.

Contact me

I am not a foreclosure counselor or a debt specialist, however, I am a mortgage advisor and am here for the long haul. Navigating the mortgage approval process can be daunting. You need someone on your side. I am available right now to help you with the loan process and know the ins and outs of FHA, VA, USDA and conventional financing. If you want to buy a home using an FHA loan or refinance using VA, I am here to help. I am licensed in Oregon, California and Washington. Contact me at Alpine Mortgage Planning, 1200 Executive Pkwy., Ste. 100, Eugene OR 97401, 541-342-7576/541-221-3455 cell or by e-mail. Only you can make the choice it is time to get the process started.

Hardest Hit Fund money will be available early next year for those who qualify and are selected to receive part of the $220 million allocated to Oregon through the Troubled Asset Relief Program.

Applications will be accepted for the program starting today through January 16. This is not a first come, first serve program, participants will be selected through a random selection drawing. Click on the image below to be taken to the website to find out if you qualify for the program and if you do, to apply for the program.

The Hardest Hit Fund will be available for at least 186 people in Lane County and will be processed by NEDCO. Those that apply will be contacted by NEDCO and scheduled a time for processing of their application.

The fund will make payments for 12 months or $20,000, which ever comes first, over the next year for those selected. NEDCO will begin intake interviews on Dec. 15 and the online application must be completed before an intake interview is scheduled. Last day to make application online is Jan. 14.

There are income and asset requirements that can be found as a potential applicant takes the Program Eligibility Test. The website is for all of Oregon, not just Lane County. Different counties will have different quotas of people they can help.

NEDCO is in need of volunteers to help out with the processing of applications. At this time, there is no way to gauge the number of applications that will be received. NEDCO is also handling the processing of Marion and Clackamas counties and will have offices open in those counties on Dec. 15. To volunteer to assist in the process, contact Desiree Moore, Hardest Hit coordinator, 541-337-2078, desiree@nedcocdc.org.

Also, pass the word on to friends, neighbors and anyone that may benefit from this program. Any time we can stop a foreclosure and give someone a chance to get on their feet again, it is a benefit for our neighborhoods.

For those that are not selected for the program, NEDCO has other troubled home owner programs that may assist them in their time of trial. Contact NEDCO at 541-345-7106 for more information or check out their website.

While many experienced real estate agents have a general understanding of the mortgage approval process, there are a few important details that frequently get overlooked which may cause a purchase to be delayed or denied.

New regulation, updated disclosures, appraisal guidelines, mortgage rate pricing premiums, credit score, secondary approval layering, rescission deadlines, property type, HOA insurance requirements, title and property flip rules are just a few of the daily changes that can have a serious impact on a borrower’s home loan financing.

With today’s volatile lending environment, it’s obviously important for home buyers to get a full loan approval which clearly defines all contingencies that pertain to each unique home buyer’s scenario prior to spending any time looking at new homes with an agent.

Either way, we’ve listed a few of the top things your agent should keep in mind while showing you new properties:

Caution – Agents Beware:

Property Type –

High-Rise, Condo, Town House, Single Family Residence, Dome Home or Shoe House… all have specific lending guidelines that can influence down payment, credit score and mortgage insurance requirements.

Residence Type –

Need to sell one home before moving into another? Is a property considered a second home if it’s in the same city?  What if I’m buying a home for my children to live in, it is still considered an investment property?

These are just a few of several possible residence related questions that should be addressed by your agent and loan officer at the initial loan application.

Rates / Locks –

Mortgage Rates are typically locked for a 30 day period, and one of the only ways to get a new rate is to switch mortgage lenders.  Rates also have certain adjustments for property / residence type, credit score and down payment which could have a big impact on monthly payments and therefore approvals.

A 1% increase in rate could literally mean the difference between an approval or denial.

Headline News / Employment –

Underwriters watch the news as well.  Borrowers who work in a volatile industry during hard economic times may have to jump through a few extra hoops to prove that their employment and income is secure.

Job changes, periods of unemployment or property location in relation to the subject property are other things to consider that may cause a speed bump in the approval process.

Title / Property Flip –

A Flip is considered a property that has been purchased by an investor and quickly sold to a new buyer within a 30-90 day period.  Generally, an investor will do a little rehab work, fresh paint, landscaping…. and try to re-sell the property for a significant profit margin.

While it seems like a perfectly fair transaction, many lenders have strict guidelines in place that prevent borrowers from obtaining financing on properties that have a previous owner with less than 90 days of documented ownership.

These rules change frequently, and are specific to particular property types, so make sure your agent is aware of all the boundaries associated with your approval letter.

Homeowner’s Association Insurance –

Some lenders require Condos and Town House communities to have sufficient insurance and reserves coverage pertaining to specific ratios on units that are owner occupied vs rented.

It may also take a few weeks and cost up to $300 to receive an HOA Certification, so make sure your Due-Diligence period is set accordingly in the purchase contract.

Appraisal Ordering Procedures –

Appraisal ordering guidelines are changing quite frequently as regulators implement many new consumer protection laws created to prevent future foreclosure epidemics.

Unfortunately, some of the new appraisal regulations have proven to slow the home buying process down, as well as confuse lenders about the true estimate of neighborhood values.

VA, FHA and Conventional loan programs all have separate appraisal ordering policies, so make sure your agent is aware of which loan you’re approved for so that they document any anticipated delays in the purchase contract.

For example, if an appraisal takes three weeks and the average time for an approval is two weeks, then it probably isn’t smart to write a purchase contract with a four week close of escrow.

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Related Articles – Home Buying Process:

• Home Buying Process
• First-Time Home Buyer Credit Checklist
• Assembling Your Home Buying Team – Knowing The Players
• Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
• Where Does My Earnest Money Go?
• HOA Hurdles to be Aware of When Looking at New Properties
• What You Need To Know About The Home Inspection Process

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