Sell your house for more than it is worth.

It seems like it has been an eternity since I last blogged. I sincerely apologize, but there are times when every project needs attention at the same time. I have been so busy making sure that my business goals are on target, that it becomes difficult to do everything on my list every day. I want to let you know that if like me on Facebook, You will get information on a more regular basis, so if you are tired of waiting for the full blog, be sure to check out my Facebook entries which are short, but much more up-to-the-minute about what I am doing. I did try to write a blog while driving down the expressway at 70 miles an hour. I thought that this was the main purpose of the “cruise control” button. The kind police officer explained to me that the law against texting also applies to writing blogs while you drive. I also discovered that if you get into an accident, like hitting the median, the air bag pops at such a tremendous force that the keyboard stuck to my face. I have one button still on my face, the “delete”, which I think would have been gone already, but my wife, upon hearing about my accident, keeps pushing it every chance she gets, but I am still here!

Seriously though, I wanted to blog so that if you are in need of help, you will know what to expect when you sell your property to investors like me. There are many different strategies that investors use, so I am just going to tell you about mine. I regularly buy houses for more than they are worth. This means that a seller can escape a bad situation, without having to do a “short sale” and the many hassles associated with foreclosure or other types of sales that the company decides to try. The recession has shown us that banks, in general, do not care about their customers. The number of foreclosures has grown astronomically and millions of people, expecting to have their home for the rest of their lives, have now lost, or are about to lose the most precious financial asset they expected to have for the rest of their lives. Fortunately, as I have written before there are some avenues that have been created to offer help. I am a private investor, so I am here to let you leave with your dignity intact.

So you make the decision to sell me your property and you are unsure of what to expect, since it is very different from traditional methods. The benefits to you are:

  • It is very quick
  • You can be relieved of many of your responsibilities (and be able to sleep again)
  • It is possible that you may get some financial benefits

In a “short sale”, since the bank gets less money than is owed to them, they are unwilling to allow you to receive any profit or benefit.

The situation could not be more embarrassing for you. The moment of realization that you have lost your property is devastating. Banks want the money that is owed to them or the property, so it is rare that you can find a loan officer who cares about anything but the bottom line. When I step in as an investor, you must understand that unless you win the lottery or have inherited enough money to pay what is owed, your property, in any case, is gone. You will need to prepare yourself emotionally that you will give up control of the property, which may take some time to come to grips with your situation. Whether it is myself or a bank, you will no longer own the home and do not get to make the decisions about the sale or the mortgage.

So let’s talk about the differences

The other things that are particularly different are:

 

  • The down payment
  • The closing
  • Possession
  • Payout
  • The future relationship with the buyer

The cause for these differences really centers on what expectation each party has from the other. In an ordinary sale you would expect the buyer to enter the closing with a down payment and a secured loan from a bank. The closing of the transaction would occur at a Title Company and they would take possession immediately while the escrowed money from the bank and the down payment pays off your mortgage company completely. You can move on and never interact with the buyer again, in most cases.

In the investor transaction there might not be a down payment. Your mortgage will not be paid off completely so there is no need for the ordinary escrow closing. Possession is then negotiated between the investor and the seller.

The investor, in this case, will take over your loan payment for you. It gives me the opportunity to buy the house for the value of the loan, even if the loan is higher than the value of the house.

There will be no traditional down payment, because I, the investor, will not get any value for the money I would have to pay. You, however, will get the value for what would have been your equity if you were able to live in your house and make regular payments. Occasionally, there may be things an investor will do for you such as paying your moving expenses, or if necessary, paying the legal fees for you to declare bankruptcy. If the rental income from the house will justify it, the investor may offer you a participation in the profits. This is rare, but it can be a point to negotiate.

The bottom line is that you get rid of a big headache and the investor takes it over! You may have contact with the investor later, particularly if your bank has already begun a foreclosure proceeding. Sometimes you will need to call the investor regarding a bill that was routed the wrong way or maybe some general business regarding the property. It is not an adversarial relationship, and if you need to make a call you can generally get the investor right away instead of listening to boring records and constantly being switched from one person to the other.

I am guessing that you have figured out that I was not being serious about the car accident. It would be nice if some people came with a delete button, but I am not an inventor so I will stick with what I know, Real Estate Investing. This business allows me to assist families in trouble and I can help to take away some of the financial responsibilities that weigh so heavily on all our minds as the country struggles to pull itself out of a recession.

What’s Better Than HAMP?

The Department of Justice and all the Attorneys General in the USA except Oklahoma made a major settlement with the major mortgage providers earlier this year and you need to hurry up if you are going to get your share. They call it the Global Mortgage Settlement.

 

“This agreement – the largest joint federal-state settlement ever obtained – is the result of unprecedented coordination among enforcement agencies throughout the government,” said Attorney General Holder. “It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will help to ensure the abuses of the past are not repeated.”

The original deadline of June 15th was extended due to demand in the program and you now have until at least the end of July 2012 to make your application. Under the settlement the banks are supposed to contact you and let you know that you qualify but don’t count on that happening. I suggest you take positive steps to ensure that you are included.

Here are the most important things you need to know about the settlement:

The banks are required to make modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.

State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay. The ratios used in the program are not the same as in previously available assistance. You may qualify now even though you have not before.

Borrowers who are current get relief! That’s right, current! Borrowers will be able to refinance at today’s historically low interest rates. Standard credit requirements do not apply if you are seeking this modification.

Compensation to people who lost their homes already! You don’t have to waive any rights to get the money and you can use it to sue the bank if they improperly took your home or you may just use it for any purpose you like.

Money is being provided to help fund consumer protection and state foreclosure protection efforts. This means that more homeowners may be helped on the state level even if they don’t qualify under these other programs.

The banks are also giving up a single point of contact so that you no longer have to restart the process with every phone call. Some individual will be assigned to your file.

There is a great website with tons of details and FAQ at http://www.nationalmortgagesettlement.com . The information is all there, now it is up to you to take action on it!

Home Mortgage Modification Warnings

 

 You may already know that the Department of Justice has made a major settlement with the nations largest banks but you may not know whether or not you are qualified for the relief. The following is what the government is worried about so I am passing it on to you as they have written it.

Scammers are already at work trying to capitalize on the national mortgage settlement to access your personal information—or worse, your money. The Attorneys General have already received reports of scammers in Alabama calling borrowers claiming to be one of the major banks involved in this settlement and offering a cash payment to consumers if they simply provide the routing number to access their bank account. If you receive an unsolicited call from one of the major banks, you can identify a scam in several ways:

 Does the caller identify themselves as representing your loan servicer? Or do they ask you to provide the name of your loan servicer? If they ask you for the name of your servicer, they may be a scammer.

 Does the caller offer to provide your personal information to assist you in identifying your account? Or do they ask you to provide that? If the caller is from your loan servicer, they will be able to tell YOU your personal information because they will have it. You should never provide your personal information (including bank account numbers, social security numbers, etc.) to an unsolicited caller—no matter what they promise you.

 Does the caller offer to speed your settlement relief for a fee? They are definitely a scammer! Neither the banks nor the Attorneys General will charge a fee to speed your settlement.

 If you think the caller may be legitimate, ask for their contact information, tell them you are going to call your bank’s hotline (located above) and confirm, then call them back. Chances are if they’re a scammer, they won’t want you to check on them and they won’t provide their contact information.

 Please be careful and exercise due diligence in all your mortgage negotiations. This can be perilous and I want all of my readers to be successful in their efforts to keep there homes! Get professional help when you need it but be certain that you may trust the professional you hire.

Watch this space for more information soon!

Best Regards,

Mark Elkins

Home Affordable Modification Program (HAMP) 2012 Update

The good news for homeowners is that the home affordable modification program or HAMP as it is called has been extended through 2013.

HAMP is a program offered by the government beginning in 2009 with the economic recovery act. While compliance by the bank is optional, HAMP allows homeowners to apply for modification to their loans and get the payment reduced down to 31 percent of their gross monthly income. There’s an application process that begins at the lender when you will need to provide them all of your income documentation as if you are applying for new loan. They’re going to evaluate this information to see if you qualify by the standards of the investor. They’re not required to talk you about the program assistance however, they receive incentives from the government for modifying those loans. These may include extra money to cover the reduced amount of principle and there are also incentives for the borrower to make regular payments. If you make regular payments after the modification you also get some money back to give you some incentive to continue paying for loan and create equity in the process

Here’s a little bit about how it works:

As long as you have a job and you’re still struggling to make your mortgage payments you maybe eligible for HAMP. It allows for you to lower your mortgage payment down to 31 percent of your verified monthly gross income. Gross income is the amount of money you make before taxes are taken out. This means, if you have a $50,000 a year salary and your take home income is $1500 dollars every 2 weeks, your gross income is still $50,000 even though your paycheck is smaller.

For example: If your monthly mortgage payment is $1,650, and your income is $50,000 per year, that payment currently equals 39.6% of your income. HAMP will lower your payment down to 31 percent of that gross income or $1,291and your savings is $359 per month.

President Obama has announced changes to the program and intends to be even more aggressive with elements of the program. Mortgage lenders got the information in February but the new information for homeowners won’t be available until June, so you can check out the government website at http://www.makinghomeaffordable.gov then. For now:

You may be eligible for HAMP if you meet all of the following criteria:

1. You occupy the house as your primary residence.
2. You obtained your mortgage on or before January 1, 2009.
3. You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income.
4. You owe up to $729,750 on your home.
5. You have a financial hardship and are either delinquent or in danger of falling behind.
6. You have sufficient, documented income to support the modified payment.
7. You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

One great thing about the HAMP modification is that the government considers entire payment including your tax escrow and your insurance escrow and homeowners association fees to calculate what your final monthly payment needs to be to reach the goal of 31 percent. This gives you an even better chance saving money in the program.

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