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The Real Estate Short Sale, What You Need

March 15th, 2011 Comments off

Article by James Boyer

Do you owe more on your home than it is likely to sell for? Are you having big trouble making your mortgage payments and in danger of being foreclosed on? Want to sell your home and just move on with your life? Do you want your real estate agent to do the negotiations with your mortgage company for you? This may or may not be possible depending you your mortgage company, but some will allow your REALTOR to negotiate with them on your behalf. Note this is not a comprehensive list as every mortgage company is different in what they will want to see, but this list should give you a very good idea of what is going to be needed in order to have any chance of having your short sale approved by your home mortgage company.

A non comprehensive list of things you will need to provide to your REALTOR if he or she is to negotiate a short sale for you.

1. All your mortgage information, account #’s, balances, contact numbers2. A copy of your Hud1 from the purchase of the home3. A copy of your dead for the home4. Your United States Social Security number, if you have one5. Your work visa information6. Copies of your green card information7. Copies of your past 5 years tax returns8. Copies of your past 5 years bank statements9. Copies of your past 6 months pay stubs10. Your past employer information for 3 years (addresses, job titles, compensation levels)11. Your current employer information (address, job title, compensation level)12. An authorization letter specifically authorizing me to negotiate with the mortgage company on your behalf.13. You will need to put together a hardship letter explaining to the bank why you cannot afford to continue to pay the mortgage on the home, and / or cannot afford sell your home and pay the difference between sale proceeds and the amount of money needed to satisfy all debts against the house.

Note banks do not like short sales. If they believe that you have the capability of fulfilling the mortgage through payments or payoff, they will likely not accept a short sale unless you have showed that you do have the ability to make full mortgage payments and are willing to proceed to foreclosure and negatively impact your credit rating including the likely closure of all credit cards.

In short, home mortgage companies don’t make it easy for you to lose money for them.

About the Author

Written by James Boyer your Chatham NJ REALTOR.  When it comes to the Chatham NJ real estate market James Boyer is the REALTOR giving you the best real estate search tools, expert advice, and grade A service to ensure that you get the best possible results in your home search and purchase, be that in Chatham New Jerse

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Understanding Subprime Home Loans

March 14th, 2011 Comments off

We as a community need to understand that subprime has noting to do with the borrower, except they make payments. It is all about the investor. He, who has the GOLD, writes the RULES. Investors know if you have the propensity to always pay your mortgage on time, you will continue do to do such! You might be late or behind on something else, but you’ll handle the house note or you have no roof to live under. Consider owner occupied rates are lower than non-owner occupied rates, down payment requirements and underwriting guidelines are more favorable toward owner occupied properties than on investment properties. Finance 101!

There was a lot of loose money in investor’s wallets as we moved into the 21st century and investors are always looking for rates of return that exceeds current market rates. These investors invest in loan pools as historically they tend to be safe investments, and all of the professional real estate guru’s were predicting continually increasing appreciation in real estate prices. On the other hand you have Congress had changed the deductibility of interest charges, except mortgage interest. This was a keg of dynamite with Americans trying to live the American by using their home’s equity as a credit card.

Quiet as it is kept, you also had the credit repositories manipulating and adjusting their credit models in creditor friendly ways. I can’t give you an estimate on the number of loans originated where the credit scores were based on an antiquated FICO model. Back in 1999 I was fighting tooth and nail with wholesale lenders as to their credit scores differed significantly from reports I pulled from my credit vendor. I quickly learned lenders preferred using older credit models and they resulted in lower credit scores, therefore they justified higher interest rates and consequently they were able to generate higher loan fees and higher premiums yields when the loan pools were sold in the secondary market.

I shortly (2 months) worked for a company when I first started in the mortgage business (a large national firm), which had developed a software application that would essentially take any loan and compute the loan fees applicable to a Section 32 loan. Then it would adjust the fees downward to display on the estimated HUD1 such that they were slightly below the Section 32 triggers. Clearly, predatory lending at its finest! We were selling high rate loans with exorbitant fees to desperate borrowers who had experienced life issues that required an influx of cash with severely damaged credit.

There is a lot of history that MUST be understood before one can just spew words or wisdom as to how we reached the current state of affairs. It started with the deregulation of financial institutions under the Regan Administration and the weak oversight provided to the activities of these lending institutions. Can we say Savings & Loan crisis? Then to light the match, you had a bunch of individuals to come into the mortgage finance business with neither training nor experience, with their only goal being to make a quick buck! Pair that combination with homeowners who were gullible for what sounded good and what provided a momentary relief from their financial pains. You get sick and tired of collectors calling you daily to make delinquent payments when your money is funny and your change is strange.

No COST, No FEES! Complete joke, the costs and fees are bundled into the loan and rate such that the lender take care of the charge on behalf of the borrower in exchange for accepting a much higher interest rate. Look at your HUD1 and look for entries that indicate Paid outside of closing or (POC). Consumers must understand and realize there are no FREE lunches and if it sounds too good, it probable is. Raise your hands! How many loan officers have originated loans that the exclusive benefits were for the lender and not the borrower? Yeah, the borrower got K cash-out of the loan but it cost him/her k in equity to do the deal. Sounds quite expensive to me!

Borrower’s beware, read and understand the fine print! Don’t take the word of a commission grabbing loan officer, but seek to identify responsible trusted professionals who have your best interest as they advise you. Also remember, your home is not your personal credit card to be used to buy toys or go on extravagant vacations! That’s marketing that make those claims and not Money 101. Marketing will keep you broke, with bad credit and a borrower instead of a lender; Money 101 will make you the lender one day and not a borrower for life.

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Guarantee a Smooth Closing on Your Next Mortgage

March 12th, 2011 Comments off

In this article I am going to draw on my experience as mortgage banker to outline some of the most common ways that you can guarantee a smooth closing on your next mortgage.   I am going to define “smooth” as being a more or less stress free transaction that closes on or before that contractual date as stated on your purchase contract.  If you think of you new loan as a production process that is to say material is required to produce an end product with the end product being your loan, then you need to understand the bottlenecks that can slow the production process down.   In what follows, I am going to explore what I consider to be the two most important relationships that if managed correctly, will ensure the best closing experience.

The first and likely most important part of the loan production process is the relationship between you, the mortgage bank and the flow documentation to and from.  If this is the first time that you have ever purchased a new home the list of documentation that the bank requires will seem daunting.  Mostly because these are items that you probably don’t keep in one place or may not have readily available.   They may be items that you have even lost or misplaced such as a social security card.  Or you may shred your recent bank and or your quarterly 401(k) statements.   The single best thing you can do for yourself when you receive the list of required documentation is to immediately start working on it.  If there are items that you do not have, put a lot of effort into determining how you can get them.  Also, read very carefully what the bank is asking for.  A common mistake will be to send in the first page of your bank statement when you’re being asked for all the pages (even the pages that may be blank).  The last recommendation that I will make on document flow is to make sure that you send in the documentation together as one package and not piecemeal.  Following this strategy will greatly enhance the speed of the loan underwriting process and hence the loan closing. 

The second relationship that I want to focus on is that which lies between the mortgage bank and the title company where the actual loan will be closed.  If the bank does not have a strong relationship with the chosen title company I can assure you that this can result in having a very bad day.  In general, the title company has the fiduciary responsibility to ensure that your transaction is insurable. Furthermore, the title company has the responsibility of generating your HUD1. The HUD1 is basically the final document that outlines in dollars and cents how much money is going where and to whom.  To put it lightly, there is a mountain of communication that goes back and forth between the bank and the title company. To further the stress the process, all of the communication typically happens right before you are expected to close and this is true with all mortgage transactions.  In order to make sure that your lender has a relationship with the title company it is actually best to ask your lender what title company they recommend and then before you sign the purchase contract make it understood to your agent and the sellers agent that this is the title company that  you need to close at.   There are some instances where a builder (new construction) will require you to close at their chosen title company in order to get the credit they are offering but in most cases if you ask, you should be ok. 

Andrew Steinbrecher is a graduate of Boston University’s School of Management having earned a BSBA concentrating in Finance and Economics. Andrew is currently employed as a Mortgage Banker with K&G Capital Mortgage. For more information please feel free to contact me http://houstonmortgagenow.com/ or read more at http://houstonmortgagenow.com/blog/


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How to automatically calculate tax in the hud1 for excel software

March 11th, 2011 Comments off

hud1forexcel.com presents how to use the HUD1 for Excel software to automatically calculate property taxes.
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How to review title commitments and HUD1 settlement statements

March 9th, 2011 Comments off

How to review title commitments and HUD1 settlement statements
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HUD1 Review for Montgomery County, Maryland

March 8th, 2011 2 comments

Review of HUD1 and closing costs for a home purchase in Montgomery County, Maryland
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Hud-1 statement forms, Hud 1 settlement statement, Hud1 …

March 8th, 2011 Comments off

www.Hud1Generator.com – Hud-1 statement forms, Hud 1 settlement statement, Hud1 software.

www.sreccoaching.com, Short Sale Investing HUD1 Seller Concessions. Josh Cantwell from Strategic Real Estate Coach trains coaching students on how to apply seller concessions to the HUD1.
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Ask the Expert: What is a HUD1 Settlement?-Seattle RealEstate-Seattle Homes-Seattle Realtor

March 8th, 2011 Comments off

Ask the Expert: Denise Eider- What is a HUD1 Settlement?-Seattle RealEstate-Seattle Homes-Seattle Realtor www.ThachRealEstateGroup.com

www.hud1generator.com – Hud-1 software, easily create a Hud1 settlement statement for your real estate closings, on your computer.
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Padding a Short Sale Hud1

March 8th, 2011 Comments off

 

On this week’s PreforeclosureDailyGrind.com’s “Tip of the Week” we uncover why it is an absolute must to add extra fees and costs on your negotiating HUD1 Settlement Statement! This is extremely important especially since short sales can take an awfully long time to complete, which leaves more opportunities for extra costs and liens to both accrue and pop up at the last minute! Listen in as we cover this fact and also the new closing process requirements on the Equator System that must be followed or they will close your file, an important fact about the difference between HFC (Household Finance Corporation) judgment liens vs. HFC mortgage loans and how they approach reviewing a short payoff. Whether or not HFC will settle their debt in full, how end buyers’ lenders are now requiring inspection reports, the newest and most profitable short sale niche to get into and why, and more.
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