This program has been around for a long time, but FHA has added some incentives.
The Federal Housing Administration has updated its guidance for its long-running REO sales program that provides incentives for policeman, firefighters and teachers to purchase FHA-owned homes in designated revitalization areas.
The Department of Housing and Urban Development will sell FHA properties to municipal employees at 50% of the appraised value provided they agree to fix up and live in the home for at least three years.
The new mortgagee letter notes that eligible buyers can take out an FHA-insured mortgage with a $100 downpayment and
“you may finance closing costs,” according to mortgagee letter 2013-20.
“The mortgagee letter provides clarification that seemed to be needed based on input from the industry, and gives us an opportunity to remind lenders of the basic program requirements,” a HUD spokesman said.
An eligible buyer can also get an FHA 203(k) mortgage that provides financing for the purchase and renovation of the property. Participants in the “Good Neighbor Next Door Sales Program” can also take out conventional or VA financing.
However, the borrower earns the 50% discount by living in the house for three years.
If the property has an appraised value of $100,000, the borrower must take out a second mortgage and a note on the
discounted amount, which is $50,000 in this example.
The mortgagee letter contains the note and second mortgages that the borrower must sign.
No interest or payments are required on this "silent second" mortgage if the borrower fulfills the obligation to live
in the home. However, they will be required to pay a pro-rata portion of the discount to HUD if they fail to live in the house for three
A tax provision that spares underwater borrowers from being penalized when they agree to a short sale is due to expire at the end of this year. But two senators want to extend the Mortgage Forgiveness Tax Relief Act through 2015.
Senators Debbie Stabenow, D-Mich., and Dean Heller, R-Nev., introduced the extension bill Wednesday.
“It is bad enough that so many families are faced with mortgages that now exceed the value of their home. But
to add insult to injury, without this bipartisan bill, the IRS would once again require these families to pay hundreds or thousands of dollars in additional income tax when they sell or refinance their home. That’s just wrong,” Sen.
Congress has provided this tax relief for underwater homeowners since 2008.
If it isn’t extended, more distressed borrowers will choose do go through foreclosure as opposed to a short sale or
The Hope Now servicer alliance recently reported that 83,400 short sales were completed in the first quarter.
“If Congress does not act this year, then thousands of Nevadans who are underwater in their homes will be forced to
pay a tax at a time when what they need is some relief,” Sen. Heller said. “This legislation is a common sense approach that will prevent Nevadans from being
taxed on income they never
This is a re-blog. It was written by Dan Danner, Published June 17, 2013 |
During National Small Business Week, politicians and bureaucrats give a lot of lip service to small business. But you might wonder what the small-business community itself might say if they themselves had the podium this week.
Here’s what I think they would say:
I’m a risk taker — but my risks are purposeful.
I’m different from a lot of folks, because I take the risks and I accept the consequences. Scientists who study risk-takers
include “people who start a business” in a category that includes mountain climbers, Navy SEALs and explorers. We aren’t adrenaline junkies, but we’re brave enough to risk everything we own to start a business that we think will serve our community and allow us to be our own boss.
I work seven days a week.
There is no such thing as a day off for a small business owner. Especially when the business is really small — i.e. just a few or no employees. If we want to take a day off or go on vacation, the business itself must temporarily close, and that can be more costly than we can afford.
My employees are my family.
There are an estimated 2.5 million true “family businesses” in the United States. That estimate includes all employing
businesses that have two or more family members as owners, and two or more adult family members who actively participate as manager, employee, or as-needed volunteer.
As for the non-blood relatives who work for me? I’ll put it this way: I know the names of my employees’ spouses and kids. I care about their lives. It’s personal.
When money is tight, I get paid last; employee payroll comes first.
Don’t ever assume that a business owner is “rich.” You may be talking to someone who hasn’t cut herself a paycheck in
months because that’s what has to be done to make sure employees get paid.
You call it ‘income;’ I call it ‘cash flow.’
Yes, small-business owners pay their taxes like individuals (versus like big corporations who get a lot of tax breaks), but
there is a big difference between our business income and your paycheck. Our income feeds our families, yes, but it also needs to be managed carefully for those times when sales are slow, the economy is dragging, or to re-invest in the
business and create new jobs.
My business is the future of my family
My business is my retirement and it is my legacy to my kids; I hope to pass it on to them.
I create about two-thirds of net new jobs, and more…
Historically, small firms create the lion’s share of net new jobs in the U.S. Collectively, they are responsible for almost half
of the non-farm GDP and employ nearly half of the private-sector workforce. All of this means I should be more than just a talking point, but politicians can make me sound more like a message and less like the economic powerhouse that I am.
I’m an innovator.
According to the Small Business Administration’s Office of Advocacy, of high patenting firms (15 or more in a 4-year period), small businesses produce 16 times more patents per employee than large patenting firms.
I’m a philanthropist.
In any given year, over ninety percent of small employers contribute to their community through volunteering, in-kind
contributions, and/or direct cash donations. I give to the Little League, buy uniforms for the high school band and advertise in the yearbook every year.
I’m a good neighbor.
According to Gallup, only the U.S. military outranks small business when it comes to groups of people they trust Congress,
for example, is in last place on that list).
The cost of health insurance is crushing me.
Buying health insurance for myself and my employees has been difficult, literally, for decades. Obamacare promises to make the cost much, much higher. When I see premium quotes these days, I’m beyond saying “uncle!” and feeling more like saying “I quit!” Fortunately, it’s not in my nature to quit.
I love what I do and I wouldn’t have it any other way.
Being my own boss, doing it the way I want to, providing jobs and contributing to my community…this the very definition of freedom, and it is the American dream.
Is it hard work? You bet it is. But I love it.
Once you get to know the people behind the small businesses in your community, you’ve taken the first step toward supporting these brave men and women.
Dan Danner is president and CEO of the National Federation of Independent Business (NFIB).
Now if you can believe all the other past mystery happenings of Bank of AMERICA losing hundreds of millions of dollars without a full explanation "Where did all that money really go?", then this should be easy. How could a prestigious firm with the name of AMERICA in its title squeeze homeowners out of the last few nickels in their pockets? Wasn't their tax dollars from the bank bailout sufficient for Bank of AMERICA? Here's the story we are hearing.
Former employees of Bank of AMERICA have claimed the bank routinely stalled the application process for the government’s Home Affordable Modification Program (HAMP).
Several former Bank of America employees in customer service positions offered declarations in the case – Kamie Kahlko v. Bank of America – suggesting the bank was more interested in delaying HAMP applications and eventually steering
troubled borrowers into solutions or situations that were more profitable for the bank.
The employee statements, filed in federal court in Boston as part of a multi-state class action, also pointed to the bank for encouraging the wrongful informing of homeowners about the status of documents already on file.
In several of the depositions, the former employees told the servicer routinely stalled and failed to timely process documents associated with the HAMP loan modification requests.
One woman working as a customer service representative said she "was instructed to inform every homeowner who called in that their file was under review – even when the computer system showed that the file had not been accessed in months or when the homeowner had already been rejected for a loan modification."
Bank of AMERICA has not had a chance to respond in court records but is expected to soon, according to reports. .
CONSTANCE GUSTKE, BANKRATE.COM
Did you know banks rate 3rd in the number of consumer complaints in relationship to all other types of businesses out there. Third right now and the way they are creating all types of fees I am sure they will succeed at being number ONE. Since we all need to have some type of banking system in our lives it's really time to look at a credit union if you haven't done so already. Credit unions come in all stripes and colors. Currently, there are 7,200 credit unions in the U.S., according to the Credit Union National Association. And not all of them are just community-related.
Your church, university or even your military branch may offer its own credit union with sweet deals and special perks, such as a no-minimum checking account that also pays interest. And that's on top of the better loan rates and fewer bank fees offered by credit unions nationwide, says Bill Cheney, CEO of CUNA. On average, a family saved about $130 last year by using credit unions rather than banks, he says.
"There's a credit union for everyone," Cheney says. "You just have to find it." To see if your university, church or other affiliate has a credit union, visit aSmarterChoice.org. Before plunking down your money, make sure the credit union's deposits are insured by the National Credit Union Administration.
As you research credit unions as a banking alternative, check out these five types of credit unions worth considering.
Tap your alma mater
Are you a university alumnus? Then chances are good that your university offers a credit union open to its alumni, faculty, students and even nearby residents. At the University of Southern California Credit Union in Los Angeles, students,
alumni and staff can use the credit union's three on-campus branches. "Students come here to establish credit," says Gary Perez, CEO of USC Credit Union. "We offer free unlimited checking and premium points on deposits."
Other USC student services include: financial workshops, student loans and account packages. Los Angeles residents are also welcome. And the USC credit union serves University of Maine students, faculty, employees and some local residents. It even offers a "Tunes+" checking account, with which you can earn credits for free iTunes downloads.
Credit unions in the community
Community development financial institutions, or CDFIs, are aimed at low- to moderate-income people. Many
of these credit unions are interested in economic justice, says Pamela Owens, vice president of programs for the National Federation of Community Development Credit Unions. Their designation allows them to apply for special government
grants to open multiple branches in hard-hit communities, she says. They can offer affordable mortgages or special, matching savings accounts. For example, at Alternatives Federal Credit Union in Ithaca, N.Y., a member can get
free tax preparation and a seven-week financial education course. The credit union has offered savings accounts that members can open with a $5 minimum deposit. The individual development accounts also match your savings deposits
when you're working toward a long-term goal, such as owning a home or opening a business.
The Lower East Side People's Federal Credit Union in New York also offers free tax preparation, financial counseling and has offered a savings account that could be opened with just $30. "These credit unions are more apt to work with people, such as helping you with credit repair so you can raise your score," Owens says.
By Minda Zetlin
Losing your job and emptying your bank account won't directly affect your credit score. Neither will refusing to pay your rent. In fact, you could be in prison facing murder charges, but as long as your bills were paid on time, your credit score wouldn't suffer a bit.
Of course, it's always best to pay all your bills on time (and stay out of trouble with the law). Nevertheless, there are many things that you might think would affect your credit score but don't. For example, some quick thinking can prevent a late payment from lowering your score. Here's a closer look at six items that -- perhaps surprisingly -- won't harm your credit score:
Changes to your income or assets.
"People get concerned that if they are laid off or get part-time work, that will affect their credit score, and it doesn't, as long as they continue to pay their bills," says Becky Walzak, president of RJB Walzak Consulting, which assists
financial institutions with risk management, including assessing the creditworthiness of loan applicants. Of course, losing your job can affect your ability to qualify for new credit as financial institutions review income and employment as well as credit scores. But receiving unemployment or even public assistance will not affect your credit score.
Not paying your rent.
Let's say you're withholding your rent because you're in a dispute with your landlord, or you've broken a lease. "That doesn't show up on your credit score unless your landlord takes you to court and a judgment is entered," says Kelley
Long, certified public accountant and a member of the American Institute of CPAs' Financial Literacy Commission. However, since landlords typically ask for references from prospective tenants, it may affect your ability to rent another place in the future. In fact, legal trouble of any sort will not affect your credit score, as long as you continue to pay any debts you've incurred.
Late payment of taxes -- up to a point.
"Paying your property taxes late will show up on your credit score if your county puts a lien on your home," Long says. Depending on your county's policies and practices, though, that will probably take a while. Likewise, problems with
the Internal Revenue Service won't immediately show up on your credit score. "If you don't pay your taxes and then enter an agreement with the IRS, that goes on your report as another loan," she says.
Late payments to small vendors who don't report to the credit bureaus.
In order for a debt to count toward your credit score, it needs to be reported to one of the big three credit bureaus: TransUnion, Experian or Equifax. "Small vendors typically don't report to credit bureaus, and some large companies don't
either," Walzak says. Once a vendor sends your account to a collections agency, however, it typically will be reported to the credit bureaus, but since collections agencies only pay a portion of what they collect to their clients, most small vendors won't take this step in a hurry.
Anything your creditor agrees not to report.
There's another reason creditors may not report your unpaid debt to a credit bureau: Because you asked them not to.
"Often, with mortgages, people work out modifications," Walzak says. "Then people think, 'I've got some debt relief and my car is shot,' so they go apply for a car loan and they're surprised to learn that their mortgage bank is reporting them delinquent. But it says in the mortgage agreement that if you pay anything less than the amount owed, you will be considered delinquent. So that's a question to ask when you're talking to a bank when reducing your debt or modifying your loan: 'Will you report me as delinquent?'"
People get concerned that if they are laid off or get part-time work, that will affect their credit score, and it doesn't, as long as they continue to pay their bills.
And, she says, you can ask a credit card company not to report you, depending on the circumstances. "If you accidentally don't send a payment, or send it late one time, you should call the credit card company, let them know, and ask them not to report it. A lot of times they won't even mark it as late. What really hurts is paying late over and over."
Not carrying a balance.
"The question I get most often is, 'What balance do I need to carry on my credit card?'" Long says. "You don't have to carry a balance to show good credit." The confusion arises, she says, because many people understand that if they have a
credit card but never use it, it won't improve their credit score. That's because a credit score is supposed to show your ability to repay debt. You can't demonstrate your ability to repay debt if you never have any to repay. But using a credit card and paying it off each month is a great way to do this.
On the other hand, you do risk hurting your credit score if you run up high credit card balances, even if you pay them in full each month -- a strategy many people adopt in order to capture credit card rewards. Since high utilization (using most or all of your available credit) negatively affects your score, it can have a negative impact if the credit card company happens to report to the credit card bureaus on a day when your balance is high.
If you still want to chase those rewards points, though, there are strategies for avoiding this effect. "I use American
Express to pay for everything and then I pay it off," Walzak says. "The closing date is the 27th of the month, and they typically report to the credit bureaus on the first of the month. So I make sure to get my payment in between the 27th and the 30th."
Remember that you don't actually have to wait till the closing date to make a payment, says Anthony Sprauve, director of communications for MyFico.com. "I use a credit card to make most purchases so as to accumulate airline miles," he says. "But I make multiple payments throughout the month."
Whatever your approach, keep in mind that a credit score is only one piece of your financial picture, and that any prospective creditor will consider many other factors, Walzak says. Someone with a less-than-perfect credit score who has
extenuating circumstances may still get credit, while someone with a good credit score but a bad financial picture may not. "I've seen so many people with good credit scores and then I look at the amount of debt they have and I think: 'These people can't manage their money,'" she says.
by Kelli Rogers
Both Bank of America and Fannie Mae had to fork out to meet a conciliation agreement with HUD.
The agreement settles allegations that the lender and Fannie Mae violated the Fair Housing Act
by denying a disabled borrower’s loan modification application.
“People with disabilities should not have to answer unnecessary questions about the nature of their
disability when seeking a loan modification,” said Bryan Greene, HUD General Deputy Assistant Secretary
for Fair Housing and Equal Opportunity. “HUD will continue to take action against lenders that subject
persons with disabilities to discriminatory practices.”
According to the complaint, a San Bruno, Calif. woman applied for a loan modification at Bank of America
to make it easier for her to pay her mortgage after her disability caused her to miss several months of work,
citing physical “hardship.”
Upon request of documentation of her medical condition, the woman provided the loan officer with a letter
from her physician, a current medical bill, and a letter from her employer certifying her approved leave of
absence due to her disability. But the bank denied her application, reportedly telling her that she had not
provided sufficient information about the nature of her disability. Fannie Mae reportedly stated that her
doctor’s letters and other documentation were insufficient to show that she was permanently disabled.
Under the terms of the agreement, Bank of America will pay the woman $22,449, which includes $19,349
to cover the approximate closing costs on a refinance loan, and agreed to follow HAMP and Fannie Mae’s
servicing guidelines. Bank of America will also provide fair lending training to its newly-hired employees.
In addition, Fannie Mae will pay the woman $3,400.
Underwriting from one lender to another varies slightly, but these are the basic
guidelines they use and a good example to direct your attention before you pay for a
mortgage credit report.
Start with the basics:
Review the applicant’s name, address, social security number, and date of birth.
What does the applicant’s employment information reveal about his or her earning
potential? A stable employment history indicates that the applicant is likely to
earn the funds necessary to repay the loan. Mismatches of the applicant’s basic
information with other documents or a former address close to the new property
are red flags.
An applicant’s housing obligation payment history is an indicator of how he or
she will handle mortgage payments in the future. Look out for late rent or
mortgage payments. Were these exceptions, or did the applicant frequently make
late payments? To qualify for a loan, applicants should not have more than one
late housing obligation payment in the past 12 months, but some lenders do not
make an exception so you should ask the loan officer before making an
“The lender must verify and document the previous 12 months’
housing history even if the borrower states he/she was living
Beaware that private mortgages and other housing payments may not show on the
credit report. Always ask for cancelled rent checks, rental ledgers, VORs, VOMs,
copies of money orders, and the like, to ensure good insight into an applicant’s
housing obligation payment history.
Debt-to-income ratio/amount owed vs. credit available for FHA
An aggressive lender accepts ratios between 31 percent (front end) and 43
percent (back end). Higher ratios need AUS (automated underwriting systems)
approval. When applying for a loan installment debt with less than ten
payments remaining may be excluded from the ratio, as long as the monthly
payment does not negatively impact the applicant’s ability to make mortgage
payments on time once the loan closes. In addition, an applicant with
installment debt must have at least three months worth of liquid funds. Federal
student loans may be excluded from the ratio if it they are deferred over 12
months after closing.
Does the applicant have a history long enough to allow for predictions about his
or her ability to repay a loan? How frequent are late payments? How high is the
past due amount? Are derogatory items current, or are they from the past? Are
there are signs of improvement in the applicant’s credit history? Take all this
into consideration when evaluating the applicant’s credit history.
“Generally, a borrower is considered to have an acceptable credit history if he/she does not
have late housing or installment debt payments, unless there is major derogatory
credit on his/her revolving accounts.”
Courthouse records section/public records:
Red flag items like bankruptcies and bank liens are listed in this section. To
qualify for a loan, all judgments must be either satisfied or placed into an
agreeable repayment plan. Applicants must provide evidence that payments were
made in accordance with the agreement for a minimum of three months. Mortgage
foreclosures may be acceptable if they happened at least three years ago. The
minimum discharge for bankruptcies is two years. Under certain circumstances,
the minimum requirement for foreclosures and bankruptcies can be reduced, as
stated in the HUD handbook 4155.1.
Instead of solely focusing on a client’s credit score rating,
some lenders look at the bigger picture when assessing the risk of a loan.
Companies that retain servicing rights, have the flexibility to evaluate and
identify credit-worthy borrowers who are not readily apparent to large
Obtaining credit for a business with no personal credit check and no personal guaranty is very appealing for any business owner. One might say this is the holy grail of owning a business, being able to obtain massive amount of funding using the business itself as collateral.
There are many steps to building an exceptional business credit profile. Each of these steps is essential in obtaining business credit with no personal guaranty. Here are some of the steps we help our clients take when building business credit...
1. Make sure they start by incorporating their business and make sure they obtain a Federal Tax ID#.
2. Insure they setup a business bank account and that the business name on their corporation papers is the same as on their business bank account.
3. Insure they have a business land-line number that is listed with 411.
4. Insure they have the proper businesses licenses for their business that they need. Have them set up a complete credit profile with Dun and Bradstreet
6. Make sure they pay business bills that report to the business credit reporting agencies ahead of the due date. The earlier they are paid, the higher their business credit scores will be.
7. Clients need to build a solid payment history with many accounts being paid as-agreed or early each month. Building excellent business scores means they have many accounts reporting as paid-as-agreed. Then we have them keep using their credit to build a solid profile.
8. Insure they monitor their business credit file. We have them keep an eye on their scores and the accounts that are reporting.
9. We have them establish a minimum 'low 5' bank rating by establishing and using their bank credit.
10. Have clients open a small business credit line that reports on their business credit profile. Credit lines have high limits and reflect positively on their business reports.
11. Insure they establish a diversity of credit using multiple store and Visa, MasterCard, and Amex accounts.
12. Insure they establish a well written business plan as many lenders will want to see this to approve them for funding. (Business plans are required when our clients begin to seek funding for projects in excess of $200,000 or more).
When our clients work with us we do all these steps for them and more. This way our clients get funding and business credit and grow their business.
Here's an article I copied from Mortgage News that I believe is misleading to the average reader.
The biggest year-over-year home price increase occurred in six years as values rose 12.1% nationwide in April, according to CoreLogic.
Meanwhile, home prices including distressed sales were up 3.2% on a monthly basis. This represents the 14th straight month where values were higher compared to the previous month.
Home price appreciation was greatest in Nevada, up 24.6% in April from March, the Irvine, Calif.-based data
provider’s home price index report revealed. Other states that had notable increases in home values during this time period were California (19.4%), Arizona (17.3%), Hawaii (17%) and Oregon (15.5%).
CoreLogic said Mississippi and Alabama were the only two states that posted month-over-month home price depreciation,
as they saw values drop by 1.7% and 1.6%, respectively.
However, all 50 states registered home price gains on a yearly basis. Anand Nallathambi, president and CEO of
CoreLogic, said he expects this trend to continue “bolstered by tight supplies and pent-up buyer demand.”
Of the top 100 core based statistical areas measured by population, 94 showed year-over-year increases in April, led
by Los Angeles and Phoenix as both were up 19.2%.
“Increasing demand for new and existing homes, coupled with low inventory, has created a virtuous cycle for
price gains, most clearly seen in the Western states with year-over-year gains of 20% or more,” said Mark Fleming, chief economist for CoreLogic.
So that is the article, but I feel what is omitted is the fact Banks have stepped up their foreclosure processes which should result in more available inventory, but Wall Street investors have been in a land grab for the past year. The intent of the large investment trust is to keep these homes as rentals for the near foreseeable future. With less inventory home prices will slowly increase, rents would continue to rise and then what?
Are we looking at a major selloff down the road because too many properties are in the control of these Wall Street entities? Time will tell, but history has told us before how large money can control the market to their advantage.
Trevana Properties is a placement company working with a variety of hedge funds, REIT's, commercial banks, specialty boutique lenders, private investors and other funding sources not widely known to the general public.