by: Michael Creditfirm.
Looking to Buy a house but can’t prove income?
A few years ago, your loan officer would have steered you toward a “no doc” or “low doc” loan where you would have to provide limited to no information about your income. But those loans are pretty much dead. Or are they?
Joe Kelly, president of ArcLoan.com, a national mortgage firm, says that no doc loans may be available from “portfolio lenders,” such as credit unions or community banks.
A Portfolio Lender is a company that not only originates mortgage loans, but also holds a portfolio of their loans instead of selling them off in the secondary market.
Portfolio Lender requirements for a no doc loan:
- Very high credit scores (720 and up)
- No Derogatory marks on your Credit Report
- Low LTV (loan-to-value)
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by: Michael Creditfirm.
The following is a list of the limits, if any, that states have imposed on deficiency judgments after a foreclosure. Not every state limits the amount of such judgments, while other states do not allow them at all. Any limitations on suing the borrowers after foreclosure for the deficiency balance and related issues can be found by searching the statutes and codes of the state.
Alabama: Deficiency judgments are possible. No limits.
Alaska: Deficiency judgments are not allowed if the foreclosure is by power of sale (nonjudicial foreclosure).
Arizona: No deficiency judgment on a purchase money mortgage for one- or two-family properties on less than two and a half acres. A deficiency may be allowed if a court decides the owners committed waste.
Arkansas: Lawsuit for deficiency must be brought within one year from the date of the public sale. Deficiency limited to amount of indebtedness less fair market value; or deficiency limited to amount of indebtedness less sales price of home.
California: No deficiency allowed under judicial foreclosure unless there is no redemption period, and no deficiencies are allowed under nonjudicial foreclosure. Deficiencies that are allowed are limited by fair market value of property.
Colorado: Deficiency is allowed, but homeowners may claim the house sold for less than the fair market value as a defense against this.
Connecticut: Deficiencies are allowed if they are pursued within thirty days of the end of the redemption period.
Delaware: Deficiency judgment allowed if lawsuit filed on note. Not allowed in judicial foreclosure proceedings.
District of Columbia: Deficiency judgments are allowed. If one is sought under judicial foreclosure proceedings, it may be entered in the foreclosure lawsuit.
Florida: Homeowners entitled to jury trial in deficiency case. Bank must have in-hand service on borrowers to include deficiency action in the foreclosure lawsuit.
Georgia: Sale will not be confirmed unless court is satisfied the sales price was for the true market value of the house. No deficiency is allowed unless the bank makes a request to the court and the sale is confirmed.
Hawaii: Allowed in some types of foreclosure, not allowed in others.
Idaho: Lawsuit for deficiency must be brought within 3 months of the public auction. Deficiency limited by fair market value as of the date of the sale.
Illinois: Deficiency judgments are allowed.
Indiana: If there is an agreement and an applicable waiting period is not waived, a deficiency judgment may be obtained.
Iowa: Deficiency not allowed if nonjudicial foreclosure process is used. Otherwise, deficiencies may be limited by statute.
Kansas: Deficiencies are allowed, but the court can refuse to allow confirmation of the sale or set an upset price.
Kentucky: Deficiency allowed if homeowners fail to answer foreclosure lawsuit or if they are served with the paperwork in-hand.
Louisiana: Deficiency only allowed in ordinary proceeding or executory proceeding if property has had an appraisal done under the state regulations.
Maine: Deficiencies are limited to an amount set on the date of the sale. If the bank that owns the mortgage is the high bidder at auction, any deficiency is also limited to the fair market value of the property.
Maryland: Report of sale and audit are required, but a deficiency can be obtained by filing a motion in court after the sale has been conducted.
Massachusetts: If a deficiency is to be pursued, the bank must include a notice of intent to seek deficiency with the required Notice of Sale. This Notice of Sale must be served on the borrowers at least 21 days prior to the actual auction.
Michigan: If the mortgagee bank purchases the property at auction, homeowners may use as a defense that the sale price was for less than the fair market value of the property.
Minnesota: Deficiency allowed, but limited by fair market value determined through a jury trial. If nonjudicial foreclosure is used and the six-month redemption period is available, no deficiency is allowed.
Mississippi: Judgment allowed if suit filed within one year of the auction. If the mortgagee bank was the winner at auction, deficiency may be denied based on unreasonably low sales price.
Missouri: Deficiency judgments allowed.
Montana: Allowed on a purchase money mortgage only under judicial foreclosure procedures.
Nebraska: Suit must be brought within 3 months of auction date. A deficiency is limited to the lessor of the difference between the amount owed to the bank and the fair market value at the time of the sale, or the difference between the amount owed and the sales price at auction.
Nevada: Allowed, but limited to the lessor of the following: the difference between the debt and the fair market value; or the difference between the debt and the sales price at auction, including interest from the date of sale.
New Hampshire: Allowed if action is brought in court after sale.
New Jersey: Judgment allowed only on the note after foreclosure, but no personal deficiency judgment allowed. Deficiency is limited by the fair market value of the property, and action must be brought into court within 3 months of sale.
New Mexico: Allowed in judicial foreclosure, but property can not be sold for less than 2/3 of its appraised value. In nonjudicial foreclosure, creditor can sue for deficiency within 6 years of sale, unless property was occupied by a low-income household.
New York: Deficiencies limited by fair market value of property, and are only allowed if homeowner was served in-hand or appeared for lawsuit.
North Carolina: May be limited by fair market value in judicial cases. No deficiency allowed in nonjudicial foreclosure of purchase money mortgage.
North Dakota: Deficiencies limited by fair market value or appraised value, but allowed on land of more than 40 acres. Not allowed on residential property of four or fewer units on less 40 acres.
Ohio: Allowed but void after two years after sale date. The property can not be sold for less than 2/3 of its appraised market value.
Oklahoma: Limited by fair market value as of auction date. Objections may be filed to confirmation of sale.
Oregon: Deficiency judgments not allowed on judicial foreclosure proceedings involving residential mortgages, or in nonjudicial foreclosures.
Pennsylvania: Allowed if a separate action is filed in court after auction. If the mortgagee purchases the property at auction, any deficiency is limited by the fair market value.
Rhode Island: Deficiency judgments are allowed.
South Carolina: Homeowners may request court to issue an order of appraisal within 30 days of the auction. If this is done, deficiency is limited by the amount of the debt over the appraised value.
South Dakota: If mortgagee or holder of note purchases the property at auction, any deficiency is limited by the market value. In judicial foreclosure proceedings, a deficiency judgment may be barred. In cases of voluntary foreclosure, no deficiency or surplus is allowed.
Tennessee: Deficiency judgments are allowed.
Texas: Action to pursue a deficiency must be brought into court within two years of auction date. If the borrowers ask the court to determine the fair market value, the deficiency may be limited or offset if the market value is greater than the price obtained at auction.
Utah: Action to pursue deficiency judgment must be made within three months of the sale date. Any judgment is limited to difference between the debt owed, including fees and charges on the account, and the fair market value
Vermont: In judicial foreclosure proceedings, the lender must request deficiency in original complaint and will be limited to the fair market value if the mortgagee is the winner at auction. In strict foreclosure proceedings, a separate judgment must be obtained and is limited by the fair market value.
Virginia: Deficiency judgments are allowed.
Washington: Deficiency judgments are allowed in judicial foreclosure proceedings, but not if nonjudicial foreclosure is pursued.
West Virginia: Deficiency judgments are not allowed if the sales price is less than the amount of the indebtedness.
Wisconsin: Deficiency judgments are allowed if included in the foreclosure action, but court must be satisfied that the house sold for its fair market value. If a lender waives its right to deficiency, the redemption period is shortened.
Wyoming: Deficiency judgments are allowed if the homeowner is obligated by a separate written agreement.
Forward is where the housing recovery appears to be going, though some advances are bigger than others. According to a leading data aggregate, home prices rose in April for the second month in a row, UP 2.2% over March and UP 1.1% versus a year ago. Taking out distressed sales, prices were UP 2.6% for the month and UP 1.9% year over year. These price gains are at a rate not seen since late 2006 and better than 2010, when sales jumped thanks to the federal tax credit.
In April, among the 100 largest metros, only 44 saw price drops year over year, 10 fewer than in March. Even better, 6 of the 10 biggest metros reported home price increases. Analysts noted that home prices are responding to a restricted supply that they think will exist for some time to come. The supply of homes in current inventory is down to 6.5 months, a level we haven’t seen in more than five years!
This is a great time to buy a house, unfortunately, many Americans still don’t qualify for a mortgage due to stringent lending practices and poor credit scores. If you have been denied for a mortgage or wish to increase your credit score to get the best interest rate possible, Sign Up to improve your credit today.
by: Michael Creditfirm.
NEW YORK (AP) — A community bank and 19 ex-employees have been criminally charged with issuing hundreds of millions of dollars in fraudulent mortgages that ended up in unwitting investors’ portfolios, prosecutors said Thursday in announcing a rare indictment of a bank in the mortgage meltdown that rocked the U.S. economy.
Abacus Federal Savings Bank was hit with mortgage fraud, grand larceny and other charges in what Manhattan District Attorney Cyrus R. Vance Jr. called “a systematic scheme to falsify and fabricate mortgage applications” so that unqualified borrowers could get loans. The loans later were sold to mortgage giant Fannie Mae, which repackaged them into securities for investors.
Abacus, a Chinatown-based bank with mainly immigrant customers and branches in New Jersey and Pennsylvania, said it had investigated and reported the problems and would vigorously defend itself.
Vance said most of the mortgages in this case were being paid on schedule. But the allegations reflect the lax lending that convulsed the economy in 2008 as borrowers defaulted and the effects rippled through a financial system that had transformed individual loans into mortgage-backed securities held by countless investors. The crisis spurred multibillion-dollar government bailouts of Fannie Mae, big banks and financial institutions.
“What you’re seeing in the allegations is the norm in ‘liars’ loans,'” a term for the unverified and fraudulent lending at the heart of the meltdown, said William K. Black, a law and economics professor at the University of Missouri-Kansas City.
The crisis has spurred lawsuits and regulatory action against banks; Abacus agreed in February 2011 to enhance training, do a risk assessment and take other steps as part of an agreement with the federal Office of Thrift Supervision, which said the bank’s loan underwriting and documentation practices were inadequate. The agency is now part of the Office of the Comptroller of the Currency.
But criminal cases against banks have been few — a dearth that has prompted commentary and criticism from activists, academics and others.
At Abacus, managers created an environment of doctoring mortgage applications to match Fannie Mae criteria, prosecutors said.
Loan officers coached borrowers — many of whom worked in nail salons, restaurants and other all-cash businesses — on inflating their incomes and job titles and falsifying job-verification forms, prosecutors said.
Loan processors helped out by calculating how much income the borrowers would need to have in order to qualify, and underwriters approved loans they knew were based on phony data, according to prosecutors.
The bank made millions of dollars in fees off the more than 4,000 dubious loans, and the employees did well, too: Some loan officers made as much as $300,000 a year, prosecutors said.
Eight ex-employees already have admitted guilt. Eleven others, including former chief credit officer Yiu Wah Wong and loan origination supervisor Wai Hung “Raymond” Tam, pleaded not guilty Thursday to various charges. The company also entered a not guilty plea.
Wong, 61, “looks forward to the opportunity to clear his name,” said his lawyer, Sanford Talkin. Tam’s lawyer, Thomas C. Rotko, said the 57-year-old maintained his innocence and was looking forward to addressing the charges.
The bank is stable, and depositors’ money isn’t at risk, prosecutors said.
Abacus said it was stunned by the charges because it had investigated the matter, informed Fannie Mae and taken action, including firing some employees. Others resigned.
Neither Fannie Mae nor any borrower was harmed, the bank said, adding that it had eschewed subprime mortgages and other risky lending practices vilified during the financial crisis.
“Our conduct in this regard has been exemplary,” Abacus said in a statement that accused prosecutors of overreaching. The 27-year-old bank, which has about $250 million in assets and 117 full-time employees, also questioned why a community bank is facing charges “when many other banks that contributed to the national economic crisis remain untouched.”
Vance said that while many banks have come under scrutiny from various authorities, prosecutors found in Abacus extensive and powerful proof of a systemic, repeated fraud that rose to the level of crime. The charges entail demonstrating that defendants had criminal intent, made material financial misstatements and other elements.
“We have to deal with each case on the facts that we have them,” Vance said. “The answer to ‘why in this case?’ is: Because it had to be done.”
He declined to say whether his office was investigating other banks.
Via Yahoo Finance
by Neal Frankle
As you probably already know, it can be almost impossible to obtain a bank mortgage with bad credit. If you otherwise can’t get a loan because you have a troubled credit history, one alternative to a traditional bank mortgage is to obtain one from the seller. Seller financing has its benefits, as well as its risks. You also need to know how to find the right seller to meet your needs.
Why sellers might consider financing a mortgage
These days, real estate prices have dropped yet property owners are still having a hard time selling homes. That means more owners are desperate to sell. As a result, more sellers may entertain using this unconventional approach.
Interest rates are also low. This can make seller financing more attractive to property owners, especially those who aren’t reinvesting in more real estate but are looking for income-producing investments. Banks offer investors less than 2% interest. If you come along and offer 4%, that could be engaging for the right seller.
The benefits of seller financing
First, if you have some financial challenges in your history and need to build your credit score, conventional lenders may not be willing to give you a loan. If that’s the case, this may be the only alternative you have to take advantage of the current low real estate prices.
Second, when you get a loan directly from your seller, you save all kinds of fees. These purchases are typically made directly. That means you save on real estate commissions on top of all the loan fees and points you keep. Compared to a conventional purchase, you could be saving tens of thousands of dollars when you consider all the commissions, points and fees.
On top of that, you could possibly arrange a much lower interest rate. For example, if you have impaired credit, you might get a loan from a bank but it might be very expensive. On the other hand, a seller might be persuaded to view your credit history differently and extend a lower rate as a result.
How to find the right seller
To be sure, most people who sell real estate are not in a position to back your loan. And even those who are may need to be persuaded. But you only need to find one seller who is willing.
You are looking for people who are downsizing and those with a ton of equity or better yet, no mortgage at all. Get the word out to friends and family. Spread a wide net. Use your social circles and social media such as Twitter and Facebook to get the word out. Search ads in Craigslist and actually place an ad there and in your local paper. Don’t give up and don’t stop there. Let people in your church, synagogue, or other communities know what you are looking for and ask them to keep their eyes open.
You can even approach real estate agents and brokers. Let them know what you are interested in doing. Speak to many brokers and follow up with them. Ask friends if they know good real estate professionals who either specialize in this or who are seasoned veterans. Realtors who have been active for many years have the greatest chance of knowing clients who might be the perfect match for you.
How to convince a seller to do business with you
As I said, most sellers will be hesitant to carry your loan. That’s because they don’t want to have to foreclose should you be unable to make your payments. And they think you are a greater risk since they know banks won’t grant you a loan.
Your job is to help them overcome their fears. You do this by coming into the deal with a very large down payment. Also, prepare a “resume” of sorts that shows them how stable your income is. Be upfront about credit blemishes and explain what you’ve done to correct your mistakes.
As a last resort, get another person to co-sign the loan. This is certainly far from ideal and it may be difficult. But like finding a seller to finance, remember, you only need to find one person to co-sign in order to make this happen.
Buying a home using seller financing is not without risk. If a bank feels it’s better off not making a loan to you, they might know something you don’t. If you take on a debt that you can’t afford, you’ll end up losing the property, your down payment and your good credit score.
Make sure if you go this route you are sure you know how much house you can afford — then buy a home that is a bit cheaper than that.
Buying a house and having the seller carry your mortgage can be a great way to take advantage of today’s low real estate prices and interest rates. It’s not easy to pull off but it’s well worth it if you have no alternative. And, while difficult, it’s far from impossible if you follow the steps outlined above.