The House Financial Services Committee passed a bill that would create $300 Billion in aid to homeowners facing foreclosure.
FHA Secure – is a program currently in existence to aid borrowers facing foreclosure, but it is strictly limited to homeowners who became delinquent on either their mortgage or other debt “after” an adjustable rate loan reset to a higher payment. These same borrowers also have had to have sufficient equity in the home and qualify for the payments on paper. To day this much publicized program has only helped about 2,000 people. Many do not fit into that tight box.
The new legislation is allowing distressed borrowers, to get a refinance of up to 90% of an appraised value of the property, as long as the borrower can qualify for the new lower payment. The current mortgage holder must agree to accept a “short pay” and forgive the difference between what is owed and what the new loan will give them in a payoff.
Although taking the loss on the payoff is not great for the current lender, it may be preferable than actually taking the property back in foreclosure. With the extremely high levels of bank owned inventory, lenders are considering just taking the loss and moving on.
This is a wonderful opportunity for borrowers who can qualify for this program. Most would be glad to give a little piece back to uncle sam when they payoff this new reduced loan. The repayment gets explained like this according to Mortgage News Daily:
“When the borrower sells or refinances the home the borrower will pay from any profits either an exit fee equal to 3 percent of the original loan amount or a declining percentage of any net proceeds attributable to home appreciation (from 100 percent in year one to 50 percent in years four and beyond,) whichever is larger. The government, therefore, would only be at risk if the borrower defaults on the new loan in which case he would lose the house.”
If you feel this could be a viable option for you or someone you know, do not hesitate to contact us for assistance in the new financing. We would be happy to help.
Craig Garcia is a Managing Member of Bridge Capital Lending, LLC. A mortgage and investment firm specializing in Investor Loans that Use Private Lenders that fund Hard Money Loans. Craig can be reached at 877-8GO-GREEN or 954-217-9518. Gene Schroeder and Angelo D’Alessandro are the founders and owners of Bank On It! – A Real Estate Investment Firm that sells Investment Properties at Wholesale Prices. Gene and Angelo can be reached at 954-515-0030. The three have also formed a service to connect prospective borrowers to a network of Local Mortgage Brokers called 888-2Lend-Fast.
October 23, 2008 at 10:05 pm
I don’t understand the exit fee. Borrower owes 297K, value at 250K. LTV at 110% needs to refi as the payment increases by $900/month. Hopw does a refinance short pay work?