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Principal Reduction Program-Short Pay Refinance-Underwater Mortgage

By FHA Short Refinance- Principle Reduction Mortgages- Underwater Mortgage | Real Estate Pro in Siesta Key, FL
  • FHA Short Refi Guidelines-Underwater Borrowers-New Short Refi Lenders

    Posted Under: Financing, Foreclosure, Property Q&A  |  May 19, 2012 11:18 AM  |  13,332 views  |  No comments

    From the FHA Mortgagee Letter, here are the conditions for the new program:

    1. The homeowner must be in a negative equity position;
    2. The homeowner must be current on the existing mortgage to be refinanced;
    3. The homeowner must occupy the subject property (1-4 units) as their primary residence;
    4. The homeowner must qualify for the new loan under standard FHA underwriting
    requirements and possess a “FICO based” decision credit score greater than or equal to 500;
    5. The existing loan to be refinanced must not be a FHA-insured loan;
    6. The existing first lien holder must write off at least 10 percent of the unpaid principal balance
    7. The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent;
    8. Non-extinguished existing subordinate mortgages must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 percent;
    9. For loans that receive a “refer” risk classification from TOTAL Mortgage Scorecard (TOTAL) and/or are manually underwritten, the homeowner’s total monthly mortgage payment, including the first and any subordinate mortgage(s), cannot be greater than 31 percent of gross monthly income and total debt, including all recurring debts, cannot be greater than 50 percent of gross monthly income;
    10. FHA mortgagees are not permitted to use premium pricing to pay off existing debt obligations to qualify the borrower for the new loan;
    11. FHA mortgagees are not permitted to make mortgage payments on behalf of the borrowers or otherwise bring the existing loan current to make it eligible for FHA insurance; and
    12. The existing loan to be refinanced may not have been brought current by the existing first lien holder, except through an acceptable permanent loan modification as described below.

    Under the initiative, lenders that are willing to work with borrowers in order to reduce principal amounts can refinance these mortgages into FHA mortgages that are insured by the federal government, essentially reducing the lender’s exposure to default in return for writing down the mortgage.  Under this plan, there is some risk for taxpayers, who would be on the hook for any mortgage that defaults (according to Nick Timiraos at the Wall Street Journal, 20 percent of loans modified through the program could ultimately default. 

    Other attempts by the administration to alleviate the ongoing foreclosure problem have fallen short of the mark.  Borrowers are falling out of The Home Affordable Modification Program (HAMP) in droves because they did not qualify for permanent modification for a wide variety of reasons.

    Although there are signs the current foreclosure crisis may be ebbing, many worry that further declines in home values could cause a whole new wave of defaults.  Demand for homes has decreased dramatically since the expiration of the first time homebuyer tax credit, and there is a massive overhang of housing supply on the market.  These conditions, against the backdrop of reduced income due to high unemployment have made conditions ripe for further declines in home values.  Many are estimating that home values have another 5 to 20 percent to fall before they bottom out.  Just over 20 percent of borrowers are underwater on their mortgages. 

    FOR Short Refi Info www.PrudentFundings.com
  • Fannie and Freddie Offering Principal Reduction Starting in California

    Posted Under: Financing in California, Foreclosure in California, Property Q&A in California  |  May 10, 2012 12:55 PM  |  15,041 views  |  No comments

    Fannie, Freddie are set to reduce mortgage balances in California

    The mortgage giants sign on to Keep Your Home California, a $2+-billion foreclosure prevention program, after state drops a requirement that lenders match taxpayer funds used for principal reductions.

    • The participation of Fannie Mae and Freddie Mac could provide a major boost to Keep Your Home California because they own about 62% of outstanding mortgages in the Golden State. Above, Fannie Mae's headquarters in Washington.

    As California pushes to get more homeowners into a $2-billion foreclosure prevention program, some Fannie Mae and Freddie Mac borrowers may see their mortgages shrunk through principal reduction.

    State officials are making a significant change to the Keep Your Home California program. They are dropping a requirement that banks match taxpayers funds when homeowners receive mortgage reductions through the program.

    More Short Refi Info www.PrudentFundings.com
  • Bank of America Offers Principal Reductions to 200,000 Homeowners-MUST READ

    Posted Under: Financing in California, Foreclosure in California, Property Q&A in California  |  May 8, 2012 10:30 AM  |  15,243 views  |  No comments

    Bank of America Offers Principal Reductions to 200,000 Homeowners

    A select group of struggling mortgage borrowers are about to get an offer that sounds too good to be true. Executives at Bank of America say they will begin mailing 200,000 letters offering certain customers mortgage principal reduction.

    INFO for Principal Reduction Short Refinance at www.PrudentFundings.com

    Bank of America flag
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    “If people get these things and toss them, they won’t be eligible,” says Ron Sturzenegger, the Bank of America executive charged with providing solutions to borrowers in need of mortgage assistance.

    But the offer is real, and eligible borrowers could get as much as $150,000 knocked off the balance of their mortgages. It is all part of the $25 billion settlement reached this year between federal and state agencies and the nation’s five largest mortgage servicers over fraudulent foreclosure document processing (so-called “robo-signing”).

    Bank of America in a deal with state attorneys general and the U.S. Department of Justice, committed $11 billion to mortgage principal reduction, but executives say they will go beyond that if enough borrowers respond to their offer. Five thousand borrowers have already received a collective $700 million in principal reduction through a pilot program for those already in a modification negotiation. The 200,000 borrowers being targeted now may have already exhausted modification options or may have yet to contact the lender. 

    Executives say borrowers receiving the letters are eligible, but they still have to prove they qualify. In order to be eligible, a borrower must be 60 days late on the mortgage payment as of Jan. 31, 2012. The borrower has to owe more on the mortgage than the home is currently worth, commonly known as being “underwater” on the mortgage, and the borrower’s loan must either be owned by Bank of America or serviced by Bank of America for an investor who is allowing the modifications.

    In order to qualify for the modification, the borrower must answer the letter with full documentation of income, showing that under the terms of the modification they can still make the monthly payment. A borrower with no income would therefore not qualify. A borrower’s current monthly payment must be  more than 25 percent of gross income, and the borrower must show they are unable to afford that.

    “If you can afford to make your monthly payment and are choosing not to, you will not get this principal modification,” says Sturzenegger.

    If the borrower qualifies, Bank of America will bring the monthly mortgage payment down to 25 percent of the borrower’s gross income. That could mean principal forgiveness well over $100,000, as there is no limit to the amount of the mortgage. If enough borrowers respond, it could cost Bank of America far more than it committed to in the settlement.

    “Yes, we have the capability to go well beyond the $11 billion,” adds Sturzenegger.

    Bank executives say that before choosing which borrowers will get the offer, they performed a net present value test on each loan, making sure that the principal reduction modification would net Bank of America or the investor who owns the loan more than foreclosing on the home. “It has to be fair to the investor as well,” says Sturzenegger.

    Not all of the 200,000 borrowers who receive the letters are expected to respond. Executives say there is a level of fatigue among delinquent borrowers who have already received several notices or who may have gone through a failed modification process already. Some borrowers simply don’t want to stay in their homes, while others may think the offer is a scam.

    “They have been contacted by a lot of other people, and this offer may appear too good to be true,” says Sturzenegger.

    That’s why Bank of America is sending the letters by certified mail and trying to make the language as simple as possible. A sample letter obtained by CNBC shows a bring red box in the top corner labeled, “IMPORTANT” and simple language stating, “Qualifying customers may reduce their monthly payment by an average of 35 percent.”

    Some 6,500 letters should be arriving in mailboxes across the country this week, with a wave of new letters going out every week until the end of the summer, when all 200,000 should have been mailed. Bank of America is staggering the mailings in order to handle the expected response. The bank has staffed up to handle the task, with 50,000 employees manning servicing desks, but the process will clearly take a lot of time. That’s why Bank of America has suspended any foreclosure actions against these 200,000 borrowers until the process is complete. 

    There are currently 5.59 million U.S. loans that are either delinquent or in the foreclosure process, according to Lender Processing Services. Bank of America services one million of those loans, but many of them are owned by Fannie Mae and Freddie Mac. Their regulator, Edward DeMarco of the Federal Housing Finance Agency, has yet to agree to principal reduction in loan modifications, despite harsh criticism from some lawmakers on Capitol Hill and increasing pressure from the White House.

    Info www.PrudentFundigs.com


    Posted Under: Financing in California, Foreclosure in California, Property Q&A in California  |  May 3, 2012 1:20 PM  |  16,484 views  |  No comments

    Get Approved For Principle Reduction FHA Short Pay Refi www.PrudentFundings.com

    Principal Reduction Alternative (PRA)

    HAMP designed a Principal Reduction Alternative (PRA) program to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home.


    You may be eligible for principal reduction alternative program if:

    • Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
    • You owe more than your home is worth.
    • You live in the home carrying the mortgage you want to modify.
    • You obtained your mortgage on or before January 1, 2009.
    • Your mortgage payment is more than 31 percent of your gross (pre-tax) monthly income.
    • You owe up to $729,750 on your 1st mortgage.
    • You have a financial hardship and are either delinquent or in danger of falling behind.
    • You have sufficient, documented income to support the modified payment.
    • 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.

    So who is participating in this program?

    More than 100 HAMP SM-participating servicers are required to evaluate homeowners for principal reduction. Participating servicers are required to develop written standards for PRA application. The largest servicers include Bank of America, CitiMortgage, JP Morgan Chase, and Wells Fargo.
    1. AgFirstFarm Credit Bank
    2. Allstate Mortgage Loans & Investments, Inc.
    3. American Eagle Federal Credit Union
    4. American Finance House LARIBA
    5. American Home Mortgage Servicing, Inc
    6. AMS Servicing, LLC
    7. Aurora Loan Services, LLC
    8. Bank of America, N.A.1
    9. Bank United
    10. Bay Federal Credit Union
    11. BayviewLoan Servicing, LLC
    12. Bramble Savings Bank
    13. Carrington Mortgage Services, LLC
    14. CCO Mortgage
    15. Central Florida Educators Federal Credit Union
    16. CentrueBank
    17. CitiMortgage, Inc.
    18. Citizens 1st National Bank
    19. Citizens Community Bank
    20. Citizens First Wholesale Mortgage Company
    21. Community Bank & Trust Company
    22. Community Credit Union of Florida
    23. CUC Mortgage Corporation
    24. DuPageCredit Union
    25. Eaton National Bank & Trust Co
    26. Farmers State Bank
    27. Fay Servicing, LLC
    28. Fidelity Homestead Savings Bank
    29. First Bank
    30. First Financial Bank, N.A.
    31. First Keystone Bank
    32. First National Bank of Grant Park
    33. First Safety Bank
    34. Franklin Credit Management Corporation
    35. Franklin Savings
    36. Fresno County Federal Credit Union
    37. GFA Federal Credit Union
    38. Glass City Federal Credit Union
    39. GMAC Mortgage, LLC
    40. Golden Plains Credit Union
    41. Grafton Suburban Credit Union
    42. Great Lakes Credit Union
    43. Greater Nevada Mortgage Services
    44. Green Tree Servicing LLC
    45. Hartford Savings Bank
    46. Hillsdale County National Bank
    47. HomEqServicing
    48. HomeStarBank & Financial Services
    49. Horicon Bank
    50. Horizon Bank, NA
    51. Iberiabank
    52. IBM Southeast Employees' Federal Credit Union
    53. IC Federal Credit Union
    54. Idaho Housing and Finance Association
    55. iServeResidential Lending LLC
    56. iServeServicing Inc.
    57. J.P.MorganChase Bank, NA2
    58. Lake City Bank
    59. Lake National Bank
    60. Liberty Bank and Trust Co.
    61. Litton Loan Servicing
    62. Los Alamos National Bank
    63. Magna Bank
    64. MainstreetCredit Union
    65. MarixServicing, LLC
    66. Metropolitan National Bank
    67. Midland Mortgage Company
    68. Midwest Bank & Trust Co.
    69. Midwest Community Bank
    70. Mission Federal Credit Union
    71. MorEquity, Inc.
    72. Mortgage Center, LLC
    73. Mortgage Clearing Corporation
    74. NationstarMortgage LLC
    75. Navy Federal Credit Union
    76. Oakland Municipal Credit Union
    77. OcwenFinancial Corporation, Inc.
    78. OneWest Bank
    79. ORNL Federal Credit Union
    80. Park View Federal Savings Bank
    81. Pathfinder Bank
    82. PennyMacLoan Services, LLC
    83. PNC Bank, National Association
    84. PNC Mortgage3
    85. Purdue Employees Federal Credit Union
    86. QLending, Inc.
    87. Quantum Servicing Corporation
    88. Residential Credit Solutions
    89. RG Mortgage Corporation
    90. Roebling Bank
    91. RoundPointMortgage Servicing Corporation
    92. Saxon Mortgage Services, Inc.
    93. Schools Financial Credit Union
    94. SEFCU
    95. Select Portfolio Servicing
    96. ServisOne Inc., dbaBSI Financial Services, Inc.
    97. ShoreBank
    98. Silver State Schools Credit Union
    99. Specialized Loan Servicing, LLC
    100. Spirit of Alaska Federal Credit Union
    101. Stanford Federal Credit Union
    102. Sterling Savings Bank
    103. Suburban Mortgage Company of New Mexico
    104. Technology Credit Union
    105. The Golden 1 Credit Union
    106. U.S. Bank National Association
    107. United Bank
    108. United Bank Mortgage Corporation
    109. University First Federal Credit Union
    110. VantiumCapital, Inc.
    111. Verity Credit Union
    112. VistFinancial Corp.
    113. WealthbridgeMortgage Corp.
    114. Wells Fargo Bank, NA4
    115. WescomCentral Credit Union
    116. Yadkin Valley Bank
  • Underwater Florida Homeowners MORE HELP Now

    Posted Under: Financing in Florida, Foreclosure in Florida, Property Q&A in Florida  |  May 2, 2012 10:54 AM  |  13,421 views  |  No comments

    New rules for Florida Hardest Hit Fund

    Florida Housing Finance Corp. is overhauling the state's $1 billion mortgage assistance program, scrapping a number of restrictive eligibility requirements. The U.S. Treasury Department has to sign off, but here are some of the new rules.

    • Homeowners who are more than 180 days behind on their mortgages will now be eligible for assistance, if their servicer agrees.

    • Homeowners who owe more than twice as much as their home's current value will now be eligible for assistance.

    • Mortgage payment assistance for unemployed and other struggling borrowers will double from six months to 12 months, with maximum payments doubling to $24,000.

    • Lump sum financial assistance to help pay overdue mortgage balances will increase from $6,000 to $25,000.

    • There is no longer a requirement that condo owners participating in the program belong to a condo building that is approved by Fannie Mae or the Federal Housing Association.

    • Mortgages originated after 2008 will now be eligible for the program.

    For info on short pay refinancing www.PrudentFundings.com
  • FHA Short Refi EXTENDED thru 2014- Allows Lates on Current Mortgage Payments

    Posted Under: Financing in California, Foreclosure in California, Property Q&A in California  |  May 1, 2012 9:13 AM  |  15,428 views  |  No comments

    Apply Today we work with all lenders but especially hsbc,beneficial,citi, and Sps


    FHA Policy Changes on FHA Short Refinancing
    Borrowers who are “underwater” on a home loan basically owe more on their home loans than the property is worth on the current housing market. Over the last few years, this has become a growing issue faced by more homeowners due to a troubled market.

    The FHA began taking steps to help, including a 2010 plan called “FHA Refinance of Borrowers in Negative Equity Positions”, also known as the FHA Short Refinance program. According to the FHA, the FHA Short Refinance Program allows “enhancements to the Federal Housing Administration (FHA) refinance program that allows responsible homeowners with negative equity an opportunity to refinance their homes.”

    Under the FHA Short Refinance program, borrowers with conventional loans who were underwater on their mortgages could save their property by refinancing into an FHA mortgage. “This opportunity allows only non-FHA insured loans to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent” according to the FHA.

    A new FHA mortgagee letter announced changes to the FHA Short Refinance program. It has been extended to December 31, 2014, giving borrowers an extra two years to apply for an FHA Short Refinance loan.

    Another change--one of the most important-- is the addition of a trial payment period which would make borrowers delinquent on their loans eligible for the FHA Short Refinance. According to FHA Mortgagee Letter 12-5, the new changes allow “borrowers who may have been delinquent on their existing loan, but who have successfully completed a trial payment plan that meets the following standards to be eligible for the program.”

    “The trial payment plan must require a payment amount which is consistent with the amount the borrower would pay if they were to refinance the mortgage under the FHA Short Refinance. If the borrower can make three consecutive on-time monthly payments successfully, they are now eligible for a FHA Short Refinance loan.”

    Contact your lender for details on how to apply for an FHA Short Refinance Loan or go here www.PrudentFundings.com --those who are looking for a new financial institution can shop around for a new participating FHA lender willing to consider an application for an FHA Short Refinance Loan.We have major lenders in place to approve the new replacement loan at the shorted new value. The FHA short refi is your lifeline in these troubled waters.

    Apply Here www.PrudentFundings.com
  • Short Refinance-Principal Reduction Steps

    Posted Under: Financing, Foreclosure, Property Q&A  |  April 30, 2012 11:01 AM  |  2,588 views  |  No comments

    Short pay at today's Value

    Applu here www.PrudentFundings.com

        As we all know the current housing market has made a turn for the worse over the last 30 months. This has put clients like you that pay on time and handle your debts correctly in a position that you have no control of. Our company will help you put control back in your hands.  We do this by working directly with the nation's leading serving companies and banks.  They allow us to submit your transaction to a new bank or lender (refinance you) and will take a loss on the current mortgage loan balance (upside down) called a short pay, loan settlement or principle reduction loan. The reason the big name banks and lenders are allowing this process to take place is for the following reason.

    1. Takes all risk off their book (the banks know that you are considered high risk because essentially you are renting your home from the bank because of being upside down in equity.  People in this situation are at a higher risk of walking away from their home instead of paying their bills statistically)

    2. It increases the banks cash flow

    3. They receive stimulus money to assist you and to compensate the loss they take 

    4. They have to take part in helping adjust the Real Estate market.

    5.They feel they may have put you in a loan you could not afford in the first place such as a 100% loan also know, as a 80/20, a STATED, NO DOC LOAN or adjustable rate loans.    

    If you fall under any of these above categories you are eligible for a short pay or loan settlement.  We achieve this for our clients by doing the following steps: 

    •1.    Help a client with a mortgage with bad equity

    •2.    Explain the new loan process (the client will be getting a new mortgage below their current market value direct with the Federal Housing Administration at a fixed rate at today's lowest rates)

    •3.    Gather clients loan documents (last 2 years income documents, current pay stub, copy of driver's license and social security card, proof of insurance or insurance declaration page and 2 most recent banks statements. Last we will help the client prepare the hardship letter to submit to you current lender.

    •4.    We will then do an automated value search on you property to get a strong idea of current market value

    •1.    Our company simultaneously submits you for a new FHA loan while we are obtaining the approval on your short pay/settlement/principal reduction from your current lender.  At this point we order an appraisal (only out of pocket cost.  approximate cost is $350.00) 

    •2.    We will have both your approvals and short pay approved within 40 days and will close your new loan inside of 60 days. 



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