Beware buying a home from a divorcing couple!!

NEW YORK (CNNMoney.com) -- Marriage break-ups can be tense. And when divorcing couples sell their homes, it's buyer, agent and everyone else beware.

There are about one million divorces a year in the United States and in most cases, there's a home that needs to be sold. That can mean great bargains, because couples divorcing -- like those in foreclosure -- are often among the most motivated of sellers, willing to accept offers below market value.

Still, house hunters may well pay the price in terms of aggravation and time when working with these sellers.

Buyers must wade through the venom generated by the divorce. Often, one spouse is anxious to sell while the other tries to sabotage the deal -- either out of spite or an unwillingness to end the marriage.

"Most of my divorcing clients dislike each other very much so navigating the transaction can be tricky," said Scott Weeda, a Seattle-based real estate agent who specializes in divorce.

We're too afraid to buy -- despite low prices
In other cases, one spouse may delay signing off just to aggravate the ex. Other times, one party may want to maximize the profits while the other just wants to get out.

"In many cases, the joint ownership is the only remaining tie that connects couple selling," Weeda said. "They sometimes want to cut that ASAP."

Buyers may find themselves in agreement on a deal with one spouse until the other vetoes the deal. Sometimes, buyers don't even know there's a problem until the last minute.

Charles Vallis, a Massachusetts-based agent for discount broker Redfin, had a recent sale in which his buyers went to contract and had a closing date, but then the wife in the divorce disappeared.

"She was nowhere to be found for the last few days before closing," said Vallis. "The day before, their attorney notified us that they might not be able to close because the wife was unreachable

One of the buyers, Megan McGuire, who works in public relations for a large law firm, said she "floored" by this. "We thought it was really reckless on her part."

She and her husband, Josh Ledeen, had already given notice at their rental and had made a date with the movers. "We would have been out on the street," said McGuire.

Vallis kept leaving messages for the wife and calling her attorney, who couldn't reach her either. Luckily, her husband was anxious to sell. He even changed the locks before the final walk-through because he feared his wife might damage the interior.

After days of desperately trying to contact the wife, the sellers' attorney finally got a call back and read her the riot act about the legal consequences of breaching the contract. The sale closed on time -- but the agitation cost the buyers sleepless nights.

To try and avoid these situations, Randy Morrow, an Arlington Va.-based real estate agent who represents divorcing couples, tells potential buyers to find out early whether a divorce is acrimonious.

Then, there's a very good chance the settlement will not happen on schedule," he said. "Buyers should talk to their agents about placing protective language in the offer. If a case is really nasty, I would tell my clients to run."

Carol Ann Wilson, an expert in divorce financial planning, also advises house hunters to delve deeper into the sellers' backgrounds if the sale involves a divorce.

"If buyers find that both parties haven't signed off on the selling agreement," she said, "buyers should back off. The deal could be easily derailed."


Thanks for checking out my blog if you have any questions about refinancing or buying or selling a home please contact me. (562) 673-1136

Thanks Rob

Wells Fargo Clarifies Short Sale Criteria for Foreclosure Postponement

The National Association of Realtors (NAR) issued a notice this week explaining Wells Fargo’s new rules surrounding short sale transactions when a foreclosure is pending.

Earlier this month, Wells Fargo advised NAR that it has modified its existing guidelines to allow the postponement of a scheduled foreclosure in connection with a short sale, but only in limited situations. Please check my website at www.shortrefiusa.com

NAR explained that for loans owned by Wells Fargo, including those inherited with the bank’s Wachovia acquisition, as well as other loans serviced by Wells Fargo but owned by an investor, the policy allows for one fore-
closure postponement, but only if: (1) Wells Fargo has a short sale sales contract in hand that has been approved (including approvals from junior lien holders and mortgage insurers, if applicable), (2) the buyer has proof of funds or financing approved, and (3) the short sale can close within 30 days of the scheduled foreclosure sale. For alternante solutions please visit my website at www.shortrefiusa.com

However, Wells Fargo noted that not all investors allow for such postponements and stressed that in jurisdictions where the courts will not approve the delay, the postponement policy will not apply. Wells Fargo told NAR that it is willing to address situations that do not qualify under these guidelines on a case-by-case basis.

Last month, it was reported that Wells Fargo had stopped delaying foreclosures in order to allow distressed homeowners to complete short sales. But as NAR outlined, the foreclosure timeline can be pushed back for a short sale as long as Wells Fargo’s specified criteria are met.

NAR has been holding meetings with the nation’s four largest lenders, including Wells Fargo, to address concerns about their processes for short sales and REO disposition. The trade group’s talks with the banks are ongoing, but NAR has indicated that the discussions have been productive in fostering mutual success and support for a market recovery.

Wells Fargo has been approving Short Refinances call me for details. Contact Robert at (562) 673-1136

America's Real Mortgage Rate!!

Record low mortgage rates? Too bad no one is taking advantage of them. Most homeowners still pay around 6% for their loans.

Mortgage rates dropped to another record low this week following the Fed's move to pump hundreds of billions of dollars into the U.S. economy. Though officials hope that buying Treasuries with newly-printed money will give the slow-growing economy a big boost, the move likely won't give today's homeowners much relief. Any Questions about refinancing please call Robert at 562-673-1136

Now is one of the cheapest times in decades to finance a home, but few are actually locking in record low mortgage rates. This isn't just because many don't qualify for refinancing as home prices plummet and banks continue to enforce tighter lending standards.

It's also because many owners who locked in relatively low rates between 2003 and 2005 don't think it's worth refinancing, according to a U.S. Federal Reserve study of the mortgage market released in September. This is a factor that has largely been overlooked. Please visit my website if you have questions about principle reduction www.shortrefiusa.com

It's true millions have been trying to redo the terms of their home loans to reduce their monthly payments. Yet a sizable group also thinks their current interest rates are at least bearable – they don't want to spend the money or time to take out a new loan for only slightly lower rate.

Mortgage rates are at their lowest since at least 1971. The rate for a 30-year fixed loan fell to 4.17% in the week ended Thursday from 4.24%, according to Freddie Mac (FMCC). The average 15-year rate declined to 3.57% from 3.63%.

But interest paid on the vast majority of home loans is much higher than the record rates, according JPMorgan, which tracks the outstanding U.S. mortgages by major lenders including Freddie Mac and Fannie Mae (FNMA). As of October 31, only about 16% of fixed-rate mortgages and 12% on floating mortgages paid between 4% to 4.99%.

A relatively bigger proportion, about 27%, are adjustable rate mortgages that fluctuate with the market and pay a lower rate ranging between 3% to 3.99%. Still, at least half of outstanding home loans still pay 5% or higher regardless of whether a fix or floating rate.

Historically when rates have dropped significantly, there's typically a flurry of refinancing.

And indeed, that happened recently when the average annual rate for a prime-quality 30-year fixed rate mortgage fell abruptly at the end of 2008 and through 2009, falling below 5% in April and May. Refinancing boomed, peaking to more than 645,000 loans in May 2009 before dropping back to monthly levels similar to those seen in 2006 and 2007, according the Fed's report.

But the recent surge in refinancing doesn't compare to what was seen historically – it's in stark contrast to the levels seen between 2001 to 2003 when rates fell sharply. In 2003 when rates were slightly more than 5%, the volume of refinance loans rose to more than 15 million, markedly greater than volumes in 2009 of about 5.8 million loans.

"There's a lot of head scratching right now as to why people aren't refinancing," says Freddie Mac Chief Economist Amy Crew Cutts. "The applications are high but the closings are low."

Cutts points to various factors, including high unemployment, home values falling well below the balances of mortgages and stricter lending standards at many major banks.

Whatever the reason, it appears homeowners aren't benefiting much from the Fed's policy prescription to accelerate the economic recovery. Who knows how low mortgage rates will go or if it will even matter months from today.

Who pays what? E-Mail Rob at Robsavestheoc@gmail.com

Robert Vaughan
Vice President/ Managing Partner
(562) 673-1136

Underwater Borrowers Get a Lifeline on September 7

With as many as 20 million homeowners going underwater by 2011, there could be a lot of interest in this new program.

"We're throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined," FHA Commissioner David H. Stevens said in a statement. "This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product."

The new loan product, called the FHA Short Refinance option, is targeted for those homeowners who are paying on time, but saw large declines in home values in their local markets. If your home is underwater and your interest rate is above 6 percent, you should definitely consider this. Even if you have a good interest rate, the write-down of your first and/or second mortgage may make this deal worth considering.


To qualify for this FHA refinance opportunity, you must be current on your mortgage, and your lender or investor must be willing to write off at least 10 percent of the original first lien on the mortgage. The big hitch is that you must have the consent of your current mortgage lien-holders, so if your lender refuses to participate, you won't be able to take advantage of this refinance program.
For your loan to qualify, you must meet these conditions:


- Your mortgage must be in a negative equity position.
- You must be current on your mortgage to be refinanced.
- You must occupy the subject property (one to four units) as your primary residence.
- You must qualify for the new loan under standard FHA underwriting and your FICO score must be greater than or equal to 500.
- Your existing loan must not be an FHA-insured loan.
- The existing first lien-holder must write off at least 10 percent of the unpaid principal balance.
- The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent.
- If you have other subordinate mortgages (such as an equity line) they must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 percent.
- Your 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.
- You cannot use the new FHA mortgage to pay off existing debt obligations in order to qualify for the new loan.

If you've already undergone a loan modification, you may still qualify for these new FHA loans. Anyone whose loan was modified under the Making Home Affordable Modification Program may still be eligible beginning the month following the date the modification was permanent. If you were modified using a non-HAMP loan, you must make three on-time monthly payments on the new modified mortgage and be current on the loan.

There are also requirements that you must meet for any secondary financing, such as a home equity loan or home equity line:

- Your subordinate lien must not provide for a balloon payment before 10 years, unless the property is sold or refinanced.
- The terms must permit prepayment by the borrower, without penalty, after giving 30 days advance notice.
- Periodic payments, if any, must be collected monthly.
- Any monthly payments must be included in the qualifying ratios unless payments have been deferred for no less than 36 months.

To encourage second lien-holders to participate and extinguish fully or partially any second lien, the existing second lien-servicer will be entitled to a onetime incentive of $500 for each successful closing. There also will be an incentive for investors, based on the combined loan-to-value of the existing lien, and all senior liens associated with the mortgage.

Hopefully, these incentives will be enough to encourage your lender to participate

Thanks for checking out this blog if you have any questions about shortpay refinance please contact me direct and I will answer all your questions.

Thanks
Robert Vaughan
www.shortrefiusa.com
(562) 673-1136 Direct

The Wasted 4.44% Mortgage Rate!!!

FORTUNE -- It appears even the bright spots of this tired economy are still working against heavily indebted homeowners. Mortgage rates have hit new lows nearly every week, but many borrowers are still unable to take advantage of them.

Like it is in so many parts of today's sideways economy, relief is out of reach. Stimulus dollars are everywhere, but somehow never where they're needed most.

Last week, U.S. mortgage rates fell for the eighth consecutive week to a record low after the Federal Reserve said it would buy more government debt to help the economy recover. A 30-year fixed-rate mortgage in the week ending Thursday dropped to 4.44% from 4.49%, according to Freddie Mac, which noted it was the lowest since the mortgage finance company began collecting data in 1971. The 15-year rate averaged 3.92%.

The fall in rates ostensibly means homeowners can lower their monthly loan payments by refinancing their existing loans. They're certainly trying -- the Mortgage Bankers
Association reported last week that 78.1% of all mortgage applications fell under the refinance category, up from 58.7% in April.

But many of them are filling out all that paperwork only to get a rejection letter in response. The mortgage association does not quantify how many of those who apply for refinance actually get approved, but mortgage brokers say many homeowners are ineligible. Last year the Home Affordable Refinance Program, or HARP, was created to help homeowners get new loans, but the program has only resulted in a small fraction of the refinancings the government aimed to enable.

"The qualifications are so much stricter," says Dale Robyn Siegel, CEO of Harrison, NY-based Circle Mortgage Group and author of The New Rules for Mortgages. "Banks have realized that even the best of borrowers have lost their jobs. A lot of people are really tapped out."

Doors closing

The stricter qualifications include a higher FICO score of at least 620, a higher down payment and lower monthly debt service ratios. Additionally, lenders typically won't loan more than the appraised value of a home. The troubled housing market has left an estimated 15 million U.S. mortgages -- one in five -- worth more than the value of the homes they helped purchase. The growing mountains of paperwork required and higher bank fees have also discouraged some from refinancing.

Add it all up, and you get a 4.44% rate that most Americans can't have.

The government-controlled Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500) either own or guarantee half of the nation's mortgages. Wall Street economists and analysts have called on the Feds to loosen lending standards and give breaks on fees so that more people qualify to refinance. In the short-term, this could free up household incomes and inject much-needed money into a slow-growing economy. But opponents argue it would only add to the hundreds of billions of dollars it will take to prop up troubled Fannie and Freddie.

The U.S. Treasury Department says it doesn't plan to ease refinancing rules.

It's easy argue against the idea of helping homeowners -- even the debt-ridden and jobless -- with their bills. After all, it can be said they bought too much house for their own good and bailing them out would only encourage the kind of irresponsible borrowing that sent the US economy into a financial crisis in the first place.

But lower interest rates, ideally, are meant to encourage investments - something the economy could use right about now. Instead, today's mortgage rates are doing nothing more than tempting those investors who can't have them.

If you have any questions about refinancing or find out what are the latest Mortgage Solutions out there feel free to call me direct at (562) 673-1136

Thank You,
Robert Vaughan
www.shortrefiusa.com

FDIC to test Principal Reduction for underwater Borrowers!!

The Federal Deposit Insurance Corp. is developing a program to test whether cutting the mortgage balances of distressed borrowers who owe significantly more than their homes are worth is an effective method for saving homeowners from foreclosure.

The program would be aimed at a growing population of homeowners who are underwater on their loans, estimated at more than 20 percent of borrowers, or 11 million homeowners. Economists consider these borrowers among the most vulnerable to foreclosure, and some industry officials worry that more of them will simply walk away from their mortgages, or "strategically default," rather than spend a decade or more trying to regain positive equity. >

Under the FDIC program, borrowers would be eligible for a reduction in their mortgage balances if they kept up their payments on the mortgage over a long period. The performance of those borrowers would be compared with borrowers given more traditional mortgage relief packages, such as those that cut the interest rate on loans.

"We're thinking about it in terms of earned principal forgiveness. If you stay current on your mortgage, you would earn a principal reduction. It would only be for loans significantly underwater," said FDIC Chairman Sheila C. Bair.

The program would have a small reach and apply only to loans acquired from a failed bank seized by the FDIC. That would be less than 1 percent of mortgages currently outstanding. The initiative could be launched later this year, FDIC officials said, but a date has not been set.

The effort adds to the growing debate about whether principal reductions should become a larger part of mortgage-relief efforts. Another government program, known as Hope for Homeowners, sought to reduce mortgage balances of underwater borrowers but has floundered since its launch, and legislation to allow bankruptcy judges to cut the principal on a borrower's loan failed in the Senate last year.

Treasury officials have said they are considering proposals to address negative equity but have not offered any specifics. Under the federal foreclosure relief program known as Making Home Affordable, borrowers can receive up to $5,000 to lower their loan balance if they keep up their payments. But that amount would make only a small dent in the problem facing millions of homeowners, housing advocates said. During the fourth quarter of last year, the average underwater borrower owed $70,700 more than the value of their home, according to First American CoreLogic data released this week.>

"Whether homeowners have equity in their home is a key predictor of whether they will default on their mortgage or redefault on a loan modification," said Julia Gordon, policy director of the Center for Responsible Lending. "That's why any serious plan to prevent foreclosures has to include principal reduction for those who owe more than their home is worth."

Lenders have been reluctant to cut the principal balance owed by distressed borrowers, arguing that it would encourage homeowners to become delinquent even if they can afford their mortgage. Instead, the industry has focused on providing mortgage relief by lowering a borrower's interest rate or extending the terms of a mortgage to 40 years. In some cases, a portion of the principal balance is put into a second mortgage that does not have to be paid off until the borrower sells the home or refinances.>

Yet, some in the industry have started to relent. During the third quarter of 2009, 13 percent of loan modifications included a reduction in the borrower's principal, according to a report by the Office of the Comptroller of the Currency. That was up from about 10 percent during the second quarter.

Wells Fargo, for example, has increasingly used principal reductions for homeowners with a risky mortgage, known as "option" ARMs. These loans, also called "pick-a-pay" mortgages, allow borrowers to choose how much to pay each month. Many of these borrowers pay less than the amount of interest due, and the unpaid interest is tacked on to the balance. These loans also tend to be concentrated in places where home prices soared and then plunged precipitously, leaving many homeowners significantly underwater.

Wells Fargo, which acquired many of these loans as part of its 2008 purchase of Wachovia, says it forgave $2.6 billion in borrowers' principal balances for these types of mortgages last year. But even when principal reduction is offered, it will not necessarily be enough to bring a borrower back to full equity, company officials said.


Robert Vaughan
(562) 673-1136

Homebuyer Credit Extension heads to Obama!!

NEW YORK (CNNMoney.com) -- First-time homebuyers will have until Sept. 30 to close on their purchases and land an $8,000 tax credit under a bill passed by the Senate late Wednesday.

President Obama is expected to sign the bill, which was overwhelmingly approved by the House on Tuesday. The deadline had been June 30.


The bill doesn't help anyone currently shopping for a home. Buyers must have signed a contract by April 30 to qualify for the tax break. At issue is when the deal must be finalized.

Qualified existing homeowners also have until Sept. 30 to close on new homes and receive a tax credit of up to $6,500.

Congress has been trying to pass the extension for the last month, but it got caught up in Washington politics. Only when it was separated from a larger jobs bill did deficit-wary lawmakers sign off on it. The extension will lower the deficit by $9 million over a decade since it is offset by certain other provisions.

An estimated 200,000 people have missed out on the tax credit because they wouldn't have been able to close by the end of business Wednesday. Many are trying to take advantage of short sales, which are complicated deals to complete.

The Senate approved the stand-alone homebuyers tax credit shortly after a failed attempt to advance a bill that combined the credit with an unemployment benefits extension.


Thanks for checking out my post, If you have any questions on the tax credit extension or questions about pruchasing a home please call me at 562-673-1136

Robert Vaughan
Affinity Lending Group