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A Valuable Resource
Whether we want to believe it or not, many economists, institutions, banks, associations, companies and people across the country and world have actually known for quite some time that home buyers and investors were headed for financial trouble. The multiple-years of double appreciation in several pockets of this country blended with the American Dream of Home-Ownership and investment success stories at cocktail parties of instant riches fueled the “creative finance” phenomenon.
Last summer I handed out a brochure that the National Association of Realtors created in May to many people I know and met at networking events throughout the region. It has many helpful resources to assist home-owners and consumers to either keep themselves from making a wrong choice in loans or to help keep owners from being foreclosed on as a result of having already taken out one of those loans. Keep in mind also, that according to some of my preferred lenders, the so-called “no-doc” loans, no income verification loans, etc. are virtually non-existent. Even 80-20 loans will be tough to get without PMI (mortgage-insurance) because it looks like it will be reinstated on all government-backed loans. Many changes have, are and will be happening in the finance world. But I am not a mortgage specialist. I just help people buy, sell and rent homes.
However, I would like to provide you with this list and links that I have added in the 1st side of the brochure. Okay, here is the Real Estate Reality - Even though Virginia still isn’t listed as one of the “biggest problem states,” in this country, there will still be more homes in this area that go into foreclosure, REO, Short Sale, and Auction status. In case you are in trouble, or someone you know is, feel free to utilize or forward this:
COUNSELING RESOURCES
Non-profit organizations dedicated to helping consumers
avoid foreclosure can be invaluable.
• NeighborWorks® organizations work with the
Homeownership Preservation Foundation to support a
nationwide assistance number—888.995.HOPE. You can
speak with a counselor, day or night, to help you get back
on track financially. (English and Spanish)
• Reputable counseling agencies, such as NeighborWorks®
organizations, can help you avoid foreclosure. Look up
your nearest NeighborWorks® organization at www.nw.org .
• The U.S. Department of Housing and Urban Development
(HUD) website has a list of HUD-approved counseling
organizations, by state (www.hud.gov/counseling ). We
recommend that the list be used as a starting point to
find good counselors. You also can call 800.569.4287
or TDD 800.877.8339.
• Watch out for questionable counseling companies
who advertise that, for a minimal fee, they will assist
homeowners by hiring a lawyer to defend the foreclosure
in court or negotiate lender assistance on the borrowers’
behalf. You should call a HUD-approved counseling
organization, a local NeighborWorks® organization,
or 888.995.HOPE before you pay or sign anything.
ADDITIONAL RESOURCES
For immediate advice, call 888.995.HOPE to speak to a
counselor on how to avoid foreclosure. Available in English and
Spanish, 24/7. Or visit www.995hope.org for more information.
HUD Resources:
• For a list of HUD-approved counseling agencies, by state,
go to www.hud.gov/counseling .
• HUD’s Internet page—“How to Avoid Foreclosure”—is
aimed at borrowers with FHA-insured mortgages, but can
help other borrowers as well. Go to www.hud.gov/foreclosure .
Freddie Mac: “Keeping Your Home, Protecting Your
Investment.” Go to www.freddiemac.com and search for
this brochure by typing in the full name of the brochure.
Ginnie Mae: For a simple calculator to help homebuyers
estimate how much they can afford to spend, read “How
Much Home Can You Afford?” http://www.GinnieMae.gov .
“Looking for the Best Mortgage” is a brochure issued by
11 federal agencies on how to shop, compare, and negotiate
the best deal on a home loan.
www.federalreserve.gov/pubs/mortgage/mortb_1.htm .
Americans for Fairness in Lending: To find consumer
resources related to a variety of lending issues, go to
Consumer Handbook on Adjustable Rate Mortgages
(the “CHARM” booklet) issued by the Federal Reserve
Board (FRB) and the Office of Thrift Supervision (OTS).
http://www.FederalReserve.gov . At the FRB site, click
on “publications and education resources” and then on
“consumer information brochures.”
Credit-reporting agencies:
• Equifax 800.685.1111 www.Equifax.com
• Experian 888.397.3742 www.Experian.com
• TransUnion 800.916.8800 www.TransUnion.com
Go to www.AnnualCreditReport.com to ask for a free copy
of your credit report, once a year, or call 877.322.8228.
WATCH OUT FOR PREDATORY LENDERS
Here are some warning signs:
• Sounds too easy. “Guaranteed approval” or “no income
verification” regardless of borrower’s current employment,
credit history, and assets. These claims indicate the lender
doesn’t care about whether you can afford to make the
payments over the long haul.
• Excessive fees. Higher lender and/or mortgage broker
fees than are typical in your market. Because these costs can
be financed as part of the loan, they are easy to disguise or
downplay. On competitive loans, fees may be negotiable.
It is common for home buyers to pay only 1 percent of
the loan amount for prime loans. By contrast, a typical
predatory loan may cost 5 percent or more.
• Large future costs. High-risk adjustable rate mortgages
where the payment rises a lot after the “teaser rate” period
are seldom appropriate for families who already have had
problems repaying other loans. Home buyers should avoid
large single “balloon” payments (a lump sum due at the
end of the loan’s term).
• Closing delays. The lender delays closing, so your
commitment on a reasonably priced loan expires.
• Over-valued property. Inflated appraisals that allow
excessive fees to be included in the loan and result in the
borrower owing more to the bank than the home is worth.
• Barriers to refinancing. Prepayment penalties that make
it hard for a borrower to refinance in order to pay off a
high-cost loan by taking advantage of a low-cost loan.
• No down payment loans. These loans may be split into
two mortgages, with one having a much higher cost. Home
buyers should be sure they can afford the payments.
• Unethical document management. Ethical lenders and
brokers always require you to sign key loan papers, and
never ask you to sign a blank document or a document
dated before the date you sign.
Stephen Adams is a Realtor and Consultant with Keller Williams Realty. His Web-site is www.NewPhaseRealty.com
His E-Mail address is Stephen@NewPhaseRealty.com
His office number is 703-669-0099
His direct number is 703-608-0090
His Fax number is 703-669-4104
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