BofA TO REDUCE LOAN PRINCIPAL FOR 200,000 HOMEOWNERS!
BofA TO REDUCE LOAN PRINCIPAL FOR 200,000 HOMEOWNERS!
We’re not in Kansas any more Toto–there has just been a paradigm shift in the nation’s mortgage loan industry. Bank of America just announced that it is reducing the principal balance of existing mortgage loans for as many as 200,000 underwater homeowners!
Several days ago, we wrote a post about the $ 25,000,000,000 foreclosure settlement between the government and the five largest loan servicers. Bank Of America was one of them. Apparently, B of A made a side deal committing $ 1,000,000,000 to reduce loan principal for borrowers.
B of A estimates an average reduction of more than $ 100,000! The goal is to change the financial situation for these homeowners, so that they are no longer underwater.
This is quite a public relations splash. Unfortunately, the billion-dollar sum mentioned is only nineteen billion short of the total required to meet the stated commitment. I guess we can’t expect bankers to do the math correctly!
Of course, this is not a purely philanthropic exercise. The actual goal is to reduce the $3.25 billion in penalties B of A faces from the foreclosure settlement.
Distressed homeowners may be eligible if B of A is their loan servicer and they must be at least 60 days late on their mortgages as of January 31.
Only loans owned by B of A or private investors are eligible. They include loans originated by Countrywide and Calabasas, both acquired by B of A in the past several years.
Loans owned or backed by Fannie Mae, Freddie Mac, the FHA or VA are not eligible. This segment covers the majority of loans.
B of A has three years to complete these principal reductions and avoid the government-imposed penalties.
We hope that this program actually helps many homeowners. It is amazing what happens when the government applies a little heat.
To view the complete New Your Times article, select this link:
If you know someone in the greater Sacramento area who is facing foreclosure and needs assistance, have them contact us at (916) 337-0658 or e-mail Mike@BuyYourVilla.com
We are here to help!
HIDDEN MORTGAGE FEE TO INCREASE SOON!
HIDDEN MORTGAGE FEE TO INCREASE SOON!
When you go into one of the major banks to get a home, loan chances are good that they will sell your loan on the secondary market soon after loan origination. Odds are that you not write many payment checks to the originating bank. They take that cash and use it to originate more loans.
Fannie Mae and Freddie Mac, the two huge Government Sponsored Enterprises, purchase most of these loans and sell them to investors. The originating banks follow Fannie Mae and Freddie Mac loan guidelines to ensure that there will be no problem selling the loans.
When the loan originator quotes you an interest rate for your loan, that interest rate made up of three segments. The largest goes to the investors who buy the loan; a smaller portion goes to the loan servicer who maintains borrower contact, collects the monthly payments and handles loans in default; and the final portion is the guarantee fee. Fannie Mae and Freddie Mac charge a guarantee fee as a form of insurance against default for the loans that they acquire and resell to investors. The fee is also a primary source of revenue for Fannie and Freddy.
On April 1, 2012, that guarantee fee will increase 10 basis points, or one percent. The increase in the guarantee fee is to cover some of the costs or the two-month extension of the payroll tax reduction last December.
The increase in the guarantee fee will result in an increase in the interest rate that loan originators will charge after April 1.
There is one way to avoid paying this guarantee fee and the associated higher interest rate on loans originated in April and beyond. You can apply to a loan originator who does not sell their loans on the secondary market.
At the beginning of this post, we stated that most loans are sold on that secondary market. There is a smaller segment of loans are known as portfolio loans. They are loans that the originators keep and service themselves. Credit unions and community banks are usually portfolio lenders. Since they do not have to meet Fannie Mae and Freddie Mac guidelines, the lenders may be more flexible with their loan guidelines and are an excellent source for financing for borrowers.
To view the complete New Your Times article, select this link:
If you have any questions about real estate financing call us at (916) 337-0658 or e-mail Mike@BuyYourVilla.com
THIS MONTH IN REAL ESTATE – FEB. 2012
THIS MONTH IN REAL ESTATE – FEB 2012
Each month we include the “This Month In Real Estate” video, which provides some of the latest real estate market data and information designed to help buyers and sellers make prudent decisions when buying, selling or refinancing their homes. This is the February 2012 edition.
If you have any questions about the buying, selling or refinancing processes feel free to contact us at (916) 337-0658 or e-mail us at Mike@BuyYourVilla.com.
STEER CLEAR OF MORTGAGE MODIFICATION SCAMS
STEER CLEAR OF MORTGAGE MODIFICATION SCAMS
Unfortunately, there are people out there who do not hesitate to take advantage of people in difficult situations. Although Federal and state authorities are cracking down on illegal activities, there are still a lot of them out there preying on unsuspecting victims.
The Certified Distressed Property Expert organization, of which we are members, has come out with a chart designed to help folks who are vulnerable avoid these scams. Please pass this information on to anyone who you know who could benefit from the information.
Please feel free to contact us if you have any questions or fi you need help (916) 337-0658
BANK OWNED (FORECLOSURE) HOME SALES DATA FOR EL DORADO HILLS, CA – Dec 2011
BANK OWNED (FORECLOSURE) HOME SALES DATA FOR EL DORADO HILLS, CA – DECEMBER 2011
This is the latest monthly report of a four-year study of bank owned home sales in El Dorado Hills, CA. This report covers December 2011.
There were six bank owned homes sold in El Dorado Hills in December, down one from the
previous month. A low inventory is the primary reason.
The average days-on-market increased from 29 in November to 79 in December. One of the homes had been on the market for over 100 days. Some old inventory was cleared out. None of the homes that sold had been on the market for two weeks or less, which is very unusual.
The six bank owned homes that sold represent only 8% of ALL homes sold in El Dorado Hills this month. This is a much smaller segment than normal, despite the increase in inventory.
The available inventory of bank owned homes in El Dorado Hills spiked at a 2.4-month supply in December, the second highest inventory level in 2011… The available inventory for ALL homes available dropped from a 2.9-month supply the previous month to a 2.2-month supply in December, the lowest inventory level in 2011. Pundits advise that a 6-month supply is a neutral market, so we are still looking at a strong seller’s market for ALL homes in El Dorado Hills.
The average cost-per-square-foot for Bank Owned homes was $ 150 in December, up considerably from $ 126 in the previous month, and the highest in the past fifteen months. The average cost-per-square-foot for ALL homes sold in El Dorado Hills in December remained $ 153 for the second month in a row.
The overall sales price for bank owned homes was 94.9% of the final asking price and 87% of the original asking price. Only one of the buyers paid the full asking price in December. The banks did not do a very good job of estimating the market value of their “toxic Assets” that sold in December.
Bank owned homebuyers paid 98% of the cost-per-square-foot for their REO home when compared with the cost-per-square-foot for ALL homes sold in December. That is only $ 3 pre-square-foot savings. When applied to a 2500 square foot home that represents a savings of $ 7,500, much less than usual.
If you have any questions about purchasing any home in El Dorado Hills, an El Dorado Hills Bank Owned Home, or a Bank Owned Home anywhere in the area, feel free to give us a call (916) 337-0658.
The data follows:
