Upside Down Mortgage

Archive for November, 2007

Bank Of America Mortgage Modification Requirements

A new Bank Bailout Plan unveiled last week may give new hope to distressed homeowners and communities. Treasury Secretary Tim Geithner recently announced the government’s plan to commit over $1 trillion in reforms aimed at rescuing the country’s financial system. The program would amend weaknesses in the bailout plan proposed by the Bush administration, and override other previous reforms.

Much of the funding would go into financing loan purchases and reviving the economy through increased lending activity. The key points of the program include:

Support for bank lending

The Treasury aims to advance the capital position of major banks to boost lending activity. This would entail a three-part process:

"Stress test": Banks and financial institutions will be checked to ensure they have enough capital to keep lending, and whether they can survive future economic downturns. The government will tighten its rules on public disclosure of a bank’s holdings, and those with assets over $100 billion will be assessed individually.

"Capital Assistance Program": The CAP will build on previous efforts by theTroubled Asset Relief Program (TARP), which has put $250 billion in capital purchases. The Treasury will continue to help banks rebuild their capital following the stress test, and take preferred shares in banks taking part in the CAP program. According to Geithner, this will serve as a buffer for banks that can benefit from increased lending.

"Financial Stability Trust": The FST is a separate trust to hold the investments made by the Treasury under the program, and will be maintained by a group of fund managers.

Buying up troubled assets

This section is designed to help relieve banks of "toxic" or hard-to-sell assets and put more of their efforts into private lending. The goal is to buy up these assets using a combination of public funds and private capital, with the private sector taking charge of the price assessments. The costs of this goal are still uncertain, but the Treasury expects to generate up to $1 trillion from the investments.

Consumer and business lending

The Treasury also plans to restore the flow of credit by increasing lending in the consumer and business levels. This goal builds on the proposed Term Asset-Backed Securities Loan Facility (TALF), but will increase funding from $200 billion to $1 trillion in federal lending. Under the plan, the government will purchase securities backed by consumer and business loans, such as auto loans, small business loans and credit cards. The plan will put a premium on higher-quality securities to minimize losses for taxpayers.

Improved transparency and accountability

Banks and financial institutions who benefit from taxpayers’ money will be closely watched to ensure they don’t misuse public funds. Any companies receiving bailout funds will have to meet new requirements and operate under tighter restrictions. For instance, they will need to submit a plan for spending the government aid to increase lending, and upload monthly reports on the website www.financialstability.gov. Details of all transactions will also be posted on the website 5-10 days after each one is completed.

Companies receiving federal loans will also have to limit dividends to 1% per quarter until the debt is paid. Until then, they cannot re-buy private shares or buy up other banks without consent from the Treasury. A cap will also be imposed on executive pay for CEOs, and lobbyists will be banned to keep them from influencing the Treasury’s decisions.

Housing and foreclosure assistance

The new plan will lower interest rates to provide more affordable housing and reduce the risk of foreclosure. This program will cost $50 billion in the first weeks following implementation, during which loan modification guidelines will be established and existing programs will be adjusted. Under this plan, all companies receiving financial assistance will need to participate in the foreclosure mitigation plan (currently, only Citigroup and the Bank of America are taking part).

For homeowners, the government plans to spend $600 billion to buy up existing mortgage-backed securities from Fannie Mae and Freddie Mac. This will allow them to lower mortgage rates and make housing more affordable for families in distressed communities.

Small business lending

Small businesses and community lenders will also benefit from the bailout plan through lower borrowing costs and increased lending activity. Key elements will include buying up loans from the Small Business Administration (SBA), reducing fees, and increasing loan guarantees up to 90%.

Loan modification options

The new bailout plan may offer new options to homeowners seeking Loan Modification and other forms of mortgage assistance. Luckily, most loan modification companies have adjusted their programs to better comply with public policies. To know more about your options under this bailout plan, visit : http://www.cdloanmod.com/loss-mitigation-news

About the Author:

The Loan ModificationDepartment is composed of a team of Loan Modification Attorneys, Mortgage Professionals, and Hardship Analysts. Lead by Expert Loan Modification Attorney, Marc R. Tow, Loan Modification Department has helped thousands of American Home Owners by Loss Mitigation through Loan Modification, Mortgage Modification, For more information Just Call 800-738-1170 or Visit our website http://www.cdloanmod.com/

Source - The 2009 Bank Bailout Plan | How Will It Help You Avaoid Foreclosure ?

COURTS ADJOURNED@nyJUDGE SPINNER CANCELS a FORECLOSER MORTGAGE!

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Mortgage Forgiveness Tax Relief

Question: The business case for a short sale?

Debating about short selling my current home: THe facts: +Home in Gilbert, AZ (Primary residence, 2-and-a-half years living in it) + Purchased in 2005 for $530,000
+ I have just been told by my agent that after looking at comps, I could list it for $430,000 to attempt to sell it (Currently 18.9% decline vs. purchase price, not yet considering any low-ball offers) +If everything goes according to analysts’ expectations (what I read in the Journal, opinions from Credit Suisse, etc), the market would continue to slide in the months to come. (Additional 25% to 35%) + First Mortgage is for $360,000, 5/1 ARM at 5.25% but resetting in 2010. +Second Mortgage is for $150,000 fixed rate 7.45%. This second mortgage was originally 86k but I refinanced it +Provided there is a new law that Congress has passed (“Mortgage Forgiveness Debt Relief , would be liable for taxes if I pursue this short sale?

Answer: 3 things about your proposed short sale.

1. You have prove that you can't handle the payments. I see nothing about being late or moving towards foreclosure in your question...

2. You had a 1st mortgage for 360,000 and second for 86,000 (total of 446,000). You refinanced and took another 64,000 out. This 64,000 is the amount that puts you in trouble right now.

Congress' law addressed federal taxes only, you could still be liable for AZ state income tax (if there is one) on the difference.

3. The business case for a short sale is to contain the loss for the lender. You are in for difficulty because your first mortgage holder would get paid in a foreclosure (they are owed 360,000 and you can list at 430,000). It is the company with the second that is in trouble. The primary mortgage holder would be much better off if they just foreclosed (remember that a short sale is a loss mitigation measure and they won't lose in foreclosure). They would be first in line to get paid, they would get paid everything they are owed and they would be happy. The second mortgage company would probably be forced to buy out the first to see any cash...

I'm betting you aren't a candidate for a short sale from your primary mortgage lender.

good luck!

Tax breaks on short sales

Loan Modification In California

Question: Can usury apply to car loans? In California?

for a car loan, or modification of a car loan?
If it is usury what might the loan look like?

Is usury something that applies to a normal person lending another average person money, or does it apply to a finance company ?

Answer: It applies to a finance company.

Loan Modification In California