Piggy Back Seconds Blocking Modifications?

At our catbird seat in Northern New Jersey we have heard of many homeowners who have been frustrated in their refinance attempts by low appraisal values and other wrinkles, such as lender's instructing borrowers to go into default before applying for a modification.

The Obama Administration's attempts at freeing up refinance money just do not seem to be working. For instance, a New Jersey homeowner buys near the top of the market, has been making on-time payments, and is looking for a lower rate. Along comes the government's HARP program and a loan limit of 105% of appraisal value. If you bought a house for $300,000, put down $30,000, and your property is now worth $225,000, the arithmetic is simple--under HARP you qualify for a loan of $236,250.00. That's a far cry from the $270,000 =/- you are trying to refi.

What if you have a piggy back second mortgage from your closing? Kenneth R. Harney's Washington Report: Second Liens and Piggyback Loans discusses the issue.

Second liens and “piggyback” loans have been big impediments to successful
mortgage modifications for thousands of financially-stressed home owners. Now
the Obama administration has a new program to deal with the problem.

Under a plan outlined last week, the Treasury department will soon begin offering cash incentives and subsidies to lenders who lower troubled home owners' monthly payments on second mortgages and credit lines, or simply write them off their books.

How will this work?

• Treasury will enter into agreements with second lien holders to reduce interest rates to just one percent on fully-amortizing seconds and to two percent for interest-only seconds, for the next five years.
• Treasury will pay cooperating lenders $500 for each second lien they modify, plus $250 a year for each year the home owners stay current on payments. Alternatively, lenders may be offered a lump-sum cash payment from the government to cancel the second-lien debt altogether.
• Whenever first mortgage holders cut a borrower's principal balances by a percentage of the loan amount, second lien holders will be required to reduce balances owed by a similar percentage.

Will it work in markets such as New Jersey? Only time will tell. Read the full article here.

For your next title order, think:

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Second-Home Blues in a time of Recession

Where's the help for second-home owners during these times? Is the government abandoning those who bought vacation properties during the 1990s? These are the questions raised and discussed in "Help for second-home owners" written by Marilyn Kennedy Meila at Bankrate.com.

When we overindulged in real estate earlier this decade, we took generous helpings of seconds.

Now the problem for many with too much debt on their plate is how to deal with the mortgage on a second home.

When buyers purchase a home that's not their primary residence and ask lenders to qualify them based on expected rental receipts, it's counted as an investment property. If, though, borrowers plan to pay the mortgage out of their own pocket and use the property for their own enjoyment, it's a vacation home.

That's an important distinction because there's "some dispute about whether or not the recently announced government effort allows owners of bona fide vacation homes and some types of rental units to seek a refinance."

Meila discusses what she sees as the four options when dealing with a second home. They are:

• Refinancing
• Selling short
• Working out a modification
• Declaring bankruptcy

To read the complete article, go here.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Recession Sing-A-Long! - One can always laugh

Pulitzer Prize-winning political cartoonist and animator Walt Handelsman plays on the Broadway revival of West Side Story with "Worst Slide Story."

Watch the full animation.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Real Estate Deals -- The E-Mail Handshake

Smart phones are here to stay, so why not use them to negotiate a real estate deal? In fact, as an article in The New York Times points out, they are being used as e-mail is exchanged between prospective buyer, seller, and brokers.

"[I]t should come as no surprise that many real estate deals involving multimillion-dollar apartments and complicated co-op board applications are also now being done electronically.

In the current market, with fewer apartments being sold and buyers waiting to scrape the bottom of the market, many brokers say that the immediacy of e-mail communication often helps them keep deals alive."

Without discussing the possibly binding nature of e-mail communications in light of a state's particular Statute of Frauds, the Times does indicate there are "a host of new questions."

Can a negotiation be conducted entirely via e-mail? How much and what kind of information can be shared online? Are there times when agents and clients should put their BlackBerrys away and pick up the telephone? Are exclamation points and smiley faces unprofessional?

Those questions are discussed in The E-Mail Handshake. Do you see any risks? We'd like to know.

For your next title order, try:

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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HARP on it to make your home more affordable

HARP is the acronym for a government program (they love acronyms) for the Obama Administration's Home Affordable Refinance Program. The program is addressed to the "homeowner who is current on [her] mortgage payments but unable to refinance to a lower interest rate because [her]home value has decreased..."

Eligibility for HARP is determined by answering yes to four questions-
1. Are you the owner of a one- to four-unit home?
2. Do you have a loan owned or guaranteed by Fannie Mae or Freddie Mac?
3. Are you current on your mortgage payments?
4. Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house?

If you can answer yes to all four questions, then you may be eligible for the program. The next hurdle is the appraisal because loans are limited to a maximum amount of 105% of the appraisal value. Eligibility and qualification are different things.

The HARP website says:

The Home Affordable Refinance Program gives up to 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to re-finance into more affordable monthly payments. The Home Affordable Modification Program commits $75 billion to keep up to 3 to 4 million Americans in their homes by preventing avoidable foreclosures.

We hope that HARP lives up to its promise.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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