“An expert's single word of advice for folks who dream of buying a foreclosed house at auction: Don't.”If you consider that “buying a house is like navigating an obstacle course, then buying a foreclosure is like crossing a minefield.”
"’I caution anyone who isn't in the (real estate) business: Buying (at auction) can be one of the worst decisions you'll ever make," says Jim Hamilton, a Realtor in Los Gatos, Calif. Another bit of counsel from Hamilton: If you want to buy foreclosures at auction, plan on making that your full-time job.”
“And you're paying for all of the loans, back interest, taxes and attorney's fees on the property. So if the house is worth $300,000, the opening bid could actually be $400,000. By the time you outbid everyone, you could be paying a lot more than that.”If the homeowner files bankruptcy on the day of the auction, or, in New Jersey, within 10 days of the sale, you won’t get your deed and will have to wait for return of your deposit.
People could still be living there. The house could be gutted -- missing copper and plumbing fixtures, or even roofless, Weintraub says.Finally, “the bank isn't going to tell you all that much about the house.” Inspect on your own if you can.
Ask yourself if you have the money, time, patience and support from the people around you to repair any problems with the house. "You need to be realistic about those questions. If the answers to any of those questions is 'no,' this probably isn't the house you're looking for," Hamilton says.Read the full article.
“IN the years since the financial crisis, adjustable-rate mortgages, or ARMs, with their low initial interest rates that changed over time, have been considered riskier than fixed-rate loans and shunned by most buyers. But these days more people are being persuaded to give the loans a try.”However, the mortgage seems to have learned one lesson of the mortgage melt down.
“This time around, lenders are rolling out more conservative ARM products — without the gimmicky extra-low “teaser” rates that adjust every six months, or the “pick-a-pay” and “option” features that allow borrowers to pay less than the monthly interest, only to be hit with a huge bill down the road.”
“Those ARMs were hallmarks of the subprime mortgage boom that fueled the soaring rate of mortgage defaults and home foreclosures nationwide.”Lenders ranging from Equity Now in New York to Bank of America are increasing the number of ARM transactions.
“Mortgage brokers and lenders say the loans most in demand are the “5/1” and “7/1,” in which the initial interest rate is fixed for the first five or seven years — after which many homeowners typically think about selling or refinancing anyway — then adjusted annually at a capped rate toward a maximum level.”While many have railed against the risk inherent in changes of interest rates over time, I believe history reveals that ARMs were safe due to caps on increase amounts at each step and over the lifetime of the loan. For a homeowner who plans on selling within a few years, the ARM may give her a nice discount in rate.
“But one catch is that getting an ARM may now be harder.While ARMs may be attractive to some, it’s doubtful that the number of ARM transactions will approach the 1994 high of about 70 percent of all home purchases.
“Last summer Fannie Mae, the government buyer of home loans, said lenders must qualify borrowers on either the initial rate plus two percentage points, or on the full index rate to which the initial rate is tied, whichever is greater.”
“The Justice Department is investigating allegations that a mortgage subsidiary of Morgan Stanley foreclosed on almost two dozen military families from 2006 to 2008 in violation of a longstanding law aimed at preventing such action.”It seems that
“Saxon Mortgage Services, is one of several mortgage and lending companies being investigated by its civil rights division. The inquiry is focused on possible violations of a federal law that bars lenders from foreclosing on active-duty service members without a court hearing.“
“[A]s many as 23 military foreclosures were under scrutiny in the Justice Department investigation.”Federal, and many state, laws have what’s called a “civil relief act” designed to protect active duty service men and women from being foreclosed. Federal law requires a judge to
“hold a hearing at which the service member is represented before granting a lender the right to foreclose on the service member’s home, even in states where a court order is not required for civilian foreclosures. As early as 2005, advocates for military families were complaining that banks and other lenders were frequently violating the law.”Read the full article U.S. Inquiry on Military Family Foreclosures
“STRUGGLING homeowners who owe more on their mortgages than their properties are worth have had few options to restructure their loans, but that may soon be changing for a few of them.
“Six months after the Federal Housing Administration announced an $11 billion refinancing initiative for these “underwater” borrowers, nearly two dozen lenders have agreed to take part in a new loan modification program.“Unfortunately, Fannie Mae and Freddie Mac will not participate.
“The F.H.A. program — called Short Refi — requires major concessions from lenders, which must agree to write off at least 10 percent of the principal balance, and from investors, who, if they own the mortgage, must also agree to the deal.“How does a homeowner qualify?
“HUD estimated that 500,000 to 1.5 million borrowers could be eligible for the program.“But the program may be short-lived as the House has voted to repeal the program. But good news may be out there.
“One mortgage expert, John DiIorio, the owner of 1st Alliance Lending, said that big banks were taking part behind the scenes, by referring homeowners to third-party lenders that could restructure their mortgages. He added that 1st Alliance had “several hundred F.H.A. Short Refi” loans in the pipeline.“
“But he said lenders and investors had agreed to reduce principal for only half of the loans he had worked on.”Underwater loans have been the bane of homeowners throughout New Jersey. Maybe this program will give them some relief.
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