When consolidating debt, we recommend considering second mortgage loans versus using a credit card. A mortgage carries simple interest and the credit cards use compounding interest that can put you in debt quickly. An equity loan or second mortgage is a fixed rate loan or a variable rate line of credit that is in second position on the property’s title. Second mortgage loan amounts approved by lenders are typically determined by calculating the difference between what you owe on your house and the estimated value of the house.
In most cases, these types of home equity loans do not require borrowers to pay significant lending fees. Many homeowners are reluctant to refinance their first mortgage because most refinance lenders charge $3,000 to $5,000 in closing charges and most homeowners already have a great interest rate between 4 and 5%.
Consolidate with a Second Mortgage
In most cases, second mortgage rates are bit higher than to prime mortgage rates available when refinancing on first mortgage liens. However, home equity loan rates are drastically lower than credit card rates and the terms for credit cards can change without your consent.
Posted in 2nd Mortgage Tips.
Millions of Americans are looking for better paying jobs but many North Carolina homeowners have been struggling in 2010 more than ever. Second mortgage foreclosure rates continue to rise but many homeowners are hopeful that mortgage help is on the way with government relief. North Carolina residents have been applying for first and second mortgage modifications from lenders at a record pace.
The Treasury announced last Wednesday that the N.C. Housing Finance Agency will be receiving $159 million from the U.S. Treasury Department to help unemployed North Carolinians save their homes from foreclosure. Even though, North Carolina mortgage rates remain at record lows, the state was one of five states approved for a total of $600 million. Arizona recently received second mortgage relief that was beginning to reach homeowners. With the funding, the HFA will be able to expand its Home Protection Program, estimated to help 7,200 homeowners in the next three years pay their first and second mortgage loans or refinance into a new more affordable home loan.
According to housing experts both 1st and 2nd mortgage foreclosures have been on the rise this year statewide because of high unemployment. Foreclosure starts in the county totaled 985 properties in the first half of 2010, up 35 % from the same period in 2009. Connie Helmlinger, a spokeswoman for the HFA said, “Given the fact that we’ve lost more than a quarter of million jobs between 2007 and 2009, and we now have 457,000 people out of work in June, this is very much needed.” The HFA’s current program, the Home Protection Program, was started by the N.C. General Assembly in an effort to help homeowners who lost their job, keep their homes. The program helped 600 homeowners across the state since 2004.
HFA introduce several unique programs in an effort to help homeowners who are receiving reduced wages by paying a portion of their home loan. One option will help refinance high-cost second mortgages and the other will reduce principal from their home mortgage through a loan modification. The second-mortgage refinancing program will be offered only in counties with severely high unemployment. All of the programs will provide assistance in the form of a zero-interest loan forgiven over 10 years, as long as the owner continues to live in the home. The HFAs submitted their Hardest Hit Fund proposals to Treasury on June 1. Treasury then reviewed each state’s proposal to ensure compliance with the Emergency Economic Stabilization Act of 2008.
Posted in 2nd Mortgage News, Foreclosure Prevention, North Carolina Mortgage, Second Mortgage Modification.
Many homeowners seeking a mortgage refinance or a loan modification have been hindered because of their second mortgage loan. Many borrowers looking to lower their payments with fixed home refinancing solutions are frequently denied because their 2nd mortgage raises their combined loan to value level beyond the threshold allowed for refinancing. Even people pursuing loan modification plans run into problems because their second mortgage lender will not cooperate. Very few homeowners have been successful getting a second mortgage modification. In some cases it’s easier to negotiate a buyout so that you no longer have a mortgage in second position. Lawyers and loan modification companies call this second mortgage lien stripping and these mortgage relief firms usually charge between $1,500 and $3,000 for their services. If you are able to buyout a $100,000 second mortgage for less than $20,000 then paying these fees makes sense. You must make sure however that if they are unsuccessful stripping the second lien that you are reimbursed your money.
Posted in 2nd Mortgage News, Foreclosure Prevention, Mortgage Relief, Second Mortgage Modification.
Tagged with Second Mortgage Modification, second mortgage relief.
Second mortgage defaults have been troubling lenders in Western states like Arizona, California and Nevada. Many borrowers got in over their heads taking out second mortgage loans for home improvements and buying things they could not afford. As property values dropped second mortgage defaults soared. Some lenders offered second mortgage modifications and some simply wrote off the losses. Arizona will receive $125 million in federal money, as one of five states that have been hit the hardest by the housing market crash.
The Hardest Hit Fund, created by the Obama Administration, is distributing the money to the Arizona Housing Finance Authority, which will disburse it through three means:
• Financial assistance through principal reductions, mortage rate reductions or term extension programs with the goal of securing permanent loan modifications to pay off second liens in cases where the second mortgage loans is preventing a homeowner from modifying the original first mortgage.
• To distressed homeowners who are either unemployed or underemployed cannot make their second mortgage payments to give them time to find a new job and resume making mortgage payments.
Arizona and the other four states — California, Florida, Nevada and Michigan will be receiving a total of $1.5 billion. “These states have identified a number of innovative programs that will make a real difference in the lives of many homeowners facing foreclosure,” said U.S. Treasury Assistant Secretary for Financial Stability Herbert M. Allison Jr. in a press release. Five other states will receive about $600 million for housing assistance programs in the near future: North Carolina, Ohio, Oregon, Rhode Island and South Carolina.
Posted in Mortgage News, Mortgage Relief, Second Mortgage Modification, Second Mortgage Updates, second mortgages.
Tagged with second liens, second mortgage loans.
The second mortgage defaults continue to rise. A few years ago borrowers were using second mortgages or home equity loans to consolidate credit card debt. They were also used to heavily in purchase mortgage transactions in order to avoid mortgage insurance. 80-20 loans were the no money down loan combinations that enabled borrowers to get 100% financing. There was a day not too long ago that second mortgages rarely defaulted, but as the mortgage market crashed so did the will of borrowers to pay their 2nd mortgage. Second mortgage lenders occupy the subordinate position in the debt stack on your home mortgage are finding out that being No. 2, quite frankly, sucks big time. Prior to 2007, money was easy to access and banks also were happy to extend second mortgage loans and lines of credit to single-family homeowners. It was as easy as walking into a bank empty-handed and out another with a toaster and home equity loan. Since credit flowed like water, banks were equally happy to do an 80-20 loan, which was basically a first mortgage for 80 % of the value of a home plus a second mortgage for the remaining 20%. Whoopee, no money down for the borrower.
Now it’s time for banks to pay the piper. Here’s the big problem: If the home value is underwater or the homeowners are having trouble paying bills, the holder of the second mortgage or home equity loan doesn’t get paid back until after the holder of the first loan, which in those two scenarios almost never happens. Those 80-20 loans by definition meant the loan-to-value was high, high, high, and now that home values have declined, collecting any money for the second-lien holder is slim at best. If there is a Home Affordable Modification Program procedure or a short sale, the second mortgage holder also gets wiped out. Needless to say, second-lien holders are in no rush to see loan modification plans completed or jump into short sales, both of which would mean writing down the loans as full losses. At most banks, second mortgage loans, no matter how precarious, for as long as possible are carried on the books at full value — a bit of a fiction, but it does make the banks look better.
In March, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, openly called for the major banks to start writing down second mortgages. His point being, reported the Wall Street Journal, was “the banks’ reluctance to write down second mortgages is hurting efforts to reduce the first-lien mortgage balances of many borrowers who owe far more on their loans than the current value of their homes.” Indeed, one new change for the Obama administration’s HAMP is that borrowers who get reduced payments on the first mortgage through HAMP would automatically get a break on the second lien as well. Underneath all the politics, however, are some serious problems in regard to home equity loans:
Delinquencies are rising very rapidly. Historically, “delinquencies on home equity loans have been very low, but all that changed last year.” In 2005 and 2006, delinquency rates for home equity loans and home equity lines of credit remained under 1%. By the end of 2008, the delinquency rate for home equity loans crept above 2%. Then, over the course of 2009 those numbers vaulted to 5%, a major leap in percentage. “Most of the gain was in a one-year period,” Leonard reiterates. “That’s a huge pick-up in delinquency.” The curve of home equity loan delinquencies mirrors that of the unemployment rate. Leonard suspects delinquencies will stay high as long as unemployment rates hover around 10% or climb higher. As a result of home equity loan delinquencies, banks have taken some very large charge-offs. Net charge-off rates increased by 50% among the top five banks in 2009. Without naming names, Leonard said she knows one of the largest lenders of home equity loans took a $4 billion charge-off last year. Read the original article >
Posted in 2nd Mortgage Tips, Home Equity News, Mortgage News, Published Loan Articles, Second Mortgage Modification, Second Mortgage Updates.
Tagged with 100% financing, Second Mortgage Lenders.
It’s been year since Obama administration announced a revolutionary plan to aid almost 2 million distressed homeowners modify their second mortgage loans, yet not one homeowner has received mortgage relief. The Huffington Post reported that the second mortgage relief program has failed as part of the administration’s $75 billion anti-foreclosure initiative. This plan was supposed to reward mortgage servicers to coordinate payment reductions on subordinate mortgage loans when the first mortgage is modified under the administration’s Home Affordable Modification Program. Many real estate experts believe that addressing the second mortgage issue is essential in overcoming the foreclosure crisis.
The second mortgage relief plan was first announced last April. In August the Treasury Department released guidelines on how the 2nd mortgage program would work. Several months passed before any loan servicing even signed up. More than five weeks ago, Bank of America, the nation’s largest servicer with about three million second mortgage loans, signed an agreement to join, but a bank spokeswoman said the firm is still awaiting final guidelines from Treasury before proceeding. A Treasury spokeswoman said the firm could technically begin the process now. On Thursday, Citigroup chief executive Vikram Pandit told the Congressional Oversight Panel why Citi has not signed up yet. “We’ve said to the Treasury we’re willing to work with them as to what this no equity loan modification program is.” Pandit said in response to a question from New York’s top bank regulator.
According to RealtyTrac, about three million homes were lost to foreclosure last year and 2010 looks to be worse, in part because so many distressed homeowners have 2nd mortgage loans. In April, the administration estimated that “up to 50 % of at-risk mortgages currently have second mortgages.” The Obama administration noted: Second mortgage loans contribute to the number of American homeowners unable to afford their housing payments. Even where a 1st mortgage payment may be affordable, the addition of a 2nd mortgage payment can increase monthly payments beyond affordable levels. In addition, second mortgage loans often complicate or prevent a loan modification agreement or mortgage refinancing for the 1st lien. The Second Mortgage Program will help create a sustainably affordable mortgage payment for millions of homeowners who qualify for a 1st mortgage loan modification, yet still face challenges in affording their monthly payments because of a second mortgage.
Compounding the problem is that more than 11 million homeowners owe more on their home loan than their house is worth, putting them “underwater.” For homeowners who owe more on their mortgage loans than their home is worth, reducing the principal owed on the mortgage is more important than interest-rate cuts, because it gives homeowners back their home equity in the house and offers them incentives to continue making the home loan payments. Neiman noted to Pandit on Thursday that the second mortgage matter “has been a real disincentive that we are hearing from second mortgage lenders on making particularly principal reductions.” According to Citi’s regulatory filings, about 28% of its first mortgages are now worth more than the underlying assets, along with about 42% of their second mortgage loans. Read the original article > HuffingtonPost.com
Posted in Foreclosure Prevention, Home Equity News, Mortgage News, Mortgage Relief, Second Mortgage Modification, second mortgage.
Tagged with no equity loan modification, Second Mortgage Lenders.
A U.S. central bank official said Tuesday that the Federal Reserve is unlikely to hike mortgage rates any time soon given what is likely to be a slow move out of recession. Default rates for first and second mortgage loans declined in April from March but rose for the third month in a row for bank cards, to data released today from Standard & Poor’s Ratings Services. The defaulting balances of bank-card loans were 9.1% in April, up from 8.9% in March and 7.7% a year earlier. First and second mortgage default rates were 3.7% and 2.5%, respectively, both down from March. Auto loan defaults were 1.9%, dropping from 2.4%.
David Blitzer, chairman of the index committee at S&P Indices, said consumer defaults for mortgage loans bottomed out around the same time as the stock market in early 2009. Bank cards, on the other hand, continue to worsen and are at levels not seen in the history of S&P’s indices. That could spell bad news for consumer spending which has shown improvement in recent months. “With attention focused on consumer spending and little hope for a fast rebound in housing, the bank card series may raise concerns for many consumer related businesses as well as for consumer oriented lending institutions,” Blitzer said.
Consumer-credit defaults varied across major cities and regions in the U.S., with Chicago showing the smallest decline in the past year among the five metropolitan areas included each month in the data. However credit card debt settlement and bankruptcy filings Sharper declines were seen in Los Angeles and Miami, reflecting a somewhat more stable, though still weak, housing market as well as some economic improvements.
Posted in Mortgage News, Published Loan Articles.
Reuters reported that second mortgage loans defaults rose again last quarter. The 2nd mortgage defaults have made such an impact that borrowers can no longer get second mortgages for cash out or consolidating credit card debt unless they have great credit and at least 25% available home equity have the new loan is factored into the combined loan to value.
The second mortgage loans originated in 2005 and 2006 with the 80-20 loans are biggest contributor to the loan defaults. Many of those borrowers that have 100% loans were not afraid to walk away from their homes. Many borrowers that took out adjustable rate credit lines a few years ago want to refinance this debt into a fixed rate second mortgage, but those programs no longer exist. Second mortgage rates remain low, but not many borrowers can meet the criteria to qualify for a home equity loan in 2010. Only time will tell if the second mortgage market can recover.
Posted in 2nd Mortgage Tips, Mortgage News, Second Mortgage Updates.
Bank of America announced on January 26 that it is the first mortgage servicer to sign an agreement committing them to participation in the next phase of the U.S. government’s Home Affordable Modification Program (HAMP) which is aimed at resolving problems with struggling homeowners who have more than one mortgage on their home. A continuing issue with HAMP loan modifications and other non-government attempts to help homeowners modify their loans so they can afford to remain in their home has been the prevalence of homeowners with two liens against the property. The HAMP loan modifications are very important for borrowers that don’t qualify for a second mortgage refinance through the Home Affordable Refinance Program.
At the height of the housing boom, many homeowners opted for an “80-10-10″ or “80-15-5″ loan which allowed them to buy a home with a down payment of just 5% or 10%, borrowing the rest in two loans in order to avoid paying private mortgage insurance (PMI). PMI is typically required when a lender is making a loan for more than 80% of the value of the property. As homeowners have watched the value in their homes diminish, making them ineligible for a traditional refinance, and have also experienced either a job loss or reduced income, they have been struggling to meet their mortgage obligations. The federal government stepped in with the HAMP program, but found that in most circumstances the second mortgage holder was unwilling to make a loan modification even when the first lender would modify that loan.
The Second Mortgage Modification Program (2MP) guidelines are expected soon from the federal government. Bank of America will begin implementing the program as soon as the guidelines are in place. The second mortgage program will require loan modifications to reduce the monthly payments on qualifying home equity loans and lines of credit under specific conditions, including a HAMP modification on the first lien. “For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment,” says Barbara Desoer, president of Bank of America Home Loans. Financially strapped homeowners may have to wait a little longer for this program to resolve the issues between first and second lien holders. But in some cases, both loans are held by the same lender, which should make modification of both loans easier. Article was written by Michele Lerner.
Posted in 2nd Mortgage Tips, Foreclosure Prevention, Mortgage Relief, Second Mortgage Modification.
Tagged with HAMP, Home Affordable Refinance Program., Second Mortgage Modification.
By admin
January 27, 2010