NY Houses 4 Sale

American Home Mortgage - no clever title here.

This is not good. 

Yesterday, American Home Mortgage was forced to stop any closing that were scheduled.  Today, same thing.  There has not been a closing since Friday due to lack of money.  I have ran across article after article about why and how this has happened but to be honest - I have no clue as to why this happened.  American Home Mortgage is was huge and to put it simply there is just no money to fund any closings right now.  So does this mean that they are filing a bankruptcy or are they being bought out? 

I have no answers.

"American Home said its financial backers will not float any more money, so the company failed to provide $300 million in mortgages promised to home buyers on Monday. The company said it expects not to be able to finance $450 million to $500 million in mortgages more Tuesday".  Long Island Business News - Breaking News

American Home Mortgage Investment Corp. Provides Update on Liquidity: Financial News - Yahoo! Finance

Mortgage Mania - Part 9 The Capital Markets Strike Back

You won't win...

• You won't win if you ignore the letters.
• You won't win if you dodge the phone calls.
• You won't win if you refuse to pay.

The banks will always win! 

If you are faced with a possible foreclosure on your hands then there are things that you can do to fix your situation, but ignoring, refusing and dodging are not on the list. 

First, lets just for arguments sake that you are the very beginning of your long road.  Let's say that you have missed a few payments and you are just starting to get the "not so nice" reminders.  What should you do? 

CALL!

Call your bank.  Find out if they are offering any programs that will allow you to catch up on late payments as well as continue to pay the current month mortgage.  Banks are offering late payers up to 18 months to rectify their situations.  This is like resigning a promissory note  and should not be taken lightly because  you are agreeing to new terms and by defaulting again could mean losing your home faster.

A Forbearance Agreement - This is an agreement that the lender could or might  reduce or even suspend payments for a specific period of time.  Don't get excited yet - these payments are usually only suspended for about three months possibly a bit more.   This is a way for people who have experienced a natural disaster, short-term illness, short-term unemployment, or a pending sale of the property.   The lack of payments are not forgotten - in actuality the the suspended payments are added on to the back end of the loan.  The only way I would recommend this is if you are selling the property and you know you will be able to pay off the loan.  This is not in my opinion a way to catch up - I only see it as digging you deeper.

Sell - I can not be more blunt than that.  Sell your property and possibly make a few dollars back and save your credit.

By ignoring or dodging you are not helping your situation, I don't think that I have ever heard a bank say "oh, we can't foreclose, the homeowner won't return my calls, Darn!"

 

 

Other Options you might not have thought about....

My brother and his wife have entered into a situation that nobody would want to be in.  They have a neighbor who has fallen very ill and they are the only ones who are there to "take care of him".  This is not something that they have to do but more like something that they feel compelled to do, the elderly neighbor is old and is totally alone.  At this point, he is unable to fully take care of himself and Medicare has made it clear that they will absorb and drain any monies that he has in his name. 

Its a sad fact to watch a man who served our country more than once, not get the proper care because he has "too much".  Yes, he has "too much" but not enough to get him around the clock care.

Questions were raised and could only be answered by an Elder Care Attorney.  This attorney advised the elderly man to take a reverse mortgage to help pay for his care.  There is not enough cash in the bank to last more than two short months and there will be funds that need to be spent to ensure proper care. 

So after I looked up some information about Reverse Mortgage, I can totally see how an elderly couple could fall into the pitfalls of the product.  But, what other options do most elderly have.  They have worked all their lives and they have become house rich but cash poor. 

What is a Reverse Mortgage?

In short, a reverse mortgage is taking the value of your home and turning it into cash.  The cash you get from a reverse mortgage can be paid to you in several ways:

• one lump sum
• as a regular monthly cash advance;
• as a "credit line" account that lets you decide when and how much of your available cash is paid to you; or
• as a combination of these payment methods.

Now the creative part of this whole product is the repayments.  No matter which way you chose to have this loan paid to you, you don't have to pay anything back until you die, sell your home or actually just move out of the home, permanently.  Keep in mind - the only way you would be  eligible for most reverse mortgages is you must own your home and be 62 years of age or older.

Is it really all because of your mortgage?

It is true, there are alot of foreclosures that are starting to pop up quicker than the dandelion weeds - I have been keeping tabs on what is coming up and what has actually been auctioned off already and to be quite honest, some of the auctioned property was only in default for a small amount of money and the property was owned by the owners for more than 5 years.    This makes me believe that there were other reasons other than high mortgage payments that are making some foreclose and I think that if the defaulted homeowner could have sold their home rather than foreclosing.   

Alot of people took huge mortgages that is true.  But lets pay attention to other factors that cost money.  I know from my own personal finances that my mortgage is the easy part.  I can afford it.  I can afford the homeowners insurance and the taxes and I can afford to send my kids to private school and I can even afford to have cable in my house.   But, the things that I find are so unaffordable are things like, health insurance, car insurance, liability insurance, Workman's comp, disability insurance and life insurance.   Don't even let me get started on the price of gas...

Are you noticing the trend? 

Insurance premiums are out of hand.  In order for my husband and I to pay for our own health insurance (we are both self employed), it costs us $1072.00 a month for a family of four without meds!  To be honest, my husband are so insuranced out, I think I have insurance just in case my other insurance does not pay.  We are at the point where seriously we might be worth more dead than we are alive. 

The other day there was an article in the NyTimes, - "Other Reasons Borrowers Falter"  that was talking about the same thing... 

"Meanwhile, delinquencies caused by too much personal debt, including insurance premiums, rose to nearly 14 percent, up from 11 percent, while delinquencies ascribed to health care and illness rose to about 21 percent, from about 19 percent."

The article goes on to also say

“If you come in at the edge of affordability,” she said, “and gas prices go up $100 a month, and insurance premiums go up, and then a water heater breaks, that’s the kind of thing that can put a family over the edge.”

Give it a read - I find it spot on!

34% are clueless...

Let me ask this.. Do YOU know what type of a mortgage you have? 

If not - you should know.  I mean wouldn't you want to know if your rate will change in 3,5 or 7 years? 

This is something that needs to be added to your "to do list".  Seriously!

According to BankRate.com - 34% or poll takers did not know what type of mrtgage they currently had.  57% have fixed: 6% have adjustable and 3% are with interest only.

My suggestions:

• The 3% of interest only - Refinance.
• The 6% with the adjustable - Refinance.
• The 34% who have no idea what type of mortgage - seriously again - LOOK!

Growing up means...

Accepting responsibility is one of the hardest things I can think of that I have had to do day  in and day out since I have been an adult.  Everyday, I have something I HAVE to do and to be honest, sometimes I just don't feel like doing anything.  I want to go shop, go to the casinos or ya know what, maybe I would love to have a day that I can sit on the couch and eat bon-bons all day.  But I can't.  I am an adult and I must pay the bills and take care of my kids, husband, dog and the house.  Ugh. 

The second hardest things I have had to do since I have become an official adult is owning up to my mistakes.  I have to admit this has been a minimal but I have had to do it once or twice before.  Saying "I am sorry" has been noted to be the hardest thing to say to anyone person. 

Since I was 16, I have had to support myself.  This is not a hard concept - it can be difficult at times but doable.  Most adults I see still struggle with this and it is understandable, but I am a believer that you can fix almost any money downfall - Live smaller and within your means.    

Clean up your mess.  This is an everyday occurrence at my house.  For some reason my two sons think that the clothes they remove from their bodies just gets picked up on their own.  They think that the empty cartons, wrappers or cans get up and walk into the garbage all by themselves.  They can not understand why their mother goes nuts when the clothes are thrown all over the floor with the laundry basket 1.2" away from them. 

I remember when I was about 11 years old, I was staying with my grandmother an older Italian lady she was sweet - but a real stickler for Respecting your elders.  I remember one visit this little ole lady single handedly corrected my back talking. (its amazing what a wooden spoon will do)...

Becoming an adult also means paying your debts back.  This is something that needs to be stressed to our kids.  People are unaware that everything - Credit cards, Mortgages, Apartment rentals, buying a car and much much more depends on your CREDIT score.  If you fail to pay - you will always be paying more.  Bottom line. It takes one year to repair your credit but only two months to destroy it. Don't fall behind the eight ball. 

MortgagesUndressed has an article called "It Is Time To Grow Up" and what Mr. Larry Cragun says has alot more truth in than most are willing to admit. 

FICO - #1 of Importance

Looking to buy a home?  How about a co-op?  Ohh Maybe you want to rent an apartment?  How is your credit score.  That is the first thing that we real estate agents will ask.  Believe it or not, but your credit score decides alot of your future.  This article from Newsday.com explains the FICO in more detail.  Before you make your first step into buying or renting anything - read this article.

"FICO scores, developed by Fair Isaac Corp., are the predominant credit measure used by the mortgage industry. The scores run from 300 to 850 and are used to predict a borrower's likelihood of future nonpayment, with higher scores indicative of better creditworthiness."  Click here to continue...

50 Year Mortgages are here...

The past five years have been remarkable people.  All this talk of the "housing bubble" is .. I feel nonsense.  Homes are still selling, people are still buying and yes, banks are still giving mortgages.  I think that any person - young or old should buy something. Actually buy anything.  It is so easy to buy property.  Now it might even be getting easier.  The banks (some) are introducing the 50 year mortgage. Oh, You heard  read that correct.  50 year mortgages are here, and I think that for young couples, its not a bad idea.  It will give you the room to finally get a lower mortgage payment, with also paying down the principal.  I think that this mortgage is ten times better than the old "interest only mortgage". The old trusty interest only mortgage, gave you a lower (not that low) payment, but you never pay towards principal.  Hummm... not sure that one is great.  It gave people a chance, but after 3, 5 or 10 years - you still owe the original principal amount.  BUT, At least with the 50 year mortgage, you can make smaller payments - and be paying toward the principal.  Ok, so at the end of the term you paid an arm, a leg, an eyeball, your right and left ear and half the hair on your head - but you know what? .. you have a house.  YOU OWN A HOUSE. 

Let's take this for example: This is P&I only. On a 30 year mortgage at 6.75% - if you borrow $500,000 your payments would be $3242.99.  On a 50 year mortgage at 6.75% - if you borrow $500,000 your payments would be $2913.12 .  Your saving $329.87!  (I wont even tell you how much you actually pay back at the end of the term, I think you would fall off your chair).