I can no longer afford to make my mortgage payment. What are my options?

 

Before you make any decision you need to determine whether your short- and long-term financial situation will allow you to make the mortgage payments.

 

Housing counselors’ are a good resource to help.  A counselor will review your financial status,  recommend a financial plan, contact your lender with you on the phone on your behalf, and will also provide other information that could be helpful.  You can visit www.HUD.gov to find a counselor.

 

If there is no chance of your financial situation changing I recommend a short sale.  I know of a company that buys them and will negotiate with the bank on your behalf, so you won’t have to.

2009 Tax Credit Info

 

Who is eligible for the tax credit?  First-Time Home Buyers who purchase a home between 1/1/2009 and 12/1/2009.  Neither spouse may not have owned a residence during the three years prior to the purchase.

 

How much will the credit be? Maximum allowable is $8,000.00.  The credit is equal to 10% of the purchase price of the home.

 

Are there income limits? Yes.  Single buyers with income limits up to $75,000.00 and married couples with incomes up to $150,000 can receive the maximum tax credit.   If you income exceeds the limit for the maximum tax credit allowed, you may still be eligible for the credit.

 

Does the Tax Credit need to be repaid?  Not if the buyer lives in the home for three years or more.  If the house is sold with-in the three year period, the credit will be recouped on the sale.

What Should I Do If You Think a Servicer Isn’t Following the Making Home Affordable Program Guidelines?

People have called asking what to do if they think that servicers are not following the guidelines for the Obama Administration’s Making Home Affordable Program for modifying eligible mortgages and refinancing Fannie Mae and Freddie Mac mortgages. Here are the recommended steps to take:

1) First, go to www.makinghomeaffordable.gov, the official Treasury website for the Making Home Affordable Program. At the site, determine whether the loan is owned or guaranteed by Fannie Mae or Freddie Mac by clicking “Loan Look Up” on the ribbon on the top of the home page. Only the holder of the loan is allowed to perform this , so do in the presence of your client or after obtaining their written permission.

If the loan is a Fannie Mae or Freddie Mac loan, call (1) 1-800-7Fannie or (1) 1-800-Freddie, as appropriate, describing the specific inconsistency. Do this whether the issue relates to the refinancing or the loan modification program.

2) Next, if the loan is not owned or guaranteed by Fannie Mae or Freddie Mac you can determine if the servicer is participating in the Home Affordable Modification Program (HAMP) by going to the website and clicking “Contact Your Mortgage Servicer” on the top ribbon. To date, 16 servicers are participating, covering more than 80% of all mortgages.

If the servicer is participating, the first step is to contact the servicer using the phone number or email address listed on the site so you can appeal the issue to a supervisor. Be sure to identify the specific provision of the guidance that you believe is not being followed. If the supervisor cannot or will not correct the problem, call 1-800-7Fannie to report the disagreement. Fannie is administering the program for the Treasury Department and will work to resolve the issue.

Making Homes Affordable

On February 18, 2009, President Obama announced his Making Home Affordable Program (MHA), designed to help up to 7-9 million families avoid foreclosure by restructuring or refinancing their mortgages. In doing so, the plan not only helps responsible homeowners behind on their payments or at risk of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs.  For more detailed information, visit MakingHomeAffordable.gov. 

How can I fix my credit, its bad?

I really don’t like the word fix when talking about credit.  Credit cannot be fixed it has to be re-establish.  There are quick fixes (which I don’t like and recommend that people avoid them if possible) that will increase your score by a couple of points for a couple of months.  I recommend that you work on re-establishing your credit, and let creditors trust you again.  Get your credit report from all three credit bureaus (www.equifax.com, www.experian.com, and www.transunion.com, or try www.annualcreditreport.com for a free credit report) and find out which accounts are hurting your credit.  The credit report will have numbers you can call for the accounts showing on your credit report.  I suggest you call the companies that are reporting bad debt and try to negotiate a settlement. 

FYI:  When negotiating an uncollected debt with a collection company never send them a check first.  Once both of you come to terms on a amount, have them send you a statement first with the amount agreed upon and then send them a check with a copy of the statement attached by certified mail.   

According to the FDCPA

Debt collectors MUST stop contacting you if you ask them to do so in writing.  AWESOME, I thought so

New Credit Card Consumer Rules
 

Sec. 108. Prohibition on universal default and unilateral changes to cardholder agreements. Prevents credit card issuers from increasing interest rates on cardholders in good standing for reasons unrelated to the cardholder=s behavior with respect to that card. Prevents credit card issuers from changing the terms of a credit card contract for the length of the card agreement. Allows penalty rate increases only for specific, material actions or omissions of the consumer specified in the card agreement. Requires issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations.

 

Debt Negotiating Companies:

Debt negotiation differs greatly from credit counseling and DMPs. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit. That’s why many states have laws regulating debt negotiation companies and the services they offer. Contact your state Attorney General for more information.

The Claims

Debt negotiation firms may claim they’re nonprofit. They also may claim that they can arrange for your unsecured debt — typically credit card debt — to be paid off for anywhere from 10 to 50 percent of the balance owed.
The firms often pitch their services as an alternative to bankruptcy. They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete their debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company. The firm may promise to hold your funds in a special account and pay your creditors on your behalf.

The Truth

Just because a debt negotiation company describes itself as a “nonprofit” organization, there’s no guarantee that the services they offer are legitimate. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to double or triple. What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved.
While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income.

Damage Control

Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. But before you do business with any company, check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. They can tell you if any consumer complaints are on file about the firm you’re considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.

Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing to explain certain costs or mention that you’re signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a bankruptcy filing, tell you everything that’s involved, or help you through what can be a long and complex process.

In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on these advance-fee loan guarantees. They may be illegal. It is true that many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan — or even represent that a loan is likely. Under the federal Telemarketing Sales Rule, a seller or tele-marketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or accept payment until you’ve received the loan.

You should be cautious of claims from so-called credit repair clinics. Many companies appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. But you already have the right to have any inaccurate information in your file corrected. And a credit repair clinic cannot have accurate information removed from your credit report, despite their promises. You also should know that federal and some state laws prohibit these companies from charging you for their services until the services are fully performed. Only time and a conscientious effort to repay your debts will improve your credit report.

If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.

Under the Fair Debt Collection Practices Act:

       Debt collectors may contact you only between 8 a.m. and 9 p.m.

       Debt collectors may not contact you at work if they know your employer disapproves.

       Debt collectors may not harass, oppress, or abuse you.

       Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.

       Debt collectors must identify themselves to you on the phone.

       Debt collectors must stop contacting you if you ask them to do so in writing.

You can report Collection Company Abuse to the FTC.  The abuse must fall under the Fair Debt Collection Practices Act, which can also be found at the FTC website, www.ftc.gov.