Archives for July 2012

Home prices are down! Interest rates are at an all time low!! But can you get a loan?

Home prices are down!  Interest rates are at an all time low!!  But can you get a loan?Mortgage rates have reached all time lows. Unfortunately, the mortgage crisis in American has made it extremely difficult for the average American to qualify for these low interest mortgages.

A number of years ago, during the housing boom, if you were breathing and you walked into a mortgage brokers office, you could walk out with a mortgage. Today, only the most highly qualified perspective homeowners can obtain mortgage financing. Recent data from the Federal Reserve System shows more than 25% of all Americans who apply for mortgage loans are being rejected.

Lawrence Yun, the chief economist for the National Association of Real Estate Brokers, recently stated “good borrowers with one or two blemishes on their credit are being denied credit.”

Statistics regarding credit scores concerning Fannie Mae and Freddie Mac financed loans show the average credit score to qualify for a loan has increased from 720 to 760. For Federal Housing Authority loans the average score has increased from 660 to 700.

Down Payments

Today it is necessary that a perspective mortgage borrower have between 15 and 20% of the total cost of the home to qualify for obtaining a mortgage. It should be noted during the boom year in the real estate market all a prospective borrower needed to buy a home was a down payment of Zero!

About the Author

Elliot Schlissel, Esq. is an attorney who assists clients in real estate related matters. He is a former president of the Commercial Lawyer’s Conference of New York. He currently represents numerous individuals throughout the Metropolitan New York area in a variety of foreclosure defense lawsuits and mortgage modification applications.

Late Mortgage Payments Increase

During the last quarter of 2011, Trans Union credit reporting agency reports more than 6% of all mortgage holders in the United States were behind on their mortgage payments by 60 days or more.  It should be noted prior to the housing crisis that exists in America, the delinquency rate on mortgages was usually in the area of 2%.

Tim Morton, a group Vice President of US Housing in the Trans Union financial services unit, stated “the more encouraging news is when looking year over year the delinquency rate dropped over 6%! At this pace it will take a very long time for mortgage delinquency rates to get back to normal.”

Delinquency rates have been decreasing in Arizona and California.  Florida, which is the state with the highest delinquency rate, has a mortgage delinquency rate of approximately 14.5%!

The recent settlement by the five largest banks concerning mortgage improprieties may result in as many as one million mortgage holders having a reduction in the size of their mortgages.

Stabilization of Home Prices

The key to the real estate crisis in the United States is the stabilization of home prices and the reduction in the unemployment rate in the United States.  As the unemployment rate goes down, more Americans will become employed and the delinquency rates on mortgage payments will go down.  Less homes will be foreclosed upon and there will be stabilization over the long run in the real estate market.

Should You Buy A Foreclosed Property?

In foreclosure situations the bank brings a foreclosure action against a home owner.  Sometimes, after many years, the bank successfully takes title of the home. They evict the family who lived in the home.  There can be significant financial benefits from buying a foreclosed home.  However, there are also a variety of potential drawbacks.

Was The Home Properly Maintained?

If a homeowner was unable to make his or her mortgage payments there is a substantial possibility that the home was not maintained very well.  Homeowners who can’t make mortgage payments don’t improve their homes and often don’t fix things that break.  There is also the possibility that the homeowner, when he was being evicted, engaged in malicious conduct damaging the home.

The following is a list of things you should look for before purchasing a foreclosed home:

  1. Is the home neat and clean? Sometimes bank foreclosed homes have been sitting empty for long periods of time.  No maintenance or cleaning has been done and the houses have fallen into disrepair.
  2. Is the home legal? Sometimes homeowners modify, extend, and change their homes without getting the appropriate approval from their local building departments.  This makes title unmarketable.  In the foreclosure process whether the title is marketable or not does not come up.  However if you buy the home and thereafter you decide to sell it you will be responsible for legalizing the home.  This can involve thousands of dollars of modifications, application fees and legal work.
  3. Has the home lost electricity? If the home was vacant for a long period of time and the electricity was cut off this can have a negative impact on the electrical appliances in the house.
  4. Water damage. If there have been leaks in the home while it was empty it is possible that the home has suffered from water damage.
  5. Low quality upgrades to the house or poorly done repairs. Sometimes the homeowners are short on money, they take short cuts when the upgrade, modify or repair their homes.  The expression “A stitch in time saves nine” may apply in these cases.  These poorly done upgrades or repairs may not last very long.
  6. Overgrown property.  Homeowners who can’t afford to maintain their homes often fail to maintain their yards and lawns.  The property may be overgrown and/or may require extensive landscaping.
  7. Vandals.  Homes that are empty have a higher propensity to be vandalized than homes that are occupied residences.  Vandalism can involve individuals breaking in to homes, breaking windows, damaging walls, and removing pipes in the basement to sell the copper or brass.

Although there are bargains to be had in buying foreclosures, be careful!  You should carefully inspect the home before purchasing it.  It is suggested that, you have an engineer write an engineering report on your home before buying a foreclosure.  The price may be cheap on a foreclosed home but the real question is have you bought a bargain or a money pit!

Foreclosure Defense in Valley Stream, Lynbrook, Baldwin, Malverne, Freeport, Oceanside, Long Beach, Elmont, Lakeview, West Hempstead, Hempstead, Merrick and Bellmore, New York

We represent individuals throughout the New York Metropolitan area with divorce and child custody, personal injury, car accident, wrongful death, estate administration, nursing home and medicaid issues

The information you obtain at this website is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your particular legal issue. This is attorney advertising.

This is attorney advertising. This website is designed for general information purposes only. The information presented on this website shall not be construed to be legal advice. If you have a legal problem you should consult with an attorney.

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