Improving Your Chances of Obtaining a Mortgage

For a period of time in America, mortgages were being given out by financial providers without the appropriate due diligence requirements being met. This caused a mortgage crisis in the United States that we are still dealing with. There are currently new rules in place regarding obtaining mortgages. The rules are strict and the requirements are more difficult to meet.

Credit Scores

It takes a much higher credit score today to obtain a mortgage than it did five years ago. Prior to obtaining a mortgage, it is important that you investigate your credit score. If your credit score is not high enough to obtain a mortgage, procedures can be undertaken to increase your credit score.

Paying Down Debt

If you have significant debt from credit cards, car loans or other types of debt, it can have a negative impact on your credit score. By paying down your debt you improve your income to debt ratio, which in turn will raise your credit score.

Don’t Make Large Purchases

If you’re planning on buying a home, do not apply for additional credit cards and do not make large purchases on your existing credit cards prior to buying your home. Lenders will look into these activities and it will have a negative impact on their underwriting process.

Put More Money Down As a Down Payment

Lenders today are looking for 20% down payment before giving mortgage loans to prospective homeowners. If you could put down more than the 20%, it will increase your chance of getting a mortgage loan.

The mortgage process will require that you produce tax records, pay stubs, bank statements, credit reports and other financial documents. Maintain all of these documents in an organized fashion. This will ease the burden of filling out the mortgage loan applications.

Beware of the Twenty Eight Percent Standard

Banks today are following guidelines that total housing expenses should not exceed 28% of your monthly gross income. If you exceed the standard it will be difficult for you to obtain a mortgage.

Foreclosure Defense

Foreclosure is a nasty term. Foreclosure notices are depressing. There’s a tendency when your financial troubles are out of control to try to avoid these problems. This is a wrong way of dealing with this problem. Come to us, we can help you! We litigate all aspects of foreclosure proceedings including, but not limited to, defective foreclosure lawsuits, defective mortgages, predatory lending issues, bad faith, and other real estate legal issues. We attend foreclosure court conferences for the clients we represent. We also assist our clients in the preparation of mortgage modification applications, as well as deal with mortgage modification programs that are unresponsive to our clients’ needs.

In certain situations, foreclosure related bankruptcies can be utilized to stop foreclosures from moving forward. Upon filing either a Chapter 7 or a Chapter 13 bankruptcy, the bankruptcy court issues an automatic stay that stops the foreclosure lawsuit from moving forward. It should be noted that bankruptcy proceedings are brought in the United States Bankruptcy Court, while foreclosure proceedings are brought in New York State Courts.

For our clients who file bankruptcy, we can sometimes eliminate second mortgages. We also can assist our clients in re-establishing their credit after filing bankruptcy. Should you have questions as to what type of bankruptcy would be appropriate for you or whether there is other alternatives related to foreclosure defense, feel free to contact us. At your initial free consultation, we will discuss all of your foreclosure options. We look forward to seeing you again on our foreclosure blog.

Aid for Home Buyers Coming to an End

Fannie Mae and Freddie Mac are the federal agencies that are responsible for the large majority of mortgages in the United States. The Obama Administration plans on eliminating these two programs and replacing them with new programs.

Fannie Mae and Freddie Mac subsidized 90% of the home mortgage loans in the United States in the year 2010. Under the new programs suggested by President Obama, the percentage of loans sponsored by federal agencies by the end of the decade will be only 10%.

Fannie Mae and Freddie Mac

Freddie and Fannie’s programs were established in the United States after the great depression. The intent of these programs was to assist Americans in the purchase of single family homes. For decades, Freddie and Fannie were successful in helping Americans fulfill the American dream of home ownership.

These programs attract investors by guaranteeing repayment of mortgages even if the homeowners default. The investors accept relatively lower interest rates under these programs due to the government guarantees. This enables both Freddie and Fannie to create a pool of mortgage money for lenders at low cost, which in turn allows the borrowers to obtain relatively low interest rates on their mortgages.

Tax Payers Back Freddie and Fannie

The problem with Freddie and Fannie is that the system only works because the United States Treasury backs the system. In the year 2008, the Federal Government was forced to take over these companies. Since then, the government has spent $135 billion dollars in honoring mortgage loan guarantees.

Freddie and Fannie To Be Dissolved By The Obama Administration

The Obama Administration plans on gradually phasing out Freddie and Fannie. They plan on doing this by reducing the number of loans that they guarantee and charging higher prices to the private lenders. Higher down payments will also be required for the perspective homeowners to obtain mortgages.

Thirty Year Fixed Rate Mortgage

The thirty year fixed rate mortgage is the most common mortgage given in the United States. This mortgage would never have existed without government support under the Freddie and Fannie programs.

Three Options to Replace Freddie and Fannie

The first option would be the complete elimination of all government guarantees for mortgages. The second option would offer some guarantees to investors, but only at times when the economy is not doing well or the real estate market is in financial distress.

The third option would involve the government guaranteeing various types of mortgages, but only if lenders first purchased a guarantee from a private insurer. Although this would limit the government’s exposure, it would also impact interest rates. The third option is a similar option to what exists today under Freddie and Fannie.

Affordable Housing

Conservatives blame Freddie and Fannie for causing the mortgage crisis in the United States. Housing advocates say the Obama Administration is making a mistake in trying to kill Freddie and Fannie. They point to the fact that these programs have been successful for decades in the past.

John Taylor, the president of the National Community Reinvestment Coalition, stated that “instead of cleaning up where Freddie and Fannie went wrong we’re eradicating a proven system that worked very well for most of it’s history.”

The ownership of a single family home is truly the American dream. I strongly believe the government should assist Americans in fulfilling this dream. However, I also believe the dream should be smaller and less expensive!

Foreclosure Help

The Law Offices of Schlissel DeCorpo provides foreclosure defense for homeowners. We litigate all aspects of foreclosures, including defective mortgages, defective foreclosure lawsuits, predatory lending and bad faith issues. We attend foreclosure court conferences on behalf of our clients and we provide our clients with the various options available to them in foreclosure matters. We also assist our clients with mortgage modifications and deal with mortgage modification programs that fail. We file Chapter 7 and Chapter 13 bankruptcies on behalf of our clients for the purposes of stopping foreclosure actions from moving forward. In some situations, we can eliminate second mortgages by filing bankruptcies for our clients. We also assist our clients in re-establishing credit after filing for bankruptcy. Thank you for visiting my foreclosure blog. Free feel to call us should you need legal assistance at 1-800-344-6431, 516-561-6645 or 718-350-2802.

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

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