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Analyzing Mortgage Applications

How large a mortgage can you afford? The size of a mortgage you can qualify to obtain will determine how much you can spend on purchasing a home. There are a variety of different factors looked at by banks when analyzing mortgage applications.

Debt – to – income Ratios

What is a debt to income ratio? There are two types of debt to income ratios. A front – end debt to income ratio and a back – end debt to income ratio. The front – end and back – end debt to income ratios are utilized by mortgage lenders during the mortgage application process. A front – end debt to income ratio is in reality a housing expense calculation. The theory is how much of an individual’s or family’s gross (pre tax) income can be utilized to make mortgage payments on a monthly basis. This front – end debt to income ratio usually runs between 28% and 33% of an individual’s or family’s income. This means that the financial institution will not approve your mortgage application if your debt to income ratio goes beyond the financial institution’s guide lines. This specifically applies to conventional loans and Federal Housing Authority (FHA) loans.

Back-end Debt to Earnings Ratio

The back – end debt to earning ratio is the percentage of you or your family’s gross (pretax) monthly income that will be utilized for debt service for your financial obligations. Financial obligations include your proposed mortgage, credit card bills, car loans, child support, and all other types of financial indebtedness in this ratio. The back – end debt to income ratio utilized by financial institutions in their mortgage underwriting process is usually between 36% and 40% of your gross monthly income. This means if your proposed new mortgage and other debts are more than 40% of your gross income, you will most likely get turned down for your mortgage application. In situations where there are assets in the bank and very high credit scores, financial institutions have been going as high as 48% on the back – end debt to income ratio.

Before you submit a mortgage application, you should calculate your front – end and back – end debt to earnings income ratios. This will give you a better idea as to whether you will qualify for the mortgage you are applying for.

Foreclosure Defense Lawyers

First you get the loan, then you start making payments to the loan. But what happens if your financial situation changes? If you lose your job, become disabled, are downsized or have other financial problems, you may find yourself in a foreclosure situation. Do not dispair. The Law Offices of Schlissel DeCorpo has been helping families deal with foreclosure problems for the last 20 years.

We provide all aspects of foreclosure defense. We attend foreclosure court conferences on behalf of our clients. We litigate issues such as defective foreclosure lawsuits, predatory lending, defective mortgages and other significant real estate related defenses. We’ve developed an expertise concerning federal laws and foreclosure.

We can also help you deal with foreclosure-related bankruptcy issues. Filing either a Chapter 7 or a Chapter 13 bankruptcy may be necessary to deal with the foreclosure on your home. If you file bankruptcy, you can eliminate second mortgages in some situations, stop foreclosure, stop other debt collections practices and at the end of the bankruptcy, action can be taken to re-establish your credit. Feel free to call us for a consulation. Our phone numbers are 1-800-344-6431, 516-561-6645 or 718-350- 2802. Thank you for visiting our foreclosure defense blog.

Mortgage Reform by President Obama

President Obama seeks to reform the mortgage industry in the United States. He plans on accomplishing this by significant changes in government backed Fannie Mae and Freddie Mac. President Obama has presented several different options to the United States Congress for reducing the country’s dependence on Freddie Mac and Fannie Mae. His program is one of fundamental reform of the mortgage industry. He hopes these reforms will provide greater protection for consumers and allow middle class Americans to obtain affordable mortgages.

Fannie Mae and Freddie Mac

Government backed Fannie Mae and Freddie Mac are involved in approximately 90% of the mortgages, one way or another, in America. As of now, these two government backed agencies have over $150 billion dollars in losses! It is anticipated these losses will climb to $400 billion dollars before the housing bubble is completely corrected.

New Programs

Some of the recommendations made by President Obama’s reform team will require Fannie Mae and Freddie Mac to charge banks the same amount for loan guarantees as paid by private financial institutions. Currently, federally backed mortgage loans can go up to $729,750. One of President Obama’s reforms would be to reduce this amount to $625,500. It is anticipated that this action will motivate the private banking sector to make more high-value mortgage loans.

The administration also seeks to have a minimum down payment of 10% regarding all government backed loans. One of the problems that caused the mortgage bubble is that Freddie Mac and Fannie Mae have been making loans with zero down payment. Query – if a homeowner has no money to put down for the purchase of a home, isn’t this an indication that if things do not go well, they will quickly walk away from making their mortgage payments? This is what caused the housing crisis. The giving of inappropriate mortgage loans to unqualified prospective homeowners!

The removal of government guarantees from the loan market is opposed by various special interest groups. Real estate agents, home builders, home supply companies, mortgage brokers and other individuals who make a living from the housing market oppose any changes to the current system. The Obama Administration seeks to make changes to the mortgage market over a five-year period.

Mortgage Modification and Foreclosure

If you have problems making your mortgage payments, reducing the amount of your monthly payments is a good idea. All financial institutions currently have mortgage modification programs. Unfortunately, some mortgage modification programs fail to provide belingered homeowners with realistic alternatives to their current mortgages. Our law office can help you deal with the complexities of the various mortgage modification programs.

Foreclosure is the process by which a bank takes back a home for the nonpayment of a mortgage. Should you be facing foreclosure, we can keep you in your home. Our foreclosure defense lawyers have developed an expertise in fighting these lawsuits. Once a lawsuit is initiated, we attend foreclosure court conferences on behalf of our clients. We defend defective foreclosure lawsuits. We deal with issues of predatory lending, defective mortgages and the failure of financial institutions to obtain the proper assignments and paperwork necessary to initiate litigation. We also update this foreclosure blog on a regular basis to keep our clients informed about the real estate industry in the United States. Call us for a free consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.

Bank of America Segregates Troubled Mortgage Loans From Performing Mortgage Loans

Posted by Elliot S. Schlissel, Esq.

Bank of America has 1.3 million home mortgage loans in its portfolio that are in default.  To deal with these defaulted home mortgage loans, Bank of America created a new entity.  This entity is known as Legacy Asset Servicing.  The defaulted loans, from this point forward, will be serviced by Legacy Asset Servicing.  Many of these defaulted loans were acquired from Bank of America when it purchased Countrywide Financial in 2008.

Performing Mortgage Loans

Bank of America has approximately twelve-million additional home mortgages in its portfolio.  These home mortgage loans are not in default.  Bank of America will continue to service these loans directly.

Countrywide Financial and Improper Mortgage Policies

Countrywide Financial was involved in initiating numerous sub-prime mortgage loans.  Since Bank of America’s acquisition of Countrywide, they have been forced to write off billions of dollars in sub-prime mortgage loans.

Bank of America has decided to remove the non-performing loans from its portfolio for a variety of reasons, including an investigation into foreclosure practices by financial institutions that is currently underway by all fifty state attorney generals’ offices.

Bank of America Changes its Foreclosure Practices

Last year, after Bank of America was criticized by state court judges in a number of states, it established a moratorium on foreclosures.  The bank has since modified its foreclosure practices.  Bank of America has also sharply increased the number of mortgage modifications that have been approved. In the last quarter of 2010, more than 80,000 mortgage modifications were approved by Bank of America.  This is a step in the right direction.

Chase Retail Services, which is a consumer banking unit of JP Morgan Chase, has also indicated that it would separate its non-performing home-equity and mortgage loans from its performing home-equity and mortgage loans.  In January of 2009, Citibank also separated its troubled home mortgage loans from mortgage loans that were up-to-date.

Foreclosure Defense In New York

The Law Offices of Schlissel DeCorpo handles foreclosure defense cases throughout the Metropolitan New York area.  We assist our clients in mortgage modifications.  Should your home go into foreclosure, we attend foreclosure conferences, we litigate these matters and deal with defective foreclosure practices, predatory lending and bad faith proceedings by financial institutions.  We also maintain this foreclosure blog to update the general public regarding a variety of issues concerning mortgage modifications, foreclosures, mortgage modification programs that fail to serve the needs of consumers, as well as other related articles.  Should you need a consultation, fell free to contact us at 1-800-344-6431; 516-561-6645 or 718-350-2802.  Our phones are answered 24/7.

Blame the Banks, Not the Homeowners, for the Mortgage Crisis (PART 2)

Fraudulent Mortgage Applications

Banks were aware that the applications that had been submitted to them by individuals seeking mortgages were fraudulent.  Instead of operating an appropriate underwriting process that provided due diligence to see to it that the consumer’s requesting mortgage loans could actually make payments on these loans, the banks simply stopped underwriting the loans in any reasonable manner.  The failure of the banks to properly underwrite the loans is one of the principal reasons for the mortgage bubble in America.

Income-to-debt Ratio

The banks have been aware for decades that there is an income-to-debt ratio a perspective homeowner must meet to be able to afford to make mortgage payments.  Loan officers, mortgage brokers, real estate agents and appraisers were involved in the submission of fraudulent documents where the loan-to-debt ratio was of such a nature that the perspective homeowner could never successfully make the mortgage payments.

Servicing Companies Who Would Rather Foreclose than Modify Mortgages

The servicing companies hired by financial institutions to service mortgages were supposed to provide the consumer with a simple, reasonable mortgage modification process.  Instead, incompetent under-financed mortgage modification programs were set up.  The financial institutions continuously ask the consumers to send and resend the same documents.  The communication level between the mortgage servicing companies and the consumer is almost non-existent.  Consumers became more and more frustrated in trying to communicate with individuals at the serving companies who knew nothing about their pending mortgage applications.  Instead of appropriately processing mortgage modifications for creditworthy individuals, these individuals have been turned down for their mortgage modifications.

Twenty Years of Representing New Yorkers in Foreclosure Defense Lawsuits

Our law firm is currently handling dozens of foreclosure defense cases throughout the Metropolitan New York area.  We help our clients obtain mortgage modifications.  We prevent banks from forcing our clients out of their homes.  We attend court foreclosure conferences, litigate defective foreclosure lawsuits, predatory lending, bad faith and other improper practices by financial institutions.

Should you need help, we are the law in the Metropolitan New York area with an extremely high success rate in our foreclosure defense cases.  Call us at 1-800-344-6431, 516-561-6645 or 718-350-2802.

Blame the Banks, Not the Homeowners, for the Mortgage Crisis (PART 1)

There is a foreclosure crisis in America.  There has been a lot of discussion as to where the blame lies for this crisis.  From my point of view, the blame sits squarely with the financial institutions.

There are those who say that homeowners are responsible for the foreclosure crisis because they haven’t been paying their mortgages.  Every foreclosure starts with a bank making a mortgage loan.  Banks make money by giving mortgage loans to consumers. They make more money when they sell the loans to other banks.  The banks that buy the loans make money when they contract with servicing companies to service these loans. When the underlying loans should not have been given to the consumer because the banks knew the consumer had no potential of making the loan payments, the banks bear the responsibility when the loans go bad.

Banks Knowingly Made Millions of Bad Loans

Banks made millions of loans in the United States to potential homeowners who had no potential of making the payments on these loans.  They carelessly handled the paperwork and processing of these loans.  Then when confronted with the mortgage crisis by President Obama, they said they would set up mortgage modification programs to help the beleaguered homeowners.  Instead of setting up reasonable mortgage modification programs, the banks intentionally and incompetently set up under-financed, poorly managed programs that were doomed to fail.  These programs, if they were properly and intelligently designed, operated and maintained, could have saved hundreds of thousands of salvageable mortgage loans.

Foreclosure Help

Should you need help with a foreclosure, we are the law firm for you.  We provide foreclosure defense for our clients.  We handle mortgage modifications.  Should you be served with a Summons and Complaint (legal documents in a foreclosure), we can represent you in these proceedings and keep you in your home.  We also countersue banks for defective foreclosure lawsuits, predatory lending and bad faith.  We attend foreclosure conferences and we litigate foreclosure proceedings on behalf of our clients. Feel free to contact us 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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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

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