Foreclosure Farmland
Loan Servicers Won’t Grant My Request for Modification
Q: I have a forbearance agreement with my lender and recently requested a loan modification. Their “loan servicers” say they’ve never heard of such at thing. I have $71,000 remaining on my mortgage. The interest rate is 10 percent and 14 years are left on the loan. I’ve been fully employed in my present position within the military for almost four years now, I’ve essentially zeroed out my credit debt and I’m ahead on my car loan. My credit scores are above 760. What can I do?
A: A loan modification is an agreement between a lender and a borrower to change an existing mortgage contract, perhaps by lowering the interest rate or extending the loan term. A lender is not required to modify a loan, many will not and some cannot because of the way the loan has been packaged and sold to investors.
In your situation, you have 10-percent financing in a 6-percent environment. Given your credit score, low debt and military service, you should first contact the nearest military housing office and ask for their advice. Next, contact other lenders and refinance your current debt.
You apparently fell behind on your mortgage at some point, but given your credit scores it’s clear that matters have straightened out. While your current lender may not be able to modify your loan, other lenders would likely be interested in bidding for your business. In rough terms, a $71,000 mortgage at 10 percent requires monthly payments for principal and interest of $623 over 30 years. At 6.25 percent, the same loan would cost $437 – a savings of $186 a month or $2,232 a year.
One consideration: If you replace the current mortgage with a 30-year loan, you’ll have a longer mortgage term – usually 30 years instead of the 14 years now remaining on your loan. The longer term means a higher potential interest cost than a shorter term. The suggestion here is that you get a 30-year mortgage with a right to prepay in whole or in part and without penalty. This way you can make larger payments each month that will reduce the loan term and possible interest costs, but you’re not required to make the bigger payments. Speak with lenders for specifics – most now welcome prepayments because their risk is reduced.
Q: What is “constructive” eviction?
A: We usually think of an eviction as the byproduct of a court order brought because a tenant did not pay rent, damaged a property or engaged in prohibited behavior. However, there are instances where landlords try to bypass the legal system and force tenants out by cutting off utilities, violating a tenant’s basic right to privacy or ignoring building and health codes. Removing a front door is a classic example of constructive eviction. Constructive evictions may expose property owners to claims for damages and may stall any court-ordered evictions. For specifics, speak with an attorney, landlord-tenant council or community housing organization in your area.
Q: Many states are moving against “foreclosure rescue specialists.” Why should it be illegal to buy foreclosed homes at discount?
A: It’s not. In general terms, “foreclosure rescue specialists” contact homeowners who have missed one or more mortgage payments and promise owners that homes can be “saved” from foreclosure. The rescue specialists then pay off a mortgage or bring it current and sometimes give the owner additional money to pay for other debt.
However, in exchange for such payments, the owner signs over title to the property. In effect, the home has been bought for the outstanding loan balance plus a few thousand dollars. All remaining owner equity is lost. The rescue specialist may then lease the home back to the owner at a steep rental, which essentially forces out the owner. The rescue specialist also offers to sell the property back to the owner, but only for a stiff price increase. Although the property is not foreclosed, title to the home is lost with foreclosure rescue schemes and the property surely is not “saved.”
A number of states now regulate foreclosure rescue specialists by requiring the up-front disclosure of all terms and costs. Some states, such as Maryland, have gone further and require that if a home is sold within18 months by a foreclosure rescue specialist then 82 percent of all profits must be returned to original owners.
We’re Tapped Financially. What Should We Do About This House That Won’t Sell?
By Peter G. Miller
Q: My late father’s house has been up on the market since June. We have dropped the price more than $30,000 but no bites. My sister and I are financially tapped out and are almost on the rocks with the bills. Should we take the house off the market, refinance it and then place it back on the market?
A: You have two sets of issues. First, the house won’t sell. Second, you have bills that are due now.
There’s a difference between listing prices and selling prices. When listing prices are too high, many buyers won’t bother to look at a property. Alternatively, selling prices – what homes sell for – may be very different than listing prices, especially in a buyer’s market and when discounts, concessions and credits are considered.
What’s necessary is to have your broker prepare another competitive market analysis – anything from last summer is out of date. With a new CMA, you can then devise a fresh marketing plan. Are you offering a seller credit to lower buyer closing costs? Would you be willing to pay all buyer settlement fees? Is the price still too high? These are important bargaining points in a market where purchasers often have little cash.
What’s the broker doing to advance the sale in terms of marketing, advertising, open houses, online promotion, etc.? If you’re dissatisfied with the broker’s efforts, and if the broker will not change, you may want to get a replacement when the current listing ends.
As to your current bills, speak with lenders about refinancing the property or getting a second loan. This is likely to be expensive financing because there will be fees and costs up front, but the loan will not be held for very long. Rather than replacing the current loan, you might want to add on a smaller second mortgage.
Q: My father-in-law co-signed on our home loan. My husband and I have recently separated, and I’m living in the house now. My father-in-law has told me that he can put a for sale sign in the yard at any time and that he owns a third of the house. I can buy out his third of the property and then it would be up to me and my husband to split the remaining balance. How can he be part owner when he just co-signed and has not made any of the payments? Is this correct with what he is saying?
A: You father-in-law co-signed your mortgage. That means if you default, the lender will look to your father-in-law for repayment.
Your father-in-law is a debtor, but is he also an owner? Is his name on the title? What is the basis for his claim to own one-third of the property? Why one-third and not a different percentage? Is there a document you signed giving him an interest in the property?
You need to review the matter with an attorney. It may be that your father-in-law simply is wrong and has no equity interest in the property.
Q: I’m using proceeds from the sale of my home to put down on my new home. So both closings are scheduled for the same day. However, this means I have to move out of my house completely on the day I also am attending two closings. Are there any other options? I would prefer to have a day or two to clean out my current home, rather than trying to accomplish all of this on the same day as the closings.
A: By any chance, can you rent back House 1 for a few days after closing? This would require a post-settlement occupancy agreement with your buyers. Speak with your broker for details.
Q: I’m looking to purchase farmland in the Northeast. Where do I find a good farm credit or an agricultural bank?
A: Most lenders will not make residential loans for working farms. Instead, take a look at the financing guarantees offered through the Farm Service Agency, a part of the Agriculture Department. Loans up to $852,000, at this time, are available through FSA. For details, contact a local FSA office or go to the FAS Web site: www.fsa.usda.gov.
The key word here is “working.” A farm or ranch is a business. If you do not have a farming background, then it would be best to take business and agriculture classes before considering the purchase of such property. Rural real estate brokers, of course, are a great source for property information.
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www.4divestdebt.com
FARMLAND Foreclosures, HUD Owned Home for Sale – 206 N HICKORY ST, 47340
