5 of 10

Write now Article Tools

There is a brand new mortgage product on the sponsored by the Federal Housing Administration (FHA) that will finally reduce the inventory of foreclosed homes and keep the American Dream alive. This loan product is for owners who cannot make their current reset Adjustable Rate Mortgage. There have been many articles written of late explaining why the banks can't or won't work with those whose adjustable rate loans are resetting. Some of their reasons are valid and this loan product addresses those issues.

Many have called their bankers to tell them that they will not be able to make these new higher loan payments only to be told that they must be late several months before the bank can help them. While that may still hold true, don't believe it, and if your bank won't help you...don't give up. The Government now has a solution that is so new, only a few lenders are working with this product; however, it won't be long before many mortgagors are taking advantage of this and helping owners save their homes.

This product, I'm told is called a "Short Pay" loan. There may be different names used in diffent parts of the country, so make sure you can explain it to your lender. The new lender gives the homeowner an FHA loan at 3% under market value, once an appraisal has determined the value of their home and a "Short Pay" amount has been approved by your bank as in a "Short Sale". You also may be able to get a modification like this from your own lender which would be much better, however, some lenders, such as Countrywide are not participating in these types of modifications.

Let's say, for example, that your home was $250,000 when you purchased it and you have a loan for $230,000. And we will say furthermore that the market value has dropped to $150,000. The bank would then lend you $145,000 on your home, fixed for thirty years at the current market interest rate. Now, you're probably thinking that that certainly won't help, because you owe $230,000...right? They way around this problem is that in order to qualify for this loan, you must first obtain permission to "Short Sell" your home and have the bank approve an amount.
Your current mortgage will then be set a price that your lender will accept from a Buyer on your home. Once they do, you will then step into position as the new "Buyer" and a new Lender will give you the FHA 'Short Pay" loan. In this loan it is important that you are not late on your former payments.

"Short Sales" usually cost banks $30,000 or more

• 1
• 2
• next page >>

Add your voice

Know something about Tips for avoiding foreclosure?
We want to hear your view. Write now!