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Ok, let’s move to the next one
The next one is that your loan to value on your house has to be at least 90% of the property value
So in other words everyone under 90% get’s foreclosed on? Right, if you only owe 80% of what your home is worth, they can foreclose on you, take your house and they do not lose as much money
Back when I was working with Fannie Mae selling repos almost 20 years ago now, they always gave us the figure that they lost 20% of the loan amount every time they had to foreclose
So they have plenty of room in there to sell your house if you only owe 80% on it
So if you owe, let’s just throw out some numbers here, let’s say your house is worth $100,000 and you owe $80,000 on it well they are going to lose a little bit but they are going to make it back when they sell your house for $100,000.
Yes, they would just as soon kick you out and keep their money
Yes, exactly I am not necessarily going to say that Fannie Mae is going to kick you out of your house however; the reason why they have this guideline is very simple, they are not going to lose money on you if they have to foreclose on you when you are under 90%
They certainly are not going to lose very much money
That one we will skip here, Freddie Mac if you have subordinate loans it may be left outstanding and will not be considered in the LTV, so let’s just give an example here, your house is worth $300,000 and you have a $300,000 1st mortgage but you happen to have a $50,000 second mortgage
They will re-modify your 1st mortgage but leave the 2nd mortgage in place
So people get to stay underwater, or upside down or whatever?
Well certainly you would be in that case and it just does not sit right
The best thing I certainly would like to see and do if nothing else in a situation like that is combine it all into one loan at a much lower interest rate
Because you know that 2nd mortgage is probably going to have a high interest rate
So it would just be so much better
We need verification of income that makes sense
Here is one I do not get, 38% as far as your debt to income ratio
That seems kind of high to me
What do you think Michael?
Well I think that people have gotten themselves into trouble and they need to do something like a loan modification for instance 38% is probably on the high side
People need relief, but they need relief that is going t last a long time
Even though this is essentially a trial period loan modification this particular guideline of 38% really does not set well with me, I personally think it needs to be lower
People need a break; people need to be able to stay in their house
Well what I was looking at is your average family; I always think probably pays about 30% of their gross income towards taxes, payroll, and things like that so right off the bat Uncle Sammy takes 30% well now that Fannie Mae and Freddie Mac are owned by the government Uncle Sammy is going to get another 38% out of your paycheck which is a total of 68% that doesn’t leave a whole lot of money does it? Especially if you have to have a car payment, or you have to have kids to feed, maybe who go to daycare while you go off to work assuming you still have a job
The unemployment rate is pretty high.
Well in order to qualify for this you do have to have income so you do have to have a job
So moving on to the next one because we are getting a little short on time, what they are going to do is take all of your back interest, escrow advances, costs, fees, everything they are going to add it to the loan amount and have you pay it back over as much as 50 years
If they need to stretch it out that long
They are going to give you a 50 year mortgage.
I looked at that and thought, why don’t you make it interest only because you are never going to pay the thing off anyway
Lowest acceptable rate that they’ll have is 3%
The real kicker, if they get you a rate of 3% it will increase because it is that low, if it’s below today’s market rate down long will actually increase starting five years from now at 1% per year until it gets up to the market rate
So not only are they getting a 50 year loan that you will never pay off their giving you an adjustable-rate loan in many cases
Just out of curiosity into the market rate at that time or today’s market rate
The market rate today so they give you 3% today it will just adjust up in the future, up until today’s market rate
So I think today’s market rate and the 6% you may get 3% for a couple years but eventually they go back up to 6%
Okay well there’s a few more of these that we want to talk about and we will get into that in the next segment for more information on Dan Havey and the MortgageAnswerMan.com you would call (480)Velocity
Or for more information on the loan modification or any questions that you may have you’re welcome to call it 888-Mod-Info
You can also find all this information at Velocity Financial that is velocityfinancial.com and we will be back with you in just a few moments
Real Estate Marketing This Week