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Recent Blog Posts
Ways to Lower your Mortgage Payments
Many people worry about their mortgage every month. There is a palpable dread when they open their mailboxes to find their monthly bill. If you feel the same way about your payments, then follow these steps to lower your payments and alleviate your stress.
The first step is to refinance your mortgage to get a better interest rate on the money you borrowed. This might not be available to you if your home's value is underwater. The only option is to try to refinance through the Home Affordable Refinance Program or HARP. This is only available under certain conditions, like your mortgage is from before 2009 and is owned by Freddie Mac or Fannie Mae. By financing at a lower rate, you can save money on your monthly mortgage payment.
The second option is to review and reduce your monthly tax payment. Taxes are escrowed over the course of the year and paid monthly with your principal and interest. The taxes are based on your county's estimate of your home's value. If your home has not been assessed since the housing bubble burst then you might be paying too much for your taxes based on that inflated value. Start by calling your country's assessor and explain the need for a new assessment of your home's value. If you can lower the taxes of your home, then you can lower your monthly payment.
Loan Modification Scams a Problem in Illinois
During the financial crisis of the 2000s, severe issues with the housing market came to light and many Americans found themselves with mortgages worth more than their homes. This is known as an “underwater mortgage,” and, according to Investopedia.com, “combined with a bad economy, resulted in numerous foreclosures” during the “aftermath of the 2000s housing bubble burst.” Many homeowners felt they had no choice but to default on their loans, as if defaulting form the mortgage was actually “cutting the losses from a bad investment.” It's not surprising, then, that loan modification rose as a viable alternative to defaulting on a mortgage, and several companies sprung up around the country offering services to help modify a mortgage loan. And yet with the myriad of upstanding companies to offer this type of service came a slew of scams that further complicated the housing crisis.
Buying a Home without Breaking the Bank
There are many reasons you may decide to buy a home or you may decide not to buy homes. All of these reasons are valid and important to the purchaser. Sometimes it's as simple as not being ready or not having the budget they would like. If you are in this boat, you may be wondering what you can do to know if you're ready to buy a house or not.
Budgeting
If you are looking at buying a home or if you should buy a home, you may need to look at your budgeting while you're renting or living in your current situation. If you are renting, you can probably purchase a home that is going to offer payments close to what you're already paying for rent. This will only work if you are keeping up with your rent easily.
Your rent is easy to compare to a home loan payment. The reason for this is most mortgages offer payments that are low if you find a home that is within the right budget. So if you're already paying rent for a home, it's easy to say that you can probably afford to buy a home that offers payments within the same price range.
How to Qualify for Short Sale
Purchasing a home requires planning and budgeting skills. Mortgage payments must be included on family calendars and paid on time. The joys of home ownership are great, but can require sacrifice. When hardships happen, it can make the home ownership even more stressful and financially difficult. In Illinois home owners do have the option of a short sale for their homes to quickly get rid of a home they no longer can afford.
Short sale is selling a property for less than what is still owed to the lender. In Illinois you must show that you have actual financial hardships that make it unable for you to make payments and better for you and the lender to rid the property lower than owed.
Typically, lenders will move forward with a short sale if the qualifications are met. You must show that you have lost a job, are receiving a reduction in income, business closure, divorce, illness/medical expenses, physically able to take care of the house, death in family, military duty or even a change in terms of your mortgage that make it unable to make payments. After notifying the lender of your intention to do a short sale, waiting for the approval and the amount you can go under to sell can be a nerve wrecking process. A bottom line price from the lender will help you negotiate your sale.
Defendants face life in Chicago ID-fraud case
According to a recent article, a very long, complicated scheme centered in Chicago but that included a murder in Mexico City ended Tuesday with three defendants facing mandatory life sentences.
This entire operation was based in Chicago's Little Village neighborhood. The scheme lasted for at least 15 years until it was broken up in 2007. In total, it generated somewhere around $3 million in annual sales of fake Social Security cards, driver's licenses, and various other documents.
Jurors determined Tuesday that Julio Leija-Sanchez, his brother Manuel Leija-Sanchez, and Gerardo Salazer-Rodrigues would all get mandatory life sentences for racketeering conspiracy because of the fact that it involved murder. This occurred one of the last stages of a six-week trial.
On Monday, the jury returned with three guilty verdicts on multiple counts.
Salazar-Rodriguez was who carried out the murder of a rival in Mexico City in 2007. According to prosecutors, he fired more than a dozen shots into a taxicab.
New Foreclosure Law In Illinois
The worst of the housing crisis that began in 2007 is over, but the ripple effects continue to plague the economy and American homeowners and likely will for some time to come. According to RealtyTrac, 1 in every 869 housing units in the country received a foreclosure filing in January 2013, which is still a staggering number. Illinois was one of the worst states for foreclosures in January of this year, having 14,090 foreclosed properties in the month—one in every 375 units in the state, a number well above the national average. In fact, next to Florida and California, Illinois is ranked third in the nation for total number of foreclosures.
In February of this year, according to ABC News Local, “the Illinois Supreme Court has developed rules that require lenders to exhaust all efforts to help a homeowner before they can move forward with foreclosure.” This could help embattled homeowners to keep their properties, and was developed by Supreme Court Justice Mary Jane Theis after “seeing deceptive practices impacting homeowners” in the state.
Bank to Compensate Thousands of Wrongfully Foreclosed U.S. Homeowners
British bank HSBC is going to pay $96 million to American homeowners and over $150 million in mortgage relief because its U.S. division unjustly foreclosed on homeowners who had the right to stay in their homes, the Huffington Post reported on January 18. HSBC will pay almost $100 million in cash compensation to over 110,000 homeowners. Additionally, the bank will have to pay $153 million, which will be used “toward reducing mortgage balances and forgiving outstanding principal on home sales that generated less than borrowers owed on their mortgages.” A single homeowner can expect a compensation that can range from several hundreds of dollars to $125,000, depending on the type of error made.
The settlement is similar to deals with 12 other banks, and in total, the 13 banks will pay $9.3 billion. The settlements may compensate homeowners who lost their homes due to improper foreclosure practices such as “robo-signing.” However, consumer advocates think that regulators settled for too low a compensation. After all, the effects of foreclosure can be devastating to families.
Some Attorneys Involved in Loan Modification Scams
The Lawyers' Committee for Civil Rights Under Law is warning consumers not to be taken in by bogus home loan modification scams. The organization is seeing more and more attorneys lending their name to fraudulent companies promising owners loan modifications and lower mortgage payments in return for thousands upfront. But the companies fail to deliver and the homeowner is out all the money they put up.
Lawyer's Committee recently filed a lawsuit against one of those attorneys, Rory M. Alarcon, a New York licensed lawyer. They say that Alarcon defrauded 17 homeowners out of tens of thousands of dollars by promising loan modifications with lower mortgage payments. The alleged victims are claiming losses from $2,500 to $8,000 apiece.
Of the seven loan modification lawsuits that the committee has filed in New York, this is the fourth one involving an attorney. Attorneys involved in these alleged scams appear to have found a legal loophole that enables them to charge upfront fees – a practice that is prohibited by the Federal Trade Commission. However, attorneys may charge clients in advance for assistance if the service is part of their general practice of law, and not outside of that practice.
Baby Boomers Experience Mortgage Issues, Foreclosures
Now that mortgages rates have lowered, people are looking to refinance their homes in order to keep them. To be eligible for refinancing a mortgage, applicants must have good credit ratings and a steady income source. This presents a problem for older people who could really benefit from easier mortgage payments.
The AARP has released many figures that document the financial state of those considering retirement. More than 1.5 million individuals over the age of 50 have lost their homes since 2007. More than 3.5 million are currently at risk of foreclosure. More than 16% of homes owned by the baby boomers are underwater or lack the equity to refinance leading to foreclosures for those who are on a fixed budget.
It is also compounded by the fact that more people are still paying their mortgages after they have retired. “More older Americans are carrying mortgage debt than in the past, and the amount of that debt is also increasing…leading to their worsening situation,” said AARP vice president for policy Debra Whitman. “It's one thing if your housing value goes down in your 50s. It's another thing if you're 75. For some people, it's not like you can go back to work.”
New Fiscal Cliff Tax Extensions Helps Short Sales
Many news reports from the last few months have talked about the “fiscal cliff” and how badly consumers and businesses would be affected by increased taxes. At the last moment, Washington came to an agreement about how the tax breaks would be handled, if that meant modifying them, extending them or letting them expire at the end of 2012. One tax measure included the decision was the Mortgage Forgiveness Debt Relief act of 2007.
This act benefits people who are planning to unload their houses and who have underwater mortgages. A short sale allows the principal to be reduced by a mortgage lender and helps avoid foreclosures. But, without the extension of this tax break, people who complete short sales could be responsible for punitive taxes on the forgiven amount.
The good news for those looking to short sell their homes is that the Mortgage Forgiveness Debt Relief act was extended to the end of 2013. The tax benefit also helps people who have experienced a reduction of principal, foreclosure, or deed in lieu of foreclosure, though it helps short sales the most.
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