Buy A Foreclosure Home

Loan modifications, specifically principal write-downs will be the answer to many people’s mortgage needs.

An interesting solution.

The Solution For Negative Equity – Loan Modifications

The Hope for Homeowners initiative passed by Congress in July and officially launched a month-and-a-half ago to much acclaim, is a potentially positive FHA insurance package aiming to insure $300B of new mortgages for borrowers in a “negative equity” position.

Negative equity, of course, meaning that most of these loans are worth more than the home.

If the home owners have a DTI of 31% or less and made at least 6 payments on time, they can qualify for a Loan Modification.

So if they qualify, what do these applicants get? (And on a side note, if I had to guess what the average DTI for mortgages approved in 2007, I would say around 40-45%. Not to mentions that most of these loans are non performing mortgages as well.

Loan Modifications – Who Qualifies?

The answer is: Very few people.

In the first 2 weeks of the program, exactly 49 people applied, and… none were approved.

NonPerforming Mortgages Included In FHA Secure Program

Just as difficult to qualify for, out of 203 applications only 49 borrowers were approved for the FHA Secure program.

In that same time in California, approximately 1,300 homes saw a Notice of Default filing.

So what’s the big deal here? Can’t we just give the H4H program some time?

Yes.

Remember that H4H, along with the lenders participating in these loan modifications will be looking for federal backing on these 90% principal reduction plans.

So, while everyone’s waiting for the good news on H4H to come out, why not get your wallets out and make an offer on those 49 notes that were just turned down?

You can bet that there will be even more non-performing mortgages to buy as well.