Home­-Equity Loans Make Impending Foreclosure More Possible

Posted on December 15th, 2008 in Avoid Foreclosure by Johnny

Talking to one lender about loan modification is hard, how about adding home-equity loans to the picture. If the first and second mortgage cannot agree the homeowner is at greater risk for foreclosure.

Home-equity loan is a mortgage where the borrower’s house is used as collateral, secondary to a primary mortgage. SMR Research found out that as of June 30 home-equity loans reached $1.05 trillion.

Also called second-lien lenders, home-equity loans fall behind mortgages. This means that lenders cannot claim a forfeited home-equity loan by taking over a house unless the borrower does not have another loan. It is just parallel that the six big home-equity lenders have $2.75 billion uncollectible.

During the peak of the housing industry, when houses still has high value, home-equity loans are beneficial to the lender. In case of foreclosure, selling the expensive home can compensate more than is actually obligated.

But with the downfall of the housing industry, foreclosure resell is not enough to pay for the mortgage, nothing for the second lien lenders.

The fear of foreclosure is more heightened than ever so the government pushes lenders and investors to help the foreclosure-troubled. But home-equities had made this a challenge.

Having to go through the process of loan modification by decreasing balance, or lowering interest or prolonging terms of agreement is already a tedious task. What more having a home-equity loan.

Lenders, or the first lien think that by adjusting loan terms gives a window to also pay off second lien lenders. With the desire to receive compensation, home-equity lenders can be more aggressive. Conflict can arise making the process more difficult, making foreclosure loom closer.

Hope Now, a group of lenders and counselors, asks both liens to fix the problem together. The federal Hope for Homeowners project enhances Hope Now’s point by letting the first-lien lender pay the home-equity lenders, thereby making the first-lien policymaker. Though there are still some hitches in the process, it has been successful so far.

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Avoid Foreclosure by Learning How to Budget Right

Posted on October 1st, 2008 in Avoid Foreclosure by Alana

According to a survey, more and more homeowners are skipping their mortgage dues and credit card bills because they failed to manage their budget properly. If this habit goes uncorrected, these individuals will find themselves at risk of losing their homes to foreclosure.

Avoid Foreclosure by Learning How to Budget Right

In order to avoid being in such an unfortunate situation, you should make sure that you are planning and maintaining your budget properly.

For starters, you should try to figure out and keep track of all the things you spend your money on. To make it simpler for you to do this, you should go through your credit card receipts and checkbook entries. This will somehow give you a picture of how you are spending your money. Try to categorize the items into groups such as personal, housing, education, etc.

In order to make sure that you stay within your budget, list down all the projected expenses you have in a year. Be sure to include gifts, insurances, medical bills and other possible expenses. After coming up with the total amount, divide it by twelve and you will now come up with your monthly expenses.

One you have this amount, you need to look if your monthly income is enough to accommodate such monthly expenses. If needed, adjust your expenses so that it will equal your monthly income. You can accomplish this by determining whether items are needs or wants. Obviously, you must prioritize your needs.

One of the reasons why many homeowners go above their budget and find themselves with huge debts they could not pay is the lack of emergency fund. Without any savings, you will surely end up using your credit card or the money you set aside for other things, which leaves you with a deficit.

If you manage your budget properly and save wisely, you can be prepared for any emergencies and you will surely be protected against foreclosure.

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