[Gustan Cho]

In a loan modification process, if your ex-wife’s name is on the title deed, she may be compelled to sign the amendment papers by the lender, although her name does not appear on the mortgage. Here’s why:

Ownership Interest: When someone else is listed as an owner of the record for real estate property with you, in this case, your wife from whom you are divorced, legally speaking, they have an ownership interest too. Therefore, any changes made regarding such things must involve all parties holding some form or stake of interest like mortgages, loans, and other joint credit tradelines. In the event of default or failure on any credit tradelines that were held jointly while married, it could mean endangering its rights over that particular piece of land, which might lead to future lawsuits or claims.

Legal consents:

Getting her signature on these documents through consent proves there was an agreement between them regarding this factor. Thus preventing any possible challenges from arising later on if she ever disputes modifications done during the loan restructuring exercise.

Lien & Title Considerations: Lenders’ lien attaches itself to properties, i.e., houses, rather than people who have signed those agreements. Hence, the need arises for recognition by signing a new contract where applicable, even though not responsible for debt repayment, so as not to affect rights associated with such co-ownership arrangement. Since, at law, when one person holds title deeds jointly with another party, each partner has equal share rights over the entire premises covered under the said instrument. Therefore, their interest should also be protected within the framework of amended terms by putting down her signature.

State law requirements: Depending on specific states’ legislation, sometimes, even if somebody does not borrow money but owns part or the whole house alongside you as joint tenants in common, they must also sign off official paperwork related to home loans according to local laws applicable there during the registration process. Thus, all involved know what is happening around them involving shared resources. If your ex-spouse or former wife refuses to sign these documents, you can still proceed with the loan modification process. However, you may need to seek legal advice from a real estate attorney or consult the divorce decree to determine if any provisions could affect her interest in the property.

Generally, all loan modification lenders need this formality. It is better to assume the worst-case scenario. It is better to be safe so it will not be held liable later concerning cases arising from such transactions entered into. Hopefully, it will be better than assumed. Still, all parties should be safe and think about it without considering other partners’ rights who have joint ownership with their clients over certain pieces of land but are not parties involved directly within specific mortgage contracts. Hence, it is a customary practice followed by banks when dealing with alterations made on mortgages where multiple individuals hold various rights as co-owners even though only one person signs the mortgagee’s agreement, whereas another does not append their signature.

[Gustan Cho]

Are Non-QM Loans Hard Money Loans?

• No, non-QM (non-qualified mortgage) loans are not hard money loans.
• Nevertheless, borrowers who must fit the traditional lending criteria can use them for similar purposes.
• Normally, banks, credit unions, or mortgage lenders provide non-QM loans for borrowers who fail to meet the stringent requirements of a qualified mortgage (QM).
• On the other hand, hard money is a loan usually offered by private investors or companies.
• Hard money loans are mainly secured against real estate properties.

What is the Difference Between Non-QM and Hard Money Loans?

Source of Funding: Non-QM Loans are given out by traditional lenders like banks and mortgage companies.

Hard Money Loans: Individual investors or specialized hard money lenders offer hard money loans.

Purpose: Non-QM Loans:

Non-QM loans are used for various purposes, such as buying a home, refinancing current residential property loan(s), and obtaining investment properties where the borrower fails to meet QM criteria.

Hard Money Loans are commonly used when quick funding is needed for the following types of transactions:

• Fix-and-flip projects.
• Transactions involving fast real estate acquisition or disposal.
• Situations where conventional financing options aren’t available.

Loan Terms: Non-QM Loan Term vs Hard Money Loan Term:

A short answer here: Underwriting Standards:

• Definition of Non-QM Underwriting Standards.
• Definition of Hard Money Underwriting Standards.

What Types of Loans are Non-QM Loans? Some non-QM loans include bank statements, interest-only, and jumbo loans.

Is A Non-Qm Loan a Good Idea?

• Non-qualified types of mortgages may work well if you don’t qualify under normal guidelines but still need to borrow money.
• They have more flexible underwriting criteria so people with unique financial situations, like self-employed individuals, can get approved for a mortgage.
• However, rates tend to have higher mortgage rates than average.
• So consider your circumstances before making any decisions.

Can You Refinance Out of a Non-QM Loan?

• It is possible to refinance from a non-qualified mortgage into another loan if your financial situation improves or you find one with better terms.
• For instance, once you make more money and stabilize your income, you can switch from an interest-only option ARM to a 30-year fixed-rate loan.
• This will reduce the risk associated with these products.
• Traditional loans usually have low initial payments that can skyrocket after a certain period.

Can You Refinance Out of a Hard Money Loan?

• Yes, it’s common for people who take out hard money loans to refinance them later on.
• Borrowers often opt for traditional mortgage financing once their property has been renovated or market conditions change.
• Hard money loans tend to be short-term and carry high rates.
• Due to their high rate, hard money loans are only meant to be used over longer periods if necessary due to various factors such as damaged credit or other reasons borrowers need fast financing.

What Loans are QM Exempt?

Several types of loans are exempt from being classified as qualified mortgages under Dodd-Frank Act regulations. QM-exempt loans include but are not limited to, reverse mortgages (designed for seniors), bridge financing (short-term), construction project funding, and certain non-traditional loans. They also include loans such as balloon payment structures or interest-only options for specific cases where they meet certain requirements outlined in this particular section.

Non-QM versus Hard Money Lending

Pros of Non-QM Loans:

• Lengthier Terms: They are set up in the same way as traditional home mortgages.
• Lower Interest Rates: Generally, they have lower interest rates when compared to hard money loans.
• Flexibility: These loans are designed for people who need to fit the typical borrower profile, such as self-employed individuals.
• Variety: Non-QM lenders offer various options, such as bank statement loans, jumbo loans, and interest-only products.

Hard Money Loan Benefits:

Speed: Approval and funding can be done in a few days, which is perfect for someone needing quick cash.

Less Documentation Required: Less paperwork is involved than with non-QM products.

Asset-Based: Lenders focus more on the property’s value than the borrower’s credit score or income history.

In conclusion, non-QM and hard money loans serve different purposes. Non-QMs are good for long-term financing, while HMLs work well for short-term and high-risk situations. The choice between them depends on an individual’s financial position, need for funds, and how soon they plan to repay it.

[Gustan Cho]

If someone would tell me about the crazy shit that is going on when I was in school or started in the workforce, I would never have believed them and would think they were crazy. Cannot believe the demons that is taking over the country and the world. Just do not know what to say but shake my head.

[Gustan Cho]

Thank you, Sapna. I will connect with Vanessa either tomorrow or over the weekend and hear more about what the problem is. I have not talked to her. Only to Alex and Carlucci is clueless so I rather hear it from the horses mouth. By the way, is it cheaper to buy Google Ads overseas versus Chicago? Maybe Viral Website Developers can do consulting for Vanessa and her law firm. By the way, I am going to be at the office next Friday. Can you please call me when you are available. I want to go over a few things concerning our business plan and traffic. I don’t know what happened with my WhatsApp but it disappeared. Can you post instructions and images as well as a power point on how to install WhatsApp? I got Business WhatsApp. What is that?

[Gustan Cho]

Lee, correct me if I am wrong but I am posting from my understanding what unsecured business funding is. If you can detail the unsecured business funding you offer our clients with your investors, it will be greatly appreciated. Unsecured Commercial Financing Described:

Unsecured business financing includes loans or credit lines that do not require borrowers to provide assets as collateral. Property, equipment, and inventory are examples of collateral. This type of funding is attractive for businesses with little assets to pledge or wanting to save their assets for other uses.

How Unsecured Business Funding Works for Startups and Established Businesses:

No Collateral Required: Unlike secured loans, unsecured business loans do not require assets to be pledged as security. For this reason, they work well for companies without significant physical capital or those who don’t want to put their homes at risk.

Flexible Usage: These funds can be used in various ways, such as working capital, franchise fee payment, expansion costs coverage, buying stock, and marketing needs. Such flexibility permits enterprises to allocate them wherever they are needed most.

No Credit Requirement for Established Businesses: A good track record in business operations often makes it possible to qualify for unsecured business loans since there is usually no strict requirement on credit history like traditional loan applications where high scores may be demanded.

Monthly Payments with Competitive Rates: These are typically structured as fixed monthly payments. Therefore, unsecured business loans can easily fit into a company’s cash flow management plan. Unsecured business loans attract interest rates starting from as low as 9% depending on market conditions vis-à-vis the financial performance indicators the borrower(s) presented.

Funding Amounts Up To $500k: Startup businesses and growing firms looking for large amounts of money but needing more collateral can get up to five hundred thousand dollars without having any assets tied down. Otherwise, the business would have been necessary if they were dealing with secured lending institutions.

Why Unsecured Business Loans Might Be the Right Solution:

For Clients Facing Conventional Funding Challenges – If your clients cannot secure conventional funding sources, this might do the trick! It provides quick access to cash without asking for collaterals or high credit scores.

Ideal For Various Business Needs – Whether covering franchise fees, boosting working capital, or meeting other business obligations, unsecured loans ensure the smooth running of operations by providing needed liquidity.

Contact Information:

Contact at gcho@gustancho.com of Lending Network, the commercial lending division of NEXA Mortgage, LLC.

Our product offering will meet the requirements of every customer with no collateral, no down payment, and competitive rates. Don’t hesitate to contact us so we can assist you in securing the required funding!

• This reply was modified 1 year, 2 months ago by  Sapna Sharma.
• This reply was modified 1 year, 1 month ago by  Sapna Sharma.

[Gustan Cho]

What is The Purpose of Short Selling A House?

In a short sale, the owner sells their property for less than what they owe on the mortgage. The aim is to prevent foreclosure by letting the homeowner avoid it and enabling the lender to recover some of their loan balance. Generally, this happens when people are not in good financial health and can no longer keep up with payments.

What Does Short Sale Mean in Real Estate?

In real estate, short selling means that the lender agrees to accept less than full payoff on a mortgage to facilitate its sale. They forgive the remaining debt after receiving reduced payment amounts. This method helps prevent foreclosures among homeowners while minimizing losses suffered by lenders.

Real Estate Short Sale Case Scenario

Scenario 1: Financial Distress

Homeowner: Jane owes $300,000 on her mortgage.

Home Value: The home is now worth $250,000 due to market decline.

Situation: Jane loses her job and can no longer afford her mortgage payments.

Process:

• Jane contacts her lender, informing them about her inability to pay and the possibility of a short sale deal.
• Jane also lists the house for $250k.
• The lender approves the buyer’s offer at the current market value ($250k).
• The lender constitutes a total debt reduction of fifty thousand dollars ($50k).
• As a result, she does not face foreclosure.
• They mitigate their losses through this transaction, which the buyer gets cheaply.

Do Realtors Get Paid On A Short Sale?

Yes, realtors get paid on a short sale. However, commission rates are typically negotiated between the seller’s agent(s), listing brokerages, or agents representing buyers who negotiate with sellers during settlement discussions. Usually, these fees are included in closing costs paid by borrowers themselves. Still, sometimes lenders may cover all or part thereof depending upon agreed terms between various parties concerned. This type, level, and extent are required from each party involved during the said process. This can be worked out depending on the specific situation.

Real Estate Short Sale Process Case Scenarios

Scenario 2: Medical Emergency

Homeowner: John has had large medical bills that completely wiped out his savings.

Home Value: John owes $200,000. However, the current market value stands at $180,000 only.

Process:

John requests a short sale from a lender. John must show an updated personal financial statement and all relevant documents (e.g., medical receipts) indicating severe financial distress arising from such unforeseen health-related issues. After the mortgage lender’s workout department verifies the factually correct position he’s presenting, the lender agrees. Now, John lists the property for sale through a realtor or agent specializing in this area of the housing business. As the homeowner, John can choose the listing real estate agent.

The homebuyer offers $180k and accepts it since there will still be some money left over after paying off the remaining balance owed to the mortgage holder.

Foreclosure is avoided when a buyer gets a cheap home purchase opportunity.

Scenario 3: Job Relocation

Homeowner: Mary needs to move quickly because she got a new job far away from her current location and can’t afford two homes.

Home Value: Owes $150,000, but market values show only about $130,000 being worth currently.

Process:

During a conversation with a representative(s) employed by the Bank, which offers loans secured against properties like hers, Mary explained the urgency of the matter and its financial implications. Considering the circumstances surrounding the request, the Bank agreed to make an urgent need for quick action before things got worse, causing more losses than necessary. Therefore, they allow short sales under these conditions, too.

The property is listed on the market. An interested buyer offers an offer equal to the present appraisal figure ($130k). A lender accepts the buyer’s proposal and forgives the twenty thousand dollar shortfall owed from the loan agreement signed with Mary earlier.

She moves away without having foreclosure hanging over her head. This is because she cannot simultaneously meet the repayment obligations of owning two houses.

Due Diligence: It’s important to conduct home inspections and title searches to find any hidden problems or liens.

Risks and Rewards of Buying a Short Sale Home

Risks:

More time is required for approval from the lender.

Potential issues with the condition of the property.

Additional liens or encumbrances may exist.

Rewards:

• Lower purchase home purchase price.
• Opportunity to buy in popular areas at a lower cost.

Is a Short Sale Bad for the Homebuyer?

No, a short sale is not bad for the homebuyer but can present some challenges. Disadvantages of buying a short-sale home include waiting longer. Other cons include potential issues with property conditions. With adequate due diligence, buying through a short-sale process can allow you to get homes at discounts!

Is it a Good Idea to Buy a Short Sale House?

Buying a short-sale house is worth considering if you are prepared for what may come your way during those transactions. One big disadvantage of buying a short-sale home is waiting times that could be months. Homebuyers need to realize that the actual seller is the Bank. The Bank needs to give final approval on short-sale home sales. Banks take their time, and there is a lot of red tape during the homebuying process. A short-sale home can take up to six or more months to close. Another disadvantage of buying a short-sale home is the house is normally purchased as is. The Bank will not negotiate to fix the house to the homebuyer’s standards. The short-sale house can have potential defects. The house could come with possible condition problems with the properties themselves. While risks are involved, such as those mentioned above, short-sale homes can offer buyers great deals since most sellers want out their mortgage payment obligation. This holds even if it means selling below market value, which requires careful thought and professional help from agents who specialize in these types of sales. Banks are not property owners or property managers. Banks do not want anything to do with REOs in their inventory. Banks want as much money as possible for their collateral and minimize their losses from the housing event.

Difference Between a Short Sale and Foreclosure

Short Sale: A homeowner sells their property for less than what is owed on the mortgage with approval from their lender; this helps them avoid foreclosure while limiting damage done to their credit rating, which should have been worse had they gone through all stages (the Bank taking over).

Foreclosure: When banks take possession because homeowners fail payments – affecting future ability to finance other big-ticket items like cars or homes due to poor credit scores caused by the foreclosure process itself, which starts when people stop paying mortgages altogether, leading up until the final stage called “sheriff sale” after that bank auctions off said home publicly but this has much longer lasting effects on individual’s financial stability than just about anything else.

Eligibility Requirements for a Mortgage Loan After a Short Sale and Foreclosure

Short Sale:

HUD Guidelines After a Housing Event on FHA Loans: Typically, there is a 3-year waiting period after a housing event on FHA loans, except when extenuating circumstances exist.

Veterans Administration Guidelines After a Housing Event on VA Loans: Generally, two years should pass before applying again for another VA Mortgage Loan after experiencing either a short sale or foreclosure event.

Fannie Mae and Freddie Mac Guidelines on After a Housing Event on Conventional Loans: Four years’ waiting time is required, but if only two years have elapsed since the occurrence, it is possible, depending upon the situation (extenuating circumstances).

Foreclosure: To qualify for an FHA loan, there is a mandatory waiting period after a short sale, foreclosure, or deed-in-lieu of foreclosure.

FHA Loans:

• Three years must elapse before an individual can obtain another home loan insured by the Federal Housing Administration if they went through foreclosure previously.
• However, this rule does not apply in some cases where extenuating circumstances exist.
• Extenuating circumstances include death and serious major medical issues that have affected the borrower’s household income.
• Extenuating circumstances are only valid if the reduction of household income was due to financial hardship that prevented them from making timely payments on their credit lines, including mortgage payments.
• Other extenuating circumstances allowed by HUD, the parent of FHA, are job loss, natural disasters, or an act of God beyond their control.
• Extenuating circumstances are any financial hardship beyond the borrower’s contract that leads to defaulting on mortgage payments, which can result in the forced sale of property due to the inability to meet financial obligations.

VA loans: Two-year minimum requirement between foreclosure event ending date and reapplication date for another VA Mortgage Loan unless there were any “extenuating circumstances.”

Fannie Mae and Freddie Mac Guidelines After Short-Sale or Other Housing Events on Conventional Loans: Fannie Mae and Freddie Mac Guidelines after a short-sale or deed-in-lieu of foreclosure is a year’s waiting period to qualify for conventional loans. There is a seven-year period after a standard foreclosure to qualify for a conventional loan.

Extenuating Circumstances on Conventional Loans

Is the standard wait time between having gone through foreclosures before one becomes eligible again under conventional lending guidelines, though three-year waits may be enough with ‘extenuating circumstances.’ Please do not count on extenuating circumstances for a shorter waiting period after foreclosure because it is very difficult to get a pass.

Different Loan Programs After a Short Sale and Foreclosure

FHA Loans:

• FHA loans are available three years after a housing event (short-sale, deed-in-lieu of foreclosure, or foreclosure).
• Sometimes exceptions can be made based on their policy provided certain criteria are met by applicants.
• Examples of exceptions include paying down some debt balances over time.
• Generally speaking, most people will need at least three full calendar years since such unfavorable economic hardships occurred before qualifying once more through an FHA program.
• FHA loans cater to individuals who want help to rebuild credit following financial setbacks caused largely by mismanagement of finances leading towards these situations happening).

VA Loans: Individuals who have had either a short sale or foreclosure may apply for another VA loan two years after the event, provided they meet all other eligibility requirements.

Conventional loans: Conventional mortgage financing is available for four years following short sales or deed-in-lieu of foreclosure. A seven-year ‘time-out’ period applies when considering someone who has undergone three back-to-back foreclosures. Again, these are subject to change based on the underwriter’s written consent and specific lender overlays.

Non-QM Loans After a Short-Sale, Deed-in-Lieu of Foreclosure, or Foreclosure:

Non-QM loans have no waiting period after a short sale, deed-in-lieu of foreclosure, or foreclosure. However, non-QM loans require a 10% to 30% down payment versus a 0-5.0% down payment on government and conventional loans.

https://gcamortgage.com/mortgage-guidelines-after-short-sale/

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Guidelines And Tips On Qualifying For Mortgage After Short Sale - GCA Mortgage

This Article On Guidelines And Tips On Qualifying For Mortgage After Short Sale

[Gustan Cho]

Folks, please contact at gcho@gustancho.com of http://www.lendingnetwork.org if you need more information about unsecured business loans.

• This reply was modified 1 year, 9 months ago by  Gustan Cho.
• This reply was modified 1 year, 2 months ago by  Sapna Sharma.
• This reply was modified 1 year, 1 month ago by  Sapna Sharma.

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[Gustan Cho]

Thanks, Lee. I will do a company wide staff email to all our team members at GCA. If you can be kind enough to point out bullet points on the type of business and case scenarios, it will be greatly appreciated. If you can explain how the loan program works, we will make sure every loan officer is aware of business loan programs.

[Gustan Cho]

Thanks for asking this question, Randy. I remember when I was first studying for my NMLS exam and preparing to get my mortgage license in January 2012, HARP mortgage loan programs was a huge thing. It was a government loan program to help homeowners with upside down mortgages to be able to refinance their conventional loans. However, the conventional loan had to be owned by Fannie Mae or Freddie Mac in order for homeowners to be eligible for a HARP Refinance Loan. It was streamlined where no appraisal was needed and no income verification. You just needed timely mortgage payments in the past 12 months. Homeowners were allowed on late payment on their mortgage loan in the past 12 months.

In this post, I will address What is a HARP Mortgage Loan and how a HARP refinance mortgage loan worked.

HARP was a federal program called the Home Affordable Refinance Program. The Federal Housing Finance Agency set it up in March 2009. This scheme aimed to support homeowners with underwater mortgages – people who owed more on their home loan than what the property was worth, also known as negative equity – who were still making payments and wanted to swap out their current mortgage for a lower interest rate.

Does that mean you must be behind on your payments to get help through HARP? No! Remember, this plan was implemented for those who remained financially responsible despite losing so much equity during the housing crisis; it’s meant as an opportunity rather than relief.

How Did the HARP Loan Work?

Eligibility For HARP Mortgage Program:

• Fannie Mae or Freddie Mac must own or guarantee your mortgage.
• The loan must have been sold to Fannie Mae or Freddie Mac before May 31st, 2009.
• Current mortgage payments in the last six months.
• Homeowners could not have more than one late payment in the last 12 months.

A loan-to-value ratio greater than 80%.

Benefits of HARP Mortgage Loan:

• Lowering interest rates.
• Reducing monthly payments.
• Converting ARM into a fixed-rate mortgage.
• Sometimes, it requires something other than a new property appraisal.

HARP Mortgage Loan Process:

• Homeowners applied through their existing mortgage servicer or other participating lenders.
• The lender reviewed the homeowner’s application and financials.
• Refinancing is similar to standard refinance but often with reduced documentation requirements and fees.

HARP Replacement Programs: Because HARP ended at the close of 2018, two new options emerged aimed at underwater borrowers.

Fannie Mae’s High LTV Refinance Option:

• They are designed for homeowners with Fannie loans having higher than normal LTV ratios.
• Intended to reach borrowers unable to achieve traditional refinances due to lack of equity.

Freddie Mac Enhanced Relief Refinance (FMERR):

• Similar to Fannie’s offering but applies to Freddie mortgages.
• Offers alternative refinancing for high-LTV borrowers seeking lower rates and streamlined costs.

Is the Government HARP Mortgage Program Real?

Yes, this was a genuine federal program that operated between 2009 – 2018. Created in response to the housing crisis, it allowed millions of underwater homeowners to refinance their mortgages through government support even though they were upside down on their loans.

Is the HARP Mortgage Loan Still Available?

No, it expired at year’s end. However, those eligible could find relief with Fannie Mae’s High LTV Refinance Option and Freddie Mac’s Enhanced Relief Refinance, which are its replacements. These programs still allow homeowners who don’t have much equity because of high LTV ratios (loan-to-value) to benefit from refinances featuring lower interest rates and reduced monthly payments.