Free Home Refi Blog

What is a bank foreclosure?  Unless you have been hiding under a rock you already, know that the housing market in the United States has been falling in value, which is caused partly by the number of homes that are facing foreclosure.In many cases, the borrowers of these loans failed to make their monthly payments as they had agreed to.  In turn, the bank, which held the mortgage on the home, was forced to take back the property in the hopes of selling it and getting out of the debt.  This is exactly what a bank foreclosure is.It is a home that is owned by a bank that held a mortgage on a home in which the owner did not keep up with their monthly payments.

These homes are now on the market and being sold. There are many misconceptions about these homes and often people do not realize that they make a great investment.Here are three important points you need to know about these foreclosures.

1: Bank’s Sell For Less, Often

One of the key benefits of buying foreclosure homes is that the bank is often willing to sell the home fast even at a discounted price.Owning these homes is not what they want therefore they need and want to sell.It is not uncommon for bank foreclosure homes to be sold below their appraised value.To the average lender this means that the property is quite profitable to them.

2: Bank Owned Homes Aren’t A Mess

Many people feel that bank foreclosure properties are properties that are run down and beaten up.  In fact, they are homes just like any other you would walk into in the hopes of buying them.  The good news is that these bank owned properties are often in good condition.Many offer a range of possibilities for low cost, without a lot of repair.With that said, you should understand that you still need to invest in appraisals and home inspections to insure you understand the level of need the property presents.

3: Regular Home Loans Work

Another deluded belief people have about bank foreclosure is that these homes are being bought solely by those that can afford to fork over a great deal of cash.  While some investors do this, most do not because it eats their reserves.  Additionally, anyone can purchase a foreclosure with a standard home loan.

Although bank foreclosure is not a pretty picture for many people, it can be an opportunity for real estate investors to get into a more affordable home quickly.

For more information please visit our Foreclosure Guide and our Loans Blog

One of the partners at FreeHomeRefi.com recently sent a letter to the President-elect Barack Obama.

A Letter to the President Elect

This is part of our ongoing commitment to rejuvenate the housing market in the United States and find reasonable solutions for all homeowners.  We will continue to be hard at work finding solutions to the current mortgage situation.  Feel free to comment or post ideas and we will keep you updated on our talks with President-elect Obama.  You can also send your thoughts to the President-elect’s website.

The Letter sent to President Elect Barack Obama:

I’ve been in mortgage banking for almost 20 years and there is a fairly simple solution to much of the economic problem. You MUST immediately create a streamlined refinance program through Fannie/Freddie so that credit qualified consumers can refinance their existing home loans to lower the rate & term without an appraisal/LTV requirement (much like the FHA program). There is enormous demand for this product but many can not qualify due to the drop in home values. People will stay in their homes, even if they are upside down, without a wholesale reduction in principle as has been proposed by many economists which only further depletes the value of trillions of dollars in mortgage securities.

This program would stimulate reductions in mortgage payments giving more disposable income for consumers to spend/save to stimulate the economy. It will also convert problematic mortgage assets (Option ARMs, high margin ARMs, etc.) to more stable, fixed rate loan programs adding/shoring up enormous value to the trouble MBS market, stimulate job growth in the mortgage banking sector and stabilize housing and home values.

The pricing for this program should be tiered based on credit score (as pricing is now) and allow even those that have had credit issues to qualify (i.e. allow low FICOs, mortgage lates, etc.). All prepayment penalties should be waived. This will provide REAL relief. The majority of the Loan Modifications that have occurred (that I’ve seen) are poorly structured and have actually taken further advantage of naive consumers resulting in little or no tangible benefit which is why we are now seeing staggering statistical default rates (50+%) on those modifications. This streamlined refinance program would create a necessary structure to create real relief without the immediate necessity for reduction of principle balances.

It should be structured such that mortgage lenders/brokers compensation is capped so that consumers can not be taken advantage of but the mortgage industry is able to make a fair compensation for their work (i.e. can not charge/finance more than 1% origination, no discount points unless actually paid to buydown the rate, cap maximum rebates, limit other fees, etc.).

We have a site (www.FreeHomeRefi.com) which advocates transparency in mortgage lending by forcing lenders to always offer consumers a No Cost option so consumers can not get confused with all of the fee games that are typically played by unscrupulous lenders/brokers. It is impossible for lenders/brokers to bury hidden fees when there are no fees. No way to bait & switch.

This loan program should be rolled out immediately along with other, simple mortgage incentive programs to stimulate home buying. (I’m happy to offer guidance on this additional concept.)

I am available to offer my expertise  in any way I can. I’d love to get to work helping America get back on its feet and put my industry (along with other related industries) back to work in a positive, stimulating way.

Sincerely,

Preston Kenney