Archive for category Mortgages
Existing Loan Modification Rules Are Not Enough
Posted by admin in Mortgages, Real Estate on October 7, 2009
According to a recent study, state laws requiring mortgage companies to talk to homeowners before starting the foreclosure process are not working. The National Consumer Law Center, which looked at loan modification laws in 14 states, said the measures have failed to protect homeowners because they lack any sanctions for banks that don’t comply.
“There is as yet no data to confirm that foreclosure-mediation programs anywhere have led to a substantial number of affordable and sustainable loan modification programs,” the report stated. The laws on the books have the potential to help borrowers, but they lack the same bank accountability as the voluntary federal program.
For example, in California, the state law says mortgager providers cannot begin foreclosure until 30 days after they have contacted the delinquent homeowner to explore options for the borrower to avoid foreclosure. The law went into effect in September 2008 and had the immediate effect of slowing down the foreclosure process. However, the number of foreclosures in California has now returned to its previous levels.
To improve the state programs, the report suggested several changes including requiring banks to disclose to homeowners the cost of foreclosure versus the cost of loan modification; imposing sanctions on lenders that do not negotiate in good faith; and requiring proof of who actually owns the loan. The report recommends that banks certify compliance with a mediator o court before being allowed to proceed on foreclosure.
Should You Use A Home Equity Loan to Pay for College Expenses?
Posted by admin in Credit and Debt, Mortgages on September 18, 2009
Using a home equity loan can be an excellent way to pay for your child’s college education. A home equity loan taps into the equity that your house has built up over the years.
If you purchased your house several years ago you have probably been paying down the principal and (hopefully!) your house has appreciated in value. The difference between how much your house is worth and the amount of praincipal you still owe on your mortgage represents the equity you can tap into. A bank will also look at your ability to repay the loan when determining how much to lend.
Home equity debt comes in two flavors. A home equity loan is generally one lump sum with a fixed interest rate and repayment schedule. A home equity line of credit (called a HELOC) acts more like a credit card account – you are only charged for the money you draw down from the account.
Either home equity loan type can be appropriate for funding a college education. The biggest advantage to using home equity loans is that, in general, the interest you pay on this debt is tax deductible.
Home equity loans should not be your first choice when paying for college, as there are more suitable programs like student loans and various federal program available to help you with the cost. But if these other sources are not providing enough, think about tapping into your home’s equity.