Foreclosure Containment Looks Promising With Introduction Of Short Pay Loans
With this introduction of “short pay” loans, many might say why has this not been around before? Well it kind of has been implemented, however not through standardized loan programs. Many realtors in this down market have established themselves profitable niches by becoming short sale realtors. With this value added service they negotiate with the banks to come up with a low enough payoff, so the home owner gets to sell his home, and the buyer of the home, will possibly move into an equity position. For the distressed homeowner, this could result in a foreclosure on their credit report, however the buyer is the one who can profit.
However with regard to regular refinancing instead of losing your home in a short sale, FHA now proposes a “short pay” loan up to 90% with no mortgage insurance to help a homeowner save their home. This should contain the foreclosure epidemic, and start allowing homeowners the ability to pay their mortgages on a low rate fixed mortgage versus high variable rate. The bill has been passed with the House, and is now just awaiting Senate, and Presidential review.
President Bush had other plans to handle the foreclosure crisis with local and state authorities selling tax exempt bonds to all of the home owners in distress Hopefully the “short pay” loan will arrive sooner then later, so neighborhoods and counties can be saved. Adams county, Colorado should benefit from this greatly, if the adjustable rate mortgages go away, and the lenders can take a hit on their loans.
Granted, the mortgage meltdown has benefited no one at all, so now is the time for people to come together to creatively find ways for people to save their homes. FHA “short pay” loans will payoff a lender less money then what is owed, however give a homeowner a second chance in keeping their property, and also preventing the property by going into a foreclosure, which can disrupt the values of the neighboring properties.
Brian Quigley is owner of Fusion Financial Mortgage in Denver, CO and is a full service mortgage broker in Colorado. You can learn more about Brian and Fusion Financial at http://www.fusionfinancial.org
Tags: Bail out, FHA, Short Pay Loans, Foreclosure Prevention