15 Sep 08 
Buy and Bail: Making The Rule Work For You. Part II
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If you missed Part I of this post you should read it because this rant may not mean too much to you without it.
Sometimes the housing market can be a bit much for people and they get frustrated. Let’s see one persons opinion and let me know if you share her thoughts.
HI Brent
I find the whole situation just backward.
Banks loaned money to people they KNEW could not afford a 800,000 house….all hell breaks loose and now those of us who had and still have excellent credit will not be able to get a house unless we jump through hoops to get it….we still have credit scores in the 800’s….YES…I said 800’s……
we have bought and sold 5 houses in the last few years (we moved a lot) and ALWAYS came out great after each sell….but we have NEVER had 20% to put down…we always did around 10 to 15% then got an 80/20 for the remaining amount….
we made 60,000 on our last sell and then moved back to V. and paid 382,000 for our current townhouse…put 30,000 down, and then put 10,000 in remodeling, and we still have 20,000 in the bank….but now unless we come up with the full 20% a bank will not loan to us?????? i just don’t get it…..
we are just staying here for another year and scratching the money aside so that if we do find a REO Home we really like we can try to jump on it….there is no way we make enough money to cover two loans…..so that option is out for us….
i am just sick of this whole thing…..but thank you for getting back to me….
C.
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It’s interesting, I appreciate the email and I can see how frustrating this whole situation can be. You may not be the person who is committing fraud but there is no way for us to convince the bank otherwise!
Keep your head down and focus because there will come that moment when this all goes away and those paying the most attention will reap the biggest financial rewards.
Brent Lane
The Lane Group
www.thelanegroup.blogspot.com
Tags: bank loan, brent lane, buy and bail, credit crunch, credit score, down payment, fha, home loan information, housing market, mortgage loan, real estate owned, reo, the lane group
12 Sep 08 Buy and Bail: Making The Rule Work For You. Part I
When you first find out about the new lending rule it can come as a bit of a shock. Knowing the rules and how to work within those rules will allow you to achieve you future goals.
Here is one persons take on the “buy and bail” rules and my response on how to work within the rules:
Subject: Buy and Bail
Brent,
I had never even heard of this until yesterday.
My husband and I own a townhouse. We have excellent credit, no late payments, no problems paying the mortgage at all…we simply want a house instead of this “hell” called townhouse living.
We paid 382,000 in March of 2007 and planned to stay here for only two years, then sell and get a real house. Fast forward to today, August 23rd 2008 and with 12 units in our complex for sale, all UNDER 320,000, some as low as $250,000, we know that we will not be able to break even let alone make a profit if we sell now.
As we drive around this city we see “real” homes that we could now easily afford if we could only get out of this townhouse. We have tried to think if every scenario possible to get us into a house but just ran into dead-ends all over the place. Yesterday, however, I spoke to a realtor about a really cute house that I saw.
Two bedroom, two bathroom, great landscaping, very modern upgrades and smack dab in a part of town that is almost always sunny..even when we have our horrible June gloom and May gray months.
I talked to the realtor for quite awhile about our situation and he gave us a lot of info on the sellers of the little house I like. Before he ended our conversation he then told me about “buy and bail”.
As home buyers who did not purchase beyond our means and who pay bills on time it is a real kick in the head to see people get refi after refi for hundreds of thousands of dollars or watch as they purchase a house that is WAY TOO MUCH MONEY…..then just casually walk away. Because of the thousands that have done this, my husband and I can not sell our home for what we paid for it and loan rules are going from no guidelines to “extreme” guidelines that even those of us with good credit will not qualify for.
Until yesterday I had never heard of buy and bail but I can tell you that this is now an option I am seriously looking into. I know we could actually get a renter for our townhouse but it would not be enough to cover the actual mortgage, HOA fees and taxes on this place. Maybe we should give it a go and hell…if we can’t make ends meet..looks like buy and bail might have to be our option.
Thousands of others are committing fraud…my luck…WE would get caught!
My response:
Hi C.!
I see it all the time, people who feel they are paying the price for others actions and honestly I can understand their point of view.
There are so many people out there who DO take advantage of the system and have gotten away with it! Now the banks have to make adjustments so they don’t continue to get burned.
Enter “Buy and Bail” here you have a scenario that is coming up all over the place but there are solutions to this issue.
To buy while owning and renting another property you simply need to qualify for both payments! This can be done by either (1) having enough income or (2) by adding a non-occupant co-borrower on an FHA loan to buy your new property.
The other way is a bit more drastic and risky but you could short-sell your home and then qualify for the new one. This would take timing and negotiation skills but it can be done. Short-sale the current home and buy the new one before your credit reflects a settled account. (not perfect but possible)
When you get thrown a guideline like this you need to get creative and work with the underwriters to find ways to work with the rule! Be Smart and NEVER LET THE BANK TELL YOU WHAT YOU CAN AND CAN’T DO! Find a way to get it done!
Both situations are not fraud, not illegal and overall follow a moral compass!
Let me know your thoughts!
Brent Lane
The Lane Group
www.thelanegroup.blogspot.com
www.brentlane.wordpress.com
Tags: brent lane, buy and bail, buy and bail rules, enough income, excellent credit, fha loan, new property, non-occupant co-borrower, short sale, the lane group
31 Jul 08 FHA Loans: Down Payment Assistance Programs
So you want to buy a house and you have little or no money for a down payment!
You ask a relative for support and you get little in the way as a positive response.
What options are you left with?
Well for the savvy homebuyer you know that you are limited when it comes to 100% Financing knowing the closest option is 97% through FHA.
Side bar, I know there are other complicated, detailed and those loans that tease you with 100% financing but I am NOT going into detail on those because in my opinion those loans are SO difficult to close I will leave it up to someone else to be that expert and focus in on FHA financing and where we are headed.
I am back to business.
So if you have limited down payment and need more where do you turn?
Luckily you can find a “Down Payment Assistance Program for FHA Loans.”
There are several different programs out there but they all have one thing in common:
THEY ARE ABOUT TO BE ELIMINATED BY
THE NEW HOUSING BILL OF 2008!
I often wonder what officials are thinking when they put something like this into effect but honestly that is a topic I don’t care to discuss here or for that fact ever. I just try to remain focused on the outcome and what we need to do to move forward.
Personally I use Down Payment Assistance Programs for FHA Loans and my clients quite often. The Program I use is called Nehemiah and can be found at www.getdownpayment.com WAIT before you leave here for there you will still need to know a few things.
To use this program you will be facing some real issues getting offers accepted by home sellers but good news is that you will get the 100% financing you are looking for.
Now if this law truly remains as is we will see this program TERMINATED on October 1st 2008 so start looking soon if you plan on using this program but be prepared for a true test of desire because again, Sellers want little to do with this program.
How it works, when you write a contract you ask the seller to contribute 6% of the sales price to the Down Payment Assistance Program for FHA Loans. IF the seller agrees they pass 6% of the sales price to the Down Payment Assistance Program for FHA Loans and a small fee is collected by the program which in turn sends in the 6% back to escrow as a gift to the buyer.
Logistically speaking, the Down Payment Assistance Program for FHA Loans typically sends the money ahead of funding of the transaction and escrow coordinates the delivery of the funds and fees.
Now the real question here is “What will happen when Down Payment Assistance Programs for FHA Loans go away?” NOT forgetting the new changes around Buy and Bail!
I think these two things will REALLY impact the Real Estate Market across the board and it will be interesting moving forward.
As always I am here to help! You can find more topics at my BLOGS www.brentlane.wordpress.com and www.thelanegroup.blogspot.com
Brent Lane
Tags: 100% financing, brent lane, buy a house, buy and bail, down payment, down payment assistance program, fha, fha loans, homebuyer, housing bill 2008, nehemiah, new housing bill, real estate market, the lane group
