August 1st, 2010

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In the mortgage industry, it is very common that a mortgage is sold to another institution. Your lender can also sell loan servicing part to another lender. This means that you will make payments under the same terms to the new lender. Everything will be transferred to the new servicer. If you have a pending loan modification application, it will get transferred as well.

If you are behind the payments and already received the notice of default, the loan does not usually get bought by other lenders. No servicer would want to purchase loans that are not current. By the same token, loans in the process of modification are also unlikely to be bought because the borrowers are mostly having financial hardship. These borrowers may already be delinquent, or are becoming delinquent very soon. Read the rest of this entry »

July 23rd, 2010

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When loan modification reaches to its final stage and unfortunately it is denied, the loan modification application will be given a “locked” status. This means the loan cannot be reviewed or changed for a certain period of time. Such period is usually 6 months but it varies among lenders.

The reason that the loan enters to such state is usually the mortgage notes’ investor wants to prevent the borrowers from re-applying for loan modification over and over again in a short period of time when their mortgage modification is rejected. Lenders require borrowers to wait for a reasonable time, enough to allow borrowers’ financial situation to be different to reapply for loan mod again.

Quite often, however, we see mortgage loan modification applications are denied due to reasons such as borrowers incorrectly filled out the financial statement, or bank’s processor failed to enter the data accordingly. As a result, the application is stuck in locked state. Read the rest of this entry »

July 1st, 2010

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A long term lease to own agreement has many benefits for the property owner. One of the main benefits is that the option keeps the tenants highly motivated to become a homeowner with the owner’s help. The first step is to find tenants who are motivated. Then the key is to keep them motivated throughout the term of the rent to own contract.

There are several things that you, as the landlord, can do to give your tenants incentive and motivate them to continue with the long term lease to own agreement. Just giving the tenant the option to purchase the property at the end of the lease term is the biggest motivator of them all.

Offering a monthly rebate to the tenant that goes towards their down payment is another good motivator. The longer the tenants are into their lease agreement, the more their rebate has accumulated. This means the tenant is less likely to walk away from the agreement or to not maintain the house. Read the rest of this entry »

June 26th, 2010

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Two important strategies for real estate investors to improve cash flow are Long Term Lease To Own and Real Estate Contract. Real Estate Contract is a form of owner financing and can be structured even the Seller/Owner has an existing loan.

Wraparound mortgage also known as an all inclusive trust deed (AITD), commonly called a “wrap”. In a wrap-around mortgage transaction, the seller accepts a promissory note (or a contract for deed or land contract) from the buyer for the total amount of the purchase price less any down payment paid by the buyer. The new purchaser then makes monthly mortgage payments to the holder of the note, typically the seller, who in turn is responsible for making payments to the primary mortgage(s) on the property.

Usually this is a short term note with a 3-5 year balloon payment due. The promise behind this type of transaction is to allow the buyer time to obtain standard mortgage financing. Once the buyer is able to refinance the property all existing mortgages are paid in full. Read the rest of this entry »

June 19th, 2010

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If you manage your property remotely and use a local trusted friend or family member to handle the rental issues for you, you need a contract or a power of attorney.

A contract involves the details on the work and the compensation in return. It should also define what happens in the case the contract is breached.

With a power of attorney, you grant the person permission and authority to make decisions on behalf of you. Your power of attorney is like a backup and you can revoke the power of attorney any time you want.

The power of attorney can be very general or specific. To protect yourself, you should always use a limited power of attorney. A good limited power of attorney document for a rental property should specify the expiration date, the property on which it is authorized, and acts permitted. You can customize this according to your needs.

For an ongoing property management purposes, you can specify the expiration date for a year or two. On the other hand, if you are on vacation or just want your power of attorney to sign the lease with the tenant, you can set the dates for a shorter period of time.

You also want to restrict the properties your power of attorney has the authority on by specifying the address of the property. Or if you allow him/her to act on all the rental properties in a city or state, you can put this in the document.

Other important things to spell out in the power of attorney are the kinds of delegations you grant. You might allow your power of attorney to lease the property only, but not collect future rent payments for you. You might give the power to them to furnish the property or adjust the rent or not.

Again, it is entirely up to you to decide how much or little power you grant to your power of attorney. Our “Do-It-Yourself Kit: Property Management and Get New Tenant in 7 Days” includes a very practical power of attorney form for managing your rental property. You can also read more about practical property management in our Featured Topics.