If you were bamboozled by a lender, read on there's hope. I'm talking about you guys that were duped into interest only loans, ARMs or "creative financing". About 40% of subprime market loans were made to no down payment or no doc "liar loans" buyers.
We can't lay the whole blame on the mortgage industry, after all it takes 2 to Tango. However, lenders were the ones pushing these outrageous loans on unsuspecting buyers. Working in the real estate industry myself I can only say, home buyers place a lot of trust in the professionals.
Assuming the lender agrees; the original loans have to be rewritten to 90% of the home's worth. This means they'll be taking a huge cut in some cases. A new appraisal will be done to determine the home's current value as well as examine and verifying of income, job history and credit scores.
So in effect, lenders will have eat part of the loan- a loan that probably should have never been written in the first place.
If you have a home equity line, you need to get rid of it and you must have bought your home between Jan 05 and Jun 07.
Lenders aren't the only ones being asked to sacrifice. Borrowers have to agree to pay the FHA any profit they realize from the sale of the home in the first year. Then 90% of profit the year after and 10% every year after that until the fifth year, where it ends up staying for the life of the loan.
Its far from perfect, but if it can keep families in their homes, it will spur confidence in the market and get buyers off the sidelines.
What are your thoughts on this bill?
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