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Posts Tagged ‘bankruptcy’

More tips from Alex Speak: One of the biggest mistakes you can make after getting served with foreclosure papers is to do nothing, figuring you’ll ‘just let the house go’. Not only do you lose your home, but your bank will probably get a deficiency judgment against you; that is, a judgment awarding the bank money for the difference between what you owe on the loan, and what the house sells for after foreclosure.

Do you owe a lot more than your house is worth? If so, you’re looking at a big deficiency judgment. Did you know that in many states adeficiency judgment is good up to 20 years? The bank’s going to be in your life for a long time. It can claim money from your bank accounts, take your income tax refunds, and dip into future assets you accumulate.

What should you do? Either hire a lawyer, or represent yourself by filing an answer. (‘hardship letter’ isn’t the same as an answer!) When answering a complaint, the lawyers may admit that the borrower (you) owns the property, but deny the rest of allegations of the complaint. In their answer, lawyers also typically raise certain defenses, such as, since the original note has been lost, and the plaintiff (the company suing you) doesn’t have a complete copy of the original note, the plaintiff cannot maintain the foreclosure action.

With adjustable rate mortgages with interest-only payment periods, and/or the option of making a variety of payments such as a minimum payment, interest only, or interest and principal, or have a prepayment penalty, many lawyers say in their answer that the loan violated state unfair and deceptive trade practices laws because the originating lender didn’t explain to the borrower that negative amortization and payment shock would result from the structure of the loan.

Those same lawyers also file a written request for the court to refer the case to mediation. One huge advantage of mediation is getting to sit down with the lender’s representative, who has the authority to settle the case without a foreclosure. Before going to mediation, you should know exactly which solutions are available to you. Find those solutions by making sure you do your homework and research all the options available.

Getting a 2nd mortgage loan or home equity loan after a bankruptcy is workable. However, loan applicants should be aware of certain disadvantages to bad credit loans. A bankruptcy is destructive to credit scores.

Bankruptcy is not encourage among the finanical experts. Those who file Chapter 7 or Chapter 13 are subjected to higher finance rates on homes, cars, etc. Before applying for a 2nd mortgage, know what to expect and understand the basics of getting a reasonable rate.

Expect Higher Finance Fees or Interest Rates

After a bankruptcy, many people are hesitant to apply for credit. The lenders expect higher interest rates, which will cause your monthly payments to go higher. However, obtaining new credit accounts is crucial to re-establishing and building credit history. On the one hand, getting banks to ok a simple credit card app can be challenging after a bankruptcy. Because of this reason, some people opt to get a 2nd mortgage.

Getting approved for a 2nd mortgage following a bankruptcy is easier because the loan is secured by your home or property. Thus, if you stop paying on the loan, the lender may claim your property and resell it to recoup their loss.

While these loans are great for improving credit, applicants should not expect the best rates. Traditionally, 2nd mortgage loans have higher rates than first mortgages. However, having a recent bankruptcy will get you higher than market interest rates. To avoid a huge monthly payment, borrow a small amount of money.

Another option involves borrowing money, and depositing the funds into a savings account. During the first 6 months make sure to repay the bank using the deposited funds. This way, you improve credit history and avoid the risk of not being able to repay the loan.

Using Sub Prime Loan Lenders For Best Rates

Applying for a 2nd mortgage with your current lender may not be the best option. If you obtained your first mortgage with good credit, the lender may not approve your loan application following a bankruptcy. Instead, apply at several different non-conforming lenders. Sub-prime home mortgage lenders will fund all types of credit. Hence, applicants can get approved after a bankruptcy, foreclosure, repossession, etc.

Furthermore, the sub-prime lenders can give you a lower rate than the regular mortgage companies. Online mortgage brokers can help you find a bad credit or sub prime lender. In addition, the lenders will have different mortgage loans choices. As a result, loan applicants can select the lender offering the best rate and loan terms.

This article was written with the help of the staff at Los Angeles Mortgage and Chicago Mortgage.