Fannie Mae has recently reported a third quarter loss and will be asking for help of $7.8 billion from the Treasury Department.  In a recent report, the government-sponsored enterprise had reported a net loss of $5.1 billion in the period between July and September. This loss is due to the defaults on loans which were made before 2009 and consequent losses that are linked to a decline in interest rates.

It has been reported that Fannie Mae is working forward in order to reduce the losses.  Both Fannie Mae and Freddie Mac have survived on the aids from the Treasury Department since 2008 after the sub-prime mortgage crisis took place.

How will Fannie Mae pay off the aids?
As per the Stock Purchase Agreement with the Treasury Department, Fannie Mae and Freddie Mac will pay 10% dividend in exchange for taxpayer support. Till date, both the organizations have received about $185 billion in aid and returned about $32 billion in dividends.

The $7.8 billion aid request by Fannie Mae today includes $2.5 billion that will be repaid to Treasury in the form of dividends on the U.S. stake.

Good news for the borrowers!! Federal regulators and nation’s largest mortgage servicers have announced that around 4 million borrowers, who had faced the problem of foreclosure since early 2009, will now have the chance to get their foreclosure cases reviewed for potential wrongdoing.  Some of the examples of financial injury can be the miscalculated fees charged to borrowers, foreclosure of property when borrower has filed bankruptcy, foreclosure of the property when borrower had applied for loan modification and so on.

The foreclosure review deal:
In the beginning of this year, around 14 servicers agreed to hire independent consultants in order to evaluate whether or not borrowers suffered financial losses as a result of the foreclosure process. If any error is found, the consultants will let the financial firms know what compensation should be granted to the homeowners.
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The housing market has still not improved and as a result the homeowners have become desperate to get a mortgage and buy a property. Due to this, the homeowners are turning out to be an easy prey for the mortgage scammers. These scammers will say what you want to hear and you will start trusting them and then sign on the dotted lines. Con artists and scammers are duping a large number of homeowners in this way every year and the number has increased in the last few years.

In order to avoid getting scammed by the con artists, its better that you become aware of the common mortgage scams. Here is a list:

1. Theft of deed: This is one of the scams which have become very common in the recent times. In order to get better interest rates, the homeowners/borrowers are lured into signing away their properties to scammers who pose as mortgage professionals. These scammers convince the homeowners that they will modify or refinance their home loans at a better rate and ask them to sign the supposed modification papers. The borrowers actually give away their properties to these con artists once they sign those documents. In order to avoid this scam, it is better to read the documents before signing on the dotted lines. Always remember that if it’s too good to be true it probably is.

2. Loan modification scams: Due to the crisis in the mortgage market, loan modification has become quite common. Thus, scams related to loan modification has also increased. It is to be noted here that loan modification does not require any kind of upfront fees. A large number of homeowners fall prey to scam artists who demand upfront fees in order to modify the mortgages. Homeowners should clearly understand the fact the upfront fees are illegal.
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The Federal Housing Finance Agency, Fannie Mae and Freddie Mac have announced an improved Home Affordable Refinance Program (HARP). Experts are of the opinion that this will allow quite a large number of delinquent borrowers to refinance their existing mortgages.

What is the new HARP all about?
Under the new HARP, those homeowners whose mortgages are owned by Fannie and Freddie, but are underwater, will be able to refinance their mortgages. Under the earlier version of HARP, the borrowers were allowed to refinance only up to 125% of the property’s appraised value. In the new version, this cap has been removed. Due to this cap, homeowners of the states that were hardest hit by foreclosures such as Florida and California were unable to take advantage of this program. As the cap has been removed now, large number of borrowers will be able to take advantage of this program.

Apart from this, HARP has been extended through December 31st, 2013. Those borrowers whose loans had been sold to Fannie or Freddie on or before May 31st, 2009, will be able to take advantage of this program.
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Buying a home is a dream come true, isn’t it? We all want to own a home and when that dream comes true, it’s the most wonderful day of our lives. However, it is the time when your credit is at risk. Your personal information is shared with a number of people such as your real estate agents, brokers, etc. Here are 5 ways in which you will be able to safeguard your credit before you buy your home:

Don’t share your personal data with everyone: You don’t have to share personal information with real estate agents or sellers. They only need to know whether or not you can afford the property. You should only share your personal financial information with potential mortgage lenders.

Make one person your point of contact: Try dealing with one person when you apply for a mortgage. This will help you minimize the risk of identity theft and only 1 person will have access to your paperwork. Never send details like social security numbers through the email. You may even ask the loan officer where and how your information will be secured.
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When you apply for a mortgage refinance, it is very likely that the mortgage lender will ask you to order a property appraisal in order to assess the property value.  This property appraisal will cost you quite some dollars. However, apart from the cost of the property appraisal, there are certain pros and cons associated with it. Let’s take a look at it:

Advantages of property appraisal:

The advantages of property appraisal are as follows:

Avoid PMI: You had to go for a private mortgage insurance or PMI in case you were unable to provide the required down payment while taking out the original loan. While you refinance your mortgage loan, there are chances that you will be required to pay for the PMI too. However, if the property appraisal shows that your property value has increased and that your loan is less than 80% of the home value, then you will be able to avoid the PMI.

Improved chances of loan approval: A property appraisal will make it easier for a homeowner to qualify for a mortgage refinance when he/she does not qualify for a FHA or a VA mortgage. A property appraisal will make it easier for the homeowner to qualify for a normal conventional refinance and take advantage of the lower market rates.

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Refinancing a home mortgage will become quite expensive in the near future due to the credit risk retention rule. Moreover, those homeowners who don’t have substantial equity in their property will have to take a decision even faster. However, it has been said that the rule governing “qualified residential mortgages” is still in fluctuation and may not come into effect until at least a year from now.

What is the Credit risk retention rule?
This is a part of the federal Dodd-Frank Act. Under this rule, it requires the lenders that they securitize mortgages to retain 5% of the credit risk. However, if the mortgage is a “qualified residential mortgage” or otherwise exempt, then this rule won’t apply.

What is qualified residential mortgage (QRM)?
As per the definition of QRM, the homeowners are required to have equity of 25% in their property for a rate-and-term refinance. They should have at least 30% equity for a cash-out refinance. Apart from that, they should meet the other credit-related guidelines as well. It has been estimated that fewer than half of the homeowners in the country have that much equity in their property. However, these loans are expected to be less costly for borrowers because the loans won’t be subject to the risk retention requirement.

Are there any alternatives to QRM?
Those homeowners who have less equity in their property will have to act fast and refinance their homes before the credit risk retention rule becomes effective. But, the rush may turn out to be unnecessary as the QRM rule hasn’t yet been finalized. However, other options to refinance their homes will be available to equity-poor homeowners.

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Credit cards play a very important role in today’s life. Credit cards are issued by a credit card company or a bank and they will send you a monthly bill of your transactions. As a credit card holder, you will be liable for paying all or part of your balance to the credit card company each month. Some of the credit cards will allow you to carry a part of your balance into the next statement period.

There are 5 different types of credit cards available in the market. Read on to know more about them:

Secured Cards: People who have a bad credit history or no credit history at all can take help of these secured cards. These secured cards are similar to that of general credit cards. However, in case of these cards, you must make a fully refundable deposit, either by cash or by sending a check. This deposited amount is considered as your credit line. As a result of this deposit, all the secured cards offer guaranteed approval.

General Credit Cards: A very common type of credit card is the general credit cards. Such credit cards don’t require any kind of security deposit and can be used in most stores/shopping malls or to make any kind of purchases.

Charge Cards: These cards are very similar to the general credit cards. However, the major difference lies in that fact that unlike general credit cards, you will have to pay your total balance in full every month.
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Unemployment and financial crisis have created havoc in our lives. In a recent survey, it has been found that there is a gap in Americans’ ability to pay their mortgage after they became unemployed. Around 68% of the homeowners have claimed that once they lose their jobs, they wouldn’t be able to make mortgage payments for more than 9-10 months.

Here is a list of 5 ways which will help you in dealing with this problem of mortgage gap:

1. Rent out a portion of your home: This is a good option to earn some extra money which will help you in paying off your mortgage. You may even rent off a single room to generate some extra income.

2. Look out for help: There are various government organizations, non-profit agencies as well as social programs which will readily help borrowers when they are facing financial hardship.  The National Council of State Housing Agencies, Home Affordable Modification Program, Hope Now are some of the organizations to contact and take help from. They will look into your situation and let you know what type of help you may expect to receive.
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Paying off the mortgage early is always a good option to go for provided you have the required money. A lot of people have seen the foreclosure crisis. Now people want be safe and secure to some extent by owning their home free and clear.

Here are 3 ways which will help you in paying off your mortgage in a safer and faster way. You can compare the options and go for the one which you think will suit you the best:

1. Pay more toward your mortgage: You can use the various online mortgage calculators and find out how much to pay more so that you can significantly shorten the length of your loan. You will be surprised to find that paying as low as $100 extra will help you in reducing the term of your loan by quite few years. The lower your principal gets, the more every payment is applied to principal. This is because a less amount will go toward the interest expense.

However, you should make sure that the extra payment is applied to the principal balance. Apart from that, before paying extra, you should check out whether or not a pre-payment penalty clause is mentioned in your loan docs.

2. Go for biweekly payments: Paying your mortgage payments biweekly will help you paying off the mortgage faster. There are 52 weeks and 12 months in the year. If you pay half of your regular mortgage payment every alternate week, you’ll have made 26 half-payments which is equivalent to 13 full monthly payments, at the end of the year. Thus, it will help you make one extra mortgage payment which, in the long run, will help you pay off the home loan quite faster.

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