The State of Vermont introduced a battery of rules and regulation changes to help streamline the financial industry and protect homeowners who are at risk of losing their homes. An important element in the protection of Vermont homeowners is the Vermont Mortgage Assistance Program.

The Vermont Mortgage Assistance Program is managed by the Vermont Banking Division and is responsible for providing advice, information and assistance to residents who have been affected by the mortgage crisis and who are struggling to make mortgage payments. However, it is important to note the Mortgage Assistance Program does not have any actual funding to provide cash payments to borrowers. Nevertheless, the Mortgage Assistance Program can help by providing quality advice and by facilitating the communication between borrowers and lenders.

According to the information provided at the Vermont’s Mortgage Assistance Program, the most important thing to know when you are facing mortgage issues is that time is of the essence. The sooner you deal with your delinquency problems the more options you have and the more likely you are of saving your home from foreclosure.

A foreclosure will typically take six to nine months to complete. This is important because even if a lender is willing to try and negotiate a settlement, it is unlikely the lender will stop the process while the settlement is negotiated.

The Vermont Mortgage Assistance Program also offers mediation services between lenders and borrowers. It also provides advice on how to arrange for loss mitigation with your lender. Loss mitigation is a negotiation between borrowers and lenders that studies the options a borrower has to restitute payments in arrears while reducing payments to a level that is affordable and realistic considering the financial situation of the borrower.

If your borrower is not willing to negotiate a solution, the Vermont Mortgage Assistance Program can help you get in touch with local institutions that offer refinancing options to borrowers. A government program that offers refinance and mortgage modification options is HOPE, which may be a useful resource.

Another point highlighted by Vermont’s Mortgage Assistance Program is the fact that in some cases losing your home is the best alternative. Trying to save your home at all casts may perpetuate a bad investment you can’t afford and are better off without. The program can suggest foreclosure alternatives that provide the least damaging alternatives for your credit rating.

Contact the Vermont Mortgage Assistance Program by clicking here or calling (802)-828-568-4547.

South Dakota Mortgage Help

The loan assistance which the South Dakota Housing Development Authority provides is known as LAP which is The Loan Assistance Program. The idea is that down payment and closing costs when buying a home can be prohibitive. For this reason they are taken care of by the program as long as the first mortgage for the property is financed through a lender who is participating with the South Dakota Housing Development Authority (SDHDA). Because the LAP loan has a very low interest rate (5.0%) and the monthly payments are reasonable, it makes owning your home a real possibility. The maximum loan available is $5,000 over a period of five years. SDHDA provide the assistance loan on condition that your take Homebuyer Education classes with an approved center to ensure that you really understand all the steps you are required to take when buying property. The actual monthly payments you make for your LAP loan will be included in your regular mortgage repayments each month. In effect the LAP loan is a second mortgage as is EMAP which is the Employer Mortgage Assistance Program. However with EMAP the amount you may borrow is a minimum of $600 up to the maximum of $6,000 over a period of 5 years and the interest rate is 2% only. To apply for this type of loan you will need to contact a participating lender and have an eligibility certificate which you can get from your employer, who must be a participating employer. As is the case with the LAP loan the EMAP loan is repaid together with the first mortgage loan and you can have it paid automatically from your bank account to the lender each month if you wish. If you obtain an EMAP loan with the cooperation of your employer but before the end of the 5 years period you change employment and therefore no longer work for the same boss your interest rate will be changed from the 2% to the prime rate plus 5%. This arrangement is provided for in the “Addendum to the Promissory Note” which you sign when you close the loan. Your participating lender might have other important details which you will need to take into consideration when you take out the loan. With the Down payment Assistance Loan there is not a prepayment penalty to worry about. If you sell your home you are required to settle the amount of the Down Payment Assistance Loan. SDHDA will inform the person who closes the sale of the amount to be paid so that the loan can be paid off. In this way SDHDA is able to assist many people to purchase their own home. The Homebuyer Education classes are very important in helping you to know what to expect and how to go about your property purchase in the best way. Please take advantage of these provisions.

Applying for a mortgage can be a daunting exercise, especially if you have made financial mistakes in the past and feel that your credit score may interfere with your loan application. This also applies to government subsidized loans through agencies such as the Federal Housing Administration which offers low-cost mortgages to medium- to low-income families. However, if you feel your credit rating will get in the way of your home purchasing dreams, take heart, this is not necessarily the case. Although your credit score is a significant factor when applying for an FHA loan, it is not the only factor. The FHA lending and underwriting rules allow for flexibility with reliable lenders which may have had some credit hiccups in the past.

So what are the FHA rules on lending? This article provides a brief overview on what the FHA looks at when assessing a loan.

There are four factors that determine the eligibility of a borrower to a loan: credit history, steady employment, debt-to-income ratio and your payment history in the last 12 to 24 months. This means that if your credit score is low because of a financial problem or mistake you made several years ago, but you score well in the other areas, you may still qualify for an FHA loan. Nevertheless, what constitutes a good or acceptable credit score for the FHA? This depends on the loan, but the FHA does have a general standard for most of its loans.

The FHA and Credit Scores

The FHA applies a sliding scale rule on loans depending on the credit score of the borrower. Borrowers with a higher credit score can apply for a higher loan to value percentage of the purchasing price of a property. For example, credit scores between 500 and 579, which would be considered very low by commercial lenders without the insurance of the FHA, can qualify for a maximum of 90 percent of the loan to value rate of the property. If your credit score is higher than 580, you may be eligible for the maximum FHA loan financing, as long as the other areas are also satisfied. If your credit score is below 500, you are not eligible for an FHA loan.

Therefore, the answer to the initial question of this article, the minimum credit score to be even considered for an FHA loan is 500. Anything less and your application will not even be considered. However, even applicants with credit scores as low as 500 to 600 can qualify for loans as long as the other elements the FHA looks into are above board.

In the current economy, few of us have the savings or income to finance the purchase of a brand new home. Even second hand homes in prime condition can be out of the reach of the average household. So what can you do if you need a new home or you are a first-time buyers looking to buy yourself a slice of the American dream? A good option for many, especially those not scared to invest some sweat and elbow grease in their home, is investing in a fixer upper and doing or at least supervising the work required to make the home livable again.

Rehab Loans with FHA

If that is your plan, you can get government mortgage assistance from the Federal Housing Administration. The FHA has a specific product for buyers interested in saving money and investing money and hard work in a fixer upper home. If you know where to look (think foreclosures, auctions, repossessions…) you can buy homes that have fallen into disrepair and need some heavy doses of tender loving care at bargain prices. Remember banks, which more often than not end up with dilapidated homes, are not in the real estate industry; they are in the lending business. So, they are often very happy to unload properties in need of renovation.

The loan you may be looking for is the FHA’s 203(k) Fixer Upper Loan. This product is based on the Housing and Urban Development’s, HUD, 203(k) program and allows buyers invest in fixer-uppers with a FHA guaranteed loan. The best things about this loan is that it is especially designed for fixer-uppers and comes with an inbuilt protection for borrowers if the repair work costs more than they expected. And let’s face it, it is next to impossible to estimate accurately how much a fixer-upper will cost to get back into shape until you actually get started.

How Do You Apply?

As usual, the FHA does not provide loans directly to borrowers, but uses lending partners. Approach a selection of lenders and request information on their 203(k) fixer-upper loans. The application process is similar to a normal FHA loan. The lender will go through the regular credit checks and debt-to-income analysis. In addition to the basic paperwork requirements of an FHA mortgage, you will need to provide a detailed list of the repairs the property requires and the estimated cost of those repairs.

The real estate collapse of the last three years has caused the federal government to come up with regulations designed to avoid this from happening again. Mortgage regulation rules are being presented under the Dodd-Frank Act of 2010. The Dodd-Frank Act is part of the far-reaching financial regulatory reform that sets out to promote financial stability and improve the accountability and transparency of the financial system as a whole. This was a reaction to the list of bail-outs of companies that were “too big to fail” and required on-going hand-outs from taxpayers to stay in business.

One of the changes proposed under this Act is to force mortgage lenders to take 5 percent of the credit risk of mortgages pooled in securities if the mortgages do not meet certain requirements. These are mortgages that are put together as an investment unit and which can be bought or sold in a similar way to stocks in a company. One of these requirements, which is making mortgage lenders unhappy, is that borrowers must pay at least 20 percent of the home’s purchase price as down payment. The idea behind this rule is to stop borrowers from buying homes they can’t afford just because loans are available. According to some analysts, cheap and available loans were one of the reasons house prices increased artificially and later crashed when the market came to its senses and corrected itself. Canada has a similar down payment requirement as part of their comparatively stricter financial regulatory system, which may have had a lot to do with why Canada was not affected as seriously by the real estate driven recession of 2009.

Critics of the 20 percent down payment rule claim this will price out many borrowers who can’t afford to come up with 20 percent of a home’s purchase price. Figures from 2010, seem to support this claim. Around 39 percent of home buyers in 2010 put a down payment of less than 20 percent, according to a poll by CoreLogic. The question, of course, is if the low down payments are because people can’t afford to pay 20 percent or because they are not required to do so? Additionally, even if many buyers can’t afford the 20 percent rule, is that necessarily a problem? Could it be argued that buyers who can’t afford to pay 20 percent of their mortgage are simply not in a position to buy and should focus their efforts on saving for a down payment? Of course, the real estate mortgage industry claims it is time for the government to stimulate the mortgage industry not weigh it down with restricting regulations. How do you feel? Is this regulation a much needed protection against another crash, or is it an example of federal government choking the growth the real estate industry so desperately needs?

Do you know what a mortgage servicer is? Many borrowers do not know that the company which receives their monthly payments and sends nasty letters when they are behind on their payments is often not the company or investor that sold them the mortgage in the first place or even the current investor. In the mortgage industry there are three main players, mortgage originators, mortgage servicers and mortgage investors. Mortgage investors put forward the money for the loan, mortgage servicers handle the payments and communication with the borrowers and mortgage originators sell the mortgage. In some cases, all three roles are played by the same company but often these roles are split between specialized companies.

Of course, throughout the life of your mortgage fees are paid to the companies that manage your mortgage. The origination fee you pay when you sign for a mortgage is part of the payment mortgage originators receive. Every month interest is paid to the mortgage lender and a portion of the interest and mortgage fees goes to the company that manages your payments. These fees do not stop when you are behind in your payments and you are applying for a mortgage modification.

Mortgage modifications are paperwork intensive procedures which require a lot of research and communication between borrowers, mortgage servicers and mortgage lenders. This may help you understand why mortgage modifications often take so long to get processed even when borrowers clearly qualify for them. Mortgage servicers receive a fee for their work during mortgage modifications. However, the rules that regulate how much they receive have just been changed.

Fannie May requires mortgage servicers to only charge a fee, if the loan modification is approved. That has been the case for some time now. However, how much mortgage servicers can charge has recently changed. Why? Fannie Mae states recent simplifications in the mortgage modification process as a basis for the reduction in fees charged by servicers under the government sponsored mortgage assistance programs. The current limit is 0.25 percent of the mortgage amount or whatever the mortgage servicer received before the loan modification.

The maximum allowed servicing fee for mortgage modifications is not the only change announced by Fannie Mae. Mortgage investors and mortgage servicers must also adapt to changes in foreclosure time frames and rules on mortgage delinquency management. Now, if mortgage servicers exceed the allowed time frame to assess a loan modification, Fannie Mae will impose penalties so servicers remediate the problem and improve their performance.

CitiMortgage, the servicing side of CitiGroup’s lending sector is promoting some new alternatives for homeowners who do not qualify for loan modifications. These alternatives work in conjunction with CitiMortgage’s new “Road to Recovery Events” program which aims to help homeowners benefit from government and private loan modification programs. According to recent figures, 65 percent of applicants at these events are successful. What happens to the 45 percent that are not granted a mortgage modification? CitiMortgage is offering a special foreclosure alternative program across six states.

What is a foreclosure alternative?

There are two main types of foreclosure alternatives: short sales and deeds-in-lieu of foreclosure. A short sales occurs when the lender allows the borrower to sell the property undergoing foreclosure at a price below the mortgage balance to avoid foreclosure. A deed-in-lieu of foreclosure occurs when borrowers agree to return their deed, and therefore their legal claim to the property, in exchange of avoiding foreclosure. These alternatives can be beneficial to borrowers as long as the lender agrees not to attempt to collect any difference between the mortgage’s balance and the sale price.

What is New?

Up to now, nothing new. Short sales and deeds-in-lieu of foreclosure have been around for a while. However, CitiGroup through its branch CitiMortgage is offering some new additions to short sales and deeds-in-lieu of foreclosures.

Six-Month Break

If you have no chance of arranging a loan modification or refinance, CitiGroup will offer you up to six months of free month if they agree to exchange the deed for six-months of additional stay in the house. As far as now, there is not completion date for this date, which means it should be open for all homeowners who qualify for the program. This six-month break will allow you to start saving for the new deposit or move and avoid some of the stress of moving after a foreclosure.

$1,000 Bonus

Moving home is a huge expense. If you have just gone through a foreclosure, the cost of moving may simply be too much to deal with. CitiGroup, through CitiMortgage, offers borrowers a helping hand here by offering homeowners who agree to a foreclosure alternative a minimum of $1,000 towards moving costs. This will help with a new deposit if you decide to rent or as aid towards the new appliances and furniture you may need for your next house.

The idea is to reduce the cost and damage of foreclosures to clients by providing tenants with an incentive to be tidy and leave the property on good terms. This does not only help borrowers save money but banks and lenders also.

If you own a Citigroup mortgage and are struggling to make your monthly payments, you may be able to benefit from Citigroup’s CitiMortgage campaign. This program is travelling as a road tour around the United States to meet struggling homeowners who want a loan modification. These outreach efforts have the effect of stimulating homeowners who would otherwise do nothing in the hope that “things will work themselves out” to attend the meeting and determine if they qualify for a modification.

Up to date, CitiMortgage has travelled to four cities as part of its 10 city tour. The tour which has already visited Baltimore, Cleveland, Atlanta and Orlando still has to visit Los Angeles, Miami, Detroit, Phoenix, Las Vegas and one more city the organizers are still deciding on. These road to recovery events are sponsored by CitiGroup and non-profit housing counselors.

What have been the results up to date of these events? The figures provided by CitiGroup are promising. According to CitiBank officials the program has approved 65 percent of those that attended the events. Although, we don’t have the attendance figures, officials say 95 percent of those in attendance were 60 days behind in their payments, which makes the previous 65 percent figure ever more so encouraging.

Sanjiv Das, the CEO of CitiMortgage, claims the priority of CitiMortgage is to help customers avoid foreclosure and according to these preliminary figures it seems like this is being accomplished in most of the cases.

What about those who simply do not qualify for a mortgage modification? CitiMortgage guides these homeowners towards foreclosure alternatives, such as a short sale or a deed-in-lieu of foreclosure to minimize the damage caused to families by foreclosures. A short sale allows homeowners to sell their home for less than the balance of their mortgage and in some cases will “forgive the difference between the mortgage balance and the short sale price. A deed-in-lieu of foreclosure allows the homeowner to hand over the deed of the property in exchange of avoiding foreclosure. In most cases the lender will forgive any late payments and the balance between the current market price of the home and the mortgage balance.

However, it is important to get these assurances in writing because in certain states lenders can claim any losses they suffer after a short sale or deed-in-lieu of foreclosure after the house has been sold if there is not a written agreement to the contrary.

Owning your own home is a dream for many Americans. Although two-thirds of American households own their home, many more would like to. However, in the last few years, the American dream has become and American nightmare for those that do own their home but face the risk of foreclosure and losing life savings and any equity locked into the home..  Sometimes this occurs because of unforeseeable problems, like losing a job you have had for years or falling sick and no longer been able to work. Yet often the cause behind mortgage financial problems is a lack of foresight in homeowners before they buy the property. This article will look at five steps you can take to minimize the risk of defaulting on your monthly mortgage payments and saving your home from foreclosure.

Step 1. Calculate Your Net Monthly Income.

Before you know how much you can afford to pay towards a new home you need to know exactly how much you earn. Add the gross pay you receive every month. This includes all the wages and salaries form your jobs and any profit from your businesses. You should also include any interest or dividends you regularly receive from your investment portfolio. From this amount you must now deduct all your fixed expenses, such as your income tax, your social security payments, retirement fund payments and so on. The result is your net monthly income.

Step 2. Deduct Debts and Other Pending Obligations.

Make a list of your long term monthly debt obligations. This includes your car payments, credit card debts and any other debts you estimate you will take longer than 10 or 11 months to pay. Add the numbers on your list and deduct the total from your monthly net income. This information, as well as the data collected in Step 1, is generally also requested by lenders when you fill in your mortgage application. So keep a copy of the information you collect during this exercise.

Step 3. Other Expenses

Add your regular monthly expenses, This includes food, medical care, gifts, charity, entertainment, savings, clothing and education. Deduct the total from the figure you calculated in step 2.

Step 4. Calculate the REAL Cost of the Mortgage

Ask your potential mortgage lenders for a list of ALL the expenses related to your mortgage. This includes property taxes, mortgage payments, mortgage insurance, water, phone and other services, maintenance costs and furnishings.

Step 5. Compare your Income with Your Housing Expenses.

This is the most crucial step when assessing if buying a mortgage is a good or dangerous idea. Compare the result of step 4, the total housing expenses of purchasing and maintaining your home, with the total of step 3, which is your adjusted net monthly income. If your total housing expenses represent more than 30 percent your household’s monthly income, you may want to reconsider the wisdom of buying at this moment, because the slightest change to your work or increase in interest payments could lead you into financial disaster.

The series of storms, tornadoes and flooding that have hit Alabama have caused thousands of families to lose their homes and increased the number that face foreclosure due to the financial and employment consequences of these disasters. The Housing and Urban Development (HUD) has reacted by announcing disaster assistance to victims. On April 29, 2011, Shaun Donovan, Secretary of HUD, stated he would speed the processing of federal disaster assistance to people affected by the storms in Alabama. This relief will come in the form of foreclosure assistance, Mortgage Help and other forms of financial assistance to families in the area. This article will look at some of the avenues HUD is using to allocate resources where they are needed the most.

Foreclosure Relief

Families affected by the storms will receive an immediate 90-day respite from any foreclosure and broader forbearance on mortgages with the FHA under foreclosure. This will grant homeowners a chance to arrange their finances and save their home from foreclosure.

Mortgage Insurance

Victims of natural disasters will also receive 100 percent mortgage insurance on loans they apply for to rebuild their homes or buy a new one. Banks and other lenders can apply to the FHA for up to 100 percent insurance on the loan’s balance including closing costs. The purpose, of course, is to stimulate the investment of money in the disaster area and help homeowners with the daunting task of rebuilding their home or finding a new one.

Home Rehabilitation and Mortgages

HUD also provides victims with mortgage insurance so they can finance their mortgage and the rehabilitation of their damaged home with a single mortgage. Effectively, HUD is covering the lender’s risk so that banks and other lending institutions are willing to offer loans to families who would otherwise not qualify for credit.

Relocation of State and Federal Funds

HUD provides states with Development Block Grants and HOME programs which are used for a variety of purposes. Communities and institutions in Alabama have been authorized to redirect these funds to cover the cost of emergencies and critical needs. The same institutions have also been granted with special authority to expedite the allocating of funds to speed up the repair and replacement of damaged homes.

These are only some of the programs and aid resources available to victims of natural disasters. If you want to find out more about what programs you can apply for if you have been affected by the Alabama storms, tornadoes and flooding, click here. Programs you will find in this section include the Disaster Housing Assistance, the Reprogramming of Public Housing funds and Assistance from Ginnie Mae.