Q. What is the impact of a short sale on the credit report/score?

A. There is no easy answer here. It will depend how the lender will report the short sale. A short sale should report a zero balance and a zero past due. The impact on your score will depend upon the current profile of your credit history and is too hard to predict or generalize. It is possible that with an excellent credit history a short sale can have minimal impact on your score.

Q. How will the lender even know there was a short sale? My credit report just shows it is paid? Can't I just say I sold my home?

A. Don't try to be slick and think a new lender won't know about a prior short sale. Lender's require a copy of the Settlement sheet (HUD-1) from the prior sale. Also, there are comment codes that may not appear on a credit report will be read by the automated underwriting systems lenders use.

Q. Can you rely on Fannie Mae/FHA guidelines when the lenders/secondary market don't follow those rules?

A. No. Many lenders have stricter requirements so you need to check with your lender. Those stricter requirements are what known as overlays. For example, there may be additional requirements in regard to credit score or down payment when obtaining a loan after a major derogatory event.

Q. What's the difference between a deed-in-lieu, and a foreclosure?

A.  For the most part a foreclosure means legal action was initiated as a result of default. Even if the home is sold and a foreclosure never happened, once it has been initiated, it will be viewed as a foreclosure in terms of underwriting the loan. A foreclosure will appear as a public record on your credit report. Public records remain on your credit report for 10-years. A deed-in-lieu is a friendly foreclosure where the deed is turned over to the lender so that legal action (foreclosure) is not commenced.

Q. What are the extenuating circumstances that allow for the shorter time frame?

A. Extenuating circumstances are isolated one time occurrances beyond your control. Examples include death of a wage earner or a serious illness. Divorces, inability to sell a home due to job transfer or relocation are not extenuating circumstances. For more details, contact Allied Mortgage Group at 215-355-5626.

Q. What is meant by requirements to re-establish credit?

A.  After a major derogatory event such as a bankruptcy, you will need to show how you can effectively manage your financial affairs. You will have to have a satifactory payment history with no late payments since the derogatory event.

Note to the wise:

This information is based on today's information. Even though these are current guidelines; guidelines are always changing. What might be allowable today might not necessarily apply in the future.

Today's blog is presented by the Whitehouse 's blog concerning the Dodd-Frank Wall Street Reform Bill.  I know too many people are not going to understand how this bill when signed into law by President Obama will affect them. 

With the final version of Wall Street Reform having passed the Senate this afternoon (July 15,2010), and the House having passed it weeks ago, the bill now comes to the President’s desk.  The President thanked those in Congress who stood strong, and noted that first and foremost, “Because of this reform, the American people will never again be asked to foot the bill for Wall Street’s mistakes.”  But that is only a part of what reform means for the American people, and only part of what makes this almost universally described as the most sweeping reform of Wall Street since the great depression:

If you’ve ever applied for a credit card, a student loan, a mortgage, you know the feeling of signing your name to pages of barely understandable fine print.  It’s a big step for most families, and one that’s often filled with unnecessary confusion and apprehension.  As a result, many Americans are simply duped into hidden fees and loans they just can’t afford by companies who know exactly what they’re doing. 

Those days will soon end.  From now on, every American will be empowered with the clear and concise information you need to make financial decisions that are best for you.  This bill will crack down on abusive practices and unscrupulous mortgage lenders.  It will reinforce the new credit card law we passed banning unfair rate hikes, and ensure that folks aren’t unwittingly caught by overdraft fees when they sign up for a checking account.  It will give students who take out college loans clear information and make sure lenders don’t cheat the system.  And it will ensure that every American receives a free credit score if they are denied a loan or insurance because of that score.  All told, this reform puts in place the strongest consumer financial protections in history, and it creates a new consumer watchdog to enforce those protections. 

Because of this reform, the American people will never again be asked to foot the bill for Wall Street’s mistakes.  There will be no more taxpayer-funded bailouts -- period.  If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy.  And there will be new rules to end the perception that any firm is “too big to fail,” so that we don’t have another Lehman Brothers or AIG. 

Because of reform, the kind of complex, backroom deals that helped trigger this financial crisis will finally be brought into the light of day.  And from now on, shareholders and other executives can know that shareholders will have greater say on the pay of CEOs, so that they can reward success instead of failure, and help change the perverse incentives that encouraged so much reckless risk-taking in the past. 

In short, Wall Street reform will bring greater security to folks on Main Street -- to families who are looking to buy their first home or send their kids to college; to taxpayers who shouldn’t have to pay for somebody else’s mistakes or irresponsibility; to small businesses, community banks and credit unions who play by the rules; to shareholders and investors who want to see their companies grow and thrive.

Posted by Jesse Lee on July 15, 2010 at 06:25 PM EDT

I have written about this subject in the past. Today, I have found an article which discusses the costs of home ownership.  The link is http://tinyurl.com/y6hdr8f

If you should have any questions concerning this article contact us at 215-355-5626.  Also, check out our Resource Library for articles on purchasing a home. 

Allied Mortgage Group is a direct lender licensed by the PA Dept. of Banking and pursuant to the secondary mortgage act.  We are licensed by the NJ Dept of Banking and Insurance and licensed in the states of DE & FL.  

Did you ever wonder why charts and graphs are put in an article of a newspaper?  They look so nice and pretty. You would think the reporters and editors would know we are not statisticians or economists.  Most of us do not understand charts and graphs.  Sure they put a nice blurb underneath the chart and try to explain to us in 10 words or less.  The lines and bars look great. Even when they insert a 3-D graph it looks great.  Your probably wondering why I am writing about charts and graphs and how it may have a profound affect on my life. Right?

If you take the time to look real close at the charts and graphs you can get an idea of what the graph and/or chart is trying to realistically state in terms of data. Most graphs are not accurate.  Most of the data in graphs and charts are manipulated to zero in on a certain area or problem.  It could be so minut the media and government likes to make things much bigger than it seems.  Statisticians and economists are paid to inform companies, news media, and the government where, why, when, and how the economy is doing.  They are forced to mathematically formulate an opinion if the economy and/or the Gross Domestic Product is going to drop.  Are factories orders down? Is unemployment on the rise?  Is new housing starts dropping faster than expected?  Do you get the picture now?  Statistics have been around before the turn of the century. It has been around since the Pharoahs of ancient Egypt kept their own statistics of how much wheat is stored and how long it would take to build a pyramid.  You can take statistics lightly or you can educate yourself to know what is going on in the world around you. 

When purchasing a home in todays world it is important to know what the market is doing. It affects the rates, prices on houses, real estate taxes, and job security.   So, next time you see a chart or graph look at it and instead of just following the line up and down take a ruler and you will find out what the graph or chart is really telling you.  It may shock you.  The small things do make a difference and it does matter. 

For more information about todays topic and other topics call Allied Mortgage Group at 215-355-5626.