A repossession will appear on your credit report and result in a significant negative mark to your credit history. A repossession, even if voluntary, will appear on a credit report for 7.5 years from the date of first delinquency. You will likely see your credit score drop substantially, as having a repossession in your credit history marks you as a credit risk. Once the vehicle is auctioned off, and if you are left with a deficiency balance, that balance can be bought by a collections agent. The collection agent can report to the credit bureaus that you still owe the difference. Your credit will continue to be negatively impacted as a result. You may not be able to repair your credit until this balance gets resolved.

A consumer should think long and hard before using a voluntary repossession of cars or homes to help straighten out their finances. A voluntary repossession by the debtor can result in bad credit and the consumer can still be obligated to pay the deficiency balance.

When using a voluntary repossession, the lender will sell the property at auction and the proceeds will be applied to the balance of your auto or mortgage loan and the fees that will be involved. If the balance is not paid off you’ll be informed of the balance and that you are still responsible for paying it off. If there is money left over after the loan balance and all fees are paid, don’t expect to get any of the profit as the company can legally keep it. The deficiency balance is the difference between what you owe on your loan and what your creditor receives from selling the vehicle. Creditors will still be allowed to sue you for a deficiency judgment to collect the remaining loan balance or deficiency balance.

A voluntary repossession can result in bad credit and make it more difficult to obtain loans in the future. The lender can still report the account to the credit agency to reflect the account as a “repossession” or “foreclosure”. It can be more favorable for the consumer to talk to the lender if he/she is behind or is going to be late on any upcoming payments. The lender can provide you with other options, such as selling the property yourself to a private party in order to get the most money out of the house or vehicle. Many creditors may also agree to delay or defer payments if they believe you will be able to pay them at a later date. However, this could cause late payments to appear on your credit report.

When it comes to voluntary repossession and credit, a consumer should look into all of the options available to them by contacting the lender immediately. The last thing a creditor wants right now is another repossession or foreclosure on their books.

This content provided by Mary Ann De Rosa, YourTexasCredit.com

NEWS FLASH!!!

New legislation was been passed and signed by President Obama delaying the reduction in the VA Funding Fee which went into affect October 1st, 2011. The new date for the reduced fees to go into affect is November 18th, 2011.

Did you catch that the changes had already gone into affect. Here’s another fine mess our government has gotten us into. Another case of the cart before the horse. dah

AUSTIN (Lubbock Avalanche-Journal, KXAN.com) – A State law that took effect 09/01/2011 has changed proof of residency requirements for homeowners applying for the property tax homestead exemption.
The new law requires applicants to provide a copy of their Texas driver’s license or state ID card and vehicle registration receipt. The documents must show the same address as the property for which the exemption is requested.
Applicants who do not own a vehicle must provide a copy of a utility bill with the correct address. They must also provide an affidavit stating he or she does not own a vehicle.
The new requirements also apply to applications for the over-65, disability, disabled veterans, homeowner’s surviving spouse and manufactured (mobile) home exemptions. They do not apply to homeowners who already have homestead exemptions.
One more reason to update Driver’s Licenses promptly after a move…..

The Good News
On October 1st, the upfront Guarantee Fee for USDA Rural Housing  Purchase Loans will be reduced from 3.50% to 2.0% of the final loan amount. The upfront Guarantee Fee will remain 1.0% for all refinance loans.

The Not-So-Good News
On October 1st, a new annual fee will be required for all new USDA loans, both purchases and refinance loans. The annual fee will be 0.30%. This fee will be added to your monthly payment.  It will be calculated based on the scheduled amortized unpaid principle balance rather than being calculated on the actual unpaid principle balance.

On August 3rd, the Restoring GI Bill Fairness Act of 2011 became law. This law reduces the VA Funding Fee for loans closed on or after October 1st.

The VA Funding Fees are significantly lower for all first time and subsequent use purchases, as well as, regular refinances.  The fees for subsequent use purchases with less than 5% down are scheduled to be lowered again in 2012 & 2013.

Here is how the old fees and the new fees compare.

First Time Use (Active Duty – National Guard & Reserves add 0.25%)

• No Down Payment: Reduced from 2.15% to 1.40%
• 5% Down or More:  Reduced from 1.50% to 0.75%
• 10% Down or More:  Reduced from 1.25% to 0.50%

Subsequent Use (Less than 5% Down – Active Duty/Guard/Reserves)

• As of 10/1/11: Reduced from 3.30% to 2.80%
• As of 10/1/12: Reduced from 2.80% to 2.15%
• As of 10/1/13: Reduced from 2.15% to 1.25%

Note: With 5% down or more, the first time use rates apply

If you have a VA disability rating of 10% or more, you should be exempt from the VA funding fee.

HUD has reopened the application intake for the Emergency Homeowners’ Loan Program (EHLP), a program that provides mortgage payment assistance to eligible homeowners experiencing a drop in income of at least 15 percent, directly resulting from involuntary unemployment or underemployment due to the economy and/or a medical condition. The mortgage assistance covers past-due mortgage payments, as well as a portion of the homeowner’s mortgage payment for up to 24 months (up to $50,000). The program is offered in 27 states and Puerto Rico. The deadline to apply is September 15, 2011. Since EHLP funds are provided to qualified homeowners on a first-come, first-served basis, it is critical that homeowners provide all required documents in a timely manner or risk losing the opportunity to apply for assistance under the program. For more information, please visit: http://findehlp.com/ or call the toll-free hotline at: 855- 346-3345.

The Emergency Homeowners’ Loan Program (EHLP):

EHLP is a new program from the U.S. Department of Housing and Urban Development that provides mortgage payment assistance to eligible homeowners experiencing a drop in income of at least 15 percent, directly resulting from involuntary unemployment or underemployment due to the economy and/or a medical condition. The mortgage assistance covers past-due mortgage payments, as well as a portion of the homeowner’s mortgage payment for up to 24 months (up to $50,000).

EHLP is offered in the following states: Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. EHLP is also offered in Puerto Rico.

Program details and contact information for the ELHP agency in your area can be found here:  http://www.nw.org/network/foreclosure/nfmcp/EHLPconsumers.asp A list of EHLP agencies can be found on that site. The deadline for homeowners to submit a Pre-Applicant Screening Worksheet is July 22, 2011.

Veteran Borrowers

Additional information for veteran borrowers in delinquency can be found in this .pdf  quick reference sheet. http://www.texasonemtg.com/pdfforms/foreclosure_avoidance_fact_sheet-1.pdf

Occupancy fraud is increasingly becoming a cause for concern for mortgage lenders nationwide. In a recent report released by Fannie Mae at the end of May 2011, statistics revealed that occupancy fraud now makes up 18% of misrepresentations in originations, narrowly trailing income and liability misrepresentation, but heading credit, SSN, value, assets, and property misrepresentation.

While occupancy fraud is currently affecting the nation as a whole, some locations in the US have seen the occupancy fraud index rise at least 25% in the first quarter alone. States currently at high fraud risk include Nevada, Arizona, Florida, Hawaii, and California, and in a 2010 examination of the nationwide distribution of misrepresentation findings, Texas ranked fourth in the nation.

Occupancy fraud occurs when an individual’s intent to occupy a property is misrepresented. The borrower trying to obtain a mortgage will list within the loan application that he or she intends to occupy a property as a primary residence, but in actuality, the borrower intends to purchase the property for investment purposes, such as a rental or a flip.

Higher interest rates are normally charged for non-owner-occupied residencies because of historically high delinquency rates. Therefore, as a result of stating that the property will be used as a primary residence, the borrower will subsequently pay a lower down payment and lower interest rates than he or she would otherwise. Moreover, when occupancy fraud occurs, there is an increase in the chance that taxes on gains are not paid, resulting in the possibility of an additional fraud.

One possible reason for the recent increase in occupancy fraud is because individuals have been hit hard by the economy and are enticed by low mortgage rates and housing prices that are more affordable than in recent years. Another reason for occupancy fraud is simply because borrowers that are interested in obtaining a mortgage are required to submit lower qualifying criteria for an owner occupied property versus an investment property.

Borrowers should be aware of the additional efforts being made throughout the industry to avoid occupancy fraud. All brokers should be prepared to provide additional documentation on loans when a borrower is not closing on their departing residence prior to closing on a new property. Wholesale lenders across the industry have implemented prefunding fraud detection policies in order to continually decrease the overall occurrence of occupancy fraud.