From Bankrate.com - 2 steps to finding credit after bankruptcy

Justin Harelik, a L.A. attorney writes about bankruptcy for Bankrate.com. A reader posed this question about life after bankruptcy-

Dear Bankruptcy Adviser,
I have had really good credit for the past 20 years and recently went through a bankruptcy and am wondering how to "start over." I did keep my two cars and my house, but they still show up as discharged in a bankruptcy on my credit report and, according to my lender, that will continue for three to six months after the bankruptcy is discharged. How do I explain that to potential creditors?
-- Terri

The answer-

Dear Terri,
"As you begin the credit repair process, you will need to explain yourself to potential lenders over and over and over again. Yes, it will get to a point where you just might give up. But you cannot!"

Lenders today are quick to say "no" to anything out of the ordinary. Credit dings, especially ones as big as a bankruptcy, give the lender all the incentive needed to reject you for a loan or financing. You must remember that you can get credit again, but it will take some time. Here's a two-step process to follow.

Here are the two steps:

Tell your story. Research shows that the vast majority, more than 80 percent, of individuals who file bankruptcy have dealt with an illness, a divorce or a period of unemployment. You need to prepare a 30- to 40-second sound bite, explaining why you filed for bankruptcy. Even the most sympathetic loan officer or underwriter will not want to hear you tell your life story. Be concise, but thorough.

Interview your lenders. You don't want unnecessary credit inquiries showing up on your credit report after a bankruptcy. You will want to know whether you have the option of a loan after bankruptcy before you even fill out an application.

Bankruptcy does not mean your life has come to an end. It may seem that way, but never, ever, let them get you down.

Read the full article from Bankrate.com.

If you have questions about what you see here,
contact Stephen M. Flatow
Stephen's Title Agency, LLC
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“Strategic defaults” or walking away from the old homestead

Notwithstanding that they can afford to make monthly payments, there are homeowners who walk away from their homes, and leave the bank holding the bag, when the value of the home is less than mortgage amount. Well, it seems that Fannie Mae won’t be taking it on the chin without a little payback.

According to the New York Times, a recent report

“found that about 19 percent of all mortgage defaults in the second quarter of 2009 involved borrowers who could afford the loans. In the previous quarter 21 percent of the defaults were strategic.”

Meanwhile, last month Fannie Mae, the government-controlled company that sets lending standards for most mortgages, changed the penalties for borrowers who enter foreclosure with Fannie Mae-backed loans.

Previously, they would have had to wait five years before becoming eligible for a mortgage. Now they can re-enter the market in as few as two years, as long as they first attempt a “graceful exit” via a short sale or a deed in lieu of foreclosure. Freddie Mac, Fannie Mae’s smaller counterpart, maintains a similar policy.

Much has been written about short sales, but we never knew that walking away from a mortgage was called a strategic “default.”

If you have questions about what you see here,
contact Stephen M. Flatow
Stephen's Title Agency, LLC
StephensTitle@comcast.net
973-556-1628 Fax

Greedy mortgage brokers charged with theft.

The Asbury Park Press reported

Three executives from Hawthorne Capital Corp., a mortgage brokerage with offices in Manalapan, New York and Pennsylvania, have been charged with theft for failing to pay off original loans after refinancing mortgages, the Monmouth County Prosecutor's Office said.

New Jersey customers used the company to refinance their mortgages, the Prosecutor's Office said. Typically when that happens, the lender pays off the original mortgages. But the Prosecutor's Office said it received a complaint from a Monmouth County homeowner who said a check sent to her original mortgage company had been returned for insufficient funds after the homeowner refinanced with Hawthorne.

Now, this is interesting because we normally find a title company and/or lawyer involved in the actual disbursement the new mortgage loans, not the mortgage broker, and there is no mention in the story or the Prosecutor's press release of any involvement. So, we think there’s more here than meets the eye. We’ll try to follow this story.

The Monmouth County, New Jersey Prosecutor's press release can be found here.

If you have questions about what you see here,
contact Stephen M. Flatow
Stephen's Title Agency, LLC
StephensTitle@comcast.net
973-556-1628 Fax

No tax credits for N.J. homebuyers; impact of end of Federal program being felt in New Jersey.

We previously told you about a plan to give N.J. home buyers a tax credit.

Well, N.J. Gov. Chris Christie has vetoed bill that would have given tax credits of up to $15,000 to homebuyers. The reason-- the state could not afford to forego $100 million in tax revenue over the program’s proposed three-year lifespan.

According to the report in the Star-Ledger,

Christie has said that while he would support some economic development programs in other times, the state does not have the luxury of paying for them now.

Responding to criticism, “Christie argued in his veto the money would have been used by people already committed to buying homes and would “’briefly and artificially inflate home values.’”

Read the full article.

Meanwhile, the New York Times reports,

“After the expiration of the federal tax-credit program for buyers on April 30, the number of contract signings in New Jersey abruptly fell to the lowest point in six years — after more than a year of continuous gains.”

Well, I guess we are not seeing the light at the end of the tunnel.

If you have questions about what you see here,
contact Stephen M. Flatow
Stephen's Title Agency, LLC
StephensTitle@comcast.net
973-556-1628 Fax