One of past clients who we sold a home in 2005 wanted to buy a newer, cheaper home and loose his current home.

Here is his scenario:

He purchased a 3 Bed / 1 bath home purchased in Los Angeles in July 2005 for $330,000.

He then used the services of another lender and refinanced his home in Nov 2006, cashed out some money and ended up getting screw up by the lender by being offered a negative amortization loan (The Famous “Pick-A-Payment-Loan”).

He borrowed $380,000 in Nov 2006.

He currently owes  $458,500 due to the negative amortization and his home value is $260,000.

He is $198,500 in the hole wants to loose his home but before he does, he wants to buy another home.

Lenders see this “buy and bail” scheme as fraudulent and borrowers could be sued by the lender if the lender can show that the homeowner committed fraud by misrepresenting themselves on their loan application.

Even real estate professionals such as  agents or brokers could face federal charges by the FBI if they knowingly collaborate with anyone to acquire a new home under false pretense.

What solution is available to homeowners with negative amortization loans?

There is always the option of “Loan Modification”

Congress recently passed a housing rescue bill aimed at sparing 400,000 struggling homeowners from foreclosure.

The measure lets homeowners who cannot afford their monthly payments refinance into more affordable government-backed loans rather than losing their homes.

If you would like detail information about how to modify your existing loan even if you are behind in your payments and have no equity whatsoever, please contact us by clicking on the following link: www.RealtorSpeaks.com/contact-us  and we will show you how you can modify your existing loan to save your home.

The bill contains a provision (SEC 2113) which forbids FHA from insuring mortgages  in which the borrower’s down payment comes from a private down payment assistance provider such as Nehemiah.

Many buyer’s who were in need of down payment assistance, were taking advantage of the services provided by Nehemiah by requesting the seller to donate “X” amount of money to Nehemiah Corporation of America (A private down payment assistance provider), and then Nehemiah, for a small fee, would turn around and apply that money towards the buyer  recurring and non-recurring closing cost.

Effective October 1st, 2008…Buyer’s will not be able to utilize the benefits of the Nehemiah program.

This means more than 300,000 families will be locked out of home ownership in the next year alone