Should you contact a foreclosure rescuer? Absolutely not! At Resolve Legal PLLC, a law firm providing Seattle avoid foreclosure help to Seattle-area consumers, we've seen many people victimized by foreclosure rescue scams. Because our attorneys have for years provided Seattle avoid foreclosure help, we know the scams will increase as more homeowners with adjustable mortgages face foreclosure in the future.
One scam our attorneys see is ?equity stripping.? The scammer promises to save your home by taking title, renting it to you and selling it back later. Instead, the scammer strips the equity by charging outrageous fees, doing phony renovations and not making mortgage payments. A variation our Seattle avoid foreclosure attorneys see: a scammer takes title without you realizing it and walks away with your equity.
As attorneys providing Seattle avoid foreclosure help to homeowners, we're familiar with scammers? tactics. These include:
?Bombarding you with letters, flyers and phone calls ?Isolating you, telling you not to contact lenders or attorneys that provide help ?Fraud, having you sign papers with blanks scammers fill in later
Instead of contacting a foreclosure rescuer, call a law firm like Resolve Legal PLLC that provides Seattle avoid foreclosure help. We'll contact your lender and try to negotiate a payment plan. If that's not possible, we'll take steps to stop foreclosure, which often involves filing a Chapter 13 bankruptcy. As attorneys providing Seattle avoid foreclosure advice, we're extremely knowledgeable about this proceeding and helping consumers deal with financial problems.
One final recommendation: As soon as you realize you can't make your mortgage payments, contact an attorney providing Seattle avoid foreclosure advice. To avoid foreclosure, you need an attorney providing advice. Hire that attorney to avoid scammers and save your home.
where they put the pea under one of three shells and you have to keep your eye on the right one.
Let's talk a little about the Lender's shell games we are seeing a lot more of in the current cool financing climate.
These are tricks lenders are using very frequently in the last 6 months. Tricks that can radically lower the amount of money they'll approve you for on your next commercial purchase.
Tricks you need to see coming from a long way off and be prepared to defend against.
The Loan To Value (LTV) Bait and Switch
Right now, the LTV Ratio may be the main number you use to estimate the amount of money you can get on a loan.
You may say to yourself something like this, "I have a $2M purchase, and its a real bargain. The Lender says 80% LTV is no problem. I should be able to get a $1.6M loan." Don't count on it and here's why ...
Once you are under contract and have presented your Lender Package to the Bank, the Loan to Value Ratio is absolutely and totally meaningless.
The LTV gets trumped by another ratio that is much more important to the bank.
That's your Debt Coverage Ratio (DCR)
Here's the basic formula:
Debt Coverage Ratio = Net Operating Income / Annual Loan Payment
Debt Coverage Ratio for most lenders needs to be 1.2 or higher. This means your Net Operating Income is equal to 120% of your loan payment.
Here's where they get you...
1) The Lender will disagree on the amount of Income you can project... and cut it.
2) They will disagree on the amount of Expenses that you will project ... and raise them.
These two changes will take a great big bite out of your Net Operating Income.
And lenders have gotten MUCH more conservative with their numbers on both sides of the ledger in the current credit crunch. You will need to have evidence to defend both your income and expense projections against the lender's inevitable adjustments.
By lowering the Net Operating Income, they may drop you below the Debt Coverage Ratio that's required for that "80% LTV loan" you were counting on.
They can then legitimately come back and lower the loan amount.
Which means you have to come to the closing table with more money in hand ... sometimes a LOT more.
If you don't do something to change their thinking you only have one choice available ... bring more money to the closing table.
The Lender's thinking has nothing to do with LTV.
The negotiations will always center on your Net Operating Income.
So rather than quietly give in to their little shell game of moving targets, you have to be willing to vigorously defend your projections of Income and Expenses in order to get the loan that you want. Be ready to build your case like a lawyer.
- You may need to link arms with your Loan Broker and go back to the Lender several different times with market data to support your Income figures.
- You may have to have link arms with your Property Manager and supply information to support your Expense data.
AND remember, all this negotiation will come down in the last 10 days of the purchase process.
Be prepared to go down to the wire to get the numbers you need.
POWER TIP:
Make sure your current purchase contract has several built in extensions of the financing period that you don't have to pay an arm and a leg for. Check your current contract for a minimum of 90 days finance period with the ability to extend to 120 days - you will need every one of them.
So when you're looking to buy your next property, start thinking like a banker.
Don't count on Loan to Value Ratios.
Be ready to defend your estimates of Income and Expense so that your Net Operating Income will support a Debt Coverage Ratio that gives you the money you need.
Both Resolve Legal & Monte Lee-wen are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.