Making Sense of the Economic Recovery Act and How it Applies to Home Mortgage Rescues

Newly passed legislation about home mortgage modification seems to be the talk around the water cooler lately. But figuring out just how this valuable legislation can affect you as a homeowner and the interest and terms of your home mortgage is difficult. Basically, the Obama plan is centered on two groups of homeowners: the first is those who are facing foreclosure due to missing payments and default, the second is those homeowners who cannot refinance to a better rate due to falling prices in the housing market.

For the first mentioned group, those who are facing foreclosure, the government offers incentives to lenders in order to secure mortgage modification on their existing mortgage. In doing so, the homeowner can reduce their monthly payment requirement enabling them to stay current on their mortgage and avoid foreclosure. For homeowners who are current on their mortgage but cannot refinance because the value of their home has gone down drastically in their area, the Obama mortgage rescue plan can allow them to refinance their mortgages to better terms that include smaller monthly payments. These mortgages are known as underwater mortgages.

Modifying Your Mortgage Under The Obama Rescue Plan

For mortgage modification, the homeowner must have taken out a mortgage on the home prior to January 1, 2009 and the mortgage cannot be a second mortgage (must be their primary mortgage). The principle of the mortgage must be less than $729,500 and the homeowner must actually live in the home that qualifies for mortgage modification under the Obama mortgage rescue plan.

Additionally, the homeowner must document their financial situation fully via income tax return statements and pay documentation in the form of paystubs or pay statements. The homeowner must also prepare a financial hardship statement that details how and why they fell into financial difficulty that requires that their mortgage be modified. If the borrower has a total household debt that is greater than fifty-five percent of their income, the borrower must agree to go for credit counseling. The homeowner does not have to be late on their mortgage payment to qualify for mortgage modification.

Once these qualifications are met, the mortgage lender can determine the amount of the new monthly payment in order to make sure that it is no more than 31% of your pre-tax (gross) monthly income and the interest rate can be as little as 2%. This provides significant savings that can keep the family in the home and allow the home to be its most affordable for them in the future.

Refinancing Your Mortgage Under The Obama Rescue Plan

For mortgage refinancing, the homeowner must live in the home and it must be their primary residence. The mortgage must be owned by either Freddie Mac or Fannie Mae (check with your lender, many mortgages are owned by these two huge entities; you may be unaware of it). The borrower must show that they have enough income coming into to sufficiently handle the mortgage payment, and borrowers cannot take cash out of the mortgage in order to pay on other debts. Also, the mortgage cannot be written for more than 105% of the current fair market value of the home. The mortgage can be refinanced under this option to a fixed 15 or fixed 30 year rate.

Overview of Illegal Collection Practices Used by Debt Collection Agencies and How to Fight Back

The Fair Debt Collection Practices Act states that federal law prohibits a collection agency from engaging in various deceptive or illegal debt collection practices such as threatening the debtor, etc. In this article, we go over some debt collection practices that are banned by the FDCPA and any collection agency that employs such tactics is looking for trouble!

i) Communication with Third Parties

In most cases, a debt collection agency cannot contact third parties about debts that you owe. There are a few exceptions to this rule such as:

Your attorney – The debt collector can contact your attorney if he knows that you are represented by one. This means the debt collector must always contact that debt attorney and should not phone you, unless you give them permission to contact you or if your attorney does NOT respond to the debt collector’s messages.

Credit reporting agency – Most creditors will file a note to the 3 major Credit Bureaus including Experian, Equifax and TransUnion about your debt and they are legally allowed to do this.

Original creditor – Since most debts are sold to collection agencies by creditors, the agencies are allowed to maintain communication with the original creditors in order to facilitate the collection of the debts.

Debt collectors are permitted to contact your spouse, parents or your co-debtors unless you ask them in writing to stop doing so. If you send a written letter to a debt collector to stop contacting your parents or co-debtors regarding outstanding debts and if they still do, then they would be violating the rules set out by the Fair Debt Collection Practices Act (FDCPA).

Another limitation is that debt collectors are permitted to contact third parties for the purpose of finding information about your whereabouts. In any such communication or phone calls, the debt collectors:

– Must state their name and if they are verifying information about your location or whereabouts.

– Are not required to identify their employer unless you ask them.

– Are not required to state that you owe a debt.

– Cannot contact a third party more than once unless if told to by that third party, of if they believe the third party’s earlier response was false, incomplete or
wrong and that the third party has the complete information.

– Cannot communicate with post cards.

– Cannot use any words or letterhead or symbols on the outside of an envelope that indicates they are trying to collect a debt (including any business logos or overheads). This is if it is clear that such a logo would give away the purpose of the letter.

– Cannot call any third parties for location information if they know a debt attorney represents you.

ii) Communication with You

When a debt collector calls you for the first time, he must state the reason of the call, which usually is an attempt to collect a debt and that any information given by you, will be used solely for that purpose. In further communication, the debt collector must tell you his/her name and the collection agency they work for. Here are some rules regarding when a debt collector can call you and when it is not a good time:

– The debt collector cannot contact you at an unusual time or place e.g. calls before 8am or after 9pm.

– The debt collector cannot contact you directly if he knows that you have an attorney representing you.

– The debt collector cannot call you at work because he knows your employer could prohibit such communications during work. If you do get such a call from a debt collector while at work, tell them your employer prohibits such communication at work and that they should not call you at this time (working hours).

iii) Abuse or Harassment

A debt collection agency cannot engage in conduct that is meant to harass abuse or oppress you. More specifically, the collection agency cannot:

– Publish your name as someone who owes debts or doesn’t pay bills in the public (some child support collection agencies may be exempt from this rule).
– List your debt as for sale to the public or investors’ community
– Make telephone calls to you without identifying themselves as debt collectors
– Call you repeatedly
– Use or threaten to use violence against you
– Harm you or threaten to harm you in any way
– Harm someone else or threaten to harm someone else or his/her property
– Use profanity when communicating with you

If you get such a collector that uses profane language, just hang up on the phone and not bother picking up again if they call back.

iv) Lies or Misleading Representations

Collection agencies cannot like to you or make false misleading representations in an effort to get you to pay debts. Some of these include:

– They cannot claim to be a law enforcement agency or suggest that they are connected with the federal, state or local governments trying to collect debt.
– They cannot falsely represent the amount you owe or the percent of commissions they will receive after collecting your debt.
– They cannot claim to be a debt collection attorney or any message they give you is from an attorney.
– They cannot claim that you will be imprisoned or your property will be seized unless the debt collector is really going to sue you possibly forcing you to go to jail or your property being seized.

Things to Consider When Getting Pre Approved Bad Credit Auto Loans

When it comes to getting car finance with a poor credit history then it can certainly help if you look around for pre approved bad credit auto loans. Not only will it make the process of buying your car a lot quicker and easier, but it can also give you some bargaining power if you have your finance approved before you begin shopping for your new car.

There are many lenders in the industry who offer pre approved bad credit auto loans, and what’s more a large number of these companies can be found on the internet. This means that you can easily shop around for pre approved bad credit auto loans online, in your own time, so that you can be sure you are accessing the right finance package for you at the right price.

If you are looking at getting pre approved bad credit auto loans it is important that you get yourself into the best financial position that you can before you begin your search. Look into your credit rating thoroughly to determine the cause of your failing credit rating and, if possible, try to pay of any outstanding debts before applying for pre approved bad credit auto loans. It may mean that you may need to delay purchasing your car for a few months, but spending some time improving your credit rating will enable you to get pre approved bad credit auto loans a lot easier and at a much lower rate.

Most lenders who deal with poor credit finance know that they are dealing with customers who have a less than desirable credit score. For this reason, your credit report will not be the determining factor when it comes to getting pre approved bad credit auto loans. Approval of this type of finance generally comes down to your current financial position and whether or not you can afford to repay the amount you wish to borrow. Spending the time working out your budget will allow you to determine exactly how much you can afford to repay and enable you to work out your borrowing capacity. Allowing room to move within your budget and avoiding borrowing up to your maximum will help make getting pre approved auto loans a lot easier, regardless of your history.

The majority of lenders who offer pre approved bad credit auto loans are your private lenders. The big banks rarely deal with customers who have a poor credit rating, so you will have a better chance of getting your finance if you go with a smaller non-bank lender. Since there are so many private lenders who specialize in bad credit finance, most are doing all they can to attract customers, including offering finance at very reasonable rates. It is extremely important, when looking for this type of finance, that you spend the time shopping around for your loan and comparing as many lenders as you can so that you can be sure you are getting your finance at the best possible price. While poor credit finance generally does cost more, you certainly want to avoid paying too much for your car loan.