What are Foreclosure Bailout Programs?
Question:
Answer:
Foreclosure Bail Out loans are esentially a refinance. The loan is refinanced, usually between 10% to 12% interest rate and the maximum LTV is normally around 70% LTV, however I am aware of 1 lender who will allow up to 80% LTV. The borrower needs to have owned the home long enough so that enough equity can be borrowed against will allow the loan amount to cover the remaining balance owed to the mortgage company who is filing foreclosure can be paid off. Sometimes, the borrower can negotiate this payoff balance with the lender to reduce the total amount for the payoff simiar to a settlement amount.
In a refinance involving a foreclosure bail out it is very important to include good Letters of Explanation to explain the circumstances that caused the property to go into foreclosure. The letters need to also assure the underwriter that things have changed and those same circumstances that caused the foreclosure are not likely to reoccur.
A forbearance is the same as a foreclosure from the view of most lenders. Rates on foreclosure bailout loans will vary depending on market conditions.
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