Credit problems? How Do I Know if T housands of people around the country Late Payments? Debt? have achieved homeownership by I Have a Loan With means of a residential mortgage loan “Subprime” Terms? classified as “subprime.” Subprime lending has been an engine of growth in home sales and, for the most part, subprime borrowers have met their mortgage loan payment Borrowers may not be aware that they are obligations, and enjoyed their new homes. placed in the “subprime” market. If you have one or more of the credit characteristics listed Some subprime loans, however, prove below, your loan may have “subprime” terms. impossible for borrowers to honor over time. Two or more 30-day delinquencies in the Some subprime lenders, and some loan last 12 months, or one or more 60-day officers in the course of marketing subprime delinquencies in the last 24 months; loans, exploited borrowers – who may now face delinquencies in payment or Judgment, foreclosure, repossession, or foreclosure. charge-off in the prior 24 months; If you feel you have been exploited by a lender, contact the New Jersey Department Bankruptcy in the last 5 years; A Homeowner’s A Fair Isaac Credit Corporation (FICO) of Banking and Insurance at 1-800-446- 7467. credit score of 620 or below; and/or Guide to A high percentage of debt compared to “Prime” and “Subprime” Markets income that may limit your ability to cover “Prime” and “Subprime” refers to the interest rate and terms of the loan based family living expenses after deducting total monthly debt-service requirements from your monthly income. SUBPRIME on the borrower’s credit history. Borrowers with the highest credit scores and cleanest For More Information payment histories present limited risk to the lender and are usually offered lower NJ Department of Banking and Insurance interest rates and placed in the “prime” 1-800-446-7467 www.njdobi.org market. NJ Housing Resource Center Borrowers with lower credit scores as a www.njhousing.gov Chris Christie result of events such as late payments, court NJ Housing and Mortgage Finance Agency Governor judgments and bankruptcies present a higher 1-800-NJ-HOUSE www.nj.gov/dca/hmfa/ Kim Guadagno risk to the lender; and, therefore, are Lt. Governor offered higher interest rates and are placed Homeownership Preservation Foundation Tom Considine in the “subprime” market. 1-888-995-HOPE www.995hope.org Acting Commissioner Tips for Borrowers 1. When Shopping for 2. When Delinquent on Payments For a list of governmental and non-profit a Mortgage Loan – or in Foreclosure – Call Your entities, including certified credit counselors and/or licensed debt adjusters that may Do Your Homework Lender or Loan Servicer! provide financial assistance or counseling, visit and Always Read the the Department’s web site at: Fine Print! Borrowers fall behind in payments for many www.state.nj.us/dobi/division_consumers/ legitimate reasons. But, most homeowners in To avoid buying a loan product that may result default or facing foreclosure fail to call for help that could have avoided the problem. Your lender If you choose an attorney, make sure he or she in future payment increases or other unfavorable has foreclosure experience and understands a terms that may make it difficult to meet the or loan servicer needs to know as soon as possible when a payment will be late. (Contact information borrower’s rights under the New Jersey Fair payment schedule, you should: Foreclosure Act. will appear on your bill.) Know your FICO credit score; Most loan servicers will readily discuss options Ask how you are evaluated as a other than foreclosure. Here are some of the 3. Don’t Fall Prey to Foreclosure repayment risk; solutions that may be available to homeowners Assistance Scams! in delinquency or facing foreclosure, when they Learn all you can about the loan product call their lender or loan servicer: you choose, including interest rates and Avoid “foreclosure specialists” promising to fees; Forbearance – An agreement to postpone keep you in your home. They are not licensed by payment until the borrower is able to DOBI, charge excessive fees, and provide services Know if your monthly payment will make other arrangements. that may not actually help you avoid foreclosure. include taxes and/or insurance; Reinstatement – A lump sum payment plan Avoid “lease/buy-back” deals in which you are Check for rate reset terms or payment may bring an account up to date. asked to sell your house to an investor for a dollar increases during the life of the loan; amount equal to the balance due on your Check for teaser rates or payments that Repayment – You may obtain a new mortgage. Typically, after you hand over your start low but increase later; payment plan that adds the delinquent title, you enter into a lease with the investor funds to future payments in affordable providing that you, now as a tenant, will have the Beware of terms permitting unlimited installments. option to buy back the house at the end of the increases in payment amounts due; lease period. In many cases, however, the rent is Refinancing – Another option may be to exorbitant, the tenant cannot pay and is evicted Check for prepayment penalties roll your debt, including the past due applicable to an early payoff. amount, into a new loan with an extended from the property; in others, the buy-back option term of years. price is set so high that the tenant is unable to It is important to check that your loan officer afford it. The investors may stop making their own is licensed by the Department or otherwise If you are unable to make new arrangements with mortgage payments on the property, and it could qualified. Use the Department’s Licensee your lender or loan servicer, you should seek help be foreclosed upon. In all of these cases, you as Search online at www.njdobi.org. from legal counsel or from a certified credit the original homeowner, lose your home and counselor and/or licensed debt adjuster. whatever equity you had in it.
Pages to are hidden for
"SUBPRIME"Please download to view full document