Mortgage Loan Information

My firm handles real estate transactions regularly and clients often have questions concerning different kinds of mortgages. There are a few different types of mortgage loans currently being offered and each has it's unique benefits and drawbacks. Only you can decide what is right for your new home.

One of the most common types of mortgage is typically called a fixed rate mortgage. If you choose this type of mortgage, you will be charged a constant rate of interest for the entirety of the mortgage. Although the idea of a constant mortgage payment can be a comforting one, you should keep in mind these types of mortgage are usually associated with higher interest rates as a penalty for such security.

Another type of mortgage is typically known as a variable or adjustable rate mortgage. With an adjustable rate mortgage, your interest rate and payment will be the same for a specified period of time, perhaps five or six years, before fluctuating depending on the market rates. While this type of mortgage is considered more risky a fixed rate, it is important to keep in mind that there is a ceiling on your payment and that these types of loans often start with lower interest rates. Adjusted or variable rate mortgages can be ideal for people who are just starting out but anticipate steady increases in their salaries. 


It is important to do your research before you decide to take on a loan the size of a mortgage. Before you do so, remember that an attorney can often times be useful in providing unbiased and accurate legal guidance. If you have any questions or concerns, you should consult a legal professional first.

What is a Property Condition Report?

A Property Condition Report is a necessary document to have when purchasing a property, whether commercial or residential. Property Condition Reports must be done by qualified property surveyor who will carefully examine the entirety of the property in order to find any potential issues or damage with the property.

The surveyor should include:
- the grounds such as the pavement, railings, irrigation and outside lighting
- the roof and roof subfloor
- structural items such as the foundation and walls
- the drainage facility and ventilation systems
- soundness of fire and other safety alarms
- an inspection of the property's "soft goods", such as furnishings

It is important to note that a Property Condition Report does not cover any damage that may be hidden in concealed areas of the property, such as the foundation, plumbing, and gas pipes. A clean bill of health from a PCR cannot guarantee that the property will not develop problems in the future.

The PCR will also include the expert's recommendation about the property. These recommendations are vital information for potential property owners to gauge the property's true worth and the time and money they may need to invest in it. PCRs can be requested by either the buyer or the original property owner. In fact, many property owners request a PCR before they even begin showing the property and make this information readily available to potential purchasers.

If you have any questions or concerns about buying a property, or Property Condition Reports, feel free to contact my office at (718) 317-5007.

Mortgage Modification Can Affect Your Credit

Mortgage modification has recently become a popular option for homeowners who are having difficulty meeting their financial responsibilities. Mortgage modification can help financially strapped families avoid foreclosure and remain in their homes. However, it is important to know that mortgage modifications can also have an effect on your credit.

When you apply for and subsequently accept a mortgage modification from your lender, that modification is reported to the three credit bureaus. The report should indicate that you, the mortgage holder, are participating in a program that qualifies you to send in partial payments on your mortgage. This is translated negatively on the your credit report, leading to a decreased score. 

The good news is, the hit on your score will most likely be small. The U.S. Treasury Department recently reported that it can range from 30-100 points. For a family facing foreclosure, which is guaranteed to create an even larger hit to the credit score, it is probably worth it to take the smaller decrease and move forward with mortgage modification. Fortunately, credit bureaus are now developing a new way to report some mortgage modifications in a way that will not negatively affect your credit. Still, it is important to be aware of all the financial implications of any mortgage modification. Possible unforeseen effects, such as decreased credit, are why it is so crucial to consult an attorney before making major financial decisions. Your attorney will guide you through the process and help you make the right decision for your family.

- Kevin McKernan

The Ins and Outs of Loan Modification

If you have had trouble paying your mortgage each month and/or your home is at risk for foreclosure, you may have been told to look into mortgage modification. In fact, in 2012, five of the country's biggest banks came to a settlement agreement with the government so that more homeowners could gain access to loan modifications if they were experiencing financial hardship.

How Loan Modifications Work
When you apply for a loan modification, you must send in a bevy of financial documents. Your mortgage bank is looking to calculate the percentage that your monthly mortgage and insurance payment takes in relation to your monthly gross income. This is commonly known as your "debt to income" ratio. If your lender sees that your "debt to income" ratio is too high for you to make your monthly payments without financial hardship, they will make you a modification offer, which you as the homeowner may either accept or deny. In order to make your payments more affordable, your mortgage lender may lower your interest rate for a certain amount of years, forgive certain loan amounts, and/or extend the term of your loan.

Unforeseen Consequences
However, for many people, loan modification was not the catch-all solution that they hoped for. Modifications require a lot of time and paperwork, with banks often dragging their feet during the process. Additionally, in some circumstances, certain modifications can actually negatively effect you in the long run. The negative aspects of loan modifications can be seen in this statistic given by the Comptroller of the Currency, John Dugan, who asserted that in 2008 over 53% of loan modifications in the United States resulted in another default after six months.

How to Get Help
If you are considering a loan modification, make sure you seek legal counsel before you do so! It is incredible how many people make the mistake of signing an incredibly important legal document without first consulting an attorney. A good lawyer will be experienced in loan modifications, having assisted clients with them many times before, and can correctly gauge whether or not the modification is the best for your unique financial future.

If you are a homeowner who was taken advantage of by unscrupulous mortgage lender, you still have options. There are ways to stop or delay the foreclosure sale of your home. If you find yourself in this situation, it is crucial that you consult an attorney. At the height of the housing boom, mortgage notes and other financial documents were passing through banks at a never before experienced speed. This resulted in a high amount of clerical error and sometimes illegal financial practices. An attorney can closely review your case to check for substandard practices that you could potentially change the outcome of your foreclosure.

If you are struggling with a loan modification, feel free to contact me at my office at (718) 317-5007.

- Kevin McKernan

How to Hire a Real Estate Attorney

Buying or selling a house is decision that can seriously impact your financial future. When making important financial decisions such as this, I always recommend that you consult a legal professional. Some potential homeowners try to go through the process with only a real estate agent, but while a real estate agent is familiar with the process of selling and buying homes, they are not knowledgeable about real estate law. They will not be able to advise you on the legal implications of the contract you sign during the closing process. Only a real estate attorney can provide you with proper legal advice.

The Facts on Reverse Mortgages

If you or your spouse recently turned 62 or older and own your home, you may be reciving offers from lenders about obtaining a Reverse Mortgage. A Reverse Mortgage is aptly named - it is the exact opposite of a traditional mortgage.

In a traditional mortgage, a lender offers you a loan in order for you to obtain your house and you, in turn, agree to pay that loan down in manageable monthly increments. Since the lender is putting himself as risk by allowing you to borrow such a large sum of money, interest is added on to every month's payment. When you pay your mortgage for the month, you are paying down on your mortgage loan and essentially becoming a step closer to owning your home.

In a reverse mortgage, you already own your home but are older, retired, and would like extra funds each month. When you enter a reverse mortgage, your lender will send you monthly checks. These funds are being taken out of the equity of the house, so the amount of you owe will grow over time. Interest will also be charged to the total balance of your loan. Additionally, most reverse mortgages have variable rates instead of fixed, which means the rate of interest you will be charged will change depending on market conditions. As with any mortgage, a reverse mortgage is a major financial agreement that should not be entered into without careful examination of all contracts and financial documents by an attorney.

Strategic Default, Short Sales and Loan Modification: What Choice is Best for Your Financial Future?

1.11 million Americans reported being "underwater" on their homes in 2011. Underwater is a commonly used financial term that is used when a homeowner owes more money on a property than it is worth. During the financial crisis, property values plummeted to rock bottom and millions of Americans suddenly experienced the unsettling feeling of owing hundreds of thousands of dollars more on their property than it was actually worth. If you are experiencing you should consider all of your options.

Homeowners who wish to get rid of an underwater or distressed property have several options.