Q & A with Dottie Herman

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Q1 - I paid $3000 for a loan modification 3 years ago & nothing happened.  My house is going into foreclosure and I'm out $3,000.   How do I get my money back?

A - You need to look at the contract you signed and check with an attorney about the laws in your state. Most states have a limited amount of time that you can sue to get your money returned.  Check on that today and file before the deadline if you can.  Hopefully, the company is still in business.

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Q2 - Unfortunately I had to short sale my home three years ago.  I have gotten another job and have been saving money for a new home.  How soon after a short sale can I get a mortgage loan to purchase a house?

A - FHA 3 years*, USDA 3 years, VA 2 years, conventional 2-7 years: 2 years with 20% down, 4 years with 10% down(2 years/10% with extenuating Circumstance**) and 7 years with less than 10% down. I am using the current Fannie Mae conventional guidelines to close loans for Short Sale as of 1/31/2012.

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Q3 - My mother is elderly and can no longer take care of her home.  She has offered me a chance to buy her house for the price of the reverse mortgage payoff.

A - There is no reason you cannot purchase the home because it currently has a Reverse Mortgage.  As long as the payoff is at least the amount of the new loan, you should be fine.  If you are over age 62, you can use a Reverse Mortgage to purchase the home. You should confirm this with a knowledgeable real estate attorney.

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Q4 - I hear about these different "ratios" when qualifying for a mortgage. What are front and back ratios?

A - Part of the mortgage application process will be the determination of how much house you can afford based on your income. The two ratios that will be computed are the front ratio and the back ratio.

Front Ratio: The total mortgage payment including principal, interest, taxes and insurance (PITI) as well as any condominium or homeowner association fees divided by your total GROSS income. Example: With a gross income of $3700 per month, a total mortgage payment (PITI) of $973, the front ratio would be 26%.

Back Ratio: The total mortgage payment PLUS any car payments, credit card and any other loan payments divided by your total GROSS income. Example: With a gross income of $3700 per month, a total mortgage payment of $973, a car payment of $212, 1 credit card payment of $59 and 1 credit card payment of $43 for a total of $1287, the back ratio would be 35%.

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If you have a real estate question for Dottie, please send it to; Reporters@WorldPropertyChannel.com