Tag Archives: value
Solving Problems with a Pawn Broker
There are a number of problems that people face with pawn brokers. However, there are two problems that people worry about the most when they deal with a pawn broker. These two problems are when you cannot pay them back and when you lose the pawn receipt that you have been given. It is important that you know what you can do if you are faced with these problems.
When You Cant Pay the Pawn Broker Back
There are a lot of people who take loans with a pawn broker that they feel they will be able to pay back. However, there are times when you will not be able to pay back the amount that you need. The options that you have available to you will vary depending on the value of the loan and what you are comfortable with.
If you are comfortable with losing the item of value that you have put up a security of the loan then you do not have to do much. When you are unable to pay the broker back they will sell the item and this could cover the loan amount that you cannot repay. However, if the sale of the item does not cover the loan then you are still liable for repayment. If the sale of the item results in more money than you owe the pawn broker must give you the difference.
If you have a loan that is less than £75 the item you put up will belong to the broker and they can sell it. If the loan is more than £75 then the item will still belong to you, but the pawn broker is allowed to sell it. For loans that are over £100 the pawn broker will need to tell you before they sell the item which gives you time to get the money together for it.
When You Lose Your Receipt
There are a lot of people who worry about what could happen if they lose the receipt that they are given. The value of the loan you have taken will also affect what you can do if you lose the receipt. If the loan is less than £75 you can get a standard form from the pawn broker which you sign. This form states that you are the owner of the item. The problem with this is that the broker is not obligated to give this to you.
If the loan has a value of more than £75 then you will not be able to get a standard form. In this case you will need to legally swear that you own the item. To do this you have to go to a magistrate or a commissioner for oaths and swear before them.
The two most common problems that people face when using pawn brokers are not being able to pay back the loan and losing the receipt they get. It is important that you know what you can do in these cases before you actually use a pawn broker. When you know what could go wrong you can determine whether or not you should be using a pawn broker.
Examples And Summary Of The Loan Modification Process (Page 1 of 2)
If you are trying to stop foreclosure, or have a mortgage payment that is too much, then you’ve probably thought about getting a mortgage modification. A mortgage modification is when the terms of a loan are permanently changed to allow a reduced payment.
The reduced payment is accomplished by either reducing the interest rate, lengthening the term, or lowering the balance to be more in line with the current market value. In most cases, a combination of all three of these choices are used to reduce the mortgage payment. There are other interesting options to reduce a payment with a modification too, but they all center around the term of the mortgage, the payoff, and/or the interest rate.
Here is an uncomplicated example of how a mortgage modification can lessen the payment, using each of the three options above.
Method 1 Dropping the interest rate
Lets assume the mortgage balance is $200,000 and the current interest rate is 7.75% and the payment amount is $1,750. Lets also assume this borrower has 20 years left on a 30 year loan. The borrower can no longer afford this payment because of a loss of income. They can afford a $1,250 payment, so the bank agrees to reduce the interest rate to a fixed rate of 4.25% for the remaining life of the mortgage. This will give them a payment of $1,240, without the need to lengthen the term of the loan or lower the payoff amount..
Method 2 lengthening the term of the loan
Lets use the same example above, only this time, we’ll assume the homeowner can afford a $1,500 payment. The loan amount will still be $200K and the interest rate will still be 7.75%. But in this case, the investor was not willing to reduce the interest rate. This happens very often, because the investors on the loan are not willing to accept a reduced rate. In this case, extending the length of the mortgage will make the payment affordable again and the investors will keep their 7.75% interest rate. The $200,000 balance is re-amortized over a 30 year period to get a reduced payment of $1,430. Everyone is happy because the foreclosure was prevented and the new payment is affordable.
Method 3 Dropping the payoff amount
In order for a payoff amount to be reduced, the value of the house must be less than the payoff amount. In a few cases, lenders will reduce the payoff amount without this stipulation, but it’s highly doubtful. To get the payoff amount reduced, you must give documentation to the lender that foreclosing on the house will cost more than dropping the amount owed to make the loan affordable again.
In this case, we’ll assume the home’s current market value has been established at $179,000, but the payoff is still $200,000. If the bank forecloses on the property and tried to re-list it, their estimated loses will be 30% of the home’s value. So after foreclosing on the property and re-selling, they will receive approximately $125,000, if they are lucky. Most lenders expect to lose 30%-60% on every foreclosure property, so this amount is being very generous.