Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking
Posted on July 4th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research
First of all, Happy Independence Day. Despite the horrible, bloody, puss-oozing blemish the Investment Banks have left on our nation’s pride, I am still more proud of being an American and my family than of anything else.
My mortgage modification YouTube video and post really ‘touched’ some people. This is a good thing. This is what I strive for in this work. By and large, the largest amount of emails I get are for ‘help’ with their mortgage and ‘when will the bottom come’. I get hundreds of emails per week. This is why I decided to finally get behind mortgage modifications in the first place.
I see the type of borrower first hand who are upside down and feel helpless and hopeless. Believe me, these are not scumbags who ripped off a bank to get a loan. The majority of the help emails I get are from everyone other than the scumbags. The majority are responsible people who simply bought at the wrong time using a loan that a large bank or financial institution said was ’safe’.
Many replies to my video and post were right in line with my thinking and support people being able to stay in their home without sharing upside with the Gov’t and not at the expense of the tax payer.
Some replies were negative, which is also great. Again, my goal is for everyone to think, discuss and come up with solutions together. However, I feel these people do not fully understand the gravity of the situation and who really is being effected.
Being forward thinking is key in understanding this mess. Talking about all of this is key because the only way we are going to navigate the murky waters ahead is for everyone to discuss and debate all options, share experiences and help each other out. For that I appreciate all of the responses.
Just remember when condemning mortgage modifications by banks, that those who stand to lose the most are not the people who lied on their loan app or ‘gamed’ the system. It is the good borrowers who did nothing wrong and due to the greedy nature of the investment banks/banks changing the mortgage and housing game for their personal gain, have been left in the lurch.
YOU MUST BE FORWARD THINKING
Remember, I was one of the original ‘doomsayers’ writing about and advising clients to ‘beware the great mortgage and housing meltdown’ and get short New Century and the other subprimes in Dec 2006, American Home Mortgage in Mar 2007, E-Trade in May, Thornburg in June, the monolines in Aug, the investment banks in Sept and Fannie/Freddie in Oct. I sent an email to everyone I knew last year saying ‘be prepared for banks to cut of the use of your home equity line of credit and if they needed the money for any reason pull out what you need right now depsite the interest hit’. This was before anybody even knew they could cut it off. It is all out there in cyberspace for the viewing. Much of my public research and analysis can be found at Karl Denninger’s Ticker Forum dating back at least a year.
My friend Herb Greenberg published one of his most widely read and responded-to stories in Dec 2007 saying…”even before this mortgage mess started, one person kept saying that this is going to get realbad. He kept saying this was beyond sub-prime, beyond low FICO scores, beyond Alt-A and beyond the imagination of most pundits, politicians and the press. When I asked him why somebody from inside the industry would be so emphatically sounding the siren, he said, “Someobody’s got to warn people.”
I am not posting my previous calls to blow my own horn, rather to add some credibility to my prediction of conditions continuing the worsen and the tax payer and home owner will ultimately be left in the lurch.
Now, you must be forward thinking about housing prices, the negative equity effect, banks collapsing the determination of the Fed, Washington and Wall St to keep it all together at all expense. At your expense. Look what they did for Bear Stearns and they were a small player compares to many who are in trouble now.
There are millions of people who are perfect A-credit borrowers, have never missed a payment, are in a negative equity position and who will default or walk away in the future due to it. Due to the banks offering loan products to people who should have never had them in the first place or giving bad loans to people who should have had good loans, these borrowers will lose their homes to the bank or future appreciation to the Gov’t and tax payers will accept much of the burden.
Remember folks, I have the data. The Prime and Alt-A borrower default rate is now spiking as subprime defualt rate is leveling off. I have told you this for three months. This means the ’subprime implosion’ is now ‘the mortgage implosion’.
Factoid: In CA in May, banks took back 26k homes and 74k nationally. Trust me, they do not want your home too. They are eager to work something out if your present mortgage or equity position is presenting a ‘hardship’ and there is a chance you may default or walk
This is not necessarily because these borrowers lied on their loan app or got into a loan they could not afford. Many of these defaults are because their home has lost 50% of its value on the last 18-months and their American Dream has been dashed. To protect their family and save money they are walking away, perhaps choosing to rent for half of what they pay for their mortgage. These are not bad borrowers. That isn’t right.
Good borrowers who put 20% down, went full doc and make their payments every month are being destroyed by crashing values. This is primarily who I am trying to help and who the banks are being very generous with when it comes to mortgage modifications. The borrower who could never afford the loan in the first place and can’t afford it now will not be eligible for a mortgage modification. Remember, banks have a responsibility to only give modifications to those who are willing and who can afford to pay back the debt. The banks want to keep these borrowers around paying a mortgage for years to come. Right now they are on their own.
BAILOUTS ARE COMING
Make no mistake about it, massive bailoutS are coming. It is the only way out of this mess. Why do you think BofA was so eager to take on Countrywide despite having nearly $80 billion in near worthless subprime, Pay Option and HELOC’s on their books? For their servicing and friendly loan officers at a branch in your city?!? Polease.
This $300 billion bailout being proposed is only the beginning. The bailout limits the banks losses and puts on the rest of FHA (the tax payer). What if in the future a law is passed making the banks exempt from all liability for the bad loans they wrote in the past? Then, you will have no choice but to either leave your home, keep paying absurdly high payments on a depreciating asset when you can rent for half the price or accept a nationalized bailout where you split any upside appreciation in the future with the Gov’t.
Everything they have tried in order to ‘fix’ the housing market thus far has failed. Now the ‘tools’ they are using are getting larger and more elaborate. $300 freaking billion for a subprime problem that by and large is over!?! Are you kidding me!! Remember, subprime defaults platued a few months back and are now flatlined albeit at very elevated levels.
It is now clearer than ever that unless you reduce principal balances or bring back the exotic loan programs home prices will fall much further. Defaults are surging and values are dropping faster then ever, even going into the summer selling season when values should be stabilizing or rising.
Should the banks compensate good borrowers, especially if they are experiencing hardship due to a borrower, who never should have been there in the first place, losing their home next door? In many cases it was the exact same bank who gave the bad borrower the defaulting subprime loan next door to the prime borrower.
Most everyone with a mortgage may need a bail-out in the future.The further home values drop, the more that will need assistance. But it will come at a great expense of all tax payers and home owners.
Right now is a special moment in time when the banks have too much inventory, they are being very generous, you do not have to split your future upside and the tax payer does NOT subsidize mortgage modifications. The banks and/or bond holders take the hit exclusively and more and more we are seeing the bond holders and mortgage insurers go back after the bank for losses. The liars and thieves can go to FHA or deal with the new Govt bailout and split their upside for all I care, but again this comes at the tax payers expense.
FHA SECURE IS NO SOLUTION
Oh sure, many will say ‘they should go get an FHA Secure loan’. Ok, sure. You tell a guy with a nice 10/1 interest only at 4.75% with 6-years left who is $300k underwater to go get an FHA Secure refi and have his payments double. I would love to hear that sales call. The following is from the FHA site- this sounds really good, ey? “With FHASecure, the lender will not automatically disqualify you because you are delinquent on your loan, and the lender may offer you a second mortgage to make up the difference between the value of your property and what you owe. ”
This makes no sense when banks will reduce your principal balance, your interest rate or both right now. FHA is telling you to go get re-leveraged with a first and second mortgage. It is cheaper to walk away and rent in most cases.
‘THE DOG ATE MY NOTE’ BAIL-OUT
The ‘dog ate my note’ defence is gaining popularity but only a few cases have ever been brought to trial and wiating for that could spell trouble. Believe me, if courts across the nation start telling trustees that they cannot foreclose because they are not the real owner of the loan, there is no real owner due to securitisation and the borrower gets a free home, there will be laws put in place overnight to protect the banks. This sort of thing would take down our nations banks overnight.
If this defence turns out in the end to be valid and accepted and you opt to do a loan modification now, you may not be eligible for your ‘dog ate my note’ bail-out down the road. But if it doesn’t pan out and you wait laws will be passed and other bail-outs put in place that surely protects the banks and you may have to split all of your upside after the bail-out you eventually opt for with the Gov’t. Essentially you are gambling with your home and net worth. A mortgage modification done right now has never been easier and carries no strings once complete.
I am under the belief, however, that in the end banks will have to take back everything that defaults for: early payment default (first 6-12 months depending on investor); fraud (self-explanatory); white-lie fraud (fudging income, assets etc on limited doc loans); and lender negligence (sloppiness, unauthorized exceptions etc). Defaults for these reasons alone could amount to 50% of all defaults…who knows. One thing is for sure, servicers are assisting bond holders and mortgage insurers in audits of defaulted loans in order to place blame off of themselves.
NON-PROFIT HELP
Hope Now said they have ‘helped’ 1.5 million people. Perhaps, who really knows. What I do know is a close friend called them as a test a month ago. I wrote about it. Below is the ‘help’ he was given. He also said the clerk was ‘obviously munching on hard fruit or vegetables while talking to him’.
-make a budget
-cut down on spending money for things that are not essential for living
-take shorter showers
-keep the AC/heater off unless it is unsafe to do so
-take public transportation
Other than this, most of what they’re issuing are repayment plans. In other words, temporarily forgiving the delinquency, then piling the fees and original debt into a bigger loan. In my opinion, a perminent mortgage modification is a much better solution.
So, guys there is your Gov’t help. I hope it helps and feel my advice is better.
For all these reasons, I remain a huge mortgage modification advocate. I know by the response rate of the YouTube video and post many need help but do not know where to turn. I am happy I was able to be of assistance. -Best Mr Mortgage
July 4th, 2008 12:03 pm
Because walking away from your home(even when an owner can afford it) is looked at as smart, the states need to change their anti-deficiency laws. This whole blow up just shed light on the issue that homeowners buy a house with a free call option and put option on the home, and are going to exercise without a second thought. This can’t be good for the lending institutions, as now the masses are aware of this gift(anti-deficiency) given to them by state gov’ts. The masses will suckle off the gov’t if allowed to do so. What has happend to us over the last 50 years? From parenting responsibilities, to saving for one’s own retirement, to education(here in CA parents fight against having exit exams in High School, because its not fair my kid has to pass a basic english and math exam showing 9th grade proficiency), something happened at some point in the 1960’s where personal responsibility has slowly withered away!
July 4th, 2008 12:39 pm
Not sure when it started, but its certainly a mess – and the work ethic that made the US famous has now been replaced with lethargy and opportunism (ie. spill a coffee on your lap, sue the company and win $29 million..)
July 4th, 2008 1:46 pm
Here – Here – ! There is no personal responsibilty, something did happen at some point, but I can tell you I am a parent, and not alot gets past my husband and I – we take our responsibility very seriously – I am not my kid’s “friend” my daughter had a sleep over the other night and the stuff coming out of this kid’s mouth was astonishing – this 12 year old announced to our family at dinner that “her life, was none of her parents’ business”, and she “always had dinner alone, in front of the t.v. – with her lap top”, her brother “doesn’t want to work – he plans on winning the lottery” Her mom is a very well paid attorney…..seems like a bit of a disconnect to me?
July 4th, 2008 2:29 pm
Yes, the taxpayer bailout will come. Well in excess of trillion dollars – all borrowed.
Will the Chinese, Japanese, Russians and Saudis lend at cheap rates? Highly unlikely. That could lead to a rout in the last bubble standing – the US Treasury bond market with 30 year rates blasting upwards. What will that do to affordability?
The only way I can see it working is for home prices to be readjusted down bigtime and those with capital stepping in. That means those who want to stay in their underwater homes will need to come up with the 20% down payment on their newly repriced downwards home and freshly recapitalized banks who have written down all their underwater loans get to issue new full doc loans.
The taxpayer cannot underwrite anything since he is broke and in effective debt default. Its the Saudis underwriting the new capital!
July 4th, 2008 4:21 pm
Right now its all about getting your deal before the new 300 billion is passed by the idiot politicians which limits banks downside to 10 pct and makes the govt a 50 pct partner in your home. This is why I am a strong advocate of mortgage mods now. It may just turn out where everybody needs one after values drop another 50 pct is states like CA so you have to think ahead folks.
July 4th, 2008 7:35 pm
Great post Mr. Mortgage, and you are absolutely correct. There is a huge bailout coming, whether we like it or not. The fact that Bank of America did not run screaming from the Countrywide deal after many months of examining their books convinced me. No way BOA would have taken that deal unless they had a Guarandamntee they would be bailed out. It’s good to be the king.
Happy Independence Day.
July 4th, 2008 8:00 pm
Mr. Mortgage,
I like your blog, but I’m perplexed by your confidence that a bailout will come. What will the bailout do to property values and lending practices? I don’t think you’re forecasting a return to sky-high prices, but couldn’t your statements be interperted that way?
July 4th, 2008 9:33 pm
I find the “walk away” website to lack ethics. How do you encourage people to walk away, and show them how to live somewhere for “free”. Someone is paying, and I’m tired of it. Lenders in the future are going to need to recover these losses, and those of us who didn’t lever up are going to be the ones paying. It’s disgusting!
July 5th, 2008 11:22 am
It just seems that the government is going to punish people who attempt to live within or below their means for not being reckless.
July 5th, 2008 1:36 pm
Seems like any contract where the sellers need to give half of the upside back to the gov’t is ripe for a black market in side deals.
ie, you (the seller) is asking for $500k, from an original $400k gov’t bailout price markdown. Instead of offering you $500k, where you would only net $50k out of the deal after the gov’t took its share, I offer you $400k plus $75k cash on the side. Everybody wins but Joe Taxpayer.
I can easily imagine several other ways to game the system. Besides being patently unfair to the people who are not upside down but lost substatial equity – do they get markdowns too?
July 5th, 2008 2:09 pm
“personal responsibility”. I am with you all the way but lets start with the people who are supposed to leed by example. Lets set up a court to prosecute any politician who lies either knowingly or not, who speaks an untruth. Then we could move into the media and apply the same system if the information is false. Then we could have a broader field of views from people connected to any particular topic.
You could then move into the financial arena and make any bonuses void for non performing institutions/companies. A system where greed regulates itself is always going to end up like this.
We dont want scapegoats- we need to see the people who got us here sacked and disgraced on ethical grounds. We need to see them accept personal responsibility.
Ive been reading about this situation developing for many years now. Why havnt the authorities?
July 5th, 2008 2:43 pm
As usual, lots of non-facts.
1) Borrowers who put 20% and were prime customers are not contributing to the delinquency or default numbers in any meaningful way. Check the data you claim to have.
2) Subprime delinquencies have not plateaued. Once again, please check the data.
July 5th, 2008 7:29 pm
My husband and I bought a house in 2002. When we got our paperwork the mortgage broker told us that we could read it later – we had 3 days to come back if we had an issue. We refused and made sure that we read it all before signing. When we refinanced in 2003, we were actively discouraged from taking the time to read our paperwork by a mortgage broker who kept looking at the clock and telling us that we were going to delay the rest of her meetings for the day. My husband and I split the paperwork and each read half before signing, MUCH to her irritation. She rolled her eyes at us when we had some questions. Those questions were important – we were told it was a no point, no fee loan and yet there was almost $1000 in fees added to our loan amount. They were refunded, but I wonder what would have happened if we didn’t ask?
I wonder how many people were nudged or pressured into not reading their paperwork before signing it? How many were intimidated into not asking questions about the most important piece of financial paperwork they would ever sign? I really hope people will read their paperwork when they get a loan mod and make sure they understand and can afford it!
July 5th, 2008 7:31 pm
Mr. Mortgage you’re an absolute joke. This is the most biased and uninformaed account of the recent history of the housing, mortgage and credit markets.
Would you please explain how house price declines impair borrowers’ ability to service their mortgage loans? Do borrowers payments increase from falling house prices?
Your comments fail to consider the consequences of borrowers deciding to abandon their mortgage payments when they have the wherewithal to pay. Those consequences include less available credit, more expensive credit and larger down payments for future borrowers. Future Borrowers will be penalized for the actions you advocate for years to come.
What about all the e-mails you receive asking about the housing bottom or when house prices will stop falling? Have you considered the effect of the actions you advocate may have on house prices, and ultimately on when prices stop falling? Who would lend in an environment where homeowners routinely walk away from their homes, and at what cost? Who would buy MBS backed by these loans? What happens when lenders curtail their activity or investors ignore this market for its many uncertainties, caused in part by the actions you advocate. Does this uncertainty and lack of lenders/investors make credit less available? What happens if credit is less available? Do sales drop further? What happens if sales drop further? What effect does a further slide in sales have on an already bloated supply, and supply/demand imbalance. Your approach is incredibly short-sighted.
I find your suggestion that borrowers should be allowed bailouts (you call them modifications) and retain their ability to profit from future house price appreciation appalling. Overall, you’re doing an incredible disservice to anyone having an interest in the future health of the housing, mortgage and credit markets. I hope this is just a casual interest for you. Thanks.
July 5th, 2008 7:38 pm
not only did borrowerws misrepresent their incomes on loan applications, now they’re creating lies about the facts & circumstances giving rise to their current situation. none will accept responsibility. what a joke. i hope fannie & freddie holds you accountable via more expensive credit, less available credit and bigger down pmts. unfortunately, you won’t be the only group penalized.
July 5th, 2008 7:39 pm
Why are we penalized for borrowers’ imprudent, reckless and irresponsible decisions? Why are those who avoided overpriced real estate being penalized by the federal reserve who has adopted a policy of rising inflation to lessen the burden of real house price declines? Am i paying $4/gallon for gas and $5 for milk & eggs to bail out homeowners? Why are those who recognized that housing was overvalued, that house price appreciation far outstripped income gains, that the historical relationship between house prices & wages became hugely distorted during 2001-present, being penalized by the desparate efforts of the gov’t & others to prevent house prices from declining? Where are the affordable housing advocates now? How can affordable housing advocates support efforts that attempt to prop up house prices or prevent them from falling? This all amounts to socialism. Moreover, i’ve commented on only a few of the growing list of bailout programs currently available.
July 5th, 2008 7:42 pm
There is no panacea or, as the treasury secretary tells us, silver bullet for the fallout from the housing market. Prices must correct before a recovery can occur. Before prices can correct, sellers must capitulate and accept lower prices. Until prices correct and buyers sense a bottoming of the market, they will remain sidelined for fear of buying a depreciating asset. As a sympton of this condition, consider the growing overhang of unsold new & existing homes.
The treasury & Fed, among other groups, recognized that a housing correction was inevitable & necessary. Knowing this, they designed a series of coordinated efforts to attempt to prevent a disorderly correction, to avoid a fire sale situation. So far it seems they’ve been somewhat effective in avoiding such a situation. However this approach delays and prolongs the housing ills, as market participants are denied price discovery. No one knows where the bottom is because too many variables and uncertainties exist (e.g., what will the government do…will they void mortgage contracts?). In this environment, how can you expect someone to reenter the market and buy mortgage debt?
The biggest bailout effort so far has been the Federal Reserve’s decision to adopt a policy of rising inflation. Inflation benefits homeowners as it counteracts house price declines making real house price declines far less severe. Inflation benefits debtors because it allows debtors to pay back their fixed debts in depreciated dollars while their incomes keep pace with prices. Most homeowners fail to recognize or appreciate the benefits accrued to them from this approach. Yet with this approach comes several costs, chief among them higher borrowing and commodity costs.
It took us a long time to get to this point, and it will likely take some time before the market recovers & confidence returns. To help you better understand our current situation, i offer the following basic outline of the events giving rise to the current situation.
The U.S. entered a recession in early 2001 following the tech-stock bust & amid several accounting scandals. In response the Federal Reserve lowered the fed funds rate a total of 5% beginning in the fall of 2001. Cheap money fueled housing demand. Housing demand fostered house price apprecition and encouraged lenders to increase capacity to support or meet the rising demand for loans. As markets experienced dramatic house price appreciation, speculators entered the market, providing excess demand and further fueling house price appreciation.
As housing grew unaffordable many new “non-traditional” mortgage products were introduced, which borrowers increasingly relied on to stay in the market and buy homes they otherwise would be unable to afford. This in turn allowed further unsustainable house price appreciation. As you’re well aware by now, these products included, among others, pay-option, hybrid arms and products having 40yr amortization schedules.
Finally, the Federal Reserve began a campaign of interest rate increases. This had the effect of cooling housing demand. Lenders, left with excess capacity in the face of cooling demand, relaxed underwriting standards to maintain volume. Also contributing to weakened underwriting standards was the originate & distribute model. Such weakened underwriting practices left many with unaffordable mortgages.
Over this period the relationship between income and house prices became hugely distorted by any measure. To anyone looking at that relationship in late 2005 it was plain to see a correction was inevitable. And if you examine that relationship now you’ll understand why the market has further to fall.
While i sympathize with your situation, my view on borrowers is this: it is incumbent upon borrowers to understand the risks they assume when obtaining a loan, namely the potential for rising interest rates and resulting payment shock and the potential for declining house prices. That borrowers would claim ignorance regarding either of those possibilities is absurd.
July 5th, 2008 10:54 pm
MortgageMan – you are so off base it isn’t funny. In my real life, I aggregate and provide proprietary data on the entire mortgage universe by bank. I know what is happening months before anyone. But without my data, everyone knows subprime has plateud and alt-a and prime defaults are surging. Here are a couple of mainstream media reports. These guys are months behind but at least ahead of you.
Remember, those who put down 20% all the way back to 2005 are severly underwater now is bubble states like CA. If they have an option arm and put down 20% they are likely in an uncurable situation. Negative equity is the leading cause of loan defualt among all loan types.
Values are falling so fast those that bought in 2003 in bubble states have lost all their equity. Thats if they didn’t put a 2nd mortgage on the prop. In that event, which accounts for about 45% of all homes that were either purchased or refi’s from 2003-2007, then they are incurable as well.
Alt-A dfaults surging – http://www.housingwire.com/2008/06/26/alt-a-performance-gets-much-worse-in-may/
Now. go to Claytons link and sign up for their free 31 page report here… http://www.clayton.com/InFront.aspx
Clayton is a large data, analytics and benchmarking firm but at least in this report you can see the facts.
Here is some general reading to get you caught up on why ALL loan types default. http://wallstreetexaminer.com/blogs/ducalion/?p=127&ref=patrick.net
Don’t come to my home and bash me on my message board spewing thing of which you know little about.
July 5th, 2008 11:01 pm
The bailout will come its do or die, the government and institutions have to share responsibility for deregulation when the industry was crying for help back in 2000. That’s the wonderful Bush Administration now they are treading water pulling every trick imaginable to avoid sinking like the Titanic. There is no question modifications are in place and well, like water pumps in the borough of the ship they can’t pump them out fast enough as water rushes in, it’s the only hope of survival or buying time.
July 6th, 2008 12:36 am
Wayne, get with the times. BE FORWARD THINKING DAMNIT. You are 3-years late and $3 trillion short.
Wayne said “Would you please explain how house price declines impair borrowers’ ability to service their mortgage loans? Do borrowers payments increase from falling house prices?
Your comments fail to consider the consequences of borrowers deciding to abandon their mortgage payments when they have the wherewithal to pay. Those consequences include less available credit, more expensive credit and larger down payments for future borrowers. Future Borrowers will be penalized for the actions you advocate for years to come.”
TOO LATE WAYNE. You should have been preaching this when I was 3 year ago, as the investment banks were changing the game every month to keep fresh deals coming in until a 2-yr McDonalds cook buy a $800k home with no money down just because they had a credit score above 660. The same $800k home right next to the guy who made $200k a year, had a 750 score, put 20% down and got a 30-yr fixed rate loan. Now both their homes are worth $400k and the fry cook left and the good guy gets screwed.
This mortgage and housing implosion will not stop until nearly everyone with a mortgage is wiped out.
This is why the mother of all bailouts is coming. The $300 billion is only a taster. They will say ‘its good for the tax payer to bailout out everyone because ultimately if we stop home prices from falling it helps everyone’.
Bullshit Wayne. Get with the times. You should have been making these arguements along side me years ago when I was waiving my arms screaming.
Now its every man for himself because before too long, the US Gov’t is going to be the largest residential home owner in the world.
With mortgage mod’s now, a good borrower can reduce his principal balance by half, wipe out a 2nd mortgage complete or cut their rate to 2% in many cases due to NEGATIVE EQUITY alone. Those whose payments are adjusting upward in the future and may not be able to afford that adjustment can also get resolution at the bank level. Bank level resolutions cossts the tax payer nothing.
Remember too Wayne, that the ALT-A loans absolutely imploding right now are by and large still rated ‘Prime’ despite have a near 20% default rate on an average credit score across the Alt-A universe of over 700. The Alt-A implosion will make the subprime implosion look like a manageable problem.
Before too long everyone will have their hand out, subprime and prime borrowers alike because most of their wealth has been wiped out. If you are upside down in your home, have a crappy exotic loan or are thinking about walking away, get yours now. This will keep borrowers in their homes and at least slow the inevitable somewhat.
I won’t lose any sleep over the banks paying back some of what they made off the loans they pushed for years. I will lose sleep if the tax payer (me) has to pay and that’s is where it is headed.
July 6th, 2008 4:42 am
Wayne. The borrowers ability to service mortgage loans has been a problem when the rates reset to a higher payment after the “teaser rate”.(up to this point)
Less available credit is due to “financial engineering” via CDO,s (to begin with). The problem with these products is there is very little real equity in them and are comprised mainly of debt. Now these highly geared products are going into reverse means more expensive credit and larger down payments are needed.
So is it the borrowers fault that these CDO,s are comprised of $30 debt for every $1 cash ?
You talk of socialism – What do you call the bail out of these banks by the government?
You talk of inflation – “the transfer of wealth from the middle classes to Wall Street” as Dr Mark Faber recently commented.
You talk of cheap money fueling demand – This isnt new. The government has been printing money (fueling demand) all the way through the Greenspan years.
“it took us a long time to get to this point” Yes it did and it wasnt going to be allowed to defuse until the public were roped in via NINJA loans- No Job – No Income or Assets.
July 6th, 2008 5:35 am
You want to know what it is ?
It’s nazi national-socialism. War war war. Oil oil oil. Inflation inflation inflation. Speculation speculatio speculation. And all these little crooked friends in Wall Street that never get their heads handed to them.
That’s it. I quit ! I will never put a dime in the US financial markets. NEVER! I have had it. You read this and you say to yourself. Geezee ! They screwed people right and left, and they want to be given taxpayer’s money.
Ludwig Von Misses was right. State and serfdom go hand in hand and the bankers are the slave owners and the middleman the damn corrupted politicians.Really distgusting for a 4th of july. You should be scared. You will really end like Nazi Germany or the ex-USSR. No I am not kidding. This is what I see.
July 6th, 2008 8:23 am
Wayne,
My conscious has wrestled with your points as my wife and I have decided to stop paying our mortgage. Tear me apart if you want, but here is our situation and our perspective, maybe it will provide you some insight.
We both had never missed a payment on anything in our lives, and had close to 800 credits scores. We are professionals and have combined income of $100,000. We live in a bubble area of a bubble state.
Due to the BS lending by banks, and the no doc exotic loans borrowers took out, prices went sky high. In order for us to live “the dream” of ownership, we had to pay $300,000 for a 340 sq ft condo…literally the least expensive property within 100 miles of our jobs. Granted, it was our mistake for buying at the peak of a bubble in Jan 2006. However, the only thing creative we did was 100% financing utilizing a second mortgage. We would have had to use all our savings and still would have needed a second to cover $60K 20%, so why not cover the whole dilly and keep some savings? Both loans were 30 year fixed, at 6.75, and 9, and we could afford the payments provided we kept our jobs.
Now mind you, lenders at the time were trying to get us into a $600K ARM suggesting we could get a better property, and refi later, or sell as prices would surely go up. However, we did what was prudent, and accepted that in order for us to live the dream of ownership we would have to live in a shoebox because speculators and profiteers had cranked the market up so high. It might have been our last chance to get in.
So the bubble bursts. That’s OK, we cans till make our payments. Mozilo makes $400 mil on stock sales as the industry and our economy start to tank. That’s OK. It has nothing to do with me making my payments.
Well ARM’s start adjusting, and no doc borrowers start walking away. The government and banks start coming up with programs to keep the ARM rates low for these poor folks. Now wait a minute, they saved money by taking the risky loan, or they got into a better property by being risky, but help them. That’s OK, I made an agreement to make my 30 year fixed payments.
Then somehow in the BOA/CW deal, Mozilo is going to get $20 Mil…who is paying for that?? The people like us who are paying their mortgage, that’s who. That’s where bank profits are going. That’s OK, we’ll keep paying.
Now, I have a direct line into the office of the President at Countrywide for an entirely different reason (They tried to extort us on flood insurance…but I digress.) and I decide to try and see if I can only get my 30 year fixed streamlined into a new 30 year fixed at the rate at the time of 5%. I knew the market was soft, and there was no way to reappraise, so all I asked was for then was to roll us into a loan that they were currently offering new customers without a reappraisal. I have it in writing, from the office of the president, that, NO, they can’t help us because we are in good standing, and we would have to be behind in our payments to get special treatment. (So essentially, they were giving new, and POOR customers better deals than the good customers who were paying the bills and Mozilo’s bonuses.) That’s OK, we made an agreement, we’ll keep paying.
So we put our place on the market…maybe get out of this with a shortsale. Well, then Countywide tells us the only way they will consider a shortsale is if we are 60 days late. The reality is, due to the REO, and recent sales, our condo is now worth…no kidding…about $100,000. So we are $200K in the hole. How many years will it take us to dig out of that hit to our networth????
That’s OK, virtually every program discussed by the government will use our tax dollars to save the banks and poor borrowers who took risky loans that inflated the market in the first place. Or they will use my tax dollars for the government to buy foreclosed properties. Awesome, either my payments go to subsidized Mozilo and BS borrowers, or my tax dollars do, all the while we are $200K in the hole simply for wanting to enjoy the “dream” of home ownership.
So guess what, we had to ruin our credit and stopped making our payments, and guess what, you are absolutely right that I’ll bring the banks to the table if I can and get my best deal or walk away. I’d have to have my sanity checked if I did anything else.
Hope that provides some perspective, Wayne. Tear me apart if you want…I know, I know, I made an agreement to make my payments, and the fact that I still can, and have the audacity to walk away is what is ruining this country. OK, sure buddy.
Thanks, Mr. M for all your insight, being ahead of the curve and being concerned about the people who did the right thing.
July 6th, 2008 9:41 am
Wayne, what you said here is absolutely correct. “There is no panacea or, as the treasury secretary tells us, silver bullet for the fallout from the housing market. Prices must correct before a recovery can occur. Before prices can correct, sellers must capitulate and accept lower prices. Until prices correct and buyers sense a bottoming of the market, they will remain sidelined for fear of buying a depreciating asset. As a sympton of this condition, consider the growing overhang of unsold new & existing homes”
You don’t understand once again however. Sellers can’t sell. In Northern CA for example 72% of everyone who bouoght since 2005 are UNDERWATER. Due to values falling so fast so far, people hat should be selling and who would normally do so when they finally realized they bought too much home or their sitations changed, are stuck.
Everyone is stuck. Thats why last month in CA you only had 33k total new and resale homes sell of which 38.4% came from the foreclosure stock leaving about 20k organic sales. That compares to 55k organic sales two years ago in May.
Capitulation Wayne, will take home prices to level that will wipe out those who bought their homes 10 years ago with 20% down in a 30-year fixed. You do not want capitulation in the housing market, which absolutely destroys the working man’s net worth.
I am not an advocate of an artificial bottom, but getting people in loans they can afford at the banks expense will save more than not even if they end up in a negative equity situation again a year from now.
July 6th, 2008 9:54 am
Wayne said… “While i sympathize with your situation, my view on borrowers is this: it is incumbent upon borrowers to understand the risks they assume when obtaining a loan, namely the potential for rising interest rates and resulting payment shock and the potential for declining house prices. That borrowers would claim ignorance regarding either of those possibilities is absurd”
YES MAN YES. But the investment banks and banks changed the game Wayne and everyone got sucked into the game. There are 75 year old retirees out there right now with Pay Option ARMs attained through Countrywide as a means of ’saving money’.
Home equity loans/lines are so pervasive that up to 35% of ALL mortagees in CA have one.
I agree with most everything you say Wayne but I have already been there and done that years ago. Now its time for us to change the game or the Gov’t will change it for us.
July 6th, 2008 10:15 am
MORTGAGEMAN – banks allowing 50% debt to income ratios qualifying at interest only payments for PRIME borrowers with 20% down in a 30-yr fixed are turning A paper borrowers into subprime. Here is why:
Excerpt from Boston Globe article:
The recent spike in home foreclosures in Massachusetts is caused by falling home prices, and not by rising mortgage payments, according to research released yesterday by the Federal Reserve Bank of Boston.
The contrarian report suggests the common understanding of the foreclosure crisis is somewhat mistaken. Unaffordable loans don’t cause foreclosures directly. Even as subprime lending became more common, even when people fell behind on mortgage payments – during the economic downturn in 2001, for example – foreclosures were rare because house prices continued to rise.
In part, people were able to escape trouble by selling their homes at prices high enough to cover their debts. But the research also suggests that troubled borrowers tried harder to make the necessary payments, in the expectation they would profit eventually.
Conversely, when prices started falling, people struggling to make payments had less incentive to find the money. And the value of the home could drop below the outstanding debt, making it impossible to sell. Over the last two years, the number of foreclosures exploded.
Housing price movement “plays a dominant role in generating foreclosures,” the report concluded.
One implication of the report is that current attempts by local and federal officials to help borrowers may be ineffective.
US Treasury Secretary Henry Paulson is negotiating a deal to freeze monthly mortgage payments on some subprime loans by delaying scheduled interest rate increases. Paulson reiterated yesterday the plan could be announced this week.
July 6th, 2008 11:01 am
Good to see a post with answers!!!
This is great advise and exactly what is required to assure YOU the borrower will succeed in keeping your home at a fixed payment for years to come. This move allows for the piece of mind needed right now by many folks out there who are indeed very worried about adjustments to thier household debt payments be it from thier mortgage, 2′nd mortgage, heloc or even thier CC payments. It is tough out thier and credit is tightening so the old answer of borrowing more to pay (rob from Peter to pay Paul) things down is just not available any longer (thank goodness). So what is now needed is for YOU to deal with your current situation as it stands today. If you can work out an arrangement that allows you to be finacially stable as you sit today then you are a fool not to do so immediately. Waiting will only prohibit your ability to do so later as your wealth gets further eaten into as your liabilities grow and adjust upwards and your situation at that point cannot keep up any longer. This is when you not only fall out of favor as a candidate to assist, but your now closer to failing period and losing your home amongst many other things before all is said and done.
An excellent wake up piece that all homeowners, and lenders as well, should read and then if it fits begin to act on together. A far better solution than the proposed “Bail Out” that Congress would like to inact on WE the people. Talk about misrepresentation of the people by the Government. If people truly understood the impact of this bill they would take to the streets in my opinion. It is so unfair to WE the taxpayers of this country.
So be smart as this article points out and help yourself now if you can before big brother gets involved and then god help us all for many years to come…
July 6th, 2008 11:47 am
“This is why the mother of all bailouts is coming.” Mr. Mortgage.
Would you please help me understand this bailout?
If the data I read is accurate the taxpayer already has something like $53 trillion in unfunded liability with social security, medicare, war in Iraq, defense spending, etc. Debt as a per cent of GDP is higher than even the depression and is around 350%. Household debt as per cent disposable income is also higher than its ever been. Real wages have been stagnating for years and Americans have a negative savings rate. All this before the mother of all consumer led recessions in recent memory comes ashore with gale force winds.
OK. Congress now goes and authorizes the mother of all real estate and banking bailouts – several trillion dollars! They have to borrow this from the Saudis and Russians and Chinese since US taxpayers don’t have any money to lend. These foreigners already are loaded to the gills with US dollars depreciating every day. Wouldn’t they want more than what the 30yr TBond is trading at right now? Wouldn’t this mother of all bailouts crater the US TBond market (IMO, the last standing bubble)? How would any borrower repay at double digit interest rates when their incomes are declining? Wouldn’t this bailout only further depress the housing and every other asset market?
Also, what happens if the Saudis don’t want to lend in US dollars but in a currency that the Fed can’t print? That becomes real debt! I’m not sure folks are thinking through the implications of bailouts. Its possible we are reaching the limits of bailouts.
July 6th, 2008 12:32 pm
The “Bail Out” will be paid for in a number of ways. Including but not limited to higher taxes and the printing of more currency. This will, as you point out, have a negative impact on growth and consumer confidence will falter as well.
That is the problem! Whenever the Government gets involved it seems it is late to the party to really help those that truly required it at the beggining and the wrong direction is often taken as a result. As each day passes the issue changes for the people who are most affected. There have been well over one million Subprime borrowers already too late to help out and the next wave of help will be required in the Alt-A and Prime arenas. Rules to assist this segement of borrowers would be quite different than that of the subprime borrowers before them. Any legislation passed without this fact in mind would be fool hardy to say the least. It will not be written in a manner that assist those that truly require it and in fact will be written to assist those that no longer need help because it is too late.
This is why in my opinion the “BailOut” is written in a way to help lenders and the financial sector of our economy and not the home debtor. They cannot pass enough laws fast enough and with the flexability needed to really work. Thier unfortunate answer is to help the banks feeling that can be accomplished and so they are helping the situation. It is unfortunate because in the end it hurts us all which in essence means the proposed bill helps nobody, but will cost all of us a fortune…
July 6th, 2008 12:40 pm
You make some excellent points. I do disagree on who should be provided assistance and who should pay for it. First, it is disparate treatment to assist those homeowners who put 20% down vs. those who did not. It will most likely favor non-minorities. Second, the lenders created these products from a business perspective to extract as much money as they could from the economy. These products were misleading and have virtually collapsed the market. As lenders made business decisions, consumers should not be critcized for making a business decision when they walk away. It is not unethical and I have grown tired of the “personal responsibility” buzzwords which are intended to shame those who do.
Yes, some people lied on their applications and some even had bad intentions. However, the product was created by the lender and they need to take responsiblity for its result.
I have some solid advice.
First: If you did not tell the truth to your lender, DO NOT GIVE THEM FINANCIAL information now in a workout. You may be setting yourself up for a fraud action when they turn you down and use that information against you.
Second: Look at other “technical” remedies. Rescission on refi’s, unfair business practices, breach of fiduciary duty claims, reformation. Sometimes the best thing to do is to bypass their loss mitigation departments and file suit immediately. This brings legal counsel to the table who is really motivated to make the problem go away. They are really not interested in getting in front of a judge with an Option ARM. This option almost always leads to having a clean slate on credit as the tradeline gets deleted if the loan is rescinded.
Third: Bankruptcy. It is quite easy to strip out junior liens in bankrupcty if they are 100% under water. You cannot cram down for diminished equity but if the value is lower what is owed on the second, they can go away forever.
Unfortunately, there is a lot of advice floating around, even by me, but the truth of the matter is that no consumer should take any advice until they have talked to an attorney and/or accountant. This is a time for doing it right, not taking sidewalk advice from persons who beleive they are qualified but really are not.
Mortgage brokers were convincing over the last few years that they were experts in the field and wanted people to “trust them” which in the end created this mess.
July 6th, 2008 1:00 pm
Love the advice Mortgage Litigation Expert. Green Credit Solutions also does what you suggest but I didn’t have enough to cover every possible type of workout.
See folk,s more people are coming out in fvavor of home owner reparations BY THE BANKS and not the Gov’t. The market can fix this stuff on its own.
I also said in my modification video and post that there are many companies out there who do mod’s but I could not check them all out and endorse them. It sounds like Mortgage Litigation Expert has his ducks in a row and could also be a good source of information and/or a modification.
July 6th, 2008 1:55 pm
It appears to me that the Fed Boston report establishes correlation, not causation.
If home prices are declining, it is harder for struggling homeowners to sell out. Therefore, they foreclose. Decreasing home prices do not “cause” foreclosures–struggling homeowners who can’t sell “cause” foreclosures.
Underlying it all is a large cohort of struggling homeowners that can’t afford the fully amortized schedule of payments over 30 years. LTV has nothing to do with this underlying root cause, IMO.
July 6th, 2008 2:27 pm
You are CORRECT!!!
The markets IF LEFT ALONE can fix this all by themselves. No intervention is required by anyone.
Will their be pain.. YES!
Will banks fail… YES!
Will many more people lose their homes… YES!
A lot will happen, but it has to for a true correction to actually take place. You must give back what you take at some point. This reccesion, that some refuse to admit that we are in, is starting to take its toll. We have a long way to go before the true pain is actually felt. It is needed however or we will never correct. We need a correction and then crawl, walk, and eventually run once agin…
July 6th, 2008 11:25 pm
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 7th, 2008 12:15 am
Is it the end of the world? Heck no! This is normal stuff with abnormal products. The secondary market should take it in the shorts on this stuff and stop asking tax payers to pick up the tab.
They want a solution, its easy. Lower the rates on all option arms for the next two years to 2% and the payment will be low enough that defaults will diminish to nothing. Reassess at the end of two years. When they drop it down to a payment low enough that renting is equal or more expensive, they will stay in the homes. If they lowered the rates, a very high percentage of the loans will return to performing on the books and the write downs would vaporize.
Too simple? Truth is… cant be done. They stripped and traunched these babies every which way and they cannot afford to do it. And… at a 25% delinquency rate means that 75% are still paying, even at reset. Until that number approaches 50%, they wont get it.
July 8th, 2008 12:27 pm
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 9th, 2008 12:03 am
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 10th, 2008 12:02 am
[...] today Senate Bill 1137, which aims to prevent foreclosures by forcing banks to offer home owners mortgage modifications . It also forces owners of homes taken in foreclosure or purchased out of foreclosure to keep [...]
July 10th, 2008 12:36 am
Hey Mr. Mortgage Do you think that the bailout would stop the bleeding the housing market?
July 10th, 2008 11:29 pm
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 11th, 2008 1:02 am
You talk about mortgage modification, although there is not much meat about what we are to do, who we are to contact. I assume what your saying is that if your loan is through a bank they’re willing to help you what if you have your loan through say indymac, are they too willing to provide mortgage modification options?
Secondly, we also heard about re-evaluating property taxes due to homes that have been foreclosed that are equal to or double in size to our home now being sold for half the value? What can you tell us about that?
July 11th, 2008 1:16 am
Hi Robert,
We work closely with and have thoroughly checked out Green Credit Solutions. They will go over your entire case and tell you everything up front for free. from then on it is up to you. You can find them here. http://getgreencredit.ml-implode.com/landing-mm.html
let me know if you need me to contact them in advance or you situation require expedience.
July 11th, 2008 2:06 am
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 13th, 2008 8:10 pm
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 14th, 2008 2:05 pm
[...] Mr Mortgage onMortgage Modifications Part 2 – BEING FORWARD THINKING! [...]
July 15th, 2008 1:14 pm
The more I think about it, the more sense the case for seeking mortgage modifications makes. It sounded like something for nothing, and in do some extent it is. But I see now that it’s better that banks take some responsibility for their part in creating this mess by working with borrowers. This bailout will become a burden for all of us, but this could mitigate the overall damage somewhat. I think you’ve won me over, Mr. Mortgage.
Tom
July 16th, 2008 1:30 am
[...] Mr Mortgage onMortgage Modifications Part 2 – BEING FORWARD THINKING! [...]
July 16th, 2008 11:41 am
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 16th, 2008 1:03 pm
Mortgage Modifications. Yeah, I checked out your referenced Green Credit Solutions. And being an ex-mortgage industry guy, I hear the same song and dance that I used to play with my customers. The company charges $3500 UP FRONT for their services to negotiate your loan terms. This fee buys you….well….I am not sure what it buys you. It’s buys someone making some calls to your mortgage company and “there are no guarantees with anything in life” which is what my rep. from Green Credit told me on the phone. OK…I can certainly understand this, but $3,500 UP FRONT? Perhaps, there should be an up front fee of some sort, and the remaining balance due once the negotiation is successful. Otherwise, we are left to go off someone’s referral (Mr. Mortgage) and the hope that this will work out.
It sounds alot like the “let me ask you some simple questions about your situation and I will see if we can get you qualified for “x” loan.”
Has anyone had any luck with this company as I have not heard any feedback yet.
Thanks
July 16th, 2008 10:05 pm
I’d like to know if anyone has used the Green service as well. I called them and they have no testimonials on the website but the rep said they were going up soon. They are registered with the BBB and have an A rating. Seems legit but I’d like to hear some testimonials.
This whole business about “modifications” is nowhere in the news and I only found out about it this week. I was about to contact my lenders to do a short sale but if this modification thing works out I will keep the home.
July 17th, 2008 9:15 am
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
July 17th, 2008 2:53 pm
I am looking at trying to get a loan modification and am trying to find the best way to approach, maybe we can come up with a “best practices” gameplan here that will allow us borrowers to approach their bank with confidence and the right information and approach.
I am the typical situation here – FICO of 800, never any lates. Income has dropped since I bought 3 years ago in Orange County CA and I have just lost six figures worth of investment, from which I used the income for making house payments (80/20 loan) – now upside down on both home value and income vs. expenses. Have explored bankruptcy – and it would be a good option (chapter 11) for me except I hold a Note for $100K on an investment property, so that wipes any chance of a BK (which would also have helped with my credit card debt in addition to the upside down second). Other troubles include that my wife and 2 young kids love their “home”. It is not a “house” that can be easily walked away from for them.
My steps so far, with many questions:
Timing – should you approach before the trouble starts, while still current? I have my second holder saying they will not even talk to me unless I am late, wish I didn’t send in that last payment…
Prepare hardship letter – describe situation and why/how it came to this for you. Include documentation for income and expenses and other pertinent facts/events. Should you use an attorney to sign off on the letter and put it on their letterhead? Will that give it more clout? Do the banks prefer to work with the borrower directly or a legal rep for the borrower?
Know your property value – I would think you should get an actual independent appraisal in addition to researching comps and local listings yourself.
Know the Bank’s value – Here is the art I am guessing. What will be the bank’s actual costs for default and foreclosure, including property liquidation – and how do you come up with a monetary proposal that will be mutually beneficial? Remember to account for depreciation and other financial changes in the future.
It seems to me that this will be hit or miss – who is the lender, who are you talking to at that lender, what is the lenders position overall on modifications, are you approaching them at the right time, do you have your info well organized and thorough, etc.
Let’s see if we can get a best practices here and maybe some feedback from people who have successfully negotiated a modification.
Another Question: If you simply stop paying on your second, and they don’t file NOD – are you not still responsible for the debt and the lein on the property, and can’t the lender use the Note/Deed for recovery in the future? Maybe there is some time limit for the debt to become dissolved?
Thanks all, this website is helping me prepare for this stressful situation.
July 17th, 2008 5:09 pm
[...] Other Related Mr Mortgage Stories Mr Mortgage on the Fannie/Freddie Crisis Mr Mortgage on Mortgage Modifications – Being Forward Thinking [...]
July 18th, 2008 10:41 am
I agree with you Spike. There has to be a game plan when go after the mortgage companies. I have a similar situation since I have a 775 middle credit score, never been late on anything ever, and am $100k negative equity on a townhouse in Miami.
Unlike most people out there…I CAN afford my payments even though I had to move to a different state and am paying on 2 properties. However, as more and more units go to foreclosure…and the banks scramble to sell them at huge discounts…they further the decline in the value of my own property. I hold no sympathy for the banks since they are the ones driving down property values with “fire sale” pricing. So I ask…what is the point in paying on a mortgage in a bubble state in a bubble area in a bubble type property (condo). Bubble bubble bubble…blah blah blah.
So I am trying to figure out if I should make my payments and negotiate a modification or NOT make my payments and negotiate a modification. I am not sure how the banks will look at either on and it seems that they may take me more serious if I am defaulting on my payments.
Any thoughts from anyone who has used Green Credit Solutions?
July 18th, 2008 10:52 am
always make your payments. Get hold of green credit for a free consult on what to do.
http://getgreencredit.ml-implode.com/landing-mm.html
July 22nd, 2008 9:06 pm
[...] Mr Mortgage onMortgage Modifications Part 2 – BEING FORWARD THINKING! [...]
July 22nd, 2008 11:08 pm
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July 23rd, 2008 3:13 pm
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[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
August 12th, 2008 1:42 pm
[...] Mr Mortgage onMortgage Modifications Part 2 – BEING FORWARD THINKING! [...]
August 12th, 2008 1:43 pm
I still cant’ figure out why, to the banks it is a business/financial deal, but to everyone else it is a “moral obligation”. BS. I am upside down, and I am looking at it exactly how the bank does. Do they keep a loser? No. Why should I. The days of “knowing your banker” and them working with you on a personal level are long gone. They are out for one thing. Their bottom line. To save it, the best way possible. That’s exactly where I stand. Why modify a mortgage that in the future would need further modifications. If you love your house, sure. But a house is a Liability, not an asset. Goes in the negative column. I don’t know of anyone who would hold on to assets that fall month after month, why is housing different.
I took an 80/20 heloc. At what I thought was close to the bottom. Appraised 160k above purchase price. I am now over 100k upside down, plus the “160k”, which didnt exist. Stay?? I don’t think so.
August 16th, 2008 11:52 am
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking [...]
September 3rd, 2008 1:32 pm
[...] Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking (63) Posted on July 4, 2008 11:17 AM [...]
September 4th, 2008 5:24 pm
Bravo stopthemadness. It’s so hilarious how the average j6p sees walking away from a bad investment (his home) as a ‘moral obligation’. Puhleeze. The Heb bankers who conjured that money out of thin air to loan to you have no qualms about wiping that losing investment off of their books AND getting a tax write-off from it to boot. We can’t even write off our losses on our upside-down homes if we let them get foreclosed on. How is that fair? I too am upside down and I bought in 2002. Thanks to the government not enforcing immigration laws and my town being ransacked by illegal aliens and all of the mess that comes along with that, values here are down an additional 20% over other localities near me where illegal aliens did not invade. I am biding my time like many others and will make my move when the time is right. All of you sheeple who see this as a moral obligation need to wake the F up and join the game that the bankers have been playing on us for centuries. The banks’ biggest fear is that one day j6p would figure that out and with any luck he soon will.
September 29th, 2008 11:35 am
How do I get a copy of the loan modification part I?
Peter Dimond
303.300.3414