I’ve been waiting for two days for someone to reply or just post. I thought that I had put a halt to a perfectly good thread. Many, out of a sense of courtesy and respect, just bit their tongues and decided that this thread had finally just played out. I’ve sensed before that my favorable experiences with WAMU were perhaps unique. Their in-house sales guy begged me for my business so as to meet his quota. Thus far, other than a couple of suspensions last year of my HELOC over small credit issues, I have had nothing but favorable experiences with them. But, I am hardly their apologist and this thread could use some new blood, etc. Please continue your post! Hammer away!

You may be able to repay your home loan using… funds from your 401(k) -account—ask your employer about making a “hardship withdrawal

You have to respect them for trying.

I believe that this creation by WAMU DOES have some problems that would keep me from actually going through with it the way it is laid out above. (”VacantHomes”: Where is there any mention of recourse?)

I am convinced that WAMU’s primary reason for offering this was to prevent their getting the home back NOW. Its a “breather”. I can’t see where there is any sinister, ulterior motive associated with this. WAMU knows that the borrower can walk at any (time absent recourse). WAMU doesn’t need the kind of adverse publicity as seen on this thread.

I approached WAMU today requesting that they reduce my interest rate to 1%/year for the next two years. I also talked about the need to be able to keep my existing loan in effect (waive the due on sale clause) so that I may incorporate this loan into a contract for deed. Without being able to offer/provide jumbo financing in order to obtain a competitive advantage over the myriads of homes on the market, I see no reason to stay in it. Forty, or so, thousand dollars in capitalized interest is nothing compared to assuming the responsibilities and costs of a vacant home. Let’s see what they have to say. (WAMU has a website entitled “WAMU cares”. There is no mention there of this mod.)

I wouldn’t have a big problem with the WaMu loan mod above (well except for the non-recourse part), as long as there was *NO* possibility that the government could purchase or subsidize the modded loan. That is the real crime going on now with the TARP and the Fed swap facilities. If WaMu/JPM wanted to keep this garbage loan on its books, or sell it to some idiot investor, I have no problem with that.

Let’s face it, this loan has a virtually 100% probability of default.

Thank you for your well thought out and considerate comments.

I agree that this is a difficult and challenging time for all of us. It is only with open discussion do we have a chance at solving the problems and the far reaching implications of doing nothing is far worse than attempting to solve the problem.

Jonathan, Not sure I want a five year rope to hang myself. That’s kind of like bobing my dogs tail a half inch at a time so it doesn’t hurt to much. :<)

I totally agree with you that there should not be any taxpayer involvement in any form to correct the problem. I would also state that I am a grown up and do accept my situation, and no one held a gun to my head to sign the loan documents.

That being said, if as I have postulated there were undisclosed undue influences in the market created by special or creative financing there is a certain responsibility of those who promoted those programs to step up and take their lumps as part of the solution as well. A position I have argued and supported in my previous posts.

TeddyBearNeil, I think the appraiser is supposed to comment on the comps and the terms and conditions of the sale, if I am interpreting the language correctly.

I think we can agree that there have been enough articles, blogs and forums that have detailed the nature of the special and creative financing programs to agree that they had an influence on the market. How much is of course up for debate.

I have looked over all proposals that I can find, from the H4H, FHA streamline and the various loan modifications and none that I find adequately address the negative equity situation in any real or constructive manner. I’ve also looked at the National Association of Realtors and the National Association of Home Builders proposals to jump start the housing market and they are nothing but a re-run of the very programs that caused the problem in the first place. More special temporary interest rates and down payment assistance with reduced qualification requirements to bring unqualified buyers into the market.

Here is my point. Currently there are 12 million households in the country that are underwater as stated by Mr. Bernanki at a recent housing conference meeting. We have all seen the headlines that indicate that housing prices continue to fall in many markets. So the bottom still seems a long way off especially when you consider the number of 5 and 7 year ARM’s that have yet to reset. I also don’t hear any mention of the 10 yr interest only Fannie/Freddie products which will reset to a 20 yr PI payment at a much higher payment and it’s impact on the problem.

When these loans reset and the owners cannot refinance because they are underwater, we are in for yet another round of foreclosures, short sales and deteriorating market prices.

We know from the recent headlines that the loan mods done in Q1 of 2008 resulted in over half of them being back in default in six months. The reasons given included lack of adressing the very real issue of negative equity. Which points out that the current approach is just not viable. Even HUD admits that their program isn’t working.

If something is not done on a mass across the board basis to stabilize the market, stop the deterioration of home values, eliminate foreclosures and short sales, we are in for a 10 to 15 year period of negative to flat housing market in this country in my opinion.

In my previous post I spoke about a proposed solution that would take every mortgage issued during the boom from January 1, 2000 to current and convert them to a 20 year, ZERO interest mortgage. I agree that not every area of the country was affected by over-inflation, but using the housing appreciation studies that are readily available those affected could be identified and modified accordingly.

A simple solution but it has far reaching implications by my analysis.
1. The resulting principal only payment would be far lower than the current PI payment. This lower payment would all go to reducing the mortgage balance far faster than any reduced interest rate loan mod and would have the additional benefit of providing from the savings additional real cash injected into the household budget that could be used to pay bills, save or spend in the general economy or put towards the mortgage to further reduce the balance. Economic stimulus every month for 20 years.
2. True the lender would not receive any interest payment, however they would receive in full the balance they lent. I can’t tell you how many investments I’ve made where if I could have gotten my principal back I would have been estatic. The lender could use these funds to lend at todays rates and guidelines, which would open up the market to new loans.
3. The lender maintains on their books the full face value of the mortgage balance, without write down, cram down or any other negative impact.
4. The lender does not have the cost of foreclosure, maintaining the home, insuring the home and re-selling the home. A considerable sum of money by all accounts, I’ve read up to 60% of the initial loan value.
5. If the lender needs to raise capital they can discount the note to produce the yield required to attract a buyer. A practice that is done everyday and much less expensive than foreclosure and related costs.
6. The State and Federal government would receive increased tax revenues as without interest there is no interest deduction. Tax dollars that can be used to support local and federal projects or provide some income to the loan servicers, all WITHOUT RAISING TAXES or passing on a deficit to our children and their childrens children.

Every one who is involved becomes part of the solution. The homeowner pays back what they borrowed, the lender gets back what they lent, all without a dime of government bailout money to the bank or the homeowner. No one time “Economic Stimulus” check from our government which we all know would eventually come our of our pockets anyway.

As a homeowner I would be much more inclined to stay in my home as I can see that the time to breakeven or gain a positive equity position will come in a much more reasonable time. I can wait it out without the WAMU balloon payment noose around my neck. As I don’t see the market coming back and home prices appreciating to adequate levels in five years under the current proposals.

With the housing market stabilized, home prices will naturally adjust to a level that can be supported by real incomes, especially since the traditional underwriting guidelines have now been re-adopted. With the extra funds in each household budget, the economy will receive the boost in spending needed to get back in gear. Incomes will naturally increase over time and so will home prices as the two have been traditionally in lock step.

Please take the time to do the mathmatical study on your own situation. Take your existing mortgage balance and divide by 240. Compare that payment with what you are making now. It is simple math to calculate the annual reduction of your mortgage balance. Based on market data for your area, find our what your home is worth and see how long it will take to bring your mortgage balance in line with the market vs your current amortization. I think you will find that the time shortening is significant.

I would encourage you to take the time to really think about this proposal, it’s not mine but the proposition of The American People’s Fix, found at http://www.americanpeoplesfix.com. So far it is the only one that makes sense to me, seems fair to all parties and does not raise taxes or require government bailout money.

I’m also sure that it does not take into consideration all aspects and all players concerned, but it may make a good platform to produce an all encompasing solution.

I look forward to your next comments, observations and suggestions.

It is very hard to hide class, but somehow you have overcome that obstacle.

I am so proud of you for your superior intellect and insights into the market and hope you enjoy your cheap home in San Diego for many, many years.

I am hardly an amateur housing speculator or a gambler, nor am I delusional. And as far as being special, thanks for the flattery, but I and 600,000 other Arizonans, who purchased homes in the last 8 years, now find ourselves underwater. Can we all be amateurs, speculators, delusional or gamblers? Or was this a case of mass hysteria? If so it happened all over the country over a 6 year period of time.

I do agree that “Nobody has a right to a price or value”, however I do think we have a reasonable expectation to have a level playing field without undue influences on the market.

DEFINITION OF MARKET VALUE, BASED ON THE FANNIE MAE GUIDELINES, FROM MY APPRAISAL STATES, : “The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

*Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the comparable property by comparisons to financing terms offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market’s reaction to the financing or concessions based on the appraiser’s judgment.”

I purchased my home as a primary residence for my family to live in. This is my sixth home purchase in my lifetime, my first at 21 years of age, each of which I have held for about six years. Nothing speculative in those purchases, or selling decisions, just moves as my family situations changed.

I bought a 5br, 3.5ba, 2538 sq ft, tract home in Buckeye, Maricopa County, Arizona. Hardly a mansion, but adequate for our needs as my wife an I run two business from the home and have a handicapped son of 46 who lives with us full time. So basically I have a 3br home for my family and use two of the bedrooms to operate our businesses.

As far as research is concerned, I did observe and follow the market trends to the best of my ability at the time and guess what, home prices were going up admittedly faster than normal. At the same time, based on the cost to build per square foot, which was running at about $125 per including the lot, the price was in the market. By the way my hazard insurance company still requires me to insure the home currently for a replacement cost of $380K, as that is what it would cost to re-build if it were to burn to the ground.

What I could not have researched was that the home prices were over-inflated because of the lenders promotion of special or creative financing. Had that data, i.e.: Number of home sales to buyers who put no money down, qualified with out having to verify income, assets or employment, or have any reserves, whose loan program was based on an ARM or Option ARM with a low temporary teaser rate, been disclosed maybe we all could have seen the problem and made our decissions accordingly.

However, those material facts were not available and were not noted, in violation of the lenders appraisal guidelines as detailed above, as influences on the home prices of the comps used in my or any appraisal.

I have been and continue to be a homeowner as I have paid the bill for homeownership for the last 39 years. I was going to ask you to send me some toilet paper but I’ve decided to use my appraisal for the task instead.

Tim, a word of advise. Often times it is better to be thought a fool, rather to open ones mouth and remove all doubt.