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Old 07-26-2008, 11:57 AM
 
Location: Cary, NC
1,036 posts, read 3,628,214 times
Reputation: 503

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Quote:
Originally Posted by revelated View Post
I agree with some measure of resolving the issue for those buyers who truly were shafted by the bank. There is some responsibility on the buyer that was absent when they signed the paper, yes. But "stated income", IMO, was just blatantly egregious. For those borrowers, I think a loan modification is in order.

Loan officers that commited FRAUD by stating income that was false should face consequences. But the borrower signed the documents (and it says right there on the application that they certify the information is honest and accurate) and agreed to purchase the home.

It doesnt take a financial or mortgage expert to know that someone making $30,000 a year should not write down $8000/month income and buy a $500,000 home. The lender should not have underwritten these loans so loosely. The loan officer should not have taken this application and lied. But the borrower should not have taken the loan either.

And I'm sorry, but if you are buying a home and you didn't take the time or effort to read the documents you signed and ask questions.... a loan modification is NOT in order to save you from your mistakes.

The bank will lose money in the foreclosure and the buyer will lose their home. Maybe that is what it takes for us to wake up and shift our attitude about debt... before the US ends up getting foreclosed on by the nations that we have mortgaged ourselves to.
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Old 07-26-2008, 06:21 PM
 
139 posts, read 429,975 times
Reputation: 66
I caught the tail end of that interview, and I thought I heard the guy incorrectly. I guess I didnt !
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Old 07-26-2008, 06:48 PM
 
16,701 posts, read 18,921,823 times
Reputation: 6798
They are NOT going to get 3% (they are delusional if they think they are), they are going to get 7% or higher and if they can't afford it, they will lose their home and deserve to lose their home because they couldn't afford it in the first place...
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Old 07-26-2008, 10:51 PM
 
Location: Southeast Georgia
65 posts, read 215,935 times
Reputation: 46
I think a mandatory hard hit on their credit rating should accompany any loan modification.
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Old 07-27-2008, 09:15 AM
 
16,701 posts, read 18,921,823 times
Reputation: 6798
The government won't do that... these "poor" people will get the very best while everyone else gets stuck on bathroom duty cleaning up the "poor" people's crap off the floor...
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Old 07-27-2008, 01:58 PM
 
2,197 posts, read 6,593,924 times
Reputation: 1684
You know, with everybody foreclosuring and defaulting left and right, good credit isn't going to matter anymore. It already doesn't, if the people who are the poorest risks are getting the best rates. And if it takes stopping your mortgage payments to get a favorable loan mod or 40% of your principal forgiven, responsible borrowers are going to do that, too. Hard to blame them, when there are penalties for playing by the rules and rewards for breaking them. When nice guys not only finish last, but get flogged at the finish line, there are going to be far fewer nice guys. Wonder if the government has a fix-it plan for that?
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Old 07-28-2008, 08:47 AM
 
2,639 posts, read 5,058,551 times
Reputation: 2346
Quote:
Originally Posted by rcarrillo View Post
Loan officers that commited FRAUD by stating income that was false should face consequences. But the borrower signed the documents (and it says right there on the application that they certify the information is honest and accurate) and agreed to purchase the home.

It doesnt take a financial or mortgage expert to know that someone making $30,000 a year should not write down $8000/month income and buy a $500,000 home. The lender should not have underwritten these loans so loosely. The loan officer should not have taken this application and lied. But the borrower should not have taken the loan either.

And I'm sorry, but if you are buying a home and you didn't take the time or effort to read the documents you signed and ask questions.... a loan modification is NOT in order to save you from your mistakes.

The bank will lose money in the foreclosure and the buyer will lose their home. Maybe that is what it takes for us to wake up and shift our attitude about debt... before the US ends up getting foreclosed on by the nations that we have mortgaged ourselves to.
I don't disagree, and even stated, that the buyer shares some of the blame. However, there were instances where banks were doing these things after the fact, altering the loan documents after signature by the borrower, unbeknown to them. Countrywide was nailed for it. The buyer had no idea that their income had been changed after the fact. Then there are unscrupulous mortgage brokers who leave forms blank and instruct the buyer to sign - me being an auditor for a financial company I know better, but Joe Schmo who works at Coca Cola likely is trusting the mortgage broker's due diligence in those matters.

Which is why I recommend that course of action: assess every single loan near default, full underwrite, full docs, loan suspended (meaning bank eats the cost for however long it takes them to fix the problem). If the buyer can repay at a reasonable, fixed term based on the value of the home, mod it to meet their true DTI and income. If there's no way possible the borrower can afford that home, accept DIL and let the borrower walk away. There are some buyers who sincerely want to keep their homes and they shouldn't be punished due to, as you say, fraud by the bank. There are also some buyers who lost their jobs or something else that negates their ability to pay for the mortgage, and they shouldn't be trapped in the home. The DIL will be just as negative on their credit as full foreclosure; they don't get away scott free, because as you said, they did sign some paperwork, so they're not absolved.
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Old 07-28-2008, 09:24 AM
 
48,915 posts, read 39,401,698 times
Reputation: 30559
Quote:
Originally Posted by goodbyehollywood View Post
You know, with everybody foreclosuring and defaulting left and right, good credit isn't going to matter anymore. It already doesn't, if the people who are the poorest risks are getting the best rates. And if it takes stopping your mortgage payments to get a favorable loan mod or 40% of your principal forgiven, responsible borrowers are going to do that, too. Hard to blame them, when there are penalties for playing by the rules and rewards for breaking them. When nice guys not only finish last, but get flogged at the finish line, there are going to be far fewer nice guys. Wonder if the government has a fix-it plan for that?
The majority of foreclosures that I'm seeing are people that also had really nice cars, ate out all the time, took nice vacations OR are just walking away because the place is so upside down. I think the anecdotal "ripped off by evil mortgage issuer" stories or death\illness are true and a much smaller portion of the total. Cases like this I can understand government protections, litigation etc.

Yeah, I'm pretty frugal...pay all my bills, drive an inexpensive car and I'm feeling like a sucker at times like this.

Basically, I'm preparing for higher taxes and phasing out of social security benefits so if you spent every nickle you made and cashed out 401k's you still collect but if you saved, well then you really don't NEED a social security payment right comrade?
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Old 07-28-2008, 10:16 AM
 
Location: Dallas, NC
1,703 posts, read 3,453,134 times
Reputation: 807
I do understand what some of you are saying about mortgage brokers being unscrupulous and all that BUT do people really not know what they can afford??? I mean really. My husband and I bring home close to $5000 a month but with our other committments, we know we can't afford a $400,000 or more house and actually be able to keep it. Is it really the bank or the mortgage companies fault when people intentionally overextend themselves? I don't think so. It's called personal responsibility. If someone loses their job, it's one thing. But just b/c you wanted to keep up with the Jones' is not a reason to have your mortgage reduced or anything else. Suck it up and deal with it.
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Old 07-29-2008, 08:59 PM
 
Location: San Antonio
2,216 posts, read 3,907,349 times
Reputation: 1179
That brings me to a question....what's the average cost of these homes being foreclosed on? Is it really the "jumbo" loans, or is it the $150k scenarios.......
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