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I just spoke with Citibank's mortgage division to determine they have a program of resetting or adjusting an existing mortgage that is "under water." The answer from the company is "no". Citibank only offers the Federal program (termed "loan modification," but which is actually only a "payment modification" program) whose purpose is to offer assistance in making payments on the existing mortgage. I find it amazing that at this point in the present economic crisis that this bank does not see that it's advantageous to retain its customers and its mortgages in force rather than to see those customers choose to stop paying their mortgages due to the present significant drop in home market value from several years ago. Some commentators have stated home values will not recover for another FIVE YEARS from today.
In my situation the home was purchased in 2003, before the top of the boom, using a conventional mortgage with 20% down. That home has fallen in market value by 20% from its 2003 price and is still trending lower. The home was not purchased for speculation. In today's housing depression, all homeowners are victims of the predatory mortgage lending activity, driven by the Collateralized Debt Obligation instruments sold fraudulently by Wall Street to institutional investors, that drove the housing price bubble and which was insufficiently regulated at the Federal level for EIGHT YEARS under the Dubya Administration.
What does today's political establishment and banking industry think that homeowners are going to do with their mortgages in this situation, especially when unemployment at the national level continues to rise to over 10%, and is much higher than that in several American cities, and therefore pressure on ability to pay mortgages is very high.
As more customers choose to walk away from their existing mortgages, the market value of ALL HOMES across the country will continue to be depressed and unlikely to recover anytime soon. Why hasn't the general public let Washington know that this situation is intolerable and needs to be more seriously addressed? The housing depression is major impediment to national economic recovery.
Last edited by ParkTwain; 10-23-2009 at 09:39 AM..
Banks indeed do offer loan balance adjustments, its called a short sale and takes place when you are selling your property at a lower than balance amount. If you are making your payment, then why would the banks lower the balance of a loan where payments are being made? Would you call them up and offer a bonus if the property value increased?
Banks indeed do offer loan balance adjustments, its called a short sale and takes place when you are selling your property at a lower than balance amount. If you are making your payment, then why would the banks lower the balance of a loan where payments are being made? Would you call them up and offer a bonus if the property value increased?
A short sale affects your credit almost as negatively as a foreclosure. I haven't seen any solid evidence that going the short sale route does anything but prolong the the agony.
I'm in the same situation as the OP, except my property has lost more than 40% of it's value since I purchased it in 2005, so far! It's so frustrating. Many of us who played by the rules are the ones who are in the worst situation.
I think you can understand what happens to the markets for single-family housing at the metropolitan/city level when you take a situation like mine and multiply it by MILLIONS of other homeowners. The result is a housing market that won't recover to the price level of X years before the top of the housing price bubble for over FIVE YEARS from today, let's say. If a significant percentage (such as 25% or more) of those homeowners across the U.S. in a situation like mine (especially those who are being affected by chronic unemployment or underemployment) choose to walk away from their mortgages going forward from today, that will perpetuate the present depression of home values even longer than what is predicted today. So it is better for the overall economy that the present situation not be made any worse by having HUNDREDS OF THOUSANDS, OR MORE, of today's homeowners walk away from their present mortgages. A nationwide program that addresses this situation is better for the economy as a whole than the present, undirected situation.
Given the degree of depression in many metropolitan markets for single family homes, are the banks likely to lose more in a mortgage foreclosure (where the home might sit vacant for YEARS before eventually being sold for LESS THAN its year 2003 value) or in a 10% loan modification today? I think that for very many situations today for mortgages that are under water, the banks LOSE LESS, and IT'S BETTER FOR THE ECONOMY, by making a 10% loan balance reduction. Remember that the banks have already taken write-downs (that is, declared as losses in their quarterly income statements) of huge numbers of their presently outstanding mortgages. I just don't know if that means that my bank might have already written down MY mortgage! What a great situation for the individual citizen!
Last edited by ParkTwain; 10-23-2009 at 09:44 AM..
I purchased my home long ago and am NOT underwater. But I have "lost" lots of equity. If banks adjust YOUR loan to reflect todays prices should they not adjust MINE as well? After all, my home is worth less than it used to be as well and I could use a lower mortgage payment. I played by the rule. I made every payment.
I purchased my home long ago and am NOT underwater. But I have "lost" lots of equity. If banks adjust YOUR loan to reflect todays prices should they not adjust MINE as well? After all, my home is worth less than it used to be as well and I could use a lower mortgage payment. I played by the rule. I made every payment.
See how that might be a problem?
Bingo. And therein lies the problem. Once you start reducing loan amounts the people asking and deserving one never ends.
I really don't agree with OP's 25% number. I think when this mess is all said and done, maybe 10% of US homeowners will find themselves foreclosed and renting. But my personal feeling is that most of those 10% probably should have been renting to begin with. Not everyone was hit with layoff or medical emergency. Many purchased multiple homes or pulled equity out to buy that swimming pool or well deserved Mercedes. And now they pay the price.
Say it with me. Personal Responsibilty for One's Actions.
I just spoke with Citibank's mortgage division to determine they have a program of resetting or adjusting an existing mortgage that is "under water." The answer from the company is "no". Citibank only offers the Federal program (termed "loan modification," but which is actually only a "payment modification" program) whose purpose is to offer assistance in making payments on the existing mortgage. I find it amazing that at this point in the present economic crisis that this bank does not see that it's advantageous to retain its customers and its mortgages in force rather than to see those customers choose to stop paying their mortgages due to the present significant drop in home market value from several years ago. Some commentators have stated home values will not recover for another FIVE YEARS from today.
In my situation the home was purchased in 2003, before the top of the boom, using a conventional mortgage with 20% down. That home has fallen in market value by 20% from its 2003 price and is still trending lower. The home was not purchased for speculation. In today's housing depression, all homeowners are victims of the predatory mortgage lending activity, driven by the Collateralized Debt Obligation instruments sold fraudulently by Wall Street to institutional investors, that drove the housing price bubble and which was insufficiently regulated at the Federal level for EIGHT YEARS under the Dubya Administration.
What does today's political establishment and banking industry think that homeowners are going to do with their mortgages in this situation, especially when unemployment at the national level continues to rise to over 10%, and is much higher than that in several American cities, and therefore pressure on ability to pay mortgages is very high.
As more customers choose to walk away from their existing mortgages, the market value of ALL HOMES across the country will continue to be depressed and unlikely to recover anytime soon. Why hasn't the general public let Washington know that this situation is intolerable and needs to be more seriously addressed? The housing depression is major impediment to national economic recovery.
I agree with Citibank, just because your home has declined in value they have no reason to forgive any of your loan balance.
Likewise, for decades when many markets had homes with significant appreciation, the homeowner received the benefit. Beyond their mortgage, they didn't offer to share the profits with the bank.
Frankly, I think those who cannot sell their home due to negative equity should just "eat it", meaning lose the house and have their credit score tanked.
A short sale affects your credit almost as negatively as a foreclosure. I haven't seen any solid evidence that going the short sale route does anything but prolong the the agony.
I'm in the same situation as the OP, except my property has lost more than 40% of it's value since I purchased it in 2005, so far! It's so frustrating. Many of us who played by the rules are the ones who are in the worst situation.
Why would it not affect your credit. You agreed to pay something, you arent paying what you agreed, your credit should be affected.
As for your situation, are you going to be like many of the other fools that walk away from their home just because it lost value? Does that really make any sense considering you have to then go and pay rent somewhere else?
Why would it not affect your credit. You agreed to pay something, you arent paying what you agreed, your credit should be affected.
As for your situation, are you going to be like many of the other fools that walk away from their home just because it lost value? Does that really make any sense considering you have to then go and pay rent somewhere else?
Many of us who have lost significant value in their homes, including me, aren't going anywhere. As you correctly state, we still need somewhere to live, and if we bought our homes because we liked them and could afford them, their current value is irrelevant.
They own a mortgage not the property itself. Why wouold they adjust to the market price.No one is doing that for those that own and have lost value either.
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