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Old 12-02-2009, 09:31 PM
 
667 posts, read 1,839,281 times
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Quote:
Originally Posted by Karen59 View Post
what are you talking about?
Oh ... I see. He has to sell 'house one' for 200,000 dollars and give that to bank along with the extra 60,000.
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Old 12-02-2009, 10:04 PM
 
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Quote:
Originally Posted by Flat2MT View Post
Huh??? x2



Doesn't have enough money to settle debts but a bank would be willing to loan $200K w/o a downpayment - Check.

.
The thing is-- Person A hasn't done anything wrong--simply wants to move to another state to take a new job, which many young people need and want to do. It seems right for banks to come up with creative solutions, creative new products, to help people. Creative solutions that help younger customers to become wealthier older customers down the line--what's wrong with that?

Silverfall has already said it's impossible to come up with simple solutions because of the complicated way the financial industry is set up. But I don't think I'd be the first person to say that's not necessarily a good thing.

The way it would have to work is--Person A finds a buyer for 'house one' and the bank agrees to a short term high interest loan for balance owed (60,000) until Person A buys second home, at which time 60,000 is combined with mortgage on house two.

I believe it when I'm told that it can't be done because of current system--I just don't understand why someone's attempt to look for solutions like this seemed to bring out such indignation. A bank looking for new products that helps people become successful is good.


Edit: person A has good credit and they are employed.

Last edited by Karen59; 12-02-2009 at 10:14 PM.. Reason: spelling
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Old 12-02-2009, 10:17 PM
 
Location: Salem, OR
15,508 posts, read 40,224,036 times
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Quote:
Originally Posted by Karen59 View Post
A bank looking for new products that helps people become successful is good.

Banks aren't interested in helping people be successful. They are interested in profit. I appreciate the noble sentiment, but it is misplaced in the banking world.

The scenario you talk about is risky for a lender because they would be stuck holding the mortgage and unable to sell it. As such it order for it to be worth it for them to do that means that person A with a good job is paying a crazy high interest rate to make it profitable for the bank.
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Old 12-02-2009, 10:26 PM
 
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Quote:
Originally Posted by Silverfall View Post
Banks aren't interested in helping people be successful. They are interested in profit. .
Aw, come on. I was in the business world. If an action you take helps your customer become more successful, that will increase your profits, as long as they remain your customer. That's not noble--that's good business.

Yes--it would have to be a crazy high interest--to motivate person A to buy a house right away, and to make it worth the risk. Academic, because I will take your word that the way things are set up, it can't be done.
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Old 12-02-2009, 10:47 PM
 
Location: Salem, OR
15,508 posts, read 40,224,036 times
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Quote:
Originally Posted by Karen59 View Post
Aw, come on. I was in the business world. If an action you take helps your customer become more successful, that will increase your profits, as long as they remain your customer. That's not noble--that's good business.

Big banks can make significantly more money by originating and selling loans than they can helping one person transfer a loan.
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Old 12-02-2009, 10:51 PM
 
Location: Charlotte, NC
2,193 posts, read 5,037,594 times
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Quote:
Originally Posted by Karen59 View Post
Aw, come on. I was in the business world. If an action you take helps your customer become more successful, that will increase your profits, as long as they remain your customer. That's not noble--that's good business.

Yes--it would have to be a crazy high interest--to motivate person A to buy a house right away, and to make it worth the risk. Academic, because I will take your word that the way things are set up, it can't be done.
The thing is, banks usually only lend if a house appraises at a certain amount. So if a home appraises at 200K, that's all they will give the homeowner. They won't lend 260K. If the homeowner tries to sell in a few years, he'll still be underwater.
If I was a lender I certainly would NOT bet that 'real estate always goes up.' I think the banks learned their lesson during the bubble craze.

Though, the homeowner could possibly just take out a regular personal loan for the difference that he owes rather than having it attached to a new mortgage. He might be able to get a lawyer involved and negotiate a settlement for the difference.
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Old 12-02-2009, 11:40 PM
 
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Quote:
Originally Posted by sheenie2000 View Post
They won't lend 260K. If the homeowner tries to sell in a few years, he'll still be underwater.
Yes, granted. I was just entering the spirit of the OP's 'think outside the box' question. The homeowner is already underwater. I was wondering if there wasn't some way the bank could switch this situation to a new home. The banks never do certain things, yes, I get it--the idea was--could the banks start to do new things.


Quote:
Originally Posted by sheenie2000 View Post
Though, the homeowner could possibly just take out a regular personal loan for the difference that he owes rather than having it attached to a new mortgage. He might be able to get a lawyer involved and negotiate a settlement for the difference.
Yes. If he could do that, that would be great. It would seem to be better if it were attached to a new mortgage, however, I guess--because the interest would be lower, of course. It's just what would motivate the bank to do this switch. It's the bank that holds the mortgage that has the vested interest in this borrower, of course--that the borrower stays employed, is able to follow the jobs wherever they may be, that they don't walk away from the loan. I wonder if banks do studies to analyze situations like these, to see how to keep the loans healthy for the long term ... well, apparently not, looking at the bubble and all.
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Old 12-02-2009, 11:58 PM
 
667 posts, read 1,839,281 times
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Quote:
Originally Posted by Silverfall View Post
Big banks can make significantly more money by originating and selling loans than they can helping one person transfer a loan.
I don't know if a bank analyzes things like other businesses, but when I was involved with business, there was short term profit, and there was 'growing the business'--growing the customer base, keeping the customers successful. Uniquely enough, the bank's customer base consists of people who are succeeding and building wealth, which puts banks in a unique position. They may not analyze it that way, but they should, IMO, if they are thinking long term.

If your business is mortgage lending, there should be some thoughts along the line of--what's the best strategy to get people back to being successful and building wealth (which of course, we the banks can start to take slivers of, which is all to the good.)

Hey--realtors, same thing. Any unique realtor-type products or methods that help people stay successful and perhaps build wealth during these difficult times is just all to the good.
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Old 12-03-2009, 02:40 PM
 
Location: Albuquerque
5,548 posts, read 16,033,917 times
Reputation: 2756
Quote:
Originally Posted by Lilybeans
The mistake you made is thinking of your home as
an investment. It isn't it's a home and place to live.
That wasn't a mistake.

The current situation is unprecedented in the U.S. for more than
70 years. Other than very localized real estate declines, a person's
home has always been an investment in addition to being a home.

The ability to refinance has always been an option for a homeowner
and people who have paid their mortgages have always been able
to just sell and move. This is not the case today and the vast
majority of people underwater are there through no fault of their own.

Almost all of the sub-prime liar-loan/investment homes are already out
of the system. The big banks got us into this and they have been
bailed out, but they continue to make the situation worse by dumping
homes on the market via unnecessary home repos.
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Old 12-04-2009, 01:48 AM
 
82 posts, read 345,003 times
Reputation: 81
If you're underwater by 75k, best to just stop the checks & ride it out. You can easily squat 6-10 months these days, and create a nice little nest of cash to purchase down the road in a location more suitable to your liking. Take it from me, it feels good to stick it to the bank! I highly recommend you follow the squatters way, it will provide you with powerful advantages down the road.

You've paid your dues. Time to take what's yours (not ask), from the very same banks who are screwing you over.
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