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Anyone know anything about this? What are the catches? Is it fair that distressed homeowner gets to refi at 1% while their neighbor pays 6%?
Yes it's true. I saw on a Suzie Orman show a caller said GMAC mortgage offered him 1% interest for 5 years and that it will slower raise (but not above current mortgage levels 5 years into the futre.
Some banks/mortgage lenders think it's better just to let the homeowner keep staying in their homes and pay rather than trying to resell it as a real estate owned (REO) property at even more distressed prices.
Of course it's not fair for one homeowner to pay 6% and the other homeowner to pay 1%. Welcome to the future of Socialism and wealth redistribution.
These banks aren't doing it out of the kindness either. The government is giving them money (our taxpayer money) to subsidize each loan modification.
It's even going to get even worse. The Xmas eve surprise by the Obama administration to raise the cap on Freddie/Fannie to over 400 Billion. This way the Obama can start shifting the 75 Billion the originally allocated for the "making homes affordable program" onto Fannie/Freddie's books. Since Fannie/Freddie (even though they are owned by the government) is still considered a "public traded company." So if Freddie/Fannie report even more huge losses (and they will), Obama can always state that they are operating within their taxpayer budget.
It's all a scam this mortgage remodification process. It's only going to delay the inevitable. 30-50% of re-modified loans have already re-defauted within 1 year. They are just throwing our taxpayer money down the drain. Who wins? Obviously the lenders still received extra payments. Plus it's encourage a whole new set of industry (these companies that claim to help modify loans) and collect huge fees up front.
Yes it's true. I saw on a Suzie Orman show a caller said GMAC mortgage offered him 1% interest for 5 years and that it will slower raise (but not above current mortgage levels 5 years into the futre.
Some banks/mortgage lenders think it's better just to let the homeowner keep staying in their homes and pay rather than trying to resell it as a real estate owned (REO) property at even more distressed prices.
Of course it's not fair for one homeowner to pay 6% and the other homeowner to pay 1%. Welcome to the future of Socialism and wealth redistribution.
These banks aren't doing it out of the kindness either. The government is giving them money (our taxpayer money) to subsidize each loan modification.
It's even going to get even worse. The Xmas eve surprise by the Obama administration to raise the cap on Freddie/Fannie to over 400 Billion. This way the Obama can start shifting the 75 Billion the originally allocated for the "making homes affordable program" onto Fannie/Freddie's books. Since Fannie/Freddie (even though they are owned by the government) is still considered a "public traded company." So if Freddie/Fannie report even more huge losses (and they will), Obama can always state that they are operating within their taxpayer budget.
It's all a scam this mortgage remodification process. It's only going to delay the inevitable. 30-50% of re-modified loans have already re-defauted within 1 year. They are just throwing our taxpayer money down the drain. Who wins? Obviously the lenders still received extra payments. Plus it's encourage a whole new set of industry (these companies that claim to help modify loans) and collect huge fees up front.
But I bet to qualify, your home has to be worth close to what you owe on it. So for me, for example, if I owe $230k on our house, and it's worth $175k, I can almost guarantee we WOULDN'T qualify. And I'm sure most people wouldnt qualify as most people probably owe more on their house than what it's worth.
It's all a scam this mortgage remodification process. It's only going to delay the inevitable. 30-50% of re-modified loans have already re-defauted within 1 year. They are just throwing our taxpayer money down the drain. Who wins? Obviously the lenders still received extra payments. Plus it's encourage a whole new set of industry (these companies that claim to help modify loans) and collect huge fees up front.
. . . . .no problem, more and more credits, keep them coming, gov't just has to print the money, bunch of counterfeiters, lol,
Federal reserve and its monetary policies. . .just keep widening the deficit. . .I wonder how the US is gonna get out of this hole??!
But I bet to qualify, your home has to be worth close to what you owe on it. So for me, for example, if I owe $230k on our house, and it's worth $175k, I can almost guarantee we WOULDN'T qualify. And I'm sure most people wouldnt qualify as most people probably owe more on their house than what it's worth.
I haven't dealt with GMAC on any modifications, so i'm no expert on the matter, but....
It would seem to me that it makes more sense for GMAC to approve the modifications an those who are MOST underwater. If you bought a house for $250k, still owe $230k, and your house is now worth only $175k, they would stand to take a big loss if they take ownership of the house. At best they will sell it for the $175k, and have to eat the rest, as well as the cost of owning & selling it. But if they reduce your interest for a period of time, you continue paying that loan, eventually repaying all off it, well then, they haven't lost anything. They make less than they originally intended, but that's better than a loss. The more underwater you are, the bigger loss they will take when they sell it.
Of course, your payment history, your ability to make even the reduced interest payments, will have an affect on what they are willing to do.
And remember, I claim no expertie on the matter. I'm just postulating.
I haven't dealt with GMAC on any modifications, so i'm no expert on the matter, but....
It would seem to me that it makes more sense for GMAC to approve the modifications an those who are MOST underwater. If you bought a house for $250k, still owe $230k, and your house is now worth only $175k, they would stand to take a big loss if they take ownership of the house. At best they will sell it for the $175k, and have to eat the rest, as well as the cost of owning & selling it. But if they reduce your interest for a period of time, you continue paying that loan, eventually repaying all off it, well then, they haven't lost anything. They make less than they originally intended, but that's better than a loss. The more underwater you are, the bigger loss they will take when they sell it.
Of course, your payment history, your ability to make even the reduced interest payments, will have an affect on what they are willing to do.
And remember, I claim no expertie on the matter. I'm just postulating.
I agree, but the banks should be doing this of their own accord, not with taxpayer money. If they were not bailed out, you better believe they'd have a much more reasonable foreclosure policy.
I agree, but the banks should be doing this of their own accord, not with taxpayer money. If they were not bailed out, you better believe they'd have a much more reasonable foreclosure policy.
Yup, if it benefits them ( lessor of 2 evils) they should be doing it on their own cuz it is a smart business decision.
Not because they are recieving govt money to do it.
a caller said GMAC mortgage offered him 1% interest for 5 years
I just mentioned this to one of our Paralegals - she said no way....
GMAC is one of the hardest lenders to deal with, we just had one file that they refused to work with us, we had to get the HUD assoc involved.
Why would they be giving out lower rates then the lenders that received government bailout money.
The best rate out there is 2% - unless the Federal government drops it's prime rate this is all hearsay (3rd party information). It obtain a low interest rate like that - your mortgage payment has to be more then 31% of your income.
People need to understand - lenders are not required to gave homeowners modifications. I speak to people everyday that didn't understand how to correctly fill out paperwork thier lender sends them. They do so - basically giving wrong information that ultimately gets them disqualified. As I have said this many times - your lender is not your friend, anything you say, any information you give them will be used against you.
Every loan modification is different - it is not how much you know about financing and how loans work, it is the method how the mitigation is preformed.
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. . .just keep widening the deficit. . .I wonder how the US is gonna get out of this hole??!
