Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I got a call from a client this week. His loan had gotten sold to GMAC. He had never missed a payment and his score is close to 700. He owes around $350K.
They called him to modify the loan based on the values now in his area.
They offered to lower the loan by $102K and lowered the rate by .250% (already a very good rate - 30 year fixed).
He is modifying this next week and is thrilled! He had never called them. They called him and indicated they were trying to securitize their portfolio.
So, he is going ahead. (Lucky guy).
Well, how do we all get so lucky? How do we get part of our principal forgiven and our rate dropped? Because ALL of us are experiencing declining home values-- not just borrowers on the bubble. If lenders offer sweetheart deals to some, how can they not be forced to offer them to everybody? I don't get how such blatant preferential treatment can be condoned in a society-- and an industry-- where discrimination is such a hot button.
Well, how do we all get so lucky? How do we get part of our principal forgiven and our rate dropped? Because ALL of us are experiencing declining home values-- not just borrowers on the bubble. If lenders offer sweetheart deals to some, how can they not be forced to offer them to everybody? I don't get how such blatant preferential treatment can be condoned in a society-- and an industry-- where discrimination is such a hot button.
I would think in this case it is simply some model suggesting this loan was in a class likely to end in foreclosure. The lender simply provides what they think is the right conditions to minimize their loss. I see no indication they are doing anyone a favor. Just avoiding future loss.
I would be quite skeptical that they are smart enough to pick the ones that need the reductions in such a cavalier fashion. But if they can do it, a very good idea.
I would think in this case it is simply some model suggesting this loan was in a class likely to end in foreclosure. The lender simply provides what they think is the right conditions to minimize their loss. I see no indication they are doing anyone a favor. Just avoiding future loss.
I would be quite skeptical that they are smart enough to pick the ones that need the reductions in such a cavalier fashion. But if they can do it, a very good idea.
Yes sir. It's not about the homeowner. In most cases, the lender's stake in a home is substantially greater than the so-called homeowner's. Lenders manage their risk, not the risks that homes at large, are loosing value. They are doing what they can to minimize their own losses. Nothing wrong with this. It's their money- their risk.
I'm sure you're right about the model-- I'm just debating its applications. You're selectively offering one product and one very large break to certain homeowners and not to others in a manner that is negatively incentivized. And it IS, ultimately, about the homeowner. One homeowner is getting a tax-free $102K break, while other homeowners are having to pay back the full amount. How is it any easier for the unaided homeowners to scrape together that monthly payment? Don't you think they would appreciate the bank subsidizing part of their loan, since their home is also worth a lot less? I see people struggling to make their mortgage and meet their obligations, while others are getting a rate reduction, and the inequity seems so unjust. I'm sure lenders would like to reduce it to a business model, but it affects human beings, their livelihoods and the homes they live in. And it affects them in disparate ways.
This is rewarding people who put little down and penalizing those who made a sizeable down payment or have built up equity. It may fit neatly into a business model, but it's a little messier in real life when you're dealing with real people.
Last edited by goodbyehollywood; 07-21-2008 at 06:40 AM..
I'm sure you're right about the model-- I'm just debating its applications. You're selectively offering one product and one very large break to certain homeowners and not to others in a manner that is negatively incentivized. And it IS, ultimately, about the homeowner. One homeowner is getting a tax-free $102K break, while other homeowners are having to pay back the full amount. How is it any easier for the unaided homeowners to scrape together that monthly payment? Don't you think they would appreciate the bank subsidizing part of their loan, since their home is also worth a lot less? I see people struggling to make their mortgage and meet their obligations, while others are getting a rate reduction, and the inequity seems so unjust. I'm sure lenders would like to reduce it to a business model, but it affects human beings, their livelihoods and the homes they live in. And it affects them in disparate ways.
This is rewarding people who put little down and penalizing those who made a sizeable down payment or have built up equity. It may fit neatly into a business model, but it's a little messier in real life when you're dealing with real people.
I had an old boss who often pointed out that "fair" was not a legitimate argument. There was no "fair" in his job duties.
I do agree with most of your post, especially your very last sentence. And I wasn't saying that people needed to be experts on the housing market and be able to see where the market was going. I was one of those people who bought (in 2004) and I had no idea we'd crash like this. I did, however, do my homework and realize that buying with no money down, or doing an 80.20.20 or ARM, was a definite risk and one I was not willing to take. I also qualified for double what we bought for, but I chose to buy low, making a responsible choice, versus using all I was qualified for and then not being able to make the gigantic payment.
I disagree with your statement about personal choice (2nd to last sentence). I wonder at what point in our society did we decide that someone else is always to blame, and not take personal responsibility for our choices.
Quote:
Originally Posted by olecapt
Point is not reasonable. To develop the neccessary skills in 2005 to project that Las vegas real estate was peaking and that effectively all housing buys...but particularly new ones... were suicidal would have required skills not present anywhere in the housing industry anymore in the individual consumer. The primary issue is not that people over bought. It is that the properties were heavily over valued. In those years the choices were to not buy at all or get taken.
Any economically rational person will walk from such a home. The exception would be those with large equities who have to take the loss. But anyone who did not have 25% or more down should certainly think about abandoning the home by one path or another.
And note that none of this was normal market forces. The non-distressed market continues to this day selling at a price point 20% or so higher than the REPOs. The lenders have chosen to dump their stock for their own reasons at prices well below the comps. That tactic results in very fast sale of the lender owned property while substantial slowing the sale of non-distressed property. That is massive market manipulation. It may well be that the massive influx of REPOs will over time force the non-distressed prices lower...though there are areas that are holding there price quite well.
So analyzing this as a matter of personal choice is incorrect. It was mostly a situation driven by greed of those in the lending and related industries.
Location: Georgia, on the Florida line, right above Tallahassee
10,471 posts, read 15,857,648 times
Reputation: 6438
Quote:
Originally Posted by olecapt
I had an old boss who often pointed out that "fair" was not a legitimate argument. There was no "fair" in his job duties.
Same with lenders.
How very true. Life's not fair.
I actually plan on the ALT A crisis to wipe out a good percentage of the home price values in & around Seattle. Won't be fair for them. Should save me about 40 - 60K, though.
I too am worried, I'm in Colorado. Does this mean I'll never be able to sell or if I do I'll just come out even? We've been there for five years so have some equity, but not as much as others who've been around for 10-15 yrs.
OK, forget fair. How about equality? Discrimination? He got X and I only got Y? Everybody screams about it when they're trying to get their mortgage-- wonder why they're not screaming now?
The whole concept intrigues me. It's a divisive issue, and people feel strongly one way or the other. I think the fallout will impact our lives in untold ways.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
How much further will prices drop?
