Loan Modification? Foreclosure? Wait for Relief?

[snax]

First off, we are fortunately in a situation of not have to make the choice to do anything. While our loan payments have lept to 66% over market rents for similar digs, we are able to keep on top of things barely. With $200-300 extra cash at the end of the month however, virtually no reasonable credit left, and a depleted 401k, we have next to no safety cushion. I.e., if the water heater blows today, one of our debtors will not be getting paid.

 

Like so many others, the value of our house has failed to appreciate in the last 3 years since taking out the loan, and housing in our area now seems to be catching up with the national trend, pushing us toward negative equity. Even if we could sell our house today, the transaction costs would eat up whatever equity may exist. Obviously this places future payments to our mortgage in the category of rent, and throwing good money after bad since we intend to move within a few years anyway.

 

So being that we live in a non-judicial state, we are in a ripe position to simply walk away. What I find completely baffling is the mortgage company's refusal or inability to work with us on this loan. They have us stuck at 10.5%, which may actually drop at the next adjustment if the 6-month LIBOR stays low, but they apparently can't see the forest for the trees that WE WILL WALK if they don't play ball by putting us into a fixed 30 year with a competitive prime market rate. Even so, we could still find a nicer place to live for less money, although we would actually prefer to stay until we are truly ready to move, and prepared to suck up that difference for the duration.

 

We have asked the mortgage company twice now to consider modification, but they have remained unresponsive. We refuse to play their game anymore, but it appears unlikely they will wise up and play ours. Instead of asking us to jump through all of these hoops to prove income, debt, etc. - which they already had proof of in the beginning, it seems insane of them not to acknowledge that they are in the weaker position to negotiate since our credit score is going to crap anyway.

 

So I suppose that I am not really asking for advice here, but inviting a discussion of the pros and cons, and the what-ifs of where things will go from here for people in a similar situation. The suggestion that there might be foreclosure relief from the federal government is interesting, but I wouldn't refuse a reasonable loan modification, nor cry over getting to use at least the next 6 months of mortgage payments to pay off other debts.

 

Perhaps I have missed something in my analysis of our situation, but I am having a hard time finding reason to think that we would even sign another mortgage in the next few years anyway as our economy continues to slide and property values follow. Our only motivation to sign onto more favorable terms where we live now is to avoid the time and hassle of moving, as there is no shortage of very nice rentals available even with shoddy credit - particularly since we will have plenty of cash for a deposit.

 

I have to wonder how many millions of homeowner/renters are in the same financial position, but have merely failed to realize or take advantage of it.

[cinderella]

but they apparently can't see the forest for the trees that WE WILL WALK if they don't play ball by putting us into a fixed 30 year with a competitive prime market rate.

 

There are many homeowners that share this attitude, they have their lender by the balls and are trying to squeeze them for every penny they can get from them. Again, ability to pay is often not the issue.

 

Default rates and foreclosures are not solely because of hardship cases, alot of folks are willingly making choices to stick it to their lender and walk when ability to pay is not in question.

 

We have asked the mortgage company twice now to consider modification, but they have remained unresponsive. We refuse to play their game anymore, but it appears unlikely they will wise up and play ours.

 

Maybe you are not qualified for a modification. A modification is done more often than not, on a need basis, not a want basis. Maybe your lender is not playing games and you are the only one playing games? If you have a surplus of cash left over, where is the inabilty to pay?

 

Having a surplus every months like you say, is pretty darn good for this economy. There are people who have their cars repossessed and are biking to their job, are working full-time while undergoing chemotherapy for the third time on cancer that has now mestasticed to their bone marrow from their prostate just to put food on the table and pay their basics, while not having the full amount of money to pay their mortgage and if they don't get one, they will be foreclosed upon.

 

So I suppose that I am not really asking for advice here, but inviting a discussion of the pros and cons, and the what-ifs of where things will go from here for people in a similar situation

 

Since the invitation has been extended........... I don't think it will be so easy as folks claim it will to just pick up their credit and come to buy a home in few years. The subprimers, are done with and the lender that will be left and able to make loans for mortgages, they will remember the ones that walked.

 

Lenders are going through h!ll right now, scrambling to stay alive, with homeowners who truly can't afford to make payments tearing into their cash flow to homeowners who have no problem making payments but demand a modification where the lender is going to lose money. How can a lender recover or stay alive in such a prevalent attitude among homeowners? Even the ones that can afford pay are preparing to stick to the lender.

 

IMHO, the prime banks that survive this, are going to punish all of us in the future. The requirements for buying in the future, will be rigid. For those w/ foreclosure on their record, I wouldn't be surprised to see if they are denied mortgages in the future, even if they have rebuilt their credit score to the 700's. because they have been foreclosed on and it reprorts.

 

 

This might very well effect lending guidelines in the future, maybe those w/ foreclosures on their record will be barred from the prime lenders for years to come, despite a high credit score. And I think the prime lenders will be the only ones left standing, like Bank of America.

 

 

What I find completely baffling is the mortgage company's refusal or inability to work with us on this loan.

 

I find it equally baffling why you can't appreciate a business is trying to stay alive and do everthing possible to collect on accounts where there is no inability to pay. The banks can't count on the guy's in construction who have experienced layoffs or the guys working at Ford or any number of major employers that were recently laid-off. The banks have to work with these guys and eat money, for the benefit of the bank and the distressed homeowner. But why should they do it on a homeowner with no ability to pay? They are business trying to stay alive, they aren't out of line to expect payments on those borrowers that can afford payment, despite not liking the terms of their loan and current home value.

 

 

 

The idea with modifications was to save a distressed homeowner that foreclosure was guaranteed because they suffered some major event - job loss/layoff, major illness that reduced their income and would leave them homeless. Lenders/investors didn't agree to modify these loans and take a loss because they are nice guys and operate a charity, they argreed to take a loss because it was necessary. But now, everyone wants a modification, even if there is no ability to pay and the sentiment is to blame their banks and complain about how horrible they are when they don't get one even though their is no hardship.

[snax]

I can't disagree with anything you said. The future mortgage prospects for those with foreclosures on their credit reports are questionable. I personally won't be counting on anything, but I've also done the math for our own situation at least, and 7 years down the road our prospects to be in any better financial shape don't look good. Just one major unexpected expense however would put us behind on everything. They are just squeezing us too tightly to want to bother - all of our creditors that is. Despite a consistant payment history spanning years, none of them are willing to drop their interest rates, the worst of which is gouging for 29.9%

 

Regardless, given the prospects for future real estate purchases, I think you raise a very valid point that foreclosees need to plan for the long haul. They may be locked out of doing anything for a solid 7 years until it falls off their credit report.

 

Frankly, I think credit has been far too easy to obtain, and we allowed ourselves to be entrapped into that. It used to be strongly tied to an assessment of one's ability to pay, but when that ability to pay cuts into our ability to put good food on the table, there is something seriously wrong with the system. Unfortunately for us and many others, the prospects for getting out of that trap on our own are slim to none without resorting to rather drastic measures.

 

I do not however fear for the big banks. They pushed for the loose credit market and allowed this situation to develop by not requiring stricter qualification rules. Deemed 'too big to fail' they have obviously already been thrown a life raft once recently (as well as decades ago), and probably will be again.

 

Neighborhood credit unions however will remain mostly solvent and able to go on in their stead, having stuck to far tighter lending guidelines than the ones that the banks have allowed to persist.

[cinderella]

Who is your lender?

 

If it is some regional bank or credit union..........they can be tough to deal with for a modification. Very tough. Even if you had a recent hardship and there was a genuine inability to pay, they might still deny you.

 

IME, lenders are not going to give away money unless they have to do it. Sure, there are some that will do goodwill gestures and reduce one's rate, especially if they are at 10.5% like you or they have an ARM that is scheduled to adjust in the near future, say two months from now.

 

But again, a homeowner is always dealing with a business that doesn't want to lose money. And they are being pummeled with modification requests from truly distressed homeowners to ones that have no inability to pay just want a deal. I can't fault the lenders and their investors for screening these requests and placing qualification on these requests.

 

When you requested assistance from you lender in the modification, what was your hardship? They did request a hardship letter, correct? If it was anything close to your original post, which I kinda see as: I'm one step away from financial disaster.........but I'm still paying all my bills or My 401K is trashed! or my credit card companies are jacking me on my interest rate and I need you to come down on my payment, I can see where you would be denied.

 

Lenders don't care you aren't sleeping well at night because your home hasn't appreciated, or your 401k has been hit, or your worried about a water heating potentially breaking and cutting into your $200-300 surplus. None of those are a hardship. If this was a basis for a modification, nearly everyone would qualify. As far as they are concerned, everything is peachy-king with you because every month they collect their full payment from you. As a creditor when they are being paid every month on time and are given generic reasons that could apply to anyone, why modify your loan? At this point, they don't see a problem, you can afford your payment, as it is evidenced every month when they receive your check.

 

If you are considering walking from your home and you get behind, try a modification request again when you are behind, you might get very different results. In no way am i encouraging you to not pay your mortgage, but if you decide to walk, you inevitably won't be paying your mortgage and that would be a better time to request a modification. IMHO, you need to think of a very good reason as to why you can't afford your current mortgage (either expenses went up for some believable reason or your income went down), put it in a short hardship letter, and tell your lender in the letter "If my payment was reduced, I would be able to make my mortgage payment on time again."

 

If you are at 29.99% with your creditors, isn't your credit already trashed? Those are default rates for debtors not paying on time. I don't blame you for being pissed about that, those are high rates, just like your mortgage. Look into paying them off if possible or even debt settlement..........I'd be looking to get out of those rates too.

 

As far as who it to blame for this housing meltdown, everyone. Mortgage brokers, the feds, borrowers, banks, appraisers, realtors.............it would be tought to find one single culprit. But I do think in a few years, when this has been mopped up some, we are going to see some tough lending standards.

[radi8]

If you are at 29.99% with your creditors, isn't your credit already trashed? Those are default rates for debtors not paying on time.

 

 

Not necessarily. Used to be that was normally the case, but the rate-jacking has been downright obnoxious lately.

[Stunna54]

Part of the problem is a sense of entitlement, seems like a lot of people feel like they are entitled to a loan modification and thats not the case I can't tell you how many people call me up every day wanting a mod or something similar because "so and so down the street got one so I want one" LOL. As cinderella said earlier a mod isn't designed for everyone. Lenders want to make money to and if payments are coming in and there's no hardship why would they modify the loan? In the end a borrower walking away hurts everyone but in the end the borrower who walks away loses the most because when it turns around lending is gonna get real tight....stick it out and make your payments until this gets better...in the end home values will go back up and your credit will still be intact

[snax]

Well we have decided to play hardball with the mortgage company (CitiMortgage) and are set to walk away. Faced with a potential job change and move, our options to eek any kind of good deal out of that boil down to a modification so that we could at least rent it out at market rate when we do move and unload it later when equity returns, or just let the bank take it and be done with it. We'd rather just be able to sell it at the proper time, but with two recent foreclosures on our street pulling values down by 25% from what we actually owe, incentive to ride it out doesn't seem to exist with the economy still going very much the wrong direction.

 

As for the lender charging 29.9%, I can only say that we had to take what we could get to avoid a lawsuit from a business deal where we were liable. That $8k is sucking nearly $250 out of our monthly budget with hardly anything going to principle. Our credit remains in the range of 600-620, but that's not good enough to get any other lender to cash us out of the higher rates.

 

We have to look at it from the perspective of where we will be in five years, seven, ten, etc. With three growing kids, we cannot justify continuing to struggle by every month when instead we could actually be saving real money for them to attend college etc. If we were to continue fighting it out, we will never get anywhere close to doing that. We also have to acknowledge that the current terms allow our rate to go as high as 15.5%, which would just flat put is in the red no matter what we do. We also really aren't married to this current home emotionally for the long term, so the only real negatives for us are the physical act of moving our stuff and potentially being barred from securing a mortgage for the next 3-7 years.

 

I also have to admit that I am sick of the credit game altogether. Much of our debt is of our own irresponsibility, but we failed to recognize how badly our creditors could take advantage of us once we got to this point. It is our intent to simply get out of the debt mess altogether and reorganize our finances away from the debt purchase model that millions of Americans live by today. I've cut up and canceled all of my credit cards/lines, am dumping cash into savings, and we will be aggressively throwing money at the rest of our debt until it is gone!

 

In short, a modification will have to be a pretty sweet deal to convince us to stay. We have too much to gain by defaulting.

[clambert1273]

where is all this "Easy credit" that was so easy to get... because it was not so easy for me and still isn't.... I bust my behind to be able to pay dam near cash for everything....

 

Here is what is unfair... that people COULD get homes that couldn't afford the payments especially knowing it was going to reset to a higher value.... but here I sit (thank god I didn't buy at the time) paying over 1800/mo in RENT and have someone tell me I can't pay a $1400/mo mortgage.... cuz it is funny that they can see that (I have barely any debt) and yet for over 3 years I have been paying almost 1800/mo in rent ontime...

 

I remember a long time ago buying my first house where it wasn't all about numbers... if you had bad things on your report we wrote letters to dictate what happened.. they looked at my current history and my current employment and said "alright you are approved".. it was way more personal...

 

Don't get me wrong, I understand the negative equity value but I never consider that when I buy a home because I am not buying something for equity - I buy it to live in for the next 40 years (hopefully). The only reason I got rid of my old house was from having to move job wise...

 

I hope you do get to figure out what will work best for you

[snax]

That's part of the problem clambert, the credit scoring model is absolutely FUBAR. It doesn't account for ability to pay at all.

[edthecncman]

I'm not sure that I fully understand the "banks will lose money" justifications. If the banks can offer a mortgage to "Joe perfect credit consumer" at 4.5% then how will they lose money by modifying "Joe not so perfect credit just down the street consumers interest down from 10.5% to lets say 6.5%?

6.5% is still more than 4.5% but the banks would lose money on the latter? This I do not understand.

 

Authorization mismatch - please go back and try again. If you have been trying to access a function incorrectly, please use the proper method.

 

Oh look...here is that mismatch thing again.

[snax]

I think the banks losing money remark is rooted in the idea that the banks aren't going to willingly write down any loan that remains current and appears to be a money maker for them. I.e., once the default starts, only then will they really consider the question of whether they really stand to lose money.

 

In our case, there is absolutely no question from our end that the bank will suffer a loss if we walk - but they have refuse to recognize that. After all, why should they since we have been paying our bill on time for the last 3 years? Oops, we've fallen a month behind.

[breeze]

Authorization mismatch - please go back and try again. If you have been trying to access a function incorrectly, please use the proper method.

 

Oh look...here is that mismatch thing again.

 

This error is caused by the way your ISP handles their load - everyone who uses this ISP has the same problem at times.

[shamrock1421]

banks won't try won't play ball unless you twist their arms. You might want to check into using a loan modification company to act on your behalf. I have a friend right now who is working with xxxxx

Anyways. Best of luck and hope you can get the modification you're looking for.

 

 

 

Edited by admin to remove link and business name. For the record, advertising is not allowed here.

[edthecncman]

I believe that the statement that the banks would lose money is somewhat of a misnomer. I am sure that the banks would like to maximize their profits in any way that they can. This is their responsibility to the shareholders. The problem arises when the banks become used to charging what ever they want and the consumer accepts the banks terms. With the banks charging upwards to 18% on a mortgage (this is what they offered me two years ago on a refinance), more marginal people were willing to just walk away from an out of control situation. The more people walked away, the tighter the banks got with their mortgage programs. The tighter the mortgage programs got, the less people were able to get suitable financing, if any, on a mortgage. The banks become so rigid that they cannot perform any more, and the customers that are fighting to pay ever escalating costs in addition to their mortgages, cannot see any light at the end of their tunnel. After trying for so long to refinance to improve their situation and finding a negative response from the banks, the consumer finds that,yes it is much easier to walk away from a losing battle. It is a vicious cycle that must be stopped in order for things to return to somewhat normal. I feel that the banks, by refinancing to suitable terms, would be the winners in the long run. But this is just my opinion.

[cinderella]

I believe that the statement that the banks would lose money is somewhat of a misnomer. I am sure that the banks would like to maximize their profits in any way that they can. This is their responsibility to the shareholders. The problem arises when the banks become used to charging what ever they want and the consumer accepts the banks terms. With the banks charging upwards to 18% on a mortgage (this is what they offered me two years ago on a refinance), more marginal people were willing to just walk away from an out of control situation. The more people walked away, the tighter the banks got with their mortgage programs. The tighter the mortgage programs got, the less people were able to get suitable financing, if any, on a mortgage. The banks become so rigid that they cannot perform any more, and the customers that are fighting to pay ever escalating costs in addition to their mortgages, cannot see any light at the end of their tunnel. After trying for so long to refinance to improve their situation and finding a negative response from the banks, the consumer finds that,yes it is much easier to walk away from a losing battle. It is a vicious cycle that must be stopped in order for things to return to somewhat normal. I feel that the banks, by refinancing to suitable terms, would be the winners in the long run. But this is just my opinion.

 

18% on a mortgage..................

 

That would be an obscenely rare example that does not represent the majority of homeowners. And you declined the ridiculous offer, right? So that doesn't even count as a fair example.

 

I think that is incredibly unfair to say most homeowners are being charged 18% by their banks. I've never met one requesting a modification with that rate. Not one. and i've talked with hundreds, maybe thousands of homeowners requesting modifications. I'm sure there are some out there with this rate considering the million of homeonwers, but they certainly are not remotely close to the average homeowner.

 

I think the highest i've heard is about 13 to 14%%. And that is very rare. If someone has that high of a rate first thing i ask is 1)Is this a hard-money loan? Private investor, some weasly deal cut with some wealse on the side after the borrower was turned down by everyone 2)Is this property affixed to permanent foundation - because you will see trailers at very high rates.

 

Either way, example one or two wouldn't qualify for a loan mod. A private individual or non-bank that did a hard-money loan gauging a desperate homeowner isn't going to modify a loan. They want the equity in the house.

 

Shouldn't the bank or anyone lending money be allowed 1) to charge a higher interest rate for a risky borrower 2) be allowed to recoup what they loaned (full principal)? Any other business or individual would have this expectation, but this can't apply to banks?

 

If a person did not like the rate, then they shouldn't have signed a contract with the lender. Or, they should have put down more money/provided better documentation/done what was necessary to qualify for better terms with a different type of a loan from their lender.

 

Nobody held a gun to the borrowers head to buy a home. At the time the lender put forth thousands, probably hundreds of thousands to loan the borrower money, they didn't complain. Now they complain because the value of their property has gone down or Joe Blow with cancer down the street received a 4.5% from his lender because his household income was reduced and now the bitter homeowner wants the deal Joe Blow got, despite having a hardship/inability to pay?

 

Now they want to forget the banks loaned them money for their dream home and they argreed to pay back the loan and to the terms. Now the banks and their investors are the evil ones?

 

I just don't buy the entitlement mentality with demands from homoewners, whereas a few years ago, they were doing the happy dance because they were able to buy a home.

 

I'm not blaming anyone or in way anyone critiquing a person with a genuine inability to pay their mortgage. Times are tough, layoffs/deaths/illness, unforeseeable tragedies happen...........heck, that is who a modification SHOULD do help, distressed homeowners. Not disgruntled homeowners with no inability to pay but jealous of the guy down the street that was just laid off from Ford where he worked for 20 years and his lender agreed to modifiy his loan to prevent a foreclosure.

 

People call up pleading hardship because a house in their tract just sold down the street for $147,000 and they owe $150,000 on their home and demand their lender reduce their prinicpal to the recent comp. at $147,000, ask what the hardship is, they will tell you "THE HOUSE DOWN THE STREET SOLD FOR $147,000....I OWE $150,000!!!!"

 

There are distressed homeowners out there that need help......I hope they get it. But IMHO, there are alot more who are not distressed demanding modification. A good chunk of them, are ridiculous. I've seen people with 4.5%FIXED - positive equity - demand a modification, with no inability to pay, because they heard somewhere, or at least interpreted that in their head, the bank is giving away money to any homeowner with a modification.

Edited February 18, 2009 by cinderella

[snax]

Unfortunately no matter which side of this you look at it from, we are currently locked into a self feeding market death spiral. With banks refusing to negotiate with people who are feeling overly squeezed, and the Mortgage Forgiveness Debt Relief Act, the default rates are only going to climb higher. If the banks would seriously start to work with people, this would be a boon to property values by actually keeping people in their homes - protecting those who cannot or refuse to ever be in the position of being foreclosed upon.

 

While people can run around proclaiming that those with sub-prime loans did it to themselves, there was still a second party to the contract. And that second party apparently thought that they would cash in and steal the equity away from borrowers as the market continued to appreciate. THEY wrote the bad loans. Many of us were just foolish enough to sign them. Personally, we thought ours was capped at 11.5%, which is a payment that we can actually make by the skin of our teeth.

 

And just for the record, our loan caps at 15.5% should the 6 month Libor ever go above 8%. Nobody in their right mind would suggest another 5% is even remotely within our capacity to pay. That makes it predatory IMO and a loan that we have to deal with one way or the other. Given the banks refusal to deal with it reasonably, they must now deal with it on our terms. I would expect nothing less from them if the table was turned and the market had actually appreciated.

[HalfFull]

In our case, there is absolutely no question from our end that the bank will suffer a loss if we walk - but they have refuse to recognize that. After all, why should they since we have been paying our bill on time for the last 3 years? Oops, we've fallen a month behind.

 

They're probably sitting on a lot of underwater loans at the moment. They may feel that the general policy of negotiating terms with people in your situation will result in greater losses across their portfolio (after massive numbers of customers call up to renegotiate) than standing firm.

 

There are practical difficulties, too, such as determining the value of the property without actually selling it. Your leverage in negotiation depends on them not being able to recover enough value from a foreclosure, but it's very hard to estimate what that number will be.

 

I don't know what the legal repercussions of loan mods are, either.

[cinderella]

With banks refusing to negotiate with people who are feeling overly squeezed, and the Mortgage Forgiveness Debt Relief Act, the default rates are only going to climb higher. If the banks would seriously start to work with people, this would be a boon to property values by actually keeping people in their homes - protecting those who cannot or refuse to ever be in the position of being foreclosed upon.

 

I don't agree with the statement that banks are refusing to negotiate with people who are feeling overly squeezed.........if banks would seriously start to work with people........

 

Not true.

 

Banks and their investors are being burned by professional debtors or homeowners taking advantage of them. Burned. Everyday it happens.

 

When a loan is truly modified on a delinquent borrower, the loan is automatically reset to current status. The house is taken out of foreclosure and the sale date is cancelled while the mortgage is reinstated in good standing. Borrower received lower payments.

 

Guess what happens?

 

A chunk of these borrowers do the same thing, stop paying their mortgage again. So the foreclosure process has to start all over again. It isn't uncommon to see homeowners that have been in their homes for 15 months with no payment to their lender, despite having their loan modified to a lower payment 8 months ago.

 

Default rates on modified loans........BIG. One of my friends at specific servicer was telling me 50-60% is what they are running for defaults on modified loans.

[cinderella]

In our case, there is absolutely no question from our end that the bank will suffer a loss if we walk - but they have refuse to recognize that. After all, why should they since we have been paying our bill on time for the last 3 years? Oops, we've fallen a month behind.

 

They're probably sitting on a lot of underwater loans at the moment. They may feel that the general policy of negotiating terms with people in your situation will result in greater losses across their portfolio (after massive numbers of customers call up to renegotiate) than standing firm.

 

There are practical difficulties, too, such as determining the value of the property without actually selling it. Your leverage in negotiation depends on them not being able to recover enough value from a foreclosure, but it's very hard to estimate what that number will be.

 

I don't know what the legal repercussions of loan mods are, either.

 

I know there can be issues about losing their position as first to collect on a modified loan.

[snax]

Losing first position on the note is an excellent point.

 

I can't help thinking however that the modified loans going into default a second time around - at least for primary residences, are most often due to life circumstance rather than a desire by the debtor to go through the process again. There is still a massive layoff going on in this country, and to that end, the banks and borrowers are both victims. Even so, the banks probably aren't really losing any money that would not lose it anyway if those loans were not modified.

 

I know at least from my own perspective that if we could get a reasonable fixed rate 30 year note on the house we are in, we absolutely would not default. Who needs that on their credit report? We would also be in a position to at least be able to pay the principle down some, sell, or rent it out down the road if we have to move. Right now none of those options exist for us and countless others.

[snax]

Here's a NY Times article that supports what I've been getting at -

 

http://www.nytimes.com/2009/02/19/us/19loa...amp;_r=2&hp

[cinderella]

Here's a NY Times article that supports what I've been getting at -

 

http://www.nytimes.com/2009/02/19/us/19loa...amp;_r=2&hp

 

First, the article is written by the NY Times, enough said.

 

I don't think the article is similar to your situation Snax. For one thing, they had a 6.5% interest WF lowered to 6.1, that isn't a bad rate. You have an unquestionably high rate, 10.5%.

 

I agree, WF did stick it to them in adding on late fees/penalties to the new loan increasing. Happens with alot of borrowers that directly approach their lender. I also don't think it is the lenders fault that property taxes increased or their insurance premium increased, but it is the lender who has now become the WishMaster and is expected to cure any woes a homeowner claims.

 

You hear alot of "predatory lending" and lenders not cooperating with those in subprime mortgages about to adjust or that have adjusted in the media or as examples, neither is the case in the NY Times example.

 

Also, the article state in a sort of dramtic way WF asked for $5,000 to bring them out of foreclosure. For a contribution/Good Faith payment, that isn't that horrible on a $2,200 to $2,700 a month mortgage for a property with a balance of $300,000. We don't know how many months behind they were for WF to put them into foreclosure, could be 4 months could be 10 months could be 20 months, I've seen people well over 20 months behind. If they were six months behind, they would have been $13,400 in arrears on payments, asking for a good faith payment/contribution on amount in arrears is common, not all do it, but many do. Although, asking for 45% or so is high, but we don't how many months behind they were, the longer a mortgage hasn't been paid, the more a lender wants in contribution/good faith.

 

 

“If the borrower is spending every last dollar on their debt,†he said, “that leaves them vulnerable to unexpected expenses.â€

 

I think it be clarified what "debt" is these days. Are we talking basics here - food/utilities/gas or are we including installment loans and credit in these debts?

 

You see people with two almost brand new cars paying $1,300 a month in car payments and $1500 a month in a mortgage while only making $3,500 a month, stable income. Yet the lender is asked to eat money and reduce this couples mortgage to say $800 a months so this couple can continue paying their debts, including the two new cars at $1,300 a month? Is that right? This is not uncommon.

 

How about a homeowner that pays $150 to QVC/Home Shopping Network, $80 Circuit City, $300 on a Furniture loan, $40 Macys, $300 to major credit cards, yet asks for a modification because their debts are too much compared to their income? Technically, yeah, they are, but sometimes, it the complete fault of the homeowner, yet the lender/investor is supposed to again modify their loan to reduce their payment so they can afford their "debts" again.

 

You don't hear these examples in the media, because a homeowner unable to make their mortgage is always a victim. You can't talk about some homeowner who live beyond their means and create their own high debt to income ratios.

 

I'm not blaming anyone who is in a truly distressed - hardship situation, layoffs happen - life altering major illness happens too. I hope those that have suffered some significant legitimate tragedy that led to a major reduction in income or increase in expenses and without a modification that lowers their payment will be foreclosed on, get a reasonable modification. However, I disagree these are the majority of homeowners seeking modifications.

[snax]

So long as you don't start trying to claim the NY Post as the more credible source, I'll keep my sword sheathed.

 

I do see your points. So why is it that local banks can more effectively deal with modifications than national banks?

 

I think it goes beyond what the intentions of the lender and borrow are and into a lack of ability to function efficiently as the nationals have attempted to streamline their processes and handling by pigeon-holing everything that comes across their desks. I.e., too big to fail and too big to manage it's business on a case by case basis, vs. people who may know you by name when you walk in the front door.

[hurricanesfans27]

Here's a NY Times article that supports what I've been getting at -

 

http://www.nytimes.com/2009/02/19/us/19loa...amp;_r=2&hp

 

First, the article is written by the NY Times, enough said.

 

I don't think the article is similar to your situation Snax. For one thing, they had a 6.5% interest WF lowered to 6.1, that isn't a bad rate. You have an unquestionably high rate, 10.5%.

 

I agree, WF did stick it to them in adding on late fees/penalties to the new loan increasing. Happens with alot of borrowers that directly approach their lender. I also don't think it is the lenders fault that property taxes increased or their insurance premium increased, but it is the lender who has now become the WishMaster and is expected to cure any woes a homeowner claims.

 

You hear alot of "predatory lending" and lenders not cooperating with those in subprime mortgages about to adjust or that have adjusted in the media or as examples, neither is the case in the NY Times example.

 

Also, the article state in a sort of dramtic way WF asked for $5,000 to bring them out of foreclosure. For a contribution/Good Faith payment, that isn't that horrible on a $2,200 to $2,700 a month mortgage for a property with a balance of $300,000. We don't know how many months behind they were for WF to put them into foreclosure, could be 4 months could be 10 months could be 20 months, I've seen people well over 20 months behind. If they were six months behind, they would have been $13,400 in arrears on payments, asking for a good faith payment/contribution on amount in arrears is common, not all do it, but many do. Although, asking for 45% or so is high, but we don't how many months behind they were, the longer a mortgage hasn't been paid, the more a lender wants in contribution/good faith.

 

 

“If the borrower is spending every last dollar on their debt,†he said, “that leaves them vulnerable to unexpected expenses.â€

 

I think it be clarified what "debt" is these days. Are we talking basics here - food/utilities/gas or are we including installment loans and credit in these debts?

 

You see people with two almost brand new cars paying $1,300 a month in car payments and $1500 a month in a mortgage while only making $3,500 a month, stable income. Yet the lender is asked to eat money and reduce this couples mortgage to say $800 a months so this couple can continue paying their debts, including the two new cars at $1,300 a month? Is that right? This is not uncommon.

 

How about a homeowner that pays $150 to QVC/Home Shopping Network, $80 Circuit City, $300 on a Furniture loan, $40 Macys, $300 to major credit cards, yet asks for a modification because their debts are too much compared to their income? Technically, yeah, they are, but sometimes, it the complete fault of the homeowner, yet the lender/investor is supposed to again modify their loan to reduce their payment so they can afford their "debts" again.

 

You don't hear these examples in the media, because a homeowner unable to make their mortgage is always a victim. You can't talk about some homeowner who live beyond their means and create their own high debt to income ratios.

 

I'm not blaming anyone who is in a truly distressed - hardship situation, layoffs happen - life altering major illness happens too. I hope those that have suffered some significant legitimate tragedy that led to a major reduction in income or increase in expenses and without a modification that lowers their payment will be foreclosed on, get a reasonable modification. However, I disagree these are the majority of homeowners seeking modifications.

 

 

 

 

how bout out and out FRAUD.. this old man had his home basically STOLEN from him

 

http://www.msnbc.msn.com/id/29198366/

[jocktheglide]

Part of the problem is a sense of entitlement, seems like a lot of people feel like they are entitled to a loan modification and thats not the case I can't tell you how many people call me up every day wanting a mod or something similar because "so and so down the street got one so I want one" LOL. As cinderella said earlier a mod isn't designed for everyone. Lenders want to make money to and if payments are coming in and there's no hardship why would they modify the loan? In the end a borrower walking away hurts everyone but in the end the borrower who walks away loses the most because when it turns around lending is gonna get real tight....stick it out and make your payments until this gets better...in the end home values will go back up and your credit will still be intact

if banks can ask for a handout based on our taxes why cant we, who pays those taxes, ask for a loan mod????