boltonblue

Today we will see the rollout of the plan to salvage mortgages.
2 elements I would like to see included.

Initial qualification review.
tax returns must be submitted for 3 years prior to initial mortgage date as well as current returns since mortgage.
If stated income is less than 70% of actual income based on tax returns.
sorry you lose. There is now way in hell you can carry the mortgage moving forward.
lying on the application can not be rewarded as if you just won the housing lottery.

asset recovery option with diminishing clawback.

IF a mortgage holder with a reduced principal sells the property at a higher valuation that the restructured valuation the mortgage holder is entitled to a percentage of the gains. The clawback will not exceed the value of the reduction in principle. And the percentage will be high at the beginning i.e close to 100% at inception and diminish to 0% at year 10.


This is not a new principle. Affordable housing contracts carry these provisions and the properties need to be treated in the same manner. Communities which have properties which fall under this classification need to be able to claim these properties as affordable housing.

Bass

this whole thing really drives me nuts

i struggle - don't buy expensive stuff - put off house beatification, cut back, use coupons so i can pay my mortgage that i bought on the high side of the market

and now they reward irresponsible people - I am against any plan that rewards stupid people and banks who shouldn

Lainey

My bleeding is showing again. There is NOTHING in it for us. BUT for some folks it could save them from foreclosure, the city/town continues to get the tax revenues from the property that is still owned vs abandoned/foreclosed upon. The declining tax revenue to the cities and towns must stop if things are ever going to get better.

that way too many people bit off more than they could chew with their mortgages, especially if they bought property on the high side. Many acted irresponsibly with their financial futures. However there are SOME that may be able to keep their homes, with a little creative financing, longer mortgage term, etc. There should be kind of payback for the help they receive and I think that is structured into this.

From what I read, there is no reduction in their principle, some may call this a gift, and if that's the way you want to look at it fine, but it should not one without strings attached.

Bass

screw them - let the banks who wrote all these take the hit & let the irresponsible owner lose his house - prices will fall and people will buy them at a lower rate.

i suspect / pray home values will come back up someday

the issue i have is that people thought their home was an ATM and that they didn't read / understand the loan

with regards to tax revenue

zdave87

[QUOTE=Bass,Feb 18 2009, 10:25 AM] screw them - let the banks who wrote all these take the hit & let the irresponsible owner lose his house - prices will fall and people will buy them at a lower rate.

Lainey

Six months after we bought our house, the same style/size, houses had increased in price by 30K. And they kept increasing....Our house is probably worth 3.5 times what we paid for it, but not so much as it was worth two years ago. The values will come back up again, but it will take time. They were over inflated.

As far as letting folks take the hit, many of them have and more will. There are some who should have NEVER gotten mortgage loans, and I'm not suggesting we bail them out.

BUT, for someone who through no fault of their own has lost their job, is getting by on unemployment, and having difficulty meeting payments, a little restructuring might prevent more foreclosures. I'm not against that.

Bass

But this plan is NOT to help those who lost jobs -

heck we've only seen layoffs for what the last 4 months or so and doesn't it take longer than 4 months to go into foreclosure

this issue was created by greedy / stupid people on both sides of the desk -

again on this one i say let um burn..

Lainey

I don't know the ins and outs of the plans. I think/hope there are guidelines as to who would qualify for this program.


BTW, I don't know why I come in this section of the forum either.

boltonblue

I could debate the length of time regarding layoffs .....

so note issue one.
did the loan start with honesty and integrity?
if the answer is no.... ya'll have a good time with that.

if the answer is yes, we can have a discussion about how the individual can be helped. sometimes bad things happen to good people.

but to the broader issue of housing values.
a crash will have disastrous effects for several years as homeowners continue to go under.
the general inability to buy and sell properties without a catastrophic loss is not good for the overall economy.

I had a discussion with a fellow engineer who had an offer to go to california for a new job.
He is employed although contracting here currently, owns a house here but by the time everything was said and down he would have to file bankruptcy to take the job in CA.
that is just broken.

Lainey

Here's a summary from CNN

The Obama plan calls for:

* Helping borrowers who owe more than 80% of their home's value to refinance and reduce their monthly payments.
* Creating a $75 billion homeowner stability initiative to reduce monthly payments for at-risk borrowers by subsidizing interest rates. The goal would be to bring payments to no more than 31% of a borrower's income.
* Providing multiple incentives to servicers to modify loans and to proactively help at-risk borrowers while they are still current in their payments.
* Creating a $10 billion fund to protect investors and servicers against further home price declines.
* Requiring all financial institutions receiving government funds to participate in a standardized loan modification program, while seeking to have all federal agencies that own or guarantee loans also apply the guidelines.
* Allowing judges to modify mortgages during bankruptcy, a measure the financial industry has strongly opposed.
* Providing more Treasury Department backing of Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) and expanding the number of mortgages the agencies back.

Note the underlined third item. If folks are CURRENT, they could get help. Deadbeats make no attempt to stay current. Responsible people do. Those are the folks I'd like to see helped.