- This topic has 23 replies, 4 voices, and was last updated 7 years, 11 months ago by bearishgurl.
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April 14, 2016 at 3:33 PM #21939April 14, 2016 at 4:11 PM #796671bearishgurlParticipant
I don’t believe in this because the vast majority of these people removed cash from their residences and bought luxury vehicles, took trips and sent kids to college with the money, etc. They should have lost their homes long ago.
It’s not fair to the rest of us who kept our head down and paid our bills all during the (lengthy) fog-a-mirror-get-a-loan party.
Some of them undoubtedly mattressed some of the cash they took out (“stole”) from their residences and are still using it to supplement their (meager) incomes today, enabling them to work part-time or not at all while paying on ~2% APR loan mods for 40 years.
This proposal enables this huge bunch of scammers to continue to “work the system” while letting their properties go to waste, thereby bringing down their neighborhoods. Of course, since their entire mortgage (with back principal and interest) will come home to roost when/if they sell, they never will sell and there is no incentive for them to sell since they won’t recover anything. They also can’t afford the maintain their homes for the duration …. until they die. That’s too long for people like me to sit around and wait since they are mostly all (opportunistic) Gen Xers. I was hoping to see much quicker foreclosures and different, more financially solvent folks get into these properties who have the means and wherewithal to repair and improve these properties before I put my property on the market.
This group never should have been qualified for a purchase money mortgage to begin with. They’re losers and should be renting.
As you may surmise, I’m “acquainted” with several of these people and my opinion of them is that they are scum.
April 14, 2016 at 4:36 PM #796673bearishgurlParticipant[quote=spdrun]So FHFA announced the possibility of eventual principal reduction for approx 33,000 borrowers that would already be available for payment forbearance. Long term (few years), that would mean that those houses could end up on the market at the reduced loan balance, vs people being encouraged to stay in them and not sell (with forbearance, the full balance would come due upon sale). What’s the advantage to Fannie/Freddie/the market here, or is this just a sop to 33,000 potential Dummyquack voters in an election year?[/quote]spd, these people being allowed to sell and get out in a “few years” all the while having kept the cash they took out still have their luxury vehicles and their kids got out of college without loans all due to the cash they successfully “stole” out of their property’s (then artificially inflated) value!
So, NO! They should NOT be allowed to get out with any amount of forbearance at all. If they don’t yet qualify for permanent mods, their lenders should be foreclosing on all of them, forthwith. This group has been given wa-a-a-a-y more than enough years at this late date to p!ss or get off the pot.
Do you have a link to provide where you saw this proposal, spd?
The rest of us who kept our noses clean for the long duration have waited long enough for these former squatters and now “near squatters” to be gone so someone more creditworthy could get the property.
Yes, even a “flipper team” who will put in plastic composition wood-look floors is preferable to these slobs.
April 14, 2016 at 4:52 PM #796674bearishgurlParticipantspd, this is the only recent piece I can find on a FF forbearance program. It’s apparently targeting households who are behind in their payments due to fairly recent unemployment.
https://www.fanniemae.com/content/guide/servicing/d2/3.2/02.html
I’m going to go thru it but I don’t see anything about it helping people who ATM’ed their residence to death in the ’00s and are now paying on ~2% permanent mods for up to 40 years and are NOT currently behind in their payments. The latter is who I’m mostly referring to around here.
Someone who ATM’ed their home to death and made off with hundred(s) of thousands of dollars in cash over one or more “cash-out transactions” should not have one dime of their debt forgiven … EVER. The only way they should be able to legally walk away from recourse debt in CA is to give a deed in lieu to their lender(s) and/or thru non-judicial foreclosure.
As it should be.
April 14, 2016 at 5:03 PM #796676bearishgurlParticipantI just found this piece dated today, but it appears to be targeting same or similar group as above who may not have even applied for a mod yet:
Again, I’m going to go thru the particulars.
I would guess that the vast majority of homeowners who are currently in the situations described in the link above may have purchased their homes since 2009 (when lending standards were actually in place) and their entire reason for being in default (or nearly so) is due to recent unemployment.
April 14, 2016 at 5:23 PM #796677bearishgurlParticipantKEY POINTS ABOUT THE PRINCIPAL REDUCTION MODIFICATION
Seriously delinquent, underwater borrowers must meet the following eligibility criteria:
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Are owner-occupants.
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Are at least 90 days delinquent as of March 1, 2016.
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Have an unpaid principal balance of $250,000 or less.
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Have a mark-to-market loan to-value ratio of more than 115% after capitalization.Builds on the Enterprises’ existing Streamlined Modification programs.
Eligible population expected to be approximately 33,000 borrowers. Final crisis-era modification program to give seriously delinquent, underwater borrowers a last opportunity to avoid foreclosure while also addressing negative equity remaining from the financial crisis.
(emphasis mine)
I love how the directive infers that these borrowers’ “negative equity” remains today due to the “financial crisis.”
Ummm, no, it didn’t. Many in this group are still “upside down” today because they took large amounts of cash out of their properties on one or more occasions, plain and simple. This is a “PC” way of blaming a scamming homeowner’s problems on “the system.”
However, the group I’m referring to currently owe a helluva a lot more than $250K on their homes and are not currently delinquent (as least not of public record) but have been in the past but either their lender(s) did not actually conduct a trustee’s sale after their NOS was filed and ended up filing a recission OR only a NOD was filed and never acted upon, both due to the homeowner(s) getting accepted into a (trial or trial/perm) HAMP mod program.
So, in short, I doubt this new program will be able to help my scamming “neighbors” …. or even very many CA homeowners at all.
Sorry for taking over your thread, spd. Carry on …
April 14, 2016 at 5:39 PM #796678spdrunParticipantThe criteria are apparently the same (narrower than, but same group) as for existing forbearance. Not sure why Fannie/Freddie would want those homes on the market, unless it’s cheaper to have “owners” dump’em in 5 years than to foreclose.
April 14, 2016 at 6:02 PM #796679bearishgurlParticipant[quote=spdrun]The criteria are apparently the same (narrower than, but same group) as for existing forbearance. Not sure why Fannie/Freddie would want those homes on the market, unless it’s cheaper to have “owners” dump’em in 5 years than to foreclose.[/quote] Some of these owners have already held onto them (as their “principal residence”) thru HAMP for more than five years now. All during this time, this group can’t maintain their property because their income either hasn’t gone up since they were in foreclosure back in ’08-’10 or has gone up very little.
The ones who have managed to “mattress” some of the equity they took out prior to ’09 are obviously still living on it today because very few of these 40-somethings appear to be gainfully employed (unless they are working out of their homes stuffing envelopes) :=0 Thus, they can’t afford to repair/improve their properties.
The longer this game goes on, the worse and worse condition these properties become, causing the lenders who are taking it in the shorts with these “phony 2% mods” to not initiate foreclosure on them.
It’s terrible for the neighbors around these properties who might want to sell in the coming months/years cuz these deadbeats aren’t going to go anywhere. Where they are living now is as cheap as it gets for them.
I don’t see any of these people voluntarily “dumping” these properties in five years … that is, unless they are foreclosed upon. If they moved, they would have to move to a place which would charge then much more rent than what they’re currently paying in their ~2% / 40-year “modified” mortgage.
When I get time next week, I’m going to check on everyone on my local “former-squatter-now-mod list” to find out if their taxes have been paid for FY 15/16. Every property owner around here got a substantial Prop 8 hike this last fiscal year so our property taxes are now quite a bit higher than they were in FY 14/15.
I just don’t see this group being able to keep up with their taxes, either, but that issue in and of itself does not affect my resale value.
April 14, 2016 at 6:09 PM #796680AnonymousGuest[quote=spdrun]The criteria are apparently the same (narrower than, but same group) as for existing forbearance. Not sure why Fannie/Freddie would want those homes on the market, unless it’s cheaper to have “owners” dump’em in 5 years than to foreclose.[/quote]
The math is simple: It’s cheaper to have owners keep them than to foreclose.
The principal is gone. Lenders cannot be made whole. For underwater properties foreclosure doesn’t recover anything, it is just more money lost due to transaction and legal costs.
April 14, 2016 at 6:41 PM #796682bearishgurlParticipant[quote=harvey][quote=spdrun]The criteria are apparently the same (narrower than, but same group) as for existing forbearance. Not sure why Fannie/Freddie would want those homes on the market, unless it’s cheaper to have “owners” dump’em in 5 years than to foreclose.[/quote]
The math is simple: It’s cheaper to have owners keep them than to foreclose.
The principal is gone. Lenders cannot be made whole. For underwater properties foreclosure doesn’t recover anything, it is just more money lost due to transaction and legal costs.[/quote]I disagree. Foreclosure is not “more money lost” if the loan is non-performing. It’s cheaper for a lender to foreclose ASAP and turn around and get “something” for the property (sell it to a flipper for cash?) than to let their trustor(s) squat into oblivion, while letting the property go to waste and defaulting on their taxes and fire insurance premiums severely lowering the value of the collateral.
April 15, 2016 at 12:36 AM #796690HLSParticipantThis is absolutely idiotic on the surface.
There’s probably a hidden agenda as to why they are doing it this way.Fannie/Freddie do not own these loans, they guarantee them.
Mortgage backed securities (such as GNMA’s) were sold that hold these loans.The sensible plan would be to sell bonds at today’s rates
and pay off the existing bond holders, leaving the principal balances the same but lowering the interest rate to the homeowner.Many of these existing loans from 10 years ago could be at 6%-8%.
Lowering rates to <4% would drop payments substantially with no need for reduction in principal.
Most people dont care how much they owe. If their payment dropped 25%-50% most people aren't going to default.The net result is that Fannie/Freddie would still be on the hook for the same amount and any losses and it makes more sense than writing down principal to people who haven't paid.
The bondholders will receive their money. The reduction will come from Fannie/Freddie. It doesn't make sense.
(I don't know if Fannie/Freddie pay taxes on their profits but if they do, any losses would offset their profits and lessen their tax liability)
April 15, 2016 at 7:23 AM #796693AnonymousGuest“Foreclose ASAP” is an oxymoron, especially in states with judicial foreclosure laws.
Principal reductions are not “idiotic” or some elaborate conspiracy. They are based on common sense.
Y’all are overthinking it.
– Purchasers stopped paying their mortgage when they realized they were paying for an investment that would never see a return.
– If they receive a principal reduction, owners have an incentive to start making payments again.
– Principal reduction doesn’t recover the lost principal. Foreclosure doesn’t recover lost principal either. Either way, the lost principal is gone – it is a sunk cost.
Foreclosure has higher costs than principal reduction, so why do it? If the owners still don’t pay after the principal reduction, foreclosure is still an option.
April 15, 2016 at 10:00 AM #796699HLSParticipantHarvey,
Y’all don’t get it.It’s not common sense and it is idiotic.There is no reason to reduce principal and take a loss when the interest rate can be reduced and lower the payment.
‘homeowner’ has to live somewhere. If you lower their payment and they still cant afford it, they have no business staying there.There is no reason to reduce principal, It’s completely unfair to others who have struggled to make their payments.
I’m convinced that idiots come up with these programs.I understand foreclosure but it rarely has higher costs
than principal reduction.April 15, 2016 at 10:04 AM #796701spdrunParticipantForeclosure requires a legal process that takes a lot more time in some states than in CA. Court costs, attorney costs, broker costs when selling an REO. This is essentially giving the owners the home to sell as they please. No attorney fees, and the homeowner pays the broker fees themselves when selling it.
April 15, 2016 at 12:03 PM #796707bearishgurlParticipantHarvey and spdrun, what part of “scamming homedebtor” and “working the system” do you not understand, here??
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