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 Simple out-of-the-box fix to the mtg problem View next topic
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mwagner
Cherry Bomb


Joined: 18 Feb 2008
Posts: 103

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 8:41 pm Reply with quoteBack to top

Extending the amortization another 20 years wouldn't result in much of a payment reduction for the average loan. I don't think it would be enough to stem the foreclosure tide.
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Credit Unon Guy
Nitroglycerin


Joined: 03 Apr 2008
Posts: 832
Location: Camden, SC

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 8:51 pm Reply with quoteBack to top

sounds good until unemployment spikes past 10% and people still cant afford their mcmansions. I hear a lot about helping people out of the ARMs. I know that there was some fraud but thtese people knew what they were doing. Let em drown. Property values will drop and then stabilize and we will all be fine. Real estate is not a short term investment.

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bdk
Wrecking crew


Joined: 24 Mar 2008
Posts: 1611
Location: Hell

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 9:10 pm Reply with quoteBack to top

"Extending the amortization another 20 years wouldn't result in much of a payment reduction for the average loan. I don't think it would be enough to stem the foreclosure tide."

I disagree i have ran some numbers and found you can lower ones payments down $275/mo from such an action. Saving $275 could literally be all one needs as it would free up money to pay down other debts. Once those debts are handled there will be more avail a domino effect if you will. I know I could use it and thats just off a hypothetical $100K loan. We can work the numbers till we a are blue in the face to go either way but this idea at least creates a system of breaks that could help a lot of people out.
I have been told it can cost a bank $40-50K to foreclose someone, multiply that by current foreclosure numbers which do you think is more appealing to the bank, extend the terms and cut the foreclosure numbers down or keep it at status quo and lose the costs of foreclosure not to mention whatever they will get for the home when it goes up for sale in an auction or just back on the market at what 30-50%lower that what it originally cost!!! That small reduction a month in pmt now looks like a better trade off
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FIXMYLOAN
Consigliere


Joined: 27 Dec 2007
Posts: 4684
Location: Jersey

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 9:15 pm Reply with quoteBack to top

Not everyone is going to get out of this alive...

It would be nice to see the folks who played by the rules of common sense make it.

What is irking me most right now is that I made a damned good living for a long time in many different industries, and now am hanging on by a thread making less than when I left college nearly three decades ago.

AND I HAVE NO CONSUMER DEBT...just a mortgage payment and utilities - of course, since there is such a budgetary shortfall, my taxes just went up 380 a MONTH in my tiny town in NJ with no high school and two traffic lights...it's DAMNED Close to more than the PI portion of my mortgage payment, and only 66 dollars less than the PITI payment was when I bought the damned house in 1989.

Thank GOD we bought land in Maine. At worst, I'll build a home there - done several in the past for others.

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mahalo guy
Demolition Man


Joined: 28 Jun 2008
Posts: 2082
Location: Honolulu

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 9:24 pm Reply with quoteBack to top

Hey Fix,

I just put my house on the Historical Register.

Property taxes went down to $100 per year.

Highly reccomend it.


FIXMYLOAN wrote:
Not everyone is going to get out of this alive...

It would be nice to see the folks who played by the rules of common sense make it.

What is irking me most right now is that I made a damned good living for a long time in many different industries, and now am hanging on by a thread making less than when I left college nearly three decades ago.

AND I HAVE NO CONSUMER DEBT...just a mortgage payment and utilities - of course, since there is such a budgetary shortfall, my taxes just went up 380 a MONTH in my tiny town in NJ with no high school and two traffic lights...it's DAMNED Close to more than the PI portion of my mortgage payment, and only 66 dollars less than the PITI payment was when I bought the damned house in 1989.

Thank GOD we bought land in Maine. At worst, I'll build a home there - done several in the past for others.
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Ex-Account Rep.
Dud?


Joined: 11 Sep 2008
Posts: 6
Location: Seattle, WA

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 9:44 pm Reply with quoteBack to top

What about the people walking away because they owe more then the house is worth, how will this plan stop them? Otherwise it could work.
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FIXMYLOAN
Consigliere


Joined: 27 Dec 2007
Posts: 4684
Location: Jersey

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 9:52 pm Reply with quoteBack to top

mahalo guy wrote:
Hey Fix,

I just put my house on the Historical Register.

Property taxes went down to $100 per year.

Highly reccomend it.


FIXMYLOAN wrote:
Not everyone is going to get out of this alive...

It would be nice to see the folks who played by the rules of common sense make it.

What is irking me most right now is that I made a damned good living for a long time in many different industries, and now am hanging on by a thread making less than when I left college nearly three decades ago.

AND I HAVE NO CONSUMER DEBT...just a mortgage payment and utilities - of course, since there is such a budgetary shortfall, my taxes just went up 380 a MONTH in my tiny town in NJ with no high school and two traffic lights...it's DAMNED Close to more than the PI portion of my mortgage payment, and only 66 dollars less than the PITI payment was when I bought the damned house in 1989.

Thank GOD we bought land in Maine. At worst, I'll build a home there - done several in the past for others.


Wish I could - my foundation is the oldest in town, but the home has been rebuilt due to fire four times since the 1600's. It is presently a Craftsman Kit from the 1920's that arrived by rail car (yup, right out of the Sears Catalogue) - modified two feet wider to accomodate what was left of the existing foundation. You can see the numbers on the studs and fireblocks in the basement and when I replaced the DOUBLE layer of lath and plaster in one room - that was fun Crying or Very sad - When the original walls cracked, they didn't fix them, they re-plastered over them. It IS the house from h**l.

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bdk
Wrecking crew


Joined: 24 Mar 2008
Posts: 1611
Location: Hell

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 10:14 pm Reply with quoteBack to top

Ex-Account Rep. wrote:
What about the people walking away because they owe more then the house is worth, how will this plan stop them? Otherwise it could work.


It would stop the foreclosures which have an indirect effect on market prices.... You home is worth 350, neighbors 320, 310, 345, 350 and then one is goes into FC and someone picks it up for 200, then you neighbor at 310 can barely make payment and has house on market for 310 but no bites and drops to 280. You see a domino effect begins and I am simplifying the mechanics but it is how prices begin dropping; homes going for much lower prices as a result of seller motivation to just get rid of it or an fc being picked up for quite less. This idea will help those already facing FC and ones who are on their way. Like I have said it is a systems of brakes not just one to help everyone. It will knock their payment down and encourage them to stay and as time goes by prices will stabilize and hopefully go up which is why I say put a mandatory 10yr restriction on holding the loan and no refis. I am hearing a turnaround for values may happen by 2014. If your buying a home to make money then you shouldn't be buying. Homes are long term investments not ATM's and that is the attitude that should be addressed.
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t2940
Schumpeter Reincarnate


Joined: 13 Feb 2008
Posts: 5548
Location: cave dweller

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 10:18 pm Reply with quoteBack to top

Quote:
Not everyone is going to get out of this alive...

It would be nice to see the folks who played by the rules of common sense make it.

What is irking me most right now is that I made a damned good living for a long time in many different industries, and now am hanging on by a thread making less than when I left college nearly three decades ago.

AND I HAVE NO CONSUMER DEBT...just a mortgage payment and utilities - of course, since there is such a budgetary shortfall, my taxes just went up 380 a MONTH in my tiny town in NJ with no high school and two traffic lights...it's DAMNED Close to more than the PI portion of my mortgage payment, and only 66 dollars less than the PITI payment was when I bought the damned house in 1989.

Thank GOD we bought land in Maine. At worst, I'll build a home there - done several in the past for others.




I'm in the same boat Fix...................there are a lot of people making wages they made back in the 70's-80's even though their ratios a couple of years ago were 18/22..................fixed rate.................jobs are going away overseas and dominoing middle class america jobs as well.

Your city situation sounds like mine. They bet on all the permits issued as future tax revenue......................duh.............mine had a million eight shortfall
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HelpWanted
C-4


Joined: 10 Jan 2008
Posts: 1139

Re: Simple out-of-the-box fix to the mtg problem
PostPosted: Wed Oct 08, 2008 10:20 pm Reply with quoteBack to top

bdk wrote:
Ok so everyone is losing their homes and jobs but I am curious about this simple out-of-the-box concept to allow ppl to keep their homes and put the brakes on the tsunami wave of foreclosures. Why not amend or have a rider added to everyones note to:
1) change their rate from an adjustable to a fixed
2) change the amortization from 30 yrs to 50yrs
3) cannot refi for the 1st 10(? maybe 5-7) yrs
4) cannot refi unless equity is there like a 70%ltv
5) limit cashout ex: 30% equity you can only pull out 50% of it(that may be too much) but a limit of some sort to keep ppl from using their home like at ATM AGAIN

I know it seems nuts to do but it would really slow the mess down to do this plus changing to 50yr wont kill anyone really i mean if you sell or refi the bank would still get its money. It will get peoples payments down and allow them sometime to breath and regroup. And maybe adding in that you cant refi for cashout unless you have a significant amount of equity or owned the home for say 10yrs. Having something like this drawn up could work. It would allow people to stay in their home, stabilize market as foreclosures would slow down or come to a stop which means no more decreasing values.

Lets hear what you guys think on this..... pls no bashing



"All other things being equal, the simplest solution is the best." -Occam's Razor.

You could simplify this even more. Here is a real puzzle for you. One of our lenders has been attempting to convert their option arms to fixed and even offering princ reductions to get there. Get this, I spoke with one of the guys making the calls and there are very few takers. Now I do not know the details but they will reduce the princ to get them to the curent value and make the loan a saleable loan and MOST people are saying, No. What? How can that even be? Did I wake up in an alternative universe? Why would someone not do that?
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