Blown Mortgage - Latest Comments

Re: Bankruptcy, Foreclosures, Loan Modifications and Ethics

bficker — Sat, 28 Nov 2009 14:21:50 -0000

I agree with your stance on loan modifications. When I am talking with someone about their options, I need to know how long they are planning on staying in their home. If it is more then 10 years, it might be worth a doing a modification. If they are going to be moving anytime before then, a loan modification doesn't make sense. It would be smarter to do a short sale, rent a few years, and buy again while prices will (most likely) still be low.

If someone owes $250k on a home that is now worth $125k (very common here in AZ) it would take 15 years at 5% appreciation every year to get to $259k.

Re: Bankruptcy, Foreclosures, Loan Modifications and Ethics

bficker — Sat, 28 Nov 2009 14:12:43 -0000

I agree... The redbox analogy was terrible (I was in a hurry?)

Anyway, so my stance is clear, if it were up to me the free market would have taken care of this whole mess. But if there was a free market, we probably wouldn't have gotten in to this mess. My point is that it is easy to say we should or should not allow this or that. But it's not my families future at stake. It's not MY kids college funds being wiped out. I'm not 60 years, 5 years from retirement, and watching my the last of my 401k being wasted while I'm hoping the market will turn around.

As a real life example, there is a guy in our office that helps people get loan modifications. His personal story is an example we use all the time. He had a home that he bought 4 years ago for $1.8mil. He owed $1.4mil on it and when he decided to work on a modification (lost his job) it was worth about $600k. He did not make a mortgage payment for 15 months before the bank agreed to a loan modification. His payment went from around $7000 to just under $2000. All the money he would have used for the mortgage went to other debts so he could stay current. He never touched his retirement accounts. His neighbor was in a very similar situation. Owed about $1.6 it was worth about $700k. He was also out of work. He stayed current on his mortgage, pulling money from savings. When he finally got his modification (after over a year of trying) his payment only dropped to about $5000 and his savings were almost wiped out. So did better for their family? Both played within the rules. One had an extra $100k at the end of the day to keep current with other debts, still had his savings, and a $2000 mortgage. The other wiped out his savings and fell into more debt trying to stay current with his mortgage. And his payment is more then 2x the amount of the other.

Re: Bankruptcy, Foreclosures, Loan Modifications and Ethics

TallSacto — Sat, 28 Nov 2009 12:36:57 -0000

I agree with this post. Putting aside the discussions on the legal and moral considerations of strategic defaults is the huge societal change that is taking place by this entire predicament. We are lowering the bar on what is acceptable for foreclosure and bankruptcy. The decades upon decades of balance between breaching contracts and the stigma of breaching contracts has unbalanced and this will impact society for decades to come.

Personally, I have not been a big fan of loan mods, not because it is not a good idea but because most did not make a lot of sense for the amount of loss in value. If lenders and contract owners of the loans acted more responsibly in these loan modifications they would not have "trained" society on walking from homes. These crisis is everyone's crisis, not just the borrower and not just the contract owner. We all know their is a "sweet spot" of modifying a loan that the borrower will not default and the contract owner will minimize their loss.

Until that happens, we are on the disastrous path of training masses in society that foreclosure and bankruptcy is ok and our neighbors are no longer gasping with hands over their mouths that their neighbor was foreclosed on or had to file bankruptcy. It is becoming more acceptable. No question, very bad for society as any recovery will be prolonged by such sentiment.

A prediction of sorts... 2010 will see a dramatic increase in strategic defaults which will result in the bankruptcy laws being changed to allow judges to cram down mortgages which will lead to contract owners allowing servicers to modify loans more aggressively and then our market will begin to stabilize. Then the healing can begin on society's attitude towards foreclosure and bankruptcy.

Re: Is Strategic Foreclosing The Best Loan Modification For You

Tax Lawyer — Mon, 23 Nov 2009 21:59:07 -0000

It may be a wise "financial" decision for many folks to walk away from their homes. For example, if you were 60 years old and were upside down by $100k to $200k what is your best option? Is the best option to pay off your mortgage that is upside down even when you are in retirement?

Re: Is Strategic Foreclosing The Best Loan Modification For You

Tax Lawyer — Mon, 23 Nov 2009 21:58:41 -0000

Re: Is Strategic Foreclosing The Best Loan Modification For You

Tax Lawyer — Mon, 23 Nov 2009 21:58:19 -0000

Re: Is Strategic Foreclosing The Best Loan Modification For You

TallSacto — Sun, 22 Nov 2009 13:57:29 -0000

Editors note has to do with the means test and whether one qualifies for a Chapter 7 or Chapter 13 for a bankruptcy filing. If someone qualifies for a Chapter 7, which is easy to do for most families, the editor's note would not apply and the debts would be discharged in approximately 90 days. For you individual circumstances, you should could consult a local attorney in your area who specializes in bankruptcy law to see if you qualify for a Chapter 7. Regardless, even a Chapter 13 allows you to pay pennies on the dollar and give you an opportunity to restructure and move on with your life.

Re: Avoid Foreclosure By Calling Your Bank Early Says HOPE

Offer in Compromise — Sat, 21 Nov 2009 22:23:57 -0000

No matter what the statistics say, the short sales and foreclosures will continue to mount. The government only wants to help buyers with tax credits, but until we do something more to help keep homeowners in their homes this real estate market has little upside.

Re: Avoid Foreclosure By Calling Your Bank Early Says HOPE

Offer in Compromise — Sat, 21 Nov 2009 22:23:25 -0000

Re: The Tale of Two Countrywides & Maybe Bank of America

joebax — Sat, 21 Nov 2009 09:13:18 -0000

A good business gone awry. I pity those who were charged.

Re: Is Strategic Foreclosing The Best Loan Modification For You

bficker — Thu, 19 Nov 2009 21:20:49 -0000

It's hard to argue the ethics of making such a decision. The fact is that when someone buys a home, they enter into a contract. If they pay the mortgage, they get to stay in the nice home. If they don't pay the mortgage, they lose the house. Those are the rules. The bank agreed to them and the homeowner agreed to them. If everybody agreed to them at the time of purchase, then a strategic foreclosure or default is still playing within the established rules. Morals have nothing to do with it IMO. It is black and white.

Imagine you rent a movie a movie from redbox. You spend $1 and enter into a contract to rent the movie for a night. You decide to keep it for a week instead. Redbox will charge you for every night you keep it. It was in the contract that you originally agreed to.

Walking away is simply a tool in the tool box.

Re: Loan Modifications: 3 Reasons They Are So Slow

bficker — Thu, 19 Nov 2009 21:13:06 -0000

Full Disclosure, I'm in Phoenix AZ. So that is going to skew my perspective.

Regarding point 3. I have NEVER seen an instance in our market where a foreclosure is better then any other option. In every file I've looked at, the bank would lose WAY more money then either a short sale or a loan modification. The people that call in to talk to us about a loan mod or a short sale are usually about $100k underwater. Add on top of that the reduced price of an reo listing and the other costs for a bank to sell a foreclosure and it starts to make sense why some of the $50k homes have gone 18 months with out a payment and not a word from the bank.

Re: Loan Modifications Are They Just A Big Scam

CRay — Sun, 15 Nov 2009 15:55:57 -0000

>>>The right thing to do for most underwater borrowers is to do a strategic default. Most borrowers are not only underwater on their mortgage but overextended on their consumer debt as well. A well thought out plan on wiping the slate clean and moving on is by far the best decision.<<<

You didn't print that with a straight face, did you..??

Nothing like rewarding society for bad behavior ... I guess the word "responsibility" has left your vocabulary, yes.?

Hmm, let's see here ...

.. They've loaded up their VISA card with $9,000 in furniture they don't sit on .. pummeled their Discover card with 2 trips to Vegas, 10 days at Jamaica and let's not forget that little Bed n' Breakfast at $285 a night for 3 nights twice last year which is now ringing the bell at $7,500 ... of course, they couldn't live without the $6,000 home theatre and those wonderful $5,000 wood floors they took the Heloc out for... let's not stop there, how about the BMW lease which is "just" a smigde under $700 a month..?

--- And you want them "just" to start over because they are inconvenienced.?!? .. if you want them to start "re-building a life," let them start by paying their bills first ...

I've worked with credit for almost 22 years, and your 2-3 year program is a joke, a farce ... first and foremost, the bankruptcy laws have changed by leaps and bounds since 2006, your creditors will now handle your future for you in the next 2/3 years, not you ..

Also your credit report will show diferent changes at different times, it's certainly not this "waving of a wand" and "poof", it's all good -- you should be ashamed for even printing such dirty slush.

But most important .. credit and low rates are now getting tougher for even 800 FICO scores - not easier ... what do you think is going to happen with a foreclosure and charged off credit.?? .. banks are now charging psychotic fees and closing and restricting credit lines with superb histories --- but, you're printing "sunshine and lollipops" in 2 years for the ones that flush their credit away?!? .l.o.l.. ... let's try 5 years just to break even, and 6 years just to get a $1,000 credit card under 25% ...

You must live in Tibet ... Really, you need to read before you print.!

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Re: Loan Modifications Are They Just A Big Scam

TallSacto — Sat, 14 Nov 2009 11:41:57 -0000

The right thing to do for most underwater borrowers is to do a strategic default. Most borrowers are not only underwater on their mortgage but overextended on their consumer debt as well. A well thought out plan on wiping the slate clean and moving on is by far the best decision. Let the lender foreclose and right before they are about to sell the property at a foreclosure sale, file a bankruptcy, wipe out all liability for the mortgage debt for any deficiency (if applicable in your state) on your primary or junior lien, eliminate all of the unsecured debt and buy a few more months to move. Start re-building your life, the market is tanked anyway for several years and as the consumers credit improves (around 3 years), they can buy again and be fairly recovered. Yes, it shows on ones credit report for 7-10 years but the credit scores can improve (if they keep clean) in 2-3 years and guidelines for many GSE's allow loans to persons who have a foreclosure/bankruptcy at around 2 years (FHA for one). Not any money in it for practioners but it is the right advice for the majority of underwater homeowners.

Re: Loan Modification Alternatives: Wells Fargo Interest Only Loans

URNOTHELPING — Mon, 09 Nov 2009 19:42:54 -0000

"The best advice comes from the government and they have a vested interest in your success."
Really? The best advice comes from the government???? Based on the terrible advice that you are giving I can believe that you may actually believe this but that does not make it true. The government is not littered with the sharpest minds in America. It is a bunch of people who are trying to get re-elected. Do you really think they are looking out for my best interest? Did you ever stop to think that the banking lobby has the politicians in their back pocket. When you call HUD all they do is give you the number at the bank to call and answer some basic questions. Wow, what a great service they provide. Politicians tell people not to use loan mod companies because the banks don't want people to help them out. Wouldn't it be great if the person that was suing you for something was representing them self and you had a great attorney to help you out??
Have you ever spent 6 months getting the run around from the bank while you stress out over the possibility of losing your home? Who has the time or mental energy or mortgage knowledge to negotiate with the banks? Do people know how to calculate their DTI or surplus/deficit? Did you know that most lenders have guidelines that are based on the monthly surplus/deficit and if you give them numbers that fall outside of those guidelines at any time during the 3-6 month negotiations or during the 3-6 month trial modification you will be DENIED? Can you imagine how somebody would feel if they went through hell for 6 months and then when they went through the final financial review after the trial mod they got denied because they got a bonus check or saw their income dip or had an unexpected expense pop up? Who is going to counsel them on how to manage their finances throughout this process and hold their hand in a great time of need... the government....yeah right. At least they have your great articles to fall back on. If you truly want to help people please educate yourself on what you are writing about before you start writing.
Which bank do you work for?

Re: Loan Modification Alternatives: Wells Fargo Interest Only Loans

danrawich — Mon, 09 Nov 2009 18:25:28 -0000

Isn't Wells Fargo's solution a loan modification?

On another note....Wells Fargo may be the worst culprit of doing nothing for borrowers when it comes to loan mods. Did you know that WF looks at the minimum payment of an option arm as the payment their borrower should be able to afford? Think about that for a minute. A borrower who's 'teaser payment' is 31 % of their monthly income, they are not getting a loan mod. That means if a borrower making $4000 a month has a teaser payment of $1240, they are not getting a loan mod. Does that seem right? Here is a borrower who was conned into an option arm who can barely afford the minimum payment. Now the lender says they must continue to eat more negative equity every month. What happens when that mortgage recasts?

Let's face it. Lenders like Wells Fargo could care less.

Sure they may be giving us a head fake by acting like they will help these borrowers. But they won't.

The truth is they had a temper tantrum when the govt. gave WAMU to Chase. They wanted their seat at the table of cheap deposits. Now when they are throwing up a little in their mouths after looking at the condition of the Wachovia (formely World Savings) portfolio, they are acting like Mother Teresa. I don't buy it.

And stop pointing your readers in trouble to HUD. What on Earth are the rocket scientists at HUD going to do to help them? Have you looked at the crap FHA is originating? You would be doing a better service for your readers if you starting calling out the banks who are doing nothing to solve this issue.

Re: Contact Us

Michael Patton — Sun, 08 Nov 2009 13:51:22 -0000

Does anyone know where/how to locate the percentage of loans (per county or state) that are FNMA or FHLMC?

I'm curious to know where the biggest impact of their rental programs may be felt?

I may be way off base but I'm not thinking it's going to be as big of an impact as the initial reactions indicate.

Re: Afternoon Quickie 02/10/2009

craigspva2 — Fri, 06 Nov 2009 23:53:18 -0000

Interesting post. I have made a twitter post about this. My friends will enjoy reading it also.

Re: Loan Modifications Scrutinized, 1340 Loan Modifications Investigated in California

Steve — Fri, 06 Nov 2009 11:02:46 -0000

Wow. You have no clue what is going on and good luck with home prices going up 9.5% next year. Please take your head out of the ground and look at the unemployment rate and the number of homes that are being foreclosed on each month.
Did you ever stop to think that maybe banks not being willing or able to give loan modifications might have something to do with all the complaints about loan mod companies? If you pay $3000 to a loan mod company and they work for 4 months trying to get you a loan mod and then the bank says no, what do you do? Well, you yell and scream about a scam because of idiot bloggers who write ridiculous articles without having a clue what is really going on.
Are there scammers, well of course there are, just like in every industry but thanks to the media it gets blown way out of proportion. Have you ever tried to negotiate a loan mod on your own or called the government for help? If we were back in the old days you would be stoned for giving such terrible advice. After hearing hundreds of stories of people who have gone down that road I would not wish that on my worst enemy. Please educate yourself before you write anything else. You are not helping people by standing on the sidelines and throwing mud in the wrong direction.

Re: Loan Modifications, 5 Things the Government Is Not Doing But Should

deanouellette — Thu, 05 Nov 2009 09:48:17 -0000

Question on number 2 principal reduction
Loan 300k
House worth 150k today so govt forces bank to do principal reduction to 150k
Owner sells house in 7 years for $320k, do they owe the bank the 150k or do they owe the bank the 300k (minus principal paid in the next 7 years obv)

Re: Disappointed Homeowners Torture Loan Modification Agents

Rob — Mon, 02 Nov 2009 22:31:10 -0000

"However they are willing to spend over 75 billion dollars to avoid to the best of their ability this situation."

I'm not sure their intent is exactly that, nor does this represent their best effort insofar as the citizen is concerned.

That said, I agree torturing your loan modification agent is not the right answer.

Re: Obamas Loan Modification Success Explained

lasvegasrealestatepaul — Sun, 01 Nov 2009 14:15:17 -0000

Interestingly... with my Bank of America short sales... they have been automatically included in the Making Home Affordable program for loan modification reviews even though the sellers have absolutely no intention of staying.

In fact.. more then once I've had to make corrections with Bank of America to move the file out of the loan modification department to the correct short sales department. (My short sale proposals CLEARLY state that the file is a short sale.)

Do you think there is a possibility that short sales are being slammed into the loan modification review to meet some type of quota?

Re: Free Home Loan Modification Help For Homeowners

Screen Sleuth — Tue, 27 Oct 2009 15:42:52 -0000

Loan mods should always be free (to a degree). Companies that prey on people by charging "setup fees" are almost always a ripoff.

Re: Free Home Loan Modification Help For Homeowners

Screen Sleuth — Tue, 27 Oct 2009 15:42:02 -0000

Loan mods should always be free (to a degree). Companies that prey on people by charging "setup fees" are almost always a ripoff.

Re: And We’re Back…

swingtrading3 — Thu, 22 Oct 2009 02:26:04 -0000

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