Don’t get me wrong, I am excited for those 80,000 homeowners who “may” be able to refinance out of their adjustable rate mortgage. But what about the other 1,920,000 homeowners who will be stuck in their exploding loans? A staggering 1.9 million plus homeowners were left to fend for themselves as President Bush announced there would be no bail out for borrowers who purchased homes that he claimed they could not afford.
He forgot to mention that many of these homeowners were pushed into these loans and properties with the help of these lenders and real estate agents who were just doing their jobs. Hell if they could “qualify” for a loan then they can “afford” the home. Right? They were acting on the advice of their “trusted” professional advisor’s. Isn’t that why we have underwriting and guidelines? Isn’t that how they determine the affordability or was that all a dream and those weren’t really loans at all and the houses they live in aren’t really homes after all?
I’m confused Mr. President. You’re just going to kick hundreds of thousands of people on the street because they never should have bought a home they couldn’t afford with the loans that were being sold to them by lenders on every corner.
I’m so sick and tired of hearing that people should have never bought their home if they couldn’t afford it. Don’t you think that most of these people understand that now? I know there are people that can’t be helped and will be casualties of war. That’s life and I accept it and I hope they do too. But there are tens of thousands of people who are in adjustable rate mortgages that were doing fine until their rate adjusted or their negative amortization loan that was pushed on them, stripped their equity.
Now that their loan is exploding, they are in trouble. They made a mistake because they trusted the bank or loan officer that presented the mortgage to them and said, “Don’t worry, in two years we’ll just refinance you right on out of that crazy ARM and into a fixed loan and you’ll be just fine!” You know how many times I heard that one? A lot! What about the people that were SOLD these loans and made promises and took advice from “licensed” professionals? You’re saying their up shit creek without a paddle, that’s what you’re saying.
That’s raping the American people who worked hard for their homes and to protect their credit.
Isn’t it completely ignorant to ruin our economy by not working with the homeowners who deserve to be helped and their toxic loans to be operated on and fixed back to normal? This isn’t rocket science and the FHA Secure Loan is going to do much but cause a blip on the foreclosure radar. Loan Modifications are the ONLY way to fix the foreclosure crisis before it ruins our country and send us into a full on recession.
The clock is ticking Mr. President.
Moe
Founder & Homeowner Advocate
LoanModification.org
Moe at LoanModification.org Email
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Well, personal responsibility should not be dismissed all together. I think it proper to add the fact that buyers were influced by the apperance of affluence. Realtor stopped asking “how much buyers qualified for” rather they wanted to know if we could get them a loan for a certain amount. Buyers did not hesitate in committing to high payments. They were warned and told of the possibilities regarding the payments. It is just the American way to blame some one else. Still, I agree with you in terms of your conclusion. This is not brain surgery. the foreclosure rate is rising primarily because the market from which those loans came, no long exist. If it did they would simply refinance to avoid the adjustment. Now they have two choices. That is pay the higher payement or foreclose. Those individuals mortage history proves that they can and will pay at the rate of interest where they entered the market. If the lenders will simply not raise the rate or inforse the terms of the note, those home owners will continue to pay and avoid the forcloser. However that would require thought. It seems that thinking is not allowed.
Yes, I agree that many homeowners should take the blame and I state that throughout my blog. Blame can really be placed on a lot of peoples shoulders and we all can point fingers as our economy goes down the drain because of these foreclosure. I’m sure you realize that. People need to understand that every foreclsoure affect EVERYONE in one way or another. The neighbors of these people who are being foreclosed on better wake up and understand that they are being affected big time. These are the same people that would refinance and pump money into the economy. Soon they will not be able to refinance either.
The FHA Secure is like a fart in the wind of a category 5 Hurricane.
Yes, I agree that many homeowners should take the blame and I state that throughout my blog. Blame can really be placed on a lot of people’s shoulders and we all can point fingers as our economy goes down the drain because of these foreclosures. I’m sure you realize that.
People need to understand that every foreclosure affects EVERYONE in one way or another. The neighbors of these people who are being foreclosed on better wake up and understand that they are being affected big time. These are the same people that would refinance and pump money into the economy and create jobs. I think a lot of people fail to realize that the refinancing boom funneled hundreds of billions of dollars into our economy. Soon they will not be able to refinance either. The well has dried up and it’s going to cause a lot of problems to a lot of politicians.
The FHA Secure is like a fart in the wind of a category 5 Hurricane. Massive loan modifications for people who “qualify” are the only way to fix some of these toxic ARM’s for homeowners.
It’s very important that the FHA Modernization gets passed. For FHA reform please visit http://www.hud.gov/offices/hsg/sfh/hsgsingle.cfm
Maximum Loan to Value Ratios for the FHA Secure
More FHA Secure guidelines to help you determine if you qualify.
1. The mortgage being refinanced must be a non-FHA ARM that has reset.
2. The mortgagor’s payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments.
3. If there is sufficient equity in the home, under additional eligibility instructions provided below, they will insure mortgages that include missed mortgage payments.
4. Under certain conditions explained below, they will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2), the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing.
5. Lenders must determine, as part of the underwriting process, that the reset of the non- ARM monthly payments caused the mortgagor’s inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.
What May be Included in the FHA Secure Mortgage Amount: They will permit the inclusion of the existing first lien, any purchase money second mortgage, closing costs, prepaid expenses, discount points, prepayment penalties, and late charges. They will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount.
Subordinate Financing under the FHA Secure Initiative: If the new maximum loan is not enough to pay off the existing first lien, closing costs and arrearages, the lender may execute a second lien at closing to pay the difference. The combined amount of the first mortgage and any subordinate lien may exceed the applicable loan-to-value ratio and geographical maximum mortgage amount. If payments on the second are required, they must be included in qualifying the borrower. If payments are deferred, they must be so for no less than 36 months to not be considered in the qualifying ratios.
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Hi I surf around the net quite a bit, and there\’s a load of rubbish out there. It\’s good to find some decent content. Great blog. I hope you don\’t mind my link here too. Your post entitled ure | Loan Modification & Loan Workout News was just what I wanted.
With all due respect, Moe, you didn’t read the Bush’s FHASecure guidelines that apply to the people that you defend below:
“But there are tens of thousands of people who are in adjustable rate mortgages that were doing fine until their rates adjusted.”
No. 1 of the FHASecure guidelines reads: “A history of on-time payments before the borrower’s teaser rates expired and loans reset.”
It appears to me that you hate President Bush on principle, and that there would never be enough that he could do to satisfy you. For you, every step is a no-win proposition. There’s no pleasing an “empty glass” kind of guy.
Gretchen,
I tell it like it is. If you interpret that has me seeing the glass as empty, then fine. You know why? Because it is.
I wrote this post 2 months ago and the FHA Secure is not being offered by lenders. You know why Gretchen? Becuase no one will buy these mortgages on the secondary market.
When there is a win/win situation, I will report on it. For now it is no-win for homeowners.
Until you know what’s really really going on, save your ill informed comments for yourself.
Marvelous review on oan Workout News. I love this view.
I acutally just found this article and couldn’t help but respond…. and I have to say that I agree with you Moe 100%. The product is now out there and the guidelines have been made so strict that NO ONE not even FHA is interested in buying/insuring these loans. FHA has made the process for these loans so involved and tight for the lenders that if just 1 “I” is not dotted or one “T” is not crossed the lenders are looking at a re-purchase. Which, from my stand point is not helping the situation at all. I think this is just another way for the government to “appear” to the “general public” as the good guys However, in reality they are only offering false hope and playing on the ignorance that got these people into their current situation in the first place.
I qualify for a FHA secure, but I’ve had 2 lates in the last 12 months, my current lender refuses to cash my certified funds I made in december 07 because it sets them up fairly well for my adjustment in feb(hello 90 days till you can stop payment), and I’ve spoken to 2 FHA approved lenders so far that have yet to close a FHA secure loan. This is either due to servicers not willing to part with the primary loan and still carry secondary loans, low appraisals from the FHA approved people, or plain out not qualifying.
There’s no FREAKING WAY I’m going to pay 6 months of inflated interest to get shut down in the end… with my savings exhausted and face moving out with my tail between my legs because I tried to keep my place that we could afford when we purchased it, in a market where refi was right around the corner.
Makes you wonder who’s actually getting any help from this system :-/
I think teenagers shouldn’t be allowed here. They don’t have a clue about life, why are they trying to look smart?
I am sympathetic toward all the homeowners currently facing high interest rate adjustments, or worse, those already in foreclosure. Being in the “business”, I find it amazing that the FHA Secure program allows for homeowners who are currently victims of increasing rates and payments but investors across the board aren’t helping by requiring homeowners to have a 580 fico, even being delinquent on the mortgage. It’s a catch 22…. you can’t get into an FHA Secure loan with an extremely low fico, but an extremely low fico is what happens when you are consistently delinquent on your mortgage. Until HUD refuses to insure loans made by banks with fico score requirements, these poor homeowners who are facing foreclosure won’t see much relief. A freeze on rate hikes seems like the best option at this point in time.