This is great news for homeowners who have been waiting for some kind of relief from their toxic loans that are eating them alive as they frantically search for a way out of them. It looks like the government is going to have to take the bull by the horns from these rodeo clown lenders and guide that damn bull out of the china shop.
Treasury Secretary Henry Paulson said ‘it’s going take longer to work through this problem in subprime’ because so many mortgages will be resetting to higher interest rates over the next 18 months. Unlike market problems he’s seen in the past, Paulson said ‘this turbulence wasn’t precipitated by problems in the real economy. This came about as a result of some bad lending practices.’
Bad lending practices is an under statement. But a step forward in placing blame where it is deserved. Back on the lenders and not on the homeowners.
President Bush has asked Secretaries Paulson and Jackson to work on ways of rescuing homeowners in trouble. They are asking the mortgage service companies to help identify, as soon as possible, people who may be heading for payment problems and modify their loans. Next, they want to refer those families to credit counseling services. And finally, Paulson said today, ‘we need an expansion of mortgage financing products’ so that the homeowners can refinance their loans.
Jackson said the Federal Housing Administration would be able to help about 250,000 people hold on to their homes with refinancing and mortgage insurance, but that could still leave more than million households with problems.
Like I had mentioned before, the FHA Secure Loan will not do much to help are housing and mortgage crisis. Either we need more lending products and options or we need a government controlled loan modification campaign. My thoughts are that we will never have the product we did before because there will be no buyers on the secondary market. Modifying these loans for “qualified borrowers” will be the only way to fix and already broken lending system.
Let’s face it, a BIG correction needs to happen. It’s an economic cycle, a major cleansing, and YES, some people WILL lose their homes to foreclosure.
It’s wrong to try and prevent it.
What you are suggesting is to keep people in debt in an overpriced home that they cannot afford.
It’s a temporary fix to a huge problem.
There are too many responsible people who did NOT buy over the last few years because they COULDN’T AFFORD IT.
Those people need to be rewarded.
Those who gambled have lost. It’s no different than going to a casino and placing a bet. There is no reason why the govt should step in and cover the losses.
If the property was worth more today, nobody would be offering part of their profits back to the lender.
I never bought a Ferrari, because I couldn’t afford one.
Plenty of people have fixed rate loans and have been paying a higher fixed rate for the last few years because they didn’t get an ARM with a lower payment for a few years. It isn’t fair to bailout those who gambled.
A bailout will only keep stupid housing prices artificially high.
The time to interfere was 5 years ago and prevent 100% financing from being available. Now is not the time to interfere.
Also, your statement above about “most homeowners” is WRONG.
MOST homeowners DO have good mortgages with equity.
Only people who bought in the last few years AND those who used their house like an ATM machine are in trouble today. I doubt that it is 5% of the population that are in trouble.
An entire generation needs to stop looking at houses as an investment. It’s a place to live. It’s not a stock to be day traded.
When the market was stupidly rising, the bubble was inflating. It was obvious that it would end. The higher it inflated, the bigger the bust will be.
Allowing people to stay in debt at inflated prices is a crime. Their needs to be a consequence for irrational exuberance, which will be more foreclosures than ever before, and the market will seek its own level.
If a house rents for $2000 a month, it’s probably worth about $200K +/-
It just isn’t WORTH $450K.
People who cannot afford their loans need to be foreclosed on and RENT what they can afford. They aren’t going to be homeless.
Asking to be saved from making a poor decision is pathetic.
If one didn’t understand their loan, they shouldn’t have one.
It’s a lot easier to understand a rental agreement.
Sorry, but I just cannot agree with wanting a bailout or any loan modifications. It’s just wrong.
I’m sorry but judging from my blog and my views, I’m assuming you knew I would have to 110% disagree with just about everything you said here. Especially since I am a big loan modification advocate.
I understand that the real estate market is cyclical and these is ups and downs and yes, maybe we need some corrections in the market. It was getting over inflated quite a bit and over hyped. Many gambled, invested and did it all for the wrong reasons. Many will lose their homes and in fact many already have. So, I agree with you there.
I don’t know about you but I am on the front lines daily. Fielding calls and emails from homeowners who are trying to refinance out of these toxic loans that have just adjusted 3,4,5% higher and they cant refi, they cant get a loan modification. These are the same borrowers that QUALIFIED for a REAL MORTGAGE using REAL UNDERWRITING GUIDELINES for the lenders to DETERMINE if the borrower that is APPLYING for the REAL LOAN can AFFORD that there MORTGAGE that they are APPLYING for at the BANK using UNDERWRITERS that are EMPLOYED by the LENDER to MAKE SURE that there BORROWER can PAY THEM BACK once they LEND THEM THE CASH.
Sorry for all the caps but I have to get my points across.
Many of these homeowners were promised they would be able to refinance out of these loans by licensed professionals who thought they had crystal balls or something. They must have right?
I’m going to pull a quote I said in another post here.
“OK, so what you are saying is that these loans that people got for the homes they purchased over the last 5 years are homes they can’t afford? Didn’t they have to “qualify” for these loans to buy the homes using underwriting guidelines that the lenders control to make sure that they can “afford” these mortgages that they would have to ultimately be responsible for?
Or were those fake loans that they had to qualify for using lending guidelines that are in place to make sure that money isn’t given to people who can’t “afford” to pay it back?
Most of the homeowners I speak with have paid their mortgage on time up until their loan adjusted. Yes, they new the risk of taking and adjustable mortgage, but they were told 99% of the time by licensed professionals, “Don’t worry in 2 years we’ll just refinance you out of that terrible loan into a new fixed mortgage. Please, sign here sir.” I bet if these same licensed professionals said, “You’ll never be able to get out of this toxic loan. The payment will go up 50% in two years and the bank will foreclose on you, ruining your credit for another 7 and kicking you, your wife, 3 kids, dog and goldfish on the street.”
How many people do you think would have taken the loan then? My guess is, is very few.”
It’s beyond loan modifications to save people’s homes. It’s now about saving or entire economy. Mark my words. If the Congress doesn’t force these lenders and servicers to modify these loans of borrowers who “qualify”, we will go int a massive recession from the fall out of what you are suggesting here. Housing affects America’s economy more than you think. Haven’t you been watching the news and reading the gloom every day. It’s just begun too and it will snowball and engulf every homeowner. One’s that even could “afford” it has you suggest.
Well, hell, at least you’ll be able to buy a home then.
I think it’s great that the adminsstration is finally stepping up, my concerns are how will they streamline these programs in Bush statement he said in ordet to qualitfy you will need at least 3% of equity in the home. I myself did a 100% finance so and I know I don not have that much equity. My mortgage has already increased by $577 and is due to reset again 2/08 I was hoping to have least made some type of headway by then. I also signed up for NACA they talked about this great product to offer borrowers. I have so called been a member since May, paid my dues but I am not sure if i qualify for the program.
I really havent heard any good stories comeing from the NACA. Meaning success stories. I would not have all my eggs in one basket. Loan modifications are the only way.
Hey Sandy,
I too have been a member of NACA for the last few months and I went through that long class and paid my dues. You know that they actually told me i did not qualify because my mortgage was some lates on it. I am considering filing a false advertising claim against them because I discussed this with them and they said that it was not a problem. I wrote a complaint to the owner (Bruce Marks) and the Board or Directors. I want my money back and money for my time wasted. I was working on a repayment plan too with Homecomings, which is another lender that needs to be watched becuase they put Countrywide to shame, but my payment went from $847.00 to $1429.00 within 6 months and will change again in 5 months. My rate is now at 13%. It is killing us but we are still trying to keep our heads up. Good luck and I can give you NACA’s addresses if you want.
Marcus
Loan modifications are a bit tricky. A few, or maybe more than a few, years ago when the typical loan was a 30 year fixed that left 20% equity in the home, modification was allowed when the borrower hit a temporary hardship. That is, loss of a job, medical illness, or some other temporary financial setback that would likely be remedied within a few months. The lender would look to the unexpected hardship being faced and decide to forgo a few months of payments or make the payments lower for a few months and then tack on the cost at the end of the term. Today, things are different. The “hardship” now facing most borrowers is the exploding ARM, that is, the huge jump in the monthly payment at the end of the teaser rate period. This is not the same kind of hardship. This hardship is not unexpected, unless there has been fraud or misrepresentation about the loan terms (which is, sad to say, more common than it should be). Thus, lenders are faced with making changes to their policies on modifications, and as is the case with all huge corporations, change in policy takes time and many committees to approve the changes. Thus, today’s loan modifications take a bit more sophistication and experience when presenting the case to the lender. A modification may be more difficult at present, but over the next few months the lender will likely have better guidelines and be more willing to help themselves from becoming property owners. And, that is what we have to keep in mind. Lenders like to be owed money, not own property.
- Paul
moe…i jus came across ur website today and i wished i knew about it sooner. Me, my husband and 3 kids(no dog or goldfish) have just inquired w/our lender re: a loan modification. in fact, i jus wrote our letter of hardship today. but going back at what u were saying about those licensed professionals…of course, if they told us that we would end up losing the house in 2 yrs anyway. i would never in my right mind have signed my life away. u would think that after having to sign a zillion papers on that “special” day, someone would’ve warned us about what we were actually signing. ha ha ha
R.C. Did you hear back from your lender re the loan modification? I am considering doing same and am wondering if anyone know the criteria for qualification? They gave me a form to account for my debts and income, i am about $1500 short including things they way they currently are, but am wondering whether or not that is too much or too little to qualify for their modification requirements. Does anyone know?
I have for 2 months been attempting the loan mod w/ wfhm.It is a night mare I continue to do all asked .income/debt assets etc.every day it is something new they want.also the department and person I speak with changes day to day. I have never been late. mortgage gong from $1399 to $1800 this minth.It was suggested to me just dont pay it,then they will talk to you. how dumb is that?so they destroy my credit first.then dont qualify for a decent rate and so it continue. every 6 months my house payment goes up the value goes down until they force you into foreclose. sue you for the difference force you into bankrupty. don.t think because you have equity and a fixed rate that you’re not affected. the homes around you start to be vacant the grass turns to weeds the snakes ,rats and looters come.Your nice neighborhood is now the slums, with its own crack houses .Your property value goes down and you can’t get out because people dont want to live in a bad neighbor hood and you too have no equity in your house.
DON’T THINK FOR A MOMENT THAT YOU ARE BETTER OFF. IF SOMETHING ISN’T DONE YOU TOO WILL BE A CASUALTY.
plogonot 79 post
all about plogonot and top news
With the mortage crisis and subprime loan borrowers falling behind on their payments, it is a nightmare. With the house prices going up the roof in 2004, don’t you think the government should have stepped in and have done something about regulating this? Then I guessed, this situation where foreclosures are proliferating could have been prevented.
Not all subprime borrowers are speculators. They are just middle class people who would like to live their american dreams and to see the fruit of their labors. With the dream of providing a decent place for their family and seeing to it that their hard earned money go to the right place, I don’t think that the blame could be theirs only. I think the people are most to blame for this fiasco are the predatory lenders , brokers and agents whose main intentions are to deceive the consumers that they can afford it and find ways to get them in the door with sweet promises that the house prices will never go down. It all boils down to greed.
With more foreclosures on the way and big losses being suffered by lenders, I think this is not the time to be hard nosed with dealing with borrowers. They should work with them not to suffer foreclosures. This lenders should think about preventing more inventories which would contirbute to more losses in their parts. If this situation continues, then it will sure forced our economy into a recession. The housing market is a big gauge on our country’s economy health.
Well said JC