San Diego Housing Bubble News and Analysis

Way more then quite possible. Mostly probable is a better description. It will mostly work out per the plan that will be discussed on April 9th. A new loan will be created based on the current value of the home. The FHA will insure the new loan. The old loan will be wiped out and the bank will take the write down. What is not being discussed publicly is that the government will more then likely "make sure" the banks do not go under do to the write downs. I would presume the new loan gets taken on by either one of the GSEs or some other entity.

Can you say presto?

Soon it may not be much use to look at loan reset charts.

SD Realtor

Contraman -

What are the precipitating conditions for a short re-fi ?

Does the property have to be in default ?
Could any Joe Schmoe who is upside down (but otherwise capable of making payments) do this sort of thing ?

FSD,

The property does not need to be in default. Any Joe can qualify that has the income to support the new mortgage payment at a reasonable DTI. Should get interesting here as you would have to expect ANYONE who is upside down will be doing this here if available.

I am doing a few here for clients as we speak but am sending the majority of them to a company that specializes in them and knows exactly how to position the files...as they have a referral and affiliate program with brokers.

Alot easier for me as it can be a tedious process working with the lender.

Sincerely, Contraman

Contraman -

Thanks for the info. I wonder if this won't encourage low-ball appraisals and perhaps a new kind of mortgage fraud ?

"Soon it may not be much use to look at loan reset charts."

I have been wondering if the charts we see are being updated for regular refi's, work outs and foreclosures that occur before resets.

"I wonder if this won't encourage low-ball appraisals and perhaps a new kind of mortgage fraud ?"

Been wondering that too..and about other types of deal steering of distressed properties. You have to know there will be fraud on the way down too.

1) Borrowers stay in the home, hence no foreclosure, and no increased inventory flooding the market.

So this amounts to a kick in the crotch for bubble sitters who have been waiting patiently for markets such as SD to return to affordable levels? And as far as the potential for a new fraud that was identified- this illustrates why I have contempt for the real estate/appraisal/loan infrastructre, excluding of course the Pigg posters here who seem honest, in fact I may contact SD Realtor soon. But the fact that you guys see a likelihood of a new type of fraud is a terrrible indictment of the industry and an unfortunate argument for regulation, and ultimately why I want to buy a house after additional price correction then be done with the industry, hopefully for a lifetime.

Well this also sucks for me. I hate to admit to being a FB. I'm one of the ones with an interest only loan who refinanced it back in summer of 2006. I went from a neg am to an I/O loan - yes I know I was a fool to have done it and I was a fool to have had a neg am. I thought I'd make up the difference with extra work - my house payment went up 57% in one month and it has been a nightmare ever since.

Now I'm in the process of short selling my house. So just as I exit my house and become a renter I will watch others who were in my situation now get to keep their homes at affordable rates. My income is $130K a year so I could make payments on an affordable mortgage but my last refi caused me major pain. I am not a speculator - just a guy who has tried to support a family of four on his own for the last 22 years and tried to do everything within his means to keep them in a house.

Something else to mention here: the lenders also took their share of equity out of my house. I refinanced twice during the last four years - yes, stupid - and each time the lenders took money out of my house to pay for prepayment penalties that totaled at least $36,000. Then add in all their "fees" and it amounted to about $60,000 taken out of my house as "fees" and "costs" for the lenders. That's $60,000 that I never saw, that I never touched, that I never spent on cars, toys, vacations, etc.

And, yes, I agree with you that I never "owned" it. I was just a renter and my landlord was a mortgage backed security. And what does a mortgage backed security know about being a landlord !?!

Thanks contraman, it's good to hear insider news. Keep it comin'!

Just two questions:

Are the principal reduction refi's all going to be recourse type loans?

What happens if the FB sells the house once the principal on the loan is reduced to 90% current value? Looks like a quick 10% profit to me.

Great thread. Thank you. I better have a relook at the reset chart.

Nos,

In answer to your question, are they going to be "recourse loans"?

The ones that I am undertaking right now are not recourse. It's all how you negotiate with the specific lender. It's all about positioning the file in a favorable way for the borrower and how you do the "principal reduction".

Having a first and second makes the task easier.....

Concerning the sale of the home for a quick profit, in some instances there will be a profit share on the way up, and in others there are no restrictions.

This is uncharted territory for alot of lenders but they are seeing it makes the most sense for everyone.

All the piggs here that want the housing market to drop should applaud a plan like this here as it will surely put major downward pressure on home values. Good for us waiting for the end to fanstasy home prices....

Sincerely, Contraman

contraman- can you post your email please. i'd like to contact you offline with respect to short refinancing.

thanks

articles- also anyone have articles regarding proposed gov't programs to back these refi's that you can post a link to?

thanks

GG,

Per your request here concerning short refinancing.

contraman1 [at] gmail [dot] com

Sincerely, Contraman