WAMU 3.5 million dollar loan at 1.75% 40 year Fixed

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Submitted by macromaniac on June 4, 2009 - 5:15pm

As some of you know, I sublease space to a loan modification processing firm and a few times a week I stop by to get the latest and greatest regarding what banks are doing for delinquent borrowers. Check the latest two deals she got for borrowers:

First is a 3.5m loan with WAMU at 8.625% - payment was $25,500 P & I

Modified loan is 40 year amortized at 1.75% - payment PITI is $11,000.00 - stopped trustee sale of July 12,2009 and capitalized $257k in delinquency

First is a 1.0m loan with WAMU at 7.5% - payment was $6173 PITI
Modified loan is 40 years at 1.5% with new PITI payment of $2972.00 - stopped trustee sale of June 10, 2009

It makes all the sense in the world to go delinquent...crazy times!

Submitted by FormerSanDiegan on June 4, 2009 - 5:20pm.

WOW !
Crazy times.

Is there any concession for a cut for potential future appreciation to be claimed by the bank on these mortgage mods ?

Submitted by macromaniac on June 5, 2009 - 9:56am.

Nope. Not in the agreement at all.....and they are now considering principal reductions to get them to 31% DTI ratio....crazy....

Submitted by PadreBrian on June 5, 2009 - 10:00am.

I suspect they will go delinquent with even that. Sounds like bank robbers that are just playing the system.

Submitted by GoUSC on June 5, 2009 - 10:01am.

Obviously I should reconsider being an ethical human being. Obviously being a total crook and doing everything in your power to screw everyone pays off in the long run.

I am sick to my stomach.

Submitted by rockingtime on June 5, 2009 - 10:37am.

Guys,
If you look at my comments on some other thread, I saw similar things with someone I know.
Their loan was modified so that they pay 30% of their monthly income for 30 years and the house is their.

So, instead of paying $4k per month for 26 years, they have to pay $2K/month for 30 years

Thats a sweet deal.
All financially responsible people get screwed here

Submitted by macromaniac on June 5, 2009 - 10:40am.

USC,

You and I both, but I guess you have to weigh it from their perspective, WAMU that is, CHASE and the taxpayer bought the portfolio and probably already wrote them off so anything over zero is a gain...welcome to accounting games....

Submitted by cv2 on June 5, 2009 - 12:35pm.

From what I read, these low 1.75% modifications are with a big catch: there is a balloon payment at the end of the 40 year period. In other words, the new loan was never designed to get paid off. It is a kind of reverse mortgage.

Submitted by macromaniac on June 5, 2009 - 12:43pm.

CV2, any loan that is FULLY AMORTIZED usually gets paid off at the end of the amortization period and most people won't be in the same home for 40 years?????

Submitted by cv2 on June 5, 2009 - 5:41pm.

I really doubt the modified loan is fully amortized.

There was an article in UT Sunday Business section about a family did a loan modification, lowered their monthly payment from over $2k to over $300. It is cheaper than rent but the catch is that it is not fully amortized and there is a balloon payment at the end. I am just too lazy to look for the article in UT, but I am pretty it was within the last two to three Sundays.

Submitted by patientrenter on June 5, 2009 - 6:05pm.

I doesn't matter what happens at the end of 40 years. Either the house price is way above the loan, and the homeowner has huge gains to pocket, thanks to taxpayers, or the house price is below the loan, and they walk away and don't pay the balloon payment.

Taxpayers are a very easy mark.

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