Banks adjusting delinquent loans? – Piggington's Econo-Almanac

This topic has 60 replies, 9 voices, and was last updated 17 years ago by SD Realtor.

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November 19, 2007 at 8:13 AM #10940

kev374
Participant

My cousin who is a mortgage broker tells me that banks are actively adjusting loans. A client of theirs was delinquent on an ARM that had adjusted upward and BofA supposedly has renegotiated her loan to 5% fixed for 30 yrs.

Is this kind of thing happening right now? And if this becomes a long term trend how will it affect the rate of foreclosures and the decline in values?

Also, if banks do this on a large scale, lend money at 5% how do they make any money since I’m sure their cost at the fed funds rate of 4.75% is a very thin margin.

November 19, 2007 at 8:56 AM #101104

no_such_reality
Participant

Let’s say you are a bank, back in late 2004, you loaned $500,000 to someone. They paid up until about June this year, then fell behind. As a bank which would you prefer?

a) Rework the loan for $550,000 for the next thirty years at 5%, which the bag-holders appear to have the capability of paying.

b) foreclose, liquidate the property for probably $400,000?

November 19, 2007 at 8:56 AM #101190

no_such_reality
Participant

Let’s say you are a bank, back in late 2004, you loaned $500,000 to someone. They paid up until about June this year, then fell behind. As a bank which would you prefer?

a) Rework the loan for $550,000 for the next thirty years at 5%, which the bag-holders appear to have the capability of paying.

b) foreclose, liquidate the property for probably $400,000?

November 19, 2007 at 8:56 AM #101202

no_such_reality
Participant

Let’s say you are a bank, back in late 2004, you loaned $500,000 to someone. They paid up until about June this year, then fell behind. As a bank which would you prefer?

a) Rework the loan for $550,000 for the next thirty years at 5%, which the bag-holders appear to have the capability of paying.

b) foreclose, liquidate the property for probably $400,000?

November 19, 2007 at 8:56 AM #101217

no_such_reality
Participant

Let’s say you are a bank, back in late 2004, you loaned $500,000 to someone. They paid up until about June this year, then fell behind. As a bank which would you prefer?

a) Rework the loan for $550,000 for the next thirty years at 5%, which the bag-holders appear to have the capability of paying.

b) foreclose, liquidate the property for probably $400,000?

November 19, 2007 at 8:56 AM #101220

no_such_reality
Participant

Let’s say you are a bank, back in late 2004, you loaned $500,000 to someone. They paid up until about June this year, then fell behind. As a bank which would you prefer?

a) Rework the loan for $550,000 for the next thirty years at 5%, which the bag-holders appear to have the capability of paying.

b) foreclose, liquidate the property for probably $400,000?

November 19, 2007 at 9:28 AM #101118

kev374
Participant

yeah, I got that point but what is the impact of this on the decline. If banks adjust loans then the foreclosure situation will be controlled, will it not? If foreclosures are controlled then the impact of the ARM resets will be negligible right? If so, people will not lose their homes and prices will stay put or not decline by much. Am I missing something??

November 19, 2007 at 9:28 AM #101205

kev374
Participant

yeah, I got that point but what is the impact of this on the decline. If banks adjust loans then the foreclosure situation will be controlled, will it not? If foreclosures are controlled then the impact of the ARM resets will be negligible right? If so, people will not lose their homes and prices will stay put or not decline by much. Am I missing something??

November 19, 2007 at 9:28 AM #101216

kev374
Participant

yeah, I got that point but what is the impact of this on the decline. If banks adjust loans then the foreclosure situation will be controlled, will it not? If foreclosures are controlled then the impact of the ARM resets will be negligible right? If so, people will not lose their homes and prices will stay put or not decline by much. Am I missing something??

November 19, 2007 at 9:28 AM #101232

kev374
Participant

yeah, I got that point but what is the impact of this on the decline. If banks adjust loans then the foreclosure situation will be controlled, will it not? If foreclosures are controlled then the impact of the ARM resets will be negligible right? If so, people will not lose their homes and prices will stay put or not decline by much. Am I missing something??

November 19, 2007 at 9:28 AM #101235

kev374
Participant

yeah, I got that point but what is the impact of this on the decline. If banks adjust loans then the foreclosure situation will be controlled, will it not? If foreclosures are controlled then the impact of the ARM resets will be negligible right? If so, people will not lose their homes and prices will stay put or not decline by much. Am I missing something??

November 19, 2007 at 11:00 AM #101245

Coronita
Participant

If that's the case, i'm wondering if it make sense to intentionally fall back on a few loan payments. I wouldn't mind having them adjust my loan to sub 5%.

November 19, 2007 at 11:00 AM #101274

Coronita
Participant

If that's the case, i'm wondering if it make sense to intentionally fall back on a few loan payments. I wouldn't mind having them adjust my loan to sub 5%.

November 19, 2007 at 11:00 AM #101273

Coronita
Participant

If that's the case, i'm wondering if it make sense to intentionally fall back on a few loan payments. I wouldn't mind having them adjust my loan to sub 5%.

November 19, 2007 at 11:00 AM #101256

Coronita
Participant

If that's the case, i'm wondering if it make sense to intentionally fall back on a few loan payments. I wouldn't mind having them adjust my loan to sub 5%.
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