paramount, unless you sell, you didn’t lose anything. From my memory of other posts, your payment is $1500, it is a fixed rate and you can afford it and you put 10% down. That is about what rent would be for your place. Right now your sales price would be based on a market almost entirely made up of shorts and repos. Why sell now? What does it matter how much equity you have, when your place was worth 400k it wasn’t in your savings account it was just an appraised value, the payment was the same. It is just a matter of how that makes you feel, you didn’t have that money and you haven’t lost the money based on today’s numbers either. 2003 numbers will return, probably sooner than you think, the people who really need to evaluate their situation are the 05/06 buyers which most of them have toxic loans that were designed to be refinanced within 5 years and now they are stuck with them.
If my assumptions were incorrect and your loan is not as low as I stated or if it is not a fixed rate, wait a few weeks. The government plans that should be released soon are all about bailout of people in your scenario. All the interviews and articles I read this week are about bailing out those in the margins and not the extremes, saving those who didn’t lie about their income and have been making thier payments for at least two years but are a little underwater and feeling just a little financial stress. The bailout would be in the form of being able to refi an underwater loan to a 4 or 4.5 fixed with low refi costs and a little principal held back that you would only pay back when you sell or when it returns to it’s value.
Scenario: your 240k debt has 70k held back to make it the current value of 170k, you make a fixed payment on the 170k at 4% which is $811/mo P&I, when the market returns to 2003 levels or when you sell, they get that 70k back. They only want to do this for those who can afford to pay, have a history of paying and more than likely will continue to pay. The only loss for them is a few years interest on 70k ($150/mo for three years is a little over 5k). For 5k, they avoid foreclosure, you stay put and keep paying and one less foreclosure hits the market.
This cheaper bailout plan will be seperate from the stimulus and I like it because it doesn’t cost taxpayers or banks much. They will have some form of qualification and solid payment history/verifiable income is the cornerstone so it rewards those who are paying. They learned that the fb’s still don’t pay even when they get a loan mod so they will have to be sacrificed but the masses in the margin do pay and will pay, they just need a little boost to get them through this rough patch. Making it quick and readily available will put a floor on things.
