Ricechex that is pretty wild stuff. I have heard about stuff like that happening in the private sector but not in government sector.
BG your posts make it sound like principal reductions do not exist. If you actually were practicing in the field in this decade or two decades, I may have a bit inclination to take seriously what you write. However clearly posting online takes much more of your time then whatever your profession is. Personally I wouldn’t make implications about things that I didn’t have hands on (in recent years) experience with, but I guess that is what the internet is all about. I have never been involved with one (principal reduction) but in my mind they would make absolute common sense for the investors holding the paper. The investors have one of three choices as I see it:
1 – Let the buyers default and then sell the home on the open market incurring the cost of the foreclosure process.
2 – Let the buyers short sell.
3 – Work out a program where the buyers get to keep the home and forgive a portion of the original loan amount.
It seems to me that in each of the 3 choices the bottom of bottom lines is that the investors lose money. In either case the home is going to get sold at market value, (even in case number 3) so the investors take a haircut. The real choice here is do the investors think that the buyer is credit worthy and worth the risk? If not then take avenue 1 or 2.
I think trying to pin someone down to every nitty gritty detail about a forgiven loan is ridiculous. I havent seen one personally but I have talked to a few different people who have claimed to have gotten them. I didn’t ask them for their loan docs. Maybe they were bullshitting me and maybe not.
