GMAC loan workout

[nostradamus]

djrobsd again thanks for posting this info, it’s very enlightening. I don’t buy foreclosures and don’t think there are many shills for the foreclosure industry on this site. I would not benefit at all if you walk, except for a little schadenfreude and hopefully in a couple years prices can justify buying a home.

On blogs there are people who are frank and people who are dick (I stole that line from Planet Terror). If I were you I would be frank and tell your bank you’ve got your 401(k) and there’s no way in hell you’re going to raid it. There’s nothing they can do unless you’re in some kind of recourse loan. Don’t be scared of the bank, at this point you may wish to be completely forthright with them to see what kind of solution they come up with. If you provide them with false information it might bite you in the arse later. The bank might say “it’s OK to raid your 401(k) because if you invest it in the house it will be your nest egg in the future” but you just tell them “if I walk now I can keep the 401(k) I’ll worry less about a steep decline in value like in the housing market”.

Although one might say you were dumb, I think we can all agree that the lender and the fed were just as dumb and it took 3 to tango. Borrowers blame the lenders, lenders blame the fed, I don’t know who the fed is gonna blame (probably back on the borrower for false “stated income” or perhaps they’ll offer up Greenspan for the sacrificial fire).

[Raybyrnes]

“But remember, you aren’t the victim (and I don’t think you see yourself as the victim, which is good); the institutions who are going to absorb your loss are.”

Banks are in the business of lending money. They take a risk for the right to the interest they earn on their money. This borrower never defrauded the bank. It might not work out the way either party hoped but I don’t see a victim.

I won’t lose sleep when WAMU, Countrywide, Merrill Lynch or any other instituition loses money on an investment. It is a game that they play and in the end they will play right more than they play wrong.

Right now djrob has the tough choice of deciding whether the initial capital he used is at this point a SUNK cost or if there is still some intrinsic value in holding his property.

I tend to think that 401K should be a lock box principal so I agree with many of the othe posters who have suggested not raiding it. I also know others who see the 401k as a guarantee fund that can be thought of as an interst free loan. People have differnt way of looking at their money.

One thing that people havn’t thrown out there is the fact that if you continue to hold on and the environment deteriorates further the Federal Governemtn may step in to help the banks which might mean more potential to help you. Buying some additional time might not be a bad thing as there is a lot going on at the moment and with an election year coming up the Republicans are going to do what they can to save face. That might mean buying votes by trying to save peoples homes.

Ra

[Raybyrnes]

“But remember, you aren’t the victim (and I don’t think you see yourself as the victim, which is good); the institutions who are going to absorb your loss are.”

Banks are in the business of lending money. They take a risk for the right to the interest they earn on their money. This borrower never defrauded the bank. It might not work out the way either party hoped but I don’t see a victim.

I won’t lose sleep when WAMU, Countrywide, Merrill Lynch or any other instituition loses money on an investment. It is a game that they play and in the end they will play right more than they play wrong.

Right now djrob has the tough choice of deciding whether the initial capital he used is at this point a SUNK cost or if there is still some intrinsic value in holding his property.

I tend to think that 401K should be a lock box principal so I agree with many of the othe posters who have suggested not raiding it. I also know others who see the 401k as a guarantee fund that can be thought of as an interst free loan. People have differnt way of looking at their money.

One thing that people havn’t thrown out there is the fact that if you continue to hold on and the environment deteriorates further the Federal Governemtn may step in to help the banks which might mean more potential to help you. Buying some additional time might not be a bad thing as there is a lot going on at the moment and with an election year coming up the Republicans are going to do what they can to save face. That might mean buying votes by trying to save peoples homes.

Ra

[Raybyrnes]

“But remember, you aren’t the victim (and I don’t think you see yourself as the victim, which is good); the institutions who are going to absorb your loss are.”

Banks are in the business of lending money. They take a risk for the right to the interest they earn on their money. This borrower never defrauded the bank. It might not work out the way either party hoped but I don’t see a victim.

I won’t lose sleep when WAMU, Countrywide, Merrill Lynch or any other instituition loses money on an investment. It is a game that they play and in the end they will play right more than they play wrong.

Right now djrob has the tough choice of deciding whether the initial capital he used is at this point a SUNK cost or if there is still some intrinsic value in holding his property.

I tend to think that 401K should be a lock box principal so I agree with many of the othe posters who have suggested not raiding it. I also know others who see the 401k as a guarantee fund that can be thought of as an interst free loan. People have differnt way of looking at their money.

One thing that people havn’t thrown out there is the fact that if you continue to hold on and the environment deteriorates further the Federal Governemtn may step in to help the banks which might mean more potential to help you. Buying some additional time might not be a bad thing as there is a lot going on at the moment and with an election year coming up the Republicans are going to do what they can to save face. That might mean buying votes by trying to save peoples homes.

Ra

[Raybyrnes]

“But remember, you aren’t the victim (and I don’t think you see yourself as the victim, which is good); the institutions who are going to absorb your loss are.”

Banks are in the business of lending money. They take a risk for the right to the interest they earn on their money. This borrower never defrauded the bank. It might not work out the way either party hoped but I don’t see a victim.

I won’t lose sleep when WAMU, Countrywide, Merrill Lynch or any other instituition loses money on an investment. It is a game that they play and in the end they will play right more than they play wrong.

Right now djrob has the tough choice of deciding whether the initial capital he used is at this point a SUNK cost or if there is still some intrinsic value in holding his property.

I tend to think that 401K should be a lock box principal so I agree with many of the othe posters who have suggested not raiding it. I also know others who see the 401k as a guarantee fund that can be thought of as an interst free loan. People have differnt way of looking at their money.

One thing that people havn’t thrown out there is the fact that if you continue to hold on and the environment deteriorates further the Federal Governemtn may step in to help the banks which might mean more potential to help you. Buying some additional time might not be a bad thing as there is a lot going on at the moment and with an election year coming up the Republicans are going to do what they can to save face. That might mean buying votes by trying to save peoples homes.

Ra

[djrobsd]

Ray,

You mention an interesting point there. While I’m sure they aren’t just going to force the banks to re-finance buyers at more affordable terms, it’s very likely they will get rid of the debt forgiveness tax. So, what are the odds this will be retroactive to a certain point? Or do you think they will sign it into law effective Jan 1, and anyone who threw the keys back before then are just going to be SOL?

We’ll see how it goes, my neighbor just reduced her place to 339k and I owe 345k on mine, so it’s not looking to good.

[djrobsd]

Ray,

You mention an interesting point there. While I’m sure they aren’t just going to force the banks to re-finance buyers at more affordable terms, it’s very likely they will get rid of the debt forgiveness tax. So, what are the odds this will be retroactive to a certain point? Or do you think they will sign it into law effective Jan 1, and anyone who threw the keys back before then are just going to be SOL?

We’ll see how it goes, my neighbor just reduced her place to 339k and I owe 345k on mine, so it’s not looking to good.

[djrobsd]

Ray,

You mention an interesting point there. While I’m sure they aren’t just going to force the banks to re-finance buyers at more affordable terms, it’s very likely they will get rid of the debt forgiveness tax. So, what are the odds this will be retroactive to a certain point? Or do you think they will sign it into law effective Jan 1, and anyone who threw the keys back before then are just going to be SOL?

We’ll see how it goes, my neighbor just reduced her place to 339k and I owe 345k on mine, so it’s not looking to good.

[djrobsd]

Ray,

You mention an interesting point there. While I’m sure they aren’t just going to force the banks to re-finance buyers at more affordable terms, it’s very likely they will get rid of the debt forgiveness tax. So, what are the odds this will be retroactive to a certain point? Or do you think they will sign it into law effective Jan 1, and anyone who threw the keys back before then are just going to be SOL?

We’ll see how it goes, my neighbor just reduced her place to 339k and I owe 345k on mine, so it’s not looking to good.

[Raybyrnes]

There are a lot of things that can happen. The average Joe thinks on the level of rates and points. The mechanics of mortgage backed securities occurs on the secondary market. If the government steps in and guarantees the loans they become more valuable to institutional purchasers. This provides lenders with better margins wherby they can reduce rates and remain profitable.

I hate to tell people to throw good money after bad money but there could be help around the corner. The bottom line is that you ahve to live somewhere for the time being and you still have a few years before the rates reset.

Besides that the winter is a bad time to be a seller and typically a good time to be a buyer. Those who have cash are really looking to low ball at this point. I would want to wait this out until some the the legislative dust settles.

There were a lot of people who bought at the high point in a lot of real estate cycles and those who were able to hold on did OK over THE LONG HAUL.

Besides that, you suggested that you liked your place in all of your posts. My thing to you is what are the job prospects? Any chance your income could rise by 10 or 20% over the next 1 to 5 years and if it’s not is there anything you could be doing to get it going in that direction.

[Raybyrnes]

There are a lot of things that can happen. The average Joe thinks on the level of rates and points. The mechanics of mortgage backed securities occurs on the secondary market. If the government steps in and guarantees the loans they become more valuable to institutional purchasers. This provides lenders with better margins wherby they can reduce rates and remain profitable.

I hate to tell people to throw good money after bad money but there could be help around the corner. The bottom line is that you ahve to live somewhere for the time being and you still have a few years before the rates reset.

Besides that the winter is a bad time to be a seller and typically a good time to be a buyer. Those who have cash are really looking to low ball at this point. I would want to wait this out until some the the legislative dust settles.

There were a lot of people who bought at the high point in a lot of real estate cycles and those who were able to hold on did OK over THE LONG HAUL.

Besides that, you suggested that you liked your place in all of your posts. My thing to you is what are the job prospects? Any chance your income could rise by 10 or 20% over the next 1 to 5 years and if it’s not is there anything you could be doing to get it going in that direction.

[Raybyrnes]

There are a lot of things that can happen. The average Joe thinks on the level of rates and points. The mechanics of mortgage backed securities occurs on the secondary market. If the government steps in and guarantees the loans they become more valuable to institutional purchasers. This provides lenders with better margins wherby they can reduce rates and remain profitable.

I hate to tell people to throw good money after bad money but there could be help around the corner. The bottom line is that you ahve to live somewhere for the time being and you still have a few years before the rates reset.

Besides that the winter is a bad time to be a seller and typically a good time to be a buyer. Those who have cash are really looking to low ball at this point. I would want to wait this out until some the the legislative dust settles.

There were a lot of people who bought at the high point in a lot of real estate cycles and those who were able to hold on did OK over THE LONG HAUL.

Besides that, you suggested that you liked your place in all of your posts. My thing to you is what are the job prospects? Any chance your income could rise by 10 or 20% over the next 1 to 5 years and if it’s not is there anything you could be doing to get it going in that direction.

[Raybyrnes]

There are a lot of things that can happen. The average Joe thinks on the level of rates and points. The mechanics of mortgage backed securities occurs on the secondary market. If the government steps in and guarantees the loans they become more valuable to institutional purchasers. This provides lenders with better margins wherby they can reduce rates and remain profitable.

I hate to tell people to throw good money after bad money but there could be help around the corner. The bottom line is that you ahve to live somewhere for the time being and you still have a few years before the rates reset.

Besides that the winter is a bad time to be a seller and typically a good time to be a buyer. Those who have cash are really looking to low ball at this point. I would want to wait this out until some the the legislative dust settles.

There were a lot of people who bought at the high point in a lot of real estate cycles and those who were able to hold on did OK over THE LONG HAUL.

Besides that, you suggested that you liked your place in all of your posts. My thing to you is what are the job prospects? Any chance your income could rise by 10 or 20% over the next 1 to 5 years and if it’s not is there anything you could be doing to get it going in that direction.

[Deserted]

Don’t overlook a critical point.

Fat_lazy_union and nostradamos are giving excellent advice, but I want to highlight one critical point that they’ve already brought up.

You probably have a non-recourse loan. I would advise you to get an expert third party to verify that. If true, GMAC will almost certainly want you to sign a new loan if they cut you any slack on the interest. This will almost certainly be a recourse loan. In your position, it sounds like a recourse loan would be a potential financial timebomb. DO NOT SIGN A RECOURSE LOAN UNDER ANY CIRCUMSTANCES.

As all other posters have pointed out, do not I repeat do not cash in your IRA to placate GMAC.

The time for assessing blame for getting into this loan is long past. For what it’s worth (not much), in my opinion offering these loans is the moral equivalent of giving car keys to someone who’s a staggering drunk.

[Deserted]

Don’t overlook a critical point.

Fat_lazy_union and nostradamos are giving excellent advice, but I want to highlight one critical point that they’ve already brought up.

You probably have a non-recourse loan. I would advise you to get an expert third party to verify that. If true, GMAC will almost certainly want you to sign a new loan if they cut you any slack on the interest. This will almost certainly be a recourse loan. In your position, it sounds like a recourse loan would be a potential financial timebomb. DO NOT SIGN A RECOURSE LOAN UNDER ANY CIRCUMSTANCES.

As all other posters have pointed out, do not I repeat do not cash in your IRA to placate GMAC.

The time for assessing blame for getting into this loan is long past. For what it’s worth (not much), in my opinion offering these loans is the moral equivalent of giving car keys to someone who’s a staggering drunk.

[Author]

Posts