OT: I made bad choices, everyone pitty me.

[CA renter]

[quote=Russell][quote=SellingMyHome][quote=Russell]

Arraya, I guess you didn’t read the whole thread. Lots of people think they should get government sponsored mark downs and keep the house and in many cases,all the goodies and good life memories they bought with the equity. Again, I think you can’t blame them for trying but it is offensive to think about the mechanisms and repercussions involved. I agree with meandale, I would rather see this level of corruption between the government and the banks than the government and individuals or the government, banks and individuals.[/quote]

I still wonder if there wasn’t some way to forgive principal for owners by giving it to their lenders. I’ve heard Jon Stewart discuss it before, between jokes, and it certainly sounded good to me. He is actually fairly intelligent, is neither liberal or conservative.

I’d like to hear arguments for and against that idea.[/quote]

Vulture Funds Raising Profits By Reducing Principal Balances On Mortgages
By twist
When a lousy economy gave them lemons, “vulture” investment firms have found a way to make government backed lemonade:

Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.

While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.

So how does this work? Here’s one example:

Last December, the couple got a letter saying that a firm had purchased the mortgage on their home in Pico Rivera, Calif., from Chase Home Finance for less than its original value. “We want to share this discount with you,” the letter said.

“I couldn’t believe it,” said Mr. Alva, a 62-year-old janitor and father of three. “I kept thinking to myself, ‘Something is wrong, something is wrong. This sounds too good.’ ”

But it was true. The balance on the Alvas’ mortgage was ultimately reduced to $314,000 from $440,000.

The firm behind the reduction remains a mystery. The Alvas’ new loan, backed by the F.H.A., was made by Primary Residential Mortgage, a lender based in Utah. But the letter came from a company called MCM Capital Partners.

In the letter, MCM said the couple’s loan was owned by something called MCMCap Homeowners’ Advantage Trust III. But MCM’s co-founders said in an interview that MCM does not own any mortgages. They would not reveal the investor that owned the Alvas’ loan because they had agreed to keep that client’s identity confidential.

MCMCap is based out of Bethesda, MD. At MCMCap’s website, they describe their operations like this:
MCMCAP Partners LLC and MCMCAP Homeowners Advantage Trusts (together, ‘MCM’) is an independent, private investment trust that invests in residential mortgages. Specifically, we purchase mortgages from some of the largest banks and Wall Street firms and service the loans through our partner, Ocwen Financial Corporation (’Ocwen’). Ocwen is responsible for billing, collection, and reporting borrower payments and loan balances. The credit crisis has allowed MCM to buy loans at a discount which in turn allows us to provide our customers with a unique opportunity: to forgive a portion of the loan balance when a qualified borrower refinances or pays off the loan for any reason. There is no fine print and there are no strings attached! MCM has to date provided principal reductions to thousands of mortgage customers across the country.

We offer debt reduction on every loan in our portfolio as long as borrowers remain current on their payments. For those borrowers who qualify for refinancing, we insist that the new loan offers tangible benefits, including lower interest rates, more stable loan programs, and limited or no closing costs. This unique program for our customers reduces mortgage payment burdens, protects credit histories, and helps stabilize property values; all of which are essential factors in the recovery of the U.S. economy.

There doesn’t seem to be a big question as to whether this is good for the borrower or the investors. What is the question is how much risk these loans have for the government, and ultimately the U.S. taxpayer.[/quote]

And the most important part of this is that the new mortgage isn’t recorded as a sale.

Some of us have been harping on this for a long time. If an FB gets a principal reduction, the house should be re-valued to the “new” price — and it should be mandated that homes with new principal reductions be used as comps for new sales. After all, the revised loan amount is what the borrower could really afford — the new loan amount is the real sales price. The lender is effectively re-selling the house to the previous buyer at a reduced price. Must be nice!

[NotCranky]

“And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.

[NotCranky]

“And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.

[NotCranky]

“And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.

[NotCranky]

“And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.

[NotCranky]

“And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.

[CA renter]

[quote=Russell]”And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.[/quote]

Maybe, maybe not. The fact is that the original sale (and the new valuations of homes in the area which were used for HELOCs and cash-out refis) was no more real than the tooth fairy.

If we’re going to go down this path of principal reductions, let’s at least make sure future valuations (for refis and sales) in the area reflect the real, affordable prices in the neighborhood.

[CA renter]

[quote=Russell]”And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.[/quote]

Maybe, maybe not. The fact is that the original sale (and the new valuations of homes in the area which were used for HELOCs and cash-out refis) was no more real than the tooth fairy.

If we’re going to go down this path of principal reductions, let’s at least make sure future valuations (for refis and sales) in the area reflect the real, affordable prices in the neighborhood.

[CA renter]

[quote=Russell]”And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.[/quote]

Maybe, maybe not. The fact is that the original sale (and the new valuations of homes in the area which were used for HELOCs and cash-out refis) was no more real than the tooth fairy.

If we’re going to go down this path of principal reductions, let’s at least make sure future valuations (for refis and sales) in the area reflect the real, affordable prices in the neighborhood.

[CA renter]

[quote=Russell]”And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.[/quote]

Maybe, maybe not. The fact is that the original sale (and the new valuations of homes in the area which were used for HELOCs and cash-out refis) was no more real than the tooth fairy.

If we’re going to go down this path of principal reductions, let’s at least make sure future valuations (for refis and sales) in the area reflect the real, affordable prices in the neighborhood.

[CA renter]

[quote=Russell]”And the most important part of this is that the new mortgage isn’t recorded as a sale.”

I really think for the sake of home valuations it probably is a moot point. The forgiven amount probably doesn’t normally drop the loan total below already existing recent comps from market transactions.[/quote]

Maybe, maybe not. The fact is that the original sale (and the new valuations of homes in the area which were used for HELOCs and cash-out refis) was no more real than the tooth fairy.

If we’re going to go down this path of principal reductions, let’s at least make sure future valuations (for refis and sales) in the area reflect the real, affordable prices in the neighborhood.

[SD Realtor]

I would strongly agree with CAR. Not only could the reduction be under the recent comps, to me it is a material fact. Frankly if I were buying a home I would like to know if there were alot of loan mods or reductions in that area. It is also valuable for people who are perhaps trying to petition property tax reductions and cannot find many comps.

I cannot think of any good reasons why the information should be concealed. On the flip side, knowledge of that information would seemingly help not only future homeowners and appraisers, but could be argued that for people buying, if other lenders knew of that information that would be helpful as well. Maybe not helpful to the buyer because the lenders may treat that in a negative manner but still, getting the information out will be good.

To me loan mods and other reductions are this grey cloud we all hear of and have stories about, but don’t really know much about. At the very least reductions should be recorded.

I understand where you are coming from Russ and there is a privacy issue…makes sense…I fall on the other side of it though.

[SD Realtor]

I would strongly agree with CAR. Not only could the reduction be under the recent comps, to me it is a material fact. Frankly if I were buying a home I would like to know if there were alot of loan mods or reductions in that area. It is also valuable for people who are perhaps trying to petition property tax reductions and cannot find many comps.

I cannot think of any good reasons why the information should be concealed. On the flip side, knowledge of that information would seemingly help not only future homeowners and appraisers, but could be argued that for people buying, if other lenders knew of that information that would be helpful as well. Maybe not helpful to the buyer because the lenders may treat that in a negative manner but still, getting the information out will be good.

To me loan mods and other reductions are this grey cloud we all hear of and have stories about, but don’t really know much about. At the very least reductions should be recorded.

I understand where you are coming from Russ and there is a privacy issue…makes sense…I fall on the other side of it though.

[SD Realtor]

I would strongly agree with CAR. Not only could the reduction be under the recent comps, to me it is a material fact. Frankly if I were buying a home I would like to know if there were alot of loan mods or reductions in that area. It is also valuable for people who are perhaps trying to petition property tax reductions and cannot find many comps.

I cannot think of any good reasons why the information should be concealed. On the flip side, knowledge of that information would seemingly help not only future homeowners and appraisers, but could be argued that for people buying, if other lenders knew of that information that would be helpful as well. Maybe not helpful to the buyer because the lenders may treat that in a negative manner but still, getting the information out will be good.

To me loan mods and other reductions are this grey cloud we all hear of and have stories about, but don’t really know much about. At the very least reductions should be recorded.

I understand where you are coming from Russ and there is a privacy issue…makes sense…I fall on the other side of it though.

[SD Realtor]

I would strongly agree with CAR. Not only could the reduction be under the recent comps, to me it is a material fact. Frankly if I were buying a home I would like to know if there were alot of loan mods or reductions in that area. It is also valuable for people who are perhaps trying to petition property tax reductions and cannot find many comps.

I cannot think of any good reasons why the information should be concealed. On the flip side, knowledge of that information would seemingly help not only future homeowners and appraisers, but could be argued that for people buying, if other lenders knew of that information that would be helpful as well. Maybe not helpful to the buyer because the lenders may treat that in a negative manner but still, getting the information out will be good.

To me loan mods and other reductions are this grey cloud we all hear of and have stories about, but don’t really know much about. At the very least reductions should be recorded.

I understand where you are coming from Russ and there is a privacy issue…makes sense…I fall on the other side of it though.

[Author]

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