OT: I made bad choices, everyone pitty me.

[CA renter]

[quote=urbanrealtor][quote=CA renter]

Russell,

If you agree that “sold” comps are meaningful to current/future buyers, then it’s only reasonable that principal reductions be recorded and used as comps as well.

Why? Because loan mods with principal reductions are de facto sales to the current “owner” **at a new price,** and should be used as current comps.[/quote]

No.
There are 2 problems with your argument:

1:Modifications are not de facto sales.

What a borrower or a bank is willing to agree to as a temporary (or even permanent) stopgap measure is really pretty different than what a buyer would be willing to pay to purchase.
If I am 100k upside down, I will likely be willing to modify my principal to make me less upside down (say 30k).
However, I would never agree to buy something for 30k over market.

2:Modifications can’t currently be used as market information.
A mod is a change to a private contract.
This is not the same as an observable public sale.
There is no common database and the mods are not kept on any public or widely accessible private record system.

So to reiterate, they aren’t what you say they are and even if they were, you can’t use them in any reliable way.[/quote]

We’ll just have to agree to disagree on this one. IMHO, a permanent principal reduction is a new sale to the current borrower. The price he’s paying for the house is completely different from what he initially agreed to — and completely different from what’s been publicly recorded.

If you were going to buy in a neighborhood where all the sales this year were for $600K, wouldn’t you want to know if those borrowers were literally willing and able to pay those prices? How would you feel if you paid $600K, then found out that all your neighbors who paid $600K had their balances permanently reduced to $350K? Still think that’s not a material fact? I do.

[urbanrealtor]

[quote=CA renter]

We’ll just have to agree to disagree on this one. IMHO, a permanent principal reduction is a new sale to the current borrower. The price he’s paying for the house is completely different from what he initially agreed to — and completely different from what’s been publicly recorded.

If you were going to buy in a neighborhood where all the sales this year were for $600K, wouldn’t you want to know if those borrowers were literally willing and able to pay those prices? How would you feel if you paid $600K, then found out that all your neighbors who paid $600K had their balances permanently reduced to $350K? Still think that’s not a material fact? I do.[/quote]

I would totally want to know.
But again 2 problems:

1: Banks reduce in proportion to the market.

A bank will not reduce a balance to 60% of the market value (to take your example).
If every house on the block just sold for $600k, then the distressed borrower could sell his for $600k.
Then there would be no incentive to modify.
There would just be an incentive to foreclose or force a sale (even a short sale).
If every house just sold for $600k two years ago, then modified it to $350k last month (this reduction being based on recent sales), then it is incredibly unlikely that there are current sales at $600k.
If there are such sales then its time to call the UT and the FBI and find out if Brent Wilkes is the buyer.
I had a guy who stated to me the other day that his house was appraised at $700k in 2005 and that is what he would accept for it now.
I advised that he would probably not be selling any time soon. The same principle applies here.
Principal reductions are based on recent comps. So are new sales.

2: Modifications are not public record nor are they part of a public market.

Only the security for the original lending contract is public.
The lending contract itself (and any modifications thereof) are private.
The modification market is not an open or competitive one.
There is only one seller of the money and only one buyer of the money.
If I have a loan with Citi, I can’t shop a mod to Wells.

@CAR:
Dude, between your “fraud” posts and the discussion of how we need to change the nature of private property, talking with you is getting more and more like talking to a member of the Green Party.
This one is shining example.

[urbanrealtor]

[quote=CA renter]

We’ll just have to agree to disagree on this one. IMHO, a permanent principal reduction is a new sale to the current borrower. The price he’s paying for the house is completely different from what he initially agreed to — and completely different from what’s been publicly recorded.

If you were going to buy in a neighborhood where all the sales this year were for $600K, wouldn’t you want to know if those borrowers were literally willing and able to pay those prices? How would you feel if you paid $600K, then found out that all your neighbors who paid $600K had their balances permanently reduced to $350K? Still think that’s not a material fact? I do.[/quote]

I would totally want to know.
But again 2 problems:

1: Banks reduce in proportion to the market.

A bank will not reduce a balance to 60% of the market value (to take your example).
If every house on the block just sold for $600k, then the distressed borrower could sell his for $600k.
Then there would be no incentive to modify.
There would just be an incentive to foreclose or force a sale (even a short sale).
If every house just sold for $600k two years ago, then modified it to $350k last month (this reduction being based on recent sales), then it is incredibly unlikely that there are current sales at $600k.
If there are such sales then its time to call the UT and the FBI and find out if Brent Wilkes is the buyer.
I had a guy who stated to me the other day that his house was appraised at $700k in 2005 and that is what he would accept for it now.
I advised that he would probably not be selling any time soon. The same principle applies here.
Principal reductions are based on recent comps. So are new sales.

2: Modifications are not public record nor are they part of a public market.

Only the security for the original lending contract is public.
The lending contract itself (and any modifications thereof) are private.
The modification market is not an open or competitive one.
There is only one seller of the money and only one buyer of the money.
If I have a loan with Citi, I can’t shop a mod to Wells.

@CAR:
Dude, between your “fraud” posts and the discussion of how we need to change the nature of private property, talking with you is getting more and more like talking to a member of the Green Party.
This one is shining example.

[urbanrealtor]

[quote=CA renter]

We’ll just have to agree to disagree on this one. IMHO, a permanent principal reduction is a new sale to the current borrower. The price he’s paying for the house is completely different from what he initially agreed to — and completely different from what’s been publicly recorded.

If you were going to buy in a neighborhood where all the sales this year were for $600K, wouldn’t you want to know if those borrowers were literally willing and able to pay those prices? How would you feel if you paid $600K, then found out that all your neighbors who paid $600K had their balances permanently reduced to $350K? Still think that’s not a material fact? I do.[/quote]

I would totally want to know.
But again 2 problems:

1: Banks reduce in proportion to the market.

A bank will not reduce a balance to 60% of the market value (to take your example).
If every house on the block just sold for $600k, then the distressed borrower could sell his for $600k.
Then there would be no incentive to modify.
There would just be an incentive to foreclose or force a sale (even a short sale).
If every house just sold for $600k two years ago, then modified it to $350k last month (this reduction being based on recent sales), then it is incredibly unlikely that there are current sales at $600k.
If there are such sales then its time to call the UT and the FBI and find out if Brent Wilkes is the buyer.
I had a guy who stated to me the other day that his house was appraised at $700k in 2005 and that is what he would accept for it now.
I advised that he would probably not be selling any time soon. The same principle applies here.
Principal reductions are based on recent comps. So are new sales.

2: Modifications are not public record nor are they part of a public market.

Only the security for the original lending contract is public.
The lending contract itself (and any modifications thereof) are private.
The modification market is not an open or competitive one.
There is only one seller of the money and only one buyer of the money.
If I have a loan with Citi, I can’t shop a mod to Wells.

@CAR:
Dude, between your “fraud” posts and the discussion of how we need to change the nature of private property, talking with you is getting more and more like talking to a member of the Green Party.
This one is shining example.

[urbanrealtor]

[quote=CA renter]

We’ll just have to agree to disagree on this one. IMHO, a permanent principal reduction is a new sale to the current borrower. The price he’s paying for the house is completely different from what he initially agreed to — and completely different from what’s been publicly recorded.

If you were going to buy in a neighborhood where all the sales this year were for $600K, wouldn’t you want to know if those borrowers were literally willing and able to pay those prices? How would you feel if you paid $600K, then found out that all your neighbors who paid $600K had their balances permanently reduced to $350K? Still think that’s not a material fact? I do.[/quote]

I would totally want to know.
But again 2 problems:

1: Banks reduce in proportion to the market.

A bank will not reduce a balance to 60% of the market value (to take your example).
If every house on the block just sold for $600k, then the distressed borrower could sell his for $600k.
Then there would be no incentive to modify.
There would just be an incentive to foreclose or force a sale (even a short sale).
If every house just sold for $600k two years ago, then modified it to $350k last month (this reduction being based on recent sales), then it is incredibly unlikely that there are current sales at $600k.
If there are such sales then its time to call the UT and the FBI and find out if Brent Wilkes is the buyer.
I had a guy who stated to me the other day that his house was appraised at $700k in 2005 and that is what he would accept for it now.
I advised that he would probably not be selling any time soon. The same principle applies here.
Principal reductions are based on recent comps. So are new sales.

2: Modifications are not public record nor are they part of a public market.

Only the security for the original lending contract is public.
The lending contract itself (and any modifications thereof) are private.
The modification market is not an open or competitive one.
There is only one seller of the money and only one buyer of the money.
If I have a loan with Citi, I can’t shop a mod to Wells.

@CAR:
Dude, between your “fraud” posts and the discussion of how we need to change the nature of private property, talking with you is getting more and more like talking to a member of the Green Party.
This one is shining example.

[urbanrealtor]

[quote=CA renter]

We’ll just have to agree to disagree on this one. IMHO, a permanent principal reduction is a new sale to the current borrower. The price he’s paying for the house is completely different from what he initially agreed to — and completely different from what’s been publicly recorded.

If you were going to buy in a neighborhood where all the sales this year were for $600K, wouldn’t you want to know if those borrowers were literally willing and able to pay those prices? How would you feel if you paid $600K, then found out that all your neighbors who paid $600K had their balances permanently reduced to $350K? Still think that’s not a material fact? I do.[/quote]

I would totally want to know.
But again 2 problems:

1: Banks reduce in proportion to the market.

A bank will not reduce a balance to 60% of the market value (to take your example).
If every house on the block just sold for $600k, then the distressed borrower could sell his for $600k.
Then there would be no incentive to modify.
There would just be an incentive to foreclose or force a sale (even a short sale).
If every house just sold for $600k two years ago, then modified it to $350k last month (this reduction being based on recent sales), then it is incredibly unlikely that there are current sales at $600k.
If there are such sales then its time to call the UT and the FBI and find out if Brent Wilkes is the buyer.
I had a guy who stated to me the other day that his house was appraised at $700k in 2005 and that is what he would accept for it now.
I advised that he would probably not be selling any time soon. The same principle applies here.
Principal reductions are based on recent comps. So are new sales.

2: Modifications are not public record nor are they part of a public market.

Only the security for the original lending contract is public.
The lending contract itself (and any modifications thereof) are private.
The modification market is not an open or competitive one.
There is only one seller of the money and only one buyer of the money.
If I have a loan with Citi, I can’t shop a mod to Wells.

@CAR:
Dude, between your “fraud” posts and the discussion of how we need to change the nature of private property, talking with you is getting more and more like talking to a member of the Green Party.
This one is shining example.

[CA renter]

I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.

[CA renter]

I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.

[CA renter]

I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.

[CA renter]

I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.

[CA renter]

I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.

[urbanrealtor]

[quote=CA renter]I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.[/quote]

Well then we have some common ground.

[urbanrealtor]

[quote=CA renter]I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.[/quote]

Well then we have some common ground.

[urbanrealtor]

[quote=CA renter]I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.[/quote]

Well then we have some common ground.

[urbanrealtor]

[quote=CA renter]I’m a staunch supporter of private property rights, and even more ardently support fully transparent markets.

More than anything, I hate fraud and unethical behavior that negatively affects other people.[/quote]

Well then we have some common ground.

[Author]

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