OT-What a loan modification with principal reduction really looks like

[sdrealtor]

I just spoke with a friend today who got loan documents from Chase on a loan modification with a principal reduction. He has been working on it for over 18 months. he said he would send me a copy of the docs so I hope to have them in the next couple days. Its a first and he has a small 2nd ($40K) he’s going after next. I think they wrote down his principal from about $440 to $400 (which is what his house is worth today), lowered his interest rate to 2% for 5 years, then 3% in yr 6, then 4% in yr 7 and then 4.75% where it stays. Also think they gave him a 40 yr loan. He also thinks that if he ever sells he has to pay back the foregiveness if he sells for a gain. Bear in mind this is Chase who from my experience is the toughest cookie in the jar to get anything out of. Bottomline his payment with principal, interest, taxes and insurance will be about $1500 and it was about $2300 on an interest only loan. Needless to say he is very excited as it will keep him in his house. He said he could rent the place out for $2200.

I’ll add more when I see the actual loan docs.

[CA renter]

A friend of mine who is trying to get a loan modification has related similar terms (but no principal reduction…yet).

Again, we are back to temporary “teaser” loans, though I’ll admit that the 4.75% cap is very generous to the borrower.

They should also stipulate that if the borrower decides to rent the place out, the lender should get every penny of the rental income.

[CA renter]

A friend of mine who is trying to get a loan modification has related similar terms (but no principal reduction…yet).

Again, we are back to temporary “teaser” loans, though I’ll admit that the 4.75% cap is very generous to the borrower.

They should also stipulate that if the borrower decides to rent the place out, the lender should get every penny of the rental income.

[CA renter]

A friend of mine who is trying to get a loan modification has related similar terms (but no principal reduction…yet).

Again, we are back to temporary “teaser” loans, though I’ll admit that the 4.75% cap is very generous to the borrower.

They should also stipulate that if the borrower decides to rent the place out, the lender should get every penny of the rental income.

[CA renter]

A friend of mine who is trying to get a loan modification has related similar terms (but no principal reduction…yet).

Again, we are back to temporary “teaser” loans, though I’ll admit that the 4.75% cap is very generous to the borrower.

They should also stipulate that if the borrower decides to rent the place out, the lender should get every penny of the rental income.

[CA renter]

A friend of mine who is trying to get a loan modification has related similar terms (but no principal reduction…yet).

Again, we are back to temporary “teaser” loans, though I’ll admit that the 4.75% cap is very generous to the borrower.

They should also stipulate that if the borrower decides to rent the place out, the lender should get every penny of the rental income.

[SD Realtor]

I have a former client in Vista who received a similar mod from Chase and it sounds almost identical. I never saw her docs but she was going to list and sell because she was in distress but after the mod she was happy as could be as she did not have to sell and could afford to stay.

Kicking the can down the road, taking the water out of the tsunami, choose your metaphor.

[SD Realtor]

I have a former client in Vista who received a similar mod from Chase and it sounds almost identical. I never saw her docs but she was going to list and sell because she was in distress but after the mod she was happy as could be as she did not have to sell and could afford to stay.

Kicking the can down the road, taking the water out of the tsunami, choose your metaphor.

[SD Realtor]

I have a former client in Vista who received a similar mod from Chase and it sounds almost identical. I never saw her docs but she was going to list and sell because she was in distress but after the mod she was happy as could be as she did not have to sell and could afford to stay.

Kicking the can down the road, taking the water out of the tsunami, choose your metaphor.

[SD Realtor]

I have a former client in Vista who received a similar mod from Chase and it sounds almost identical. I never saw her docs but she was going to list and sell because she was in distress but after the mod she was happy as could be as she did not have to sell and could afford to stay.

Kicking the can down the road, taking the water out of the tsunami, choose your metaphor.

[SD Realtor]

I have a former client in Vista who received a similar mod from Chase and it sounds almost identical. I never saw her docs but she was going to list and sell because she was in distress but after the mod she was happy as could be as she did not have to sell and could afford to stay.

Kicking the can down the road, taking the water out of the tsunami, choose your metaphor.

[sdrealtor]

No metaphor for my friend. He was out of work and the 2% rate on the trial rate kept him going. He kept current on the 2nd which is only about $100 per month. He’s back to work and his home is saved. The bank never took a loss and down the road should get all money back. They reduced the interest income they got but after several years will be getting what are now current rates my friend could not have refi’d into because he had no equity.

BTW, he has a roomate in his house and has for years. He has owned the house since 1999 and had to pull out about $200K to settle his divorce. He has never lived extravagently or atm’d himself for personal enjoyment. To the contrary most people would consider him a bit of a sad sack. He was completely truthful in everything he did with them and dsiclosed his situation income/ assets/expenses accurately. He piled up some credit card debt which he will be able to get caught up on also.

To me this looks like a win-win and a system that is working at least for some deserving folks.

[sdrealtor]

No metaphor for my friend. He was out of work and the 2% rate on the trial rate kept him going. He kept current on the 2nd which is only about $100 per month. He’s back to work and his home is saved. The bank never took a loss and down the road should get all money back. They reduced the interest income they got but after several years will be getting what are now current rates my friend could not have refi’d into because he had no equity.

BTW, he has a roomate in his house and has for years. He has owned the house since 1999 and had to pull out about $200K to settle his divorce. He has never lived extravagently or atm’d himself for personal enjoyment. To the contrary most people would consider him a bit of a sad sack. He was completely truthful in everything he did with them and dsiclosed his situation income/ assets/expenses accurately. He piled up some credit card debt which he will be able to get caught up on also.

To me this looks like a win-win and a system that is working at least for some deserving folks.

[sdrealtor]

No metaphor for my friend. He was out of work and the 2% rate on the trial rate kept him going. He kept current on the 2nd which is only about $100 per month. He’s back to work and his home is saved. The bank never took a loss and down the road should get all money back. They reduced the interest income they got but after several years will be getting what are now current rates my friend could not have refi’d into because he had no equity.

BTW, he has a roomate in his house and has for years. He has owned the house since 1999 and had to pull out about $200K to settle his divorce. He has never lived extravagently or atm’d himself for personal enjoyment. To the contrary most people would consider him a bit of a sad sack. He was completely truthful in everything he did with them and dsiclosed his situation income/ assets/expenses accurately. He piled up some credit card debt which he will be able to get caught up on also.

To me this looks like a win-win and a system that is working at least for some deserving folks.

[sdrealtor]

No metaphor for my friend. He was out of work and the 2% rate on the trial rate kept him going. He kept current on the 2nd which is only about $100 per month. He’s back to work and his home is saved. The bank never took a loss and down the road should get all money back. They reduced the interest income they got but after several years will be getting what are now current rates my friend could not have refi’d into because he had no equity.

BTW, he has a roomate in his house and has for years. He has owned the house since 1999 and had to pull out about $200K to settle his divorce. He has never lived extravagently or atm’d himself for personal enjoyment. To the contrary most people would consider him a bit of a sad sack. He was completely truthful in everything he did with them and dsiclosed his situation income/ assets/expenses accurately. He piled up some credit card debt which he will be able to get caught up on also.

To me this looks like a win-win and a system that is working at least for some deserving folks.

[Author]

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