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

[no_such_reality]

Hmm, so my taxes are subsidizing the loans for him to stay in a house I can’t buy because he’s staying in it subsidized by my taxes. 🙂 Nothing to hate there.

Seriously, for your friend, it’s a good deal. For Joe Schmoe, maybe, maybe not. How many are going to increase their incomes by 6% a year? Honestly, if I could get the deal, I would.

And again, not necessarily your friend, but for Joe Average borrower that didn’t understand their option ARMs, do you think they understand this deal or do they just understand they get to stay as long as they make payments?

By real problem is more simple, it’s the DTI target. 31%. Studies have repeatedly show that in excess of 30% of income going to rent is a driver of poverty. This is very close to renting and for many, I suspect it will be a gateway to poverty.

[sdrealtor]

If prices go down or stay flat it doesnt matter to him. Its his home and its cheaper than rent. At some point in time prices will go up simply because of long term inflation but that is not part of the equation for him. He is very settled in to say the least.

As for the recourse loan, there is essentially no such thing on a 1st TD even a cash out refinanced 1st TD. California is a one action state and if the lender forecloses they cant pursue a deficiency judgement. NOw 2nd TD’s are another matter.

[sdrealtor]

If prices go down or stay flat it doesnt matter to him. Its his home and its cheaper than rent. At some point in time prices will go up simply because of long term inflation but that is not part of the equation for him. He is very settled in to say the least.

As for the recourse loan, there is essentially no such thing on a 1st TD even a cash out refinanced 1st TD. California is a one action state and if the lender forecloses they cant pursue a deficiency judgement. NOw 2nd TD’s are another matter.

[sdrealtor]

If prices go down or stay flat it doesnt matter to him. Its his home and its cheaper than rent. At some point in time prices will go up simply because of long term inflation but that is not part of the equation for him. He is very settled in to say the least.

As for the recourse loan, there is essentially no such thing on a 1st TD even a cash out refinanced 1st TD. California is a one action state and if the lender forecloses they cant pursue a deficiency judgement. NOw 2nd TD’s are another matter.

[sdrealtor]

If prices go down or stay flat it doesnt matter to him. Its his home and its cheaper than rent. At some point in time prices will go up simply because of long term inflation but that is not part of the equation for him. He is very settled in to say the least.

As for the recourse loan, there is essentially no such thing on a 1st TD even a cash out refinanced 1st TD. California is a one action state and if the lender forecloses they cant pursue a deficiency judgement. NOw 2nd TD’s are another matter.

[sdrealtor]

If prices go down or stay flat it doesnt matter to him. Its his home and its cheaper than rent. At some point in time prices will go up simply because of long term inflation but that is not part of the equation for him. He is very settled in to say the least.

As for the recourse loan, there is essentially no such thing on a 1st TD even a cash out refinanced 1st TD. California is a one action state and if the lender forecloses they cant pursue a deficiency judgement. NOw 2nd TD’s are another matter.

[sdrealtor]

nsr,
You gotta understand the concept of sunk costs. The property has declined in value and we cant change that right now. The big WS banks are being propped up by our tax dollars and we cant change that either. If the lender forecloses the loss is greater and incured immediately. That would require an even greater tax subsidy.

The people getting these modifications go through alot of hoops to get them. I didnt calculate the 6% number but I’ll take your word on that. Thats not a huge number and remember after 7 years it capped so if your income goes up less than 6% you can catch up in a few more years.

The papers are very clear and will there is plenty of legal mumbo jumbo fine print the important material points are all very straight forward and clearly stated. You would have to be an imbicile not to understand. granted there are plenty of imbiciles in this country.

Your simplification of the real problem is really flawed. Rent is not tax deductible while the interest and taxes that comprise the majority of that payment are. So the 31% of income on housing is 20 to 25% with the tax benefit. Also rent can go up every year but after 7 years the payments here are capped. Moving every couple of years is expensive while sitting on your couch watching South Park re-runs for the next 20 years is pretty cheap.

[sdrealtor]

nsr,
You gotta understand the concept of sunk costs. The property has declined in value and we cant change that right now. The big WS banks are being propped up by our tax dollars and we cant change that either. If the lender forecloses the loss is greater and incured immediately. That would require an even greater tax subsidy.

The people getting these modifications go through alot of hoops to get them. I didnt calculate the 6% number but I’ll take your word on that. Thats not a huge number and remember after 7 years it capped so if your income goes up less than 6% you can catch up in a few more years.

The papers are very clear and will there is plenty of legal mumbo jumbo fine print the important material points are all very straight forward and clearly stated. You would have to be an imbicile not to understand. granted there are plenty of imbiciles in this country.

Your simplification of the real problem is really flawed. Rent is not tax deductible while the interest and taxes that comprise the majority of that payment are. So the 31% of income on housing is 20 to 25% with the tax benefit. Also rent can go up every year but after 7 years the payments here are capped. Moving every couple of years is expensive while sitting on your couch watching South Park re-runs for the next 20 years is pretty cheap.

[sdrealtor]

nsr,
You gotta understand the concept of sunk costs. The property has declined in value and we cant change that right now. The big WS banks are being propped up by our tax dollars and we cant change that either. If the lender forecloses the loss is greater and incured immediately. That would require an even greater tax subsidy.

The people getting these modifications go through alot of hoops to get them. I didnt calculate the 6% number but I’ll take your word on that. Thats not a huge number and remember after 7 years it capped so if your income goes up less than 6% you can catch up in a few more years.

The papers are very clear and will there is plenty of legal mumbo jumbo fine print the important material points are all very straight forward and clearly stated. You would have to be an imbicile not to understand. granted there are plenty of imbiciles in this country.

Your simplification of the real problem is really flawed. Rent is not tax deductible while the interest and taxes that comprise the majority of that payment are. So the 31% of income on housing is 20 to 25% with the tax benefit. Also rent can go up every year but after 7 years the payments here are capped. Moving every couple of years is expensive while sitting on your couch watching South Park re-runs for the next 20 years is pretty cheap.

[sdrealtor]

nsr,
You gotta understand the concept of sunk costs. The property has declined in value and we cant change that right now. The big WS banks are being propped up by our tax dollars and we cant change that either. If the lender forecloses the loss is greater and incured immediately. That would require an even greater tax subsidy.

The people getting these modifications go through alot of hoops to get them. I didnt calculate the 6% number but I’ll take your word on that. Thats not a huge number and remember after 7 years it capped so if your income goes up less than 6% you can catch up in a few more years.

The papers are very clear and will there is plenty of legal mumbo jumbo fine print the important material points are all very straight forward and clearly stated. You would have to be an imbicile not to understand. granted there are plenty of imbiciles in this country.

Your simplification of the real problem is really flawed. Rent is not tax deductible while the interest and taxes that comprise the majority of that payment are. So the 31% of income on housing is 20 to 25% with the tax benefit. Also rent can go up every year but after 7 years the payments here are capped. Moving every couple of years is expensive while sitting on your couch watching South Park re-runs for the next 20 years is pretty cheap.

[sdrealtor]

nsr,
You gotta understand the concept of sunk costs. The property has declined in value and we cant change that right now. The big WS banks are being propped up by our tax dollars and we cant change that either. If the lender forecloses the loss is greater and incured immediately. That would require an even greater tax subsidy.

The people getting these modifications go through alot of hoops to get them. I didnt calculate the 6% number but I’ll take your word on that. Thats not a huge number and remember after 7 years it capped so if your income goes up less than 6% you can catch up in a few more years.

The papers are very clear and will there is plenty of legal mumbo jumbo fine print the important material points are all very straight forward and clearly stated. You would have to be an imbicile not to understand. granted there are plenty of imbiciles in this country.

Your simplification of the real problem is really flawed. Rent is not tax deductible while the interest and taxes that comprise the majority of that payment are. So the 31% of income on housing is 20 to 25% with the tax benefit. Also rent can go up every year but after 7 years the payments here are capped. Moving every couple of years is expensive while sitting on your couch watching South Park re-runs for the next 20 years is pretty cheap.

[no_such_reality]

Renting doesn’t have property tax and maintenance either…

I get the sunk costs, it’s all completely logical. If I was the bank, I’d cut that deal. If I was your friend, I’d cut that deal. If I was running the government, I’d cut the deal.

I stand by my original soundbite. The deal for many will be financial serfdom.

Your friend will be fine, a new career, willing and able to change careers to stay where he wants to stay is a total win. Their income will probably rise faster than the 6% payment increases. Don’t know if that is true for the masses.

The big brains in Washington think realising the loses is too damaging. They also have amassed $13 Trillion in debt. I have my doubts.

[no_such_reality]

Renting doesn’t have property tax and maintenance either…

I get the sunk costs, it’s all completely logical. If I was the bank, I’d cut that deal. If I was your friend, I’d cut that deal. If I was running the government, I’d cut the deal.

I stand by my original soundbite. The deal for many will be financial serfdom.

Your friend will be fine, a new career, willing and able to change careers to stay where he wants to stay is a total win. Their income will probably rise faster than the 6% payment increases. Don’t know if that is true for the masses.

The big brains in Washington think realising the loses is too damaging. They also have amassed $13 Trillion in debt. I have my doubts.

[no_such_reality]

Renting doesn’t have property tax and maintenance either…

I get the sunk costs, it’s all completely logical. If I was the bank, I’d cut that deal. If I was your friend, I’d cut that deal. If I was running the government, I’d cut the deal.

I stand by my original soundbite. The deal for many will be financial serfdom.

Your friend will be fine, a new career, willing and able to change careers to stay where he wants to stay is a total win. Their income will probably rise faster than the 6% payment increases. Don’t know if that is true for the masses.

The big brains in Washington think realising the loses is too damaging. They also have amassed $13 Trillion in debt. I have my doubts.

[no_such_reality]

Renting doesn’t have property tax and maintenance either…

I get the sunk costs, it’s all completely logical. If I was the bank, I’d cut that deal. If I was your friend, I’d cut that deal. If I was running the government, I’d cut the deal.

I stand by my original soundbite. The deal for many will be financial serfdom.

Your friend will be fine, a new career, willing and able to change careers to stay where he wants to stay is a total win. Their income will probably rise faster than the 6% payment increases. Don’t know if that is true for the masses.

The big brains in Washington think realising the loses is too damaging. They also have amassed $13 Trillion in debt. I have my doubts.

[Author]

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