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

[andymajumder]

“This is a pretty responsible guy rather than someone who lived off his house like an atm. ”

Does it really matter….being responsible is also a relative term. Basically, his 200K divorce got funded through taxpayers money.

As a renter, I feel sick about this, will a bank give me a 2% rate even with an excellent credit score, so that I can purchase a house well beyond my means and keep my payments to 31% of my gross. No, of course not…

We as a society will collectively pay (are paying) for these bailouts, trust me as these things go on and unemployment doesn’t improve, there will some kind of social unrest in this country as a ceratin section of people keep getting bailed out….

In fact, I myself wouldn’t mind taking to the streets to protest the fact that my tax payer money is being spent to keep losers in their expensive homes.

[Arraya]

yes, people with jobs getting “help” to pay for an overpriced home is absurd and people that think that money is is to help those people rather than the institutions that hold the mortgages is equally absurd.

[Arraya]

yes, people with jobs getting “help” to pay for an overpriced home is absurd and people that think that money is is to help those people rather than the institutions that hold the mortgages is equally absurd.

[Arraya]

yes, people with jobs getting “help” to pay for an overpriced home is absurd and people that think that money is is to help those people rather than the institutions that hold the mortgages is equally absurd.

[Arraya]

yes, people with jobs getting “help” to pay for an overpriced home is absurd and people that think that money is is to help those people rather than the institutions that hold the mortgages is equally absurd.

[Arraya]

yes, people with jobs getting “help” to pay for an overpriced home is absurd and people that think that money is is to help those people rather than the institutions that hold the mortgages is equally absurd.

[sdrealtor]

Sorry andy but that is not the case. His principal was temporarily written down by about 40K and the loan amount is the current value of his home. If he ever sells the bank will recover its money (based upon what I beleive the terms are thus far). I dont hink he will ever move or at least not in the next 10 years. His divorce was not funded by anyone other than him as the equity was and for the most part still is there. The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books. There are all sorts of assistance programs in theis country and this is one. I’m sorry you feel like you are on the wrong side of this but trust me, you would not trade places with him if given the chance.

[sdrealtor]

Sorry andy but that is not the case. His principal was temporarily written down by about 40K and the loan amount is the current value of his home. If he ever sells the bank will recover its money (based upon what I beleive the terms are thus far). I dont hink he will ever move or at least not in the next 10 years. His divorce was not funded by anyone other than him as the equity was and for the most part still is there. The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books. There are all sorts of assistance programs in theis country and this is one. I’m sorry you feel like you are on the wrong side of this but trust me, you would not trade places with him if given the chance.

[sdrealtor]

Sorry andy but that is not the case. His principal was temporarily written down by about 40K and the loan amount is the current value of his home. If he ever sells the bank will recover its money (based upon what I beleive the terms are thus far). I dont hink he will ever move or at least not in the next 10 years. His divorce was not funded by anyone other than him as the equity was and for the most part still is there. The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books. There are all sorts of assistance programs in theis country and this is one. I’m sorry you feel like you are on the wrong side of this but trust me, you would not trade places with him if given the chance.

[sdrealtor]

Sorry andy but that is not the case. His principal was temporarily written down by about 40K and the loan amount is the current value of his home. If he ever sells the bank will recover its money (based upon what I beleive the terms are thus far). I dont hink he will ever move or at least not in the next 10 years. His divorce was not funded by anyone other than him as the equity was and for the most part still is there. The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books. There are all sorts of assistance programs in theis country and this is one. I’m sorry you feel like you are on the wrong side of this but trust me, you would not trade places with him if given the chance.

[sdrealtor]

Sorry andy but that is not the case. His principal was temporarily written down by about 40K and the loan amount is the current value of his home. If he ever sells the bank will recover its money (based upon what I beleive the terms are thus far). I dont hink he will ever move or at least not in the next 10 years. His divorce was not funded by anyone other than him as the equity was and for the most part still is there. The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books. There are all sorts of assistance programs in theis country and this is one. I’m sorry you feel like you are on the wrong side of this but trust me, you would not trade places with him if given the chance.

[ucodegen]

[quote sdrealtor]
The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books.
[/quote]
The first statement is not accurate. The loss would be nowhere near $200K on a property that has a current value of $400K. The bank is taking a partial loss in the loan negotiation. The second two sentences are much more accurate of what is really going on. The only problem is that the fed is tampering in these steps with the blind intent of ‘we got to keep those people in those houses’. To do this, the fed is putting their finger on the scale when the bank is weighing whether there is a better outcome on liquidation or renegotiation of the loan. The cost of this is carried by the taxpayers and is being done quite opaquely – contrary to the ‘promise’ of the current administration.

Unfortunately, one aspect of the costs of supporting current house prices is being ignored by the fed. If the price of housing is kept at the current high percentage of available income, less discretionary income is available for other things. ie. to support other businesses other than banks, retirement, health care. It also causes a higher barrier to entry for new homeowners.

Using a metaphore: Congress has forgotten one thing. You can’t increase the size of one piece of the pie without reducing the size of other pieces unless you work on increasing the total size of the pie..

[ucodegen]

[quote sdrealtor]
The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books.
[/quote]
The first statement is not accurate. The loss would be nowhere near $200K on a property that has a current value of $400K. The bank is taking a partial loss in the loan negotiation. The second two sentences are much more accurate of what is really going on. The only problem is that the fed is tampering in these steps with the blind intent of ‘we got to keep those people in those houses’. To do this, the fed is putting their finger on the scale when the bank is weighing whether there is a better outcome on liquidation or renegotiation of the loan. The cost of this is carried by the taxpayers and is being done quite opaquely – contrary to the ‘promise’ of the current administration.

Unfortunately, one aspect of the costs of supporting current house prices is being ignored by the fed. If the price of housing is kept at the current high percentage of available income, less discretionary income is available for other things. ie. to support other businesses other than banks, retirement, health care. It also causes a higher barrier to entry for new homeowners.

Using a metaphore: Congress has forgotten one thing. You can’t increase the size of one piece of the pie without reducing the size of other pieces unless you work on increasing the total size of the pie..

[ucodegen]

[quote sdrealtor]
The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books.
[/quote]
The first statement is not accurate. The loss would be nowhere near $200K on a property that has a current value of $400K. The bank is taking a partial loss in the loan negotiation. The second two sentences are much more accurate of what is really going on. The only problem is that the fed is tampering in these steps with the blind intent of ‘we got to keep those people in those houses’. To do this, the fed is putting their finger on the scale when the bank is weighing whether there is a better outcome on liquidation or renegotiation of the loan. The cost of this is carried by the taxpayers and is being done quite opaquely – contrary to the ‘promise’ of the current administration.

Unfortunately, one aspect of the costs of supporting current house prices is being ignored by the fed. If the price of housing is kept at the current high percentage of available income, less discretionary income is available for other things. ie. to support other businesses other than banks, retirement, health care. It also causes a higher barrier to entry for new homeowners.

Using a metaphore: Congress has forgotten one thing. You can’t increase the size of one piece of the pie without reducing the size of other pieces unless you work on increasing the total size of the pie..

[ucodegen]

[quote sdrealtor]
The bank is avoiding a loss and his interest rate is being subsidized but no where near $200K. Part of the process he went through involves the bank making a NPV calculation. If it was better to liquidate they would have done that but the asset is more valuable to them and hence tax payers by keeping this one on the books.
[/quote]
The first statement is not accurate. The loss would be nowhere near $200K on a property that has a current value of $400K. The bank is taking a partial loss in the loan negotiation. The second two sentences are much more accurate of what is really going on. The only problem is that the fed is tampering in these steps with the blind intent of ‘we got to keep those people in those houses’. To do this, the fed is putting their finger on the scale when the bank is weighing whether there is a better outcome on liquidation or renegotiation of the loan. The cost of this is carried by the taxpayers and is being done quite opaquely – contrary to the ‘promise’ of the current administration.

Unfortunately, one aspect of the costs of supporting current house prices is being ignored by the fed. If the price of housing is kept at the current high percentage of available income, less discretionary income is available for other things. ie. to support other businesses other than banks, retirement, health care. It also causes a higher barrier to entry for new homeowners.

Using a metaphore: Congress has forgotten one thing. You can’t increase the size of one piece of the pie without reducing the size of other pieces unless you work on increasing the total size of the pie..

[Author]

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