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

[teaboy]

sdr,
If a bank sold me a $400k mortgage and after 30 years received total mortgage payments of $400k, would you consider them to have made a loss, profit or broken even on that mortgage?

tb

[Zeitgeist]

The banks also received a significant amount of bailout money and yet they are not making low interest loans to start up businesses. I have a problem with corporate welfare to the Chargers and to the big banks who have swallowed the smaller banks. The same thing happened with grocery chains, is happening with car companies and will happen with the airlines. Pretty soon it will be like the Sci Fi movie with one restaurant- Taco Bell. Good grief. Fight back people before Lieberman takes the Internet from us. This is an extension of my anti government rant and not an authentic threadjack: “Lieberman said the Internet was ‘constantly being probed by other countries for weaknesses and that “we need the capacity for the president to say to an Internet service provider, ‘We’ve got to disconnect the American Internet from all traffic coming in from this country.’”

He cited China, which has long been criticized for its Internet censorship, as an example. “Right now, China can disconnect parts of its Internet in times of war. We need to be able to do that too.”

What really scares me is his citing what China, a totalitarian regime can do, as a logical example. What is Joe smoking?

http://blogs.wsj.com/washwire/2010/06/20/lieberman-dismisses-concerns-over-internet-bill/

[Zeitgeist]

The banks also received a significant amount of bailout money and yet they are not making low interest loans to start up businesses. I have a problem with corporate welfare to the Chargers and to the big banks who have swallowed the smaller banks. The same thing happened with grocery chains, is happening with car companies and will happen with the airlines. Pretty soon it will be like the Sci Fi movie with one restaurant- Taco Bell. Good grief. Fight back people before Lieberman takes the Internet from us. This is an extension of my anti government rant and not an authentic threadjack: “Lieberman said the Internet was ‘constantly being probed by other countries for weaknesses and that “we need the capacity for the president to say to an Internet service provider, ‘We’ve got to disconnect the American Internet from all traffic coming in from this country.’”

He cited China, which has long been criticized for its Internet censorship, as an example. “Right now, China can disconnect parts of its Internet in times of war. We need to be able to do that too.”

What really scares me is his citing what China, a totalitarian regime can do, as a logical example. What is Joe smoking?

http://blogs.wsj.com/washwire/2010/06/20/lieberman-dismisses-concerns-over-internet-bill/

[Zeitgeist]

The banks also received a significant amount of bailout money and yet they are not making low interest loans to start up businesses. I have a problem with corporate welfare to the Chargers and to the big banks who have swallowed the smaller banks. The same thing happened with grocery chains, is happening with car companies and will happen with the airlines. Pretty soon it will be like the Sci Fi movie with one restaurant- Taco Bell. Good grief. Fight back people before Lieberman takes the Internet from us. This is an extension of my anti government rant and not an authentic threadjack: “Lieberman said the Internet was ‘constantly being probed by other countries for weaknesses and that “we need the capacity for the president to say to an Internet service provider, ‘We’ve got to disconnect the American Internet from all traffic coming in from this country.’”

He cited China, which has long been criticized for its Internet censorship, as an example. “Right now, China can disconnect parts of its Internet in times of war. We need to be able to do that too.”

What really scares me is his citing what China, a totalitarian regime can do, as a logical example. What is Joe smoking?

http://blogs.wsj.com/washwire/2010/06/20/lieberman-dismisses-concerns-over-internet-bill/

[Zeitgeist]

The banks also received a significant amount of bailout money and yet they are not making low interest loans to start up businesses. I have a problem with corporate welfare to the Chargers and to the big banks who have swallowed the smaller banks. The same thing happened with grocery chains, is happening with car companies and will happen with the airlines. Pretty soon it will be like the Sci Fi movie with one restaurant- Taco Bell. Good grief. Fight back people before Lieberman takes the Internet from us. This is an extension of my anti government rant and not an authentic threadjack: “Lieberman said the Internet was ‘constantly being probed by other countries for weaknesses and that “we need the capacity for the president to say to an Internet service provider, ‘We’ve got to disconnect the American Internet from all traffic coming in from this country.’”

He cited China, which has long been criticized for its Internet censorship, as an example. “Right now, China can disconnect parts of its Internet in times of war. We need to be able to do that too.”

What really scares me is his citing what China, a totalitarian regime can do, as a logical example. What is Joe smoking?

http://blogs.wsj.com/washwire/2010/06/20/lieberman-dismisses-concerns-over-internet-bill/

[Zeitgeist]

The banks also received a significant amount of bailout money and yet they are not making low interest loans to start up businesses. I have a problem with corporate welfare to the Chargers and to the big banks who have swallowed the smaller banks. The same thing happened with grocery chains, is happening with car companies and will happen with the airlines. Pretty soon it will be like the Sci Fi movie with one restaurant- Taco Bell. Good grief. Fight back people before Lieberman takes the Internet from us. This is an extension of my anti government rant and not an authentic threadjack: “Lieberman said the Internet was ‘constantly being probed by other countries for weaknesses and that “we need the capacity for the president to say to an Internet service provider, ‘We’ve got to disconnect the American Internet from all traffic coming in from this country.’”

He cited China, which has long been criticized for its Internet censorship, as an example. “Right now, China can disconnect parts of its Internet in times of war. We need to be able to do that too.”

What really scares me is his citing what China, a totalitarian regime can do, as a logical example. What is Joe smoking?

http://blogs.wsj.com/washwire/2010/06/20/lieberman-dismisses-concerns-over-internet-bill/

[no_such_reality]

[quote=sdrealtor]nsr,
It should be a win for everyone. In 5 years his income situation should be stabilized, he will have caught up on the consumer debt acquired during his layoff and he will rebuild his reserves. This is a pretty responsible guy rather than someone who lived off his house like an atm. I dont know what percentage of the distressed homeonweners fall into his category but its important to recognize there are people like him out there. Around here you would think every one of them had it coming and that no one who goes beyond 6o days late will ever return to paying their mortgage without defaulting.[/quote]

Yes, I said maybe awin for your friend because I didn’t know how the payments are compared to income. That’s the big question in most mods, front end DTI.

31% is a hefty front end DTI.

If that is at 2% interest, then hopefully his income will rise to make it a lower DTI at 4.75% interest.

Also, there is the other portion as you mentioned, the interest rate is being used as a temporary make the payment work, principle reduction if necessary.

So as long as the payment is low enough and the modded principle is not leaving them upside down still, then they’re winning.

If the house was only worth $300K today, would it still be winning?

[no_such_reality]

[quote=sdrealtor]nsr,
It should be a win for everyone. In 5 years his income situation should be stabilized, he will have caught up on the consumer debt acquired during his layoff and he will rebuild his reserves. This is a pretty responsible guy rather than someone who lived off his house like an atm. I dont know what percentage of the distressed homeonweners fall into his category but its important to recognize there are people like him out there. Around here you would think every one of them had it coming and that no one who goes beyond 6o days late will ever return to paying their mortgage without defaulting.[/quote]

Yes, I said maybe awin for your friend because I didn’t know how the payments are compared to income. That’s the big question in most mods, front end DTI.

31% is a hefty front end DTI.

If that is at 2% interest, then hopefully his income will rise to make it a lower DTI at 4.75% interest.

Also, there is the other portion as you mentioned, the interest rate is being used as a temporary make the payment work, principle reduction if necessary.

So as long as the payment is low enough and the modded principle is not leaving them upside down still, then they’re winning.

If the house was only worth $300K today, would it still be winning?

[no_such_reality]

[quote=sdrealtor]nsr,
It should be a win for everyone. In 5 years his income situation should be stabilized, he will have caught up on the consumer debt acquired during his layoff and he will rebuild his reserves. This is a pretty responsible guy rather than someone who lived off his house like an atm. I dont know what percentage of the distressed homeonweners fall into his category but its important to recognize there are people like him out there. Around here you would think every one of them had it coming and that no one who goes beyond 6o days late will ever return to paying their mortgage without defaulting.[/quote]

Yes, I said maybe awin for your friend because I didn’t know how the payments are compared to income. That’s the big question in most mods, front end DTI.

31% is a hefty front end DTI.

If that is at 2% interest, then hopefully his income will rise to make it a lower DTI at 4.75% interest.

Also, there is the other portion as you mentioned, the interest rate is being used as a temporary make the payment work, principle reduction if necessary.

So as long as the payment is low enough and the modded principle is not leaving them upside down still, then they’re winning.

If the house was only worth $300K today, would it still be winning?

[no_such_reality]

[quote=sdrealtor]nsr,
It should be a win for everyone. In 5 years his income situation should be stabilized, he will have caught up on the consumer debt acquired during his layoff and he will rebuild his reserves. This is a pretty responsible guy rather than someone who lived off his house like an atm. I dont know what percentage of the distressed homeonweners fall into his category but its important to recognize there are people like him out there. Around here you would think every one of them had it coming and that no one who goes beyond 6o days late will ever return to paying their mortgage without defaulting.[/quote]

Yes, I said maybe awin for your friend because I didn’t know how the payments are compared to income. That’s the big question in most mods, front end DTI.

31% is a hefty front end DTI.

If that is at 2% interest, then hopefully his income will rise to make it a lower DTI at 4.75% interest.

Also, there is the other portion as you mentioned, the interest rate is being used as a temporary make the payment work, principle reduction if necessary.

So as long as the payment is low enough and the modded principle is not leaving them upside down still, then they’re winning.

If the house was only worth $300K today, would it still be winning?

[no_such_reality]

[quote=sdrealtor]nsr,
It should be a win for everyone. In 5 years his income situation should be stabilized, he will have caught up on the consumer debt acquired during his layoff and he will rebuild his reserves. This is a pretty responsible guy rather than someone who lived off his house like an atm. I dont know what percentage of the distressed homeonweners fall into his category but its important to recognize there are people like him out there. Around here you would think every one of them had it coming and that no one who goes beyond 6o days late will ever return to paying their mortgage without defaulting.[/quote]

Yes, I said maybe awin for your friend because I didn’t know how the payments are compared to income. That’s the big question in most mods, front end DTI.

31% is a hefty front end DTI.

If that is at 2% interest, then hopefully his income will rise to make it a lower DTI at 4.75% interest.

Also, there is the other portion as you mentioned, the interest rate is being used as a temporary make the payment work, principle reduction if necessary.

So as long as the payment is low enough and the modded principle is not leaving them upside down still, then they’re winning.

If the house was only worth $300K today, would it still be winning?

[sdrealtor]

[quote=CA renter][quote=sdrealtor]I disagree that the 1st statement is not accurate. The bank is not recognizing a loss and it is not taking a loss. Are they making as much money as they hoped when the loan documents were first signed? Absolutely not! But that is not a loss. They are getting paid interest and principal on this property and ultimately should recover all their principal. Please show me where the bank is taking a loss.[/quote]

The value of the mortgage bond they hold is now worth much less than it was at the original rate.

That is a loss for the bank (and for taxpayers, if we’re subsidizing it).[/quote]

There is no loss until it is realized and they get less money then they put out. Its all paper losses and gains until then. Making less than you hoped for is not a loss. If I had a contract to earne $1M this year but got injured and only made $500K would you say I lost $500K?

[sdrealtor]

[quote=CA renter][quote=sdrealtor]I disagree that the 1st statement is not accurate. The bank is not recognizing a loss and it is not taking a loss. Are they making as much money as they hoped when the loan documents were first signed? Absolutely not! But that is not a loss. They are getting paid interest and principal on this property and ultimately should recover all their principal. Please show me where the bank is taking a loss.[/quote]

The value of the mortgage bond they hold is now worth much less than it was at the original rate.

That is a loss for the bank (and for taxpayers, if we’re subsidizing it).[/quote]

There is no loss until it is realized and they get less money then they put out. Its all paper losses and gains until then. Making less than you hoped for is not a loss. If I had a contract to earne $1M this year but got injured and only made $500K would you say I lost $500K?

[sdrealtor]

[quote=CA renter][quote=sdrealtor]I disagree that the 1st statement is not accurate. The bank is not recognizing a loss and it is not taking a loss. Are they making as much money as they hoped when the loan documents were first signed? Absolutely not! But that is not a loss. They are getting paid interest and principal on this property and ultimately should recover all their principal. Please show me where the bank is taking a loss.[/quote]

The value of the mortgage bond they hold is now worth much less than it was at the original rate.

That is a loss for the bank (and for taxpayers, if we’re subsidizing it).[/quote]

There is no loss until it is realized and they get less money then they put out. Its all paper losses and gains until then. Making less than you hoped for is not a loss. If I had a contract to earne $1M this year but got injured and only made $500K would you say I lost $500K?

[sdrealtor]

[quote=CA renter][quote=sdrealtor]I disagree that the 1st statement is not accurate. The bank is not recognizing a loss and it is not taking a loss. Are they making as much money as they hoped when the loan documents were first signed? Absolutely not! But that is not a loss. They are getting paid interest and principal on this property and ultimately should recover all their principal. Please show me where the bank is taking a loss.[/quote]

The value of the mortgage bond they hold is now worth much less than it was at the original rate.

That is a loss for the bank (and for taxpayers, if we’re subsidizing it).[/quote]

There is no loss until it is realized and they get less money then they put out. Its all paper losses and gains until then. Making less than you hoped for is not a loss. If I had a contract to earne $1M this year but got injured and only made $500K would you say I lost $500K?

[Author]

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