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

[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]

tb
In nominal terms they would have broken even and in real terms it would be a loss. But that is not the case here. The bank has already recieved over a $100K in payments most of which was interest payments. They will likely receive close to $1M over the term of this loan and that is a profit.

[sdrealtor]

tb
In nominal terms they would have broken even and in real terms it would be a loss. But that is not the case here. The bank has already recieved over a $100K in payments most of which was interest payments. They will likely receive close to $1M over the term of this loan and that is a profit.

[sdrealtor]

tb
In nominal terms they would have broken even and in real terms it would be a loss. But that is not the case here. The bank has already recieved over a $100K in payments most of which was interest payments. They will likely receive close to $1M over the term of this loan and that is a profit.

[sdrealtor]

tb
In nominal terms they would have broken even and in real terms it would be a loss. But that is not the case here. The bank has already recieved over a $100K in payments most of which was interest payments. They will likely receive close to $1M over the term of this loan and that is a profit.

[sdrealtor]

tb
In nominal terms they would have broken even and in real terms it would be a loss. But that is not the case here. The bank has already recieved over a $100K in payments most of which was interest payments. They will likely receive close to $1M over the term of this loan and that is a profit.

[sdrealtor]

His income is still lower than it was 10 years ago as he has had to retrain himself in a new industry, He was in his prior industry for almost 20 years. He has had roomates off and on. He hasnt had one the last year but if he took one in that would cover close to half his PITI. Even if the house was worth only $300K, his payments are well below rent so I would say he was still winning for the time being.

[sdrealtor]

His income is still lower than it was 10 years ago as he has had to retrain himself in a new industry, He was in his prior industry for almost 20 years. He has had roomates off and on. He hasnt had one the last year but if he took one in that would cover close to half his PITI. Even if the house was worth only $300K, his payments are well below rent so I would say he was still winning for the time being.

[sdrealtor]

His income is still lower than it was 10 years ago as he has had to retrain himself in a new industry, He was in his prior industry for almost 20 years. He has had roomates off and on. He hasnt had one the last year but if he took one in that would cover close to half his PITI. Even if the house was worth only $300K, his payments are well below rent so I would say he was still winning for the time being.

[sdrealtor]

His income is still lower than it was 10 years ago as he has had to retrain himself in a new industry, He was in his prior industry for almost 20 years. He has had roomates off and on. He hasnt had one the last year but if he took one in that would cover close to half his PITI. Even if the house was worth only $300K, his payments are well below rent so I would say he was still winning for the time being.

[sdrealtor]

His income is still lower than it was 10 years ago as he has had to retrain himself in a new industry, He was in his prior industry for almost 20 years. He has had roomates off and on. He hasnt had one the last year but if he took one in that would cover close to half his PITI. Even if the house was worth only $300K, his payments are well below rent so I would say he was still winning for the time being.

[jpinpb]

I’m glad to hear some people are benefitting from modifications. I do think 40 year loans are tough, IMO. I just see that as mortgage slavery. But I read this and everything else I read just continues to make me think that modifications are not very successful.

Borrowers exit troubled Obama mortgage program
More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

Last month alone,155,000 borrowers left the program — bringing the total to 436,000 who have dropped out since it began in March 2009.

But analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery.

As more people leave the program, a new wave of foreclosures could occur. If that happens, it could weaken the housing market and hold back the broader economic recovery.

Even after their loans are modified, many borrowers are simply stuck with too much debt — from car loans to home equity loans to credit cards.

“The majority of these modifications aren’t going to be successful,” said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. “Even after the permanent modification, you’re still looking at a very high debt burden.”

Credit ratings agency Fitch Ratings projects that about two-thirds of borrowers with permanent modifications under the Obama plan will default again within a year after getting their loans modified.

[jpinpb]

I’m glad to hear some people are benefitting from modifications. I do think 40 year loans are tough, IMO. I just see that as mortgage slavery. But I read this and everything else I read just continues to make me think that modifications are not very successful.

Borrowers exit troubled Obama mortgage program
More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

Last month alone,155,000 borrowers left the program — bringing the total to 436,000 who have dropped out since it began in March 2009.

But analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery.

As more people leave the program, a new wave of foreclosures could occur. If that happens, it could weaken the housing market and hold back the broader economic recovery.

Even after their loans are modified, many borrowers are simply stuck with too much debt — from car loans to home equity loans to credit cards.

“The majority of these modifications aren’t going to be successful,” said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. “Even after the permanent modification, you’re still looking at a very high debt burden.”

Credit ratings agency Fitch Ratings projects that about two-thirds of borrowers with permanent modifications under the Obama plan will default again within a year after getting their loans modified.

[jpinpb]

I’m glad to hear some people are benefitting from modifications. I do think 40 year loans are tough, IMO. I just see that as mortgage slavery. But I read this and everything else I read just continues to make me think that modifications are not very successful.

Borrowers exit troubled Obama mortgage program
More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

Last month alone,155,000 borrowers left the program — bringing the total to 436,000 who have dropped out since it began in March 2009.

But analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery.

As more people leave the program, a new wave of foreclosures could occur. If that happens, it could weaken the housing market and hold back the broader economic recovery.

Even after their loans are modified, many borrowers are simply stuck with too much debt — from car loans to home equity loans to credit cards.

“The majority of these modifications aren’t going to be successful,” said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. “Even after the permanent modification, you’re still looking at a very high debt burden.”

Credit ratings agency Fitch Ratings projects that about two-thirds of borrowers with permanent modifications under the Obama plan will default again within a year after getting their loans modified.

[jpinpb]

I’m glad to hear some people are benefitting from modifications. I do think 40 year loans are tough, IMO. I just see that as mortgage slavery. But I read this and everything else I read just continues to make me think that modifications are not very successful.

Borrowers exit troubled Obama mortgage program
More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

Last month alone,155,000 borrowers left the program — bringing the total to 436,000 who have dropped out since it began in March 2009.

But analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery.

As more people leave the program, a new wave of foreclosures could occur. If that happens, it could weaken the housing market and hold back the broader economic recovery.

Even after their loans are modified, many borrowers are simply stuck with too much debt — from car loans to home equity loans to credit cards.

“The majority of these modifications aren’t going to be successful,” said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. “Even after the permanent modification, you’re still looking at a very high debt burden.”

Credit ratings agency Fitch Ratings projects that about two-thirds of borrowers with permanent modifications under the Obama plan will default again within a year after getting their loans modified.

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