What should this guy do?

[blue_sky]

“who’s Casey?”

http://www.iamfacingforclosure.com/

[CMcG]

Raybyrnes–Where can I find a foreign exchange student program like that? Do you know the names of any organizations that handle that kind of thing? I have a spare BR and could use $1K a month.

[CMcG]

Raybyrnes–Where can I find a foreign exchange student program like that? Do you know the names of any organizations that handle that kind of thing? I have a spare BR and could use $1K a month.

[Nancy_s soothsayer]

Tsk, tsk, CMcG – do you sound like an FB in need of a GF? Could you just unload and sell that alligator now instead?

[Nancy_s soothsayer]

Tsk, tsk, CMcG – do you sound like an FB in need of a GF? Could you just unload and sell that alligator now instead?

[CMcG]

Not an FB. I would just like to cut down my regular job work hours and devote more time to developing an entrepreneurial side business. I live just a few minutes from SDSU, though, thankfully, not in the College “Mini-Dorm” Area.

[CMcG]

Not an FB. I would just like to cut down my regular job work hours and devote more time to developing an entrepreneurial side business. I live just a few minutes from SDSU, though, thankfully, not in the College “Mini-Dorm” Area.

[gary_broker]

FormerSanDiegan pretty much nailed this by referencing the inablility of the lender to file a deficiency judgement againt the owner (loss is limited to the real estate that secured the loan).

Furthermore, the comment regarding possiblity of fraud on the application is dead on.. unfortunately many people do not understand what they are doing when they sign over IRS form 8821 and hand it to the lender.

On a stated income loan lenders were typically allowing the borrower to put whatever salary that was reqd to qualify for the loan. At closing the borrower is told to sign the IRS form and provide it to the lender (no form = no loan). This little gem gives the lender permission to pull the borrowers tax records to verify they told the truth on the loan application. In essence the lender has provided the borrower with the rope that they use to hang themselves. If the person lied the lender has recourse for fraud. I believe that scores of folks are in for a rude awakening because of this tax document, and most people have no idea that they ever signed it.

Attempting to re-negotiate the rate is a waste of time. They should get a broker who is versed in dealing with short sales pursue that route. If PMI was involved the broker should contact them..seeing how CW is listed as a second holder this was more likely a piggy back situation without PMI. If this is the case contacting CW is useless as the second is likely toast and they therefore have no incentive to help out.

[gary_broker]

FormerSanDiegan pretty much nailed this by referencing the inablility of the lender to file a deficiency judgement againt the owner (loss is limited to the real estate that secured the loan).

Furthermore, the comment regarding possiblity of fraud on the application is dead on.. unfortunately many people do not understand what they are doing when they sign over IRS form 8821 and hand it to the lender.

On a stated income loan lenders were typically allowing the borrower to put whatever salary that was reqd to qualify for the loan. At closing the borrower is told to sign the IRS form and provide it to the lender (no form = no loan). This little gem gives the lender permission to pull the borrowers tax records to verify they told the truth on the loan application. In essence the lender has provided the borrower with the rope that they use to hang themselves. If the person lied the lender has recourse for fraud. I believe that scores of folks are in for a rude awakening because of this tax document, and most people have no idea that they ever signed it.

Attempting to re-negotiate the rate is a waste of time. They should get a broker who is versed in dealing with short sales pursue that route. If PMI was involved the broker should contact them..seeing how CW is listed as a second holder this was more likely a piggy back situation without PMI. If this is the case contacting CW is useless as the second is likely toast and they therefore have no incentive to help out.

[DaCounselor]

Might be tough to get a short sale approved in this situation due to the fact that the guy has $90K of available funds that he could bring to the table. And I can’t see CW approving a short sale unless they are going to receive some payout. If CW is looking at a complete loss due to foreclosure of the 1st mtg., they may agree to a short sale for a token payout as something is better than nothing. I suppose a deal could be put together but based on the facts of this case there are alot of stumbling blocks.

This scenario illustrates how badly piggyback lenders/investors can get pounded by defaults. I am very interested to see how things develop over the next several years in this area. If values fall to the point that a piggyback lender will suffer a complete loss, what will they do if the borrower simply stops making payments on that loan (but keeps the 1st current)? Why spend money on the foreclosure process when you’re not going to see a red cent?

Piggyback lenders may be ripe for cents-on-the-dollar buyouts in these cases. Picture an 80/20 package – the borrower stays in the home by keeping the 1st current and wipes out the 2nd for pennies on the dollar. The borrower may have to play chicken and go into default on both mtgs to get to this result, then get back current on the 1st.

Anyway, just a thought.

[DaCounselor]

Might be tough to get a short sale approved in this situation due to the fact that the guy has $90K of available funds that he could bring to the table. And I can’t see CW approving a short sale unless they are going to receive some payout. If CW is looking at a complete loss due to foreclosure of the 1st mtg., they may agree to a short sale for a token payout as something is better than nothing. I suppose a deal could be put together but based on the facts of this case there are alot of stumbling blocks.

This scenario illustrates how badly piggyback lenders/investors can get pounded by defaults. I am very interested to see how things develop over the next several years in this area. If values fall to the point that a piggyback lender will suffer a complete loss, what will they do if the borrower simply stops making payments on that loan (but keeps the 1st current)? Why spend money on the foreclosure process when you’re not going to see a red cent?

Piggyback lenders may be ripe for cents-on-the-dollar buyouts in these cases. Picture an 80/20 package – the borrower stays in the home by keeping the 1st current and wipes out the 2nd for pennies on the dollar. The borrower may have to play chicken and go into default on both mtgs to get to this result, then get back current on the 1st.

Anyway, just a thought.

[Author]

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