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Huckleberry
ParticipantMy thought on this is BofA announced it will do this because of the litigation and settlement. I’m sure they figure if they state they are voluntarily doing this, they will not be mandated by the govt to do it.
It’s really hard for me to believe the banks would just take the hit (write-off) completely, and just expunge the borrower of the original obligation and lost loan value.
I would speculate they will minimally lower the principal loan amount (from original) and work some sort of deal where they get compensation on the end of the loan. Maybe making new mortgages a 40 or 50 year and the interest fixed a 6.
Here is an article by MM related to how CW/BofA is structuring their mortgage modifications:
http://mrmortgage.ml-implode.com/2008/09/03/countrywidebofa-conspire-against-a-borrower-shareholders/I’ll bet the new program is along these lines…
ParticipantMy thought on this is BofA announced it will do this because of the litigation and settlement. I’m sure they figure if they state they are voluntarily doing this, they will not be mandated by the govt to do it.
It’s really hard for me to believe the banks would just take the hit (write-off) completely, and just expunge the borrower of the original obligation and lost loan value.
I would speculate they will minimally lower the principal loan amount (from original) and work some sort of deal where they get compensation on the end of the loan. Maybe making new mortgages a 40 or 50 year and the interest fixed a 6.
Here is an article by MM related to how CW/BofA is structuring their mortgage modifications:
http://mrmortgage.ml-implode.com/2008/09/03/countrywidebofa-conspire-against-a-borrower-shareholders/I’ll bet the new program is along these lines…
ParticipantMy thought on this is BofA announced it will do this because of the litigation and settlement. I’m sure they figure if they state they are voluntarily doing this, they will not be mandated by the govt to do it.
It’s really hard for me to believe the banks would just take the hit (write-off) completely, and just expunge the borrower of the original obligation and lost loan value.
I would speculate they will minimally lower the principal loan amount (from original) and work some sort of deal where they get compensation on the end of the loan. Maybe making new mortgages a 40 or 50 year and the interest fixed a 6.
Here is an article by MM related to how CW/BofA is structuring their mortgage modifications:
http://mrmortgage.ml-implode.com/2008/09/03/countrywidebofa-conspire-against-a-borrower-shareholders/I’ll bet the new program is along these lines…
October 5, 2008 at 5:45 PM in reply to: Bailout – What does it mean for real estate for us waiting? #281547Participant[quote=SD Realtor]PR I think that there are 2 ways the empire can try to stop falling prices. The first would be to stem inventory. Effectively that means eating all of the distress balances and letting people stay in the distress homes at new valuations of those homes. The second would be to provide incentives to possible buyers. These incentives could take the form of tax credits, direct financing, or other subsidies.
Does this will exist? Could it happen? Well I think it is absolutely possible. We passed the point of no return long long ago so those who think that it could not are just as much in denial as cheerleader realtors.
I absolutely hope it will not happen but nothing surprises me anymore.
[/quote]Yes, these are the two primary ways they may try to stop the decline, but there are WAY to many market forces working against them to be successful.
Values will continue to decline no matter what they try…
October 5, 2008 at 5:45 PM in reply to: Bailout – What does it mean for real estate for us waiting? #281824Participant[quote=SD Realtor]PR I think that there are 2 ways the empire can try to stop falling prices. The first would be to stem inventory. Effectively that means eating all of the distress balances and letting people stay in the distress homes at new valuations of those homes. The second would be to provide incentives to possible buyers. These incentives could take the form of tax credits, direct financing, or other subsidies.
Does this will exist? Could it happen? Well I think it is absolutely possible. We passed the point of no return long long ago so those who think that it could not are just as much in denial as cheerleader realtors.
I absolutely hope it will not happen but nothing surprises me anymore.
[/quote]Yes, these are the two primary ways they may try to stop the decline, but there are WAY to many market forces working against them to be successful.
Values will continue to decline no matter what they try…
October 5, 2008 at 5:45 PM in reply to: Bailout – What does it mean for real estate for us waiting? #281828Participant[quote=SD Realtor]PR I think that there are 2 ways the empire can try to stop falling prices. The first would be to stem inventory. Effectively that means eating all of the distress balances and letting people stay in the distress homes at new valuations of those homes. The second would be to provide incentives to possible buyers. These incentives could take the form of tax credits, direct financing, or other subsidies.
Does this will exist? Could it happen? Well I think it is absolutely possible. We passed the point of no return long long ago so those who think that it could not are just as much in denial as cheerleader realtors.
I absolutely hope it will not happen but nothing surprises me anymore.
[/quote]Yes, these are the two primary ways they may try to stop the decline, but there are WAY to many market forces working against them to be successful.
Values will continue to decline no matter what they try…
October 5, 2008 at 5:45 PM in reply to: Bailout – What does it mean for real estate for us waiting? #281869Participant[quote=SD Realtor]PR I think that there are 2 ways the empire can try to stop falling prices. The first would be to stem inventory. Effectively that means eating all of the distress balances and letting people stay in the distress homes at new valuations of those homes. The second would be to provide incentives to possible buyers. These incentives could take the form of tax credits, direct financing, or other subsidies.
Does this will exist? Could it happen? Well I think it is absolutely possible. We passed the point of no return long long ago so those who think that it could not are just as much in denial as cheerleader realtors.
I absolutely hope it will not happen but nothing surprises me anymore.
[/quote]Yes, these are the two primary ways they may try to stop the decline, but there are WAY to many market forces working against them to be successful.
Values will continue to decline no matter what they try…
October 5, 2008 at 5:45 PM in reply to: Bailout – What does it mean for real estate for us waiting? #281882Participant[quote=SD Realtor]PR I think that there are 2 ways the empire can try to stop falling prices. The first would be to stem inventory. Effectively that means eating all of the distress balances and letting people stay in the distress homes at new valuations of those homes. The second would be to provide incentives to possible buyers. These incentives could take the form of tax credits, direct financing, or other subsidies.
Does this will exist? Could it happen? Well I think it is absolutely possible. We passed the point of no return long long ago so those who think that it could not are just as much in denial as cheerleader realtors.
I absolutely hope it will not happen but nothing surprises me anymore.
[/quote]Yes, these are the two primary ways they may try to stop the decline, but there are WAY to many market forces working against them to be successful.
Values will continue to decline no matter what they try…
October 4, 2008 at 11:48 AM in reply to: Bailout – What does it mean for real estate for us waiting? #280903ParticipantLA Renter beat me to the post, but here is what I had to say anyway…
Oh, and don’t forget the HUGE factor of unemployment. It is rising at it’s fastest pace in 10 years. This variable alone will take a significant percentage of potential “sideline” or future buyers out of the market.
I just don’t see any way they can stop the home price decline freight train! It’s going to keep rolling until prices reach their intrinsic value, which IMO will be somewhere in the late 90’s price ranges, back where incomes could actually support prices.
October 4, 2008 at 11:48 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281179ParticipantLA Renter beat me to the post, but here is what I had to say anyway…
Oh, and don’t forget the HUGE factor of unemployment. It is rising at it’s fastest pace in 10 years. This variable alone will take a significant percentage of potential “sideline” or future buyers out of the market.
I just don’t see any way they can stop the home price decline freight train! It’s going to keep rolling until prices reach their intrinsic value, which IMO will be somewhere in the late 90’s price ranges, back where incomes could actually support prices.
October 4, 2008 at 11:48 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281182ParticipantLA Renter beat me to the post, but here is what I had to say anyway…
Oh, and don’t forget the HUGE factor of unemployment. It is rising at it’s fastest pace in 10 years. This variable alone will take a significant percentage of potential “sideline” or future buyers out of the market.
I just don’t see any way they can stop the home price decline freight train! It’s going to keep rolling until prices reach their intrinsic value, which IMO will be somewhere in the late 90’s price ranges, back where incomes could actually support prices.
October 4, 2008 at 11:48 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281226ParticipantLA Renter beat me to the post, but here is what I had to say anyway…
Oh, and don’t forget the HUGE factor of unemployment. It is rising at it’s fastest pace in 10 years. This variable alone will take a significant percentage of potential “sideline” or future buyers out of the market.
I just don’t see any way they can stop the home price decline freight train! It’s going to keep rolling until prices reach their intrinsic value, which IMO will be somewhere in the late 90’s price ranges, back where incomes could actually support prices.
October 4, 2008 at 11:48 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281236ParticipantLA Renter beat me to the post, but here is what I had to say anyway…
Oh, and don’t forget the HUGE factor of unemployment. It is rising at it’s fastest pace in 10 years. This variable alone will take a significant percentage of potential “sideline” or future buyers out of the market.
I just don’t see any way they can stop the home price decline freight train! It’s going to keep rolling until prices reach their intrinsic value, which IMO will be somewhere in the late 90’s price ranges, back where incomes could actually support prices.
October 4, 2008 at 10:31 AM in reply to: Bailout – What does it mean for real estate for us waiting? #280844ParticipantHere is my take on this.
Based on this article:
http://money.cnn.com/2008/10/01/real_estate/hope_for_homeowners/index.htmThe new $300 billion Hope for Homeownership program will more than likely be a template for subsequent programs.
It states these criteria for eligibility:
– have taken out their mortgages on or before Jan. 1, 2008 and have made at least six payments.
– be unable to afford their current loan, but did not intentionally miss payments.
– have a debt-to-income ratio of at least 31%.
– live in the house and not own other homes.
– have provided accurate information on their loan documents and not been convicted of fraud in the past decade.
Under the program, borrowers will get:
– a 30-year, fixed rate mortgage of up to $550,440.
– a new appraisal and loan for no more than 90% of the home’s value.
– released from second mortgages and prepayment penalties.
– But homeowners must pay a premium of 3% of the loan’s value upfront, and 1.5% of the outstanding mortgage amount annually. Also, they must share any appreciation in the home’s value with the FHA when they sell.
But, based on MR. Mortgages analysis of the banks and modeling of RE values:
http://mrmortgage.ml-implode.com/2008/09/30/banks-bad-math-home-price-indexing-responsible/I can’t see how this convinces SoCal owners to use the program(s), considering how upside down most are. I would personally rather walk away than pay 10% down (based on the new loan only being 90% of appraised value), 3% premium, a 1.5% annual fee plus appreciation sharing w/ FHA.
I would much rather walk away, take the credit hit, save money while renting, let values decline more, then try again in five years.
Additionally, without the exotic loan programs there still aren’t enough buyers on the fence to soak up all of the coming inventory. This is backed up by MM analysis of how the bailout doesn’t even scratch the surface of the defaults in the pipeline:
http://mrmortgage.ml-implode.com/2008/09/23/mortgage-defaults-already-at-50bb-per-month700bb-wont-go-too-far/And again, I can guarantee many won’t even qualify for this program, as they will be proven to have fraudulently acquired their original loans.
So Piggs, what are your thoughts on this? I would also like to hear some opinions…
peterb and temeculaguy, what are your thoughts? You guys usually have good insight to these topics…
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