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October 4, 2008 at 10:31 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281118October 4, 2008 at 10:31 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281122
Huckleberry
ParticipantHere 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…
October 4, 2008 at 10:31 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281166ParticipantHere 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…
October 4, 2008 at 10:31 AM in reply to: Bailout – What does it mean for real estate for us waiting? #281175ParticipantHere 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…
ParticipantI heard on CNBC this morning that ten different industry groups got together and signed a letter to Congress stating the urgency to supplement/augment the IndyMac/FDIC home loan rework programs.
They are stressing that without additional monies to actually support home prices, the bailout will not accomplish much, as home prices will continue to decline.
CNBC commentators actually agreed and stated they believe more home owner bailouts/house price stabilization provisions are on the way.
Is anyone hearing the same crap? I guess 700 billion isn’t enough of our tax dollars. We are now going to get gouged even more, to support housing prices and dumb ass purchasers.
ParticipantI heard on CNBC this morning that ten different industry groups got together and signed a letter to Congress stating the urgency to supplement/augment the IndyMac/FDIC home loan rework programs.
They are stressing that without additional monies to actually support home prices, the bailout will not accomplish much, as home prices will continue to decline.
CNBC commentators actually agreed and stated they believe more home owner bailouts/house price stabilization provisions are on the way.
Is anyone hearing the same crap? I guess 700 billion isn’t enough of our tax dollars. We are now going to get gouged even more, to support housing prices and dumb ass purchasers.
ParticipantI heard on CNBC this morning that ten different industry groups got together and signed a letter to Congress stating the urgency to supplement/augment the IndyMac/FDIC home loan rework programs.
They are stressing that without additional monies to actually support home prices, the bailout will not accomplish much, as home prices will continue to decline.
CNBC commentators actually agreed and stated they believe more home owner bailouts/house price stabilization provisions are on the way.
Is anyone hearing the same crap? I guess 700 billion isn’t enough of our tax dollars. We are now going to get gouged even more, to support housing prices and dumb ass purchasers.
ParticipantI heard on CNBC this morning that ten different industry groups got together and signed a letter to Congress stating the urgency to supplement/augment the IndyMac/FDIC home loan rework programs.
They are stressing that without additional monies to actually support home prices, the bailout will not accomplish much, as home prices will continue to decline.
CNBC commentators actually agreed and stated they believe more home owner bailouts/house price stabilization provisions are on the way.
Is anyone hearing the same crap? I guess 700 billion isn’t enough of our tax dollars. We are now going to get gouged even more, to support housing prices and dumb ass purchasers.
ParticipantI heard on CNBC this morning that ten different industry groups got together and signed a letter to Congress stating the urgency to supplement/augment the IndyMac/FDIC home loan rework programs.
They are stressing that without additional monies to actually support home prices, the bailout will not accomplish much, as home prices will continue to decline.
CNBC commentators actually agreed and stated they believe more home owner bailouts/house price stabilization provisions are on the way.
Is anyone hearing the same crap? I guess 700 billion isn’t enough of our tax dollars. We are now going to get gouged even more, to support housing prices and dumb ass purchasers.
Participant[quote=temeculaguy]Has anyone ever read the fine print on principal write downs for current reworks, fdic run banks like indymac and the proposals floating in the legislature. They aren’t what you think, they don’t forgive the loan, they “write down” the loan for purposes of determining the payment but they don’t actually forgive it, when you sell, transfer or refi, they get that back. It’s a modified way to contnue a teaser rate or having a silent partner. The FHA sponsored stuff actually gives the forgiver their original money back and a cut of any profit. They also prohibit helocs, forever.
It will keep a roof over your head but that is about it. Let’s see, you pay someone a mortgage payment and when you leave, you get nothing, that smells a lot like renting except you get a tax deduction yet pay a higher payment over rent. Here is a scenario, FB pays 600k zero down, neg am, balance is 625 and enter some write down program. Their mort should have gone from 2800 to 5000 but the rework bases the loan on the current value of 350k and they pay about 2500 piti, usually .38 of their income in typical reworks. Then after ten years, they have paid down about 50k, price comes back to 650, after realtor fees and closing they clear 600, principal is 300k and rework holdback is 275k, lender gets the 575k in it’s entirety and they walk with 25k for ten years of paying too much for rent and all the maintenance. That is if it gets back to 650k. If it goes to 750k, bank gets half of the 100k profit, which offsets ten years of no interest on the 275k and the borrower walks with 75k but houses cost 750k.
It would actually be better to walk away or buy a place for 350k, walk away from the old and when and if things return just like the previous scenario, you are up 250-350k after fees. Or just walk away, rent for a year or two, buy a 350k house with fha 3 1/2 down and reap the actual rewards. Reworks are debtors prisons, much better for the lender than the fb, and that is why it wont work. So don’t get your panties in a bunch about all this forgiveness.[/quote]
Thank you for posting this!
I am okay with this type of mod. as it does not reward poor decision making or fraudulent behavior.
It will motivate a distressed owners to sell, or walk….
Participant[quote=temeculaguy]Has anyone ever read the fine print on principal write downs for current reworks, fdic run banks like indymac and the proposals floating in the legislature. They aren’t what you think, they don’t forgive the loan, they “write down” the loan for purposes of determining the payment but they don’t actually forgive it, when you sell, transfer or refi, they get that back. It’s a modified way to contnue a teaser rate or having a silent partner. The FHA sponsored stuff actually gives the forgiver their original money back and a cut of any profit. They also prohibit helocs, forever.
It will keep a roof over your head but that is about it. Let’s see, you pay someone a mortgage payment and when you leave, you get nothing, that smells a lot like renting except you get a tax deduction yet pay a higher payment over rent. Here is a scenario, FB pays 600k zero down, neg am, balance is 625 and enter some write down program. Their mort should have gone from 2800 to 5000 but the rework bases the loan on the current value of 350k and they pay about 2500 piti, usually .38 of their income in typical reworks. Then after ten years, they have paid down about 50k, price comes back to 650, after realtor fees and closing they clear 600, principal is 300k and rework holdback is 275k, lender gets the 575k in it’s entirety and they walk with 25k for ten years of paying too much for rent and all the maintenance. That is if it gets back to 650k. If it goes to 750k, bank gets half of the 100k profit, which offsets ten years of no interest on the 275k and the borrower walks with 75k but houses cost 750k.
It would actually be better to walk away or buy a place for 350k, walk away from the old and when and if things return just like the previous scenario, you are up 250-350k after fees. Or just walk away, rent for a year or two, buy a 350k house with fha 3 1/2 down and reap the actual rewards. Reworks are debtors prisons, much better for the lender than the fb, and that is why it wont work. So don’t get your panties in a bunch about all this forgiveness.[/quote]
Thank you for posting this!
I am okay with this type of mod. as it does not reward poor decision making or fraudulent behavior.
It will motivate a distressed owners to sell, or walk….
Participant[quote=temeculaguy]Has anyone ever read the fine print on principal write downs for current reworks, fdic run banks like indymac and the proposals floating in the legislature. They aren’t what you think, they don’t forgive the loan, they “write down” the loan for purposes of determining the payment but they don’t actually forgive it, when you sell, transfer or refi, they get that back. It’s a modified way to contnue a teaser rate or having a silent partner. The FHA sponsored stuff actually gives the forgiver their original money back and a cut of any profit. They also prohibit helocs, forever.
It will keep a roof over your head but that is about it. Let’s see, you pay someone a mortgage payment and when you leave, you get nothing, that smells a lot like renting except you get a tax deduction yet pay a higher payment over rent. Here is a scenario, FB pays 600k zero down, neg am, balance is 625 and enter some write down program. Their mort should have gone from 2800 to 5000 but the rework bases the loan on the current value of 350k and they pay about 2500 piti, usually .38 of their income in typical reworks. Then after ten years, they have paid down about 50k, price comes back to 650, after realtor fees and closing they clear 600, principal is 300k and rework holdback is 275k, lender gets the 575k in it’s entirety and they walk with 25k for ten years of paying too much for rent and all the maintenance. That is if it gets back to 650k. If it goes to 750k, bank gets half of the 100k profit, which offsets ten years of no interest on the 275k and the borrower walks with 75k but houses cost 750k.
It would actually be better to walk away or buy a place for 350k, walk away from the old and when and if things return just like the previous scenario, you are up 250-350k after fees. Or just walk away, rent for a year or two, buy a 350k house with fha 3 1/2 down and reap the actual rewards. Reworks are debtors prisons, much better for the lender than the fb, and that is why it wont work. So don’t get your panties in a bunch about all this forgiveness.[/quote]
Thank you for posting this!
I am okay with this type of mod. as it does not reward poor decision making or fraudulent behavior.
It will motivate a distressed owners to sell, or walk….
Participant[quote=temeculaguy]Has anyone ever read the fine print on principal write downs for current reworks, fdic run banks like indymac and the proposals floating in the legislature. They aren’t what you think, they don’t forgive the loan, they “write down” the loan for purposes of determining the payment but they don’t actually forgive it, when you sell, transfer or refi, they get that back. It’s a modified way to contnue a teaser rate or having a silent partner. The FHA sponsored stuff actually gives the forgiver their original money back and a cut of any profit. They also prohibit helocs, forever.
It will keep a roof over your head but that is about it. Let’s see, you pay someone a mortgage payment and when you leave, you get nothing, that smells a lot like renting except you get a tax deduction yet pay a higher payment over rent. Here is a scenario, FB pays 600k zero down, neg am, balance is 625 and enter some write down program. Their mort should have gone from 2800 to 5000 but the rework bases the loan on the current value of 350k and they pay about 2500 piti, usually .38 of their income in typical reworks. Then after ten years, they have paid down about 50k, price comes back to 650, after realtor fees and closing they clear 600, principal is 300k and rework holdback is 275k, lender gets the 575k in it’s entirety and they walk with 25k for ten years of paying too much for rent and all the maintenance. That is if it gets back to 650k. If it goes to 750k, bank gets half of the 100k profit, which offsets ten years of no interest on the 275k and the borrower walks with 75k but houses cost 750k.
It would actually be better to walk away or buy a place for 350k, walk away from the old and when and if things return just like the previous scenario, you are up 250-350k after fees. Or just walk away, rent for a year or two, buy a 350k house with fha 3 1/2 down and reap the actual rewards. Reworks are debtors prisons, much better for the lender than the fb, and that is why it wont work. So don’t get your panties in a bunch about all this forgiveness.[/quote]
Thank you for posting this!
I am okay with this type of mod. as it does not reward poor decision making or fraudulent behavior.
It will motivate a distressed owners to sell, or walk….
Participant[quote=temeculaguy]Has anyone ever read the fine print on principal write downs for current reworks, fdic run banks like indymac and the proposals floating in the legislature. They aren’t what you think, they don’t forgive the loan, they “write down” the loan for purposes of determining the payment but they don’t actually forgive it, when you sell, transfer or refi, they get that back. It’s a modified way to contnue a teaser rate or having a silent partner. The FHA sponsored stuff actually gives the forgiver their original money back and a cut of any profit. They also prohibit helocs, forever.
It will keep a roof over your head but that is about it. Let’s see, you pay someone a mortgage payment and when you leave, you get nothing, that smells a lot like renting except you get a tax deduction yet pay a higher payment over rent. Here is a scenario, FB pays 600k zero down, neg am, balance is 625 and enter some write down program. Their mort should have gone from 2800 to 5000 but the rework bases the loan on the current value of 350k and they pay about 2500 piti, usually .38 of their income in typical reworks. Then after ten years, they have paid down about 50k, price comes back to 650, after realtor fees and closing they clear 600, principal is 300k and rework holdback is 275k, lender gets the 575k in it’s entirety and they walk with 25k for ten years of paying too much for rent and all the maintenance. That is if it gets back to 650k. If it goes to 750k, bank gets half of the 100k profit, which offsets ten years of no interest on the 275k and the borrower walks with 75k but houses cost 750k.
It would actually be better to walk away or buy a place for 350k, walk away from the old and when and if things return just like the previous scenario, you are up 250-350k after fees. Or just walk away, rent for a year or two, buy a 350k house with fha 3 1/2 down and reap the actual rewards. Reworks are debtors prisons, much better for the lender than the fb, and that is why it wont work. So don’t get your panties in a bunch about all this forgiveness.[/quote]
Thank you for posting this!
I am okay with this type of mod. as it does not reward poor decision making or fraudulent behavior.
It will motivate a distressed owners to sell, or walk….
ParticipantMM was interviewed on CNBC yesterday for about 10 min. specifically related to why this bailout is not going to stem the tide of defaults and foreclosures.
It may still be posted on the CNBC site.
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