You got it!

When we count on government as a saviour, the responsible pay the price.

Expect a LOT more of this going forward... looks like we'll be "spreading the wealth around" from the responsible to the not-so-much quite soon.

D

dave donhoff; "When we count on government as a saviour, the responsible pay the price.

Expect a LOT more of this going forward... looks like we'll be "spreading the wealth around" from the responsible to the not-so-much quite soon."

Yes..all engineered by a Republican administration..whose Presidential candidate & VP pick continue to lambaste their opposition for being a "socialist"..when bank and company buyouts by the Govt is THE hallmark of socialism.

The Bush admin is "spreading the wealth" as we speak...right into the pockets of those who were chiefly responsible for this mess
BIG bonuses are still slated to be awarded to execs and/or employees of the bought out entities as well as those receiving BIG bailout bucks, to the tune of about 14 billion in bonuses for this year.

Here is a link that might be useful: How Washington's Bailout Will Boost Wall Street Bonuses

This very subject made the AP wire Sunday. Unless they are owner occupied, hedge fund managers are turning away loan restructuring. Investors in Florida are mailing the keys to the banks, and now they're calling loans on properties used as rentals with second home riders on them. Oops. Guy called me yesterday and offered me his "deed in lieu of", a 3/2/2 w/pool in Port Charlotte 81K, bank approved short sale. That's the second time I've seen this term in as many days.

logic, "Yes..all engineered by a Republican administration..whose Presidential candidate & VP pick continue to lambaste their opposition for being a "socialist"..when bank and company buyouts by the Govt is THE hallmark of socialism.

The Bush admin is "spreading the wealth" as we speak...right into the pockets of those who were chiefly responsible for this mess
BIG bonuses are still slated to be awarded to execs and/or employees of the bought out entities as well as those receiving BIG bailout bucks, to the tune of about 14 billion in bonuses for this year."

It cracks me how we can turn anything political. Just an FYI, the democrats control the house and senate. The bailout bill went through both and had support from both parties before Bush signed it. I agree the bill is a crock, but to blame it all on the Bush admin or the republican party is pretty narrow minded.

Who are you going to blame when Obama gets elected? The previous Bush administration? So do you think the Clinton admin had something to with the current credit crisis? I didn't think so, but maybe we should ask Greenspan.

Why would any bank assume additional risk on a bad debt? Wouldn't it be better off if they are to sell the house at current market price to a good solid buyer w/ real $$. This will help them raise capitals. What if price went further south and the homeowner defaults again, does FHA (i.e. us) have to eat the cost? How long can we keep this continuous bailing out?

Why would anyone stay on the mortgage (even at the lower price and/or lower interest which they can afford)?? would it be better to just leave it to the bank, go rent and shore up the cash -- waiting for that house to drop further & buy back at "bottom"?? Instead of being a knife catcher, he/she would be a bottom feeder. A much better position IMO.

Would the new adjusted price be recorded as new sale? If not, then it won't be considered as comps and price will be artificially inflated for that area. That would be bad for new buyers who bought in thinking last sold was 1M but actually all those 1M houses were "adjusted" to 500K. I have the feeling those deals won't be recorded because the local gov would want to keep property tax high. And responsible people who bought at peak but keep paying will not have the lower comps to request for a tax adjustment.

I would not mind if the program would provide help for those who deserve it -- responsible folks who can't pay because of job loss, illness, etc. But responsible folks probably would have back up savings, and not buy something they can't afford, read the docs before signing, etc. :-)

I think it all started because some bozo told the mass that owning houses is a "right", and forget to mention that every right comes with a responsibility. How can anybody learn a/b responsibility if they are never shown the consequences of irresponsibility?

I'm not going to start blaming any party - they are both to blame!!!!!!! And there is more than enough evidence of that.

However, I had an interesting discussion with one of our bankers the other day on the subject of renegotiating a mortgage. It seems that by law, a bank cannot enter into renegotiations of a mortgage until it goes into default.

This sounds stupid to me. If a person knows their financial status has taken a drastic change for the worse, and they want to keep paying, but a lower amount per month, why not renegotiate. It seems the responsible thing to do.

Dave, could you way in on this one?

Enjoy the journey.
eal51 in western CT

"It seems that by law, a bank cannot enter into renegotiations of a mortgage until it goes into default."

Depends on who actually owns the note.

If it has been sold into the secondary market the bank is NOT the owner (they are just a servicer).
This is how most banks deal with mortgages (either ones they originate or just service).

If the bank is holding the note they can do whatever they want.

FYI .. here's a little information on the FHA Hope 4 Homeonwers program:

This is a refinance - new appraisal is needed to establish current market value. 30 Year fixed rates only.

The loan-to-value is 90%, so the current mortgage holder(s) have to agree to write off anything over 90%.

Borrowers have to qualify at 31% of their gross inocme for their new housing payment, and 43% of their gross income for all monthly payments.

Borrowers have to agree that when they sell the house they will pay HUD some of the initial equity they had, some of the initial 10% based on a sliding scale depending on how long they lived in the house since this new mortgage was taken out.

Borrowers have to agree that when they sell the house that they spilt any appreciation with HUD. This is a 50/50 split. HUD gets 50% of any future appreciation.

And there are many other nuances required for borrowers to qualify for this program.

Honestly, I don't see that many people will be able to, or want to qualify for this program.

Hi eal51,

However, I had an interesting discussion with one of our bankers the other day on the subject of renegotiating a mortgage. It seems that by law, a bank cannot enter into renegotiations of a mortgage until it goes into default.

That's not at all true. Banks *CAN* renegotiate (aka a "note modification") at any time... and in the commercial world they in fact do.

The reality, however, is that in the residential world most banks do not VOLUNTARILY enter into any renegotiations for modification or short-pay (shortsale) until the mortgage is in statutory default (usually 90 days late, and ready to start foreclosure proceedings.)

Further, the servicing company (the company most borrowers think is the actual "lender") is responsible for the negotiations... but the "decision maker" is the actual loan owner (the "Note Holder.") Since so many loans were packaged & sold off to hedge funds, it is the hedge fund managers who have the final "say".... and many of them (under heavy financial fire on Wall Street) are currently saying "tough luck!" They're taking the position that they're willing to take ownership of the properties in foreclosure auctions before they're willing to drop the loan balances or repayment yields.

This sounds stupid to me. If a person knows their financial status has taken a drastic change for the worse, and they want to keep paying, but a lower amount per month, why not renegotiate. It seems the responsible thing to do.

Absolutely... and certainly worth the attempts.

As for the rest of the politics in this thread... it hasn't made any difference WHICH of the twin parties have held power for well over 20 years now... they're both sliding us down a rapidly accelerating economic decay, unfortunately.

The more the politicians are allowed to ignore basic economics, the sooner we will disintegrate the fundamental fabric of our nation's commercial and social strengths... that of robust determinism and individualism.

In the big picture is is a very tragic and sad reality... but in the small, individual picture, there are STILL ways and means of success for yours and yoru family's. Be AWARE of the ill tides... but set your own sails!

Cheers,
Dave Donhoff
Leverage Planner

Dave & brickeyee -

Thanks for the information. Always informative!

Not that I need to renegotiate, I don't. The only loan we have is the mortgage. No other debt including the good old credit cards. Despite all the negative news, we are in good shape financially.

My wife and I have been with the same bank, mortgage, checking & savings that is, for over 20 years. It's a local community bank that is fiscally conservative and the bankers live locally and are people's neighbors. In fact, if you apply for a loan, you still need to have your W-2's attached to your application - even a car loan for customers like us!.

So when we stop in, we usually talk to our banker about a variety of topics, including Red Sox versus Yankees! This one came up.

I just found the topic interesting and thought I ask here. A lot of good advice here.

Enjoy the journey.
eal51 in western CT