patrick.net

I was actually looking at the rules to modify my mortgage. I pretty much qualify except one small detail. My mortgage is about 29% of my gross income, also, that includes taxes and homeowners insurance. Does anyone know if the 31% rule of income towards your mortgage includes those additional costs?

Only 29% com'on Techie you're letting our GDP down. Get with the program and spend, spend, spend. Spend like there's no tomorrow for our kids.

I think some money savant somewhere in Washington should be punishing those that over budgeted on housing, instead of trying to give them a financial Mulligan.

A friend works at WF, he stated 422,000 mortgage payment modifications started...only 3537 takers thus far (thanks Wachovia). We are both guessing that many of these loan owners are upside down. Are they reducing the principle of the loan or just giving out low rates?

Well I'm royally screwed at around 17%

If they'd give me 2% then I'd borrow a shitload of money. I'll get this friggin party started!

I'm in the same boat. Bought a house I could afford easily, at peak had more than 50% equity. Now best case scenario I break even, worst case scenario I am 60k upside-down.

We are DINKs paying boatloads of taxes because we have so little debt. We're paying for all these people making less but living large. What can you do?

Your refusal to borrow yourself into slavery makes you a bad slave. In fact, not a slave at all. You must be punished!

The thing I hate about all of the loan modification programs is that the people being rewarded by them are often the people who created the problems in the first place by purchasing a home they could not afford. I worked hard and purchased a home within my means and now I feel like I am having to pay for all of the people who spent money they did not have. A analogy to me would be waiting in a long line to get tickets for an event, but not being able to get in because all of the people who cut in front where given priority.

d3, you are right. But wait, more unfairness on the horizon! This just in from the National Inflation Association: "The main areas of increasing employment in November were health care and government jobs, which are non-manufacturing jobs. This increases the global inbalance. These jobs are not being created due to a strengthening economy, they are being created due to our artificial, temporary and destructive "stimulus." They are forcing our country to get deeper into debt and create massive inflation."

Translation: The result is that YOU (and everyone else in America) WILL BE PAYING HIGHER PRICES FOR EVERYTHING YOU PURCHASE. Inflation is unfair.

Wells Fargo purchased Wachovia. Is WF treating the Wachovia loans differently than their own?

I would argue that there is some manufacturing under the 'health care' term. Some times when I use some piece of equipment, ie, blood tubing, 3-way stopcock, needle, syringe, etc, I look at the 'Made in ____' and you'd be surprised how many say some town in Minnesota or Indiana, etc.

How are they treating them differently? They are a bank, everything is business to them. Don't they try to do whatever makes them the most money regardless of whether they are Wachovia loans or WF loans?

My 'personal insider' told me that WF wrote off $60B on Dec 31, 2008 thanks to the Wachovia deal so there;O)

It is my understanding that WF had made very few bad RE loans, I think their default rate was around 2% but then they took over the ugly Wachovia portfolio that was loaded with bad loans. My insider said they just wrote off 30% of the entire Wachovia deal instead of looking at each individual loan. Not sure how they are picking through the ashes now. I do know that WF turned many of those risky Wachovia loans into Interest Only for 6-10 years in hopes of the market turning around.

WF basically bought Wachovia 70cents on the dollar so what are their chances of making a profit on those mortgages? Guess it depends where most loans were given, ie, Nevada? Florida?

If they've managed to convert many of them into 6-10 year loans, then they've done pretty well. The housing market will likely be fairly different in 10 years. Even if it's not massively appreciating, the amount collected + 10 year future sale will probably be more than 70% of that investment.

On another thread, someone was complaining about warren buffet and his dealings. After having read his book, I realize that all the companies I *hate* are ones that he's invested in. The ones I hate, are the smart ones, who know how to milk their products and customers. Wells fargo will walk away with a boat load of money. So I dont think it matters where many of these properties are, as long as they can lock people into 10 year loans, many people will snap those up and be happy they got out of their dire predicament. I would say they're making another mistake, but that mistake is going to end up profiting wells fargo nicely.

Btw, Warren Buffets book had very little to do with investing, and more to do with his personality and life. It was a fascinating book.

Here's a link to WF data:
Wells Fargo has written $2 billion off Pick-A-Pay balances for borrowers, or nearly $46,000 per modified loan. The bank has modified 43,500 Pick-A-Pays so far this year through September, and said the program is effective at keeping borrowers in their homes. The program eliminates the nearer-term risk for borrowers of sharply ballooning payments, according to the company.
To reiterate what someone else said, this is business for WF -- not some gov't program (not the say the gov't wasn't involved in declaring Wachovia troubled and parading them through the streets to look for a buyer). Wells was a fairly conservative lender during the boom years and are being rewarded for it. They do have, though, a large portfolio of seconds, so the jury is still out...