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I know two people personally who are more than financially able to make their mortgage who've had their monthly payments reduced. One guy had his mortgage written down preemptively by their mortgage holders simply because he skipped one month of payment. Instead of a 1700 mortgage payment, he now pays 900. The other person I know is now paying 700 instead of 1600 thanks to HAMP, and is now doubling up on her monthly payments, and looking to invest in future properties as rentals.
crash-olah
2009 Dec 29, 3:55am
It just seems those in charge are doing everything to keep everyone in their homes (even when they put $0 down and have paid less than $0 principal).
I knew this was happening... but can someone please explain WHY banks are reducing the principal balances of some mortgages? I understand they are trying to keep people in their houses... but seriously, rewarding people for borrowing over their heads? Why doesn't the government just stop bailing out the banks, who are bailing out people who obviously have no financial common sense-and START giving out the money to people that actually know what they are doing? -- like renters, who crunched the numbers and knew they couldn't afford...
That would be nice (giving money to people with common sense), but it's not reality. We need to deal with reality, and unfortunately it means giving money to the crooks and the idiots while screwing the savers.
Serpentor
2009 Dec 29, 3:36pm
Unless someone have some real data, I just don't think the principle reduction is going to be happening at a large enough scale to make an affect and prop up the prices. The majority of these exploding loans were diced up and packaged. How are they going to rework the loans if the barely know who holds these loans.
Â¥
2009 Dec 29, 3:38pm
How are they going to rework the loans if the barely know who holds these loans.
FNM and FRE can buy them back from the MBS at face value, and then rework them as they see fit. They're going to need money for this, luckily they've got Bernanke on speed-dial now.
How are they going to rework the loans if the barely know who holds these loans.
FNM and FRE can buy them back from the MBS at face value, and then rework them as they see fit. They’re going to need money for this, luckily they’ve got Bernanke on speed-dial now.
Yeah, that's great for GSE loans. Hell, they'll refiance you at 125% LTV if you're foolish enough to not just walk.
Securities packaged by investment banks are a much bigger problem, both in dollar terms and complexity.
Â¥
2009 Dec 29, 8:24pm
Securities packaged by investment banks are a much bigger problem, both in dollar terms and complexity.
I was going to say they can't be ~that~ much bigger since Fannie and Freddie guaranteed about half of outstanding loans, but I guess much of these loans still date from the 90s and are otherwise safer than the non-conforming, alt-A, and junior liens that were the main transgressions allowed to happen this decade.
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My wife and I are looking to get into a larger home. We currently rent a very modest size cottage in the south SF Bay Area. While we think we will end up finding a new rental, we thought we would give buying a shot. You never know, right?
Well, over the last several weeks every single real estate professional we have talked with, including a mortgage broker, has commented that no one (i.e., real estate professionals) knows what the banks are doing with the growing "shadow inventory". Because four different real estate professionals have said that to us in the last week, it really hit home. If the people whose business is to sell real estate don't know what is going on, then what the hell is going on??? Does anyone have any thoughts? Are banks just holding properties or are they selling them to investors? Why aren't they being released for sale?
A colleague recently suggested that we start contacting banks directly and asking for a list of their REO properites for sale. Are banks receptive to being contacted directly? Has anyone had any luck with this?
Oh, BTW, don't worry that we are out there trying despartely to buy something. We are avid partrick.net readers!! We are simply trying to get a more sophisticated handle on what is going on with the growing inventory of REO properties (NOTE: Over 100 homes in Santa Clara County scheduled to be sold at foreclosure sale this week alone). Any insight is welcome. Thanks.
#housing