Maybe We Can Work It Out

If banks would modify the loan terms, the majority of at-risk borrowers could pay their mortgages and stay in their homes.

By Jane Bryant Quinn | NEWSWEEK

From the magazine issue dated Nov 26, 2007

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Discuss

Posted By: msoliman @ 07/10/2008 1:36:09 AM

Comment: Modifications are a joke. Let the lender squeeze your last few dollars out of you while you hope they honor the commitment to write a new loan or better terms down the road. It's estimated over 85% of all loans made are suffering from impairment...in other words don't meet the stringent guidelines of the Government. RESPA and TILA are tow big legislative forces most homeowners are clueless about. File claim thats first. Do a qualified audit second. Then send a demand for relief under threat of filing an action for predatory lending Wake up folks. you can buy back your home for half the mortgage according to expert Maher Solman. "And that maybe more than they will sell it as a bank REO"! admin@borrowerhotline.comorroerhotline.com
Posted By: msoliman @ 07/10/2008 1:31:17 AM

Comment: Modifications are a joke. Let the lender squeeze your last few dollars out of you while you hope they honor the commitment to write a new loan or better terms down the road. It's estimated over 85% of all loans made are suffering from impairment...in other words don't meet the stringent guidelines of the Government. RESPA and TILA are tow big legislative forces most homeowners are clueless about. File claim thats first. Do a ququalified audit second. Then send a demand for relief under threat of filing an action for predatory lending Wake up folks. Youo can buy back youor home for more than they will sell it as a bank REO admin@borrowerhotline.comorroerhotline.com
Posted By: kenmoyes @ 05/01/2008 3:50:54 PM

Comment: I keep reading about how the housing slump worsens. I read about the plans to help those who are in trouble and may lose their homes. I keep hearing about those who were hood winked into the unaffordable mortgage. I see the moves made to save the financial institutions. No one in Washington or the media is getting it! The solution is to stabilize residential property values first, then push them back up. This helps financial institutions, those who may lose their homes, those who want to get out, those who were hood winked. The problem is that the usual mechanism to resolving an equity lending problem, the disposal of the equity to close out the equity based loan, does not apply when the equity is draining from the home faster than the owner or the financial institution can act.

The solution is a supply and demand solution and not selected bailouts. Our politicians proposing pandering type solutions are apparently economic illiterates. Rebuild the equity in the residential market and the equity resolution mechanism will take hold and move us out of this problem. Of course, some regulations will need to be in place to protect the consumer and the banks from overzealous managers seeking the big hit to get promoted. In fact most of those who pushed these programs have probably already been promoted to new positions, leaving the next manager to resolve the problem.

Stimulate the residential real estate market with demand to balance the supply side of the equation. In fact, stimulate demand so much that the supply starts to dry up and all those affected from the bewildered borrower, through the subprime habitual poor payers, to the good sound borrower who used to have equity and is also being hurt, will have a way out.

People can???t sell because they are locked into no equity positions, banks will not lend due to tightened criteria and a lack of a strong equity position for the borrower. The only way to break this cycle is to structure a favorable mortgage program for quality borrowers, but at an enticing rate. The rate plus the soft property values help make the purchase affordable and thus popular.

Instead of doling out money on a spot basis, set up a short term well funded broad based lending program offering extremely low rates to quality credits. http://brokengovernment.wordpress.com/wp-admin/post.php?action=edit&post=49

If we generate a buzz for resale homes with enticing rates, we will stimulate demand and stabilize property values. Once the trend to devaluation is reversed and the supply begins to diminish and demand stays strong, values will begin to rise. When values begin to rise, the sale of new homes under standard mortgage conditions will begin to pick up.

Why are we attacking this downwardly spiraling problem from the wrong end? All Congress and the candidates seem to know is throw money at the problem result. They do not know how to solve problems. http://brokengovernment.wordpress.com
Posted By: twebster321 @ 02/10/2008 5:54:04 PM

Comment: Yet another casualty of the housing market here. I thought for sure I would have seen this coming. Now I'm just CHASE-ing my tail, so to speak!

I lost my job in May of 2007. After 6 months without any prospect of finding employment, our savings were near tapped. I was discouraged, under pressure and felt like it was only a matter of time before we were going to lose our home. Fortunately for us, God came through and my wife was able to secure employment here in town. We would now be able to start catching up on our mortgage payments!

We found out that Chase has a (barely mentioned) 'homeowners-assistance' program. It was set up to provide relief to purchasers under a new federal program and is supposed to help people like us who are having trouble making their mortgage payments. Luckily we heard about it ourselves because it certainly wasn't mentioned at all by our lender.

So in January of this year we contacted Chase and informed them that we needed to speak with someone in the 'homeowner-assistance' program. That was more than 4 weeks ago. Both my wife and I have placed calls and left messages for the 'homeowners-assistance' department. Time and time again we were told someone would contact us. It still hasn't happened.

We were fiscally conservative in our attempt to purchase a home which meant we did not attempt to purchase above our means. There was no intention on our part of 'flipping' the home like many others did. We didn't take an adjustable rate mortgage, we relied on an 'appraisal' and felt comfortable that the builders financing and closing company would streamline the process, save us money and in the end would protect us from overpaying for a new home - wrong!

BOTTOM LINE:

*A piece of legislation created by the federal government that was supposed to help folks like us who are at risk of losing their homes does absolutely nothing for me and my family because we didn't purchase our home on an adjustable rate mortgage.

*The representatives from Chase's homeowners (un)assistance have yet to get back in touch with us and it's been well over a month since we first initiated contact with them.

*Our clock is ticking and we are now further behind on our payments. How is it that in this day and age a company like Chase has no desire to call this homeowner to try and figure out a solution. I care about repaying my debt and I am not interested in walking away from my obligation. So what's the deal here?

I wonder how many other homeowners are waiting to hear back while they slip further behind on payments? Oh well, I'm sure they'll be able to write off the loss but our family is certainly going to have a tough time trying to even rent a place with a foreclosure on our credit history.

Thanks for all your help Chase... way to go!

Sincerely,

T A Webster
Unsatisfied Customer
Central FL
twebster321@hotmail.com
Posted By: Markwri @ 01/06/2008 3:43:08 AM

Comment: The Energizer Bunny will be back. 3 years and 13,000 miles left to go though.
- Posted By: daro355 @ 04/17/2008 20:23:13
  
  Comment: I am in a similiar situation with a fixed subprimb loan of 7.25% for 30 years and a PMI of $225/month on $210,000 mortgage loan. But the Government will not help people who don't have an adjustable rate even though we were taken advantage of as well. I will be forced to walk away because Chase does not want to help and would rather I lose the house. If, chase owns the loan then adjust the APR and lower the PMI. They still make a ton of money in the end. I don't get it and I understand why people just lose it these days.
Posted By: reuben.nieves @ 12/07/2007 8:55:48 AM

Comment: I agree with your assessment. I am a realtor and mortgage loan officer in Sacramento. Although I made loans all of my loans were affordable to my clients. However, I find some of my clients who are trying to refinance even though they had downpayments are unable to refinance because the value of their home has gone below there mortgage.Yet, it is the act of lenders who forclosed on a massive scale and dumped these properties on the market that depressed the values. As a result, some people with good credit and strong families are buying homes of better quality for less and after escrow closes allow the banks to take the house they already have.
The new government solution does not go far enough to stabalize the situation. Stopping forclosures should be stopped and the lenders should be forced to deal with the homeowners regardless of whether they were subprime or not. Lenders were responsible for this mess and they should be held accountable for the deteriorating values. Lenders could reduce the interest on both 1st and seconds by 2 percent to allow the homeowner to remain in place without resorting to forclosure which when published lowers the values of all remaining homes. Local governments are affected by the loss of property taxes that ensue. Lenders losses would be less if they were to deal with the homeowners from the onset. Another solution is to have Fanniemae and Freddiemac take over the loans that in potential forclosure by letting the government eminent domain the mortgages at the newly discounted prices and forgiving a good portion of the difference from what they acquired the property with what is owed to stabalize the market and allow new buyers who are afraid that values would be still eroding some measure of confidence.

Yours truly

Reuben Nieves
Posted By: naor @ 12/06/2007 8:41:22 AM

Comment: Froam Washington Post-Darren McKinney, 48, a renter in the District, said he has been waiting for housing prices to fall so he can buy a condo without resorting to a dubious loan. He turned down an opportunity to buy his 600-square-foot apartment for $310,000 in late 2004 because he thought it was "absurdly overpriced."

Now the government is rewarding people who made irresponsible decisions and bought homes beyond their means, he said.

"There are those of us who purposely sat on the sidelines during the course of the last three years while the senseless frenzy was going on, and we presumed the free market would be allowed to correct itself," McKinney said. "The government is now meddling in the market and looking to prop up lenders and borrowers alike, and those of us who wisely bided our time get screwed."
Posted By: naor @ 12/06/2007 8:40:46 AM

Comment: From Washington Post article.Darren McKinney, 48, a renter in the District, said he has been waiting for housing prices to fall so he can buy a condo without resorting to a dubious loan. He turned down an opportunity to buy his 600-square-foot apartment for $310,000 in late 2004 because he thought it was "absurdly overpriced."

Now the government is rewarding people who made irresponsible decisions and bought homes beyond their means, he said.

"There are those of us who purposely sat on the sidelines during the course of the last three years while the senseless frenzy was going on, and we presumed the free market would be allowed to correct itself," McKinney said. "The government is now meddling in the market and looking to prop up lenders and borrowers alike, and those of us who wisely bided our time get screwed."
Posted By: CarolynWarren @ 12/05/2007 7:41:09 PM

Comment: The only long-term solution is education about financing. People are still taking risky, over-priced loans. Yes, many sub-prime lenders have gone out of business, and guidelines have changed, but the greedy loan sharks are still hungry for money.

I am in favor of modification, because it will help our economy. I am not in favor of bail-outs funded by tax payers. Where is the fairness in that?

I am especially in favor of exposing the mortgage rip-offs and explaining how to get a good, cheap loan.

-- Carolyn Warren, author, Mortgage Rip-Offs and Money Savers (Wiley)
Posted By: CarolynWarren @ 12/05/2007 7:40:31 PM

Comment: The only long-term solution is education about financing. People are still taking risky, over-priced loans. Yes, many sub-prime lenders have gone out of business, and guidelines have changed, but the greedy loan sharks are still hungry for money.

I am in favor of modification, because it will help our economy. I am not in favor of bail-outs funded by tax payers. Where is the fairness in that?

I am especially in favor of exposing the mortgage rip-offs and explaining how to get a good, cheap loan.

-- Carolyn Warren, author, Mortgage Rip-Offs and Money Savers (Wiley)
Posted By: JaxFLResident @ 11/28/2007 12:41:08 PM

Comment: I agree with Taukzalot and Fjord. I know this crisis is not easy, but I don't want to reward those who continue, decade after decade, to mismanage money. I feel for the people who are inexperienced first time homebuyers who got in over their heads. Yes, let's help them. But I have little sympathy for the repeat refinancer who has a $600K+ mortgage on a house they bought 15 years ago for $80K, with a combined annual income of $45K, and who refinanced to payoff their $30K Lexus. Yes it's their primary residence, but let's get reasonable! Who in their right minds should fiscally overindulge themselves and then expect banks, the government, or the US taxpayers to bail them out of circumstances like that?!

I became a subprime borrower in 2006 after losing my home in a divorce settlement 5 years earlier. Every safe apartment complex in my city started going condo and kicking out renters during this last buying frenzy, and I finally bought a house with 100% financing. Yes that makes me subprime, but I got reasonably priced fixed rate loans on a property priced well within the old rule-of-thumb that a house shouldn't cost more than 2.5x your annual income. The 20% second mortgage is on track to payoff in 4 years versus 30. Maybe then I'll replace my 10-year old car (though I surely won't refinance my home to buy it. My reward? Homeownership again. I expect no more, but I do resent the proposals that would reward the irresponsible repeat refinancers, just as much as I resent thoughts of potentially bailing out failed investor "flips" for borrowers who lied to the lenders about their loan purposes.
Posted By: Taukzalot @ 11/22/2007 5:30:34 PM

Comment: Since I decided to obtain a fixed rate mortgage and live within my means shouldn't I get a reward also? Or is it only those who decided to live in a home they couldn't afford in the first place who should be allowed to pay less for it and still reap the benefits. Simply answer the question for me please? The real ramifications of this fallout is that housing will be more affordable to those who are smart enough to buy now while the prices are more realistic. Perhaps the people who are renting now who may soon be able to afford a house of their own will go about it more responsibly.
Posted By: fjord @ 11/20/2007 7:23:30 PM

Comment: Did Mrs. Quinn speak to any real estate appraisers before writing this article? When determining a value for a property they base it on the comparable value of like homes. It is not uncommon to remove a value that was obviously sold below martet value. So in this article the assertion that home next door to a foreclosed property will be decreased is likely not the case at all.

I have worked in the mortgage industry for the past 5 years. The people she want sto let off the hook are often those that used refinancing over and over again. Each time they gambled the equity in their homes to pay off maxed out credit cards. Refinancing was often a last ditch option to correct a life time of financial mismangement.

This problem is being blown out of proportion in an attempt to sell more newspapers/magazines. Homes are still selling all over the country. Further new homes are being built, all be it a reduced rate. The media is the problem and will continue to ride the wave updating America on every auction in an attempt so scare us.
Posted By: thosfiore @ 11/19/2007 12:05:21 AM

Comment: Back in the early 1990s houses in California lost a substantial percentage of their values. This resulted in a bunch of people walking away from the houses in which they had negative equity. Given that the decline is even worse this time combined with it being even easier to buy a house with little or no equity, what's going to prevent the same thing from happening this time?
Posted By: thosfiore @ 11/18/2007 11:56:54 PM

Comment: Back in the early 1990s the value of homes declined in California. The result was a bunch of people with negative equity in their homes and that resulted in a bunch of people walking away from their homes and mortgages. It took years for the market to get back to where it was before the decline.
With that as background, what would make homeowners react differently this time with the values declining even more and with even more avenues for borrowers to buy houses with even less equity?