Foreclosure Program

[427 S/O]

Looks like $1000 yr. is all the help foreclosures will get?. I don't see that helping anyone.


http://blogs.wsj.com/economics/2009/...on-guidelines/

[cobra de capell]

[quote=427 S/O;926553]Looks like $1000 yr. is all the help foreclosures will get?. I don't see that helping anyone.


No, it's not.

Section of overview...

Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).

The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.
___

Meaning that their payment can be reduced by reducing the interest rate and/or reducing the principal (forbearing [give up] principal) and/or entend the loan to 40 years.

Therefore, FANNIE and FREDDIE will be writing off principal, reducing interest and extending loans to 40 years in the billions to reduce payments to 31% of income. Loan payments in the target category are more than likely in the 45-55% of income.

Now, when someone secured this sort of break, but their neighbor does not simply because they are managing in a financially responsible manner - what will the neighbor do if, for example, the 'break' involves a principal reduction of $100,000? It's a road that America should have never gone down.

We are so screwed.

[427 S/O]

I mentioned some time back, restructuring delinquent loans to 40 yr. might be an instant and quick fix?. I really don't see investors, who put up the money for home loans, agreeing to any reduction in principal. Unless of course, Barney limp wrist uses your money to pay the difference.

[SP01715]

Evertime I hear about the forclosure bailout it pisses me off. I played by the rules and get nothing. The idiots that rolled the dice and commited fraud are going to be rewarded. Obama is destroying this country.

[cobra de capell]

Originally Posted by 427 S/O

I mentioned some time back, restructuring delinquent loans to 40 yr. might be an instant and quick fix?. I really don't see investors, who put up the money for home loans, agreeing to any reduction in principal. Unless of course, Barney limp wrist uses your money to pay the difference.

It depends of the type of loan one has now (those in trouble). If they have a floating rate with a balloon payment even a 30 year fixed loan would help them out – big time. If they have a 30 year fixed loan, for example $300,000, 40 years reduces the payment by only $164 per month, so it’s really all about the current market interest rate versus the rate a lot of people are facing as rates adjust on variable rate loans.

The problem is that a high percentage of those in trouble are also flaky, e.g. other toys (boats, etc), lots of kids with lots of kid toys – loss of a job is a two job family – they may not have started out that way – it just happened, or perhaps they did and it was just a matter of time.

The best way to handle this is allow foreclosures to happen. Perhaps – let people sort of off by not noted the foreclosure on their credit report so that they can secure a rental and perhaps buy something they can afford down the road, perhaps even next door to the one they lost.

If the courts are allowed to step in and reduce mortgages - all of us will pay with that routine factored in each time a financial institution makes a loan.

[cobra de capell]

Originally Posted by SP01715

Evertime I hear about the forclosure bailout it pisses me off. I played by the rules and get nothing. The idiots that rolled the dice and commited fraud are going to be rewarded. Obama is destroying this country.

Just think if you lived next door to someone that gets bailed out and you get nothing, simply because you are a responsible person! YIKES! I'll bet that will be happening, a lot.

[427 S/O]

It was a general statement cdc, I don't catre to go on and on as you do.