"4 weeks and then all hell breaks loose"

[NewportSkipper_IHB]

"there are many cases where a 38 DTI just can’t be done"

Let me fix this for you: there are no cases where a 38 DTI can’t be done.

How can a 38% Back end DTI always be done? Is the "home debter allowed to default on all of their other loans.... This is clearly stated on Page 4 under Back end DTI I wish I could cut and paste but it is a PDF. If someone did an 80/20 finance the 20% still exists and counts toward the 38% back end and so do all of their other credit payments or installment debts, like car payments.

Bringing the Front End to 31% does not and cannot guarantee that the back end will be 38%.

Are you implying that if before my mortgage the rest of my installment debts are 32% of my income then they will reduce my mortgage payment to 6% of my income.

Then there is that pesky recession we are going through. We have massive unemployment, under employment and people that have taken reductions in salary.

That may hurt as well.

They don't care about the back end ratio as long as it's not over 100%. I swear.

"Treasury will partner with financial institutions to reduce homeowners’ monthly mortgage payments. The lender will have to first reduce payments on mortgages to no greater than 38% Front-End Debt-to-Income (DTI) ratio. Treasury will match further reductions in monthly payments dollar-for-dollar with the lender/investor, down to a 31% Front-End DTI ratio for the borrower."

"Borrowers who otherwise qualify for a modification under this program, but who would have a post-modification Back-End DTI greater than or equal to 55%, will be provided with a letter stating that they are required to work with a HUD-approved counselor and the modification will not take effect until they provide a signed statement indicating that they will obtain counseling."

They have to sign a form saying they will get counseling.

 

[CapitalismWorks_IHB]

"I can reduce someone’s payment on a $500k loan to $1000 per month… but it would probably be easier to sell that house for $450k."

That one is not very far underwater, this is more likely:

(Loosely)

Original value = $600,000 (100% financing)

Home value @ $400,000 - 30%(ish) expenses foreclosure expense = $280,000 proceeds and $320,000 loss.

Normal payment of $4,000 x 60 months = $240,000

New payment of $1,000 x 60 months = $60,000

Loss of interest ($180,000) versus loss on foreclosure ($320,000) equals "pass".

Now adjust the value of the interest income from the modded loan by 50%, since 50%+ of these things re-default in very very short order, and you have a complete loss of interest and THEN you have to put the home through foreclosure. Boy, the rosy mod scenario sure looks pretty crappy now doesn't it?!?

C'mon man, THINK about what is happening in the real world. Your numbers accurately reflect how the beauracrats HOPE this thing will work, not what is actually happening.

The biggest determinate of default and redefault is negative equity.

 

[NewportSkipper_IHB]

I'm just the messenger. Unless the market is dropping like a lead balloon, there is little to be lost in trying.

 

[IrvineRenter_IHB]

"How does that not fit within the definition of troll, above?"

Is this the question you want answered? The definition fits just about everyone here, including the both us us.

I will give you the definition of a troll -- at least the one that matters -- a moderator's definition.

I have been getting emails about the abrasive nature of your postings. You are disrupting the community, not for what you say, but for the way you are saying it (it may be a little of both). You need to find a way to communicate with everyone in a way that does not irritate everyone or I will be forced to do something about it. I saw the list awgee created a few pages ago, and although no individual statement crosses the line, the collective impression is not good.

Please be less combative and avoid the characterizations, or you will be asked to leave. If you become belligerent, I have the seldom-used power to ban you.

We run a fairly open forum, and most people learn to get along, but there are limits. Please don't push them.

 

[graphrix_IHB]

"I can reduce someone’s payment on a $500k loan to $1000 per month… but it would probably be easier to sell that house for $450k."

That one is not very far underwater, this is more likely:

(Loosely)

Original value = $600,000 (100% financing)

Home value @ $400,000 - 30%(ish) foreclosure expense = $280,000 proceeds and $320,000 loss.

Normal payment of $4,000 x 60 months = $240,000

New payment of $1,000 x 60 months = $60,000

Loss of interest ($180,000) versus loss on foreclosure ($320,000) equals "pass".

This is pure fantasy. No lender would ever drop a payment from $4000 a month to $1000. That is pure fantasy. Never ever would that happen. Just try to imagine what the MBS holder's reaction when the servicer tells them yeah... we cut a few of your payments by 75%, so uh... hope that doesn't hurt your yield too much. LOL!

 

[NewportSkipper_IHB]

"I can reduce someone’s payment on a $500k loan to $1000 per month… but it would probably be easier to sell that house for $450k."

That one is not very far underwater, this is more likely:

(Loosely)

Original value = $600,000 (100% financing)

Home value @ $400,000 - 30%(ish) foreclosure expense = $280,000 proceeds and $320,000 loss.

Normal payment of $4,000 x 60 months = $240,000

New payment of $1,000 x 60 months = $60,000

Loss of interest ($180,000) versus loss on foreclosure ($320,000) equals "pass".

I would tend to agree that example is extreme. However, I personally know a gal in Mission Viejo being offered a $1,300 payment on a $650,000 loan. I don't know if that includes property tax. Her home is worth around $550,000.

 

[irvine_home_owner_IHB]

"there are many cases where a 38 DTI just can’t be done"

Let me fix this for you: there are no cases where a 38 DTI can’t be done.

I can name one:

The homeowner lost their job and has no income.

Yes, unemployment is an example where there is nothing that can be done. You are missing the point about how this is all done. The more underwater the borrower, the greater the loan mod can be, not the other way around. You pretty much have this whole thing backwards.

Not really... but shouldn't that be the correct way to do it?

Isn't that what got us here in the first place? OptionARMs and no-doc loans that matched payments to the "stated" income instead of requiring the income to make the payments? The bigger problem here is like CapWorks mentioned, all parties know it's a neg-equity transaction.

Yet another reason loan mods will not be as effective... some people would just rather walk away.

I don't know if NewSkip answered these questions, but do you think there is a wave of shadow inventory out there and will loan mods prevent them further reducing market value?

 

[NewportSkipper_IHB]

"How does that not fit within the definition of troll, above?"

Is this the question you want answered? The definition fits just about everyone here, including the both us us.

I will give you the definition of a troll -- at least the one that matters -- a moderator's definition.

I have been getting emails about the abrasive nature of your postings. You are disrupting the community, not for what you say, but for the way you are saying it (it may be a little of both). You need to find a way to communicate with everyone in a way that does not irritate everyone or I will be forced to do something about it. I saw the list awgee created a few pages ago, and although no individual statement crosses the line, the collective impression is not good.

Please be less combative and avoid the characterizations, or you will be asked to leave. If you become belligerent, I have the seldom-used power to ban you.

We run a fairly open forum, and most people learn to get along, but there are limits. Please don't push them.

I swear I am trying to stay on topic here, but I still get attacked left and right.

 

[NewportSkipper_IHB]

"I don’t know if NewSkip answered these questions, but do you think there is a wave of shadow inventory out there and will loan mods prevent them further reducing market value?"

I think the answer lies in the middle. There will be some mods. There will be some foreclosures. Prices will depend on many factors, including timing and demand.

 

[irvine_home_owner_IHB]

"I swear I am trying to stay on topic here, but I still get attacked left and right."

Funny, I think the opposite.

(sorry... I love irony)

BTW: Thanks for answering my last question... but "some mods" doesn't sound like what geo was saying. He contends most of the shadow inventory will get fixed by loan mods. Also... did you read IR's post today? The numbers just don't seem to support the "some foreclosures" opinion you have.

 

[NewportSkipper_IHB]

"I swear I am trying to stay on topic here, but I still get attacked left and right."

Funny, I think the opposite.

(sorry... I love irony)

BTW: Thanks for answering my last question... but "some mods" doesn't sound like what geo was saying. He contends most of the shadow inventory will get fixed by loan mods. Also... did you read IR's post today? The numbers just don't seem to support the "some foreclosures" opinion you have.

That quote feature is cool! Yes, I just read the post. I think it's exaggerated. I am somewhere between Geo and Irvinerenter, on the Geo side of the 38th parallel.

P.S. What do you think these short sale numbers mean vis a vis delinquent loans?

Short sales closed 2009 = 3,327

Short sales backup, hold, pending = 4,372

Short sales active = 2,154

That's 9,853 units addressed so far in 2009.

 

[SoCal78_IHB]

I guess being called a one-armed monkey, and troll and being told to kick rocks on the freeway are considered polite.

Now it appears that you may have poor reading comprehension or retention skills, or you are choosing to misrepresent so that you can claim victim status. No one told you to go kick rocks on the 5. Here is the original post where Dry Heat invited you, if you were correct, to tell him to go kick rocks on the 5...

(He's referencing this.)

 

[trrenter_IHB]

"I can reduce someone’s payment on a $500k loan to $1000 per month… but it would probably be easier to sell that house for $450k."

That one is not very far underwater, this is more likely:

(Loosely)

Original value = $600,000 (100% financing)

Home value @ $400,000 - 30%(ish) foreclosure expense = $280,000 proceeds and $320,000 loss.

Normal payment of $4,000 x 60 months = $240,000

New payment of $1,000 x 60 months = $60,000

Loss of interest ($180,000) versus loss on foreclosure ($320,000) equals "pass".

I said 100% financing split 80/20 to avoid PMI. Which is more of a real world example.

600k home

480K First

120k Second.

Now do the math.

ANDDD The reduction is not a reduction but a forebearance that needs to be repaid as a baloon or when you sell the home from what I understand.

 

[graphrix_IHB]

I guess being called a one-armed monkey, and troll and being told to kick rocks on the freeway are considered polite.

Now it appears that you may have poor reading comprehension or retention skills, or you are choosing to misrepresent so that you can claim victim status. No one told you to go kick rocks on the 5. Here is the original post where Dry Heat invited you, if you were correct, to tell him to go kick rocks on the 5...

(He's referencing this.)

Thanks for bringing it up again, but that was already pointed out here by NS. And while it was not nice, quite a few people agreed with that comment. Hopefully now that other moderators have stepped in to tone things down, we all will. I already extended my olive branch in case you missed that part too.

And for the record: I did not call NS a blind one armed monkey. I said that a blind one armed monkey would be able to post a screen shot. I'm not saying he is or isn't a blind one armed monkey, but he didn't post a screen shot.

 

[NewportSkipper_IHB]

I guess being called a one-armed monkey, and troll and being told to kick rocks on the freeway are considered polite.

Now it appears that you may have poor reading comprehension or retention skills, or you are choosing to misrepresent so that you can claim victim status. No one told you to go kick rocks on the 5. Here is the original post where Dry Heat invited you, if you were correct, to tell him to go kick rocks on the 5...

(He's referencing this.)

Thanks for bringing it up again, but that was already pointed out here by NS. And while it was not nice, quite a few people agreed with that comment. Hopefully now that other moderators have stepped in to tone things down, we all will. I already extended my olive branch in case you missed that part too.

And for the record: I did not call NS a blind one armed monkey. I said that a blind one armed monkey would be able to post a screen shot. I'm not saying he is or isn't a blind one armed monkey, but he didn't post a screen shot.

Haha! Yes, I saw the olive branch. I appreciate that. I think we have a fairly good handle on the number (which I now forget). It was a few dozen, that's close enough. Now we can watch what becomes REO going forward, seems that would be easier than recreating history. Aliso Viejo is a good proxy for OC. It's somewhere between the REO rate of CDM and Santa Ana, it doesn't really have long, long term owners since its a baby of the 1990s and it has a fairly homogeneous housing stock.

 

[SoCal78_IHB]

I guess being called a one-armed monkey, and troll and being told to kick rocks on the freeway are considered polite.

Now it appears that you may have poor reading comprehension or retention skills, or you are choosing to misrepresent so that you can claim victim status. No one told you to go kick rocks on the 5. Here is the original post where Dry Heat invited you, if you were correct, to tell him to go kick rocks on the 5...

(He's referencing this.)

Thanks for bringing it up again, but that was already pointed out here by NS. And while it was not nice, quite a few people agreed with that comment. Hopefully now that other moderators have stepped in to tone things down, we all will. I already extended my olive branch in case you missed that part too.

And for the record: I did not call NS a blind one armed monkey. I said that a blind one armed monkey would be able to post a screen shot. I'm not saying he is or isn't a blind one armed monkey, but he didn't post a screen shot.

Sorry, too many quotes of quotes of quotes for me to visually separate so I didn't see his comment already. I'm having lots of computer trouble today (just f.y.i. in case anyone tries to reach me again) so I'm using someone else's for now and it's got weird settings that I'm trying to get used to. I don't think I've missed anything you wrote but thanks for your attempt to help.

 

[awgee_IHB]

"How does that not fit within the definition of troll, above?"

Is this the question you want answered? The definition fits just about everyone here, including the both us us.

I will give you the definition of a troll -- at least the one that matters -- a moderator's definition.

I have been getting emails about the abrasive nature of your postings. You are disrupting the community, not for what you say, but for the way you are saying it (it may be a little of both). You need to find a way to communicate with everyone in a way that does not irritate everyone or I will be forced to do something about it. I saw the list awgee created a few pages ago, and although no individual statement crosses the line, the collective impression is not good.

Please be less combative and avoid the characterizations, or you will be asked to leave. If you become belligerent, I have the seldom-used power to ban you.

We run a fairly open forum, and most people learn to get along, but there are limits. Please don't push them.

I swear I am trying to stay on topic here, but I still get attacked left and right.

I am unsure if you really want to know how to respond without attacking and being offensive, but I will try and help.

Seriously.

Go back to the thread on Ted Kennedy.

A contententious thread to be sure.

Folks were not just defending Ted Kennedy, but they were making personal attacks on me.

I was on the unpopular side.

Did I ever make any personal attacks in response?

Why not?

In this thread, did I ever attack you personally, or did I attack what you had written?

I think you are able to make your point, even if it showing the wrongness of a previous point or statement without being personal, even if someone else makes it personal first.

My father asks the question, "Do you prefer to act, ... or react?

By the way, my father is a psychologist and I asked him this morning if I am passive-agressive. He laughed, and proceeded to explain that I am agressive and about as far from passive-agressive as one could be, and he said that passive-agressive might be an improvement in my case.

 

[bigmoneysalsa_IHB]

Now we can watch what becomes REO going forward, seems that would be easier than recreating history.

Skipper, it seems from this comment that you still don't quite understand what the shadow inventory proponents are saying. They don't know exactly when the shadow inventory is going to have an effect... only that it eventually will (obviously whoever started this thread is an exception and was wrong). It's a lot harder to predict the timing of an event than the event itself. For example, in mid-2005 I was predicting that there was a housing bubble and So-Cal housing prices would crash. Now if you only analyzed my prediction based on what happened over the next year, you would have judged that I was wrong. But I wasn't wrong... I was completely right. The fact that I didn't include a timeline in my prediction didn't make me any less right. Think about it.

 

[irvine_home_owner_IHB]

So I'm still stuck on that whole LTV requirement and started searching around.

The one thing that bugged me was the link that NS provided was for a loan mod company in Illinois. Everywhere else, I'm reading that it can't be an LTV above 125% (it used to be 105%). This is based on the Federal plan which I would think servicers would have to follow in order to get compensation for the shortfall from the gov:

http://www.hud.gov/news/release.cfm?content=pr09-104.cfm

This lead me to the same site tr was posting and this FAQ on eligibility:

http://www.makinghomeaffordable.gov/borrower-faqs.html#a2

>>



2. How do I know if I am eligible for a refinance under HARP?

You may be eligible if:

* The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac (Don't know? See below);

* At the time you apply, you are current on your mortgage payments ("current" generally means that you have not been more than 30 days late on your mortgage payment in the last 12 months, or, if you have had the loan for less than 12 months, you have never missed a payment);

* The amount you owe on your first lien mortgage does not exceed 125 percent of the current market value of your property;

* You have a reasonable ability to pay the new mortgage payments; and

* The refinance improves the long term affordability or stability of your loan.



<<

So this is where many of us (or at least me) are getting that information that not only does LTV matter, but so does DTI. And, what I found counter-intuitive is that they require you to be current on your mortgage payments and have not been late more than 30 days.

It seems like banks won't even consider your for a loan mod unless you have been late on your payments so I'm not sure how strict they are on that. And if so, then basically ANY pre-foreclosure on FR.com (since those are 90+ days late) will NOT be eligible for a loan mod based on these guidelines.

Now I'm sure you can find some place (like NS did) that will state they don't look at LTV and that DTI is not used for eligibility... but when it comes down to it... do they really disregard that?

 

[CapitalismWorks_IHB]

So I'm still stuck on that whole LTV requirement and started searching around.

The one thing that bugged me was the link that NS provided was for a loan mod company in Illinois. Everywhere else, I'm reading that it can't be an LTV above 125% (it used to be 105%). This is based on the Federal plan which I would think servicers would have to follow in order to get compensation for the shortfall from the gov:

http://www.hud.gov/news/release.cfm?content=pr09-104.cfm

This lead me to the same site tr was posting and this FAQ on eligibility:

http://www.makinghomeaffordable.gov/borrower-faqs.html#a2

>>



2. How do I know if I am eligible for a refinance under HARP?

You may be eligible if:

* The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac (Don't know? See below);

* At the time you apply, you are current on your mortgage payments ("current" generally means that you have not been more than 30 days late on your mortgage payment in the last 12 months, or, if you have had the loan for less than 12 months, you have never missed a payment);

* The amount you owe on your first lien mortgage does not exceed 125 percent of the current market value of your property;

* You have a reasonable ability to pay the new mortgage payments; and

* The refinance improves the long term affordability or stability of your loan.



<<

So this is where many of us (or at least me) are getting that information that not only does LTV matter, but so does DTI. And, what I found counter-intuitive is that they require you to be current on your mortgage payments and have not been late more than 30 days.

It seems like banks won't even consider your for a loan mod unless you have been late on your payments so I'm not sure how strict they are on that. And if so, then basically ANY pre-foreclosure on FR.com (since those are 90+ days late) will NOT be eligible for a loan mod based on these guidelines.

Now I'm sure you can find some place (like NS did) that will state they don't look at LTV and that DTI is not used for eligibility... but when it comes down to it... do they really disregard that?

The issue is there are multiple plans, and I think that is causing some confusion. There is the Hope for Homeowners, and the Loan Modification Plan. These are separate efforts. The Hope Plan is the refinancing plan for Fannie and Freddie loans that allows for refinancing for up to 125% LTV. The Loan Mod plan is the payments to servicer and homeowners for modifying loans. There is no hard limit on how much a servicer can write down, but in order to qualify for the payments the servicer must reduce the loan/payment terms to the 38%/31% levels in order to receive that portion of the incentive cash.