"4 weeks and then all hell breaks loose"

[NewportSkipper_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.

I think I understood fine. My comment meant we could better track actual REOs going forward since we all agree, more or less, what it is today.

 

[irvine_home_owner_IHB]

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.

From what I read, don't they only receive the difference from 38 to 31?

This is why I do think that DTI **IS** a factor because the servicer has to determine if the difference they have to eat to get it down to 38% is worth more or less than just foreclosing. I can't imagine someone coming in with a 72 DTI and the servicer saying "Sure... we'll give you a mod".

 

[NewportSkipper_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?

Your answer is in your own post. Those are the "refinance" guidelines. A loan mod is not a refinance. Sorry, Capitalismworks beat me to it. One correction though: Hope for Homeowners doesn't exist anymore. The public initiatives are both called Making Homes Affordable and are consituted by the refinance and modification offerings.

 

[NewportSkipper_IHB]

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.

From what I read, don't they only receive the difference from 38 to 31?

This is why I do think that DTI **IS** a factor because the servicer has to determine if the difference they have to eat to get it down to 38% is worth more or less than just foreclosing. I can't imagine someone coming in with a 72 DTI and the servicer saying "Sure... we'll give you a mod".

It happens every single day. You have to remember too: those rates are fixed for five years and then increase 1% per year until the final rate is reached. Yes, it's a big windfall, but not 30 years big. This is why some people may be OK with the upside down issue, because they are recovering some of it this way.

By the way: it's critical to understanding the market that one understands these iniatives.

 

[irvine_home_owner_IHB]

Your answer is in your own post. Those are the "refinance" guidelines. A loan mod is not a refinance. Sorry, Capitalismworks beat me to it. One correction though: Hope for Homeowners doesn't exist anymore. The public initiatives are both called Making Homes Affordable and are consituted by the refinance and modification offerings.

Ahaaa... thanks. This is like the shadow/pre-shadow semantics. I consider a loan refinance still a loan mod.

Every single day someone with a loan at 72 DTI gets it modded down to 38 DTI? Screenshot!!!

 

[NewportSkipper_IHB]

I'll go get my monkey.

 

[irvine_home_owner_IHB]

I'll go get my monkey.

Make sure he/she only has one arm or you're cheating.

 

[bltserv_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.

I will buy you some cheese to go with your whine.

 

[trrenter_IHB]

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.

From what I read, don't they only receive the difference from 38 to 31?

This is why I do think that DTI **IS** a factor because the servicer has to determine if the difference they have to eat to get it down to 38% is worth more or less than just foreclosing. I can't imagine someone coming in with a 72 DTI and the servicer saying "Sure... we'll give you a mod".

It happens every single day. You have to remember too: those rates are fixed for five years and then increase 1% per year until the final rate is reached. Yes, it's a big windfall, but not 30 years big. This is why some people may be OK with the upside down issue, because they are recovering some of it this way.

By the way: it's critical to understanding the market that one understands these iniatives.

I think you are wrong. The guideline is to get the Front end DTI to 31%. Once that is accomplished they want to look at the back end DTI.

They are just looking at sane standards that used to be in place. You couldn't buy a home with 72% DTI because they knew the loan would fail. Just like they know the mod will fail if they are over 38%.

Then if the Front end DTI is at 31% will the homeowner be below 38% DTI. The goal isn't go get them to 38% DTI. That is why they ask for information about monthly gross income, including recent pay stubs, if the borrowers are salaried and receive them, and documentation of any income received from other sources.

Most recent income tax return.

Information about assets.

Information about any subordinate lien mortgage on the house.

Account balances and minimum monthly payments due on all credit cards.

Account balances and monthly payments on all other debts such as student loans and car loans.

A letter describing why your mortgage is unaffordable (i.e. what caused your income(s) to be reduced or expenses to be increased).

At 55% they must seek credit counceling and I am sure the will be councled to give the house back to the bank and stop spending so much damn money.

I think that the matching of funds lasts only 5 years as well.

Oh and finally they are being very transparent when they sell this program.

Imagine this conversation. Well Mr. Knifecatcher it seems as though we will have to put a forebearance of 200k on your loan. What does that mean. It means we are not forgiving principle we are just putting it to the side until you pay off your loan and then you will have a 200k balloon payment or you sell your home and you will owe us 200k.

UMMM here are my keys.

 

[NewportSkipper_IHB]

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.

From what I read, don't they only receive the difference from 38 to 31?

This is why I do think that DTI **IS** a factor because the servicer has to determine if the difference they have to eat to get it down to 38% is worth more or less than just foreclosing. I can't imagine someone coming in with a 72 DTI and the servicer saying "Sure... we'll give you a mod".

It happens every single day. You have to remember too: those rates are fixed for five years and then increase 1% per year until the final rate is reached. Yes, it's a big windfall, but not 30 years big. This is why some people may be OK with the upside down issue, because they are recovering some of it this way.

By the way: it's critical to understanding the market that one understands these iniatives.

I think you are wrong. The guideline is to get the Front end DTI to 31%. Once that is accomplished they want to look at the back end DTI.

They are just looking at sane standards that used to be in place. You couldn't buy a home with 72% DTI because they knew the loan would fail. Just like they know the mod will fail if they are over 38%.

Then if the Front end DTI is at 31% will the homeowner be below 38% DTI. The goal isn't go get them to 38% DTI. That is why they ask for information about monthly gross income, including recent pay stubs, if the borrowers are salaried and receive them, and documentation of any income received from other sources.

Most recent income tax return.

Information about assets.

Information about any subordinate lien mortgage on the house.

Account balances and minimum monthly payments due on all credit cards.

Account balances and monthly payments on all other debts such as student loans and car loans.

A letter describing why your mortgage is unaffordable (i.e. what caused your income(s) to be reduced or expenses to be increased).

At 55% they must seek credit counceling and I am sure the will be councled to give the house back to the bank and stop spending so much damn money.

I think that the matching of funds lasts only 5 years as well.

Oh and finally they are being very transparent when they sell this program.

Imagine this conversation. Well Mr. Knifecatcher it seems as though we will have to put a forebearance of 200k on your loan. What does that mean. It means we are not forgiving principle we are just putting it to the side until you pay off your loan and then you will have a 200k balloon payment or you sell your home and you will owe us 200k.

UMMM here are my keys.

I'm not wrong. I know for an ironclad fact that the back-end can be 100%. I know it doesn't make sense, but it is the truth. The balloon is not as bad as it sounds, we all pay back much more than principal over the life of the loan. It is the total that really counts (assuming you want to stay where you are).

 

[EvaLSeraphim_IHB]

Graphrix, I don't want to call you lazy, that would not be cool. However, your list is a joke. The property at 4 Berkshire closed escrow last year, on 11/10/2008.

Doesn't show up in county records as closed. Still REO.

The property at 52 Las Flores closed escrow on 8/29/2009.

Try reading first, then learn how to count. I listed more than 15 properties. And... if you look carefully it says SOLD in capital letters by 52 Las Flores.

The property at 131 Sandpiper was listed last year as an REO.

Doesn't show up in county records as closed. Still REO.

Your list has Dogwood in both Aliso Viejo and Laguna Hills. What Robert put up was twice the effort and three times the value of what you added.

Long before Aliso existed the zip code was part of Laguna Hills. Much like many houses in Ladera still show Mission Viejo as the city in the zip code of 92694. So WTF is your point? That you didn't know that? That you can't see that the zip code is clear as f'ing day as 92656?

Thanks for not providing anything useful, again you add zero, nada, nothing but hot air. Now go kick rocks on the 5 freeway by yourself.

I guess your reading comprehension really does leave a lot to be desired. Did I do the quote thing right?

You are right and I am wrong. I apologize. I had not read the whole the thread, only some at the beginning and yesterday's posts, so I didn't see Graph's post from 8/31.

You did the quote thing right. Yea!

 

[EvaLSeraphim_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.

If you're willing to own it, I will too.

**Dashes off to find new avatar**

That said, I think you have made great strides today. We can all agree to disagree, but it's much better when it's a pleasant exchange. Yes, I know you were on the receiving end of the stick. I suspect that most of that arose from how you chose to introduce yourself, which is no excuse, but certainly an explanation.

I know IR and Awgee stepped in, but as a person who all day listens to other people try and make their point, the point is more effective if it just made without editorial. This applies to everyone; I'm not singling out NS.

So, are we yet at the point that after beating on each other we can all just go get a beer - or in No_Vas' case, scotch?

 

[caycifish_IHB]

At 55% they must seek credit counceling and I am sure the will be councled to give the house back to the bank and stop spending so much damn money.

I think that the matching of funds lasts only 5 years as well.

Oh and finally they are being very transparent when they sell this program.

Imagine this conversation. Well Mr. Knifecatcher it seems as though we will have to put a forebearance of 200k on your loan. What does that mean. It means we are not forgiving principle we are just putting it to the side until you pay off your loan and then you will have a 200k balloon payment or you sell your home and you will owe us 200k.

UMMM here are my keys.

Reading this thread has started to make me upset about the whole loan mod situation. I used to get upset when I read about new government programs to keep unwise, reckless people in their houses, and then I would read the details, see that few in OC would qualify, and chill out. Now I'm reading about these balloon payments and I'm getting mad again. WTF?! All they have to do is go to counselling? Seriously? I really hope I'm misunderstanding something.

There were millions of people who didn't care what happened only a few years in the future and look on debt accordingly. They figured they would deal with the problems later, or hope that the problems never happened. I have no faith that these folks will be of the mind to walk away from an opportunity to pay the piper DECADES from now. "I can afford the payment today? Okay, I'll stay. I'll worry about the balloon payment later." Also, handing in the keys is a difficult financial choice that I also have no faith most homedebters are capable of making.

Arg!

 

[trrenter_IHB]

I’m not wrong. I know for an ironclad fact that the back-end can be 100%. I know it doesn’t make sense, but it is the truth. The balloon is not as bad as it sounds, we all pay back much more than principal over the life of the loan. It is the total that really counts (assuming you want to stay where you are).

Humor me and explain to me how a person with a back end DTI of 100% will be able to live.

DTI is based on GROSS income. So right away that would mean in order for it to be 100% you could have ZERO deductions on your pay check. Then only debt that would show on a credit report is counted. IE a credit card, a car payment etc. first mortage, second mortgage.

It does not include gas for your car, utilities, insurance for the car. that pesky food you need to survive etc.

That is why even 55% is really to high.

Now I know you are wrong.

 

[No_Such_Reality_IHB]

Reading this thread has started to make me upset about the whole loan mod situation.

Why? I used to, but then I thought about it and came to the following conclusions, all scenarios work out in my favor as a current renter and future buyer provided I have patience.

I see four scenarios:

1. The banks write down principal for owners. Means owners with a lower cost basis. Means more owners capable of selling at prices at or below today's prices. The main problem today is a lack of capable sellers, write downs means more capable sellers.

2. The banks mod for lower payments. Means owners with a lower cash flow position. When they want to move, if they are upside down, they can compete more effectively with rentals. More rental competition means lower rents. Lower rents means lower prices.

3. Banks mod lower payments with Balloon payment 'bombs'. Same as above but increased future inventory and potentially distressed sellers. Means a steady stream of future inventory. Future being 5+ years out.

4. The banks don't mod. Banks foreclose. REOs means inventory. More inventory now means sellers, the banks, that can actually sell the place today. More inventory means more choice. To me, the primary problem with housing right now isn't that it will come down in the future, it's that the available inventory is frankly crap, particularly in the sub-$500K market which at the current rates is insanely competitive.

5. Banks accelerate short sale approvals. Means more inventory of homes that can be sold.

Right now, it's the worse of everything. Short sales are slow for approval, banks don't foreclose and many homeowners can't sell even if they want to means low and poor inventory.

Anything the banks do basically immediately increases inventory today or insures a steady stream of inventory in the future.

So as long as you buy something that you can rent effectively in the future you're okay. But run away prices in the future, not likely to happen unless the banks capitulate and really drive prices down.

Or maybe Ben will lose the inflation fight and we won't care if an Irvine home is $800,000 because a your Starbuck's latte will be $7.50.

 

[NewportSkipper_IHB]

Eva, sorry, I had to step out. Thank you. Love the avatar, I'm old enough to remember them firsthand.

TRrenter, I didn't say it made sense.

Caycifish, this stuff is optional if it makes you feel better. I happen to think there could be some cases where assistance like this may be deserved - along with the cases where it's not (but I know that is an unpopular opinion).

No such, you're a hopeless optimist (pessimist?). There will be some middle result that everyone will be half happy/angry with, including you. You are going head-to-head with motivated owners and more-motivated banks. Neither will give up easily.

There are many variables in play. Anyone claiming certainty of outcome is foolish.

 

[trrenter_IHB]

TRrenter, I didn't say it made sense.

Not only does it not make sense it is impossible.

Gross income is before they take out one deduction. DTI is based on gross income not net income.

You are wrong, plain and simple. No way can they make a loan at 100% DTI

 

[no_vaseline_IHB]

No way can they make a loan at 100% DTI

Oh, you could - just nobody will!

Assuming otherwise is "Wish Upon a Star" territory.

 

[bltserv_IHB]

Eva, sorry, I had to step out. Thank you. Love the avatar, I'm old enough to remember them firsthand.

TRrenter, I didn't say it made sense.

Caycifish, this stuff is optional if it makes you feel better. I happen to think there could be some cases where assistance like this may be deserved - along with the cases where it's not (but I know that is an unpopular opinion).

No such, you're a hopeless optimist (pessimist?). There will be some middle result that everyone will be half happy/angry with, including you. You are going head-to-head with motivated owners and more-motivated banks. Neither will give up easily.

There are many variables in play. Anyone claiming certainty of outcome is foolish.

Its simple mathematics. Your dealing with a depreciating asset. Your business model is fatally flawed. It needs to predict this constant depreciation stopping.

From what I see this may take decades.

I would like to sell you some parachutes. They will open when you leave the plane. But after that. Not my problem.

This whole loan modification business needs to be bonded. You need to put a couple hundred grand in the game so you have some skin in the process.

Otherwise I look at all you loan mod guys like I look at the guys selling winners at the track. Vultures picking at the foolish and injured.

 

[tmare_IHB]

Nothing to add, only that this thread has proven to be exceptionally interesting. This appears to be the thread to watch around here lately. Thanks to all of the newbies, agree or not, a few of you have brought back the controversy and I like that. Carry on, I'm just watching and enjoying it.