"4 weeks and then all hell breaks loose"

NEW -> Contingent Buyer Assistance Program
[quote author="irvine_home_owner" date=1251855720]This is the type of language that is divisive. You may not mean it to be, but since there is no way to convey tone effectively on the Internet, you may want to choose more neutral statements such as:



"I do not agree with your assessments."</blockquote>


He wants to take over me in being the nastiest person on the internet. He is doing a really... really good job too.
 
[quote author="NewportSkipper" date=1251854093]"I posted two people I personally know that are 13 and 18 months behind with no action taken. They will not qualify for this.'



Everyone on these boards has an anecdote like this one, but we see hard records that show foreclosures taking place for the most part on schedule.



"I posted two people I personally know that are 13 and 18 months behind with no action taken. They will not qualify for this.'



Why don't they qualify?</blockquote>


Because they stopped paying before Jan 1 of 09.



Even if they did they don't want a mod. They are so far upside down at this point they just want to walk away.



Last time I checked the loans that caused a lot of this were zero down. So if Housing prices have gone down 5% then they would owe more then 105% of the loan.



I am not sure but I think RE in the area has gone down a little more then 5%
 
Here is one example of there being no LTV minimum or maximum:



http://www.acornhousinghelp.org/downloads/resources/Making_Home_Affordable_Plan_Guidelines.pdf





Your friend who stopped paying before January is not disqualified for that reason. What is the real reason? (I see you added the real reason.) Everyone I know thinks the 20%-30% they are down will be regained one day.



I swear, I'm not trying to be testy. You all come off like a pack of jackals! You should hear yourselves!



Edit: the people I know who are down, are still not underwater. These are not 100% financing types.
 
Thought this was interesting



<a href="http://www.bankinvestmentconsultant.com/news/postponing-reckoning-foreclosure-2663681-1.html?ref=patrick.net">Postponing the Day of Reckoning</a>



But industry data and anecdotal evidence suggest banks and servicers have been dragging out the process-not rushing to kick people out of their homes.



Granted, the deferrals may not be motivated by compassion, or even political pressure. Rather, banks and mortgage investors want to avoid repossessing hundreds of thousands of homes, which would produce losses and hits to capital.



"The goal is to hold off on foreclosures and take losses as slowly as possible to keep balance sheets up," said Deborah Voelz, the chief financial officer of National Asset Direct Inc., a New York buyer and servicer of distressed loans. "Everyone is looking at what the ultimate loss is going to be and whether it makes sense to hold off another year or two and mitigate the results."
 
[quote author="NewportSkipper" date=1251857123]Here is one example of there being no LTV minimum or maximum:



http://www.acornhousinghelp.org/downloads/resources/Making_Home_Affordable_Plan_Guidelines.pdf





Your friend who stopped paying before January is not disqualified for that reason. What is the real reason? (I see you added the real reason.) Everyone I know thinks the 20%-30% they are down will be regained one day.



I swear, I'm not trying to be testy. You all come off like a pack of jackals! You should hear yourselves!



Edit: the people I know who are down, are still not underwater. These are not 100% financing types.</blockquote>


You are right I misread that one I thought the loan needed to be current at that point. It needed to be made before that.



The point still stands though not a lot of people will qualify for a loan mod in CA. We are not talking subprime here on the next wave. Many of the next in line will be over the 729k.



The other sticking point is if Forebearance is used it isn't forgiven. Look at page 9 in your link.



The other thing that sticks out at me is you pulled out of my article that 10% reduction has the greatest success in not redefaulting.



This program looks for 6% minimum so the minimum reduction would still have a high re default rate.
 
"To qualify for servicer Pay for Success payments and borrower Pay for Performance Success Payments, the modification must reduce the monthly payment by a minimum of 6 %."



All this says is that the servicer may be eligible for a bonus on loans meeting a 6% or greater reduction in payments. It says nothing about the expected payment adjustments. If people start at 50% debt to income ratio and are taken to 31% (or even 38%), that is a large reduction in payment.



You state that few will qualify, but I could not possibly disagree with you more than I do.



Like I said: there are programs for jumbos too.
 
[quote author="NewportSkipper" date=1251857123]Here is one example of there being no LTV minimum or maximum:



<a href="http://www.acornhousinghelp.org/downloads/resources/Making_Home_Affordable_Plan_Guidelines.pdf">http://www.acornhousinghelp.org/downloads/resources/Making_Home_Affordable_Plan_Guidelines.pdf</a>

</blockquote>
Thanks for this link. Although disregarding LTV is risky on the lender's part (part of how we got into this mess in the first place).



I think a big stickler here is the DTI. In most exotic lending, DTI was mostly ignored or income was inflated. I think most of the people who got stuck with $500k homes and could only afford $200k ones are going to be hard pressed to pass the DTI test.



And let's do a real world test... if mods were so easy to qualify for... can someone show us the numbers of how many have been done and have been successful?

<blockquote>

I swear, I'm not trying to be testy. You all come off like a pack of jackals! You should hear yourselves!

</blockquote>
I'm not understanding where we are coming off like a pack of jackals. We are merely pointing out the flaws in the system and some people's opinions of how the system works.



Do you personally believe that a majority of distressed homeowners will qualify for HAMP and be able to successfully maintain their mods? And that these mods will outpace the number of distressed properties that will end up in foreclosure?



I'm not looking for a wrong or right answer... just your opinion.
 
[quote author="irvine_home_owner" date=1251859317][quote author="NewportSkipper" date=1251857123]Here is one example of there being no LTV minimum or maximum:

<blockquote>

I swear, I'm not trying to be testy. You all come off like a pack of jackals! You should hear yourselves!

</blockquote>
I'm not understanding where we are coming off like a pack of jackals. We are merely pointing out the flaws in the system and some people's opinions of how the system works.



Do you personally believe that a majority of distressed homeowners will qualify for HAMP and be able to successfully maintain their mods? And that these mods will outpace the number of distressed properties that will end up in foreclosure?



I'm not looking for a wrong or right answer... just your opinion.</blockquote>


I think HAMP will help, but it won't outpace the number of distressed properties going to end up in foreclosure. Demand is very strong right now and it will be able to absorb the foreclosures. There are more homes in escrow in Laguna Beach right now than there have been since june and july of 2005. For Irvine, I think it's the most in the past 3 years. (I know everyone will be yelling "where is your cite" right now, but it'll have to wait) I'll post the data and my weekly market update tonight. Overall the 12 cities that I follow in Orange County had a great week; over 50% In Escrow vs. Active ratio.



I personally would love for all the short sales to be handled as REOs right now because they are much more efficient to work with. Short sales are better than 9 months ago, but they are still a pain in the arse. Most REOs go quickly, most...
 
[quote author="RobertLarsen" date=1251851616][quote author="CapitalismWorks" date=1251834541]RL, when someone who knows better says something isn't truw I find it obnoxious. I figured someone in RE would know. Since you appear to have been unaware of the practice of cash for keys, well I am surprised. More importantly, when you say something I posted "isn't true" you had better damn well be able to disprove the statement.



As I pointed out there are 2.9 MILLION hits on Google. Just read a few.



Preventing the destruction of the property may not be the sole reason to offer cash for keys, but it is certainly an important reason.



BTW, coming here to promote your blog is seeking to drum up business. Using your real name, is seeking to drum up business. Don't try to play coy with your motives for being here. Your objective is to make money, and you are holding yourself out as a professional on this blog. If I question your knowledge and mention your occupation it is for these reasons.



If you want to avoid these types of comments, I suggest changing your screen name to something unknown. You could still learn about blogging and R/E without being held to the higher standard that should apply to R/E pros. Otherwise your background is fair game.</blockquote>


Sorry, but your insistance is pointless. Just look at the name of the program, Cash for KEYS. Meaning, we will give you cash, you give us keys... To say that the point of the program is to pay the occupants to keep it clean is ignorant.



And I'll correct you again on your narrowed minded opinions. I would much rather have my blog generate revenue through advertising, not referrals. I tried to change my screenname the day after I signed up, you can't, so I got over it.</blockquote>


LOL. So do you think banks would honor a cash for keys arrangement if the previous owner took the appliances/fixures/plumbing/wiring/ placed pigs in the home?



Here is my favorite example of foreclosure rage.

(http://www.kgw.com/news-local/stories/kgw_052607_news_pig_house.12e66bfa.html)



Here is another one:

http://latimesblogs.latimes.com/laland/2008/04/foreclosure-hom.html



Again the point of the program is multi-faceted with one of the objectives being mitigation of the potential for damage/theft.



As for your blog, I didn't say you were looking for referrals, I said you were trying to drum up business. And, I was correct. Whether the revenue is derived through referrals or advertising is irrelevant.
 
[quote author="NewportSkipper" date=1251858870]"To qualify for servicer Pay for Success payments and borrower Pay for Performance Success Payments, the modification must reduce the monthly payment by a minimum of 6 %."



All this says is that the servicer may be eligible for a bonus on loans meeting a 6% or greater reduction in payments. It says nothing about the expected payment adjustments. If people start at 50% debt to income ratio and are taken to 31% (or even 38%), that is a large reduction in payment.



You state that few will qualify, but I could not possibly disagree with you more than I do.



Like I said: there are programs for jumbos too.</blockquote>


So we can agree to disagree. I guess everyone will qualify and the bank will start writing down principle tomorrow. I bet the percentage of loans being modified is sky high right now.



<a href="http://www.latimes.com/business/la-fi-loans5-2009aug05,0,858718.story">Banks slow to modify mortgages, Treasury reports</a>



In its first report on the Obama administration's efforts to prod lenders to help as many as 4 million homeowners by reducing their mortgage payments, the Treasury Department said just 9% of eligible loans had been changed.
 
"Thanks for this link. Although disregarding LTV is risky on the lender?s part (part of how we got into this mess in the first place)."



You're welcome. The lenders already hold these loans. They would be making them less risky.



"I think a big stickler here is the DTI. In most exotic lending, DTI was mostly ignored or income was inflated. I think most of the people who got stuck with $500k homes and could only afford $200k ones are going to be hard pressed to pass the DTI test."



You don't understand the test. As long as you can cover the new payment, you will qualify. You don't need to prove your old income, you only need to prove that you can afford the payment that is 31% of your gross. It's a self-fulfilling test. What people will not be able to afford 31% of their gross income? It is affordable by its very definition. By this magic, your $500k home is made to look like the $200k home you can afford. Crazy, isn't it?



"And let?s do a real world test? if mods were so easy to qualify for? can someone show us the numbers of how many have been done and have been successful?"



The data are not yet available.



"I?m not understanding where we are coming off like a pack of jackals. We are merely pointing out the flaws in the system and some people?s opinions of how the system works."



Some of you do not behave like jackals.



"Do you personally believe that a majority of distressed homeowners will qualify for HAMP and be able to successfully maintain their mods? And that these mods will outpace the number of distressed properties that will end up in foreclosure?"



I believe many will qualify, but some who are severely underwater will walk away. The market can absorb many of these, just like it has been doing.
 
[quote author="trrenter" date=1251861726][quote author="NewportSkipper" date=1251858870]"To qualify for servicer Pay for Success payments and borrower Pay for Performance Success Payments, the modification must reduce the monthly payment by a minimum of 6 %."



All this says is that the servicer may be eligible for a bonus on loans meeting a 6% or greater reduction in payments. It says nothing about the expected payment adjustments. If people start at 50% debt to income ratio and are taken to 31% (or even 38%), that is a large reduction in payment.



You state that few will qualify, but I could not possibly disagree with you more than I do.



Like I said: there are programs for jumbos too.</blockquote>


So we can agree to disagree. I guess everyone will qualify and the bank will start writing down principle tomorrow. I bet the percentage of loans being modified is sky high right now.



<a href="http://www.latimes.com/business/la-fi-loans5-2009aug05,0,858718.story">Banks slow to modify mortgages, Treasury reports</a>



In its first report on the Obama administration's efforts to prod lenders to help as many as 4 million homeowners by reducing their mortgage payments, the Treasury Department said just 9% of eligible loans had been changed.</blockquote>


It's worth noting "changed" means "Extend and Pretend". No bank is meaningfully writing down principal. There have been a couple (like, two) examples of principal writedowns I've seen that totaled less than $10K. That's not meaningful when you've got people with massive neg. equity (upside down 50% from the peak).
 
"I guess everyone will qualify and the bank will start writing down principle tomorrow. I bet the percentage of loans being modified is sky high right now."



Typical bear response.
 
[quote author="NewportSkipper" date=1251862323]"I guess everyone will qualify and the bank will start writing down principle tomorrow. I bet the percentage of loans being modified is sky high right now."



Typical bear response.</blockquote>


How shall we evaluate the success or failure of the modification program?
 
It is a lot easier to climb out of losing 20% of value than 50%. A $500,000 home that loses $250,000 needs to see 100% appreciation. A $500,000 home that loses $100,000 needs to see 25% appreciation.
 
Oh, so now it's multi-faceted... Before I don't ever recall hearing that...



Here let me recap what started this entire discussion: You said: "1) Banks pay occupants of foreclosed homes to Not Destroy the Home upon exit. If a former homeowner can live rent free for a period of time then why would he trash his home. However, once it becomes apparent that the bank is planning on moving the property the incentives change. Simple enough, yes?"



Common sense tells you that when describing the program, such as Cash for Keys, that you should probably state the primary purpose of the program, which is to get the occupants out. Once again... Cash for KEEEEEYS. How do you expect someone to recognize what you're referring to when you only state a secondary requirement?
 
"How shall we evaluate the success or failure of the modification program?"



When enough time has passed.
 
Couple things:



1. The banks can do loan mods that don't meet the government's requirements if they feel like it, it's just they don't get the government incentives (cash) if they do.

2. If one is current on your loan, there's a second, related, government program that allows refis up if the balance owed on the first mortgage is less than 125% of the current value of the property.

3. Most importantly, even though "common sense" says few loan mods will succeed-Where are all the REOs? The banks aren't not foreclosing on them for no reason, and once they foreclose, they aren't holding them back en masse. Inventory is still amazingly small.



This is a "time will tell" situation. How this plays out is unknowable. It might end in a flood of foreclosures, or it might not. So far, not is winning.
 
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