Reader Offers Simple Plan to End Foreclosure Turmoil

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

barbara — Sat, 26 Jul 2008 11:00:00 GMT

Rick must be one.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Javed — Fri, 11 Jul 2008 11:00:00 GMT

FHA Secure product will not help home owner, those who are going to get a payment shock on adjustable rate comming due, will fall back on increased mtge pmt, will again try to find a way out, and will fall in FHA Secure product plan, again lender will take advantage of this pgm and will charge premium pricing to borrower with increased MI based on mortgage delinquencies, which will not be the basic .50% of base loan amount and will be higher with high mtge payment again. every loan from CA are in the declining market. marketing time is more then 6 months I see appraiser struggling to get comps to support fair market value, there is no fair market value left. this industry is a roller coaster now, this is a buyers market and FHA will be getting loan structured for primary homes, with straw borrowers, and will be an investment property once the loan closed, there are too many LLC trying to take advantage of this declining market and are buying home in FCL and sell home with profit to buyer under FHA loans, One has to be very very careful in doing loan in such market like CA,NJ,IL and so on let us not abuse FHA loan and let real people get their home at reasonable rates and terms. I recommend investors to make real loans with real people, dont push home owner to get FHA Secure product which may not help them as much as they think. Javed TX

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

David A. Yablonsky Sr. — Mon, 23 Jun 2008 11:00:00 GMT

Response to Beth, who asked what field I work in. I am a subprime pricing and product consultant to lenders, investors and hedge fund managers. my background includes 30 years as a real estate licensee (still licensed) and 15 years in the mortgage business, the bulk of which is and has been spent as a subprime pricing and product analyst for national lenders. In other words, I have been involved in the subprime lending environment almost from the beginning of that segment of the lending industry. Those of you that propose any type of blanket solution to the current repercussions of the subprime fiasco are on a fool's errand. There are already laws in place to handle loan fraud (loan fraud is the basis of more than 90% of the current crop of problem loans). Borrowers tried to borrow property they couldn't afford and lied about their income. Fraud. Loan officers padded income on the 1003 and coaxed borrowers into signing. Fraud. Brokers failed to supervise. Bad business practices. Lenders, in order to boost volume, made exceptions that were out of line with their own underwriting guidelines. Percentage of exceptions rose from about 10% (reasonable) to more than 30% (waaaay out of line). Bad business practices. Products were created (particularly Option ARMs and long-term ARMs) that the borrowers liked the sound of, but without proper disclosures attached, the products were nothing but shoehorns to get the borrowers into the property and close the loan. Bad business practices and products. The investors buying the loans approved the credit guidelines (they were in control of this because they didn't have to buy the loans) because they were erroneously advised by credit rating agencies about the value of the structured investment vehicles the loans ultimately wound up in. They relied on other people to do their homework for them. Bad Business practices. Those loans where fraud was involved should be investigated and the perpetrators brought up on felony charges. Those businesses that ran their businesses poorly or invested without due diligence should take their losses and get on with it. This is an election year. All of this FHA bail-out stuff is B.S. because it is just political and doesn't really handle the problem for the bulk of the losers that are going to be foreclosed on. Making a profit by your own blood, sweat and tears is a privilege and not a right.......

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Javed — Tue, 17 Jun 2008 11:00:00 GMT

I am a FHA mortgage underwriter, I have noticed that most big mortgage companies doing FHA loans are implementing their own FHA guidelines, and ask underwriter to condition not requried by FHA guidelines, FHA loans are the only loans now left in the market to support FCL, but must not increase their loan amount limit in high cost states like NY and CA this will help the seller and not the borrower, loan decrease will bring the market more down and lower high priced homes. we still have high priced homes and loan being given to borrower which they will default in near future. let FHA reduced LTV and loan limit to such states, seller will bring the sale price down hence lowering prices will stabalize the higher market. and affordable housing. reducing FCL risk to FHA insured loans.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Anonymous — Sat, 07 Jun 2008 11:00:00 GMT

if 40% of all computers sold are the $1 and the supply is increasing, the Dell either goes out of business or is forced to sell close to $1.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

hurtinginMich — Tue, 03 Jun 2008 11:00:00 GMT

I agree with ANA. STOP INCLUDING BANK SALES AND FORECLOSURES in appraised values! If I buy 1,000 Dell computers worth $2,000 and sell them for $1, the buyers that bought the $1 computers got a good deal but once those are gone, the value of the remaining computers has not changed. Apprasied values are calculated wrong and the method hurts a lot of good people.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Bob H — Mon, 02 Jun 2008 11:00:00 GMT

Although the recommendation that lenders just keep the interest rate at the "original" rate sounds like it may have benefits, the writer was presuming that it was rate resets that caused the problem. If that was so how do you explain the high % of defaults in the first 12-18 months BEFORE any resets. How do you explain the inability of lenders to find the "owner occupant" borrowers. Or the multiple purchases by some of these borrowers, all with different lenders to cover their tracks. This problem occured due to fraud/misrepresentation by borrowers, loan brokers and RE agents. It also is because people took cash out and got lenders to give them 100+% loans. And you also have borrowers who now feel that they were the victims when in fact they were as much the participant in the fraud as the broker and the agents. We don't need a bailout as much as we need people to own up to their stupidity-and that includes the bankers who were stupid enough to make these loans.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Wayne — Mon, 02 Jun 2008 11:00:00 GMT

Ok enough already about "teaching consequences" ..we get it...The old saying "throwing the baby out with the bath water" comes to mind here...when a home goes into foreclosure the entire neighborhood is the victim...and those who are too short sighted to recognize this as an economic fact need to go back to school and pay attention in Econ 101 this time! The real shame of it is that the fundamental idea could never work...there isn't enough red tape or hoops to jump through...and we all have come to realize that the government would never support any program that could jeopardize a pencil pushers need to be slow and useless.... Just take a look at the "tax rebate check" program...they could have just told everyone to pay $600 less in taxes and saved millions of dollars in postage (not to mention the stupid letter we all got to tell us we were going to get a check sometime soon!). If you think the US government would support any program that doesn't involve waste and abuse of power then you haven't been paying attention for the last 30 years!

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Bill — Fri, 30 May 2008 11:00:00 GMT

Regarding agents commission. Not everyone nets 6 figure incomes in real estate. Also what about the buyers who are determinded to buy regardless of their real income situtation. In response to Posting By: beth | Thu, 29 May 2008 16:36:27 EST I ran into several people who wanted to buy, was advised not to buy, and went into foreclosure. Their statement was if you don't help me buy, I'll find someone who will. There isn't one single group who is completely at fault. In all groups you have motivated people, some by greed, others by conscience. You typically hear about the ones motivated by greed and how they became victims. Let's not lump everyone into a bad category just for the sake of making a point.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

beth — Thu, 29 May 2008 11:00:00 GMT

David A Yablonsky Sr. Just out of curiosity, what field do you work in? Could we do without your being paid? The average real estate agent in the US makes $30,000 a year in 2006. Last I heard we have something like 3,000,000 real estate practioneers in this country. Wouldn't it be nice to put all of us who don't deserve to make a living I.E. (a commission) on food stamps and unemployment?

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Jim — Wed, 28 May 2008 11:00:00 GMT

Why are we trying so hard to keep people in houses they never could afford and shouldn't have bought in the first place? Who takes the loss here? People that have invested in MBS's and CMO's while people who lied about their income and/or overbought get a free ride. Liz - Shame on the lenders? Shame on the Realtors for overselling people. Cindie & Jay - You might have something here with extending the terms. My Plan - After foreclosure (remember all these people are in houses they can't afford no matter what you might try to do) allow them to repurchase another foreclosed property in their range of affordability. That way there won't be a glut of REO's on the market and people will still be able to own a home. The vehicle for this? FHA

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

David A Yablonsky Sr. — Wed, 28 May 2008 11:00:00 GMT

This plan will not work. The lady simply does not understand the dynamics of subprime pricing. She simply ignores the fact that these loans were made in a risk-based environment. That is, the interest rates were set according to the risk posed by the borrower's credit history. That risk does not disappear just because the loan is recast. Risk-based means that the basis for making the loan depends on the risk involved and the interest rate(s) is meant to offset that risk. Same borrower, same risk. Like the former loans, these loans will be purchased by investors. the problem we now face were cause by ignoring or soft-peddling risk. Does that mean that we now ask the investors to buy the same loans back at a lower profit while accepting the same risk? I think not. Ther are some long term solutions to this type of problem, but rate freezes are not among them. These borrowers cast the dice and crapped out. They should pay the price, like any gambler.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

EW in Atlanta — Wed, 28 May 2008 11:00:00 GMT

I am for the medicine, I purchased (moved in) my home ten months ago and have lost 9% of what I paid so far and I feel lucky, my neighbor paid 40K more for a similar home the year before, his home went from a 310K purchase price to a 245K in the span of 20 months. I agree that capping the interest rate on the ARMS for two or three year term that won't go above the standard mortgage rate (which is unfair to me) would help and is very simplistic, it is a KISS solution that would at least give many a chance to keep a home while still allowing the ones where the mortgage interest rate is not the real problem continue to follow the natural path to its end, the other problem that has to be dealt with is the sub prime lenders who miss led burrowers and investorâ€™s, Mortgage brokers are worse then Auto sales men and I dare say Lawyers!

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

Linda in Memphis, TN — Wed, 28 May 2008 11:00:00 GMT

I agree with the writer. If the interest rate is lowered to the original rate and the borrower is given 2 years to regroup that would be a great help. I also think every situtation should be looked at individually. My situation is not because I was not responsible as many of you are saying. I lost my job however I am still in my house and it is a struggle to pay my payment on time. My note consist of back payment, taxes, and my original payment. By the grace of God we are covering the note. I believe if I am given the chance of real help it would lessen the struggle and allow me to keep my home. Our home was purchased based on 2 incomes now there is only one. So you see everyone is not looking for a bailout. We simply want a chance to fix what wrong. It would also be helpful if the back payments could be forgiven and erase allowing the borrower to get in a shape to refinance if they need to after that 2 year period. I am praying daily for this situation to get better for everyone involved. Please don't judge the matter if you don't know the whole story. Everyone deserves homeownership and a chance experience the American Dream.

RE:Reader Offers Simple Plan to End Foreclosure Turmoil

NJS — Wed, 28 May 2008 11:00:00 GMT

The REAL problem that everyone has overlooked, is that most homeowners that did a 100% loan. Know that after the agents get thier comminssion (7% in this area) they have no choice but to walk away. IF the gov needs to get involed why do we not have a national MLS for homeowners facing default. Then HUD or some agency can offer a flat fee to sell the property. I would rather have the goverment pay the agents 7% commission, then have the banks lower the loan amount. We have people walking away from a 5.875% 30 year fixed loans, because"its the thing to do now" or "we have no money due to the agents commission" Just think about this, a homeowner has paid 7% too much for the home and now will lose 7% more if they elect to sell the home the next week. On an average home price of 198k, this is over 27k......Think about what this would do the the economy? No need to reduce loan amounts, which will reduce values even more. We need congress to wake up and look for ways to sell and buy a house without paying 7% too much and losing 7% if you sell. Sad how the media overlooks this, its always the mortgage and banks fault. In this area, most of the loans came from local banks. These Banks only did Fannies's "My Com 100% loans". 500 dollars down and a 30 year fix rate between 5.5% and 7.5%. The payment has not changed, the rate has not changed, yet people are still walking away. Is it the media? Is it the big bad bank? Could it be that the homeowner knows they will need 7% cash to bring in to break even due to commissions?????????