The question for the newly above water borrower: to sell or not to sell

 NEWS
Mar 162013
 
The question for the newly above water borrower: to sell or not to sell

The increase of home values have pushed some 1.4 million underwater borrowers into positive equity territory. The Federal Reserve have engineered ultra low mortgage rates and banks have suppressed the shadow inventory into “cloud inventory‘” Meaning many homeowners will receive loan modification after loan modification leading to a false sense of confidence, but in the long term most will end up losing their homes. However, for these newly above water borrowers threats still remain to push them underwater again. Whether its market risk, balloon payment shock, mortgage rate increases, tax law changes or even demographic changes in their neighborhood it’s [Read More...]

Man refuses to sell house he couldn’t afford, complains about foreclosure

 MISSION VIEJO, NEWS
Dec 072012
 
Man refuses to sell house he couldn't afford, complains about foreclosure

We’ve become so accustomed to foreclosures on underwater homes that we forget that’s not how it used to be. Foreclosures have always been part of the system, and prior to the housing bust, foreclosures happened to people who had equity in their properties. Foreclosures happen because people borrowed money and failed to repay it. The lender exercised their contractual right to call a public auction to recover their capital. They go to the auction and bid up the price to the outstanding value of their loan. If other bidders want to bid more, they are welcome to do so. When [Read More...]

The failure of loan mods will cause a new wave of foreclosures

 COTO DE CAZA, NEWS
Dec 052012
 
The failure of loan mods will cause a new wave of foreclosures

I am constantly amazed by the ignorance of the mainstream media when it comes to housing issues. They consistently cheer-lead, take the NAr’s statements at face value, and fail to question their rosy assumptions. This behavior provides people bad information and may cause someone to buy who might otherwise chose to rent if they knew the truth. There are many good reasons to buy today as values are well below historic norms, but people should be given accurate information in order to make an informed decision. That’s not what people get from the mainstream media these days. Today’s featured article [Read More...]

Government and lender solutions focus on loan modifications and short sales

 ANAHEIM, NEWS
Nov 132012
 
Government and lender solutions focus on loan modifications and short sales

Based on their recent behavior, it’s safe to conclude the government and the banking cartel believe they can resolve all their ills through loan modifications and short sales. Despite a huge shadow inventory of delinquent loans, lenders have slowed their foreclosure processing, and they show no signs of picking up the pace despite the recent increase in delinquencies likely caused by people opting for a free ride. I believe lenders will ultimately be forced to push out committed squatters in a foreclosure, but I also believe that lenders will also try and fail at every other alternative first. The push [Read More...]

Bank of America has one million customers who missed at least two payments

 FULLERTON, NEWS
Jul 182012
 
Bank of America has one million customers who missed at least two payments

CA – Foreclosure Outcomes Banks are slowing foreclosure rates yet again, and it isn’t because they are out of borrowers to foreclose on. With the settlement earlier this year, banks began to clear out their existing REO inventory, and they slowed foreclosures in the Southwest in order to modify mortgages to meet their requirements under the settlement (note the uptick in cancellations last month). Ideally, the banks would like to modify loans to keep borrowers in place and complete short sales for those who want to leave. They don’t want to resolve there legacy toxic loans by foreclosure. Unfortunately, borrowers [Read More...]

Detailed review of the new changes to California foreclosure law

 CYPRESS, NEWS
Jul 052012
 
Detailed review of the new changes to California foreclosure law

The California legislature passed the so-called Homeowners’ Bill of Rights, and Jerry Brown has indicated he will sign it into law. So how does this new law change the foreclosure process? Let’s take a closer look. Calif. Legislature OKs homeowners’ bill of rights Marisa Lagos and Wyatt Buchanan — Updated 11:33 p.m., Monday, July 2, 2012 What the legislation does: Delays: Bans banks from proceeding with a foreclosure when a homeowner is seeking a loan modification, a practice known as dual tracking. Dual tracking has always been part of the foreclosure process. Foreclosure is supposed to be a threat to [Read More...]

Jumbo loan owners have no hope of a bailout

 IRVINE, NEWS
Jun 272012
 
Jumbo loan owners have no hope of a bailout

Most people assume the relative lack of must-sell inventory at the high-end of the housing market is because fewer borrowers at these price ranges are distressed. Nothing could be further from the truth. So why have we seen so few foreclosures? Amend-extend-pretend. The banks are choosing squatting over foreclosure. With little government support and no political support for a bailout, the neighborhoods with house prices in excess of $800,000 are only maintained by the legions of unforeclosed delinquent mortgage squatters. With no pressure from regulators to mark their loans to market value, and with near zero cost of money, banks [Read More...]

Loan modifications are not an entitlement, banks don’t want to make them one

 NEWS
Jun 282011
 
Loan modifications are not an entitlement, banks don’t want to make them one

Lenders and borrowers are stuck with each other. Lenders know everything about their borrowers, and most lenders believe their borrowers are capable to making their mortgage payments. Unfortunately, when they are severely underwater and paying more than a comparable rental, borrowers don’t want to make their payments. A poor compromise is a loan modification. They haven’t worked out very well. Why is housing market stuck? This family offers one answer By Bob Sullivan — June 27. 2011 CHICAGO — Ron and Cheryl Schmalz think they know one reason the U.S. housing market is stuck. They just spent more than two [Read More...]

Loan modifications and principal reductions fail to prevent future delinquency

 NEWS
Apr 012011
 
Loan modifications and principal reductions fail to prevent future delinquency

In early 2010, i predicted the moral trepidation about strategic default would largely be gone from the American psyche. People are beginning to look at their homes as their other investments, and when the numbers favor waling away, they do so. People are opting to get out of the rat trap of working to service a bottomless pit of debt. As underwater borrowers strategically default, lenders are trying different methods for holding back the rising tide. Loan modifications have postponed some foreclosures, and principal reductions might postpone a few more. The value in doing a few principal reductions goes beyond [Read More...]

More Than Half of Loan Modifications Fail within One Year

 NEWS
Jun 222010
 
More Than Half of Loan Modifications Fail within One Year

Everyone who participated in the Great Housing Bubble wants to go back to the way things were before. That is the problem with Ponzi schemes; once they collapse, you can’t rebuild them. Borrowers were only making their debt-service payments by borrowing more money. When faced with the prospect of paying their debts without continued borrowing, Ponzis can’t do it. Loan modifications seem like a great idea: borrowers resume making payments and get to keep their houses, and lenders don’t have to foreclose and recognize any losses. In other circumstances, this solution may have worked, but with recidivism rates exceeding 50%, these programs are largely a failure. Imagine a residential real estate [Read More...]

Foreclosure Is a Superior Form of Principal Reduction

 NEWS
May 172010
 
Foreclosure Is a Superior Form of Principal Reduction

The banks blew it. We all know that, and now we are all being asked to pay the bills for their catastrophic mistakes. I didn’t cast the first stone, but I hope my writing about this issue has left a lasting impression. I also hope we can all learn something from this are avoid the mistakes again in the future. I have my doubts. We can all see the problem and the solution, but we all know the government is likely to blow it. Excessive debt is the problem Ever since the Great Housing Bubble began to deflate, everyone has [Read More...]

Loan Modifications Succeed by Increasing Borrower Entitlements

 NEWS
Mar 312010
 
Loan Modifications Succeed by Increasing Borrower Entitlements

Lenders really need to let go. They blew it. It’s over. Just let it die. Both the lender and the borrower pay a price — or at least they are supposed to. Instead, we bail them out, and we pay the price. Don’t forget about us who pay for their mistakes. Part of the price we pay is obvious in the accounting for the various bailouts, but much of the price we pay is hidden in higher home prices, greater public indebtedness, and in the subsidized entitlements of borrowers everywhere.  Government backed loan modification attempts are ill-conceived because bailouts create moral hazard. However, the bailouts and the [Read More...]