Irvine Housing Blog

While that news really IS new(s), what you might be missing is “The Why” of it.

What you must keep in mind is that those Big Bad Banksters (the new, improved BBB’s - if you don’t think they are good, just ask them) bought up all the mortgage originators who created all those bad ARMs and subprime RE loans in the sand states.

But, while they have been praying and pretending that all of Those People would have been foreclosed upon, and/or strategic defaulted, and/or gone bankrupt, THEY did not DO what they were supposed to do. And, some - too many - are suing them, now. The size of their legal exposure is horrendous.

You do see, do you not, that by “fixing” those bad ARMs and subprime RE loans they are cutting off the home owners future ability to sue them.

Tis called “minimizing your losses”. And, never admitting that they did anything wrong.

Our purchase second is with BoA. It would be a complete loss in the even of a foreclosure. Interested in refinancing months ago, I contacted BoA and offered to pay 50% in cash to settle the lien.  If it were marked anywhere near market, you’d think this would at least be something they’d consider, and possibly a starting point for negotiating a settlement.

No such luck. I was so interested in getting a near 4% 15Y mortgage that I may have gone as high as 90% to pay-off the second. BoA’s response was simply, “We don’t do that.”

I can understand their position. Their Loss Mitigation Dept can always start discussing these things with us once we’ve missed a couple payments. Why should they discount anything now, especially when they’re collecting our fully-amortized monthly payment?

Public relations and free advertisement are 2 large reasons.
Reward/gaming maximization is another.  As Las Vegas, you need some random winners to keep the game going.  If everybody loses, no one will play.  If the winning as at set intervals, less people will play.  For the maximum motivation and action, rewards at randon give this highest results for the house and of course the lowest benefit for the guest.

What is interesting about the listing is that the seller is cutting the price pretty quickly.  Started off over $400K not that long ago…

I’ve said all along that prices should have been cut to market value, BUT, loans changed to recourse. Principal reduction *WILL* happen in this market, whether it goes to the current owner, or the “loss” is covered with tax money, the reduction is happening.

Given the choices, I’d rather have the PEOPLE get a principal reduction rather then the BANKSTER get insured for running a Ponzi scheme.

But money elects, so expect the PEOPLE to get shafted and the BANKSTERS to get rich. Same ol’ same ol’.

This is a quite clever strategy, actually. Just like the state lotteries, this keeps a lot of gullible loanowners “playing the game” instead of strategically defaulting.

-Darth

As a former broker, I can say proudly that none of my option arm borrowers are in default.  I take offense when everyone puts down this loan without truly understanding its benefits.  Option Arm was never meant for primary residence who intended to live in the property for years, nor was it meant for someone who is just a casual landlord.  The loan was designed for professional (those that handle multiproperty cashflow management) landlords.  The idea behind the loan was never as simple as pay less to the bank.  It was pay less now so the money stays in your pocket to invest simultaneously in something else.  All my borrowers knew the cashflow wasn’t theirs to keep, rather it was a loan, a far better loan then the home equity lines of credit.  When the markets started to crash these borrowers sold their rentals immediately and invested the cash in something else.  The problems that the banks find themselves in today is their own doing.  But as long as the government offers them money at 0-0.25% interest loans, why would they negotiate with the property owner?  All the foreclosures are just a temporary loss, they are recouping that with the money from the federal govt. 
The only way to force them is allow the fed to offer loans directly to consumers.

A better way for the banks would be to actually increase the consequences of default, e.g., no more Fannie/Freddie insured loans for defaulters - ever, for starters.  To do this, a change of administration (if not already inevitable) would need to be helped along, since we have this President out there badmouthing the banks and blaming them and insisting that they help the underwater housesitters.

An Alternative to Capitalism (which we need here in the USA)

Several decades ago, Margaret Thatcher claimed: “There is no alternative”. She was referring to capitalism. Today, this negative attitude still persists.

I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:

http://evans-experientialism.freewebspace.com/steinsvold.htm

John Steinsvold

Perhaps in time the so-called dark ages will be thought of as including our own.
—Georg C. Lichtenberg

Truth,

As I envision a way of life without money, we will all gain complete economic freedom in addition to and without infringement on our present freedoms.

John Steinsvold

I think the person who takes a job in order to live - that is to say, for the money - has turned himself into a slave.
—Joseph Campbell