Irvine Housing Blog

The Coto Blogger says: “I’m wondering if this mod is a one in a million or if they are offering up mods like this on a regular basis.”

Yes, this is the only “solution” for Option Arm loans (get out your calculator and try to figure any other way to keep a $600,000 mortgage at an artificially low payment of $1800, which is clearly the max these folks could afford.)

And I worked for one of the largest subprime/option arm servicers, where this was common practice.

Final note: these are INTEREST BEARING deferments, not Zero Coupon, as IR suggests, so it’s even worse than it sounds.

I hope they never offer actual principle reductions… It’s just not fair to the hardworking, responsible taxpayer.

What do you think of principal mods in bankruptcy?  This carries real hazard, as people will still be reluctant to BK.  At that point, I don’t see why FC & becoming a renter would be the worst part of the BK process. 

Your bigger point of mortgage mods w/o principal reduction is true and should be repeated to those running the mod programs.

What would the market be for the z-c bond?  Would the bank hold it, sell it, dish it to the fed?  Anyone have a wager on what they’d be worth?

I think Obama needs to realize that there are going to be a huge number of foreclosures no matter what he does.  It is an unfortunate fact that is a result of the bubble.  It is an unpopular and unpleasant fact, but a fact nonetheless.  Putting resources towards stemming inevitable results is a waste, and we don’t have a lot to waste.

It should not come as a surprise that people are willing to happily accept these modification terms.

This was the goal in the first place: allow people to rent houses from the bank and allow the debtor to call themselves a home owner.

Lots of bubble deniers are efficient-market hypothesis believers.  EMH says the price is right, all the time.  That could justify high prices (think Manhattan), but not continuously RISING prices.  Either new information would have to come on line, or the price yesterday was wrong.

Markets eventually (almost always) get prices right but they can (1) take a long time, and (2) overshoot steady-state, or oscillate.  Treating different markets as different systems you can see that some markets, as constructed, are more prone to overshoot or oscillation.  Not all negative feedback systems are stable, and many, under certain conditions become unstable positive feedback systems.  An oscillating system will never reach its theoretical steady state.

That kitchen doesn’t look very upgraded to me.

IR puts it so succinctly—Government Intervention equals Unsustainable Clusterf***. Let markets work!

Don’t look now, but a similar unit at 60 Nightbloom just closed for $18,000 over its 2005 purchase price.  Prices will never come back.  Never.   

I am aware that lenders normally have 2 options to foreclose on a property:  judicial vs. non-judicial.  Does anyone know what percentage of defaults are pursued by the judicial method in CA? Why would a lender choose one method over the other?  Thanks in advance for any info you may be able to provide.

IMHO non-legal HO, Why the loan modifications are brillant for the lenders. 
1.  Modify the loan to use the “modified loan” as a secondary loan with compounding interest and large payment at selling or 30 years out.
2.  Primary loan is still intact.  Secondary loan is paying off primary loan, so principal on the first may be stable or going down.
3.  FC using primary loan (non-judical) and use secondary loan modification loan to go for unsecured debt (judical).
4.  Bankster get the best of both worlds.  If they can collect on the secondary, bill the cost to the FEDS or CDO them through a GSE.
Using primary loan for Trustee sale (non-judical) void the borrower’s 2 years chance to pay back or reclaim the house by paying off the judgement (rarely happens, but the deed in in semi-limbo for 2 years).  The borrower would/could be stuck with paying off the possible larger second (modified) note.

BHO pre-election talked about making the new loans unforgivable as with the student loans.  Anyway the unforgiven clause is entering though the back door of loan modification or foreign treaties?  Some state still have on the books that the adult children are responsible for their parent’s debts (usually no longer enforced, but could be with the right judges at least for the banksters).

What was an ownership society is transforming into a homerentor society. The better plan would have been to cut and run, not extend and enslave.

Methinks the bank wants to put the $$$ on the back end so that they can claim -0- principal loss and “income” which is as phantom as the “income” Option ARM interest was. I’d hope some of the accountants who cruise the site to confirm or deny this theory.

My .02c

Soylent Green Is People

“convert part of the mortgage to a zero coupon bond”

Government is the only potential buyer for these zero bonds (using taxpayers or freshly printed money). I can not see any alternative.

Once you determine who should take the hit, the solutions are simple, but there will be consequences.

A.  If the investors take the hit, they may sue the issuing banks and GSE for defective products.  The primary investors (banksters) can collect (end investors will be out of luck as end consumers on retail products, e.g., infant formula).  The primary investors are other banksters.  Laywers to benefit.  Too bad for retail investors to suffer the loss.

B.  If the taxpayers take the hit, the govt. will need to package the bailout, modification, or whatever it’s called to confuse the public so there’s no revolt and delay the paying until it’s too late to change. Investment banksters to benefit.  Too bad for retail investors and tax payers to suffer the loss.  Most likely course of action.

C.  Banksters to take the hit (not likely).  Bankster likely to start an internal revolt for payment and war to force payment.  Military Industialist and banksters likely to benefit.  People to really suffer with war. Banksters own the Democrats and Republicans.

D.  Force banksters to pay and include prison.  Likely a fleeing to safe countries and war or embargo against countries that force the banksters to pay.  See C.

Not many good choices.  BHO’s hands are tied.  He just a mouth piece for the banksters.  Just don’t get caught converting a non-recouse loan to a recourse loan.

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jacky

All I know is that this BS shadow inventory and lack of release on part of banks is killing Realtors and loan officers alike. Less inventory translates into less sales, which means less commissions for those involved.  In current market, only Listing agents with few realtors are able to make the sale and they are barely making anything.  THe whole system is corrupt including our Govt., Fed, you name it.  Regardless, putting a bandaid over dead corpse is not going to prevent it from stinking. Sooner or later it will cause plague. Watchout. Second economic dip is coming! Winter 2011

Unemployment in Construction Industry hit hign 30% and Union Benches are at well above 55% so go figure!