Underwater refinancing?

[lostfan]

http://www.washingtonpost.com/business/eco...oUCM_story.html

 

Cliff's notes version:

no negative equity cap on refinancing (before, it was 125%)

with no fees, must refi to 20-year loan

must be current on payments for the last 12 months

with fees, refi 30-year loan, reduce payment to today's interest rates

For Fannie and Freddie-backed loans

 

I don't have a Fannie or Freddie loan so I guess I have to call my bank and ask. For me this is a HUGE personal obstacle. I should have about 10% equity by now. I have none, there is a massive gap between what my house is worth and what I owe of about 30% and it's only getting worse. It's not that I have trouble making my payments or made any bad decisions, it's just the equity hammer came crashing down on everyone and since I didn't have anything yet mine hit rock bottom and proceeded to dig. I can't refinance and selling this place is impossible. If I could refinance then I could lower my payments with better interest rates, and build equity faster to get out of this hole. Right now I can't really do that (salary isn't rising like it used to). Crossing my fingers I guess.

[Balta1701]

Hate to have to say this...but be patient and see how the program develops before you put in the call. The last time the administration tried to do something on Housing it was the HAMP program which did nothing but find a way to shuffle hundreds of thousands of people into foreclosure...and I'd never have guessed that from when the program was announced.

[lostfan]

I'm in no danger of foreclosure.

 

If I was able to do this I would lower my payments, but pay the same amount I'm paying now to start killing off some principal and building equity. Then, eventually, I'll be able to sell this place. Or at the very least rent it out without having to eat the difference (who the f*** would rent this place for what I'm paying in mortgage plus HOA fees?)

[Balta1701]

A significant number of the people who signed up for the HAMP program weren't in danger of foreclosure until they entered the program either.

 

Just be real careful on this one...there's no reason to trust the administration to set this program up well right now. Don't rush into it.

[lostfan]

A significant number of the people who signed up for the HAMP program weren't in danger of foreclosure until they entered the program either.

 

Just be real careful on this one...there's no reason to trust the administration to set this program up well right now. Don't rush into it.

Noted.

[Y2HH]

A significant number of the people who signed up for the HAMP program weren't in danger of foreclosure until they entered the program either.

 

Just be real careful on this one...there's no reason to trust the administration to set this program up well right now. Don't rush into it.

 

How did this program take people that were in no danger of foreclosure and force them into foreclosure? This makes no sense to me. If they had the money to keep paying, how did anything "force" foreclosure? The only way you can get foreclosed on is if you don't pay your bills...what was this, some sort of program where you paid your bills and they foreclosed anyway?

 

Something sounds fishy with this...sounds to me that people stop paying bills or ran out of money to do so, and were then foreclosed on, despite entering this program.

[kapkomet]

I think because people sat and waited on refinancing under the guise that they were taken care of?

 

[Balta1701]

How did this program take people that were in no danger of foreclosure and force them into foreclosure? This makes no sense to me. If they had the money to keep paying, how did anything "force" foreclosure? The only way you can get foreclosed on is if you don't pay your bills...what was this, some sort of program where you paid your bills and they foreclosed anyway?

 

Something sounds fishy with this...sounds to me that people stop paying bills or ran out of money to do so, and were then foreclosed on, despite entering this program.

Basically, people applied for "trial modifications". Once they did that, they were told to make lesser payments. But if the modification wasn't approved, and only a handful were...then anyone who followed the instructions wound up in foreclosure. If you applied to the hamp program and did everything you were told to do, you wound up with like a 90% chance of being foreclosed upon, even if you were fully current when you applied.

 

 

As epic of a clusterf*** as you can imagine.

[kapkomet]

Basically, people applied for "trial modifications". Once they did that, they were told to make lesser payments. But if the modification wasn't approved, and only a handful were...then anyone who followed the instructions wound up in foreclosure. If you applied to the hamp program and did everything you were told to do, you wound up with like a 90% chance of being foreclosed upon, even if you were fully current when you applied.

 

 

As epic of a clusterf*** as you can imagine.

 

So why do you continue to support this asshole of a president who thinks he can just executive order everything to his whimsical wishes?

[caulfield12]

Kapkomet, what would you suggest they do? That, for the "greater good," over the long-term, it would be best if every single American behind on their payments was foreclosed upon more quickly, further adding to the 2.5-3.0 million inventory of unoccupied homes already without a market of buyers? Don't you accept the fact that 80% of the damage was caused by companies like Countrywide and by reckless oversight from Alan Greenspan? Or you prefer to blame it all on Freddie Mac, Fannie Mae and Bill Clinton/Richard Rubin?

 

 

 

And it's essentially the same problem in Europe, isn't it?

 

Taxpayers don't think it is fair to subsidize either bankers or reckless homebuyers/speculators.

 

The banks won't take a "haircut" even if the risk of the entire system falling apart increases by the day.

 

Especially in Germany, they're being asked to subsidize the rest of the continent...if they don't, it will eventually have a direct impact on their economy as well, because much of Europe will be ruined in the coming years as an export market for German products. France will literally be insolvent if they contribute any funds to the banks, which will decrease their Moody's ratings and send the markets into another freefall.

 

The one thing they can't do in Europe is print more money, like we can do in the US (not that QE has had much more than a negligible effect)...instead, they're forced to borrow real money from Germany or France. The actual number will be in the 1-2 trillion dollar range, not the low hundreds of billions.

Edited October 25, 2011 by caulfield12

[caulfield12]

Basically, people applied for "trial modifications". Once they did that, they were told to make lesser payments. But if the modification wasn't approved, and only a handful were...then anyone who followed the instructions wound up in foreclosure. If you applied to the hamp program and did everything you were told to do, you wound up with like a 90% chance of being foreclosed upon, even if you were fully current when you applied.

 

 

As epic of a clusterf*** as you can imagine.

 

 

So basically, Cash for Clunkers has been the only successful, "universally-popular" program in the last 3 years?

[Balta1701]

So basically, Cash for Clunkers has been the only successful, "universally-popular" program in the last 3 years?

Why does "universally popular" have anything o do with anything? If this program worked it would have outraged other people. People here would complain about "paying their neighbors mortgage" and such. But it would have helped a lot.

[kapkomet]

Clearly, it's all Bush's fault. Everything is. Even according to our current 3 years in office president.

 

[caulfield12]

Why does "universally popular" have anything o do with anything? If this program worked it would have outraged other people. People here would complain about "paying their neighbors mortgage" and such. But it would have helped a lot.

 

Maybe Obama would have been better off starting his term in 2001 with this one...

 

 

The Second Bill of Rights was a list of rights proposed by Franklin D. Roosevelt, the then President of the United States, during his State of the Union Address on January 11, 1944. In his address Roosevelt suggested that the nation had come to recognize, and should now implement, a second "bill of rights". Roosevelt's argument was that the "political rights" guaranteed by the constitution and the Bill of Rights had "proved inadequate to assure us equality in the pursuit of happiness." Roosevelt's remedy was to declare an "economic bill of rights" which would guarantee:

 

Employment, with a living wage,

Freedom from unfair competition and monopolies,

Housing,

Medical care,

Education, and,

Social security

 

Roosevelt stated that having these rights would guarantee American security, and that America's place in the world depended upon how far these and similar rights had been carried into practice. Later in the 1970s, Czech jurist Karel Vasak would categorize these as the ‘second generation’ rights in his theory of three generations of human rights.

 

 

[kapkomet]

And that is clearly beyond a limited government's role.

 

"proved inadequate to assure us equality in the pursuit of happiness."

 

And that is clearly what's f***ed up about our country now. Again, that's not supposed to be the government's main role. Now, that is all the functions that socialists want. Wear the label proudly, because if this is what you support as a main role for our government, then you're a socialist.

 

 

[caulfield12]

And that is clearly beyond a limited government's role.

 

 

 

And that is clearly what's f***ed up about our country now. Again, that's not supposed to be the government's main role. Now, that is all the functions that socialists want. Wear the label proudly, because if this is what you support as a main role for our government, then you're a socialist.

 

 

It doesn't take a Michael Moore lecture to realize capitalism/free markets/zero regulations and oversight simply doesn't work for America right now.

 

What incentive do banks have to raise capital requirements, stop using excessive leveraging or simply avoid moral hazards?

 

Perhaps the country would have been better off had all of those banks been allowed to fail...GM, Chrysler, etc. Nobody gives any credit to government for being a stabilizing force and stepping in at a point where no private entity was capable or willing in those days.

Edited October 25, 2011 by caulfield12

[EvilMonkey]

Kapkomet, what would you suggest they do? That, for the "greater good," over the long-term, it would be best if every single American behind on their payments was foreclosed upon more quickly, further adding to the 2.5-3.0 million inventory of unoccupied homes already without a market of buyers? Don't you accept the fact that 80% of the damage was caused by companies like Countrywide and by reckless oversight from Alan Greenspan? Or you prefer to blame it all on Freddie Mac, Fannie Mae and Bill Clinton/Richard Rubin?

The program in question is for people that are current, and not in danger of foreclosure, but instead owe $150k on a house that is now only worth $100k.

 

As or who to blame, it is always a mix. Government pushing home ownership as the be-all end-all to people who had no business owning a home, banks lending to people who couldn't afford it because sugardaddy government said they would cover it as well as the idiots buying $400k homes when they knew they should have bought less or who took out home equity loans to cover vacations and cars.

[lostfan]

The program in question is for people that are current, and not in danger of foreclosure, but instead owe $150k on a house that is now only worth $100k.

 

As or who to blame, it is always a mix. Government pushing home ownership as the be-all end-all to people who had no business owning a home, banks lending to people who couldn't afford it because sugardaddy government said they would cover it as well as the idiots buying $400k homes when they knew they should have bought less or who took out home equity loans to cover vacations and cars.

I did none of the above. The only thing I did was buy a house about 9 seconds before the market blew up in my face.

[NorthSideSox72]

Seems like some good adjustments to make to the program, but the real problems in the program were the ones forcing people to be late on payments, which was ludicrous. We'll see how this plays out, but on the surface it seems like a good thing. Small one though.

 

[cabiness42]

http://www.washingtonpost.com/business/eco...oUCM_story.html

 

Cliff's notes version:

no negative equity cap on refinancing (before, it was 125%)

with no fees, must refi to 20-year loan

must be current on payments for the last 12 months

with fees, refi 30-year loan, reduce payment to today's interest rates

For Fannie and Freddie-backed loans

 

I don't have a Fannie or Freddie loan so I guess I have to call my bank and ask. For me this is a HUGE personal obstacle. I should have about 10% equity by now. I have none, there is a massive gap between what my house is worth and what I owe of about 30% and it's only getting worse. It's not that I have trouble making my payments or made any bad decisions, it's just the equity hammer came crashing down on everyone and since I didn't have anything yet mine hit rock bottom and proceeded to dig. I can't refinance and selling this place is impossible. If I could refinance then I could lower my payments with better interest rates, and build equity faster to get out of this hole. Right now I can't really do that (salary isn't rising like it used to). Crossing my fingers I guess.

 

I'm in a similar boat. Financed 95% of purchase price (90% of appraised value) when I bought my first house 4 1/2 years ago. What I owe is now about 101% of current appraised value, yet there's no way I could get even close to appraised value if I tried to sell right now. Would love to be able to refinance, but I don't think this new program covers me.

 

[Y2HH]

I did none of the above. The only thing I did was buy a house about 9 seconds before the market blew up in my face.

 

I did the same thing, but I haven't had my house reappraised in the last few years, so I have no idea what it's actually worth anymore.

[NorthSideSox72]

I did the same thing, but I haven't had my house reappraised in the last few years, so I have no idea what it's actually worth anymore.

I'll go with... less than it was a few years ago.

 

[Y2HH]

I'll go with... less than it was a few years ago.

 

 

I just don't know how much less, and the problem is, I don't want to spend a few hundred dollars getting it reassessed for no reason.

[southsider2k5]

It doesn't take a Michael Moore lecture to realize capitalism/free markets/zero regulations and oversight simply doesn't work for America right now.

 

What incentive do banks have to raise capital requirements, stop using excessive leveraging or simply avoid moral hazards?

 

Perhaps the country would have been better off had all of those banks been allowed to fail...GM, Chrysler, etc. Nobody gives any credit to government for being a stabilizing force and stepping in at a point where no private entity was capable or willing in those days.

 

It wasn't really a problem until the federal government incentivized making bad loans.

[Balta1701]

It wasn't really a problem until the federal government incentivized making bad loans.

 

At least you're consistent, I will give you that.