3 Responses to “Mortgage modification plan” »»

1. Nemo
   Comment by Nemo | 08/31/11 at 4:25 am

   Okay, can somebody explain to me why they keep talking about going to the trouble and expense of refinancing? Mortgages are contracts. You can amend contracts. Just offer all borrowers who have a rate above 4% or anything other then a 30 year fixed loan an amendment. If they agree, they sign it, the terms are changed, and we’re done (with appropriate filing in the counties).

   We wouldn’t be able to do this in cases where the CDOs were owned by somebody other then the government, the fed, or Fannie/freddie themselves. However, even in those cases we should be able to work something out.

   Why go to the expense and difficulties of a refinance?

2. Rich
   Comment by Rich | 08/31/11 at 6:29 am

   The big problem we face is that there are now many more houses than people who want to buy them. Super low interest rates allow owners to carry these empty properties longer than makes economic sense.

   One solution is to get the bulldozers out. A better solution is to allow house prices to drop to make properties more affordable.

3. Funny
   Comment by Funny | 08/31/11 at 6:49 am

   Not only that, there’s no point in refinancing a loan when you’re underwater. The asset is bust, and many times bankruptcy makes a better financial decision. Moral qualms aside (and don’t think for a second moral qualms drive lenders decisions) there’s no point.

   Financially it be better off for everyone to renegotiate principals. It drops home prices so that buying and selling will get jump started, it keeps people in their homes, it’ll insure that balance sheets are better than if a bank spent all the time, money and cash trying to foreclose on a house.

   But both people and banks are living in a fantasy world where the highest appraised value of their home is the price now and forever (until it goes up). While others complain that principal adjustment is bailing out the assholes.

   Whats better for balance sheets? Lowering 400K to 200K and getting payments? Or foreclosing, spending money on lawyers, upkeep, marketing and then selling it for it’s market price of 150K?

   The only reason the banks are not doing it, is because it’ll pull the mask off and showing their balance sheets for what they are; seriously fraked. Look at the BS BOA has been pulling, and how no one believes them. They don’t want to do it, because they don’t want to realizable the loss on their MBS. So we trudge along.

   TLDR: Prices are still seriously out of whack; both in home prices and MBS valuations. Until they’re realistic, the outlook isn’t good.

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