Loan modification vs refi

When the bailout cheerleaders mention every available tool they are not kidding.  Why not let the homeowners appraise their own property. 

Solution for no doc loans - how about - self appraisal refis?


GSEs Look to Follow FHA’s Lead on Streamlined Refis : HousingWire || financial news for the mortgage market

In particular, the GSEs are considering a plan to allow some borrowers to refinance without the use of an updated appraisal.

“If they refinance someone, rather than doing a loan mod, do they need a new appraisal if they already have the credit?” Federal Housing Finance Agency director James Lockhart told reporters after a speech, according to a Bloomberg report. “That’s an issue that’s being discussed. They’re looking at it.”

The same Bloomberg report managed to find analysts, such as Paul Miller at FBR Capital Markets, in a lather over the proposed changes, calling it a “disaster.” Josh Rosner at Graham Fisher & Co. also jumped on the overreaction bandwagon, too. “To refinance loans without any concern for collateral value suggests a world in which no lender would ever hold a loan they refied and no investor would ever buy, unless it carried an explicit federal guarantee,” he told the news service.

Every one of them is missing the point here.

The U.S. Department of Housing and Urban Development has permitted so-called “streamlined refis” without appraisals on FHA loans since the early 1980s, according to a department Web page. It’s a program limited, however, to rate and term refis — no cash-out refis here — and borrowers must be current on their loan. The VA has a similar program.

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Short Sale warnings - Prosecutors are going after borrowers

Early on in my blogs on the subject of short sale - I warned Realtors that they should be careful about reviewing sellers finances and then submitting them to the bank.  Especially if the sellers fudged on their loan apps.

Now you can see why.

Someone explained on one of my other blogs that these people should have the finances reviewed and possibly submitted under an attorney client privilege. 


Prosecutors Going after Fraudulent Mortgage Borrowers - Seeking Alpha

From Inside Mortgage Finance:

While lenders are coming under increased pressure to help borrowers avoid foreclosure, the U.S. Attorney in San Francisco has launched an effort to pursue fraud cases against subprime borrowers who lied on their loan application.

“In my way of thinking, it didn’t make any sense for us to excuse any one component of the group that was involved in this phenomenon,” said U.S. Attorney Joseph Russoniello. “So while we obviously have an interest in the predatory lending practices, we’re also finding from our investigators that significant numbers of borrowers submitted falsified applications for a mortgage.” [Emph. added]

example of a bad Loan Modification

Mr. Mortgage is right this is bad loan mod. However if the borrower has a strategy the borrower may be planning on doing a short sale or he or she may cease making to the second into the opening move of a short payoff.


Mr. Mortgage’s Guide to the TRUTH! » Mr Mortgage: Actual IndyMac (Exotic) Loan Modification: "If they would have had these loans out during the bubble years the housing bubble could have grown twice as large.

This borrower is not as bad off as many in the bubble states - they are only 44% or $370k underwater in their home. Their present first mortgage is only slightly higher than the value of $475k. But when you add in the $345k second mortgage that the IndyMac modification lets stay in place, they are $370k upside down.

This modification makes the borrower a renter and debt-prisoner for life. This is not a financial solution for the borrower, rather a structure that lures the borrower into a terrible financial decision because it is cheaper to stay than walk away and rent. All of these new proactive loan modification plans by the law makers, regulators and bank are designed to do just this. A ’solution’ where the borrower still owes $840k on a $475k home and will never be able to refi or sell, should send them running.

While some will take this offer, I am hopeful that the typical home owner is not this ignorant. That is a lot of debt to carry around for life. On the other hand when you have nothing to lose and your only alternative will be foreclosure 6 months down the road, you may just"

Mortgage Loan Modification - borrowers keep defaulting

Ouch! Borrowers Keep Defaulting After Mortgage Modification: Tech Ticker, Yahoo! Finance: "In the first half of this year, borrowers defaulted on modified mortgages at rates higher than almost every estimate. According to the Office of Comptroller of the Currency statistics released today, 36% of borrowers who had their loans modified in the first two quarters of 2008 re-defaulted after just 3 months. After six months, the redefault rate was roughly 56%. After eight months, 58% of borrowers re-defaulted.

'The results were surprising, and not in a good way,' OCC director Dugan said."

Loan Modification - mortgage meltdown part 2

Seller Info: "Loan Modification and the Mortgage Meltdown what will happen to real estate prices | Print |

Loan Modification or short sale, we may be heading for a mortgage meltdown part 2.



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