Why We May Never See Principal Reductions…
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The 60 days behind is so that the bank can steer the borrower (who now would have bad credit so no other bank would want them for anything) towards a short sale if possible…where the bank makes more money. The bank will have the borrower by the _____ ! They will give them an adjustable even if they demand a fixed rate, etc. That is to be EXPECTED when the fox guards the hen house…No surprise!!! They ain’t givin nothin away!!!!! Forgiveness program my ass!
…he said ‘qualified home owners’ huh huh…hu hu huh…but really it’s not just lo’s saying it. We need to move away from government subsidies. If businesses need to charge more to make up for thier losses which weakens them to the point they cannot exist then the market has rightfully extinguished a weak performer and a stronger, more efficient organization will take it’s place. This ensures an efficient economy where ALL benefit.
Jack.. the dates were put it primarily for MBS investors. If you had a free for all .. then people would not be on the other end of the trades.. which means HIGHER rates which means no more loans for anyone. I could see them move the dates in 6 months or so.. but it is pretty difficult to update their software.
Understood. Many are frustrated with program, I see LO’s passing on program until straightened out. However, also see underwater homeowners taking program seriously as alternative to stay in their home, versus having to short sale. I would like to see slant of success details, giving us tips on how to get loans approved with this program. There is an urgency voiced from underwater homeowners who are asking for help and are also concerned about the end of the Mortgage Forgiveness Debt Relief Act on 12/31/12. Call out those who are making this work and get info. on how it can better work for more of us.
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We are closing HARP 2.0 over 150LTV, which is helpful for our Las Vegas borrowers who would rather stay than sell. Things are taking time to push through underwriting, but mostly all of our clients seem to understand.
If there is a principal reduction program, it’s just going to piss everyone off who did a strategic default and went through the hassle of moving.
Pam, I think everyone agrees with you that it’s a good idea, but the complaint is that the rollout on a MAJOR national GSE backed program should somewhat work out of the gate. The results so far have been abyssmal. Freddie Mac HARP 2.0 is a joke. This program could really help financially save some homeowners, it’s laughable that they learned nothing from HARP 1.0. This is well beyond a few \start up\ problems. If this was a launch in the private sector, people would be fired.
Hawk, glad to see that \Talking with your hands\ seminar is paying off.
Principle write-downs sound like something that came out of Greece or France. You would think that based upon American history, we would stand up and be accountable for our decisions. But NO, the whiners are dominating the discussions. Where does it stop ? Who is going to make up for the fact that my SEP-IRA has been decimated (more than once) in the past 4 years. When will we start reimbursing those who lose in Vegas? Sorry, but homeowners need to suck it up and assume responsibility for their decisions. So the house is worth less than they paid for it….. they still need a place to live. They probably really liked it when they bought it, so stop it with the whining, make the payments agreed to, on get on with life. The \woe is me\ generation is becoming really tiresome.
Ken in AZ
And when the “too big to fails” whined to the Fed, where they not mollycoddled with TARP I&2 and other QE1&2&3? Trillions of dollars. You and I get to pay for Wall Street’s excesses taxes and inflation, and yet you dare complain when there is a feigned reciprocation in the works? Donovan claims that there will be 200,000+ such reductions by B of A. Do they even own that many loans? Friend,,,, your cry is absurd…… this has the same chance of coming to fruition as the Maya end of times………….
I should mention that I’ve already had one borrower tell me that Green Tree told them that nobody but them could facilitate their HARP loan, since (I think) they had transferred the MI certificate somehow… (I did get Approve/Ineligible findings in DU–which was really odd, as the borrower seemed like a shoe-in for this.)
I’m wondering if there is any way that Green Tree has been able to freeze the ability of competition to perform these loans (possibly as a protection for afforementioned investors)
or, maybe I just got an approve/ineligible for some other reason.
either way, I think it warrants more investigation.
It’s come to my attention that Bank of America recently (as of somewhere around October of last year) transferred a large bulk of its servicing to GreenTree Servicing.
Coincidence? (“To be eligible for Principal Reduction your loan must currently be serviced by BofA.”)
I think that the timing of this shrugging off of servicing is a little too timely.
HARP 2.0 is announced Oct 2011.
http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf
BofA offloaded a ton of their portfolio to Greentree in November.
Is this a way for BofA to protect themselves from not having to perform certain types of reductions via any sort of modification or refinance in order to protect their investors?
Just a question… Maybe someone with more inside info than me can look into it.
those who elect to accept the reduction need to keep in mind, it will impact their credit and limit their ability to purchase or refi another property for quite some time…. have a few now where they took the reduction offered 3 yrs ago on an investment property and now can’t purchase a new primary residence (jumbo). Oh, and they were never late on a payment, yet still got the offer to retire a purchase $ second and modify to an FHA / a new first…
Once again, FNMA has shot itself in the foot with Harp 2.0. Everytime I have run DU on my seriously underwater borrowers, I am getting a level III approval. DUH!! With all the adds with level III pricing, the new rate is about equal to the borrower’s current interest rate. Defeats the whole purpose of unlimited CLTV, huh?
I do not like principle reductions, BUT the fact is they are already doing it for only SOME people! That is BS! Give EVERY American adult (who owns a mortgage) a $100,000 principle reduction! AND every American adult (who does NOT own a mortgage) a $50,000 mortgage VOUCHER! This could only be done ONCE in your lifetime! Do this and we would see the biggest boom in real estate that this country has ever seen!!!
Will all those LO’s who complain about the “moral hazard” of principal reduction by the lenders please look at the bigger organic picture? Institutional holders of trillions of dollars of toxic assets are allowed to excersize a form of strategic default by the change in accounting in 2009 that no longer required them to mark-to-market their underwater securities. In essence the tax payers are already subsidizing the lenders, but suddenly it is a moral hazard now that principal reductions may be given to some qualified home owners.
AGAIN.. forget about principal reduction, a win-win for banks and homeowners would be to require an across the board 3% interest rate on all ARM loans. These loans were designed to re-set before the 5-year term of the contract (predatory). Why doesn’t anyone see this resolve? OK then, please explain the downside?
Can’t you guys get up in the morning anymore ! I don’t like these new faces trying to take over your show ! Sorry , I have grown accustomed to your antics that I enjoy and its just not the same without your guys
. Your shows new messages are just not the same .
Principal reductions are a bad idea and just an unfair redistribution of wealth. It would be a slippery slope, who will determine who gets what. It also creates the ‘What about me?” question, causing more people to turn to the government for ‘help’. It will continue to erode the morale of this country. Like a favored employee or employees destroys the morale of a company because they are getting something at the expense of others.
I read yesterday officials were considering moving the Loan sold to Fannie Mae or Freddie Mac date up a year to May 31, 2010. Anyone know if this is going to happen and if so when?…….and by the way….why don’t they just get rid of the date sold provision all together…..seriously….we are looking at the lowest mortgage interest rates here in history…..what does it matter \when\ you got your loan from Freddie or Fannie.
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I am not sure how HARP 2.0 can be considered FULLY rolled out. DU revisions JUST took place to assist with the PIWs. The MBS’s have yet to actively trade and the 15 yr option(over 105) will not be available to deliver until June 1. The shorter terms have the most benefit(0 llpa) and should be a great product. Is it the best… NO. But it sure helps our #s.
HARP Question:
How does anyone out there have the confidence or financial bank roll to take on these transactions? I am an employee of a direct lender that sells into the secondary market 15 to 90 days after funding. The financial risk associated with ONE early payment default could shut down our branch. We would be on the hook for over $60,000 on a $261,000, 150 LTV scenario. I would presume that if you are placing the loan back with the same servicer, as a broker, this may not apply? Otherwise, I just don’t see how anyone can financially take on the risk associated with these deals. Any thoughts or comments would be gladly welcomed!
Matt… It is a numbers game. These are performing loans(at least the ones we do). There is a margin built in to anticipate an occasional default. We anticipate a larger default % in the future but believe we have met the cert. We also ONLY do the PIW(No appraisal). Adding an appraisal brings on the reps and warrants. Delivering to the Fannie Cash window also makes transaction actual/actual vs scheduled/scheduled(MBS) so you are not on the hook for the payment. At a net profit of 2.5 to 3.5 % .. We think its a net positive for us and great for the industry.
Thanks for anwering this… I was wondering the same! Makes sense.
Unlimited LTV, this is what we need, and NO 105 or 125. I work with 10 lenders and none of them want to do unlimited. HARP 1, HARD 2, HARP3 and maybe HARP3 and HARP4 will be the same. Why do we continue with this game ?
Angelo, send those deals to me and I’ll be happy to take care of them. We do unlimited LTV.
angelo.. some lenders are doing unlimited LTV. Your not looking hard enough. The BIG banks dont offer it for a few reasons. 1. they dont really want the 180ltv loans in their servicing portfolio. 2. If they do provide it .. it usually is for their existing serviced loans.. and the rates are usually .5 to .75 of what the market will offer. So if they have to .. they will do it.. make a ton of money on each.. but if they dont.. someone else will do it and get rid of that loan they dont want anyway. make sense?
We in industry need to stop criticizing helps such as HARP 2.0. Though we see start up problems that seem to accompany all new programs that roll out, smart homeowners are using this as a vehicle to lower principal with shorter terms, and it is easy show them break even with amortization schedule. HARP 2.0 and the ability to be approved for it or not is making the difference between folks wanting to stay in their homes and provides the clear path of reason if it is just not worth it.