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kelly
Posts:14
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| 10/08/2008 5:45 PM |
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Hey there, SDLookers -
With all of the news about the Countrywide plan to proactively modify borrowers' mortgages, I started thinking about what will show up on the MLS, in public record (and thus on sites like SDLookup), after somebody gets their loan balance lowered.
That's my job, to figure out what happens in a case like this. But what I'm wondering from you is this: do you think a borrower's ability to secure a mortgage writedown should be noted on public record somewhere? Would you -- housing market watchers, house-hunters, realtors -- receive any benefit from having that information? It couldn't be used as a comp on an appraisal, since a transaction hasn't taken place. But what use would you have for knowing that information?
I'd love to hear from you -- shoot me a note at kelly.bennett@voiceofsandiego.org.
Kelly Bennett
staff writer
voiceofsandiego.org |
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airplanedad
Posts:131
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| 10/08/2008 6:17 PM |
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I am guessing that a loan modification might be a document that gets recorded, and thus shows up in public records and will appear on a title search.
Personally,I don't think many people will "need" to see such a document because most people realize that if a property was bought in 2004-2006 (or whatever time period) that it took a hit in the double digits regarding it's value.
Even though I just argued against a great "need" for a clearinghouse of data on this topic, it might be helpful nonetheless. For example, if maps of renegotiated loans were published, it might help people have some confidence that there is a little more stability in a given local market. Such compiled data might help people to draw inferences regarding the relative risk of their neighborhood getting hit by waves of foreclosures because of a high proportion of people with negative equity. If I were a buyer, info like that might help me have more confidence making a purchasing decision.
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Bluforest
Posts:56
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| 10/08/2008 6:31 PM |
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| kelly, these loan modifications that include principle adjustments stink! Already in CA you have no deficiency if you walk away, that's reward enough for people who bought homes they couldn't afford. My daughter bought at the high and put $400K down. She saved for years. What will she get? Nothing! But the guy next door who gambled with nothing down and a teaser rate loan now gets everything, he'll get to renegotiate his mortgage. So the responsible people get punished and have their net worth shoved down into the toilet, while the clever creeps who caused this mess come out with a house they get to, essentially, pay hundreds of thousands of dollars less for than my daughter. This is not fair. It is socialism, where the government screws around with everybody until everyone is equally poor. If they leave these mortgages alone and the gamblers get forclosed on, it gives the responsible people a chance to get an investment house cheaper, and that's how it's always, until now, been. Those that got rich did so at times where they could come in and buy assets cheap because the economy was bad. Not any more. Now we are all supposed to be exactly the same, dirt poor and dependent upon the government for everything. |
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LoonyQT
Posts:894
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| 10/08/2008 6:55 PM |
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| The loan modifications are government invervention at its worst. By providing tangible benefits to those who are struggling, those who didn't act foolishly during the irrational housing price run-up are being punished. It reinforces stupid behavior by sending the government message of, "don't worry if you screw up, we'll protect you". Meanwhile, the prudent savers of the USA are stuck with the bill and no rewards. Further, those who saw the bubble in action and were waiting to purchase when buy vs. rent fundamentals became more in line will have to wait even longer. It's a giant band-aid covering the asses of the greedy, stupid, foolish, and fraudulent. My household makes over 200k annually and we rent. We are considering taking our brains and dollars to another country altogether. |
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Bluforest
Posts:56
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| 10/08/2008 6:59 PM |
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| We've had it with the USA as well, it's not what it used to be. I always warned my kids that if it looked like this country was going toward the Robin Hood model, with the exponentially increasing masses of poor that vote, they should find another homeland. Little did I know how suddenly that transformation would occur, within weeks, and that my husband and I would be alive and not even at retirement age yet when it happened! |
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NCgirl
Posts:206
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| 10/08/2008 7:28 PM |
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My guess is this loan modification program won't be a free for all. The stipulations will be steep and it will probably only be offered to people with money down and arms. The reduction in principal will probably go to places like El Cajon and north east Escondidio , riverside the crummy places with the big hits. I doubt La jolla and places like that will get a reduction in principal. If they do I will be pissed and want something to come my way! I saved for many years too, while my friends bought Jimmy Choos and Chanel I was still kickin Nine West. Life is not fair I tell ya.
From he banks perspective it probably costs less to reduce the principal and modify the loan than foreclose.
I do think the modification should show up somewhere to show the true market value of the home, the comps should be affected. |
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wilson
Posts:541
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| 10/08/2008 7:29 PM |
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Loony,
Should we find you a nice place in Nicuragua? |
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Brian
Posts:2210
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| 10/08/2008 7:36 PM |
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Posted By airplanedad on 10/08/2008 6:17 PM
I am guessing that a loan modification might be a document that gets recorded, and thus shows up in public records and will appear on a title search.
Airplanedad is correct, under the current system, that is all that would show up on public records.
For proper accountability, there should be a national database of loan modifications to account for taxpayer's money. Unfortunately, the politicians will keep the process as opaque as possible to nobody can figure out how the money was spent.
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kelly
Posts:14
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| 10/08/2008 7:52 PM |
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Thanks for discussing this with me, you guys. A couple of points that could nuance your perspective. The Countrywide deal (http://www.voiceofsandiego.org/articles/2008/10/08/housing/862aguirre100708.txt) is a response to litigation and isn't "government-imposed." Some people are looking at the Countrywide settlement and the IndyMac one (http://www.voiceofsandiego.org/articles/2008/10/09/survival/436precedent100708.txt that one is gov't-mandated from when the FDIC took over) as potential models for other lenders to follow. That's ultimately a private-sector decision (minus the fact that it's hard to tell what's public and private anymore in the housing market).
So what should be required of these lenders that aren't run by the government? Should they be forced to attach a loan mod notice to a property's title report?
Again, it wouldn't show up as a comp on an appraisal or something because it's not a transaction. But should that information be searchable, the same way that somebody's HELOC was searchable during the boom? What do you think?
kb |
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Bluforest
Posts:56
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| 10/08/2008 7:57 PM |
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| The principle reduction should only be for purposes of the loan, I think, but not for the value owned. So if you could afford a 500K house and they reduce your 800K mortgage to reflect the current 500K you can afford, when you sell the taxpayers should be paid back if the home value rises. If you only can sell for 500K, then nothing. But if you sell for 700K, you should pay back the 200K profit to the government. Otherwise, the person who put down 300K and sells will get 200K back, a loss of 100K of their hard-earned money, while you the spendthrift sleazeball will get 200K you never saved or had and don't deserve. So, so unfair it is. |
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Bluforest
Posts:56
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| 10/08/2008 8:06 PM |
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| The loan modicfication should be attached to the title report or some other public record and be searchable, I think. It used to be when you made an offer you could tell what the seller paid for the property, and when, so you had a better idea of how much profit, or loss they would have. With a loan mod, you don't know what amount the seller has been paying on. And that amount he pays on is the real value now, not what he bought it for in 2005/6 that's in the MLS info. |
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lurknomore
Posts:270
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| 10/09/2008 7:47 AM |
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| The McCain plan (which is most likely going nowhere) would take a different approach, apparently. The Treasury would essentially pay off a mortgage (at some negotiated reduction, maybe?) and refinance it at better terms for the owner. As a refi, I doubt anything would show up in records related to property values. Private deals (such as that planned by Countrywide) seem no different from a developer offering incentives to sell at a higher price, like upgrades or prepayment of several mortgage payments. Don't be so obsessed with making sure the "public records" show the "real" selling price--that often isn't the case for the more usual transactions. |
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PolarBearKing
Posts:161
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| 10/09/2008 8:35 AM |
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Quite frankly I feel that Loan Mods are short sited. Home values are bound to go up eventually. Most likely within the next decade. Lenders would be smart to restucture loans so that the buyers continue to pay for fifty years (or something to that effect) but keep the balance where it was when the fools jumped in. Hopefully, people bought a home that they want to live in for a long time. If they were investors, then they lost and should be kicked out for smeone who is in it for the long haul.
Look, the way I see it, is that people will always need a place to live. There are tons of homes out there already built sitting empty. If the lenders gambled and won it the short turn (which we all know that they did), they can also win in the long term by becoming landlords for those that can't or don't want to be owners/occupants.
I just feel that writing off debts with any kind of consiquence is bad business and will only lead to more trouble in the future. Lets let basic economic principle do what they have done for thousands of years and be done with it. Just rip that bandaid off... |
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PolarBearKing
Posts:161
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| 10/09/2008 8:37 AM |
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| Qt, leaving the country ain't gonna help. By the time you get passports for the whole fam damily the rest of the worlds econmy is gonna be in the tank too. |
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tpc
Posts:498
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| 10/09/2008 11:59 AM |
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NCgirl-Great, great post. Very smart. All of your posts are smart (sans the ones picking on me). Lots and lots of common sense.
NC is right-THIS IS GOING TO BE DONE WITH A COST-BENEFIT ANALYSIS. These lenders aren't fools. What the process is to be considered for a principal reduction and would be interesting to find out. It will probably done at the written request of the borrower or loan servicer. Out of 100 requests, mayby 5 will make sense.
There are lots of smart underwriters and credit people who know how to do this. I am sure that lots and lots of these people were disgusted with the underwriting standards that go us into this mess. But these people are street smart, so don't get your panties in a uproar. Let them do their job.
The govt is in crisis mode and is trying to figure out every way possible way to limit the number of foreclosures that will come on the market. The fewer the foreclosures, the better for the govt and the better for all of us.
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tpc
Posts:498
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| 10/09/2008 12:46 PM |
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Kelly-
As an appraiser who has had a lot of background in the both the academic and practical parts of the profession, I don't think that a loan mod would be a legit sale for comp purposes. It doesn't meet the sale definition-Informed buyer and informed seller, neither under duress, blah, blah. No seller.
If the appraiser knows that modifications is common in an area, then it should be noted in the appraisal. The extent of the impact on value will vary dramatically between appraisers depending on whether it is a sunny day or a rainy day, what they had for breakfast, ie there is no way of accurately measuring the real impact. Every individual benefitting from a modification will be getting a different deal, different price modification, etc. Too many variables to accurately measure. |
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LookeyLou
Posts:3
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| 10/10/2008 2:33 AM |
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| It's very difficult to get a principal reduction. Lenders are more likely to stretch the term and lower the rate. |
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kelly
Posts:14
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| 10/10/2008 11:06 AM |
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| Thanks again for discussing this with me. Here's what I came up with: http://www.voiceofsandiego.org/articles/2008/10/10/news/02loanmod101008.txt kb |
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title
Posts:20
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| 10/10/2008 5:04 PM |
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| we are not seeing anything yet when we search properties. |
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Dirtcheap
Posts:28
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| 10/10/2008 10:21 PM |
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| does anyone know anyone who has actually recieved on of these loan mods? |
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