Cheap Obama mortgages to get more expensive

[ArkRescue]

" NEW YORK (CNNMoney)
Nearly 783,000 homeowners whose mortgage rates were reduced under the government's Home Affordable Modification Program are going to see their rates increase over the next few years, which will likely lead some borrowers to re-default, a federal watchdog warned.

Launched in 2009, HAMP helped troubled borrowers by either reducing the principal they owed or the monthly interest they paid, with many receiving rates as low as 2%. "

http://money.cnn.com/2014/03/04/real_estate/hamp-mortgage-resets/index.html

 

[b23hqb]

If you like your home mortgage plan, you can keep your home mortgage plan.

 

[Rommey]

As of November 31, 359,000, or 28%, of borrowers with HAMP-modified mortgages had already re-defaulted on their mortgages and nearly 100,000 more were deemed "at risk" of default, SIGTARP reported.

As callous as it sounds, the sooner the government stops manipulating the housing market the better. How many of the remaining 72% should not have gotten the mortgage they got? How many of those are likely going to default once rates rise?

But the government just can't seem to understand that some people just shouldn't own a home (or at least not the "McMansion"); they continue to let people make bad decisions on top of bad decisions and still want to let them make more bad decisions. At what point do these people just need to be cut off?

In an effort to continue to provide meaningful solutions to the housing crisis, effective June 1, 2012, the Obama Administration expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include:

Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it.
Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.
If you are a homeowner who falls into any of these criteria, you may be eligible for a modification under the expanded criteria. Please check with your mortgage servicer to see if you are eligible to begin the HAMP evaluation process.link

 

[vraiblonde]

The whole thing is completely hosed up. When I was nervous about They Who Shall Not Be Named trying to put us out of business by blocking us, I called Fannie Mae (who owns my mortgage) to see what I could do about refinancing/reducing my interest rate. The rep I spoke to was very candid and gave me an education, which was confirmed by my own financial advisor so I know they're not lying.

Basically they couldn't do anything for me UNTIL I missed a payment. So forget trying to avoid missing a payment and getting that blotch on your credit. Even then they'll give you the runaround, but! when you've missed THREE (!) consecutive payments suddenly they can offer you all sorts of great deals, from reducing your interest rate, to deferments, to reducing the amount you owe on your home. But you must default on your loan first.

I said, "Let me make sure I understand..." and repeated that back to him. "Yep," he replied, "You got it!"

So then we explored scenarios where I might have to/want to just give up my house (because that luxury apartment complex and general freedom is calling my name) and THAT'S when it got fun. Google "strategic default" and read up on it; your head will explode. You can literally walk away from your home with no repercussions. The only thing that happens to you is your credit rating goes in the toilet, but credit is so easy to repair it's not even worth worrying about.

These ads for HARP and HAMP and whatever else make it sound all peachy keen, but that's not the way it works in reality. The people who are upside down on their mortgage and will likely remain that way for a good long time, then are facing financial hardship - why wouldn't they walk away? It would be stupid not to.

 

[vraiblonde]

And PS, you could never "just keep" your home mortgage plan. My mortgage has changed hands three times in 7 years without warning or my having any choice in the matter. Chances are good that whoever you're writing your check to doesn't even own your mortgage; most likely they just service it and it's owned by Fannie Mae.

 

[RoseRed]

My mortgage hasn't changed hands.

 

[czygvtwkr]

I had two mortgages cause I had an 80/20 loan, both through GMAC. For some stupid reason GMAC decided to sell the 20 loan to Green Tree. Well the terms were supposed to be the same, and technically they are except with GMAC I could just go on their website and make a payment, Green Tree charges $12 for an online payment, not a one time fee, but every time wtf, how is this the same terms? Every time Green Tree calls me trying to telemarket to me I nag them about the fee for online payment. Funny thing they havent called me in months trying to sell me some other crap.

 

[mamatutu]

And PS, you could never "just keep" your home mortgage plan. My mortgage has changed hands three times in 7 years without warning or my having any choice in the matter. Chances are good that whoever you're writing your check to doesn't even own your mortgage; most likely they just service it and it's owned by Fannie Mae.

From your posts, I can see you understand the whole thing. My hub has been in the mortgage biz for 35 years, and works for a top five bank. I hear him in his office everyday cursing under his breath. The government has again as always screwed things up. And, even though my hub is in the biz, we had our mortgage change hands too at one point, and didn't know. We want to sell and move to Delaware, but we have to wait. How long that will be, who knows? My hub doesn't even know, and he knows, if you know what I mean. It all blows!

 

[GURPS]

.... but! when you've missed THREE (!) consecutive payments suddenly they can offer you all sorts of great deals, from reducing your interest rate, to deferments, to reducing the amount you owe on your home. But you must default on your loan first.

I said, "Let me make sure I understand..." and repeated that back to him. "Yep," he replied, "You got it!"

yeah that is just ignorant .... having to default 1st ...

 

[vraiblonde]

The financial guy says a lot of the people who have defaulted, gotten a new deal, then re-defaulted are people who have become unemployed or had some other hardship. Most of them could afford their mortgage just fine until the economy went south. You get laid off, someone gets sick, property taxes go up, insurance goes up....and suddenly you're in a situation. What they should have done is walked away in the first place but the mortgage lender coerced them into sticking with it, reduced their interest rate, did a deferment, whatever, to keep that money coming in, even though they couldn't afford the new terms either.

We hear these stories in the media about deadbeats who shouldn't have qualified for a home loan in the first place, and speculators who are gaming the system, but a good number of the mortgage defaults are legitimately because of the economy. There are a TON of people who are upside down in their mortgage, even still. It's just crazy.

 

[MarieB]

The whole thing is completely hosed up. When I was nervous about They Who Shall Not Be Named trying to put us out of business by blocking us, I called Fannie Mae (who owns my mortgage) to see what I could do about refinancing/reducing my interest rate. The rep I spoke to was very candid and gave me an education, which was confirmed by my own financial advisor so I know they're not lying.

Basically they couldn't do anything for me UNTIL I missed a payment. So forget trying to avoid missing a payment and getting that blotch on your credit. Even then they'll give you the runaround, but! when you've missed THREE (!) consecutive payments suddenly they can offer you all sorts of great deals, from reducing your interest rate, to deferments, to reducing the amount you owe on your home. But you must default on your loan first.

I said, "Let me make sure I understand..." and repeated that back to him. "Yep," he replied, "You got it!"

So then we explored scenarios where I might have to/want to just give up my house (because that luxury apartment complex and general freedom is calling my name) and THAT'S when it got fun. Google "strategic default" and read up on it; your head will explode. You can literally walk away from your home with no repercussions. The only thing that happens to you is your credit rating goes in the toilet, but credit is so easy to repair it's not even worth worrying about.

These ads for HARP and HAMP and whatever else make it sound all peachy keen, but that's not the way it works in reality. The people who are upside down on their mortgage and will likely remain that way for a good long time, then are facing financial hardship - why wouldn't they walk away? It would be stupid not to.

Well, there can be tax consequences depending upon the circumstances.

As far as credit rating, I disagree. You have to also realize how many companies now check credit ratings when considering someone for employment.

 

[vraiblonde]

Well, there can be tax consequences depending upon the circumstances.

As far as credit rating, I disagree. You have to also realize how many companies now check credit ratings when considering someone for employment.

The financial guy says foreclosures are usually not considered. He says they're looking for credit card debt and a history of irresponsibility.

The tax consequences can be that they take the difference between what you owe on the home and what they sell it for at auction, and that is considered income on your next tax return. But many times they don't even bother with that. Even more seldom they will bother you about paying the actual difference itself, but not usually because they know you'll just declare bankruptcy and it costs them more to pursue you than they will get in the end.

:shrug:

I know an awful lot about this stuff that I previously had no interest (ha) in. I dislike fooling with money; I just want to make it and spend it, some in savings, keep it simple. I don't even like to mess with my IRA, which is why I have a financial guy tell me what to do periodically. And the things I've learned during this process are why I dislike it; it's way more complicated than I realized and the stuff the news people cherry pick to report isn't always the truth.

 

[slotpuppy]

I had two mortgages cause I had an 80/20 loan, both through GMAC. For some stupid reason GMAC decided to sell the 20 loan to Green Tree. Well the terms were supposed to be the same, and technically they are except with GMAC I could just go on their website and make a payment, Green Tree charges $12 for an online payment, not a one time fee, but every time wtf, how is this the same terms? Every time Green Tree calls me trying to telemarket to me I nag them about the fee for online payment. Funny thing they havent called me in months trying to sell me some other crap.

GMAC went bankrupt. My mortgage from them has been sold twice since then.

 

[czygvtwkr]

GMAC went bankrupt. My mortgage from them has been sold twice since then.

I still have my 80% mortgage with them, they changed their name to Ocwen Mortgage.

 

[slotpuppy]

I still have my 80% mortgage with them, they changed their name to Ocwen Mortgage.

Ally took over GMAC but they did sell a lot of Mortgages to Ocwen, that who I have too.

 

[ArkRescue]

The financial guy says foreclosures are usually not considered. He says they're looking for credit card debt and a history of irresponsibility.

The tax consequences can be that they take the difference between what you owe on the home and what they sell it for at auction, and that is considered income on your next tax return. But many times they don't even bother with that. Even more seldom they will bother you about paying the actual difference itself, but not usually because they know you'll just declare bankruptcy and it costs them more to pursue you than they will get in the end.

:shrug:

I know an awful lot about this stuff that I previously had no interest (ha) in. I dislike fooling with money; I just want to make it and spend it, some in savings, keep it simple. I don't even like to mess with my IRA, which is why I have a financial guy tell me what to do periodically. And the things I've learned during this process are why I dislike it; it's way more complicated than I realized and the stuff the news people cherry pick to report isn't always the truth.

So what about the people who paid for Private Mortgage Insurance (PMI)? Seems like the sole purpose of that insurance was to provide assurance to the lender that they would not suffer losses right? So those with PMI should have been covered in cause of a deficiency?

http://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx

 

[czygvtwkr]

Ally took over GMAC but they did sell a lot of Mortgages to Ocwen, that who I have too.

I don't think they sold the mortgages, they sold the mortgage business, they even lifted the website, until the redesign this Jan it was the exact same website that GMAC had.

I got to say I am more than happy with Ocwen, Green Tree on the other hand can go under and burn for all I care.

 

[czygvtwkr]

So what about the people who paid for Private Mortgage Insurance (PMI)?

Turned out the insurance companies couldn't cover all of those defaults, this is what happened to AIG.

 

[vraiblonde]

So what about the people who paid for Private Mortgage Insurance (PMI)? Seems like the sole purpose of that insurance was to provide assurance to the lender that they would not suffer losses right? So those with PMI should have been covered in cause of a deficiency?

http://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx

I didn't ask about that because I don't have mortgage insurance, but that's a good question.

 

[MarieB]

Turned out the insurance companies couldn't cover all of those defaults, this is what happened to AIG.

Not to mention, probably a good portion of them didn't have the insurance at all due to the creative lending practices