1 first?

2 I see this as yet another vote of confidence for the benevolent rule of our Glorious Tyrants!

3 Hmm, maybe we should all up our mortgage holder and drop hints that we are both worried about layoffs.

4 I was at a talk given by a NY fed researcher a few weeks ago on foreclosures. The bottom line is that it's going to get significantly worse before it gets better.

Yes, there are still many, many people who will default in the near future but have not yet done so.

5

Will they also whack your credit score?

The hidden side of this shenanigan!!

6 @5: What, you expected to reduce your outstanding debt without taking a hit someplace else?  No free lunch...

7
Hey - I've got a BofA mortgage! Time to stop making payments!

8 That was a test to see if my floating IP was the banned one this morning . I just love hearing about all the programs to rescue people who took out mortgages they could not afford. Makes me feel so naive for not having any debt, never taking on a mortgage because I have not and don't consider my job very secure and I'm not in a field where I could just trade employers etc etc.

9

In a similar feat of accounting legerdemain, GM just broke even. It's amazing what can be accomplished, when you don't care who gets the credit administration representatives on the Board. 

On further reflection, Reagan may have been taken too literally. The housing market of the last two decades was based on not caring who got the credit.

10 SHIT!! I just refinanced my B of A mortgage.  You mean I could have reduced the principal 30% if I would have waited?

11 Will they also whack your credit score?

Undoubtedly, but credit scores only matter when people buy things they currently can't afford to pay cash for.  This too is changing.  Credit card balances and usage is down.

12 There's a lot of 'ifs' here.

It's a big carrot, if there's the potential that the property value will begin appreciating again someday.

13 I thought I'd read though that the rule is:

Amount owed on loan must be 120% or more of FMV of house?  So, it won't work if you're not significantly underwater.

14

Eh--read the details.  I see no terms to lower payments and it's intended to only benefit those 20% underwater back to actual value.

Which leads me to this oldie (relatively), but goodie:

All those bad loans?  STILL BAD.

15 What, you expected to reduce your outstanding debt without taking a hit someplace else? "When you owe the bank $10,000 and can't pay, you are in trouble. When you owe the bank $10,000,000 and can't pay, the bank is in trouble." Right now, they are worried about underwater mortgages. Are you struggling to pay a $300,000 note on a house you could sell for $200,000? The thought to walk away would cross your mind. They want to give an incentive for people to keep paying.

16 Will they also whack your credit score?

They were loaning to people who don't have credit scores.  Or forwarding addresses, I'm guessing.

17

The original mortgage modification whacked the credit score

July 2009 in minor media

March 2010 in major media

The problem, is if you take the new Bof A, and they whack your credit score, then what happens to your ability to do anything else? You become thier servant.

Foreclosure is still better for the consumer

18 I heard another BoA rumor - they aren't paying their foreclosure firms per schedule and are renegotiating the agreements to sweeten the pot vice paying the bills.

19 I thought O! was going to pay everyones mortgage .

20 Makes me feel so naive for not having any debt, never taking on a mortgage because I have not and don't consider my job very secure and I'm not in a field where I could just trade employers etc etc.


Yeah.  And now the money I was saving up for a down payment is going to be worthless after the hyperinflation.

21 If you're not significantly underwater, then you're not going to be strategically defaulting.  If you have any equity at all, you could sell the place at FMV and still walk away with a little cash or flat.

22 BofA, the Illegals credit source. Fuck'em.

23

The problem, is if you take the new Bof A, and they whack your credit score, then what happens to your ability to do anything else? You become thier servant.

Foreclosure is still better for the consumer

How will foreclosure not be a worse whack to your credit score?

24 As my nom de Web suggests, I lived in France for some time, and unlike most tourists, really lived there, and got a sense, economically, of the place.

Why am I writing this in this thread?  Because this post made me think of the somewhat stealthy way (at least temporarily) socialist governments try to hide the decline they engender.  Employment may go up, but the "new jobs" will he crappy.  Housing starts may go up, but the houses being built will be less affluent than before, the rules will be bent to give the impression that fewer defaults are taking place.

But at the end of the day decade, there will have been real decline.  And a decade's worth of memory loss as to the way things used to be.

We must resist the Washington bullshit and lies in every peaceful way possible.  WE MUST RESIST.

25 Debt forgiveness is taxable as gain, so if it's all realized in year 1, you're looking at what could potentially be hundreds of thousands of Dollars in phantom income and getting bumped up a few brackets. 

This could only really work for economically distressed people if there was a corresponding IRS Reg that excluded this specific kind of debt forgiveness from taxable income.

26 pee pee! POOP!

27 Couple weeks ago, I was "volunteered" to help out on a Habitat-for-Humanity project for my corporation "Day of Service".  Nice day away from work, practiced my sheet-rock skills and got brown-noser points. Seems like the right way to get people into homes. You put in sweat equity and people help you out.

This BofA BS is the opposite. Take a bunch of idiots who can't balance a household budget and give them a loan. Then have taxpayers bail them out

28 One euphemism for the guillotine during the French Revolution was a "Republican shave".

29 30% of nothing is 0. Great plan!!!!!!dump Meryll......QMAO!!!!!!!!

30 BOA has a great Twitter support team, but it is a shitty bank that's 1 step away from being nationalized.  Also, they took two mortgage payments from my checking account, returned one, but have claimed for the last 1.5 months that they gave BOTH back.  BOA should be split into pieces, or sold off.

31 You become their servant.

I'm pretty sure that's the long term plan.  I severed all business relationships with BofA last year.  The branch staff are pleasant, but their corporate policy towards customers is reprehensible.

32 of course it is always easier to walk away from a house that you bought on spec, rather from the family home. I see this as being applicable more to the former than the latter. An investment is easier to walk away from than a family's home Posted by: Andy Rand

You are a douchebag.  I guess you never say the B of A loan officers giving mortgages to illegals selling oranges on the freeway off ramps here in California. They practically had a parade for them complete with balloon animals and clowns.

33

Aren't they the bank that busted some chicks house up and stole her parrot?

Or was that another bank?

34 That was them Entropy.

35

I don't think this is necessarily aimed at the idiots.  It is aimed at the people that are able to do the math on housing costs.  If my house is worth $200k and I owe $300k, I'm better off defaulting, taking the credit hit, and renting a place for 7 years until the credit hit clears.  By taking the BoA plan, I still take the credit hit, but I get to stay in the house.

I say "I" but my houses are actually worth more than what I paid.

Grim

36 Wow, another good deal for those who probably bought off more than they could chew.

37

Good times good times.

Quality bank. Great customer service.

Would lol again.

38 Aren't they the bank that busted some chicks house up and stole her parrot?

Yea, that was them.  I sidebar'd that story a while ago.  They're a real class act.

39 Interesting ploy they're offering. They'll reduce your principal amount by up to 30% over 5 years is you'll just please keep paying on time.

30%??  That's nothing.  Just before the November elections, the federal government is going to start reducing principal by 3000%, and you don't even have to threaten a default - only promise to vote for dems.

40

People don't strategically default because they can't afford their loans.  There's nothing "strategic" about that kind of default.

What BoA is trying to prevent here is someone who can pay their loan choosing not to becauuse they don't want to pay back a $500K loan on a $300K house.

41 PA - I severed with them several years ago because they were changing terms so often I couldn't keep up -- then they bought my new lender. And, have sent me notice a slew of term changes.

42 I don't know what deal BofA got during TARP or whatever bailout was happening.  However, by these actions, it doesn't sound anywhere near as corrupt as the deal One West Bank (Indymac now owned by Soros, etc.) has.  I think whoever picked up WaMu (Chase?) got a similar deal.

It's worse than you think.

43 I think there's more to this story. Remember, B of A took over the racketeer Countrywide at the government's "request" and has come out since with full page ads touting their contributions to community organizers so that the "underserved" can get free loans.

They are totally in bed with the government. I think they are expecting another bailout. It's another redistribution.

44 Hey, if I stop paying my mortgage today (I'm only above water, barely, because I 1) bought less than I could afford, and 2) have been paying ahead of time on a 15-year fixed-rate note) can I petition CitiMortgage in 3-months to cram-down upwards of 30% of my principal too? Fair is fair, right? Yep, let's continue to punish the prudent and reward the stupid. That'll work.

45

What BoA is trying to prevent here is someone who can pay their loan choosing not to becauuse they don't want to pay back a $500K loan on a $300K house.

Posted by: JohnG at March 24, 2010 11:44 AM (ImIF6)

Bingo!  And since they are, it tells me they don't have the sweetheart deals that One West do, where it is in their best interest to foreclose.

46 The people who actually work in my branch are nice and helpful other than that they suck big time.
Stealing a person's parrot is just fucked up.

47 I think whoever picked up WaMu (Chase?) got a similar deal.

Yea, WaMu got sucked up by Chase for a song.  I think they were buying turnkey physical market penetration in areas where they were scarce more than anything else.  There used to be maybe two Chase branches here in Palm Beach, now there's probably 50 of them after the WaMu takeover.

48

I think there's more to this story. Remember, B of A took over the racketeer Countrywide at the government's "request" and has come out since with full page ads touting their contributions to community organizers so that the "underserved" can get free loans.

They are totally in bed with the government. I think they are expecting another bailout. It's another redistribution.

I already read that book.

I do not particularly even like that chick. Nor do I like that she totally told us so. Nor it's implications. But she did.

49 On top of that, BoA pays crap for CDs.  My CD with them came up for renewal a month ago and they promised me a "loyal customer" deal: .5% interest!  Wow.  What a deal.  I took the money to a local credit union and got 2%.

Bye-bye, BoA.

50 The only way this is "strategic" to the lender is if BoA is predicting that the homes won't go back up in value over a fairly long time horizon. The only way it is "strategic" to BoA is if they are trying to avoid a liquidity crisis. Soon, it might make sense for the big lenders to form an entity dedicated to making very low cost mortgages, just break even from the bank's perspective. Use those mortgages to stimulate buying of the toxic or overvalued assets for a few years -- then close the door. Let everyone know this sweet deal is only going to last 24mon. Get the non-performers off the books or they might have to start walking away as well.

51

So those who have been responsible, paid their bills, bought only as much house as they could afford, and do the right thing get to subsidize the grasshoppers among us?

That really ticks me off!!!

52

45: ain't that the effing truth.

When are the people who haven't been SCREWING EVERYONE ELSE finally going to stop getting punished?

Paying our mortgage on time every month (plus a little extra, in fact) while I drive a beat up car with whiny steering -- and forget about "cheap meal day" or saying "no, honey we can't afford that right now" -- is quite possibly the dumbest thing we've ever done.

And no, we're not hurting, we scrimp to save for extra fun stuff, but being responsible these days is like a sucker play.  I sure wouldn't mind a 30 percent cut on our principle.

53 52

So those who have been responsible, paid their bills, bought only as much house as they could afford, and do the right thing get to subsidize the grasshoppers among us?

That really ticks me off!!!

Posted by: Boots at March 24, 2010 12:01 PM (06JTY)

Yup, welcome to Amerikka Comrade.  Soon your retirement accounts will be government controlled too.  You are too dumb to plan for your own retirement.

54 Bankers don't do 'favors', unless there is something in it for them.  A foreclosed house is an empty house.  No maintenance.  A lot of cities are forcing mortgage holders to take care of the physical appearance of their properties.  That's another cost.  Might as well bite the bullet and keep someone in the house.  Three months of nonexistent home sales appears to indicate the market is not rebounding.

55 The only way this is "strategic" to the lender is if BoA is predicting that the homes won't go back up in value over a fairly long time horizon.

That's my take.  If they thought there was going to be any recovery, they'd just decline foreclosure as long as legally possible on these strategic defaulters waiting for the market to improve, then drop the hammer.  That leaves the borrower on the hook for taxes, maintenance, etc in the interim and reduces the bank's outlay of "instantaneous cash"

There may be some insurance aspects to this too.  If someone stops paying, and stops paying their insurance too, now the bank's risk of a total wipeout goes way up.  If they foreclose and toss someone, buying insurance on an empty building is a lot more expensive than an occupied one.  Vacant houses go down hill and get stripped pretty quick.

56 What's going on here is the same scam the credit card companies pull(ed):
They are trying to squeeze a few more drops of blood out of the turnip and then sell the debt to someone else. They know damn good and well that these people are going to default, they just want to get a few more payments and string these defaults out so it doesn't take them down. Whoever they are targeting this offer toward is a sucker to take it because the bank has already determined they are going to have to default.
This is the same scam that is going on in the stock market; blazing hot deals that are too good to pass up but, really its a scheme to suck in more real, hard cash to paper over their "investment" losses.

57 PA, FWIW, within a six minute walk of my brownstone, there are now one...two...three Chase branches, plus a Chase ATM.--for comparison, the nearest Starbucks, is ten minutes away, with a second one about fifteen minutes away at a rail station and mall.

I can't imagine this density is anything other than a condition of the WAMU acquisition.  The gov is in control. 

58

If you read up on the WAMU acquisition it reads like a suspense/thriller novel. Whodunnit?

Some very shady associations. WAMU was in all likelyhood practically stolen. "Firesale" does not do it justice.

59 There may be some insurance aspects to this too.  If someone stops paying, and stops paying their insurance too, now the bank's risk of a total wipeout goes way up.  If they foreclose and toss someone, buying insurance on an empty building is a lot more expensive than an occupied one.  Vacant houses go down hill and get stripped pretty quick.

There is a really simple answer to this:  Let the market figure out what home prices are supposed to be. 

Instead, the federal government and the banks are propping prices using false hope bought with taxpayer and borrowed money.  Their other bullshit strategy is to wait until inflation hits and let the prices stay nominally stable while the dollar devalues until the nominal prices better match what an actual market would bear.

This is "ant and grasshopper," and I am having some very dark thoughts.

60

It seems in the "game of chicken" between borrowers and lenders, BofA just flinched. Obviously they don't see any significant rebound rebound in housing anytime soon, or they'd not be making such offers.

Don't worry, PA, BoA will just make it up with higher credit card rates and annual fees.

There is a really simple answer to this:  Let the market figure out what home prices are supposed to be. 

Bernanke, Geithner, and Obama will let the whole system collapse before they allow housing rates to fall down to market levels. 

A typical mortgage-to-income ratio was about 3/1 in a healthy market (e.g., $150K mortgage for a $50K income).  With the average home price running over $200K and the median wage stagnating or deflating, housing has a hell of a long way to drop before it can be considered healthy again.  Given that the Alt-A and OptionARM resets are going to put yet another anchor on the market, I can't see how anyone with common sense would purchase a home right now unless they were 1) going to pay it off in 10 years or less; or 2) planned on living in that house for the next 40 years and had a ton of savings to deal with downturns and potential job losses.

61 Well folks back from the yard for a while.  If you will stop and think for a minute about what this strategy is for and what led to all this shit you will immediately see that once again this is an outcome from the government intrusion.

They want to excuse some of the principle if people will continue to pay on time.  This is for people who are NOT deadbeats and who probably could afford their original loan to begin with.  The collapse of the market in places like CA, FL, and NY have caused them to now owe more on the house than what it is worth, and what's more not only do they owe more than it is worth but they could walk away from the loan and buy a new house with LOWER payments and still owe LESS money.

Right now the only thing that is stopping people from doing this is personal honor.  That is something that has been getting to be in short supply over the past few years.  And it is no wonder when you have idiots like Piss Dodd, Bwarney Fwank, and Jugears paying off loans for the indigent with THEIR tax money. In short, having honor now means you are a damn sucker.

So how are they able to do this?  The same thing that started this whole freaking mess; CRA.  Under the old rules if you walked away from a loan your credit score would go to absolute shit and you would not be able to borrow enough money to buy a 50 cent coke until you paid it all back plus ten years.  Banks are no longer allowed to do that.

So don't blame BOA on this crap sandwich.  They are just trying to get back some of their money before the whole system collapses.

62 So once again, making your payments, living within your means, and trying to save for your future is shown to be a suckers play. Welcome to Obama's America.
Why am I playing by the rules again? Anyone?

63 Oh and  BoA does hold my mortgage, after buying it from at least 2 other companies.

64 Oh and  BoA does hold my mortgage, after buying it from at least 2 other companies.

Posted by: Iblis at March 24, 2010 12:41 PM (9221z)

Really?  They likely don't actually have the note in hand.  It's probably gone in a poof.  Legally, they might not have squat.  They know this, people are figuring it out, and that's one of the reasons for this move.

65 Does BoA get to write this off as a loss?  That's a lovely tax incentive for them to do this then.

Couple weeks ago, I was "volunteered" to help out on a Habitat-for-Humanity project for my corporation "Day of Service".  Nice day away from work, practiced my sheet-rock skills and got brown-noser points. Seems like the right way to get people into homes. You put in sweat equity and people help you out.

Yeah, except there's a family here that got not one but two homes via Habitat and they ended up losing both of them.  I volunteered on the first, got guilted into going to work on the second and openly laughed in the face of the person who came to ask me for a donation to help them get a third place. 

66 BofA holds my $360k mortgage... but my place has dropped to $135k.  Hooray for San Diego property values!

When I negotiated the mortgage, the deal was I either pay, OR the bank gets the property.  I don't see any moral problem with going with option B, and giving the bank the property.  That risk was built into the mortgage interest rate.

However, I am only thinking about a strategic default because (a) California has a 'no recourse' statute, meaning the bank can only take my property and can't go after my personal assets, and (b) Congress has passed a law that all 'forgiven debt' - which is what the written off mortgage would be - is no longer taxable as income.  Whodathunk that politicians would write laws that encourage socially destructive behavior?

67 Congress has passed a law that all 'forgiven debt' - which is what the written off mortgage would be - is no longer taxable as income.

It's time for a tax revolt.

68 In short, having honor now means you are a damn sucker.


Yup.  Here in the midwest my home value has been fairly stable; if I had somehow bought real estate in CA where FMV has dropped like a greased stone, defaulting would seem like a pretty attractive option.  Lets face it; the market in places like CA or NY are not coming back soon.  Or at all.

69 Lets face it; the market in places like CA or NY are not coming back soon.  Or at all.

Not only are they not coming back soon, but they haven't finished dropping yet at least in CA.  When I checked a few months ago my old neighborhood in Castro Valley, CA (1950s track houses on postage stamp lots) were still selling for $550/sq ft. 

That is insane because even with a job nobody can afford that except rich people.  And rich people are not going to buy 1950s track houses on postage stamp lots.

70 Does BoA get to write this off as a loss?  That's a lovely tax incentive for them to do this then.

Posted by: alexthechick at March 24, 2010 12:52 PM (8WZWv)

Oh, no. No, no, no.  It's much worse than that.  It's not a tax incentive.  It's an "original loan value + purchased loan price + insurance rewarded + auctioned price" incentive.

71 I'm with GMAC, and I pay like clockwork. I like my primary residence out in the country, even if I would have a hard time getting my full construction price out of it at the moment. But I'm in it for the long haul and the advantages of tactically sound terrain, so it still works for me. The ability to shoot .30 caliber battle rifles in my backyard legally saves on range fees if nothing else.

72 ouple weeks ago, I was "volunteered" to help out on a Habitat-for-Humanity project for my corporation "Day of Service".  Nice day away from work, practiced my sheet-rock skills and got brown-noser points. Seems like the right way to get people into homes. You put in sweat equity and people help you out.
Habitat is much better sounding than it is in practice.

73 The AP never fails to disappoint!

WASHINGTON — Sales of new homes fell unexpectedly to their lowest point on record in February, in part because stormy winter weather kept buyers away. The results pointed to the housing industry's struggle to rebound from the worst slump in decades.

Bwahahahaha!

The housing market is going to tank this summer when the government credits end.

Then what?

As the housing market goes, so goes the economy.

As for me, I just bought a home. I expect our area to dip another 10%-15% but putting 20% down gives us some cushion and we expect to retire in our new home.

Plus interest rates will never be better.

It was all about good schools and the right neighborhood for my boy. We'll be as far away as can be from the urban blight, crime, welfare collecting animals that surround me now.

And that is more than worth the investment.

74 Of course, my area didn't get hit as bad as others because the bubble here was relatively small.. I sold the starter home I bought 7 years ago for a little less than I paid for it.

It didn't feel good, but I was able to pull plenty of equity from it. I'm in far better shape than a lot of people.

75 Vic,
Yes, the CA market will not come back for a while. My house which I bought in 1980 on one mid-level salary would now require an income of $175K to qualify for a traditional 30-yr mortgage. A young couple is not going to do that. They are going to move to Texas.

76 My house which I bought in 1980 on one mid-level salary would now require an income of $175K to qualify for a traditional 30-yr mortgage.

I am betting that a "minority" could get it for zero money down and interest only payments for 5 years still.

77

The housing market is going to tank this summer when the government credits end.

 

Come on Down.

78 We're talking about people's lives here, but as a strategic political move? Starve the beast, bleed the beast.  Getting out from under an upside down mortgage does both at the same time.

 Who is John Galt?

79

News template for house sales:

Sales of new homes fell unexpectedly to their lowest point on record in (fill in blank), in part because (fill in blank) weather kept buyers away. The results pointed to the housing industry's struggle to rebound from the worst slump in decades.

80

Interesting. So the 30% will knock it down to 90% on the books, which intern allows BOA to reduce their allownace for loan loss. At the same time since the mortgagee does not have 20% into the balance they can be subject to PMI.

The savings on the ALLL (allowance for loan loss) will be huge from the change in days delinquent and the new equity balance.

I am sure they did an analysis of their portfolio and the loss on the asset side will be more than made up for with the change in ALLL. This will give them more net income (expense reduction) and good PR.

Does anyone have the exact details of the qualifiers?

81

"unexpectedly"

When events keep wrongfooting your expectations, it's time to change your fucking expectations, Bucky.

82 Aside from being the bank/lender of choice for illegals (or maybe as a result), BofA is also the preferred bank for Mexican cartels to launder cash proceeds of drug sales.

83 This makes sense and means that Banks have decided that the housing market will not recover anytime soon. Occupied property with owners who like the property, and are negative by 10-30% are more likely to stay in the property with a mortgage adjustment, they can't refinance and many may be tempted to walk away if renting is an option. Only way to make the best of a bad choice.

84

Aside from being the bank/lender of choice for illegals (or maybe as a result), BofA is also the preferred bank for Mexican cartels to launder cash proceeds of drug sales.

Hey, maybe we have something here. That National debt is getting mighty large...

85 For fun look at SoCal RE, go to Drhousingbubble.com.

86 BofA took over Fleet Bank. We had a dead credit card with Fleet that for some damn reason BofA tried to resurrect in 2009. Part of their consolidation of databases, I guess. Nothing owed on the card and closed out for 20+ years. After  trying to reach us at a house we sold in 1986 they decided to close us out of our online banking. No notice, well not to anywhere we'd lived since 1986. Apparently no attempt to find us at another address despite our still having accounts with them. My wife had a small business account she was paying down online, while she was in the middle of chemotherapy and out of state to boot. The local BofA CSR had no idea what was going on but tried during a couple of visits to the local branch to figure it out. In short order, we started getting calls from a collection agency for the wife's business account. The number we're talking about was $20 per month - don't know why she didn't just pay it off all at once. The agency asked for bank card and CC info and PINs - classic phishing moves. I googled the company - guess who owned them - BofA of course. My wife is winding down her business and still has an account with the bastards  because of some of their on-line services. I'll be glad when  we have no longer have dealings with these unethical and incompetent crap weasels.

Break'em up. Not just too big to fail, too big to perform competently.

87

Amnesty Boosters: Don't Hold Your Breath!   [Mark Krikorian]

Lindsey Graham acknowledges "comprehensive immigration reform" is kaput:

Immigration reform legislation is "dead" in the Senate this year, Sen. Lindsey Graham (R-S.C.) said Thursday.

Graham, who's sought to work with some Democrats on the controversial issues, said that healthcare efforts had "poisoned the well" for bipartisan cooperation going forward. . . .

88