Posted on 12/07/2007 5:57:26 PM PST by jiggyboy
A day after the White House unveiled a program to salvage the mortgage market, people are already talking about how borrowers might game the system.
To qualify for the fast-track program, borrowers must have a FICO score of less than 660 and it can't have increased by more than 10% since they took out their original subprime mortgage.
Because income isn't checked, some experts worry that borrowers who might otherwise be able to afford higher payments will try to lower their FICO score to qualify for a rate freeze.
"The message here is to get your FICO score down," Mark Adelson, a structured finance expert, said. "Don't pay some bills, but keep up with mortgage payments."
(Excerpt) Read more at marketwatch.com ...
“The mortgage companies are, and they went into it with their eyes wide open.”
More correctly, it is the funds that hold the arms pools that will be financing much of this, though I can hardly see how renegotiating terms on a tranche is even possible mortgage by mortgage....
I guess you missed the post last night in which British Bank(s) were seen to keep fixed rates high to compensate for losses in ARMs. Same deal. No one said they were entitled to a given rate of return but their shareholders expect it and rating agencies expect it. Any less and its a disappointment and downgrade. Spend more time reading and lay off those weekend cartoon shows.
They will be lucky if they get their principle returned at this point. They should be doing back flips at the prospects of getting any return at all. These funds are losing hundreds of billions of dollars due to foreclosures.
THIS is the plan???
This plan is designed to help ONLY the bums and like anything else, if you want more of something subsidize it!
Wow. This just floors me.
Good luck with that. It don't work that way.
It can be rather easily proven whether or not someone lives in the property.
It is a curious thing that those funds and other holders of the tranches didn’t seem to be consulted prior to this agreement being made. Were they?
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Not sure about it for this plan, but I know that if someone owns more than one property and is doing a loan that is for a supposed owner-occupied property, lenders are really making people jump through some major hoops to prove it. Now they are. A year ago, not so much.
Of course. I’m referring to people already in loans that are trying for this “extension.”
And the first thing speculators learn is to say "Yes, sir, I do" in response to that question.
What a visual. This plan selects a group that got caught up in their own greed. There is no way you can select a certain group like this, given the many that went conventional without balloons and are paying on time. The government needs to stay out of the property business.
And you should learn something about real world business and not believe everything you read by some expert in some paper.
They’d probably pay more if most of those homes ended up foreclosed. Not to mention, the intent was never to make the interest off the loans when the rate adjusted, since the idea was that the loan would be refinanced at or soon after adjustment.
I’m going to quit posting on this topic, go to Costco and buy enough bulk microwave popcorn to last a couple years along with some beer, and prepare to watch a slow motion nuke detonation as the credit/housing bubble unwinds. Government efforts to intervene only throw premium octane on the fire.
Actually, while you have to have a credit score under 660, which, by the way isn’t that bad anyway, you still have to have paid the mortgage on time every month since it was taken out.
Wouldn’t say those are deadbeats.
The ones who were late don’t qualify.
You read it right.
I have, in the past, had a client (or should I say, POTENTIAL client) say they lived in a property or planned to live in a property that I soon discovered they had NO intention of occupying. If it’s a refinance it’s easiest to tell, things like the home address on a paystub or bank statement not matching, or the home in question is in a horrible neighborhood and another property they own is in a nice area, etc.
On a purchase it’s harder to tell, but there are clues that can often be confirmed by the way they answer questions.
If I suspect they’re lying, I call them on it. In a professional way of course. And then if my hunch is right I tell them either I do the loan as an investor loan or not at all.
Better that those financial institutions would be shuttered and their remaining loan portfolios sold off for pennies on the dollar. As it should be. As the free market would have it.
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