It’s time for principal reductions

By Felix Salmon
November 7, 2011
flurry of enthusiasm for the Baker-Samwick own-to-rent proposal, and over four years since the op-ed from Dean Baker and Andrew Samwick first published in August 2007.

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It’s been over two years since my last flurry of enthusiasm for the Baker-Samwick own-to-rent proposal, and over four years since the op-ed from Dean Baker and Andrew Samwick first published in August 2007. It’s been so long, in fact, that it seems to have disappeared from the Providence-Journal website; fortunately, Dean Baker has mirrored it here.

The idea is very simple, and is based on the idea that there’s a difference between foreclosure and eviction. A bank can foreclose on a house, and seize it and/or sell it to settle the mortgage. But once that has happened, there’s no need to kick the homeowner out of the house. Instead, rent the house back to the homeowner at market rates. This keeps people in their homes, reduces foreclosure sales, stops houses being trashed when they’re foreclosed upon, and even maximizes the income stream from homes in default on their mortgages.

Since then, a couple of interesting things have happened.

For one thing, despite the fact that legislation along such lines has gone nowhere, independent actors have started putting it into practice on a case-by-case basis anyway. Elyse Cherry of Boston Community Capital has an op-ed explaining her scheme, called Stabilizing Urban Neighborhoods, which seems to be going very well. And Jorge Newbery, of American Homeowner Preservation, tried his own version of the plan, which involved negotiating short-sales with individual banks and giving homeowners the option to rebuy their homes. When banks refused to cooperate, he moved on to Plan B, which involves buying up pools of distressed mortgages himself, and then working them out with himself as the mortgage holder. That has been so successful and profitable that he’s setting up a socially-responsible hedge fund designed to do these workouts at scale.

Now comes word that Greg Lippmann, of all people — one of the big winners of the subprime bust, and a man who became extraordinarily wealthy playing in the mortgage CDS market — is thinking along similar lines himself.

“Principal reductions are necessary to help ameliorate the housing crisis,” Lippmann, chief investment officer for New York-based hedge fund LibreMax Capital LLC, said in an Oct. 31 letter to investors obtained by Bloomberg News. The step will also lower losses on loans underlying mortgage bonds, he said.

In other words, Lippmann sees what’s pretty obvious — principal reductions are not only helpful but necessary if the housing mess is going to clear. The question isn’t whether they’re going to happen, it’s how they’re going to happen.

After all, every foreclosure or short sale is, in its own way, a principal reduction. And FHFA chief Ed DeMarco, a steadfast opponent of principal reductions, is pushing instead plans where foreclosed homes are turned into rentals.

So it’s really not much of a stretch to put the two together, and just add the minor twist that the person who ends up renting the home should be the same person who used to own it.

Yes, there is a little moral hazard here — it is possible that people who would otherwise remain current on their mortgage will now happily default on it instead, safe in the knowledge that they can simply rent their home after they default, with lower monthly payments.

It’s possible. But the fact is that foreclosures and evictions themselves are much more hazardous to the housing market than an entirely hypothetical moral-hazard problem on the part of homeowners who have diligently been paying their mortgages for the past three years. Mass foreclosures, along with the subsequent fire-sales of distressed property, devastate real-estate values; anything which can bring those numbers down is going to be good for the housing market.

So let’s try this one more time, shall we? If red-in-tooth-and-claw capitalists like Greg Lippmann think that principal reduction is a good idea whose time has come, maybe even Ed DeMarco — who acts, after all, on behalf of all Americans — might come round to the idea, one day.

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Comments
26 comments so far

3..2..1 Time for the howls of protest over free money for deadbeats!

I guess I’ll interject myself first to ponder Felix’s suggestion.

First off, it’s important to point out that, having made his killing, Lippmann thinks it’s time for write downs to protect the big banks (oddly) and investors.

The devil would always be in the details but I think this idea is too late in the day to help the people I know you, Felix, mean it to help. It will not save the millions of people in foreclosure today. It will probably be used to help the same people who are refinancing with Obama’s help to lower rates. This won’t “save the market.” Far from it.

Moreover, the angry renters will be all over this (I hear them approaching, even now…). And rightly so. Contracts and fairness and all that. Yadayadayada. You know the drill.

I still don’t see how renting at “market rates” (who sets these, anyway?) solves anything. A house that is in or approaching foreclosure has big maintenance problems to begin with. Add five years to that and you will have nothing but teardowns. Is this a long-term plan to benefit big developers?

I would say that renting the house back to the former owner for two years is not a bad idea because that is how long they are barred from an FHA loan. You could set it up so there are incentives to keep the place up and pay rent on time.

But it isn’t necessary to keep people in homes they used to own and may not want to stay in to do this. Why can’t the big players do more to transition people through the foreclosure/short sale process? Why can’t we give them incentives to move out without trashing the place (smart banks do)? And why can’t we make it easier to repair your credit (by paying rent and bills on time, maybe you could speed up the process of qualifying for a new loan)?

We seem to understand that the current process is brutal to families/people who lose their homes, but not accept that there are things we could do to make it less brutal (without damaging rule of contract and incurring moral hazard).

Please, Felix, stop digging up dusty ideas and start thinking afresh.

Posted by LadyGodiva | Report as abusive

But once that has happened, there’s no need to kick the homeowner out of the house. Instead, rent the house back to the homeowner at market rates.

__

You can do arthimetic can’t you?

You do understand that property insurance and property taxes are MORE for rental properties than owner occupied properties don’t you?

I was discussing this nonsense with a premier econ blogger the other night. Here are the numbers and here is why this silliness of ‘keep the finacially insolvent house debtor in the house as a tenant’ WILL NOT WORK.

(1) Investor owned residences will be hit with both high property taxes and higher insurance costs since they would not be owner occupied

(2) Maintenance would be difficult and probably more expensive. Typically a SFR that is a rental property is owned by someone in a community. They can zip over and fix a faucet or do other minor jobs. Large investors would be footing more hefty bills for maintenance as they would be calling in a contractor for every leaky faucet or loose gutter. The former owner-now tenant certainly wouldn’t maintain the property because (a) they probably couldn’t afford to do so (see below as to how the rent will be substantially more than PITI for a new resident owner) and they lost the house because of financial problems and (b) why would they when merely tenants?

Ergo, one of two things would happen: (a) Maintenance would not get done and the property would deteriorate driving down neighboring values; or (b) Rent would be jacked up considerably to cover the higher maintenance costs for always bringing in the contractor.

(3) Large ‘investors’ would not be located in the community – like the person who owns some SFR and rents them out – and would have to hire management companies who would charge a fee.

Start off with the fact that very few Single Family Residences can actually have a positive cash-flow. Now add that the purchase price will be at Fair Market Value. Now add in the higher taxes and insurance costs of a non-resident owner. Now add in the higher maintenance costs of always contracting out every leaky faucet. Now add in the property management company fees – around here 10% of rent. Now add in that the investor/lender-owner wants at least some profit All that adds up to a much higher rent which would probably be difficult for the defaulting borrower.

Here is an examples from around here – cute little 100+ year old farmhouse of 1800 sq ft with 4 bdrms and 2 baths nicely restored on 1 acre with a 2 car garage with gorgeous original hardwood floors, huge 100+ year old trees, new kitchen and baths with oak cabinetry and ceramic tile , insulation, furnace etc. Good example of a well-maintained home that is affordable to the median household income of $39,000 and the median earned household income of only $24,000 (tourist economy) in the county at an REO (foreclosure) list price tag of $95K.

Borrower owed $135,000 . Fannnie MAe sold it for $90,000 and, after carrying costs and closing costs (taxes and insurance while waiting to get possession after auction, realtor, closing costs and 3 ½% to buyer’s closing costs) would have netted about $78,000 from the sale.

The value of the money for its purchase price has to be factored in. If using borrowed money, it would be $377 a month in PI (and odds are it would be borrowed to fund bulk purchases of REOS.) Even purchase price was not actually paid , there is still the diverted earning potential of the $90,000, so call the I of PI value around $125 a month.

Property taxes for a resident owner would be $86 a month but for a non-resident owner it would be $176.

Property insurance for a resident owner in this area would be as low as $40 a month but for a non-resident landlord it would be $100 a month. (Yep – not having earthquakes or hurricanes or any crime rate beyond people growing pot, $50 a month with a $500 deductible and $300,000 replacement coverage is typical for owner-occupied.)

Maintenance costs – allow $100 a month

PI $377 + taxes $176 + insurance $100 + Maintenance $100 = $753 + profit $325 (assume 5% of purchase price or $3900 a year ÷ 12) = $1078 ÷ .9 (10% property management company fee) = RENT of $1197 ($1200 a month)

Let’s assume the defaulting borrower had a 30 year mortgage at 7%. That would be a PI of $898 + the $86 in taxes + the $40 property insurance = $1024.

If the defaulting borrower couldn’t pay $1024 a month, how in hell are they going to pay $1200???

I can run example after example of REO-foreclosures on single family properties around here and get exactly the same result.

On this example, the large investor would want a rent that is higher than what the defaulting borrower couldn’t pay in PITI so no way could they remain in the house as a tenant. And anyone else would have to be a bloody fool to rent that when you could buy something just like it and have a PITI of $452!!! Maximum – absolute maximum that house would command in rent around here is $800.

The numbers D-o N-o-t W-o-r-k.

I suspect that it would work out pretty much the same anywhere. The rent needed by a large investor/lender-landlord would be more than the property could support if purchase for what a buyer-occupant would pay for the property.

Silly idea. And keeping a defualting borrower/tenant in the house does mean it wil be maintained. They typically stopped doing maintenance long before the default. No reason they should or would pay for the maintenance as tenants. And the investore/lender landlord sure isn’t going to sink money into the property for things like new windows, repaving a drive, etc. The properties will continue to deteriorate.

Neither the numbers nor the fantasy the the former-owner-now tenant will ‘keep up the property’ work in reality.

Posted by onthelake | Report as abusive

But once that has happened, there’s no need to kick the homeowner out of the house. Instead, rent the house back to the homeowner at market rates.

__

You can do arthimetic can’t you?

You do understand that property insurance and property taxes are MORE for rental properties than owner occupied properties don’t you?

I was discussing this nonsense with a premier econ blogger the other night. Here are the numbers and here is why this silliness of ‘keep the finacially insolvent house debtor in the house as a tenant’ WILL NOT WORK.

(1) Investor owned residences will be hit with both high property taxes and higher insurance costs since they would not be owner occupied

(2) Maintenance would be difficult and probably more expensive. Typically a SFR that is a rental property is owned by someone in a community. They can zip over and fix a faucet or do other minor jobs. Large investors would be footing more hefty bills for maintenance as they would be calling in a contractor for every leaky faucet or loose gutter. The former owner-now tenant certainly wouldn’t maintain the property because (a) they probably couldn’t afford to do so (see below as to how the rent will be substantially more than PITI for a new resident owner) and they lost the house because of financial problems and (b) why would they when merely tenants?

Ergo, one of two things would happen: (a) Maintenance would not get done and the property would deteriorate driving down neighboring values; or (b) Rent would be jacked up considerably to cover the higher maintenance costs for always bringing in the contractor.

(3) Large ‘investors’ would not be located in the community – like the person who owns some SFR and rents them out – and would have to hire management companies who would charge a fee.

Start off with the fact that very few Single Family Residences can actually have a positive cash-flow. Now add that the purchase price will be at Fair Market Value. Now add in the higher taxes and insurance costs of a non-resident owner. Now add in the higher maintenance costs of always contracting out every leaky faucet. Now add in the property management company fees – around here 10% of rent. Now add in that the investor/lender-owner wants at least some profit All that adds up to a much higher rent which would probably be difficult for the defaulting borrower.

Here is an examples from around here – cute little 100+ year old farmhouse of 1800 sq ft with 4 bdrms and 2 baths nicely restored on 1 acre with a 2 car garage with gorgeous original hardwood floors, huge 100+ year old trees, new kitchen and baths with oak cabinetry and ceramic tile , insulation, furnace etc. Good example of a well-maintained home that is affordable to the median household income of $39,000 and the median earned household income of only $24,000 (tourist economy) in the county at an REO (foreclosure) list price tag of $95K.

Borrower owed $135,000 . Fannnie MAe sold it for $90,000 and, after carrying costs and closing costs (taxes and insurance while waiting to get possession after auction, realtor, closing costs and 3 ½% to buyer’s closing costs) would have netted about $78,000 from the sale.

The value of the money for its purchase price has to be factored in. If using borrowed money, it would be $377 a month in PI (and odds are it would be borrowed to fund bulk purchases of REOS.) Even purchase price was not actually paid , there is still the diverted earning potential of the $90,000, so call the I of PI value around $125 a month.

Property taxes for a resident owner would be $86 a month but for a non-resident owner it would be $176.

Property insurance for a resident owner in this area would be as low as $40 a month but for a non-resident landlord it would be $100 a month. (Yep – not having earthquakes or hurricanes or any crime rate beyond people growing pot, $50 a month with a $500 deductible and $300,000 replacement coverage is typical for owner-occupied.)

Maintenance costs – allow $100 a month

PI $377 + taxes $176 + insurance $100 + Maintenance $100 = $753 + profit $325 (assume 5% of purchase price or $3900 a year ÷ 12) = $1078 ÷ .9 (10% property management company fee) = RENT of $1197 ($1200 a month)

Let’s assume the defaulting borrower had a 30 year mortgage at 7%. That would be a PI of $898 + the $86 in taxes + the $40 property insurance = $1024.

If the defaulting borrower couldn’t pay $1024 a month, how in hell are they going to pay $1200???

I can run example after example of REO-foreclosures on single family properties around here and get exactly the same result.

On this example, the large investor would want a rent that is higher than what the defaulting borrower couldn’t pay in PITI so no way could they remain in the house as a tenant. And anyone else would have to be a bloody fool to rent that when you could buy something just like it and have a PITI of $452!!! Maximum – absolute maximum that house would command in rent around here is $800.

The numbers D-o N-o-t W-o-r-k.

I suspect that it would work out pretty much the same anywhere. The rent needed by a large investor/lender-landlord would be more than the property could support if purchase for what a buyer-occupant would pay for the property.

Silly idea. And keeping a defualting borrower/tenant in the house does mean it wil be maintained. They typically stopped doing maintenance long before the default. No reason they should or would pay for the maintenance as tenants. And the investore/lender landlord sure isn’t going to sink money into the property for things like new windows, repaving a drive, etc. The properties will continue to deteriorate.

Neither the numbers nor the fantasy the the former-owner-now tenant will ‘keep up the property’ work in reality.

Posted by onthelake | Report as abusive

Sorry – miskeyed. The buyer-owner-occupant of the REO property in the example would have a PITI of $575, not $452.

$575 for a buyer of it as an REO vs over $1200 in rent to cover the carrying costs for the lender/landlord.

Do the math..

Posted by onthelake | Report as abusive

From strictly a legal, clear-title perspective, I see many potential problems. When the title is clear but for one first mortgage, those are minimized, but that is often not the case. If an actual foreclosure is completed, that will clear off second mortgages and some other junior liens, but will not relieve the owner from liability on the related debts, and there is nothing that even the most cooperative first mortgage holder can do to help with that. We have an established legal mechanism that could easily be modified to deal with this situation very effectively: Chapter 13 reorganization under the bankruptcy laws. However, too many well-placed people, notably President Geithner, refuse to contemplate it.

Posted by kenjd | Report as abusive

@onthelake, I’m really confused by your calculations. I’ve never heard of a rental property where 25% of monthly rent is profit (325/1200). I’ve also never heard of property taxes being different based on who owns a property.

Posted by Harpstein | Report as abusive

To onthelake,

Maintenance costs of $100/month for a 100 year old house seem a real underestimate IMO, and I have some experience in the matter.

But your larger point is well taken. The math doesn’t work. Unless you are going to give the investor/bank a tax break to participate, but that just drives taxes up on the neighbors, who are already paying more than their share.

Again, if you are going to rent the foreclosure out it should be available to all at a fair market rate and there should be no special deals for developers/landlords. We know these things tend to become permanent (see the higher limits on conforming loans for just the most recent example).

The more foreclosures there are, the more rentals or cheap deals there will be available for those in the market (including the foreclosed upon). THAT will clear the market faster and more fairly for everyone.

Posted by LadyGodiva | Report as abusive

Here’s the bottom line. The consumer, and particularly the middle class cannot, will not begin to consume again until the deleveraging cycle is over and done. Intervening to accelerate that process is a good idea. The banks scream moral hazard, but their argument fails in light of TARP and two rounds of QE that have allowed the banks to book phantom profits based on the spread between a zero cost of capital and interest income on zombie loans that will never be repaid.

Posted by Jollyrodgers | Report as abusive

“Mass foreclosures, along with the subsequent fire-sales of distressed property, devastate real-estate values; anything which can bring those numbers down is going to be good for the housing market.”

Are we still seeing “mass foreclosures”? We’re certainly seeing more than a decade ago (foreclosure is almost impossible when real estate prices are rising rapidly), but I’ve gotten the impression that it is settling down.

Still have more houses than we have people to live in them, especially in some areas, but this kind of financial engineering won’t cure that problem. Only things that will:
(1) Getting more money into the hands of young people.
(2) Letting home prices continue to fall.

Posted by TFF | Report as abusive

The short-sale/buyback maneuver has merit, especially if you can break the former investors free from the obligation. I’m not surprised that Newbery has had so much success with it that he’s setting up a fund. The important thing to remember is that a lot of people who are in bad loans or headed for foreclosure did in fact think of the home as an investment, not just as a place to live. Ironically, this could make them more inclined to keep the property up.

Posted by mattdebord | Report as abusive

@Harpstein, in some jurisdictions there are different tax rates in some scenarios based on whether or not the house is owner-occupied. Here in Baltimore it’s called a “homeowner tax credit.” My wife bought our house just before the property bubble inflated here in 2001; the value has been reassessed every three years, and it’s now worth about 250% more than what she paid for it, even post-bust, but the homeowner tax credit means that our taxes can only go up a maximum of 4 percent per year, so we’re still paying about half of what the taxes would otherwise be for our assessment. If we moved out of the house and used it as a rental property, we’d lose the tax credit, and the taxes would go up almost $2K a year.

Posted by jfruh | Report as abusive

@onthelake, I’m really confused by your calculations. I’ve never heard of a rental property where 25% of monthly rent is profit (325/1200). I’ve also never heard of property taxes being different based on who owns a property.

Posted by Harpstein | Report as abusive

_

It most certainly is different tax rates depedning upon who LIVES in the property they own in nearly every state in the country.

It is often called a ‘homestead credit.’ If a property is owner-occupied (we are talking single-family here – not a duplex or apartment building), then the effective tax is less. It is either by a ‘credit’ – typically a percentage of the tax bill or by using a different tax rate.

That can be a huge difference. We pay $35.4298 per $1000 of assessed value (which 1/2 of the estimated market value) of the house. My next-door-neighbor who does not reside here as his primary residence pays $53.4298 per $1000 of assessed value. He is NOT an owner-occupant as it is not his primary home but a 2nd home. Ditto rental properties.

BTW, 5% a year profit on the purchase price of a property is a typical return on rental prpoerty. Put $90,000 into this Single Family Residence, expect to earn a net profit of around $3900 – and that is net which means after maintenance and operational costs and carrying costs.

__

ladyGodiva – Maintenance costs of $100/month for a 100 year old house seem a real underestimate IMO,

I used $100 a month on this property as it had been completely restored (furnace, fixtures, windows etc) only 7-8 years ago. (You must have missed that sentence in the original post…..) It is as close as it can be to being in ‘nearly new’ condition.

My family still owns the family’s original home after they left Plymouth, MA for “the west” built in 1812, my grandfather’s Folk Victorian built in 1860, my great-grandparent’s 1882 Queen Family and my other grandparent’s 1925 Tudor Revival…… talk about maintenance costs…..yieee…LOL! And I keep buying houses that are always pre-WWII since they have more character and are better built.

Posted by onthelake | Report as abusive

Unless you’re an elected Democrat, in which case now is the time – much as it has been for the past thirty-five years – for principle reductions.

Und so weiter…

Posted by larsolsson | Report as abusive

“Jorge Newbery, of American Homeowner Preservation, tried his own version of the plan…
…which involves buying up pools of distressed mortgages himself, and then working them out with himself as the mortgage holder. That has been so successful and profitable that he’s setting up a socially-responsible hedge fund designed to do these workouts at scale.”

I completely support actions like the one described aboves. I completely oppose using the living dead GSE’s to artifically reflate home prices by allowing re-fi’s on terms more favorable than they will allow on new purchaces.

Posted by y2kurtus | Report as abusive

Remarkable what can happen when we knock it off with the name calling and start trying to find practical solutions to actual problems. Own-to-rent looks exactly like one of them.

Posted by borisjimski | Report as abusive

@Lady Godiva

You misunderstand those who after three years of being underwater in their mortgages. I can speak with some authority on the matter because my mortgage is underwater.

I have a good job and I have never made a late payment on anything. I resent be called a deadbeat. The deadbeats and those who lost their jobs through no fault of their own were long ago washed out of the real estate market.

The Mortgage Bankers Association did a short sale on their new headquarters in Washington, DC before most Americans knew what a short sale was. Did you angrily refer to them as deadbeats?

My 50K down payment is gone. Do you angrily refer to the people whose fraudulent activities caused my property value to collapse as criminals? Those of us who remain current on our mortgages even though there is no mathematical reason to do so deserve a little respect.

That said, I can’t do this indefinitely. I’m getting older. Don’t worry about me. I have managed my other investments well and I have a arranged a good retirement, but my plan was to sell this house. Even if I don’t sell it, I will eventually not outlive my mortgage. You can refer to me as a deadbeat then, if you wish. When I’m dead, I won’t mind.

Felix’s assertion remains intact. It’s to your advantage as a property owner and as a participant in this economy to allow a principal reduction in underwater mortgages.

Posted by breezinthru | Report as abusive

“my plan was to sell this house”

Maybe you should have planned to LIVE in the house? If more people thought that way, and fewer people bought with the intention to flip at a profit, then the bubble would never have inflated in the first place. A home is not an investment, it is part of your household consumption.

“Do you angrily refer to the people whose fraudulent activities caused my property value to collapse as criminals?”

Don’t you have it backwards? The fraudulent activity (on the part of banks, borrowers, brokers, and everybody else involved) caused the property values to *RISE* to levels that were completely unrealistic.

Real estate prices need to come down for the health of the economy. You can’t have people spending more than half their income on housing. It leaves them no margin for error.

I have no objection to principal reductions. That is between you and your bank. I only object to being asked to pay for them out of my own pocket.

Posted by TFF | Report as abusive

I did plan to live in the house and I am… until I reach retirement age. I did not intend to flip it. The absence of liquidity in the real estate market is no fault of mine.

I also believe that you should not be required to make me whole. I think those who caused the problem should be tried under RICO laws under which the perpetrators assets can be confiscated and the proceeds should go to those who have been harmed.

Posted by breezinthru | Report as abusive

Ah, Hubris. I owe an apology to Lady Godiva. I didn’t read her entire post. It was thoughtful, though I agree with Felix Simon on this matter.

The first sentence triggered my temper. Sorry.

Posted by breezinthru | Report as abusive

“I think those who caused the problem should be tried under RICO laws under which the perpetrators assets can be confiscated and the proceeds should go to those who have been harmed.”

Works for me… But who ended up with the bulk of the assets from the spiraling home prices?

* Those who sold (or downsized) at the peak of the bubble.
–or–
* The builders who put a steady supply of new homes on the market at premium prices.

And in neither case were their actions what I would consider to be fraudulent. In retrospect, nobody should have been paying those prices in the first place. But given people’s willingness to pay those prices, it is hard to fault the suppliers for profiting from it.

The banks acted to enable the illness, loaning on too-generous terms, but they’ve already paid heavily for that mistake. (Look at the share price of C or BAC these days.) The executives and employees grabbed their bonuses and ran, but again most of them were just doing what the buyers/sellers asked of them, not deliberately defrauding anybody.

The whole system was sick for half a decade, from the POTUS on down.

Posted by TFF | Report as abusive

Breezinthru,
No need to apologize. I fully empathize with your plight, because not long ago it was my own. We too were underwater on our home, husband lost his job, got a new one that paid much less…well, you read the papers. I won’t bore you.

I would not object if there were principal reductions, so long as the loans were otherwise viable, so long as they did not go to liar’s loans, and a few other caveats. It might help some people (I hope you). But I’d be very careful, if I were to be offered one. Is it enough to make the loan viable? What about property taxes? The devil is in the details.

I do think it’s time to move from a search for ONE solution to a flexible plan that helps everyone get where they need to go and helps housing as a whole heal itself. I don’t see this as the “big idea” it’s credited with here, sorry Felix. Lots of people need and want to move, not stay. Above all, their income and expenses need to be aligned. They’ve been out of whack far too long. The uptick in defaults for last quarter signals the ice breaking after a long strain.

TFF, I don’t think you understand who profited from the bubble on the way up, and on the way down. Anyone who can say that banks “paid heavily” for their mistakes is not to be taken seriously. You paid heavily for their mistakes. They did not.

Posted by LadyGodiva | Report as abusive

LadyGodiva, you are mistaken. The bank owners, the shareholders paid heavily. BAC is down 80% over the last ten years, C is down 93%. Won’t find quotes on WB these days, and WM has been recycled. Bear Stearns and Lehman folded, Merrill was forced to sell at a discount.

The bank executives were rewarded handsomely with bonuses while the bubble expanded, then side-stepped the damage from the collapse. You could argue that they raided the institutions they were entrusted to manage, perhaps.

But the banks themselves? A fragile shell of what they were ten years ago. Hard to take you seriously if you deny that obvious truth.

Posted by TFF | Report as abusive

If you or a friend is like the estimated 1 in 4 California Homeowners who owe more on their home than it is worth. Our Fresh Start Program allows an underwater homeowner to Own their Home at “Today’s Market Value” and Eliminate their Negative Equity!  

Today, many homeowners are overpaying on an existing mortgage in hopes that someday the home value will recover, or they have decided that not paying is an option because it really makes no economic or business sense to continue to overpay on a devalued asset.

Take less than 3 minutes to watch a quick video that provides you with an overview of this Fresh Start program: http://vimeo.com/31786629

We are NOT associated with any Government Program. I’m sure you are aware of the Obama Administration’s New Housing Plan turned out to be a Disappointment for Millions as it WILL NOT do principal reductions.

Our legal counsel, Gerachi Law Firm, has reviewed our program and states the following: “The Fresh Start program is straightforward, legal and transparent and has undergone extensive legal review”

If you or a friend of yours is serious about keeping their home and would like to discuss our program, my schedule is very busy so I will not be viewing this website anytime soon. However, I will be more than happy to answer any questions that you may have by sending me an e-mail to: equityrecovery@877the1stop.com

Warmest Regards,
Ross Beal
Janus Group Inc.

P.S. We pay referral fees too

Posted by 1EquityRecovery | Report as abusive

Principle reductions for all home owners-ok, those that don’t own homes can pay for it! Socialist & communist love their wealth redistribution schemes-it’s a power thing! What’s next-Cash for Cons?

Posted by DrJJJJ | Report as abusive

Rent to own does make sense, but I’m guessing too many will want something for nothin here!

Posted by DrJJJJ | Report as abusive

you guys must assume that we folks who do the deals are morons…
.
We take all the factors mentioned above in deciding if a lease/buy-back is good for…me…Newbery…the homeowner…
.
My first deal…Loan $209,000 … Acquisition $61,000 …
Re-buy is $78,500 all (5) yrs…typical deal…
.
Market value maybe 90k… Nothing the bank can do about it… They gave up and salvaged what they could…
(Guess they didn’t get this one sold to Freddie soon enough…heh)
The bank can NOT command anyone to pay them 209k… Y—lost the homeowner exemption…Do I sound stupid…? That’s factored in… (2) years later… All ok… Typical deal…
I haven’t lost anyone so far out of quite a few deals….but…am foreclosing on one in Michigan… Gonna make ton$$ after we kick them out…but…they were offered a reasonable deal… got a lawyer…declared bankruptcy… Now we are just wading through the court proceedings as their equity gets eaten up with lates and no pays… sigh…
23 years in their condo …and…listened to the f*****g lawyer…dumb dumb dumb…
.
Does it cascade as Mark’s neighbors learn of his deal…
I’m thinking yes…
.
but here’s a personal opinion… The dollar is doomed over time…
.
Levis 501s cost $3.25 in Casper, Wyo in 1954…Now $30 or so…
Comic books were 10 cents back in 1940…
http://en.wikipedia.org/wiki/Whiz_Comics …Now $2.99 (yes, I checked this price) …
Multiple choice question….
Do you think a Batman comic book will cost $90.oo someday…?
…or…
will the dollar and the American dream crash first…
..
I pay 100% cash for my houses… notes I’ve bought…loans to developers…Bring your money, honey…Analyze each deal separately…and… btw… you can trust Geo…

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