Comments on: How to help underwater homeowners http://blogs.reuters.com/felix-salmon/2012/07/25/how-to-help-underwater-homeowners/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Janise Pych http://blogs.reuters.com/felix-salmon/2012/07/25/how-to-help-underwater-homeowners/comment-page-1/#comment-55308 Fri, 17 Oct 2014 16:14:24 +0000 http://blogs.reuters.com/felix-salmon/?p=16512#comment-55308 How i get an outside line? provera online college professional professional development. professional professional

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By: McLeo http://blogs.reuters.com/felix-salmon/2012/07/25/how-to-help-underwater-homeowners/comment-page-1/#comment-48976 Tue, 07 Jan 2014 21:01:45 +0000 http://blogs.reuters.com/felix-salmon/?p=16512#comment-48976 Revisiting this article as I am looking to buy another home. Its interesting to see the way the market has turned a corner and interest rates are climbing. I know many that hunkered down in their ‘underwater’ dwellings, choosing instead to ride out the waves and remodel! Personally I chose to rework my garage, inspired by sites like http://www.houzz.com, http://www.hgtv.com/topics/garage/index. com/index.html?layout=desktop, http://www.garageremodelguides.com.

Of course, my garage doesn’t resemble Tony Stark’s but I was able to remodel and get more use from the space. It provided a modest value increase and proved cathartic.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/07/25/how-to-help-underwater-homeowners/comment-page-1/#comment-42296 Sat, 04 Aug 2012 17:04:10 +0000 http://blogs.reuters.com/felix-salmon/?p=16512#comment-42296 @breezinthru, the POTUS isn’t the one footing the bill. I think the answer depends on the magnitude of writedowns and the degree to which that impacts the economy?

But it also depends on all working together. If one bank writes down their mortgages, the rest profit from the economic activity while the one which acted responsibly bears the losses (and needs years to rebuild its equity capital).

Too many different parties in play, with very different interests in the game. Those holding second mortgages want to drag it out as long as possible even if it ends in default. Those guaranteeing the first mortgages want to avoid default. The POTUS simply wants the issue resolved so we can move forward.

One resolution is to have the Treasury foot the bill (giving the banks a fat windfall as a reward for their misdeeds), but I prefer trying to put pressure on the banks to act for the greater good.

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By: breezinthru http://blogs.reuters.com/felix-salmon/2012/07/25/how-to-help-underwater-homeowners/comment-page-1/#comment-42293 Sat, 04 Aug 2012 10:37:22 +0000 http://blogs.reuters.com/felix-salmon/?p=16512#comment-42293 It occurs to me that the POTUS, the Treasury Secretary and several well-known economists would like me to win the game I’m playing against the banks because it will advance their goal of returning the US to economic health and advance their goal of maintaining or increasing political power.

Banks have a different objective of minimizing losses and maximizing profits, but it seems to me that banks would have more opportunities to make money in an economy that is thriving and growing.

Are the banks being short-sighted or do they not believe the POTUS’s plan will work or do they not want the POTUS’s plan to work because they like the other guy better?

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By: TFF http://blogs.reuters.com/felix-salmon/2012/07/25/how-to-help-underwater-homeowners/comment-page-1/#comment-42264 Thu, 02 Aug 2012 23:10:42 +0000 http://blogs.reuters.com/felix-salmon/?p=16512#comment-42264 @breezinthru, the game theory is most significant on a larger level. The banks very much want to maintain the “hazard” of default, by punishing the borrowers.

And that strategy appears to be working for them. Defaults are presently at a level they can sustain indefinitely (at least as long as their borrowing costs remain low). Banks have even started releasing loan loss reserves, as the anticipated heavy defaults haven’t wholly materialized.

They won’t abandon this strategy unless non-performing loans rise significantly from their present level. Then they might be more motivated to try something new.

As noted on the other thread, Fannie/Freddie guarantee the bulk of the first mortgages. The banks hold the second mortgages, which get creamed just as badly in a short sale as they do in a foreclosure. Further reason for the banks to drag their feet — and conflicting interests when it comes to loan modifications.

It is a royal mess, one we’ve all dealt with. But underwater homeowners have an option that minimizes their losses. They can walk away and dump the remainder of the loss on the bank. In that, they are better off than homeowners who are not underwater.

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By: breezinthru http://blogs.reuters.com/felix-salmon/2012/07/25/how-to-help-underwater-homeowners/comment-page-1/#comment-42222 Thu, 02 Aug 2012 05:58:19 +0000 http://blogs.reuters.com/felix-salmon/?p=16512#comment-42222 The game theory aspect makes sense to me but theory doesn’t always translate into the real world. I know some people who have walked away, including the neighbors on both sides of me. In both cases, the bank didn’t make any effort at option 2 or 3. The banks repossessed the home, put a roof on one house and a new furnace in the other, hired a company to maintain the property and hired a realtor. It appears that option 2 is significantly more expensive to the bank than option 3.

Both cases next door went option 1, foreclosure, so the banks did a poor job of looking out for their own best interest.

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