Home Loans and Support

Is Cheerleading Appropriate

Discussion in 'Deed in Lieu of Foreclosure - Do You Need Help to ' started by ProfessorShays, Mar 23, 2009.

  1. ProfessorShays

    ProfessorShays LoanSafe Member

    On occasion I go to the other forums to see how things are going. What I continue to find is frustration, coupled with the occasional success story, but I have to question whether or not the word "success" is being too liberally applied.

    I honestly do not believe that "success" should be earmarked to a situation where the borrower's foreclosure is delayed through some sort of "delay at a cost," where that cost is greater than the fair rental value of the property. Whether it is defined by the term deferment, modification, or some other descriptive term, we are being told by a recent HOPE study that the adjustments in loan terms, when extended out for a period of six (6) months, fail and the property is back in "non-performing" status about 40% of the time.

    From where I sit, extending "hope" where the failure rate is this high tells me that some triage effort should be instituted, not wasting time on situations where the property is hopelessly under water and the borrower's income is hopelessly inadequate. Providing "hope" simply because no one wants to server the role of judge, jury, and executioner, isn't right.

    So, what do the rest of you think? Should a suggestion be made to Moe, Cat, et al., that responsible of moderating these forums includes evaluating situations and suggesting that sometimes given circumstances the best thing to do is just to allow the foreclosure process to continue unimpeded?

    "Hope is nature's veil for hiding truth's nakedness." Alfred Bernhard Nobel

    Daniel
  2. baileys dad

    baileys dad LoanSafe Member

    First, I would want to know a little more about HOPE's analysis. From what I heard on this forum, they have been a little less than helpful in aiding homeowners. So, assuming that there numbers are valid, Ibelieve that such advise from the moderators might be helpful. That being said, the advise might go in one ear and out the other as we are talking about a very emotional subject, people's homes.
    If you designed a mini-spreadsheet, where people could input their data (purchase price, loan amount, current house value and estimated time to recoup lost value) vs renting and plowing the savings into a down payment for the next house, where people could see that it would make more sense to walk or not...
    I essentially did that and I am trying to stay despite the analysis. Like I said, an emotional subject....
    (nice quote, by the way)
  3. dogatemy

    dogatemy LoanSafe Member

    I agree with Bailey. I think the decision to allow a foreclosure or not tends to be more emotional than financial. The spreadsheet may clarify the real costs/benefits but I doubt it would chance someone's opinion regarding the successful (or unsuccessful) outcome of a negotiation with a lender.

    I routinely argue with my friends / coworkers / family about the myths of a mortgage. For example.. some feel it is a good idea to extend a mortgage from 30 to 40 years if it keeps someone in their home without regard for age, income, location, home value or market rates for rentals. I also have friends who refuse to pay off their mortgage because they will loose a tax deduction (even if $6000/year in interest only leads to a $900 tax reduction) but instead opt to leave cash in their savings with a return of 1%.

    There should be a sticky warning about any organization who may not be getting people the best value for their financial and emotional needs. If there is suspicion about HOPE then a sticky containing a warning at the top of the forum should suffice.
  4. helpinNE

    helpinNE LoanSafe Member

    I have to agree with Prof. Shays. Some of the posts are from people who clearly should not have been given the loans in the dollar amounts they were and there is no way that paying interest only at 3% is ever going to get them anywhere. Plain and simple, hard fact is some people just need to let the foreclosure happen and move on. Do not run through all your savings and 401k just to put a band aid on a problem because it is not a long term solution.
    For most people, these mods are only short term solutions, lasting 3-5 years and then the interest starts to readjust up again. Plus, you are still only paying interest on a loan, probably on a house that is way underwater and will not regain its value in that time period for a person to refi.
    I know it is an emotional decision for some people but I do not think you do anyone any justice to offer false hope. Sometimes, what people NEED to hear is NOT what they want to hear.
  5. dogatemy

    dogatemy LoanSafe Member

    I personally believe there should be a general ban on ARMs and interest only loans. They are not beneficial for the homeowner or housing market. You would think the banks would have learned by now too.
  6. cactus77727

    cactus77727 LoanSafe Member

    Hmm, how come I get the weird feeling you are talking about me there Professor? :eek:

    I am so glad you made this post Professor. It's been my thoughts exactly. Many times, I've read a new story from someone where I thought this poor soul needs to go directly to the walk away forum. I don't post, because maybe they haven't exhausted all possibilities. BUT when the numbers are obviously indicating 'walk away', people need to act swiftly, or they will waste several months of payments down the drain. I wasted $6000 in savings, and now have $7000 in credit card debt because I delayed walking for 2 or 3 months. I was in denial at the time. It is so obvious now.

    Some of the terms of mods, I just don't get. 'I saved my house' (emotion), but the terms of the deal (business) outright stink.

    I think everyone needs to see a loan modification as if they are RE-PURCHASING their own home. Why the heck would you buy a home for $250000 when it is only worth $125000?
    Plus tack on all the late fees, attorney fees, servicing fees, on and on, to the back end of the loan. Now that $125k house just cost you $270k or worse. And that doesn't even count the extra interest you will pay over the life of the loan. Massive.

    Because I'm a walker, I now try to stay out of the modder forums. I just can't take it anymore. Since this post is in the walk away forum, I'll say this: I occasionally peak into a modders forum, and it looks like opening the door to an all out bottle and chair throwing bar fight. Or more accurately, a horrible battle field where the servicers and banks are mowing down the people with machine gun fire.

    Choose your battles. Sometimes, it's better to fallback, regroup, and live to fight another day.

    And my opinion is, cheerleading is inappropriate in these circumstances. The same as it would be inappropriate after a severe car accident. Swift, focused, careful, deliberate action is required. Hope and emotions have no use at that instant in time. By the way, don't remove your seatbelt and step out of the wreck, until you are sure the danger is over.

    And the spreadsheet idea is great.
  7. KT in CA

    KT in CA LoanSafe Member

    I agree. I read how people say they were successful because they got a mod for 2 years or 3 years. How is that a success? You are prolonging the inevitable, and is precisely why we did not go for a mod or help of any kind. I am someone who sees things in black or white, so I knew there was no gray area for us. We could either pay and put ourselves more into the poor house and have a miserable life, or not pay and be able to live and breathe again, but hanging out in the gray mod area for 2 or 3 years waiting to go through it all over again and continuing to throw money away wasn't where we wanted to be. And with what in the end? Nothing.

    I think the absolute best advice you have given all of us who have found a home in this forum is that we need to see it as a business decision. That really put it into perspective for us personally, and I know for most of the other people here. There are a lot of taboos from society some people have a hard time overcoming. Like we are all a bunch of loser slackers because we have walked away. We are part of the problem and not part of the solution. Yeah, whatever. The media also adds insult to injury by misleading people into thinking there is real help out there and that the lenders are working with people. We know all of the hundreds of stories too well.

    It is interesting to me how people really truly believe what the media says. My aunt is very supportive, but at the same time she peppered me with questions about why we are doing this when the news says the banks are helping people. After I shared the many stories of my friends here, and what the real truth is that the media is not reporting, she was surprised to say the least.

    I agree about some kind of spreadsheet too. Maybe if people could see on paper the reality of their situation it would help them. But in the end some people need to realize that there is no happy ending. They need to pick themselves up, dust themselves off, and start all over again. Just like all of us are doing in this forum.
  8. Enough Already

    Enough Already LoanSafe Member

    I agree. The sooner people can face the facts, and make the hard decisions the better off they'll be. I haven't seen one loan mod that was anything more than a band aid.

    I also agree that the interest only loans should be banned, along with the 80/20 loans. If a person doesn't have the money for a big down payment they should not take out the loan.

    It is an emotional subject, but one really does have to view it as business decision. A spread sheet is a great way to do that. Once we had the numbers all down in black and white the decision was obvious.
  9. Moe

    Moe Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    How can you all define ones success? How can you sit back and judge what is good for someone and what is not if you are not that person?

    That is my only question and I hope "Mr. Professor" and the rest who side with him can explain this because I am at a loss of words?
  10. ClueLess

    ClueLess LoanSafe Member

  11. ProfessorShays

    ProfessorShays LoanSafe Member

    Moe:

    In an email discussion I had with Cat this afternoon, I responded to her email by saying:

    "I guess my point in this posting was that I see so many people unwilling to accept the truth. That is they continue to bleed themselves dry, hanging on to that home as it continues to slide in value, sinking ever so deeper into the abyss while they think they can re-float it. It is one thing to have the forum available. It is another to suggest that while they are working so hard to modify their loan with an uncooperative lender, perhaps they should take the 30,000 foot view of their situation as it relates to the future by stopping by the "Walk Away" forum. Better to sell knowledge than hope. My belief is that both sides of the coin (walk away vs. modification) need to be measured before any forum participant can make an informed decision. And the goal should be for forum participants to succeed with that success being measured not by the outcome, but whether or not they make an informed decision. My $0.02......"

    Little more that I can add except to point out the "Success Stories" forum that "is dedicated to the homeowners who were facing foreclosure and fought back to win the battle against their lenders. I hope to add many more stories here as times goes by. Please let us know if you have a success story that you can share to give others encouragement to keep fighting!"

    Success in this identified forum seems solely focused on retaining your residence, irrespective of the terms of resolution. I would suggest those participants in the "Walk Away" forum who surrender to the realities of their situation and share with us the road they are traveling are tasting success and in many instances a less foolish success than those choosing to retain their homes "at any cost."

    Daniel
  12. cdmosaic

    cdmosaic LoanSafe Member

    I see your point Moe that success is in the eye of the beholder. But in actuality I have had the same thoughts reading through the loan mod forums. Clearly bad deals that are only at the benefit of the lender and will most likely fail in the end after even more heartache is suffered by the homeowners and more money wasted. Is that a success in the long run? Sometimes the truth sucks and the best decision is the most difficult.

    I agree with the Professor and everyone else who posted here that it is time to drop the fallacy of loan mods that really only benefit the servicer and and lender and look at the cold hard numbers. If an individual chooses to make the wrong choice in the long run to save their home in the short run, that is their choice and why I don’t offer my two cents to them, but is it in their best interest to foster that fallacy? Or time to deal with the cold harsh reality we all face?

    Bitter medicine – might as well get it over with instead of procrastinating. Always better to have all the facts at hand, as hard as they may be to accept.
  13. Yanqui

    Yanqui LoanSafe Member

    "Ones home is their biggest investment for their future"
    Ones home is their sheltered castle. It's the "American Dream" the only way I'll stay in my home is with principle reduction and 2% interest rate with a 40 year extended loan. It's cheaper then rent, and it's the home I want to live in for the next ten years. That's how I see it and if it doesn't happen it doesn't happen. There were alot of things that were wrong in this preceding the crash. One I keep thinking about is the builder I bought from filing for bankruptcy after we closed on my home and the realtor wanting to be a silent partner and the empty lots and the tax and cw and hoa raising the rates over two years while everything falls apart.

    I just want to stay in my home near my daughters and go back to work.
    Everything is different now. Society and the government have become something I want no part of anymore.
  14. Moe

    Moe Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    I believe in balanced opinions with no personal attacks. So, be my guest but watch yourselves and the words you choose please. Careful, emotional ground there folks....

    Quick question before bed, "Have either of you worked with homeowners (counseled) on these types of decisions in a one on one environment for any length of time?" Just curious......
  15. deb64

    deb64 LoanSafe Member

    I realize that it is an emotional decision for many, but it shouldn't be. In my opinion, the first step should always be laying out the cold, hard, facts. Income. Expenses. The amount owed on the mortgage. The present value of the home. The rate at which home prices have historically risen, and the rate at which they might realistically be expected to rise in the future - taking into consideration past real-estate cycles, current events, and the best-guess future. The expected cost of needed repairs/maintenance. Etc.

    What helped us make our decision was to set up some Excel spreadsheets. We made some assumptions about when we felt RE values might stabilize, and some assumptions about what might be reasonable rates of increase of our home value (1%, 3%, flat, etc) over time. We set up spreadsheets showing various scenarios. Then we compared these scenarios to our mortgage amoritization schedule and looked at when the value of our home might once again be worth at least what we owed on the mortgage. In our best-case scenario, which wasn't even realistic (values won't drop lower than they are today, values will increase at 3% per year, every year from here on out), that day would come sometime in the range of the years 2018-2020.

    Keep in mind that at that point we would still not be able to recover any of our downpayment or other money that we have put into the house - it would simply be the point at which we could finally sell it for what we owed.

    And then we were able to see that no, it absolutely was not in our best interest to be eating beans & weenies and depleting our savings and college and retirement accounts in order to hold onto this house.

    There is nothing wrong with hope. Hope is good, as long as it is realistic. So the first thing to do should be to take a brutally honest look at facts, and then decide whether being "hopeful" is even in a person's best interest.

    Just my humble, non-professional opinion.
  16. ProfessorShays

    ProfessorShays LoanSafe Member

    If the "either one" includes me, then I would easily qualify, and continue to qualify, based upon my actions started in the early '70s that continue through today. I come to this forum with extensive experience relative to having advised borrowers feeling the pain associated with an economic downturn that hits residential ownership. I was present too in the late '70s, and early '90s, although I can honestly say this is much worse than either of those downturns.

    Perhaps that is why I'm such a realist. Experience tells me that this downturn still has at least another year and a half before we hit bottom. Experience also tells me that bottoms are flat, not the "V" shape many would like to believe. What that means to those trying to hold on until the market turns is they are in for a long wait. Too long to justify paying mortgage payments that greatly exceed the fair rental value of the property where the home is underwater in terms of equity.

    Daniel
  17. Enough Already

    Enough Already LoanSafe Member

    Well put Deb64. That's basically the same way we did it, and we came to the same decision.

    I don't mean to seem judgmental at all. I don't think anyone here does. I think it's more that we're looking at it from the stand point of the home owner, and their long term financial well being. I think Professor's point was more that if people could really look at the harsh realities, and make their decisions with as much knowledge and understanding possible, they would be better off in the long run.
  18. ProfessorShays

    ProfessorShays LoanSafe Member

    Enough Already:

    You have correctly identified the point I was trying to make. My goal in creating this thread was to suggest that forum leaders should focus more attention on advising those facing tough decisions to educate themselves as to the alternatives. If any of us need a reminder of just how bad things are, the following example that appeared in a AZ newspaper article today provides evidence.

    “Bob Ortega bought a foreclosed home in Queen Creek for $90,000 late last year. Similar homes in the area that aren’t in foreclosure were listed for more than $150,000. But he had to buy a new stove, refrigerator, washer and dryer and then repaint and carpet the house. ‘The last owners must have been mad because they did some real damage,’ he said. ‘It was a big headache, but I think I ended up with a deal.’â€Â

    “Unfortunately, he is seeing other foreclosed homes in his neighborhood now selling for $10,000 to $20,000 lss than he paid.â€Â


    Daniel
  19. Moe

    Moe Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    I am open to all opinions and help for the homeowners that visit here.

    In order to properly accomplish what you would like to do with this forum, then we would have to literally analyze their entire financial situation. This would entail personally reviewing all financials, bank statements, W-2's, 10-99's, income and expense sheets, debt etc ALL before we can coach or recommend a person to walk away from their home.

    Our approach has always been to just offer free help and tools for people to make their own decisions with out swaying them or steering them to a loan modification or to walk away.

    I personally feel that encouraging people to walk away that come here for a loan modification that you have not properly counseled, have not reviewed their entire financial situation and do not have enough information to make that life changing situation is extremely foolish and would probally be the demise of this forum from ill informed homeowners who then bring litigation and lawsuits against us for steering them into something they did not want to do.

    Please explain how this can be done an an online environment properly without spending 3-5 hours in person with each member?
  20. Dan Bailey

    Dan Bailey Senior Member

    <sigh> If you ask anyone who knows me...even those who don't know me real well (like Moe) they will tell you I am the eternal pessimist. Although, I do try very hard to inject some hope and gratitude into my permanent cloud.

    I would never claim to have as much knowledge as either Moe, Cat or Prof Shays.

    At times, when I read peoples situations...I do see them mention the possibility of "walking away" along with their request of help and hope for a mod...when I see this-I refer them to Prof Shays and this section of the forum. As well as some possible things to do to "save the home"

    My father was a CPA for an extremely large international firm...a senior partner. He made millions. I know exactly what he would say if he were alive-to the situation in general, and my specific situation. He would agree with Prof. Shays.
    My great grandfather was an artist, mercenary, rode with Roosevelts Rough Riders...and I believe I know what he would say in this situation-he would agree with Moe.

    Both lived their lives the way they believed in.


    Me.....I'm a pessimist with hope. I know what may happen-but I will fight the bastards 'til the end. I think and make decisions with emotion(the artist in me) and at times it gets me in trouble financialy. (hence-my being here)I've also been a salvage captain...and would do stupid reckless things to keep a boat afloat-even knowing there was no profit...for the shear sake of knowing we did it.

    I'll keep pointing people both here(to this part of the forum) and to hope. Depending on what they mention in their intro post.

    Different strokes for different folks.

    My dad died with millions-and miserable full of regrets.

    Great Grandfather-dont know how he died...ran off to Morracco, dissappeared. Let behind medals , beautiful paintings of exotic places....I think he died happier. And poor.

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