For those that keep saying, "the banks don't want to own my house"..

[HHM]

I can't count how many times I have read in here, "the bank doesn't want your house" etc. Foreclosures are at record levels for a reason, banks are still foreclosing.

Here is an interesting read on why banks are still foreclosing
http://www.************************/...and-principal/

In summary, everyone seems to forget about Purchase Mortgage Insurance. Everytime a bank forecloses, what ever their actual costs and loss gets submitted as a claim to the Mortgage Insureror (FHA, AIG, etc).

[Lajazz947]

Thanks, now a question.

I can't count how many times I have read in here, "the bank doesn't want your house" etc. Foreclosures are at record levels for a reason, banks are still foreclosing.

Here is an interesting read on why banks are still foreclosing
http://www.************************/...and-principal/

In summary, everyone seems to forget about Purchase Mortgage Insurance. Everytime a bank forecloses, what ever their actual costs and loss gets submitted as a claim to the Mortgage Insurere (FHA, AIG, etc).

So, how does one find out if his/her loan is subject to that insurance.

If all loans are then why are some banks modifying and others not.

Wachovia tells me that they are working on a loan mod program.

Thanks for this valuable post. The article is interesting.

[justbroke]

Yeah, HHM... they don't want the house... they want the money (insurance)! LOL

The real thing is, that they don't want this illiquid assets (that are questionable) on their books anymore. Foreclosure certainly helps speed that up as I believe the secondary market (where they use to sell the loans or collateralize them into nice marketable securities) is all gone.

[fltoo]

So, how does one find out if his/her loan is subject to that insurance.

If all loans are then why are some banks modifying and others not.

Wachovia tells me that they are working on a loan mod program.

Thanks for this valuable post. The article is interesting.

You will have MIP if you have a FHA loan where you pay for the mortgage insurance but it is insured through the government.

PMI (Private Mortgage Insurance)is insurance through private companies and you will know if you have it because you are paying the premium every month.

If you put 20% down on your house when you bought it, your lender will be more agreeable to a mod because the loan is not insured.

[HHM]

Three problems with loan mods:

1. The loan servicers actually make more money when they foreclose because of the contract fees paid by the note holders.

2. The note holder, 8 times out of 10, have insured against the loss.

3. Even if you qualify for a loan mod, the bank can still deny you the mod, granting a loan mod is ENTIRELY up to the lending institution.

Note, that doesn't mean that some loans will be granted a mod...some of the government incentives can over come this reality.

[fltoo]

Don't know the stats, but I am going to take a stab at a guess that only about 10% of mortgages have mortgage insurance. I will have to look that up.

This last wave of financing offered the "soft second" which eliminated the need for PMI. Basically the lender was giving you a mortgage and a home equity loan at the same time.

I notice lenders doing mods on the neg ams. Hell, they got enough interest and added enough to the principle every month. They are lowering the rate and making it fixed, but are not lowering the balance.

This housing downturn is so very different from the one in the 80s for so many reasons. I see it lasting longer than back then.

The note holder, 8 times out of 10, have insured against the loss

[albacore44]

I was able to keep from paying PMI, as the price of homes were increasing so fast , I always had equity. I refid my HELOC 5 times through the same broker from 2003-2007. He would call and tell me he could do it "no cost" out of my pocket and up the avaliable cash another $20-$40K, and always keeping me at about 25% equity, and always with no income verification due to the equity. so I said sure as long as the Int rate stayed the same or better. Ohh how blind I was. That 25% equity has turned to $100-200K upside down, and it seems like the whole neighborhood is giving up their homes.

[StartingOver08]

fltoo, I have to disagree with you on the MI. I agree that borrower paid MI is low - but I did find out that the lenders themselves purchased BLANKET MI for the loans in order to sell the loans. They purchased blanket mortgage insurance to 'upgrade' the credit risk. Doesn't this sound familiar?

I found this out with the multitude of short sale deals being negotiated with the 1st mtg, 2nd mtg and the mortgage insurer. Not just my customers and clients - but of course I don't have stats for the entire US. And then I experienced it personally whet my rental property when into foreclosure and I spoke directly to the negotiator for the MI company. My LTV at the time of the loan was 75%. No second.

In fact, the lenders were not cooperative because of the MI. Now, if the loan was issued early on (don't know the exact turning point, but it seems to be before 2000-2001), then the blanket mortgage insurance is probably not there.

[fltoo]

Don't know at all, but guessing that number is not too high either. It is pretty mess and expensive insurance for a lender.

I ran into it with a Countrywide loan.

[imbarbara6]

How come they can sue you and get a deficiency judgement against you if you have been paying for mortgage insurance? Doesn't seem right because appaarently they are going to get all their money from the insurance company so what are they suing you for?

[krhsierra]

Feeling stupid!

Hello!
I was trying to modify my loan with indymac, and it was going no where. I really thought they were trying to help me, and long story short, I came home from work to find a 3-day quit notice on my door. I didn't even know the house was being sold. I wasn't given any kind of notice, and now I have no clue what is going on. I only owed 155,000.00, and the house is valued at 257,000.00. I was chocking on my payments due to a job loss, and divorce and ...anyways, I realize that the loan modification ""attempts" and the FDIC putting a hold on foreclosures from Indymac, and the all of the "help" offers I was getting by the boatload were all just a way to rush my home into foreclosure and the sale of my home without telling me anything. I have nothing now, and sure would like to know what to do next to protect myself from being homeless. I am a 46 year old women that drives a towtruck many long hours a day, and was just trying to stay in my home. I just want to say "Thanks Indymac! How do you all sleep at night?"
K.H.

[bulletproof77]

Actually, all the efforts at "loan mods" are just smoke and mirrors...Countrywide did the same to me and in the end I just gave up...it's just a house..

[fltoo]

How come they can sue you and get a deficiency judgement against you if you have been paying for mortgage insurance? Doesn't seem right because appaarently they are going to get all their money from the insurance company so what are they suing you for?

Strictly speaking of the PMI that the borrower pays, the insurance only covers the lender for a slice of the loan.

I have been negotiating some mortgages for a relative. GMAC accepted a short sale on a rental(the loan had PMI), but the deficiency was over $100,000 and the lender is not suing for the difference. (loan was in default for 8 months.)

On his primary residence, a neg am loan and no PMI, American Home modified the loan to a fixed, low rate. Loan was in default 6 months and the lender added the outstanding amount to the principle.

On a rental with Countrywide in default 6 months, the lender would not modify the already fixed rate. (no PMI) They offered an unsecured loan for 4% with no payments for 6 months for the amount outstanding. On this unsecured loan, he plans to default and then offer a settlement for less.

Another rental with Countrywide, loan in default 6 months and no PMI, they are not budging at all and the house is in foreclosure.

I am finding no rhyme or reason for modifications. Just keep plugging away at it to see what happens.

[chad9162]

Hmm so this doesn't really apply to 2nd mortgages or HELOC. Would the insurance cover a 2nd Mortgage buying out the 1st Mortgage holder?

[krhsierra]

Now What?

Once I get over the shock (shame)of finding out I am no longer in MY house, and am being asked to leave in 3 days (which is impossible) what comes next? I have never been through this before, and while I know my credit is shot, I am afraid to make matters worse than they are . Can anyone share their experiences, or thoughts on this. I have been told to go to court for the unlawful detainer that will be filed soon, and then file for bk. Won't a bk make things worse for my credit, or is that impossible. I just need more time to get out of here, and I work 50 hours a week, and am on call all night 5 days a week, so I don't have time to pack and find a place to live and hang out in court houses. Also, how do I pay for a bk and try to save for a place to live. I have been told to stop worrying so much because the bottom line is that "they" can't eat me...I'm not so sure.
When I was 3 I used to carry a blanket for comfort...I really miss that blanket!