Honest question...

[huberm]

you do realize your mortgage company can call your loan due at anytime right?

If the market gets bad enough, and the mortgage company cannot find another buyer to liquidate the mortgages, they will call your loan due. At this point if you cant pay it all, the bank will search for another buyer to satisfy the debt through foreclosure.

We are getting dangerously close to this, which is scary.

 

[Atomic Playboy]

Originally posted by: JS80
1) Offer Lehman to buy your mortgage for 40 cents on the dollar
2) Profit.

What's to stop this from happening theoretically? I mean, apart from the obvious answer of not being able to afford to front that much cash up front; could a borrower theoretically purchase their own mortgage at a discount when the lending institution starts having a firesale?

 

[waggy]

Originally posted by: huberm
you do realize your mortgage company can call your loan due at anytime right?

If the market gets bad enough, and the mortgage company cannot find another buyer to liquidate the mortgages, they will call your loan due. At this point if you cant pay it all, the bank will search for another buyer to satisfy the debt through foreclosure.

We are getting dangerously close to this, which is scary.

if you are current on all payments they can't call in the mortgage at any time.

but lets say they can. there is no way in HELL they would. they would be faced with tons of lawsuits and people would stop paying.

 

[OCGuy]

Originally posted by: huberm
you do realize your mortgage company can call your loan due at anytime right?

If the market gets bad enough, and the mortgage company cannot find another buyer to liquidate the mortgages, they will call your loan due. At this point if you cant pay it all, the bank will search for another buyer to satisfy the debt through foreclosure.

We are getting dangerously close to this, which is scary.

Not going to happen. Banks dont want to own your house. They want you to pay the loan.

If you owe $700,000 on your home, and its worth $450,000 now, why would the bank want to take the home? They will have to dump it for $300,000, because they need it off thier books.

There are still plenty of people out there that are paying thier mortgages.

 

[waggy]

Originally posted by: Ocguy31

Originally posted by: huberm
you do realize your mortgage company can call your loan due at anytime right?

If the market gets bad enough, and the mortgage company cannot find another buyer to liquidate the mortgages, they will call your loan due. At this point if you cant pay it all, the bank will search for another buyer to satisfy the debt through foreclosure.

We are getting dangerously close to this, which is scary.

Not going to happen. Banks dont want to own your house. They want you to pay the loan.

If you owe $700,000 on your home, and its worth $450,000 now, why would the bank want to take the home? They will have to dump it for $300,000, because they need it off thier books.

There are still plenty of people out there that are paying thier mortgages.

by far the majority pay thier mortgage on time every month. TO tell people who are current that they have to come due in say 5 months with the rest of the mortgage is insane.

what are they going to do if people refuse and continue paying monthly? sue them? then what?

that would drive the cost of houseing down even more. many would win the lawsuit etc.

in other words it would be idiotic.

not that it matters i have NEVER seen a mortgage that had that clause (unless you are paying late)

 

[tcsenter]

Originally posted by: sdifox
With the current bail out plan, in effect the American Public is picking up the tab on these mortgages. Should not the American public also get some benefit out of this, namely the elimination of said mortgages? The greater public is already on the hook for the mortgage so you can't say it is still owed to the banks.

This isn't a zero-sum game. You don't get to benefit because someone somewhere else in the world did something whose actions have nothing to do with you. Karma is not a rational basis for public policy.

The greater public wouldn't benefit, anyway. A fraction of irresponsible borrowers would get a windfall of undeserved debt forgiveness, while the 'greater public' would get nothing except another kick in the ass for being tax-payers. A bail-out is a bail-out, whether you're bailing out a dozen irresponsible companies, or a few million irresponsible home buyers. The 'greater public' always takes it in the arse.

So if you're pleading on behalf of the 'greater public', save it. What you're really talking about is disproportionately benefitting a small irresponsible fraction of the 'greater public' (who more likely than not couldn't afford the home in the first place).

 

[huberm]

Originally posted by: waggy

Originally posted by: Ocguy31

Originally posted by: huberm
you do realize your mortgage company can call your loan due at anytime right?

If the market gets bad enough, and the mortgage company cannot find another buyer to liquidate the mortgages, they will call your loan due. At this point if you cant pay it all, the bank will search for another buyer to satisfy the debt through foreclosure.

We are getting dangerously close to this, which is scary.

Not going to happen. Banks dont want to own your house. They want you to pay the loan.

If you owe $700,000 on your home, and its worth $450,000 now, why would the bank want to take the home? They will have to dump it for $300,000, because they need it off thier books.

There are still plenty of people out there that are paying thier mortgages.

by far the majority pay thier mortgage on time every month. TO tell people who are current that they have to come due in say 5 months with the rest of the mortgage is insane.

what are they going to do if people refuse and continue paying monthly? sue them? then what?

that would drive the cost of houseing down even more. many would win the lawsuit etc.

in other words it would be idiotic.

not that it matters i have NEVER seen a mortgage that had that clause (unless you are paying late)

this happened during the depression.

Additioanlly, did you know banks typically look over their HELs and HELOCs yearly to evaluate risk. If they deem you a big enough risk, they can call due on the money.

 

[waggy]

Originally posted by: huberm

this happened during the depression.

Additioanlly, did you know banks typically look over their HELs and HELOCs yearly to evaluate risk. If they deem you a big enough risk, they can call due on the money.[/quote]

maybe during the depression. but not now.

and yes if you are a risk (such as not paying the mortgage etc) they can call it due. but they won't/can't if you are paying it.

i have never seen a mortgage that would allow it anyway.

 

[alkemyst]

Originally posted by: Ocguy31
There are still plenty of people out there that are paying thier mortgages.

Still it doesn't look good though...it's still only about 50/50:

Survey Shows Majority to Pay-Off Mortgages
PRWeb (09/16/08)
A recent survey by Housing Predictor indicates that 57 percent of homeowners polled expect to one day repay their loans, signaling optimism that the property market will take a turn for the better down the road and residential values will improve. However, the other 43 percent of respondents do not anticipate paying off their mortgages in the future, as many currently owe more than their property is worth.

 

[Special K]

Originally posted by: Ocguy31

Originally posted by: BlahBlahYouToo

Originally posted by: LegendKiller
Essentially, it's costing people a whole crap-load of money to finance anything right now. People just aren't lending money because nobody knows who is next. That means that the people who are lending money will demand a huge premium for it. Credit is contracting, quickly.

not arguing or disagreeing, but then why are mortgage rates dropping?

Mortage rates are fairly good right now for Fannie grade borrowers (700+ FICO, Assets, < 55% DTI, low LTV). These are an extremely low risk borrower.

There are plenty of people selling money still, but the standards have tightened up immensly.

Lets say Fannie and Freddie were allowed to fail. Mortgage rates would likely skyrocket, but then home prices would have to fall to balance it out. In the end, doesn't it all come down to monthly payments? That seems to be the measure of affordability for most people.

 

[BlahBlahYouToo]

Originally posted by: Special K

Originally posted by: Ocguy31

Originally posted by: BlahBlahYouToo

Originally posted by: LegendKiller
Essentially, it's costing people a whole crap-load of money to finance anything right now. People just aren't lending money because nobody knows who is next. That means that the people who are lending money will demand a huge premium for it. Credit is contracting, quickly.

not arguing or disagreeing, but then why are mortgage rates dropping?

Mortage rates are fairly good right now for Fannie grade borrowers (700+ FICO, Assets, < 55% DTI, low LTV). These are an extremely low risk borrower.

There are plenty of people selling money still, but the standards have tightened up immensly.

Lets say Fannie and Freddie were allowed to fail. Mortgage rates would likely skyrocket, but then home prices would have to fall to balance it out. In the end, doesn't it all come down to monthly payments? That seems to be the measure of affordability for most people.

in a way yes, but i prefer low house prices coupled with higher mortgage rates because there's always the possibility of refinancing later.
the price you paid for the house isn't as flexible, if at all.
and you can buy low, sell higher on a lower purchase price.

 

[LegendKiller]

Originally posted by: Special K

Originally posted by: Ocguy31

Originally posted by: BlahBlahYouToo

Originally posted by: LegendKiller
Essentially, it's costing people a whole crap-load of money to finance anything right now. People just aren't lending money because nobody knows who is next. That means that the people who are lending money will demand a huge premium for it. Credit is contracting, quickly.

not arguing or disagreeing, but then why are mortgage rates dropping?

Mortage rates are fairly good right now for Fannie grade borrowers (700+ FICO, Assets, < 55% DTI, low LTV). These are an extremely low risk borrower.

There are plenty of people selling money still, but the standards have tightened up immensly.

Lets say Fannie and Freddie were allowed to fail. Mortgage rates would likely skyrocket, but then home prices would have to fall to balance it out. In the end, doesn't it all come down to monthly payments? That seems to be the measure of affordability for most people.

Home prices would fall, but a lot faster and damage a lot more people.

To the guy who said mortgages are callable: They aren't.

 

[rasczak]

Originally posted by: iamwiz82
I'm a financial idiot, but I'd assume that someone out there would buy the debt.

unless the note was lost?

 

[OCGuy]

Originally posted by: alkemyst

Originally posted by: Ocguy31
There are still plenty of people out there that are paying thier mortgages.

Still it doesn't look good though...it's still only about 50/50:

Survey Shows Majority to Pay-Off Mortgages
PRWeb (09/16/08)
A recent survey by Housing Predictor indicates that 57 percent of homeowners polled expect to one day repay their loans, signaling optimism that the property market will take a turn for the better down the road and residential values will improve. However, the other 43 percent of respondents do not anticipate paying off their mortgages in the future, as many currently owe more than their property is worth.

Noo....a VAST majority of mortages are fine. The percentage of mortgages in default is not that high. It is relatively speaking, but 1/2 of all homes are not going to forclose.

"The percentage of U.S. loans in some stage of delinquency is small. According to the Mortgage Bankers Association, the seasonally adjusted delinquency rate for mortgage loans on one- to four-unit residential properties stood at 6.35 percent of all loans outstanding at the end of the first quarter of 2008, and the percentage of loans in the foreclosure process was 2.47 percent. Those figures are 31.2 percent and 92.9 percent increases, respectively, over first quarter 2007."

http://www.bendbulletin.com/ap...0713/BIZ0102/807130304

 

[LegendKiller]

Originally posted by: sdifox

Originally posted by: LegendKiller

Originally posted by: sdifox
I am talking about the public as one entity, not creditor/debtor as 2 separate entities. As a whole, the current wave of folding banks is caused by over buying RMBS. The banks made a bad choice in investment, they lose a great deal of their clients' money.
With the current bail out plan, in effect the American Public is picking up the tab on these mortgages. Should not the American public also get some benefit out of this, namely the elimination of said mortgages? The greater public is already on the hook for the mortgage so you can't say it is still owed to the banks.

Again, what you're not getting, is that it's not the BANKS who own the vast majority of the debt, it's investors. Mutual funds, pension funds, index funds, wealth management firms, individual investors, all foreign and domestic.

As far as the American Public picking up the tab, they also benefitted from low borrowing costs. Bailing the system out lets them keep their jobs and lower borrowing rates.

What you're seeing with Lehman, AIG, and others, is only the tip of the iceberg. Things are far worse than you really appreciate.

oh, I know the whole world is heading to the crappers... and I know the investors are on the hook for these things. All I am saying is, MBS is only as valuable as the repayment power of the mortgagee. With the meltdown, people are just defaulting en masse. Which leaves the MBS with the actual property that is not worth the borrowed amount. With the nationalisation of Fanny and Freddie the country, and its people, has taken on the whole crap load of bad debt and loaded it onto the national debt. Not a desirable action, but a necessary one.

Now this mean the companies that made these decisions are not paying for their bad decisions. The American public is. So why not spread the devaluation a bit? After all, the conservative consumers that did not go out and over reach are paying for the blunders of the others?

people aren't defaulting "en masse". At worst, we may lose 25% of the lowest tier obligors. Overall subprime might default at 15%. Alt-A might default at 10%. Both of those make up 40% of mortgages originated in the last 2 years of the boom. Prime mortgages might default at 6%, at worst.

That means, weighted average, 9% might default.

That's not en masse, but it does mean that, in the absolute worst case scenario, 1.8TR or so will default. Many will have already been planned for and reserved against, many will not.

 

[JS80]

Originally posted by: Atomic Playboy

Originally posted by: JS80
1) Offer Lehman to buy your mortgage for 40 cents on the dollar
2) Profit.

What's to stop this from happening theoretically? I mean, apart from the obvious answer of not being able to afford to front that much cash up front; could a borrower theoretically purchase their own mortgage at a discount when the lending institution starts having a firesale?

Can't happen because the loans are packaged up into a security. So unless you have enough money to buy the entire package, you can't just cherry pick your mortgage.

 

[alkemyst]

Originally posted by: rasczak

Originally posted by: iamwiz82
I'm a financial idiot, but I'd assume that someone out there would buy the debt.

unless the note was lost?

Depends on state.