Why didn’t I buy more house?!
April 6th, 2007 | by mbhunter |If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
I could have my lender offering me incentives to keep me from going into default!
Mortgage Pros Scramble to Modify Loans
Lenders like EMC Mortgage Corporation that have subprime (i.e. poor risk) loans in their portfolio are counseling borrowers in trouble in order to keep their loans from going into default. Extending the teaser rate period for ARMs or forgiving some of the principal is a whole lot better for everyone, but more importantly it’s better for the lender. The banks are starting to lose big time on defaults now that price appreciation has slowed or reversed. Defaults on high-risk loans happened before, of course, but the underlying assets had appreciated enough to allow full repayment of the loan at auction of the property. Not anymore!
It’s good to see the lenders themselves cutting their losses rather than wringing their hands and saying “Help Us.” EMC’s “Mod Squad” is even throwing in $100 Home Depot gift cards to attract struggling borrowers to the counseling sessions!
Hmmm … home builders are throwing in discounts, free upgrades, etc. Lenders are reducing payments and principal, and are handing out gift cards. I’m feeling their pain.
Come on, baby, make it hurt so good!
My wife and I have been thinking of moving closer to town, which would be a price jump. I’ve thought that time is on our side, and if we’re patient, we’ll be able to get a much better deal than we can now. This sudden interest in lenders helping out strapped borrowers is another data point in the “wait” column.
Maybe my lender won’t be throwing gift cards at me, but I don’t like that strapped feeling.
2 Responses to “Why didn’t I buy more house?!”
By cw on Apr 8, 2007 | Reply
this counseling after lending so recklessly seems a$$backwards and will prove little more than a feeble stop-gap measure…. essentially, putting a bandaid on a gusher…
here’s some unconventional thinking…. why didn’t the subprime lenders do their due diligence (or, at the very least, acted proactively with these risky accounts) prior to lending tons of money willy-nilly? This is their own fault, their companies (and the people, unsuspecting though they were, who went for these types of products without the ability to afford what they were buying) deserve the end result. It’s just too bad that this is so closely tied to the rest of us, and we will pay a great price to compensate for the greed of these companies (and homebuyers).
By Christopher Smith on Sep 5, 2007 | Reply
Lenders are trying to work themselves out of a bad situation. The previous poster is right about due dilligence, but the horse is out of the barn now; time for damage control.
This points out an important fact the the media often overlooks, though: the bank doesn’t want your house! Look at any popular media outlet and you get this vision of fat bankers in three piece suits licking their chops ’cause they’re about to foreclose grandma. In reality a foreclosure is a catastrophe for everyone - hence efforts like EMC’s to get late payers on track. But time will tell whether or not this turns out to be too little too late…