deed-in-lieu of foreclosure - now that's a plan

problem is that there can't be a HELOC or second mortgage. many of the non-heloc'd properties have been resolved.
otherwise, i agree with you.

ar: "...many of the non-heloc'd properties have been resolved."

...and MANY more have not. No program is going to be a 'cure all.' Find me a better idea that's more fair and responsible for everyone concern.

testy, aren't we. i said i agree. sadly, this does nothing to resolve the second mortgage issue, which quite frankly i don't know how to resolve. and is a huge impediment to the success of a program such as this.

Easing troubled borrowers out of their homes is an *EXCELLENT IDEA*. The banks are being pragmatic and looking at ways to reduce the incentive where the soon to be evicted trash and strip their homes of value.

Fannie Mae has a similar program

http://www.fanniemae.com/kb/index?page=home&c=homebuyers_supportforrenters

To help minimize disruption, eligible renters who want to stay in a home that has been foreclosed can sign a month-to-month lease if the property is owned by Fannie Mae. The policy, which applies to properties owned by Fannie Mae, will help bring stability to communities affected by high foreclosure rates.

Eligible renters will be offered a new month-to-month lease with Fannie Mae and Fannie Mae will manage the properties through a real estate broker or a property management company. Renters may also be eligible for financial assistance if they desire to relocate.

ar, if your kid come home all happy with a 95% grade, do you say, "the problem is you didn't get the other 5% right, otherwise, I agree you should celebrate." Now, I know this program doesn't solve 95% of the problem mortgages (not even close), but for those that it will help, it gets at least a 95% grade from me.

sunday, i'm not denigrating the program. i think it is wonderful. but to ignore the fact that it can only help a certain group of people and not others is to minimize the fate of the others. their needs are not being addressed.

good on citi. i've actually been fairly impressed with their efforts during this mess. and i'll give them an A for effort.

Solution on second liens is fairly simple
Bring back mark to market and force the banks(very few second liens are securitized) to mark down to zero and let's get on with it. The reason this hasn't happened is because the banks are not doing as well as they would have us believe.

Sunday? How is manipulating the 'natural' process of taking your lumps of any benefit except for the lumpee and don't wanna take a write down but wanna pay bonus financial institutions?

How about for someone who wants to buy? Thru no fault of their own they are buying into a manipulated market? How does that morality tale fit into telling your daughter to get a 95 on an exam while the stupid kids gets a 94 just for showing up so that school's staff 'looks' better?

To me it stinks to high heaven that our government has become nothing more than a financial institution with a large inventory of real estate. They might as well put up a Coldwell sign at the fed.

Letting them rent for a year. beats gifting them the property by reducing the mortgage balance 50% and seeing them default in a year. Consider this a nuisance "pay off" that works to the banks advantage. In other words, a sweetner to ensure they don't trash the place.

Yeah and who sets the rent? Is it fair to the guy paying 'mkt' rent and who probably got priced out of buying this under water home bc of that lemmings inability to do simple math? And stupid bank underwriting skiillz? Flmao.

The fact is we are heading into an abyss of breaking down the pillars of American values of self determination and freedom to make choices and then having to live with the consequences.

It is fair(or more aptly the prudent thing to do) because it minimizes the potential loss to the financial institution that will own the property. The sad fact is that many people when they know they will lose the house strip it bare and there's very little that can be done about it. When the lender does take possession the unit requires thousand of dollars of investment to make it salable.

"No program is going to be a 'cure all.'"

And this program doesn't work at all for people facing foreclosure due to unemployment.

w67thstreet. I hear your point. One of the reasons we're in this crisis is because of gov't. Gov't policies resulted in an over-allocation of resources into housing. When I think of the hubris of our elected officials and the resulting waste it makes one wonder, why our gov't thinks they can manage an economy better than the Russians or the Chinese(when neither of them have or will succeed in the long run).

Well the only program that's going to reduce the over-supply of available housing and increase home affordability is to let prices drop, but that's against government policy.

So this is basically facilitating what was already kind of an option...Walking away from an underwater delinquent mortgage. I like it. Honestly the banks should hold the bag. If you are going to give a mortgage with no equity, this should be the realized risk.

w67, the banks made a choice as well, to make ridiculous loans. If you're dealing with a corporation that would take any loophole...then these underwater owners should do the same and walk away from these underwater mortgages. There is no honor here on either side. There never was.

w67, I don't understand you comment addressed to me. Perhaps you didn't read the article in the OP or misunderstood my point about the 95% comment...

Flmao. Riversider even my corner dunkin donuts 'reserves' for stale donuts, and they don't pay 60% of donut income on salaries. Hahaha

Wall Street firms were partnerships for so long for a reason...like law firms, like advertising firms. You can't pay everyone and still generate a return for shareholders... Unless you use a shit ton of leverage and take ridiculous risk. They should repeal Glass-Steagall.

"Wall Street firms were partnerships for so long for a reason...like law firms, like advertising firms. You can't pay everyone and still generate a return for shareholders."

There was also a built-in incentive to run a tight ship: the guys at the top had their asses on the line all the time.

It made more sense. Like AT&T these monsters need to be taken apart. You can't have a finance industry that can hold the world hostage.

NYCMatt, "And this program doesn't work at all for people facing foreclosure due to unemployment."

Yes, the program from the OP does work for people facing foreclosure due to unemployment, unless you keep sticking to the believe that somehow unemployed people are 'entitled' to keep their home ownership status regardless of economic condition.

I think you mean re-enact Glass Stegal. Of course until the 1980's banks made no money and offered what was essentially utility type returns. The up-side was that we didn't have a crisis every 7 years.

The sad part here is that for all good intentions and bad no everyone is ready for home ownership...especially if we are going to create a price bubble in housing. Taking this apart is not going to be fun. What is appealing about this plan...is it puts people who should have been renters back to being renters..and it has banks who made stupid loans owning a bunch of homes...as it basically should be.

"Yes, the program from the OP does work for people facing foreclosure due to unemployment"

Please explain to me how it works for people who've lost their incomes.

"Of course until the 1980's banks made no money and offered what was essentially utility type returns."

Maybe so for commercial banks, which is as it should be. Top Wall Street advisory type firms always made a killing... As did top trading firms... as do hedge funds. I'm with Soros on this. High risk high reward undertakings should exists in partnerships, not in financial supermarkets that are deemed too big to fail. Break em up.

If you've lost your income and didn't have savings there is no program that would work, short of gifting them a residence.

"Please explain to me how it works for people who've lost their incomes."

Sorting out who should own the real estate is not meant to be a solution for unemployment. Job recovery is another thing...The most important thing actually...but could not be expected to be addressed by anything Citi can do.

"f you've lost your income and didn't have savings there is no program that would work, short of gifting them a residence."

Or giving them a forbearance, tacking their back payments onto the back of the mortgage, and letting them resume their normal payments when they regain employment.

In this case, it's hardly a "gift" ... they'll actually be paying MORE in the long run, since the bank would be tacking interest to the long-term principal.

"but could not be expected to be addressed by anything Citi can do."

Of course it can.

Citi can extend them a forbearance until they resume employment.

Banks can do forbearance. It's not a new concept. They look at how long they believe the unemployment will last.

If we are talking about long-term unemployment tackling on payments to the end will not work since it makes an even more under-water mortgage. If you treat the tacked on payment as deferred principal you turn the home into a de-facto rental. If you increase the payment you increase the odds of a default due to high mortgage payment or a home owner making a strategic default.

I guess thats a calculation for Citi to make. I can't imagine why Citi wouldnt want to have the right to remarket the house. I think the only thing they want to be less than a real estate company is a shelter provider.

They want to sell the house. They also don't want to make repairs on the house.

And there's no reason why they cannot sell the house as an investor property with an existing tenant for six months while they wait for the lease to run-out. And once citi gains full "title" or what ever the correct word is, they have more legal rights in the event that the occupant attempts to damage or strip the house.

Which is why this Citi idea makes some sense. The fact that so many Americans cant make ends meet is a different issue.

w67th, don't get your knickers in a twist. this is net-net beneficial to most (even the bank, and i have mixed feelings about that).

at least this puts a timeline on the foreclosure process. now far too many are in limbo, far too many properties don't get foreclosed and sold. this actually speeds up things. which is good for those who want to buy, those who want to walk, and the results are mixed for the banks.

btw, many, many lemmings. many others, not so much.

This has a couple benefits for Citi over waiting for the homeborrower to mail the keys in:
1. The house is less likely to be trashed by a bitter borrower
2. Citi gets the house back in six months instead of 1+ years in the foreclosure process

Presumably the borrower also avoids any chance that Citi would go after thier assets after foreclosure.

The presumption is that these are not wealthy borrowers.

Why presume that? Strategic defaults are real and Citi has as much to gain from speeding these up as any other default.

aboutready
about 4 hours ago
ignore this person
report abuse testy, aren't we. i said i agree. sadly, this does nothing to resolve the second mortgage issue, which quite frankly i don't know how to resolve. and is a huge impediment to the success of a program such as this.

another fight involving aboutready. What a surprise

aboutready
about 4 hours ago
good on citi. i've actually been fairly impressed with their efforts during this mess. and i'll give them an A for effort.

What kind of uneducated whore says "good on citi"? And how can you then give any grades to anyone? You don't even work and did nothing beyond your free Bachelors degree in the most basic of subjects.

http://mortgage-negotiation.suite101.com/article.cfm/the-moral-dilemma-involving-foreclosures--debts
Banks are Pursuing Homeowners to Collect on Debts From Foreclosures

Years ago a homeowner would simply walk away from their home and leave the keys on the counter. They stripped the homes of everything they could and wiped away the tears and closed the doors. Those were the days when foreclosures were at a minimum. Today with millions of homes in foreclosure the picture is changing.

Lenders are choosing to pursue homeowners for the debts owed and even on short sales. The lender will of course check the credit report and if there is sufficient evidence that the homeowner is paying on their other obligations, lenders may pursue them for the amount owed. In some states this is not possible such as California which is a one step state.

There are one and two step states and this is referring to non-recourse and recourse loans. Many non-recourse states are now allowing deficiency judgments. A one step process means that the lender has only one choice; foreclosure or legal action. A two step state is where the state allows lenders to pursue borrowers who have the funds to pay their debts.

Sunday. The colgan pilot failed 5x bf passing. Should own rent and walk away ppl have same credit as you or I? I've got like a 840 or some ridiculous #. And some crazy azzed gpa. Why should a flunkie have the same gpa as I?

"Why should a flunkie have the same gpa as I?"

Because it's not the fault of the "flunkie" when the economy hits the shitter and he loses his job for more than a year.

w67th, this will get MORE properties to foreclosure earlier. this should be your goal. for those who think it's such a great thing for the people, it's not, except those that desperately want to walk. and those people are starting to do so, leaving banks with the costs.

there's NO way to foreclose on everyone who should be foreclosed upon at one time without a depression. a serious depression. you might not recall but mortgage forebearance was alive and well during the depression. if you'd like prices to reach their lowest levels without dislocations that would make the whole process meaningless other than for a few people, this might be it.

w67th, i really don't think you want that depression. really. it may very well come, despite everything, but we really don't want it. i don't care how much cash you have. have a heart, dude.

w67, ok, now I understand what you're trying to say...

Note the following from the article:

"To be eligible, homeowners must have their first mortgages with CitiMortgage, no second mortgage, actually live in the home and be seriously delinquent on mortgage payments, at least 90 days late."

Being three consecutive months late is a big deal in the credit score world, something that is very negative and sticks around for years.

sunday, i think this is good because many people are actually trying to walk away from non-recourse loans and they can't. the banks won't take the properties. they don't want to pay the taxes.

w67th just wants the crash to happen as quickly as possible. he may be right. he probably is more right than wrong, but i think some softening is absolutely necessary. but in the meantime, we try to save as many crash victims as possible.

just remember, w67th, they're not all lemmings. not at all.

"It’s a whole new ballgame once you have a 90 day late payment, however. If you have been over 90 days late (even just once), the credit scoring models consider you much more likely to do it again. One 90 day late payment will damage your credit for up to seven years. From a scoring perspective, a single 90 day late payment is as damaging to your credit scores as a bankruptcy filing, a tax lien, a collection, a judgment or repossession. Being 90 days late causes you to be viewed as a possible “repeat offender” and a higher risk to creditors."

http://www.credit.com/credit_information/credit_report/Late-Payment-Secrets-Revealed.jsp

To be eligible, homeowners must have their first mortgages with CitiMortgage, no second mortgage, actually live in the home and be seriously delinquent on mortgage payments, at least 90 days late

This is one of the reasons we are seeing serious delinquencies. Any one wanting to qualify has to stop paying their mortgage.

rs, come on. most people already are seriously delinquent. people don't walk away from their homes idly, although they are more likely to do so if they are better off.

ACtually, AR - judging by what's been happening in CA, NV and FL, the less well off are the ones who have been walking away, and renting more cheaply in their same communities.

actually, ph41, no. if you look at all the studies, those who "strategically" default are those who are better off.

those who default because they have zero choice? that's the poorer. maybe semantics, but important ones to me.

People have woken up to the double standard in society. When companies default it's an efficient breach. when owners do it they are not living up to their contract. For many default who have the money, defaulting is a strategic decision. They know their credit begins coming back after two years. If you are significantly under-water it might make good business sense.

RS, i've agreed with you at least three times today, and i swear my hives are about to act up.

for those of means a strategic default has far less of a credit implication than hanging on and something going terribly wrong in the future. but from what i've heard, it's not so easy to do jingle mail in some areas. the banks won't take possession, and insist that owners continue to pay the taxes.

The best part about the program is that it doesn't involve the government. It also mot likely decrease the chance of the government having to get involved in those cases.

"The best part about the program is that it doesn't involve the government."

Neither would forebearances.

It's also logical to assume the loan has significant equity to protect the lender....

An option you might want to consider as a way to prevent foreclosure is mortgage forbearance. It's commonly used for temporary financial bearing situations such as short periods of unemployment or poor health. In the simplest of terms, mortgage forbearance enables you to temporarily stop making your mortgage payments.

As for mortgage rates and interest, they continue to accumulate on the mortgage forbearance and is added to the remaining balance of the loan. You are generally also asked to sign a forbearance agreement that states when the lender will require you to pay the amount you owe. Once the forbearance period comes to an end, you are once again obliged to make full payments on your home loan.

While mortgage forbearance may only serve as temporary fix, it does buy you some time to overcome your financial state, and is a far better option than loosing the home you worked so hard to purchase.

Matt, do you really think the bank executives haven't considered it? Perhaps it make sense for some borrowers, for some banks, and in certain economic conditions. I'm not saying it's a bad idea. It would be good if such programs are included in the mix as well. When we discussed that in previous threads, what I said was the government should not force banks to do it or encourage/subsidize it using more government funding. If the banks find it as an option for some borrowers at a particular time, great.

Do you really think the program referenced in the OP is not good? Again, I'm not saying it cures all.

Sunday. Let's take a look at how that suasage got made. 90 days past due, gonna lose home, reading about how bankers are getting record bonuses and how bankers can walk away from mortgages. I'd say citi is probably experiencing a tremendous loss as these foreclosed owners leave. Like selling all the appliances, ripping out all copper piping, garage selling all fixtures and as a last kiss off, turning on the faucets. Ya think a cop is gonna figure out if the owner did this or some vagrants between a bank foreclosing and bank taking physical possesion. Citi is up to their eyeballs with these 'loss mitigating' dept.

See how many 'transition' meetings occur? It's to ensure the owners aren't trashing the place. Flmao. Maybe they should've spent the $1k on doing some Due dilignence on that $100k/yr dog walking income. Oh never mind, we bundled it and sold it to Fannie Mae!!!!!!

Oh and it also makes citi 'look' good hahahahahahhaaaa.

Fwiw I'd expect ppl to keep an eye out on underwater unit owners on a higher stack. Water damage sucks

I know I asked this the other day, but I don't think anyone answered. Is there a source or sources that show within one or more categories the number (and trend) of delinquent (however you define that) mortgages in nyc, hopefully broken down by borough .....

wouldn't that tell a lot about what is going on or about to go on?

w67, I never said citi is doing it out of the goodness of its heart. I'm simply saying that it's a good program, better than others I have seen so far, especially the others that required government funding.

anyone on this board hearing any stories in nyc condos of people in default on c charges...or walking away from it all...i dont recall any stories along these lines....just wondering....

in other words..how relevant as of now is that debate to nyc?...not saying it isn't, just wondering where the stats or anecdotes are

jim, once again, it takes a couple of years to foreclose in new york. and our building boom took a lot longer to take off. so it will take longer for those stories to surface.

to be honest, it seems as though the media isn't doing a great job covering the plight of the person. it stuns me how little we hear about the effects of this recession.

I understand it takes two years.

But...somebody somewhere has delinquency stats, which will show the pipeline. The point is to get an idea of what the foreclosure (or in the meantime short sale, perhaps) potential flow is. Even a small but increasing trend could be important. Long before foreclosures make a news story there should be increased delinquencies.

doesnt some govt organization track this stuff....

I do think it is worth pondering why we aren't seeing any personal stories like this....

jim, i was talking to a friend who worked for one of the major econ sources (now unemployed). i asked him why we weren't seeing more of the face of the disaster. he said, well, we don't want to go to the soup kitchen and photograph our former co-workers.

jim, realtytrac has some stats by county though I'm not sure how accurate it is.

http://www.realtytrac.com/STATES/New-York.html

The poorer neighborhoods are probably experiencing the first wave of foreclosures first.

i think delinquencies might be more significant, at least at this stage, for the kind of stuff people on here are looking at....it looks like the ny fed has lots of data on 90+ day delinquencies but so far i haven't tabbed through to the micro data below very broad brush country level....probably worth a call to the stats person if someone were so inclined

http://data.newyorkfed.org/creditconditions/#

that's the map data base but it's driving me up the wall trying to get down to county level....maybe someone else has more patience

jim, just use the "County Search" on the right side of the map.

i tried that it wasnt going well....

It works for me, it shows all the counties in the state once you search for one county.

Bronx +8.5%
Kings (Brooklyn) +7.2%
New York (Manhattan) +2.3%
Queens +7.8%
Richmond (Staten Island) +5.0%

is that up over the previous quarter?...(by the way, i think the up over previous year numbers are lower)

i wasn't sure how to find the number of delinquencies vs. outstandings total mortgages...which would be interesting to see if it is something significant or still neglibgible

im not sure how to read this...is this kinda not so bad yet, certainly in manhattan

just glanced at florida...lots of the numbers in the teens percentage change....

How about paying strategic defaulters to stay current?

This idea of “strategic default” has become a universal concern within the industry, but one New Jersey company says it has a plan to counter such calculated flights of exodus.

According to the Loan Value Group LLC (LVG), it’s time to pay current borrowers to stay that way.

http://www.dsnews.com/articles/company-proposes-paying-homeowners-not-to-walk-away-2010-02-12

The government needs to understand what is being sowed here. The more unsure that lenders will be about getting paid back the less they will lend in the future when the home is pledged as the asset. With Easy Street's top economists predicting 40% drops in prices....well

I personally don't like the LVG program because it will keep the house off the market. I can see how it makes sense for both the borrower and the lender.

Sounds like a bunch of ex-Morgan Stanley guys trying to sell advisory servicers to lenders. They do not work on behalf of the borrowers.....

Loan Value Group LLC is an independent, third-party provider of advisory services dedicated to assisting financial institutions, rating agencies, and mortgage insurance companies assess, and effectively manage residential mortgage risk.
LVG looks to provide greater transparency and clarity by using analytics and modeling solutions that drive PV. We assist in the design and implementation of refinancing and modification structures, while seeking to preserve the integrity of the capital markets through sound risk-transfer strategies.

Loan Value Group LLC operates four businesses:

Data Aggregation: Compile data from many sources to create a multi-dimensional portfolio profile.
Research: Identify the main drivers of default and performance through in-depth analysis and statistical modeling.
Advisory Services: Helping our clients extract value with many new innovative loan modification and optimization strategies.
Technology: Licensing of patent-pending servicing technologies. see less

So the government is saying it doesn't matter what you do with your credit, its okay. Sometimes I wonder if the credit bureaus are the good guys, but then remember they aren't. Check out what to do with foreclosures that are on your credit at http://archercredit.net/foreclosures/.