TIOMA- Temporary Interest Only Mortgage Adjustment
Started by truthskr10
over 13 years ago
Posts: 4088
Member since: Jul 2009
Discussion about
Yes I invented it just now. Was thinking, banks hate to own real estate. They just want to collect. Citizens don't want to lose their house. Markets don't want short sales and foreclosures on the market tanking the market. What if eligible mortgagees can be given a temporary option on their 15 and 30 year mortgages to pay the interest only...for say 1 year and renewable a second year or the like.... [more]
Yes I invented it just now.
Was thinking, banks hate to own real estate. They just want to collect.
Citizens don't want to lose their house.
Markets don't want short sales and foreclosures on the market tanking the market.
What if eligible mortgagees can be given a temporary option on their 15 and 30 year mortgages to pay the interest only...for say 1 year and renewable a second year or the like. Option allowed every 10 years or something.
The interest paid similar to like a 5 year ARM. Drastically reducing the monthly bill. It doesn't pay down any of the existing mortgage but provides a temporary breath for those that need to get back on their feet. If interest rates are way out of wack, maybe some combo of original mortgage interest rate and real time libor hybrid formula.
Eligible Mortgagees
My main concern was those 1 home owners who lost their jobs. Further eligibility up for deiscussion and debate.
So is every other aspect as I defer to the bigger finance experts on here.
I know it's friday and dont expect many responses 'til monday.
If I waited until monday I would have forgot about it.
And some of you may think I should have already forgot about it. That's ok too, do post so if you feel so.
Is something like this possible? Is it win win? Or Undoable? Or just totally moronic.
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Response by truthskr10
over 13 years ago
Posts: 4088
Member since: Jul 2009
Ok officially moronic. My brother just said, "you mean a loan modification program?"
LOL, Im not too swift on fridays.
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
TIOMA sounds like a special mortgage product from 2005 that was among the reasons why people got into trouble.
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Response by Brooks2
over 13 years ago
Posts: 2970
Member since: Aug 2011
if you are talking about a pay-option arm, they were in existence far before 2005. Golden West had been originating them for years. poor underwritten loans is what got people into trouble
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
>poor underwritten loans
You can't just blame the banks. The borrowers too got themselves in trouble.
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Response by NWT
over 13 years ago
Posts: 6643
Member since: Sep 2008
Their mortgage payments are almost all interest anyway. The principal portions, in these early years of their mortgages, aren't much.
E.g., someone who borrowed $200K at 6% five years ago pays $932 this month in interest, and $267 in principal.
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Response by Brooks2
over 13 years ago
Posts: 2970
Member since: Aug 2011
"poor underwritten loans
You can't just blame the banks. The borrowers too got themselves in trouble."
100% correct.
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Response by Brooks2
over 13 years ago
Posts: 2970
Member since: Aug 2011
"Their mortgage payments are almost all interest anyway. The principal portions, in these early years of their mortgages, aren't much."
not true. By definition, the borrow has the option to pay the amount she desires; it can be the minimum amount, the interest only amount or the amortizing amount. If the borrow consistently pays the minimum amount, the loan will neg-am... have negative amoritization. Sometime these loans are referred to as neg-ams.
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Response by NWT
over 13 years ago
Posts: 6643
Member since: Sep 2008
Truthskr10's proposal was for modification of a typical 30-year amortizing mortgage. That's what I was referring to.
If a borrower already has the kind of mortgage you're talking about, where negative amortization is possible, then she wouldn't need any modification.
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Ok officially moronic. My brother just said, "you mean a loan modification program?"
LOL, Im not too swift on fridays.
TIOMA sounds like a special mortgage product from 2005 that was among the reasons why people got into trouble.
if you are talking about a pay-option arm, they were in existence far before 2005. Golden West had been originating them for years. poor underwritten loans is what got people into trouble
>poor underwritten loans
You can't just blame the banks. The borrowers too got themselves in trouble.
Their mortgage payments are almost all interest anyway. The principal portions, in these early years of their mortgages, aren't much.
E.g., someone who borrowed $200K at 6% five years ago pays $932 this month in interest, and $267 in principal.
"poor underwritten loans
You can't just blame the banks. The borrowers too got themselves in trouble."
100% correct.
"Their mortgage payments are almost all interest anyway. The principal portions, in these early years of their mortgages, aren't much."
not true. By definition, the borrow has the option to pay the amount she desires; it can be the minimum amount, the interest only amount or the amortizing amount. If the borrow consistently pays the minimum amount, the loan will neg-am... have negative amoritization. Sometime these loans are referred to as neg-ams.
Truthskr10's proposal was for modification of a typical 30-year amortizing mortgage. That's what I was referring to.
If a borrower already has the kind of mortgage you're talking about, where negative amortization is possible, then she wouldn't need any modification.
sorry. was referring to HBs post.