Posted by jojo_MN on 9/25/08 8:14am
Msg #265285

Lower interst rates/Give us more work

Maybe a law should be passed to lower everyone's interest rate to a livable one. This could give us a lot more work because there are so many out there.

Many people took out loans they couldn't afford because they were desperate. Their credit scores were low due to recent job loss, medical bills or reasons at no fault of their own. Not everyone has bad credit just because they ran up credit card bills.

The point I am trying to make is that I think it is outrageous that a lender has to jack up a person's interest rate because their credit score is low. If anything, you would think they would get the lowest rate available just to make it easier for them to afford the payment!

One couple I know in particular had an ex-wife's credit show up on their credit report. The best interest they could get was 9.8% on a $350,000 loan. This couple was never late on bills, had good income, etc. They were able to prove that the credit did not belong to either of them, it was removed, their credit score improved enough that they should have been at a 6% rate. The lender went out of business and he is self-employed. Now he can't get a loan because lenders wont take stated income and is stuck with the 9.8%.

There are also many low-income people that can make the payments, but dont have the two-months set aside assets so instead of giving them a low interest rate, they make it harder by jacking the rate higher.

If the gov't could just do a REAL hellp and make the interest rates lower so people could keep their houses, it would also give us more work by traveling to all of those homes. The lenders could just call us directly because the interest rates aren't normally listed on the mortgage (unless it is an adjustable rate rider). They could just do it through modifications.

Reply by JanelWI on 9/25/08 8:54am
Msg #265286

I agree with some of what you said, I am also self employed and going through the mill with trying to re-finance right now. They want everything but retina scans, DNA and fingerprints! I do my own books through QB. They want me to spend money and go to a CPA and have them write on letterhead that my income is correct according to my tax returns, bank statements and QB. I had to provide them with exactly what bills are considered business debt, even though I have two bank accounts and keep it separate. The list of hoops go on!

My feeling is, with what is going on we are just going to have to realize this is a sinking ship and get off. This "bail out" gives me very deep uneasy feelings. I don't feel it is the right solution and I feel it will only thrust us forward into even more disaster. We really can't rely on our administration to make sound decisions can we? Look at the past eight years and before. I don't need to even elaborate further. This has been long time coming. Our economy is finally changing, there are only so many band aids you can apply before they can't afford to make any more band aids. I don't believe we can stop this particular run-away train. The good ol' United States is falling rapidly. I have decided to go back to school, take a second job, my husband has three, and diversify my talents and try to survive the best that I can for myself and my family. The government has always made decisions, kept secrets and maneuvered for our so called "Best Interest" now we are seeing the price tag. I guess I wouldn't mind footing a bill if it did not include people who have walked away with billions and will never feel the struggle of some families we meet, like you said, It is not all about CC debt and irresponsible Americans.

Reply by Linda_H/FL on 9/25/08 8:56am
Msg #265287

Or...

Convert the adjustable rate loans out there to fixed at their present rate - if people are making their current payments, and it's the resetting interest rate that's killing them, converting them to a fixed rate will insure they won't walk away from their homes and their loans and the lenders will continue to have the payments coming in (as opposed to foreclosed/abandoned properties where they have nothing coming in)...

Also, no government infusion of funds - people pay back what they borrowed...period. I'm not real pleased that other people's mistakes (and yes, lenders' mistakes) are going to come out of my pocket!!

Reply by CF on 9/25/08 9:01am
Msg #265289

Re: Or...

In other words- the "bailout" should not entail giving money to these companies. It should entail keeping the tax payers in their homes and from that the market will not further degregate. The Govt has proposed to use these tax payers money and they will still loose their home....the plan that they have is not a plan at all. If they lower rates it will stimulate the economy- lowering people’s payment by hundreds of dollars per month ( there are still people with equity- myself included and if rates went down my house payment would be lowered by about $250.00 per month) - giving them more disposable income. If they pass a law that lowers the people's rates that are on the brink of foreclosure that will stimulate the economy too- these people will be able to stay in their home- and have money to live on!

I am just not talking about saving my livelihood here- I am talking about helping people out....not just big banks and big money people! It is absurd....what is being proposed!!!!! Just another reason for me to stay self-employed and get all the tax benefits associated with it!!!!!!

Reply by Linda_H/FL on 9/25/08 9:04am
Msg #265290

This whole thing should probably be moved to the JP forum.. n/m

Reply by jba/fl on 9/25/08 9:23am
Msg #265294

Re: This whole thing should probably be moved to the JP forum..

Yes - it does belong there. I kept on thinking that while typing my response. Complicated issue...going there for further comment as after last night's speech by Bush I have 'issues'.

Reply by jojo_MN on 9/25/08 9:25am
Msg #265295

This pertains to all, that's why I posted it on this forum.

CF was reiterating what I was trying to say. I am one of those people that can't get a loan because of self-employment.

This is political, but if for some reason the President could see that this is a more effective way of helping out, it would be to our advantage. We could be the ones going to all of the homes and getting the paperwork signed that lowers the interest rates. In reality, only we and the lenders should have charges for this. The lenders already have the loan, so there really shouldn't be a need for an appraisal or title search unless they were asking for cash out. My thoughts would be that it would be for strictly converting the loan they already have into a fixed, low-interest rate loan.

Reply by Linda_H/FL on 9/25/08 9:33am
Msg #265297

I know..and this wasn't directed at your original post

just at the turn the thread took...

Reply by jba/fl on 9/25/08 9:22am
Msg #265293

"Maybe a law should be passed to lower everyone's interest rate to a livable one. This could give us a lot more work because there are so many out there."

Following this logic, I should apply for a 1-1.5% rate which would be more livable for me and in keeping with the rates I receive on my savings acct. That would be fair to me...

"Many people took out loans they couldn't afford because they were desperate. Their credit scores were low due to recent job loss, medical bills or reasons at no fault of their own. Not everyone has bad credit just because they ran up credit card bills."

No fault of their own????? Then whose fault? I walked to many front doors through mini car lots of RV the size of busses, 2 or 3 monster trucks, 2-3 cars and huge boats and jet skis, squeezing my way through. Liquidation of 'assets' never crossed their minds - got to keep up with or stay ahead of the Jones'es. Whose fault? Plenty of people inside, scarfing the assets of the borrowers that can't limit themselves, or bo's who can't say no to their kids: whose fault? What you as a visitor see is incomplete, not the whole story. What one presents to you is almost always designed to give the best of what they are, not the worst.

"One couple I know in particular had an ex-wife's credit show up on their credit report. The best interest they could get was 9.8% on a $350,000 loan. This couple was never late on bills, had good income, etc. They were able to prove that the credit did not belong to either of them, it was removed, their credit score improved enough that they should have been at a 6% rate."

The time to fix this is prior to signing that loan, not after one commits to a rate they don't find palatable. My own loan in '05 originally started at 8.5% with one lender, I indicated it was unsatisfactory, laughed at that LO and found another. I shopped for 3 mos., with lots of "you've got to be kidding: get lost: sorry, no good, and various other comments I made during the process. I stated what I wanted, refused to accept less, and got offered a lot of junk with their comments of "you'll never get that; this is the best I can get you; you're being unreasonable because..." and finally ended with exactly what I wanted: 6%, no arm, no PPP. The whole key was no greed on my part, persistence and willingness to wait and/or walk away from a deal that was not to my liking.
Much of what I saw during that time was people who were pushed around by their LO who they 'trusted' all the while telling them not to worry, quit making payments as this new loan would clear everything and give them $20K to boot, and then stalling the closing so that they were forced to sign or be foreclosed the new few days. Unconscionable - yes, but lenders and LO's were salespeople out for themselves. Just like this whole mess now...

"If the gov't could just do a REAL hellp and make the interest rates lower so people could keep their houses, it would also give us more work by traveling to all of those homes."

The government is NOT Big Daddy nor is it designed to be such; the entitlement stated here "give us" is so blatant, hinging on just that theory that government is here for our needs beyond what we are willing to do for ourselves.

Reply by jojo_MN on 9/25/08 9:33am
Msg #265299

Livable, meaning an interest rate of 6%. I have walked into MANY houses such as you described. I'm saying that alot of the time it is NOT the borrower's fault.

Have you had anyone close to you almost lose their house because the business they worked for the last 20 years closed down or moved out of the country? That happened to too many people in my area. When the companies left, they didn't have money to pay bills, etc, so they were late on payments and had to charge minimal amounts just to survive.

The example I used about the ex-wife: He had a major health issue that his insurance didn't pay most of. He could have filed bankruptcy, but chose to keep paying his house payments and refinance to pay his hospital bill. It was only then that he found out about the ex-wife. If he would have waited, he would have been incurrring late charges, etc.

Yes, there are a lot of users out there (borrowers, lenders and LOs), but remember there are just as many good, compassionate ones!

You need to have a little compassion about the people you are dealing with. If you don't, you're in the wrong business!

Reply by LisaWI on 9/25/08 9:37am
Msg #265300

Found this site this morning doing a search on the Credit Card Holders Bill of Rights that just passed the House.
http://www.creditslips.org/creditslips/
The very first blog is in reference to modifying loans. Still reading the content of the site, but it seems to have some very good info on there, not just in reference to the bailout, but other subjects that apply to credit as a whole.

Reply by Julie/IL on 9/25/08 9:55am
Msg #265309

I'm not sure where everyone stands on this, but my husband and I have talked in great detail about property taxes. Why is there no cap on them, especially during these times? Property values are down but our property taxes keep going up. Here in the suburbs of Chicago, property taxes that were once $7-$8,000 a year have sky rocketed to $12-$13,000 a year. People that have bought a home for around $350,000 with a payment that they were comfortable with are now going into foreclosure because of the huge hike in taxes. I do not feel bad for people that bought a home that they could not afford, but I do feel bad for people that were making their mtg payments on time and then got slammed with a $4000 property tax hike and had no other choice but to foreclose.

Reply by Linda_H/FL on 9/25/08 10:05am
Msg #265314

Because if your taxes go down your town/city/county can't afford to provide you the services they've been providing - your taxes fund your municipal government. Your home value may go down but your municipal budget goes up, requiring an increased mill rate to meet the budget...

Reply by JanelWI on 9/25/08 12:07pm
Msg #265345

Linda,

I totally agree with what you have posted. But we the common working folk I guess, get the illusion of help while the government seems to favor big money as you suggested. That was exactly my point. Does the government ever do anything for the working class people that does not end up taxing us to death in the end? There are always underlying "catches" and "strings" attached. But for big money, there is benefits. This bailout is no different except we have turned the corner and for the first time we are really seeing how unafraid the government is of its people. They have no boundaries, no limits, no accountability. That is what truly scares me. I really wonder if they ever did have any. Where do we stop then after this bail out? What next? Where is this money coming from when most of these people as you said won't be able to stay in their homes anyway. The cost of living is risen dramatically, the cost of the war, talks of more war on the horizon.....I mean enough already! We are spiraling downward at such a rapid rate. I hope people are really prepared for a wake up call, because I have a feeling America as I know will no longer exist.

Reply by Sylvia_FL on 9/25/08 1:02pm
Msg #265352

Re: Lower interst rates/Give us more work - Julie

You need to address Property Taxes with your county.
I just got my proposed property tax notice which they send out every year. Shows what our taxes are now, what they will be if proposed changes aren't made and what they will be if the proposed changes are made. Looks like our county is lowering my property taxes by about $200.

Reply by Linda_H/FL on 9/25/08 1:14pm
Msg #265354

Re: Lower interst rates/Give us more work..Sylvia

Could be a new assessment came out - here in FL we get notices of assessment every year - some states and municipalities only re-assess every 10 years - if taxpayers haven't voted in to phase in the increase over a specified period of time they get slammed all at once....this could account for the significant increase...

Although, even in CT where properties are high, $12-14K tax bills represented the higher priced homes...our taxes in CT were at $4,500/year when we sold in May, 07 and the new assessment was going to go into effect on 10/1 of that year...glad we got out. Our taxes here are going to be $2,700/year....and even that hurts when you consider they were $1,300 when we bought in May, 06..

Reply by Becca_FL on 9/25/08 4:56pm
Msg #265397

It's much more complicated than that. Much more.

Haven't you been watching what is going on with our economy this week?

Tell your friend to call the loss mitigation department of his servicing company.

Reply by Becca_FL on 9/25/08 5:12pm
Msg #265398

Biz 101 = Supply and Demand dictates our business.

Just as with any other business. Under your theory, no one would have been buying homes back in the 80s when a typical home loan would cost you 18% and that just didn't happen.

Reply by SharonMN on 9/25/08 6:01pm
Msg #265401

JoJo wrote: I think it is outrageous that a lender has to jack up a person's interest rate because their credit score is low.

The lender charges a higher interest rate for people with lower credit scores because they have determined that the lower-credit-score person has a higher probability of default. Why should they get LESS money for taking MORE risk? That's like saying you should get less interest on a junk bond than on a Treasury bill. (That said, the lenders and the buyers of the securitized loans need to suck it up and not beg for government handouts now that the risk part has come back to bite them.)

As far as keeping people in their homes, some people would be much better off renting. In many cases, this would result in a lower monthly payment, no maintenance costs, lower energy bills (= more money to spend on other things) and much greater flexibility in case a move is required or desirable. Home ownership is not for everyone, especially if you need to trash the rest of your budget to own a home.

Reply by Virginia/PA on 9/25/08 6:44pm
Msg #265405

From what I have read about the need for the bailout as opposed to directly handing help to homeowners is much more complicated than what we understand. That's why I posted the message about who invented "bundling". From what I read, once a loan is made it is bundled with many others and then the group of loans is sliced up into multiple pieces to spread out the risk (one articles likened it to pieces of humpty dumpty). So when the borrower tries to refi or modify, EVERY investor of each slice of his pie or humpty dumpty piece must agree to the loan modification or it will not happen. Refi's are costly due to closing costs, and the value of the borrowers' home is likely much less than their last refinance. That slows refi's. But does allow for modifications.

I don't believe that it is all that easy to help a homeowner whose loan has been spread out into pieces of an investor's portfolio like humpty dumpty's great fall. My understanding of the bailout is that many (but certainly not all) of these troubled loans may be bought up and all of humpty dumpty's pieces for a particular borrower will be owned in one place. Since 700B won't do everyone, then there are those borrowers whose loans won't get any special treatment at all since their loans will still be owned by multiple investors. But for those whose do get bought in the bailout and all of their pieces are in one place, then they can modify their loan or refinance - whatever the law finally allows or recommends.

I don't think this is politics. This is economics. And our business totally relies on economics - and not just the checks we receive for our work.

JMHO