Archive for November 21st, 2008

Thankfully loan modifications are up!! Unfortunately there are no golden standards.  Luck and who the servicing agent is plays a tremendous role in how the modifications are made and what they are based on.

I encouragage readers to comment or link to relevant blogs addressing ways to modify loans and helpful hints, etc….

Popular modification options include:

  • Lower rates
  • Reduction in principal amounts
  • Models to reduce payments to 28% of total annual income
  • Reducing principal payments but maintaining the total amount owed so banks do not need to take losses on a temporary decline in the house value now.

Remember, the government and the banks want you to stay in your home.  In foreclosure they lose a lot more money.  Thus, now, they are trying to avoid foreclosure.  They want the houses lived in, maintained, and ideally sold at a later date when values have recovered (which they will, it is just a question of when.)

If you are facing a modification or foreclosure situation, let us know.  Share your experiences.  We will also share with you our latest news and findings.  I encourage you to use local resources, like your Legal Aid office, Chamber of Commerce, and any of the hundreds of task forces which have emerged around the country.

Investor groups are forming to assist homeowners and relieve the banks of assets they do not want.  The potential returns are modelled to be 8-10% per year plus significant potential profits on the monetizing of the interest in the property five years out. Reach out to me at if you have an interest in learning more.

As always, share your ideas, thoughts and experiences.

The WSJ yesterday highlighted changes in credit card terms that I have been speaking of for weeks.  Terms are getting very difficult for the typical user of credit.

The following summarizes some of the changes highlighted.

American Express: Raising rates and fees for advances, purchases, late payments and defaults.

Bank of America: Lowing credit lines and closing accounts with $0 balances.  Repricing individual accounts.

Capital One: Changing its minimum payment calculations, resulting in increased minimum payments required.  Raising rates.

Chase: Raising rates and fees.  Raising minimum payments from 2% to 5% on some customers, adding a $10 monthly service fee on some accounts.

Citi: Raising rates on select customers.

Discover: Removing the cap on balance transfer fees.

Bottom line:  Credit is getting more expensive, more restrictive, and more punitive for usage!

Buyer and friends beware!

If you know of any good alternatives, please share them as a comment!!!! Thanks.