Is anybody in the Santa Rosa area getting a loan modification based on current appraisal?

Asked by www.esonomacounty.com, Sonoma County, CA Tue Jul 7, 2009

..or are the banks not willing to negotiate given the state of the economy. What are your experiences?

I heard some are pushing the remainder to the end of the loan.. I'm starting to realize why so many home owners are doing a strategic foreclosure. Stats show 25% are letting homes go to foreclosure as a strategic financial move thinking homes wont appreciate 100% to upside after falling 50%

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Steve, , Rohnert Park, CA
Wed Jul 8, 2009
Interesting article from a Fed study on why foreclosures keep occurring:
http://seekingalpha.com/article/147604-boston-fed-we-don-t-u…

Basic points seem to be:
1. A decent chunk of the requested mods are from people who don't actually NEED a mod to avoid foreclosure, but would obviously like it. Not too hard to come up with a story why someone needs a mod, even if they can keep paying. Granting mods to these folks just costs the banks money.
2. The re-default rates on mods is massive anyhow, and it amounts to just kicking the can down the road a bit.

Given those two, speculation is foreclosing is arguably better for the bottom line of the bank. Granting a mod to folks who truly need one will likely just lead default a bit further down the road. Granting a mod to a household that doesn't truly require one is just throwing cash away.
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Daphne Peter…, Agent, Santa Rosa, CA
Tue Jul 7, 2009
Hi Craig,
Many of my short sale clients went through the loan modification process only to find that the modification offered to them was inadequate. I have also seen some great loan modifications. To me there are three critical factors: 1) who actually owns and controls the terms of the loan, 2) the financial condition of the person or family that needs the loan modification and knowing precisely what modification will work for their circumstances, and 3) persistance.

It appears that there are 2 types of loan modifications- one requires a lawyer, the other does not. I would be interested to see some statistics as to the outcome of paid loan modifications as opposed to the Do It yourself kind. And, for some, other alternatives may be the best solution.
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Hannah Flieg…, Agent, Larkspur, CA
Tue Jul 7, 2009
Hi Craig!

Yes, there are some effective loan modifications. Principle write downs are the hard ones to get but doable. The FHA Fannie and Freddie have an 80% failure rate after 6 months. There is a company that I like a lot that is getting interest for a 5 year fixed.
Also, loan mods that are done with purchase loans here in California are modified into not exactly recourse loans, but certainly put the borrower on the hook for new modified loan. Here is a website that might be of assistance.
Hope all is well Craig!

This website might help some of your clients.
http://www.foreclosureoptionsnetwork.com
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