Loan Modifications Are Complete Bullshit
I was lying in bed this morning, watching CNBC, when a reasonably intelligent newscaster named Steve Liesman interviewed a clueless government bureaucrat on the subject of loan modifications. In short, the clueless bureaucrat was explaining how fifty percent of all loan modifications have already gone back into default after six months. After eight months, the number climbed to 80 percent.
To that, a shocked Steve Liesman asked the clueless bureaucrat if he knew why people who were lucky enough to get a second chance with their mortgage would be foolish enough to go back into default again?
The clueless bureaucrat scratched his head for a few moments, then sunk to new levels of cluelessness by saying, “Uhhh, no one’s really sure about that. Maybe the new payments still weren’t low enough, or maybe it’s just the lousy economy. It’s difficult to say.”
Difficult to say? What a clueless idiot!
The simple fact is that the reason these people keep defaulting on their mortgages is because they should have never bought these fucking homes in the first place! They knew they couldn’t afford them! They were just playing the refi-game, which is to say: they were riding the housing-bubble for all it was worth, while pulling out as much cash as they could along the way. They’re all deadbeats! Refi-addicts! Credit-criminals!
Furthermore, if you look back at their original mortgage-applications, I’m willing to bet that 90 percent of them lied through their teeth, most of them with the help of a mortgage broker. Either they inflated their income, inflated their assets, lied about their employment-history, or bought their home under the guise of a primary residence, when it was actually an investment property.
Bottom line: With a few legitimate exceptions, these people should all lose their homes—homes which can then be bought at rock-bottom prices by people who lived responsibly all those years and didn’t overextend themselves.
And if you’re worried about a fresh wave of foreclosures driving down property-values in your own area, I wouldn’t worry too much. The decline will only be temporary. Once the right kind of people repopulate these neighborhoods—meaning, people who buy a home they can truly afford, and intend to live in it for the long-term—and the people who should have never bought these homes in the first place—the flippers, the speculators, the serial refi-addicts, the credit-criminals—go back to the shitty little rentals they came from, this country can begin a legitimate housing recovery that will last for decades.
To that end, any money the government throws at this mess should go to the people who played by the rules—subsidizing their purchases with ultra-low mortgage-rates and whopping tax-credits.
If that’s not fair, then tell the Wolf what the fuck is?
December 10th, 2008 at 9:23 am
Jordan,
You certainly have first hand insight into the mortgage market. There is no doubt that many of today’s defaults are people that over extended themselves, and most of those will lose their homes. The market will not rebound for quite some time however. When the top to bottom is measured at 30-45%, and a bottom starts the base for home appreciation, it will be lucky if those homes will rise in value at 2-5% annually, which is a long journey to where many people bought their homes, especially in the last five years. As to the allocation of funds to those who “played by the rules” we all know that any efforts at allocation like that will only find hustlers claiming to be those people so the best answer is probably to let the water find the level that it seeks. Look forward to continuing our discussions on this topic at your convenience.
December 10th, 2008 at 10:20 am
[...] details: Loan Modifications Are Complete Bullshit | The Real Wolf of Wall … [...]
December 10th, 2008 at 10:20 am
[...] details: Loan Modifications Are Complete Bullshit | The Real Wolf of Wall … [...]
December 10th, 2008 at 10:20 am
[...] details: Loan Modifications Are Complete Bullshit | The Real Wolf of Wall … [...]
December 10th, 2008 at 10:20 am
[...] details: Loan Modifications Are Complete Bullshit | The Real Wolf of Wall … [...]
December 10th, 2008 at 10:55 am
There is an old Chinese saying “People can’t wear big hats if they don’t have big heads”. It sucks that the people who affect the most are those who works hard and pays their bills on time. Who the fuck is going to bail out these harding working people? The goverment takes care of the riches and the poors but for those who are in the middle got fucked big time.
December 10th, 2008 at 11:49 am
Hey Jordan,
I agree with you on the loan modifications totally. All that is going on now is that the same idiots that shouldn’t have bought their houses in the first place have now found a way to stay in them for a little while longer. Thank god that have actually become smart enough to call their banks, and not just let their houses go into foreclosure without trying to do anything about it… but what they are really doing is just prolonging the inevitable. The smart ones have found a way to stem the foreclosure process. As long as they stay only 2 months behind, they are safe and foreclosure proceedings will not begin. These people probably has subprime mortgages to begin with, something like the pick-a-pay from Wachovia is a good example. They can pay the absolute minimum payment, and be 2 months behind. Their credit was probably shot to begin with, so what the fuck do they care if the lates on their mortgage pound their credit into the ground….
They ARE refi addicts who do just keep borrowing and borrowing to stay afloat…
Hey, you don’t have to pay it back when your dead right?
And the loan modification process itself is complete bullshit, along with all of these companies…Ex subprime guys and any broker that is scraping together a few pennies to keep his own house from going into foreclosure… They are the same jackasses that got everyone into this mess, along with the banks. What I don’t get is how I hear about these guys actually doing this loan mod process, charging up front fees and laughing all the way to the bank in the process. They are taking advantage of people who need “Loan Modifications”, which means that these people are fucked to start with. Do you really think that any of these people have the money to be shelling out up front fees to have their loan modified? It’s highway robbery. Brokers taking advantage of something that most people can accomplish themselves simply by picking up the phone and calling their own bank.
That said, I was wondering what your view is on the credit market right now, and where do you think it will be in the next few months? For example, it is obvious that there is going always a higher demand for credit during the holiday season….Just to put presents under the tree…
And there are some of these lenders who have already gotten some or all of their piece of the pie with the bailout, correct? Now what are they doing with this money? Are they actually lending it out and using it for Multiple Deposit Creation or are they just sitting on it to stem any real losses that will be incurred over the next few months, or years…whichever is more relevant…
In a nutshell, are they lending? Who are they lending to? Small businesses? Retail consumers?
_-JP-
P.s. Awesome interview on Luckystartups… Those guys sounded like some amateurs at doing interviews; it’s just a good thing that they had The Wolf on the other end to carry the whole thing!
December 10th, 2008 at 4:38 pm
[...] Loan Modifications Are Complete Bullshit | The Real Wolf of Wall … [...]
December 12th, 2008 at 12:42 pm
Hey Jordon, really looking forward to seeing this blog develop. I loved your book and enjoyed your interview on Luckystartups ever more.
Please keep going!
December 12th, 2008 at 3:26 pm
Hi Jordan,
Well sad to say this is happening all over the uk currently!!!
I live in a steady middle class area and you cannot count on two hands how many houses have been repoed within the last three months!!!
I can remember interviewing an estate agent a year or so ago for a position and when we discussed the salary he laughed!!!
Opps guess who rang today… Out of work house about to be repoed and is wife has walked off into the distance with his mate!
Looking into January is not a very pleasing site at the moment with many highstreet companies closing or going to the wall who knows what the new year will bring!
GBU
December 17th, 2008 at 5:06 am
[...] unknown wrote an interesting post today onLoan Modifications Are Complete Bullshit | The Real Wolf of Wall …Here’s a quick excerptLoan Modifications Are Complete Bullshit | The Real Wolf of Wall … [...] Alex Says: December 12th, 2008 at 12:42 pm. Hey Jordon, really looking forward to seeing this blog develop. I loved your book and enjoyed your interview on … [...]
December 17th, 2008 at 2:46 pm
[...] unknown wrote an interesting post today onLoan Modifications Are Complete Bullshit | The Real Wolf of Wall …Here’s a quick excerptEx subprime guys and any broker that is scraping together a few pennies to keep his own house from going into foreclosure… They are the same jackasses that got everyone into this mess, along with the banks. … [...]
December 17th, 2008 at 6:23 pm
[...] unknown wrote an interesting post today onLoan Modifications Are Complete Bullshit | The Real Wolf of Wall …Here’s a quick excerptI can remember interviewing an estate agent a year or so ago for a position and when we discussed the salary he laughed!!! Opps guess who rang today… Out of work house about to be repoed and is wife has walked off into the distance with … [...]
December 18th, 2008 at 6:39 am
First of all congratulation for such a great site. I learned a lot reading article here today. I will make sure i visit this site once a day so i can learn more.
December 18th, 2008 at 7:29 am
[...] unknown wrote an interesting post today onLoan Modifications Are Complete Bullshit | The Real Wolf of Wall …Here’s a quick excerptLoan Modifications Are Complete Bullshit | The Real Wolf of Wall … [...] Alex Says: December 12th, 2008 at 12:42 pm. Hey Jordon, really looking forward to seeing this blog develop. I loved your book and enjoyed your interview on … [...]
December 24th, 2008 at 12:47 pm
I disagree that you put the blame solely on the people who bought the homes. It is more so the fault of the banks and mortgage companies who pushed people to refi or buy outside their means so that they could make a quick buck. The sales people who said if you’re in a fixed, you need an arm… or if you are in an arm you need a fixed.
It’s also unfair to blame the people when the banks approved the loans when they KNEW people could not afford them but they didn’t care because they wanted the banks and mortgage brokers wanted the money.
How can you blame people for wanting the American Dream? To own a home? When prices skyrocketed and the average American could no longer could afford a home.
And they are not all deadbeats. Look at what’s causing many of the foreclosures… A dying economy where people loose their jobs and loose their income and then can no longer afford a home.
The criminals were also the people to approved and sold these loans.
January 14th, 2009 at 2:44 pm
What’s even more hilarious/ironic is that FNMA - Freddie have now given them all the opportunity to live rent free until January 31 under the foreclosure moratorium.