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A Trip to Magic Fairy Land for Some Homeowners

By JLP | May 8, 2012

This makes me ill:

Bank of America Offers Principal Reductions to 200,000 Homeowners

A select group of struggling mortgage borrowers are about to get an offer that sounds too good to be true. Executives at Bank of America say they will begin mailing 200,000 letters offering certain customers mortgage principal reduction.

…eligible borrowers could get as much as $150,000 knocked off the balance of their mortgages. It is all part of the $25 billion settlement reached this year between federal and state agencies and the nation’s five largest mortgage servicers over fraudulent foreclosure document processing (so-called “robo-signing”).

Responsible people get nothing.

Regardless, I’m ready to get this stuff behind us.

Topics: Credit Crisis, Housing Market | 23 Comments »

23 Responses to “A Trip to Magic Fairy Land for Some Homeowners”

  1. Steve Braun Says:
    May 8th, 2012 at 10:45 am

    I understand where you’re coming from when you say “responsible people get nothing” but don’t feel too bad. In the end, responsible people usually are way better off while irresponsible people generally find themselves right back in another hole of some sort before too long. I’ll take being responsible and “nothing” over being irresponsible with “freebies” any day.

  2. Russ Says:
    May 8th, 2012 at 11:14 am

    It does blow.

    As a mortgage lender, I deal with clients everyday who just want to refinance to a lower rate and can’t. People who still are gainfully employed, great incomes, great credit, etc. Never late. Some would even refinance to a 15 year to get their loans paid off. However, they are underwater so they can’t refinance or all kinds of other BS barriers put up by lenders, including Fannie/Freddie.

    Yet, those who aren’t paying or never paid their mortgages get huge principal reductions.

    I’m starting to think the smartest people were those who said f’ck it in 2007 and walked away then.

    Big Banks get bailed out and continue to screw the responsible homeowners. The deadbeats continue to be “helped out”.

    Makes you wonder if the real suckers are us responsible homeowners.

  3. Traciatim Says:
    May 8th, 2012 at 2:00 pm

    You are incorrect in stating that responsible people get nothing . . . They get the bill.

  4. Valkyrie Frost Says:
    May 8th, 2012 at 3:16 pm

    Traciatim hit the nail square on the head.

    Interesting note: the article says a pilot program of 5000 loans have been reduced (the math says on average, that program reduced principle by $140,000 per home).

    What’s really interesting is the program is about principle reduction, not interest rate reduction. So, a $300,000 loan at 9% can become a $200,000 loan at 9%.

    Once the principle is reduced, the owner may then qualify to refinance the home at a lower rate with another lender. In essence, this allows the owner to “repurchase” their own home at a lower price point without going through the foreclosure/resale process.

    Does anyone else read it this way?

  5. BG Says:
    May 8th, 2012 at 3:27 pm

    I’m a responsible homeowner, and I could care less what BofA, the government, and the affected homeowners negotiated as a deal when THE BANK decided to settle (the bank agreed to this settlement).

  6. Jon Says:
    May 8th, 2012 at 3:46 pm

    In a free market economy this is probably what would have happened to begin with, people getting reductions on their mortgages. Of course, in a free market we would never have had the bubble to begin with :\.

  7. Retiredat40 Says:
    May 8th, 2012 at 3:59 pm

    Have you looked at your magic fairy land 401(k) value lately based on stock market levels at near all-time highs? Think you haven’t been bailed out from your stupid financial decisions? Think again.

  8. Jack Says:
    May 8th, 2012 at 7:16 pm

    Tell me, retired, how did they do that?

  9. Retiredat40 Says:
    May 8th, 2012 at 8:54 pm

    Jack you are a hopeless case aren’t you? It’s just another one of those things you just don’t want to believe.

  10. Todd Hickman Says:
    May 8th, 2012 at 9:13 pm

    People who originate debt and expect other them out are in the same camp as those who want freedom to make decisions but want freedom from the responsibility of them. They suck. (the wealth away from your family to theirs.) They’re no better than pirates sailing the seas looking for ships to plunder. May they all do without and recede.

  11. Jack Says:
    May 9th, 2012 at 7:08 am

    Just another gratuitous assertion from you, retired.

  12. Retiredat40 Says:
    May 9th, 2012 at 9:04 am

    I’m not interested in interfering with your reality. Keep the faith.

  13. Jack Says:
    May 9th, 2012 at 11:04 am

    Nor am I interested in your gratuitous assertions. Keep them to yourself.

  14. Retired at 40 Says:
    May 9th, 2012 at 11:12 am

    Aye, Aye. Rocket Man. Now fire up the fuse and blow.

  15. Jack Says:
    May 9th, 2012 at 12:28 pm

    How did you know I was a Rocket Scientist?
    (Actually, the paper says “Aerospace Engineer,” but same idea.)

  16. Retired at 40 Says:
    May 9th, 2012 at 1:03 pm

    You revealed that info previously when I was not particularly impressed with your intelligence.

  17. Jack Says:
    May 9th, 2012 at 1:24 pm

    Ah, very good. I must say, it is a lot of fun being a Rocket Scientist. Fairly lucrative, too!

  18. Retired at 40 Says:
    May 9th, 2012 at 1:37 pm

    I’m sure. Nothing like a govt paycheck!

  19. Jack Says:
    May 9th, 2012 at 1:53 pm

    Keeping the world safe for democracy!

  20. Retired at 40 Says:
    May 9th, 2012 at 1:54 pm

    Exactly…and from democracy.

  21. Jack Says:
    May 9th, 2012 at 2:12 pm

    Just from democrats!

  22. BG Says:
    May 9th, 2012 at 4:34 pm

    Keeping the world safe for democracy?!? Who are you kidding? The US may use the guise of democracy while waging wars and butting into the affairs of other nations (and our own citizens), but I thought you were smarter than to fall for that BS. Eh, comrad?

  23. Jack Says:
    May 9th, 2012 at 7:46 pm

    It’s a joke, BG.