Oh boy, this won’t end well

From Housingwire:

New York now allows shared appreciation mortgage modifications

Underwater homeowners in New York state are now eligible for an additional form of mortgage modification intended to help more of them keep their homes, in a development quietly passed in the state.

On July 9, the New York Department of Financial Services adopted regulations that allow for shared appreciation mortgage modifications under certain circumstances. The new regulations were announced in the state’s register and went into effect that day.

The regulations, Section 6-f of New York banking law, state that if a borrower is at the risk of foreclosure due to owing more on their home than it is currently worth, a a lender or mortgage holder may reduce the principal amount of a loan to help the borrower stay in their home.

According to a letter from the DFS sent to New York lenders, the lender or mortgage holder would then be entitled to share in any appreciation of the market value of the property between the effective date of the reduction in the principal amount of the mortgage loan and the date when the property is sold or transferred.

But there are stipulations on the amount of return that the lender can receive under the agreement. The lender is limited to a return whichever of the following amounts is lower:

The amount of the reduction in principal, plus interest on such amount calculated from the date of the shared appreciation agreement to the date of payment based on a rate that is applicable to the modified mortgage loan

50% of the amount of appreciation in value

“Currently, a number of New York homeowners owe more on their mortgage loans than their homes are worth. Meanwhile, foreclosures have soared in recent years. While mortgage modifications have helped many homeowners keep their homes, many other struggling homeowners do not qualify,” Daniel Burstein, executive deputy superintendent of the DFS’s real estate finance division, said in the letter to bankers.

This entry was posted in Foreclosures, Mortgages, Risky Lending. Bookmark the permalink.

28 Responses to Oh boy, this won’t end well

  1. EsSex says:

    11.4 million Americans age 16 and over have left the workforce since President Obama took office in January 2009, according to data released today from the Bureau of Labor Statistics (BLS).

    In July 2014, there were 92,001,000 Americans, 16 and over, who were classified as “not in the labor force,” meaning they not only did not have a job, but they didn’t actively seek one in the last four weeks.

    This number has increased by 11,472,000 since January 2009, when the number of Americans not in the labor force was 80,529,000.

  2. Grim says:

    Post secondary enrollment for fall 2014 is estimated to be 2 million higher than 2009.

  3. Fast Eddie says:

    According to a letter from the DFS sent to New York lenders, the lender or mortgage holder would then be entitled to share in any appreciation of the market value of the property between the effective date of the reduction in the principal amount of the mortgage loan and the date when the property is sold or transferred.

    Every time I think a new and better scam cannot be concocted, I read something like this and I am absolutely stunned at the brilliance of the art of the con. Using housing as a prop for a heist is magnificent! All it takes is one signature by an unassuming muppet and the rest takes care of itself.

  4. Mike says:

    What if the home gets paid off twenty years later, is their some type of lien?

  5. grim says:

    Someone please calculate the long-term cost to the borrower of such a loan. Not only are they going to be paying significant interest on the principal over 30 years, but potentially half the appreciation as well?

    Or don’t, because I don’t need to do the math to know that walking away is still the smarter option.

  6. Continue to transfuse the cadaver. And don’t worry about that pervasive stench.

  7. joyce says:

    You ever see a listing agent call-out the previous buyer like this before?


  8. grim says:

    Yeah, all the time, BOM properties get a stigma that either there is a defect in the property that was uncovered during inspection, or that it didn’t appraise.

    Any time I see this, I’m more concerned that the gesticulation is a diversion.

  9. anon (the good one) says:

    Please support American Friends Service Committe.

    About AFSC

    Who we are

    The American Friends Service Committee (AFSC) is a Quaker organization that promotes lasting peace with justice, as a practical expression of faith in action. Drawing on continuing spiritual insights and working with people of many backgrounds, we nurture the seeds of change and respect for human life that transform social relations and systems.

  10. Michael says:

    Thought these comments on this article were funny and worth sharing.

    “Bingo….the funny part is most people across all skill sets are starting to form their own business and/or consultancies due to the lack of pay at most employers…especially the F1000…those places don’t pay anymore and are career killers.

    However, if your a consultant you the same companies will pay you significantly more on contract and people are starting to realize that….not to mention you can take on multiple clients on while your on a contract and morph it into a business.

    Your average worker isn’t stupid anymore and companies are going to have a very difficult time filling positions…even entry level customer service which is your most basic position to get your foot in the door somewhere.

    People are wising up: When companies are paying peanuts, cut benefits at every corner, expect you to work extra hours for free and you have to report every day and play by their rule…..it just doesn’t make sense…..when you can get paid more, have more freedom and work at your own comfort level as a consultant..not to mention you actually might get a break between projects to recharge….companies are not offering benefits to begin with so you are no better off working as a W2 than a consultant…if anything the consultant is the way to go….also there is no difference in job security anymore between the two of them.”

    “I’m going to stop “hatin’.”

    I’m going to lose my job very soon and have to start blaming Bush instead of Obama. I’ll need that attitude to get a new job writing code for 40k a year. Silicon Valley is a land of purity of thought. Just like code. We all have to be on the same page.

    My competitors from India gladly work for $30K. I don’t know what to do about that except to stop “hatin’ ” and suck it up. Maybe there really is a career in flipping burgers.”

    “MS is laying off tens of thousands of tech workers but only in the US. All of their Indian workers are safe.”

    “Thank God the new Mexican tide of illegals can’t code!”


  11. Michael says:

    Wage inflation coming?

    “Stronger job gains are spreading to middle- and higher-wage industries as employers gain confidence in the economic recovery.

    In July, for the second straight month, employment growth in higher-wage industries such as business services, construction and manufacturing outpaced increases in low-wage sectors such as fast food outlets, a UBS analysis shows.

    Over the past two months, mid- and high-wage industries have added 257,000 jobs, while those with lower pay added 210,000, according to the research firm’s analysis of Labor Department data.

    The development marks a shift from last year, when many economists and worker advocates lamented that payroll advances were concentrated in low-paying sectors, such as restaurants and home health care.

    Overall, employers added 209,000 jobs in July, Labor said Friday, the sixth straight month of 200,000-plus gains. More jobs in higher-wage industries would be a boon for the economy, raising average pay and bolstering consumer spending.”


  12. EsSex says:

    7. New to me, but who the hell knows. Not particularly good marketing. The house is bland as hell to me.

  13. jj has a big eggnog explosion every day…

  14. Comrade Nom Deplume, a.k.a. Captain Justice says:

    I live in a Quaker community and one of my children goes to a Friends school. You can tell their cars–fuel efficient, Japanese, and covered with left wing stickers. When I need to leapfrog a lane, I look for them as I know they will always back off.

    Funny rules too. No wearing anything that could connote violence. I used to have a pair of Converse Allstars with camo uppers. I was told that they would not be permitted in the school. Boys get sent home for wearing Transformers t-shirts.

  15. EsSex says:

    16. Violence is fun. Ultra-violence….not so much.

  16. Michael says:

    Wage inflation? Or are you guys in denial that wage inflation is coming.

    “Small businesses see revenue gains, hire workers

    NEW YORK (AP) — The long-awaited surge in hiring at small businesses appears to be underway.

    Owners who resisted hiring after the recession are taking on workers to keep up with rising demand for products and services. Companies began stepping up their hiring pace in the spring.

    Faulkner Hyundai in Harrisburg, Pennsylvania, is adding seven people to its staff of 92 because new cars are selling at their fastest rate in eight years. The market for used cars is also strong.”


  17. go drink some flammable eggnog, passion blossom

  18. Comrade Nom Deplume, Guardian of the Realm says:

    [18] sx

    Yeah! One of my faves!

  19. EsSex says:

    I’m pretty sure this guy would approve:


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