Leverage Planners BLOG

This press release was sent out today by NACBA.

Maureen Thompson

Legislative Director

mthompson@hastingsgroup.com

 Near Half of Homeowners in "Loan Modification? Programs Face  Higher Monthly Payments; Failure of Voluntary Industry Efforts Hikes Pressure  on Incoming Obama Administration, New Congress to Clear Way for Court-Supervised  Modifications.



WASHINGTON, D.C.//December  19, 2008//Much  hyped "foreclosure prevention programs? relying on voluntary loan modifications  are failing to reach a significant number of troubled homeowners and are often  backfiring when they do so, according to newly updated research released today  by the National Association of Consumer Bankruptcy Attorneys (NACBA). The across-the-board failure of these much  ballyhooed "fixes? for the foreclosure crisis are expected to result in the new  President and Congress facing considerable new pressure to clear the way for  court-supervised loan modifications that will prove more beneficial for homeowners.

The  findings released today by NACBA come on the heels of a dire new projection  from Credit Suisse that "over 8 million foreclosures (are now) expected? over  the next four years in the U.S. That astounding level accounts for 16 percent  of all mortgages -- including 59 percent of all subprime mortgages and more  than 11 percent of all other mortgages, including Alt-A, options ARMS and even those  in the prime category. This new forecast  from Credit Suisse is up sharply from the two to six million foreclosure range cited in previous  estimates from industry sources.

The  new data presented today from Professor Alan White, Valparaiso University  School of Law, Valparaiso, IN, is updated through November 2008 (http://www.hastingsgroup.com/Whiteupdate.pdf)  and shows that:

• Less than 10 percent of the time do the voluntary programs result  in a reduced principal loan balance with  more than half of modifications capitalizing unpaid interest and fees into  larger and more drawn out debt on the back end of the mortgage; and

• Only  about a third (35 percent) of voluntary mortgage modifications reduce monthly  payment burdens for homeowners, with nearly half (45 percent) actually saddling  distressed homeowners with increased payments under the  modifications.

Just how badly are the voluntary modification  programs flopping? To answer that  question NACBA reviewed the publicly available data about the reach to date of  the much-hyped programs. In one  prominent case - the Hope for Homeowners Act FHA refinancing program passed by  Congress with much fanfare earlier this year on the strength of forecasts that  400,000 homeowners would be aided - there have been only 312 applications to  date -- and no mortgage modifications whatsoever have taken place. This is consistent with the most recent  estimates from the National Association of Attorneys General that "nearly 8 out of 10 seriously delinquent homeowners  are not on track for any loss mitigation outcome ... up from 7 in 10 in  previous reports.?

Henry  Sommer, president, National Association of Consumer Bankruptcy Attorneys, Philadelphia PA.,  said: "Court-supervised loan modification is urgently needed to deal with  this problem. We call on the incoming  Obama administration and the new Congress to adopt this solution without delay.  The American home mortgage foreclosure  crisis has gone from the danger zone to the full-blown crisis stage. The number of foreclosures is growing  rapidly and is reaching well beyond the subprime world to the American middle  class. Despite a proliferation of voluntary  programs, we are not seeing evidence of a meaningful number of sustainable loan  modifications.?

Professor  Alan White, Valparaiso University School of Law, Valparaiso, IN, said: "American  homeowners are carrying 10.5 trillion dollars in mortgage debt, a number that  has risen by 250 percent in the past decade.  While banks have written down more than half a trillion in mortgages and  mortgage-related securities, homeowners have gotten little or no relief. A broad range of economists from Nouriel Roubini  to Ben Bernanke to Martin Feldstein have recognized the need to deleverage the  American homeowner. The excess mortgage  debt is depressing home prices and consumer spending, and acting as a drag on  the broader economy. Empirical evidence  from mortgage servicer reports to investors shows that for the most part, the  necessary deleveraging of homeowners is not happening.?

Alys  Cohen, staff attorney, National Consumer Law Center (NCLC), Washington, DC,  said: "Sadly, the magnitude of the foreclosure crisis dwarfs the response to  date from the financial services industry, regulators and lawmakers. The  lack of aggressive and meaningful solutions from federal policymakers is  baffling, particularly given that most economists, including the Chairman of  the Federal Reserve Board and the Chair of the FDIC, have recognized that the  financial crisis can be resolved by only by dealing with its root cause - the  escalating millions of mortgage foreclosures ... The foreclosure crisis will not  be resolved through voluntary efforts on the part of the financial services  industry alone. Despite widespread efforts to encourage voluntary loan  modifications, it is clear that the financial services industry has failed to  implement a loan modification strategy on a scale that matches the urgent  crisis we are facing. Bankruptcy courts must be empowered to implement  economically rational loan modifications where the parties are unwilling or  unable to do so on their own. Loan  modifications through the bankruptcy courts can help accomplish this on a  sufficient scale and timeframe to have a meaningful impact. Congress  should lift the ban on judicial modification of primary residence mortgages, as  part of the solution to stemming the tide of avoidable foreclosures and stabilizing  the housing market and the broader economy. The need is urgent. The time for action is now.?

 

When  NACBA, NCLC, Consumer Federation of America (CFA) and the Center for Responsible  Lending (CRL) called on Congress in April 2007 to move aggressively to stem the  growing flood of home foreclosures, it was estimated that some 2 million  homeowners were at risk of foreclosure.  And, at the time, the financial services industry accused the  organizations of being overly pessimistic about the likely toll of foreclosures. However, it turns out we were low-balling quite  significantly the number of foreclosures.

As  of September 2008, a full 1.2 million homeowners with subprime loans already  had lost their homes to foreclosure.  Another 1.7 million families with subprime loans are seriously  delinquent and at risk of losing their homes in the very near future. Credit  Suisse ("Foreclosure Update: Over 8 million foreclosures expected,? December  2008) now estimates that 8.1 million mortgages will be in foreclosure over the  next four years, representing 16 percent of all mortgages. Disturbingly, Credit Suisse finds that the  problem has spread from subprime loans to Alt-A, option ARMs, and even prime  loans.



FAILURE OF "FORECLOSURE PREVENTION PROGRAMS?

Bowing  to the demands of the financial services industry that created the foreclosure  crisis in the first place, every program put in place to prevent foreclosures  has relied on the voluntary cooperation of mortgage servicers who handle the  mortgages that, in most cases, are owned by securitized trusts that have issued  bonds to investors. It is painfully obvious that these voluntary programs have  failed to stem the tide of foreclosures. The few successful attempts at  mortgage modification, such as the FDIC efforts with IndyMac, have largely  dealt with those rare mortgages that are still owned by a single lender, rather  than securitized loans.

Voluntary  programs are failing for a variety of reasons that cannot be changed without  action by the Obama Administration and new Congress:

• Multiple owners make voluntary modification impossible. Many borrowers and  even their servicers simply cannot locate the holders of the mortgage to  negotiate with, or there are multiple owners all of whom would have to agree to  modification; the loans have been sliced and diced so many times that all of  the owners cannot be found and brought into the process.

• Fear of investor lawsuits blocks voluntary modifications. The servicer has  obligations to the investors who have purchased the mortgage-backed securities  through pooling and servicing contracts, and the interests of these investors  conflict. Servicers are hesitant to modify the loans because they are concerned  that it will impact different tranches of the security differently, and thereby  raise the risk of investor lawsuits when one or more tranche loses potential  income. At least one servicer has already been sued. Under the current system, the legally safest  course for the servicer clearly is foreclosure.

• Piggyback seconds block voluntary modifications. Perhaps the most  intractable problem is the fact that a third to a half of all 2006 subprime  borrowers took out piggyback second mortgages on their homes at the same  time they took out their first mortgages.  In these cases, the holders of the first mortgages have no incentive to provide  modifications that would free up borrower resources to make payments on the  second mortgages. At the same time, the holders of the second mortgages have no  incentive to support effective modifications by waiving their rights, which  would likely cause them to face a 100 percent loss. The holders of the second  mortgages are better off waiting to see if a borrower can make a few payments  before foreclosure.

• Overwhelmed servicers are not set up to negotiate modifications. Hundreds of  thousands of borrowers are asking for relief from organizations that  traditionally have had a "collections? mentality of trying to foreclose as  quickly as possible. They know how to foreclose, and the foreclosure process  has been increasingly automated to maximize the fees the servicers receive.  Many receive no extra compensation for working on modifications. These  servicers are not disposed to postponing foreclosure or equipped to handle  case-by-case negotiations. Many also have monetary incentives to foreclose  rather than modify.

In  practice, these roadblocks - all of which were warned of months ago by NACBA  and other groups - have resulted in gridlock in the voluntary modification  programs. Consider these examples:

• Hope for Homeowners  Act -- This law, passed with much fanfare last spring, provides an FHA refinancing if  the servicer agrees to accept slightly less than the value of the home in  satisfaction of the debt. The thought was that servicers would agree to accept  less than 100% payment if that payment was guaranteed by the government. It was expected that the program would help  400,000 homeowners but since it opened in October, fewer than 312 people have  applied for the program and no loans have been modified. The result? As Credit Suisse notes in its December 2008  report: "While loan modifications and  similar interventions (such as the Hope for Homeowners FHA refinancing program)  could help to reduce the march of foreclosures, the proliferation of generally  timid loan mod programs with confusing loan features raises significant doubt  as to whether the current loan mod momentum is sufficient to reduce  foreclosures materially ... modified loans remain a small percentage of  delinquent loans and loans in foreclosure, even though servicers have ramped up  their efforts in recent months.?

• Hope Now -- This voluntary effort by the industry,  promoted by the Administration, has produced more public relations than real  results. Homeowners have great  difficulties getting answers because the services do not have adequate staff to  deal with requests. When some accommodation is reached, servicers virtually  never reduce loan principal and often enter into repayment agreements that do  not even reduce loan payments. Studies have shown that most of the workouts  negotiated through Hope Now provide at best temporary short-term relief from  foreclosure, and in a large percentage of cases, the homeowner cannot keep up  with payments because the agreement does not adequately modify the loan. As of September  2008, Hope Now worked out loan modifications resulting in lower monthly  payments for 266,087 homeowners; loan modifications with the same or HIGHER monthly payments for 226,667  families; and 780,000 short term repayment plans.

• FDIC/IndyMac - This effort covers  65,000 borrowers who are more than two months delinquent on their mortgage, but  doesn't reduce the outstanding debt in any meaningful way and therefore has not  attracted much interest. So far, 7,200 homeowners  have modified their loans under this program.  And, after a two-month moratorium on foreclosures pending the  modification program, IndyMac foreclosures in November skyrocketed 242 percent  from October, according to Mark Hanson of the Field Check Group.

Most  recently, FDIC Chairwoman Bair has proposed a program that would, like Hope for  Homeowners, provide government guarantees as a carrot to entice servicers to  make modifications of interest rates and defer principal payments under a  formula based on the debtor's ability to pay. If the payments are modified by at least 10  percent, (but only for five years) the government would guarantee 50 percent of  the loan losses. The Treasury Department  noted that this program could actually give servicers an incentive to make  minimal modifications and then foreclose to collect the guarantees.

While  NACBA applauds FDIC Chair Bair's commitment to homeowners, it fears that, other  than in cases where a planned foreclosure would be more lucrative for the  servicer, this program also would have few takers. It is likely that, for all the same reasons  plaguing existing programs, servicers would be unwilling to make meaningful  modifications of most loans voluntarily.  Moreover, the program does nothing to deal with the problem of piggyback  second mortgages, often the riskiest loans given by the most irresponsible  lenders. Holders of second mortgages can  block the modification of the first mortgage, even though the second mortgage  typically would be wiped out in a foreclosure sale. Absent reductions in principal, the program  will neither sufficiently reduce payments nor prevent later foreclosures when  homeowners need to move or cannot refinance to resolve a financial problem. As  even Federal Reserve Board Chairman Bernanke has noted, "With low or negative  equity ... a stressed borrower has less ability (because there is no home equity  to tap) and less financial incentive to try to remain in the home.? At best, the Bair proposal would help only a  small number of homeowners and, in most cases, only postpone the foreclosure  problem - at considerable expense to taxpayers.

ABOUT NACBA

The  National Association of Consumer Bankruptcy Attorneys (http://www.nacba.org) is  the only national organization dedicated to serving the needs of consumer  bankruptcy attorneys and protecting the rights of consumer debtors in  bankruptcy. Formed in 1992, NACBA now has more than 3200 members located  in all 50 states and Puerto Rico.

CONTACT: Patrick Mitchell, (703) 276-3266, or  pmitchell@hastingsgroup.com.

EDITOR'S NOTE: A streaming audio  replay of this news event will be available on the Web  athttp://www.nacba.org as of 6   p.m. ET on December   18, 2008.

Originally Published at The Motley Fool


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Q: What is your advice regarding keeping your house fully mortgaged and investing the money that would otherwise go towards paying off the mortgage?

The FIRST critical qualifying question is this; How financially mature & responsible are you?

Generally speaking, people who oppose the management of your home leverage virtually always boil down their justification against it as "most people are too dumb/irresponsible to do such a thing."

In many (perhaps even most) cases, these detractors may actually be correct... but that doesn't mean they are correct ABOUT YOU.

Leverage (debt tied to growth assets) can be a very powerful and defensively used tool. Properly managed, it can help you accelerate the achievement of financial independence, and defend your net worth. If ignored or abused, it can also give some people the ability to wipe themselves out.

For the savvy personal financial manager, a fully mortgaged home provides defensive protection against 4 types of risks... what I call the "S.L.A.P." risks;

Softening real estate markets' decay of equity (and thus frozen liquidity,)
Litigation exposure of unliened equity,
Acts Of God (under-insured or uninsurable catastrophe's)
Personal disaster (the "D" word previously mentioned, as well as under-employment, outlaws, inlaws, etc.)


In an inflationary environment (which is highly expected in a massive way after we're done insisting our elected servants over-manipulate the markets,) maximally leveraged real estate is also arguably the greatest wealth development hedge position you can have.

A) Real estate will roughly match inflation, plus 1-2%... and inflation is expected to hit the teens (at minimum) within 3-10 years (depending on who you listen to.)

B) Real estate income will trail inflation... but at "merely" sub-teen rates of growth, that is a strong yielding investment,

C) 2008-Dollarized debt (current mortgages) that are paid in decades-later dollars will have the benefit (to the payer) of being paid with dramatically devalued currency. In simple, a dollar worth a dollar borrowed today will be paid back with a dollar only worth a fraction of today's dollars in later years.



Please comment on the methodologies of Alan Kaplan...
www.newschoolofwealth.com

I didn't go beyond his 1st page... but found a significant problem with his "deferred sales trust" strategy. Itgs a bit complex to explain... but in short; it won't work the way he describes it (you can't avoid the excise taxes of the sale to the trust by simply transferring to the trust... a sale and a transfer are treated differently.)

Hope that's helpful.
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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I see 4.5% at par, on the 30 FRM, being very realistic within as soon as this week.

NOW... metaphorically... "the stream can only get so low on water and still allow the fish to live." That is to say, I wouldn't be looking for 30 FRMs to get too much lower than this... and even if they did, it would be fairly academic at best. While 4% is a 20% discount off of 5%... the real dollar-value of that 1% difference has to be recouped against the real dollar value of whatever the slippage/transactional costs are.

My opinion; ANY real estate leverage financing secured at or below 4.75% is an all-time brag-point for life.

Back up the truck, and hunt for depressed investment real estate at 5.5%-ish... the impending backlash inflation is going to sweep all real estate portfolios to the moon in the coming 2-5 years anyway (and decimate the dollar-cost of repayment of any leverage.)

In a decade, everyone is going to be kicking themselves that they didn't "see the obvious" and grab as much easy-pickings real estate as they could have in 2008/9.

Cheers,
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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Hello, how long after the fed cuts rates do we see rates at banks drop? Does it take 1 day, 1 week, 1 month?

It depends on the product in question.

Banks will sell treasury bonds at rates reflecting an ANTICIPATION of the Fed moves.

Mortgage rates, however, reflect the mortgage backed security (bond) market directly, which doesn't have a pure correllation (direct match) to the Fed's manipulations.

I'm getting ready to sign a purchase agreement and wondering if I should stall.

NEVER base an asset-acquisition timing decision on the cost-of-money markets.

(IN ENGLISH; NO!)

You won't gain (nor necessarily lose) a better deal on a purchase by waiting (or rushing) to try to "catch" an interest rate of one level or another.

IN ADDITION;
"Rates are relative"... which means that when costs of money borrowed are generally low, rewards of money deposited are also generally low... and verse veesa. Asset values (and their growth rates) will anticipate the relative costs/rewards of money, and you'll get no advantage either way by timing the money markets.

Make sense? (I know... maybe not... but try to trust me on this one ;~)

Cheers,
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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We paid a $350 non-refundable lock deposit, and there has been a $350 appraisal of our house. The underwriting of the loan isn't quite complete. What would be the greatest sum of money we could lose?

It APPEARS that your outright sunk costs would be that $700... but then again, you're also at risk of getting no better position in your next lock.

Just figure that this sunk cost, plus any "next provider" potential sunk costs, have to be recouped in the improved interest costs on your loan.

Your post raises further questions/curiousities;

A) Is this a retail lender, or a broker? (You'd have far less concern with a broker as the appraisal could be simply resubmitted to another wholesale funder.)

B) Why did you lock at the time you did? Was it on your own market judgment, or your professional's? (Or was it on any valid market judgment at all, really?)


LASTLY;
The STRATEGIC STRUCTURE of your financing can make a dramatically larger difference to your net worth over time (even as short a time as 3-5 years, plus,) than an eighth or a quarter (or sometimes as much as a full interest point) on your locked loan itself.

Have you had your financial structure fully designed to fit the rest of your financial profile and portfolio?

Luck!
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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WOW... 30 FRM at 4.9% PAR

I do believe we have officially 'touched'... if not penetrated... the 2003 lows for fixed rate mortgages.

As bond yields continue to be truncheoned to death, I believe we'll see rates drop a bit further.

We are in the range of the "point of diminishing returns"... which is to say, if you are in a loan situation where you see staying put long enough for a break even within 3-5 years on a refi... then dilly-dallying around to "see if it goes lower" is simply playing with fire.

MY MARKET OPINION (for whatever it is worth... but which (if I may say so myself, has been scarily accurate over the last several years,)) is as follows;

Fed Prime will likely be artificially constrained (kept lowww) for at minimum through 2009, and could reasonably remain constrained through 2012 (all depending on how long the government fears civil economic rebellion ;~)

Conforming FRMs (the stuff now not only explicitly backed by the "givernment", but packaged & sold into securities/bonds that the feds have decided to directly buy, with no future limit nor exit strategy,) will roll around in the 4% range for as long as it takes for the natural real estate cycle to absorb its past 'exuberances' and return to its average growth rate of real inflation* plus 1-2%

(* Real inflation is the massive tidal wave forming while the present white-water is appearing to currently be receding (deflation.) We're likely to see this "surprise" inflationary tidal wave begin to hit in anywhere from 6-18 months, and it is going to be a doozy... and its going to sweep away economic roots making the last 6-12 months look like a birthday party.)

Nobody is exactly sure how ugly the real inflation metrics will register, nor how soon.... but double-digits is mostly unargued... the question is whether it will be contained to the teens.

SO... "real inflation" being in the teens (at our prayerful best,) plus 1-2% to reflect approximate population growth along with relative quality preference to other nations (this is a hope, anyway,) would mean that the 30 FRMs are predictably going to stay between 4-6% until real estate rebounds to double-digit annual growth... and then (Paul Volker IS on the new administration's economic adviser team) we may very well see a "whiplash" at the Fed Prime... driving short-term rates on a death march to try to "soak up" the inflationary tidal wave set in place.

It will all be futile, of course.. just like the last time it was tried... but that never stops the tinkerers that think something "has to be fixed" even when history shows you can't fight mother nature.

Cheers,
Dave Donhoff
Leverage Planner


PS.... if I haven't mentioned it recently... ESPECIALLY in light of realistic expectations... the ULTIMATE wealth development hedge is;
A) Acquire as much distressed income/yield real estate (directly,) as possible,
B) Use as MUCH current-dollar leverage as can safely be supported from yield. (Strategically "dancing" your funds around between primary-residence 30 FRMs in the 4%s, and HELOCs in the 3%s... is a quite worthy dance!!!)
C) Allow to simmer in the economic slow-boil... real estate values ROCKING up with the ludicrous inflation, while borrowed-dollar values are decimated in value at the same time.
D) Discover, in a decade, that your 'real estate fleet' has 5-bagged, your yield has 3-4-bagged, your equity has 1,000-bagged, and your leverage costs have been decimated by silly government "fix it quick" shenanigans.

Not EXACTLY a "no brainer".... but considering the so-called 'minds' working feverishly in government to make it all come true, its about as close as it gets ;~)


FINAL PPS. a bit of a gratitude post I sent up at a different quiet board on Sunday... worthy of a repeat, I think. Bless ALL of you for your support!!!
http://boards.fool.com/Message.asp?mid=27250981

Originally Published at The Motley Fool


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Should [my friend] expect their realtor to provide advice on this topic?

NO... it is quite rare when Realtors® have significant financial expertise even in general, and the shortsale process is far from "general" nor stable... it is a perpetually shifting 'specialty' financial issue right now.


Is there any other professional they should be dealing with?

Yes, there are shortsale negotiation specialists. Most states are now requiring that any consumer-representative shortsale (and/or loan modification) negotiators must have either a state lending license or a law license. (Of course, the presence of either license, by itself, is no assurance of that professionals exspertise in this very specialized area.)

There is a GROWING amount of fraud & scammage in this arena... so I would strongly advise your friend to select representation carefully and do a good background due diligence (including state licensing,) but get busy.... his timeclock is definitely ticking to his disadvantage.

Luck!
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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I was going to hold my loan forever, as it's pretty decent (5.75% fixed), but I have a decent amount of equity built up and was going to refinance to lower my monthly payments (not to take any cash out!). My work is slowing down, and an extra $500/$600 month would be good to have perhaps. But I'm on the fence.

Dropping your monthly cashflow burdens in the current environment is a VERY PRUDENT move, in my opinion.

Further... if you have anything less than 12 full months of your TOTAL costs of living in reserves... now is a very opportune time to do so (rather than retaining it entrapped in the real estate.)

An extra $10,000 of reserves, at a cash-cost (interest) of 5%, is just $41.67/month. Pulling out $10,000 into liquid reserves would cover its own payment for almost 20 years (ignoring any interest you may also get on those reserves.) That is an OUTSTANDING "gliding ratio" for financial security.

Luck!
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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One idea I had was to refi- cash out my current mortgage and use the cash to buy ourselves a new home, while retaining our current home to rent out. There are advantages here, but the more I look into it the more I am confused. Is this method just as simple as it sounds? Some sources say that it is, but I have also been learning that I may get into trouble with my current lender if I don't disclose the new use of my current home as a rental.

As long as your refi your primary residence WHILE you still have a legitimate & non-fraudulent INTENT TO OCCUPY for at least the future 6-12 months, you should be fine.

"Intent" is the legal issue here.

Else... doing the "crab-shell shuffle" is a great way to begin building a rental portfolio... as long as you acquire rentable places along that path. Its exactly how I did my 1st 3 places.

Luck
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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In response to the following article: http://www.bankrate.com/elink/news/financial_literacy/investing_money/negative_equity_a1.asp

Wow... I am so surprised and disappointed in these Certified Financial Planners'® answers (although I know I shouldn't be... most CFPs never acquire a professional working knowledge of the leverage side of finance.) All three missed the actual facts presented, and how they play for this family.

FIRST OFF, I'll channel SeattlePioneer to say "1,500 sf for 2 adults and a child is a SUPERDOME of room!!!" Truly their complaint appears to be a bit of a spoiled-child complaint at its surface....

HOWEVER... let's look at it from perhaps a perspective of a "Brady Bunch" new family literally busting at the seems...

All ships are sailing on the same tide in Florida (and everywhere else.) If they have to sell at 45-50% off 2005 prices, they are also going to be BUYING at roughly 45-50% off 2005 prices. They MAY have to bring cash or credit into their sale to get it closed (and maintain their good credit...) but it will be offset by their relative acquisition position, relative to time, on their next purchase. They are neither losing nor gaining "equity per foot" in the transition... it is a lateral move.

They don't have to cover BOTH mortgages either, in order to move up to a more fitting family home. If our hypotherical larger family WAS liquidity-challenged, they COULD approach their lender and request that their shortfall be released as an unsecured debt (very highly likely approvable in Florida markets to borrowers with worthy credit histories and income!) This would mean instead of having to bring $50k of cash into their sale, they may have a $50,000 unsecured debt, with a monthly payment in the low $400's. This is VERY justifiable when considering the depth of buying DISCOUNT in the current Florida markets.

The article states that their new 2-income position affords them better digs... so the implication is they also either have the liquidity to bring in to close out this sale... and/or the capacity to include the smaller payments on an unsecured loan to cover the marginal shortfall on the sale.

YES... if they simply sit still and suffer maybe (VERY maybe) that is better off for them... but if it is not, they don't have to do so.

The "annointed ones" missed it.

Cheers,
Dave Donhoff
Leverage Planner