The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: GraceZ who wrote (150240)	9/25/2008 1:44:19 PM
From: jrhana	Read Replies (1) of 306849

<...to make those underwater on their mortgage in the black again.... [and]..... write down the RE asset and re-create a mortgage the borrower can pay.> My daughter was a mid level supervisor for a privately held commercial mortgage company. When the commercial mortgage bubble finally burst, she was laid off with full severance pay. Less than a month later, she was called back in for another position at the same company. Somebody has invested five billion in her employer, and they are now going around buying up the mortgages of failed subprime companies for less than $.30 on the dollar. They then are picking out those borrowers who are up to date on their mortgages even though the mortgages are now clearly at greater than 100% loan to value. Next they put these borrowers through a full doc loan process and making sure a reliable and realistic appraisal gets down. They are then writing down the mortgage to less than the current appraisal. So the borrower gets a lower loan principal value and lower payments so they would have to be crazy not to accept. Again these are people who obviously are trying to keep up with their payments. Then her company goes out and sells these now full doc and no longer subprime loans for 100% of the new and lower loan balance. They did write the loan balance down some, but remember that they only paid less than 30 cents on the dollar of the original principal balance. I am curious to see what happens next to the loans that are in serious arrears. But apparently there are enough people that are paying their loans on time to keep them occupied for quite a while. My daughter says it is going great guns. She is extremely busy and is processing several of these loans daily. She was good at her previous job and is enjoying the chance to use her people skills on these stressed out borrowers while lending them a helping hand and making her company some good coin at the same time. She has always been a calming voice to me in times of crisis.

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