By: Bill Black CDPE CMP

Bill Black CDPE CMP — Sun, 01 Apr 2012 20:56:34 +0000

I am sure the reason behind this is the changes that MHA implemented allowing from .21 cents on the dollar up to .63 cents on the dollar in which is the new incentive to non-GSE loans. This is is down to a 105% of loan to value.
Fannie and Freddie may be next but until then it is only going to make sense for B of A to take a client down to a 105% LTV. Say a $300,000 loan value at $200,000. They drop the principal down to $210,000 and earn $56,700 from the tax payer. They now have a 105% loan that they can “refinance” over to Fannie Mae and receive a complete $210,000 pay off PLUS the fees and benefits of originating a loan making about $5,000 minimum on offering a 4.75% rate. This then gets sold to Fannie Mae or Freddie Mac and the total loss may only be $38,300 or maybe 12% loss. If they didn’t do this it may have ended in a foreclosure with a net of about $170,000 or a $130,000 loss vs. the $38,300 loss…. make sense? Yes the banks have and will to continue to profit from our tax payers dollars all at a benefit to their bottom line.

Comments on: Bank of America claims to be ramping up principal reductions

By: Bill Black CDPE CMP