Sunday, August 3, 2008

People Who Can't Afford Homes Will Modify the Loans...

In the world of loan modifications (I guess) this is a sucess story. In April the Portland Tribune did a story about a woman who couldn't afford a home and was about to lose it.

As recession grips other communities around the country, the health of Portland’s economy rests partly on what happens to Shell and thousands like her, who hold shaky home loans poised to unravel in the coming months.
“It’s all smoke-blowing,” said Shell, 45, who complains she’s gotten the runaround for six months trying to arrange a workout with Countrywide Home Loans.“It’s like you’re in this big pinball game,” Shell said of her travails. “All the while you’re losing your equity, and the market’s getting worse.”

Here is a follow up also from the Tribune.

The single mom, who works as a waitress and massage therapist, snared a new 40-year mortgage last month with a fixed 4 percent interest rate, to help save her one-story bungalow near Grant High School.
Her new below-market-rate loan could be a hopeful sign for other area residents stuck with subprime and other mortgages they can’t afford, and provide evidence that lenders are serious about offering loan “workouts” that keep people in their homes.
But local experts said Shell’s deal is the exception, and lenders aren’t keeping pace with the recent spike in foreclosures here. Initially Oregon was largely buffered from the foreclosure wave sweeping the nation, but now it appears the crisis just took longer to get here.

Shell still must pay $1,608 a month, a stretch for her budget. And her loan grew by $20,000 because of the extra amount tacked onto her principal each month.
“I’m looking into roommates,” she said. “If I can get somebody else in here I can actually afford to live here.”
In six years, her loan principal will be back to where it started when she bought the house, and she’ll be on pace to own the home outright by 2045.

Her old payment was $1,900 per month.