Tuesday, December 15, 2009

Underwater, Securitized, and Screwed by the "Pass the Trash" Strategy

Calculated Risk had an interesting post last Saturday about Refinancing with Negative Equity. http://www.calculatedriskblog.com/2009/ ... ed+Risk%29

His post refers to an article written by David Streitfeld from the NY Times Interest Rates Are Low, but Banks Balk at Refinancing citing among other things the plights of Mark Belvedere who owes $235,000 on a condo that would sell for barely half that today, and Andrew Knapp who has tried twice to refinance and failed. From the Times... http://www.nytimes.com/2009/12/13/busin ... .html?_r=1

Mr. Belvedere said he would be willing to live with all that lost equity if he could refinance his loan from a variable rate, which could eventually go as high as 12 percent, into a 30-year fixed term.

His lender said no, citing the diminished value of the property. “It makes no sense and is so frustrating,â€