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September 9th, 2010 (Modified on September 10th, 2010)

HSH’s underwater refi plan: Comments rolling in



Realizing the scope of the underwater-but-can’t-refinance problem in this country and the lack of relief that has been directed to this group of borrowers, HSH published our own concept on how Washington could assist these borrowers. Since we published the article — titled “Underwater Solution: Value Gap Refinance” — on Monday, the comments have been rolling in from readers, reacting to our underwater refinance plan.

Let’s take a look at some of the reactions this article has generated from HSH’s readers so far.

Anthony from Michigan writes:

What can we do to move the Value Gap plan forward? It sounds like an excellent idea, are any current members of congress sponsoring or considering sponsorship of such a bill?

Bruce from California had this to say:

I like your idea concerning Value Gap refinancing. Perhaps I missed it in your story but I feel that especially for individuals that are just slightly above the FHA loan limits with Jumbo Loans this program would possibly allow them to qualify for a conventional loan with the low interest rates they will unfortunately miss out on.

There is a large gap when it comes to Jumbo Mortgages out there. Is this idea that you have come up with being looked at by Barney Frank or anyone in a power play position in the Federal Government?

It sure seems like a great idea to me. Thank you for the article, and the great idea!

JoAnne from Detroit said:

The Value Gap Coverage Program sounds great and would assist a number of people who need assistance with their mortgage situations. However, there are those who purchased their homes prior to 2003 and refinanced for various reasons who would not be eligible for this program. What about those “good guys”. Once again, there is no help for them. They, too, are currently “underwater” and have no way out except to walk away from their property but continue to refuse to do so.

Nada from Chicago says:

I’m one of the underwater homeowners who make timely payments and tried for 1 1/2 years with GMAC to modify my loan in vain. I can’t get help because I don’t qualify for a refi and can’t modify. I like your idea with the ‘value gap’. Please let me know if this ever comes to pass. Thanks!

Scott asked:

Any chance of this going through? Is there any help for regular people like me who need a better situation but don’t want to default?

Ofeliya from Michigan said:

I read the article “Underwater Crisis: One Solution, Perhaps” about help to the homeowners who don’t walk away from their homes even if their mortgages are underwater. This will work for me. I am the homeowner who needs the help. I was the first home buyer in 2005. Now I’m underwater. But I think I have a very SIMPLE SOLUTION for homeowners like me. Every lender just needs lower the interest rate for any mortgage from 2003-2007 without refinancing. The same way as adjustable rates change. What is wrong with this idea?

Allan Sloan, senior editor-at-large at Fortune, wrote a column about HSH’s underwater refinance plan that was published in both Fortune and the Washington Post. Both the Fortune and Washington Post locations have received quite a bit of comments from their readers — both for and against our underwater refi concept. Be sure to check out those comments and reactions as well.

Want to share your opinion? Leave us a comment below!

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12 Responses to “HSH’s underwater refi plan: Comments rolling in”

  1. Randy Says: September 9th, 2010 at 6:05 pm

    I just read everything discussed about the value gap. I too am in this very situation however the value gap is now approximate $150,000. Please help. I would never consider just walking but there has been absolutely no help.


  2. JW Says: September 9th, 2010 at 6:33 pm

    A new program just started 2 days ago with HUD, its the FHA Short-refi option. This program addresses all the key points (principal reduction, underwater on-time borrowers, lower interest rate, etc..). My loan mod has taken over 15 mtns w/o any solid results so I hope this new refi program from the feds will do the tricks but I expect this program will take some time for it fully operational. So the fight goes on….

  3. Tim Manni Says: September 10th, 2010 at 8:11 am

    Hey Randy,

    Thanks for commenting. We’ll see if an underwater refi plan is created that’s better than the one the FHA announced this week.


  4. Tim Manni Says: September 10th, 2010 at 8:15 am


    We actually compared our underwater refi plan to HUD’s. Here’s the link: http://blog.hsh.com/index.php/2010/09/comparing-underwater-refi-plans-theirs-vs-ours/

    We think there are several factors about HUD’s underwater refi plan that will limit it greatly. The main one is that it’s voluntary for lenders to participate…and they’re required to reduce a borrower’s principal by at least 10%. We’ll see.

    Thanks for commenting,

  5. dumb to be responsible Says: September 10th, 2010 at 11:28 am

    I bought my home in Dec 2005 for $295k on a 100k down, 6 1/4% 20 yr fixed rate mortgage. Zillow says my house is worth 150k (florida), and my mortgage is now 165k after the large down payment. Obviously that 100k is gone forever. So much for fiscal responsibility. Anyway, my value gap is narrowing each month as long as Florida doesn’t tank anymore. Would I benefit from your plan? Never late on a payment. But wonder if there are refi costs associated with this to factor in if I’m only planning on being here a few more years. Of course all that assumes you get anywhere with your idea :-) Thanks.

  6. Tim Manni Says: September 10th, 2010 at 11:50 am

    Dumb to be responsible,

    First off, thanks for commenting. Since you’re underwater and you could benefit from a lower interest, sure you would qualify. However, our idea was meant for homeowners who want to remain in their homes for the foreseeable future. There would be refi closing costs associated with our idea, so you’d have to weigh your costs vs. potential savings. Important to note our value gap coverage plan is a well thought out idea, it’s not being implemented by Congress or anything, though I many many people who think it should.

    Thanks again,

  7. Bernadette Says: September 10th, 2010 at 12:38 pm

    The best solution offered that I’ve read about or come across so far. Excellent idea! As a REALTOR who have sold homes under a short sale and have seen the pain and suffering that families go through before and throughout the short sale process, I would really love to see this happen. This would save so many families from the devastating emotional rollercoaster of a looming foreclosure. I hope this takes hold and becomes reality. I would use this for myself as well since I fall into this category of responsible underwater homeowners.

  8. Tim Manni Says: September 10th, 2010 at 12:47 pm


    Thanks so much for commenting. We’re so glad that you think our idea is a well-thought-out concept, especially from a professional point of view.

    I would love to hear more about your experiences in selling short sale properties — I bet our readers would to. Any interest in writing a guest blog post?


  9. JW from CA and HI Says: September 10th, 2010 at 6:48 pm

    Thanks for the comparsion link Tim. I am a responsible underwater owners too, never been late on the mtg and want to keep my house and credit.
    About a yr ago, I was brain-storming with some of my housing group here in CA on the principal reduction but never have a chance to promote and get a second opinion on our ideas. But now w/ the push from the Feds and this great ‘value gap’ plan from HSH, I think my plan will give add’l incentive to the banks/investors/servicers to get rid of the principal percentage AND we can be Federal-like (GSE). Let me give a little more thoughts on it then I’ll posted here for your thoughts and would love Tim & Keith comments. Thanks JW

  10. Tim Manni Says: September 13th, 2010 at 8:17 am

    Sounds good JW, we look forward to checking it out

  11. H P R II Says: October 10th, 2010 at 11:14 am

    I purchased my “dream home” new construction condo in Livonia, Michigan in November, 2003.
    The price was $177,000. I owe $142,000, and pay $1,000.00 per month, which includes an extra $190.00. The loan matures in 2033, at 5.25%.

    Compaarablee condos are selling at $105,000 or less. Foreclosures have hurt prices, and have resold as low as $98,000.00 in late 2008.

    Am I a good candidate for the “gap” program menti0ned by Mr. Sloan in “Fortune” magazine ?

  12. Tim Manni Says: October 19th, 2010 at 9:04 am

    HPR II,

    You can read the plan in full here: http://library.hsh.com/articles/refinancing/ValueGapRefi.html

    Unfortunately at this junction it’s only a plan. But if you think it’s worthwhile, tell your Congressman about it. Our underwater refi plan is designed for current but underwater borrowers who want to stay in their homes for the long term.

    Thanks for commenting,

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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