FDIC, BoA both doing workouts in residential real estate on clarkhoward.com

There's been a lot fuss about the advice Clark gives out to callers who are upside down in their mortgages. For those in an owner-occupied property, Clark suggests a workout -- as is often done in commercial real estate. The reality is that lenders would rather renegotiate the terms of your mortgage than have to foreclose and play property manager.

Now even the FDIC is getting involved in the workout game. After the failure of IndyMac, the FDIC voluntarily contacted the bank's mortgage customers who were upside down with offers of a workout. Why? The federal taxpayer benefits more this way than if the feds have to foreclose, mismanage a property and finally unload it as a distress sale.

So far, the FDIC has lowered monthly mortgage payments for IndyMac customers by $430; they're adhering to a flat 38% of the homeowner's income. Meanwhile, other workouts are being orchestrated by Bank of America for their Countrywide division. For more on that, see Clark's discussion of the topic earlier this month. Simply put, workouts are a smart business move. It's cheaper to cut a deal with a borrower than to put them out on the street.

On the other side of this issue, you have the question of fairness. Is it fair that you pay your mortgage as agreed and get no help? No, it's not fair. Workouts do protect the value of your neighborhood by preventing too many foreclosures. But if you drill down to you as an individual borrower, it's obviously not fair. The world is grey sometimes -- even though we'd prefer it to be black and white.

What others are saying

Countrywide/BOA mortgages
My daughter got into a Countrywide mortgage that is horrible. She's been doing everything she can to make her mortgage every month, but it's getting harder and harder. She went to BOA to get some help but was told unless she was behind in her mortgage, BOA would not be able to help her. This is ludicrous! How can she get help without ruining her credit score? Clark, please point us in the right direction!!
By Carol @ 10/27/08 09:57:05 PMreport abuse
Childish dreams
Yvonne, do you still believe in the Easter Bunny? You probably do if you think it's a good idea for the government to pay off your credit card debt. Oh and BTW, the total bill for credit card debt is now about $2.5 trillion.
By Ed @ 10/27/08 04:20:20 PMreport abuse
bailout
If the government wants to do something for the American people how about paying off all our credit card debt so that we can have a new start. I do not beleive that our national credit card debt would exceed the current 700,000,000,000., given out to those responsible for this crisis.
By Yvonne @ 10/27/08 12:38:18 PMreport abuse
Bailouts
Are you kidding me? Greed is good remember. The Banks knew that they had a number of folks that should not have qualified and still gave them mortgages(Including folks in their 70's and 80's). Now the government is Bailing out Banks. Now the government gives money to State Government who has agreed to buy up forclosed home instead of helping those that simply want to stay in their homes. Which do you think is worst, banks not assisting those that want to stay in their homes or those folks leaving their homes and taking their money with them? Leaving folks like me and you with less revenue for schools, roads, and other programs along with my neighborhood looking like a ghost town and property value taking a Nose Dive. In short your being able to pay on time ..well good cedit is your only reward..the banks and our government is the real joke and everyone is paying for it.
By Gee @ 10/27/08 10:36:10 AMreport abuse
I do agree with protecting neighborhood values and avoiding foreclosures. I also think those who avail themselves of the handout should be required to have a family budget set for them (either govt. or private) and have them live within it -- repaying the handout. That may mean no cable, no cell phones, no call waiting, no dining out, etc. Untill their debt is paid off, they will have to have every expenditure approved. If you can't manage your money and need a handout, your budget hould be controlled until you are paid off. And who knows, You just might learn something.
By anonymous @ 10/25/08 02:08:42 PMreport abuse
Mortgage
Gee I paid my mortgage, like a good little boy sometime hard sometimes easy, what a jerk I was. I should refide and default on it, so they can rescue me..haha
By Guy @ 10/25/08 01:03:27 AMreport abuse
No Clark, this is a simple black and white issue
Dave54, you hit the nail on the head. All this "bailout" nonsense is doing is delay the inevitable until after election day. No country has ever borrowed its way to prosperity and the U.S.A is no different than Argentina, pre-WWII Germany, or Zimbabwe. We will eventually fall by the wayside because idiots like Clarke can't bring themselves to admit that wrong is wrong, and that people need to sometimes suffer the consequences of their bad decisions..
By Greg @ 10/24/08 07:25:30 PMreport abuse
Not Fair
When the country, as a whole, basically keeps the presses running 24/7 printing monopoly money to cover wallstreet, what example is that for the gneral public....get yours before it's too late.If you're a responsible citizen paying your bills on time, living within your means, then whose the fool? Oh, we got our stimulus a few months back, paid for with thee same funny money this bail-out is parid with. It's been all a scam since we got off the gold standard. This time, the whole world is feeling our financial pain.
By Dave54 @ 10/24/08 05:36:21 PMreport abuse

Countrywide/BOA mortgages

My daughter got into a Countrywide mortgage that is horrible. She's been doing everything she can to make her mortgage every month, but it's getting harder and harder. She went to BOA to get some help but was told unless she was behind in her mortgage, BOA would not be able to help her. This is ludicrous! How can she get help without ruining her credit score? Clark, please point us in the right direction!!

By Carol @ 10/27/08 09:57:05 PMreport abuse

Childish dreams

Yvonne, do you still believe in the Easter Bunny? You probably do if you think it's a good idea for the government to pay off your credit card debt. Oh and BTW, the total bill for credit card debt is now about $2.5 trillion.

By Ed @ 10/27/08 04:20:20 PMreport abuse

bailout

If the government wants to do something for the American people how about paying off all our credit card debt so that we can have a new start. I do not beleive that our national credit card debt would exceed the current 700,000,000,000., given out to those responsible for this crisis.

By Yvonne @ 10/27/08 12:38:18 PMreport abuse

Bailouts

Are you kidding me? Greed is good remember. The Banks knew that they had a number of folks that should not have qualified and still gave them mortgages(Including folks in their 70's and 80's). Now the government is Bailing out Banks. Now the government gives money to State Government who has agreed to buy up forclosed home instead of helping those that simply want to stay in their homes. Which do you think is worst, banks not assisting those that want to stay in their homes or those folks leaving their homes and taking their money with them? Leaving folks like me and you with less revenue for schools, roads, and other programs along with my neighborhood looking like a ghost town and property value taking a Nose Dive. In short your being able to pay on time ..well good cedit is your only reward..the banks and our government is the real joke and everyone is paying for it.

By Gee @ 10/27/08 10:36:10 AMreport abuse

I do agree with protecting neighborhood values and avoiding foreclosures. I also think those who avail themselves of the handout should be required to have a family budget set for them (either govt. or private) and have them live within it -- repaying the handout. That may mean no cable, no cell phones, no call waiting, no dining out, etc. Untill their debt is paid off, they will have to have every expenditure approved. If you can't manage your money and need a handout, your budget hould be controlled until you are paid off. And who knows, You just might learn something.

By anonymous @ 10/25/08 02:08:42 PMreport abuse

Mortgage

Gee I paid my mortgage, like a good little boy sometime hard sometimes easy, what a jerk I was. I should refide and default on it, so they can rescue me..haha

By Guy @ 10/25/08 01:03:27 AMreport abuse

No Clark, this is a simple black and white issue

Dave54, you hit the nail on the head. All this "bailout" nonsense is doing is delay the inevitable until after election day. No country has ever borrowed its way to prosperity and the U.S.A is no different than Argentina, pre-WWII Germany, or Zimbabwe. We will eventually fall by the wayside because idiots like Clarke can't bring themselves to admit that wrong is wrong, and that people need to sometimes suffer the consequences of their bad decisions..

By Greg @ 10/24/08 07:25:30 PMreport abuse

Not Fair

When the country, as a whole, basically keeps the presses running 24/7 printing monopoly money to cover wallstreet, what example is that for the gneral public....get yours before it's too late.If you're a responsible citizen paying your bills on time, living within your means, then whose the fool? Oh, we got our stimulus a few months back, paid for with thee same funny money this bail-out is parid with. It's been all a scam since we got off the gold standard. This time, the whole world is feeling our financial pain.

By Dave54 @ 10/24/08 05:36:21 PMreport abuse

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Oct 24, 2008 -- FDIC, BoA both doing workouts in residential real estate

What others are saying