{"id":10783,"date":"2010-01-09T10:21:23","date_gmt":"2010-01-09T17:21:23","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=10783"},"modified":"2010-01-09T10:21:23","modified_gmt":"2010-01-09T17:21:23","slug":"principal-reduction-or-interest-rate-decrease","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10783\/principal-reduction-or-interest-rate-decrease\/","title":{"rendered":"Principal Reduction Or Interest Rate Decrease?"},"content":{"rendered":"

My stompin’ ground is San Diego. When the bubble burst here, the median price for a single family residence was within shoutin’ distance of $600,000. To give you some perspective on that number, my first ever listing was a 4 bedroom home in a blue collar area in October of 1969 — $18,100. It didn’t sell during the 90 day listing period, as it was um, a tad overpriced. Gimme a break, it was my first day on the job, and I was just 67 days past my 18th birthday. <\/p>\n

Let’s say you and I are partners in a bank making real estate loans in San Diego. In January of 2005 we approved a couple’s application to refinance their well located 2,500 foot home with a view. Our own appraiser came in with a value of $675,000. The borrowers wanted 80% which was $540,000 — very doable considering their 770+ FICOs and impressive credit history. The interest rate was 6% fixed for 30 years — a payment of $3,237.57 monthly. Add taxes and insurance — just under $4,000!<\/p>\n

Their home is now worth $450,000 — more than $100,000 above the current median price for the county. She’s had to resume full time work due to her husband’s job loss. He’s now workin’ two jobs at drastically reduced pay. They’re goin’ through their savings like a mower spits out grass on Saturday morning. <\/p>\n

What do we, as the lender wanna do?<\/p>\n

Our Board of Directors thinks either the government or the market will eventually save us. But then the White House floats a plan calling for principal reduction. Crap on a cracker. <\/p>\n

Even if we reduce the loan balance by $90,000 (Almost 17%), the payment will only be reduced by $540 — hardly a real life solution when we consider the couple’s severely reduced income. <\/p>\n

If we offered them a significant reduction in interest rate, say 4.5% with interest only payments for two years, then 5% the next three years, then 5% fixed for 30 years fully amortized — it would make the difference in going through foreclosure or not. <\/p>\n

Their payment the Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

My stompin’ ground is San Diego. When the bubble burst here, the median price for a single family residence was within shoutin’ distance of $600,000. To give you some perspective on that number, my first ever listing was a 4 bedroom home in a blue collar area in October of 1969 — $18,100. It didn’t […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-10783","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":3273,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3273\/estatelycom-in-san-diego-map-based-search-in-a-land-without-rain\/","url_meta":{"origin":10783,"position":0},"title":"Estately.com in San Diego: Map-based search in a land without rain","author":"Greg Swann","date":"June 26, 2008","format":false,"excerpt":"Estately.com starts operations in San Diego today, the third city to be served by the Seattle-based map-based real estate search start-up. Considering that the company has so-far only raked in a modest six-figures in venture capital, this would seem to argue that Estately's software scales easily. No news on finances,\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":15792,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/15792\/where-is-he-wrong\/","url_meta":{"origin":10783,"position":1},"title":"Where Is He Wrong?","author":"Don Reedy, San Diego, CA","date":"March 26, 2012","format":false,"excerpt":"This was in the San Diego Union Tribune, and references an occurrence at a local real estate meeting here last week. Wednesday: Jim Abbott, owner of a San Diego real estate brokerage, backed out from appearing on a real estate event\u2019s panel after he was told to refrain from speaking\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1007,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1007\/glenn-kelman-on-redfincoms-move-into-southern-california-ive-never-had-to-think-so-hard-in-an-interview-in-my-life\/","url_meta":{"origin":10783,"position":2},"title":"Glenn Kelman on Redfin.com’s move into Southern California: “I’ve never had to think so hard in an interview in my life”","author":"Greg Swann","date":"February 8, 2007","format":false,"excerpt":"Here's the newspaper news, and we'll come back to it in due course: Redfin.com today opens three new offices in Southern California: Los Angeles, Orange County and San Diego. The company has expanded its web site to include listings from nine Southern California MLS systems. Here's the real news, which\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":17470,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/17470\/listing-and-selling-a-san-diego-home-the-bloodhound-blog-way\/","url_meta":{"origin":10783,"position":3},"title":"Listing and Selling A San Diego Home The BloodhoundBlog Way","author":"Brian Brady","date":"January 19, 2021","format":false,"excerpt":"I am a California real estate broker.\u00a0 I don't sell a lot of homes and prefer not to have a robust brokerage business.\u00a0 My business partner (and wife of 22 years) and I make our bread by funding residential and commercial loans, the former in California and the latter nationwide.\u00a0\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2021\/01\/frank-mckenna-OD9EOzfSOh0-unsplash-480x320.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1710,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1710\/cyberhomes-vs-zillow-dueling-valuation-tools-for-your-san-diego-home\/","url_meta":{"origin":10783,"position":4},"title":"Cyberhomes vs. Zillow – Dueling Valuation Tools for Your San Diego Home","author":"Kris Berg","date":"July 29, 2007","format":false,"excerpt":"For the uninitiated, the title is a bad joke. Moving on... At our most recent office meeting, between the property pitches and the vendor pitches, our office manager promoted our company's new affiliation with Cyberhomes. Now, being too lazy to do a site search this morning, Cyberhomes has undoubtedly been\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":15930,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/15930\/really-what-if-hes-not-wrong\/","url_meta":{"origin":10783,"position":5},"title":"Really, What If He’s Not Wrong?","author":"Don Reedy, San Diego, CA","date":"May 2, 2012","format":false,"excerpt":"A follow-up to an article on syndication I wrote just a short time ago. \u00a0Keep in mind that I've never even met Jim Abbott, and am not promoting his company. \u00a0But I'm listening harder now to him, and as he speaks his words continue to etch a path that I\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/10783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=10783"}],"version-history":[{"count":2,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/10783\/revisions"}],"predecessor-version":[{"id":10785,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/10783\/revisions\/10785"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=10783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=10783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=10783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}