Don’t feel bad. It’s just a computer program.

Why, Jackie! That’s nice of you. In other words, are these letters going out by the thousands across the country to everybody on mortgage lenders’ lists?

Isn’t the title of this post a bit disingenous?

You didn’t “lose” anything…perhaps I’m misreading the tone of your post.

If I’m guessing right, the value of your house decreased and thus the HELOC reduction. But, as we’ve seen housing “values” in the Bay Area were nonsensical.

Besides, I firmly believe one should look at a house as a place to live, not an investment. It’s totally illiquid unless one plans to move which will vaporize any ‘gains’ because one is likely to have to purchase a new house at a higher price anyway.

Hey there, Slappyfrog, nice to see from you! I am so glad you posted, because it sounds like you might have a good answer to my question. I would like to move, simply because I have lived in my ‘hood for eight years and don’t like it. I keep thinking if I just jump on it really fast, I can at least get my down payment back, and then take advantage of low prices to move to a nicer area.

I’m wondering what you think of this idea? I’m especially interested because you mention that a house is a place to live, not an investment, and I totally see the sense in that.

(P.S. sorry if title was a bit OTT, though I did feel sad and as though I lost something, though u r right, that’s nonsensical.)

With all the craziness going on in the mortgage market, I was recently wondering if there might be a way to buy my mortgage back from the bank at $0.25 on the $ like the recent Merrill, Lynch deal. Wouldn’t that be cool!

Hahahahaha, that’s brilliant, Mark! If you figure out a way to do it, please let me know immediately!

Actually, back in the day (1980-1982), when interest rates went up to 18%, banks were offering people who got in their loans at 6% in the ’60s principal writedowns to fix them in higher interest loans.

What! Who would be crazy enough to do that? Even if the bank forgave some of the principal, mortgages are usually for 30 years, right? How could a borrower benefit by boosting his or her interest rate to double digits?

Janis:
Nobody actually holds onto a loan for 30 years anymore. People either move, or improve and refinance it seems. If the bank discounted my mortgage to yield a high rate, I’d jump at it, then pay it off. It’s not like money in the stock market has been a great idea lately…
There are times when cash is king, and I think we are about to experience that again.
Rates on new HELOC’s that come even remotely near the home valuation are going to be sky high now that defaults are skyrocketing. Banks may be willing to write down existing balances to get the money back.

In my mind, the interest rates won’t hit double digits fast enough. Unfortunately, I suspect with Fannie/Freddy under conservatorship the housing market will swirl around a while longer before that final flush. Based on my observation that the government always acts to maximize my suffering, I bet we’ll see an increase in capital gains tax first.

[...] readers Red, Brandon and David recently suggested that as this crazy market worsens, it might become possible to get your mortgage lender to write [...]