Mortgage lenders pursue homeowners even after foreclosure
02-03-2010 | 01:33 PM
#1
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Mortgage lenders pursue homeowners even after foreclosure
A long read but a great article. I for one am definitely in favor of going after "strategic defaults". 
As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right?
Wrong.
Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes.
It can even happen to people who got their bank to approve them selling their home for less than it is worth.
Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.
"My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."
Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called "liar loans" where they didn't have to verify their income.
Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances -- like unemployment or a job transfer -- can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.
"After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney.
Lenders mostly declined comment. Although Corey's lender, BB&T did indicate it was pursuing more deficiency judgments.
"They follow the rise and fall of foreclosures," said the spokeswoman, who would not discuss Corey's account.
Can they come after you?
Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.
"Once they have a judgment, they can pursue you anywhere," said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail."
In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.
Some states, such as California, are "non-recourse" and don't allow deficiency judgments. But, even there, if the if the original loan was refinanced, some or all of it may be subject to claims.
Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.
But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.
"People shouldn't have a false sense of security that a deficiency judgment may not be later sought," Zaretsky said.
He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.
"The parties who bought those notes wouldn't have paid money for them unless they had the intention of acting," Zaretsky said.
Ticking time bomb
What can be scary is that the judgments don't have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.
It doesn't have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.
It wasn't until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.
"I told them, 'Hey, you guys released the title,'" he said. "As far as I know, I'm off the hook."
He wasn't. Releasing title does not necessarily end the debt. It's complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.
Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.
Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.
"He had no idea what he was doing," said Zaretsky. "All the lender had to do was go to court to convert the confession into a deficiency judgment."
Lenders are also very inconsistent. One of Zaretsky's short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.
Strategic defaults
Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.
"Banks are pulling credit reports to see if it's a strategic default," he said. "If you're behind on all your other payments, you're okay. But if you're not, they'll come after you."
If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.
"We don't favor any short-sale contracts that leave any deficiency that can be pursued," he said.
Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.
Wrong.
Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes.
It can even happen to people who got their bank to approve them selling their home for less than it is worth.
Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.
"My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."
Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called "liar loans" where they didn't have to verify their income.
Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances -- like unemployment or a job transfer -- can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.
"After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney.
Lenders mostly declined comment. Although Corey's lender, BB&T did indicate it was pursuing more deficiency judgments.
"They follow the rise and fall of foreclosures," said the spokeswoman, who would not discuss Corey's account.
Can they come after you?
Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.
"Once they have a judgment, they can pursue you anywhere," said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail."
In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.
Some states, such as California, are "non-recourse" and don't allow deficiency judgments. But, even there, if the if the original loan was refinanced, some or all of it may be subject to claims.
Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.
But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.
"People shouldn't have a false sense of security that a deficiency judgment may not be later sought," Zaretsky said.
He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.
"The parties who bought those notes wouldn't have paid money for them unless they had the intention of acting," Zaretsky said.
Ticking time bomb
What can be scary is that the judgments don't have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.
It doesn't have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.
It wasn't until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.
"I told them, 'Hey, you guys released the title,'" he said. "As far as I know, I'm off the hook."
He wasn't. Releasing title does not necessarily end the debt. It's complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.
Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.
Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.
"He had no idea what he was doing," said Zaretsky. "All the lender had to do was go to court to convert the confession into a deficiency judgment."
Lenders are also very inconsistent. One of Zaretsky's short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.
Strategic defaults
Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.
"Banks are pulling credit reports to see if it's a strategic default," he said. "If you're behind on all your other payments, you're okay. But if you're not, they'll come after you."
If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.
"We don't favor any short-sale contracts that leave any deficiency that can be pursued," he said.
Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.
02-03-2010 | 01:58 PM
#2
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Joined: Jun 2005
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From: NY
It's another reason why people need to think very hard before walking away from their home. It's one thing if someone loses their job and can't pay the mortgage, but people who walk away just because they owe more than the home is worth, I just don't understand. If you don't *need* to sell right this second and you still have your job and can pay your mortgage, then just keep paying it. The market will eventually change and you'll owe less if you keep paying. Walking away is a very bad thing to do and will stay with you for a very, very long time. There are big consequences for doing so.
02-03-2010 | 02:19 PM
#3
Honda+Blue=My garage
Joined: Dec 2003
Posts: 2,564
Likes: 43
From: DFW TX
To me the people in the artice seem to have no sense of responsibility. You signed a note for $XXX000, you owe it and the sale of the house only covers part of that-you still owe it.
Article was great about pointing out the financial and ownership halves of mortgage notes and how they are independent.
Luv is right, people need to own their decisions, be it purchasing a house or any other life decision.
Article was great about pointing out the financial and ownership halves of mortgage notes and how they are independent.
Luv is right, people need to own their decisions, be it purchasing a house or any other life decision.
02-03-2010 | 02:24 PM
#4
Team Owner
Joined: Oct 2003
Posts: 37,666
Likes: 3,864
From: Chicago
This would be a bad time to be living in a condo in, for example, Illinois that you hate with a significantly upside-down mortgage.
These are the states that are anti-deficiency:
Alaska
Arizona
California
Connecticut
Florida
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington
These are the states that are anti-deficiency:
Alaska
Arizona
California
Connecticut
Florida
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington
Last edited by svtmike; 02-03-2010 at 02:27 PM.
I waiting for that comment to appear. 
02-03-2010 | 02:33 PM
#6
It's another reason why people need to think very hard before walking away from their home. It's one thing if someone loses their job and can't pay the mortgage, but people who walk away just because they owe more than the home is worth, I just don't understand. If you don't *need* to sell right this second and you still have your job and can pay your mortgage, then just keep paying it. The market will eventually change and you'll owe less if you keep paying. Walking away is a very bad thing to do and will stay with you for a very, very long time. There are big consequences for doing so.
There's a guy on a motorcycle forum that walked away from his mortgage for that very reason. It's pathetic to listen to him justifying his actions.
Loan = promise = needs to be kept
But we just can't hold everyone to the same level of virtues and integrity as the rest of us, I guess.
02-03-2010 | 02:51 PM
#7
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From: where the weather suits my clothes
My analogy is turning to the blackjack dealer and asking him for your money back after you busted and explaining you didn't understand that you could actually lose money.
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02-03-2010 | 03:11 PM
#8
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Joined: Sep 2007
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Those are people who wanted to get in on the real estate action during the boom. They wanted the easy money, so just as easily, they will take the easy way out.
There's a guy on a motorcycle forum that walked away from his mortgage for that very reason. It's pathetic to listen to him justifying his actions.
Loan = promise = needs to be kept
But we just can't hold everyone to the same level of virtues and integrity as the rest of us, I guess.
There's a guy on a motorcycle forum that walked away from his mortgage for that very reason. It's pathetic to listen to him justifying his actions.
Loan = promise = needs to be kept
But we just can't hold everyone to the same level of virtues and integrity as the rest of us, I guess.
if loan = promise = needs to be kept, then how do you feel about businesses closing their doors and filing for bankruptcy? how does that work into your little equation?
if a business can make an educated decision to cut their losses and close up shop, so can i.
its not the most admirable thing in the world but sometimes its the only choice to move on with life. life is too damn short to stay miserable for no reason other than to keep flushing money down the toilet on a mortgage. my life and my time and my happiness are more valuable than a couple hundred (if that) points on my credit score for the next 7 years...whatever...
02-03-2010 | 03:15 PM
#9
if loan = promise = needs to be kept, then how do you feel about businesses closing their doors and filing for bankruptcy? how does that work into your little equation?
if a business can make an educated decision to cut their losses and close up shop, so can i.
its not the most admirable thing in the world but sometimes its the only choice to move on with life. life is too damn short to stay miserable for no reason other than to keep flushing money down the toilet on a mortgage. my life and my time and my happiness are more valuable than a couple hundred (if that) points on my credit score for the next 7 years...whatever...
if a business can make an educated decision to cut their losses and close up shop, so can i.
its not the most admirable thing in the world but sometimes its the only choice to move on with life. life is too damn short to stay miserable for no reason other than to keep flushing money down the toilet on a mortgage. my life and my time and my happiness are more valuable than a couple hundred (if that) points on my credit score for the next 7 years...whatever...
If homeowners foreclose, the bank can still come after them. This is mainly what the article is about as apparently people do not know this.
If the bank came after them for additional money and they declared bankruptcy, then the bank would have to back off. The article mentions this, however, its main theme is not bankruptcy... it's foreclosure.
02-03-2010 | 03:22 PM
#10
I don't understand walking away from a property unless you can no longer afford the mortgage payment (as in you can't afford it, not don't want to pay it) and the bank isn't willing to work with you to make the mortgage payments more affordable.
If the property isn't gaining value the way you expected it too...too bad so sad! This is part of real estate!
If you no longer like where you live, too bad! You should've considered this longer before you bought!
We, the honest consumers, have to pay for shit like this in the long run and it's not right.
If the property isn't gaining value the way you expected it too...too bad so sad! This is part of real estate!
If you no longer like where you live, too bad! You should've considered this longer before you bought!
We, the honest consumers, have to pay for shit like this in the long run and it's not right.
02-03-2010 | 03:26 PM
#11
if loan = promise = needs to be kept, then how do you feel about businesses closing their doors and filing for bankruptcy? how does that work into your little equation?
if a business can make an educated decision to cut their losses and close up shop, so can i.
its not the most admirable thing in the world but sometimes its the only choice to move on with life. life is too damn short to stay miserable for no reason other than to keep flushing money down the toilet on a mortgage. my life and my time and my happiness are more valuable than a couple hundred (if that) points on my credit score for the next 7 years...whatever...
if a business can make an educated decision to cut their losses and close up shop, so can i.
its not the most admirable thing in the world but sometimes its the only choice to move on with life. life is too damn short to stay miserable for no reason other than to keep flushing money down the toilet on a mortgage. my life and my time and my happiness are more valuable than a couple hundred (if that) points on my credit score for the next 7 years...whatever...
If an unfortunate situation transpired, such as loss of employment, and you just can't keep up despite an honest effort, then I believe you should get a break.
But as I thought I made it clear, especially with the example I used in my previous post, I have a thing against people who walk away just because they think they are losing money on it, but otherwise able to pay it.
That's fine if you want to walk away for that reason. That's your decision. But don't expect me to agree with it.
And I don't understand your description of flushing money down the toilet on a mortgage. You bought a house. The market value dropped. So you will walk away?
You bought a car. Market value depreciates. Do you abandon the car?
I don't know, I guess I just see it differently than you. When I sign my name on something and my credit/reputation is on the line, then I intend to keep my word unless I'm otherwise unable to.
02-03-2010 | 03:30 PM
#12
Worse part is that all of the programs out there help the people who pull this shit or live beyond their means, etc... but if something bad happens to honest people, there's no help for them.
02-03-2010 | 03:33 PM
#13
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Joined: Jun 2005
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Likes: 13
From: NY
02-03-2010 | 03:34 PM
#14
02-03-2010 | 03:38 PM
#15
I'm not saying it should be the number 1 priority in life.
If an unfortunate situation transpired, such as loss of employment, and you just can't keep up despite an honest effort, then I believe you should get a break.
But as I thought I made it clear, especially with the example I used in my previous post, I have a thing against people who walk away just because they think they are losing money on it, but otherwise able to pay it.
That's fine if you want to walk away for that reason. That's your decision. But don't expect me to agree with it.
And I don't understand your description of flushing money down the toilet on a mortgage. You bought a house. The market value dropped. So you will walk away?
You bought a car. Market value depreciates. Do you abandon the car?
I don't know, I guess I just see it differently than you. When I sign my name on something and my credit/reputation is on the line, then I intend to keep my word unless I'm otherwise unable to.
If an unfortunate situation transpired, such as loss of employment, and you just can't keep up despite an honest effort, then I believe you should get a break.
But as I thought I made it clear, especially with the example I used in my previous post, I have a thing against people who walk away just because they think they are losing money on it, but otherwise able to pay it.
That's fine if you want to walk away for that reason. That's your decision. But don't expect me to agree with it.
And I don't understand your description of flushing money down the toilet on a mortgage. You bought a house. The market value dropped. So you will walk away?
You bought a car. Market value depreciates. Do you abandon the car?
I don't know, I guess I just see it differently than you. When I sign my name on something and my credit/reputation is on the line, then I intend to keep my word unless I'm otherwise unable to.
To all the above...
02-03-2010 | 03:42 PM
#16
This would be a bad time to be living in a condo in, for example, Illinois that you hate with a significantly upside-down mortgage.
These are the states that are anti-deficiency:
Alaska
Arizona
California
Connecticut
Florida
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington
These are the states that are anti-deficiency:
Alaska
Arizona
California
Connecticut
Florida
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington
02-03-2010 | 03:55 PM
#17
Racer
Joined: Sep 2007
Posts: 499
Likes: 6
I don't understand walking away from a property unless you can no longer afford the mortgage payment (as in you can't afford it, not don't want to pay it) and the bank isn't willing to work with you to make the mortgage payments more affordable.
If the property isn't gaining value the way you expected it too...too bad so sad! This is part of real estate!
If you no longer like where you live, too bad! You should've considered this longer before you bought!
We, the honest consumers, have to pay for shit like this in the long run and it's not right.
If the property isn't gaining value the way you expected it too...too bad so sad! This is part of real estate!
If you no longer like where you live, too bad! You should've considered this longer before you bought!
We, the honest consumers, have to pay for shit like this in the long run and it's not right.
I hear what your saying but the grey area here is "can no longer afford it"
That has no clear defintion and means something different to everyone you ask. Some say it means when there is simply more money going out than there is coming in....to some its when you sacrafice quality of life in order to maintain paying a mortgage that does nothing but continue to depreciate. that in itself is a grey area....to some sacraficing quality of life is selling the acura and getting a 1992 honda to avoid a car payment...to others its selling the car altogether, taking public transport, and eating ramen noodles everyday.
02-03-2010 | 04:06 PM
#18
I hear what your saying but the grey area here is "can no longer afford it"
That has no clear defintion and means something different to everyone you ask. Some say it means when there is simply more money going out than there is coming in....to some its when you sacrafice quality of life in order to maintain paying a mortgage that does nothing but continue to depreciate. that in itself is a grey area....to some sacraficing quality of life is selling the acura and getting a 1992 honda to avoid a car payment...to others its selling the car altogether, taking public transport, and eating ramen noodles everyday.
That has no clear defintion and means something different to everyone you ask. Some say it means when there is simply more money going out than there is coming in....to some its when you sacrafice quality of life in order to maintain paying a mortgage that does nothing but continue to depreciate. that in itself is a grey area....to some sacraficing quality of life is selling the acura and getting a 1992 honda to avoid a car payment...to others its selling the car altogether, taking public transport, and eating ramen noodles everyday.
"can no longer afford it" - monthly mortgage payments are, for the most part, fixed. The only variable would be your income or increased spendings in other areas.
That's fine if that happened and you simply don't have enough money to pay the mortgage.
But walking away because "well, I keep pouring money in, but the value dropped and I won't make even for the next 5 years" is just irresponsible when your income is still steady and no other costs have had a significant increase.
For those people, I raise both hands in agreement that the banks should go after them. They are doing nothing but further harm to our already weakened and volatile economy.
02-03-2010 | 04:20 PM
#19
Racer
Joined: Sep 2007
Posts: 499
Likes: 6
Au contraire, I think thunder's statement was pretty clear and common sense.
"can no longer afford it" - monthly mortgage payments are, for the most part, fixed. The only variable would be your income or increased spendings in other areas.
That's fine if that happened and you simply don't have enough money to pay the mortgage.
But walking away because "well, I keep pouring money in, but the value dropped and I won't make even for the next 5 years" is just irresponsible when your income is still steady and no other costs have had a significant increase.
For those people, I raise both hands in agreement that the banks should go after them. They are doing nothing but further harm to our already weakened and volatile economy.
"can no longer afford it" - monthly mortgage payments are, for the most part, fixed. The only variable would be your income or increased spendings in other areas.
That's fine if that happened and you simply don't have enough money to pay the mortgage.
But walking away because "well, I keep pouring money in, but the value dropped and I won't make even for the next 5 years" is just irresponsible when your income is still steady and no other costs have had a significant increase.
For those people, I raise both hands in agreement that the banks should go after them. They are doing nothing but further harm to our already weakened and volatile economy.
subsequently it can ALSO be said that why are we blaming the people who GOT these mortgages they couldnt afford? Who are the morons who GAVE the mortgages, they could have turned them down, they could have seen a train wreck approaching, but banks succomb to greed as well....when the money was flowing, they contributed to this mess. without banks agreeing to give these loans, we wouldnt be here today...
02-03-2010 | 04:29 PM
#20
subsequently it can ALSO be said that why are we blaming the people who GOT these mortgages they couldnt afford? Who are the morons who GAVE the mortgages, they could have turned them down, they could have seen a train wreck approaching, but banks succomb to greed as well....when the money was flowing, they contributed to this mess. without banks agreeing to give these loans, we wouldnt be here today...
When I applied for a motorcycle loan, my FCU said I was approved up to $50,000... for a motorcycle. I smiled and said "no, thank you."
Just because you can, it doesn't mean you should. That's a fine example of stupidity.
02-03-2010 | 04:36 PM
#21
Racer
Joined: Sep 2007
Posts: 499
Likes: 6
yes im serious...and im also right....this is proven by the fact that lenders have changed their proceedures and tightend their restrictions and willingness to lend....try going for that same motorcycle loan today...your income and your credit probably havent changed but the amount they offer to lend you will be reduced, no doubt....they are wising up to their mistakes...some would say TOO much...making it TOO difficult to get a mortgage...and also by taking control of the appraisal process....gone are the days of giving an appraiser a 50 dollar handshake for an extra 10k on an appraisal of a home to secure a loan...banks took control of that now....so yes, im dead serious...banks were at least partially responsible for this mess just as much as ignorant buyers were...
02-03-2010 | 05:01 PM
#22
I typed more, but decided against it.
02-03-2010 | 05:33 PM
#23
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From: where the weather suits my clothes
yes im serious...and im also right....this is proven by the fact that lenders have changed their proceedures and tightend their restrictions and willingness to lend....try going for that same motorcycle loan today...your income and your credit probably havent changed but the amount they offer to lend you will be reduced, no doubt....they are wising up to their mistakes...some would say TOO much...making it TOO difficult to get a mortgage...and also by taking control of the appraisal process....gone are the days of giving an appraiser a 50 dollar handshake for an extra 10k on an appraisal of a home to secure a loan...banks took control of that now....so yes, im dead serious...banks were at least partially responsible for this mess just as much as ignorant buyers were...
02-03-2010 | 06:08 PM
#24
05/5AT/Navi/ABP/Quartz
Joined: Nov 2004
Posts: 3,348
Likes: 53
From: Central CA
yes im serious...and im also right....this is proven by the fact that lenders have changed their proceedures and tightend their restrictions and willingness to lend....try going for that same motorcycle loan today...your income and your credit probably havent changed but the amount they offer to lend you will be reduced, no doubt....they are wising up to their mistakes...some would say TOO much...making it TOO difficult to get a mortgage...and also by taking control of the appraisal process....gone are the days of giving an appraiser a 50 dollar handshake for an extra 10k on an appraisal of a home to secure a loan...banks took control of that now....so yes, im dead serious...banks were at least partially responsible for this mess just as much as ignorant buyers were...
1. Market conditions change over time and businesses have to change along with them. The home secured the loan that your good credit got for you. If you had a contract guaranteeing a break even or profit I want to see it.
2. The final responsibility for accepting a loan is the borrower (you). As stated no gun was held to your head. If your word is no good, you deserve what you get. Making excuses and blaming other people for your problems is really immature and some would say indicates lack of character. All of the gains and all of the losses belong to you, that's how it works.
3. I'm an appraiser, know lots of appraisers and loan officers, some good and some bad. It would take a real loser to violate the law and lose a license over $50.00 or $1000. If you have examples you can show, produce them.
4. Ignorant - there is a word we can agree on. What if you had to pass a test before you were allowed to buy a house (or lakefront condo)?
Things have not worked out well for a lot of people over the past few years. Far to many are pointing fingers and whining about how unfair it all is. That's a sure way to get things back on track. Good luck and let us know how it works out.
02-03-2010 | 08:25 PM
#25
is learning to moonwalk i
Joined: Feb 2004
Posts: 15,520
Likes: 3
From: SoCal
As I see it, the buyers are responsible foy buying homes they cannot afford.
The banks/brokers are responsible for providing and pushing loans that become unaffordable (adjustable/interest only, etc) without properly disclosing the risks.
There are two completely different and separate issues and each side should take responsibility for their part in the mess.
The banks/brokers are responsible for providing and pushing loans that become unaffordable (adjustable/interest only, etc) without properly disclosing the risks.
There are two completely different and separate issues and each side should take responsibility for their part in the mess.
02-03-2010 | 09:57 PM
#26
Registered but harmless
Joined: Aug 2005
Posts: 14,859
Likes: 1,151
From: Los Angeles, CA
2. The final responsibility for accepting a loan is the borrower (you). As stated no gun was held to your head. If your word is no good, you deserve what you get. Making excuses and blaming other people for your problems is really immature and some would say indicates lack of character.
As I see it, the buyers are responsible foy buying homes they cannot afford.
The banks/brokers are responsible for providing and pushing loans that become unaffordable (adjustable/interest only, etc) without properly disclosing the risks.
There are two completely different and separate issues and each side should take responsibility for their part in the mess.
The banks/brokers are responsible for providing and pushing loans that become unaffordable (adjustable/interest only, etc) without properly disclosing the risks.
There are two completely different and separate issues and each side should take responsibility for their part in the mess.
We stretched to get our house, in my estimation-- we put 25% down and got a mortgage that was 30% of take-home pay.
I still cannot believe that many buyers would go for 0% down, variable interest with initial payments of 30%+ of gross pay or that lenders were willing to make such loans.
02-04-2010 | 09:08 AM
#28
Nothing changes in your mind. You are dead wrong on just about all counts
1. Market conditions change over time and businesses have to change along with them. The home secured the loan that your good credit got for you. If you had a contract guaranteeing a break even or profit I want to see it.
2. The final responsibility for accepting a loan is the borrower (you). As stated no gun was held to your head. If your word is no good, you deserve what you get. Making excuses and blaming other people for your problems is really immature and some would say indicates lack of character. All of the gains and all of the losses belong to you, that's how it works.
3. I'm an appraiser, know lots of appraisers and loan officers, some good and some bad. It would take a real loser to violate the law and lose a license over $50.00 or $1000. If you have examples you can show, produce them.
4. Ignorant - there is a word we can agree on. What if you had to pass a test before you were allowed to buy a house (or lakefront condo)?
Things have not worked out well for a lot of people over the past few years. Far to many are pointing fingers and whining about how unfair it all is. That's a sure way to get things back on track. Good luck and let us know how it works out.
1. Market conditions change over time and businesses have to change along with them. The home secured the loan that your good credit got for you. If you had a contract guaranteeing a break even or profit I want to see it.
2. The final responsibility for accepting a loan is the borrower (you). As stated no gun was held to your head. If your word is no good, you deserve what you get. Making excuses and blaming other people for your problems is really immature and some would say indicates lack of character. All of the gains and all of the losses belong to you, that's how it works.
3. I'm an appraiser, know lots of appraisers and loan officers, some good and some bad. It would take a real loser to violate the law and lose a license over $50.00 or $1000. If you have examples you can show, produce them.
4. Ignorant - there is a word we can agree on. What if you had to pass a test before you were allowed to buy a house (or lakefront condo)?
Things have not worked out well for a lot of people over the past few years. Far to many are pointing fingers and whining about how unfair it all is. That's a sure way to get things back on track. Good luck and let us know how it works out.
As I see it, the buyers are responsible foy buying homes they cannot afford.
The banks/brokers are responsible for providing and pushing loans that become unaffordable (adjustable/interest only, etc) without properly disclosing the risks.
There are two completely different and separate issues and each side should take responsibility for their part in the mess.
The banks/brokers are responsible for providing and pushing loans that become unaffordable (adjustable/interest only, etc) without properly disclosing the risks.
There are two completely different and separate issues and each side should take responsibility for their part in the mess.
We stretched to get our house, in my estimation-- we put 25% down and got a mortgage that was 30% of take-home pay.
I still cannot believe that many buyers would go for 0% down, variable interest with initial payments of 30%+ of gross pay or that lenders were willing to make such loans.
A co-worker of mine bought his house in 2006 and he's currently in a 10 year interest only ARM. I don't know how he sleeps...I'd be worrying like crazy about that!!
02-07-2010 | 03:09 PM
#29
Safety Car
Joined: Jul 2008
Posts: 4,068
Likes: 111
From: NYC
not many continue the thought process as to what happens to these deliquent loans and foreclosures. banks arent in the business of selling real estate. not all banks sell foreclosures at auction bids. many revert them to REO (real estate owned) assets and are sold to equity investors at a discount (going rate is about 35%). i must say, theres a HUGE demand for REOs- many investors have been sitting on the sidelines with dry powder for 18+ months now. (i broker these deals). my firm has been filtering through about $3-4B a month in REO assets and distressed loans (1st & 2nd). and these asset/loan pools have literally been flying off the shelves. i have never witnessed anything like this before.
Last edited by ThermonMermon; 02-07-2010 at 03:12 PM.
02-08-2010 | 11:27 AM
#30
^ Yeah, the REO's are starting to pick up steam here as well. I also think a lot of people are getting in before the tax credits expire. We are putting our house on the market in about 2 weeks so we can get in on the fun!!
02-08-2010 | 01:03 PM
#31
Safety Car
Joined: Jul 2008
Posts: 4,068
Likes: 111
From: NYC
you are trying to sell your home to move into an REO?
02-08-2010 | 01:05 PM
#32
Yeah, we're looking at a bunch of REO's, foreclosures, and short sales. Tons of great deals to be had...
We just bought a piece of land in a custom home community for $110k below appraisal value but we decided not to build. So we're going to find a nice deal on an existing home and likely flip the land...
We just bought a piece of land in a custom home community for $110k below appraisal value but we decided not to build. So we're going to find a nice deal on an existing home and likely flip the land...
02-08-2010 | 01:09 PM
#33
Safety Car
Joined: Jul 2008
Posts: 4,068
Likes: 111
From: NYC
Yeah, we're looking at a bunch of REO's, foreclosures, and short sales. Tons of great deals to be had...
We just bought a piece of land in a custom home community for $110k below appraisal value but we decided not to build. So we're going to find a nice deal on an existing home and likely flip the land...
We just bought a piece of land in a custom home community for $110k below appraisal value but we decided not to build. So we're going to find a nice deal on an existing home and likely flip the land...
be aware of as-is conditions. good inspection + documentation are best. but im sure you know what youre doing.
i just started working on large cap REO sales while im going for my masters in R/E Finance/Investment. so far so good...
02-08-2010 | 01:12 PM
#34
g'luck!...i wasnt sure if you were being sarcastic by saying that your neighborhood was seeing foreclosures and you were about to be in the same boat.
be aware of as-is conditions. good inspection + documentation are best. but im sure you know what youre doing.
i just started working on large cap REO sales while im going for my masters in R/E Finance/Investment. so far so good...
be aware of as-is conditions. good inspection + documentation are best. but im sure you know what youre doing.
i just started working on large cap REO sales while im going for my masters in R/E Finance/Investment. so far so good...
No, we're in good shape. We actually just got our appraisal back about 35 minutes ago and it came in ~$10k then we thought, so we're happy. We'll be able to cash out here and make an investment in another property... hopefully by the end of summer.
And yeah, we know about AS-IS. We have a killer inspector as well as several GC's and home builders we know, so we wouldn't make an offer unless we were 1000% sure about the dwelling.
02-11-2010 | 02:20 PM
#35
This is exactly right. I've inquired about refinancing through Suntrust and Navy Federal Credit Union, and both times they have told me that since I would owe more than 105% of the value ($184K owe, $163K value, bought for $242K) of the house, then they can't help me. But for all the people who want to foreclose, well, we can work with you!
02-11-2010 | 02:23 PM
#36
These are the people why in which we're in this "crisis" in the first place.
02-11-2010 | 02:34 PM
#37
To drive home another point, you can lose your job over this too.
I have a co-worker that, along with his wife, bought a beautiful waterfront property along the St. Johns rive rin Jacksonville after moving down from Norfolk. They knew what they were getting into by signing the loan. No one put a gun to their heads to make them sign the loan.
A few months after moving into the house and paying bills, they quickly realized that they could not afford this place. This was on two GS-12 Government salaries. They had some family members living with them too.
The woman decided that they should just stop paying the mortgage. Just stop paying. Continue to live at the place, but not pay. The mortgage company sued them to evict them, but they argued in the defense that it was their right to get refinancing and to get a lower rate.
They won the case against the mortgage company.
The mortgage company appealed, and the appeal was successful (the mortgage company won). The family appealed THAT decision and lost. All in the meantime over the course of several years, they did not pay a cent in mortgage costs.
So now the mortgage company said the house was going to be foreclosed. They put ads in the paper, local news sites, etc. to get interest in it.
Get this: the woman decided to use a GOVERNMENT fax machine to fax a forged document (allegedly from the mortgage company) to the news media demanding that they take down the ads advertising the foreclosure.
She got caught and long story short went to jail for 3 months. She lost her Government job.
This still astounds me to this day that people feel entitled to this crap.
I have a co-worker that, along with his wife, bought a beautiful waterfront property along the St. Johns rive rin Jacksonville after moving down from Norfolk. They knew what they were getting into by signing the loan. No one put a gun to their heads to make them sign the loan.
A few months after moving into the house and paying bills, they quickly realized that they could not afford this place. This was on two GS-12 Government salaries. They had some family members living with them too.
The woman decided that they should just stop paying the mortgage. Just stop paying. Continue to live at the place, but not pay. The mortgage company sued them to evict them, but they argued in the defense that it was their right to get refinancing and to get a lower rate.
They won the case against the mortgage company.
The mortgage company appealed, and the appeal was successful (the mortgage company won). The family appealed THAT decision and lost. All in the meantime over the course of several years, they did not pay a cent in mortgage costs.
So now the mortgage company said the house was going to be foreclosed. They put ads in the paper, local news sites, etc. to get interest in it.
Get this: the woman decided to use a GOVERNMENT fax machine to fax a forged document (allegedly from the mortgage company) to the news media demanding that they take down the ads advertising the foreclosure.
She got caught and long story short went to jail for 3 months. She lost her Government job.
This still astounds me to this day that people feel entitled to this crap.
02-11-2010 | 02:53 PM
#38
This is exactly right. I've inquired about refinancing through Suntrust and Navy Federal Credit Union, and both times they have told me that since I would owe more than 105% of the value ($184K owe, $163K value, bought for $242K) of the house, then they can't help me. But for all the people who want to foreclose, well, we can work with you!
As for foreclosures... they expect this year to be as bad, or worse then last year.
http://money.cnn.com/2010/02/11/real...21105&hpt=Sbin
02-11-2010 | 05:41 PM
#40
Team Owner
Joined: Oct 2003
Posts: 37,666
Likes: 3,864
From: Chicago
This is exactly right. I've inquired about refinancing through Suntrust and Navy Federal Credit Union, and both times they have told me that since I would owe more than 105% of the value ($184K owe, $163K value, bought for $242K) of the house, then they can't help me. But for all the people who want to foreclose, well, we can work with you!
I was able to re-fi my house late last year, but my mortgage balance is considerably below even the current value of the house.