Americans face post-foreclosure hell as wages garnished, assets seized

[Vic]

The evil corporations were just as reckless in their lending practices yet they were given a free pass when the Bill came due

Umm.. what? Because hundreds of companies didn't go out of business along with thousands and thousands of jobs, right?

 

[doubledeluxe]

Fuck those people. Rational people don't stretch their finances so thin that they can't afford their mortgage or buy an obviously overpriced piece of property hoping to flip it and get rich.

 

[OverVolt]

Fuck those people. Rational people don't stretch their finances so thin that they can't afford their mortgage or buy an obviously overpriced piece of property hoping to flip it and get rich.

Medical debt and getting laid off are two of the biggest reasons people default. You're bad and should feel bad

 

[LegendKiller]

Technically that isn't the entire agreement. People who borrowed the money agreed to either 1) pay it back or 2) give the house back.

The bank AGREED to this. The bank signed the loan docs, too.

When the loan docs are signed it is made *very* clear that it is a recourse loan in the states that allow recourse loans. *VERY* clear.

The chick who just up and left was a moron. She had the opportunity to do what was right and decided not to. It is her fault.

This is just a continuation of stupid people doing stupid things and being held accountable for it.

 

[theeedude]

If it's a problem, you can thank Republican Congress and President (you know who) for it:
http://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act

 

[doubledeluxe]

Medical debt and getting laid off are two of the biggest reasons people default. You're bad and should feel bad

Maybe they shouldn't get sick and should work harder.

Just kidding of course but quite frankly too many idiots borrowed too much money, did interest only, and were just trying to get rich quick.

If you got sick and lost your house then so be it. We're all guilty of voting in politicians who don't serve our interests. Our healthcare system is a joke.

If you lost your job and your house then that's once again partially our own making. We handed over all the power to the corporations and have pretty much eliminated unions and worker protections.

The system as a whole only works for a select few. For the rest you better hope you never get sick or have employment issues.

 

[Pipeline 1010]

When the loan docs are signed it is made *very* clear that it is a recourse loan in the states that allow recourse loans. *VERY* clear.

The chick who just up and left was a moron. She had the opportunity to do what was right and decided not to. It is her fault.

This is just a continuation of stupid people doing stupid things and being held accountable for it.

Agreed. I sometimes forget other states are recourse states. In that case you're screwed and too bad. At minimum she should have consulted an attorney in advance who would have straightened that right up for her.

As a side question, does anybody know what happens when a recourse loan has mortgage insurance? Does the MI cover the shortfall if the foreclosure sells for less than the loan?

 

[DCal430]

Negative. California is a Non recourse.

http://www.forecloseddreams.com/recourse_states

That link doesn't tell the full details, but in California if you have a cash-Out refinance after 2012, then the cash-out portion is full recourse. All refinancing in their entirety before 2013 are full recourse loans in California even the purchase money refinancing.

 

[Jhhnn]

No one is listening. It's fun to pick on little man - makes one feel good. Nobody really cares about bankers' role in this whole mess anymore, that ship has sailed.

Nor do they seem to care that servicers fuckover investors in a variety of ways.

One is by keeping abandoned properties on the books rather than liquidating. The late fees are collected from the income stream coming to the mortgage pool from good mortgages.

Send out a computer generated letter every month, suck 'em all dry.

Another is achieved with quid pro quo agreements with lawyers doing the actual foreclosure work. Charge the trust exorbitant fees, do other work for the servicers at greatly reduced cost.

When the income from mortgage pools falls below servicer fees, the pool is defunct & the servicer assumes ownership of the assets of the pool, at which point they cut losses drastically & maintain ownership of the good mortgages & salable foreclosed houses in the pool.

They'll hound defaulters to the ends of the earth over money owed on foreclosed properties they allowed to be vandalized into public nuisance & demolished by the City. Plus fees, of course.

It's all the borrowers' fault, of course. Nobody is subject to forces beyond their control, right? Certainly not the little people.

 

[Newell Steamer]

Not surprised - the borrowers were immediately thrown under the bus as soon as this toxic debt 1st emerged and they are still getting kicked it seems.

 

[PokerGuy]

Not surprised - the borrowers were immediately thrown under the bus as soon as this toxic debt 1st emerged and they are still getting kicked it seems.

Unless someone put a gun to your head and made you sign an agreement, isn't it your responsibility to makes sure you can live with that agreement and the possible consequences of it before you sign it?

 

[TheSlamma]

It's all the borrowers' fault, of course. Nobody is subject to forces beyond their control, right? Certainly not the little people.

While I agree for the most part, it would be nice if the little people would learn a lesson from this. Why are all the little people STILL banking with Skank of America, Chase, Wells Crapital One, ETC? The word has been on the streets for DECADES now to look into credit unions and other lenders that have more of an interest in their customers than banks ever will. But yet we get the majority of people compelled to head into banks still right after filing bankruptcy cause of them.

Is it the martyr syndrome or something? Honestly it's one area where I can't put myself in other peoples shoes cause it just doesn't make any sense, my credit union has never let me down on ANYTHING, checking, credit card, travel out of country, mortgage, paying online, no ATM fees at any credit union ATM across the country. Like I said, I don't get all the power the little people give to banks.

 

[PokerGuy]

Technically that isn't the entire agreement. People who borrowed the money agreed to either 1) pay it back or 2) give the house back.

The bank AGREED to this. The bank signed the loan docs, too.

Actually, no. The agreement isn't that if you don't pay back the bank takes the house and considers it full payment. The agreement is you pay back the full amount, and if you fail to do so, the bank can take the house and sell it to use the proceeds to pay back the amount borrowed. If the proceeds of that sale don't cover the amount owed, unless the lender agrees otherwise, you still owe the difference.

 

[glenn1]

Nor do they seem to care that servicers fuckover investors in a variety of ways.

One is by keeping abandoned properties on the books rather than liquidating. The late fees are collected from the income stream coming to the mortgage pool from good mortgages.

Send out a computer generated letter every month, suck 'em all dry.

Another is achieved with quid pro quo agreements with lawyers doing the actual foreclosure work. Charge the trust exorbitant fees, do other work for the servicers at greatly reduced cost.

When the income from mortgage pools falls below servicer fees, the pool is defunct & the servicer assumes ownership of the assets of the pool, at which point they cut losses drastically & maintain ownership of the good mortgages & salable foreclosed houses in the pool.

They'll hound defaulters to the ends of the earth over money owed on foreclosed properties they allowed to be vandalized into public nuisance & demolished by the City. Plus fees, of course.

It's all the borrowers' fault, of course. Nobody is subject to forces beyond their control, right? Certainly not the little people.

Hounding defaulters who don't declare bankruptcy is exactly the proper course of action. It's both completely proper and prevents further moral hazard.

 

[Newell Steamer]

Unless someone put a gun to your head and made you sign an agreement, isn't it your responsibility to makes sure you can live with that agreement and the possible consequences of it before you sign it?

Of course it is - like it is the responsibility of the loaning professional to make the right decision. What benefit would a bank get, for loaning out $900,000 to someone who barely makes $25,000 a year??

Wait - I know what is next; the government forced these loaning professionals to turn a blind eye to such things and just shovel money out the teller window.

I've heard it plenty of times before; the banks did nothing wrong in the events leading up to '08 - it was all the borrowers and the government.

I recognize that someone making $25K a year should not be asking for a $900K loan,.. I am not sure why the person being asked of this is absolved of any responsibility to actually do their job and say no to such an absurd request.

 

[moonbogg]

Some of this shit is enough to make we want to go on a fucking rampage down wall street in a damn tank and just level the place.

 

[glenn1]

Of course it is - like it is the responsibility of the loaning professional to make the right decision. What benefit would a bank get, for loaning out $900,000 to someone who barely makes $25,000 a year??

Wait - I know what is next; the government forced these loaning professionals to turn a blind eye to such things and just shovel money out the teller window.

I've heard it plenty of times before; the banks did nothing wrong in the events leading up to '08 - it was all the borrowers and the government.

I recognize that someone making $25K a year should not be asking for a $900K loan,.. I am not sure why the person being asked of this is absolved of any responsibility to actually do their job and say no to such an absurd request.

Can you not hold more than one thought in your head simultaneously? It does not matter if the bank, regulator, or anyone else did wrong. Borrowers should not be allowed to default on debts (outside proper legal venues like bankruptcy), bankers should not commit lending fraud, and regulators shouldn't become captured by those they oversee. Each of those actors can and should be punished appropriately for their own misdeeds no matter what the other actors may have done. That you somehow excuse away illegal, immoral, or self-serving behavior by defaulting borrowers under the rationale "well the banks did something bad also!" just shows how much of a hack you are.

 

[PokerGuy]

Of course it is - like it is the responsibility of the loaning professional to make the right decision. What benefit would a bank get, for loaning out $900,000 to someone who barely makes $25,000 a year??

Wait - I know what is next; the government forced these loaning professionals to turn a blind eye to such things and just shovel money out the teller window.

I've heard it plenty of times before; the banks did nothing wrong in the events leading up to '08 - it was all the borrowers and the government.

I recognize that someone making $25K a year should not be asking for a $900K loan,.. I am not sure why the person being asked of this is absolved of any responsibility to actually do their job and say no to such an absurd request.

I agree completely that what the lenders did wasn't correct and there's plenty of blame to go around, that still doesn't absolve anyone from being accountable for their own actions and the agreements they entered into.

 

[pauldun170]

What benefit would a bank get, for loaning out $900,000 to someone who barely makes $25,000 a year??

There is no benefit and I'd like to see a real world example to back up your claim that anyone would lend 900K to someone making 25K a year.

 

[TheSlamma]

There is no benefit and I'd like to see a real world example to back up your claim that anyone would lend 900K to someone making 25K a year.

Not as extreme but I remember when CNN ran this story as if it was some sob story we should all feel bad about. http://steadfastfinances.com/blog/2...driver-losing-her-800000-home-to-foreclosure/

Do I feel sorry about the mom and dad that make $60K a year combined and are losing their 220K place? yes. This lady? no

 

[Pipeline 1010]

Actually, no. The agreement isn't that if you don't pay back the bank takes the house and considers it full payment. The agreement is you pay back the full amount, and if you fail to do so, the bank can take the house and sell it to use the proceeds to pay back the amount borrowed. If the proceeds of that sale don't cover the amount owed, unless the lender agrees otherwise, you still owe the difference.

Again, I addressed this. My misunderstanding was whether the agreement was signed in a recourse state vs a non-recourse state. In my state, this IS the agreement.

 

[Subyman]

As a real estate investor that has a friend that works in foreclosure law, the banks do not want to foreclose. Houses tend to sit for around two years between when the foreclosure process starts and the house is given to a real estate agent. There is a sheriff's auction at city hall in some regions. The bank is responsible for the property taxes which add up over the two years. They also pay the lion's share of the closing costs. The banks end up losing two years of interest and, in most cases, the house never sells for the principal because the banks do not fix up the houses or stage them.

The bank never receives a "windfall" either. The bank only gets their lost interest and principal from the sale, the home owner gets the rest if they have a lot of equity built up in the house. The bank only gets its lost interest, principal, and fees in some states.

Banks typically work with people and go as far as interest only payments but people still don't pay. I've heard some pretty lousy stories from my friend.

It is both sides though from ignorant buyers to fraudulent approvals. The real estate market was a circus.

 

[Subyman]

Not as extreme but I remember when CNN ran this story as if it was some sob story we should all feel bad about. http://steadfastfinances.com/blog/2...driver-losing-her-800000-home-to-foreclosure/

Do I feel sorry about the mom and dad that make $60K a year combined and are losing their 220K place? yes. This lady? no

That was a poor article. The author even said he's probably speculating too much, he had no idea what the husband did as a job.

 

[who?]

Why should the banks care since they just created the mortgages to sell to somebody else? They weren't worried about the borrowers ability to repay, just their ability to sign a piece of paper.

 

[pauldun170]

Not as extreme but I remember when CNN ran this story as if it was some sob story we should all feel bad about. http://steadfastfinances.com/blog/2...driver-losing-her-800000-home-to-foreclosure/

Do I feel sorry about the mom and dad that make $60K a year combined and are losing their 220K place? yes. This lady? no

That article sucks

This “small detail” that stood out like a jalapeno pepper in my Cheerios is that one of the co-owners of this $800,000 home is actually a school bus driver (the second family member’s profession was not disclosed).

Actual case study from Long Island New York.
Husband is in the construction business and been in the business for close to 20 years. Wife is a stay at home mom, out of the work force for a ver long time.
They bought their first home for around 120K years ago (mid 90's). They sold it for close to 500K and moved to a larger home in a better neighborhood. New house when purchased was around 750K. At the top of the market, comparable houses in the area were selling for a little more.
He had a solid business and they lived comfortably.

Then construction took a hit and business started to suffer. The real estate taxes shot through the roof. The wife started to look for work to help out and she got a job with the school (lunch lady or whatever they are called nowadays) making money comparable to a school bus driver.
They did take out a line of credit to help cover some expenses and after 4-5 years struggling our finally starting to recover.

They took out a 300K mortgage to buy a 750K house that at its peak was worth over 800K but is now probably worth 600K.

Income level expected for 300K mortgage is around 100K. Add on real estate taxes and that income requirement increases considering. I'm guessing he was pulling in 160K-180K consistently until the market got shaky.