can someone explain why people are complaining about banks foreclosing?

[highland145]

Folks keep repeating the line that the CRA mandates loans to unqualified borrowers. So I'm simply asking folks to prove it.

Greed is an incredible incentive and deregulation allowed banks to run free to satisfy their greed. As I wrote above, if we mis-diagnose the causes of the bubble/bust then we will select the wrong remedies. Folks have attempted to blame government mandated social engineering for the bubble/bust while ignoring the structural changes to bank regulation that made the bubble possible.

Were there mandates? Might as well say so if the Fed and Reno are threatening you with the might of the government.

But it looks like a combination of government & private issues.
From wiki

In July 1993, President Bill Clinton asked regulators to reform the CRA in order to make examinations more consistent, clarify performance standards, and reduce cost and compliance burden.[51] Robert Rubin, the Assistant to the President for Economic Policy, under President Clinton, explained that this was in line with President Clinton's strategy to "deal with the problems of the inner city and distressed rural communities". Discussing the reasons for the Clinton administration's proposal to strengthen the CRA and further reduce red-lining, Lloyd Bentsen, Secretary of the Treasury at that time, affirmed his belief that availability of credit should not depend on where a person lives, "The only thing that ought to matter on a loan application is whether or not you can pay it back, not where you live." Bentsen said that the proposed changes would "make it easier for lenders to show how they're complying with the Community Reinvestment Act", and "cut back a lot of the paperwork and the cost on small business loans".[36]
By early 1995, the proposed CRA regulations were substantially revised to address criticisms that the regulations, and the agencies' implementation of them through the examination process to date, were too process-oriented, burdensome, and not sufficiently focused on actual results.[52] The CRA examination process itself was reformed to incorporate the pending changes.[40] Information about banking institutions' CRA ratings was made available via web page for public review as well.[36] The Office of the Comptroller of the Currency (OCC) also moved to revise its regulation structure allowing lenders subject to the CRA to claim community development loan credits for loans made to help finance the environmental cleanup or redevelopment of industrial sites when it was part of an effort to revitalize the low- and moderate-income community where the site was located.[53]

This one clip shows where there were some good intentions and, in hindsight, pitfalls.

If Fred/Fan could not have sold the loans to investment banks then it would have stopped there. Still the taxpayer would end up paying though.

What allowed investment banks to purchase the loans to start with?

 

[highland145]

Not that I support people walking away from their obligations, but I do have to ask the question. Why is it that we seem to be 'ok' with businesses looking at a situation like this and deciding to bail, but when people do it we want to ridicule them?

Because many don't see the harm the business is doing but the costs of the filing bailing is passed onto everyone of us via higher fees down the line.

And if the business could still afford to pay their bills, they should too.

 

[randomrogue]

The difference between a business doing it and a private person is subtle but there. First off if a business tried walking away even though they could pay their bills they would get sued. When a private person does it the bank doesn't sue them, they simply take back their collateral. Businesses do lots of transactions without collateral. Huge difference.

 

[ImpulsE69]

It's not just people, it's also the government as well as the banks. Here is one such story:

During the bailouts, one particularly large bank did not want a bailout. The government did not want to appear to be doing favors and told them that they had to take it, and that if they didn't they would never be able to get help from the government in the future (if needed). The bank reluctantly took the money.

At this point, they could have just paid the money back, but instead it turned around and went out and purchased another bank. Soon after they started struggling.

As the struggles continued and the stocks started to fall, they went to lay off people to help their "stocks" and the government stepped in and said, "No you took our money you can't lay anyone off."

In this case, both parties were in the wrong, and the people are who are going to suffer.

 

[the DRIZZLE]

The difference between a business doing it and a private person is subtle but there. First off if a business tried walking away even though they could pay their bills they would get sued. When a private person does it the bank doesn't sue them, they simply take back their collateral. Businesses do lots of transactions without collateral. Huge difference.

If you are in a recourse state they can sue you for the difference.

 

[Bird222]

The difference between a business doing it and a private person is subtle but there. First off if a business tried walking away even though they could pay their bills they would get sued. When a private person does it the bank doesn't sue them, they simply take back their collateral. Businesses do lots of transactions without collateral. Huge difference.

Sorry, I don't see the 'huge difference' here. It's still going to be a loss. The bank loses some money later (or they probably settle for a lesser amount to get it over with) or a person loses a house and probably can't get a mortgage again for awhile. If people have to honor their obligations so should businesses or neither have to. If it makes good business sense to let the house go for a business then people should be able to make that calculation too without being looked at as scum.

 

[Stuxnet]

I'm amused by the "holier than thou" attitude of a few posters. Even wealthy people (especially wealthy people) have financial advisers.

You're right... especially wealthy people. They have multiple properties, business, investments, etc that all need to be managed. For them, determining what they can and cannot afford is more than just adding up their utilities and car payments, and subtracting that figure from one or two salaries.

Come on, is it really that difficult for the average Joe to determine - mathematically or otherwise - that perhaps a $2000 mortgage is out of reach?

This is no different than going after cigarette companies for the rate of lung cancer. Companies sell products. Fortunately, we're not compelled to purchase them.

 

[LegendKiller]

It is irrelevant. This isn't just a "lost note" like a lost car title we're talking about here; the foreclosing bank can't prove they ever owned the note to begin with.

What % of notes is that? I have a *very* hard time it is as systemic as you claim.

 

[SMOGZINN]

If after all that, you still agreed to dumb ass terms, well that's what life calls "the penalty for being stupid".

What it all comes down to is that the stupid are really bad at math, and really good with the torches and pitchforks. If you penalize the stupid to much they become a mob and try to occupy Wall Street.

In fact I think a working economy can be defined as the thin line between fleecing the stupid enough to make the smart rich, but not so much that they band together to kill you. The banks have gone to far in the fleecing, now comes the killing.

 

[LegendKiller]

I'm still trying to figure out how many CRA regulated mortgages were originated as a % of all mortgages originated and what % of those mortgages defaulted. Further, can anybody answer for me whether or not CRA mortgages were No-Doc option arms?

Actually, shit, I know the answer. CRA mortgages were a small proportion of all mortgages. They defaulted at a little higher rates, but not that much higher.

Further, CRA mortgages were not no/low-doc option arms.

I'll also clue you in on something, the worst mortgage offenders were not CRA regulated entities.

CRA is a ridiculous canard tossed out by the right to duhvert you from the real issue.

 

[KingGheedora]

There are two basic answers to the OP.

1. Banks following illegal/improper procedures, and in some cases attempting foreclosure on people who have been paying their bills.

2. The irony or hypocrisy of the banks being bailed out while homeowners were not bailed out. The banks knew they were making shit loans just like people knew they were taking loans they couldn't afford. Just as the borrowers are responsible for making sure they can afford what they borrow, the banks are responsible for making sure they can afford what they lend. You can't have the borrowers be the only one taking haircuts in a situation like this.

 

[Corporate Thug]

There are two basic answers to the OP.

1. Banks following illegal/improper procedures, and in some cases attempting foreclosure on people who have been paying their bills.

2. The irony or hypocrisy of the banks being bailed out while homeowners were not bailed out. The banks knew they were making shit loans just like people knew they were taking loans they couldn't afford. Just as the borrowers are responsible for making sure they can afford what they borrow, the banks are responsible for making sure they can afford what they lend. You can't have the borrowers be the only one taking haircuts in a situation like this.

I thing both sides paid the price to some extent. The borrowers lost homes that they were not in a position to pay for from the start and the banks lost a shit ton of money on stock value, lawsuits and litigation expenses, and selling properties well below market value to remove toxic assets off their books.

Realistically, for the zero down crowd, what exactly did they lose? Moving expenses?

 

[phillyTIM]

A-men, bro! Word. Prices have totally gone out of whack, God-forbid that peoples' & banks' houses might return to pre-bubble valuations. That's today's problem: even though the bubble "officially" burst, real corrections have not occurred. Look at Philadelphia, we're still well within bubble levels:

http://www.zillow.com/local-info/PA...&rt=8&r=13271%2C214232%2C214976%2C210763&el=0

We all seem to be in a lingering state of price deflation, withering ever so slowly at the vine. Until another bubble takes route and drives up prices again. *SIGH*

It's a lot simpler than all this, houses are just too damn expensive.

...

I don't know about you but even earning decent wage I literally could not buy a house in my area with 100% of my income for the rest of my life. Something is wrong with that.

 

[waggy]

I didn't. I never saw that roughly 1" thick stack of paperwork until it was time to close on the house (both times.) It's what I paid a lawyer for. Otherwise, closing would have taken a week, instead of half an hour. While I was signing my name umpty-billion times, and signing my initials 5 times more often, he was explaining what every page was. "Read," I did not. Of course, I was given a copy of everything at the closing, but there's still never been a reason to read through everything.

/this

but at this point its to late (btw get a damn lawyer when buying a house).

The issue comes when you get the loan. When my wife and I were getting a loan on teh new house we were swamped in jargon and Bullshit. the loans were insane.

We were looking for a 130-200k house (wich would be 3 bedrooms on a small plot of land (small for the country)). they were pushing us to get a $300-400k house since we could afford it. that plus the changing interest rates and other stuff i didn't understand. Get someone in a 400k house with 3% rate and change that to 12% and not many can stay in that house..

this was AFTER i found a house i wanted to buy. I couldn't find a loan i wanted that was a flat rate for 30 years.no addons no bullshit. EVERY mortgage i had before was like that but for some reason at that time you couldn't get one.

finally i called my bank where my original mortgage was and they gave me a great rate with no bullshit.

I can see though how some people were suckered into far far larger mortgages then they should have. the pressure and tactics they used were insane.

 

[IronWing]

More dominoes are falling in my neighborhood. The foreclosures are moving up the food chain into the higher rent districts. I don't know if these are can't pay foreclosures or strategic defaults. What chaps my ass is that one of the houses, a golf course-side McMansion, is a Homepath foreclosure meaning that the FHA ended up holding the bag on the bad loan. It makes no sense to me that the FHA was/is paying in the high end housing market. The intent of the FHA was not to risk taxpayer money get millionaires into lower interest mortgages.

 

[Darwin333]

You borrow the money from the bank
You can't pay anymore because you didn't think ahead/plan properly
Bank forecloses on delinquent accounts because it's a business

What's the issue?

In a lot of the cases the bank doing the foreclosing does not or can not prove that they have the financial interest or legal rights/ability to foreclose. That means that technically the wrong bank can foreclose, take your property and sell it, and you still legally owe the rightful debt holder.

We have this thing called due process in this country and before a person or entity can take your stuff they first must prove that you actually owe that person or entity. Especially when dealing with homes there are very specific legal requirements one must meet to prove that they have the legal right to foreclose on a person. In a metric shitton of cases those legal requirements were either not met or flat out lied about in a court of law which for us normal folk is called perjury and is a crime.

 

[Darwin333]

It is YOUR responsibility to read what you sign. There are tons of laws on disclosure that when buying a house it must be explained to you in very clear terms. If after all that, you still agreed to dumb ass terms, well that's what life calls "the penalty for being stupid".

And LOL at "inconvenient" to pay your bills. It is as simple as you owe X and didn't pay, otherwise all the hoops needed to be jumped through to foreclose, all the notices, all the legal certified deliveries notifying you of such, wouldn't have been jumped through.

But please do describe this fine print you're talking about. Have you ever bought a home? There are tons of things you need to sign and understand. Remember that penalty for being stupid thing I talked about? Yeah, the biggest one is not reading what you sign, especially when there is a lawyer right there who can answer your questions and explain everything as a neutral arbiter.

And it is the BANKS responsibility to do their due diligence and make sure that you can reasonably afford a loan before lending you the money.

I have no problem with the "penalty for being stupid" but I DO have a problem when two parties both make equally stupid decisions and one party gets bailed out at tax payer expense while the other party gets hosed. Where is there "penalty for being stupid"? How about when they lose or do not properly transfer titles as required by law in order to foreclose on someone? It was their stupidity that lost them the legal right to foreclose so why should they be allowed to to forgo the "penalty for being stupid" and foreclose on someone despite it being against black letter law? How about perjury, I would call committing perjury pretty stupid and the rest of us would definitely pay a penalty if caught doing it, why do the get a free pass on the "penalty for being stupid"?

That is my biggest issue with all of this mess. One side is expected to do as you say while the very same peoples tax dollars are covering the other sides stupid.

 

[Darwin333]

If the homeowner has a title for their home listing them as the sole owner, then they can tell the bank to DIAF.

Yeah, its not quite that easy.

http://www.tampabay.com/news/busine...n-house-that-couple-had-paid-cash-for/1072632

 

[Fritzo]

If the homeowner has a title for their home listing them as the sole owner, then they can tell the bank to DIAF.

Yet it happens.

I agree, people are stupid, but some banks were taking advantage of that stupidity. If you go to a doctor and say "I WANT 1000 TABLETS OF OXYCODONE!" the doctor will look at you and say "In my professional opinion, that would not be good for you, so I can't help you."

Now, if you went to a bank before 2009 and said "I MAKE $30000 A YEAR AND WANT A $300000 LOAN BECAUSE I KNOW THIS HOUSE WILL BE WORTH $400000 NEXT YEAR", the banker would say "Sure! I'll take that commission! Let's pull some strings and pool a bunch of unsecured credit on this very risky idea to get it going!"

There was a lack of professionalism on the bank's side (and banks answer to investors). They were taking completely outrageous risks on idiots to boost their mortgage sales, and in doing so nearly broke the entire economy.

And this is why people are complaining about banks.

 

[Hugo Drax]

I still do not get the complaining. If you put down Zero or a few thousand to buy a 400K home now underwater, and you are foreclosed on it then what exactly did you lose?

You had no skin in the game, the risk was not on you since you did not tie up capital to buy the home, you had no equity anyways and technically the home really belongs to the bank since they wrote the note.

Just walk away and call it a day.

BTW: Banks cannot foreclose on a home that is paid for. When you pay off your mortgage that is the equivalent to calling away a bond from a bond holder. They get the Principal plus the interest to the point of the last payment. The bank no longer has a note and your home is now in your name registered with the city on the books. And you get a satisfaction of mortgage letter with the stamps etc.. You are done there is no obligation on your part to the bank, and the bank no longer has rights over your property. End of story.

 

[alkemyst]

/this

but at this point its to late (btw get a damn lawyer when buying a house).

The issue comes when you get the loan. When my wife and I were getting a loan on teh new house we were swamped in jargon and Bullshit. the loans were insane.

We were looking for a 130-200k house (wich would be 3 bedrooms on a small plot of land (small for the country)). they were pushing us to get a $300-400k house since we could afford it. that plus the changing interest rates and other stuff i didn't understand. Get someone in a 400k house with 3% rate and change that to 12% and not many can stay in that house..

this was AFTER i found a house i wanted to buy. I couldn't find a loan i wanted that was a flat rate for 30 years.no addons no bullshit. EVERY mortgage i had before was like that but for some reason at that time you couldn't get one.

finally i called my bank where my original mortgage was and they gave me a great rate with no bullshit.

I can see though how some people were suckered into far far larger mortgages then they should have. the pressure and tactics they used were insane.

wow. $130 to 200k? those are very different homes.

However most of your and other's discussion would never happen.

Just in your's there is a thing called caps and margins.

 

[alent1234]

/this

but at this point its to late (btw get a damn lawyer when buying a house).

The issue comes when you get the loan. When my wife and I were getting a loan on teh new house we were swamped in jargon and Bullshit. the loans were insane.

We were looking for a 130-200k house (wich would be 3 bedrooms on a small plot of land (small for the country)). they were pushing us to get a $300-400k house since we could afford it. that plus the changing interest rates and other stuff i didn't understand. Get someone in a 400k house with 3% rate and change that to 12% and not many can stay in that house..

this was AFTER i found a house i wanted to buy. I couldn't find a loan i wanted that was a flat rate for 30 years.no addons no bullshit. EVERY mortgage i had before was like that but for some reason at that time you couldn't get one.

finally i called my bank where my original mortgage was and they gave me a great rate with no bullshit.

I can see though how some people were suckered into far far larger mortgages then they should have. the pressure and tactics they used were insane.

i've had 3 mortgages through countrywide/BoA and they were all fixed rate and easy to understand. and no one ever pushed me into a higher loan amount

you seriously have to be a retart not to understand the packet they send you

 

[waggy]

i've had 3 mortgages through countrywide/BoA and they were all fixed rate and easy to understand. and no one ever pushed me into a higher loan amount

you seriously have to be a retart not to understand the packet they send you

this was 7 yrs ago during the "boom" it was rather insane. the amount of pressure we received reminds me of going to a car dealership!

I will say i looked at getting a different home last summer. it was a total 180. no pressure at all but also just told to make sure everything is 100% correct.


lol

wow. $130 to 200k? those are very different homes.

However most of your and other's discussion would never happen.

Just in your's there is a thing called caps and margins.

we wanted 3-20 acres in a specific school zone It is the cost of property that drives the price not so much as the home. I DID NOT want to live in the other town near me (maybe 2000 people) since the plots are smaller.

i was shooting for 10-12 acres but couldn't find one. in fact during that time there was not much to choose from. Now? pfft

 

[RadiclDreamer]

It is YOUR responsibility to read what you sign. There are tons of laws on disclosure that when buying a house it must be explained to you in very clear terms. If after all that, you still agreed to dumb ass terms, well that's what life calls "the penalty for being stupid".

And LOL at "inconvenient" to pay your bills. It is as simple as you owe X and didn't pay, otherwise all the hoops needed to be jumped through to foreclose, all the notices, all the legal certified deliveries notifying you of such, wouldn't have been jumped through.

But please do describe this fine print you're talking about. Have you ever bought a home? There are tons of things you need to sign and understand. Remember that penalty for being stupid thing I talked about? Yeah, the biggest one is not reading what you sign, especially when there is a lawyer right there who can answer your questions and explain everything as a neutral arbiter.

I typically don't side with spidey on non network issues, but I agree 100% in this case. People are bad about buying homes they can't even come close to affording and become "house poor" due to this. I didnt buy an expensive house because i couldnt afford it, you shouldn't get off the hook because you bit off more than you could chew.

 

[alkemyst]

this was 7 yrs ago during the "boom" it was rather insane. the amount of pressure we received reminds me of going to a car dealership!

I will say i looked at getting a different home last summer. it was a total 180. no pressure at all but also just told to make sure everything is 100% correct.


lol



we wanted 3-20 acres in a specific school zone It is the cost of property that drives the price not so much as the home. I DID NOT want to live in the other town near me (maybe 2000 people) since the plots are smaller.

i was shooting for 10-12 acres but couldn't find one. in fact during that time there was not much to choose from. Now? pfft

I understand your plight. I didn't need you to explain it.