Posted on 02/23/2010 4:03:22 PM PST by rumrunner
So, after waiting for more than five years to finally buy a house that I thought was fairly priced in socal, and having paid out about $150,000 in rent over that time period, I'm about to close on a short sale.
The banks/investors (BofA, Citi) are going to "lose" about $400,000 on the house. The guy that's selling the house never lived in it. He never put a dime of his own money it. He will still have his own house in a different part of the county. He will keep that house. He is out nothing.
I did a little digging about short sales and came upon this gem this month:
Guy buys a house in Florida. $290k mortgage. Takes out a Heloc of $140,000. Uses it for his S corp business. He asks that his loan be modified. Citi says "sure". He settles the entire Heloc for $15,000 and the Heloc is now extinguished. Yes, 10% on the dollar. He still has his business and other assets.
This was his reply in that forum:
"WOOOOOHOOOOOOOOOOOOOOO!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!! I just got my letter!!!!! $15,000.00 or 10% whichever is greater!!! I just settled 140K for 15K!!!!
THANK YOU xxxx You guys are the best!!!! I'm sooo happy right now!!!!!!!!!!!!!!!!
I was never behind on my 1st or 2nd. My credit is still good, the only remark will show paid in full but less than agreed on my credit file."
Ok, I can see the point but let’s take it to a slightly different degree and illustrate the other side.
Say you have a credit card with a 25% interest rate. The bank asks you to pay a minimum balance every single month. They encouraged lots of people to do that with ever increasing lines of credit, smaller minimums, and even sent checks out in their solicitations. Now those were the heady days of banking but we all remember their exhortations to people. I couldn’t rip the enevelopes up fast enough.
Now did the banks enter into a contract with those people with an expectation of payment? No. They wanted to drag it out as long as they could.
I am not an anti-bank person, far from it. But to wrap up contracts in ethics is dangerous. There are risks associated and the banks walked in with eyes wide open. The banks certainly knew better than the consumers what they were doing and they gambled up.
My first mortgage had a pre-payment penalty buried deep into it (hidden, btw, on purpose IMO). Boy, that was a good lesson for a 20 something year old getting his feet wet for the first time. Never repeated that mistake.
Family law in this country is a huge pile of crap, based on what I see here and in other forums. Good luck to you.
Bingo!
“There is a “Yankee banker” and “Big corporation” exception to that rule.
parsy, who says, surely you have heard ofit.”
Don’t forget to include your beloved ambulance chasing trial laywers. :0)
After continuing on to the next page I now understand your message.
I liked it better when I thought there was a possibilty you just completed paying off your mortgage.
I resent that! I take umbrellas, or whatever that word is...
Deadbeats have been at the forefront of the Great Democratic Human Struggle! Deadbeats led the way in settling America and Australia! Deadbeats have been the ones to destroy great family dynasties by bilking the 3rd or 4th generation of their un-earned wealth!
Deadbeats have interjected an element of surprise and spontaneity into everyday life. We keep large numbers of bill collectors employed, bankruptcy courts and their personnel. We tend to separate the stupid creditors from the smart ones, thus providing a public service! (And don’t you even think of objecting to that one, what with Wall Street feeding us that line of BS about their gambling being “price discovery”)
Deadbeats settled the American continent, constantly moving West, one step ahead of the bill collectors.
Yes, look and wherever freedom and liberty have flourished, the deadbeats were there first, having thrown off the shackles of debt, and emerging, from the cocoon of usury, like butterflies...
parsy, who is carrying on an old family tradition
You signed an agreement that says you will drive yourself into penury?
Why?
As for mortgages, they contain provisions that cover your inability or unwillingness to continue paying.
As long as you don't violate those, steal all the fixtures, tear out the plumbing, start black mold cultures, etc., you've lived up to your end of the "agreement."
” The homeowners and banks are paying off their markers with our money. And laughing all the way to the bank. At me. At you.
So, in closing, the guy in Florida and his business thanks you, and me, collectively known as the “taxpaying suckers of Freerepublic.”
Yep. The willing led by the greedy. I paid off a 12% mortgage, as a single mother getting NO support from anyone, least of all the government.
The difference was I lived within my means. None of those you mention did. And yes, I’m just a little tired of paying for their excesses. And NOW that I have some savings, I get 1%! If I’m lucky.
American dream, my butt.
Got it!
parsy
>> Now did the banks enter into a contract with those people with an expectation of payment? No. They wanted to drag it out as long as they could.
Clearly the banks make more money if the CC borrower delays paying back the loan.
But the borrower is always in complete control of the process. Don’t borrow more than you can afford to pay back each month, and you’ll never have to pay that exhorbitant rate.
If you view credit card lending as immoral, then the immorality is in the actions of the borrower, who didn’t know when to quit.
In all my years I have never had a revolving account lender force his way into my home, put a gun to my head, and thereby make be borrow money from him.
The banks provided a service that literally millions of borrowers were clamoring for — in the GOOD times, that is. Why are they the evil ones?
>>You can rationalize it all you want but if you can’t honor an agreement, either verbal or otherwise, you are not a person of honor........sorry.<<
I understand that is your opinion. I simply disagree, and have articulated why. Also, when you give back the keys, you ARE honoring the agreement. At least you are honoring the agreements I saw as a commercial and residential real estate agent. That’s why contracts are in writing.
Meanwhile, I bought my farm in Kentucky on a handshake. We both looked each other in the eye, made a verbal contract, and shook hands on it. We closed last August.
I’ve been thinking about this scenario for some weeks now, there have been discussions like this before with the same arguments, anyway, I’ll have to dig up my old mortgage and see what it says, but isn’t a mortgage similar to a car loan in that the home is the security like the car is? And if you stop paying for your $50,000 car and the bank repossesses it, then auctions it for $30,000 don’t you still owe the difference minus any principle that you already paid? I mean, the bank paid the car dealer the $50000 on your behalf, because you promised to pay them back. I remember a few years back, reading about a guy that reported his car stolen and then torched it hoping the insurance would pay the bank and save his credit score. The insurance paid wholesale and he ended up owing the difference???? How is a house and mortgage any different, other than cars depreciate and houses normally don’t???
Was it P.J. O’Rourke who said that the purpose of liberalism was to shield people from the consequences of their bad behavior?
I know you may have some area picked out but a couple of suggestions on locations, being in Colorado.
South Fork, Creede, South Park County, and Bayfield area. There are lots more but just a nice starting point if Colorado is on the list.
Don't forget PMI. The bank loses nothing.
You live your life the way you want but I'll live mine with honor...........
I don't know what penury is but obviously it's your back door excuse for whatever..........
It varies by state. Most states are “recourse” states, meaning that the defaulting mortgage holder can be pursued for a deficiency judgment, which would be any shortfall, between the amount owed on the note and the amount brought at REO sale or auction.
Some states, however, are “no recourse” states. Hand the house keys back and walk away with nothing but damaged credit.
Not so coincidentally, the states with the worst problem are the states that had “no recourse” lending.
Never said they were evil just they knew they could find plenty of suckers to take them up and the banks had no qualms doing it.
You equated it to a moral issue. My point is that it is not. The banks don’t care and a non-living thing has no ethics. The banks made loads of money and should have been forced to failure for bad risks.
The issue is with the government doling out relief. It is nothing to do with a contract signed by parties.
That is why the default rate is going up. People are gaming the system. They know they won't be foreclosed upon for 12 months if they apply for a loan mod, wait to get the docs back, then send it in and wait for a response, then appeal it. Get denied through HAMP, apply to the traditional modification department. Rinse, repeat. Why pay your mortgage when one suffers no harm?
To the other poster that claims most are doing loan mods. Many of these debtors have second mortgages, having put down nothing, so they had an 80/20 loan, or 80/10/10. On the second loans, they are getting them charged off.
By the way, the terms for MOST of the loan mods: Their interest rate is reduced to 2% for 5 years, and on some the max interest rate is 3% or 4%.
For those of you with an interest rate above 5%, the federal government thanks you for subsidizing these folks for the next 20 to 30 years.
Based on your previous statement, I wouldn't trust your handshake any more than I trust Obama.........
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