Posted on 03/07/2010 8:13:19 PM PST by reaganaut1
In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.
This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.
More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.
For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.
Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.
“We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury senior adviser.
The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000.
(Excerpt) Read more at nytimes.com ...
Why not just do a deed in lieu then?
1 Corinthians 15:33
Do not be misled: "Bad company corrupts good character."
NOOOOO, not relatives. We went to a Chamber of Commerce Dinner and there were about 25 at our table. That discussion occupied most of the dinner discussion. Hey, I’m not the scam police force. I said it was theft, got dirty looks. The economy sucks, I don’t need to make enemies with other business owners so I shut up and listened. What they do is their business. There is a lot of nutty stuff going on right now. Our landscaper and air conditioner guy both OFFERED discounts for cash. They have never done that before. An electrical contractor we know is doing about 35% barter and cash. Times are a changing that’s for sure.
Another thing, we are getting into a catch 22 situation. People feel the government is screwing them so in turn they don’t care anymore and they begin to think of ways to screw them back. Until we have some sanity in DC, it’s gonna get a whole lot worse.
I’m glad I’m not invovlved in business anymore. Just don’t let anybody pull you in on the scams. They may call you names but in the end they will respect your pinciples and see you as someone they can trust. That kind of person is held on to.
If you believe people at firms that got taxpayer bailouts should be getting multi-million dollar bonuses and that is supposed to be a conservative view then corruption is now a conservative view. You are a lost cause.
Corruption not only lives, it has cheerleaders!
If the note holders did not do their homework, if they made bad decisions, then why should I as a taxpayer bail them out. Does conservative apply only when it does not hit someone's pocket. Life does not or should not operate in that vacuum.
That's great. They repaid the money. But the capital that was made available to them bailed them out. That comes with a cost. That cost is no multi-million dollar bonuses (or at least it should be the cost). It should also come with the cost that people will not be put out of their homes - and I will qualify that.
If with a traditional mortgage at a fixed rate and a reduced rate they can afford to stay in their home, they should not be put out of their home.
But should they be rewarded for this...
1) A small lender makes a loan to a disable person on a fixed income, putting them into a loan with a variable rate that they cannot possibly make once the rate goes up.
2). The lending institution sells the note to a big bank without the bank giving it the slightest look (due dilegence).
3). The loan goes bad as anyone could predict.
4). The bank gets bailed out for the multitude of similar such loans (all bought without ever looking at the particulars).
5). The bank gets bailed out for its mistakes.
6). The homeowner gets put out on the street.
7). The bank gets the house back.
If my seeing something wrong in that picture makes me sound crazy then call me crazy. But what sounds crazy to me is to hear supposed conservatives defending such gross incompetance, saying it should be rewarded with multi-million bonuses and then railing at homeowners only (many of whom were just plain stupid - as the banks).
I'll make you a deal. I'll agree the homeowners were stupid and should lose their homes if you will agree that those in government that failed to catch the problem and those at the lending institutions that were more responsible than anyone for creating it should all go to jail.
I on the other hand will get a free pass on that borderline run-on sentence.
One of the primary reasons for government is to enforce contract law between individuals. The government is essentially abrogating that responsibility. They are setting a precedent that contracts aren't enforceable. Watch the lawyers have a field day chewing up other contracts with this new precedent.
There is also that matter of "just compensation". If the government forces a sale at below market price, the bank has a case against the government for the value of the private property that has been forcibly taken by government edict. The legislation is punishing a class of people (lenders) without due process. A "bill of attainder". Unconstitutional.
Assuming it was a "recourse" loan, a 1099 for the amount forgiven is treated as income. There are some "non-recourse" loans that might not see a 1099. My son would have the precise details as short sales of one of his specialities.
No, I play by the rules and we have an accountant that goes over everything at the end of each month. However, if health care passes, all bets are off. I will NEVER pay a cent toward that bill. Not a dime of taxes, penalties, whatever it may be...not a single cent. That is when I join the others.
Anatomy of a Government-Abetted Fraud: Why Indymac/One West Always Forecloses
Iamfacingforeclosure.com ^ | December 1st, 2009 | Patrick Pulatie
Posted on 01/03/2010 11:00:40 PM PST by Auntie Mame
The latest insight on the foreclosure crisis — and help for those in need.
Several times per week, I get phone calls from attorneys. These calls all start out the same. “I am unable to get loan modifications done through a lender. What can I do?” The first question I ask is if the lender is Indymac/One West. Invariably, it is.
I also field the same type of calls from homeowners and from loan modification companies. Everyone is having the problem of Indymac not cooperating with regard to doing loan modifications. Furthermore, if I google the issue or check out loan modification forums, the same is true on the internet.
What is going on with Indymac/One West? Why aren’t they doing loan modifications? This article will try and bring together the known facts for a better understanding of the situation, and discuss what the Indymac situation means for foreclosures in general — and the government’s response to the crisis. First, to understand the situation today, one must have an understanding of the recent history of Indymac.
I don’t believe there is anyone... ANYONE... in this Obama administration that knows a damned thing about economics, the Constitution or a free enterprise system! Dolts!
Agree! Agree! Agree!
Bailing out the people who knowingly signed up for a mortgage that they knew they couldn’t afford is NOT on my to-do list. I’ve been paying twice my required mortgage payment for the past four years and will save thousands in interest when 30 yr. note is paid off 12 years early.
btw... I live on SSA and a pension from my career and am definitely a low-middle class income person. Was cut from employment after over 35 years at age 59. Had to go 9 months with NO income before retirement pension was available (special deal with Legal Dept. to keep me as unpaid leave of absence and medical until age 65 to prevent lawsuit). Began SSA at 62, as I figured it would pay me more money in the long run (based on life expectancy) than waiting another three years just to get a little more each month.
I apologize for being so wordy.
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If you can show me the note holder for my loan I would be grateful ,, then I could compel discovery. The simple truth is that for 60-75% of all mortgages written in the last 15 years they were underwritten by investors that not only aren't a party to the note but that are TO THIS DAY hiding their involvement as the financial instruments used to fund the mortgage pools are often at legal odds with the terms of the note itself.
Please read http://livinglies.files.wordpress.com/2010/02/180787_86_opinion-lehman.pdf
here's one opinion as to the meaning of that ruling...
The relevance is that if the derivatives are construed as part of a single transaction in which the homeowner loan was funded, and that there are conditions under which the derivative operates that add or change the original contract as set forth in the note, then the original note was REPLACED with a new deal that did not include the homeowner.
This means the original obligation was replaced with a new obligation in which parties inserted themselves into that contract without disclosure to either the investor who funded the transaction or the homeowner who secured the transaction with the home. In my opinion (check with your own lawyer) the legal effect is that the note was a nullity the moment it was signed or assigned. This eviscerated the security rights of the creditor — although the creditor (if he/she/they can be found) might have some right to sue in equity to create a constructive trust over the property — subject to the various defenses and counterclaims available to the homeowner.
People .. PLEASE DON'T DO A MORTGAGE MOD! BY RE-SIGNING NEW LOAN DOCS YOU ARE ALLOWING THE LENDERS TO WEASEL OUT OF WHAT ARE (USUALLY) INDEFENSIBLE CONTRACTS.
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Too bad for them ,, they are "sophisticated investors" .. if they bought securities IN THE FULL KNOWLEDGE that the seller/creator was hedging against them at up to 30X face value (with CDS's) KNOWING THAT THE ISSUE WOULD FAIL without getting a clue that they were buying junk they SHOULD lose money, Stupidity should be painful.
Please explain to me why I should care about a party that isn't a party to the note itself ,, sounds to me that I am NOT INVOLVED ...
BUSINESSPROFESSOR, You have your head stuck in the 1980's .
What will this do to existing home sales? My Mother in Law is trying to sell her house to move into an apartment or condo because she just can’t handle home ownership upkeep any longer. She has owned her home for 25 years. How will she ever get fair market value, much less an offer at all if others can “short sell” theirs in the same neighborhood?
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