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Re: Foreclosure Land
Old 03-23-2007, 01:37 PM   #41
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Re: Foreclosure Land

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Originally Posted by tio z
The government has an obligation to keep our economic system intact. It should be done by making sure the fully regulated institutions (i.e. banks) have sufficient liquidity to survive and to keep making loans to those with the ability to repay.
Well, you should be happy because that is what has happened. The banks were never allowed to get in as deep as the sleazebag unregulated lenders, so the banks are still in decent shape while the idiots running with scissors unregulated entities are drying up and blowing away.
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Re: Foreclosure Land
Old 03-23-2007, 01:37 PM   #42
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Re: Foreclosure Land

Risky borrowing--the borrower side.
I do feel sympathy for the home purchaser who overextended and will suffer the consequences of the loan they took out. Children will suffer, families will hurt. Unfortunately, that is the downside of the housing boom. Time to tighten the belt, scrimp and save like so many before have, and come out of the problem in better financial shape than before.
We, as a nation, have had many ups and downs, booms are followed by busts. This is nothing different in that way than the 80's, 70's, 50's, 30's, etc.
Hard lessons.
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Re: Foreclosure Land
Old 03-23-2007, 01:45 PM   #43
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Re: Foreclosure Land

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Originally Posted by crazy connie
NOPE you pay for a long time on the default via your FICO score.
The problem was that credit cards and other lenders did not care that much if you had a low FICO.... when my BIL was in BK, he was still getting many offers from different banks...

And as for throwing them the keys... if you don't have anything, what can they get It is the ones with 'other means' that get hit.. the ones like the poster that had to be out of a house for 10 years to get back to even... or the ones who could not sell because only the repos were being sold...

I also live in Houston during the bad times, but bought during that time.. the house I bought was 'discounted' by just shy of 50%...
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Re: Foreclosure Land
Old 03-23-2007, 02:53 PM   #44
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Re: Foreclosure Land

Getting sick or getting laid off seem like things you can and should plan for.


There is no way you can plan for all of the things life can throw your way .
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Re: Foreclosure Land
Old 03-24-2007, 07:58 AM   #45
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Re: Foreclosure Land

http://www.bloomberg.com/apps/news?p...efer=exclusive


Quote:
Homeowners, Lenders Skirt Default, May Curb U.S. Housing Slump

By Kathleen M. Howley
There are many reason for people losing their homes, loss of job, death, divorce, even not paying attentions to what kind of loan your getting. In any case this is happening all over the country and I personally think that some of these lenders should start to get a little creative on their end or else they will be left holding the bag....there is already talk of many mortgage lenders going belly up..that is no good for any one. Will it trickle down to all of us you bet, in one way or another.

I am not saying that it is all the lenders fault, but there were many lenders out there that let these "creative" loans go through that should never have gone through. The same thing with credits cards how many have gotten credit cards that should not get them, heck even dogs and babies have been issued them...

In one of the cases I know this couple had a 15 year mortgage a divorce happend and the lenders wouldn't allow the person left in the house to stretch the loan out for a longer period so they could make the payment on there own...on top of that come to find out, there was a clause in the morgage papers that said there would be an early pay off penalty. Clear case of the borrower not knowing what they signed, maybe, maybe not the husband got the loan she in trusting him signed it as well.. he then left his wife holding the bag....


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Re: Foreclosure Land
Old 03-24-2007, 08:16 AM   #46
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Re: Foreclosure Land

Kathyet...

I will give my opinion on the example...

Suck it up and refinance... your 'ex' screwed you... you have a choice... don't pay your full mortgage and eventually get repoed, refinance if you can afford it and there is equity in the house (not always!!!) and pay the fees (life lesson), or not ask for the house in divorce... give it to HIM...

Everybody always looks at the convenient way to get it fixed... and sometimes that is not available to you for one reason or another... so you move to option 2.. or 3...
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Re: Foreclosure Land
Old 03-24-2007, 06:28 PM   #47
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Re: Foreclosure Land

I forget what they call it but lenders can just add the missed payments to the back of the loan. Although since there is Pmi they may better off foreclosing cause that means they get paid something today.
As far as the 1099 you can have that forgiven by the irs if you can show that you are trully broke.
Plus most people still qualify for the old bankruptcy where they forgive most of your debt.

I think the issue of the divorced people is that the remaining spouse cant refinance. They probaly already shot their credit and they dont earn enuff to get the house with just their income. Its how I bought some of my rentals....
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Re: Foreclosure Land
Old 03-25-2007, 08:14 AM   #48
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Re: Foreclosure Land

Texas Proud,
It isn't happening to me...so I don't have to "suck it up".

spideyrdpd,
I suggested paying only principle until they can get back on there feet, I think that is how they add to the back end of the mortgage. Not sure though.

The point is lots of people are going through this and unless the lenders try and work things out were all going to pay for it ...my friends have just walked away.... bad credit or not....come to think of it I have noticed a lot of empty house lately some have fore sale signs other have not...

In any case I have genuine sympathy for some of these families whether it is there own doing or not..

Here is something on the subject from John Mauldin I get his weekly news letter

http://www.frontlinethoughts.com/index.asp

Kathyet
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Re: Foreclosure Land
Old 03-25-2007, 03:14 PM   #49
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Re: Foreclosure Land

Quote:
Originally Posted by kathyet
Texas Proud,
It isn't happening to me...so I don't have to "suck it up".

Kathyet
Kathyet...

Not trying to hit you in the chops... but read what I wrote... I said "I will give my opinion on the example...". I knew it was not you.. but you had put down an example of 'someone' and I was responding to that 'someone'..

I still think that many people get themselves into trouble and want to blame others for their problems... no, not everyone, but you see so many examples on the various shows and article etc. of someone who was a drug addict or whatever and now have turned themselves around etc. etc... a shining example of the 'human spirit'... but what about the vast majority of people who never got in that situation because they knew better... so they did not turn their lives around and are not shining examples... I would rather show children the later example than the former...
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Re: Foreclosure Land
Old 03-25-2007, 03:48 PM   #50
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Re: Foreclosure Land

I (almost) felt guilty when we sold our condo in October (but we were desperate to sell and the buyer wasn't looking for financial lessons or advice from us). A very young guy, newly out of the service, no money for a down payment. Condo selling for $130K (definitely the cheapest housing in our area). He had a job, but it seemed like the (reputable, so far as I know---major company) mortgage lender had some doubts with his income to debt ratio and he had to get a note from his employer saying that he typically gets some overtime pay to supplement the regular income. The buyer's real estate agent also negotiated that we would pay a year of condo fees ($200 a month). It seems like this guy is cutting it very close. What if the overtime stopped/he lost his job/encountered some expenses with the 20 year old condo?

It seemed crazy that he was having trouble qualifying for the loan since the mortgage payments wouldn't have been that high on a 130K mortgage, even at a higher interest rate. Assuming he was earning in the 30's, you would think he could swing the monthly payments (he also is in the Reserve, so that's additional pay). And the mortgage payments were going to be much less than the $1000 rent these condos and similar apartments in the area go for. (There did seem to be a live-in girlfriend who could help with expenses, but her name wasn't on the mortgage).

In some ways, we felt he was crazy to be getting into this. Why not wait a few years and save up some money and get lower interest rates, not have to pay mortgage insurance, have the peace of mind of a nest egg to cover unexpeted expenses (the condo never has had an assessment, but at 20 years old, one could be coming...). In other ways, we sort of admired him because it usually is best to own rather than rent, so we envied his courage in going after what he wants. DH and I have always been way too cautious, which is why he waited until our thirties to buy an inexpensive condo.

Our buyer may not be the best possible example of an irresponsible person since he wasn't looking to buy a very expensive place. What slayed me was an article I read in a women's magazine about dealing with "adult" children. They cited one example of a 26 year old who wanted a $500K home. Parents are holding the mortgage for her. She pays them back a higher interest than they could get on CDs but has a very understanding/
forgiving lender if she has a shortfall one month and gets into more housing than she could have qualified for. Supposedly a win-win situation for both. But why the hell does a 26 year old need a $500K house? What is wrong in having a starter home and working her way up to a McMansion?

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Re: Foreclosure Land
Old 03-25-2007, 04:09 PM   #51
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Re: Foreclosure Land

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Originally Posted by youbet
I'm curious as to what this actually means? Throw back the keys to the lender? I thought it meant defaulting on your mortgage and subsequently your credit rating going down the toilet. Can you walk away without consequences as this term seems to imply?
``I told the bank to come get the keys and just let me know when we need to be out"

http://www.bloomberg.com/apps/news?p...efer=exclusive

There used to be shame and embarrassment when one defaulted on debt, today there seems to be an air of detachment on the part of many. Easy come...easy go...

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Re: Foreclosure Land
Old 03-25-2007, 04:22 PM   #52
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Re: Foreclosure Land

I think the segment of the population whose homes go into foreclosure and who don't care is small. There are some who looked at their home as a piggy bank but I suspect many signed for loans they didn't understand or they are among many in community who lost their job so there is no liquidity in their housing market.

The reality is that their grief will echo down the national financial pipeline and through their communities. I think the states (at least) should tighten up mortgage laws so that exploitative lenders will be roped in.

For the communities who have suffered job losses I feel the pain as the NW went through that when the Spotted Owl was declared endangered and the wood products industry imploded. It took ~10 years to redirect the economy.
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Re: Foreclosure Land
Old 03-25-2007, 04:28 PM   #53
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Re: Foreclosure Land

Quote:
Originally Posted by tangomonster
What slayed me was an article I read in a women's magazine about dealing with "adult" children. They cited one example of a 26 year old who wanted a $500K home. Parents are holding the mortgage for her. She pays them back a higher interest than they could get on CDs but has a very understanding/
forgiving lender if she has a shortfall one month and gets into more housing than she could have qualified for. Supposedly a win-win situation for both. But why the hell does a 26 year old need a $500K house? What is wrong in having a starter home and working her way up to a McMansion?
It may have been a "win-win situation" for both. Did the article say how much she was earning?

Also, did the article say where the home was located? It may not have been a McMansion. Maybe it was in NYC (or a nice suburb), or Silicon Valley.

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Re: Foreclosure Land
Old 03-25-2007, 06:02 PM   #54
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Re: Foreclosure Land

Quote:
Originally Posted by tangomonster
But why the hell does a 26 year old need a $500K house? What is wrong in having a starter home and working her way up to a McMansion?
In many markets $500,000 is a starter home, and not a very nice one at that.

Ha
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Re: Foreclosure Land
Old 03-25-2007, 06:09 PM   #55
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Re: Foreclosure Land

In my neighborhood $500k usually means a townhouse or condo. You might be able to get a 50 year old, 1000 sq ft ranch for that price if you get lucky?

At these prices you can easily imagine why someone would jump at a risky loan if it was the only possible way to buy a house and real estate prices (based on short term data) seem to go no where but up.

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Re: Foreclosure Land
Old 03-25-2007, 06:37 PM   #56
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Re: Foreclosure Land

This prolly sounds callous but I am not sure I have much sympathy for anybody involved. Now there are many exceptions to the scenario I'm about to outline, but in general I think this is what we are seeing.

A couple of years ago, a person/couple with marginal credit tries to purchase a home that can't afford, rather than wait and save more money for the down, wait and try to restablish there credit, or settle for someplace less expensive, they get greedy and decide to gamble. Gamble that the housing price will continue to go up, interest rates stay down, and their income will go up to afford the higher future payments.

They go to see the friendly mortgage broker. The broker knowing, that with marginal credit, zero or small down payment, and without sufficient income to qualify for a conventional loan, he will have to get creative to earn his fee. More often than not the broker and borrower pad income, lie about the source of the down payment, and generally turn the loan application into a novel not a documentary.
You add this fudging to teaser rates, negative amortization, ballon payments etc. and you have a receipe for disaster. Now, I can understand how the average not-so-financially-astute person can be confused about variable payment loans. But every loan application has a section, in big bold letters, where you swear under penalty of perjury that everything you filled out is truthful. So when the poor 67 year old lady signs the papers saying she makes 1,500 a month in a job that she hasn't had for 10 years, not the $540 she actually gets my sympathy goes away. Of course the broker is gambling also that nobody will double check the loan figures, and he'll be long gone before the fraud is detected.

The sub-prime lender is happy to make these loans because they know they can resell the loans to greedy investors and other institutions. The greedy investors looking at 4% CD rates are happy to get 8% on sub-prime mortgage cause they think the risk of default is very low.

So we fast forward to present day. The couple finds that once the teaser rates have ended they can't make the mortgage. They can't refi because house prices have stopped going up. I don't have a lot of sympathy for them because they didn't put much down payment, they were living beyond there means, and for the most part they got to live in a nice place at virtually the same cost as rent.

The mortgage brokers are losing their jobs, while am I sure many were honest, I suspect most cut corners so no sympathy from me.
The sub-primer lenders are heading for bankruptcy, they knew what they were doing. Actually New Century Financial Chairmen Robert Cole who sold 150,000 shares @$40 last summer really knew what he was doing!.

The investor and instutitions who bought sub-prime loans at 8%+ got a lesson on the dangers of loaning money to people with bad credit. Actually probably the biggest victims are the shareholders, and the admin and support personal of the subprime lenders.

The good news is that once again we will see a widening in interest rates between those people and institutions who pay back borrowed money and those with a checkered history.


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Re: Foreclosure Land
Old 03-26-2007, 01:48 PM   #57
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Re: Foreclosure Land

tangomonster--I don't know the details of your transaction, but if the buyer were using a VA loan, the lending regulations are very strict. He might be able to afford the condo (does VA loan on those?), but because of the VA's requirements he had to go through many loops.
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Re: Foreclosure Land
Old 03-27-2007, 08:43 AM   #58
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Re: Foreclosure Land

Yup, the VA does do loans on condos and the buyer tried to obtain one, but couldn't. He had to go with a regular mortgage.
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