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Old 06-14-2011, 01:14 PM   #21
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Originally Posted by ziggy29 View Post
But it's not only the bank that "lost". To the extent this bank was taken over by FDIC, other deposit institutions bailed their bad choices out. To the extent Uncle Sam bailed them out, the taxpayers lose too.

As long as these businesses don't operate in a vacuum, there are more losers than just a business making a bad decision.
The system has problems, I am paying for them with everyone else, no doubt. Personal responsibility goes both ways though. When I bought property near the peak of the bubble, when I bought shares of these banks through my index fund, I condoned the actions of the bank. I assume the risks by participating in the system.

Why would someone in her situation to tough things out and pay off the loan? The personal hardship of doing so would be massive, with very little tangible benefit.
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Old 06-14-2011, 06:33 PM   #22
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Interesting that the towns have not foreclosed for back taxes. Are the banks keeping the taxes - and insurance - current?

THAT's why the banks will settle (sell short) ... to stop the bleeding. Might take a few TOTAL losses (ie. fires, liability law suits, tax lien sales ...); but they'll come to thier senses.
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Old 06-14-2011, 07:18 PM   #23
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My opinion has changed on this.I used to be infuriated by the people who walked away from their loan. But I believe now it's a business decision.
My opinion has changed as well. It's a business contract. The banks make the loan in the expectation that the lendee will pay; if they don't, they foreclose and the lendee takes a credit hit. That's how the system works.
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Old 06-15-2011, 07:03 AM   #24
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Interesting that the towns have not foreclosed for back taxes. Are the banks keeping the taxes - and insurance - current?

THAT's why the banks will settle (sell short) ... to stop the bleeding. Might take a few TOTAL losses (ie. fires, liability law suits, tax lien sales ...); but they'll come to thier senses.
Yes we keep taxes current (at least in MI), If we dont pay them as we go we just have to pay at the closing table when we ultimately sell.
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Old 06-15-2011, 07:09 AM   #25
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My opinion has changed as well. It's a business contract. The banks make the loan in the expectation that the lendee will pay; if they don't, they foreclose and the lendee takes a credit hit. That's how the system works.
Don't have a problem with all that; it's all part of risk and reward. The hang up I have is once the borrower is in the position that they can't afford it, they continue to live in it for free. I don't think less of a person if life throws them a curve (divorce, health, long term unemployment), but to live in my house for a year and not pay one red cent...?
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Old 06-15-2011, 07:37 AM   #26
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but to live in my house for a year and not pay one red cent...?
But the banks have enabled this ... wasn't like that last time (1992-1995). Forclosed owners were put out then the house was SOLD ASAP ... at absolute auctions. Because if they didn't sell, the pipes disappeared.

The current "arrangement" is permitted to keep the asset "safe". Having a caretaker in the building is better than having a vacant building. Especially if you're not willing to book the loss (via short sale).

Point being you can't entirly blame the thieves if the store was left open ... unattended ... with a sign hanging in front : OPEN.
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Old 06-15-2011, 10:32 AM   #27
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So 'attractive nuisance' is a mortgage default defense?
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Old 06-15-2011, 12:20 PM   #28
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... not a "defense" .... more like a necessary evil.
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Old 06-16-2011, 10:32 AM   #29
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I worked with a guy who was renting a house for his family that was foreclosed on. The bank refused to accept rent, due to liability concerns. Yet, they couldn't evict him. After staying rent free for several months, the bank finally paid him several months rent to leave.
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Old 06-16-2011, 11:08 AM   #30
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But the banks have enabled this ... wasn't like that last time (1992-1995). Forclosed owners were put out then the house was SOLD ASAP ... at absolute auctions. Because if they didn't sell, the pipes disappeared.

The current "arrangement" is permitted to keep the asset "safe". Having a caretaker in the building is better than having a vacant building. Especially if you're not willing to book the loss (via short sale).

Point being you can't entirly blame the thieves if the store was left open ... unattended ... with a sign hanging in front : OPEN.
+1 Agree.
They couldn't live for free if the banks did not allow it. It is also the banks that messed up their paperwork putting a huge hitch in foreclosures. There is no incentive for the occupant to do anything but STAY. Their credit is already messed up.
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Old 06-17-2011, 08:50 PM   #31
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If a loan is insured Ė either by FHA or PMI companies or guaranteed by VA or Rural Housing, then yes, the investor recoups a large portion of the loan, but not all. For those loans that are uninsured, the investor eats the loss. Banks/mortgage servicers do not like to foreclose on properties. The foreclosure process is expensive and time consuming. Then the servicer has a property in inventory to maintain and sell. Also expensive and time consuming.

In my 30 years experience in this industry, I can tell you that by and large, most borrowers default on their mortgages due to overextending their credit. They buy a house that they qualify for, then they buy a new car, a big screen TV, expensive new furniture, etc. They max out their credit cards, they take second and third mortgage out. They whine to the mortgage company that they canít afford their house payments and what is the company going to do to help them out? We had one borrower who demanded we modify their loan because they spent all their money on beauty pageants for their daughter and could not afford the payments. They claimed they were investing in her future. Another took a two-week vacation to Tahiti and couldnít make their payments. Many others demanded a loan modification so they could buy a new $25,000 car. Others quit their job because the boss was mean. And on and on. You would not believe the excuses people have for not being able to afford their mortgage. And yet the mortgage company/bank is the bad guy. I am not saying all borrowers are like this, but the majority simply make bad decisions with their lives and their money and then expect someone else to bail them out. They feel entitled because "President Obama says you have to help." Because the media tells them itís OK to walk away Ė after all itís not their fault.

Sometimes life is a struggle. There were years we did without luxuries. We didnít have cable TV, we didnít go on vacations, we didnít go out to eat, we didnít buy a new car, and we didnít buy new clothes. We hunkered down, took second jobs and worked at making it work out. However, no one is expected to do this anymore. Now they can just put their hands out and the government will pass a law and make somebody somewhere fill that hand.

Great Post.
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