Posted by Linda_H/FL on 1/13/11 8:02am
Msg #368360

Foreclosure crisis

Wow..I knew it was bad...but 1 in 45 households receiving a foreclosure filing? Good grief - and they say it's going to get worse....

http://news.yahoo.com/s/ap/20110113/ap_on_bi_ge/us_foreclosure_rates

Reply by MW/VA on 1/13/11 8:07am
Msg #368363

I think it's interesting which bank is being pictured here. The foreclosure crisis is a shame, but that 1 in 45 still amts. to about 2% of all loans. I'm sure that percentage is much higher, like 40%, 50%, etc. in areas that were hard-hit. Again, why isn't more being done to help these people avoid foreclosure?????

Reply by Shoshana/AZ on 1/13/11 9:07am
Msg #368368

Because this is the goose that's laying the "Golden Egg"

Banks make lots more money on foreclosures than they do on loan mods or short sales. The loans are insured. Then they turn around and sell the house at auction. In addition, they often try to extort money from the home owner.

Reply by Linda_H/FL on 1/13/11 9:16am
Msg #368370

"they often try to extort money from the home owner."??

Not sure what you mean here..

Reply by Shoshana/AZ on 1/13/11 9:22am
Msg #368371

Re: "they often try to extort money from the home owner."??

Yes. They will try to get money from the homeowner as well if it's a state that allows them to do so. There are some states such as Arizona where the banks cannot come after the homeowner for money after the foreclosure if it meets certain criteria such as primary residence, purchase money loan, etc. best to consult a real estate attorney on that.

Reply by Robert Williams on 1/13/11 4:04pm
Msg #368523

Re: "they often try to extort money from the home owner."??

It's usually in the form of a "Deficiency Judgement" which is when they take the house through forclosure and it then sells for less than is owed. The borrower still owes the difference which in many states can become a judgement against the defaulting borrower.

I do have to disagree that banks make more money through forclosure, since the process is very time-consuming and expensive for them and the property almost never sells for full value in the end.

Tragic times for everyone involved, but I do find it hard to fault a bank for forclosing on a delinquent loan.

Reply by MikeC/NY on 1/13/11 4:10pm
Msg #368526

Re: "they often try to extort money from the home owner."??

I think what she's referring to is whether or not the bank can file for a deficiency judgment if the sale doesn't cover the amount owed. Some states have "no recourse" laws, which would prohibit the bank from doing that.

Reply by Linda_H/FL on 1/13/11 5:05pm
Msg #368537

I know...but can they "double dip"??

Get the deficiency judgment AND claim against the insurance? That was my point.

Reply by Shoshana/AZ on 1/13/11 6:53pm
Msg #368554

And sell the house at auction!!!

They can. If they will would be a different story. I hear that happens here in AZ too even though this is a no recourse state. This is just for a first loan. A 2nd or HELOC must be either paid off or discharged in Bankruptcy.

Reply by MikeC/NY on 1/13/11 7:33pm
Msg #368563

Re: I know...but can they "double dip"??

I don't think so, but I'm not an attorney, yada yada yada...

My understanding is that they can only recover what they are owed plus legal fees. To me, that means they can't foreclose, hit the PMI for the deficiency, and then go after the homeowner for the same deficiency.

This should be common sense, no? If the PMI recovery makes them "whole", how can they get more than "whole"? Especially in the current environment, where judges are challenging foreclosure proceedings?

Reply by Linda_H/FL on 1/13/11 7:40pm
Msg #368564

That was my point, Mike..thanks..:) n/m

Reply by SharonMN on 1/13/11 9:28am
Msg #368374

It is my opinion that many of these people would benefit from foreclosure (or selling their property) in the long run, as they would then be able to get on with their lives and secure housing within their budget. Trying to keep people in houses they can't afford and never should have bought in the first place is not helpful - it's just prolonging the agony. For some, renting makes the most sense - there is no risk of depreciation, no maintenance costs and home repairs to worry about, and you can move if you want or need to without needing to sell your house.

Reply by Shoshana/AZ on 1/13/11 9:39am
Msg #368381

I don't think it's our place to pass judgement on them.

Many people lost their jobs. The fact that their home is in foreclosure may have nothing to do with buying homes that they should never have bought in the first place. have some compassion for people.

Reply by SharonMN on 1/13/11 12:36pm
Msg #368459

Re: I don't think it's our place to pass judgement on them.

I'm not passing judgment. I certainly realize that sometimes people fall on financial hard times through no fault of their own (illness, job loss, etc.). However, in many cases (as we've seen) loan officers convinced people to buy homes they couldn't afford or take out ARM loans where the borrower KNEW they wouldn't be able to make payments after the initial teaser period was over. I'm just saying that in these cases, trying to keep people in their homes may not be the best long-term solution. Giving them a fresh start may be. Even in the case of an illness, job loss, etc. if the person doesn't anticipate being able to afford the home soon, the most financially sound thing to do would be to cut their losses and move. If I have a $2000/month mortgage payment, and my income declines to $1800/month with no real prospects of recovery, cutting my payments to $1500/month will not help the situation. What will be helpful is for me to move to a $500/month apartment so I have some cash to spend on insurance, groceries, and other things.

And I don't think the banks should be *required* to reduce the principal or the interest rate. The bank made the loan based on a certain return expectation, and the investors that bought the repackaged loans did also. Restructuring the loan without the agreement of the bank/investors is kind of like a SS saying "We are in financial trouble, so we want to pay you less than we agreed." It may be in the bank's best interest to restructure a loan if that's the way they will get the most money out of the borrower, but they certainly shouldn't be required to do so.

Reply by Robert Williams on 1/13/11 4:06pm
Msg #368524

Re: I don't think it's our place to pass judgement on them.

Amen, Sharon.

Reply by MSFlorida on 1/13/11 10:01am
Msg #368392

JMO and I sorry if I have run on sentencs but this eats me up and causes me to go off. As much as I hate taking care of another persons bills I wish the Gov. would step in on this one. I think the banks should have to refi the people with the ARMS only if the property is their primary residence into a fixed rate and use the same rate that was given to them at the beginning of the loan and also do not require an Appraisal Because we all know no one underwater will be able to refinance. IMO this way the Banks will still be receiving there money at what they were already getting ,the values of the homes would become stable and most of the people will be able to make their payments. Of course this doesn't apply to those who are in double trouble as far unemployment and illness and simply can't afford the payment at all. With this being done this would help alot of people and give them cofidence again to start spending money and jobs will come back. OK JMO.

Reply by MW/VA on 1/13/11 10:14am
Msg #368402

It is a major myth that people in foreclosure are there because they bought homes they couldn't afford. All is takes is illness, divorce, loss of a job, etc. Being put out of your home is a major trauma. I hope you never have to face that.

Reply by kathy/ca on 1/13/11 11:13am
Msg #368434

The problem with renting a home is the owner can take your

money and not make their mortgage payment for months then suddenly you the renter have a notice on your front door that the property is being foreclosed on and you have to vacate the property. This has happened twice to someone I know. The only way around this is to rent an apartment and many people dont like apartment living, they want to be in a private home. I would appreciate any comments or suggestions on this subject, Thx!

Reply by Robert Williams on 1/13/11 4:10pm
Msg #368527

Re: The problem with renting a home is the owner can take your

Not sure about your area, but in Ohio there are tenant protections in place to somewhat shield a renter.

Keep in mind that even if the landlord did make the payments, in the absence of a lease, he could kick you out in 30 days anyway, so why the worries?

Reply by 101livescan on 1/13/11 10:32am
Msg #368413

As a foreclosure auctioneer, I can tell you positively that today many people are facing foreclosure due to financial losses in the stock market, loss of employment, divorce, death of a spouse or relative, drug problems, alcohol problems, a myriad of reasons. I see it all. Foreclosures are up for all of these reasons, and the bank gets more inventory back than they are staffed to handle. The Loss Mitigation departments are highly stressed. But they must do the due diligence that the Deed of Trust and Note says they will do by civil code law and banking regulations.

More to come for sure, I am seeing a surge every day when I get new files to process, and many of these people are the ones I helped get loans signed for. It's a tragedy in America. We're making history. The banks are getting fatter, and middle America is disappearing. The costs that are racked up during the process only further encumbers the property with debt, especially for people who've been in foreclosure for going on three years because the banks don't want to foreclose on everything that is in the default state.

This business will be around for quite a while.