Foreclosures and Irresponsible Home THIEVES

[Munchkin03]

Originally Posted by AGDee

Because a house is a secured loan. They can take it away from you if you don't pay. Rent however, is not. If you don't pay, that's imply income lost while you use resources and live there for free. It's more crucial to a landlore that you pay on time than it is to a bank.

I know why, but shouldn't as much documentation be required? It goes to show that if you didn't have to put any work into getting a mortgage--not saving $$, not maintaining a good credit score, not even giving any proof that you have a job--what's keeping you from walking away? In the case of these people, nothing.

[Drolefille]

Originally Posted by Munchkin03

I know why, but shouldn't as much documentation be required? It goes to show that if you didn't have to put any work into getting a mortgage--not saving $$, not maintaining a good credit score, not even giving any proof that you have a job--what's keeping you from walking away? In the case of these people, nothing.

Bankers screwed up. They knew they were selling the mortgages and they were lazy/sloppy and were all about making the deal. I agree that people should have known better, but the guy in the suit telling you how wonderful it'll all be and how amazingly affordable this is for you, even on your limited income can be awfully convincing. I've read and worked with mortgages, they're really confusing to people who don't have that kind of experience and there are tricks that can be used to confuse even more, just like with sleazy car dealers who base the cost of your car on how much they think you can afford.

However, unlike the car dealers, the banks knew that by the time your ARM became unaffordable, they wouldn't own the loan anymore and it would be out of their hands. Dealerships wanted you to keep paying.

[srmom]

Munchkin, I think you're right.

What he's seeing are people who had no business buying homes, in some cases they have no documentation of income and when he asks what they brought when they got the initial mortgage, they tell him the paperwork was filled out for them and they didn't have to provide W-2's or bank statements, it was totally based on "their word" and in many cases these people didn't have any concept of what they were getting into.

The whole thing is making my 24 year old son very jaded....

His attitude is becoming, "Welcome to adulthood, hate your job and find out most people are either idiots or a-holes."

I'm really hoping that after he has a year under his belt he can transfer to a different department or branch, it's a bummer talking to him, he seems really beaten down. That kind of banking is no fun! Maybe it was back in the hayday when money was rolling in, but now that the piper has come to be paid, the people cleaning up the mess are having a horrible time of it.

I want to know where all those brokers and mortgage loan officers are now? They should be cleaning up their own messes!!

[starang21]

i remember watching this property virgins show or something like that....two PE teachers bought a 400k home in philly. is this feasible? my gut says not.

[srmom]

Maybe it's a generational thing, or maybe it's just a symptom of this economy, but I do feel it is inherently dishonorable to default on a loan. It's just something that was ingrained in me, but I understand your point. I just think I'd do absolutely everything to keep paying my mortgage even if I had to default on a car loan or much less forego restaurant visits and trips. I've always thought that your mortgage is the #1 most important thing to pay - home and hearth and all that

My grandfather would roll over in his grave if he knew I had walked away from a debt or a signed contract. I still feel guilty at 46 when I do things I think he'd disapprove of, but that's my issue

It is definitely a decision that is made higher up (my son is at the absolute BOTTOM of the totem pole), and they may just be filling him a line of bull about regulations, but he does say that the bank does not want to foreclose and will go to great lengths to keep people from defaulting. It's much cheaper for them to take some $ off the balance or lower the interest rate than it would be to sell at foreclosed rate or even short sales.

[Drolefille]

Originally Posted by srmom

Maybe it's a generational thing, or maybe it's just a symptom of this economy, but I do feel it is inherently dishonorable to default on a loan. It's just something that was ingrained in me, but I understand your point. I just think I'd do absolutely everything to keep paying my mortgage even if I had to default on a car loan or much less forego restaurant visits and trips. I've always thought that your mortgage is the #1 most important thing to pay - home and hearth and all that

I think for me it's a difference between walking away and not caring and having to make a principled decision to do it. I think very few people don't care and most would rather pay but have had to decide that they cannot.

I also think that it's a result of it being so increasingly common due to the housing bubble/crisis/whathaveyou.

It is definitely a decision that is made higher up (my son is at the absolute BOTTOM of the totem pole), and they may just be filling him a line of bull about regulations, but he does say that the bank does not want to foreclose and will go to great lengths to keep people from defaulting. It's much cheaper for them to take some $ off the balance or lower the interest rate than it would be to sell at foreclosed rate or even short sales.

I suspect the gap lies between the owner's perspective of "great lengths" and the bank's, fairly or not. Not that all banks are bad, but I hear one more story about how BoA forecloses on a home that isn't even theirs, and I'm starting to consider getting a mortgage just to default on it. (They've done it several times now, sometimes destroying property in the process.)

[Munchkin03]

Originally Posted by srmom

Maybe it's a generational thing, or maybe it's just a symptom of this economy, but I do feel it is inherently dishonorable to default on a loan. It's just something that was ingrained in me, but I understand your point. I just think I'd do absolutely everything to keep paying my mortgage even if I had to default on a car loan or much less forego restaurant visits and trips. I've always thought that your mortgage is the #1 most important thing to pay - home and hearth and all that

Considering many people who are foreclosing out of having bought too much house or using their house as a piggy bank are in their 50s and 60s, I can't really call it generational. I won't even call it family-based: even after having been raised by the same parents who were big about paying off mortgages early and investing wisely for retirement, my sister and I have almost exactly opposite financial experiences and perspectives.

Basically, people wanted more house than they could afford and thought the party was going to last forever. That goes beyond generational or family mores.

[srmom]

Luckily my son's not at BofA but, probably all big banks are the same.

He does really try to help those that want help, and he does what he can when he can, but obviously not too many decisions are left up to him.

At the same time that he deals with a ton of a-holes, he also deals with some pretty great people who've just either gotten in over their heads or hit rough times, and they work with him (and sometimes pray for him for helping them - which is good, we all need prayers ), those people make the day not a total disaster!

[MysticCat]

Some people will abuse the system.

Some people will be abused by the system.

The sun rose again this morning.

And the rain is falling on the just and the unjust alike.

[Drolefille]

Originally Posted by MysticCat

Some people will abuse the system.

Some people will be abused by the system.

The sun rose again this morning.

And the rain is falling on the just and the unjust alike.

I thought the just got umbrellas. No? My bad.

[Jill1228]

Originally Posted by Munchkin03

I know why, but shouldn't as much documentation be required? It goes to show that if you didn't have to put any work into getting a mortgage--not saving $$, not maintaining a good credit score, not even giving any proof that you have a job--what's keeping you from walking away? In the case of these people, nothing.

Out here in Northern Cali, it is a hot mess too. During the time of NINJA loans, people were buying scads of houses. There was a family on my block that bought 3 houses. And this was at the peak of housing in Cali (2006). These houses were 2700-3200 sq feet at 600-800K a pop. Thought they were going to rent them out and get PAID!

You know where this is going right? Market went to hell in a handbasket. All 3 houses were foreclosed on

When we moved here in August 2006, it was at the point that people were BEGGING us to rent their houses


Yup, folks took out equity loans or got NINJA loans...ain't that a bitch?

[StargazerLily]

Originally Posted by MysticCat

Words have meaning. Recognizing that isn't a technicality; it's good communication.

Did you forget where I said If you take something without paying for it, and it was not a gift to you, then it is considered stealing? So because a house can't be physically picked up, it's not considered stealing? riiight. Until the mortgage is paid in full, it belongs to the bank. If the borrower of the money to purchase that house stops repaying the bank, s/he his stealing.

[DrPhil]

Originally Posted by StargazerLily

Did you forget where I said If you take something without paying for it, and it was not a gift to you, then it is considered stealing? So because a house can't be physically picked up, it's not considered stealing? riiight. Until the mortgage is paid in full, it belongs to the bank. If the borrower of the money to purchase that house stops repaying the bank, s/he his stealing.

(Notice that stealing is a component of, but not synonymous with, theft under the criminal law)

I'm still missing how they're getting away with anything that can't be handled by the bank. Do they get to keep a lump sum of money and/or a house to show for their
stealing?

Drolefile once told me to not get stuck in the literal (despite how words and phrases have meanings) because you miss the general point that is being made. People are debating the "theft" and "steal" parts of this when we all agree that it's not a good thing what these people are doing. What are some solutions to this problem that don't involve extremes of labeling these people based on the criminal code (because, as was said already, all of the people in debt aren't spending money at Outback)?

[MysticCat]

Originally Posted by StargazerLily

So because a house can't be physically picked up, it's not considered stealing? riiight. Until the mortgage is paid in full, it belongs to the bank. If the borrower of the money to purchase that house stops repaying the bank, s/he his stealing.

Except that the house doesn't belong to the bank until the mortgage is paid in full. You're starting with a false premise.

Legally, the house belongs to the owner/borrower, whose name is on the deed. The bank has a secured loan, with the real property as the security. If the owner/borrower defaults on the loan, the bank has the right under the terms of the loan to initiate legal proceedings to take possession of the property (which wouldn't be necessary if the bank already owned the property) and have the property sold in order to satisfy the loan. But despite the fact that people say it all the time, the bank does not own the property unless and until it forecloses. Hence, no stealing.

Call them deadbeats, call them defaulters, call them useless. But thieves simply doesn't fit because they, not the bank, own the property.

Meanwhile, what Dr. Phil said.

[Drolefille]

Originally Posted by MysticCat

Except that the house doesn't belong to the bank until the mortgage is paid in full. You're starting with a false premise.

Legally, the house belongs to the owner/borrower, whose name is on the deed. The bank has a secured loan, with the real property as the security. If the owner/borrower defaults on the loan, the bank has the right under the terms of the loan to initiate legal proceedings to take possession of the property (which wouldn't be necessary if the bank already owned the property) and have the property sold in order to satisfy the loan. But despite the fact that people say it all the time, the bank does not own the property unless and until it forecloses. Hence, no stealing.

Call them deadbeats, call them defaulters, call them useless. But thieves simply doesn't fit because they, not the bank, own the property.

Meanwhile, what Dr. Phil said.

Everything you said.

I don't have an outside solution as I think mostly this is all going to work itself out through some people getting modifications and others losing their homes. I don't think there's any reason to froth at the mouth over other people's choices.