Comments on: Foreclosure Insanity Reaches New Heights

By: Why Do You Need A Real Estate Agent in California?

Why Do You Need A Real Estate Agent in California? — Mon, 28 Sep 2009 00:57:59 +0000

[...] Foreclosure Insanity Reaches New Heights (themoderatevoice.com) [...]

By: Foreclosure Insanity Reaches New Heights « Economics Info

Foreclosure Insanity Reaches New Heights « Economics Info — Fri, 25 Sep 2009 22:19:53 +0000

[...] Source [...]

By: JSpencer

JSpencer — Fri, 25 Sep 2009 18:09:35 +0000

“Damn, SD. I actually hit the “Like” button on one of your comments. Don't worry, I'll get over it.”

So did I! If hell hasn't frozen over, it's at least seeing a good frost!

By: DLS

DLS — Fri, 25 Sep 2009 16:13:38 +0000

"they wouldn't be hit with upkeep fees"

Property taxes (which many a government nowadays might actually raise, believe it or not) --

-- and liability issues, including for injuries to squatters or from crimes committed in abandoned homes. So far, no lawsuits I've heard of demanding damages from banks due to lowered property values.

Related (scams and overdue demolition, etc.):

http://metrotimes.com/archives/story.asp?id=13791

http://metrotimes.com/news/story.asp?id=14037

http://metrotimes.com/news/story.asp?id=14351

By: ProfElwood

ProfElwood — Fri, 25 Sep 2009 04:07:12 +0000

“That would surely be the end of the financial system.”
End the current financial system . . .
'still trying to figure out the downside. . . .

By: mikkel

mikkel — Fri, 25 Sep 2009 01:55:04 +0000

Are you insane? Then banks would be forced to live on a measly 3-4% spread on 10x leverage, rather than being able to bundle it and charge origination fees and leverage it 30x. That would surely be the end of the financial system.

By: GeorgeSorwell

GeorgeSorwell — Fri, 25 Sep 2009 01:51:55 +0000

Doesn't having foreclosures in a neighborhood also lower the book values there?

By: ProfElwood

ProfElwood — Fri, 25 Sep 2009 01:41:25 +0000

Hey, I've got an idea! It's pretty radical, but hey, these are extreme times. Why not make the banks keep and service their own loans instead of selling them off? That way, there's no other parties to consult when changes need to be made, less paperwork and redundancy when the loan originates, and an incentive on the bank's part to make responsible loans. It would also eliminate the derivative markets that have so problematic lately. I know it sounds crazy, but it still just might work.

By: tidbits

tidbits — Fri, 25 Sep 2009 01:38:45 +0000

Damn, SD. I actually hit the “Like” button on one of your comments. Don't worry, I'll get over it.

By: superdestroyer

superdestroyer — Fri, 25 Sep 2009 01:21:01 +0000

The other question is what did the foreclosure and sell back at a much cheaper price do to the book value of all of their neighborhoods house. The problem with the lowering of house values is that all of the responsible people take a huge hit and get nothing out of it.

By: GeorgeSorwell

GeorgeSorwell — Fri, 25 Sep 2009 00:59:03 +0000

I can't seem to scrounge anything up on Google, but I'm pretty sure Mikkel is right. And it's not even that the many parties are eager to foreclose. The problem is identifying all the parties whose consent is required.

And I actually think the solution described by Patrick at the end–foreclosing on the owner and then selling the foreclosed house right back to the same owner at a more sensible price–is a stroke of genius, not madness.

By: mikkel

mikkel — Fri, 25 Sep 2009 00:09:16 +0000

I have a theory...

Remember most banks don't actually have the loans on their books, but have packaged and sold them off. This means that mods are very difficult most of the time as it involves the consent of many parties, most of whom prefer foreclosures.

Now this is pure speculation, but it's possible that they foreclosed in order to avoid that but then offered to sell it back so they wouldn't be hit with upkeep fees.

By: roro80

roro80 — Fri, 25 Sep 2009 00:04:00 +0000

“But the obvious question is why didn’t they simply start at the beginning and modify the original mortgage ?”

Maybe if your friend in his house were to go to the bank in today's market instead of the 8-months-ago market (or with the 8-months-ago set of bank policies), they would have simply modified the original loan.

By: tidbits

tidbits — Fri, 25 Sep 2009 00:00:24 +0000

Well, it's pretty schizophrenic in the banking world right now. Friends just had their mortgage cut 45%, including a write off of principal. Meanwhile, I'm being offered a stacked four-loan package to cash out at 90% LTV on two houses…without cross-collateralizing. “Who's on first?”

By: Foreclosure Insanity Reaches New Heights

Foreclosure Insanity Reaches New Heights — Thu, 24 Sep 2009 23:56:50 +0000

[...] Insanity, Lenders, Money, Mortgages, New Heights, New News, News Sources, Real Option News Sources wrote an interesting post today onHere’s a quick excerptFrom time to time in my work I come [...]

By: Leonidas

Leonidas — Thu, 24 Sep 2009 23:50:47 +0000

But the obvious question is why didn’t they simply start at the beginning and modify the original mortgage ?

Its the obvious question and I don't have the knowledge required to give a factual answer, but I will make a guess. Perhaps there is some legal requirement involved that makes the foreclosure mandatory to achieve a better result for the bank. Then again, perhaps its just idiocy.

By: Foreclosure Insanity Reaches New Heights | Low Loan Refinancing

Foreclosure Insanity Reaches New Heights | Low Loan Refinancing — Thu, 24 Sep 2009 23:05:32 +0000

[...] Continued here: Foreclosure Insanity Reaches New Heights [...]

By: Foreclosure Insanity Reaches New Heights

Foreclosure Insanity Reaches New Heights — Thu, 24 Sep 2009 22:46:24 +0000

[...] News Sources wrote an interesting post today onHere’s a quick excerptFrom time to time in my work I come across a new level of bizarre behavior on the part of lenders. I have previously written about how it never made sense to me that banks with mortgages or credit card companies would not work with their customers to try and work something out. It always seemed to be more logical for the bank/credit card company to get a deal which would give them some money rather than none. But for many years that wasn’t even a real option for my clients. I remember bluntly [...]