You’re not the only one. This kind of thing now seems to be EXTREMELY common. People are sucking out all all the equity in their homes and then some. Everyone knows the “appraisals” are inflated to begin with and then some banks even have 125% loans. Gee, some people might end up with a 135% loan to value ratio even before the market begins to drop. What a joke!

In the greed to sell more loans, banks appear to have been loaning out as much $$ as possible to as many people as possible. These loans are so crazy, the people at the banks HAD to know the borrowers would end up not paying back the loans. If I’m a responsible bank and I that see a prospective borrower bought a house in 2002 for 500K with zero down, now he wants to refi all the way up to the 900K “appraised” value and suck out 400K from the bank, what are my chances of getting that 900K back. Slim and none! I wonder if most of these people blew that 400K or whatever amount on yellow Hummers and toy trailers or if they still have the cash. I wonder how many of the banks will try to get the money back since these would be non-purchase money loans with recourse. Technically, I think the banks can sue these people. Anyone know how practical it is for the banks to do this?

I wonder how many of the banks will try to get the money back since these would be non-purchase money loans with recourse. Technically, I think the banks can sue these people. Anyone know how practical it is for the banks to do this?

I’m sure the banks will try it if the amount owed is large enough. Of course, once it gets to that point, the loan will be a money loser for the bank.

The banks sure do make it tempting to try and rip them off. If you don’t have any money saved up or any assets, why not buy a house using stated income, then re-finance every chance you get and throw that money into risky investments? You might hit it big. Even if you don’t, it was the house’s money anyway and didn’t cost you a dime.

Nor_LA-Temcu-SD-Guy

I think anyone who is not the CEO (or exec) of one of these big home builders has to feel like a chump (or will feel like one when we have to bale out the banks via the government).

If you think you feel like a chump now, just wait until the boomers try to withdraw from their 401K’s.

You will know your a chump when :

1) The government stops paying out Social Security benefits so they can meet the pension demands of government employee’s (who don’t pay SS tax). And your not a government employee.

2) The Stock market has gone all K-Mart on you before you could get your 401K money out.

You cannot simply walk away from a re-fi or cash-out.

The only loan that you can “walk away” from is an original purchase loan. This is called a non-recourse loan. In this case the bank cannot come after you for other assets. The exception to this is when fraud is committed.

However, any refinance loan is no longer considered non-recourse. Same thing for Home equity products and cash-outs. All of these are subject to recourse, in which case the bank can go after other assets.

So, no you are not a chump. The person who re-fied and cashed out only to go into default will see their due, assuming they haven’t fled the country and assuming they didn’t steal someone else’s identity to get the loans.

Since the statistics in the US demonstrate that we are in “negative savings”, they certainly weren’t putting the $$ in CDs or other savings/retirement accounts.

The employees do pay SS Tax. But do Federal agencies pay SS tax like private employers do? I don’t know. But I think not, since that would reflect negatively on the budget.