[quote=HLS]We are witnessing the slow painful breakdown of the largest Ponzi scheme in the history of the world.
So many people still don’t get that BANKS do not own most of these loans, they are SERVICERS.
They make more money by dragging out foreclosure due to contractual agreements.
I completely agree with the outrage but what nobody seems to understand is that if foreclosures were all completed ASAP and homes were put on the market and listed at current market prices, it would push prices down further leading to even more underwater borrowers which would lead to more people walking away leading to even more distress sales.
There are not enough QUALIFIED buyers to buy these homes at current levels. At lower prices houses will get sold.
It’s a vicious cycle that if allowed to happen would cause the economy to collapse.
It’s a Catch-22 for the govt. They are counting on more people to be stupid & worried about their credit scores and having an emotional attachment to a house rather than being financially intelligent.
There are govt idiots making decisions but even they are aware of what the consequences are.
The money simply does not exist to buy all these homes. The derivitives market has been built on a shaky house of cards, based on risky loans.[/quote]
HLS, I DO understand that it is gubment manipulations that have made the housing market what it is today. People started defaulting in SD County en masse in early 2007 which was more than five years ago.
I believe if lenders had foreclosed promptly on the defaulters beginning in 2007, and continued to do so thereafter, we would already have worked our way thru the bulk of distressed inventory by now and the sold comps would have been now stabilized or well on their way to doing so. This in itself would have lessened the incentive to strategically default. When underwater homeowners in CA see their friends, relatives, coworkers and neighbors default and then get promptly foreclosed on, they will either continue to pay their mtg, give keys for cash and walk, or “squat” up to 141 days (3.5 months, not 3.5 years) until they have to leave.
This BS about “playing the game” to obtain a mod is just a tactic used by defaulting trustors to buy more time to live free. It’s only a game that’s being “cooperated with” because they don’t have to make mtg payments for many months while they’re in the throes of “applying” and “reapplying.” During all this, they were hoping (and rightly so) that there would be another bailout waiting for them if they could just pretend to be interested in a loan mod that they didn’t qualify for. Meanwhile, some successfully sold short and the balance of their debt owed was “forgiven.” The vast bulk of these short sales generated even lower sold comps than REOs did. Short sales are a scam on the defaulted-upon lender as well as all property owners in their surrounding area, IMO. If potential strategic defaulters saw that they wouldn’t be able to sell short and they would lose their properties to foreclosure in 111-141 days, they would have done the “cash for keys” thing (if offered to them) or let their lenders take their property in foreclosure. Yes, the sold comps in 2007 thru as late as mid-2009 would have fallen to sh!t but we would been able have seen the light at the end of that tunnel by now.! As it stands, we are five-years-plus into these never-ending gubment manipulations and all they have done is string out the inevitable and unjustly enrich many, many undeserving scumbags. The many homeowners who purchased pre-bubble and never cashed out are now left holding the bag on this debacle with significantly artificially-lowered home values as a byproduct of this “social experiment,” which caused the market in late 2011 to crater to ’99 – ’02 values in many areas. These years were long before “loose lending” became the norm.
I’ve posted here a few times that I don’t believe in “short sales,” except for those who purchased at the height of the boom and never extracted any cash from their property. In general, underwater “owners” have “too many options” in my book, NONE of which were listed on the trust deed(s) and note(s) that they signed. The only ones benefiting from short sales are RE brokers, agents (and their buyer-friends and relatives), mtg loan brokers and RE ancillary services. The scumbag debtor comes out of a SS with a slightly higher credit score than if he/she had been foreclosed upon plus the cash (or what they bought with the cash) they extracted from their property.
I think there WAS in 2007 and IS NOW enough private money available to buy REOs in bulk. I would not have been opposed to timely foreclosing benes lowering their prices of several REO SFRs in one tract to be sold in bulk 3-5 yrs ago or even now! Those deeply-discounted sold comps of yesteryear would have been behind us now. I also think there are more qualified buyers out there today than there are listings or “desirable listings” so more REOs flooding the market would add more inventory to select from.
In sum, underwater homeowners who are potential strategic defaulters now see and hear all of these things going on around them:
* short selling and excess debt being forgiven;
* defaulting and pretending to apply for a mod whilst squatting for 28-38 months;
* receiving a “trial mod” at artificially-low interest rates (=<2%?) and making the new payments while still retaining ownership of “their” property;
* each indiv on title file for BK in succession to temporarily stave off foreclosure and live free longer;
* hire a scumbag attorney to “prosecute” a MERS lawsuit on their behalf (past tactic), again, to live free longer;
* and, stop paying on trial/permanent mod granted to them to see how long it will take their lender(s) start the foreclosure process all over again (again, buy more time to squat), etc.
Why wouldn’t potential strategic defaulters want to give this game a whirl? It’s “worked” for so many … why not get a piece of this pie for yourself??
Every single tactic used by these opportunist home-debtors is employed for one purpose only. That is to be able to “squat” as long as possible. It has nothing to do with “worrying about their credit score” or “emotional attachment.” I could see becoming “emotionally attached” to a house with a Mills Act contract or one that you bought as a hull and spent 3000 hrs of your own backbreaking labor putting back together yourself. But NOT on a “late-model” tract mcmansion that looks like every fifth house on your street!
The rest of us “head-down” owners just want it all over with so we will be able to move on with our lives without losing our downpayment of 10-20 yrs ago. At this rate, it will take another decade-plus to transfer all of the “distressed” inventory into stronger hands. The hands it transferred out of will have to hit the road to find a cheaper locale to rent in if they can’t afford to rent here.
