[quote=SK in CV][quote=bearishgurl][quote=SK in CV] . . . I think they (the lenders and loan servicers) really are that bad at managing distressed assets.[/quote]
How did they get so bad?
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They were always this bad during RE bubble bursts. I didn’t have any direct knowledge of it during the bust of the early ’80’s, but I was told it was the same. I know it was just as bad with the bust of the late 80’s. I worked pretty closely with a bunch of former RTC asset managers when I did a lot of bankruptcy work in the early 90’s, liquidating lender portfolios. The incompetence in the process is truly incomprehensible.
I don’t think political pressure was ever a meaningful factor, except to the extent it caused some small delays, eventually everything returned to the norm.[/quote]
If your theory is true, should the “cat get out of the bag” that RE lenders, on the whole, are incompetent at nonjudicial foreclosure, and have always been, this doesn’t bode well for CA lenders going forward as their borrowers, in the back of their minds, will believe they can squat into oblivion before being foreclosed upon so many will have few qualms about defaulting, whether involuntary or otherwise.
Depending upon the solvency of the individual borrower, the “tipping point” between delinquent trustors taking a big hit on their credit report for defaulting will be offset by being “unjustly enriched” by the “length of squatting-time granted them” by their lender.
The delinquent trustors of modest means who never had anything to lose by overborrowing were the winners in this game, as it is actually the “length of time squatting granted” that lenders allowed delinquent trustors which has been and will be to the lenders’ detriment more than the borrowers.
