[quote=SK in CV]BG, do you have any evidence that lenders “thought” they would be reimbursed by the federal government for allowing delinquent borrowers to remain in their homes? I’ve seen no evidence this was ever suggested, or even discussed. Nor do I think this was ever a motivation for their failure to act. It’s much more likely they were simply incompetent. Not only did they not get fully reimbursed. They never got partially reimbursed.[/quote]
At one time (2008-2009?), lenders were being “pressured” to modify their delinquent borrowers’ mortgages by the PTB. Supposedly, TARP funds were dangled in front of them as incentive for lenders to do so. Some lenders permanently modified the TERMS of their delinquent borrowers loans and a few (very few) modified the principal of their delinquent borrowers’ loans. I hear stories like the one below and can’t help but think that the poster isn’t privy to the what really happened:
[quote=evolusd]Great story related to this topic…
Had a friend who bought during the peak in Murrieta – a $600k house with 100% financing. Market crashes and house declines in value to $300k. They ‘strategically default’ and somehow partake in one of the mortgage modification programs and the bank reduces their balance to $300k and lowers their interest rate.
Low and behold, the market recovers and they just sold their house for $500k, rolling over $120k into a new and improved $600k home and…wait for it…cashing out $80k into the bank! All while driving Bimmers and taking Hawaii vacations.
Never put a penny down.[/quote]
I can’t imagine that ANY lender in their right mind would modify the principal amount until their trustors signed a mod agreement giving them the right to a portion of “equity sharing” upon sale. There are no laws in place compelling any lender in the US to modify ANY mortgage they made or make.
The vast majority of mortgage modifications were temporary and the affected borrowers ended up being foreclosed upon application for, concurrent or subsequent to their temporary modifications.
In CA, I don’t buy into the notion that these lenders were “incompetent,” ESPecially after the final remittitur was rendered in Gomes v. Countrywide (2011) 192 Cal.App.4th 1149 (docket nos. D057005 and S191816) and especially NOT those Big Banks who have mortgage business spread out nationwide.
Multiple well-known trustees abound in every single county in this state and all any of these lenders suffering from a nonpaying trustor had to do was send a copy of their trust deed and delinquent account to one of these (very competent) trustees (and after Gomes v. Countrywide became law, just the accounting) and let them do their jobs as they have been doing for many decades.
A couple of pieces of paper and one phone call was and is all it took.
Many of these “trustee-outfits” have been in business for ~50 years and KNOW the law and KNOW EXACTLY what they are doing.
Sorry, but the “poor incompetent lender” excuse is nothing but hogwash in a non-judicial foreclosure state, such as CA. A newly-hired HS graduate could send the trustee the proper forms need to initiate foreclosure action if they were first trained how to locate them.
In any case, there was never any excuse to let ANYONE squat multiple months or years in CA … ever. All that resulted from the “excessive squatting” phenomenon was that it created an environment where most of the delinquent trustors were able to take further advantage of their lenders by living for “free” (or collecting monthly rent from an asset that wasn’t costing them anything) while the rest of us paid our mortgages and/or taxes on time.
Both the “squat-mod” group and “squat-SS” group of homedebtors had the same outcome in that they both ended up losing their properties and their lenders lost big time, all due to sitting on their hands. In that respect, the lenders made their own beds causing ALL homeowners to have to sleep in them for a period of time.
