bail out math, WTF?

[Anonymous]

TheBreeze,

My thoughts exactly, which is why I want to make sure I understand how this new bill would work.

With respect to buying things using the HELOC, I called my lender and asked them about that and was told it’s a nonrecourse loan tied to the house. Of course the people speak to are wrong all the time. Before I do anything I’ll speak with a Real Estate attorney, but the main point of my post was to illustrate how bailing people out is basically wrong because no matter what program they come up with it will be “unfair” to others and in some cases provide an incentive to default.

[SK in CV]

Discharge of HELOC debt in bankruptcy is complicated. Generally, in California, for purchase money debt (standard 1st mortgage debt or HELOC), the creditor’s only recourse is the property. For all other debt, (Refi’s with or without cash-out and HELOC withdrawals) the creditor has the option of a non-judicial foreclosure (which is the standard NOD followed by NOT and then trustee sale) or judicial foreclosure which can result in a deficiency judgement. There is also the issue of fraud in the application process. Credit granted based on a false loan application (over-stating income, for instance) can be considered fraud and may not be dischargeable. These types of judicial foreclosures became quite common during the early 90’s and then virtually disappeared. While I haven’t seen any significant increase yet, I suspect they’ll be showing up very soon.

There was, however, a recent bankruptcy court decision that may change much of this scenario. A bk court judge ruled that despite the fact that a borrower lied on his loan application, the lender relied solely on the value of the property, not the borrower’s credit or wherewithal to repay, and the debt was therefore dischargeable in bankruptcy.

Lenders have never been particularly logical in how they approach these things. I don’t suspect that will change.

[SK in CV]

Discharge of HELOC debt in bankruptcy is complicated. Generally, in California, for purchase money debt (standard 1st mortgage debt or HELOC), the creditor’s only recourse is the property. For all other debt, (Refi’s with or without cash-out and HELOC withdrawals) the creditor has the option of a non-judicial foreclosure (which is the standard NOD followed by NOT and then trustee sale) or judicial foreclosure which can result in a deficiency judgement. There is also the issue of fraud in the application process. Credit granted based on a false loan application (over-stating income, for instance) can be considered fraud and may not be dischargeable. These types of judicial foreclosures became quite common during the early 90’s and then virtually disappeared. While I haven’t seen any significant increase yet, I suspect they’ll be showing up very soon.

There was, however, a recent bankruptcy court decision that may change much of this scenario. A bk court judge ruled that despite the fact that a borrower lied on his loan application, the lender relied solely on the value of the property, not the borrower’s credit or wherewithal to repay, and the debt was therefore dischargeable in bankruptcy.

Lenders have never been particularly logical in how they approach these things. I don’t suspect that will change.

[SK in CV]

Discharge of HELOC debt in bankruptcy is complicated. Generally, in California, for purchase money debt (standard 1st mortgage debt or HELOC), the creditor’s only recourse is the property. For all other debt, (Refi’s with or without cash-out and HELOC withdrawals) the creditor has the option of a non-judicial foreclosure (which is the standard NOD followed by NOT and then trustee sale) or judicial foreclosure which can result in a deficiency judgement. There is also the issue of fraud in the application process. Credit granted based on a false loan application (over-stating income, for instance) can be considered fraud and may not be dischargeable. These types of judicial foreclosures became quite common during the early 90’s and then virtually disappeared. While I haven’t seen any significant increase yet, I suspect they’ll be showing up very soon.

There was, however, a recent bankruptcy court decision that may change much of this scenario. A bk court judge ruled that despite the fact that a borrower lied on his loan application, the lender relied solely on the value of the property, not the borrower’s credit or wherewithal to repay, and the debt was therefore dischargeable in bankruptcy.

Lenders have never been particularly logical in how they approach these things. I don’t suspect that will change.

[SK in CV]

Discharge of HELOC debt in bankruptcy is complicated. Generally, in California, for purchase money debt (standard 1st mortgage debt or HELOC), the creditor’s only recourse is the property. For all other debt, (Refi’s with or without cash-out and HELOC withdrawals) the creditor has the option of a non-judicial foreclosure (which is the standard NOD followed by NOT and then trustee sale) or judicial foreclosure which can result in a deficiency judgement. There is also the issue of fraud in the application process. Credit granted based on a false loan application (over-stating income, for instance) can be considered fraud and may not be dischargeable. These types of judicial foreclosures became quite common during the early 90’s and then virtually disappeared. While I haven’t seen any significant increase yet, I suspect they’ll be showing up very soon.

There was, however, a recent bankruptcy court decision that may change much of this scenario. A bk court judge ruled that despite the fact that a borrower lied on his loan application, the lender relied solely on the value of the property, not the borrower’s credit or wherewithal to repay, and the debt was therefore dischargeable in bankruptcy.

Lenders have never been particularly logical in how they approach these things. I don’t suspect that will change.

[SK in CV]

Discharge of HELOC debt in bankruptcy is complicated. Generally, in California, for purchase money debt (standard 1st mortgage debt or HELOC), the creditor’s only recourse is the property. For all other debt, (Refi’s with or without cash-out and HELOC withdrawals) the creditor has the option of a non-judicial foreclosure (which is the standard NOD followed by NOT and then trustee sale) or judicial foreclosure which can result in a deficiency judgement. There is also the issue of fraud in the application process. Credit granted based on a false loan application (over-stating income, for instance) can be considered fraud and may not be dischargeable. These types of judicial foreclosures became quite common during the early 90’s and then virtually disappeared. While I haven’t seen any significant increase yet, I suspect they’ll be showing up very soon.

There was, however, a recent bankruptcy court decision that may change much of this scenario. A bk court judge ruled that despite the fact that a borrower lied on his loan application, the lender relied solely on the value of the property, not the borrower’s credit or wherewithal to repay, and the debt was therefore dischargeable in bankruptcy.

Lenders have never been particularly logical in how they approach these things. I don’t suspect that will change.

[Anonymous]

I’m not going to declare bankruptcy. If I were to do this I would simply stop making the payments and live mortgate/rent free until I’m foreclosed on. I’ll take the credit hit instead of losing 100,000k or more.

As I read more this plan helps the banks and the most irresponsible borrower at the expense of bond holders, tax payers and the few borrowers who can make their payments after resets.

[Anonymous]

I’m not going to declare bankruptcy. If I were to do this I would simply stop making the payments and live mortgate/rent free until I’m foreclosed on. I’ll take the credit hit instead of losing 100,000k or more.

As I read more this plan helps the banks and the most irresponsible borrower at the expense of bond holders, tax payers and the few borrowers who can make their payments after resets.

[Anonymous]

I’m not going to declare bankruptcy. If I were to do this I would simply stop making the payments and live mortgate/rent free until I’m foreclosed on. I’ll take the credit hit instead of losing 100,000k or more.

As I read more this plan helps the banks and the most irresponsible borrower at the expense of bond holders, tax payers and the few borrowers who can make their payments after resets.

[Anonymous]

I’m not going to declare bankruptcy. If I were to do this I would simply stop making the payments and live mortgate/rent free until I’m foreclosed on. I’ll take the credit hit instead of losing 100,000k or more.

As I read more this plan helps the banks and the most irresponsible borrower at the expense of bond holders, tax payers and the few borrowers who can make their payments after resets.

[Anonymous]

I’m not going to declare bankruptcy. If I were to do this I would simply stop making the payments and live mortgate/rent free until I’m foreclosed on. I’ll take the credit hit instead of losing 100,000k or more.

As I read more this plan helps the banks and the most irresponsible borrower at the expense of bond holders, tax payers and the few borrowers who can make their payments after resets.

[Author]

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