Houses still used as ATM

[SDowner]

So, in the recent few months I have personally heard of 4 different households pulling equity out of their homes multiple times to do improvements in the kitchen, put in a new pool etc. These households are not flush with money and live from paycheck to paycheck, have credit card debt, student loans. Moreover, they all declared bankruptcy and foreclosed on their homes during the bubble aftermath.

No one seems to have learnt any lesson and using their homes as ATM. I feel I am just being punished for being prudent. Saving instead of spending and getting very little in return. Am I the only one?

[bearishgurl]

The $64M question is, “Will their lenders (the Big Banks) promptly foreclose on those (defaulted-upon) HELOCS as soon as the law allows?” Any Pigg correct me if I’m wrong that all foreclosure moratoriums have now passed.

In my experience, BK filers tend to be repeat BK filers just 7-8 years after final discharge of their last filing (yes, even 3-5 times in a row). You can’t change someone’s basic character. If the character of someone includes a “sense of entitlement,” then the behavior of that person will continue to reflect that throughout his/her life.

If the answer to the $64M question is yes, then this group is overindebted and will get their comeuppance sooner than later or be forced to sell if they can get out with their heads above water. If the answer is no, then banks have learned nothing this time around but will likely NOT be bailed out by the gubment (ESP HELOC lenders). This will only make it more expensive for highly-qualified homeowners to take out HELOCs in the future.

[spdrun]

Punished? What do you think will happen if one of them loses a job?

Plus if they’re living from paycheck to paycheck, good luck to them if they want to take a vacation, see the world, take time off, etc. They’ve made themselves some very nice jail cells, complete with pools and renovated kitchens.

Don’t envy if you should pity. Think of it as the Martha Stewart house-arrest plan.

[flyer]

No SD, you are not the only one–good for you–and I like sp’s comments also–spot on.

We see this type of behavior with people we know of also, and wonder what in the world they are thinking.

Although we invested heavily in real estate in San Diego and other places many years ago, and have tons of equity in those properties today, it’s just not in our DNA to live the way you described.

Separate and apart from other investments we’re involved in, we wanted to have seven figures stashed by the time we were 50, and have no regrets in doing so. Even then, we have still been able to enjoy life along the way.

Many people want what they want when they want
it–whether they can afford it or not. For some, that may work out, for others it will be a disaster. Guess they are placing their bets and taking their chances.

[scaredyclassic]

its just amazing to me that people continue to want all kind s of crap. often when i go in a store, i think, why is there even a security guard who the hell wants this crap? i wouldnt take it for free. im exaggerating a bit, and there are some things i want here and there, but really, most of it all, please, keep it. just not worth the hassle. an endless sea of more and more crappy stuff. i guess it’s good that people continue to brred and spend, breed and spend…im just not feeling it.

[FlyerInHi]

[quote=spdrun]

Don’t envy if you should pity. [/quote]

I can understand the envy a little bit, but only a little.

I went to this couple’s house in The Lakes, NV (Citibank processes credit cards there so the neighborhood is not called Las Vegas because of the bad connotation with gambling). It’s on a man made lake made to look like the intercoastal in Florida, complete with small boat dock in the back.

They sold their house in Orange County and just bought a $1.3 million house. They are gutting the whole thing and remodeling the Tuscan palace. It has a swimming pool with sunken bar area and a separate guest suite. Grand a first sight but kinda ugly upon closer examination.

I was a little jealous for a few minutes. But I wouldn’t want to carry such a McMansion and maintain that kind of lifestyle. They are not that rich. I think the guy did it to make his wife happy.

If I had more money to spare, I’d rather want a small 400sf studio in NYC and another one in Europe somewhere.

[Coronita]

I have needs and wants too.

I want a ferrari..
I need a porsche…

[scaredyclassic]

Cars are a pain.
Clothes require cleaning.
Furniture is dumb.
Odd objects are clutter.
I hate shoes. All you need is one pair sandals.
We could redo stuff but why???? Why????

If I took 50,000 out right now I don’t think I could find anything to spend it on.

I really wanted a copy of My Struggle by Karl knaussgard but that was a mere 15$. For vol. 1. I expect I will desire vols. 2 and 3 also(Awesome book!!!) Can’t think of anything else.

I need tuition money for SDSU, arborist school and also I like to spend money on good groceries. But we have that $.

I’d like to have enough cash to slip my kids a few grand whenever. That’d be cool. They have stuff they desire.

A mew ex pokemon card for instance. The level of desire is incredible.

i guess minialism is trndy, perhaps even peaking. im not saying necessarily minimalism, all im saying is, when you really look at stuff, do you really really want it?

i also wonder that more men don’t feel this way about affairs and not staying with their wives. when i see another woman, all i see is a giant headache. more desires, more problems, expenses, this that the other thing. good lord. it makes the head hurt.

i don’t think my testosterone is low. but i am low on desire.

[spdrun]

^^^

50 grand to burn — easy, take wife and kids on a trip to somewhere (or multiple places) interesting. Not necessarily luxurious, but interesting.

[scaredyclassic]

[quote=spdrun]^^^

50 grand to burn — easy, take wife and kids on a trip to somewhere (or multiple places) interesting. Not necessarily luxurious, but interesting.[/quote]

too complicated. scheduling, arrangements, etc. i can’t do it.

[spdrun]

too complicated. scheduling, arrangements, etc. i can’t do it.

Downsize your home, get a job that’s more flexible. You’re thinking like an overworked American.

[scaredyclassic]

[quote=spdrun]

too complicated. scheduling, arrangements, etc. i can’t do it.

Downsize your home, get a job that’s more flexible. You’re thinking like an overworked American.[/quote]

nope. im not realistically going to get a much lower mortgage payment ona place. i like my place. im happy in my house.

also, I hate to go places. i hate driving and flying.

i do like trains hwoever.

but.. i have a routine every day that incorporates the gym most days. travelling isn’t for me. i rambled around for 7 years when i was young and it’s all out my system. i ahve no desire to be anywhere else.

i like my yard. I have a hill i call “cactus hill”. I love to work on it. it was completely weeded and denuded of chaparal. i ahve carefully weeded it and the chaparral is coming back, plus all the cacti ive been bringing along there. lots of cacti. id rather be on cactus hill than say, the champs elysee

I like to sweep the floor.

[scaredyclassic]

[quote=spdrun]

too complicated. scheduling, arrangements, etc. i can’t do it.

Downsize your home, get a job that’s more flexible. You’re thinking like an overworked American.[/quote]

divorced coworker dropped out and took kids ona world tour. one kid balked a few months in and insisted onr eturn to boring hs with dad in boring suburb. in reality, the details of a boring life are what is so rich about it all.

this all become s clear in reading MY STRUGGLE by karl ove knaussgard …

there’s nothing out there…it’s all inside…

[FlyerInHi]

[quote=scaredyclassic]
i also wonder that more men don’t feel this way about affairs and not staying with their wives. when i see another woman, all i see is a giant headache. more desires, more problems, expenses, this that the other thing. good lord. it makes the head hurt.

i don’t think my testosterone is low. but i am low on desire.[/quote]

I feel exactly this way.

I’m all setup in terms of material needs and housing. 700sf condo as a main residence and an 1800sf second home.

If I get married to an older woman whose biological clock it ticking, she’ll probably want a house in the suburbs somewhere with a luxury SUV. A younger woman would want shopping sprees for handbags, shoes, etc…

Yes, it makes the head hurt!

[scaredyclassic]

[quote=FlyerInHi][quote=scaredyclassic]
i also wonder that more men don’t feel this way about affairs and not staying with their wives. when i see another woman, all i see is a giant headache. more desires, more problems, expenses, this that the other thing. good lord. it makes the head hurt.

i don’t think my testosterone is low. but i am low on desire.[/quote]

I feel exactly this way.

I’m all setup in terms of material needs and housing. 700sf condo as a main residence and an 1800sf second home.

If I get married to an older woman whose biological clock it ticking, she’ll probably want a house in the suburbs somewhere with a luxury SUV. A younger woman would want shopping sprees for handbags, shoes, etc…

Yes, it makes the head hurt![/quote]

perhaps you are Harold looking for his Maude.

[scaredyclassic]

buy a rolex and youll get hit with a $500 cleaning and lube bill a few years down the line.

everything you get comes witha cost.

[CA renter]

[quote=scaredyclassic][quote=FlyerInHi][quote=scaredyclassic]
i also wonder that more men don’t feel this way about affairs and not staying with their wives. when i see another woman, all i see is a giant headache. more desires, more problems, expenses, this that the other thing. good lord. it makes the head hurt.

i don’t think my testosterone is low. but i am low on desire.[/quote]

I feel exactly this way.

I’m all setup in terms of material needs and housing. 700sf condo as a main residence and an 1800sf second home.

If I get married to an older woman whose biological clock it ticking, she’ll probably want a house in the suburbs somewhere with a luxury SUV. A younger woman would want shopping sprees for handbags, shoes, etc…

Yes, it makes the head hurt![/quote]

perhaps you are Harold looking for his Maude.[/quote]

I’ve never seen the movie, but because of your post, looked it up. Looks seriously good. Going to see if my DH will watch it with me (or I will watch it alone). Thanks for more inspiration, scaredy.

And, yes, Brian needs to give up on his unrealistic and conflicting desires and just marry a terrific older woman who is done with the whole family and kids thing. Great suggestion!

[scaredyclassic]

Harold and maude was a big formative movie for me. I assumed everyone in the USA had seen it because I did.

[UCGal]

[quote=scaredyclassic]Harold and maude was a big formative movie for me. I assumed everyone in the USA had seen it because I did.[/quote]
It had big impact on me to.
If only for how he turns a jag sportscar into a mini-hearse. Awesome!!!!
He was goth before goth was cool.

[scaredyclassic]

I still can’t listen to cat Stevens at night after 3 drinks and not cry tears of joy.

[spdrun]

If I get married to an older woman whose biological clock it ticking, she’ll probably want a house in the suburbs somewhere with a luxury SUV. A younger woman would want shopping sprees for handbags, shoes, etc…

Crunchy hippie girls who wear comfortable shoes for the win. She’d want a Prius and a bungalow in North-Park. I think you could live with such an arrangement, no?

Or just look in mid-40s. Past child bearing age, not quite at the Maude stage.

[scaredyclassic]

[quote=spdrun]

If I get married to an older woman whose biological clock it ticking, she’ll probably want a house in the suburbs somewhere with a luxury SUV. A younger woman would want shopping sprees for handbags, shoes, etc…

Crunchy hippie girls who wear comfortable shoes for the win. She’d want a Prius and a bungalow in North-Park. I think you could live with such an arrangement, no?

Or just look in mid-40s. Past child bearing age, not quite at the Maude stage.[/quote]

i ahve a crunchy hippie girl! try to get the yoga subspecies.

[FlyerInHi]

[quote=spdrun]
Crunchy hippie girls who wear comfortable shoes for the win. She’d want a Prius and a bungalow in North-Park. I think you could live with such an arrangement, no?

Or just look in mid-40s. Past child bearing age, not quite at the Maude stage.[/quote]

I like modern sophisticate with earthy crunchy values. hard to find.

I just can’t deal with any india/Nepal type hippie influence. The clothing, the food… not for me.

[CA renter]

Why should anyone have learned a lesson? If anything, the “Financial Crisis” taught us that being a deadbeat borrower or reckless lender will make you a victim; often, a rich victim.

The deadbeats were allowed to squat for YEARS while us loser renters paid our rent dutifully every month. If we renters were to stop paying, nobody would have revolted or marched to protect our rights to stay in our rentals for free or significantly reduced rents. Nobody is crying for us when we can’t earn a low-risk interest rate over 1% for short term savings vehicles — losing money every year because of the inflation that was forced on us in order to save the aforementioned “victims.”

Yes, it’s easy to become disillusioned with our financial system and govt, but at least we should be able to sleep well at night. Hopefully, someday, those who’ve tried to be more conservative and responsible will be rewarded for their efforts…but don’t hold your breath.

[SDowner]

You verbalized the root reason for my post very well CA renter. That is exactly my frustration. I dont know if the financially responsible ones will come out the winners, just cause the govt and tax laws encourage a debt ridden society.

[Coronita]

[quote=SDowner]You verbalized the root reason for my post very well CA renter. That is exactly my frustration. I dont know if the financially responsible ones will come out the winners, just cause the govt and tax laws encourage a debt ridden society.[/quote]

I think a lot of us will. The ones that bought when the floor fell out, whether it’s a primary or rental or both..and/or the ones that are going to enjoy the next 15 or 30 years with an unheard of fixed rate mortgage…..and possible will sell at the top again in the future…

Rinse and repeat, over and over again….

As a wise person put it to me.. It’s not so much whether you’re going to win or lose… At this point, it’s a question of how much you’re going to win by… Which is an excellent point that I took for granted…

[scaredyclassic]

[quote=CA renter]Why should anyone have learned a lesson? If anything, the “Financial Crisis” taught us that being a deadbeat borrower or reckless lender will make you a victim; often, a rich victim.

The deadbeats were allowed to squat for YEARS while us loser renters paid our rent dutifully every month. If we renters were to stop paying, nobody would have revolted or marched to protect our rights to stay in our rentals for free or significantly reduced rents. Nobody is crying for us when we can’t earn a low-risk interest rate over 1% for short term savings vehicles — losing money every year because of the inflation that was forced on us in order to save the aforementioned “victims.”

Yes, it’s easy to become disillusioned with our financial system and govt, but at least we should be able to sleep well at night. Hopefully, someday, those who’ve tried to be more conservative and responsible will be rewarded for their efforts…but don’t hold your breath.[/quote]

you will die of asphyxiation.

http://www.cnn.com/2014/06/19/opinion/waldman-cheney-iraq/index.html?hpt=hp_t2

exhibit 1. dick cheney blaming the fucked up situation in iraq on obama. look i ahve been dutifully praying the the dark Lord Satan every night for dick cheney to die some miserable horrible death, quickly, swiftly, adn to rot in hell for all eternity, but what does he gt? an oped page in the ny times …hilarious! the key is to be utterly shameless, utterly nonconservative, just completely batshit crazy, and the system will reward you. anyone else must be punished.

die dick cheney. please satan, have him suffer a stroke and be trapped consciously for years in his body.

[enron_by_the_sea]

[quote=scaredyclassic]

you will die of asphyxiation.

http://www.cnn.com/2014/06/19/opinion/waldman-cheney-iraq/index.html?hpt=hp_t2

exhibit 1. dick cheney blaming the fucked up situation in iraq on obama. look i ahve been dutifully praying the the dark Lord Satan every night for dick cheney to die some miserable horrible death, quickly, swiftly, adn to rot in hell for all eternity, but what does he gt? an oped page in the ny times …hilarious! the key is to be utterly shameless, utterly nonconservative, just completely batshit crazy, and the system will reward you. anyone else must be punished.

die dick cheney. please satan, have him suffer a stroke and be trapped consciously for years in his body.[/quote]

I think Dick Cheney’s opinions on Iraq are very useful!

We should listen to what he says and recommends … then do exactly opposite of that!

[FlyerInHi]

[quote=enron_by_the_sea][quote=scaredyclassic]

you will die of asphyxiation.

http://www.cnn.com/2014/06/19/opinion/waldman-cheney-iraq/index.html?hpt=hp_t2

exhibit 1. dick cheney blaming the fucked up situation in iraq on obama. look i ahve been dutifully praying the the dark Lord Satan every night for dick cheney to die some miserable horrible death, quickly, swiftly, adn to rot in hell for all eternity, but what does he gt? an oped page in the ny times …hilarious! the key is to be utterly shameless, utterly nonconservative, just completely batshit crazy, and the system will reward you. anyone else must be punished.

die dick cheney. please satan, have him suffer a stroke and be trapped consciously for years in his body.[/quote]

I think Dick Cheney’s opinions on Iraq are very useful!

We should listen to what he says and recommends … then do exactly opposite of that![/quote]

Cheney can live.

I just thank God that McCain Palin are not in power. We’d have 1 million men in Iraq now.

If God made that compromise, then I’m OK with it.

[ltsddd]

[quote=SDowner]
No one seems to have learnt any lesson and using their homes as ATM. [/quote]

You couldn’t be more wrong. These folks learned that there’s no real consequences to their fiscal irresponsibility. When the sh!t hits the fan simply file for bankruptcy, squat for a few years and then wait for a few more years for the bankruptcy record to go away and “buy” again….wash, rinse, repeat. Talking about OPM, these folks are taking it to the next level – no skin in the game, nothing to lose, so why not living it up?

The banks need to stop being an enabler in these situations.

[scaredyclassic]

[quote=ltsdd][quote=SDowner]
No one seems to have learnt any lesson and using their homes as ATM. [/quote]

You couldn’t be more wrong. These folks learned that there’s no real consequences to their fiscal irresponsibility. When the sh!t hits the fan simply file for bankruptcy, squat for a few years and then wait for a few more years for the bankruptcy record to go away and “buy” again….wash, rinse, repeat. Talking about OPM, these folks are taking it to the next level – no skin in the game, nothing to lose, so why not living it up?

The banks need to stop being an enabler in these situations.[/quote]

kind of. although im not sure it’s that healthy. i feel responsibility can be rewarded in some ways. you can relax.

[NotCranky]

The smart ones did interest only cash out refi’s short sold to themselves and cashed out again when the market went up.

[spdrun]

The smart ones did interest only cash out refi’s short sold to themselves and cashed out again when the market went up.

How does one “short-sell to themselves” without a trusted middleman? AFAIK, short sales have to be arm’s length transactions.

[NotCranky]

[quote=spdrun]

The smart ones did interest only cash out refi’s short sold to themselves and cashed out again when the market went up.

How does one “short-sell to themselves” without a trusted middleman? AFAIK, short sales have to be arm’s length transactions.[/quote]

Trusted middle man/family/friend.

Other possible schemes.
Let the agent handle the whole thing and get a kickback from the agent and/or the buyer.

I don’t know how much this happened. But with properties going pending with little real marketing. It does make you wonder. I would say I had proof of at least some of it but then someone might want me to give specifics and short of being water boarded I am not going there.

If real estate office walls could talk , I think it would be very interesting.

[HLS]

I’m well aware of what goes on but I don’t see how it’s possible for anyone who had “a bankruptcy AND foreclosure” in the last 6 years to have bought another house since then AND have enough equity to do a cash out refi recently.

I don’t doubt that you have ‘personally heard’ about 4 different people doing this but do you happen to actually know any of them ?
I’m just curious. I’d like to speak to any one of the four and understand how they did it.

[ltsddd]

It’s conceivable for someone to buy a house, say in 2002 for $500K with 0% down. House value goes up to $1m in 2007. Refi with 125% cash out. Stash the roughly $700K that they cashed out somewhere. Filed for bankruptcy. Heck, they don’t even have to wait for the bk record to go away. That’s plenty of cash to perhaps scoop up a similar house during the downturn. Now, 7 years later, bk record went away – continue to step two (refi cash out)….

[HLS]

[quote=ltsdd]It’s conceivable for someone to buy a house, say in 2002 for $500K with 0% down. House value goes up to $1m in 2007. Refi with 125% cash out. Stash the roughly $700K that they cashed out somewhere. Filed for bankruptcy. Heck, they don’t even have to wait for the bk record to go away. That’s plenty of cash to perhaps scoop up a similar house during the downturn. Now, 7 years later, bk record went away – continue to step two (refi cash out)….[/quote]

Uh-Huh….and how many people do you personally know who did this ?

[ltsddd]

[quote=HLS][quote=ltsdd]It’s conceivable for someone to buy a house, say in 2002 for $500K with 0% down. House value goes up to $1m in 2007. Refi with 125% cash out. Stash the roughly $700K that they cashed out somewhere. Filed for bankruptcy. Heck, they don’t even have to wait for the bk record to go away. That’s plenty of cash to perhaps scoop up a similar house during the downturn. Now, 7 years later, bk record went away – continue to step two (refi cash out)….[/quote]

Uh-Huh….and how many people do you personally know who did this ?[/quote]

Would you think it would be possible if it’s “the last 7 or 8 or 9 years” instead of “the last 6 years”? Would you care to share why you think such a scenario is not possible?

[HLS]

[quote=ltsdd]

Would you think it would be possible if it’s “the last 7 or 8 or 9 years” instead of “the last 6 years”? Would you care to share why you think such a scenario is not possible?[/quote]

Because I deal with loans, lenders, guidelines, regulations & underwriters on a daily basis and don’t just make up scenarios based on what I think I know.

It makes for creative writing and the possibility of developing a movie ‘based on a true story’ though….

Nobody was getting a new loan for a few years after a bankruptcy, foreclosure or short sale.
Certain programs have loosened up a bit if hardship in the past can be well documented.
Credit scores were affected and are a factor in getting a new loan.

Although not impossible, there were some creative things happening on both sides of the fence…
BUT to assume that this was widespread because of stories in the media and internet is silly.

Based on the OP, it was not implied that ‘these people’ ever had any cash as you suggest, but all done with borrowed money.

[ltsddd]

[quote=HLS][quote=ltsdd]

Would you think it would be possible if it’s “the last 7 or 8 or 9 years” instead of “the last 6 years”? Would you care to share why you think such a scenario is not possible?[/quote]

Because I deal with loans, lenders, guidelines, regulations & underwriters on a daily basis and don’t just make up scenarios based on what I think I know.
[/quote]

I am tracking you. I think it’s you who wrote

“but I don’t see how it’s possible for anyone who had “a bankruptcy AND foreclosure” in the last 6 years to have bought another house since then AND have enough equity to do a cash out refi recently”

I don’t think the OP said anything about how long it’s been since the “4” filed for bk & was foreclosed for. You and you alone came up with the bk & foreclosure in the last 6 years scenario.

[quote=HLS]
It makes for creative writing and the possibility of developing a movie ‘based on a true story’ though….
[/quote]

Nah…it makes for a lame strawman argument.

[quote=HLS]
Nobody was getting a new loan for a few years after a bankruptcy, foreclosure or short sale.
[/quote]

That’s a pretty broad statement there. But I trust that that’s your experience so it must be true.

But what is a few years? 1, 2, 5,7, 20? It must be something more than two right?

Here’s an anecdote – I know of 1 person, who is a veteran, that went through a short sale in 2010. After 2+ years he jumped back into the housing market. After going through some form of “counseling” he got the (VA) loan approved. I I guess you’ve never heard about VA loans.

[quote=HLS]BUT to assume that this was widespread because of stories in the media and internet is silly.[/quote]

hmm..you might want to read the thread again. I don’t remember seeing anyone making a claim that this is something that is widespread. You are just making up stuff and arguing against them and try to attribute that to other posters.

[HLS]

LTS.
The OP stated “they all declared bankruptcy and foreclosed on their homes during the bubble aftermath”
My mistake for assuming that was within the last 6 years.

For a new loan:
Conventional guidelines are currently 7 years after foreclosure AND a decent credit score.
FHA is 3 years with a possible exception.
VA is generally 2 yrs.

There certainly may be other programs available,
It’s just not the norm to have this happen and I’m not sure what ‘stuff’ you think I’m making up.
Your insight is apparently better than mine.

[SDowner]

Yes, all the 4 households were VA loans that foreclosed. Their repurchase was VA too, they are refinancing it. I do not qualify for VA or FHA loans, bought my primary property with > 33% down on a jumbo loan at a low interest rate and having to listen to these VA loan folks discuss a down payment of $1500.

Now tell me that I shouldn’t be envious/frustrated/pissed off royally

[FlyerInHi]

Our heroes have earned their VA benefits.

[CA renter]

[quote=HLS][quote=ltsdd]

Would you think it would be possible if it’s “the last 7 or 8 or 9 years” instead of “the last 6 years”? Would you care to share why you think such a scenario is not possible?[/quote]

Because I deal with loans, lenders, guidelines, regulations & underwriters on a daily basis and don’t just make up scenarios based on what I think I know.

It makes for creative writing and the possibility of developing a movie ‘based on a true story’ though….

Nobody was getting a new loan for a few years after a bankruptcy, foreclosure or short sale.
Certain programs have loosened up a bit if hardship in the past can be well documented.
Credit scores were affected and are a factor in getting a new loan.

Although not impossible, there were some creative things happening on both sides of the fence…
BUT to assume that this was widespread because of stories in the media and internet is silly.

Based on the OP, it was not implied that ‘these people’ ever had any cash as you suggest, but all done with borrowed money.[/quote]

How about this, HLS?

So how long? I have made a helpful list to give you an idea of when the bankruptcy will stop being important for the purpose of getting a mortgage loan.

CHAPTER 7:
Conventional mortgage – 4 years from the discharge or dismissal date.
FHA mortgage – 2 years from the discharge or dismissal date.
VA loan – 2 years from the discharge or dismissal date.

CHAPTER 13:
Conventional – 2 years from the discharge date, or 4 years from the dismissal date.
FHA mortgage – You must have made at least 13 of the Chapter 13 payments on time. This should take 13 months.
VA – You must have made at least 13 of the Chapter 13 payments on time. This should take 13 months.

FORECLOSURE – you can begin to qualify for a mortgage 2 to 3 years after the foreclosure. These years can pass at the same time as the years from the bankruptcy, so you have an incentive to do both at the same time, especially if your house is underwater.

http://www.bankruptcytruth.com/minnesota-bankruptcy-information/how-long-after-bankruptcy-can-i-qualify-mortgage-buy-house

[scaredyclassic]

VA and FHA loans were not strong offers for distressed properties a few years back is my understanding. never wouldve gottena good deal with VA fianncing

[bearishgurl]

[quote=ltsdd][quote=HLS][quote=ltsdd]It’s conceivable for someone to buy a house, say in 2002 for $500K with 0% down. House value goes up to $1m in 2007. Refi with 125% cash out. Stash the roughly $700K that they cashed out somewhere. Filed for bankruptcy. Heck, they don’t even have to wait for the bk record to go away. That’s plenty of cash to perhaps scoop up a similar house during the downturn. Now, 7 years later, bk record went away – continue to step two (refi cash out)….[/quote]

Uh-Huh….and how many people do you personally know who did this ?[/quote]

Would you think it would be possible if it’s “the last 7 or 8 or 9 years” instead of “the last 6 years”? Would you care to share why you think such a scenario is not possible?[/quote]

ltsdd, I’ll share with you why I think your scenario wasn’t possible. In the 2001-2002 era, the only “zero down” mortgages available were VA loans. And at that time, the VA had a $359,650 loan limit for 1-4 units. That $700K “mattress money” you’re talking about here was likely borrowed at an exorbitant interest rate, since it was a 125% LTV loan in an era of rampant “fog-a-mirror,” get-a-loan” financing. Do you actually believe a loan for $1.2M taken out in 2007 is still sustainable (irrespective of the borrowers actual monthly incomes)? What would you surmise has happened to this loan by now? Do you actually think these borrowers were ever able to refinance this loan beginning in 2007 (within months of taking it out)? How about in 2009? How about when it invariably got “recast” and its monthly payments “adjusted” in 2012 to capture all that missing principal and interest for 5 years (assuming those borrowers hadn’t lost the property to FC by then)? Assuming arguendo that they did indeed mattress the money instead of blow all or most of it (doubtful) and spent it on lower-cost properties, they would have had to pay all cash for those properties since they were supposedly “bankrupt” and grossly “overmortgaged” as well. So that cash is tied up in these “lesser” propertie(s) and perhaps they held back some of the $700K to keep making payments on their (formerly $1.2M) albatross.

What do you suggest these borrowers tell their BK trustee as to what they did with $700K that they just borrowed when they refied “cash out” at 125% LTV on their home? How are they going to get their BK case discharged if they have the cash to pay their bills? Moreover, how are they going to get a BK judge to let them keep their “automatic stay” from foreclosure on this $1.2M home that they are underwater on that they want to “reaffirm.” If they are keeping up exorbitant payments on this home when it is underwater with all or part of the $700K they took out of it, do you think a BK court will let them keep the luxury home whilst stiffing the rest of their creditors when they own lesser properties to move into? Did it occur to you that as BK Chapter 7 filers, they could be forced to sell one or more of their free and clear properties to pay creditors?

I’ve seen this kind of stuff before, including 4 Chapter 7 filings one after another in 28 years (the 29th year being 2004 where same debtors began borrowing on their house (purch ~1982) for a total of 4 times (until early 2007) instead of filing another Chapter 7. Said borrowers are in their late 60’s today. Why don’t you take a stab at what their current “net worth” is?

My (educated) guess is that your scenario as described was a monopoly game that very quickly went south and these people have absolutely nothing to show for it today, except perhaps 1-2 steady jobs if neither one got sick, got too old or otherwise lost their job in the ensuing years.

[NotCranky]

[quote=HLS]I’m well aware of what goes on but I don’t see how it’s possible for anyone who had “a bankruptcy AND foreclosure” in the last 6 years to have bought another house since then AND have enough equity to do a cash out refi recently.

I don’t doubt that you have ‘personally heard’ about 4 different people doing this but do you happen to actually know any of them ?
I’m just curious. I’d like to speak to any one of the four and understand how they did it.[/quote]

If you are responding to me bankruptcy , foreclosure and subsequent purchase that is not what I said happened. The things I mentioned did happen and I said I won’t remember if anyone wants to know who, so no names.
I am pretty sure most busy agents can tell you about at least a few cases of each of the examples I gave, if they wanted to. I wouldn’t be surprised they happened a lot…especially some kind of kickback for cooperating with a short sale being a pocket listing steered to preferred buyers.

If agents are or were steering short sales to preferred buyers…I don’t think anyone is going to catch or enforce that.

[HLS]

[quote=Blogstar][quote=HLS]I’m well aware of what goes on[/quote]

If you are responding to me [/quote]

Nothing to do with your post Blog. Read the OP.

I am licensed for both real estate & mortgage and well aware of what some others do OR try to do.

[NotCranky]

[quote=HLS][quote=Blogstar][quote=HLS]I’m well aware of what goes on[/quote]

If you are responding to me [/quote]

Nothing to do with your post Blog. Read the OP.

I am licensed for both real estate & mortgage and well aware of what some others do OR try to do.[/quote]

Can you give some stories and examples of what people did and tried to do? What worked , how often, what didn’t?

[Jazzman]

[quote=SDowner]
No one seems to have learnt any lesson and using their homes as ATM. I feel I am just being punished for being prudent. Saving instead of spending and getting very little in return. Am I the only one?[/quote]

No, you are not the only one, just a part of a mostly silent minority.

[FlyerInHi]

Actually, savers should be happy there is debt fueled consumption. The pie is larger for everyone so it’s easier to earn money.

Just don’t keep your savings in cash.

[bearishgurl]

SDowner, be happy you qualified for conventional financing. Borrowers using $0 down VA financing are already upside down upon COE. This is due to the humungous “funding fee” of 2.15% that is wrapped into the VA purchase-money or refinance loan. Due to this (and the slow payoff in the first years of their 102.15% LTV mortgage), they still owe 100% of their mortgage ~3 years later when it is time for a change of duty station. A lot of these borrowers let their VA-funded property go into foreclosure when they change duty stations or retire in a different locale because they can’t get enough proceeds from a sale to pay all their closing costs and retire their mortgage and the spouse is unwilling or unable to stay behind to attempt to ready the property for sale and put it on the market while the sponsor/member reports to his/her new duty station. After these borrowers default and then transfer to a new locale, they just live in military housing (if available) until such time as they have another change of station or they are able to buy again. If they can’t get their VA loan entitlement returned to them (due to foreclosure and the VA paying off the 25% “guarantee” to the lender) then they will have to try to later qualify for financing which requires a downpayment.

Most military families (and even retirees) especially from the enlisted ranks, live check to check all of their lives. If the sponsor dies before his/her spouse and has elected to have a survivor benefit premium taken from his/her pay at the time of retirement, his/her spouse will receive a benefit of 55% of his retirement pay (which could be substantial, esp in combination with SS benefits).

This group really doesn’t care if they have to live check to check the rest of their lives or their credit is (temporarily) shot because the vast majority of them will have some kind of a check coming in (plus SS, when they become eligible) until they die. In addition, if they are retirees, they (and their spouses) are eligible for Tricare and Tricare for Life plus have commissary and exchange privileges for life and a myriad of other recreational, travel and social services available to them at low or no cost through their local base.

Essentially, just think of most of these recent VA buyers as “glorified renters” who will likely never build up any equity before they find themselves having to sell due to a life circumstance. They live in a transient culture where “big brother” has always taken care of their daily needs.

These poor schmucks (your neighbors?) aren’t really “better off” than you. When push comes to shove and you are all applying for SS, I predict your net worth will be 10X theirs. It is also quite possible that some or all of them will have no net worth at all by then and that is okay. They’ll just live off their pensions in a double or even single-wide mobile home in flyover America and the house they once “owned” for a minute and a half in your neighborhood will be but a fleeting memory 😀

[spdrun]

Plus being government property can’t be fun — remember Agent Orange and Gulf War Disease? Who knows what will come out 10 years after Iraq II and Afghanistan?

BTW – if the soldiers buy at a good price, can’t they rent it out after changing duty station? Or wait till separation from the service before buying a home, as my friend who’s an ex-Marine did.

[Author]

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