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spdrun.
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August 11, 2013 at 1:34 AM #764327August 11, 2013 at 1:48 AM #764329
FlyerInHi
GuestHow are the pensions victims?
The booms and busts should smooth themselves out over time. So far the gains from the booms outweigh the loses of busts. Problem is the pension funds counted on the returns of the booms continuing. Bad forecasting on their part. Easy fix: increase contributions or reduce benefits.August 11, 2013 at 1:55 AM #764330GuestCAr, the borrowers were not victims.
They abided by the terms of their loans when they stopped making payments and the banks foreclosed on the collateral. Simple resolution to a business contract between 2 private parties.August 11, 2013 at 2:22 AM #764332CA renter
Participant[quote=FlyerInHi]CAr, the borrowers were not victims.
They abided by the terms of their loans when they stopped making payments and the banks foreclosed on the collateral. Simple resolution to a business contract between 2 private parties.[/quote]There are plenty of people who are selling the story of borrowers being “victims” of the housing bubble. No, they are a major *cause* of the housing bubble, and the inevitable crash. The sympathy well is very dry as far as I’m concerned.
August 11, 2013 at 2:30 AM #764331Participant[quote=FlyerInHi]How are the pensions victims?
The booms and busts should smooth themselves out over time. So far the gains from the booms outweigh the loses of busts. Problem is the pension funds counted on the returns of the booms continuing. Bad forecasting on their part. Easy fix: increase contributions or reduce benefits.[/quote]No, they don’t, not as far as pension funding is concerned. Yes, the public employers and pension fund managers/actuaries believed (or pretended to believe) that the outsized gains would go on forever, and they didn’t make provisions for when returns would dip precipitously — which would seem an obvious probable outcome after years of well above-average returns.
Bad planning, no doubt; but the pensioners are still victims of this nonsense because they had no choice as to the asset allocations of their pension funds, and were not able to convince their superiors that pension contributions should still be made even when the funds are earning above-average returns.
Additionally, the politicians made foolish mistakes WRT pension increases when employers were not making pension contributions and asset prices were peaking. Lots of very bad decisions were made…none of which were the decisions of rank-and-file public employees.
And yes, they will have to do both: increase contributions and reduce benefits, IMHO.
But let’s please not get this off-topic. There are plenty of other threads regarding this issue where it’s all be re-hashed over and over again.
August 11, 2013 at 9:28 AM #764341njtosd
Participant[quote=FlyerInHi]CAr, the borrowers were not victims.
They abided by the terms of their loans when they stopped making payments and the banks foreclosed on the collateral. Simple resolution to a business contract between 2 private parties.[/quote]That’s like saying that when I refuse to pay you money that I owe you under a contract and you take me to court it’s a “simple resolution to a business contract.” Foreclosure is a legal remedy for breach of contract – it was not the goal of the contract.
August 11, 2013 at 10:09 AM #764342Guestnj, you seem to imply that those who can afford to pay should suck it up and pay.
But the contract doesn’t care what the cause of non payment is. It could be sickness, loss of job.., the bank doesn’t care.
Why inject morality into a contract where there is none?
Would it make any difference if the OP lost his house because he was sick, and now he has the downpayment from an inheritance?
Also, in CA there is the trustee sale bit so no court is involved in the foreclosure. The remedy was negotiated.
August 11, 2013 at 11:41 AM #764345bearishgurl
Participant[quote=FlyerInHi]nj, you seem to imply that those who can afford to pay should suck it up and pay.
But the contract doesn’t care what the cause of non payment is. It could be sickness, loss of job.., the bank doesn’t care.
Why inject morality into a contract where there is none?
Would it make any difference if the OP lost his house because he was sick, and now he has the downpayment from an inheritance?
Also, in CA there is the trustee sale bit so no court is involved in the foreclosure. The remedy was negotiated.[/quote]
Yes. It WOULD have made a difference, FIH. The OP would not have had a “voluntary” SS and thus, under FF guidelines, possibly would have been able to qualify for a modest purchase-money mortgage a year or two sooner.
But that’s not what happened here. Acc to the OP, he would well afford his mortgage when he purchased the property, he would well afford his mortgage all during the time of his ownership and he could well afford his mortgage after he decided to strategically default and “squat” for as long as his lender would allow him to. Since he could well afford his mortgage all during his default period, “squatting” enabled his household to save even MORE money for a downpayment for their “dream home.”
Just ONE+ month after he closed his unclean SS in a solidly middle-class area (sorry folks, but most of SEH is NOT “upper middle class,” nor is SM), he was here on this forum stating that he was “new to SD,” lamenting the dearth of listings and asking Piggs for recommendations for listings on 1 AC lots, no less :=0, in three of the most expensive communities in the county.
It is crystal clear to me that at the time he decided to “strategically default,” he believed he could “trade in” his home in a middle-class community (where he was supposedly $200K “upside down”) for an upper-middle class or upper-class community without so much as a blip on the radar screen!
Not only is this carrying an “entitlement mentality” thru the stratosphere, but it clearly demonstrates a delusional thought process, in my book.
I’m sure the OP is not alone in this regard. I know a person who tried this (initially “successfully”) with SEVEN homes in successively more exclusive areas here in SD South County (incl Coronado). She has now lost them ALL except one (which is rented out because it is still “upside down”) and is currently living as a “roommate” in another homeowner’s home because her credit is beyond shot. This person was a longtime CA RE LICENSEE and should at all time have “known better” but was delusioned with ever more grandiose ideas about what she thought she “deserved” and could afford and the availability of easy money undoubtedly enabled her.
As we all know, there’s no free lunch, folks.
August 11, 2013 at 12:05 PM #764346ParticipantOh, and FIH, in CA, a “foreclosure remedy” is not negotiable. Virtually all money loaned on real property is secured by a trust deed which has the explicit language in it mirroring state law giving the beneficiary the right to foreclose for non-payment. The trustor(s) MUST sign the TD if they want the money.
Explicit guidelines, long spelled out in state law, detail the procedure for foreclosing a CA trust deed. The PROBLEM was that in recent years, lenders loaning in CA didn’t follow it. They didn’t follow it (and let their defaulting trustors squat for months/years) because they thought they would get reimbursed for their trouble by the Federal Govm’t for allowing them to squat. They didn’t get fully-reimbursed because the losses were too great (all due to “lender malaise”). By allowing prolonged “squatting” and then approving subsequent SS offers and some REO offers which were often below land cost, lenders screwed nearly EVERY surrounding property owner for miles around. Their inaction and negligent action (approving SS and REO offiers 50%+ off in very established areas) caused longtime property owners’ (who were NEVER “underwater”) values to fall precipitously.
In my mind, (both ignorant and calculating) buyers, “sellers” (and their greedy, unethical agents) and lenders were ALL to blame equally for this mess.
August 11, 2013 at 1:16 PM #764350SK in CV
ParticipantBG, 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.
August 11, 2013 at 2:03 PM #764351Participant[quote=FlyerInHi]nj, you seem to imply that those who can afford to pay should suck it up and pay.
But the contract doesn’t care what the cause of non payment is. It could be sickness, loss of job.., the bank doesn’t care.
[/quote]
You do realize that banks are different than social service agencies, right? And by the way, there is nothing to stop the borrower, during negotiations, from requesting that a clause be put in the mortgage contract that allows the borrower to walk away in the event of illness or loss of job. Borrowers never do it because they know that the bank won’t give them the money under such terms. Borrowers are big boys and girls and I think people should live up to their promises.
August 11, 2013 at 2:21 PM #764354Participant[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.
http://login.findlaw.com/scripts/callaw?dest=ca/caapp4th/192/1149.html
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.
August 11, 2013 at 3:18 PM #764356ParticipantI just noticed the findlaw link I posted above doesn’t work.
For those who don’t belong to myfindlaw.com, here is a free way for the public to get a CA opinion:
http://www.lexisnexis.com/clients/CACourts/
Click the box that you have read and reviewed the terms and conditions and click “begin searching opinions.” Click (search) “by citation” in the upper LH corner of your screen and then fill in the cite for Gomes: 192 [tab] Cal.App.4th [tab] 1149 and click “Go.”
Your cite will show up in Lexis Nexis.
Here is a very concise holding (in laymen’s terms) for Gomes v. Countrywide:
August 11, 2013 at 3:49 PM #764357ParticipantBG, none of these programs “bailed out” lenders. There have been over a million permanent loan modifications to date, and not a single one of them resulted in the lenders being made whole. And none of the programs motivate the lenders to allow homeowners to stay in their homes without making payments. Indeed, to the contrary, if a homeowner has stopped making payments and a loan modification is being attempted, the motivation would be for the lender to get the agreement in place as quickly as possible.
With regards to your opinion on lender competence, we’ll have to agree to disagree. While it would seem the actual process is simple in non-judicial states like CA, that isn’t the way it works. Distressed assets are assigned to asset managers who are required to determine the value of collateral. That also shouldn’t be terribly time consuming in an ideal world. They could call up one of our friendly pig RE professionals and ask the question, and get an opinion of value. But instead they prepare a 15 page report. For each of the 200 or so distressed assets they’re assigned each week. They fall behind and never catch up.
August 11, 2013 at 4:09 PM #764358Participant[quote=SK in CV]BG, none of these programs “bailed out” lenders. There have been over a million permanent loan modifications to date, and not a single one of them resulted in the lenders being made whole. And none of the programs motivate the lenders to allow homeowners to stay in their homes without making payments. Indeed, to the contrary, if a homeowner has stopped making payments and a loan modification is being attempted, the motivation would be for the lender to get the agreement in place as quickly as possible. . . .[/quote]
SK, why do you think the bulk of delinquent trustors were permitted to “squat” for many months/years before their lenders approved for them permanent modifications (or foreclosed on them) if the motivation was to “get the agreement ASAP?”
I personally witnessed delinquent trustors here in CA having their application for mod in suspense for up to ten months before they heard anything at all from their lenders. Meanwhile, they were “squatting” and also not paying taxes and homeowner insurance premiums.
Two of these squatters were foreclosed upon by the “left hand” (trustee) simultaneous to the “right hand” (lender’s collection dept) accepting their mod applications and asking for further documents :=0.
Lenders took severe unreimbursed losses only because they were unwilling to foreclose in a timely manner to which they were allowed by law and there was absolutely nothing stopping them from doing so.
There is obviously a very good reason why a Big Bad Bank is completely unwilling to go get their asset which is not performing so they can recover as much as they can for it and get it off their books. And that reason is NOT “incompetence.”
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