People who can’t afford their house but get to keep it?!

[sdrealtor]

[quote=bearishgurl][quote=SD Realtor]Why would someone go through the hassle of selling the home when the lender went ahead and granted them instant equity and a lower rate and basically valued the home at present day prices? Seems like a pretty easy decision to stay and keep the home.[/quote]

Except he didn’t “stay,” lol . . .

SDR, sdr stated that this individual’s divorce occurred several years before he lost his job. Then he lived in the property “free” for a year after defaulting and THEN presumably worked out the mod after landing a new job. Regardless of the $80K, this particular family (like most divorcing couples) would have been better off selling at the time of divorce and splitting the proceeds, IMO. It would have saved his credit. Now, neither party has this heartwarming, special house for their “school-age kids” to live in. Why?? Because “Dad?” is now using it for a biz oppty, courtesy of his generous “loan mod.”

He’s apparently so “upper middle class” (like ALL sdr’s “friends” are, lol) that he needs the $1000 mo rental income to supplement his income.

I thought the function of “loan mods” was to keep families together in their homes … a roof over their heads while they put their financial lives back in order . . . a second chance, so to speak?[/quote]

Again you were wrong on all accounts especially your bolded statement. He lost his job and was unemployed for an extended period, had to be retrained in a new industry (he was never in any of the FIRE sectors) and got a second chance. It was right for everybody involved and he will be fine now.

You are only capable of viewing the world one way and it has obviously been slanted by years of living with EXTREME BITTERNESS! Give it up.

[bearishgurl]

[quote=sdrealtor]Again you were wrong on all accounts especially your bolded statement. He lost his job and was unemployed for an extended period, had to be retrained in a new industry (he was never in any of the FIRE sectors) and got a second chance. It was right for everybody involved and he will be fine now. . . . blah, blah[/quote]

Yeah, his “second chance” allowed him to essentially parlay his former “family home” into a $1000 mo net income for himself, even after defaulting on it for a year!

The fact that you elected not to address any of the points I laid out here shows, once again, that I was right on the money with this one, lol . . .

[sdrealtor]

I dont know why I bother but here is what I wrote. “He has a tenant and his PITI net of the rent he recieves is about $1000.”

You are pathetic and wrong. He doesnt recieve $1,000/month net income and doesnt even get that much in rent for that matter. He’s net cost (PITI) to live there is about $1,000. I addressed all your points and dismissed them all as wrong and you responded by bringing up another one which was wrong. Read this and understand this… he has no income from the property!!! He has an affordable mortgage for his long time home which he will stay in for at least another 10 or 20 years if not longer.

[bearishgurl]

[quote=sdrealtor]. . . Did I ever say he didnt live there? I said he had a tenant (i.e. roomate) so his net cost to live there was $1000 out of pocket.[/quote]

Yes.[quote]…He has a tenant and his PITI net of the rent he recieves is about $1000…[/quote]

[quote=sdrealtor]None of his equity was removed, his ex’s was and it was long before the bubble peaked or burst.[/quote]

Again, shoulda, woulda coulda sold at the peak … everyone has the same problem …

[quote=sdrealtor]I never said he had kids, he doesnt. And he’s not upper middle class for that matter. He’s also orphaned and the only family he has to hold onto the house for is his dog.[/quote]

Guess that’s a good enough reason … for HIM but not for me, tho :={ (inside joke)

[quote=sdrealtor]The mod kept him in his house and that is where he will stay as long as he wants. It was good deal for the lender and a good deal for him.

You were wrong. Please admit it so we can move on. Just say the words. Its not hard. I..WAS…WRONG!!![/quote]

sdr, in the same paragraph you used to describe your friend’s situation, you stated the following:

[quote]FWIW many of the divorcing couples I know have one spouse hold onto the house particularly when there are school age children. Thats usually what divorcing couples in upper middle class communities do in CA.[/quote]

sdr, YOU put your friend’s “story” out there (in dribs and drabs – only after I asked for more detail), ostensibly to demonstrate how great of a mod/cramdown deal he got, correct? Why did you feel a need to brag about his deal here if you didn’t expect Piggs to “dissect it?”

My last question to you, of course, would be, is “How does your friend’s credit score look today?” Of course, if you don’t wish to answer that, I’ll just use my imagination ;=]

As you might surmise, I don’t have an innate need to “sugarcoat” everything so it’s more “palatable.” I can usually be depended on to call a spade a spade when I see or hear of one.

[sdrealtor]

It was not meant to demonstrate what a good deal he got it was to discredit your false statements. I wasnt bragging but rather was putting out a factual example in direct contrast to your statements. I didnt expect Piggs to dissect it but I guess one Pig decided to.

My comment about divorcing upper middle class couples was mocking your blanket steretypical statement about what divorcing couples do in CA. You only see one very depressed corner of the world.

[bearishgurl]

[quote=sdrealtor]It was not meant to demonstrate what a good deal he got it was to discredit your false statements. I wasnt bragging but rather was putting out a factual example in direct contrast to your statements. I didnt expect Piggs to dissect it but I guess one Pig decided to.

My comment about divorcing upper middle class couples was mocking your blanket steretypical statement about what divorcing couples do in CA. You only see one very depressed corner of the world.[/quote]

I see now. You’re apparently not used to having “a few rocks turned up” when you come in here with your “blanket statements” on how everything is peachy keen amongst all your “friends, comrades and clients” in your “perfect world.”

I learned a long time ago that there’s a backstory to everything. That’s why I carry a flashlight on my keyring.

Why am I not surprised to hear the two chief reasons you “shared” this heartwarming story with the Piggs? Hasn’t this been your usual MO around here . . . lol??

You actually have no idea which “corners of the world” I’ve seen.

[Ricechex]

Treehugger—your friend may end up paying if he short sells or forecloses. By losing his job. I work for fed government and they have started some background check on existing contractors. Numerous people have been let go due to having short sales and foreclosures. My supervisor says that government employees are next for these reviews.

[SD Realtor]

Ricechex that is pretty wild stuff. I have heard about stuff like that happening in the private sector but not in government sector.

BG your posts make it sound like principal reductions do not exist. If you actually were practicing in the field in this decade or two decades, I may have a bit inclination to take seriously what you write. However clearly posting online takes much more of your time then whatever your profession is. Personally I wouldn’t make implications about things that I didn’t have hands on (in recent years) experience with, but I guess that is what the internet is all about. I have never been involved with one (principal reduction) but in my mind they would make absolute common sense for the investors holding the paper. The investors have one of three choices as I see it:

1 – Let the buyers default and then sell the home on the open market incurring the cost of the foreclosure process.

2 – Let the buyers short sell.

3 – Work out a program where the buyers get to keep the home and forgive a portion of the original loan amount.

It seems to me that in each of the 3 choices the bottom of bottom lines is that the investors lose money. In either case the home is going to get sold at market value, (even in case number 3) so the investors take a haircut. The real choice here is do the investors think that the buyer is credit worthy and worth the risk? If not then take avenue 1 or 2.

I think trying to pin someone down to every nitty gritty detail about a forgiven loan is ridiculous. I havent seen one personally but I have talked to a few different people who have claimed to have gotten them. I didn’t ask them for their loan docs. Maybe they were bullshitting me and maybe not.

In my mind, it doesnt really matter.

[bearishgurl]

[quote=SD Realtor] . . . BG your posts make it sound like principal reductions do not exist. If you actually were practicing in the field in this decade or two decades, I may have a bit inclination to take seriously what you write. However clearly posting online takes much more of your time then whatever your profession is. Personally I wouldn’t make implications about things that I didn’t have hands on (in recent years) experience with, but I guess that is what the internet is all about. I have never been involved with one (principal reduction) but in my mind they would make absolute common sense for the investors holding the paper. The investors have one of three choices as I see it:

1 – Let the buyers default and then sell the home on the open market incurring the cost of the foreclosure process.

2 – Let the buyers short sell.

3 – Work out a program where the buyers get to keep the home and forgive a portion of the original loan amount.

It seems to me that in each of the 3 choices the bottom of bottom lines is that the investors lose money. In either case the home is going to get sold at market value, (even in case number 3) so the investors take a haircut. The real choice here is do the investors think that the buyer is credit worthy and worth the risk? If not then take avenue 1 or 2.

I think trying to pin someone down to every nitty gritty detail about a forgiven loan is ridiculous. I havent seen one personally but I have talked to a few different people who have claimed to have gotten them. I didn’t ask them for their loan docs. Maybe they were bullshitting me and maybe not.

In my mind, it doesnt really matter.[/quote]

Except YOU, (as a former trustee’s deed buyer?) have never seen them in practice, lol . . .

SDR, you act here as if your 3 choices are cast in stone and have been in practice since the dawn of time. In fact, only option 1 was in use until the recent “millenium boom.” There were (very few) short sales taking place during the “gulf war malaise” (’90-’92) but they were NOT approved if the borrower had 2nd (or subsequent) TDs filed against their property. The shorts were for minimal amts ($7-$15K) and the borrower was promptly issued a 1098 from their lender in the forgiven amt for this “phantom income” taken for the tax year in question (as it SHOULD be).

Your options 2 and 3 are currently in widespread use solely due to lender malaise and the ill-thought-out advent of CA Civil Code section 2923.5 (for “millenium boom” borrowers only). This increases the non-judicial foreclosure process for them from 111 days (min) to 141 days (min). It reads, in pertinent part:

2923.5. (a) (1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after initial contact is made as required by paragraph (2) or 30 days after satisfying the due diligence requirements as described in subdivision (g).
(2) A mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee, beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower’s financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically. . . .

(i) This section shall apply only to mortgages or deeds of trust recorded from January 1, 2003, to December 31, 2007, inclusive, that are secured by owner-occupied residential real property containing no more than four dwelling units. For purposes of this subdivision, “owner-occupied” means that the residence is the principal residence of the borrower as indicated to the lender in loan documents.
(j) This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.

(emphasis added)

Your options 2 and 3 are clearly not in a lender’s best interest. Lenders are screwing themselves royally by allowing FB’s to squat in their properties for many months and often years. As they do so, their losses build up to ridiculous proportions and we ALL pay for this one way or another.

As you are well aware, acc to CA law, lenders are to file a notice of default on a property after its payments are 90 days late in accordance with CA CC sec 2924. Then they are to adhere to a publication schedule laid out in CA Civil Code 2924f and post a Notice of Sale on the property, setting forth a sale date at least 20 days after the the Notice of Default is filed.

Lenders who conduct proper and timely non-judicial foreclosure in CA suffer far less loss compared to the other choices you mention here. Prior to the era of “loose lending,” a 2nd TD holder (investor) who desired to protect their position would typically appear at the courthouse steps at the time of trustees sale and bid one penny over the opening bid (and they very often did)! This bid amount consisted of the principal balance owing + 3-4 mos interest + 3-4 mos late fees + trustee’s fees. Upon the filing of the trustee’s deed in their favor, this (formerly 2nd TD holder) would take on the foreclosing lender’s note “subject to,” and usually evict the defaulted borrower and ready the property for sale. NO ONE PAID ANY WALKING $$ or “KEY $$!” Upon an eviction order, the (then) marshal’s office was sent out to evict the occupants and change the locks! No occupants died or fell off the face of the planet when eviction loomed. They all KNEW THEIR TIME WAS UP and many moved out to friends, relatives or a rental before the eviction date was set (often leaving behind household goods and junk when they had no place to store it).

I myself watched these (lunchtime) auctions regularly for a good many years in the 1980’s.

If all these (more recent) FB’s properties had been dumped on the market as REOs as they became available thru foreclosure (even many at once) and resold to new buyers between 2007 and 2010, ALL RE owners would have been able to see the light at the end of the tunnel by now. As it stands, lenders are coddling these FB’s and allowing them to support lifestyles they have become “accustomed to” but have never been able to actually afford. This is keeping values down for EVERYONE affected by RE values in this state, including longtime owners, free-and-clear owners and honest owners who bought what they could afford with a substantial downpayment and may be sacrificing to keep their payments current.

Many FB’s are now “working the current (failed hodgepodge) system” to get as much “free rent” as possible and also qualify for “key $$,” lol. It’s BS and they don’t deserve it. When word spreads thru word-of-mouth and the internet on the how-to’s of stiffing your lender(s) to the nth degree (even if you can afford to pay your mtg(s)), it just exacerbates the problem.

(yawn) … Nothing has changed. People have always wanted to live in areas they can’t afford and many want as much “cash out” as they can get from their property. It’s just human nature.

The failed practice of “short sales” and “mods” should go by the wayside in favor of non-judicial foreclosure, as it has ALWAYS been, IMO. As UCGal mentioned, that’s what borrowers “signed up for” when they signed the papers to buy properties which were out of their league or signed their (refi) 1st TD, 2nd TD or HELOC to take “cash out.”

[SD Realtor]

Lots of typing but nothing we don’t all know. To make a brief and readable point. We all know how things should be and we all know how they are. sdr pointed out an example of something that happened that was very real. We all know what should and should not be allowed and have posted about that since 2006.

Try not to be a broken record.

[bearishgurl]

[quote=SD Realtor]Lots of typing but nothing we don’t all know. To make a brief and readable point. We all know how things should be and we all know how they are. sdr pointed out an example of something that happened that was very real. We all know what should and should not be allowed and have posted about that since 2006.

Try not to be a broken record.[/quote]

I’m sure you will agree that principal reductions are an anomaly and not common. And I don’t see them becoming common in the future.

and btw, I type 80+ wpm …

[SD Realtor]

See was it that hard to say? That they actually do exist? Very well done. You didn’t even need to take up 4 paragraphs.

[bearishgurl]

[quote=SD Realtor]See was it that hard to say? That they actually do exist? Very well done. You didn’t even need to take up 4 paragraphs.[/quote]

Except that in all YOUR experience, YOU haven’t seen any … and neither have I … and sdr is “claiming” ONE here.

Next time you post something longish, I’ll make it a point to “critique it” if I see it.

Ironically, I don’t see you arguing with any of the points I made here. So where is your problem exactly?

[SD Realtor]

There are no points for me to argue with you about. I made my assertion and that is all I cared about. If you cannot figure it out you will have to reread them. All of the other diatribe wasn’t addressing my point so it wasn’t worth my time to read.

[sdrealtor]

[quote=bearishgurl][quote=SD Realtor]See was it that hard to say? That they actually do exist? Very well done. You didn’t even need to take up 4 paragraphs.[/quote]

Except that in all YOUR experience, YOU haven’t seen any … and neither have I … and sdr is “claiming” ONE here.

Next time you post something longish, I’ll make it a point to “critique it” if I see it.

Ironically, I don’t see you arguing with any of the points I made here. So where is your problem exactly?[/quote]

I’ve actually heard of a bunch of them but my friends is the only one I actually got to review the loan mod agreement on. A couple years ago a client of mine who had done a major kitchen remodel (high end restaurant quality) and home expansion for a couple hundred thousand lost his job and was un/underemployed for over a year while his wife was back in school retraining for a new career in a new industry also. They stopped paying and were in default for over a year. According to the trustee sale default amount they were about $100K behind. About a week before the trustee sale, someone from the bank knocked on his door with a principal reduction deal and loan mod. They were shocked as they had packed up and ready to go. I dont know the details but it was a spectacular deal according to a mutual friend. The wife now has a great new stable/recession proof job and the hubby has a good job again also. FWIW the loan was with one of the more aggressive banks regarding loan mods/short sales etc. I’m not saying these are common but they are out there. Its called loss mitigation and figuring out the best alternative is what they should do.

[Author]

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