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

[bearishgurl]

[quote=sdrealtor]…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… [/quote]

If this “story” is actually true, then it just bolsters my assertion that lenders are doing it to themselves.

Why should the rest of us have to pay for these people’s remodel work (one way or another)? And moreover, why should we feel sorry for them when one of the parties in this scam was “voluntarily retraining” (for no pay?) after their $200K of remodel work was done and they had bills to pay?? Having a $200K HELOC/2nd TD or newly cashed-out refi is NOT the time one’s life to choose to be to “back in school,” ESP full-time.

There is no excuse for lenders allowing property owners to fall $100K behind in payments, interest and late charges. They have a remedy. A lender who allows themselves to be screwed in this way is not mitigating their damages and then “cries wolf” when their losses are unsustainable.

Do you know if this particular lender rec’d bailout funds from the Federal govm’t, sdr? If so, have they paid any of these funds back??

[sdrealtor]

The wife lost her job and couldnt find employment in her industry. It wasnt voluntary or by choice. Its easy to look at these one by one and say the lenders should have acted differently but they had thousands if not millions to deal with. They couldnt absorb the losses that quickly nor were they set up to deal with loss mitigation on that many this quickly be it loan mod, short sale, deed in lieu, foreclosure etc.

Its obvious to all of us that the lenders did this to themselves. No one is contesting that point. Its now a matter of getting through it all in manner that works best from a macro perspective not a micro one.

[bearishgurl]

[quote=sdrealtor]The wife lost her job and couldnt find employment in her industry. It wasnt voluntary or by choice. Its easy to look at these one by one and say the lenders should have acted differently but they had thousands if not millions to deal with. They couldnt absorb the losses that quickly nor were they set up to deal with loss mitigation on that many this quickly be it loan mod, deed in lieu, foreclosure etc.

Its obvious to all of us that the lenders did this to themselves. No one is contesting that point. Its now a matter of getting through it all in manner that works best from a macro perspective not a micro one.[/quote]

They should have packed up and relocated after seeking and finding work elsewhere after the husband was out of a job. They might have even gotten some “cash for keys!”

Of course, why would they, when they could live a year for free in a much nicer than avg house? That’s $8,333.33 per month (for 12 mos) in mortgage payments, late fees, penalties and any deferred interest!

I don’t buy this BS. As a mtg lender doing biz in CA, all you gotta do is hire a trustee on the 91st day (or 121st day, as the case may be) of default, provide them with a few documents and let them do what they do best. A clerk to get some records together and ONE phone call to make. $100K is an egregious amount to be in default prior to any trustees sale taking place. Because of these FB’s “job travails,” they are essentially getting a $200K remodel of “their” home for 50% off or even free if your “story” is true!!

What about the rest of homeowners out there with existing mtgs who might have “job travails? Or even be underemployed? Should they take out student loans at the age or 45, 50, 55 or 60 and “retrain” . . . lol? Of course, your people HAD to get student loans, because they’re “broke,” remember? At least too broke to make their house payments, right??

If folks like this brag enough like they did to your “mutual acquaintance,” it could cause a lot more homeowners who took cash out to just keep whatever cash is left (if any) or enjoy the fruits of their extensive remodels, “retire” early and begin stiffing their lenders (to see if they can get that proverbial knock on the door offering to make it all better).

The idea of cramdown for those who took “cash out” of their properties defeats the purpose of playing by the rules. Who’s going to if it the only penalty is 3 years lowered FICO score? In this case, at $100,000 forgiven, that’s approx $33K per year that they’re being paid for their lowered FICO score and at $200,000 forgiven, that’s approx $67K yr that they’re being paid for this inconvenience.

To the vast majority of “homeowner-debtors,” the above would be more than adequate compensation to stuff whatever remaining cash-out proceeds they still had under a mattress and begin “squatting.”

You never told us if you knew if this particular lender rec’d “bailout funds” from “we the people” and if so, if they paid any of it back. And if you don’t mind, WHO is the lender who offered them the cramdown??

[SD Realtor]

yeah and what is your name, rank and serial number!

[sdrealtor]

Again lots of false assumptions. They tried to relo and it didnt work out either. They didnt brag and arent proud of what happened. The mutual acquaintance is a childhood friend.

It isnt as easy as you think for the lenders. They owe the investors due diligence to determine the proper course. At one point and possible to this day the major lenders were receiving several thousand homeowner assistance packages a day. They were set up to make loans not to handle loss mitigation on a major scale. Sometimes it makes sense to foreclose asap and sometimes it doesnt. Your blanket statements show your ignorance as to the nature of things.

That lender is long since gone and rolled into another. You have enough information and arent getting anymore.

Just curious as to how much federal taxes you have paid each of the last 5 years? You can round up to the nearest dollar. I just want to know exactly how much you potentially contributed to home debtors.

[bearishgurl]

[quote=sdrealtor]Again lots of false assumptions. They tried to relo and it didnt work out either. They didnt brag and arent proud of what happened. The mutual acquaintance is a childhood friend.

It isnt as easy as you think for the lenders. They owe the investors due diligence to determine the proper course. At one point and possible to this day the major lenders were receiving several thousand homeowner assistance packages a day. They were set up to make loans not to handle loss mitigation on a major scale. Sometimes it makes sense to foreclose asap and sometimes it doesnt. Your blanket statements show your ignorance as to the nature of things.

That lender is long since gone and rolled into another. You have enough information and arent getting anymore.

Just curious as to how much federal taxes you have paid each of the last 5 years? You can round up to the nearest dollar. I just want to know exactly how much you potentially contributed to home debtors.[/quote]

What money did they use for “relo” when they were “broke?” Why didn’t they give “cash for keys” before they reloed? Why didn’t relo work out for them? Weather not as nice there as SoCal?? I could go on …. lol

As you can see, I’m fundamentally against cramdowns for FB’s who took “cash out” and I am not alone.

Your FB’s would have HAD to brag or YOU wouldn’t have heard about this “spectacular deal” (your words) from your “mutual acquaintance.” This bragging creates a systemic distaste for sticking it out in any underwater home-debtors who hear of this supposedly-successful coup.

If you as a defaulted-upon lender are well on your way to $100K in losses in the form of missed payments and your note is secured by a TD in CA, you have NO EXCUSE not to timely foreclose on that trust deed! This is precisely what the foreclosure laws are in place to prevent!

Why does the “realtor crowd” seem to think that “loss mitigation” in the form of cash-for-keys or SS, is preferable to foreclosure when foreclosure has always been the remedy for default in the past?? Duh, let’s see . . . could it be churning?? Cramdown gives underwater homeowners a fresh start (even if as a result of SS) and their credit may recover a bit earlier than if they get foreclosed upon. Cramdown in the form of mod allows FB’s home values to build above water quicker to enable them to pay a RE commission to sell without a SS. A realtor can ostensibly get a commission for a SS and then get the client again as a buyer in 3 yrs. Not so with a foreclosure (unless one is a broker for an REO lender in a particular region). Of course, someone who makes all or part of their living as a “realtor” handling “short sales” would be in favor of cramdown for FB’s whose “cash out” extractions got them into the situation they are in today – forced to SELL!

Wow, now it all makes sense!! Who woulda thunk it?

Why don’t you reveal the particulars of YOUR tax return on here, sdr?

It doesn’t matter how much Federal income tax a homeowner pays to be affected by cramdown for “cash out” FB’s. All they have to do is have a few successful SS transactions in the vicinity of their property (which sold somewhat or substantially lower than if the same property were marketed and sold as an REO) and there you have it – their OWN property is now worth less! Or a few owners on a very homogenous block (speaking of housing inventory here) where some of the owners took “cash out” along the way and are now receiving cramdowns on all their former “home improvement funds.” Even though the cheaply (or free) remodeled properties’ higher sales prices raise the “sold comps” on the block, those owners of the remodeled properties will no doubt receive MORE for their properties upon sale than those who played by the rules, kept their heads down while the “loose-lending” songs were playing and didn’t install gourmet kitchens and the like.

Simply put, it’s nothing more than unjust enrichment to the fools who borrowed into oblivion, causing their OWN properties to be underwater. Now they are whining claiming they are “entitled victims.”

I don’t have a problem per se with cramdown (within reason) used for bubble-era purchasers who have never taken “cash out.”

[sdrealtor]

MOre nonsense and false assumptions abound which is what I expect from you. Your wrong and your not getting any more details.

As for me, what I beleive should be is very different than the system. I just operate in the system and do the best I can. You really know nothing about what makes me tick. I have walked away from transactions that could have paid me more than you likely make in a year because I didnt feel comfortable with them.

The short sales arent pulling your value down. Its clear you feel victimized by them but the market is now speaking across all sales and normalizing values albeit in an inefficient haphazard way but over time we are getting where we should and need to be.

[hslinger]

Lenders have a good understanding of what they can get out of a foreclosure, if they are better off eating $1ook of the principle than foreclosing they will eat the principle. Get over it.

[bearishgurl]

[quote=sdrealtor] . . . The short sales arent pulling your value down. Its clear you feel victimized by them but the market is now speaking across all sales and normalizing values albeit in an inefficient haphazard way but over time we are getting where we should and need to be.[/quote]

My opposition to SS’s and principal reductions isn’t about me. As far as I am aware, there haven’t been any transactions in this regard in my immediate area. There have been a handful of REOs sold around me since 2007, however.

However, I AM concerned about the (likely in the thousands) lurking “shadow inventory” EVERYWHERE whereby one or more NODs were filed on an “owner” 18 mos to 3 years ago and the affected lenders are “sitting on their hands” while the home-debtor is likely still squatting or paying regularly? on an I/O mod or 40-yr mod and never gaining any equity. IMO, these cases are time bombs waiting to explode when the home-debtor realizes his/her mod isn’t getting them anywhere or the reason for taking out their mod is moot (their kids graduate from HS, for instance).

This whole “squat-mod, squat-SS syndrome” is keeping ALL market values down by affecting EVERY owner’s mobility and is and will cause the thousands of longtime prudent owners (like myself) to have to rent our properties out instead of sell in the coming months/years when we want to retire elsewhere. Owners in this situation aren’t asking for the moon. Just a reasonable sales price which reflects a well-maintained property where it was purchased 10 – 45 years ago, the owner did NOT use his/her property as an ATM machine and put perhaps $10-$50K on average of improvements in it in the last ten years. These owners number in the many thousands locally, btw.

Why should an owner like this NOT be compensated for what they actually have IN their property (+ enough for closing costs) if they are NOT bubble-purchasers?? A lot of buyers today seem to think they’re entitled to get all these improvements for “free” but cannot actually do this in practice unless a seller is a distressed position (the buyer is successful in a “bidding war” for an “improved-but-not-stripped” REO or engaged in a very long escrow in a SS). If they are first-time buyers, they typically have NO IDEA of the time and money it takes to even maintain a home properly, let alone make (expensive) improvements to it.

All of this “market distress” (which is now playing out into oblivion due to lender malaise) is completely unnecessary. It’s artificially created and serves no one. We could have been done with these foreclosures 1-2 years ago (yes, ALL of them) and the resulting REO’s could have been long sold. Multiple-property deals in less-desirable newer inland tracts (in high-distress areas) on zero lot lines and in condo complexes could have been sold to REITS who promptly turn them into rental properties. Contrary to the MSM posturing that current and future household formation is/will be low, there has actually been a dearth of inventory in CA coastal counties in recent years. Gen Y wants to live in these areas (that’s where the good jobs are) and most are still renting. I don’t believe that the buyer pool is dwindling. If all the shadow inventory in CA coastal counties was foreclosed on forthwith, it would be repurchased very quickly by Gen Y pent-up demand, IMHO.

Instead, the vast majority of longtime owners are still “stuck” (unless they want to “take a bath”) and their mobility hampered by the “squat-victim mentality” of FB’s and other self-made home-debtors being systematically “coddled” like two-year olds by their lenders.

There’s absolutely no excuse for this in CA. None at all.

[sdrealtor]

“My opposition to SS’s and principal reductions isn’t about me. ”

“This whole “squat-mod, squat-SS syndrome” is keeping ALL market values down by affecting EVERY owner’s mobility and is and will cause the thousands of longtime prudent owners (like myself) to have to rent our properties out instead of sell in the coming months/years when we want to retire elsewhere.”

You could have saved us all several paragraphs none of which I or anyone else read. Those two statements make your point clearly. Its all about you.

[UCGal]

[quote=bearishgurl]
Why should an owner like this NOT be compensated for what they actually have IN their property (+ enough for closing costs) if they are NOT bubble-purchasers?? [/quote]

If they bought 10-45 years ago – they likely will be able to get out their sales price.

But to say they should be GUARANTEED that is to say that housing should “always go up in price”.

I’ve lived in other areas. I’ve seen flat to down markets. A friend bought in a western ‘burb of Philly in the early 90’s. When he sold 10 years later, even though he’d not taken any cash out and had put 20% down – he had to bring cash to the closing. That’s the reality. When I sold my house in a different burb, the increase in price barely covered the closing costs and returned my 20% down. That’s the reality. And I was lucky to get them covered because I’d only owned 8 years…. the market had increased slightly – but not dramatically in the CA bubble style.

The market price is completely unrelated to what the owner has in. Regardless of whether that owner pulled cash out or not… regardless of the size of the down payment they put down. The market price is what a buyer is willing to pay.

Is it fair that my father saw his house increase in price by 20x in 30 years. (29k to 600k). Is it fair that’s it gone down in value since we purchased it 8 years ago? It’s not about fairness. It’s about market value.

Lets say you have 2 houses, identical.. Both people paid the same amount at the same time. One refi’d, pulling cash out. Both did basic maintenance improvements – but nothing dramatic. Their houses should be worth the same if put on the market- without ANY concern over what the owners owe.

[bearishgurl]

[quote=hslinger]Lenders have a good understanding of what they can get out of a foreclosure, if they are better off eating $1ook of the principle than foreclosing they will eat the principle. Get over it.[/quote]

hslinger, it’s a good thing you’re not an “institutional lender.” With this kind of thinking, you would surely lose your a$$ in short order.

Under the current CA foreclosure “statutory scheme” of 111 to 141 days to trustees sale, if a lender lost $100K in “missed payments” (and followed this procedure to the letter), they would have lost $709 to $901 per day!

It is extremely likely that no one has that large of a mortgage. Folks owning multimillion-dollar properties typically paid cash for them :=]

Lenders in CA who have $100K in missed payment losses (such as the one who held the TD(s) and note(s) in sdr’s “squatting-remodeler” example) obviously allowed a jumbo borrower to stiff them into oblivion without exercising their right to complete a timely non-judicial foreclosure. It’s as simple as that.

[bearishgurl]

[quote=sdrealtor]”My opposition to SS’s and principal reductions isn’t about me. ”

“This whole “squat-mod, squat-SS syndrome” is keeping ALL market values down by affecting EVERY owner’s mobility and is and will cause the thousands of longtime prudent owners (like myself) to have to rent our properties out instead of sell in the coming months/years when we want to retire elsewhere.”

You could have saved us all several paragraphs none of which I or anyone else read. Those two statements make your point clearly. Its all about you.[/quote]

Save your own keystrokes. We all know why you’ve consistently sided with the “squat-mod, squat-SS” group. It’s about YOU having any current biz at all and being able to cultivate future client relationships in the douchebag “squat-mod group.”

[bearishgurl]

[quote=UCGal][quote=bearishgurl]
Why should an owner like this NOT be compensated for what they actually have IN their property (+ enough for closing costs) if they are NOT bubble-purchasers?? [/quote]

If they bought 10-45 years ago – they likely will be able to get out their sales price.

But to say they should be GUARANTEED that is to say that housing should “always go up in price”.

I’ve lived in other areas. I’ve seen flat to down markets. A friend bought in a western ‘burb of Philly in the early 90’s. When he sold 10 years later, even though he’d not taken any cash out and had put 20% down – he had to bring cash to the closing. That’s the reality. When I sold my house in a different burb, the increase in price barely covered the closing costs and returned my 20% down. That’s the reality. And I was lucky to get them covered because I’d only owned 8 years…. the market had increased slightly – but not dramatically in the CA bubble style.

The market price is completely unrelated to what the owner has in. Regardless of whether that owner pulled cash out or not… regardless of the size of the down payment they put down. The market price is what a buyer is willing to pay.

Is it fair that my father saw his house increase in price by 20x in 30 years. (29k to 600k). Is it fair that’s it gone down in value since we purchased it 8 years ago? It’s not about fairness. It’s about market value.

Lets say you have 2 houses, identical.. Both people paid the same amount at the same time. One refi’d, pulling cash out. Both did basic maintenance improvements – but nothing dramatic. Their houses should be worth the same if put on the market- without ANY concern over what the owners owe.[/quote]

I understand the current market dictates the price a buyer is willing to pay, UCGal. But prices are depressed everywhere because lenders are still coddling FB’s and various and sundry “home-debtors” and there is no excuse for this in CA.

Let’s narrow the 10-45 yr ownership time frame into 10-15 yrs. Let’s make it about ME (since sdr thinks I’m the ONLY boomer who wants to sell/retire in the next few years, lol). I did NOT pay too much 11+ years ago (I actually rec’d a lg credit in escrow also). Even if I wanted to sell NOW, I need to make a few repairs and improvements before doing so. Whether or not I spend this money, I KNOW I may NOT be able to recover my entire downpayment and my improvement $$ upon sale with closing costs added in. That’s not right! This is happening due to it not being a normal market right now because the local REOs which sold more recently (and should have sold in 2007-08) dragged down the values in my local market. Even though most of those REO sold comps have now become too old to use, we’ve got a buyer pool down here than can now choose from five zip codes (from formerly three). The two “newer zip code” markets are still extremely depressed. In areas of 91915 (7-12 mi away), there are still 6-12 properties on every street which are in various stages of squat-mod, squat-SS or languishing vacant REO (some currently being marketed). Yes, they ALL have HOA/MR, the MR is very high and most have <4000 sf lots. When I bought my current property, these subdivisions did not exist! Young buyers (who mostly grew up in South County) are attracted to them because of the "style" of their construction and most do not realize all that they will be getting into if an offer they make on them should be accepted. Even though their depressed prices are not comps to my property, these heavily-encumbered newish tracts in lizardland siphon young, qualified buyers in the prime stage of homebuying away from my well-established area with large lots.

ALL this distress in 91915 (example here) was caused by FB's. This whole string of developments were built during the "FB era." It started purging in early 2007 and it should be finished with by now. But it’s NOT anywhere near close to being plowed thru solely due to lender malaise!

I will likely leave SD County and I really feel I’m going to have to rent my property out (which will still be okay for a few years) but would prefer to sell and recoup what I have in it. My “target buyer” will likely be a local (or fmr local) who has longtime family on the same street or within a block or two of me. That’s how it works around here.

There are a LOT of owners in my position in SD County. Many thousands. Prospective buyers on this forum have repeatedly complained about lack of well-located “equity sale” inventory on the market in SD County in recent years and this is the reason why. “WE” can’t take a bath and still have a modest retirement so those who are already past retirement age and would have preferred to relocate have remained to await a better day (hopefully before getting to the old and feeble stage). We are able to do this because, unlike the vast majority of current sellers, we CAN!

[sdrealtor]

[quote=bearishgurl][quote=sdrealtor]”My opposition to SS’s and principal reductions isn’t about me. ”

“This whole “squat-mod, squat-SS syndrome” is keeping ALL market values down by affecting EVERY owner’s mobility and is and will cause the thousands of longtime prudent owners (like myself) to have to rent our properties out instead of sell in the coming months/years when we want to retire elsewhere.”

You could have saved us all several paragraphs none of which I or anyone else read. Those two statements make your point clearly. Its all about you.[/quote]

Save your own keystrokes. We all know why you’ve consistently sided with the “squat-mod, squat-SS” group. It’s about YOU having any current biz at all and being able to cultivate future client relationships in the douchebag “squat-mod group.”[/quote]

I use keystroke sparingly compared to you. I dont side with them. I operate in the system as it is and do my best to fix problems within the laws and the system. If things were different I would find a way to succeed in whatever the situation was. Thats what successful people do.

[Author]

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