Viral Nature of Walking Away

[sdduuuude]

[quote=davelj]Clearly the most unethical are the folks who can’t pay because they were living well beyond their means.[/quote]

I’ll buy into the “sliding scale” of unethical behavior. It isn’t black and white. I suspect my scale is a little different than yours. I don’t think any walkers-away are very far down the unethical path.

I want to agree that those who stop making payments, then rent out the place are acting unethically, but I’m not sure I can – just because, again, the banks are stupid enough to let it happen.

I just don’t understand why the banks, after two years of this, have not staffed up to a point where they can foreclose more rapidly on these people. I bought the “not enough staff” line last year, but with a high unemployment rate, it seems the banks should come through with some bodies to hammer out these foreclosures. Maybe we need a new thread for that one, though.

[davelj]

[quote=sdduuuude]

I just don’t understand why the banks, after two years of this, have not staffed up to a point where they can foreclose more rapidly on these people. I bought the “not enough staff” line last year, but with a high unemployment rate, it seems the banks should come through with some bodies to hammer out these foreclosures. Maybe we need a new thread for that one, though.[/quote]

Forgetting about the charge-offs, it’s also expensive to have a bunch of people in your OREO department. It’s 100% overhead with no profit. I’m not defending it, just explaining.

Also, remember that most of these mortgages are ultimately held by securitization trusts (MBS). (And I’ve explained this all before.) While the servicer gets reimbursed by the trust for certain costs related to disposing of the asset… a lot of the costs prior to foreclosure are not recouped (like all of the extra manpower used to call these deadbeats over and over again). So, servicers are losing their asses because their little 50 bps of servicing fees – which is contractually agreed upon and great when times are good – doesn’t leave anything left over for profit when your costs are going through the roof. So, THEY are reticent to hire more folks even though it isn’t their credit loss – it’s their operating loss.

Also, it’s important to realize that when you hear about BofA (or whatever Big Bank) putting properties on the MLS, you have to distinguish between what they’re holding on their balance sheets and what their serving arm is doing. A lot of folks don’t know there’s a difference and don’t make that distinction.

[davelj]

[quote=sdduuuude]

I just don’t understand why the banks, after two years of this, have not staffed up to a point where they can foreclose more rapidly on these people. I bought the “not enough staff” line last year, but with a high unemployment rate, it seems the banks should come through with some bodies to hammer out these foreclosures. Maybe we need a new thread for that one, though.[/quote]

Forgetting about the charge-offs, it’s also expensive to have a bunch of people in your OREO department. It’s 100% overhead with no profit. I’m not defending it, just explaining.

Also, remember that most of these mortgages are ultimately held by securitization trusts (MBS). (And I’ve explained this all before.) While the servicer gets reimbursed by the trust for certain costs related to disposing of the asset… a lot of the costs prior to foreclosure are not recouped (like all of the extra manpower used to call these deadbeats over and over again). So, servicers are losing their asses because their little 50 bps of servicing fees – which is contractually agreed upon and great when times are good – doesn’t leave anything left over for profit when your costs are going through the roof. So, THEY are reticent to hire more folks even though it isn’t their credit loss – it’s their operating loss.

Also, it’s important to realize that when you hear about BofA (or whatever Big Bank) putting properties on the MLS, you have to distinguish between what they’re holding on their balance sheets and what their serving arm is doing. A lot of folks don’t know there’s a difference and don’t make that distinction.

[davelj]

[quote=sdduuuude]

I just don’t understand why the banks, after two years of this, have not staffed up to a point where they can foreclose more rapidly on these people. I bought the “not enough staff” line last year, but with a high unemployment rate, it seems the banks should come through with some bodies to hammer out these foreclosures. Maybe we need a new thread for that one, though.[/quote]

Forgetting about the charge-offs, it’s also expensive to have a bunch of people in your OREO department. It’s 100% overhead with no profit. I’m not defending it, just explaining.

Also, remember that most of these mortgages are ultimately held by securitization trusts (MBS). (And I’ve explained this all before.) While the servicer gets reimbursed by the trust for certain costs related to disposing of the asset… a lot of the costs prior to foreclosure are not recouped (like all of the extra manpower used to call these deadbeats over and over again). So, servicers are losing their asses because their little 50 bps of servicing fees – which is contractually agreed upon and great when times are good – doesn’t leave anything left over for profit when your costs are going through the roof. So, THEY are reticent to hire more folks even though it isn’t their credit loss – it’s their operating loss.

Also, it’s important to realize that when you hear about BofA (or whatever Big Bank) putting properties on the MLS, you have to distinguish between what they’re holding on their balance sheets and what their serving arm is doing. A lot of folks don’t know there’s a difference and don’t make that distinction.

[davelj]

[quote=sdduuuude]

I just don’t understand why the banks, after two years of this, have not staffed up to a point where they can foreclose more rapidly on these people. I bought the “not enough staff” line last year, but with a high unemployment rate, it seems the banks should come through with some bodies to hammer out these foreclosures. Maybe we need a new thread for that one, though.[/quote]

Forgetting about the charge-offs, it’s also expensive to have a bunch of people in your OREO department. It’s 100% overhead with no profit. I’m not defending it, just explaining.

Also, remember that most of these mortgages are ultimately held by securitization trusts (MBS). (And I’ve explained this all before.) While the servicer gets reimbursed by the trust for certain costs related to disposing of the asset… a lot of the costs prior to foreclosure are not recouped (like all of the extra manpower used to call these deadbeats over and over again). So, servicers are losing their asses because their little 50 bps of servicing fees – which is contractually agreed upon and great when times are good – doesn’t leave anything left over for profit when your costs are going through the roof. So, THEY are reticent to hire more folks even though it isn’t their credit loss – it’s their operating loss.

Also, it’s important to realize that when you hear about BofA (or whatever Big Bank) putting properties on the MLS, you have to distinguish between what they’re holding on their balance sheets and what their serving arm is doing. A lot of folks don’t know there’s a difference and don’t make that distinction.

[davelj]

[quote=sdduuuude]

I just don’t understand why the banks, after two years of this, have not staffed up to a point where they can foreclose more rapidly on these people. I bought the “not enough staff” line last year, but with a high unemployment rate, it seems the banks should come through with some bodies to hammer out these foreclosures. Maybe we need a new thread for that one, though.[/quote]

Forgetting about the charge-offs, it’s also expensive to have a bunch of people in your OREO department. It’s 100% overhead with no profit. I’m not defending it, just explaining.

Also, remember that most of these mortgages are ultimately held by securitization trusts (MBS). (And I’ve explained this all before.) While the servicer gets reimbursed by the trust for certain costs related to disposing of the asset… a lot of the costs prior to foreclosure are not recouped (like all of the extra manpower used to call these deadbeats over and over again). So, servicers are losing their asses because their little 50 bps of servicing fees – which is contractually agreed upon and great when times are good – doesn’t leave anything left over for profit when your costs are going through the roof. So, THEY are reticent to hire more folks even though it isn’t their credit loss – it’s their operating loss.

Also, it’s important to realize that when you hear about BofA (or whatever Big Bank) putting properties on the MLS, you have to distinguish between what they’re holding on their balance sheets and what their serving arm is doing. A lot of folks don’t know there’s a difference and don’t make that distinction.

[scaredyclassic]

i guess davelj is serious but it’s difficult to believe he really believes this. It just sounds like crazyland.

Query: if there really really were this moral component, why not really put it unambiguously in the contract.

“I promise” is a bit vague and incomplete, especially when the doc is read as a whole, with default provision (compare your wedding vows, which typically don’t includee an “in the event of divorce ” clause at the end (but since you haven’t been married davelj, I wuld understand if you weren’t aware of that). Would a minister agree to marry you if you put a default provision in your wedding vows? Hell no! Because it would be seen as a vioaltion of the PROMISE you were undertaking. a real violation.

But if you want the contract to contain this moral obligation, there are lawyers writing this thing, why not have them draft it in, clearly, unambiguously, addressing the existence of the defaul provision:

For instance, why couldn’t the contract read: “I promise to pay ____. I understand that I have taken on my solemn oath to make a good faith effort to continue to make payments in spite of the available default rememdy, and that it would be a breach of my ethical duties under this contract to fail to continue to pay so long as I have in excess of $5,000 in assets. I hereby affirm an oath on the heads and souls of my wife/kids/loved ones. should i fail to make these payments willfully, I am scum. Literally, pond scum, Human feces.

I acknowledge that it would be just if I got cancer, and my children died, and my testicles rotted if i failed to wilfully make a payment. I should roast in hell if I breach this solemn ethical duty.

I should be subject to ridicule and I hereby asset to the publication of this document with my photo in my local newspaper so that appropriate levels of public opprobrium can be heaped in my direction”.

I understand that the Bank has a team of paid praying professional who will pray for bad things to happen to me if I breach this solemn oath and that a just god would ensure their prayers are swiftly carried out.

Strong contract language like that. Make the signer initial each terrible thing that should justly happen to him if he doesn’t make payment. Make him swear to his lord (jesus christ, etc.) that he will make these payments if at all possible come hell or highwater.

The reason there is no such language in the contract? Can you guess why?

Because there is no “moral component” to the contract davelj! that’s a component that we’re just making up after the fact. It may be “understood”, hoped for as a matter of historical practice. But contracts are interpreted by the four corners of the document, not what you would like them to mean, and the single word “promise” here is to vague to carry all the freight you’re trying to load upon it.

[scaredyclassic]

i guess davelj is serious but it’s difficult to believe he really believes this. It just sounds like crazyland.

Query: if there really really were this moral component, why not really put it unambiguously in the contract.

“I promise” is a bit vague and incomplete, especially when the doc is read as a whole, with default provision (compare your wedding vows, which typically don’t includee an “in the event of divorce ” clause at the end (but since you haven’t been married davelj, I wuld understand if you weren’t aware of that). Would a minister agree to marry you if you put a default provision in your wedding vows? Hell no! Because it would be seen as a vioaltion of the PROMISE you were undertaking. a real violation.

But if you want the contract to contain this moral obligation, there are lawyers writing this thing, why not have them draft it in, clearly, unambiguously, addressing the existence of the defaul provision:

For instance, why couldn’t the contract read: “I promise to pay ____. I understand that I have taken on my solemn oath to make a good faith effort to continue to make payments in spite of the available default rememdy, and that it would be a breach of my ethical duties under this contract to fail to continue to pay so long as I have in excess of $5,000 in assets. I hereby affirm an oath on the heads and souls of my wife/kids/loved ones. should i fail to make these payments willfully, I am scum. Literally, pond scum, Human feces.

I acknowledge that it would be just if I got cancer, and my children died, and my testicles rotted if i failed to wilfully make a payment. I should roast in hell if I breach this solemn ethical duty.

I should be subject to ridicule and I hereby asset to the publication of this document with my photo in my local newspaper so that appropriate levels of public opprobrium can be heaped in my direction”.

I understand that the Bank has a team of paid praying professional who will pray for bad things to happen to me if I breach this solemn oath and that a just god would ensure their prayers are swiftly carried out.

Strong contract language like that. Make the signer initial each terrible thing that should justly happen to him if he doesn’t make payment. Make him swear to his lord (jesus christ, etc.) that he will make these payments if at all possible come hell or highwater.

The reason there is no such language in the contract? Can you guess why?

Because there is no “moral component” to the contract davelj! that’s a component that we’re just making up after the fact. It may be “understood”, hoped for as a matter of historical practice. But contracts are interpreted by the four corners of the document, not what you would like them to mean, and the single word “promise” here is to vague to carry all the freight you’re trying to load upon it.

[scaredyclassic]

i guess davelj is serious but it’s difficult to believe he really believes this. It just sounds like crazyland.

Query: if there really really were this moral component, why not really put it unambiguously in the contract.

“I promise” is a bit vague and incomplete, especially when the doc is read as a whole, with default provision (compare your wedding vows, which typically don’t includee an “in the event of divorce ” clause at the end (but since you haven’t been married davelj, I wuld understand if you weren’t aware of that). Would a minister agree to marry you if you put a default provision in your wedding vows? Hell no! Because it would be seen as a vioaltion of the PROMISE you were undertaking. a real violation.

But if you want the contract to contain this moral obligation, there are lawyers writing this thing, why not have them draft it in, clearly, unambiguously, addressing the existence of the defaul provision:

For instance, why couldn’t the contract read: “I promise to pay ____. I understand that I have taken on my solemn oath to make a good faith effort to continue to make payments in spite of the available default rememdy, and that it would be a breach of my ethical duties under this contract to fail to continue to pay so long as I have in excess of $5,000 in assets. I hereby affirm an oath on the heads and souls of my wife/kids/loved ones. should i fail to make these payments willfully, I am scum. Literally, pond scum, Human feces.

I acknowledge that it would be just if I got cancer, and my children died, and my testicles rotted if i failed to wilfully make a payment. I should roast in hell if I breach this solemn ethical duty.

I should be subject to ridicule and I hereby asset to the publication of this document with my photo in my local newspaper so that appropriate levels of public opprobrium can be heaped in my direction”.

I understand that the Bank has a team of paid praying professional who will pray for bad things to happen to me if I breach this solemn oath and that a just god would ensure their prayers are swiftly carried out.

Strong contract language like that. Make the signer initial each terrible thing that should justly happen to him if he doesn’t make payment. Make him swear to his lord (jesus christ, etc.) that he will make these payments if at all possible come hell or highwater.

The reason there is no such language in the contract? Can you guess why?

Because there is no “moral component” to the contract davelj! that’s a component that we’re just making up after the fact. It may be “understood”, hoped for as a matter of historical practice. But contracts are interpreted by the four corners of the document, not what you would like them to mean, and the single word “promise” here is to vague to carry all the freight you’re trying to load upon it.

[scaredyclassic]

i guess davelj is serious but it’s difficult to believe he really believes this. It just sounds like crazyland.

Query: if there really really were this moral component, why not really put it unambiguously in the contract.

“I promise” is a bit vague and incomplete, especially when the doc is read as a whole, with default provision (compare your wedding vows, which typically don’t includee an “in the event of divorce ” clause at the end (but since you haven’t been married davelj, I wuld understand if you weren’t aware of that). Would a minister agree to marry you if you put a default provision in your wedding vows? Hell no! Because it would be seen as a vioaltion of the PROMISE you were undertaking. a real violation.

But if you want the contract to contain this moral obligation, there are lawyers writing this thing, why not have them draft it in, clearly, unambiguously, addressing the existence of the defaul provision:

For instance, why couldn’t the contract read: “I promise to pay ____. I understand that I have taken on my solemn oath to make a good faith effort to continue to make payments in spite of the available default rememdy, and that it would be a breach of my ethical duties under this contract to fail to continue to pay so long as I have in excess of $5,000 in assets. I hereby affirm an oath on the heads and souls of my wife/kids/loved ones. should i fail to make these payments willfully, I am scum. Literally, pond scum, Human feces.

I acknowledge that it would be just if I got cancer, and my children died, and my testicles rotted if i failed to wilfully make a payment. I should roast in hell if I breach this solemn ethical duty.

I should be subject to ridicule and I hereby asset to the publication of this document with my photo in my local newspaper so that appropriate levels of public opprobrium can be heaped in my direction”.

I understand that the Bank has a team of paid praying professional who will pray for bad things to happen to me if I breach this solemn oath and that a just god would ensure their prayers are swiftly carried out.

Strong contract language like that. Make the signer initial each terrible thing that should justly happen to him if he doesn’t make payment. Make him swear to his lord (jesus christ, etc.) that he will make these payments if at all possible come hell or highwater.

The reason there is no such language in the contract? Can you guess why?

Because there is no “moral component” to the contract davelj! that’s a component that we’re just making up after the fact. It may be “understood”, hoped for as a matter of historical practice. But contracts are interpreted by the four corners of the document, not what you would like them to mean, and the single word “promise” here is to vague to carry all the freight you’re trying to load upon it.

[scaredyclassic]

i guess davelj is serious but it’s difficult to believe he really believes this. It just sounds like crazyland.

Query: if there really really were this moral component, why not really put it unambiguously in the contract.

“I promise” is a bit vague and incomplete, especially when the doc is read as a whole, with default provision (compare your wedding vows, which typically don’t includee an “in the event of divorce ” clause at the end (but since you haven’t been married davelj, I wuld understand if you weren’t aware of that). Would a minister agree to marry you if you put a default provision in your wedding vows? Hell no! Because it would be seen as a vioaltion of the PROMISE you were undertaking. a real violation.

But if you want the contract to contain this moral obligation, there are lawyers writing this thing, why not have them draft it in, clearly, unambiguously, addressing the existence of the defaul provision:

For instance, why couldn’t the contract read: “I promise to pay ____. I understand that I have taken on my solemn oath to make a good faith effort to continue to make payments in spite of the available default rememdy, and that it would be a breach of my ethical duties under this contract to fail to continue to pay so long as I have in excess of $5,000 in assets. I hereby affirm an oath on the heads and souls of my wife/kids/loved ones. should i fail to make these payments willfully, I am scum. Literally, pond scum, Human feces.

I acknowledge that it would be just if I got cancer, and my children died, and my testicles rotted if i failed to wilfully make a payment. I should roast in hell if I breach this solemn ethical duty.

I should be subject to ridicule and I hereby asset to the publication of this document with my photo in my local newspaper so that appropriate levels of public opprobrium can be heaped in my direction”.

I understand that the Bank has a team of paid praying professional who will pray for bad things to happen to me if I breach this solemn oath and that a just god would ensure their prayers are swiftly carried out.

Strong contract language like that. Make the signer initial each terrible thing that should justly happen to him if he doesn’t make payment. Make him swear to his lord (jesus christ, etc.) that he will make these payments if at all possible come hell or highwater.

The reason there is no such language in the contract? Can you guess why?

Because there is no “moral component” to the contract davelj! that’s a component that we’re just making up after the fact. It may be “understood”, hoped for as a matter of historical practice. But contracts are interpreted by the four corners of the document, not what you would like them to mean, and the single word “promise” here is to vague to carry all the freight you’re trying to load upon it.

[peterb]

This subject was discussed ad nauseum on this site about 2 years ago. I stand by my original statement that I made back then.”There will come a time in the not too distant future where public opinion will shift and people who continue to pay on their underwater mortgage will be considered “suckers”.

[peterb]

This subject was discussed ad nauseum on this site about 2 years ago. I stand by my original statement that I made back then.”There will come a time in the not too distant future where public opinion will shift and people who continue to pay on their underwater mortgage will be considered “suckers”.

[peterb]

This subject was discussed ad nauseum on this site about 2 years ago. I stand by my original statement that I made back then.”There will come a time in the not too distant future where public opinion will shift and people who continue to pay on their underwater mortgage will be considered “suckers”.

[peterb]

This subject was discussed ad nauseum on this site about 2 years ago. I stand by my original statement that I made back then.”There will come a time in the not too distant future where public opinion will shift and people who continue to pay on their underwater mortgage will be considered “suckers”.

[Author]

Posts