[bubba99]

On home number one, I am guessing that the ARM and HELOC are different loans, the Arm is non-recourse. The HELOC may have also been non-recourse up until you tapped it for something other than the original purchase of home number 1.

If the arm and heloc are the same loan, all home 1 loans are recourse.

Home 2 loans are much the same situation. If property 2 has its own purchase money loan for the 1st plus a new HELOC, both may be non-recourse if the HELOC has not been tapped for any money other than the original purchase.

My recollection is that the negative credit item stays on your credit report for 7 years and 7 days from the date the final disposition is recorded. The final date is months later than the original foreclosure date.

The confusing part of the foreclosure is judicial vs. non-judicial remedy. If the property is foreclosed on in a non-judicial action (the bank just takes the property without a judge as allowed in Ca.) they cannot also try to take anything again in another judicial action.

The confusing part is:

If the property is foreclosed on by the 1st mortgage holder, what remedies does the second (HELOC) holder have. Some say none, some say many. Either way, just because the lender has no legal remedy does not mean the debt on recourse loans disappears. A colleciton agency can still try to collect and mess with your credit for even longer thatn the 7 years.

Hope some of this helps.

[bubba99]

Unbelievable, September sales were well below expectation, almost across the board, and the market hits new highs. Walmart cost cutting was the only bright spot and the market rallys on news of “reduced payroll expense”. Bubble does not capture it

[bubba99]

Unbelievable, September sales were well below expectation, almost across the board, and the market hits new highs. Walmart cost cutting was the only bright spot and the market rallys on news of “reduced payroll expense”. Bubble does not capture it

[bubba99]

Can’t speak specifically to US Auctions, but others in the industry have a terrible reputation. Some use shills to up the bidding where necessary (not illegal, just sleazy) and the final bid is subject to acceptance by the owner (usually the bank).

Dozens of stories about people way over bidding on foreclosed property at these auctions. Be careful.

Bubba

[bubba99]

Can’t speak specifically to US Auctions, but others in the industry have a terrible reputation. Some use shills to up the bidding where necessary (not illegal, just sleazy) and the final bid is subject to acceptance by the owner (usually the bank).

Dozens of stories about people way over bidding on foreclosed property at these auctions. Be careful.

Bubba

[bubba99]

My 25 years buying and selling California real estate tells me that:

The first is almost always non-recourse – the only exception I have run into is fraud.

The second is also non-recourse if it was:
1 purchase money
2 not a heloc (with caveats)
3 does not secure any other non-real estate items like tractors, horses, etc.
4 did not exceed the value of the transaction (money out at closing)

The item 2 caveat is that even if it was a HELOC, if no funds other than the purchase have been used, and the language in the contract does not specifically prohibit standard foreclosure, it may still be non-recourse.

If the house is foreclosed on, there is no 1099. There is no loan forgiveness, the foreclosure cancels the debt not forgives it.

If they renegotiate with the lender, and the lender “forgives” part of the loan as part of a third party sale for a reduced amount, the whole forgiven amount is 1099-ed.

The attorney must believe that the second is going to be forgiven, which is not part of a foreclosure, but another sale, or incentive for the owner to stay and keep paying.

Here is a quote from http://eastbayplus.wordpress.com/
(answers all of your questions and give examples)

“The lender is not limited to taking the property back and the borrower may be personally liable on the debt. If the lender chooses to foreclose using a trustee’s sale, then the lender waives the right to go after the borrower for the deficiency despite the fact that the loan was a recourse debt.”

[bubba99]

My 25 years buying and selling California real estate tells me that:

The first is almost always non-recourse – the only exception I have run into is fraud.

The second is also non-recourse if it was:
1 purchase money
2 not a heloc (with caveats)
3 does not secure any other non-real estate items like tractors, horses, etc.
4 did not exceed the value of the transaction (money out at closing)

The item 2 caveat is that even if it was a HELOC, if no funds other than the purchase have been used, and the language in the contract does not specifically prohibit standard foreclosure, it may still be non-recourse.

If the house is foreclosed on, there is no 1099. There is no loan forgiveness, the foreclosure cancels the debt not forgives it.

If they renegotiate with the lender, and the lender “forgives” part of the loan as part of a third party sale for a reduced amount, the whole forgiven amount is 1099-ed.

The attorney must believe that the second is going to be forgiven, which is not part of a foreclosure, but another sale, or incentive for the owner to stay and keep paying.

Here is a quote from http://eastbayplus.wordpress.com/
(answers all of your questions and give examples)

“The lender is not limited to taking the property back and the borrower may be personally liable on the debt. If the lender chooses to foreclose using a trustee’s sale, then the lender waives the right to go after the borrower for the deficiency despite the fact that the loan was a recourse debt.”

[bubba99]

Given I am a glass half empty type of economist, the liquidity meltdown was worse than I ever expected. I did not realize that mortgages were packaged in CMO’s and CDO’s that were then leveraged in REPO’s by “un-educated” hedge fund managers.

I expected prices to fall quicker as interest rates increased, but did not expect financing to all but dry up.

Now I am truly worried about what happens to the dollar – at its lowest level ever – with further interest rate cuts from the FED pending. Could it be that the FED intends to let inflation remedy the mortgage default problem by inflating prices above the “break even” line?

[bubba99]

Doom and Gloom- for sure, but when you speak of the metoric rise and fall of the United States, it all seems possible.

Unlike the European conutries that have a thosand years or more of history, and a long rise to economic power before their ultimate fall – the U.S. peaked in only a few hundred years, and the fall could be a few decades.

We (the U.S.) have exported most of our manufacturing, intellectual property development, and raw material acquition to other countries. We make little except food, and consume a lot. Our government is way in debt and promises to pay impossible benefits in the future to “retired” workers.

I really do not see what can save us from our own desire to destroy our own economy. The dollar has competition for the world currency, the once mighty U.S. military is almost ham strung in two little mideast counties, and we have real competition from China and the rest of the developing world for oil.

Yep, the great era of the United States is almost over.

[bubba99]

Remember how the June and July numbers looked O.K. Then all of a sudden got revised down by “a bunch”. If August follows this pattern, and it looks like it might (good prelim #’s and then a massive down revision)it could mean a real negative.

More troubling is the 5 plus million people who have “left the work force” in previous months” and the 100’s of thousands that left in August for a “stable” unemployment rate. Does anyone really believe that unemployment is under 5% with home construction and banking falling into the pit?

And that may be why 13 ppm is an issue. The numbers are so bad now, that even the lies look bad

[bubba99]

Most in fixed income – Euro bonds like Toyota at 4%. FNME at a variable – now 5%, and the new foreign exchange traded funds like FXE and FXF.

The FXE and FXF are directly tied to the dollar exchange rates. As the dollar declines, the funds increase. Right now the dollar has dropped to .73 euro/dollar – a bad time to get in. Wait for the next dollar rise.

[bubba99]

I know that some of the CDO’s have insured themselves against default, but I can’t find any details about how many, or how much. Or even if the insurer is sufficiently liquid to really payout.

The insurance bankruptcies may be the next shoe to drop.

[bubba99]

Hilarious,

If only the politicians spoke so clearly

[bubba99]

“FHA will begin charging “risk-based” premiums, a move that will enable the agency to help riskier borrowers since they can charge those individuals higher insurance rates. Right now, FHA premiums are a flat 1.5% of the loan, and the change would give the FHA flexibility to charge some borrowers as much as 2.2%.”

I get it, those who cannot pay the market rate 7% will be able to pay 7% with 2.2% insurance on top for a rate of 9.2%

The new quarantees will only bail out those holding the now government guaranteed delinquent mortgages.

And I always thought that cops had the best drugs

Bubba

[bubba99]

“But Las Vegas always reinvents itself, Weinberg says. With “job growth consistently every month, population growth every month, very low unemployment and money still pouring into development on The Strip,” he is anticipating a recovery by late 2008. ”

This kills me – the anticipation of contiuned job growth in Las Vegas when the rest of the country is headed into recession. Where are the vacationeers going to come from?
The newly poor?

Bubba

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