[ucodegen]

LA_R – I don’t think that freezing the interest rate or in some other way modifying an existing purchase money loan would automatically change the characterization of the loan from non-recourse to recourse.
The ones I have seen are really a no-cost refi, not a change in loan terms. It is put forth (advertised) as a loan modification, but paperwork looks like a no-cost refi… some even advise that you take a little money out (cash out) for emergency cushion. This cash out also allows them to charge an extra 0.25% to 0.5% on the rate. Admittedly, I have not seen all the ‘mods’ being done..

Certainly anyone who agrees to a modification would want to pay close attention to any mod agreement they may be required to sign to determine if there is any language regarding recourse.

As always Caveat Emptor..

[ucodegen]

LA_R – I don’t think that freezing the interest rate or in some other way modifying an existing purchase money loan would automatically change the characterization of the loan from non-recourse to recourse.
The ones I have seen are really a no-cost refi, not a change in loan terms. It is put forth (advertised) as a loan modification, but paperwork looks like a no-cost refi… some even advise that you take a little money out (cash out) for emergency cushion. This cash out also allows them to charge an extra 0.25% to 0.5% on the rate. Admittedly, I have not seen all the ‘mods’ being done..

Certainly anyone who agrees to a modification would want to pay close attention to any mod agreement they may be required to sign to determine if there is any language regarding recourse.

As always Caveat Emptor..

[ucodegen]

LA_R – I don’t think that freezing the interest rate or in some other way modifying an existing purchase money loan would automatically change the characterization of the loan from non-recourse to recourse.
The ones I have seen are really a no-cost refi, not a change in loan terms. It is put forth (advertised) as a loan modification, but paperwork looks like a no-cost refi… some even advise that you take a little money out (cash out) for emergency cushion. This cash out also allows them to charge an extra 0.25% to 0.5% on the rate. Admittedly, I have not seen all the ‘mods’ being done..

Certainly anyone who agrees to a modification would want to pay close attention to any mod agreement they may be required to sign to determine if there is any language regarding recourse.

As always Caveat Emptor..

[ucodegen]

The banks should pursue charges against these people for felony vandalism. Until the house is completely paid off, the bank is co-owner in the property. Damage in the amount excess of $5000 can make it a felony (up from a misdemeanor).

To do so, the banks would need to move real quick after NOD/NOT and monitor the property(something they are not used to doing). They should also notify that they current ‘owners’ will be charged with criminal vandalism and may see the inside of a jail cell should this happen before they vacate. They should notify the present ‘owners’ that they should notify them when they vacate, and if after vacating, they attempt to return and/or vandalize the property, they can be charged with trespass as well as potentially criminal vandalism.

Everybody else pays indirectly for this type of behavior in the form of higher interest rates and insurance rates as well as the reluctance of people to buy foreclosed properties and the potential of blight to the neighborhood. This does not account for the ecological toll in the form of a large volume of solid waste that results from this (replacing refrigerators, flooring, walls.. etc).

This behavior is very much like that of a spoiled child throwing a tantrum. Very good example these people are showing to any children they have. They deserve all the trouble the get from their children.

[ucodegen]

The banks should pursue charges against these people for felony vandalism. Until the house is completely paid off, the bank is co-owner in the property. Damage in the amount excess of $5000 can make it a felony (up from a misdemeanor).

To do so, the banks would need to move real quick after NOD/NOT and monitor the property(something they are not used to doing). They should also notify that they current ‘owners’ will be charged with criminal vandalism and may see the inside of a jail cell should this happen before they vacate. They should notify the present ‘owners’ that they should notify them when they vacate, and if after vacating, they attempt to return and/or vandalize the property, they can be charged with trespass as well as potentially criminal vandalism.

Everybody else pays indirectly for this type of behavior in the form of higher interest rates and insurance rates as well as the reluctance of people to buy foreclosed properties and the potential of blight to the neighborhood. This does not account for the ecological toll in the form of a large volume of solid waste that results from this (replacing refrigerators, flooring, walls.. etc).

This behavior is very much like that of a spoiled child throwing a tantrum. Very good example these people are showing to any children they have. They deserve all the trouble the get from their children.

[ucodegen]

The banks should pursue charges against these people for felony vandalism. Until the house is completely paid off, the bank is co-owner in the property. Damage in the amount excess of $5000 can make it a felony (up from a misdemeanor).

To do so, the banks would need to move real quick after NOD/NOT and monitor the property(something they are not used to doing). They should also notify that they current ‘owners’ will be charged with criminal vandalism and may see the inside of a jail cell should this happen before they vacate. They should notify the present ‘owners’ that they should notify them when they vacate, and if after vacating, they attempt to return and/or vandalize the property, they can be charged with trespass as well as potentially criminal vandalism.

Everybody else pays indirectly for this type of behavior in the form of higher interest rates and insurance rates as well as the reluctance of people to buy foreclosed properties and the potential of blight to the neighborhood. This does not account for the ecological toll in the form of a large volume of solid waste that results from this (replacing refrigerators, flooring, walls.. etc).

This behavior is very much like that of a spoiled child throwing a tantrum. Very good example these people are showing to any children they have. They deserve all the trouble the get from their children.

[ucodegen]

The banks should pursue charges against these people for felony vandalism. Until the house is completely paid off, the bank is co-owner in the property. Damage in the amount excess of $5000 can make it a felony (up from a misdemeanor).

To do so, the banks would need to move real quick after NOD/NOT and monitor the property(something they are not used to doing). They should also notify that they current ‘owners’ will be charged with criminal vandalism and may see the inside of a jail cell should this happen before they vacate. They should notify the present ‘owners’ that they should notify them when they vacate, and if after vacating, they attempt to return and/or vandalize the property, they can be charged with trespass as well as potentially criminal vandalism.

Everybody else pays indirectly for this type of behavior in the form of higher interest rates and insurance rates as well as the reluctance of people to buy foreclosed properties and the potential of blight to the neighborhood. This does not account for the ecological toll in the form of a large volume of solid waste that results from this (replacing refrigerators, flooring, walls.. etc).

This behavior is very much like that of a spoiled child throwing a tantrum. Very good example these people are showing to any children they have. They deserve all the trouble the get from their children.

[ucodegen]

The banks should pursue charges against these people for felony vandalism. Until the house is completely paid off, the bank is co-owner in the property. Damage in the amount excess of $5000 can make it a felony (up from a misdemeanor).

To do so, the banks would need to move real quick after NOD/NOT and monitor the property(something they are not used to doing). They should also notify that they current ‘owners’ will be charged with criminal vandalism and may see the inside of a jail cell should this happen before they vacate. They should notify the present ‘owners’ that they should notify them when they vacate, and if after vacating, they attempt to return and/or vandalize the property, they can be charged with trespass as well as potentially criminal vandalism.

Everybody else pays indirectly for this type of behavior in the form of higher interest rates and insurance rates as well as the reluctance of people to buy foreclosed properties and the potential of blight to the neighborhood. This does not account for the ecological toll in the form of a large volume of solid waste that results from this (replacing refrigerators, flooring, walls.. etc).

This behavior is very much like that of a spoiled child throwing a tantrum. Very good example these people are showing to any children they have. They deserve all the trouble the get from their children.

[ucodegen]

You are all missing the point; even if you kept your nose clean and only made loans to people with 800 credit scores with 20% down, the underlying value of the assets that you lent on have been severely affected by your competitors.

Not if you didn’t use inflated appraisals and used your own appraiser as a bank. Banks make money two ways on a loan. They make it on the carry spread (difference between the cost of the money they are lending out and the amount they charge) for the loans they keep and they make it on finance fees and securitization charges on the ones they sell.

A lender has every right to refuse to lend $400,000 on a $500,000 property because they feel the underlying value is really $350,000. They don’t have to follow the ‘crowd’. Let some other lender take the risk. Unfortunately they got greedy and picked up those loans; promptly securitizing them, labeling them AAA and selling them to get rid of the risk. The lenders (many, not all) forgot that by law, if they misstate the risk or fundimentals on the CDO/MBSs, the originating lender can be forced to repurchase the securitized loan package. The lenders that did not forget about the law formed wholly owned subsidiaries to funnel the money through, using the corporate shield to protect themselves from liability.

[ucodegen]

You are all missing the point; even if you kept your nose clean and only made loans to people with 800 credit scores with 20% down, the underlying value of the assets that you lent on have been severely affected by your competitors.

Not if you didn’t use inflated appraisals and used your own appraiser as a bank. Banks make money two ways on a loan. They make it on the carry spread (difference between the cost of the money they are lending out and the amount they charge) for the loans they keep and they make it on finance fees and securitization charges on the ones they sell.

A lender has every right to refuse to lend $400,000 on a $500,000 property because they feel the underlying value is really $350,000. They don’t have to follow the ‘crowd’. Let some other lender take the risk. Unfortunately they got greedy and picked up those loans; promptly securitizing them, labeling them AAA and selling them to get rid of the risk. The lenders (many, not all) forgot that by law, if they misstate the risk or fundimentals on the CDO/MBSs, the originating lender can be forced to repurchase the securitized loan package. The lenders that did not forget about the law formed wholly owned subsidiaries to funnel the money through, using the corporate shield to protect themselves from liability.

[ucodegen]

You are all missing the point; even if you kept your nose clean and only made loans to people with 800 credit scores with 20% down, the underlying value of the assets that you lent on have been severely affected by your competitors.

Not if you didn’t use inflated appraisals and used your own appraiser as a bank. Banks make money two ways on a loan. They make it on the carry spread (difference between the cost of the money they are lending out and the amount they charge) for the loans they keep and they make it on finance fees and securitization charges on the ones they sell.

A lender has every right to refuse to lend $400,000 on a $500,000 property because they feel the underlying value is really $350,000. They don’t have to follow the ‘crowd’. Let some other lender take the risk. Unfortunately they got greedy and picked up those loans; promptly securitizing them, labeling them AAA and selling them to get rid of the risk. The lenders (many, not all) forgot that by law, if they misstate the risk or fundimentals on the CDO/MBSs, the originating lender can be forced to repurchase the securitized loan package. The lenders that did not forget about the law formed wholly owned subsidiaries to funnel the money through, using the corporate shield to protect themselves from liability.

[ucodegen]

You are all missing the point; even if you kept your nose clean and only made loans to people with 800 credit scores with 20% down, the underlying value of the assets that you lent on have been severely affected by your competitors.

Not if you didn’t use inflated appraisals and used your own appraiser as a bank. Banks make money two ways on a loan. They make it on the carry spread (difference between the cost of the money they are lending out and the amount they charge) for the loans they keep and they make it on finance fees and securitization charges on the ones they sell.

A lender has every right to refuse to lend $400,000 on a $500,000 property because they feel the underlying value is really $350,000. They don’t have to follow the ‘crowd’. Let some other lender take the risk. Unfortunately they got greedy and picked up those loans; promptly securitizing them, labeling them AAA and selling them to get rid of the risk. The lenders (many, not all) forgot that by law, if they misstate the risk or fundimentals on the CDO/MBSs, the originating lender can be forced to repurchase the securitized loan package. The lenders that did not forget about the law formed wholly owned subsidiaries to funnel the money through, using the corporate shield to protect themselves from liability.

[ucodegen]

You are all missing the point; even if you kept your nose clean and only made loans to people with 800 credit scores with 20% down, the underlying value of the assets that you lent on have been severely affected by your competitors.

Not if you didn’t use inflated appraisals and used your own appraiser as a bank. Banks make money two ways on a loan. They make it on the carry spread (difference between the cost of the money they are lending out and the amount they charge) for the loans they keep and they make it on finance fees and securitization charges on the ones they sell.

A lender has every right to refuse to lend $400,000 on a $500,000 property because they feel the underlying value is really $350,000. They don’t have to follow the ‘crowd’. Let some other lender take the risk. Unfortunately they got greedy and picked up those loans; promptly securitizing them, labeling them AAA and selling them to get rid of the risk. The lenders (many, not all) forgot that by law, if they misstate the risk or fundimentals on the CDO/MBSs, the originating lender can be forced to repurchase the securitized loan package. The lenders that did not forget about the law formed wholly owned subsidiaries to funnel the money through, using the corporate shield to protect themselves from liability.

[ucodegen]

@SD Realtor

My belief is not that eradicating non recourse will solve the problem and my apologies for not conveying it properly.
I would have to disagree with you on this (eradicating non-recourse part of the statement). We got into this problem with the banks/loan originators feeling that the increasing property value would cover any loss even with the fact that the loans were non-recourse. The property would give them back their money on foreclosure. The lenders made the bad assumption that the current rate of property appreciation would continue unabated. Making loans recourse means that all loans have the potential to return the money to the lender, continuing the problem.
For responsible lending to exist, the lenders have to realize that they can loose their skin in the game, not just the borrower. This way, the lender will be forced to do their due diligence.

No doubt adding curbs, regulation to the lending and institutional side of the equation will be most helpful.
I think this would be the most useful, and on more than just the lending side of the equation. I want to see legal regulations along the lines of series 3 and 7 SEC licenses for real estate agents, brokers and mortgage brokers (same with the disciplinary portion) I would also like to see LTV restrictions on loans much like the margin restrictions for stocks (Though not necessarily at the same %LTV weighting. Houses and stocks are both assets)

[ucodegen]

@SD Realtor

My belief is not that eradicating non recourse will solve the problem and my apologies for not conveying it properly.
I would have to disagree with you on this (eradicating non-recourse part of the statement). We got into this problem with the banks/loan originators feeling that the increasing property value would cover any loss even with the fact that the loans were non-recourse. The property would give them back their money on foreclosure. The lenders made the bad assumption that the current rate of property appreciation would continue unabated. Making loans recourse means that all loans have the potential to return the money to the lender, continuing the problem.
For responsible lending to exist, the lenders have to realize that they can loose their skin in the game, not just the borrower. This way, the lender will be forced to do their due diligence.

No doubt adding curbs, regulation to the lending and institutional side of the equation will be most helpful.
I think this would be the most useful, and on more than just the lending side of the equation. I want to see legal regulations along the lines of series 3 and 7 SEC licenses for real estate agents, brokers and mortgage brokers (same with the disciplinary portion) I would also like to see LTV restrictions on loans much like the margin restrictions for stocks (Though not necessarily at the same %LTV weighting. Houses and stocks are both assets)

[Author]

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