Black Monday - Foreclosure Apocalypse?

If that were the case, that they wanted land, what really bothers me about that,
is it gives imminent domain to the banks.

So my land goes way up in value in the future, they can drop the ball and say pay now. Hopefully there is some kind of protection in place to keep this from happening .

Originally posted by jtma508
What possible reason would they have for doing this? The US and arguably the global economy is teetering on the brink. The government is taking extraordinary measures to calm the population and stabilize the economy. Any mass foreclosure movement would dump tens or hundreds of thousands of additional properties into a housing market that is already glutted with unsold properties. This would tank whatever sliver of activity currently exists in the housing market. The banks would then end up with massive numbers of unsold properties on their books likely causing many to fail. I just don't see any reason why any bank would take this course if it could be avoided.

Why do you suppose that this is not possible with these Banks, expect them to do even worse, expect the unexpected from them, do not think that they care a hoot about your tree to piss....Remember that these Banks together with their other con-job companies have already plotted this long ago, and have borrowed this Poker Game cash from other Foreign Banks, like Northern Rock...who closed down.....these are not Banks, they are Banksters.

Originally posted by jsobecky
reply to post by jprophet420

 

Correct me if I'm wrong, but mortgage insurance is pretty useless in the first couple of years you pay for it.

For instance, if your mortgage is $1000/month and you lose your job, the policy will only pay about $75 - $100 towards your mortgage. It only becomes an effective "tool" after you've invested quite a few years (and dollars) into the policy.

That's the way credit card insurance policies work, at least. Mortgage policies may be different.

If you have credit cards, and you use them for non emergencies, you arent handling your money efficiently. Had to adress that first and foremost.

As far as the mortgage is concerned, I said unable to work, not lost your job. there is a HUGE difference legally and in basic responsibility. You cant expect to live at the same level as you were when you were working if you're not. Period. I went from working on particle accelerators to flipping burgers, I KNOW the drill. I meant long term disablility insurance, so that if you are unable to work you can keep your house.

Originally posted by jtma508
What possible reason would they have for doing this?

Because

A.) They KNOW they'll be bailed out.

B.) options still exist for them. There are still people who have lots of money who could buy these houses and rent them or flip them. There's lots of money to be made in real estate as we know

But ya gota have the house first.


C.) I'm not sure how it works with the housing industry, but i know that Credit Card companies are able to "write off" any charge-off accounts that have been deliquent more than 90 days. In this "write-off" they are basically able to say it never happened, they never lost the money, and they dont have to report it as a loss in their earnings (atleast that is how i understand it...)

So if the mortgage lenders are able to do the same, they would be "netting" huge profits by allowing these homes to foreclose, and be sold to other people.

keep in mind too, even if the house gets sold to someone else, the possibility of the original borrower STILL owing money to the mortgage lender is very very high.
You add in a little bit of time, and a judgement in a court of law, and now the mortgage lender can start attaching annual interest penalties until the loan is paid off in full.



In summary:

If the mortage industy is anything like the credit card industry - they make most of their money off people who can't pay.

I know that sounds stupid

But think about it:

If you're late on a payment, what happens?

Late fee. Interest rate hike

If that late fee puts you over your limit, what happens?
Overlimit fee. Interest rate hike

over the course of 6 months, its possible to increase a 1500 dollar credit limit to 3200 dollars by 'standard' fee's in the lending industry by simply not paying.

Now the lender WILL seek judgement against you for 3200, instead of the originally lent 1500


and if my assumptions are correct, the "mortgage lenders" are doing the same damn thing.

A policy such as this would be a disaster for everyone,when banks foreclose on a house,the property taxes are no longer paid to local municipalities until the house is sold to a new buyer.So the local municipality would go broke,as well as the former owners who lose their house,then their credit rating,job,car...everything.
Can you say "Agenda 21"????

Originally posted by jtma508
What possible reason would they have for doing this? The US and arguably the global economy is teetering on the brink. The government is taking extraordinary measures to calm the population and stabilize the economy. Any mass foreclosure movement would dump tens or hundreds of thousands of additional properties into a housing market that is already glutted with unsold properties. This would tank whatever sliver of activity currently exists in the housing market. The banks would then end up with massive numbers of unsold properties on their books likely causing many to fail. I just don't see any reason why any bank would take this course if it could be avoided.

Exactly. Not even the the incompetant (exceedingly highly paid tax avoiding) fools who run these institutions are that dumb! However, there is a problem that is appearing in the UK. When people miss a payment extreme pressure is being applied resulting in folks losing their homes. This is a consequence of upper management pressure to balance books and lower management implementing literal interpretations. Now, the bull# that flows in all corporations between levels ensures this dumb action will carry on long enough to cause a severe problem.

reply to post by jprophet420

Originally posted by jprophet420
If you have credit cards, and you use them for non emergencies, you arent handling your money efficiently. Had to adress that first and foremost.

That's true, except that in these days of $4 gas more people are living on plastic than ever before.

And a TV ad states that the average family has *8* credit cards! About 6 too many, imo.

Originally posted by jprophet420
As far as the mortgage is concerned, I said unable to work, not lost your job. there is a HUGE difference legally and in basic responsibility. You cant expect to live at the same level as you were when you were working if you're not. Period. I went from working on particle accelerators to flipping burgers, I KNOW the drill. I meant long term disablility insurance, so that if you are unable to work you can keep your house.

Oh, LTD insurance, Well, I fully agree with you - LTD insurance can save your butt! It pays a percentage of your income in the event of disability.

Credit card insurance *does* cover loss of job, however.

If this is happening (and I'm not saying it isn't), my feelings would be this:

House is mortgaged. Buyer pays mortgage for 'x' number of years. Now buyer has a problem and the bank forecloses. The bank does not keep the house; the bank sells the house at an auction, required by law. The money from the auction is then divided up, first to the costs of auction/foreclosure, second to the lien-holders (banks), lastly any remaining must by law be returned to the original buyer. Of course, there's never any left for the buyer, but that still means the house has to be liquidated in order to verify that.

Does anyone here realize just how easy it is to set up a holding company? A few hundred dollars to a lawyer for incorporation and a shoddy office somewhere is all it takes. Now the bankers can bid on the foreclosed homes using their holding company and buy them for a song. The bank is now out of the picture with almost everything that was 'paid' for the house, and if that's not enough, they can still go after any assets the original buyer has.

The holding company (owned by the banker) now has the house. The bank has all the money they could get. There is one fast and hard rule about real estate: they can't make any more of it. Regardless of the economy, there is only a set amount of land. People will have to live somewhere, so eventually a buyer who has gone through foreclosure has to rent the house.

This is a hedge against an economic collapse. If the bank fails while holding a mortgage, they will get pennies on the dollar (not even the Feds can really bail them out completely) and that's it. Plus, the dollars they get will be losing value like mad. This way, they (the bankers, not the bank) have a tangible asset that will always have value and will always be able to generate income.

I remember hearing about how wealthy families around here made their money after the Great Depression. Doctors would take whatever they could get in return for their services, usually land. As the economy grew again, the land appreciated and soon they were wealthy. Looks to me like this little bit of knowledge hasn't been forgotten by those in power. I am amazed that anyone would sign a note that allowed interest rates to adjust or that could be called in on demand. Both, IMO, are foolhardy.

I'm glad I have no mortgage.

TheRedneck

Forclosures are not good for a bank. Banks do not make money off forclosures, they often loose money.

Just to put it into perspective, the current "BAD" housing market is as follows:

-Bob buys home and takes out mortgage for 500k. Home is worth 500k so he is using 100% financing.

-Home depereciates quickly due to the volitale market, with in one year home is work 400k.

-Bob was approved for loan based on a no income verification loan, and Bob exagerated his income a little bit. Bob was always having a hard time paying his mortgage, but always paid on time because he enjoyed his 500k home. Bob is very upset his home is not worth what he paid for it. Bob cannot sell his home and payoff the mortgage. If Bob needed to move he would be stuck selling the house for 400k, and still needs to pay the bank back the extra 100k that he would owe after the sale.


In this situation the best outcome for the bank is for Bob to keep his house and keep making payment. The bank still gets all their money bank, and interest. Worst case situation would be as follows:

-Bob doesn't want to take a 100k hit, and since he is struggling to pay his mortgage anyways Bob will do what he heard a lot of home owners are doing. Bob is going to "walk-away". Bob would much rather take a forclosure hit on his credit report than pay 100k. Bob becomes a renter for a few years, perhaps up to seven years(the forclosure will fall off the credit report in about 7-10 years).

-The bank sells Bob's house. Forclosure properties are about 20% under market value. Home sells for 320k. the bank has to eat around 180k depending on how much Bob paid down his mortgage during their relationship.


This is what is happening all over the country, people are preferring for bank to eat their properties loss in value, rather then them. I don't blame them. I'm just pointing this out so you can see how foolish it would be for a bank to forclose on everyone's homes. I didn't even get into the legal fees involved in a forclosure, that is probably another 10k or so.


If the home is worth more than the mortgage, then forclosing may be benificial for the bank. The bank maybe able to take the home, sell it, pay off what the buyer owned, and then some. This situation is going to be very rare since the home owner can always sell the property before the bank forcloses. It takes about 6 months of non-payment to start forclosure, and another 6 to finish it. Anyone should be able to sell the home with in a year, esp if they can discount it because they don't have a 100% financed loan to take care of.

So in summary, it isn't worth it for a bank to forclose. In the off-situation where a bank may benifit from a forclosure, they would need to be dealing with a home owner who didn't care, or didn't know what was going on.

-

reply to post by prestonberryworth
In a 'normal' market, you are exactly right. But today's market is far from normal.

Housing prices are declining steadily, with no end in sight. In your example, that $500K home may be worth only $300K. At auction, it may only bring $150K. After auction expenses, the bank may see only $125K of their original $500K investment (plus, of course, the payments that have already been made).

That is not bad business, that is terrible business. Which is why I say, maybe this time it is not the buyers who are really walking away, maybe it's the banks. There's a difference between a company and a company owner. The company does not have to eat. If it collapses, there will be no funeral, no mourners, no one left to cry over it. It is an artificial entity, created solely to produce income for a person (or a group of people).

With the failing dollar, why would anyone want to own more dollars? Some of the richest investors are already trading their dollars for euros. So what is keeping the bankers from simply walking away from their banks, preferring to have a company with more tangible assets?

So let the bank fail. It was probably going to happen eventually anyway, with all the sub-prime lending and questionable business practices. The bankers will already have their fortunes safe in real estate, which was bought for a song. That $150K they bought the auctioned home for? That's well below market value, enough so that any future depreciation will be negligible. Also, any fall in the economy will be followed by a rebound eventually, so when that rebound happens, they will be in prime position to take full advantage of it.

It's a win/win situation for the bankers. The problem is that it's a lose/lose situation for the average investor who owned stock in the bank, for the now-homeless homeowner, and for the average Joe who doesn't have the advantage of moving his fortune to a safer place.

TheRedneck

Maxmars and The Redneck have it right--sure, in the short term banks lose on foreclosures. Empty houses, regardless of estimated value, are essentially worthless right now. But, in five to ten years all that land they now control could be worth twice what they loaned out in the first place.

Money will always be paper and promises. Land will always be Land.

And when paper and promises mean something again, those who have massive land holdings will be in a position to make billions.

And that's assuming they'd sell it purely for residential and/or commercial development. There's a Hell of a lot of land in the US that has never been fully explored for usable (and profitable) resources--oil, natural gas, precious minerals, etc. Flint, Michigan might be sitting on top of a huge vein of Uranium and nobody noticed because nobody checked. (Just an example; I'm not suggesting it's actually the case, just that there's a reasonable possibility that there are untapped resources in the US that are untapped because nobody explored it before and now someone lives on it, so it's too late.)

TheRedneck,

You make some good points. In this market it does appear that not only home owners are "walking-away", but also CEO's are also "walking-away".(I'm looknig at you countrywide). The thing is, things aren't always as they appear.

Countrywide's CEO Angelo Mozilo made the mistake of letting his company write too many bad-loans. These bad-loans eventually caught up to the company when home owners stopped paying. At that point the only options Countrywide had was to go bankrupt, or be bought out.

Yes, Angelo Mozilo is now mega-wealthy, but he was mega-wealthy before Countrywide tanked anyways. I doubt his intentions were to screw over home owners and low-level investors. I'm sure the dude feels like a failure, but I'm sure the bed full of money is pretty comforting.

I guess one thing to note is that CEO's, and top level executives take a lot of pride in their companies. No CEO wants their company to fail. No *GOOD* CEO is going to walk from their company because times get tuff. I know it seems unfair that Countrywide can tank and their CEO gets $136 million. It is what what it is.

Lets all remember that a mortgage is a loan. A loan is a gaurentee to pay someone back, plus any interest and fees. A loan is not "I'll pay you back, but only if my house goes up, or keeps it's value". The banks should have really done their due-diligence prior to writing the loan, to make sure all borrowers have a history, and ability to repay. The borrower should have really taken responcibility for their home purchase, and the risk that is involved in real estate.

I guess I'm playing devil's advocate, but I don't think bad banks are to blame for out problem, well atleast not in full. I really the lazy, greedy average americain is to blame. In the 90's it was racking up as much credit card debt as you could, then filling for bankruptcy and getting to keep all of your fancy products. Now it is racking up home debt and hoping to walk away from your house, while still keeping all your fancy products and gizmo.

The problem isn't banks, it is consumerism. STOP SPENDING MONEY YOU DON'T HAVE PEOPLE. It isn't the banks fault you can't repay. You signed the loan also.

So thats my rant for now

reply to post by prestonberryworth
I think we both misunderstood each others' positions a bit. My take on this is simply that it is a precursor, not some well-thought-out scheme from 50 years ago to defraud the people. The people are simply in the way, and yes, you're right, it is their fault. They borrowed the money.

I guess one thing to note is that CEO's, and top level executives take a lot of pride in their companies. No CEO wants their company to fail. No *GOOD* CEO is going to walk from their company because times get tuff. I know it seems unfair that Countrywide can tank and their CEO gets $136 million. It is what what it is.

You're right, no one wants to walk away from their business and let it fail. But what homeowner wants to walk away from their home and let the bank have it? Sometimes there is simply no other way out, and going down with one's ship is not such a romantic ideal when your feet are getting wet.

Lets all remember that a mortgage is a loan. A loan is a gaurentee to pay someone back, plus any interest and fees. A loan is not "I'll pay you back, but only if my house goes up, or keeps it's value". The banks should have really done their due-diligence prior to writing the loan, to make sure all borrowers have a history, and ability to repay. The borrower should have really taken responcibility for their home purchase, and the risk that is involved in real estate.

All I can say is But that's in the past now, and we have to tackle things from where we are at present.

I guess I'm playing devil's advocate, but I don't think bad banks are to blame for out problem, well atleast not in full. I really the lazy, greedy average americain is to blame. In the 90's it was racking up as much credit card debt as you could, then filling for bankruptcy and getting to keep all of your fancy products. Now it is racking up home debt and hoping to walk away from your house, while still keeping all your fancy products and gizmo.

The problem isn't banks, it is consumerism. STOP SPENDING MONEY YOU DON'T HAVE PEOPLE. It isn't the banks fault you can't repay. You signed the loan also.

Again, Nothing wrong with a little devil's advocating now and then.

I tend to look on these issues as more a milestone of where we are heading than a place to put blame. If the CEOs of the banks are hedging their bets on an economic collapse, I'd say that's reason for concern. And as we both seem to agree on, that's the only thinking that makes sense. Anything else is, well, economic stupidity. Bank CEOs are not known for their stupidity.

TheRedneck

Originally posted by prestonberryworth
TheRedneck,

You make some good points. In this market it does appear that not only home owners are "walking-away", but also CEO's are also "walking-away".(I'm looknig at you countrywide). The thing is, things aren't always as they appear.

Countrywide's CEO Angelo Mozilo made the mistake of letting his company write too many bad-loans. These bad-loans eventually caught up to the company when home owners stopped paying. At that point the only options Countrywide had was to go bankrupt, or be bought out.

Yes, Angelo Mozilo is now mega-wealthy, but he was mega-wealthy before Countrywide tanked anyways. I doubt his intentions were to screw over home owners and low-level investors. I'm sure the dude feels like a failure, but I'm sure the bed full of money is pretty comforting.

I guess one thing to note is that CEO's, and top level executives take a lot of pride in their companies. No CEO wants their company to fail. No *GOOD* CEO is going to walk from their company because times get tuff. I know it seems unfair that Countrywide can tank and their CEO gets $136 million. It is what what it is.

I'm not so sure. I recall reading that very few CEOs actually have an investment stake in the companies they run, and common practice is to stack the board with yes-men and others who also have little or no financial stake besides their paychecks and/or bonuses--thus there is little incentive to be truly successful aside from stroking one's own ego. I have heard many, many calls for regulations to put more power in the hands of shareholders, giving them more of a say in how a given company is run (makes sense if you ask me, since the shareholders essentially own the company) and also in how the CEO and Board are compensated.

Lets all remember that a mortgage is a loan. A loan is a gaurentee to pay someone back, plus any interest and fees. A loan is not "I'll pay you back, but only if my house goes up, or keeps it's value". The banks should have really done their due-diligence prior to writing the loan, to make sure all borrowers have a history, and ability to repay. The borrower should have really taken responcibility for their home purchase, and the risk that is involved in real estate.

I guess I'm playing devil's advocate, but I don't think bad banks are to blame for out problem, well atleast not in full. I really the lazy, greedy average americain is to blame. In the 90's it was racking up as much credit card debt as you could, then filling for bankruptcy and getting to keep all of your fancy products. Now it is racking up home debt and hoping to walk away from your house, while still keeping all your fancy products and gizmo.

Something that needs to be noted here: We're not talking about a few loan officers who didn't do their homework.

Banks deliberately lobbied for the right to issue these high-risk loans.

See, banks did this because they "sell" loans off to be reinvested in various markets, usually through high-risk "hedge funds". I'm not completely sure of the details myself, but I'll explain it in the simple terms used to explain it to me:

Banks wanted more profit, especially in the short-term. Now banks have a certain amount of operating and investing capital; all companies do on some level. But there is the pull of quick easy money that is hard to resist, even for those who should definitely know better.

Enter hedge funds. Essentially, banks wanted quick capital to invest in risky ventures with the idea they'd make many, many times their investments back. The way they saw to get that capital was through loans to people with shaky credit histories and limited money for a down-payment. They actively lobbied Congress to alter regulations allowing them to make these risky loans, then issued them, sold them, used the money for these "iffy" investments, and hoped the money would come pouring in before the whole thing blew up in their faces. Look at it like using a high-interest credit card to enter into a million-dollar poker game with a $10K buy-in, confident you'll win it all back and then some--only to lose it all on your first hand.

The problem isn't banks, it is consumerism. STOP SPENDING MONEY YOU DON'T HAVE PEOPLE. It isn't the banks fault you can't repay. You signed the loan also.

But it IS the bank's fault they pursued people they knew were unlikely to be able to fully repay. In this they share responsibility. It's just like abortion: Most abortion laws affect the woman only, when it takes 2 to concieve. The man who knocked the woman up can usually walk away scot-free.

Now--should people live within their means? Absolutely. But if you're going to blame consumers for signing the papers, you'd also better take a long, hard look at the banks who wrote those papers in the first place.

The fact they deliberately had Congress change regulations allowing them to do this, then actively advertised to and pursued the business of those high-risk borrowers in a scheme to try and make easy money means they share at least an equal amount of the blame.

maybe they are trying to force people in the south and Florida to buy new houses in other states because all those areas are gonna be disaster magnets. Have you seen the projections for how much of Florida will be underwater in some years down the road? Its scary. I tell my friends there to move somewhere else. Then in the south you have hurricanes and flooding.

I'm shocked that they are trying to rebuild New Orleans, its below sea level, and sea level is only gonna go up in the years ahead. Move to the mountains people. higher elevation is your friend.

I never did understand why people move to areas that are prone to disaster.

I guess its the survival gene in me.

Ama

Fact

WHO ARE THE REAL OWNERS OF THE FEDERAL RESERVE?

1. Rothschilds of London and Berlin
2. Lazard Brothers of Paris
3. Israel Moses Seaf of Italy
4. Kuhn, Loeb & Co. of Germany and New York
5. Warburg & Company of Hamburg, Germany
6. Lehman Brothers of New York
7. Goldman, Sachs of New York
8. Rockefeller Brothers of New York

All of the above listed men are Jews. Note that ALL are also "foreign" with established headquarters in Europe even the ones in New York are only "branches" of European establishments. There are an additional three hundred people, approximately, mostly relatives, who hold stock or shares, and they comprise the ownership of this monster, the massive wealth of which is beyond man's comprehension.

www.iamthewitness.com...