Foreclosures are like Towlie?

I'm sooo high right now.....

I wish I wasn't one of those suckers who actually makes their mortgage payments.

Should have been born a derelict I guess.

I also hear, people who have lent huge sums against "equity" are forced to drop the loan, because in order to foreclose, they would have to buy out the main loan.

If you buy a house for $400, and it looks like it is worth $750 on paper, you can borrow $300 on the "equity," but if the house falls to $300, they have to come up with $300 cash to foreclose on a house worth $300.

Cheaper to punt than to pour money into a dead horse I mean, house.

Common sense finally hits the banks...

in 1930 banks threw people off their farms - then couldn't sell them: didn't go well for the banks.

Financial smoke-and-mirrors aside, it sounds like a good idea to me, with one little change: If they can't pay the ridiculously-inflated mortgage payments, rent them the place for what they can pay until someone else wants to buy it. What's the use of the place going empty and someone being made homeless and more likely to lose their job and commit crimes to get by?

predatory lending + repackaged securities = epic fail.

Unfortunaltey we are all going to pay for this ponzi scheme, while those who took advantage will walk away rich.

Eh...the main loan is usually non-recourse. Most home equity loans are recourse, so they can take your other stuff if you default. The US housing market is about 40% overvalued right now, many many people are going to jingle-mail before this mess is over.

Eh, why not. The homeowners can take an active role in selling / maintaining the house and negotiate some sort of agreement to keep their credit clean (not unheard of). Not to mention save up a bit to possibly buy the house back themselves.

Depending on the conditions it can be a good thing. Of course, the article is about a bunch of broke guys who just stop paying to see how long they can save money before they absolutely, positively have to move.

"hockeyfool:" In the 1930s people would get thrown off their farms, then about 500 people would show up at the Sheriff's Auction with guns, the former owner would bid $1 and get his farm back.

Will history repeat itself?

Now you know the real reason for gun control!

itdood: predatory lending + repackaged securities = epic fail.

Unfortunaltey we are all going to pay for this ponzi scheme, while those who took advantage will walk away rich.

Yes, but slightly less rich then they would have been if they had just stopped a few months before the economy tanked.

See? The market is adjusting. No problems here.

olddinosaur: I also hear, people who have lent huge sums against "equity" are forced to drop the loan, because in order to foreclose, they would have to buy out the main loan.

If you buy a house for $400, and it looks like it is worth $750 on paper, you can borrow $300 on the "equity," but if the house falls to $300, they have to come up with $300 cash to foreclose on a house worth $300.

Cheaper to punt than to pour money into a dead horse I mean, house.

Lol, buying a house on margin, what a fascinating idea.

12.fl.oz.: Crazy Bacon Legs: I wish I wasn't one of those suckers who actually makes their mortgage payments.

Should have been born a derelict I guess.

Personal responsibility says alot about a person. I am one of those suckers too.

Personal responsibility? I thought they repealed that in the late '90s.

well damn, i'm glad that we're trying to sell the house before we got into any of these problems. hopefully it'll be someone else's problem here soon!

Why don't they just let people keep making the same payments they were when they bought the house. I may be dim but this seems like it's all about people having their monthly payment jacked up by the banks because the buyers got ARMs instead of fixed rate mortgages.

I mean are the banks really LOSING money if they do this as opposed to eating the entire mortgage and let them continue to pay the same rate as when they started?

Crazy Bacon Legs: I wish I wasn't one of those suckers who actually makes their mortgage payments.

Should have been born a derelicte I guess.


FTFY

I still wonder who thought it would be a good idea to give loans to people who couldn't afford them. It's right up there with people who can't afford loans applying for them.

A total goatfark, the whole thing.

hockey fool
same thing happened in the 80s in texas too. real estate market tanked and banks ended up with a huge amount of property they couldn't sell. there were 15 story buildings being used a storage space.

itdood: predatory lending + repackaged securities = epic fail.

Huh?

I was told this was all the fault of people who are such losers that they tried to live the American dream without bothering to be filthy rich GOPers first. But then again the Rush-ites tell me that in America anyone who tries will succeed and only the blatantly lazy philistines who never try to advance themselves are the ones who are poor and they therefore deserve to be killed by stoning so you can feel good about kicking them in the neck every time you get the chance.

Wait! People on Fark said there was no housing bubble! How can people on Fark be wrong?!?

itdood: predatory lending + repackaged securities = epic fail.

Unfortunaltey we are all going to pay for this ponzi scheme, while those who took advantage will walk away rich.

And who would that be?

one of the main problems is that the banks selling these mortgage backed securities insured them, basically saying that they guarantee these people will pay them back when in fact they had no way of backing that up. the housing market was going through the roof and they assumed that these people would be able to use the escalating value of their homes as equity to cover their payments. as the housing bubble burst this became impossible and they were unable to pay. now companies like bear stearns that insured these securities have to pay out on the insurance even though they are losing boatloads of cash. a lot of state governments use institutions like bear stearns to insure their treasuries and when they collapse they have to find somewhere else to do this costing the tax payers tons of cash to get new insurance. it costs us tons of cash to bail them out and it will costs us tons of cash if we don't. these unregulated off the books mortage backed securities have totally farked everything up.

//i think thats how it works
///could be way off though since i have no background in economics

I came in here for:



And I was thoroughly unimpressed.

Well duh... if they kick you out of the house you will stop paying them. Everyone started to treat their houses like ATMs. Now banks are treating your mortgage loan like credit cards. Rack up late fees and hiked interest rates and the buyers become stuck for life.

I feel like such a moran for not buying a million dollar house on a negative amortization loan. Think of all the hookers and blow I could have bought with my "equity" over the last few years.

austin_millbarge: Why don't they just let people keep making the same payments they were when they bought the house. I may be dim but this seems like it's all about people having their monthly payment jacked up by the banks because the buyers got ARMs instead of fixed rate mortgages.

I think a lot of those banks would lose money. Some of the intro ARM rates were teaser promotions. An initial loss for the lender, but then the rate is assured to go back to market level probably plus some extra. And many locked in the borrowers with prepayment penalties. All pretty reasonable, except the lenders really had no experience with that type of product and were pretty careless about ensuring the borrowers would be able to handle the higher payments when they came around.

The borrowers in those cases were pretty stupid too, they both deserve to suffer IMO

"A house is an investment!" "A house is an investment!" Idiots. It's the S&L scandal all over again.

Lack of money gets you in to some strange situations........

HILARIOUS My Broke ass Videos

the_geek: Well duh... if they kick you out of the house you will stop paying them. Everyone started to treat their houses like ATMs. Now banks are treating your mortgage loan like credit cards. Rack up late fees and hiked interest rates and the buyers become stuck for life.

I really really hate to say it. THIS

austin_millbarge: Why don't they just let people keep making the same payments they were when they bought the house. I may be dim but this seems like it's all about people having their monthly payment jacked up by the banks because the buyers got ARMs instead of fixed rate mortgages.

Read a transcript from a speech from the head of the San Francisco fed, he said that the problem wasn't so much that mortgages were reseting, but that property values inflated so much that people basically couldn't afford the mortgage, fixed rate, ARM or no. Exhibit A is that most of the ARM's that went into default did so before _before_ they even reset.

austin_millbarge
Why don't they just let people keep making the same payments they were when they bought the house. I may be dim but this seems like it's all about people having their monthly payment jacked up by the banks because the buyers got ARMs instead of fixed rate mortgages.

I mean are the banks really LOSING money if they do this as opposed to eating the entire mortgage and let them continue to pay the same rate as when they started?

Its a good question but the answer is a little complicated due to federal regulations on asset to lending ratios.

If I think back to my econ and finance classes, banks operate on a ratio of about $10 of assets (generally loans outstanding) per $1 of shareholder equity capital. So a 1% loss of existing loans can wipe out about 10% of shareholder capital (value of the organization).

Lending institutions have federally mandated regulations that require them to hold the aforemention equity against their loan portfolio. Wiping out capital also wipes out part of their ability to originate new loans.

In short, if you are the bank and have dog loans, it stops up the works, preventing you from being able to make new loans. Not advancing the interest rate to reflect the current cost of money means (with adjustable rate mortgages) you are essentially paying your customers (the mortgage lenders) to borrow money from you.

Both are losing propositions for banks interested in staying in business....here's where the government is attempting to step in 1) by lowering prime rates (the monthly payment stays affordable) and 2) by co-signing for these sub-prime loans so that it does not tie up lending institution's assets.

I hope I remember that all correctly.

Anyone ever notice that whenever there's some major catastrophe in this country, the only people that wind up holding the financial bag are the people who weren't involved?

THIS

Am I the only one that thinks this sort of foolishness is complete douchebaggery?

OccamsWhiskers:
I think a lot of those banks would lose money. Some of the intro ARM rates were teaser promotions. An initial loss for the lender, but then the rate is assured to go back to market level probably plus some extra.

Still, isn't it better to get some money, even if it's a small loss, rather than to sit on an empty rapidly depreciating, soon to be burned-to-the-ground property, and hope that someone, sometime might give you something for it?

The borrowers in those cases were pretty stupid too, they both deserve to suffer IMO

Agreed.
Lort of stupid to go around

When I got divorced a year ago, in addition to the cash settlement I gave my wife, I also gave her the house (along with the mortgage).
Today, I spend 6 months of the year laying on the beach in Mexico while she struggles each month to come up with the mortgage payment.
I feel sad for her, sometimes.

potee: Anyone ever notice that whenever there's some major catastrophe in this country, the only people that wind up holding the financial bag are the people who weren't involved?

Well, 50% of the people who will be paying for Iraq were kind of involved.

The one thing not mentioned is that banks have it in their best interest to renegotiate mortgages so that mortgage holders continue to pay something--even if it is not the sky high returns the banks originally wanted.

Remember that mortgages have two functions: rate and time. So why not renegotiate both? If balloon payments are driving holders into bankruptcy, then rearrange them. If the time is too short, lengthen it.

It shows a lack of creativity more than anything else.

bugdog: I still wonder who thought it would be a good idea to give loans to people who couldn't afford them. It's right up there with people who can't afford loans applying for them.

A total goatfark, the whole thing.

never lost your job?

whammer: . If the time is too short, lengthen it.

It shows a lack of creativity more than anything else.

People only live so long...

My mom may loose her home. The problem is that she consolidated. The mortgage is $55,00. The house will not sell for more then $20,000. There is a tear down property across the street from her that is for sale for $2500 with no takers there. Things are getting bad out there folks. She lives in Okmulgee which is 40 miles south of Tulsa Oklahoma.No one wants to make a 100 mile round trip anymore to go to work.

I considered myself to be wise and financially conservative. Then my brother told me about some relocated Eastern Europeans (Czech I think) that work at his plant. They save their money to buy everything, they never borrow anything at all!

He told me of a conversation that went like this:

"Hey Alexandr nice new car."

"Thanks."

"How much is your payment?"

"about $26,000."

"No, your monthly payments."

"I have no payments, I just bought it"

"Holy crap."


I think we need a shiatload of immigrants from those countries to help even out the stupid here.

re-elect_jimmy_carter: never lost your job?

Ah yes all the people who borrowed too much are the victims here...

Crazy Bacon Legs: Should have been born a derelict I guess.

Derelicts aren't born... we are MADE!!!

A Tout Le Monde: I think we need a shiatload of immigrants from those countries to help even out the stupid here.

I thought about doing that with my college education... then I realized that making $10 an hour in a factory with no tuition reimbursement would not provide me the means with saving up the $38,000 I needed.

HempHead:

That cartoon forgot to mention one thing, we outsourced all the manufacturing jobs to Mexico/China.

Before any Kudlow clone starts crowing about borrower personal responsibility as the root of this evil, I would remind you all to think back to every ad screaming "BAD CREDIT? NO CREDIT? NO PROBLEM!" at the population for years. Even that was not enough in the end to get enough suckers into the game, so they ended up letting them borrow more then the cost of the house (thats called a bribe) to be in on their con which goes like this:

1: Sell mortgage + future equity
2: Collect payments which cancel out cash to buyer
3: 2-3 years later: Raise rates, foreclose house (which has increased in value and the borrower can't renegotiate because we already know they have a bad credit score)
4: Go back to step 1

These loans were DESIGNED TO DEFAULT. Don't let anyone tell you otherwise. The banks turned a blind eye to this scam because everyone was making money. Until... glut of homes on the market from foreclosures and overbuilding of new homes, equity going down not up and the scam collapses in on itself.

The_Gallant_Gallstone: Crazy Bacon Legs: Should have been born a derelict I guess.

Derelicts aren't born... we are MADE!!!

A Tout Le Monde: I think we need a shiatload of immigrants from those countries to help even out the stupid here.

I thought about doing that with my college education... then I realized that making $10 an hour in a factory with no tuition reimbursement would not provide me the means with saving up the $38,000 I needed.

I guess it only works after college or with cushy factory jobs, but damn if they aren't smart for doing it.

A Tout Le Monde: I considered myself to be wise and financially conservative. Then my brother told me about some relocated Eastern Europeans (Czech I think) that work at his plant. They save their money to buy everything, they never borrow anything at all!

He told me of a conversation that went like this:

"Hey Alexandr nice new car."

"Thanks."

"How much is your payment?"

"about $26,000."

"No, your monthly payments."

"I have no payments, I just bought it"

"Holy crap."


I think we need a shiatload of immigrants from those countries to help even out the stupid here.

I live in LA and have no payments on my $24k new car. I just bought it.

Stupid is stupid. Smart is smart. It doesn't matter where you are from.