Where do you think most will walk to?
Anyone know any REITs that do low income housing...
Anyone know any REITs that do low income housing...
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Will walking away turn into an epidemic?
- Thread starter cgtrader
- Start date
Quote from JB3:
I agree the big boys got a lot of these guys by the balls when they changed the bankruptcy laws a few years back. It's much harder to just walk away nowadays. But that doesn't seem to deter people from trying. :eek:
I think that's because a lot of them don't have a choice or aren't smart enough to figure out a choice.
Quote from gnome:
If the defaulting mortgagee has other assets, the lender can strive to collect. If there are no assets, the defaulter gets "1099-ed", then has to deal with the IRS for income tax due. Bankruptcy would be the only true relief.
I just to clarify these terms for everybody as they are often switched around and used incorrectly:
1/Mortgagor is the borrower( homeowner)
2/Mortgagee is the lender
Quote from TraderZones:
Anyone who earns an income will learn what "garnishing their salary means." Creditors rarely have mercy, and they have endless resources at their disposal.
They have to find you first.
If you have a stable job, you wont be hard to pin down. But that isnt the profile of the majority of the people who will be walking away..
NY PostQuote from ElCubano:
people are doing exactly that...walking away ...and if 1000's upon 1000's keep doing it...I find it hard to believe that banks will have endless resources to do anything...considering they are trying to stay afloat themselves....
4/13/08
FORECLOSURE ST.
By SUSANNAH CAHALAN
***
Welcome to New York City's foreclosure capital - tree-lined Blackford Avenue on Staten Island.
On two tiny blocks in the Port Richmond neighborhood, eight houses are in foreclosure and five other families have received formal notices from banks informing them they are in danger of the same.
In the first quarter of 2008, 174 foreclosures were filed on Staten Island - the highest per-capita rate of any borough, up from 34 foreclosures in the same period last year, according to data compiled by PropertyShark.com, a real-estate search Web site.
As the city finds itself in the maw of the national housing crisis, these buyers - many lured by subprime and other adjustable-rate loans to buy houses out of their price range - are now losing their homes.
And it's on Blackford Avenue where foreclosure is bearing down on more families than anywhere else in the city.
Of the street's 13 crisis homes, most are newly built two-story town houses, worth $300,000 to $400,000.
These homeowners saddled themselves with debt, some taking out subprime loans almost $100,000 more than the price of their homes to cover interest payments. And they did so often with hardly any down payment.
"It seems that everyone's going through housing problems around here," said Desiree Figueroa, whose 172 Blackford Ave. townhouse was seized by Option One Mortgage and sold last week.
Figueroa, 42, and her husband, José, 41, bought their $445,000 three-bedroom, two-story dream home less than two years ago from a developer. Neither had owned property before. They support four children with Desiree working as a waitress in Brooklyn and José as a UPS driver.
"I never thought they'd let me have the house because my husband and I have such bad credit," Desiree explained.
But the couple was approved for a subprime loan with a down payment of only $5,000.
They took out a first and a second mortgage. When home prices in the area dropped, the Figueroas quickly owed more than their house was worth.
Six months after signing on the dotted line, the Figueroas realized they could not keep up with the $3,700 monthly payments.
"I couldn't pay my mortgage, pay my bills and get groceries - so we gave up on the house," she said.
The bank took over the house, and it was resold - for $375,000.
Now the Figueroas - who rent a smaller home across the street at 153 Blackford Ave. for $1,700 a month - are filing for bankruptcy because they can't pay back the money they owe to the mortgage company.
"We got suckered into it and looked like idiots," she said. "I'm not buying another house anytime soon."
MaryAnne Fix, 54, is lucky to be outside the block's foreclosure crisis, living at 98 Blackford Ave. in her mother's mortgage-free home.
"I was shocked at the number of houses that went up for sale in the past year," said Fix of the 10 homes on the market.
As home prices continue to plummet and houses stay on the market longer, Fix said neighbors were nervous about their future.
"I've never seen so many people moving in and out," Fix said. "The whole neighborhood is going down. There's more crime these days, more people hanging out on street corners. Some people are worried."
scahalan@nypost.com
Quote from gnome:
There is a high level of misunderstanding on ET about the ease/difficulty of "walking away" from a mortgage.
In most states, a personal residence mortgage is a full recourse loan.... (I keep hearing about how in California it is not, but I still find it hard to believe.)
In California the lender may not pursue a deficiency judgment if the loan is a purchase money loan (the loan used to buy the house as opposed to a refinance).
Further, in California, if the lender wished to avail themselves of a non-judicial foreclosure as opposed to a judicial foreclosure (one done in the courts), he may not pursue a deficiency judgment. California has what they call a "one-action rule". If you take the house non-judicially, you may not pursue the deficiency judgment. The reason this is important is that pursuing a deficiency judgment in court may take a year or two, cost large sums in legal fees, not to mention the possibility that once you obtain judgment, the borrower may file bankruptcy, thereby nullifying your ability to collect on the judgment anyway. So borrowers opt for the quicker, and less costly non-judicial foreclosure. I have personally never seen a lender do a judicial foreclosure in California.
So the summary for California is that lenders may never pursue a deficiency judgment for a purchase money loan. The may only pursue a deficiency judgement for a refinancing type of loan, except that if they do, they must forego the benefits of the non-judicial foreclosure, and opt for the more expensive, time-consuming judicial method. This ain't gonna happen.
OldTrader
Quote from cgtrader:
Could this be the start of the whole credit system being crushed by the consumers that hold credit?
Will all credit be broken, nobody pays back, what are the lenders going to do about it?
Fannie warns homeowners who walk away
http://www.sfgate.com/cgi-bin/article/comments/view?f=/c/a/2008/04/13/RE34101D2M.DTL
What the lenders will do about it is what they have already done...run to the federal government for a bailout.
That said, what they will have to do in the future is make responsible loans. For instance, you require a down payment. People who have something to lose don't typically walk away. Check their credit. People with a history of paying usually continue to pay. And finally, make sure there is stable employment with ample income to repay the loan.
Note: none of these standards were typically followed on subprime loans.
OldTrader
Quote from cgtrader:
Could this be the start of the whole credit system being crushed by the consumers that hold credit?
Will all credit be broken, nobody pays back, what are the lenders going to do about it?
Fannie warns homeowners who walk away
http://www.sfgate.com/cgi-bin/article/comments/view?f=/c/a/2008/04/13/RE34101D2M.DTL
lol more nonsense
\\
there is no credit crisis
Quote from gnome:
The "way it works" is that the bank writes off the difference between what the property brings at sale/auction and the mortgage owed.
For the bank to be able to "write off the loss", he in effect 1099s the mortgagee for the difference.. and the defaulting mortgagee has to pay taxes on it like it was "income received".
There is legislation proposed which would allow certain mortgagees to NOT be "1099-ed" for the differential. Should that pass, however, somebody else pays for it. Can you guess who?
BTW... debt always, ALWAYS, gets accounted for by SOMEBODY... And under current U.S. Economic Facism, the wrong person(s) often unfairly pay for the greed and mistakes of others.
I think you may confusing two things here.....Walking away and a short sale. If you "walk away" from a house that is underwater, you still owe the balance plus fees. That IS NOT A SHORT SALE. In a short sale, the LENDER AGREES to accept less than owed as payment in full. In the past, they 1099'd you for the balance. A recently passed law may allow the forgiven debt to be tax free ..........
WASHINGTON - Homeowners whose mortgage debt was partly or entirely forgiven during 2007 may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their 2007 federal income tax return, according to the Internal Revenue Service.
Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on IRS.gov
<i>"If the defaulting mortgagee has other assets, the lender can strive to collect. If there are no assets, the defaulter gets "1099-ed", then has to deal with the IRS for income tax due. Bankruptcy would be the only true relief."</i>
Big picture: the majority of people do not care about future consequences.
Here's what they know for sure: mtg payments cannot be made when food, clothing and transportation are taken care of. Deal with survival today, and walk away. That's the first step. Whatever happens next will be dealt with as it comes.
All of the other consequences may hurt later, but the masses do not care about future problems when faced with immediate crisis. They will walk away today, then resign to face comes what may.
Net result is a mass exodus just getting started. See other real estate bubbles in the past for what lies ahead. Threats of asset seizure and IRS issues are moot... they will not stop the majority from abandoning houses which are upside-down. Banks will still be saddled with a glut of overpriced houses while seeking recourse from people with nil assets to seize.
That's the reality
Big picture: the majority of people do not care about future consequences.
Here's what they know for sure: mtg payments cannot be made when food, clothing and transportation are taken care of. Deal with survival today, and walk away. That's the first step. Whatever happens next will be dealt with as it comes.
All of the other consequences may hurt later, but the masses do not care about future problems when faced with immediate crisis. They will walk away today, then resign to face comes what may.
Net result is a mass exodus just getting started. See other real estate bubbles in the past for what lies ahead. Threats of asset seizure and IRS issues are moot... they will not stop the majority from abandoning houses which are upside-down. Banks will still be saddled with a glut of overpriced houses while seeking recourse from people with nil assets to seize.
That's the reality