Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Larry Rubinoff — Wed, 09 Jul 2008 11:00:00 GMT

This is a very interesting topic with some very interesting comments. I have written on this myself and proposed a similar and even more extensive solution. The effort as well is to keep people in their homes. Under the current circumstances, that would do so much more for everyone and begin to stabalize the market. The problem is we always refer to speaking to the "Lenders" to do the workout. Almost no one speaks to their lender, they are speaking to a servicing company hired to collect their payments and keep records of their accounts. Yes, many servicers are owned by the original lender but as one comment said, they do not own the loan. The loans for the most part are owned by hundreds or even thousands of "investors" who bought interests in a security backed by mortgage loans (MBS). There is so much more to this story then meets the eye. Basically it is all about greed and the transference of wealth by our large institutions. We tend to forget that institutions are run by individuals who in many cases own a great deal of stock in their own companies and recieve LARGE paychecks, benefits, stock options and more. They live better then most in this country. From time to time the government needs to boost the economy and to do so they must make credit available. Since the government cannot legislate credit availability, they go to the people that do - the heads of our financial institutions. They offer them incentives and show them how they can further enrich themselves by making more credit available. None of this is done for the people. Yes, the people do benefit for a short period of time but when it comes time to stem the tide of oridnary people making too much money, the people are sacraficed. We all see the impact of what is currently happening. Not only are people losing their homes, they are losing their jobs, their savings and their investments. We, as a nation, are going broke. Just look around you and see the misery surrounding you and your naeighbors. The fraud began at the top. Fraudulent AAA ratings, fraudulent sales of securities to unwitting investors worldwide many of whom were large financial institutions themselves. Sales of these securities to pension plans, etc., etc. etc. In other words EVERYONE is losing. Would not that investor or investors holding their interests in the security (the actual owners of the mortgage) not be better off to lower the interest rates, lower the payments even write off the inflated value and keep the property OCCUPIED and paying. After all, now they receive 0% return on their investment so even if they lowered rates to 1% at least they are getting positive cash flow instead of negative returns and losses. The problem is that their are too many investors in each MBS, the "servicer" cannot identify them all and are better off themselves to continue "servicing" then working things out. THE ENTIRE SYSTEM IS BROKEN and no one is addressing that fact nor doing anything to fix it. All the government so called solutions are just window dressing and fluff to show us, the people who are in trouble, that help is on the way. False hope and misleading to the people in a democratic society where these same government people work "for us" and are responsible "to us" not the other way around. Let us not forget that they are on OUR payroll. Yes, even the President of the United States is on OUR payroll. Three cheers to Michael, the attorney in his June 3rd post. He is keeping people in their homes during a foreclosure as he is keeping the system at task. In other words, I believe he has discovered the FRAUD in foreclosures and is enforcing the laws.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

CaliGirl — Fri, 27 Jun 2008 11:00:00 GMT

Why aren't the States legislating that the lenders/servicers are required to rework loans for both consumers in default and those who are paying as agreed. Borrowers struggling to keep their mortgages current are getting the shortest end of the stick. A lender won't even consider a loan mod for a borrower who is current. Also, maybe the Feds should establish an anonymous tip-line for industry insiders to blow the whistle on lenders and brokers who embraced illegal lending practices. Lastly, it is unfathomable that our elected representatives are allowing this meltdown to occur. They worked through the weekend to ensure that Bear Stearns didn't evaporate, yet, helping the average American family is a bailout. Most Americans are dumb and vote against their own economic interest. Mostly poor, white, illiterate folks ensure that criminals like George Busch, Cheaney and those who support them can disembowel the general public, steal from the Treasury and not be accountable, nor pay taxes on their ill-gotten gains. The system is corrupt and until people think for themselves and stop being manipulated by fear mongering and race bating, the country we knew and loved, America the Beautiful, will see its people relegated to the ranks of a third world nation. Really people, wake up and smell the coffee. The crooks in the White House are so confident that our wide-spread apathy will keep us silenced, they don't even pretend to want to help us in any way.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Lea — Mon, 23 Jun 2008 11:00:00 GMT

Interesting comments and having owned a mortgage banking firm for 28 years I'm wondering why this melt-down is a surpise to those in the lending industry? The sound principal of making loans has always been the buyers willingness and ability to repay the loan. Ooops, our industry forgot that small detail, and the mania started. Bonds were created to back these loans (secondary market). ABC Hedge Fund establishes a set of guidelines and says to XYZ mortgage banker, follow these guidelines and we'll buy them. XYZ mortgage banker says to CBA mortgage broker, here are our guidelines. CBA mortgage broker goes to customer and says I can get you a loan the guidelines they are given from XYZ. Property values escalate by 20%, the american consumer is bombarded by advertisements, refinaces become an epedimic, we're tired of working 40 hours and traveling 20 hours and not spending time with our family. Our next door neighbor tells us how they just bought a rental with zero down and are going to make a killing when they sell the property and guess what, they didn't even have to qualify to get the loan. Greed, you bet..who's to blame...we all are as Americans. Does the lender loose money on a foreclosure, you bet. Can they do a workout, well depends on the investor. Remember they don't own the loans, they only service them and therefore they don't get to change the rules. If I invest money in the stock market and that stock looses value, who is going to bail me out. Didn't I take that risk hoping to win but knowing that I could also loose? My company didn't join the sub-prime arena, 58 employees lost their jobs because the consumer wanted that ARM that their neighbor had, and my LO's would try to talk them out of it because they understood that they would never be able to repay that loan. Now those same consumers are saying poor me? Don't we all need to accept the blame?

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Elfie — Tue, 17 Jun 2008 11:00:00 GMT

The big magnates at the top who control the economy got their money's worth with this mortgage mess. Betty Lou above is right about the damage to our monetary system. Our economy and institutions are being dismantled piece by piece. It is another Enron feast. There is nothing you can do, but pray that the end does not come sooner than expected, but everything seems to be collapsing around us. Greed and the love of money is driving this economic collapse.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

20 Years in Banking — Fri, 13 Jun 2008 11:00:00 GMT

You guys can point your fingers at the banks, mortgage brokers, servicers and appraisers all you want, but the real fault lies with the borrowers. How many of you borrowers told the truth on you loan apps? You cannot convince me that you did not know what you were getting yourselves into! You just did not think that there would be any repurcussions!!!

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

anonymous — Tue, 10 Jun 2008 11:00:00 GMT

I work for a servicer. One challenge is that other servicers have not been staffed appropriately and have not trained their loss mit staff appropriately. Another issue is that many of the people who are looking for a workout or relieft option do not qualify for a loan modification that is, even if we modified their loan they still could not afford their payments.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Anonymous — Fri, 06 Jun 2008 11:00:00 GMT

You know, when you tell lies and do people dirty all the time, you start believing what you do is right. These lenders, banks, brokers, real estate, and mortgage people, and Justin, have done people (the American consumer)wrong for so long, it is finally catching up with them and its a fixin to hit you hard that is the reason why you are sitting in the hot seat and calling names. Business is NOT dirty when it is done true and correct and honestly which is obviously, something you know nothing about.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Screwed by greedy banks — Thu, 05 Jun 2008 11:00:00 GMT

I am one of the guys who is doing the right thing and paying my mortgage on time on a house that is worth less what I owe. However I am reaching this conclusion, I did everything by the book and I at a loss, in the mean time the big banks are asking for a government bailout. If that happens I will stop paying my mortgage and give back my home to the bank, in the end it belongs to them until I pay the loan off. If these greedy pigs would have not approved mortgages to everyone who can sign their name we would not be in this mess. All new construction form 2002to 2005 was financed that way, it was nice job done by builders and lenders, builders sold more homes at higher prices while the lenders made the underwriting fees, sold the debt as CDO to the unsuspecting public with the help of the Wall Street crooks that are also getting bailed out by their buddy Paulson, the ex Goldman Sachs chief now Treasury Secretary. Who is left holding the bag? We the hardworking public. Unfortunately the average American is so dumb that he can not figure out who is screwing them and how they are getting screwed.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Justin — Thu, 05 Jun 2008 11:00:00 GMT

Everyone is asking where the money has gone? And call you congressman or woman to help. Well they are getting paid, ALL the people who can help with the foreclosure crisis are benefitting from the losses one way or another. Some people need to get real and get thinking. Dont be lazy and read every loan document that you sign, and if you dont understand them, then have someone there who does. Dont be a moron. Its business, and business is dirty. We are in this crisis because the Average American thought well if something bad happens, SOMEONE will take care of me, SOMEONE in the government will bail us out. HOW ABOUT TAKING RESPONSIBILITY FOLKS! So sick of hearing the banks be blamed for this. I know everyone who took an ARM was offered a fixed rate at the same time! They just wanted to gamble! Dont blame the bank for giving you what you wanted. ITS YOUR RESPONSIBILITY TO DO THE RESEARCH ON THE MOST IMPORTANT TRANSACTION OF YOUR LIFE! People are sooooo stupid. We are begging for Communism, because we can't govern ourselves.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

cliff pape — Tue, 03 Jun 2008 11:00:00 GMT

One reason why lenders are willing to take homes to foreclosure is because usually these loans have insurance that covers 20%-30% of the loan. So if they take property to foreclosure they only need to recoup 70%-80% of the original loan and there are alot of people at foreclosure auctions that are willing to pick up a foreclosure at that discount. Did the study take into account that the mortgage company is being covered by insurance?

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Margie OCampo de Castillo — Tue, 03 Jun 2008 11:00:00 GMT

Our market is saturated with abandoned homes, foreclosed homes and short sales, which prompt many questions that need to be answered. â€¢ How are lenders dealing with homeowners who CAN afford their mortgage payments but because their home is no longer worth what they paid, the go out and buy a second home and then allow their first home to go into foreclosure? o Are new clauses being incorporated to loan documents that will penalizes folks who do this? These selfish & fraudulent schemes affect everyone. They are a direct hit to homeowners who need to sell their homes or those who choose to weather the storm as they are the ones left with dilapidated homes in the neighborhood which makes the entire neighborhood prone to criminal activity. These homes also help drop the area values further and make the neighborhood less desirable for Sellers who desperately need to sell. This does not even begin to address the financial damage to an already feeble housing industry and national economy. o What checks and balances do lenders have in place to spot these types of buyers? Are they even looking out for these trends? â€¢ Itâ€™s within the Lenderâ€™s purview to alleviate much of the real estate market stress and it should be the Lender's responsibility to provide a solution as they were not only the benefactors of the greed and alleged fraud that is causing the collapse of a pillar that once helped keep the economy's steady pace. Instead, we hear about Lenders making the sale of their foreclosed home inventory sometimes impossible! Is it because they are waiting to be given the easy way out at the taxpayerâ€™s expense? o Shouldnâ€™t a third party be in charge of selling the foreclosed property inventory since â€œtime is of the essenceâ€ is not a factor when it comes to Lenders responding to purchase offers? Thereâ€™s an ever increasing number of allegations of Lenders turning down reasonable offers to purchase foreclosed properties....who benefits from this? o Why donâ€™t Lenders allow the homeowner who was able to pay the original monthly mortgage payment (but is not able to afford the new adjusted interest rate) to keep that original teaser interest rate for an additional 5 years, versus taking the property to foreclosure? Foreclosure can cost between $40,000-$75,000, and this does not begin to address the ripple effect on the neighborhood, community and economy! o Rather than have a vacant home, why don't lenders allow homeowner who can no longer afford their original mortgage to stay in the property as a tenant. A lesser monthly payment in lieu of the damage and crime that accompanies a vacant property seems to be a wiser alternative. It can't be done...It's never been done before..... Well, we've never been down this road before either. Yes, we have been down similar roads, but our economy today is the victim of a perfect storm of sorts with many variables at play.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Michael — Tue, 03 Jun 2008 11:00:00 GMT

I'm a lawyer keeping borrowers in their homes. I haven't lost one yet and some have been in for over 2 years with not a single payment! Lenders don't want to workout anything even though we have a judge "encouraging" them to come to the table.The lenders are waiting for the bailout coming soon to your back pocket. Hang on to your hat folks....it may be all you have left!!!!!

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Andy — Tue, 03 Jun 2008 11:00:00 GMT

I am disgusted with banks in general and most mortgage brokers in particular. No one in my state has been arrested yet for criminal practices, nor have they even been fined. Its business as usual. Yet, I was confused as to why the banks would not accept offers to buy homes at decent prices ( not short sales), why the banks put the homes with realtors anywhere from 20-70,000 OVER the high retail price, why ba nks let those houses sit on the market for 4-9 months reducing their prices all the while to the market level, why the banks do not often accept short sales, and why the banks are so stubborn, arrogant and defiant in dealing with agents who present purchase and sales agreements. I got my answer from several attorneys I deal with. They say that the banks made Ga-Zillions during the upsurge and are playing a paper game, namely, counting the losses from the high 7ok range down to the lowest dollar amount at the point of sale and reporting that as a loss on their books. They pick and choose according to their most recent month's report as to when and where they will declare such losses. If that is true, then the IRS should be vigorously auditing those banks, and placing under arrest those individuals who partake in such fraud. This white collar criminality is the absolute worst in the history of our country. It makes the Dot.com bubble seem insignificant in comparison, and we are told that over 7 TRILLION dollars were stolen in that fiasco. My question to that would be: Where did all that money go? ...and WHERE is the money going in THIS mortgage crisis??? Folks, there's a TON of money missing and those responsible should have to pay, and pay dearly. Call your congressmen and ask them why they're not doing more to expose the vicious attack on our monetary system that we see happening, because, folks, that is exactly what has happened. Our dollar is low ( in violation of the mandates of the Constitution, which these congressmen are sworn to uphold), our monetary system is in shambles and debt overwhelms most people in our country. We need answers, and we need them now. Make those calls today. Thank you

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Roz — Tue, 03 Jun 2008 11:00:00 GMT

For one thing, I find that $77k figure a bit far fetched. But opinions on that aside, what I will keep going back to is the fact that these lenders would not be taking such large losses if they had properly accounted for the inherent risk. If you're going to make a 90% LTV Interest Only loan with no docs and no PMI, then you better have a plan in place to absorb the loss. Otherwise it is nothing but a bad business decision, the consequences of which no one else but that lender should have to bear. This idea of bailing people out for making bad business decisions is like a get out of jail free card. You want to help the homeowners who might have been swindled? Ok. I am for that. But tell these guys that it was ok to be greedy and be careless and reckless because when it all blows up the american public will back you up? Absolutely not. But then that's the American way, isn't it? All the rights, none of the responsibility.

RE:Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks

Dan — Tue, 03 Jun 2008 11:00:00 GMT

Lenders have been getting a bad reputation here lately, and to most degree they deserve the verbal slamming they are recieving. I agree that so lenders are crooked and lead their clients astray, I do believe that it is their fault for not educating the buyer on the evils of ARM loans, but the market is changing and the wrong is being righted and most of those vendors are taking their money and running. So let's not place fear on buying a house, and drive the market down further. Let's pick up the peices and learn from our mistakes and the mistakes of others so we can hopfully pull through this crisis.