Mortgage contracts and moral obligation

[Lynnie]

Once the lender officially forecloses, they pay for everything: insurance, property taxes, HOA, any mechanics' liens, etc.

This could be one reason it takes so long in FL, NV, AZ.....to name a few. If the PMI co. is insolvent, why foreclose? There are also some stats which show that if they modify, the homeowner will default within six to nine months. It takes a while in a normal economy for a family under hardship to recover and generally aren't ready within such a short time frame.

I am certainly not defending the lenders. But, to abate expenses, just let the house sit and not push paper for a while.

 

[Miss Critter]

I am certainly not defending the lenders. But, to abate expenses, just let the house sit and not push paper for a while.

And on the homeowner side, just sit in the house and not send payments for awhile. This is some crazy new Mexican standoff (can I still say that, or is it not pc?)


from wiki:

A Mexican standoff is a slang term defined as a stalemate or impasse, a confrontation that neither side can forseeably win. In popular culture, the Mexican standoff is usually portrayed as two or more opponents with guns drawn and ready, creating a very tense situation. Neither side is willing to shoot in fear of being shot in return, and yet, neither side wants to relinquish its weapons for fear that its opponents will shoot them. This situation forces the participants to resolve the situation either by diplomacy, surrender, or a pre-emptive strike. Discussions of the Soviet Union-United States nuclear confrontation during the Cold War frequently used the term, specifically in reference to the Cuban Missile Crisis of 1962.
This expression came into usage during the last decade of the 19th century, most likely originating in the American southwest, although the Cambridge Dictionary claims that the term is of Australian origin.[1] One possibility is that it may relate to the difficult and paradoxical social and economic conditions of 19th and early 20th century Mexico.
The Mexican standoff is now considered a movie clich? through its frequent use in Spaghetti Westerns and B-movies. Nevertheless, it remains a staple in popular culture because of its potential for high-tension drama

 

[Lynnie]

Yes, Miss Critter. The homeowner can sit for a while. From a fiscal standpoint, the lender can add the unpaid interest at the back of the loan when the homeowner is stable.......and, they will actually make more money in the long term. We also need to keep in mind the number of defaults is minor to the number of healthy mortgages out there.

If I was CEO of a lender, I would consider the true hardship cases and work a deal for the homeowner to maintain the property and keep it insured, property taxes paid, etc....in exchange for no foreclosure proceedings and a reamortized 30 year note when the homeowner is stable. Win-win! And, I don't even like that corporate phrase.

 

[Matt J]

Yes, Miss Critter. The homeowner can sit for a while. From a fiscal standpoint, the lender can add the unpaid interest at the back of the loan when the homeowner is stable.......and, they will actually make more money in the long term. We also need to keep in mind the number of defaults is minor to the number of healthy mortgages out there.

If I was CEO of a lender, I would consider the true hardship cases and work a deal for the homeowner to maintain the property and keep it insured, property taxes paid, etc....in exchange for no foreclosure proceedings and a reamortized 30 year note when the homeowner is stable. Win-win! And, I don't even like that corporate phrase.

It is what it is.

 

[30ashopper]

Once the lender officially forecloses, they pay for everything: insurance, property taxes, HOA, any mechanics' liens, etc.

This could be one reason it takes so long in FL, NV, AZ.....to name a few. If the PMI co. is insolvent, why foreclose? There are also some stats which show that if they modify, the homeowner will default within six to nine months. It takes a while in a normal economy for a family under hardship to recover and generally aren't ready within such a short time frame.

I am certainly not defending the lenders. But, to abate expenses, just let the house sit and not push paper for a while.

This is a major problem today for HOAs here, they only get back 12 months in back dues, and have to maintain the empty homes. The responsible homeowners in the community have to pick up the whole tab. Worse, it appears 2010 will be just as bad of not worse than 2009. It's no wonder people in this country are pissed off, we're all tired of picking up somebody elses tab.

 

[Matt J]

This is a major problem today for HOAs here, they only get back 12 months in back dues, and have to maintain the empty homes. The responsible homeowners in the community have to pick up the whole tab. Worse, it appears 2010 will be just as bad of not worse than 2009. It's no wonder people in this country are pissed off, we're all tired of picking up somebody elses tab.

While a HOA can only collect back dues of 12 months they can, in many cases, accelerate them and get a lien against the property.

 

[Mango]

This story ran in the Daily News Sunday. You wonder why people are walking? They are trying to do the right thing, and the lenders are simply not responding.
Real Estate - Government Mortgage Plan Aids 7% of Borrowers - CNBC

Government Mortgage Plan Aids 7% of Borrowers


And lest you believe the mortgage companies' claims that homeowners are not completing the paperwork, ask any Realtor who's handled a short sale about their dealings with lenders. They never speak with the same person. Documents have to be re-sent time and again. And entire files get "lost" well into the process. It's a nightmare. This is far from over.

What the government and servicers should have worked out was to simply modify the existing loans into 50 year fixed rate mortgages. The Homeowners would have only needed to sign a Consolidation and Extension Agreement and pay the recording fees. But no, instead they make them send in documentation of which most likely none have. This would have even worked with ARMs since the FEDS have been keeping rates so low. Then, eventually, they could have worked out mods later, if needed, on ARMS to a fixed rate. In the interim, at least they would have simplified the process and had more paying loans.

 

[30ashopper]

While a HOA can only collect back dues of 12 months they can, in many cases, accelerate them and get a lien against the property.

From what I understand, tertiary liens are worthless when primary and secondary loans are more than the value of the house. The HOAs are stuck between a rock and a hard place - they have the lien, but when these homes finally go to auction, they'll only get what Florida law stipulates, which is 12 months of back dues and fees. Basically the lein just assures they get a seat at the table.

From what I understand, acceleration is possible but costs the HOA legal fees that can't be recouped, something HOAs can't really afford these days. (Maybe you've heard something different? I'd love to forward that info to our HOA if you have.)

With Florida law totally working for the banks and against HOAs, the banks just put a thumb on the foreclosure paperwork internally until they think they can sell the house. Meanwhile the HOAs are slowly being bled dry. It's pretty twisted - the laws are designed to make things fair in a normal market, but this isn't a normal market.

 

[Matt J]

Perhaps I over simplified.

While a HOA can only go back 12 months they can get a lien every 12 months. In most cases when a property sells the liens must be satisfied prior to the sale being completed.

Acceleration is a specific clause in the HOA's bylaws. Basically it states that once behind on a monthly, quarterly, or whatever time period dues the HOA can go ahead and charge through the end of the fiscal year and then obtain a lien for that amount.

P.S. A lawyer is not necessary to file a lien, any officer or authorized agent (CAM in most cases) can file the lien with the courthouse.

 

[30ashopper]

Perhaps I over simplified.

While a HOA can only go back 12 months they can get a lien every 12 months. In most cases when a property sells the liens must be satisfied prior to the sale being completed.

Acceleration is a specific clause in the HOA's bylaws. Basically it states that once behind on a monthly, quarterly, or whatever time period dues the HOA can go ahead and charge through the end of the fiscal year and then obtain a lien for that amount.

P.S. A lawyer is not necessary to file a lien, any officer or authorized agent (CAM in most cases) can file the lien with the courthouse.

That doesn't help if the house has sat in forclosure limbo for three years. 12 months is all the HOA will ever collect when a summary judgement is finally filed. (And banks have ways around that too.) The only other option HOAs have is to go after the owner on their own.

Generally speaking, the banks have plenty of reason to let the house sit in foreclosure limbo, and around here they are doing it quite often.