Mortgage contracts and moral obligation

Some more information for you so you'll be fully armed when you start the fiscal biatch slapping:

Some hedge funds that backed subprime lenders knew their loans were poorly written, but if a conforming loan (under conforming loan limits by fannie/freddie standards) was written outside of fannie/freddie guidelines, no sweat.......they would buy the toxic loan in a pretty package of good loans 12 mos. later. Why? The toxic loans were only 1-3% of the total pretty packaged loans. Should fannie/freddie have ever bought those?

It's done now. Take comfort in and faith that it's not something that will ever be repeated in our lifetime. We are trying to clean up. One issue I see for the next wave of foreclosures is that these people most likely would not be in default had the economy truly been stimulated.....i.e. small businesses and individuals......not billions of dollars given to a handful of major corporations.

I think we have about 18 mos. of this (maybe less), then as we have been slowly correcting out of the contraction, we should be in good shape on the other side.....except for the trillions of debt we carry as a nation.

The sad thing is that I really don't have faith that it won't be repeated - the same players are still there making the same dumb decisions and being richly rewarded for it! :angry:

The sad thing is that I really don't have faith that it won't be repeated - the same players are still there making the same dumb decisions and being richly rewarded for it! :angry:

This has to be new dumb decisions or lingering ramifications from old ones. As for lending, the guidelines are changed forever and are hardfast rules. I have faith that they are changed forever.

I was thinking more in terms of mortageg backed securities & hedge funds & Wall Street on that one. Though people walking away for the heck of it and the continued need to keep prices inflated and bend the rules to get people to buy are certainly part of that equation.

This has to be new dumb decisions or lingering ramifications from old ones. As for lending, the guidelines are changed forever and are hardfast rules. I have faith that they are changed forever.

You stand alone in your faith. The previous guidelines had stood for 25 or 30 years, and were wiped out in months.

You stand alone in your faith. The previous guidelines had stood for 25 or 30 years, and were wiped out in months.

There was pressure to loosen lending in the 90's (80/20 programs under Clinton's Admin) and then guidelines were relaxed after 9.11.2001. Everything was relaxed from buying an auto to FED taking the discount down to 1%. From approx. December 2001 through 2003, we had record bankruptcy filings. And, mortgage lending guidelines became increasingly more relaxed....until we actually used the words 'subprime' lending.

It is tougher now than ever to secure a mortgage. I am not alone in knowing that we won't repeat this mistake. And, am thrilled to see the light at the end of the tunnel.

It may be tougher now to secure a mortgage, but I still think there are some dumb contracts being written, exceptions being made, ...................... and that it's a temporary condition that will soon be forgotten.

It may be tougher now to secure a mortgage, but I still think there are some dumb contracts being written, exceptions being made, ...................... and that it's a temporary condition that will soon be forgotten.

It is an absolute impossibility for any exception with regard to Fannie Mae, Freddie Mac or FHA. Absolute Impossibility. If you know of something, please report it. That mortgage/lending operation will be out of business in less than 24 hours.

There are private lenders and they can do whatever they want but they are expensive, very expensive.

While I don't agree with the people who bought 2nd, 3rd, and 4th homes to either rent for cash flow (SHELLY's lurking and snickering) or flip for a profit and got caught during the burst walking away to simply avoid the financial hit. I do understand some instances. I'm not going to call out one of the people I know who did this, but they did so because the bank was not responding. While I understand the concept of a payment schedule and obligation if a bank is completely ignoring a borrower who is desperate to keep the home and pay back the obligation through either a restructuring of the loan, postponing some payments, or at least starting over because they can't catch up. Then I say puck the bank and walk. How many banks used the we work with our clients and care for them line when they were selling the mortgage?

Before anyone points to a mortgage as though it's carved in granite and unchangeable that's B.S. A lender can always amend a contract unless the amendment is illegal.

While I don't agree with the people who bought 2nd, 3rd, and 4th homes to either rent for cash flow (SHELLY's lurking and snickering) or flip for a profit and got caught during the burst walking away to simply avoid the financial hit. I do understand some instances. I'm not going to call out one of the people I know who did this, but they did so because the bank was not responding. While I understand the concept of a payment schedule and obligation if a bank is completely ignoring a borrower who is desperate to keep the home and pay back the obligation through either a restructuring of the loan, postponing some payments, or at least starting over because they can't catch up. Then I say puck the bank and walk. How many banks used the we work with our clients and care for them line when they were selling the mortgage?

Before anyone points to a mortgage as though it's carved in granite and unchangeable that's B.S. A lender can always amend a contract unless the amendment is illegal.

It seems like the banks are bending over backwards to amend, or modify loans to big borrowers. (i.e. the borrower into a bank for $4 Million on a shopping center plaza) THey should be diligent in modifying things for individuals as well, and to date, they have not been. They ignore the small borrower at their peril. Some loans cannot be restructured of course, and many more could be. I know a small business man, who purposely borrowed more money when he was in trouble about a year ago now, b/c he knew the old adage.. "If I owe the bank 600K, that's my problem, if I owe them 1.5M then its THEIR problem" true story.

While I don't agree with the people who bought 2nd, 3rd, and 4th homes to either rent for cash flow (SHELLY's lurking and snickering) or flip for a profit and got caught during the burst walking away to simply avoid the financial hit. I do understand some instances. I'm not going to call out one of the people I know who did this, but they did so because the bank was not responding. While I understand the concept of a payment schedule and obligation if a bank is completely ignoring a borrower who is desperate to keep the home and pay back the obligation through either a restructuring of the loan, postponing some payments, or at least starting over because they can't catch up. Then I say puck the bank and walk. How many banks used the we work with our clients and care for them line when they were selling the mortgage?

Before anyone points to a mortgage as though it's carved in granite and unchangeable that's B.S. A lender can always amend a contract unless the amendment is illegal.

It seems like the banks are bending over backwards to amend, or modify loans to big borrowers. (i.e. the borrower into a bank for $4 Million on a shopping center plaza) THey should be diligent in modifying things for individuals as well, and to date, they have not been. They ignore the small borrower at their peril. Some loans cannot be restructured of course, and many more could be. I know a small business man, who purposely borrowed more money when he was in trouble about a year ago now, b/c he knew the old adage.. "If I owe the bank 600K, that's my problem, if I owe them 1.5M then its THEIR problem" true story.

If Private Mortage Insurance was involved in the underwriting (first lien over 80% loan to value and PMI co. still solvent), this could be one glaring reason why the mortgage co. is ignoring the debtor. If there is a default, the PMI protects the lender. Not saying this is the case always, but certainly in some instances.

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

The Obama administration's mortgage relief plan provided help to only 7 percent of borrowers who signed up last year, another black mark for the struggling program.

About 900,000 borrowers have enrolled in the $75 billion program since it launched in March, the Treasury Department said Friday. But as of last month, only about 66,500 homeowners had received permanent relief. Another 46,000 have been approved and should be finalized soon.
The plan aims to make borrowers' mortgages more affordable by reducing the mortgage interest rate to as low as 2 percent. They receive temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete necessary paperwork, including proof of income and a letter explaining the reason for their financial hardship.
The Treasury Department is pressing the 102 mortgage companies that are participating in the program to do a better job.
The mortgage companies say they have struggled to get homeowners to return the necessary paperwork. Wells Fargo executives project that only about half of the borrowers who enrolled last summer will wind up being approved.

The rest will either won't send back all the required documents or will be deemed ineligible according to the government's formula. Collecting the documents up front would make the process much easier, said Mike Heid, co-president of Wells Fargo & Co.'s mortgage division.
"You could make a better decision for the consumer right up front," he said.
Nevertheless, homeowners and housing counselors say navigating the bureaucratic maze often seems impossible.
The nation's economic woes have made more borrowers fall behind on their payments. More than half of the borrowers approved for a loan modification have seen their income cut, according to the Treasury Department.
Unemployment, now at 10 percent, is expected to remain elevated for the whole year. Industry executives and housing advocates alike have been in talks with the Treasury Department to develop a program to aid the unemployed, but nothing has been rolled out yet.

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.

Yes, they really are being unresponsive and unreasonable.

I can't quite figure out why the banks are so slow to respond aside from not wanted to show a loss on their books.

They sure as hail better not be waiting for some bailout or new program. :angry:

You guys may want to start paying attention to the battles between elizabeth warren and christopher dodd. There are articles attached to todays huffington post and reuters...

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

I'm not disagreeing with you.

Are there any that are owned by the banks that aren't paying HOA fees?