Mortgage contracts and moral obligation

[Matt J]

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?

 

[30ashopper]

I'm not disagreeing with you.

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

I have no idea, my only experience is within my own neighborhood.

 

[Chip and Dale]

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.

OMG, that was Shelly, wasn't it?

His WaterColor house is in foreclosure now. The bank is really going to take it in the shorts for that mortgage and HELOC.

Well, I guess that's one way to "stockpile some cash" before the dine and dash.

 

[Lynnie]

Interesting that this thread popped back up. My cousin and I were discussing this over lunch last week. While US Bankruptcy Court was designed to protect the debtor in the event of a true hardship, there is still a moral obligation whether reorganized or fully discharged.....that is, if you have this kind of morals.

I haven't looked at the number of filings in the last two-three years, but I believe the last record filing (before this recession) was right after 9.11.01. We were coming out of a recession when we were attacked, which placed those already hard hit in an even greater tenuous situation.

What about those who owe Uncle Sam $400K and negotiate down to $50K. Moral obligation? I have a client who successfully negotiated his hefty delinquent tax bill like this. Credit report shows the lien 'satisfied.' :shock:

 

[jlweathers]

yes it's okay to walk away from your mortgage: Tech Ticker, Yahoo! Finance

Interesting stuff from Henry Blodget. The contract states, if you stop paying, the bank gets the house, and that's about it.

"Now, compare this to a situation in which you DO have a moral obligation to pay: When you borrow money from a friend at no interest, for example, and you promise that friend that you will give him or her every penny back. THAT is a moral obligation to pay. In this case, your friend did not lend you money to make a profit. Your friend loaned you money to help you out--with no collateral or contract other than your promise to pay. "

Since when is a question of morality driven by a profit motive?

Additionally, this is not an original idea of the authors. A professor out of California claimed that because California mortgages are made without recourse to the borrower, in other words a lender can only foreclose on the collateral & not pursue the borrower's assets, the contract contains an inherent put option. Non-recourse loans are not the norm across the nation & certainly not the case in Florida. As a borrower you guarantee the mortgage note. Is that not an explicit "moral" obligation to pay?

Lastly, google the author. Taking moral advice from a gentlemen who has been banned from the securities industry seems rather ironic.

 

[Matt J]

I don't think I'd feel too morally insignificant to an organization that would charge a 250% service charge for covering very small amounts of money.

 

[melscuba]

Never done this before, but here is a link (I hope) to a VERY interesting article about this subject.
http://www.usatoday.com/money/economy/housing/2010-03-25-underwater25_ST_N.htm