Deadbeat nation
in [Design]
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From: Joel Koltner on 2 Jun 2010 15:47 <dagmargoodboat(a)yahoo.com> wrote in message news:ee090994-470d-47d8-baa4-cd15d69be182(a)o12g2000vba.googlegroups.com... > Articles: Thanks, that's a good combination. The lawyer in the second one, Mark Stopa, soliciting clients who want to default and still live in the home -- he's in the same class as ambulance chasers IMO. I expect this will all prompt changes in the way mortgages are written, adding various penalties if you refuse to leave after you've been foreclosed upon (although it will also force the lenders to implement better tracking/re-sale policies to avoid the nonsense that Stopa is creating, which is good and something they should have already been doing). Kinda like hotels: My understanding is that if you refuse to leave a hotel room, while you often can't be physically forced out for a number of days/weeks/etc., you are liable for the full rack-rate room charge each and every day you decide to stick around. This makes it unattractive to abuse the system unless you really are bankrupt and hence have nothing to lose. When you loan to people who aren't that horribly credit-worthy, is it any surprise they turn around and abuse the system? The lenders also didn't do themselves any favors by initially being unwilling to work with borrowers who had missed payments or were already foreclosed upon, although the second article suggests this has now changed. (In fact, in certain situations, it might actually be in the lender's best interest to try to negogiate some "low rent" with the -- defaulted -- mortgage holder -- there's a real cost to having a vacant home sitting around and, in this economy, being very unlikely to sell for many months or years.) As with the greater banking crisis, there's plenty of blame to go around -- lots of badly-behaving lenders, homeowners, brokers, executives, etc. ---Joel
From: dagmargoodboat on 2 Jun 2010 19:08 On Jun 2, 2:47 pm, "Joel Koltner" <zapwireDASHgro...(a)yahoo.com> wrote: > <dagmargoodb...(a)yahoo.com> wrote in message > > news:ee090994-470d-47d8-baa4-cd15d69be182(a)o12g2000vba.googlegroups.com... > > > Articles: > > Thanks, that's a good combination. > > The lawyer in the second one, Mark Stopa, soliciting clients who want to > default and still live in the home -- he's in the same class as ambulance > chasers IMO. > > I expect this will all prompt changes in the way mortgages are written, adding > various penalties if you refuse to leave after you've been foreclosed upon > (although it will also force the lenders to implement better tracking/re-sale > policies to avoid the nonsense that Stopa is creating, which is good and > something they should have already been doing). Kinda like hotels: My > understanding is that if you refuse to leave a hotel room, while you often > can't be physically forced out for a number of days/weeks/etc., you are liable > for the full rack-rate room charge each and every day you decide to stick > around. This makes it unattractive to abuse the system unless you really are > bankrupt and hence have nothing to lose. It's not that complicated Joel. Badly-written mortgage terms aren't delaying evictions. Today's lenders can boot people immediately, they're just overwhelmed by the sheer numbers of defaulters, and being restrained by the government. Foreclosees are taking advantage of that, and dragging the courts into it as well. As one of the commentors pointed out, foreclose used to mean "Out!, Now!" > When you loan to people who aren't that horribly credit-worthy, is it any > surprise they turn around and abuse the system? It's worse than that. The credit-worthy upside-down borrowers are watching the deadbeats get off scot-free and starting to emulate them. Which the NYT celebrates. Nationally, that's a disaster--a quarter of all mortgages. > The lenders also didn't do themselves any favors by initially being unwilling > to work with borrowers who had missed payments or were already foreclosed Those are all euphemisms for forgiving part of peoples' loans, for a retroactive discount on something the bank did not sell them. > upon, although the second article suggests this has now changed. (In fact, in > certain situations, it might actually be in the lender's best interest to try > to negogiate some "low rent" with the -- defaulted -- mortgage holder -- > there's a real cost to having a vacant home sitting around and, in this > economy, being very unlikely to sell for many months or years.) Renting to the former owner could make sense, yes. > As with the greater banking crisis, there's plenty of blame to go around -- > lots of badly-behaving lenders, homeowners, brokers, executives, etc. It's the homebuyer's choice to steal the use of the home after they've already cheated the bank. Note that a lot of these people refinanced, got the bank's cash in their pocket, squandered it, then they defaulted. I've been in hundreds and hundreds of foreclosed homes. Thrashed, generally. Not vindictive stuff mostly, but simple long, long term neglect. I was more sympathetic before that. Even the President was playing that game, in his personal life. But, instead of defaulting he became a Senator. It's a terrible thing to encourage. To understand the impact, consider this: 2 million defaults brought down the banks and our financial system in 2008. Currently, we've triple that many outstanding, in process. -- Cheers, James Arthur
From: Joel Koltner on 2 Jun 2010 19:20 Hi James, <dagmargoodboat(a)yahoo.com> wrote in message news:78005474-2bff-4def-b039-9e9ab0710871(a)k31g2000vbu.googlegroups.com... > It's not that complicated Joel. Badly-written mortgage terms aren't > delaying evictions. Today's lenders can boot people immediately, > they're just overwhelmed by the sheer numbers of defaulters, and being > restrained by the government. OK >> The lenders also didn't do themselves any favors by initially being >> unwilling >> to work with borrowers who had missed payments or were already foreclosed > Those are all euphemisms for forgiving part of peoples' loans, for a > retroactive discount on something the bank did not sell them. For me "working with borrowers" means re-doing the loan to lower the rate (spreading out the term -- the lender may or may not decide to try to obtain the same overall profit on the loan as was done originally; that can be calculated based on the likelihood the homeowner otherwise will just default completely). I mean, I would think that you could find an awful lot of people who had ARMs and offer them a fixed-rate loan at what their ARM had been when they weren't behind in their payments and they'd be more than happy to sign on the dotted line -- even if it did turn, e.g., a 10-year loan into a 20-year loan; in many cases I think the people we're talking about here are the ones who primarily seem to care about, "what's my monthly payment going to be?" and don't even consider the term. > It's the homebuyer's choice to steal the use of the home after they've > already cheated the bank. Yes, that certainly counts as bad behavior. :-) People rationalize it by noting how crooked they believe the bankers to be, but even when that's the case most people don't really believe that two wrongs make a right. Thanks for the additional information... ---Joel
From: dagmargoodboat on 2 Jun 2010 20:07 On Jun 2, 6:20 pm, "Joel Koltner" <zapwireDASHgro...(a)yahoo.com> wrote: > Hi James, > > <dagmargoodb...(a)yahoo.com> wrote in message > > news:78005474-2bff-4def-b039-9e9ab0710871(a)k31g2000vbu.googlegroups.com... > > > It's not that complicated Joel. Badly-written mortgage terms aren't > > delaying evictions. Today's lenders can boot people immediately, > > they're just overwhelmed by the sheer numbers of defaulters, and being > > restrained by the government. > > OK > > >> The lenders also didn't do themselves any favors by initially being > >> unwilling > >> to work with borrowers who had missed payments or were already foreclosed > > Those are all euphemisms for forgiving part of peoples' loans, for a > > retroactive discount on something the bank did not sell them. > > For me "working with borrowers" means re-doing the loan to lower the rate > (spreading out the term -- the lender may or may not decide to try to obtain > the same overall profit on the loan as was done originally; that can be > calculated based on the likelihood the homeowner otherwise will just default > completely). I mean, I would think that you could find an awful lot of people > who had ARMs and offer them a fixed-rate loan at what their ARM had been when > they weren't behind in their payments and they'd be more than happy to sign on > the dotted line -- even if it did turn, e.g., a 10-year loan into a 20-year > loan; in many cases I think the people we're talking about here are the ones > who primarily seem to care about, "what's my monthly payment going to be?" and > don't even consider the term. For financial reasons that simply doesn't work. Mr. Obama has perpetuated the error in several different guises (mortgage "help" / "work with the borrower", etc.) and all have instantly failed. The 3- month re-default rate among hand-picked recipients is something like 80%. The root problem is this: the houses are worth less, and someone has to take the loss. Terms or no, whether they can afford it or not, people don't want to continue paying $350K for a $270K house. They want us to make up the difference. And we have been, thus far. > > It's the homebuyer's choice to steal the use of the home after they've > > already cheated the bank. > > Yes, that certainly counts as bad behavior. :-) People rationalize it by > noting how crooked they believe the bankers to be, but even when that's the > case most people don't really believe that two wrongs make a right. Yep. > Thanks for the additional information... You bet. -- Cheers, James Arthur
From: Charlie E. on 3 Jun 2010 12:08
On Wed, 2 Jun 2010 12:25:24 -0700, "Joel Koltner" <zapwireDASHgroups(a)yahoo.com> wrote: >I mean (and sorry for the topic drift here), how many young adults would >actually sign up for something like the CCC if it were still available in the >form from the '30s? --> >http://www.opb.org/programs/oregonexperience/programs/15-Civilian-Conservation-Corps >(very good video...): > >"The program targeted unemployed young men, veterans and American Indians hard >hit by the Great Depression. The CCC boys, as they were called, were required >to send a portion of their wages home to their parents. The boys also received >free education, healthcare and job training. > >Throughout its nine-year existence, the program put millions to work on >federal and state land for the 'prevention of forest fires, floods, and soil >erosion, plant, pest, and disease control.' Nationwide, enrollees planted >three billion trees and came to be known as the Tree Army." > >---Joel I saw the tail end of an PBS special on the CCC, and was struck by a comment about how, when WW2 started, the CCC boys went into the army, and were already half trained! They were used to discipline, knew how to take care of themselves, and knew how to obey orders. Charlie |