Sub-Prime Lending/Foreclosure etc

[Stephen Eisel]

[Bill Call]

Your reality is of another time, another place and certainly another planet.

Finally, we agree on something.

In the olden days it was considered a crime for a debtor to fail to pay a debt. Now when a debtor fails to pay a debt the crime is committed by the creditor.

[ryan costa]

send them to Australia.

[Ryan Salo]

Sharon,

If flying a plane was outside my realm of experience yet I went down to a local airport, faked some docs and signed a waiver and then crashed the plane would if be the airports fault?

This happens in the mortgage business daily. Brokers are not the only ones who falsify documents and lie. Desperate people do desperate things, they learn the system and then work around it.

If something is outside your realm of experience does the government need to protect you from doing it anyway??

My thought is people need to be responsible no matter how experienced or not they are.

[ryan costa]

I don't know what people borrowed money for in the Old Days. Or who lended to them and for what

But today it costs at least 60 dollars a day to keep someone in jail. That could cover several mortgage payments.

Donald Trump isn't in jail. Neither is Neil Bush. somehow they avoided being liable. They were able to negotiate down lower terms for much higher stakes.

perhaps people should form limited liability corporations, have the corporation buy their house, and then have their corporation rent the house to themselves.

[Tim Liston]

Ryan (Costa) it's the old saw: "When you owe the bank a little money, the bank owns you. When you owe the bank a LOT of money, you own the bank."

It may reverse this time. If/when Congress passes legislation that no longer subjects debt forgiveness to taxation, we'll see hundreds of thousands of defaults. And we're not talking about the inner-city residents who may or may not have been duped into a loan they could not afford. Now we're talking about the Florida/Nevada/etc. condo speculators who are way upside-down on property they bought as "investments." No more mortgage payments and association dues, just put the keys in the mail....

[ryan costa]

Maybe it is time for a paradigm shift in the way people finance home purchases. They form an LLC and issue thousands of dollar bonds.

They get spread out so thin in the market, the bondholders hold bonds from thousands of different LLC homeowners so it don't matter if a few don't meet payments. It's all tracked by computers. computers make it possible. It is the new information economy kicking up a new 1920s.

Homebuyers issue bonds on their own terms. The bonds are swooped up and bought in that immense hypothetical free market. Maybe their LLC is given some kind of rating by a federal agency acting as a Utility for every american's entitlement to the dream of owning a home. They can get extra points for what college, military program, and degree/trade they are certified in.

Maybe the Feds can oversee the utility that tracks the bonds and processes repayments into whatever accounts. Micropayments with low administrative costs. Kids can trade dollar bonds online like they used to trade baseball cards. The bonds got stats about the owner. So guys who do cool things like be firefighters or racecar drivers or landscape maintenance get their bonds traded more.

If you manage a shoe store at the mall, and once scored 4 touchdowns in one game, you can dole out 90 grand in bonds for a 4 bedroom house near W117 easy. If you did a great restoration job on an old chevy nova, or found a pair of shoes that you look really great in, it goes on your bond profile, so people into that kind of thing will trade for your trading bonds. It is an immense market of unlimited niches. If you crash your motorcycle running from the cops, or leave six crates of empty forties for the garbage men every week, it can be documented so investors/consumers can invest in that lifestyle.

[Richard Cole]

From Today's PD

"A federal judge in Cleveland has accused the mortgage industry and its lawyers of hijacking the foreclosure system in the interest of profits and at the expense of homeowners and municipalities."

http://www.cleveland.com/news/plaindeal ... xml&coll=2

"at the expense of homeowners and municipalities" and Baker Motors gets away with $2m in tax arrears? (taken from another LO thread).

Lakewood has to be very proactive in dealing with the repurcussions of foreclosure and non-payment of taxes. I'm not sure what the options are.

[Bill Call]

From Today's PD

"A federal judge in Cleveland has accused the mortgage industry and its lawyers of hijacking the foreclosure system in the interest of profits and at the expense of homeowners and municipalities."

.....
Lakewood has to be very proactive in dealing with the repurcussions of foreclosure and non-payment of taxes. I'm not sure what the options are.

This is exactly why I have a problem with politicians trying to place blame on the lender.

A mortgage company loans money to a buyer, the buyer provides a house as collateral, buyer fails to make payments, lender forecloses, judge calls the process a hijacking of the system.

I guess instead of speaking out against this insanity I should just join in. Maybe I should stop making my payments and then when the bank asks for its money I can scream YOU'RE HIJACKING THE SYSTEM!!!

I am sure it would be great fun but... who will loan money to provide the mortgage when judges make it a crime to collect a debt? What happens to property values in this County when no sane lender will provide a mortgage?

As to the $4 million - The Cities in Cuyahoga County should act as the agent of the County in the collection of back property taxes. The fee for that agency would be the County's portion of the back taxes.

[Richard Cole]

A mortgage company loans money to a buyer, the buyer provides a house as collateral, buyer fails to make payments, lender forecloses, judge calls the process a hijacking of the system.

The ways and means of of Lending is under dispute, it's not as simple as you have often implied.

Lender Forecloses - again, the PD article and the quotes in that article indicate that the process is being used for the financial gain of the lending institution.

"In a written opinion, Judge Christopher Boyko accused lenders of creating confusion about who holds the mortgages of houses in foreclosure so they can collect interest on default judgments while avoiding the cost of maintaining empty houses."

[ryan costa]

I guess in the old days it was a bank lending out the money of its depositors to people borrowing it. Usually to buy a house you had to pay about 50 percent down and the rest off within 5 years or so.

What exactly is a mortgage broker? Do they exist so the bank can avoid having to use discretion in handing out loans? Is a mortgage broker at all liable to the bank if their client defaults on the loan?

It is great that Banks can own a house that gets foreclosed up. But the trend is they simply don't know what to do with the house once they own it. This would seem to indicate its original purchase price was much higher than justified in the hypothetical free market. That's ok though: Appreciation of real estate don't count as Inflation. The house goes vacant, then gets the metal and stuff chiseled out by vandals and thieves.

But appreciating real estate is the only way to keep out the hoodrats and lowlifes. Middleclass folks have mostly lost that old technology of confronting people in person and telling them it ain't cool to be a hoodrat or lowlife: that they don't deserve to have high self-esteem. Then throwing them out.

[sharon kinsella]

Bill -

I'm sure you would like it if a supplier you dealt with quoted you a price and payment arrangements, you agreed and then they changed the terms and said they told you about it.

Then when you went to court and the judge said "but who does he owe the money to, why was one price quoted and another exacted, show me the paperwork". The supplier could say "Well, that's just the way we do business, you don't understand".

That would be nice, wouldn't it? And perfectly justified - I'm sure you would agree.

[Ryan Salo]

The only problem with your hypothetical is that in all but very few cases lenders can show SIGNED paperwork that the borrower signed.

The bait and switch that occurred typically happened between the original quote and the final paperwork, not after the final paperwork. The unethical lenders/brokers would tell people not to make a mortgage payment because the loan was about to close then at the end of the month the lender would jack the rate up and tell the borrower that if they didn't sign a 30 day late would kill their credit and people were strong armed into the loan. They still have a choice to not sign and they should know better than spend their current mortgage payment on other things. I feel bad for them but come on they still have to be responsible for what they sign.

There are ways to get the bad lenders/brokers out of the system, but we need to stop punishing the lenders for ignorant borrowers. If we don't we will go back to 20% down and 660+ scores and a very large population of America will be forced back into renting. (Something I don't entirely disagree with)

This is similar to knocking big corporate companies. Lets not forget how many people they employ - if we make it too difficult for them to exist here they will simply pack up like many are doing. No matter what we think of it, big business never suffers, only consumers. We tax the rich/big companies more = prices increase and it hurts us little folks. Punish the big lenders = no more loans to common folk.

[sharon kinsella]

Ryan -


Here's where your hypothetical falls apart - read today's paper, I did and that's what I based my remarks on.

Go to [url]www.cleveland.com[/url]

[Ryan Salo]

Now I understand why you think and write like you do. You think because a judge or a paper states something it must be true. I have seem some reports out of the PD that are complete lies about the mortgage industry.

I am don't know much about this particular case but I do know that most lenders can call a note due for some very tiny reasons. It is called the acceleration clause. Borrowers sign forms about it.

Most of the time lenders lose money on foreclosures that's why for the most part they try to prevent it. If a home is sold at sheriff's sale for more than what the borrower owes the borrower gets the rest. If lenders profit from foreclosures 90% of the subprime lenders that went out of business would be healthy and growing.

I feel bad for the people that got hurt but lets be careful of the backlash. Remember big companies never lose only the consumer.

Consumer rights and union rights are some of the biggest forces hurting us now. Penalize the rich/companies to feed the needy and the rich/companies leave.

We need to empower people rather than constantly hand stuff out.

Ok, now that my monthly LO rant is over, have a great night.