Sometimes people just allow a foreclosure to happen when they have exhausted all resources. Huge loans and reset mortgages have often led to foreclosures nationwide. Prince William County was one of the hardest hit areas in Virginia. Now the Washington Post tells us more bad news:
After the bank foreclosed on Fernando Palacios’s Gainesville home in March, he thought he was done with what he described as the most stressful financial situation of his life.
The bank sold the home for far less than Palacios owed on it, as often happens with foreclosures. What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02. “I really thought I was through with this house,” said Palacios, who fell behind on payments when the economy soured and his cleaning business stumbled.
Over the past year, lenders have become much more aggressive in trying to recoup money lost in foreclosures and other distressed sales, creating more grief for people who thought their real estate headaches were far behind.
In many localities — including Virginia, Maryland and the District — lenders have the right to pursue borrowers whose homes have sold at a loss to collect the difference between what the property sold for and what the borrower owed on it, also called a deficiency.
Before the housing bust, when the volume of foreclosures was relatively low, lenders seldom bothered to chase after deficiencies because borrowers had few remaining assets to claim and doing so involved hassles and costs. But with foreclosures soaring, lenders are more determined to get their money back, especially if they suspect borrowers are skipping out on loan they could afford, an increasingly common practice in areas where home values have tanked.
Palacios said he was committed to staying in his house, which he bought in 2005. He sunk $20,000 into improving it and hoped to raise his children there. But his lender refused to modify his loan, he said. To avoid personal liability for the deficiency, Palacios is filing for bankruptcy protection, as many people do who are in similar situations, said Nancy Ryan, his bankruptcy attorney.
It makes sense that if people could afford to pay their mortgage, they just would. Isn’t this practice going to greatly increase the number of bankruptcies in the area? That hurts all the other creditors.
I’m not a banker, but, it seems that the bank would have done better to work with him and modify the loan.
I agree Cargo. The people I have known who had trouble in this dept really had to go do the leg work themselves. their banks didn’t do jack with them.
You don’t see me crying the blues for any of these banks.
Modifications are key to keeping people in their houses. Banks should be more willing to work with property owners to stay in their homes. The have a much better chance of recovering their money as opposed to foreclosure. The banks are sure to loose major money when the house gets foreclosed on.
The banks should have NO sympathy from the general public.
Each case is case specific, but its never that simple. The real larger danger here is the number of banks that are foreclosing and shifting those liabilites over to the feds. Poor and overexteded borrowing leaves some real tough stories, but we need to be watchful and careful of the anti-business, kill BP, government takeover of dividends and the corporations themselves crap agenda that this Administration is responsble for. We are going to pay for it big time when European banks start to really go down.
“creating more grief for people who thought their real estate headaches were far behind”
How nice, people buy far more house than they can afford, live high on the hog, and then walk away leaving the bank and the neighbors dealing with the mess, not to mention reduced housing prices, and I have to feel badly for them? They should be held responsible, otherwise it will just keep happening, or the banks will stop making loans all together. There are those who do fall on hard times and aren’t living above their means, and I do fell for them. However, those who walked into a house with no money down, and knew the rates would increase eventually, were just playing the system and taking advantage of the fact that banks would dare not give them a loan (equal housing opportunity and all that!). To those I say fool me once, shame on you, fool me twice shame on me! Never again.
No mercy and no restructuring for anyone who changed their house into a flophouse, subdivided basements, crammed people in in violation of zoning laws.
I feel bad for the good people who got burned by the crazy real estate market, the way prices swelled. We’re all at fault for allowing our corrupt, sick, whorish government to turn a blind eye to widesptread mortgage fraud. We actually subsidized this madness with our tax dollars. Take Barack Obama, George Bush, Barney Frank, and the whole of Congress and send them all to the moon please. Our government failed us again at a MOST BASIC LEVEL.
How did we get from discussing foreclosures to Prez bashing?
Poor and over-extended borrowing didn’t start under this administration. It appears to be more of a condition of the times.
The dividends situation is a real conundrum. It sucks that BP is giving out its dividends which I believe is 84 cents a share when we have people unable to work because of their accident. By the same token, free\zing the dividends or however that would work is going to cripple Brit and American pensions and crater BP stock which is the lowest it has been in 14 years.
Is it possible to discuss that with the finger pointing?
SA, not everyone lived high on the hog. People often had things change in their lives. Divorce, child custody, loss of job, unintended pregnancy, death of a spouse, business downturns such as the man in the article. I am glad you threw in that you do feel badly for them.
And I agree. It is hard to feel badly for those who were playing the system. I wonder what the break down is?
Rick, You might have to leave Obama out of this. The industry wasn’t regulated. The financial world beyond us ruled and made their own rules.
It is sort of hard to blame the feds.
Too many people own homes, too many people go to college. We Americans have high goals.
There are realtors who are known as “Certified Distressed Property Experts”. These folks are nationally certified and one of the things they specialize in is preventing foreclosures. One such person lives in my neighborhood–he and his wife are CDPE designated. You can find out more at http://www.chrisdinapoli.com
@PWC Taxpayer
Of course modifications aren’t the answer in every case. I never said they were. Obviously there are those that bought beyond their means, and the encouragement of greedy realtors, lenders, etc..
As Moon stated life is not always perfect. I guess in your world people don’t die, get ill with terminal illness, loose their employment, take pay cuts, and have perfect marriages. Life is not that simple.
There were 13 of 30 houses on block that had been foreclosed on, at the height of the foreclosures. I’m fully aware of what can happen to property values, as is everyone in the county is. I doubt there’s a single a subdivision without at least one foreclosure in PWC. Neighborhoods are seeing a revitalization of sorts now that we don’t have so many bank owned properties. Take a look at yesterday’s report from Neighborhood Services. They have before and after shots of a couple of houses. One of these houses is on the next block. It looks a million times better and is now occupied by a single family as the builder intended the house to be. Not the flop house it once was.
http://www.pwcgov.org/documents/bocs/agendas/2010/0615/6-A.pdf
@PWC Taxpayer
Why is everything this administration’s fault? Remove you head from some undisclosed location and look around–this did just happen yesterday.
Pointing out the leadership failures and truly inane policy preferences of this Administration is not Prez bashing. It is pointing out that we have now begun to pay for the foiables of our first affirmative action Prez – and I say that in the most respectful way- who could have ever dreamed he was qualified much less voted for a community organizer who never completed an election cycle, never held even an entry level management position and was already beholding to the unions. No, the Prez bashing is coming in a rising crecendo from the likes of Olbermann, Mathews, Shultz and others, who have begun to cover their buts and they see this guy going down – and taking a lot of congressional democrats with him. As a result the universe is now out of order. Bend over and grab your ankles because the universe is out of balance and only thing left is to play the race card.
“You might have to leave Obama out of this. The industry wasn’t regulated. The financial world beyond us ruled and made their own rules. ”
??????
http://hnn.us/articles/1849.html
“The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, have operated since 1968 as government sponsored enterprises (GSEs). This means that, although the two companies are privately owned and operated by shareholders, they are protected financially by the support of the Federal Government. These government protections include access to a line of credit through the U.S. Treasury, exemption from state and local income taxes and exemption from SEC oversight. “
Barack Obama largest recipient of funds from Freddie Mac, Fannie Mae – http://latimesblogs.latimes.com/washington/2008/09/mortgage-giants.html
Now, when George Bush’s pals created an S&L crisis in the early 90’s, and he stuck us (taxpayers) with the bill, most if us perceived it quite rightly that we had been stolen from.
Obama’s bipartisan friends have done this on a much larger scale.
It’s time to be angry.
The mistake would be in targeting that anger towards voting for GOP candidates, who are at least as crooked.
The positive way forward is to move past these two FAILED parties who can’t succeed at any of the most basic tasks entrusted to them.
@PWC Taxpayer
Olbermann, Mathews and Shultz are your best references? Unbelievable. As to “taking a lot of congressional democrats with him.” Do you have a crystal ball? Guess we will have to wait until November to see. He may be a one term president but it won’t be because he didn’t try–more than I could ever say for either President Bush (father and son).
Fannie and Freddie are only 1 component of the financial mess. And they had very little to do with a prez, any pres @ Rick
Sure sounded like a Prez bash to me. Man up there, TP.
Do you really think that Olbermann and Shultz and (and Stewart and Maddow, although you didn’t mention them) are covering their butts? I would say it is more a case of criticizing when criticism might be deserved, rather than what you described. SNL has no sacred cows either.
That is probably one of the biggest differences between the left and the right. The left has darn few sacred cows.
Furthermore, much of what the left is upset over is that the Obama administration didn’t follow through on some of the liberal demands such as closing Gitmo.
Probably the happiest people out of all this are the moderates…and remember the moderates are the silent majority and you don’t hear much from them.
I agree with a lot of what TP is saying.
The current administration is offering a 8K+ credit on new purchases to stimulate the economy. However, it has the unintended (or maybe it is intended) consequence of artificially increasing the value of homes by the same amount as the credit.
That artificial elevation increases our county taxes by another…. $80~?
I think the arguement here is that while it may make financial sense for the banks to keep a person in there home and squeeze that person for the rest of there life….they’re not obligated to. They make the decision for themselves. If they make a bad decision they could go out of business. Well, they could if we’d allow them to and not bail them out but that’s another topic.
It used to be that if a bank forgave the debt you’d owe Uncle Sam the difference as income. The current administration I believe has waived that for the last 2 years. So, all the people getting forclosed on are not paying there ‘fair share’ of taxes as well.
Government should not be involved in home affordability, figuring out income/debt levels for home ownership or trying to help increase home ownership (especially for minorities).
For full disclosure, I’ll point out that when I purchased my home that I did get a govt/private subsidy because I am brown.
I will have to say that I believe you either qualify for a home or you don’t. Being a single mom or a brown person or a whatever else might artifically qualify someone isn’t going to pay the mortgage.
So who decides what a cut off is? Part of me agrees that it should be the lending institution but then that takes us right back where we started from…with banks giving huge mortgages to people who cannot afford them. It ends up costing us.
I don’t have an answer here. It should also vary from location to location and investors should not have the same rates as private home buyers. Nothing trashes up a neighborhood like investment property.
Actually, I do not have a problem with focused subsidies for certain economically disadvantaged groups. It contributes to a more diverse society at all levels. I do object to non-economic preferences and those subsidies that are made available regardless of economic condition. Obama clearly believes in direct income redistribution. It wasn’t Bush that caused the foreclosure problem – it was the current leadership in the Congress, who also believe in income redistribution – and we know the names – that insisted / threatened the banks to lower the bar and then the normal movement of the Markets that came together to cause the foreclosure tsunami. Classic do gooders messing with things they do not understand, while attributing evil to the markets or market managers.
I wonder, do you think – overall – whether more people benefited and had a chance to get into a home or did more people ultimately get hurt by the government’s attemtp to manipulate the financial markets? Is the number of new homeowners plus the number who moved up the housing chain greater than the number of homes lost? Seems to me that before we cry big nationwide crocodile tears and try to manipulate the system again, we want to know that.
Mortgages should be given only to those who can afford them. Being a single mom or a black secretrary doesn’t make that mortgage check any easier to write at the beginning of the month.
Mortgages should be granted on credit-worthiness only. How do we decide sub-groups to select for preferential treatment? Otherwise we all end up paying for this mortgage in the long run.
I never said Bush cased the foreclosure problem although it started on his watch. What could have do about it?
Income redistribution?? Glenn Beck alert!!!!!! whoop whoop whoop Beck alert!!!
Holy cow, TP, not sure what you just said there. Sounds like a combo of beck and Republlican or die to me!
Is TP turning liberal on us??? Is that what I am reading here??
Rut Roooooooo
Not match’s chance in a very cold hell.
Sure sounds like it. Sounded like mixed messages.
“Actually, I do not have a problem with focused subsidies for certain economically disadvantaged groups. It contributes to a more diverse society at all levels.”
I disagree because why does me being brown mean I need an advantage over someone that is white? Or black? Or asian? Or insert race/gender/ethnicity here.
Treat me equal to someone else by looking beyond any color other than green. What money do I bring to the table. What money do I make? What is the value of the asset I’m asking to buy? If we simply look at this only as a monatery transaction and not a sociology experiment then we’d be in a better position.
Fundamentally, we have to tell ourselves and each other that the American Dream doesn’t pan out for everyone. Some people just don’t have the ability to own a house …and thats OK. ..why so much negative stigma on renters?
I am with you Marnim on the ethnic/racial advantages – that is wrong – and unconstitutional in my view (even the SCOTUS said it was corrective and needed to end) , but we need to encourage home ownership, wealth creation, responsbility and responsible citizenship. In contrast to the redistribution and the limosine liberals, who use taxpayer money to ausage their guilt, I would much rather help a economically disadvantaged young person who is trying to get out of the poverty grind to own a home than to subsidze public housing and effectively keep them in that poverty environment. That is entirely diffferent than trying to tell a bank that they have to lower the financial bar (the banks due diligence) or face audit and regulation.
We subsidze farmers and accept some of their risk in order to assure more than adequate food production and against the uncertainties of weather. Its only when those subsidies go to multi-million /billion dollar agribusiness that it becomes abusive to the taxpayer. Same here.
And to return to another subject for a minute, that was the goal of the Federal FERS – wealth and generational wealth transfers. It was not to reduce cost (it hasn’t) but has created new sources of inheritable wealth, through incentivized investments in the markets that were beyond the reach of many. And lets be clear, the government has a very disportionate (higher) share of minority employees relative to their populations or education levels – so its working, as planned. The Bush proposals on Social Security would have done the same for a much larger group – but without a subsidy – and the Democrats – for all their concern for the poor – closed that door to future wealth. Ya just gotta wonder why?
I know of a few neighbors who have just chosen not to pay their mortgage, and let the property go into foreclosure. They figure, they can save the payment now, walk away when they are kicked out, but a house later, and be on the upside later on. The banks *should* be going after people like this. Yes, bankruptcy may increase, but if they are not bankrupt, they should not be allowed to just walk away, and pass the buck on to me.
Then TP, if you would rather help someone in that position, have at it.
The earth may stop rotating but I am going to agree with Marin. It doesn’t happen often.
I don’t think home ownership is necessarily a sign of having arrived at the American dream.
Not sure on those government stats regarding minority employment. It all depends on the company.
That’s ok M-H, I did not expect you to support any program that encourages independence from government fealty, or personnal wealth development.
“What is in your pocket …” such that your home is not you most important asset?
TP, I am actually growing very tired of your rudeness towards me.
I am going to reiterate my position: I do not feel people should be subsidized for home ownership. Qualifications should be based on credit and ability to repay the loan. I think there are plenty of good people who should continue to be good renters.
If you want to subsidize people who don’t qualify with your own money that is fine with me.
Banks may be tightening up and trying to recoup their money because there are plenty of “financial advisors” out there who are now telling people who could afford to continue paying their mortgages but owe more than their houses are worth to do a strategic foreclosure and simply walk away. The thought that the bank will sue to recoup the money owed may be aimed at this crowd as well as families who can no longer afford their mortgages for any number of reason with which we’d sympathize.
reason= reasons ^
Pat, I would agree with you. I would certainly hope that their credit report would catch up with them. Some people always land on their feet. I think those kinds should be gone after. They probably cry the blues if someone catches up with them.
If MH is agreeing with me.. I may have to re-evaluate my position. 😉
Pat brings up a good point about “strategic defaults” but without debtors prisons whats the real downside to the defaulter? Wait 3-5 years to get a government mortgage from Fannie or Freedie? If that’s the only penalty………… We’ve created a moral hazard condition where you don’t have to be responsible and accountable because the system will ‘take care of you’ because your obviously disadvantaged.
On the flip side to the defaulter is the people that stay in those homes, pay there mortgage, “do the right thing” and are hammered. Those same people doing the right thing then cannot refinance (not enough equity, risk exposure, or any number of reasons outside of the lenders control) OR those seeking entry (the renters who saved to buy a home and now see a good buying opportunity) are being cut at the knees by an $8K increase in valuations and companies not wanting to shoulder risk with so many defaults.
To me it boils down to…too much government, too much regulation and artificial increased valuations of property by government.
The system should be allowed to reset itself by finding it’s new level.
People will suffer (both the good and bad) and we have to just accept that.
BTW, the anologies from home ownership, foreclosures, and moral hazard are almost dead on for healthcare. 🙂
I think in 5 years, that a bankruptcy on your credit report will mean close to nothing (a few fico points). THere is no longer the shame in filing for bankruptcy. The foreclosures are not limited to the low end, just look at how many high end houses have gone into foreclosure – the real reason, I think, is too many people living beyond their means – and young people who are used to getting everything now, without waiting. The youth of today want for nothing.
“The youth of today want for nothing.”
But have almost no chance of retiring at 65 or of receiving health care over time like their parents and grandparents have. And are taking on debt with every air that they breath. Much of our current safety net for the elderly is being constructed at the cost of our children’s futures.
I agree Rick, we (the US) have not lived within our means since the 70’s – we have been living off the credit card. You can bash Clinton, but he was on a mission to reduce our debt. The baby boomers have just taken on the same spending habits as the Feds.
Totally agree. I love Clinton for restoring financial sanity. And am bitterly disappointed that immediately afterwards we the people elected Bush to do the opposite.
*I* didn’t elect Bush. Rick, I too love Clinton.
Actually I think I have been paying and paying. WWII was not free.
check out charts on national debt during WWII.
Part of our problem is that we are involved in 2 wars, one being the longest running war in US history. I keep hearing all this cut this and cut that. Get out of the freaking wars and see how much is saved.
I am tired of being accused of being a spender when over a billion a week is being spent on Afghanistan. Wait. Wrong War…..Iraq.
Please forward your request to Ms. Nancy Pelosi as she has the power to cut off the war. She’s had that power for the last 3~ years.
One person does not have that power.
When we are spending over a billion dollars a week and then blame something else…you gotta wonder.
Ms. Pelosi is leader of the House. She can determine what legislation comes up for vote or not. She has a majority. They can cut war funding at any time and stop the war.
They’ve failed to do so for 3 years, going.
You have to assume that if she doesn’t excercise that power that maybe there is a good reason that the war is being allowed to continue. Or, she’s just a moon bat. 🙂
Both.
And/or she’s a liar, who profiteers off false impressions. And/or schizophrenic.
What we do know about the woman is that she has no integrity, she runs a vineyard that profiteers off illegal labor even while pushing for Amnesty. So that the rest of us can help to subsidize her labor pool. She’s a typical limosine liberal.
A moon bat? Probably another relative.
I would hope not. Your more intelligent than Ms. Pelosi. I still have faith that we can bring you to the TEA party cause. 🙂
Oh yee of little faith, ….not a chance. You know what Charlton Heston said about his gun…..
God Bless you. Don’t give up that death grip (on your gun that is)!!
As for moving you from the left to the light… I’ll keep trying. The dark side has better cookies.