Another housing word problem/case scenario RE: foreclosures

How is this going to work out exactly? Forgive me if it sounds like Captain Obvious showed up but, I was thinking about it this morning, thinking about a scenario and I wonder what the solution will be?

For instance, let's say in 2005 Joe bought a home that was overvalued and Joe got the financing and Joe got the mortgage, now Joe is 4 months behind on the payments and is selling his property. He puts it on the market and has it listed at what he needs to sell it for (i.e., the overvalued price) because that is what will keep him out of foreclosure. Now, times have changed and the properties are no longer selling at the asking/list price and above plus it appears that Joe's property wasn't worth what he paid for it. Bummer. So, what is the solution, how will this work, a new buyer won't pay what Joe needs to sell the property for? The property sits and sits until it goes back to the bank. Then what do they sell it for? Joe's credit is ruined with the foreclosure. The bank is not a realtor and they lose money too? I am not sure but I think the companies that were doing the financing sold the mortgage? Then what? According to some, the mortgage companies/lenders are circumventing the procedures that have been in place for years...a sort of hijacking.

Joe's situation seems to be a no win one eh. Who is going to pay the price that Joe needs? It isn't the new buyer's fault Joe made a bad decision and the house isn't worth that much. Joe doesn't have the money to catch up on the payments or to absorb the cost of selling the house for less than he owes (which the mortgage company won't allow anyway).

It's like a bad riddle and it seems this could be, if it isn't already, of epidemic proportions. How is that going to work? What will that do to the economy? To American families? Not to mention to Americans who would still like to buy a home?

"Short sales" seem to be the new get-rich-quick scam for investors. I've seed road-side flyers saying "Learn Short Sales." Also, I've seen it advertised on Craig's List.

One of my colleagues (I'm in the mortgage business) claims to have a client that makes money arraigning short sales.

for the property? How much less? Does that effect the seller's credit negatively?

I'm not sure about the credit rating as I haven't seen one on a credit report. I HAVE seen credit cards listed as "settled less than full balance" and, IIRC, it doesn't seem to be that bad of a "ding." I wonder if, like the credit card settlements, the homeowners will get a 1099 from the lender for "income" and subject to income tax by the IRS?

I assume the lender can always go after for a deficiency judgment as well.

yes, the IRS considers the difference to be income and the lender can pursue the individual for the deficiency. That seems like the individual gets it from both sides eh.

First, just because a home was overvalued doesn´t automatically mean that Joe should be 4 months behind on his payment. Joe is behind on his payments because either his income has decreased in the meantime or he is spending his income on other things or his payments have gone up, based on the contract.

Second, if Joe would come out a winner in this situation, that would be interesting.

Third, sooner or later, the "balloon economy" will have to pop, and most everyone will feel the consequences.

The amount of our mortgage was $180,000

After foreclosure, the lender sold it for $140,000

To keep the lender from coming after us for the other $40,000

we had to declare chapter 7

just between the two of us ... :-)

What was your situation?
Did you consider yourself as having a "risky mortgage"?

What happens next, will you rent or will you be able to get another mortgage again?

Actually this is the situation of someone who has a house for sale that we are thinking about purchasing. His plight made me think about how many people are or will soon be in this situation, especially in markets where properties were overvalued and sold that way.

is if you think that with so many families losing "their homes", are there enough affordable rental properties to meet the demand?

will be problematic because the owners have mortgages with variable interest rates tied to the going market rate.

The owners aren't going to be able to afford their payments which will effect the people renting.

As for the number of rentals available...not sure?

My wife and I together made plenty to afford the house

$115,000 with $12000 down, 30 years, 8 1/2% payment around $850

But we didn't have enough room for both our families

so we refied, temp we thought, at 11 1/2% to get $30,000 to add on

which would have been great as the finished appraisal came in at $241,000 (long story)

We planned to refi again when it was finished.

Well, first I had to have back surgury (and, though I tried, that was the end of my career, but didn't know it then)

but that was ok because my wife made twice as much as me anyway and could handle the payments easily herself.

But then her job was outsourced and she only got worrk for less than half of before.

On top of this the builder took 1 1/2 years for a job he said he could finish in four months

and we struggled to pay our now, $1400/mo payments until it was finished and we could refi

By then our credit had slipped so far the only refi we could get had $1800/mo payments

We finally tried to sell but in 2002 the market crashed and we were trying to sell a lake house

finally lost it as by then we had fought over money too long to continue living together

Zombie debt industry



Zombie debts could include old lender incomplete records showing "income" from foreclosure transactions.

even the IRS can't come after me

with so many foreclosures, are there enough "rental properties" to meet the demand?

their rates increased, in some cases, in tandem with mortgages payments of the galloping overvalued homes.

Another poster said it succinctly, the "new" indignant, the working homeless.

some of those foreclosed houses will be put on the rental market.

outright. It was the only way I could figure to live on what is now $623/mo.

I manage even without foodstamps (so far) except when the car breaks down or I need dental work (not covered by Medicaid)

When that happens, I become a slave to the payday advance store, as I am now.

At the moment, I'm on dry land on a friend's farm refitting the old tub

Once I'm back in the water, I'llk have to pay marina rent or else rough it out at anchor

But, still, marina rent is much less than any apt would cost.

On a write-off from 1990!

IF you respond to those people, and it truly is an ancient debt, the only thing you say to them is that you contest it via statute of limitations. Do not EVER agree to pay off anything.

I picked up my phone number a few years back, and it must have belonged to someone with debt, because I started getting collection agencies harassing me looking for him. I went nuclear against a few of the companies. It didn't matter that the number was not in this guy's name, it was their only link, an they would accuse me of protecting him. I'd finally fight off one and a new company would buy the debt and it would restart again.

http://www.northlandgroup.com/
Northland Group was among the biggest collection of thieving fraudulent assholes and shitbags I had to battle.


And I wasn't even in debt! I just got a new Phone bumber, and it took 6 months before the calls started. By that time, My friends and family had the number, so I didn't want to get rid of it.

I've seen some houses listed for sale with the term "redemptive rights may apply". What does this mean?