Bank of America halts foreclosures in all states

[BlueStateSaint]

I've just started the pre-approval process for a VA loan, for a townhouse.  It's a little complex/develpoment of them about a mile from where we live now.  There's two foreclosures in that development that I know of, plus a couple of other units for sale there.  Reading the thread has helped me a tad; I really need to do more homework on this.  But, what it does do is piss me off, because we followed the rules and didn't do something stupid a couple of years ago.  Sure, my wife would have been happy initially, because we would have been near her parents; but the stress that the home would probably have put on our marriage would have been tough to overcome.

But, we didn't do something stupid, and now, when we can do something, we get it yanked out from under us because whole boatloads of idiots did do spmething stupid, and they're being rewarded for it!

[NHSparky]

This doesn't just throw the chain-of-custody of foreclosures into question, pretty much ANY home that wasn't purchased as new construction or financed by a credit union or other entity that services its own mortgages is called into question now.

Then again, what should we have expected when the government held a gun to the heads of the banks and said effectively, "You WILL make these bad loans to people who don't qualify, or ELSE!"

Thanks, Billy Jeff!

[true_blood]

I have to say, debk, that I have learned more about mortgages and real estate in this thread in the past two days than I thought was learnable.

but, in macroeconomic terms, the forestalling of foreclosures is a bad thing.

as an economy, we need to move these bad loans off the books.

do we agree on that?

I'm like you Wretched, I learned a lot from this thread alone. I do agree that forestalling these loans is a bad thing.

[AllosaursRus]

History is on our side. Every time you put a certain class of people above the mainstream, it never turns out helping anyone!

Yet, DUmbasscRats, will keep doin' the same thing over and over, expecting a different outcome!

[rich_t]

I have to say, debk, that I have learned more about mortgages and real estate in this thread in the past two days than I thought was learnable.

but, in macroeconomic terms, the forestalling of foreclosures is a bad thing.

as an economy, we need to move these bad loans off the books.

do we agree on that?

I do think that it is important to get these bad loans off the market, but I also think it is important for the banks to exercise due diligence and ensure that they aren't foreclosing on homes where the loan is NOT in default.  It is my understanding that this is part of the reason that BA put their program on hold.

[cmypay]

I think it  is a good idea for these banks to be looking at their processes, just not sure what they are doing is the best way to go about it.  A friend of mine just went through a complete mess with her mortgage lender, which really says to me that the process at her bank (not sure which one) is seriously messed up. She missed one mortgage payment, in June, due to paying medical bills (a whole different conversation there), but made her payments on time ever since.  Two weeks ago, she got a notice that the bank was foreclosing on the property because she "is more than 90 late on the mortgage payment due June 01, 2010."  It has always been my understanding that payments are applied to the oldest payment due, but apparently that is not the case with some banks/mortgage lenders.

[Evil_Conservative]

I do think that it is important to get these bad loans off the market, but I also think it is important for the banks to exercise due diligence and ensure that they aren't foreclosing on homes where the loan is NOT in default.  It is my understanding that this is part of the reason that BA put their program on hold.

Okay...

And when the foreclosure process is found to be legit and we have to put all those houses back onto the market... then what?

[debk]

but, in macroeconomic terms, the forestalling of foreclosures is a bad thing.

as an economy, we need to move these bad loans off the books.

do we agree on that?

Yes and no as far as agreeing on getting "bad loans" off of the books.

There's two ways to look at those bad loans.

#1 is the "party line -government way". Government gave out loans to people who couldn't afford them....ever. Ok, yes there are those loans still out there, but the majority of them have already been foreclosed on. I've been doing foreclosures since early in the 2000's and I was doing a lot of the ones who never should have gotten a loan in 2005-2007. Some are still straggling in....not so much because people couldn't afford them at the time, but they can't now because of job loss - many of those loans were given to people who weren't much above minimum wage type jobs (not necessarily hourly, but salaried) and those people were in jobs where they have either been laid off or the company has shut down due to the general economy.

#2 is today's reality of those so called bad loans. The Obama government wants the public to believe that its so-called "bad loans" that are bringing the housing industry to it's knees and it isn't. It's all those people who have lost one or both incomes, or have had to take jobs at much lower salaries....or they were small business owners who have lost their business. Or they are in large businesses that have either folded or closed the business in a specific area.

Example. My sister in law lost her job at Allstate back in August after 14 yrs....and was making well into 6 figures. My brother called me Friday and told me his company had been sold. He's pretty sure that he has a job for the next 3 months....he's well into 6 figures also...does not know if he will after the sale goes through, or if his customers will stay with the new company. Some have already said that they won't, some have said they would give the new company a chance. They bought a $750,000+ house in the Chicago 'burbs a year ago, and put $250,000 down. They just refinanced and besides lowering their interest rate about 3%, they put another $50K down. They certainly were not a "bad risk" by any stretch of the imagination a year ago when they got their loan!! Fortunately, my brother is tight as a tick, and they purchased the house based on his income alone - did not purchase the max that their lender qualified them for , and stashed most of hers, because he was worried about losing his job (he's in a tech industry), so they have money to make payments for quite some time. But they are NOT the norm!

The "norm" is that most homeowners, if they are a two-income family, purchase their homes based on both incomes - particularly if they are through having children. Whether or not, buyers use one or both incomes to qualify, most will purchase on or near the max amount a lender qualifies them for, unless the max is an outrageous amount of money (for the area- here, spending $1M when $750K is a fabulous house!!) Most people are going to buy what a lender tells them they can afford.

Those of you that are homeowners, did you buy in the price range, you lender qualified you for? Or did you spend more? Or did you say, not going to spend that much money and spent 10's of thousands less? If you bought in your "qualified" price range, does that mean you were given a "bad" loan?

If you lost your job tomorrow....God forbid, and I pray that it doesn't happen to any of you.....could you still make your house payment? Or if you bought your house by including your spouse's income, could you make it with just one of the incomes? Even if it was the smaller income that was lost? What about the larger income?

If you answer no to any of the questions in the last paragraph....YOU could become a "deadbeat" homeowner!!

What if you - or an immediate family member, even a parent - became ill or in an accident and were on disability for 6 months? Could you make your house payment?

What if you and your spouse got a divorce? Would your house have to be sold in the settlement? Could the house payment be paid until it sold?

What if you got a job transfer? Would your company buy your house for you - either the old one so you could buy a new one, or the new one until your old one sold? Could you make 2 house payments ( or a house payment and a rent payment) until your house sold?

If you could not make your house payment under any of those circumstances....congrats - you just became a "deadbeat" homeowner!!!

Which is just ridiculous!! NONE of the scenarios I gave would make anyone of us a "deadbeat" homeowner!!!

But it's exactly what the Obama admin is putting out there!

God forbid, that the Obama admin would publicly admit that homes are going on the foreclosure block because homeowners are losing their jobs!!!

Or because there are too damn many houses on the market for a seller to sell their home - in stellar condition or not - at a reasonable fair market value and be able to pay back the existing mortgage.

Or because there are 11 million homes on the market across the country, that are foreclosed homes that are priced at least 80% or below the going fair market rate, for the area within a mile or two of the home's specific location!!! And are selling for thousands upon thousands of dollars less than any fair market priced home within that mile or two radius. Which in turn, devalues almost if not every, house in that same radius.

It's real easy to say that it's all the fault of those "deadbeats" out there who didn't pay their mortgage and lost their house, that are causing the housing/mortgage/banking problems that the country is experiencing.

It's real easy to say that "I'm making MY payment, why can't everybody else?"

It's easy, IF .... one's job, or whatever source that pays the mortgage payment, is still present and the circumstances that allowed the purchase of said home, have not changed enough through this economic nightmare, to alter those circumstances.

So far. Today.

Tomorrow? Who knows.

I'm not sure that anyone is completely "safe" these days.

("you" does not refer to any one specific person....please do not take it personally as it isn't meant that way. )

[rich_t]

Okay...

And when the foreclosure process is found to be legit and we have to put all those houses back onto the market... then what?

Good question.  I don't work in the housing/mortgage arena and never have.  I freely admit that I am ignorant on the various ins and outs of the arena.

[rich_t]

Outstanding post debk.

H5.

Those of you that are homeowners, did you buy in the price range, you lender qualified you for? Or did you spend more? Or did you say, not going to spend that much money and spent 10's of thousands less? If you bought in your "qualified" price range, does that mean you were given a "bad" loan?

We had our current home built for just slightly less than what we qualified for.  We used both of our incomes when we applied for the loan.

If you lost your job tomorrow....God forbid, and I pray that it doesn't happen to any of you.....could you still make your house payment? Or if you bought your house by including your spouse's income, could you make it with just one of the incomes? Even if it was the smaller income that was lost? What about the larger income?

When I got laid off in Jan of 09, we were in the one-income situation.  Mine was the larger income.  I was getting unemployment insurance, but it was a hell of a lot less than my salary.  We kept the bills paid, but it wasn't easy.

I was unemployed for about 10 months.  I got a short term contract job that lasted 5 months that gave us a little breathing room (I socked as much of that $ into savings as I could).  I was then unemployed for another 5 months.  We still kept the bills paid, but were getting to the point that we would soon have to put the house up for sale.

If you answer no to any of the questions in the last paragraph....YOU could become a "deadbeat" homeowner!!

I came closer than I like to think about.

What if you - or an immediate family member, even a parent - became ill or in an accident and were on disability for 6 months? Could you make your house payment?

For 6 months?  Yes.  But not much past that.

What if you and your spouse got a divorce? Would your house have to be sold in the settlement? Could the house payment be paid until it sold?

Probably.  But that would depend on how long it took to sell.

What if you got a job transfer? Would your company buy your house for you - either the old one so you could buy a new one, or the new one until your old one sold? Could you make 2 house payments ( or a house payment and a rent payment) until your house sold?

I'd be pretty much screwed right now if forced into a job transfer.  Might be able to keep the existing mortage up to date for 4-6 months, but it would be really tough to do.

I work in the telecommunications arena and have for over 25 years.  I saw the writing on the wall several years ago and busted my ass to become debt free except the mortgage.  Once I had my credit cards and what-not paid off, I started putting as much money in my savings account as possible.

Having that cash buffer was the only thing that saved our asses during my period of unemployment.

[true_blood]

Outstanding post debk.

H5.

I just read her post and though the same thing. Nice write up Deb!

[Evil_Conservative]

Good question.  I don't work in the housing/mortgage arena and never have.  I freely admit that I am ignorant on the various ins and outs of the arena.

I'm not an expert in the housing market.  We can leave that to debk.  lol

Halting all foreclosures and taking them off the market for now makes me nervous.  Yeah, it takes the bad loans (or whatever you want to call them) off the market, but it's not going to end well when all of those houses are legitimately in foreclosure and have to go back on the market to be sold to me or you.

[DumbAss Tanker]

Both of the extremes piss me off - banks that pull the trigger on foreclosure when both parties would be much better served by renegotiation based on current real circumstances on one hand, and home-occupants who decide the bill they can most easily blow off is the mortgage rather than sacrifice their amenities like expensive cars or credit card balances.  I do have to say that in most markets a seller who really, honestly thinks his home has gone up in value by six grand in the past year and a half should put down the crack pipe.

[AllosaursRus]

Deb can put in her analogy of this, but, how 'bout the banks regenotiate the "worth" of the property since the total collapse in the market in some areas, and go from there.

I realize someone, more then likely the bank, is goin' to lose "some" money on the loan. Wouldn't that be better than foreclosing, having the homeowner trash the house because he thinks he got screwed and the bank sellin' it for less anyway? Usually, much less!!!

Isn't that what BamBam gave them the money for, in the first place?