Erma1ina wrote:
Jay-T wrote:
I am not sure, but I think that California is one of only a few states that
do not permit lenders to get a deficiency judgment against the debtor after
a foreclosure on a primary residence mortgage. If that is correct, the bank
cannot come after you for the difference between what they get from the
Sheriff's sale or foreclosure and the actual balance due on the mortgage.
According to this article California IS one of the few states that
limits deficiency judgments.
http://www.washingtonpost.com/wp-dyn...112504186.html
Excerpt 1:
"[U of Arizona law professor, Brent T.] White argues that far more of
the estimated 15 million American homeowners who are underwater on their
mortgages should stiff their lenders and take a hike.
"Doing so, he suggests, could save some of them hundreds of thousands of
dollars that they 'have no reasonable prospect of recouping' in the
years ahead. Plus the penalties are nowhere near as painful or
long-lasting as they might assume.
" 'Homeowners should be walking away in droves,' according to White.
'But they aren't. And it's not because the financial costs of
foreclosure outweigh the benefits.' Sure, credit scores get whacked when
you walk away, he acknowledges. But as long as you stay current with
other creditors, 'one can have a good credit rating again -- meaning
above 660 -- within two years after a foreclosure.'
"Better yet, you can default 'strategically.' Buy all the major items
you'll need for the next couple of years -- a new car, even a new house
-- just before you pull the plug on your current mortgage lender.
" 'Most individuals should be able to plan in advance for a few years of
limited credit,' White said, with minimal disruptions to their
lifestyles."
Excerpt 2:
"The main point, [White] says, is that too often people's emotions get
in the way of clear financial thinking about mortgages, turning them
into what he calls 'woodheads' -- 'individuals who choose not to act in
their own self-interest.' Most owners are too worried about feelings of
shame and embarrassment following a foreclosure, and ignore the powerful
financial reasons for going through with it, he said.
"Buttressing these emotions is a system that White labels 'the social
control of the housing crisis' -- pressures and messages continually
sent to consumers by the 'social control agents,' namely banks,
government and the media. The mantra these agents -- all the way up to
President Obama -- pound into owners' heads, White says, is that
'voluntarily defaulting on a mortgage is immoral.'
"Yet there is an inherent imbalance in the borrower-lender relationship
that makes this morality message unfair to consumers: Banks set the
rules during the housing boom, handing out home loans with no down
payments, no income checks and inflated appraisals. Now that property
values have dropped 20 to 50 percent in many areas, banks have been slow
to modify troubled mortgages and reluctant to reduce principal debts.
"Only when homeowners cut through the emotional fog and default
strategically in large numbers, White argues, will this inequitable
situation be seriously addressed.
"How does White's 52-page manifesto go over with mortgage lenders?
Predictably, not well."
White is an unethical twit. Yes, banks wrote a lot of paper to people
they shouldn't have, with made-up dreamworld numbers. But they didn't
hold a gun to anyone's head to get them to sign. Anyone who commits to a
debt they can't afford SHOULD suffer some pain if their house of cards
collapses. That is how mother nature educates people who didn't pick it
up in school. I don't think the banks should be off the hook either- if
they write bad paper, they should have to eat part of the loss.
Yes, I know, some people suffer financial reversals through no fault of
their own, and should have a way to start over. That is what bankruptcy
laws are for. But people who still have jobs, but happen to notice that
their McMansion is worth less than they owe on it, I have little pity
for. Shouldn't have bought such an ego palace in the first place, fool.
Houses lower on the food chain have held their value a lot better, and
you can still sell them for something close to what you paid, in most
areas. There are several 10-year-old beige subdivisions around here,
maybe 1/4 built out, that haven't had any new starts in five years. But
due to the CCRs requiring McMansions, they won't be built out anytime
soon. At some point, the developers will walk away from the vacant lots,
and they will tax-revert to the city. Maybe they will sell them to the
neighbors, or make some nice unofficial pocket parks once nature plants
trees in them.
--
aem sends, ranting.....