"Buy and Bail" -New Scam

[Pat Butler]

The language in the mortgage and note does not give the borrower the option to do this. The language provides for the lender to have a remedy against someone who walks away from their mortgage. That's a big difference between saying that there is an expectation that it's Ok to walk away from a mortgage as if though that has been agreed to.

It's like saying it's OK to steal because the law provides a remedy to the public for theft and that you are going to accept that remedy as part of a 'business' deal so long as it makes financial sense to do so. Only in CA do people think that way.

These lenders need to start going after people for deficiency judgements. That way they could get a judgement against any homeowner who walks away from their mortgage. That judgement can then be enforced by placing a lien on their new house and foreclosing. Of course, no CA judge would every do that, and instead, will allow losers to walk away from their obligations under their mortgage and note and rip off the big bad corporation. Those of us in the rest of the country have watched as fools in CA bought tiny little houses for outrageous sums of money, and now those same people are blaming the lenders for their own mistakes. Pathetic.

 

[Wayne Tomlinson]

George, I would like for you to show just one example where a mortgage contract says that if you don't like your deal, we will just take it back.

Every sale finance transaction includes at least two documents. One is the mortgage, the other is the note which, on all that I have seen indicate that the lender wants their money back and a schedule of just how it should be returned.

I think that someone said that in some states a lender cannot go back on the buyer for the remaining amount of the money (deficiency) but most of the states can enforce the terms of the note.

Bankrupcy is an option, but this is somewhat more than just a ding on their credit. After that one needs to learn how to get around without a credit card, maybe a new car, buying furniture on credit and maybe even being on good term with the furniture rental agencies.
Renting a home, or even possibly when applying for employment. Who would want an employee who thoiught it ok to stick the lender for the amount of a mortgage note?

It aint no picnic. Many of those choose that way of living will eventually find out.

I suspect, when the early flush of stuff of all the meltdown is long over, many of those lender will sell those notes for pennies on the dollar to companies who will not be so backed up on finance and will be persistent persuers of those folks in those new cheaper homes.

Wayne Tomlinson

 

[hglenbetts]

Exactly, purely a business decision. No extra vitriol need be assumed nor added.

Just because it's a "business decision" doesn't mean it's moral, ethical or legal. These people do this for personal gain, at the expense of those who invested in their financing. These practices cost everyone thanks to higher interest rates on future mortgages to recoup loses, government bail outs and the loss of opportunity for other to become home owners due to tightening lending practices because of people making business decisions.

A restaurant owner sees a business opportunity to remodel and buy new equipment. All he has to do is have a nice big kitchen fire. The insurance company picks up the tab. After all, he made all those payments. It's just a business decision.....

 

[Smokey Bear]

Only in CA do people think that way

Yeah, right, this isn't happening anywhere but California. There are good and bad people everywhere, and it's pure laziness to try to pin it on one geographical area.

 

[Greg Bell]

Purchase money trust deeds are NOT actionable for a deficiency judgment.Mortgage states may be possible , however , the borrower is already in the tank and suing a sinking ship is a waste of time..

 

[DTB]

Just because it's a "business decision" doesn't mean it's moral, ethical or legal. These people do this for personal gain, at the expense of those who invested in their financing. These practices cost everyone thanks to higher interest rates on future mortgages to recoup loses, government bail outs and the loss of opportunity for other to become home owners due to tightening lending practices because of people making business decisions.

A restaurant owner sees a business opportunity to remodel and buy new equipment. All he has to do is have a nice big kitchen fire. The insurance company picks up the tab. After all, he made all those payments. It's just a business decision.....

My scenario was a legal option, your Greek lightning story was not. A slight difference, eh?

Nothing turns people off more than to listen to Johnny holier than thou speeches about THEIR ethics and morals. Perhaps, you are not the be all, end all judge of things.

I know all these events have consequences to my and your financing abilities. It is what it is and I CHOOSE not to give a rat's azz as long as I can work within those limitations. I want to change the world, except it's my little world.

 

[MARK JOLLIFF]

http://www.wsj.com/article/SB121314811278463077.html

This article talks about people who are "Upside down" purchasing a comparable new home at a savings and allowing the former home to go into foreclosure once the new purchase is complete.

Today we see what the lack of ethics and integrity have cost us.

In the late 1960s and 1970s when discussions of morality and ethics became controversial we were fed the lines; "who are you to judge" and "what makes your standards of ethics valid"?

The tolerance and acceptance of today's world comes at a heavy price. "If it feels good do it" and "no holds barred dealings with evil corporations" and "situational ethics" philosophies have all cost us a heavy price and undermined our social, governmental and business structures. Broken homes, fragmented families, governmental corruption and corporate greed plague us.

Character still counts

Been preaching the same thing for years to deaf ears. Steroids anyone?

 

[Mike Boyd]

As distasteful and such ethics may be, the was the greed and lack of ethicical behavior of some, and certainly the largest, lenders which afforded this option to the borrower. In fact you could say that borrowers are now acting just like the lenders, looking out only for themselves with complete disregard for others. Had these lenders shown prudence in their lending guidelines much of the current crisis could have neen avoided however that would have meant less short term profit and production bonuses. It was all about the pushing product (loans) through pipe, folks.

Even now with the lenders, it's all about about short term $$$. The REO sales rationale I see is "don't prep the property for sale just put it on at a lower price than the other REO properties for sale and get it sold now". This has created a vortex of lower prices causing even more borrowers to lose their home as they can't refinance and consider walking from the loan. Why are we suprised to see the borrower acting in his/her personal self best interest when the lenders have been doing that for years without regard for the borrower?

You said it better than I did, John.

 

[Mike Boyd]

Yeah, right, this isn't happening anywhere but California. There are good and bad people everywhere, and it's pure laziness to try to pin it on one geographical area.

How do you like living down there with the un-evolved?

 

[Restrain]

Not the first time. In the oil-collapse of the early 80's, this happened in Texas all the time, especially when FHA loans were assumable. Just part of the real estate landscape. The use of a "rent" for the house you're moving out of is common and typical. It's one way to actually amass real estate wealth. Living in a home 5 years, then rent it out and buy another one. The fact that people are using this and then walking away from the first can create a fraud situation if there is no actual rent of the existing home, when one is alleged in the application for purchase. It can result in the loan going back on the originator, and may result in doc fraud charges against the property owner.

It's not always clean-cut, and there are possible repurcussions against the home owner. However, with all the real big cases of fraud, I really doubt that anyone's going to go after the homeowner, except for a deficiency judgement or a big 1099 that they'll have to deal with.

Don't be claiming morality, etc. Sometimes you do what you have to do to keep a roof over your head. There is NO morality in this industry. It's business, pure and simple. Morality went out the window when lending rules changed.