"Buy and Bail" -New Scam

[Tim Hicks (Texas)]

I am seeing more of the new home sales purchased by out of state investors that never get occupied and end up in foreclosure.

 

[Couch Potato]

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

And a bad decision on the part of the lenders to loan money to people they know cannot repay. The article talks of a new policy to be sure the borrower can reasonably be expect to make the payments.

I don't think it is right to borrow money, and then not repay the loan. At the same time if I give money to someone knowing they are unlikely to be able to repay me, I don't think ill of them when they don't. I consider such "loans" to really be gifts.

The mortgage company makes a secured loan. They either get the money or the collateral. The risk that the collateral is worth less than the money is just part of the mortgage business. The lender loses money in these situations, it's just their tough luck. They knew, or should have known the risks when they made the loan.

 

[Mike Boyd]

There is one X poster I wonder how he's doing. Many of his posting's got mixed with Mike Neff postings cause although he did supposedly similar invested as Mike Neff the only actual common thing they from what I can tell, was his name was Mike also. Wonder how he's doing with all these new current events.

You all do realize who is going to be the ultimate payer for all these BAD loans don't you??

So far, it has been the lenders and the buyers of the securities. You sound very angry, Karl. Did YOU, perhaps, invest in a fund that dealt in these high risk portfolios? Yes, the government has bailed out a couple of banks and made more funds available for loans. So what? My taxes have not gone up a farthing. In the meantime, life goes on. Real estate continues to sell and loans are made......albeit at a lower pace. The US economy has always depended on financing to maintain growth. Growth is what keeps the orders coming in to your office. How much down and how much per month has been the buying philosophy of all big ticket purchases for at least the last half century. Remove that option and you would have 75% unemployment........not the 6% you see right now.

 

[Mike Boyd]

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.

In CA most RE loans are secured by a note AND deed of trust. Not a mortgage. There is a difference and one of those differences is non-recourse. I can't remember the exact phraseology but there IS a clause that allows the borrower to deed the property back to the lender in lieu of foreclosure. The lender has the option of foreclosing it as a mortgage which means a lawsuit that can take years plus there is a period of redemption for the borrower. This is not likely to happen with a typical residential loan.

 

[Karl]

So far, it has been the lenders and the buyers of the securities. You sound very angry, Karl. Did YOU, perhaps, invest in a fund that dealt in these high risk portfolios? Yes, the government has bailed out a couple of banks and made more funds available for loans. So what? My taxes have not gone up a farthing. In the meantime, life goes on. Real estate continues to sell and loans are made......albeit at a lower pace. The US economy has always depended on financing to maintain growth. Growth is what keeps the orders coming in to your office. How much down and how much per month has been the buying philosophy of all big ticket purchases for at least the last half century. Remove that option and you would have 75% unemployment........not the 6% you see right now.

Slightly angry yes!! NO I did very well in selling Real Estate & stock that delt with R.E. What makes me angry is that when this all shakes out we'll see who actually pays for the mess that has been created & continues to be created wirh this NEW deal where as long as you present a document that "Someone" is leasing your current home. You can get another home. Sorry but I still believe that's B.S. & when you start seeing, additional charges tacked on for bank services, property taxes go up, insurances rise, Interest income decline, ETC ETC You may change your thoughts.

 

[Mike Boyd]

Slightly angry yes!! NO I did very well in selling Real Estate & stock that dealt with R.E. What makes me angry is that when this all shakes out we'll see who actually pays for the mess that has been created & continues to be created wirh this NEW deal where, as long as you present a document that, "Someone" is leasing your current home. You can get another home. Sorry but I still believe that's B.S. & when you start seeing, additional charges tacked on for bank services, property taxes go up, insurances rise, Interest income decline, ETC ETC You may change your thoughts.

You're right on one point, anyway. CitiBank now charges me $10 per month for my business account......unless I maintain a balance of $5,000 or more. To me, that's extortion, designed to keep you from moving funds to an interest bearing account.

You can't stop the sleazy from lying. You can't legislate morality. There always has been and always will be an element in a free society that will not follow the rules or "Do the right thing."

 

[Couch Potato]

You're right on one point, anyway. CitiBank now charges me $10 per month for my business account......unless I maintain a balance of $5,000 or more. To me, that's extortion, designed to keep you from moving funds to an interest bearing account.

You can't stop the sleazy from lying. You can't legislate morality. There always has been and always will be an element in a free society that will not follow the rules or "Do the right thing."

Time to move the whole account. Wachovia charges me nothing for my business account. No minimum balance.