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Originally posted by Keyhole
All these rich people care about is their "money", their "nest egg", they have other homes, they are just getting rid of an investment that was depreciating. (SELFISH is what it is!)
[edit on 5/12/2008 by Keyhole]
Originally posted by vor78
reply to post by mybigunit
The bank shouldn't be left completely holding the bag in that situation, IMO. Typically, if you voluntarily surrender a car/house/whatever, you're liable for the remaining principal balance after the bank sells it.
On the other hand, if you want to completely absolve yourself of the loan, declare bankruptcy. The bank gets the property back and you owe nothing. But even moreso than the above, it puts a blight on your credit that lasts for many years.
In either case, I think this is the way it should be, as it punishes both parties.
[edit on 12-5-2008 by vor78]
Originally posted by Keyhole
I can see your point of view, I just think it is not a good time to renege on a mortgage if you can afford it, the bank isn't the only one who took the risk that the home would appreciate and not depreciate, so did the the person who signed the mortgage agreement.
[edit on 5/12/2008 by Keyhole]
Originally posted by mybigunit
reply to post by vor78
Ok if the person should get stuck with the negative then what about the gains...like I pointed out above it used to be people would live in the house for many years then lets say a factory shut down and the people were forced to foreclose because the bank wouldnt work with them. They would take the house back and the 10 years or whatever in equity and sell it at a profit and the banks kept that..they didnt give that profit to the people. So on the flip side if the people dont get the piece of the profit then they shouldnt have to eat the negative either.
Originally posted by vor78
The bank cannot earn a profit from a repossessed item unless it actually bids upon and wins the item at the sale auction. At that point, it is technically the owner and can do whatever it wants. Otherwise, they can only charge the amount necessary to clear their books; usually the principal plus any legal and sale prep expenses. In all cases, the bank must pay the debtor for the balance of any equity that exists at the time of the sale.
Granted, some will try to cheat the system by tacking on exorbitant charges to hide the equity. That eventually lands them in hot water, though.
[edit on 12-5-2008 by vor78]
Originally posted by vor78
reply to post by mybigunit
I understand what you're saying, but I'm about 99% sure that its incorrect. I've worked in the banking industry and unless the president of our bank was wrong, the bank is not allowed to keep anything more than the $160,000 that they are owed in this example (again, plus legal and sale prep expenses and provided that they themselves do not purchase the property at sale). The remaining $90,000 of the $250,000 sale is supposed to go to the owner.
You always get your equity back (though nothing more). Or at least, you're supposed to.
(This may also vary by state, which could explain the discrepancy; I'm not sure if it was state or federal law)
Originally posted by vor78
reply to post by mybigunit
www.foreclosurelaw.org...
Granted, this is for the state of Arkansas where I live, but the last paragraph verifies my earlier posts:
Once the sale is complete, the proceeds will go to the pay for the expenses of the foreclosure sale, then toward the obligations secured by the trust deed that was foreclosed and then to junior lien holders in order of their priority. The original borrower is entitled to receive any remaining funds.
BTW, I'm assuming that you're from Florida? It appears to be true there as well. EDIT: The first link doesn't work (hopefully this one does). Go to 56.27 and read section 2:
www.foreclosures.com...
[edit on 12-5-2008 by vor78]
[edit on 12-5-2008 by vor78]
Originally posted by vor78
reply to post by mybigunit
Undoubtedly, its a risk, but there has to be some incentive for the borrower to repay the loan. If there was no penalty for nonpayment, no one would repay their debts.
Note that I'm not defending the banking industry. I hated it, I think its a bloodsucking leech, and that's why I got out.
"This problem didn't even exist before," said John Brady, a broker with Coldwell Banker in East Hampton. "They used to pop up once in a while, and you wouldn't even pay attention. Now you expect to see new ones every week."
A total of 10 East End homes, including a massive Westhampton mansion, were foreclosed outright since the beginning of the year.
In addition, more than 800 East End homeowners - a mix of rich and middle-class people from Riverhead to Montauk - have been flagged by credit-monitoring companies this year for late payments.
Brady said the high-end, delinquent borrowers are finance types, lawyers and speculators who overextended themselves on second homes and investment properties.
Some of the Hampton high rollers feeling the pinch are:
* Janice Becker, a regular on the Southampton village social circuit, is facing foreclosure on her multimillion-dollar Wyandanch Lane property.
* Advertising veteran Ransel Potter is defaulting on a $1.8 million mortgage on an Amagansett parcel.
* Real-estate honcho John Conroy is in lis pendens for a $3.5 million mortgage on a Bridgehampton spread on West Pond Drive.
* Former UBS executive Marc Warren is in lis pendens on a $1 million mortgage for a Mitchells Lane pad in Bridgehampton.
* Investor Roger Thanhauser is trying to sell a home on Main Street in East Hampton village to avoid foreclosure....
....Corcoran broker Susan Breitenbach said young Wall Streeters who gobbled up trophy properties in recent years are starting to suffer. She recalled getting calls from Bear Stearns employees desperate to unload their East End homes after the company's recent implosion.
"These are people who are used to success," Brady said. "There is a level of denial and embarrassment when I have to call [people] to ask about mortgage problems."....
....Barbaria, who just sold a foreclosed Bridgehampton home for $3 million last month, said that lis pendens and foreclosures may be rising, but that they are mainly limited to the subprime market and pricey spec homes.