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Trouble in Paradise... Hamptons hit by foreclosure crisis

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posted on May, 12 2008 @ 01:31 PM
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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]

Selfish, maybe, but not illegal. These kinds of decisions are the ones that get a person to the point of being rich. Perhaps honor and wealth don't go together anymore, I don't know.
Personally, I agree that you have to differentiate between those who are well off and making financial decisions, and those who are caught by market forces out of their control. I had a good-paying factory job for 17 years. After working there for 10 years and saving a bit of money, I got a mortgage. 7 years later the factory closed. Now, I make less than half of what did. I had cut back on my lifestyle big-time, in order to keep my house. No more luxuries, vacations, no name groceries; sacrifices were made. The only thing that saved me was the fact that my house is not large, and I got a good deal on the mortgage. Or else, I could have been a foreclosure.




posted on May, 12 2008 @ 01:33 PM
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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]


Not that I necessarily disagree with your post, but I have two questions:

No one 'forced' the bank to make the loan. Why shouldn't they be 'left holding the bag'? They took the risk seeking profit but because it failed they rate absolution?

Why is it that the consumer bears the 'blight' on their credit rating, but for the bank it's just another burp on the spreadsheet? They get all sorts of financial leniency, almost on demand, but the consumer is now a 'bad risk'. What are we to them, racehorses?



posted on May, 12 2008 @ 01:35 PM
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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]


I know and I can see your point of view also...its a tough call. Do you do the moral thing or not is what it comes down to. To me it isnt a rich poor thing because I think there are a lot of normal working class people doing the same thing. I think it comes down to a moral issue and from my experience in the past the banks have never been the most moral to working class people. If people used to struggle in the past they would boot them and sell their house at a profit. Now they cant do this so now they're are willing to work with you. That is my issue...I think a shafting to the banks have been due for a long time because they have made money hand over foot over you and me and now its their turn to pay the piper (We ALL pay the piper).

Make no mistake there are some banks hurting but dont be fooled these guys have a lot of cash on hand fresh from the FED (This is why you see banks going up on every corner down here) and when the rates go up they will be lending this cheap borrowed money at nice high rates and dont expect normal lending to start till this happens.



posted on May, 12 2008 @ 01:43 PM
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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.

It sucks and it doesnt seem like its moral but you have to look at this as a business transaction. The banks took a risk and it didnt work so they take a loss. I promise you they make many more good risks than bad ones and that is why they stay in business and make all the money they make. The bank is not family and they do not care for you trust me if this housing situation wasnt what it is people in this situation would be booted out no questions asked and that is my point.

Now the Hamptons I feel is not necessarily people walking away more so than its just people who wanted to pretend to be rich and lived way outside their means. Now they are being called on it...I know it sucks listen Im kicking myself because I spent all sorts of money when times were good on crap I shouldnt have like 100k cars and $500 diners now Im kicking my self hard because I could of used that money in a lot better of a place now that times are hard.



posted on May, 12 2008 @ 01:45 PM
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reply to post by grover
 


ok - here is the thing - in the Hamptons an 1,100 sq ft house on a quarter acre with 3 bedrooms (that you can't fit a queen size bed and a dresser in the same room) one bath and NO garage is worth $954,000 --- if you put a deck on the back of the house and add a half bath the value goes up to $1,300,000 --- so the houses you are seeing in foreclosure are in many cases houses that the regular working person (phone company employee, office workers, carpenters) own -- not the houses the Rich and Famous Own --- those homes run into $8-$14,000,000 range



posted on May, 12 2008 @ 01:46 PM
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reply to post by Maxmars
 


The bank, like any business, exists merely to make money for its shareholders. To that end, a loss of money on the loan IS their punishment.

That said, if the bank is truly making 'bad' loans, the state and federal bank examiners will catch onto it sooner or later. The lending staff may be subject to fines or even prison sentences depending upon the charge.



posted on May, 12 2008 @ 02:06 PM
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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.




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]



posted on May, 12 2008 @ 02:15 PM
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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]


Umm you might be misunderstanding me but lets see.....Ok if john smith owns a house and the bank who has the note is bank of america. Lets say he bought the house for 200k and stayed in there for 15 years so now he owes 160k. Plus that house will have appreciated over that 15 years so no the house is worth 300k. john smith loses his job and cant afford the mortgage and bank of america forecloses on the house and takes it back. Bank of America then puts it up for sale and lets say market is 300 but they blow it out for 250k. that is still a 90k profit they get + they made all that interest the guy paid over the 15 years of the loan. So off this one guy the bank probably made over 150k. So john smiths misfortunes was an opportunity for bank of america. Do you see what I am saying? Now does bank of america out of moral say haey john smith thanks for the 15 years of interest and the 90k we just made on your house we just sold here is 30k to help you out? HELL NO! they say cya john smith wouldnt want to be ya and thanks for the profits....sucks but that is reality and that is why I dont feel bad for the banks AT ALL because they have been getting away with this for over 90 years and now its their turn to pay the piper.



[edit on 12-5-2008 by mybigunit]



posted on May, 12 2008 @ 02:24 PM
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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)



posted on May, 12 2008 @ 02:29 PM
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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)





Well that is the question of the day because I was under the impression that was not the case...maybe we have someone who knows law who can answer this question. Is the bank required to give you your equity in the case of a foreclosure and your house is worth a lot more than the foreclosed amount. I dont think that is the case just because I remember seeing articles about people losing their houses and the banks keeping the whole stash...maybe Im wrong but Id like to think I am never wrong



posted on May, 12 2008 @ 02:41 PM
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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]



posted on May, 12 2008 @ 03:04 PM
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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]


Ok if that is how it is for all 50 states and the word "entitled" doesnt mean you have to go after the bank to get that money then I stand corrected. I still stand by my statements though because it is still a risk and they still made a lot of money on the interest that was paid over the 15 years. Also the banks have the right to sue for the negative difference so its not like there isnt laws for recourse for the banks...if they choose not to sue that is their choice.

Its a risk. I take risks all the time whenever I invest sometimes I get money and sometimes I take losses that is how it is. The key is knowing when to cut your losses and walk away.

[edit on 12-5-2008 by mybigunit]



posted on May, 12 2008 @ 03:12 PM
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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.



posted on May, 12 2008 @ 03:21 PM
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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.


Sure and there is penalties for the borrower

A You risk being sued

B Your credit goes to crap

C it just does not look good when you get foreclosed on (the embarrassment factor)

There is plenty of money in it for the banks and thats why they have made so much money for many years. This time though they are taking hits and Ive taken my hits for dumb investments and I paid and am paying for it as we speak. Dont mean to put you in a position to defend the banking industry because it is really the only industry that gets the full backing of the government to make sure it doesnt go down. I mean hell the government wouldnt even let Bear Stearns go bankrupt but yet they will allow other businesses from other industries go under. Just not fair.

Like I said and mark my words a lot of banks are sitting on a lot of cash that they have been borrowing from the fed at 2%. They are going to sit on this money with (tight credit) till the FED starts to raise rates. Then and only then will they start lending but it will be at 9 to 12% rates. Down here in south florida there is a bank going up on every corner literally. For such a struggling industry they sure are building new locations like they are going out of style.



posted on May, 12 2008 @ 03:49 PM
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reply to post by mybigunit
 


Its the same way here with banks going up everywhere. Sure, they cry poverty, but its hard to believe when they can all build a $5-10 million facility in this fairly small town in the last few years, along with numerous smaller branches on the outskirts of town. And not too many higher-ups aren't driving $50k vehicles...on the company dime, of course.

So, no disagreement.



posted on May, 12 2008 @ 07:28 PM
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I too do not shead a tear for people in the Hamptons. Afterall, they are just like other people of different incomes. Just because they make more money doesn't mean that they don't spend beyond their means. I just wonder how their children who are so spoiled will live up to it. It will be something to see when it gets worse. But since I don't live in the Hamptons I will never see their faces sorry to say just to see how the so called rich handles it.



posted on May, 13 2008 @ 10:23 AM
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Did anyone read my post -- those $1,000,000 homes you are all attributing to the RICH are the home that people in the Hamptons who work for the rich live in - the people who work in the hospital, who work in the offices, who cut the lawn of the rich, who work in the supermarkets, or fish markets, who work on the farms, who are the volunteer Fire Department or the Volunteer Ambulance crews. These aren't Rich people who have 3 other houses and business managers etc. THOSE people own the homes in the 8 million to 14 to $200 million range and they aren't having problems at all.

There is a 784 sq foot house that is selling for $920.000 and there is no room to expand the size of the home on the property after it is sold....

The people in those homes aren't living the good life they are working their butts off just to stay in this area - in most cases because their families have lived here for centuries and they can't imagine living anywhere else.

The house I grew up in that has a water problem in the basement (because it is on a natural spring and if there is a storm or a moon tide it fills with water and you need 3 sump pumps to pull the water out) with well water, a village where the electric for the whole village goes out if a dog pees on the power pole just sold for $750,000 (unfortunately - it hasn't been my home for a long time - so I'm not getting that money)

So don't picture McMansions when you think of a million dollar home think of the house you live in or the house down the street and think of yourself trying to live in an area where the average cost of a home is in that price range.....it isn't easy



posted on May, 13 2008 @ 10:29 AM
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reply to post by justme1640
 


I read it and I agree thats why I put in my posts that these are working people who just lived way beyond their means. I dont consider someone in a million dollar house rich I just dont. The fact is people lived beyond their means and now they are paying. If you really want to know when its bad youll know its bad when you hear the rockefellers are losing their house to foreclosure.



posted on May, 13 2008 @ 11:53 AM
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I think where we are hanging up on each others posts is that I am reading that you think they are intentionally living beyond their means -- and I am trying to say they are just trying to live - in an area where you can't get anything at a cheaper price.



posted on May, 14 2008 @ 01:41 PM
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reply to post by justme1640
 


To quote the article in question:



"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.


So... I beg to differ.



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