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When the foreclosure price

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posted on Aug, 24 2008 @ 05:38 PM

becomes the market price.

"A typical foreclosure price progression: "In November 2005, the house sold for $126,000. The bank, which took it back last spring, is asking $59,000. The Seattle man (a prospective buyer) offers $40,000."

Another foreclosure scenario: "The owners, who owe $350,000, can no longer make their mortgage payments. Mr. Seivert is negotiating to buy the house for $170,000 and then rent it back to the couple, who have jobs in the area. They will pay $1,100 instead of their current $2,600 a month."

posted on Aug, 25 2008 @ 05:23 AM
Excellent link.

People should read this artcle and the comments attached to it.

It makes one wonder though, why are the banks being so stupid. If they are going to take the loss anyway, maybe they should just reset the mortgage and give the people who are losing the homes the opportunity to be at least still paying them the lowered amount.

Take the hit (which they are going to anyway) and at least keep these properties in the hands of the original owners. They waould then at least be paying some interest and the write down would not be a total loss.

posted on Aug, 25 2008 @ 09:32 AM
reply to post by Relentless

Certainly logical. I would guess they don't do it because pay capable people would demand the same deal.

For what it's worth ...

posted on Aug, 25 2008 @ 09:45 AM
That makes no sense to me. Say the Jones bought(financed through a bank) a house for $500,000, 3 years later its now worth $250,000. The sellers got $500,000 Now the buyers are upside down for $250,000 and the banks want their money. Who gets the short end of the stick?

The banks can't just reset values, they will lose their tails by the mortgage holders walking away right?

[edit on 25-8-2008 by 38181]

posted on Aug, 25 2008 @ 09:52 AM
reply to post by 38181

If that was me, I would walk whether I could pay or not and buy elsewhere at the lower price - and many are doing just that.

When the bankers receive a set of home keys in the mail, they call it, "jingle mail".

[edit on 25-8-2008 by leo123]

posted on Aug, 25 2008 @ 10:01 AM
reply to post by leo123

If it were that easy to walk away from their current UPSIDE DOWN mortgaged home, wouldn't everyone be doing it? (Im not being sarcastic).

Then lets say I found a super deal, bought a Second home, walk away from the first, move into the second. Would the second not get taken away from me for default for the first loan?

posted on Aug, 25 2008 @ 11:01 AM
Nothing is impossible I guess.

If it were me, I would negotiate a mortgage on the new home before I defaulted on the first.

posted on Aug, 25 2008 @ 01:26 PM
reply to post by 38181

There are alot of variables involved as to whether it's possible or feasable. The first being if the loan is recourse or non-recourse. On a non-recourse mortgage it's really possible to walk away, basically you quit paying and the bank gets the collateral (the house) and that's pretty much it. Of course your credit is trashed with a foreclosure on it, but that is pretty much it with a non-recourse loan. Most first money purchase mortgages are non-recourse in most states, including California.

Refinances, investment properties, second homes, etc are usually recourse. To my understanding even with a recourse loan, the forcloser must persue a judicial forclosure, which is more expensive and time consuming than a non-judicial forclosure if allowed.

The best advice for anyone thinking about "jingle mailing" the keys back is this. Consult both an attorney and tax professional for possible repercusions of that action.

I hear tons of people showing "moral outrage" that people are walking away from mortgages. I say why? Does not the mortgage contract have a provision for failing to pay, ie forclosure? Do the same people show the same moral outrage when the CEO/Board of a public company declares BK ,due to whatever reason,stiffing it's creditors get the same outrage. There is also the law of unintended consequences. The revisions to the bankruptcy laws a few years ago have made it easier to walk away from a non-recourse mortgage than to discharge credit card debt.

posted on Aug, 25 2008 @ 09:57 PM
Good and interesting post.

I learned much about the differences between Canadian and US mortgages.

Up here, my understanding (I'm not a lawyer, I am a stockbroker of some 25 years) is everything is recourse.

That wasn't the case in Alberta during the early 1980's depression in that province - thus spawning the "$1 mortgage phenomina" - but that's another topic.


[edit on 25-8-2008 by leo123]

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