AZ New Law, You must pay bank difference if you foreclose

AZ New Law, You must pay bank difference if you foreclose

www.azcentral.com

new law passed by the Arizona Legislature that makes homeowners liable for tens of thousands of dollars on homes lost to foreclosure is now the focus of an intense repeal battle.

An amendment to the state's foreclosure laws, passed in the recent legislative session, was designed to protect small community banks from people buying speculative new homes they can't sell for a profit.

But the impact of the change is much larger. It makes some homeowners in foreclosure liable for the difference between their mortgage and what their lender can recoup from reselling the house. In the current

(visit the link for the full news article)

So if I rent my house out, because I can not afford it myself, but want to avoid foreclosure, then the renter does not pay, and it does, this means I have to pay the difference to the bank it what they can sell it for , and what I paid.

This is so unfair on SOO many levels. What about the insurance that "I " pay for so if I can not pay, the bank gets the money back.
The bank is double dipping and I can have my wages garnished.

What a crock. I can not believe this passed!!! Not a whisper about it on the news either.

It is in repeal.

www.azcentral.com
(visit the link for the full news article)

reply to post by amatrine



This thing has got me really ticked off ! It's not bad enough that because of this crappy economy many will lose their house, but now they want to add further injury by forcing them to pay for a house that they no longer own ! And why, because most of the foreclosures will be due to the fact that the banks made loans to people they shouldn't have made the loans to in the first place ?

Butler said he was at a meeting last week with real-estate agents who were "shocked" the legislation passed. "Lenders that shouldn't have made the loans to investors in the first place," Butler said, "are trying to cover up their own mistakes with this new law."

Before i even read half way through i knew this one was coming....

"I got a call from an out-of-state lender that is considering holding off on a foreclosure until after September 30," said Phoenix real-estate attorney Marc McCain.

So even if a home should be foreclosed on right now they're gonna wait almost three months to do it (giving the owner a false sense of security) just so they can take advantage of the new law

The problem is just like always, it will be the little guy that suffers while the bigwig investors get off scott free!

www.azcentral.com...

I have always wanted to move to Arizona, but i don't think so anymore hearing to much bad stuff about it lately.

Give those in power enough time and before this is all over they'll probably bring back debters prison

edit for spelling error

[edit on 7/27/2009 by chise61]

That's so wrong. If you get foreclosed, it's because you don't have enough money to may your mortgage or for other financial reasons like that. It's not like you have all this extra money to give to the bank.

Kick you out and make you pay for it?
Doesn't make sense. That is meeeessed up. Chalk that up as another crappy authoritarian law for AZ. I hate that place.

Oh but we do not have to worry, because we can " rent our home" from the bank ! I can see where this is heading!

reply to post by amatrine


You know i was thinking about just that as i read the article. Seems like the two go hand in hand doesn't it. TPTB sure are hard at work trying to bring back the serfs aren't they

Hmmm, so what happens when the banks can't, or won't, sell the house? Does the foreclosee (or whatever they're called) still have to pay the whole mortgage. Lol, that just doesn't make sense in any way. Can't get blood from a turnip, as my grandmother used to say.

I wonder how much the banks payed to get this law passed.

You know there lobbyist were all over the state legislature to get this passed.

This type actions are what gives politicians a bad name.

Originally posted by mooseinhisglory
Kick you out and make you pay for it?
Doesn't make sense. That is meeeessed up. Chalk that up as another crappy authoritarian law for AZ. I hate that place.

Well I am sorry, but that is the way it should be. If you cant afford to buy the house in the first place, EVEN IF THE BANKS GAVE YOU THE MONEY, then be it on your head.
You dont buy something you cant afford then walk away from the payments. That really stuffs with the rest of those people that CAN afford to buy a house.
They up all the interest rates, and those that walked away from those houses, get off scott free... NO WAY ... You brought the house, you finish paying for it (well the difference anyways).

reply to post by The_Seeker


If they're gonna be forced to pay for the house through wage garnishment, etc then they should be allowed to keep the house.

Originally posted by chise61
reply to post by The_Seeker

 

If they're gonna be forced to pay for the house through wage garnishment, etc then they should be allowed to keep the house.

Not if you couldnt afford it in the first place.
That is the whole point, the world in in a serious mess, and this type of things doesnt help.... If you couldnt afford it in the first place, EVEN if the banks offer you the money, you should never have taken it.
Or what should have happened is the house that was being purchased should have been more within the price range, so that it CAN BE PAID BACK...


I dont agree with kicking people out of their home, and I think the Rental Scheme is a good idea, if those that are doing it can stick to their guns and be a bit more frugal.

But most people cant... So you rent... SIMPLE.

I can foresee a lot of people making their final homeowners insurance payment and letting their foreclosed houses spontaneously combust in the hot August sun.

Oh goody, happy happy joy joy! ANOTHER way for bankers to fleece the public. They just don't have enough money that they are trying to kill us off with vaccines they cooked up. If killing us off isn't enough, they have to make more laws - and make no mistake, they make the laws - so they can gain even more money.

Do they get all the dead peoples money when they can't pay on their houses on account of being murdered?

reply to post by amatrine


Unbelievable.
First of all, Senator Steve Pierce needs to stop coddling the banks and protecting their interests at the expense of the public at large.
He knows darn well half of the residents in the Valley are snowbirds, who spend, on average, less than six months in their winter homes here.

I'll bet the banks pulled out all the stops and threw special interest firms and PR guys armed with rounds of golf and invitations to the exclusive events - and a good chunk of change to his re-election coffers to sway him ... check that ... to sway anyone who voted yes to this atrocity.

The only entity this law serves is the bank. No one else. For what? To 'protect' them from property investors and speculators who buy land and homes in hopes to make a profit, but end up defaulting on the loan.
Since the banks don't really want the foreclosed house (too much trouble to resell, etc) they had the legislature pass a law that gives them their cake and lets them eat it too.

I wonder if, during the hearings for this scam-of-a-law, anyone in our State Government asked the following questions to the banking folks who surely were there pushing it along:

"Let me get this straight.
So, you want to lend money to whomever wants to purchase a home - investor and homeowner alike - and make a profit in the form of interest on that loan ... and you want do so without any liability or risk of loss to your institution?
You're telling me if the value of a foreclosure is less than the loan you want to have the recourse of going beyond the foreclosure laws to garnish wages or attach liens to other named properties of the party in foreclosure?
All because you made some loans that you lost on and want the State Government to pass legislation so it never happens again?"

Wouldn't everyone be thinking "Frickin' Duh!" right about now?

I wasn't born in this State, but in the 7 years I've been here the State Reps have passed Laws that are so clearly not in the interest of the majority ... it almost seems like the old mafia days when they all were on somebody's payroll.

Or, I don't know ... maybe it's something in the water?

Oh, and by the by Ms Amatrine -
If you have loan guarantee insurance you are still protected. That is paid to the bank by an insurance underwriter if you default.
That is as long as the premiums are paid. If premiums are added to your monthly mortgage payment and, say you miss a few months or send partial payments ... guess what? The policy will lapse.
They added mine in with my mortgage payment, which seemed a bit off to me. And after thinking about it a few months later I asked around -
Then I asked to have the premiums billed separate from the loan payment.
Just an FYI.
Stay cool

reply to post by The_Seeker


This statement to the seeker:
If I may?
To protect people from hardship should they have a legitimate loss of income or sudden inability to pay their loan the foreclosure laws were put in place. Allowing the lender to take back the home to resell and the lending community to put a big scarlet letter on that individuals credit report - without making the already downtrodden homeowner file bankruptcy and lose whatever they have left.
That system was introduced by .... who do you think?
Did I hear you say the Banking industry? Very good! A star on your paper.

But this new law gives the bank a virtually risk free venue to profit.
Now, I ask you ... Is that the American way? Is that Capitalism?
I'm thinking ... no.

You seem to be solvent. (I'm basing that on your statement quoted below) -

That really stuffs with the rest of those people that CAN afford to buy a house.

And, God bless you. It seems the economic downturn has left you unaffected.
But, let's say - just for sh ... ts and giggles - that you have some catastrophe befall you. Loss of income is the one happening to many, so let's use that.
Don't you think that the bank taking your home from you and leaving you with a mad scramble to find a new place to live ... and giving you an effective credit score of zero - which means no more owning a home or car on credit for you for a very long time - Isn't that plenty of punishment? Or should we squeeze you till you bleed because ... well if for no good reason, because we're a vengeful lot?

That's what this new law amounts to. Squeezing blood from those who have just lost their anchor in life. Home.

It does nothing to improve interest rates. I don't know where you got that. Interest rates are based on the prime interest rate that the bank has to pay back to the fed for loaning them the money to loan to you (A whole nother scam - for another time) and your personal credit rating ... It has nothing to do with the guy's who just foreclosed. Look at today's rates for proof. If foreclosures had any effect on the interest rate, just based on the sheer number of defaults the interest rate would by up around 25%.
So ... what do you think? Is a law that only helps the bank and does nothing for you a good thing?
Have you reconsidered your position ?... maybe?

reply to post by The_Seeker

That is the whole point, the world in in a serious mess, and this type of things doesnt help.... If you couldnt afford it in the first place, EVEN if the banks offer you the money, you should never have taken it.

Are you by any chance a banker ?

Yes the world is in a serious mess, partly because of this type of thing. If you couldn't afford it in the first place the banks should NEVER have loaned you the money. You know there was a time in this country when if you could not afford a $1/2 a million home the banks sure as heck wouldn't loan you the money.

I understand full well that the homeowner holds some of the blame (although not in all cases) however you seem to be trying to paint a picture where the banks hold none of the blame, and that just is not the case.

What you're saying is that the banks should not take any of the loss, that the homeowner should bear all the financial burden, i'm sorry but that is wrong. These banks have been getting away with usury for years, charging exhorbitant interest rates, giving loans to people that they knew full well didn't understand the difference between fixed and variable rates, etc.

They recopped their losses when we were FORCED to bail them out, and look what they chose to do with that money These banks are also partly to blame for the economic situation by denying US citizens jobs and instead recruiting foreigners to do the work that Americans should be doing......

www.cbsnews.com...

Well who's gonna bail out the homeowners ? The banks should get a free pass and take no losses while everyone else loses out, no that's just not right. The banks made bad business decisions just like the homeowners made bad decisions (although not in all cases) and they should be made to carry their fair share of the blame and their fair share of the losses.

Or what should have happened is the house that was being purchased should have been more within the price range, so that it CAN BE PAID BACK...

Yes and the bank plays just as much a part in that also. The banks should have made sure that the house being purchased was within the price range that the homeowner could pay back. How about they shouldn't have played their sneeky little games with refinancing said houses.

I dont agree with kicking people out of their home, and I think the Rental Scheme is a good idea, if those that are doing it can stick to their guns and be a bit more frugal.

You hit the nail on the head a Scheme is exactly what it is. It is a good idea if it allows people to pay off what they owe on their home and keep it, but not if they are given the option to rent it and still lose it along with everything they've already paid into it.


Edit to add;

And BTW just where exactly are these people supposed to live after this new law goes into effect and the banks are garnishing their wages and going after what little else they have left ? How are they supposed to pay rent when they banks are dipping into their paychecks to pay off a house they can no longer live in ?




[edit on 7/28/2009 by chise61]

reply to post by chise61


In total agreement with the member from Chi-town.

The banking industry is what started us on this road of sorrows.

This whole recession thing started when the banking industry 'sold' packages (or pools) of loans - a mix of prime and sub-prime mortgages - as 'high yield paper' to each other. In other words, as an investment. Some schmucks at the credit agencies rated these 'securities' with a triple A rating (Aaa) based of the past 30 year rate of property appreciation - always going up. And they came up with a formula to value these securities based on expected 'performance' (How much money it generated based on so many loans in the package defaulting, how many going to term, etc)
The problem -
In the banks earnest to create more mortgages to 'pool' into security packages that they could sell off, loans were given out indiscriminately. Many of the folks who got huge home loans with low interest and very little or no money down (as security) from the expanding (and booming) industry of mortgage loans never had to prove employment ... some even got money without a full credit check.
AIG, Lehman's and most others were heavily invested in these 'High yield paper' securities.
So, the loans started to default. First a few ... then many.
The packages holding those default loans rapidly became illiquid. Or, 'toxic' paper. And no way to unload them because virtually every bank and investment firm had been exposed to the toxin already, and surely didn't want any more.

And you know the rest ... bailouts ... unemployment .... repression
("No, man ... you mean recession, man.. It's a recession."
"Repression, recession ... ah..it's all the same thing, man."
- Cheech and Chong)

Sources:

Toxic Paper

Time.com


[edit on 7/28/2009 by LatentElement]

Most of the mortgages are tide up in securities. In other words the contract has been sent down the derivatives river. You can pretty much squat in your home if you can not pay the mortgage. Once it goes to court the bank will not be able to produce proof they have the mortgage.

So if a Credit default swap, a form of Credit derivative, is purchased to demminish risk of the loan should it default, Then by collecting the redemption value of the contract,, sometimes multiple policies per single loan were purchased,

Investopedia Says:
For example, a bank concerned that one of its customers may not be able to repay a loan can protect itself against loss by transferring the credit risk to another party while keeping the loan on its books.

shouldn't the insurer of derivatives, get the "difference" should the repeal of this law fail?

The banks may collect the default swap insured value, then, with this law, collect the difference of the mortgage resale value persuant the upsidedown "never should have qualified" loan balance, while the mortgage holder is held head first above this wild fire of financial corruption?

This should open the flood gates of the 70% of forclosures that are not put back on the market, keeping the already artificial housing prices up.
By offering these held properties, they can be assured to lower values, have more defaults, collect the default swap values and file the defaulted loan balance against the now bankrupt former mortgage holder.

It's like having a pedophile with a sweet tooth babysit a room full of kids the day after halloween. It doesn't get any sweeter for the banksters.

In the meantime, those who's equity is slashed as neighboring homes lie vacant, are also paying a price. Loss of equity and property value.

When Congress expected renegotiations of defaulting mortgage holders with the lenders to stem the sunami size tides of forclosures, the result was more like going through the motions at a tortoise-like pace, all the while the bankruptcy filings grow exponentially and will not peak until even next summer.

When the next wave comes, (after the commercial real estate defaults pending shortly, know the ones, the malls that jobless communities no longer patronize, Service companies that see business dwindling as the unemployed snowball and consumption freefalls, leaving businesses with no choice but to close and default on the overpriced commercial property loans), ARMs and such that don't kick in until later this year or sometime in 2010, then what?

As it is, those profitting are the lenders, derrivative holders, and the Government that is generating property tax revenues in excess of 300% or more beyond actual values.

It seems as the prices are falling, the taxes are not following suit. the assessed values rose expodiciously, but now at record highs, the correction must be a low priority.

I suggest that many mortgage holders should challenge their assessed tax rates and ask that the County re-evaluate and reduce the rate according to falling market values.

AZ....The Ostrich legislator state.


It seems a class action could be taken persuant many aspects of these contracts.

How about pro bono representation by a law firm with balls the size of beattleguess goes after the entire cast of firms, palyers and agencies?

As they use tax payer billions to defend, defer, appeal and deny those claiming damages, again, the only winners will be the lawyers, court systems, firms, agencies and individuals involved.

But next thing will be incacerating those who cannot pay the balance payments, akin to some child support laws.

I still think the '80's S & L Scandal was a test leading to this disaster which is the motherload of scandals above any other in the historical record of pi;fering and theft.

In fact, even Abscam, should also have a sequel.

[edit on 28-7-2009 by imd12c4funn]