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

reply to post by chise61


I agree with you. I feel badly for the people who lose jobs and then get screwed out of the money. It is a sad situation. However, for the people who either invested or bought too much house, well, that is a different story.

I just wish we waited a bit longer before we bought our house two years ago...

Really this is a GOOD thing

Americans in general have been disgusting in taking low paying jobs and living on a corporate budget ... i.e the real thing that makes you a SERF

IF, you are faced with needing to genuinely come up with money to buy a home, the ONLY answer you have to a 100,000 down and another good 50 G or more in the bank to MAKE SURE you make the payment is to save for 10 years....

OR

Go into business and earn a REAL LIVING... Entrepreneurship in the states will grow again.

I'm sick of Mc Jopbs and nO ONE working a MC Jopb as their only source of income should be able to aquire a nice house they can't actually pay for...

This entire situation of economy exists because we have been dumbed down to want "Jobs" and to pay for things on credit Over 30 years?

That's not owning a house.. you don't "Own" a home you haven't paid for the bank does, your a renter with interest if you don't buy before 30-35 (and why... I mean jesus I wasn't ready to settle down yet) your liable to DIE before even paying off the house...

It's a moronic system ...worse the high payment absorbs money you COULD be using to MAKE money...

We need a wake up Call to RELEARN How to MAKE Money not waste it...

I saw Millions of immigrants in NY growing

Pile 10 to an apartment for 2 years and buy businesses... these people Own their homes in 5 years very often... in one of the highest priced markets in America no less....

The price is LESS to suffer for a few years and give up some luxury than it is to be approved on credit and OWE for the next 30... GET IT OVER WITH WHEN YOUNG.... Work, Start a Business cut expenses learn FINANCE

Don't be a slave.... retire at a normal age like 45 or 50...

Death to Credit I say

Tp hell with student loans too... I see kids from Korea open fruit stands and buy homes for the whole family and Americans... who take a 1/4 Mil to go to school.... as IF you can't buy the BOOKS for 1/10th the price of the class...

It's maniacal already 80% of Universities are sleep away camps anyway...

who wants a Mortgage in the first place..... 50% down... with the other 50% in the bank to assure the payments... build your credit and that's it...

we need to learn to MAKE Money... not borrow it...

You give them the power, whatever names you call these guys, you took the fools gold...

reply to post by The_Seeker

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).

That is an unrealistic comment for an economy in ruins, when the economy is booming maybe, but not right now.

This person is either rich or....
has never been suddenly layed off or lost their job. Or perhaps had massive medical bills.
Realistic empathy is not their strong suite either way.

reply to post by MarshMallow_Snake

I just wish we waited a bit longer before we bought our house two years ago...

I know a few people saying that. A few years back my son and i were sitting on my front porch talking to my landlord. My son was talking about wanting to buy a house and how overly expensive they were here in Chicago. My landlord (who owns many properties in several states) told him to hold off for a couple of years. He said "mark my words the bottom is gonna drop out of the housing industry in 2-3 years" I'm glad he gave the advise and that my son took it.

It's just so sad and unfair what is happening to many people right now that truely don't deserve it. And it is unforgivable that so many banks and big investors were allowed to get away with the dirty little role they played in it, while we're all forced to foot the bill.

reply to post by chise61


I could not agree with you more! Your son was wise to take the advice of that person.

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. ........

I understand where your coming from and in those particular circumstances, but what some banks have done here in Australia, they can organize a scheme, where they can delay your payments for a period, or they can organize minimal payments (based on what you can afford). There are other ways around this.

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.
No everyone is affected...
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 ...........

To be honest I have had to do that, until I learnt my lesson, banks are not here to help us, as you said, they are here to take as much money from us as possible.
In fact for many years I suffered, but, I took responsibility for my actions, looked at what I could and couldnt do and I organised myself... Not hard.

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 .......
Have you reconsidered your position ?... maybe?......

Actually it does affect the interest rates. If you dont pay off your debt, they raise either their fees or the rates and whatever else they can find to cover this shortfall....And we all end up paying for it.

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 ?

No!

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.

And that is the way it should be!!! You only hurt yourself by taking on more than you should. Our parents didnt do it so why do we.

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.

I agree that it does look that way, but I hate the banks just as much as everyone else. But I am just saying if the banks offers you $1 mill and your home your after is only worth 300 thou, common sense prevails, just cause the banks offered it to you doesnt mean you take it...It works both ways, the banks are irresponsible and so are you if you take the over offers!!!!

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.

Yes the banks have been getting away with it for a long time, but we let them do it. We still took their money! Again it works both ways!

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......


If the Gov didnt bail them out where would the US be now! I am not agreeing with what has been done, but if they hadnt have done this, well things would be a lot worse.

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.

No one cause we will all still allow them to do!

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.

Why refinace!! That just add more pressure to what your TRYING to keep up with in payments already. Again you dont have to do this, we are all given free will. It take 2 to play the game...

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.

Agree with you on this.

I dont dispute that the banks are stuffed up. And that people are suffering because of this, but, as I have stated, no one put gun to anyones head and said, you WILL HAVE THIS MONEY!!!
What people also fail to see is the money that the banks have is everyones.... so again when you default everyone is loosing out!
I am sorry that people suffer because of this and I honestly feel that everyone has a right to a home. But to often we don't look to ourselves and see the part that we have played in the whole thing. We and the Governments, the Corp, the Banks all created this mess......

reply to post by chise61



Thank goodness your son heeded that person's advice. My mother knew the bottom was going to fall out long before it happened. Everyone labeled her as "the chicken little lady," as they continued to live fat off the land. She was trying to tell everyone to move off the track before the train hits them and last September the bottom fell out as she was saying for years. Her words couldn't have been more prophetic.

However, I still see the real estate market as being a crap shoot to be honest. A house may appear cheaper than pre-2007 levels but they are still not cheap enough. They ought to be almost giving them away for me to move on them. For example, if the house was say 50-thousand-dollars and you still lose your job, it doesn't matter what your interest or payment is, because if that income stream has dried up; you are out on the street if you can't find a job of comparable salary quick enough. This job market sucks! However, best of luck to your son and that his life remains financially solvent.

Originally posted by Blue_Jay33
reply to post by The_Seeker

 

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).

That is an unrealistic comment for an economy in ruins, when the economy is booming maybe, but not right now.

This person is either rich or....
has never been suddenly layed off or lost their job. Or perhaps had massive medical bills.
Realistic empathy is not their strong suite either way.

I am neither rich, if fact I come from an extremely poor family and I have been laid off before. And no I have never had massive medical bills, because our medical system doesnt work the way the US one does.

Why is the economy in ruins....... WHY!!!!

The economy HAS NOT booming for some years now, we were all running on money NO ONE HAD (they were just PRINTING the stuff for the hell of it), yet we all still went to the banks, knowing full well what was going on, and continued to overdraw our lives.... No there is no Empathy for those that have placed themselves in this situation.
I understand that there are those that have done the right thing and are suffering because of it... but that, from what I can see, is the minority. And that is bloody scary!!!
There are a number of countries that work on this scheme, and here in Australia we are one of them, and I tell you now, look at the position we are in in comparison to the rest of the world.
I am sorry that you guys are suffering, but, keep taking money that you dont have....

reply to post by The_Seeker


Just to clarify a few points, if I may?
For one thing, if you would in the future ... Please use the "quote" button above the text box (the one with the yellow text balloon in it) then paste in the text you are quoting in the box that comes up so it stands out in your post. Otherwise it makes it hard for readers to disseminate what you are quoting and what you have written in reply to that quote.
Thank you.

I didn't want to admit to this because it is ... quite frankly it's no one's business. I know for a fact you do not work for a bank.
Because I use to. National City Bank, which was bought out by J.P. Morgan (the Chase Bank conglomerate). I was going to college at the time and even changed my major to business management with the goal of running that branch someday. I changed my mind for reasons I won't go into. So, to answer your next question; no I am not in that industry any longer. That was more than 28 years ago. I've had several careers since then.
Now, to some of your statements I found misleading:

What people also fail to see is the money that the banks have is everyones.... so again when you default everyone is loosing out!

A common misconception due to the memory of the 'run' on the banks during the Great Depression.
Money provided in a loan comes directly from the Fed, then processed through your branch, and then given to you. In effect, it puts new money in circulation. This system was developed so there never would be another "run on the bank" which would, of course lower confidence in the US dollar.

Again, I'm not sure where you are getting this stuff, but:

But I am just saying if the banks offers you $1 mill and your home your after is only worth 300 thou, common sense prevails, just cause the banks offered it to you doesnt mean you take it.

No bank or lender would offer more than the appraised value of a property. Appraisals are conducted by a third party so as to avoid anti-trust issues.
The reason homes are not worth what the bank originally lent is the drop in the housing market. the bubble burst. The homeowner had nothing to do with it.
Hence the bailout. It was intended to help banks refinance homes to reflect the new lower values and not make them, or the homeowner take a loss. But greed, as usual, has gotten in the way and some lenders did not follow that plan for the money they received.

Actually it does affect the interest rates. If you dont pay off your debt, they raise either their fees or the rates and whatever else they can find to cover this shortfall....And we all end up paying for it.

I will once again explain what drives interest rates:
the Fed loans money to the bank at a prime rate. The bank in turn sets an interest rate to you, the borrower, above that rate in order to make a profit.
How much above? That's where your credit score comes into play. "Prime credit" customers, with a score of 720 to 850 will get a rate from one quarter point to a half point to above prime. A score of 670 to 710 should put you in a two point loan. under 600 a three point loan.
At no time does the bank take into account the defaults of other loans to determine the rate it will charge to you. But, if the Fed feels there is reason to raise rates due to economic conditions, only then does it go up - across the board, for everyone.
Remember, the Federal Reserve in NOT the US Government nor is it run by the US Government. It is a private entity that took over the control of the printing and circulation of US currency in 1913 under President Wilson. FYI

Fees charged by banks are usually used to offset processing costs. i.e. personnel, computer hardware and software, branch maintenance, etc. Not to offset losses due to defaulted loans.

reply to post by The_Seeker


Continued ...
You are right in that folks who took a loan - and knew there was no way they could pay it back - have contributed to the current situation. But they are by far in the minority.
The bank could have ridden it out, if they had invested in some other security.
but ...
Remember, the banks invest heavily in "pooled mortgage" securities. The bulk of their assets, which they would need to ride out the storm of the defaulting notes, were in those securities, or 'High yield paper". An investment that backfired as those mortgage notes which defaulted were "bundled" in with ones that were sound. The thing is, it was sold as a 'lot'. They couldn't separate, or weed out the bad loans. so, in effect, one bad apple DID spoil the whole cart. They couldn't GIVE those securities away.
And they began to sink ... fast.
As loans began to default, the Fed stopped the flow of money for new loans. It had to, or the problem would have kept getting even worse.
No new loans meant business could not borrow to cover short term operating costs (A very normal practice. Used to pay payroll, etc and then paid back as sales, which always fluctuate, increased)
Businesses defaulted, putting people out of work. People who worked hard to pay their mortgages were suddenly out of a job.
.
The point is, this law will give the banks a net to prevent loss ... at the expense of those who have been displaced, and laid off - because the banks blew it and didn't have the money available that they should have when businesses, sound established companies, went to borrow short term to cover expenses...
Are you seeing the big picture now?
Now do you get it?

Originally posted by amatrine


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)

Most states already have this in the way of deficiency judgments. And if you are talking about PMI insurance, yes they will pay the bank if you can't, but they will come after you. PMI is for the bank, not you and is based on your loan to value ratio. Make your payments on time for a certain number of years and it will go away.

Forgot a link on the judgments:
www.foreclosurefish.com...

[edit on 7/28/2009 by Pauligirl]

reply to post by LatentElement


I tried the quote thing (am normally quite successful at it), but for some reason it didn't work out quite right! So I do apologize if you had difficulty reading it.

Again I am sorry, I disagree, when people don't pay for things its does make a difference on what we have to pay back.

If we look at it from this perspective, its the same as shops for example, someone steals their stock, they raise their costs to cover for the short fall... But they don't use the "processing fee" as an excuse...

as for the rest..

Mate I see what your saying, but again I think we may have to agree to disagree.

reply to post by The_Seeker


Agreed, my friend.
I respect your position, and appreciate the fact you are standing behind your guns.
No worries.
Just had to say it, hehe.

reply to post by LatentElement


Yeah I know what you mean and thanks for not taking offense either.
Sometime its hard to write what you mean without someone reading more into it Sometime its just hard to write

Originally posted by The_Seeker
Not if you couldnt afford it in the first place.

What about all those who had a good income until they lost jobs due to the economy?

I don't see a real problem (other than it's unfair, as is much of life). Is there no bankruptcy in New Zealand? AFAIK, most countries have some sort of relief for people whose debts exceed their ability to pay them. If you get buried in debt, declare bankruptcy, cut your losses, and start over again. Not a happy decision, but beats lots of other heartbreaks.

As for this law, it's one-sided. I'll bet the former owner isn't paid the extra, if the bank manages to sell the home for *more* than the mortgage. If that were the case, I could almost see it being fair.

I want to purchase a home.

I find a home I want, for, say, $200,000.00. I do not have $200,000.00. I have, let's say, $40,000.00.

I need $160,000.00. So I go to a bank and ask them to loan me the money.

The bank looks at my credit rating and agrees to loan me the money, with certain stipulations. They want a mortgage, which is basically an agreement that if I do not pay, they get the house. They want my signature on a loan agreement, a legal promise that I will make my payments on time. They want an escrow account, to make sure the house doesn't get pulled out from under me (and them, since it is their guarantee to get their money back) because the taxes aren't paid or I forget to insure the house and something happens to it.

I buy the house with my $40,000.00 and their $160,000.00.

I live in the house and work to repay the bank the money they loaned me.

I get laid off and have trouble finding a job.

I can't make the house payments.

The housing market has collapsed and now that $200,000.00 house is only worth $100,000.00.

I throw my hands up in the air, move out, and tell the bank to come get 'their' house. I have paid back $40,000.00 on that loan.

The bank takes the house back and, since they weren't wanting to buy it in the first place, sell it at auction for $80,000.00.

Now the bank has $80,000.00 from the sale of the house, and $40,000.00 from what I already paid. that's $120,000.00, of the original $160,000.00.

The bank lost $40,000.00.

The bank didn't want the house. I did. The bank didn't get laid off. I did. The bank wasn't unable to find a job. I was. So someone explain to me exactly why the bank should be forced to just forget that $40,000.00 and move on?

Look, the plain unvarnished truth is that every time you sign a loan agreement, you are responsible for paying back the money. Period. It isn't the lender's fault or responsibility if something happens to your income. It's yours. But in this thread I am seeing the majority of posters who simply think they should be able to borrow money and not repay it.

Someone earlier said "you can't get blood from a turnip". True. That's the risk the banks are taking. Even if they garnished your wages, even if they attached everything you own, they have no guarantee that they will get their money back other than your word. Every day, banks 'write off' loans. That means they basically give up and accept that the money they lent someone is gone.

Now, would you lend your money to someone if they could legally just decide they didn't want to pay it back and instead could give you something worth less than they borrowed? No, of course you wouldn't! But that is exactly what many of the posters on here are now advocating that someone else do to them.

Oh, there is an excuse: "the bankers already take enough of our money". Well, if you're talking about the bailouts, I agree. But if you're talking about those payments on a loan you asked for, I do not agree. If you're talking about the interest, I do not agree. Every business in the world makes money through mark-up... that is, they sell something for more than it cost them to make/buy it in the first place. That's the only way to make money, and no business can keep operating without making money. How exactly do you think those tellers get paid? How exactly do you think they built the building? How exactly do you think they put up ATM machines? By spending the money they made through profit!

Banks have only one thing to sell: money. A bank is nothing more than a money store. You buy the money for a certain length of time, and you pay a profit to the bank for the privilege. If you do not repay the money, you have just stolen it from the bank!

I honestly had no idea there was even a law that allowed homeowners to walk away! That in itself is criminal! Every loan arrangement I ever made, I knew that even if the bank took the collateral, I was still liable for any difference between what it was worth and what I owed.

I would hazard to guess that a lot of those who post here about how evil this new law is for favoring the banking industry are the same people who were adamantly against the bailout plans. Well, guys, you can't have it both ways. If you can steal from them, then it's only fair they can steal from you.

What ever happened to personal responsibility? No wonder this country is in such a mess.

TheRedneck

reply to post by amatrine


Shows the govt. is all about the banks and not the people!!

Unbelievable. Just wait until our dollar hyperinflates and people would be able to pay off their mortgages - there will be laws that go in effect to protect the banks at that time too.

S and F

reply to post by The_Seeker


WOW you are cold blooded to the max, let’s say you have this job and it pays great and you decided to get a house that is well with in your means.
Than one day you get downsized from your job due to the sinking economy and now you’re unemployed and struggling to make ends meet, now you have to decided ether to get food or pay bills. And threw no fault of your own you default on your loan now you get kicked out of your house and than you have to pay the difference on the loan and hell, if you could not afford it than and your still in the same situation no job and no steady income what makes you think that a person would deserve this?
So now the family has to pay rent and bills and on top of it are still paying on a loan for a house they don’t own any more….Sad simply sad.

On a side not I would look in to squatter rights if AZ has any that is, you would be amazed as to what you can do with them. It’s how I got my first house got to love Oregon and Washington for there laws!

and now I sold that home and am in the army..... What was I thinking?



[edit on 28-7-2009 by SPC_D]

reply to post by The_Seeker


Double post sorry.

[edit on 28-7-2009 by SPC_D]