I am suing Citimortgage.....follow along as I hang these bastards.

Foreclosures are a huge money maker for the banks. With all of the late and junk fees added to a troubled loan, the government foreclosure compensation, and the fact that these mortgage companies are insured against any losses- Foreclosures are, overall, a giant windfall for the banks. Tax write offs too. Also, what people are failing to grasp, is that no money is ever really loaned for a mortgage. It is fiat money, an accounting ledger......the bank doesn't loan it's own money.

Foreclosures are, most emphatically, not a huge money maker for banks. If they were, how would you ever explain the unprecedented number of bank failures over the past couple of years? There has been a tidal wave of bank failures, and more to come. If foreclosures are so profitable, why would there be so many bank failures?

Junk fees? Listen, it is extremely expensive for the bank to foreclose on a property. When a borrower stops paying, the bank has to hire collectors, attorneys, and loan workout resolution officers to try to remedy the defaulted loans. This all takes time and money. It's very costly for the bank to foreclose because of these expenses. The average attorney and loan workout officer at a bank have salaries that are not cheap -- because these are specialized niches of finance that require specialized legal, bankruptcy, and collection law knowledge.

Banks are not insured against these losses. You must be confusing FDIC insurance, which protects depositors, not banks, from loss of their deposited funds at the bank in the event the bank fails. There is no insurance that a bank can purchase that insures them against their own stupidity of lending money to deadbeat borrowers.

If the bank doesn't loan its own money, then what do you think the bank should do with all of the interest on the loans that it receives over the course of a 30 year mortgage loan portfolio? Do you even consider the possibility that the bank makes a profit in the form of interest payments? Where do you think that profit goes? It goes towards making more loans, and expanding operations -- more retail branches, more infrastructure, and yes, more loans. You act as if a bank operates in a vacuum in some magical fairy land spitting out free cash at will to anyone that wants it.

That's why they want people's homes. Period.

I assure you, banks definitely don't want to be saddled with rapidly depreciating assets on their books. Let alone the maintenance costs, collection costs, auction costs, etc.

What banks want is a performing loan that earns interest, from a good borrower that pays their note on time. They don't want to be in the real estate maintenance and auction business. First, it's a hassle. Second, the bank makes a ton more money from borrowers that actually pay their mortgage on time, versus a deadbeat that doesn't. That is just common sense.

When a borrower defaults, the bank stops earning interest, and then has to spend tons of money to pay for collection and legal costs, not to mention appraisal costs and hiring a realtor to sell the property -- all of which cost big bucks.

Then, when the house is actually taken back by the bank, most of the time the house is trashed. So the bank has to then spend thousands of dollars in repairs to make the property livable and sellable.

By this time, with the rapid plummet in real estate prices -- oftentimes 50-60% declines since the peak a few years ago -- a house worth $500,000 is now worth $300,000 or less. That's a huge hit to the bank's bottom line.

Trust me, the foreclosure business is hardly profitable for the banks. If you talk to anyone in the banking sector, they will confirm the abovementioned statements. Many bankers -- sales, operations, credit, etc. -- have lost their jobs and cannot find work within the financial sector. If foreclosures were so profitable, these bankers would be working today.

So when a bank makes out a loan, does it loan against its assets as collateral, or does it simply "create money out of thin air" by giving the Federal Reserve a printing order? I think we can all agree that the Federal Reserve is america's semi-private central bank as they have admitted so themselves.

Lets attempt to keep things as simple as possible so those without a PhD in economics can understand. Most economists(if not all) will tell you that economics is not a true science; that is provable with empiracle methods such as astronomy, biology and math. Its more of a philosophy or religion if you will.....

CookieMonster makes some good points despite the fact I have a hard time believing him. Why do some banks fail while others get stronger? If money was truely created out of thin air wouldn't all the banks survive just by ordering more money from the federal reserve? In that case, hard assets would be quite unimportant!

So when a bank makes out a loan, does it loan against its assets as collateral, or does it simply "create money out of thin air" by giving the Federal Reserve a printing order? I think we can all agree that the Federal Reserve is america's semi-private central bank as they have admitted so themselves.

If a bank could truly "create money out of thin air" (it can't, by the way), then no bank would ever fail. We have had an unprecedented number of bank failures in the past couple of years, and more to follow. I am sure that if the CEO and Board Members of these failing banks could magically make money appear out of thin air to prevent their bank from failing, they would. Unfortunately, such is not reality, despite conspiracy theories to the contrary aplenty on the web.

As I stated elsewhere, when a bank makes a loan, it earns interest on that loan. After operational expenses have been paid, that interest is profit for the bank. Lending money at interest is the main way a bank makes money.

Over the course of a typical 30 year residential mortgage, a bank might earn 2-3 times the original principal balance paid out at closing. That's a chunk of change. Remember, banks act as businesses, and are not non-profit organizations run for the goodwill of others. They are in business to make a profit. Like any business, some banks fail due to mismanagement, over zealous lending to unqualified borrowers, etc.

Take a look at the balance sheet of any well-run publicly traded bank, and you will see that these banks have assets in the form of huge reserves of liquid cash, investments in stocks and bonds, etc. They also carry significant deposits from depositors -- such as CD's (Certificates of Deposits), which hold penalties for the depositor if withdrawn before the maturity date.

Why do some banks fail while others get stronger? If money was truely created out of thin air wouldn't all the banks survive just by ordering more money from the federal reserve?

Banks fail when they make too many loans to unqualified borrowers that cannot possibly repay. At first, when banks aggressively lend to unqualified borrowers, it appears that the bank is growing and making money, so their stock price rises. But when these loans eventually default, the bank takes huge losses and the stock price plummets.

Again, banks can't survive by simply borrowing from others --- such as the Federal Reserve system --- to cover their huge losses on these bad loans. In fact, that only perpetuates the problem, and can make things worse. Because now they have bad loans that aren't paying any interest, and they also owe money to the Federal Reserve at interest. It's a double whammy.

If you lent $1,000 to a friend, and the friend stiffs you, you are out that $1,000. Banks are the same way. If the borrower stiffs the bank, the bank cannot magically cover the loss by creating money out of thin air. That's why banks have credit analysts and underwriters -- to scrutinize the borrower's financial health to determine the borrower's capacity for repayment based on the borrower's income, credit history, job prospects, etc.

When that friend stiffs you for $1,000, you could go get a credit card and charge it for $1,000 to get your money back, but then you have just created a debt for yourself, and really haven't done much for yourself. Same thing with the bank -- When the bank that was stiffed has to go borrow money from the Fed or from investors, they really aren't accomplishing much but creating larger problems for themselves further down the road.

reply to post by CookieMonster09


Thanks for explaining it to me in laymen's terms. Banks make money through a variety of ways but not "out of thin air" as some suggest. They make money in two basic ways:

1)bank fees
2)interest differential between deposited money and loaned money; they give interest to the depositers which is substantially less than the interest they charge on loans.

Then they invest that money into various "securities" which MAY give them a higher return on their bottom line.

The issue with people that claim banks make money "out of thin air" seems to be that the money in circulation is not backed up by anthing precious; no gold, silver,gems, etc! It has been said again and again that there are NOT enough precious commodities available to account for all the outstanding currency, yet they keep repeating fiat currency is the problem.

The real issue is the semi-private federal reserve imo because in reality it is a private central bank issuing all the currency, with the majority of its shareholders coming from the big commercial banks such as citicorp, chase, boa, barclays, deutcshe bank, etc.

They are operating the primary lending machine while commercial banks operate the secondary lending machine. I cannot go to the federal reserve and ask for a car loan and even the government has never mentioned borrowing directly from them.

So in essence the big bankers loan to the small bankers and people end up paying TWO LEVELS OF INTEREST for their money. Remember a government is supposed to repesent the people and as such should have issuing authority over currency. They don't! The money government RAISES comes from taxation and issuing bonds; fancy name for promissory notes!

I can give an real world example of how banks make big money out of foreclosures.

Often it is corrupt / opportunist people within the banks who profitby forcing the action then taking steps to see they profit from it.

Somone I Know recently lost their home thru foreclosure by their bank lender.

They knew they were getting into trouble - the guy earned a lot in a mining co job - fly in fly out lots of overtime etc, then he was offered an even better payng job with another mining co - so he took it - for more pay. 6 months later the mining co folded and he was out of a job. His old job at the first mining co was filled so he was out of work, so he came home and took a job fitting truck tyres, within about 3 months he injured his back badly - a permanent disabiliy that put him on low maintenance wage paid by te workers compensation in surance - he was in and out of hospital for spinal surgery that failed to fix the problem etc for over a year.

His wife lost her part time job and their income more than halved basically and they couldn't make payments - there was no mortgage nsurance on their loan.

Because they had been paying this house of for over 10 years they had quite a lot of equity in the house, and they knew they were going to lose it so they decided to sell it and at least get rid fo the debt and salvage their equity.

It was appraised by the realtor at $480K - and was neat as a pin the guy was fastidious about his lawns and gardens all auto reticulated the house presented like new.

They had one or two potential buyers, but no firm offers and acceptances received - the bank saw the house listed - knew the mortgage was falling behind - saw ther opportuity for a quick profit and moved fast to foreclosure.

As soon as the couple were evicted, and before forecloure was finailsed - they shut off the water and power so no more auto reticulation - the gardens went all limp and trees shrubs started to wither and die back in the heat f summer with no rain and now water - the mani cured lawns went brown not green from dieing grass - the grass wasn't cut and was allowed to grow tall before it died off - and now the place presented as tho - it wasn't well maintained.

Then the auction sign went up from a local realtor.

It wasn't well advertised other than the sign on the front lawn and few potential buyers viewed the place.

At auction it sold for just $330K.

The buyer was a relative by marraige of the bank employee who forced the foreclosure.

Within a week of the auction close - the power was back on the for sale sign gone, and the lawns & gardens being reticulated again - about a month later, the lawns were bein trimmed by a contractor lawn mowing agent, a landscape gaden contractor replaced a few plants and trimmed out the dead leaves from plants in the gardens that all came back lush and green.

The pool was chlorinated and filtered and all sparking blue again...and the place presented like it used to before the original owners were evicted. The same realtor again listed the place - this time using photos from when the original owners listed it of everything looking lush and green and well maintained - featuring the below ground pool etc and it was a BIG advertising campaign with mass media coverage.

It sold by private treaty thru the realtor (not by auction) within 6 weeks for $540K!

So.

Original owners owed the bank about $200K after more than 10 years paying a 15 - 20 year mortgage.

They listed for $480K so had at the time about $280K equity + the $200K mortgage.

It didn.t sell and they didn't realise their equity!

The Bank employees relative provided with a no deposit mortgage/loan by his relative at the bank based entirely on the value of the house, bought it at auction for $330K

If lucky they might have spent $2 or $3K getting the gardens and pool presentabale again.

They flipped / sold the house within a couple months for $540 byprivate treaty thru the listing agent.

In effect the Bankers relative made a tidy $207K "profit" thru his relatives insistence that the loan be foreclosed and providing a loan to a relative by marriage.

There was suggestion that this 207K profit was later "split" between the bank Employee involved and is relative by marriage of about $103K each.

Essentially - by use f foreclosure the bank employee and his relative by marriage took al of this couples hard won equity, by fraudulent use of the banks foreclosure policy.

You don't think other employees n the banking industry - keep an eagle eye out for this kind of opportunity?....

The more equity you have in your home (i.e. the potentially more their is to steal from you) the MORE the bank is likely to foreclose on you because someone who works n th bank is on the lookout for these types of "ast buck opportunities by using their relations and their access too the banks money.

It might not be the bank per se who's robbing home owners blind (bye technically doing it legaly albeit in an immoral way) it is FAR more likely to be employees who work for the bank who see a fast buck opportunity buying selling (flipping) houses and realising profits from someone elses hard earned equity.

The original owner couple - got almost nothing back out of ther equity - the bank who held their remaining 200K mortgage - added hge fees and carges penatly interest etc to the 200K mortgage loan, and fees for the realtor selling it (commission) - after it was all done and dusted of the 330K realised at auction for the property - they received from the bank less tha $50K even tho the house realised 130K at auction above the 200K odd owed.

This is how the banking system works against the mortgagor, once your forced into foreclosure - you pay for everything and I mean everything and the bank andits employees cleanut your lifes equit in theproperty - because they can afford to wait and to advertise to sell the house with a big campaign etc and they deliberately manipulate the condition fo the overall property by havng power and water shut off for a period etc.

Defending the bank isn't the issue - its the thieves and scounderels who work at th bank are the real issue.

They are vultures who sit in their ivory tower perches just looking for their next prey victim.

Thats how it works in the real workd - make no mistake - unless you can liquidate before foreclosure, you will lose basically al your equity - that was the whole reason for foreclosure in the first place you will find. Your equity is someone elses fast buck.

These banking profiteers are the ones you see with waterfront homes and big yachts and fast cars.

Cheers

I agree banks usually lose money in foreclosures but this is why I don't understand why so many aren't doing permanent modifications.

And they aren't - only about 10% of eligible loans have been permanently modified? So why?

And not only are the not allowing permanent modifications, they are taking steps to make people THINK they are getting permanent modifications - but not really ever giving one. From personal experience, I can tell you banks have told me lie after lie after lie. Read the class action cases that have been filed, this isn't a unique experience.

Why not just be honest and state they aren't going to give out modifications? Why not just be honest? This is the part I really have a hard time with.

The only thing I can think of is Banks want to prevent the recovery, so they can get Republicans in power again.

Originally posted by CookieMonster09

Again, banks can't survive by simply borrowing from others --- such as the Federal Reserve system --- to cover their huge losses on these bad loans. In fact, that only perpetuates the problem, and can make things worse. Because now they have bad loans that aren't paying any interest, and they also owe money to the Federal Reserve at interest. It's a double whammy.

But this isn't how it really works, is it? The large banks know they will get bailed out (AND GET TO KEEP THEIR BONUS CHECKS).

Again, if they really lose money with bad loans, why not complete more modifications?


You did a good job Cookie Monster, of avoiding the issue of the problem of banks lying during the modification process.

reply to post by Daughter2

Why Banks Foreclose

"Servicer Compensation and its consequences paints a picture of how the current mortgage servicing industry has little to no incentive to work with borrowers.

One commonsense solution to the foreclosure crisis would seem to be offering borrowers loan modifications. But as countless borrowers continue to point out -all they continue to get is a loan modification run-around that further ruins their credit and pushes them into unfair or illegal foreclosures.

The financial industry has responded to media questions as to why borrowers complain of mortgage servicers losing documents and slow -to no- responses on their loan applications indicating the problem is a result of too many applications for their staff to handle the load.

But this report takes us down a different path. Turns out there may be a good reason borrowers are getting the run-around pointing out that servicers may have a reason not want to help their customers modify their loan at all; "Even if the investor takes a hit on the post-foreclosure fire sale, the servicers have stopped its bleeding and recovered any fees, costs, and advances...".

According to this report, servicers unlike investors or homeowners, do not generally lose money on a foreclosure. In fact, loan modifications can be costly to the mortgage servicers;

"A servicer deciding between a foreclosure and a loan modification faces the prospect of near certain loss if the loan is modified and no penalty, but potential profit, if the home is foreclosed." And it turns out -the quicker the foreclosure -the more money they could potentially make.

"Servicing companies get repaid all advances when a foreclosure is concluded. They can also recognize as revenue on their books, after foreclosure, all previously unpaid charges, such as late fees, and collect the costs of those unpaid charges from the foreclosure. By moving to foreclose quickly and to sell the properties after foreclosures it can actually help servicers offset the costs of interest advances..."

Read and download this 60 page in-depth report on the mortgage servicing industry -and it may provide the answer that many homeowners have been repeatedly asking; "Why won't my mortgage servicing company work with me?"

The truth is, as things stand now, unless legislative regulatory actions are taken and homeowner complaints are taken seriously - the economy will continue spiral downward as homeowners continue to lose their homes."
-From Denise Richardson's blog, Denise Richardson

reply to post by ianmoone1

Banks have PMI to protect them from defaulting borrowers, if people put down less than 20%. Don't people remember why PMI was created? In response to record foreclosures in the late eighties. Banks are protected through PMI, and most banks have additional insurance to cover losses......and not FDIC insurance that protects the consumer.
Large banks have policies to protect them from foreclosures. The banking industry's wide risk may lie in large directors' and officers' (D&O) and errors and omissions (E&O) claims on policies. There are insurance policies to cover junior insurance policies. There is so much more to the story than people know. The government stepped in with TARP, knowing that there was a looming disaster. Unfortunately, the 30 billion TARP fund, has only paid out 300 million to date, to help struggling homebuyers.

I don't believe for a minute that foreclosures aren't profitable. Banks don't do anything that doesn't improve their bottom line. They wouldn't have made a dime modifying my loan, but they wouldn't have lost a dime either. However, in foreclosing on my home, they could have made over 200k while collecting PMI insurance for the default, and all additional fees. Something doesn't add up.

reply to post by CookieMonster09

It is not expensive to foreclose in a non-judicial state, and furthermore, foreclosures are only a small reason banks are failing. Bad investments, purchasing troubled assets, bad business decisions and rapid growth are other issues. Banks could do no wrong for fifteen years, riding the wave of growth. Now, home buying is down, people who have lost fortunes in their 401k;s are no longer investing, commercial property foreclosures are up, commercial vacancy rates are up, the markets are down, and growth has slowed. If you think consumers were greedy, take a look at commercial real estate investments....it eclipses the consumer market. No one is yet talking about the downfall of commercial real estate that is now picking up speed.

reply to post by Daughter2

Cookie Monster's thinking is so black and white, and so misinformed that he/she can not be objective. Most people who bought homes, did so in good faith. Most people trying to save their homes have done so in good faith. Cookie Monster would have everyone think that most people were greedy, devious thieves that lived beyond their means, lied on their mortgage papers and conspired to cheat the system. I would assume that percentage is less than 1%.

What is blatantly obvious, is that banks are flat out refusing to modify loans to qualified people. Common sense would dictate that this is because it is more profitable for them to foreclose. Less than 6 percent of all people in foreclosure will find an attorney to represent them/or have the means to do so.

I wish Cookie Monster would go back to his trashcan....or change his name to Oscar. Cookie Monster appears to be paid to blog on behalf of the banks.

Originally posted by lostviking
reply to post by ianmoone1

 

Banks have PMI to protect them from defaulting borrowers, if people put down less than 20%. Don't people remember why PMI was created? In response to record foreclosures in the late eighties. Banks are protected through PMI, and most banks have additional insurance to cover losses......and not FDIC insurance that protects the consumer.

How can we know if private mortgage insurance is enough for the bank to potentially offset the inheritant risk of loss? It would depend on many factors such cost of foreclosure, market value of real estate and most importantly how much equity the future home owner has acquired.

I think it is safe to assume most foreclosures are conducted on an oportunistic basis, so naturally someone who bought "their" new home 2-3 years ago will be given "the freedom" of modifying their loan, while someone in the 10-15 year of a 20-30 mortgage would likely be turned down.

Originally posted by lostviking
Large banks have policies to protect them from foreclosures. The banking industry's wide risk may lie in large directors' and officers' (D&O) and errors and omissions (E&O) claims on policies. There are insurance policies to cover junior insurance policies. There is so much more to the story than people know. The government stepped in with TARP, knowing that there was a looming disaster. Unfortunately, the 30 billion TARP fund, has only paid out 300 million to date, to help struggling homebuyers.

Now your talking! Big banks(including mortgage firms) were the prime culprits in this seemingly planned financial disaster. Merryl Lynch bundled these SERVICE mortgages and sold them on wall street as CDOs, moodys gave them a AAA status and AIG came along to insure them.

From another angle now, the Federal Reserve(america's semi-private central bank) is owned and operated by THE SAME people that own and operate all the big banks and wall street investment firms/brokers. They issue the currency, they then bribe government to pass any legislation they want and bingo big banks are "too big to fail" while small banks either go under or get absorbed by the giants at the very last moment...so they can be bought as cheaply as possible.

Its all related my friend.....

Originally posted by lostviking
reply to post by Daughter2

 

Cookie Monster's thinking is so black and white, and so misinformed that he/she can not be objective. Most people who bought homes, did so in good faith. Most people trying to save their homes have done so in good faith. Cookie Monster would have everyone think that most people were greedy, devious thieves that lived beyond their means, lied on their mortgage papers and conspired to cheat the system. I would assume that percentage is less than 1%.

His misrepresentation of facts in this regard is obnoxious to put it mildly.......

Most of the house-flipping he loves to mention is happening RIGHT NOW, not before the crisis. Whats the point of buying expensive property and having to refurbish it, if you can't sell if for a profit? The whole idea is to BUY CHEAP and SELL EXPENSIVE. I am sure there are some wealthy sobs buying run-down appartments, now that the market is depressed, and waiting for the bull market to sell!

And how can someone put all the blame on people living over-their-means, when banks and government CONSPIRED to encourage low wage earners to "get out of your appartment and buy a home"? I am not condoning endless debt, to the contrary they were BRAINWASHED to be aggressive.

Just FYI, in Israel a bank will not lend over 60% of the value of a house.

It's pretty obvious people here, for the most part, blame banks for being greedy. They would have you believe the poor borrower is just a victim. But there's plenty of greed to go around. I would maintain that no bank forecloses on a borrower who had made all his payments on time. There's always a first cause, and that first cause is the borrower stopping payments. Now the OP here has a complex case and perhaps he HAS a case to sue. We'll have to see, but, frankly, I don't think we know the whole story here. But there are lots of people generalizing here far beyond the OP's particular case. Is there greed involved here? There surely is, and it's usually with the original borrower.

You have to ask yourself why a borrower would take out a loan whereby anything that happened to him would put the loan at risk. Now you can say 'victim of circumstances' and all that, being forced to buy into an inflated market, losing a secure job, illness, etc. All those are factors, and they are all the responsibility of the borrower to assess. Now we all know all borrowers are extremely intelligent with IQs in the top five percent, and all borrowers are making a bet that their house will increase in value. Otherwise, why would you ever want to buy a house when you could rent for less than a mortgage payment? It may not seem like a house purchase could go underwater, but that's only because most borrowers aren't old enough to have ever experienced it. Housing prices began to dramatically go up in 1975. Why? Because the first baby boomers were pushing the available supply of houses. I bought a house in 1975 for $19,000 on an income of $13,000. I sold it in 1978 for $58,000. That trend never slackened until just recently. So although this is certainly not the first boom & bust cycle, most borrowers, unless they lived in the rust belt, had never seen it before.

Now a financially intelligent borrower would assess the risks to his loan from a conservative standpoint. He would assess the security of his employment, for example. He would assess the risk factors to his life, including illness or accident. He would buy life insurance with the intent that it would pay off the house in the event of his death. He woud cover himself for medical emergencies. You can even buy insurance that makes your house payment if you become sick or disabled. He would make sure he had a year's worth of payments in the bank. He would not take out a loan so large that it ate up all his discretionary income. For example, when my wife and I decided to buy our last home, we decided to take out a mortgage that any one of us could comfortably handle ourselves. We could have qualified for a much, much higher payment on a much fancier house, but we took a conservative approach. The point here is that there are many things a borrower can do to minimize his own risk. If he doesn't do them, it's not the bank's fault. You can tell me all these hard luck stories you want, but every sob story I've heard so far could have been handled by the borrower well ahead of the issue.

Here's a very good example of stupidity:

Guy buys a house for about $190K with about half down from his old house n a nice neighborhood, good for kids, good neighbors, passable schools. It's not a huge house, maybe 2000 ft sq, but there's not a thing wrong with it. It's quite repectable and well within his budget.

But our guy wants to live on the lake. One of his buddies lives on the lake and oh, is it nice! It's a party lake and everyone just loves the water. Isn't there a way he can live on the lake, too? You see, we're in the midst of a boom and that $190K house is now worth $290K! Instant equity! So here's what he does. He refinances and takes as much equity as he can from the house, then rents it out for less than the new mortgage. So his payment went up from about $700/month to $2000/month, but he rents it for $1400 or so. But he's got $200K to put down on the lake house that cost him about $950K.

He's on the lake! But he needs a boat, so he buys a $100K boat, too. And the beat goes on. Housing prices are still rising, and the kitchen could use a remodeling: granite countertops and all new cabinets. The lake house is now worth $1.2 million. So he refinances for $1 million and uses the cash to fix the kitchen, buy a truck, and a couple of classic cars. His payment is now something over $4,000/month.

Then several things happened. First, the septic tank failed. It was an undisclosed but known problem from the previous owners who have moved out of state and now have no money. He could sue, but it would take awhile with an uncertain outcome. So the house is uninhabitable. He moves out, but an untended house can be an issue. Power goes out and it freezes, and a water pipe bursts upstairs and floods the house, wicking up the wallboard. He then screws up by turning on the heat, causing mold to grow everywhere. HazMat crews haul it all out.

Meanwhile the housing market tanks. On a good day, after he rebuilds the entire inside of the house, the house is worth $500K and falling. He makes good money. He works in commercial construction. Now had he not been so greedy he could have had his old house paid for 100% and had a brand new boat he could take to the lake, which he now has seen so much that it is kind of boring. He's thinking of walking away from the house now and sticking the bank with it.

But it's all the bank's fault. After all, they were stupid enough to lend him the money.

I am done posting. I have heard enough ATS members blaming people for losing their homes, and feeling horrible for the banks. I am done with people saying that there is 'more to my story' than I am revealing.

I am so disgusted by my fellow man. The majority of homeowners in foreclosure have tried to make it right. They have filled out modification papers and been denied again and again. They have called their loan servicer who has given them the wrong information, hung up on them, and transferred them from department to department. Life is messy.....things happen to people, but given a chance, most people will try to make it right. Homeowners in foreclosure are NOT given this opportunity. 300 million dollars of the 30 billion in TARP money has been spent to assist homeowners in default.

Don't tell me foreclosing on a home is not profitable. Look at the statistics, banks prefer foreclosure to modification. Look at the bankruptcy court filings.....people are filing in record numbers because it is their last chance to save their homes. They go into bankruptcy so they can catch up on their home.

If you think that vacant homes and families in distress is good for America, think again. We are all in this together. There are those people who were greedy, purchased too much home, and flipped properties- but these are the minority. The majority of people have had life circumstances impact them. Lost jobs, lay offs, health issues, the BP oil spill, 401k losses, and pensions liquidated when an employer filed bankruptcy. Bad stuff has happened in this country the past ten years.

I chose to share my own story, because I was treated so badly by my bank and thought I could help others. I had no idea the people of ATS would attack me too. I can pay. I wanted to pay. Citimortgage wanted my home, and the equity in my home. It is that simple.

They make money in two basic ways: 1)bank fees 2)interest

Fair enough. However, the fees earned on a residential mortgage are much less than the interest earned by the bank over a 30 year time frame.

I can give an real world example of how banks make big money out of foreclosures.

Great story. I am sure this happens, though not as often as you would think. Most employees that work at banks aren't that sophisticated, and are up to their eyeballs in paperwork.

What you are describing would be considered a major conflict of interest by most of the larger banks, and would be definite grounds for getting fired. Nonetheless, these things do happen - Agreed on that point.

I agree banks usually lose money in foreclosures but this is why I don't understand why so many aren't doing permanent modifications.

Because the borrower never would have qualified for a traditional mortgage in the first place.

Secondly, when a borrower defaults, and seeks a modification, this means that the borrower is in severe distress. The borrower no longer has the capacity to repay, and has all kinds of cash flow problems. It's really hard to justify a modification if the borrower doesn't pay their bills - auto, credit cards, even electric and cell phone bills go unpaid with a distressed borrower. The borrower may have lost their sole source of income - their job -- and they are barely surviving on unemployment checks which barely cover their auto payment, food and gas, let alone a mortgage payment -- even a modified one at that.

Thirdly, many of these loans were fraudulent loans in the first place. When the bank begins to look at the original file, they usually find that the borrower grossly inflated their income. Why reward a borrower that lied on their loan application with a principal reduction or loan modification?

You did a good job Cookie Monster, of avoiding the issue of the problem of banks lying during the modification process.

Technically, the loan is in default, and the bank has no obligation to do a loan modification according to the original contract, least of all from a borrower that committed mortgage fraud.

Banks are protected through PMI, and most banks have additional insurance to cover losses

PMI is for covering the 20% down payment that was never paid, not the entire principal balance owed. If banks have such great insurance (they don't) for loan losses, then how do you explain all these bank failures?

The fact is, there is no insurance that covers a bank from their own stupid decisions to lend money to unqualified borrowers. FDIC insurance and PMI insurance don't help in this regard.

(Besides, what insurance company is going to lend against bank losses such as what we have seen in recent years? Maybe AIG, lol.)

I don't believe for a minute that foreclosures aren't profitable.

If foreclosure is so profitable for banks (they are not, by the way), then how do you explain the record number of bank failures?

It is not expensive to foreclose in a non-judicial state, and furthermore, foreclosures are only a small reason banks are failing.

We can agree to disagree. If you look at the FDIC post-mortem reports on failed banks, the number one reason why these banks fail is due to loan losses in their loan portfolio.

Most people who bought homes, did so in good faith.

You really need to read the FBI's reports on the rampant mortgage fraud that took place during the boom years.

Go here to read the annual reports on mortgage fraud, direct from the FBI:

www.fbi.gov...

I wish Cookie Monster would go back to his trashcan....or change his name to Oscar. Cookie Monster appears to be paid to blog on behalf of the banks.

I must have struck a nerve, eh? : )

Most of the house-flipping he loves to mention is happening RIGHT NOW, not before the crisis.

You must not talk to many house flippers. During the boom years, house flipping was all the rage. Now, most of them have gone bankrupt. Right now, the real estate market is stale, and lending is negligible at best.

I am done posting.

Boo Hoo. Cry me a river, lol. : )

reply to post by lostviking


Please don't stop posting. I read an article with a situation nearly identical to yours from a gentleman in CA who, ironically, did contract work for CitiFinance and had his mortgage through CitiMortgage. CitiFinance owed him over $100 K on contracts he had fulfilled, yet would not pay. He was advised to stop payment on his home in order to trigger the application for new terms, was given it twice, but conveniently CitiMortgage lost track of his paperwork, TWICE. Neither would they give him any documentation as to how the payments were being applied during the period he was under the renegotiation terms, so he stopped paying again. They also had come back with a new agreement with terms worse than the original mortgage he was trying to modify. At the time of the article he had an attorney trying to stop an imminent foreclosure, but that was were his story left off. Hope you have more success. Will google to see if I can find it, since I couldn't find it in my bookmarks.

He was advised to stop payment on his home in order to trigger the application for new terms, was given it twice, but conveniently CitiMortgage lost track of his paperwork, TWICE.

I guess considering he is about to lose his house, that was pretty bad advice.

I am sure he claimed that CITI lost his paperwork - After all, anyone this desperate will claim just about anything to keep the house from being foreclosed. It does make for a dramatic news story, though.

CitiFinance owed him over $100 K on contracts he had fulfilled, yet would not pay.

Maybe he did have contracts, maybe he didn't. Maybe CITI had good reason not to pay on those contracts, such as the work not being done to specification, or being incomplete, etc. After all, if this borrower will renege on his mortgage contract at the risk of losing his residence, who only knows what kind of shenanigans he plays when it comes to billing his commercial clients.

.....trying to stop an imminent foreclosure

What all of these distressed borrowers have in common is that they defaulted on their original contract. And they will use any gimmick they can to stop foreclosure, including posts for sympathy on Internet forums, and trying to get some media attention to plead their case. If they had any sense of honor, they would hand over the keys to the bank quietly, and go find a nice apartment or house to rent.

I just don't believe one iota of these wild-eyed stories. It reminds me of the grade school kid that complains that the dog ate their homework. Some people never learn.

reply to post by CookieMonster09


I found the article: An Arizonan's Nightmare Journey Through Citi's Foreclosure System

See full article from DailyFinance: srph.it...

I got two things wrong in my summation. He worked for CitiCommercialCapital (equally an affiliate, though) not CitiFinance and his home was in Arizona. (I read it two weeks ago, though.)

".....So, in January 2010, he reorganized his business and then declared personal bankruptcy. Throughout his bankruptcy, John kept in touch with Citi about his mortgage, although he was no longer making payments on it."

It's quite evident he lost his source of income. That happens in a down economy. He bought off more than he could chew.

Why is that the bank's fault? The borrower makes some outrageous claims in defending his position, and we never get to hear from CITI's side of the story.

I can, however, see the somewhat ironic part that CITI owed him money for his inspection work ---- or so he alleges. Who really knows the truth? Obviously, we are hearing from the bankrupt borrower only, and not the bank.

(And, really, what business owner continues to do business with companies that aren't paying their invoices to the tune of $100k? If the story is true (probably not), he should have stopped doing business with CITI long before it hit the $100k mark.)

Once he filed bankruptcy, the borrower can't pick and choose which creditors he wants to pay. That's up to the judge to determine.

And, remember, during this whole period of time, CITI isn't getting paid one red cent while this borrower dickers with them and plays these ridiculous games.