Black Monday - Foreclosure Apocalypse?

Black Monday - Foreclosure Apocalypse?

www.puredoxyk.com

In a nutshell, what happened is that Monday morning, all the major mortgage banks in the U.S. issued some kind of order or decree, that they would cease conducting any kind of workouts or negotiations with borrowers, and instead foreclose on every home they could.

(visit the link for the full news article)

A comment related to me from someone who asked the biggest foreclosure law firm in our area about it was, “We’ve been given our marching orders: No more deals. No more workouts. We play by the rules, and if we can foreclose, we foreclose.” Apparently these “marching orders” came down from every major bank (at least) in the U.S. first thing Monday morning, and as of today, there still seems to be no movement away from this new “policy” of letting homes go into foreclosure en masse, with no way out whatsoever for troubled homeowners.

This horror story comes from the blog of a guy who apparently helps people mediate mortgage problems with their banks. Can anyone confirm this, as it would appear to put many many people in dire straights immediately. As he says: "it could be the worst thing to happen to the U.S. — and even the world — economy yet."

Note: In the blog it says Black Monday was June 14 but in the comments, he actually meant July 14, 08.

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

What possible reason would they have for doing this? The US and arguably the global economy is teetering on the brink. The government is taking extraordinary measures to calm the population and stabilize the economy. Any mass foreclosure movement would dump tens or hundreds of thousands of additional properties into a housing market that is already glutted with unsold properties. This would tank whatever sliver of activity currently exists in the housing market. The banks would then end up with massive numbers of unsold properties on their books likely causing many to fail. I just don't see any reason why any bank would take this course if it could be avoided.

This is a horrible (for the consumer) tactic of forcing the Fed's to bail them out. The only plus is that this article happened about a month ago, and I haven't heard of any followup; maybe the banks saw what happened to IndyMac and thought twice.

reply to post by Shar_Chi


When you have a mortgage that you can afford, you buy insurance on it, so that if you become unable to work you dont lose your home. I feel bad for all the people that bought homes they couldnt afford, but READ WHAT YOU SIGN. If you got yourself into a house you can't afford, dont expect to keep it.

Thats shrewd and it sucks, but its reality.

As far as it being black monday, it's not even close. I totally agree that its the next chapter in a bad story, but I remember black monday. It was a lot worse. My grandfather remembers the fist black monday and it was worlds worse.

What possible reason would they have for doing this?

To make their money back. Person A lives in a house that they purchased for $200,000. Person A can no longer pay, they have made $10,000 in payments so far. Now they foreclose on A and sell to person B. Person B buys the house for $175,000. The lender makes money instead of losing it. Really sucks for the forclosee but its totally in the limits of the contract.

I believe that the blogger is on the right track.

Both State and Federal goverments are trying to find ways to tighten up regulation of Federal and State banks.

Arnold, Governer of California , just passed a bill forcing California banks to have a sit down with the persons they are forclosing on in order to work things out.

The banks hate this. They see that California has passed a Bill that imposes upon what they would consider a breach of contract.

If California has passed this Bill then other hard hit States will do the same.

Nevada, being the State that was the hardest already has a law like Califronia's law ready to go.

For the 18th consecutive month, Nevada leads in the number of home foreclosures. In fact, in Gov. Gibbons State, 1 out of every 122 households was in some stage of foreclosure - four times the national average. Loan foreclosures in June amounted to 3,133 properties in Nevada.

FLorida is not far behind.

SO, with the banks seeing the trends in new bank regulations coming from both State and Federal levels, they would naturaly want to Foreclose on as many homes as they can before the homes are devalued more and they are forced by the Federal and State goverments to make consescions that will cost the Banks money.

Very scary world we live in at the moment.
axcessnews.com...

Sorry..here is the link.

[edit on 17-7-2008 by whiteraven]

reply to post by jsobecky

As noted this was posted this monday just gone, he put the month wrong in the blog and apologised below in the comments.

reply to jprophet420
I guess the blackness of the monday depends whether you find yourself on the street or not. Whether or not you get directly affected by someone else's foreclosure, if this blog is true... the ramifications will be enormous and probably can't be understated. True you must read before you sign, but when they change the rules mid-game who holds the banks to account>?


[edit on 17-7-2008 by Shar_Chi]

I worry about the economy taking a dive and loosing my disability check. It is not much but it does pay the mortgage.
I have only been late one time in going on 9 years after my ex was injured OTJ.

As for the cost of living I am doing what I can, but do have worries over the economy crashing, I could never afford things like the electric bill, phone, trash, my van payment or insurances and taxes.

I once heard that when the crash is official that the Banks and lending institutions can and will call all high risk mortgages. These are loans that have the highest risk of default regardless of what your payment history has been...

Originally posted by jsobecky
This is a horrible (for the consumer) tactic of forcing the Fed's to bail them out. The only plus is that this article happened about a month ago, and I haven't heard of any followup; maybe the banks saw what happened to IndyMac and thought twice.

Agreed! Seems this will force the 'government' to step in and bail them out or face the heat of thousands upon thousands thrown into the streets.

It still seems like a rash decision on the part of the lenders. Hard to believe they are motivated to do this at a local level. The higher ups seem like they're desperately provoking Fed action. But isn't it their own policy of vetting borrower's that's to blame?

Here is another snippet of news that I found interesting.

RealtyTrac's vice president of marketing was quoted as saying that foreclosure activity has not been this high since the Great Depression of the 1930s. Other experts say the home foreclosure problem will overhang the US economy well into the next decade.

If the banks see this trend to be a decade in length then they may start to forecles ASAP.

Forcing the Fed into action is probably their game but maybe they actually want to be holding property instead of money for some reason. Could it be possible that the banks know something is coming up and want tangible assets on their books rather than (nonexistent) cash or loan credits?

They can do that?

So even though we both signed on the line, they can just for no reason say hey,
we want all the money you own now or we are taking your house?

What if it is FHA backed?

Correct me if I am wrong but I believe a foreclosure takes a few months, does it not?

So if the banks begin to close their bad loans and high risk loans we will not see this until September or October.

A new October surprise?

Also I wonder why banks are going after reverse Mortgages? Will they not own the land as they would if they foreclosed? (besides the fact that they made tons of money on a Reverse Mortgage) I ask this in line with the idea that banks do NOT want to own the property. One of the above posters had suggested that banks may want to own this type of asset. I

I may tend to agree with that idea.

In Reply to amatrine: Yes, in most cases, not all, the note is a demand note. The bank can call it at any time.



[edit on 17-7-2008 by whiteraven]

No mortgage company or bank would ever do this, because they would end up losing more money than they would have. NO bank actually wants your house; let's go through this logically, if they foreclosed on most all houses in or teetering on default what would that do to home prices? Hrm...well it would make them fall dramatically...so they would actually lose more money...be unable to issue more paper, would be highly illiquid and would eventually go under...and well in short this guy is talking out of his ass.

[edit on 17-7-2008 by yellowcard]

I noticed most or the majority of the foreclosures are happening in the south. It's like all of it was planned because the banks will not have to worry about the pipes busting in the winter. Does anyone see this strange coincidence or is it just me?

Well I am in the Southwest. Here in the Metro Phoenix Area it was the second worst area hit, but it was also a very high bubble here.

Investors from California bought up a lot of property out here for profit.
The number one industry here has always been construction. Put those together,
and the bubble burst, we are now out our number one job source, building homes, and a lot on the market, in a place where housing was the number one market.... So I would not say it has anything do do being close to the south. It was just the way it affected the market here.

There will still always be some market here as more retirees find there way here, but your not going to see jobs go back up until the stock of homes goes down which can take a while. Here in the valley 7,000 home foreclosed last month. Rents are shooting way up, as so many have lost their homes , and are competing for rentals. Last year, the rent on my old rental home was $790.

The current residents pay $990. That was a 1970's non updated home.
An average home rent here is now $1,200. We just bought our home after the downturn, and my mortgage is now $800. Made sense to buy, where before it made sense to rent.

Even with the downturn here, prices have not dipped below 2005 levels except in major outlying areas.

Yay! Here's how to fix the housing problem... flood the market with more vacant homes. Oh, wait, isn't that what drives the values of our homes down in the first place?

reply to post by jprophet420

Originally posted by jprophet420
When you have a mortgage that you can afford, you buy insurance on it, so that if you become unable to work you dont lose your home.

Correct me if I'm wrong, but mortgage insurance is pretty useless in the first couple of years you pay for it.

For instance, if your mortgage is $1000/month and you lose your job, the policy will only pay about $75 - $100 towards your mortgage. It only becomes an effective "tool" after you've invested quite a few years (and dollars) into the policy.

That's the way credit card insurance policies work, at least. Mortgage policies may be different.

Correct me if I'm wrong.... (sorry, j/k)

This could not be more 'synergistically' coincidental if it had been planned and systematically carried out. The timing perfection of the failures, the bank practices, the triggers. Is this a text-book case of some economic model established for MBA training?

It makes me bitter. I am no economist, nor do economists count among my friends. I can't understand how can such a plundering of the wealth of our nation have occurred right under our noses?. This country was once in possession of what the world recognized as trillions of dollars, we were THE preeminent economic powerhouse on the planet.

Am I to understand that 'no-one' is responsible for this? Sure you can blame the little people chasing the "American Dream" and taking too much risk to have it. But wasn't the Bank also 'willing' to take that risk, shouldn't they have known better? Little by little through the banking system, we lost trillions of dollars? That's a LIE. Through the banks we created TRILLIONS in DEBT.

The banks are at the center of this evil. We owe them money and interest on money that never existed, they never had it, they were just 'guaranteeing' it for profit. And now we see the proof that they never had it. It was a lie, and they couldn't guarantee squat, they were unable to uphold their purpose, the contract was defaulted as the banks never had the wherewithall to support the loans, in kind. You call a cab and a guy shows up on a unicycle, are you still obliged to pay him? This, as preposterous as it may sound is how it 'feels' to me..

I understand the 'tried and true' maxim regarding the statement: "banks don't really want your house." But I don't think it can be that simple. Alarmist as it may sound I see large-scale NAFTA and EU plans in place, HUGE infrastructure projects are going to foreign interests, as our government has opted to allow our infrastructure to rot; those same interests are represented in the central banks of the world (the elite's piggy bank). They may not want your house, they may want your LAND. With the creation of say the SPP or NAU the planet grows a new economic teat from which the wealth can be drained on a sustained basis, rapture for the 'free marketeers'.

"Wealth", that's a laugh. In reality it's our labor, the resources of our land, our time, our very thoughts and art; that's what wealth is, they just measure it in specie and make us beg for it.

(I'm sorry, what were we talking about? )