I just had a client go into foreclosure

[AlCzervik]

I'm very sad and pissed for them. i listed their house 3 months ago and actually helped them get it ready to show. I talked my broker into reducing the commission % which was no easy task and i thought for sure they'd be ok. She just called me and told me the bank said no, they have exhausted their avenues. Her husband got laid off 15 months ago and has been working 2 part-time jobs, 32 hours a piece and she got laid off from Washington Mutual 4 months ago, ironically where her mortgage is from. they sold their other car and some jewelery she had from her grandmother and still they couldn't make it. What makes this even worse is that there is a guy in my town that we call the vulture, he buys up foreclosure all the time and i know he's waiting on this one. I'm hoping her parents can buy it out from under the vulture although they would have to take a second to manage that.

[MikeG]

1. Have they tried Chapter 13 Bankruptcy?

It stops the foreclosure and allows them to pay the arrears in installments over 5 years.

[AlCzervik]

2. They told me they have tried everything

i've seen their finances and it isn't pretty, i'm still hoping her parents can help them out.

[flvegan]

3. Familiar with foreclosures...they might:

1. Ask the bank to modify the mortgage, kick the arrears to the end of the mortgage (call and ask for the Loss Mitigation Dept.). Worst case scenario, they could ask for a Deed In Lieu of Foreclosure ;
2. Depending on the state, if it's Freddie Mac or Fannie Mae money, they can call a rep there, as they're sidestepping f/c a bit these days;
3. Bankruptcy can hold up a foreclosure for years, if need be;
4. If it's a Judicial state, file a Motion to Dismiss if the mortgage isn't held of record by the Plaintiff on the Lis Pendens, or if they don't have the Note and haven't filed the proper Lost Note Affidavit;
5. If they can come up with a decent chunk of money, they can plead to the court. Judges oftentimes will toss attorney fees and costs, strike escrow funds, etc. Basically, the judge says, "bank, take their money and let them keep their home."

The true evil is that these banks LOSE so much money on foreclosing on homes, yet they make it tough to work with them in these situations.

[TexasBushwhacker]

4. Unless the value of the home has gone down ....

the banks don't lose money. You have to pay for PMI if your mortgage is for over 8O% of the value of the house. If the house is worth $200K, the bank doesn't really lose money unless they have to sell it for less than $160K because PMI covers the rest.

[flvegan]

5. Or so it would seem...

PMI covers what...20-30% of the insured mortgage. Let's talk forclosure. First, PMI doesn't work with FNMA and FHLMC. So, let's say this is Fannie money. Payments on that $200k mortgage are pretty steep, and the interest is $1000/mo. That's a check that the bank gets to write to Fannie EVERY month it's in default. So, a foreclosure in a Judicial state takes from 160-200 days, best case scenario. In the middle, that's $6k to Fannie. Lawyer costs, service of process, escrow, the code enforcement liens that rack up. BTW, did I mention that the owners took the fridge, stove, cabinets, shutters and fireplace with them? Yeah, you're looking at $10k in damage (this is factual reality). The bank's gotta pay someone to come clean the pool, mow the lawn and keep things kept up. That costs. So, all told, that $200k mortgage, defaulted at $198,000 goes to Final Summary Judgment. The final outlay to the bank? $230-240k. That's hard cost. They'll blow the property out for it's "value" fleas and all on a quick sale for $150k. Even on an FHA, less the $6k to Fannie, you're looking at a loss of $30k even after PMI picks up their share.

Don't believe it? Ask around.

[liberalhistorian]

6. Well, I was a paralegal for a real estate attorney

for three years and I say, with all due respect, that that's bullshit. In most of the foreclosures I saw and that we attempted to stop, the bank/mortgage company made money or stood to make a lot of money. And as for the owners taking things with them-as far as I'm concerned, that's their property (the appliances, especially) and they're entitled to it.

Many of the foreclosures I saw were due to overwhelming medical bills (the hospital would foreclose in order to get its greedy, grubby little hands on the one asset a patient with a serious illness and without the will to fight since all of their will went into fighting their disease, or the bills would have to be paid before anything else, including the mortgage, in order for the medical treatment to be continued), or sudden job losses.

And most of the banks/mortgage companies couldn't care less that, if they worked with the person a little until they got back on their feet, they'd get their money. Many mortgage companies were absolutely unscrupulous and ruthless, filing foreclosures claiming nonpayment when it could be proved, through cancelled checks, that the payments had been made and cashed, the company had somehow "misplaced them" or similar bullshit. Or they'd receive checks and yet not deposit them until after the payment date, then charging "late fees and penalties" and jacking them up for all they were worth. Or they'd receive checks but not deposit and cash them for a few months so they could claim non-payment. One mortgage company in my area was busted for doing just that, and there are many more where that's from.

I saw people who'd worked hard for 30-40 years deal with foreclosures because their retirement health insurance had gone up drastically or they had a serious illness, etc., with the banks not giving a shit about 20-30 or more years of steady payments. And most of the foreclosures, the banks made a nice tidy little profit well above what they normally would have. It makes me sick that there's even such a thing as foreclosures. And for you to get bent our of shape over people taking their own property from their homes before the vultures move in is just shameful.

NO ONE should lose their house, or fear losing their house, because they or a family member have a serious illness or sudden job loss or something like that. NO ONE. I even saw a woman who lost her home because her husband got cancer, she had to stay home to take care of him since they couldn't afford home care or a lot of hospital care, she couldn't work and the medical and other bills were overwhelming. Her husband died and a month later the vulture who took her house at the sheriff's sale kicked her and her two young sons out when she had nowhere to go. That's just plain sick and should outrage everyone who considers themselves to be human beings.

[TexasBushwhacker]

7. Yeah, I thought that was more the case

The longer you're in the house, the less you owe on the mortgage compared to its value, the more foreclosing looks like a good deal for the bank. Actually, when the interest rates go up to 7 or 8%, I think some of those people with mortgages at 5.25% better be REALLY CAREFUL. It would be so easy for the banks to just swoop in and foreclose over a couple of missed payments.

[liberalhistorian]

8. Technically, banks can foreclose

even after just one missed payment, but they almost never do for obvious reasons. I'm not that crazy about banks, but they're a lot better than the ruthless heartless inhuman $%#$^#@%#^#$%$@%#$^ mortgage companies.

Banks will usually at least try to work with you somewhat and give you some breathing room, but mortgage companies will first rip you off with the terms of the mortgage, jack up all kinds of fees and charges, then slam you with a foreclosure after even one or two missed payments. Even banks, though, lately, have been getting a lot nastier and more aggressive. Maybe because there are so many foreclosures now and people are worn out and they know that.

[barb162]

9. side question

when you were doing that work, about how many cases did you see where the homeowners couldn't control their spending (vacations, restaurants, jewelry, etc) versus they had unexpected medical bills, work injuries, got laid off, etc. I am just looking for a rough percentage.

[liberalhistorian]

10. Actually, very few of them were cases

where they couldn't control their spending. I'm not denying that that happens and there are, indeed, people who have no concept of the fact that money doesn't grow on trees; we saw some of that. But the vast majority of the foreclosures I saw or dealt with were for reasons like serious illnesses bringing on huge medical bills (and hospitals aren't shy about bringing foreclosures, believe me) or disability, sudden job losses, injuries and disability, etc.

[flvegan]

15. Well, opinion of BS aside,

I STILL work for a real estate attorney, and if you read my orig post, I spoke of loss mitigation (working with the person a little) first and foremost. So, yes, I'm sure that many cases you saw did involve just what you stated, and yes, nobody should lose their home, that wasn't my point. I went through the facts of f/c as it stands in my (and a great many) states, to wit you cried bullshit.

[BiggJawn]

11. Had my house listed for 2 years before I lost it.

I had a couple of those "Realtors" who stick a sign in your yard and check their voice mail from the country club a few times a day...That and the fact I got over-sold and was more top-heavy than Dolly Parton in the first place...Sure left a sour taste in MY mouth! I used to think only lawyers were scum....

[AlCzervik]

12. I'm sorry!

Thats really shitty. I really try an work hard for any client no matter what but this one even more so. I painted this woman's bathroom! I'm waiting on a call back from to see whats going on, i'm hoping for the best, even my broker said he'd help as well.

[BiggJawn]

13. Hope it works out.

Wow, all my first realtor did was blow a bunch of smoke up my ass about how much he was gonna get for my house. After a year with only ONE offer (and a non-pre-approved buyer, at that) I cut him loose, and hired another guy, who bought me ANOTHER non-pre-approved "buyer", then "forgot" to tell the front office people the house was back on the market for FOUR months before I found out......

The first bozo's company uses a rock for a logo and the second jerk rides around in a balloon...Both "Multi-Million Dollar Club" members, FWIW....

Sounds like you really worked for these folks. Hope SOMETHING works out!

[tjdee]

14. Can't they sell something on Ebay? Dick Cheney says that's where the money

is!

I feel so for those people, I wake up every day worrying about money, and it must be so horrible for them to not know about their living situation.

You're a good person to be concerned.

[LynneSin]

16. I just started talking to my parents about finally buying a home

and they're like 'why don't you just keep renting until the economy picks up'. I mean, I think I can finally swing buying a house, but they're just worried that I'll get into this big investment and then something will happen to my job and I'm stuck in this house.

Probably why I'm looking at the 2 bedroom condos. I figure if I lose a job and have to go back to waiting tables, I could bring in a roommate to help make up the difference for costs