Plan B Forum

Like placing a Band-Aid on a hemmorage.

Exactly; what good is $2k to someone who lost their home?

Nonsense, nonsense, and more nonsense.

NO BANK is anxious to foreclose on a property, as they invariably lose money when that happens.

MOST OF THE PEOPLE benefitting from this program lived in their houses for a year or more after stopping the payments on their mortgage loans, and thus have already reaped many thousands in unearned benefits from their situation. To whine that his settlement will not make them "whole" is pure idiocy.

Every contract allocates risks and responsibilities to both parties, according to the factors that are under their respective control. Every contract.

In these mortgage loan contracts, the borrowers took the money and assumed the risk that they would be able to make the payments (job losses do happen, right?), and that the property values would not drop. They knew that if they were not able to make the payments, the bank could take the house. They agreed that if the defaulted and the bank took the house and re-sold it, they would be responsible for the "deficiency balance," which is the difference between the proceeds of the sale of the house and the remaining loan balance.

Oddly, the people who complained loudest when the Government (i.e., we) bailed out the banks, are not complaining now when the Banks are forced into a $25 Billion haircut because the people they loaned money to have defaulted.

And as has been extensively documented, there are essentially no "wrongful" foreclosures in this mess. There have been paperwork shortcuts due to the sheer number of foreclosures that were being processed, but NOBODY who made the payments as agreed had their mortgages foreclosed.

but NOBODY who made the payments as agreed had their mortgages foreclosed.

There have been some people who did. They were on payment plans with one arm of the bank while the other arm never got the word and wrongfully foreclosed. Those are the exceptions, but the borrowers in those cases were adequately compensated by the offending banks.

While what dgs49 says is true with respect to the vast majority of borrowers, it is also true that the banks -- if they want to take the property -- have to follow very precise rules. They failed to follow those rules, which are in place to protect the homeowner. One purpose of those rules is to impress upon banks the importance of making solid loans, something many banks ignored. It is hard to feel sorry for these banks when they failed to hire and train their employees in how to do essential bank functions like determining credit worthy borrowers and good collateral, as well as proper foreclosure methods.

I would agree that it would make more sense for the settlement money to go to shore up the FDIC or repay the bank bailout.

These band-aid programs are distorting the real estate market and are doing more harm than good. Hundreds of thousands of rightful foreclosures are in limbo now, and until they work through the system the market in many major markets will be in turmoil.

The properties need to hit the market, the banks need to recognize their losses and move on. If you are living in a house that you cannot pay for, you need to get the hell out, find another place to live, and move on. Housing prices will make a short term drop, but this is only bad for SELLERS, and not so bad for BUYERS, eh?

Until this happens, the market remains artificially inflated. Which is what caused the problems in the first place.

The problem is for a large number of people who cannot refinance because the house is underwater but have still paid their mortgages. They are being forced into a 'strategic default'.

Lack of regulation of the financial sector created the problem and individuals are being forced to pay the price.


yrs,
rubato