Skip to comments.Deficiency judgments let creditors haunt borrowers for up to 20 years
Posted on 03/28/2011 7:16:39 AM PDT by dawn53
Think of it as Act 2 of Florida's foreclosure crisis.
In the first act, borrowers lose their homes.
In the next, lenders come after them for the debt still owed.
Unlike a foreclosure, which homeowners dread but expect once they stop making payments, deficiency actions can sneak up on people who thought their problems were behind them when they handed over the house keys.
"People have no idea of all the trouble that's coming," said Margery Golant, a lawyer in Broward County who is handling a growing number of deficiency defense cases.
(Excerpt) Read more at tampabay.com ...
Realtors that are under agency are legally obligated to represent one or the other (or can be neutral). On occasion in ‘dual’ agency both sides, are being ‘serviced’ with full disclosure to each party. That’s the way it is in Missouri. But the advice regarding seeking an attorney is absolutely valid but attorneys are not looked at any more favorably than Realtors (at least that’s been my experience). Most of my clients do not wish to seek out an attorneys advice.
People sometimes confuse legality with morality. Legal stealing is no less immoral than the illegal sort.
I would not do it and yes indeed, I believe that makes me the better person for it.
Anybody who wants too, just go ahead and flame away, I'm not scared of F.R. members flames, it's those eternal ones, that literally scare the hell out of me.
Risk is inherent in borrowing and lending. Banks want the govt to protect them from all the consequences of losses. Screw ‘em.
“Well not being argumentative; but what have they done to hurt you?”
1) accepted massive bailouts from the govt
2) put us into a massive recession
3) bought numerous politicians thereby subverting our govt and the rule of law
4) failed to properly care of houses they owned in my neighborhood thereby further reducing the value of my property
The list is long. The problem isn’t cleaned up until some banks do jail time.
The stories of the banks illegal and immoral activities are long and distinguished.
The banks no not deal in good faith with homeowners trying to work out deals.
The banks are willing to use the law to protect themselves, why shouldn’t the borrowers? Don’t borrowers deserve equal protection under the law? Seems like I’ve read that somewhere.
Well just a couple quick points.
Any bailout money has been repaid a large profit to the govt.
Banks did not put this nation into a recession; people pulling back from spending $$ they didn’t have is what started things.
3) every industry “has politicians in their pocket”
4) Did people complain when loans were made to make house prices go up? And what about all the other positive economic affects on the way up during the bubble times?
It does not do your profession on bit of good to adverstise now might be a good time to buy with the market still headed south. As a note of truth, I was a member of the board realtors for years as well as the chamber of commerce, I am ashame of both.
People will file for bankruptcy. The banks and mortgage companies are getting greedy over deficiency judgments.
It is most definitely a ‘buyers’ market. Foreclosures constitute a huge percentage of the current sales trend. I’m doing a BPO now for a property in a small town and in the previous 6 month sales period, 50% were foreclosures. Stunning really.
Disgusted is what we should be; not ashamed.
“Any bailout money has been repaid a large profit to the govt.”
And yet small business owners cannot get a loan. But banks will give loans to companies in foreign countries.
“Banks did not put this nation into a recession”
What the banks did led to the recession. People want to blame the govt, but the govt was only doing what the banks paid them to do.
Nobody complained when prices were going except people who were trying to buy with real numbers in mind. The banks pushed the numbers up because of the obscene profits they were making.
“Most of my clients do not wish to seek out an attorneys advice.”
Why get an attorney when you can blame the agent.
I don’t see that happening at least in a legal sense. Sure agents are bad mouthed all the time and some deserve it but I don’t see any legal actions dominating the scene. Which actually is kind of surpising given the nature of field.
Documentation is my best friend. That’s my philosphy.
I had my real estate license for 2 years. Saw the crash coming and did not like residential real estate. The sheer stupidity of some people was too much for me.
I would definitely use a lawyer to protect my interests. Using one to screw another party is a different story. I know there are some crooked banks out there, just got done dealing with one, who will screw borrowers at every opportunity, but, to me, that doesn’t excuse borrowers trying to screw them too.
“I know there are some crooked banks out there, just got done dealing with one, who will screw borrowers at every opportunity, but, to me, that doesnt excuse borrowers trying to screw them too.”
You cannot trust banks in these kinds of dealings, you have to have a lawyer and you have to fight for your legal rights.
I sold a house and went through all kinds of problems because the bank just would not respond. I’d fax them paperwork and they’d lose it. I’d refax it and they’d acknowledge having it, and then lose it.
Every time they lose someones paperwork its a violation of privacy laws. Nobody is enforcing those laws and the banks sure do not care.
At some point, sellers still unrealistic expectations will give way and there will be a big fall, perhaps even an overreaction (as is typical when bubbles pop). Remember, mortgage rates for those who still qualify remain artificially low, and as inflation heats up, as it now is, borrowing costs will increases, reducing buyers' purchasing power, and hence, prices.
Some observers think prices could drop to 1987 levels (although, 1987 was itself a bit of a bubble year.....).
I guessing that most people looking to buy in the long term would be better off renting in the short run and saving money to buy when prices drop another 15-20%. Few people will perfectly time the bottom, but it's not really time to buy yet.
You got it 100% backwards
The banks were FORCED to make these bad loans.
Barney Frank and Chris Dodd made the rules that said that banks had to make loans to lower income people. But the banks were not doing it- they refused.
Then Andrew Cuomo came along and sued one of them for ‘discrimination’, and won what was the single biggest judgement in history (at the time) $$Billions.
Then the banks saw the light- They either made the loans and lose some money, or get sued and lose billions. And the government was going to guarantee those loans anyway, so.... the made them.
This is also why the banks got bailed out. They would have spilled their guts about this otherwise.
You should NOT be giving legal adive!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
This is remarkably bad advice. You clearly are not a lawyer and do not have a clue.
In California mortgages are by law secured only by the property. Banks have no ability to come after people for other assets once they foreclose.
Do you feel you are losing money when the pawn shop has to sell the saxophone? If not, why do you feel you are losing money when a bank has to sell a piece of property it's client has defaulted on?
The bank my *claim* they are out money if the loan was for $200,000 and they can only sell the house for $150,000. But, on the other hand they made interest payments on it for however long it was in place.
Banks are given a monopoly by the state, which they use to make themseves very rich. In excange for this they can be required to take some risks as well.
And yes, sellers for the most part are unrealistic and unreasonable. That's why I haven't listed anything for quite awhile. They get pissed when they're told the truth and that is hard to take. Some still have not realized just what is happening.
Anyway, if someone is set financially they can step in and get great bargains right now, but buyers are going to become scarce because there are more and more people losing their livelihoods. That's why the foreclosure rate is so high in the area I'm in. The Chrysler plant closed down and it was the largest employer in the area. Whatever else is coming, it's not good.
Anyway, if someone is set financially they can step in and get great bargains right now, but buyers are going to become scarce because there are more and more people losing their livelihoods. That's why the foreclosure rate is so high in the area I'm in. The Chrysler plant closed down and it was the largest employer in the area. Whatever else is coming, it's not good.<.i>
If some one has the cash, it's no bargain to buy now if prices will decline further - especially to buy for investment. You would still see further declines of another 20% (from 2008 prices) and, while you could borrow at low rates, you'll lose substantial equity on the way down while you're still paying taxes and financing costs. The smarter money will wait another 2-3 years, earning something on her money, and let someone else buy on the way down, losing equity, and paying the taxes and carrying costs. So, when that buyer falls into trouble and has to sell at a loss, then the savvy investor will swoop in....
You’re right of course. I should have put in the added comment that current purchases are going for up to 30% less than LP and many of the List Prices were already below market value. Alot of it is dependent on the area as well. For example, there are homes going for 15K-30K. Yes alot need work but over all still a good investment even if for only the rental market. Some with money are looking for places to ‘park’ it for now; thinking they can ride out the storm.
Also, first time home buyers are still surfacing but, need near perfect credit. I listed a foreclosure, 1350 sq feet, 1 acre. House in good condition. Went for 45K (u/c) and it is a first time home buyer. His payments will be less than renting.
So it’s dependent on each individual’s circumstance. I’m not sure anyone knows what the true value is of any one property. What is the value based on now? Original SP, which was most likely based on an inflated appraisal? The MLS trends? LP and then the SP of that property? Or is it volume based which is also skewed. I don’t trust the MLS any further than I could toss it because there are agents that deliberately inflate their sp in this area. There’s no way to verify the SP around here, not without tracking down the closing office because it’s not required to disclose the amount to the county. (yet)
In other words, how can anything be predicted when the original figures were so skewed? Another thing to consider is the 1st and 2nd mortgages. You know, the lines of credit based on equity. If you were to investigate the loans/homes underwater, 9 times out of 10, they have a 2nd.
One thing we can agree on...it’s a mess and it is going to get messier.
The thing is that the bank took that risk when they accepted the house as collateral.
For example, say you think silver is a good risk at $37 bucks and you buy a bunch and next week it goes to $16, that was a risk you took with your eyes wide open.
Those banks loaned money on the value of the houses and it wasn’t the homeowner who made the value fall. It is the risk of doing business and why should the banks be sheltered? They made bad business decisions.
By current prices (from which I expect at least a 20% additional decline -from 2008 levels), I mean actual selling prices. Truly, the only price that matters is what a willing buyer will pay and what a seller (including a bank that wants to unload REO) will take for it.
Listing prices, as you correctly note, usually reflect little more than sellers' wishful thinking abetted by agents who don't want to lose the listing to someone who will play along.
I think are are in agreement that the trip to hell in a handbasket continues apace!
Ya mean the same Frank and Dodd who have deep connections to banks. They didn’t force the banks to do anything the banksn didn’t want them too.
Thats why the banks spent so much money and had all the right people on their Boards.
If there is a deficiency after resale??? Dang!!!!
Banks were making money as fast as they could and were lobbying for lax standards, same as the builders, the realtors and the republicans and democrats.
oh my gosh, we agree on something
Telling someone to go see a lawyers is bad advise, well you may be correct but for the wrong reason.
And where did you get your degree in real estate????
Banks were not forced to do one thing, as long as they sold them to fanny and Freddie, you would take the majority of the hit, and with off setting bets they thought there was no way they could lose, the value of real estate would go up forever.
Sorry. Thought you were complaining about banks, and that quote from “It’s a Wonderful Life” just sprang to mind.
“Community Reinvestment Act And a fourth: ACORN Mr.K @67 is right.”
And WHO pushed that through? People who worked for the banks.
I know MANY people who got loan after loan after loan with nothing down on any of em and nothing but rental income to cover the mortgages. CRA didn’t force those loans.
Yes but the homeowners made the decision to buy the home. They had the opportunity to do all the due diligence they wanted. Many cases they didn't want to do the due diligence. The response in the mid 2000’s would have been; “just get the darn loan closed”.
This story I stumbled across perfectly illustrates some of what the mindset was in the bubble:
Any of us who worked in the industry could vouch for this:
Take a look at this story and tell me who was responsible here:
“Of nine deficiency motions filed in Hillsborough County in the past six months, the most active plaintiff was Suncoast Schools Federal Credit Union, with one-third of the actions.”
Looks like our nice, friendly, credit unions are behaving WORSE than the big, bad, banks...that we always bash here.
The banks put people tied to govt officials on their Board. They paid those people. They all lobbied the govt to get laws passed which allowed them to make loads with little oversight.
They made huge profits during the boom time. That is all they cared about. Look at Countrywide, once they collapsed the guys moved on to the next fraud. Meanwhile the govt hires some of the other leaders of the fraud and make them Sec of Treasury or executives in the Fed.
I've been in nearly every aspect of the business since 1976. Broker, appraiser, underwriter, auditor, secondary sales, mortgage servicing, collections, mortgage company owner, etc., and do you know when the real estate sales business went downhill into the sleazy cat fight you see today? The clue is in the phrase "cat fight".
No...I’ve been in only since ‘99. Please elaborate
ok, I understand where you’re coming from now. Sorry ‘bout my last comment, I had an emergency, had to take mother to hospital (she’s fine).
I still think CRA had a very large initial effect, especially on the housing bubble. But I also realize that there was more to it — i.e., shady, too-close relations between the gov’t and some of the larger banks that pushed things to a head. I just don’t know (can’t know?) exactly what all of the shady dealings were, or exactly what effect they had. The effects of the CRA and pressuring banks to make Federally guaranteed loans to bad risks, is something I understand. Something I can get my head around.
I always believed there was more to it; it’s simply that I don’t know/ don’t understand what that “more” was. And that’s the stuff you’re speaking of.