[SkaredShtles]

<snip> so many people
<snip> fiscally responsible,

I've boiled it down for you. This doesn't happen.

 

[dante]

Dirtbag property owner borrowing more than he can afford and then walking away from the debt when it all goes pear shaped? No, not the American public, but our most favoritist presidential candidate!!

 

[stevew]

legalzoom the next huffpo?

 

[dante]

Shrug, it was the first link I came to when I typed in Trump and Bankrputcy. Maybe you would prefer Forbes?

 

[Pesqueeb]

As I was saying.....

Bank of America, based in Charlotte, North Carolina, holds $408 billion of mortgages and home-equity lines. Its home-loan division has lost more than $15 billion since the 2008 acquisition of Countrywide Financial Corp., the biggest mortgage lender during the housing bubble.

Regulators later found its growth was fueled by lax lending standards, with loans marred by false or missing data about borrowers and properties.
http://www.bloomberg.com/news/2011-05-10/bank-of-america-billions-of-dollars-in-losses-at-stake-on-moynihan-outlook.html

 

[Pesqueeb]

12345

melissa white and her husband stopped paying their mortgage in may 2008 after it reset to $3,200 a month, more than double the original rate. That gave them extra cash to pay off debts and spend on staples until their las vegas home sold two years later for less than they owed.

“we didn’t pay it for about 24 months,” said white, who quit her job as a beautician during that period after becoming pregnant with her first child and experiencing medical complications. “what we had, we could put towards food and the truck payments and insurance and health things i was dealing with.”

millions of americans have more money to spend since they fell delinquent on their mortgages amid the worst housing collapse since the great depression. They are staying in their homes for free about a year and a half on average, buying time to restructure their finances and providing an unexpected support for consumer spending, which makes up about 70 percent of the economy.

So-called “squatter’s rent,” or the increase to income from withheld mortgage payments, will be an estimated $50 billion this year, according to michael feroli, chief u.s. Economist at jpmorgan chase & co. In new york. The extra cash could represent a boost to spending that’s equal to about half the estimated savings generated by cuts to payroll withholding in december’s bipartisan tax plan.

“we’ve had a lot of government transfers to the household sector; this is a transfer from the business sector to households,” feroli said. “it’s a shock absorber that has helped the consumer ride out the storm.”

now renting
white, 28, now has two children, daughter makenzie, 2, and son christian, 1. She and her husband, shannon, a sheet-metal worker, rent a house for $1,425 a month.

“my credit’s back,” she said. “i’d buy a house again, but i’d get a fixed-rate loan.”

consumer spending is projected to rise 2.8 percent this year, according to economists in an april bloomberg news survey, after a 1.7 percent increase in 2010.

Delinquencies and defaults have helped homeowners save more, pay down other debts and move on to more affordable homes, according to stan humphries, chief economist at zillow inc., a seattle-based provider of housing data. Owners in default need the savings because degraded credit scores from the default make it more difficult to borrow, he said.

“it’s bad that they’ve lost the home, but household finances have been rearranged in such a way that it’s arguably more sustainable,” humphries said.

Delinquent debt
van perrault, a home appraiser who defaulted on his saint mary’s, maryland, investment property in 2007 after his tenants stopped paying the rent, used the extra money to take care of late payments on his delinquent credit-card debt.

The additional $1,500 a month “made a difference in my life,” said perrault, 60, adding that paying down his card balances helped him and his wife limit the damage to their credit scores.

Consumer debt fell to $11.4 trillion in the fourth quarter of 2010, down about $1.1 trillion from the peak in the third quarter of 2008, the federal reserve bank of new york said in february. Mortgage debt dropped 9.1 percent in the period.

A total of 6.3 million homeowners weren’t current on their loans at the end of march, with 2.2 million in the process of foreclosure, according to data from lender processing services inc., a jacksonville, florida-based provider of mortgage- processing services and data. Loans in foreclosure were an average 549 days late.

Conscious decision
while many americans couldn’t make payments because they lost their jobs or earned less during the recession, others made the conscious decision to stop paying -- or carry out a so- called strategic default -- on homes worth less than the outstanding obligation.

About 27 percent of single-family homeowners with mortgages, or about 15.7 million, were “underwater” at the end of last year, according to zillow, the highest share since the first quarter of 2009, during the recession. Las vegas led the nation, at 82 percent, followed by 70 percent for phoenix.

Failing to pay a mortgage bill is “a big moral issue,” said karl case, co-founder of a housing-price index that bears his name. “on the other hand, it’s exactly what you would expect given the way we treat and reward behavior in an economic system built for private gain.”

strategic default
more than a third of mortgage defaults were strategic, according to a june 2010 survey by finance professors paola sapienza of the kellogg school of management at northwestern university and luigi zingales of the university of chicago’s booth school of business. That was up from 29 percent in a march 2009 survey.

Almost half of americans surveyed in january “said they would be more likely to default if their bank was accused of predatory lending, even if they’re morally opposed to strategic default,” zingales said in a telephone interview from chicago. “one likely reason for this may be related to a psychological notion of retribution.”

adam turner, 43, went eight months without making payments on his las vegas townhouse after he quit his job as a casino- restaurant wine steward in november 2009. He stopped paying as “a way of sticking it back to the banks” for pushing mortgages on people who shouldn’t have been qualified, he said. He sold the property in a july 2010 short-sale -- when a bank agrees to accept less than the outstanding value of the loan.

Distressed deals
distressed deals -- short sales and foreclosures -- accounted for 40 percent of existing-home transactions in march, up from about one third last year, according to the chicago- based national association of realtors.

With unemployment at 9 percent in april and forecast to average 8.7 percent for the full year -- well above the 4.6 percent average in 2007 before the recession began -- more americans probably will enter the default pipeline this year. The number of homes receiving a foreclosure notice will climb about 20 percent, reaching a peak for the housing crisis, predicts realtytrac inc., an irvine, california-based data seller.

Turner, now a waiter and renting an apartment, used the money he saved by not making mortgage payments to take care of electric and phone bills and buy necessities while he was unemployed.

“it definitely boosted my cash flow, which was helpful to move on with my life,” said turner, who made almost $100,000 a year before the recession. “it was not like i was celebrating and partying. It was a rough time. It represented the american dream that collapsed around me.”
http://www.bloomberg.com/news/2011-05-06/-squatter-rent-may-boost-spending-as-u-s-mortgage-holders-bail.html

 

[$tinkle]

are you trying to piss me off?


i bet these same people who take a "strategic default" would also stop paying their rent, in which case the landlord should get the sheriff & have them tossed

 

[rockofullr]

^^^^

Free rent? I gotta get in on this.

 

[$tinkle]

can you play drums?

 

[Pesqueeb]

are you trying to piss me off?

So, its working?

After the housing market crashed, reports of suspected mortgage fraud soared.

As lenders, homeowners and brokers rushed to close deals, the process during the boom years was tainted by fakery, according to reports later submitted to the Financial Crimes Enforcement Network, an agency of the Treasury Department. The number of reports of suspected mortgage fraud rose to its highest level on record last year, as 70,472 reports were submitted to the government agency, according to a new release from the LexisNexis Mortgage Asset Research Institute.

That's nearly double the number of cases reported in 2006 when the market was at its peak, and it's nearly 22 times the number of cases reported in 2000. From the LexisNexis release:

Fraudsters thrive on inadequacies within lengthy loan-related processes and a lack of consistency across organizations and/or industries that help them hide their true motives. Technology has enabled faster loan production through automation, ease of processing, and analytics. Industry professionals have keen knowledge of those processes, which makes it much easier to manipulate protocols in place to thwart adverse activities.

The number of verified cases of mortgage fraud declined from 2009 to 2010, but that's partially attributable to a decline in the number of new loans, the LexisNexis report says. Reports of suspected fraud increased nearly 5 percent during that period.

Homeowners and investors have filed numerous lawsuits against mortgage companies, claiming that crucial mortgage documents were misplaced or even forged. Some of these suits have been successful, bolstered by testimony from bank employees. In a widely cited example, an employee of the lender now owned by Bank of America testified in a New Jersey court in 2009 that her company regularly held onto mortgage notes even as the loans were sold to investors, contradicting what contracts usually require.

Without a note, a bank cannot prove it has a right to foreclose on a home; homeowners have used the absence of a note to contest foreclosures. Likewise, a missing note compromises the legal rights of an investor in a mortgage security, a situation that has prompted some investors to sue the banks that sold them the securities.

But it's not just the banks who have been accused of fraud. The Wall Street Journal describes a practice some brokers allegedly used, in which they would get artificially low valuations of distressed homes, and then help a buyer sell those homes for a profit.

Homeowners, too, have been accused of misstating their income on mortgage documents. One borrower is now serving a 21-month prison sentence for mortgage fraud, the New York Times reported.

The chiefs of the lenders that helped fuel this boom, meanwhile, have largely escaped punishment.
Examples of alleged fraud extend to the foreclosure process as well. When it came out last fall that employees at foreclosure processing companies would sign thousands of foreclosure documents daily without even reading them, some of the county's biggest lenders temporarily halted their foreclosures.

The nation's five biggest mortgage lenders -- Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial -- have been accused of wrongfully foreclosing on homeowners and improperly handling mortgages. All 50 state attorneys general along with the Obama administration are working to reach a settlement deal. Fines could reach $30 billion, The Huffington Post reported.
http://www.huffingtonpost.com/2011/05/10/mortgage-fraud-reports_n_859845.html

 

[$tinkle]

Der Tod eines Menschen: das ist eine Katastrophe. Hunderttausend Tote: das ist eine Statistik

 

[stoney]

Ahh.... the moral dilemma. My biggest qualm with 'strategic default' is that people who have done so have not been truly hit on their credit record. Those of us who were smart about our funds and activities are now near equivalent to those who over levered.

 

[rockofullr]

can you play drums?

yes

YouTube - Quadruple Blasting

 

[Pesqueeb]

Der Tod eines Menschen: das ist eine Katastrophe. Hunderttausend Tote: das ist eine Statistik

This is America, speak english pal.

Ahh.... the moral dilemma. My biggest qualm with 'strategic default' is that people who have done so have not been truly hit on their credit record. Those of us who were smart about our funds and activities are now near equivalent to those who over levered.

Its almost like being punished for doing the "right thing". I swear to the FSM it feels like sometimes the faster I pay down my principal the faster my home value drops.

 

[Westy]

Friend of mine moved and is renting his old house out. He wanted some cash to buy a boat and could get much better interest rates on a second mortgage or home equity loan. Called the bank to inquire about borrowing on the house. They told him he couldn't get an equity loan on a house that he wasn't living in then promptly explained how to cheat the paperwork to get around it. They also explained how to get the home evaluated at a higher price so he could borrow more.

Good to see lessons have been learned from the past few years.

 

[stoney]

This is America, speak english pal.



Its almost like being punished for doing the "right thing". I swear to the FSM it feels like sometimes the faster I pay down my principal the faster my home value drops.

Wait for inflation to go veritcal. Assuming fixed rate, you win.

 

[woodsguy]

They should be able to sue the "squatters" for the payments they missed before they kicked them out.

 

[$tinkle]

Wait for inflation to go veritcal. Assuming fixed rate, you win.

howso?
my understanding is inflation only suits those who hold troy ounces

 

[stevew]

12345

“my credit’s back,” she said. “i’d buy a house again, but i’d get a fixed-rate loan.”

would you lend this twat money?

 

[$tinkle]

would you lend this twat money?

seeing how she thought what she did before was 'buy a house', no

 

[Pesqueeb]

Wait for inflation to go veritcal. Assuming fixed rate, you win.

Yea, but when that happens were all gonna have bigger issues than our mortgages.

 

[Westy]

Yea, but when that happens were all gonna have bigger issues than our mortgages.

I need to take the time to read this, bastards won a pulitzer for what is essentially a blog.

http://www.propublica.org/series/the-wall-street-money-machine

 

[stoney]

howso?
my understanding is inflation only suits those who hold troy ounces

Wage's will have to adjust to compensate for inflation. Fixed rate loans will not adjust. Dollar worth less = lower actual value to numerical value = pay less for the loan.

 

[Pesqueeb]

I need to take the time to read this, bastards won a pulitzer for what is essentially a blog.

http://www.propublica.org/series/the-wall-street-money-machine

I've read a bunch of that stuff. Last best place for investigative journalism. There is a “This American Life” story done in conjunction with them abut the Magnetar Trade that is most definitely worth listening to.

 

[Pesqueeb]

Wage's will have to adjust to compensate for inflation. Fixed rate loans will not adjust. Dollar worth less = lower actual value to numerical value = pay less for the loan.

Thats assuming an awful lot isn't it?

 

[SkaredShtles]

Thats assuming an awful lot isn't it?

Not really...

 

[Pesqueeb]

Not really...

You obviously dont work for an airline.

 

[SkaredShtles]

You obviously dont work for an airline.

Hahahahaha. Touche.

 

[dante]

Ahh.... the moral dilemma. My biggest qualm with 'strategic default' is that people who have done so have not been truly hit on their credit record. Those of us who were smart about our funds and activities are now near equivalent to those who over levered.

Uh, haven't you spoken before about your little "financial indiscretions" when you were younger and how it's only going to be another couple years before they drop off your credit score? Don't tell me that people who have strategically faulted in the past couple years have an 800+ credit score.

Wait for inflation to go veritcal. Assuming fixed rate, you win.

And this is why it's not going to. On the one hand you have blowhards like Glenn Beck preaching Zimbabwe-style inflation while not putting a single penny of his own money behind that possibility. On the other you've got hedge funds and Wall St. (and foreign governments) betting tens (hundreds?) of trillions of dollars that it won't happen. Gee, I wonder who I'd have more faith in....

 

[stoney]

You obviously dont work for an airline.

That was your first problem.

 

[stoney]

Uh, haven't you spoken before about your little "financial indiscretions" when you were younger and how it's only going to be another couple years before they drop off your credit score? Don't tell me that people who have strategically faulted in the past couple years have an 800+ credit score.

I had them, but I paid off every penny, even before I got into 'the business'. I never defaulted on a loan or debt.

And this is why it's not going to. On the one hand you have blowhards like Glenn Beck preaching Zimbabwe-style inflation while not putting a single penny of his own money behind that possibility. On the other you've got hedge funds and Wall St. (and foreign governments) betting tens (hundreds?) of trillions of dollars that it won't happen. Gee, I wonder who I'd have more faith in....

So someone like Bill Ackman taking a 25% position in his fund on physical gold is not making that bet? He called the mortgage crisis years in advance.

Which funds do you know of directly that are/aren't making that bet? And how many were right the last time?

 

[Pesqueeb]

That was your first problem.

I got 99 problems and that is definitely one of them. Don't know if its the first, but its one of them.

 

[stoney]

I got 99 problems and that is definitely one of them. Don't know if its the first, but its one of them.

I can go somewhere with a JayZ lyric here... BWT, your Wifey is awesome. My Wifey really likes her and the Kiddo.

 

[dante]

I had them, but I paid off every penny, even before I got into 'the business'. I never defaulted on a loan or debt.

Since you've alluded to the fact that they hit your credit score, I'm assuming that you weren't perfect with paying them on time or paying them off. If you *had* been perfect with paying them down and paying them off, you'd have an 800+ credit score and wouldn't be b!tching and whining about other delinquents having the same score as you.

So someone like Bill Ackman taking a 25% position in his fund on physical gold is not making that bet? He called the mortgage crisis years in advance.

Which funds do you know of directly that are/aren't making that bet? And how many were right the last time?

I'm not talking about outliers, I'm talking about The Market. The fact that you can get a non-Fannie/Freddie loan right now for 6% on a 30y fixed means that that's what the market is pricing average 10+ year inflation + profit (including possibility of foreclosure). You'll always find people to outwit the market, and the market has been spectacularly wrong before. **BUT** in general the market prices things far more accurately than average Joe's who claim to think that the price *should* be something or other. So to see the market pricing in 3-4% inflation and someone claiming that we should BUY GOLD because 1000% inflation is right around the corner tells me that someone doesn't know what they're talking about.

Oh, and gold sucks as an inflation hedge anyway. Do you mean to tell me that we had 80% DEFLATION between 1980 and 1999? In my mind the real clue is leveraging, and we haven't seen any of that yet. When companies start hocking everything they can get their hands on to go massively into debt (so that they can profit from inflation), look out. Blue chip companies are doing the exact opposite, sitting on mounds of cash that would go *poof* if major inflation hit.

 

[$tinkle]

http://chartsbin.com/view/1363

 

[dante]

http://chartsbin.com/view/1363

You obviously have been buying all the lies that they're telling you.

 

[stoney]

You obviously have been buying all the lies that they're telling you.

You leave zerohedge out of this. Those boys are totally brilliant and of sound mind.

 

[Toshi]

http://www.nytimes.com/2011/05/11/business/11housing.html

One bit that rankled me:

Greg Peterson recently purchased a house in Monterey for $700,000. &#8220;That doesn&#8217;t get you a palace,&#8221; said Mr. Peterson, a flight attendant.

Why the **** is a FLIGHT ATTENDANT, who probably makes $60k/yr, approved for a $700k house note? No sense at all, this makes.

 

[$tinkle]

what can be said about white people that hasn't already been said?

they be crazy

 

[BurlyShirley]

2 Questions:

#1 - Sky waitresses make 60k? Why?

#2 - Still dont understand adjustable rate mortgages. Banks lose when people default on the loans. Why do they raise rates to the extent that people continue to default? Surely there is some actuarial bastard figuring out how to jack the rates up just enough to bleed people dry while still allowing them to stay in their home.