The banks aren’t chasing down people who walk from their homes. They are simply putting the homes back on the market at a steep discount, selling them, then sending the former owners a 1099 for the difference.
Proving once again that banks created the problem, perpetuate the problem, and are generally just scumbag orgs.
Keep in mind that is was the politicians who pressured banks to lend to people that were poor credit risks.
And no those same pols are looking for someone else to blame.
Not to detract from your point Joe. Banks are still scumbags.
You know…I keep my money in the bank. The idea behind loans is to generate income to pay those who invest their money with the bank. What banks do to protect their investors - within the law - is their duty to them.
Who begrudges the real estate agent who keeps his commission when a home is lost to foreclosure…and then earns another 7% on top of it when he finds another buyer to replace the one in default?
I wonder if one could deduct the amount of interest paid over the life of the loan against the “earnings” on the 1099??
There are no real earnings. A loan was made for an amount, and the loan went into default. It’s all speculative. A good ambulance chaser should be able to beat that up real good! :roll:
Spoken like a true regular American. Unfortunately, mosty reghular Americans have much more predjudice and misconceptions than they do knowledge of the banking and mortgage system.
When people lie and enter into contracts that they know they can’t fulfill, it is their own fault. It’s called being an adult.
What was that old saying? “No one can cheat and honest man.”
I don’t know if any 1099s are ever issued after a foreclosure but they are in the following situation:
During preforclosure and and prior to the sheriff’s sale, the bank may accept an offer less than it’s owed from a potential buyer. In this case the originall borrower would get a 1099 as he has in effect received “income” in the amoumt of the what he owes minus the accepted offer.
20/20 expose on the lending industry has a former loan officer describe how he was trainied to steer borrowers into ARMs. Now, what folks do not know is that banks are not required in all states to disclose all the hidden fees and accelleration clauses within the loan itself.
When you borrow or refinance, no one is looking at the terms of the loan, and explaining the terms. No one really explains anything.
Also, with bankruptcy laws now no longer affording any real protection to the average Joe, predatory lending is at its peak. Universal default allows one who falls behind on a single payment, to not face much higher interest rates on all credit cards, with nothing to fight back. Credit scores are a joke, and are merely a way to allow a lender to charge more money. It used to be called “usery”.
There are even those who lend “hard money”. These are private investors who do whatever the hell they want.
I am not a liberal. I am generally regarded as conservative. I am also not one who believes in big government or the government’s involvement in much of what I do.
But, the nonsense with banks must stop. For instance, knowng that the bank is not entitled to the equity you own in your home, should you default, they have found ways to accellerate monies owed to them, at a rate and to a point where they justify reaping that equity anyway.
You have better odds in Vegas.
You fall behind. You lose your home. You have no say in what it sells for. There’s an obvious shortfall. You receive notification that, because you were forced out, the difference between what you owed ad what they got is not declared as a “payment” (income) to you.
You now have a tax issue. You could theoretically go to jail, have your wages garnished, have even higher interest rates, not be able to finance a car because a tax lein exists, not be able to gain employment, and the list goes on and on.
This aint about being an adult. Its about predatory lending on all levels; from credit cards to loans of all shapes and sizes.
Some folks with decent credit and real equity who wanted to refinance or improve their homes are in real trouble.
Adults enter into contracts knowing what they are getting into. Anyone who buys a house or enters a mortgage (or, pretty much signs any contract) should, if they practice due dillegence, read the contract and understand it, or have their lawyer read it and explain it, before they sign.
Government is not there to protect me from my own stupidity and laziness. As Gerry Beumont says, “you can’t cure stupid”.
Besides, the reason that the mortgage companies (of wich, very few are banks, BTW) are issuing 1099s is because the IRS rules require them to. Legally, if the sale is for less than what was owed on the mortgage, the person in default had a gain. Stupid or unreasonable, it is still the law.
How many people don’t bother to read and understand their health insurance contracts and then get all bent when something they want to be covered isn’t? A contract is a contract and is always negotiable.
Too often, when people start blaming banks or insurance companies or big business or other easy targets, it’s mainly because they don’t want to admit their own error.
As we all have seen, as HIs, some people are just too stupid to own a house. I would submit that the same applies to signing contracts.
BTW: The government is bailing these people out by allowing them to convert their loans to FHA guarenteed fixed rate loans. No one who takes the time to try to solve the problem, will be in trouble.
The real problem is that young people are getting bad advice from their parents and schools. Young people are told to study, get good formal education, get a good steady job and buy a house that they can’t afford. Wrong.
I tell my own sons:
“If someone offers you a steady job or drugs, just say no. However, if you have to take one or the other… get hooked on drugs. It will do your life less harm than getting hooked on the fake security of a steady job which is nothing more than economic slavery at best.”
You lost me. I won’t be taking parenting advise from you for now.
It’s all a big scam. I was a REALTOR when the banks were handing out 103% LTVs to 23 year old couples like they were handing out candy.
Nick is right as you do not get rich working for someone else.
You get rich having them work for you.
Back to topic , Will aren’t some of these Banks using Appraisers on a preferred list that tend to puff up the value of a house.
This produces more money for them on the sale and every one is happy until the poor sucker who bought the property go’s for a equity loan and finds out the place is worth less than what they paid.
Now these same (care about humanity Banks) want nothing to do with Mr Homeowner as there is no way to recover pseudo value.
People to stupid to own is not fair as many people are still hard working blue collar types that know nothing of finance and are simply stuck when those thy pay to trust , instead take advantage of them.
Everyone out there whom works 8 hours a day should have a right to the American dream and not just those lucky enough to have a lawyer or Mortgage consultant in the family.
When a client hires me I am expected to do my job as part of the buyers expectations and I strive to do just that.
Some of these appraiser’s have been under pressure to falsely inflate values of property much in the same way some inspectors cozy up to agents and under report defects.
Me thinks that everyone out there does have the right, but not everyone out there has the ability.
Blain …you are perfectly right as the problems are compounded by more than one concern.
Did big business go overboard on approving loans to people who shouldn’t have qualified for a loan in the first place? YES. Did consumers go overboard on thinking they could afford a home when if fact they may have known they couldn’t afford it? YES. Did both think that if things turned sour they would be able to get the government to save their butts? Probably!
The moral of this is that common sense was not put in to common practice! Had everyone acted and abide by the common sense guidelines, then we may not be having this problem now. It was another example of business and consumers getting greedy with someone else’s money. Evey one wanted in on the gold rush, now we take a breath and wonder how the heck did this happen? It happened because people and business wanted to make a quick buck. (Hence the dramatic increase in the number of home inspectors, Realtors, mortgage lenders etc) Some people name it capitalism, and rightly so, while others think where is the common sense?
Just my 4 cents.
Around these parts it’s not the kids that are defaulting. It’s the ego hungry grown men and women 40+ years old. It’s greed, it’s the keeping up with the “Jones” mentality.
It’s not the getting bad advice, it’s the following in their footsteps. If mom and dad can do it, then surely I can it do (is how they think).
Times are a changin’ !
Hmmm, drugs could ultimately kill you. It’s not very often I see a person with a steady job kick the bucket.