Judge Blasts Bank's Foreclosure Conduct and Cancels Mortgage

[karl_1052]

Originally Posted by Smittie61984

Hey Einstein did you read this part???


Reduced rate of interest which means a loss of money for the bank. Perhaps if the bank assumed they would give out a loan with a smaller percentage rate they wouldn't have given the loan in the first place. She agreed to a percentage and should have paid it. If she can't then it should be up to the bank (and not some snooty judge) on wether they want to accept less money.

I don't see the "Win-Win" there. If you loaned a buddy $100 and they said they were only going to give you $90 back, then you'd be pissed off as hell.

$90 is better than none.
The bank could take a reduced rate for a longer term which would equal the same money, but allow the homeowner to continue to make payments.

If you lost your job(I know, not possible in this booming economy), would you not try to make arragements with the bank to keep your house?
(No, you sound like an internet tough guy, who will turn into Chuck Norris and roundhouse kick money into existence to pay your mortgage)

What about the part where the bank tacked $200,000 onto the loan? What are your comments about that part?

[Smittie61984]

Originally Posted by karl_1052

$90 is better than none.
The bank could take a reduced rate for a longer term which would equal the same money, but allow the homeowner to continue to make payments.

What about the part where the bank tacked $200,000 onto the loan? What are your comments about that part?

Still, if you were expecting $100 (let's say this week and not $110 a year from now) then you'd still be upset. Then on top of that because she couldn't make her payments (wether spending too much money on Starbucks or loosing her job which is not hte banks concern) the bank has to take a hit of anything or wait for the money they were promised?

As for the $200,000, I have no clue what that's for or from.

My main concern is that the judge upholds the terms of the original contract and not rewrite them so he looks good. Not saying what the bank is doing is right, but if it's within the bounds of the contract she signed then they should be able to do it without punishment. If what they are doing violates her contract that they both signed then I want the judge to punish them then.

[karl_1052]

Originally Posted by Smittie61984

Still, if you were expecting $100 (let's say this week and not $110 a year from now) then you'd still be upset. Then on top of that because she couldn't make her payments (wether spending too much money on Starbucks or loosing her job which is not hte banks concern) the bank has to take a hit of anything or wait for the money they were promised?

As for the $200,000, I have no clue what that's for or from.

My main concern is that the judge upholds the terms of the original contract and not rewrite them so he looks good. Not saying what the bank is doing is right, but if it's within the bounds of the contract she signed then they should be able to do it without punishment. If what they are doing violates her contract that they both signed then I want the judge to punish them then.

I agree that contracts should be honoured, but due to unforseen circumstances, the people wanted to work with the bank to get a mutually beneficial outcome. The bank was not interested. Why? I don't know. If they foreclose on houses, they lose more money. Houses in the area are worth less, there are less buyers, and the bank has to dump the home.

I don't know what it is like in the states, but here, I can renegotiate my mortgage any time I want. I will pay a penalty($10-20K), but that is much better than losing my home, and the bank wins(keep my mortgage, plus get a penalty from me).

[goof2]

Originally Posted by karl_1052

What about the part where the bank tacked $200,000 onto the loan? What are your comments about that part?

I suspect the difference was due to the small number being the amount the bank loaned them and the larger number being the total repayment amount if the borrowers had followed their repayment schedule.

Ultimately what this comes down to is the lender and the borrower signed a contract. The borrower is no longer able to fulfill their requirements under the contract. If the lender is willing to change the terms of the contract to accommodate the borrower that is great, but the lender is completely within their rights to hold the borrower to the original terms. What would be most beneficial to the lender is irrelevant. They can choose to do whatever they want within the law no matter what this shithead judge says. Cases like this are why the appellate courts exist.

[Papa_Complex]

Originally Posted by goof2

I suspect the difference was due to the small number being the amount the bank loaned them and the larger number being the total repayment amount if the borrowers had followed their repayment schedule.

Ultimately what this comes down to is the lender and the borrower signed a contract. The borrower is no longer able to fulfill their requirements under the contract. If the lender is willing to change the terms of the contract to accommodate the borrower that is great, but the lender is completely within their rights to hold the borrower to the original terms. What would be most beneficial to the lender is irrelevant. They can choose to do whatever they want within the law no matter what this shithead judge says. Cases like this are why the appellate courts exist.

Except in this case the law is against the lender. The required settlement conference requires that both parties bargain in good faith, not just sit there and draw a line in the sand.

While I generally believe that banks get a bad rap from people who don't understand the realities involved, after having two parents in the industry for my whole life, this is a case in which a lending institution needed to be hammered down.

[goof2]

Originally Posted by Papa_Complex

Except in this case the law is against the lender. The required settlement conference requires that both parties bargain in good faith, not just sit there and draw a line in the sand.

While I generally believe that banks get a bad rap from people who don't understand the realities involved, after having two parents in the industry for my whole life, this is a case in which a lending institution needed to be hammered down.

If the lender believes they have the legal right to have the house foreclosed and they want the home foreclosed they operate in good faith up to that point. Good faith doesn't require them to accept less than what they feel they are entitled to under the law.

Originally Posted by The Chi

Ftr, even with the astronomical Rates if people unable to pay their mortgages, and with sufficient efforts made to remedy the issue, most banks are still refusing to assist the homeowners and are the main contributing force behind the housing foreclosure issue.

The main contributing forces behind the housing foreclosure issue are stupid people borrowing and stupid bankers lending way more money than the borrowers could hope to afford to pay back.

[pauldun170]

Originally Posted by goof2

The main contributing forces behind the housing foreclosure issue are stupid people borrowing and stupid bankers lending way more money than the borrowers could hope to afford to pay back.

Greed all around

Lenders, trying to make a few extra $$$ start offering non traditional loans to regular folk offsetting the risk by increased rate.

Folks - we shall call them by the common name "idiots" jump on the bandwagon and start chasing homes they normally could not afford.
The next group of folks -also known as"asshats" - start taking out jack ass loans like ARMs, interest only and whatever fuckall "should only be for wealthy people" loans because:

• Their friends told them about all the money that can be made from flipping houses and they no a "friend" who does it.
• They read this great book about how to make money in real estate
• They'll just sell it before the mortgage resets and then they'll make a killing because "you can't go wrong " in real estate

Finally you have "the jackasses" all the folks who were the core demographic for sub prime loans.

Lenders stop taking ownership of loans by selling them off as soon as soon as the borrower signs the paper work. So the guy working the mortgage doesn't give a shit about the quality of the application or loan because they are just going to sell it off to Ginnie Mae or some other institution so that the loan could be bundled up with a bunch of other loans in a mortgage backed security. Hell, maybe that MBS wilol get bundled up in a collateral debt obligation and then they can take out a credit default swap on it and make a fucking killing on the market.
And guess what? It doesn;t matter if half your mortgages were made to unemployed convicts and homeless people...the ratings agencies will still slap a triple A rating on the security those mortgages are bundled into!!

Since there is such a nice revenue stream from selling off these mortgages lets generate as many loans as possible to whatever demographic we can find that can sign their name. Hell, the government is always pushing to up homeownership and all those stupid reports we have to submit to the gov have to breakdown the portfolio to make sure we are abiding by all the regulations so lets mipress em by listing a bunch of mortgages to poor people!! Who the fuck cares if they probably will defualt on the mortgage 2 years from now...by the time we won't even own the mortgage (or the risk that goes along with it) anymore.

Lets just sell sell sell. Maybe even hire some PR firms to spread the word to the public that all these kooky mortgages are a sure thing and that everyone should by a home. Who cares if these people don't know what they are getting into.

Don't get me started on the people that took out all these fruity mortgages to buy houses.



who that was a fucking tangent...

Anyway...now it looks like most of the foreclosures are being generated by people who took out regular mortgages and were prime. So now the foreclosure rate is being pumped up from poor economic conditions. Lets not forget that a lot are health related as is the case with the people in the story.

must stop typing.

now I'm rambling

[Papa_Complex]

Originally Posted by goof2

If the lender believes they have the legal right to have the house foreclosed and they want the home foreclosed they operate in good faith up to that point. Good faith doesn't require them to accept less than what they feel they are entitled to under the law.

The main contributing forces behind the housing foreclosure issue are stupid people borrowing and stupid bankers lending way more money than the borrowers could hope to afford to pay back.

Good faith isn't demanding double the current debt amount. If the term of the loan is cut short by the lender, then said lender has no claim to 20+ years worth of interest.

Given what I've absorbed regarding the North American banking system by osmosis over the years that my parents worked in banks, in various capacities, this particular bank has some agenda other than simply maintaining their profit on this loan. The amount of money that they would lose on a property that has been devalued, by foreclosing on it, could approach the amount that they were legally entitled to. Something else is going on here.

The best interests of the bank's stock holders are served by extending the loan and reducing the interest rate, in order to either minimize or eliminate losses. The judge recognized that the bank's representative wasn't dealing in good faith and apparently had more than a little to hide, so he slapped the bank down. This seems to be a completely appropriate approach in this situation.

Here's the real issue: Banks were making loans to people who probably never should have qualified for them. They used predatory lending practises in order to do so. The loans were upside-down from day one. It doesn't take a stupid person to fail to understand finance. I've run into loan officers who don't.

The banks were using these essentially worthless loans in order to create profit in other arenas. If a regular business rather than a lending institution cooked the books the way that they did, the board of directors would be out on the street and the stock holders would be storming the gates. The stupid people were the excessively greedy ones who didn't think that this massive Ponzi Scheme would ever come crashing down on their heads.

[goof2]

Originally Posted by Papa_Complex

Good faith isn't demanding double the current debt amount. If the term of the loan is cut short by the lender, then said lender has no claim to 20+ years worth of interest.

The term of the loan was cut short by the borrowers deciding they were no longer going to pay. The borrowers were the first ones to fail to live up to the terms of the loan.

Originally Posted by Papa_Complex

Given what I've absorbed regarding the North American banking system by osmosis over the years that my parents worked in banks, in various capacities, this particular bank has some agenda other than simply maintaining their profit on this loan. The amount of money that they would lose on a property that has been devalued, by foreclosing on it, could approach the amount that they were legally entitled to. Something else is going on here.

The best interests of the bank's stock holders are served by extending the loan and reducing the interest rate, in order to either minimize or eliminate losses. The judge recognized that the bank's representative wasn't dealing in good faith and apparently had more than a little to hide, so he slapped the bank down. This seems to be a completely appropriate approach in this situation.

You are making a lot of assumptions here about what is in the best interests of the bank and its shareholders. You assume that the only sources of revenue available are the value of the house or payments by the borrowers. That isn't necessarily the case. Is the bank going to receive TARP money to make up for the difference between the value of the house and the value of the loan? Will they receive a similar payment for modifying the loan?

You also assume modification of the loan is best for the shareholders. If the loan is modified the bank may have to carry the lost revenue on their balance sheet for the life of the loan. If they foreclose they can take one big hit in an already crappy year and be back to showing a profit in a few years. The latter alternative is usually better for the value of a company's stock, thus better for the company's shareholders.

Originally Posted by Papa_Complex

Here's the real issue: Banks were making loans to people who probably never should have qualified for them. They used predatory lending practises in order to do so. The loans were upside-down from day one. It doesn't take a stupid person to fail to understand finance. I've run into loan officers who don't.

The banks were using these essentially worthless loans in order to create profit in other arenas. If a regular business rather than a lending institution cooked the books the way that they did, the board of directors would be out on the street and the stock holders would be storming the gates. The stupid people were the excessively greedy ones who didn't think that this massive Ponzi Scheme would ever come crashing down on their heads.

If you want to absolve the borrowers of all responsibility for the current situation that is your purgative. I place the blame equally on the lenders and the borrowers.